Please note that as the European Commission will be closed over the summer, the next issue of Brussels Brief will be published on Friday 9 September 2005
Mergers: DG Competition Information Note on Abandonment of Concentrations
When the European Commission initiates second phase proceedings into a concentration notified under EC Regulation 139/2004, such proceedings will, in principle, be closed by means of a final decision. However, the new merger Regulation adopted in 2004 introduced express provisions in Article 6(1)(c) allowing the closure of second phase proceedings without a final decision, when the undertakings concerned have demonstrated to the satisfaction of the Commission that they have abandoned the concentration.
Further to a communication issued by the Commission, the requirements for the proof of the abandonment are as follows. Where the notified agreement is a binding agreement, the parties must prove the cancellation of this binding agreement. Where the notified agreement is a letter of intent or a memorandum of understanding, documents must be produced proving that the intention to enter into an agreement has effectively been cancelled. Where there has been an announcement of a public bid or of the intention to make a public bid, there must be a public announcement terminating the bidding procedure. Last of all, where the concentration has been implemented prior to a Commission decision, the re-establishment of the situation prevailing before the implementation of the concentration (status quo ante) will be required. Conversely, minor modifications of a concentration cannot be considered as an abandonment of the original concentration.
Justice and Home Affairs: Council Endorses Transfer of Air Passenger Data to Canada
The Council of the European Union has decided to sign an agreement that will define the conditions for transferring data to the Canadian authorities on passengers travelling by air to Canada. The agreement provides a legal framework for airlines to comply with the Canadian requirements while respecting their EU data protection obligations. Canada has committed itself to provide a high level of data protection and to ensure rights of recourse for passengers subject to data transfer. Compared to a similar agreement concluded with the United States in 2004 (and which the European Parliament challenged before the European Court of Justice) the Canadian agreement provides a higher degree of data protection. Firstly, a smaller amount of data for each passenger will be transferred, and secondly, this will happen by means of a controlled “push” system as opposed to the “pull” system that temporarily gives US authorities access to each airline’s main passenger database.
Mergers: Commission Clears P&G/Gillette Deal Subject to Conditions
The European Commission has cleared the acquisition of Gillette by the consumer goods giant Procter & Gamble, subject to conditions. Both companies are US based, and their combination will give rise to a leading producer of branded consumer goods. The European Commission has conducted a thorough market investigation which focused mainly on the possible “conglomerate effects” of the merger and on the horizontal overlaps of the parties on the market of battery-operated toothbrushes. The investigation showed that the parties would not be in a position post-merger to exclude competitor’s products to the detriment of end consumers or to obtain control over the shelves of retailers. Concerning the horizontal overlaps of the parties on the market of battery-operated toothbrushes, Procter & Gamble offered commitments that alleviated the Commission’s concerns. It committed to divest its entire battery-operated toothbrush business and to grant a licence for the co-brands used on these toothbrushes.
State Aid: New Measures to Increase Legal Certainty
The Commission has adopted its first set of measures implementing the State Aid Action Plan (see Brussels Brief of 10 June 2005) in a package of measures aimed at clarifying the rules relating to the financing of Services of General Economic Interest (SGEI). First, the package includes a draft Commission Decision specifying conditions under which public service compensation is compatible with State aid rules and which need not be notified to the Commission in advance. The latter covers compensation of less than EUR 30 million per year to beneficiaries with an annual turnover of less than EUR 100 million. It also covers financial support to hospitals and social housing, for air and maritime links to islands, and to airports and ports with passenger volumes below certain thresholds. Second, for all other grants of public service compensation, the Commission has drawn up a Framework clarifying the existing conditions for determining whether compensation constitutes State aid, as laid down in the Altmark judgment of the European Court of Justice in 2003. (Transport and public service broadcasting are already subject to sector specific rules). The Commission has given EU Member States 18 months to bring their schemes for the financing of SGEI into line with the Framework. Finally, clarification of accounting separation rules for companies receiving compensation for SGEI, and operating in both the public service and the private sector is foreseen by an amendment to the Commission Transparency Directive (80/723/EEC).
NEXT WEEK’S EVENTS
Monday 25 July – Friday 29 July 2005
No Council meetings scheduled for next week
COURT OF JUSTICE
No cases next week: Judicial vacation of the Court of Justice until 2 September 2005
COURT OF FIRST INSTANCE
No cases next week: Judicial vacation of the Court of First Instance until 2 September 2005