Competition: Public Consultation on Dominance Guidelines
The European Commission has published a “discussion paper” on the application of Article 82 EC to exclusionary practices, i.e. those likely to suppress competitors from the market. With this 70 page document, the Commission aims at promoting a debate leading ultimately to the adoption of formal Commission guidelines. Most proposals in the paper are in line with existing case law and merely provide clarification of current policy. However, in certain matters, such as rebates, the Commission appears to consider new approaches whereby commercial justifications and efficiencies would be given more importance in the assessment of practices. While the Commission services have been working for several years to produce the discussion paper, interested parties only have until 31 March 2006 to submit their comments.
Air Transport: ECJ Upholds Rules Expanding Air Passenger Rights
The European Court of Justice (ECJ) has upheld Regulation (EC) No 261/2004, which requires airlines to compensate passengers in the event of overbooking, long delays and cancellations. This regulation, which took effect in February 2005, was challenged in the High Court of Justice of England and Wales by two airline associations – the International Air Transport Association and the European Low Fares Airline Association. The Regulation applies to flights to, from, and within the EU. Since the validity of the EU regulation was at issue, the High Court referred the case to the European Court of Justice. The airlines argued before the ECJ that the regulation was invalid on several grounds, complaining that the regulation is too costly and would require them to provide compensation for events out of their control. The ECJ, however, backed the regulation, rejecting each of the airlines’ arguments.
Institutions: Access to Third Party Documents Held by the Commission
The European Ombudsman has welcomed the European Commission’s decision to grant access to a letter received from the Portuguese Government as part of the excessive deficit procedure. Access to this letter was requested by a Portuguese Member of Parliament in 2004. The Commission had first denied access to this letter without consulting the Portuguese Government, concluding that its release could adversely affect Portugal’s economic and financial policy. Regulation (EC) No 1049/2001 governing access to documents requires such consultation unless it is clear that the document should or should not be disclosed. Following involvement by the Ombudsman, the Portuguese Government confirmed that the letter did not contain any information which would affect Portugal’s current economic and financial policy. The Commission subsequently agreed to release the letter in December 2005.
Trade: Russia-Ukraine Gas Price Dispute
After nearly a month-long stand-off, Russia and Ukraine have reached agreement on new gas prices. Ukrainian President Viktor Yushchenko agreed to an increase in gas prices after Gazprom, Russia’s state-owned natural-gas company, reduced the supply of natural gas. For the next five years Ukraine will pay $95 per 1,000 cubic metres for fuel, less than double the $50 it was previously charged. Ukraine opposed Russia’s demands to bring gas fees in line with prices of about $250 per 1,000 cubic metres charged to Western European countries, but the increase of $45 is still much more than Ukraine was previously willing to accept. The European Commission helped to broker the deal after Russia stopped supplying fuel to Ukraine, and the supply of natural gas to Central and Western Europe was seriously disrupted. After the agreement was reached the European Union decided that Europe needed a more collective and cohesive policy on the security of energy supply. A first draft of such policy will be published by the end of spring, while the final document is to be presented to Member States before the end of the year.
Mergers: Commission Clears O2 - Telefónica Deal Subject to Conditions
The European Commission has cleared the acquisition of the UK-based mobile telephony operator O2 by the Spanish telecommunications company Telefónica, subject to conditions. The Commission was concerned about the functioning of alliances of mobile operators, created to improve international roaming services. Telefónica is a member of the FreeMove alliance, together with the largest mobile operators in the EU (France Télécom, TIM, and Deutsche Telecom). O2 on the other hand is a member of the smaller Starmap alliance. The Commission found that the concentration might have anti-competitive effects in the market for international roaming services, as O2 would most probably be forced to either join or align its behaviour with FreeMove. As there is no international roaming provider independent of this alliance in the UK (apart from Vodafone), this would imply cost increases for non-FreeMove members. The Commission decided to clear the operation after Telefónica undertook to leave FreeMove.
Taxation: Commission Proposes "Home State Taxation" for SMEs
The European Commission has proposed a "Home State Taxation" system for EU small and medium-sized enterprises (SMEs) with a subsidiary or branch in another EU Member State. SMEs who opt for this system would be able to compute their company tax base according to the tax rules of the home state of the parent company or head office. The Member States’ own corporate tax rates would then be applied to the subsidiary’s profit share. This share would be determined by its share of the total payroll and/or turnover of the SME. The system, which would apply only to corporate tax, would be based on bilateral or multilateral agreements between the Member States wishing to participate and would run for a five-year pilot period starting 2007. The proposal is part of the Commission’s goal to harmonise EU Member States’ tax legislation (see Brussels Brief of 28 October 2005).
Company Law: Proposed Directive to Facilitate Cross-Border Shareholder Rights
The European Commission has proposed a new directive to facilitate the exercise of shareholders’ rights across borders, in particular voting rights. The proposed directive includes the following minimum standards aimed at eliminating obstacles to shareholders: First, General Meetings should be convened with at least one month’s notice and all relevant information should be posted at the same time on the issuer’s website. Second, the proposed directive suggests that a record date should replace “share blocking”, set no earlier than 30 days before the meeting. Third, non-residents should have the right to ask questions. Five per cent should be the maximum shareholder threshold to be able to table resolutions. Fourth, shareholders should have a choice of methods for distance voting, and proxy voting should not be unduly hindered. Finally, voting results should be available to all shareholders on the issuer’s website. The proposed directive pertains only to listed companies, but Member States will be free to extend the provisions to non-listed companies.
NEXT WEEK’S EVENTS
Monday 16 January – Friday 20 January 2006
No meetings scheduled for next week.
COURT OF JUSTICE
C-240/03P Comunità montana della Valnerina v Commission
C-547/03P AIT v Commission
Free movement of capital
Freedom to provide services
C-244/04 Commission v Germany
C-90/05 Commission v Luxembourg
C-28/05 Dokter and Others
Approximation of laws
C-145/05 Levi Strauss
Common Customs Tariff
C-289/04P Showa Denko v Commission
C-301/04P Commission v SGL Carbon AG
C-308/04P SGL Carbon v Commission
C-36/04 Spain v Council
Freedom of movement for persons
C-330/03 Colegio de Ingenieros de Caminos, Canales y Puertos
Law governing the institutions
C-459/03 Commission v Ireland
Social security for migrant workers
C-466/04 Acereda Herrera
C-509/04 Magpar VI
COURT OF FIRST INSTANCE
T-107/03 Regione Marche v Commission
T-398/04 Henkel v OHMI (Tablette rectangulaire rouge and blanc avec un noyau ovale bleu)