Mergers: DONG’s Acquisition of Danish Electricity Generators and Suppliers Approved Subject to Conditions
The European Commission has approved, subject to conditions, the acquisition by DONG A/S of four Danish electricity companies. DONG is the Danish State-owned gas incumbent. The acquired companies are two regional electricity generation incumbents and two electricity suppliers. Initially the Commission found that the proposed acquisition would have anti-competitive effects in a number of markets along the gas supply chain in Denmark. This is because the electricity suppliers, before the acquisition, represented potential competitors to DONG in the gas distribution market, and because the vertical integration of the combined entity would be capable of foreclosing the market. DONG therefore offered to divest from the larger of its two Danish gas storage facilities and to hold annual auctions, each of 400 million cubic metres of gas, until 2013. The Commission considers that these remedies will ensure competition in the Danish gas distribution market.
Trade: EU May Impose Anti-Dumping Duties on Footwear from China and Vietnam
Contact Philip Bentley
The EU will be deciding on Thursday whether to impose provisional duties on shoe imports from China and Vietnam. Peter Mandelson has recommended duties to be phased in over five months starting at 4 per cent on 6 April 2006. He argues that Europe is justified in defending against unfair trading practices but warned that such measures cannot shield manufacturers from Asia’s natural and legitimate low-cost advantage. There should be little impact on consumer prices as the duties would be just over EUR 1.50 on shoes which sell for EUR 40-120. However, the Commission has also warned that European footwear producers must be ready to adapt to changing production and consumption patterns as a natural result of globalisation. The Commission has proposed a global adjustment fundof EUR 500 million to provide relief to business failures linked to globalisation.
The European Commission has opened a detailed investigation under the EU Merger Regulation into the planned acquisition by China International Marine Containers (CIMC) of the Dutch Burg Group. Both CIMC and Burg are active worldwide in the production and sale of standard ISO tank containers, i.e. cylindrical tanks, supported by a frame and used for the transportation of hazardous and non-hazardous liquid cargoes in container ships. The Commission’s initial market investigation found that the proposed acquisition would raise serious competition concerns in the sector of tank containers, as the merger would bring together the two largest worldwide producers of standard ISO tank containers, giving them a quasi-monopolistic market position. The Commission will take a final decision by 28 July 2006 on whether the concentration would significantly impede effective competition within the European Economic Area. The Commission will also examine the potential anti-competitive impact of the planned transaction on the neighbouring markets for special tank containers where only Burg is currently active.
Competition: BMW and GM Amend Distribution and Servicing Agreements
The European Commission has closed its investigation into BMW’s and GM’s distribution and servicing agreements after the companies brought them in line with the motor vehicle block exemption Regulation. The two cases raised new policy issues related to removing (i) unjustified obstacles to multi-brand distribution and servicing, and (ii) unnecessary restrictions on garages on becoming members of the authorised networks. Following the investigation BMW and GM accepted for example the joint and non-exclusive use of all facilities other than the part of a showroom dedicated for the sale of their brands. BMW and GM have also removed from their repairer contracts all quantitative criteria such as minimum turnover targets and minimum throughput capacity requirements. The cases clarified a range of questions and thus provided guidance to industry and national authorities on the application of the Regulation.
Competition: Developments in the Microsoft Compliance Saga
The European Commission and Microsoft Corporation continue to dispute whether Microsoft has complied with the Commission’s March 2004 decision that, among other things, ordered Microsoft to share its code with its rivals. Last week, the Commission sent a letter to Microsoft, outlining its position that Microsoft failed to comply with the decision. The Commission has scheduled a two-day oral hearing on 30-31 March 2006 to resolve the issue, but denied Microsoft's unusual request that the hearing be open to the public, explaining that Commission antitrust hearings are always closed. In a related development, Microsoft has filed a formal complaint against the Commission, alleging that the Commission improperly colluded with Microsoft’s rivals when investigating Microsoft’s compliance with the decision. In response, the Commission published a previously undisclosed agreement outlining the duties of the Microsoft-nominated “monitor trustee,” who is charged with determining Microsoft’s compliance with the decision. The Commission explained that this memorandum proves that the monitor trustee’s contacts with Microsoft rivals were entirely appropriate. Incidentally, Microsoft's appeal of the decision itself will be heard before the Court of First Instance on 24-28 April 2006.
