Brussels Brief - April 24, 2009
April 24, 2009
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Key Developments
Transport/Competition: Commission Investigates Airline Cooperation Agreements
Matthew Kopetski
The European Commission is reported to have formally initiated proceedings in relation to certain airlines’ existing and planned cooperation on transatlantic routes. The first investigation apparently concerns agreements between certain members of the Star Alliance, while the second investigation is said to target a proposed cooperation agreement between certain members of the Oneworld alliance. In both cases, the airlines involved represent some of the main players on transatlantic routes and are alleged to be contemplating a degree of cooperation that goes far beyond the standard cooperation within their respective alliances. The Commission will assess whether these agreements, which involve the joint management of schedules, capacity, pricing and revenue management on these routes, restrict competition and are therefore prohibited by Article 81(1) of the EC Treaty. The Commission has stated that it will also be considering any demonstrated consumer benefits that arise from such cooperation.
When the Commission takes the procedural step of initiating formal proceedings, this does not imply that the parties being investigated have infringed EC competition rules. Such a finding can only be made at the end of such proceedings, and there is no time limit for this.
Telecommunications: European Parliament Approves Proposal on Roaming Charges in the European Union
Mary Dineen
The European Parliament has voted in favour of new EU rules on SMS and data roaming, proposed by the European Commission in September 2008. The new roaming rules, which add to the first EU Regulation on voice roaming adopted in 2007, are expected to come into force on 1 July 2009 and will apply until 2013. The Commission found that the dynamics of the roaming market have not changed sufficiently since the implementation of the original Regulation and prices remain very high.
The new EU roaming rules will cap the price that consumers can be charged for sending a text message while abroad at EUR 0.11, compared with a current average of EUR 0.28. It will reduce progressively the price caps for mobile roaming calls from EUR 0.46 to EUR 0.35 per minute by July 2011 and from EUR 0.22 to EUR 0.11 for mobile calls received while roaming abroad. Mobile operators will also be required to bill roaming calls per second after the first 30 seconds for calls made and from the first second for calls received while abroad. This will end the current practice of billing by the minute, by which customers are overcharged by up to 24 per cent. The new rules will introduce greater price transparency for roaming charges and protect customers from “bill shocks”.
Financial Services/State Aid: Commission Approves UK Asset-Backed Securities Guarantee Scheme
Lawrence Grabau
The European Commission has approved, under Article 87(4)(b) of the EC Treaty, the UK Asset-Backed Securities Guarantee Scheme. This new measure is intended to restore one of the main sources of leverage used by UK banks: mortgage lending. Under the scheme, the UK Government will provide full or partial guarantees to eligible asset-backed securities including portfolios of mortgages. Guarantees allocated under the scheme will be limited to a total of £50 billion. The instruments eligible under the scheme are bonds issued by vehicles sponsored by UK banks and building societies that have a substantial business in the United Kingdom.
The Commission concluded that the aid scheme meets the conditions in its Communication on the application of the State aid rules to banks during the financial crisis [See “On the Subject” 31 March 2009]. The scheme will enable banks to acquire liquidity and will become a fundamental element in underpinning lending to the UK real economy.
The Securities Industry and Financial Markets Association (Sifma), together with its affiliate, the European Securitisation Forum, has welcomed the scheme as an important solution to increase funds available to banks in order to promote lending to homebuyers and homeowners.
Justice and Home Affairs: Report and a Green Paper on Jurisdiction and Cooperation in Civil and Commercial Matters
Teresa Arnoni
On 21 April 2009, the European Commission adopted a report and a green paper on the review and application of the Council Regulation (EC) No 44/2001 (known as “Brussels I”) on jurisdiction, recognition and enforcement of judgments in civil and commercial matters. The Regulation sets out rules on the identification of the court over which Member States shall have jurisdiction in cases of a dispute (in the civil and commercial field) involving persons from different Member States. It also clarifies the rules on the recognition and enforcement of the judgment adopted by that court in other Member States.
