Brussels Brief - March 23, 2007
March 23, 2007
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KEY DEVELOPMENTS
Trade: Anti-Dumping Duties on Russian Silicon Annulled
Philip Bentley QC
The European Court of First Instance (CFI) has annulled anti-dumping duties (of 22.7 per cent) on imports of silicon originating in Russia and exported by the SUAL International group. The CFI found that the EU anti-dumping authorities made a manifest error by stating that the EU industry’s market share had decreased significantly during the period under consideration, when in fact its market share increased by 2.4 percentage points. In addition, there was a failure to take account of harmful effects caused by factors other than Russian imports, notably contraction in demand. Independent importers of silicon from other Russian suppliers can now challenge the validity of the anti-dumping duties (of 23.6 per cent) on the same grounds as in the SUAL case.
Competition: Commission Issues Statement of Objections for Professional Videotape Cartel
Marta Becerra
The European Commission has sent a Statement of Objections to the participants of an alleged cartel for professional videotape. Statements of Objections constitute the formal initial step in European antitrust investigations against companies accused of collusion and can lead to fines of up to ten per cent of a company’s worldwide turnover. In the present case the companies are being accused of fixing prices. The Commission’s conclusions are based on the results of inspections carried out in 2002 and on information supplied by the alleged members of the cartel in the framework of the Commission’s leniency policy notice.
Internal Market: Minimum Retail Prices For Cigarettes
Mélanie Bruneau
The European Commission has decided to take France to the European Court of Justice (ECJ) for fixing minimum retail prices for cigarettes. The Commission takes the view, based on well-established case law, that such minimum prices (i) infringe Article 9(1) of Directive 95/59/EC on taxes other than turnover taxes which affect the consumption of manufactured tobacco, (ii) distort competition by limiting the freedom of producers and importers to determine their selling prices, and (iii) are of benefit only to manufacturers, by safeguarding their profit margins. Based on earlier case law, the Commission’s theory is that limitations on tobacco consumption should be implemented through levying excise duties and not through price control. It has also decided to close infringement proceeding against Belgium, since the latter has now brought its legislation into line in accordance with the Commission’s official request of 4 July 2006.
Environment: France May Face Legal Action Over Nitrate Levels in Water
Andrea Hamilton
The European Commission has announced that it may bring France before the European Court of Justice (ECJ) for a second time over nitrate levels in certain waterways, and seek heavy fines. In 2001, the ECJ ruled that France had failed to comply with the Surface Water Directive, 75/44/EEC, because some waterways in Brittany exceeded the maximum nitrate level of 50mg/l. The Commission contends that France has still not complied with the judgment, since nitrate levels remain above the legal limit in 11 rivers in Brittany that are sources of drinking water. If the Commission launches legal proceedings against France, it will seek a lump sum fine of EUR 28 million and a daily fine of EUR 117,882. Before bringing any legal action, however, the Commission has allowed France the opportunity to put forward a plan to comply with the judgment and reduce nitrate levels, a process which could take several months.
State Aid: Commission Investigation into Hungarian Intra-Group Tax Scheme
Geert Dierickx
The European Commission has decided to open a formal investigation into a tax scheme allowing Hungarian companies to claim only 50 per cent of interest received from or paid to affiliates in the context of intra-group financing. According to these tax rules, only half of the interest received will be taxed. In turn, an affiliate can only deduct half of the interest from its taxable income. However, interest-paying affiliates located outside Hungary are not subject to these rules and can therefore deduct the full amount of the interest paid. The Commission doubts that the scheme forms a general tax measure, as it applies only to group companies and excludes small and individual companies.