Internal Market: Co-existence of GM Crops with Conventional and Organic Farming
Philip Bentley QC
In a Report published on 10 March 2006 the European Commission concludes that it would be premature to adopt EU legislation on the co-existence of genetically modified (GM) crops with conventional and organic farming, given the limited experience in this area. For the time being the matter remains wholly within the realm of the Member States, although they should respect the Commission’s Guidelines of 23 July 2003 which recommend, inter alia, that management measures should be (i) science-based, (ii) constructed around existing practices, and (iii) efficient, cost-effective and proportionate. Since these Guidelines do not deal with specific crops, the Commission now proposes to work jointly with Member States and stakeholders on the development of crop-specific recommendations.
Trade: London WTO Doha Negotiations Meeting
Trade negotiators from the EU, US, Brazil, India, Japan and Australia met this week for two days of talks intended to further the ongoing WTO Doha negotiations. The meeting marked an attempt to narrow differences over the contentious topic of tariffs on agricultural products and industrial goods, ahead of a deadline of 30 April 2006 for the settlement of these issues. Trade officials hope that by settling these issues first, they will have adequate time to sew together the complex details of a wider-ranging trade deal by the end of 2006. The meeting concluded without any formal agreement but parties indicated some progress in key areas. The agricultural policies of developed countries are under attack from poor countries who claim that they constitute an unfair trade advantage and amount to protectionism. On the other hand, developing countries have resisted pressure from rich countries to open up their markets to industrial goods and services.
Trade: EU-US Wine Agreement Signed
The EU and US have signed a bilateral wine agreement. This agreement, which follows 20 years of negotiation, should facilitate access to the US market for EU wines. The agreement provides, inter alia, protection rules on some European names such as Port, Sherry and Champagne. In addition, the agreement provides that EU wines are exempt from the 2004 US wine-making certification requirements. Furthermore, US existing current wine-making practices not covered by EU derogations are accepted by the EU. The US and EU have also agreed to resolve bilateral issues through informal bilateral consultations rather than through formal dispute settlement mechanisms. This is only a first phase agreement. The EU and US have agreed to start talks within 90 days on a more ambitious second-phase agreement.
The Court of First Instance (CFI) has reduced the fines imposed by the European Commission on BASF and Daiichi in relation to their participation in the Vitamins cartel. In 2001 the Commission found that several companies had participated in a series of cartels relating to several vitamins, and had imposed record fines of EUR 855.23 million. BASF and Daiichi contested the decision before the CFI. The CFI rejected most of the arguments put forward by the two companies. However, it found that the Commission had committed errors in calculating the fines. BASF’s fine was reduced from EUR 293.16 million to EUR 236.845 million while Daiichi’s fine was reduced from EUR 23.4 million to EUR 18 million.
NEXT WEEK’S EVENTS
Monday 20 March – Friday 24 March 2006
Agriculture and Fisheries Council (20 March 2006)
General Affairs and External Relations Council (20 – 21 March 2006)
European Council (23 – 24 March 2006)
COURT OF JUSTICE
Environment and consumers
C-209/04 Commission v Austria
C-535/03 Unitymark and Others
Freedom of establishment
C-465/04 Honyvem Informazioni Commerciali
Freedom of movement for persons
C-408/03 Commission v Belgium
C-206/04 P Mülhens v Office for Harmonization in the Internal Market
C-210/04 FCE Bank
Approximation of laws
Freedom of movement for persons
C-24/05 P Storck v Office for Harmonization in the Internal Market
C-25/05 P Storck v Office for Harmonization in the Internal Market
COURT OF FIRST INSTANCE
No judgments scheduled for next week