Brussels Brief - April 14, 2006
April 14, 2006
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KEY DEVELOPMENTS
Competition: Anticompetitive Conduct of Opel Nederland Confirmed by ECJ
Patrice Corbiau
Opel Nederland concluded dealership agreements with about 150 authorised dealers in the Netherlands. The European Commission commenced investigations in 1996 and in 2000, ordered Opel Nederland to pay a fine of EUR 43 million for restricting free competition. The Commission found that Opel Nederland had organised a general restrictive strategy in relation to supply and bonuses, and a direct prohibition on exports to final consumers and Opel dealers established in other Member States. Opel Nederland applied to the Court of First Instance (CFI) for annulment of the Commission’s decision. In its judgment of 21 October 2003, the CFI confirmed the Commission's decision but reduced the fine to EUR 35 million. Opel Nederland then lodged an appeal with the European Court of Justice (ECJ). In its judgment of 6 April 2006 the ECJ held that the CFI was right to find that Opel Nederland had implemented a bonus system designed to restrict exports, and confirmed the reduced fine. In particular, the ECJ concluded that such restrictions would be achieved not only by means of direct restrictions on exports but also by indirect measures such as by granting bonuses only on national sales.
Internal Market: Minimum Retail Sale Price for Cigarettes
Maria Scimemi
The European Commission has commenced infringement proceedings against Member States who impose minimum retail prices on cigarettes. In line with the European Court of Justice, the Commission takes the view that the imposition of minimum prices as a measure to tackle cigarette consumption is contrary to Community law and distorts competition by safeguarding margins for the sole benefit of manufacturers. To achieve the objective of reducing tobacco consumption the Commission advocates an increase of excise duties on cheap cigarettes, because this would achieve the desired results without hampering price competition. The Council, acting on the basis of a report from the Commission, will re-examine the rates and structures of excise duties on tobacco products by the end of 2006. In the context of this review, the Commission will examine whether and to what extent the current EU excise directives can be improved with a view to health protection whilst respecting the principle of “proportionality”.
Taxation: Infringement Proceedings Concerning VAT on Postal Services
Geert Dierickx
The European Commission has sent formal requests for information to Germany, Sweden and the United Kingdom on the application of VAT on postal services. Currently, VAT legislation regarding postal services is not yet adapted to the liberalised postal market. Some Member States, including the United Kingdom and Germany, exempt all or most postal services provided by their former postal monopolies from VAT. Sweden, however, does not exempt any postal services from VAT. The Commission argues that the postal VAT exemption should only apply in so far as the strict discharge of universal service obligations is concerned. .
Competition: Increased Competition in Spanish Service Station Market
Iveta Mikelsone
The European Commission has adopted a formal decision, which makes commitments from the Spanish oil company REPSOL legally binding and ends its investigation into alleged violations of EC Competition rules. These commitments free hundreds of Spanish service stations from long-term exclusive supply agreements. REPSOL is active in the distribution of motor vehicle fuel and lubricants in the Spanish market. Through these commitments REPSOL also undertakes (i) to refrain from acquiring stations that it does not supply; (ii) not to enter into new exclusive supply agreements with a term exceeding five years; and (iii) to grant service stations freedom to offer discounts on retail prices. The Commission has appointed a Trustee who will monitor REPSOL’s compliance with the commitments. Non-compliance could result in a fine.
State Aid: Commission Clears Nanoelectronic Technology Research Collaboration
Andrea Hamilton
The European Commission has approved German plans to grant EUR 232.5 million of public funding to support research in nanoelectronic technology, a next-generation semiconductor technology. The project involves public-private collaboration between Fraunhofer-Gesellschaft and industrial partners Infineon Technologies AG and Advanced Micro Devices Inc (AMD). The partners aim to establish a top nanoelectronic technology research platform in Dresden using both public and private funds. The Commission explained that research in the field of nanotechnologies is aligned with the International Technology Roadmap for Semiconductors, and is consistent with the objectives of the EU Research Framework Programme. The Commission also noted that the project will safeguard existing jobs at Infineon’s and AMD’s Dresden production facilities, while creating 190 new research jobs.
Mergers: Acquisition of Guidant by Boston Scientific and Abbott Cleared
Yannis Virvilis
The European Commission has cleared the acquisition of the US cardiovascular producer Guidant by the health group Boston Scientific. In a parallel proceeding, the Commission also cleared the acquisition by Abbott Laboratories (Abbott) of Guidant’s interventional cardiology and endovascular devices business. The Commission identified some competition concerns in relation to the implementation of an agreement between the acquiring companies to share Guidant’s drug-eluting stent IP portfolio. However, Boston Scientific and Abbott offered modifications to this agreement that removed the Commission’s concerns.
Competition: Interim Report on Payment Cards Finds Barriers to Competition
Elena Kostadinova
The European Commission has published its interim report on payment cards and payment systems as part of its inquiry into retail banking (see Brussels Brief of 17 June 2005). The objective of this inquiry is to further the creation of a Single Euro Payment Area (SEPA) in line with the White Paper “Financial services policy 2005-2010”. The report concludes that much of the industry still operates on a national basis and that entry barriers are very high. The Commission identifies three categories of barriers that prevent effective competition - structural, technical and behavioural - and proposes various remedies. Interested parties are invited to present their comments by 21 June 2006.
NEXT WEEK’S EVENTS
Monday 17 April – Friday 21 April 2006
COUNCIL MEETINGS
No meetings scheduled for next week
COURT OF JUSTICE
Judgments
Judicial vacation of the Court of Justice from 10 April to 23 April 2006 inclusive
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 10 April to 23 April 2006 inclusive
Due to the closure of the Commission and other European Institutions over the Easter period, the next Brussels Brief will be published on Friday 28 April 2006.
