Brussels Brief - May 19, 2006
May 19, 2006
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KEY DEVELOPMENTS
Internal Market: Obligation to Reimburse Surgery Performed in Other Member States
Andrea Hamilton
The European Court of Justice (ECJ) has ruled that EU Member States may be required to reimburse patients for medical treatment obtained in another Member State. The case arose from a dispute brought by a British woman seeking reimbursement for hip replacement surgery performed in France, when she was faced with a year-long wait for the surgery in England. Relying on Regulation (EEC) 1408/71 (as amended) and the EC Treaty, the ECJ explained that reimbursement for treatment in other Member States may be required where a patient cannot receive treatment that is normally available without “undue delay.” The reasonableness of a delay, the ECJ stated, is determined by an objective medical assessment, not the length of a waiting list. The case will now be returned to the Court of Appeal in London for a full decision.
Air Transport: Implementation of the Single European Sky
Philip Torbøl
The European Commission has adopted a Regulation on Airspace Classification, thus completing one more step in the implementation of the Single European Sky. The Regulation introduces a common classification for all airspace above 19,500 feet and clear rules for access to this airspace. It is designed to create a transparent framework for flights operating over European borders and to make the airspace system more understandable for foreign pilots. The Regulation follows two other recently adopted Regulations relating to the Single European Sky: Regulation (EC) 2096/2005 which establishes a set of requirements against which air navigation service providers in Europe will be certified, and Regulation (EC) 2150/2005 which establishes rules and procedures between civil and military authorities responsible for air traffic management.
Consumer Protection: Fortified Foods Regulation
Philip Bentley QC
The European Parliament has voted in favour of the Fortified Foods Regulation which will lay down common EU rules on the addition of vitamins, minerals and other substances to foods. A positive list of vitamins and minerals that can be added to food is included in the proposed Regulation, as are criteria for setting minimum and maximum levels for nutrients in food. The Council is expected to adopt the Regulation formally in the forthcoming weeks. The new rules will apply six months from entry into force of the Regulation. For up to three years afterwards, non-complying products could still be marketed, provided that they were placed on the market prior to entry into force of the Regulation.
Consumer Protection: Health and Nutrition Claims Regulation to be Adopted
Elena Kostadinova
The European Parliament has voted in favour of a Regulation on nutrition and health claims made on foods. Formal adoption is expected by this autumn following the Council’s vote. The aim of the Regulation is to ensure that consumers are not misled by unsubstantiated, exaggerated or untruthful claims about foodstuffs. It will apply to any food or drink product produced for human consumption to be sold on the EU market. Nutrition claims, for example, ‘low fat’ or ‘reduced sugar’ and health claims, for example ‘lowers cholesterol’ can only be used if the food respects a specific nutrient profile. For existing products the profile will be set by the Commission within 24 months of entry into force of the Regulation based on a scientific opinion of the European Food Safety Authority and after consultation with relevant stakeholders.
ECJ: Public Contract Awards Without a Prior Call for Tenders
Andrea Hamilton
The European Court of Justice (ECJ) has interpreted Council Directive 93/36/EEC, clarifying when a municipality may directly award a public contract to an undertaking it controls. The case arose from an Italian municipality’s withdrawal of a call for tenders for a fuel supply and maintenance contract worth more than EUR 8.45 million, and subsequent award to an entity for which it was an indirect majority owner. The municipality – Comune di Busto Arzisio – was challenged by two disappointed bidders in an Italian court, which referred the case to the ECJ. The ECJ reasoned that, under the Directive, the Comune could award a public contract directly to an entity it controls if the essential part of its activities are carried out for the municipality. Focusing on the element of control, the ECJ, however, held that the Comune’s indirect ownership of the entity precluded it from exercising sufficient control to justify a direct award.
Taxation: Commission Proposes to Extend the “e-commerce VAT” Directive
Geert Dierickx
The e-commerce VAT Directive introduced rules ensuring that electronic services, including radio and television broadcasting services supplied for consumption outside the EU, are exempted from VAT. When supplied for consumption within the EU, those electronically delivered services are subject to VAT. The European Commission now proposes to extend the period of application of the Directive to 31 December 2008. Without this extension, the VAT rules would have reverted to those prevailing before the e-commerce VAT Directive was introduced. Under these rules EU suppliers had to charge VAT even for services supplied to clients outside the EU, and faced competition within the EU from third country suppliers who did not have to charge VAT.
Trade: US Withdraws Tax Breaks for Exporters
Michal Cieplinski
The US Congress has repealed the WTO-incompatible tax breaks of the Foreign Sales Corporation – Extra-Territorial Income (FSC-ETI) Act and the Jobs Act. In 2003 the WTO Dispute Settlement Body (DSB) decided that the provisions of the FSC-ETI Act and the US Jobs Act are incompatible with World Trade Organisation (WTO) law. As a result, the EU was authorised to impose countermeasures in the form of additional ad valorem duties on certain products originating in the US. On 14 March 2006, after years of legal battles, the DSB reconfirmed the Panel and Appellate Body rulings and deemed the grandfathering provisions of the FSC-ETI and the US Jobs Act as incompatible with WTO law. In a reaction to the ruling, the US Congress has adopted legislation repealing these WTO-incompatible tax breaks. The new legislation has to be approved by the US President.
State Aid: Investigation into Italian Merger Incentives for Small and Micro Enterprises
Maria Scimemi
Pursuant to EU State aid rules, the European Commission has launched an investigation into the Italian “merger incentive”, a scheme which aims at encouraging external growth of micro and small undertakings through the provision of tax credits on their mergers. The credit amounts to ten per cent of the increase in the value of the acquiring enterprise, which constitutes the tax base for the regional business tax (IRAP). In the Commission’s view the measure, far from being the appropriate instrument to tackle the issue, might distort trade and competition. The Commission has raised doubts about the proportionality of the measure with respect to the level of support and its possible negative effects, notably the possibility that some firms may profit unfairly from it.
Competition: Commission Sends Statement of Objections to Suez Subsidiary
Yannis Virvilis
The European Commission has confirmed that it has addressed a Statement of Objections to Distrigas, a part of Suez group, for allegedly abusing its dominant position in the Belgian market for supply of gas. The Commission’s preliminary view is that a large proportion of the Belgian gas market is not open to competition, because Distrigas, which is the largest gas supplier, has concluded long term agreements with industrial customers. According to the Commission, the latter is very worrying, as a large proportion of the remaining gas sales in Belgium are intra-group sales within the Suez group. This case illustrates the competition problems identified by the Commission in the energy sector.
NEXT WEEK’S EVENTS
Monday 22 May – Friday 26 May 2006
COUNCIL MEETINGS
Agriculture and Fisheries Council (22 – 23 May 2006)
COURT OF JUSTICE
There will be no sitting of the Court of Justice during the week from 22 – 26 May 2006 inclusive
COURT OF FIRST INSTANCE
There will be no sitting of the Court of First Instance during the week from 22 – 26 May 2006 inclusive
