Brussels Brief - May 5, 2006
May 5, 2006
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KEY DEVELOPMENTS
Competition: Bleaching Chemicals – Seven Companies Fined
Maria Scimemi
As the outcome of its investigation into alleged cartels in the market for bleaching chemicals, the European Commission has imposed fines of EUR 388 million on seven out of nine companies (Akzo Nobel, Edison, FMC/Foret, Kemira, Snia, Solvay and Total/Elf Aquitaine/Arkema). According to the Commission’s findings there were several violations of Article 81 in the EU market for hydrogen peroxide and perborate in the European Economic Area between 1994 and 2000, including price fixing and market share allocation. Tougher fines were imposed on Arkema, Edison and Solvay, who were found to be repeat offenders. The German group Degussa benefited from the leniency programme, escaping fines for having cooperated with the Commission, and the French company Air Liquide was not fined because it left the market in 1998.
Trade: EU Increases Measures in Response to US Byrd Amendment Payments
Michal Cieplinski
The European Union has adjusted compensatory measures in response to the continuation of payments to US companies under the terms of the Byrd Amendment, which has been ruled as incompatible with World Trade Organisation (WTO) rules. The US has repealed the Byrd Amendment but maintained a transition clause that allowed the US Government to continue paying anti-dumping duties collected on imports made before 1 October 2007. The EU is permitted to impose additional duties on imports of products from the US up to the amount of the Byrd Amendment payments. As of 1 May 2006, the compensatory measures will be set at USD 36.91 million, an increase of USD 9.1 million. As a result of the increase in compensatory measures, new products such as blankets, photocopying apparatus, paper products and drills will be subject to an additional 15 per cent duty.
Energy: EU Position on EU-Russia Gas Trade Relationship
Elena Kostadinova
The EU has expressed its position on gas trade with Russia in a letter to the Russian Energy Minister Mr Khristenko. The letter answers concerns raised by Russia and Gazprom on the EU’s intention to diversify its sources of gas supply and to limit Gazprom’s aspirations to become a global energy company. The EU confirms that EU demand for Russian gas will increase in the future. It clarifies in this regard that EU competition rules favour long term gas supply contracts when these facilitate significant investments. The letter also makes clear that the EU will apply to Gazprom the same EU merger control rules it applies to all other companies. The fact, however, that Gazprom is the exclusive exporter of gas from Russia to the EU is very important and will be taken into account in any merger analysis. Finally, the letter expresses the EU’s wish that Russia ratify the Energy Charter Treaty.
Internal Market: Infringement Proceedings Concerning Spanish Electricity and Gas Regulator
Patrice Corbiau
The European Commission has sent a letter of formal notice requesting Spain to provide information about the new law which amends the functions of the Spanish electricity and gas regulator (CNE). This new law requires prior authorisation from CNE (i) for the acquisition of a shareholding giving significance influence over a company that engages in regulated activities or activities subject to special administrative control, and (ii) for the acquisition of assets to carry out these activities. The Commission considers that CNE could use this power to unduly restrict the free movement of capital and the right of establishment. In particular, the Commission takes the view that Spain’s aim may be to thwart E.ON's takeover bid for Spanish firm Endesa, knowing that this new law was adopted four days after E.ON announced its hostile bid for Endesa. This bid is currently being examined by the Commission under the Merger Control Regulation (see Brussels Brief of 28 April 2006).
Insolvency: ECJ Rules on Regulation (EC) No 1346/2000
Philip Bentley QC
In a conflict between the Irish and Italian courts arising out of the insolvency of one of the Parmalat companies, the European Court of Justice (ECJ) has ruled, in effect, as follows: The sole court having jurisdiction over an insolvency in the EU is determined by reference to the situation of the company’s registered office, unless it is clear to third parties that the centre of the company’s interests is situated elsewhere (as might be the case for a “letter-box” company). If insolvency proceedings are opened in the wrong Member State, this can be challenged only before the courts of that State, not in another State. A Member State may, however, refuse to recognise insolvency proceedings opened in another State if such opening was decided in flagrant breach of the fundamental right to be heard.
