Mergers: Commission Clears Adidas/Reebok Deal
The European Commission has approved the EUR 3.1 billion acquisition of Reebok International Ltd by Adidas-Salomon AG. The investigation revealed overlaps in the athletic footwear market, in which both companies are strong players. However, the Commission found that the parties had “slightly different” brand and pricing positions. Adidas is perceived as a professional, technically oriented brand in the medium to high price range. Reebok’s image is that of a leisure brand favoured by young people and women, and it offers products in the low to medium price range. In the market segments for medium priced tennis, basketball and workout shoes, where the combined position of the two companies is strongest, the Commission considered that the competition would remain intense, thus preventing the merged entity from increasing prices.
Competition: Greece Still Not in Compliance with Electronic Communications Directive
The European Commission has sent a formal request to Greece for information on its compliance with the European Court of Justice (ECJ) ruling in 2005 that Greece had failed to fulfil its obligation to implement the Electronic Communications Directive. The original deadline for the implementation of the Directive was 24 July 2003, and it has already been implemented by all the other Member States. A key provision of the Directive provides for the abolition of exclusive or special rights granted by the Member States for the establishment and/or the provision of electronic communications networks or the provision of publicly available electronic communications services. In Greece, where the level of competition in the fixed voice telephony market is very low, there is extremely low penetration in the broadband services market.
Internal Market: ECJ Ruling on Excessive Visa Requirements
The European Commission brought an action against before the ECJ Germany on the grounds that its visa and prior employment requirements were contrary to EU law. Under these requirements an undertaking wishing to provide services in Germany must ensure that its workers who are non-EU nationals obtain a special visa before they can start work. One of the requirements for obtaining such a visa is that the worker must have been employed by the undertaking for at least one year prior to the application. The ECJ found that the German requirements exceeded what was necessary to prevent abuse and circumvention of the EU rules on the freedom to provide services. The ECJ found that a simple prior declaration by an undertaking, certifying that the situation of its workers’ residence, work visas and social security would be sufficient. The ECJ also found that the requirement of one year’s prior employment with the undertaking concerned was disproportionate. The ECJ dismissed arguments that the requirement for issuing visas to non-EU nationals was designed to protect workers and guard against "social dumping".
Consumer Protection: Voluntary Restrictions on Soft Drinks Makers
Soft drinks makers have proposed a Europe-wide code of practice on advertising to children and sales through school vending machines. The voluntary restrictions include measures to improve nutritional information on drinks packaging and to increase the range of low-calorie drinks on offer. Companies will also cease targeting children under 12 through advertising as well as sales in primary schools, unless requested by school authorities. In secondary schools sodas will be offered alongside water, juices and other calorie-free drinks in unbranded vending machines that promote healthy drinks and lifestyles. Drinks will also be offered in container sizes that encourage portion control. The decision to increase self-regulation comes as the EU prepares new measures to fight a growing obesity problem. The industry is hoping thereby to avoid compulsory measures.
Consumer Protection: EU/China Memorandum Of Understanding on Food and General Product Safety
The European Commission has signed a Memorandum of Understanding (MOU) with China, aiming to promote cooperation in food and general product safety for consumer goods. The MOU contains commitments by the EU and China to develop a consultation and cooperation mechanism, hold regular meetings, and promptly notify and exchange information in the event of product safety problems. Although the MOU reflects continued efforts to improve product safety, major European consumer protection groups have noted that certain EU Member States continue to oppose a proposal by the European Commission to remove non-child-resistant lighters from the market. Citing statistics of fires and fatalities attributable to children under five playing with lighters, these groups have called on all Member States to support the Commission’s proposal.
The European Commission has found the proposed German reimbursement mechanism for the toll paid by heavy goods vehicles on German motorways incompatible with the common market. As of 1 January 2005 the German authorities introduced a mileage-based motorway toll for heavy goods vehicles and fixed the average toll rate at 12.4 cents/km. They intend to increase the rate to 15 cents/km and introduce a toll reimbursement system to compensate road hauliers for the increase. The reimbursement would depend on the payment of excise duties on fuel purchased in Germany. The Commission supports the German toll system as such. However, it has found that the linking of a reduction in toll fees to the amount of excise duties paid on German territory would result in discrimination between hauliers who fill their tank in Germany and those who do so in other Member States. Therefore, the German measures do not respect the principle of non-discrimination among EU nationals.
Internal Market: EESC Opposes Commission Proposal On Data Retention
The European Economic and Social Committee (EESC) has called for substantial revision of the European Commission’s proposal for a Directive on the retention of certain electronic data. (See Brussels Brief of 23 September 2005.) In an effort to combat crime and terrorism, the Commission’s proposed Directive would obligate providers of electronic communication services to retain and report certain categories of “traffic” data relating to electronic and telephonic communications. The EESC faulted the proposed Directive on several grounds, arguing that it infringes fundamental rights and may not comply with the principles of proportionality or subsidiarity. The EESC also predicted that the proposed Directive would undermine consumer confidence in electronic communications, thereby jeopardising the Lisbon Strategy objective of developing an “information society”.
State Aid: Enforcement Proceedings against Italy and Belgium
The European Commission has decided to refer Italy and Belgium to the ECJ for their failure to recover illegally granted State aid. The initial decisions, adopted in 2002 and 2004, found as incompatible: (i) aid granted by Italy to undertakings investing in the regions affected by the natural disasters in 2002; and (ii) aid granted by Walloon authorities to the group of Belgian companies active in the carpets and synthetic fibres sector. Both Member States failed to comply with the Commission’s decisions and recover the State aid granted. In Belgium in particular, the recipient of the aid challenged the Commission’s decision and the national courts suspended the recovery. The Commission’s action demonstrates its commitment to ensure complete enforcement of the EC State aid rules.
NEXT WEEK’S EVENTS
Monday 30 January – Friday 3 February 2006
General Affairs and External Relations Council (30 – 31 January 2006)
COURT OF JUSTICE
Freedom of movement for persons
C-503/03 Commission v Spain
C-202/04 Macrino and Capodarte
C-11/05 Friesland Coberco Dairy Foods
C-406/04 De Cuyper
Free movement of goods
C-170/04 Rosengren and Others
COURT OF FIRST INSTANCE
Environment and consumers
T-251/03 Albrecht and Others v Commission
T-273/03 Merck Sharp & Dohme and Others v Commission
T-206/04 Rodrigues Carvalhais v OHMI - Profilpas (PERFIX)
Joined Cases T-466/04, T-467/04 Dami v OHMI - Stilton Cheese Makers (GERONIMO STILTON)