Brussels Brief - October 17, 2008
October 17, 2008
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KEY DEVELOPMENTS
Finance – State Aid:
Philip Bentley
The current financial crisis has prompted the European Commission to issue guidance on the measures that can be taken by EU Member States while respecting State aid rules and avoiding excessive distortions of competition. The legal basis for the Emergency Guidelines is not the existing Rescue and Restructuring Guidelines, but a little-used EC Treaty provision (Article 87(3)b) that allows for aid to remedy a serious disturbance in the economy of a
There are a number of specific conditions that must be complied with in order to ensure that State support schemes clear State aid hurdles. These include non-discriminatory access to State schemes, e.g., eligibility should not be based on nationality. State supports should be limited in time, reviewed, adjusted and then terminated as soon as market conditions allow. There should also be rules to prevent abuse, such as aggressive market expansion, on the back of State supports such as guarantees. Other conditions relate to ensuring that unjustified benefits are not granted to shareholders, that the private sector pays a significant part of the cost of the support granted and that appropriate structural adjustments are made to the financial sector as a whole.
Meeting the conditions set out in the Emergency Guidelines enables Member States to access a fast track procedure that can provide clearance in as little as 24 hours. Like most high-level banking officials,
Energy: Ministers Agree Compromise on Market Liberalisation
Leigh Smith
On
One of these key areas concerned the Commission’s plan to force integrated energy firms to sell off their transmission assets. Under the compromise, former State monopolies can retain ownership of electricity and gas grids subject to outside supervision. In exchange for this concession, energy companies will not be able to buy transmission networks in European countries where the transmission networks have already been “unbundled” from incumbent operators.
Ministers also reached agreement on what has been termed the “Gazprom clause”. This sought to prevent non-European energy companies from buying transmission assets in
The compromise is now subject to the approval of the European Parliament, with the Commission aiming to adopt the measures in the first half of 2009.
Competition:
Andrea Hamilton
The UK Court of Appeal has upheld a High Court ruling that limits the level of damages claimants may seek in follow-on cartel cases. This case arose from a 2005 lawsuit brought by Devenish Nutrition Ltd., seeking damages from members of the “vitamins cartel”, which the European Commission condemned in 2001. Devenish purchased vitamins from the defendants during the time period in which the cartel operated and, using the Commission’s 2001 decision as proof of an infringement, sought damages in the UK High Court.
As well as actual damages, Devenish also sought full restitution and exemplary damages. The High Court, however, ruled that claimants seeking an award in a follow-on cartel case are limited to actual provable damages. The Court of Appeal affirmed, ruling that a claimant may be compensated for any actual loss it incurred because of the cartel’s activity, but no more than that. This decision clarifies that defendants’ liability in follow-on damages actions is limited to compensatory damages, which is also likely to reduce the risk of duplicative recovery. At the same time, this ruling may also reduce incentives for potential claimants to bring cases in the
Sports & Media:
Laura Zadunayski and Andrea Hamilton
The European Court of Justice’s (ECJ) Advocate General, Yves Bot, has opined that a Portuguese law conferring a State internet gambling monopoly may be legal under EU law, if certain conditions are met.
Portuguese law conferred a State gambling monopoly on Santa Casa de Misericórdua de Lisboa, a non-profit organisation, and later extended this monopoly to cover gambling conducted over all forms of communication, including the internet. Two companies, Bwin, an online gambling company based in
ECJ Advocate General Bot issued a non-binding advisory opinion. As a preliminary matter, Advocate General Bot opined that the legislation should be notified to the European Commission because it falls within the scope of the Information Society Directive. As regards the substance of the Portuguese law, Advocate General Bot opined that Portugal’s legislation extending the State gambling monopoly to cover the Internet would be consistent with EC law if it were justified by—and necessary to secure—an overriding public interest and was not discriminatory in practice. While these conditions are for the national court to apply, Advocate General Bot opined that Portuguese law satisfied them; i.e., the law was justified on the basis of consumer protection and ensuring public order and it is both proportionate and non-discriminatory.
The ECJ is not obliged to follow Advocate General Bot’s opinion. If, however, it upholds the right of a
NEXT WEEK’S EVENTS
Monday 20 October –
COUNCIL MEETINGS
Environment Council (20 – 21 October)
COURT OF JUSTICE
Judgments
Freedom of establishment
C-157/07 Krankenheim Ruhesitz am Wannsee-Seniorenheimstatt
Freedom of movement for persons
C-286/06 Commission v
C-274/05 Commission v
State aid
T-309/04 TV 2 v Danmark / Commission
T-317/04 Denmark v Commission
T-329/04 Viasat Broadcasting
T-336/04 SBS TV and SBS Danish Television v Commission
Opinions
Agriculture
C-241/07 JK Otsa Talu
Approximation of laws
Joined Cases C-261/07, C-299/07 VTB-VAB
Customs union
C-256/07 Mitsui & Co. Deutschland
Environment and consumers
C-362/06 P Sahlstedt and Others v Commission
Taxation
C-371/07 Danfoss and AstraZeneca
COURT OF FIRST INSTANCE
Judgments
State aid
T-309/04 TV 2 v Danmark / Commission
T-317/04 Denmark v Commission
T-329/04 Viasat Broadcasting
T-336/04 SBS TV and SBS Danish Television v Commission
