European Union (EU) Council agrees software patent proposed Directive
By adopting a common position on 7 March 2005, the Council backed, although with several amendments, a controversial Commission proposal for a Directive on the patentability of computer-implemented inventions. The decision to move on was taken despite objections from a number of national parliaments, a unanimous call from leaders of all political groups in the European Parliament to withdraw the draft as well as opposition from small and medium businesses. Even if the text adopted by Council included 22 amendments proposed by European Parliament at its first reading, there remain however some important differences between the two institutions’ positions that mainly relate to exceptions from patentability for certain computer-implemented inventions. Under the co-decision procedure, the European Parliament will now have to consider the “common position” text in its second reading.
Trade: World Trade Organisation (WTO) decision on South Korean shipping subsidies downplayed
On 7 March 2005 the WTO issued its ruling in a European Community’s (EC’s) complaint against South Korea, the world’s largest shipbuilder, for measures affecting trade in commercial vessels. The WTO upheld part of the EC’s claim, that certain subsidies in the form of Export-Import Bank of Korea (KEXIM) advanced payment refund guarantees and pre-shipment loans were “prohibited subsidies” and therefore should be withdrawn within 90 days. South Korea’s claim that KEXIM was not involved in a “government practice” was rejected. The WTO also rejected the EC’s claim that Korean subsidies in the form of workout and restructuring plans, and tax concessions were illegal subsidies causing prejudice to the interests of the EC. The ruling has been downplayed by the foreign ministry of South Korea which reportedly said that it has “no impact” in the shipbuilding industry as the subsidies no longer exist.
Competition: Car prices converge in enlarged EU
The European Commission’s latest report on car prices shows that new car prices continue to converge across the EU, including in the new Member States. Price differences, based on 1 November 2004 figures, are smaller than those recorded in May 2004, with the average standard deviation of prices between the 25 national markets falling from 6.9% to 6.4 %. However, price differences for particular models can still be substantial and Germany continues to be the most expensive market in the EU for the models surveyed. Looking at the EU as a whole, cars are less expensive on average in the new Member States. The Commission considers that the new block exemption Regulation N° EC/1400/2002 applying EU competition rules to the motor vehicle sector, which came into force on 1 October 2002, have contributed to this price convergence as it makes it easier for consumers to take advantage of lower prices in other EU Member States. In particular, the Regulation contains measures to allow those dealers who wish to sell to consumers in other EU Member States to be more pro-active. In this respect, it enables (i) dealers in a selective distribution system to engage in active sales and to set up a secondary sales outlet in another Member State; (ii) dealers in an exclusive distribution system to sell actively to independent resellers within their exclusive territory and also, if approached, to sell to final consumers or resellers based outside their territory.
European Court of Justice (ECJ): EC law does not prevent lawyers sitting on Bar exam juries
On 17 February 2005 the ECJ issued a ruling to the effect that Italian rules on the composition of examination juries for admission to the legal profession are compatible with EC rules on competition and freedom of establishment. The juries are appointed by the Ministry of Justice and are composed of two practicing lawyers chosen by the Bar Council, two judges and one law professor. The Court considered that there was sufficient State supervision to prevent anti-competitive practices and that the participation of two practicing lawyers was justified, in the public interest, to assess candidates in the light of the specific requirements of the profession. This ruling could be of wider application than to just the legal profession.
Mergers: Orkla/Chips deal cleared subject to conditions
By undertaking to terminate some of its distribution agreements, Norwegian consumer goods group, Orkla, prevented an in-depth investigation by the European Commission of its acquisition of Finnish snacks company, Chips Abp. The Commission decision had been postponed a few weeks due to serious competition concerns resulting from the concentration, in particular in the Finnish retail market for frozen pizza. The Commission had also investigated whether the merger would strengthen a dominant position by bringing together the activities of Orkla in the salted biscuit sector and Chips’ snacks production. Those products were however found to constitute separate markets. The undertaking by Orkla to terminate Chips’ distribution agreement with its sole frozen pizza distributor in Finland was therefore sufficient to satisfy the Commission who concluded that the deal would not significantly impede effective competition in any substantial part of the common market.
State aid: Commission asks France to abolish certain tax exemptions for mutual and provident societies
French mutual and provident societies’ non-health risk policies are governed by the Mutual and Provident Societies’ Code. Therefore they are not subject to premium tax on insurance policies. The Commission considers that this exemption constitutes State aid which puts the mutual and provident societies at an advantage over their French and foreign competitors. The Commission has called for this exemption to be abolished by 1 January 2006. If a favourable response is not received from France within a month, the Commission may initiate a formal investigation. In 2001, the Commission asked France to abolish a similar exemption concerning mutual and provident societies’ health risk policies. France satisfied the Commission by replacing the exemption with one that applied irrespective of the status of the body providing the cover.
State aid: Following Court ruling, Commission annuls restructuring State aid
The European Commission has annulled and ordered Germany to recover a State aid grant of €6.7 million in favour of Chemische Werke Piesteritz, a German producer of phosphoric acid and phosphates. The aid formed part of a restructuring package adopted by German authorities in the years 1997 and 1998. The Commission originally approved the State aid but following a successful court action by a competitor, the Commission has had to reexamine the case. In its new decision, the Commission has concluded that the restructuring plan was not carefully crafted, steps were missing and costs were understated. This case shows how companies can successfully use EC competition rules as a sword against competitors. Although third party complaints in antitrust and merger control proceedings are now common in the EC landscape, companies have been more reluctant to complaint against State aids and appeal Commission decisions approving them.
NEXT WEEK’S EVENTS
Monday 14 March – Friday 18 March 2005
Agriculture and Fisheries Council (14 March 2005)
General Affairs and External Relations Council (16-17 March 2005)
COURT OF JUSTICE
C-285/03 Greece v Commission
Approximation of laws
C-228/03 The Gillette Company and Others
Common Customs Tariff
C-467/03 Ikegami Electronics (Europe)
C-91/03 Spain v Council
C-437/02 Commission v Finland
Freedom of movement for persons
Law governing the institutions
C-294/02 Commission v AMI Semiconductor Belgium
Staff Regulations of Officials
C-160/03 Spain v Eurojust
Approximation of laws
C-244/03 France v Parliament and Council
C-281/03, C-282/03 Cindu Chemicals and Others
C-129/04 Espace Trianon and Sofibail
C-522/03 Scania Finance France
C-475/03 Banca popolare di Cremona
C-63/04 Centralan Property
COURT OF FIRST INSTANCE
T-192/98 Eurocoton v Council
T-195/98 Ettlin Gesellschaft für Spinnerei und Weberei and Others v Council
T-177/00 Philips v Council
T-160/03 AFCon Management Consultants and Others v Commission
T-283/02 EnBW Kernkraft v Commission
T-112/03 L'Oréal v OHMI - Revlon (FLEXI AIR)
Law governing the institutions
T-29/02 GEF v Commission
T-187/03 Scippacercola v Commission
Staff Regulations of Officials
T-329/03 Ricci v Commission
T-362/03 Milano v Commission
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