Internal Market: Compulsory Licensing of Pharmaceutical Patents
Andrea Hamilton
The EU Council has adopted a regulation which will allow EU companies to produce patented drugs for export to “countries in need” without the authorisation of the patent holder. The regulation implements in the EU recent amendments to the WTO Trade Related aspects of Intellectual Property Rights agreement that aim to make drugs more accessible to countries which (i) face public health problems and (ii) lack the ability to produce the drug themselves. A company becomes “eligible” by notifying the WTO of its needs, at which point the EU may grant a licence to a requesting EU company to meet those needs. To prevent abuse, the regulation prohibits the re-importation of drugs into the EU, and imposes restrictions on the licensee’s acts under the licence. The regulation will be directly applicable to all 25 EU Member States 20 days after its imminent publication in the Official Journal.
Environment: Commission on Track to Combat Bird Flu
Geert Dierickx
The European Commission is well on track to fully mobilise EUR 100 million pledged to combat bird flu around the world. Funds pledged will help poorer countries tackle bird flu in the animal population, and increase preparedness for a possible human pandemic. Before Easter, the Commission gave its green light for EUR 50 million to help affected countries in Asia, Mediterranean and Eastern Europe. In parallel, the African, Caribbean & Pacific countries have endorsed the EUR 30 million assistance package already offered by the Commission. A EUR 20 million package devoted to research in the field of bird flu is well underway. The Commission aims to deploy the whole amount pledged before the meeting of senior officials on 6-7 June, and is set to achieve that goal well within the deadline.
Institutions: Consultation on More Transparency in EU Lobby
Philip Torbøl
The European Commission has published a consultation paper in which it proposes that certain standards apply when lobby groups seek to influence EU policy development. Transparency is a key element of the Commission's initiative that aims to make clear to the general public what input lobbyists provide to the European institutions, who they represent, what their mission is and how they are funded. To this end, the Commission proposes a web-based voluntary registration system for all lobbyists who wish to be consulted on EU initiatives. Another suggestion is that a code of conduct for all lobbyists be developed by the lobbying profession itself. A new "watchdog" would monitor lobbying activities and apply sanctions in case of incorrect registration or breach of the code of conduct. Comments may be provided before 31 August. The consultation paper is available online at:
http://europa.eu.int/comm/commission_barroso/kallas/doc/com2006_0194_4_en.pdf.
Competition: CFI Partially Annuls Commission’s Decision on O2-T-Mobile Agreement
Yannis Virvilis
The Court of First Instance (CFI) has partially annulled the Commission decision concerning the agreement between O2 and T-Mobile on network sharing for 3G Mobile Telecommunications in Germany. Back in 2001, the two German mobile operators notified the Commission of an agreement concerning infrastructure sharing and national roaming. The Commission found that the agreement relating to roaming fell under competition rules and granted an exemption. O2 sought an annulment of the decision, arguing that the agreement should not be exempted, but should be deemed not to fall under competition rules altogether. The CFI accepted this argument, finding that the Commission should have considered in more detail whether in the absence of the agreement, O2 would be able to compete in the emerging market for 3G mobile telecommunications.
Energy: EU Regulation of Emergency Oil Stocks
Philip Bentley QC
A recent meeting of the European Commission and the Member States’ Oil Supply Group confirmed that emergency oil stocks in the EU are running at 117 days consumption compared with the mandatory minimum of 90 days. In the light of recent infringement procedures, the Commission reminded Member States of their reporting obligations under EU legislation designed to ensure a constant clear picture of stock levels. The Commission also aired views on the restraint measures envisaged by Member States in case of emergency. EU legislation allows the Commission to set targets for reducing consumption of petroleum products by as much as ten per cent of normal consumption.
NEXT WEEK’S EVENTS
Monday 8 May – Friday 12 May 2006
COUNCIL MEETINGS
No meetings scheduled for next week
COURT OF JUSTICE
Judgments
Company law
C-340/04 Carbotermo and Consorzio Alisei
Customs union
C-11/05 Friesland Coberco Dairy Foods
Intellectual property
C-416/04 P Sunrider v OHMI - Espadafor Caba (VITAFRUIT)
Taxation
C-197/03 Commission v Italy
C-384/04 Federation of Technological Industries
Opinions
Freedom of establishment
C-506/04 Wilson
C-193/05 Commission v Luxembourg
COURT OF FIRST INSTANCE
Judgments
State aid
T-395/04 Air One v Commission
