Brussels Brief - May 1, 2009
May 1, 2009
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Key Developments
Taxation—Postal Services: The “Universal Postal Service” Provided by Royal Mail is Exempt from VAT
Vasilios Bousis
The European Court of Justice (ECJ) has confirmed that the universal postal service provided by Royal Mail should be exempted from VAT. TNT Post brought an action before the High Court of England and Wales, calling into question the validity of the VAT exemption granted to Royal Mail’s postal services. TNT Post submitted that their services are the same as those provided by Royal Mail but are subject to VAT. The High Court asked the ECJ for an interpretation of the expression “public postal services” in the context of a fully liberalised market and the extent of the VAT exemption for those services.
The Sixth VAT Directive exempts “public postal services” from VAT on the basis that they represent activities in the public interest. In 2001, Royal Mail was designated the only “universal postal service” provider in the United Kingdom. Under its license, Royal Mail is obliged to provide a universal postal service, which means including at least one delivery to every address and one collection from every access point every working day, at affordable and uniform prices. Royal Mail's status and obligations did not change when the postal market was liberalised in 2006.
The ECJ declared that public postal services must be regarded as operators that undertake to supply postal services that meet the essential needs of the population. The ECJ therefore ruled that Royal Mail supplies postal services under a legal regime different to the one that applies to TNT Post. The ECJ did rule, however, that only universal postal services are exempt from VAT; VAT is still due on those that are negotiated individually.
Financial Services: Commission Sets Out Further Guidance on Executives’ Compensation
Katarzyna Wilk
The European Commission has adopted two non binding Recommendations setting out best practices for compensating risk taking staff (e.g., traders) in financial institutions and directors of listed companies (complementing previous Recommendations 2004/913 and 2005/162/EC). The goal of these recommendations is to give these staff and directors greater incentives to ensure medium and long term sustainability of the company.
Both Recommendations emphasise that: (i) the structure of remuneration must be linked clearly to achievement while promoting sound and effective risk-management; (ii) the process for determining remuneration needs to be transparent; and (iii) proper supervision, notably by shareholders, has to be ensured.
The Commission will examine and evaluate both Recommendations after one year.
Energy: Article 82 EC Investigation of Svenska Kraftnat
Lawrence Grabau
The European Commission has announced that it has opened formal proceedings in relation to possible breaches of Article 82 of the EC Treaty by Svenska Kraftnat (SvK), the Swedish electricity transmission system operator. The Commission is investigating whether SvK has abused its dominant position by restricting the amount of export transmission capacity on Swedish interconnectors allocated to neighbouring countries, thereby discriminating in favour of domestic customers and hindering the proper functioning of the electricity single market.
The investigation into SvK’s activities comes at a time when the Commission is taking a targeted approach to identifying where competition enforcement actions may be appropriate and effective, as a result of its January 2007 energy sector inquiry. Since this inquiry, the Commission has begun a number of investigations in the energy sector.
Energy: Commission Adopts Climate and Energy Package
Martino Sforza
The European Commission has announced the formal adoption of the climate and energy package that sets legally binding targets to reduce greenhouse gas emissions, increase the share of renewable energy and cut CO2 emissions from new cars and transport fuels. The adoption of the package was agreed in December 2008 and will enter into force 20 days after its publication in the Official Journal, which is expected in May.
The package consists of four legislative texts: (i) a Directive revising the EU Emissions Trading System (EU ETS), which covers approximately 40 per cent of EU greenhouse gas emissions; (ii) an "effort-sharing" Decision setting binding national targets for emissions from sectors not covered by the EU ETS; (iii) a Directive setting binding national targets for increasing the share of renewable energy sources in the energy mix; and (iv) a Directive creating a legal framework for the safe and environmentally sound use of carbon capture and storage technologies.
The package is complemented by two more legislative acts: (i) a Regulation requiring a reduction in CO2 emissions from new cars; and (ii) a revision of the Fuel Quality Directive, which now requires fuel suppliers to reduce greenhouse gas emissions in the fuel production chain.
Intellectual Property—Trade Marks: Luxury Goods and Discount Stores
Mary Dineen
The European Court of Justice (ECJ) has decided that the quality of luxury goods is one of their material characteristics and part of the prestigious image that gives them an aura of luxury. As a result, an impairment of that image is likely to affect the quality of these goods. Therefore, a contractual provision which prohibits the sale of such goods to unauthorised retailers must be considered to be falling within the scope of Article 8(2) of the Trade Mark Directive and must be upheld.
The case concerns an agreement between Dior and Société industrielle lingerie (SIL) whereby Dior granted SIL a licence to manufacture and distribute luxury corsetry goods bearing the Christian Dior trade mark. Under this agreement, SIL had agreed to not distribute these goods to discount stores without the prior consent of Dior. In contravention of this provision, SIL sold these products to Copad, a company operating a discount store business. In response, Dior brought an action for trade mark infringement. The French Supreme Court (Cour de Cassation) referred a question to the ECJ asking whether such a provision in a licence agreement, on the grounds of the prestige of the trade mark, falls within the scope of Article 8(2) of the Trade Mark Directive.
The ECJ decided that it is for the national court to determine whether SIL’s breach of the agreement had damaged the aura of luxury of the contract goods and thus affected their quality.
NEXT WEEK’S EVENTS
Monday 4 May – Friday 8 May 2009
COUNCIL MEETINGS
Eurogroup (4 May 2009)
Economic and Financial Affairs Council (ECOFIN) (5 May 2009)
Eastern Partnership Summit (7 May 2009)
COURT OF JUSTICE
Judgments
Approximation of laws
C-553/07 Rijkeboer
Common Customs Tariff
C-150/08 Siebrand
Environment and consumers
C-530/07 Commission v Portugal
C-516/07 Commission v Spain
Free movement of goods
C-398/07 P Waterford Wedgwood v Assembled Investments (Proprietary) and Office for Harmonisationin the Internal Market
Transport
C-504/07 Antrop and Others
Opinions
Agriculture
C-446/07 Severi
Environment and consumers
C-227/08 Martín Martín
COURT OF FIRST INSTANCE
Judgments
Competition
T-116/04 Wieland-Werke v Commission
T-127/04 KME Germany and Others v Commission
T-122/04 Outokumpu and Luvata v Commission
T-151/05 NVV and Others v Commission
Intellectual property
T-104/08 ars Parfum Creation & Consulting v OHMI (Forme d'un vaporisateur)
T-414/05 NHL Enterprises v OHMI - Glory & Pompea (LA KINGS)
T-185/07 Klein Trademark Trust v OHMI - Zafra Marroquineros (CK CREACIONES KENNYA)
T-449/07 Rotter v OHMI (Forme d'un assemblage de saucisses)
