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Competition: Sector Inquiry Finds Antitrust Problems in Retail Banking
The European Commission has published the final report of its competition inquiry into the retail banking sector. The inquiry has found a number of competition concerns in the markets for payment cards (Visa, MasterCard, etc), payment systems and retail banking products. Particular indicators are: (i) large variations in merchant and interchange fees for payment cards, (ii) barriers to entry in the markets for payment systems and credit registers, (iii) obstacles to customer mobility, and (iv) product tying. The Commission intends to use its powers under the competition rules to tackle any serious abuses, working closely with national competition authorities. The outcome of the inquiry is intended to promote competition in retail banking as part of the run-up to the creation of the Single Euro Payment Area.
Environment: Stricter Fuel Standards to Reduce Air Pollution
The European Commission has proposed new standards for transport fuels as part of its policy to combat climate change and reduce air pollution. The new standards will be achieved by amending the 1998 Fuel Quality Directive, which sets out common EU specifications for petrol, diesel and gas oil for road and inland waterway transport. The revised Directive will introduce an obligation for fuel suppliers to reduce greenhouse gas emissions from fuel by one per cent per unit of energy per year starting in 2010. A separate petrol blend will be developed with a higher permitted content of oxygen-containing additives, which will enable the use of more biofuels in petrol. From 1 January 2009 all diesel fuel marketed will have to have an ultra-low sulphur content (no more than ten parts per million). Compliance with these and other new requirements will oblige industry to make significant investments in their products.
Competition: France Telecom Fails in Predatory Pricing Appeal
The Court of First Instance (CFI) has dismissed the appeal lodged by the French telecommunications operator France Telecom (formerly Wanadoo) against the decision of the European Commission concerning predatory pricing in the ADSL internet market. The Commission found that the French company had infringed European competition rules by charging below cost in the market for high speed internet access as part of a plan to exclude competitors. The CFI, following previous case law, ruled that prices below average variable costs are always considered abusive. Finally, in an issue that constitutes a divergence from practice in the US and other countries, the CFI ruled that the illegality of predatory pricing is not conditional on the possibility of the dominant firm being able to recoup its losses.
Agriculture: Less Quota Sugar for EU Producers
The European Commission has announced that it is planning a substantial withdrawal of quota sugar from the market, in order to avoid a significant surplus at the end of the season. Withdrawal of quota sugar entails a temporary reduction in the amount of sugar producers can produce within their quota. As such, a proportion of the sugar produced in the marketing year 2007/2008 will either have to be counted against the quota for 2008/2009 or be sold as out-of-quota sugar for industrial use. Provisionally the Commission believes that sugar that producers should expect a withdrawal of at least two million tonnes corresponding to 12 per cent of the quota. A definitive figure will be set after the summer, once the Commission has a clearer picture of the harvest and production of sugar.
The European Commission has referred the Netherlands to the European Court of Justice (ECJ) following its failure to comply with a Decision of 13 December 2000. This Decision required the Netherlands to recover unlawful and incompatible aid of EUR 2.5 million awarded to six manure processing companies. More than six years after the Decision, one beneficiary of the aid, Fleuren Compost, has still not reimbursed its share (EUR 487,000 plus interest). Following the Decision, the Netherlands started an administrative procedure to recover the aid. However, after a series of judgments, the Dutch courts ruled that the recovery of the interest element had to be based on civil law. Therefore, in June 2006 the Dutch authorities started proceedings before the civil courts for recovery of the aid and interest, but this could take several years. The Commission considers that the Netherlands has not complied with its obligation to achieve an immediate and effective execution of the Decision of 13 December 2000 and has referred the case to the ECJ.
State Aid: Low Spanish Regulated Electricity Tariffs Investigated
A formal State aid investigation has been opened by the European Commission into artificially low regulated tariffs for electricity supplied to energy-intensive industries in Spain. These tariffs, which are lower than the liberalised market prices, appear to constitute significant operating aid for these industries. The Commission is concerned about the potential distortion of competition in the product markets affected.
State Aid: Germany Ordered to Recover EUR 5.2 Million from Biria Group
The European Commission has ordered Germany to recover EUR 5.2 million in State aid granted in 2001 and 2003 to the Biria Group, a bicycle manufacturer, in violation of Article 87 EC. The aid, which was provided by a public investment company and the German federal region of Saxony, took the form of a “silent participation” and two guarantees. A “silent participation” is comparable to a loan, where the investor receives a remuneration but no shares in the company. After receiving a complaint from a Biria competitor, the Commission opened an investigation in 2005 and ultimately concluded that the aid was illegal because: (i) remuneration for the “silent participation” was below market levels, and (ii) the guarantees were provided to help Biria and its subsidiary – both in financial difficulties – ensure liquidity, without appropriate restructuring plans or compensation measures. The Commission has limited recovery to Biria, and not the Lone Star group, which acquired Biria assets in 2005.
State Aid: Danish SME Risk Capital Scheme Investigated
The European Commission has opened an investigation into a planned Danish scheme facilitating access to risk capital for small and medium sized enterprises (SMEs). The scheme would provide favourable tax treatment for certain institutional investors, especially pension funds and insurance companies, investing in shares traded on alternative markets. By encouraging these investors to invest in alternative markets, Denmark hopes to provide an extra source of equity financing for SMEs. However, the Commission believes that the measure could give rise to distortions of trade and competition within the EU's Single Market and doubts whether the scheme addresses a true market failure. Further, the measure could discourage other investors and may not be the most appropriate instrument to attain the planned objective. Interested parties are invited to comment on the proposed measures.
Monday 5 February – Friday 9 February 2007
No meetings scheduled for next week
COURT OF JUSTICE
C-3/06 P Groupe Danone v Commission
C-114/06 Commission v Slovak Republic
Free movement of goods
C-254/05 Commission v Belgium
COURT OF FIRST INSTANCE
T-23/03 CAS v Commission
T-477/04 Aktieselskabet af 21. november 2001 v OHMI - TDK Kabushiki Kaisha (TDK)
T-317/05 Kustom Musical Amplification v OHMI (Forme d'une guitare)
T-88/05 Quelle v OHMI - Nars Cosmetics (NARS)