Brussels Brief - March 3, 2006
March 3, 2006
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KEY DEVELOPMENTS
State Aid: Commission Endorses Refinancing Measure for UK Post
Yannis Virvilis
The European Commission has decided not to oppose a refinancing measure in favour of Post Office Limited (POL). POL is the retail subsidiary of the Royal Mail Group which in turn is wholly-owned by the UK Government. POL is required to maintain loss-making rural counters in order to guarantee access to essential services, such as government and payment services. The Commission found that the measure in question constitutes State aid. It also found that the UK will only compensate POL for the net costs of the public tasks it is entrusted. The Commission therefore concluded that the aid is compatible with the EC State aid rules, as it is in line with the Community framework for State aid in the form of public service compensation.
Mergers: Commission to Investigate Merger of Canadian Mining Companies
Andrea Hamilton
The European Commission has launched an in-depth investigation into the merger of Canadian mining companies Inco Ltd. and Falconbridge Ltd. Both companies are active in the mining, processing, refining, and sale of various metals, including nickel, cobalt, and copper, among others. The EUR 9 billion merger, which has been approved by the Canadian competition authorities, would create the world’s largest nickel producer. The Commission expressed concern that the merger could impede competition within the EEA by eliminating the main alternative supplier for nickel and cobalt for specific applications. In particular, the Commission noted that the merger could restrict the supply of nickel and cobalt used for (1) electroforming and plating (i.e., coating objects in nickel), and (2) creating superalloys, which are used primarily in the defence and aerospace industries. US antitrust authorities are actively cooperating in the investigation pursuant to the 1991 bilateral agreement on antitrust cooperation.
Accounting: Convergence Between EU and US Standards
Contact Philip Bentley QC
The European Commission has welcomed the Memorandum of Understanding between the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The document outlines a programme for convergence between US Generally Accepted Accounting Practices (US GAAP) and International Financial Reporting Standards (IFRS). The aim of the programme is to bring about mutual recognition of accounting standards between the EU and the US, reflecting the eventual intention to remove the requirement for foreign private issuers to reconcile IFRS-based financial statements with US GAAP. In order to smooth the transition for EU companies that have to apply IFRS, the IASB will provide interpretations if needed so that there is consistent application of standards. The Commission emphasised the need for regular review and wide consultation with businesses in relation to the areas of the work programme which concern complex and controversial accounting areas.
Transport: Commission Proposes Anti-Terrorism Measures to Protect Freight Transport
Hannah Wilson
The European Commission has proposed new rules to enhance the protection of the supply chain in freight transport against terrorism. The rules make provision for a voluntary scheme allowing commercial operators to be conferred with the title “secure operator” if they comply with minimum European security standards. Compliance will require operators to implement and document a security management system, in addition to meeting other requirements, including those relating to personnel and security procedures set out in detail in the proposal. Once attained, “secure operator” status will enable an operator’s vehicles to enjoy fast track treatment at security checks, both within the EU and at external borders, and will allow operators to distinguish themselves from non-secure competitors on the transport market.
Mergers: In-Depth Investigation into Ineos’ Acquisition of BP Ethylene Oxide Business
Frank Schoneveld
The European Commission has opened an in-depth investigation into the planned acquisition by the UK company Ineos of the ethylene oxide business of BP in Germany. The Commission is concerned that the transaction could create significant competition concerns given that it would make Ineos by far the largest supplier of ethylene oxide to the merchant market in Europe. Ethylene oxide is used in the production of polyester for textiles, films and plastic (PET) bottles, and in the production of detergents, cosmetics, paints and antifreeze. The Commission has 90 working days to take a final decision on whether the acquisition would significantly impede effective competition within the European Economic Area (EEA) or a significant part of it.
Mergers: Tensions Around Planned Merger of Gaz de France and Suez
Iveta Mikelsone
Gaz De France SA, a state-controlled European natural gas supplier, and Suez SA, a French energy and utilities company, have approved what they refer to as a “friendly merger” of their respective businesses. The merger was announced after Enel SPA, Italy’s biggest power company, had shown interest in Suez. Following this announcement the Italian Government accused France of protectionism and of undermining the principles of the internal market. The European Commission has yet to approve the merger, and is refraining from comment until the merger is formally notified.
Energy: Seven EU Regional Electricity Markets as a First Step Towards a Single EU Market
Elena Kostadinova
The European Regulators’ Group for Electricity and Gas (ERGEG), who acts as an advisory group to the European Commission, has launched an Electricity Regional Initiative to demarcate the entire EU into seven regional electricity markets, in order to remove barriers to cross-border trade in those regions. ERGEG regards this as a first step towards a single EU market for electricity. The Commission, however, is sceptical about the creation of smaller-scale regional electricity markets within the EU. In an early draft of its Green Paper it proposes a single European electricity grid by harmonising grid rules and defining route-by-route electricity interconnection plans. In the long run, the Commission foresees the replacement of the ERGEG by a new Community body, the European Energy Regulatory Agency.
NEXT WEEK’S EVENTS
Monday 6 March – Friday 10 March 2006
COUNCIL MEETINGS
Environment Council (9 March 2006)
Employment, Social Policy, Health and Consumer Affairs Council (10 March 2006)
COURT OF JUSTICE
Judgments
Agriculture
C-174/05 Stichting Zuid-Hollandse Milieufederatie and Stichting Natuur en Milieu
Commercial policy
C-371/03 Aulinger
Customs union
C-293/04 Beemsterboer Coldstore Services
EA
C-65/04 Commission v United Kingdom
Environment and consumers
C-310/05 Commission v Luxembourg
Free movement of goods
C-421/04 Matratzen Concord
Police and judicial cooperation in criminal matters
C-436/04 van Esbroeck
Social policy
C-499/04 Werhof
Social security for migrant workers
C-493/04 Piatkowski
Taxation
C-114/05 Gillan Beach
Transport
C-323/03 Commission v Spain
Opinions
Approximation of laws
C-48/05 Adam Opel
Freedom of establishment
C-346/04 Conijn
Social policy
C-484/04 Commission v United Kingdom
Taxation
C-517/04 Visserijbedrijf D.J. Koornstra
C-106/05 L.u.p.
C-166/05 Heger
COURT OF FIRST INSTANCE
No judgments scheduled for next week.
