Brussels Brief - March 18, 2005
March 18, 2005
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KEY DEVELOPMENTS
Trade: European Court of First Instance (CFI) annuls European Union (EU) Council rejection of anti-dumping measures
Philip Bentley
On 17 March 2005 the European Court of First Instance annulled the Council’s failure to adopt the Commission’s proposals for anti-dumping duties in two investigations, the first concerning unbleached cotton fabrics from various countries and the second concerning television camera systems from Japan. In so doing, the Court of First Instance found that it could not distinguish these two cases from the first Eurocoton case decided by the European Court of Justice on 30 September 2003. It is thus well established that the EU Council must give written reasons if it decides not to act on a Commission proposal for anti-dumping action. This, combined with the modifications made to the EU Council’s decision-making procedure in anti-dumping proceedings since the enlargement of the European Union on 1 May 2005, means that any political opposition to proposed EU anti-dumping action must be voiced expressly by at least 13 of the 25 EU Member States and must be supported by proper economic and legal reasoning. The successful applicants were represented by Clive Stanbrook QC of the Brussels office of McDermott Will & Emery.
Trade: World Trade Organisation (WTO) recommends modifications to EU Geographical Indications (GIs) system
Tina Cagnano
On 15 March 2005 a report by a WTO panel held that the EU rules providing for the coexistence of Geographical Indications (GIs) with prior trade marks are justified under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, but are in breach of Article 3.1 of the TRIPS agreement in several respects. Among those aspects of the Regulation which were held to be in breach were the equivalence and reciprocity conditions as applicable to the availability of protection for GIs and the application procedures, insofar as they require examination and transmission of applications by governments. The WTO panel suggested that the EU could comply with the TRIPS agreement by amending the Regulation so as not to apply the conditions on equivalence and reciprocity to procedures for registration of Gls located in other WTO members.
Internal Market: ECJ Decision on French tax relief for research
Philip Torbøl
National legislation granting tax relief for research, but limiting it to research activities on the territory of one Member State, is contrary to the EU’s principle of freedom to provide services. This was established by the ECJ in a preliminary ruling concerning provisions of the French Code Général des Impôts allowing companies to receive tax credit for expenses relating to scientific and technical research activities carried out in France. First, the Court stated that such legislation does not flow from the principle of fiscal territoriality, but is based upon the place of operation of the company and is therefore liable to restrict its cross-border activities. Second, the Court found that the restriction could not be otherwise justified by either (i) the need to safeguard the coherence of the tax system, (ii) the promotion of research and development, or (iii) the effectiveness of fiscal supervision.
Internal Market: Commission proposal for European Small Claims Procedure
Nicola Chesaites
On 15 March 2005 the Commission adopted a proposal for a European Regulation establishing a small claims procedure. The proposed procedure would be available to litigants in Member States as an alternative to national procedures for civil and commercial matters where the total value of the claim does not exceed EUR 2000. The Commission envisages a simple procedure whereby documents could be served, not only by registered letter but also by ordinary letter, fax or email. Courts could determine the means of proof and the extent of evidence taking. An oral hearing, for which no legal representation would be required, would only occur where the court deemed it necessary, and could be conducted through audio, video or email conference.
In accordance with the principle of mutual recognition of judicial decisions, a judgment made under the European Small Claims Procedure would be fully enforceable throughout the European Union without the need for a declaration of enforceability and without the possibility of opposing its recognition.
Competition: Commission consults on future of International Air Transport Association (IATA) passenger tariff conferences
Patrice Corbiau
The Commission has published a consultation paper asking whether the IATA passenger tariff conferences should continue to benefit from the block exemption provided by Commission Regulation 1617/93. This exemption, which allows IATA to organise tariff conferences where airlines agree on interlining prices, expires on 30 June 2005. The Commission recognise that interlining prices benefit consumers because they can use one ticket for a journey involving flights on several airlines. However, the Commission is considering whether the IATA interlining system should be maintained or whether there are less restrictive means than price fixing that would secure the benefits of interlining. Comments can be submitted to the Commission before 1 April 2005.
Mergers: Equity investment in the Digital Rights Management (DRM) sector
Mélanie Bruneau
Thomson is acquiring a 33% stake in ContentGuard, one of the main Digital Rights Management (DRM) patent holders. This acquisition is not subject to EU merger control rules and follows the abandonment of a previous transaction, whereby Microsoft and Time Warner planned to acquire joint control of ContentGuard. Since the Commission considered that this could have buttressed Microsoft’s monopoly in the market for PC operating systems and could have blocked competitors’ access to ContentGuard’s patents, the parties decided to withdraw their notification. Microsoft, Time Warner and Thomson will now each hold one third stake in ContentGuard.
Mergers: Commission opens second phase proceedings in the Blackstone-Acetex case
Yannis Virvilis
The Commission decided to investigate further the acquisition of the Canadian chemicals company Acetex by Blackstone, a US-based private merchant bank. Blackstone is the owner of Celanese, a chemicals company, which is active on the same markets as Acetex. The Commission found that the operation needs to be more closely scrutinised, as it may create significant competition concerns in some markets. More specifically, the Commission found that the operation will create horizontal overlaps in the markets for acetic acid, vinyl acetate monomer and acetic anhydride. In these markets, Acetex and Celanese are among the biggest European players.
Competition: Defence merger and de-merger cleared
Javier Berasategi
The European Commission has granted clearance under the EU Merger Regulation to the proposed acquisition of the avionics and communication business of BAE Systems (“BAES”), the UK defence contractor, by Italian defence company Finmeccanica. In addition, the parties have agreed a de-merger of their AMS joint venture, which is active in command and control systems, radar and simulation systems for the land and naval military markets. This joint venture will be dissolved and Finmeccanica and BAES will acquire its Italian and its British business activities. According to the Commission, there are very few competitive overlaps between Finmeccanica’s current avionics & communications activities and the business to be acquired from BAES, and no horizontal overlaps result from Finmeccanica and BAES acquiring sole control of respectively the Italian and UK part of the AMS joint venture. In particular, the Commission has taken into account the existence of buyer-power, i.e. the fact that the defence ministries, are considered sufficiently powerful to counterbalance any anti-competitive attempts on the part of the new entity.
NEXT WEEK’S EVENTS
Monday 21 March – Friday 25 March 2005
COUNCIL MEETINGS
General Affairs and External Relations (22-23 March 2005)
COURT OF JUSTICE
No cases next week
Judicial vacation of the Court of Justice from 21 March to 3 April 2005 inclusive
COURT OF FIRST INSTANCE
No cases next week
Judicial vacation of the Court of First Instance from 21 March to 1 April 2005 inclusive
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