Brussels Brief - November 14, 2008
November 14, 2008
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KEY DEVELOPMENTS
Competition: EC Slams Car Glass Makers with Highest Ever Cartel Fine
Philip Torbøl
The European Commission has fined four car glass manufacturers a total of more than EUR 1.3 billion for illegal market sharing and exchange of commercially sensitive information regarding deliveries of car glass in the European Economic Area. This is the first time that the effects of the Commission's new Fining Guidelines on a big cartel case can really be felt. The four companies controlled about 90 per cent of the glass used in
The fined companies risk further financial cost should private actions for damages be brought against them. Such actions are highly recommended by the Commission, which publicly provides assurance that a Commission decision is binding proof for national courts that the behaviour took place and was illegal. Any damages awarded will come as an additional penalty to the fine already levied by the Commission. Competition Commissioner Neelie Kroes noted in a press release that the high fines reflect the Commission’s commitment to be tough on European industry. One question is whether the Commission is prepared to push this view as far as putting companies out of business. In addition, with this approach, might the Commission be getting dangerously close to disproportionate action? It is uncertain whether this will be tolerated ultimately by the European Courts.
Transport – State Aid: Commission Approves Alitalia Asset
Contact Philip Bentley
The European Commission has approved the plan by the Italian authorities to sell the assets of the airline Alitalia, which had entered into financial difficulties, under a special insolvency procedure. The Commission concluded that the sale of the assets would not constitute a subsidy prohibited under EU State aid rules provided the assets are sold at market value and other conditions have been satisfied. An independent trustee has been appointed to oversee the sale by the administrator assigned under the special insolvency procedure.
The administrator has received a large number of bids from national and international operators for the assets. The largest bid has been made by Compagnia Aerea Italiana (CAI), which the Commission is satisfied has no continuous link with Alitalia. CAI will carry 69 per cent of the current passenger numbers of Alitalia with the remaining capacity going to other parties on the market.
The Commission has also closed its investigation into State aid of EUR 300 million received by Alitalia in the form of a loan which the Commission concluded was illegal State aid. The Commission is satisfied that
Finance: Commission Adopts Proposal to Regulate Credit Rating Agencies
Vasilios Bousis
The European Commission has put forward a proposal for a regulation on credit rating agencies. This forms part of a wider package of proposals to deal with the financial crisis. In October 2007 EU Finance Ministers agreed to a set of objectives in response to the crisis (the Ecofin Roadmap), which included a proposal to assess the role played by credit rating agencies and to address any relevant deficiencies.
The proposal lays down conditions for the issuance of credit ratings that are needed to restore market confidence and increase investor protection. It introduces a registration procedure for credit rating agencies to enable European supervisors to control the activities of rating agencies whose ratings are used by credit institutions, investment firms, insurance, assurance and reinsurance undertakings, collective investment schemes and pension funds within the Community.
Credit rating agencies will have to comply with rigorous rules to make sure that: i) ratings are not affected by conflicts of interest; ii) they remain vigilant on the quality of the rating methodology and the ratings; and iii) they act in a transparent manner. The proposal also includes an effective surveillance regime whereby European regulators will supervise credit rating agencies.
Some of the proposed rules are based on the standards set out in the International Organisation of Securities Commissions (IOSCO) code. The proposal gives those rules a legally binding character.
Energy: Commission Favours Investment in Carbon Capture and Storage through European Emission Trading Scheme
Leigh Smith
In a speech given on
Having recognised the continuing importance of coal in meeting the European Union’s energy needs, the Commissioner argued that the only way the European Union can meet its greenhouse gas emissions targets is through the CCS systems. However, these systems are expensive, adding approximately EUR 1 billion to the cost of a new coal-fired plant. Therefore, to encourage their implementation, the allocation of 500 million ETS allowances, worth approximately EUR 10 billion, has been proposed to fund 12 CCS demonstration projects.
Whilst the Commission is in favour of the ETS funding, it will insist on a clear set of criteria for its application. This will include ensuring the funding is technology neutral, will not result in windfall profits and is compatible with State aid rules. This proposal will be added to those relating to climate protection and renewable energy adopted by the Commission in January 2008. It should form part of the new CCS directive expected at the end of this year.
Energy – Mergers: Proposed Acquisition of Union Fenosa by Gas Natural Enters Second Phase in Spain
Laura Zadunayski
Spain’s National Competition Commission (NCC) has decided to examine the proposed acquisition of Union Fenosa, the third largest electricity provider in the country, by Gas Natural, the dominant gas provider, under a second phase investigation.
The first phase of the investigation showed that, as Gas Natural and Union Fenosa would cease to exist as separate entities, the acquisition would most likely have a negative effect on competition, increase the interrelation between the gas and electricity sectors and create heavy barriers to entry in both markets.
Both companies are active in Latin America and the acquisition has already obtained approval from Mexico’s Federal Competition Commission, making the new company the second largest private electricity provider in Mexico. Nevertheless, the Spanish NCC will have two months to complete its investigation, and the merger will also require approval from the Spanish Energy Commission.
NEXT WEEK’S EVENTS
Monday 17 November –
COUNCIL MEETINGS
Agriculture and Fisheries Council (18 – 19 November 2008)
Education, Youth and Culture Council (20 – 21 November 2008)
ECOFIN Budget Council (
COURT OF JUSTICE
Judgments
Competition
C-209/07 Beef Industry Development Society and Barry Brothers
Customs union
C-375/07 Heuschen & Schrouff Oriental Foods Trading
C-38/07 P Heuschen & Schrouff Oriental Foods Trading v Commission
Environment and consumers
C-66/06 Commission v
Freedom of establishment
C-1/07 Weber
Freedom of movement for persons
C-158/07 Förster
C-94/08 Commission v
Taxation
C-18/08 Foselev Sud-Ouest
Opinions
Agriculture
C-430/07 Exportslachterij J. Gosschalk & Zoon
Company law
C-489/06 Commission v
Competition
C-350/07 Kattner Stahlbau
Free movement of goods
C-421/07 Damgaard
Freedom of establishment
C-348/07 Semen
State aid
C-494/06 P Commission v
Taxation
C-302/07 J D Wetherspoon
COURT OF FIRST INSTANCE
Judgments
Intellectual property
T-6/07 Galderma v OHMI - Lelas (Nanolat)
T-187/06 Schräder v OCVV (SUM
T-315/06 Ercros v OHMI - Degussa (TAI CROS)
T-269/06 Rautaruukki v OHMI (RAUTARUUKKI)
Law governing the institutions
T-185/05 Italy v Commission