The report presents an evaluation of the Regulation’s application since its adoption. The green paper outlines possible improvements on the points raised in the report: (i) removing the remaining obstacles to a free circulation of judgments; (ii) protecting European citizens and companies in cases of disputes with parties domiciled in third States, ensuring equal access to the courts of the Member States and equal protection against judgments given by courts in non-EU countries; (iii) avoiding parallel proceedings in different Member States and ensuring the application of contractual agreements as to which courts in the European Union will deal with the case.
A proposal for revision of the Regulation should be adopted by the end of 2009, on the basis of the consultation launched by the green paper.
Financial Services: Public Consultation on New Legal Framework for Securities “Post Trading”
Jacques Pieters
The European Commission has embarked on the preparation of a new legal framework on securities “post-trading”. “Post-trading” occurs when two parties have agreed to a securities transaction but the transfer of the securities and their disposal remains to be dealt with. On 20 April 2009, the Commission launched a public consultation open to all parties possibly affected by this new framework.
Differences in the financial laws and systems of post-trading in the various Member States can give rise to a higher cost of transactions and credit. Furthermore, these differences affect the protection of investors' rights with regard to the acquired securities (e.g., when exercising their rights in corporate actions abroad). These issues were already raised and investigated in the so-called "Giovanni Reports".
The closing date for the submission of comments is 11 June 2009.
Telecommunications—State Aid: ECJ Dismisses Bouygues Telecom’s Appeal on 3G Licences
Mélanie Bruneau and Katarzyna Wilk
The European Court of Justice (ECJ) has upheld a Court of First Instance (CFI) judgment, which found that the retroactive reduction of fees due by Orange and SFR did not constitute State aid and was not discriminatory.
In 2001, following a call for applications for the award in France of four universal mobile telecommunications system (UMTS) licences, also known as 3G licences, only two applications were received: one from Orange and one from SFR. They were both granted a 15 year licence for a total of EUR 4.95 billion. Following another call for application, a third licence was issued to Bouygues Telecom in 2002 for 20 years for EUR 619 million (plus a percentage of turnover). These conditions were then awarded retroactively to the first two licence holders.
Bouygues Telecom filed a complaint with the Commission claiming that the retroactive applications of the same conditions to Orange and SFR constituted State aid. The Commission, then the CFI and the ECJ dismissed Bouygues Telecom’s actions. The ECJ found that the retroactive reduction of the 3G licence fees took into account the fact that the licence holders’ situation was comparable (none of the operators had entered the market at that time) and was therefore not discriminatory. The ECJ also found that the fact that the reduction in fees created an advantage to the beneficiaries was not sufficient to prove the existence of State aid incompatible with the Common Market.
NEXT WEEK’S EVENTS
Monday 27 April – Friday 1 May 2009
COUNCIL MEETINGS
General Affairs and External Relations Council (GAERC) (27- 28 April 2009)
COURT OF JUSTICE
Judgments
Area of Freedom, Security and Justice
C-420/07 Apostolides
C-256/08 Commission v United Kingdom
Environment and consumers
C-75/08 Mellor
External relations
C-497/06 P CAS Succhi di Frutta v Commission
Freedom to provide services
C-518/06 Commission v Italy
Free movement of capital
C-132/08 Lidl Magyarország
Free movement of goods
C-531/07 Fachverband der Buch- und Medienwirtschaft
Law governing the institutions
Joined Cases C-393/07, C-9/08 Italy v Parliament
State aid
C-494/06 P Commission v Italy and Wam
Opinions
Competition
C-534/07 P Prym and Prym Consumer v Commission
Intellectual property
C-301/07 PAGO International
Principles of Community law
C-103/08 Gottwald
COURT OF FIRST INSTANCE
Judgments
Agriculture
T-281/06 Spain v Commission
Competition
T-12/03 Itochu v Commission
T-13/03 Nintendo and Nintendo of Europe v Commission
T-18/03 CD-Contact Data v Commission
Intellectual property
T-81/08 Enercon v OHMI (E-Ship)
T-430/07 Bodegas Montebello v OHMI - Montebello (MONTEBELLO RHUM AGRICOLE)
T-23/07 Borco-Marken-Import Matthiesen v OHMI (α)
