Brussels Brief - February 10, 2006
February 10, 2006
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KEY DEVELOPMENTS
State Aid: Commission to Investigate Greek Telecom Incumbent Early Retirement Plans
Yannis Virvilis
The European Commission has opened a formal investigation into Greece’s proposed financial contribution to the early retirement scheme of the Greek incumbent telecommunications operator (OTE). The Commission wants to make sure that this contribution does not exceed what is necessary to help former monopolist OTE to adapt to a liberalised market environment. According to the voluntary early retirement scheme, the Greek State will contribute approximately EUR 360 million by transferring a part of its shares in OTE. The argument put forward by the Greek Government is that the financial contribution relieves OTE only from extraordinary charges due to the specific status of OTE employees as quasi-civil servants.
State aid: Commission Investigates Luxembourg‘s 1929 Tax-Exempt Holdings Legislation
Patrice Corbiau
The European Commission has opened a formal investigation into the well-known Luxembourg 1929 legislation exempting holdings from corporate taxation. The Commission is concerned that this long-established tax regime may constitute a subsidy favouring multinational groups setting up their financial activities in Luxembourg. This in-depth investigation is being launched in parallel with the Member States’ current action to tackle harmful tax competition pursuant to the Council’s Code of Conduct on Business Taxation. On 21 October 2005 the Commission proposed appropriate measures to gradually review the 1929 scheme, but these measures have been rejected by Luxembourg. The investigation that has now been opened by the Commission will allow interested parties to submit their comments as to the preliminary qualification of the scheme as State aid, and the possible existence of legitimate expectations as to the future duration of such a long-lasting regime.
Transport: Driving and Resting Times for Professional Drivers
Hannah Wilson
Following agreement reached with the European Parliament in December 2005, the Council has adopted a regulation and a directive relating to professional drivers. The regulation aims to improve social conditions for drivers and road safety in general. It introduces a maximum weekly driving time of 56 hours, and obliges drivers to take a rest period of 45 hours at least once every two consecutive weeks worked. The regulation also demands that all new vehicles put into service be fitted with a digital tachograph, a measure likely to become mandatory from early May 2006. The directive aims to increase the quantity and quality of checks on compliance with Community legislation. From 2008 at least 2 per cent of days worked by drivers will have to be checked by Member States, rising to at least 3 per cent from 2010.
Mergers: Cargill Cleared to Buy its Italian Inland Water Transporter
Philip Torbøl
The European Commission has decided not to oppose Cargill’s acquisition of the inland water transport business of the Italian business Pagnan. Pagnan is the only company active in inland water transport for dry bulk cargo in Italy and provides its services exclusively to Cargill. The Commission examined whether the deal could give rise to concerns in certain upstream and downstream markets where Cargill has significant activities. The Commission found that, should demand emerge for those transport services, market entrance would not be hindered and competition would not be impeded.
Mergers: Clearance of MBDA/EADS Deutschland Tactical Missile Deal
Frank Schoneveld
The European Commission has cleared the proposed acquisition of EADS Deutschland’s guided weapons activities by MBDA, a joint venture between defence contractors EADS (France/Germany), BAE Systems (UK) and Finmeccanica (Italy). The Commission concluded that, because overlaps are limited and other large and capable players compete to supply military equipment, the operation will not significantly impede effective competition in the European Economic Area or any substantial part of it. Whilst MBDA is a leading missile producer, the Commission’s market investigation confirmed that a sufficient number of viable competitors will continue to operate after the acquisition, both in the German market and worldwide. Moreover, the buyers on the market - defence ministries - are considered sufficiently powerful to counterbalance any attempted anti-competitive behaviour by the new entity and to maintain a procurement policy based on open competition between suppliers.
Trade: WTO Finds Against EU in Biotech Row
Alana Tervo
According to a confidential interim report of a World Trade Organisation (WTO) panel, the EU approval process of genetically modified (GM) products in place between 1998 - 2004 constituted a de facto moratorium and was in violation of trade rules. The WTO also condemned Austria, France, Germany, Greece, Italy and Luxembourg for retaining their separate national bans on GM crops under the safeguard clause provided in EU legislation. The case was brought in 2003 by the US, Canada and Argentina who complained that delays in the EU GM approval process reflected business protectionism and political concerns rather than science and concerns about the health of consumers or the environment. The EU insists that the decision will not apply to the current GM approval process which was introduced in 2004.
Competition: Commission Initiates Formal Proceedings Against Music Copyright Managers
Andrea Hamilton
The European Commission has issued a Statement of Objections (SO), initiating formal antitrust proceedings against the International Confederation of Societies of Authors and Composers (CISAC), the umbrella organisation of music copyright managers, and its national members in the European Economic Area (EEA). The SO alleges that CISAC’s model contract infringes Article 81 of the EC Treaty, which prohibits restrictive business practices. Significantly, the scope of the SO is limited to the transmission of music by internet, satellite or cable, and excludes traditional forms of exploitation. The SO focuses primarily on the CISAC contracts’ territorial restrictions, which among other things limit licences to national areas and oblige authors to transfer their rights at the national level only. Because the CISAC contracts “interlock,” these territorial restrictions also strengthen CISAC members’ de facto monopolies in national markets, and prevent new entry. The Commission previously criticised the current national licence system for online music last year when it argued in favour of a single, pan-European copyright and licensing system for online music.
Taxation: Agreement on Reduced VAT Rates Ends Damaging Uncertainty
Elena Kostadinova
The EU Council has reached agreement to extend until 31 December 2010 the application of reduced VAT rates for certain labour intensive services listed in the Sixth Directive 77/388/EEC. The services covered are the repairing of bicycles, shoes and clothing, the renovation of private dwellings, the cleaning of private households, domestic care services and hairdressing. District heating services will be added to this list. Nine Member States were authorised by the Directive to apply reduced VAT rates for certain services for a six-year period ending 31 December 2005. The proposal, whose adoption required unanimous decision of the Council, initially met with opposition from the Czech Republic, Cyprus and Poland. These Member States were seeking to broaden the scope of services that can be provided at reduced VAT rates.
NEXT WEEK’S EVENTS
Monday 13 February – Friday 17 February 2006
COUNCIL MEETINGS
Economic and Financial Affairs Council (14 February 2006)
COURT OF JUSTICE
Judgments
Common Customs Tariff
C-500/04 Proxxon
Environment and consumers
C-215/04 Pedersen
External relations
C-502/04 Torun
Freedom of movement for persons
C-137/04 Rockler
C-185/04 Öberg
Judgments Convention/Enforcement of judgments
C-3/05 Verdoliva
Social policy
C-294/04 Sarkatzis Herrero
Opinions
Approximation of laws
C-356/04 Lidl Belgium
Environment and consumers
C-60/05 WWF Italia and Others
Intellectual property
C-169/05 Uradex
Regional policy
C-84/04 Commission v Portugal
Social security for migrant workers
C-50/05 Nikula
Taxation
C-494/04 Heintz van Landewyck
COURT OF FIRST INSTANCE
Judgments
No judgments scheduled for next week