Competition: ECJ Dismisses British Airways’ Appeal
Benoît Keane
The European Court of Justice (ECJ) has dismissed British Airways’ (BA) appeal against the Court of First Instance’s (CFI) judgment upholding the European Commission’s decision that BA had abused its dominant position on the market for air travel agency services in the United Kingdom through its loyalty rebate schemes. The Commission found that the abusive conduct of rewarding loyalty from the travel agents and of discriminating between travel agents had the effect of excluding BA’s competitors from the UK passenger air transport market. BA appealed the CFI’s upholding of the Commission’s decision on the ground that its conduct was not abusive. However, the ECJ rejected the appeal on the basis that it could not substitute its own assessment of the market data and competitive situation for that already carried out by the CFI.
Transport: Ten Member States Taken to ECJ for Failure to Transpose Railway Directives
Jérôme Cloarec
On 21 March 2007, the European Commission decided to pursue infringement proceedings against ten Member States that have not yet communicated their national implementation measures to transpose two key Directives of the so-called "second railway” package. The ten Member States concerned are: Germany, Greece, Spain, Italy, Luxembourg, the Netherlands, Portugal, Sweden, Slovenia and the Slovak Republic. The Directives should have been transposed into national legislation before 30 April 2006. The first Directive (2004/49/EC) aims at strengthening rail safety by ensuring full transparency in relation to safety procedures in force. The second Directive (2004/50/EC) updates legislation already in force on technical interoperability which is a step required to achieve a fully integrated European railway market.
Internal Market: Commission to Enhance Single Market for Investment Funds
Elena Kostadinova
The European Commission has adopted guidance for Member States’ financial market authorities to enhance the EU single market for retail investment funds by removing obstacles to their cross-border activity. The funds, known as “undertakings for collective investment in transferable securities” (UCITS), account for 70 per cent of all EU investments. These are professionally managed investment portfolios of ordinary households. The UCITS Directives regulate the management of these investments and protect investors through investment limits, disclosure requirements and independent supervision procedures. They also introduce a “passport system” which allows a UCITS fund authorised in one Member State to operate in all other Member States. The guidance concerns the inclusion of new financial instruments in the current scheme and instructions on scrutiny of investment funds from other Member States.
ECJ: Advocate General Rules that German Conditions on Study Grants Violate Community Law
Yannis Virvilis
In a case which was brought to the European Court of Justice (ECJ) upon referral from a German administrative court, Advocate General Ruiz-Jarabo has taken the view that German legislation relating to the grant of aid to students unduly restricts freedom of movement. German legislation provides study grants in other Member States on the condition that the study should represent the continuation of study of at least one year in a German establishment, and denies such grants to students who live in German border towns while studying in another Member State. Mr Ruiz-Jarabo’s view is that these rules deter students from exercising their freedom of movement and constitute excessive restrictions in relation to the aims pursued.
NEXT WEEK’S EVENTS
Monday 26 March – Friday 30 March 2007
COUNCIL MEETINGS
ECOFIN (27 March 2007)
COURT OF JUSTICE
Judgments
Environment and consumers
C-423/05 Commission v France
Fisheries policy
C-64/04 Commission v United Kingdom
Social policy
C-320/06 Commission v Belgium
Taxation
C-347/04 Rewe Zentralfinanz
C-111/05 Aktiebolaget NN
Opinions
Approximation of laws
C-80/06 Carp
Environment and consumers
C-429/05 Rampion and Godard
External relations
C-331/05 P Internationaler Hilfsfonds v Commission
Freedom of establishment
C-260/04 Commission v Italy
Freedom of movement for persons
C-182/06 Lakebrink and Peters-Lakebrink
Free movement of capital
C-298/05 Columbus Container Services
Intellectual property
C-234/06 P Ponte Finanziaria v Office for Harmonisation in the Internal Market and F.M.G. Textiles (anciennement Marine Enterprise Projects)
Law governing the institutions
C-503/04 Commission v Germany
Regional policy
C-158/06 Stichting ROM-projecten
Social policy
C-287/05 Hendrix
Joined Cases C-231/06, C-232/06, C-233/06 Jonkman
Taxation
C-97/06 Navicon
COURT OF FIRST INSTANCE
Judgments
Agriculture
T-220/04 Spain v Commission
