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Mergers: Commission Prohibits Ryanair-Aer Lingus Merger
The European Commission has prohibited the acquisition by the Irish low-cost airline Ryanair of its rival Aer Lingus, the former Irish “flag” carrier. This is the first Commission prohibition decision for more than two and a half years. The Commission found that the combined entity would create a monopoly or dominant position on 35 routes to and from Ireland, where competitors would be unlikely to enter, due to Ryanair’s and Aer Lingus’ size, established brands and Ryanair’s reputation of aggressive retaliation against entrants. Ryanair offered commitments, including the divestment of airport slots and the lowering of short-haul fares, but these were deemed insufficient by the Commission. It is reported that Ryanair intends to appeal the decision to the Court of First Instance.
Transport: EU Agrees to Liberalise Rail Passenger Transport Services by 2010
The European Council and the European Parliament have reached agreement on the third railway package at the final stage of the legislative procedure. The package includes a directive on the development of the European Union’s railways, a directive on the certification of train crews operating locomotives and trains, and a regulation on rail passengers’ rights and obligations. The package provides for the opening-up of the market for international rail passenger transport services to competition by 2010. Trains operating on international routes would also be able to perform cabotage, i.e., picking up and setting down passengers between two stations located in another Member State. It is expected that the opening-up of the international passenger market will lead to increased use of rail transport services, which are more environmentally friendly.
Telecommunications: Commission Takes Germany to Court for Granting Deutsche Telecom a “Regulatory Holiday” From Competition Rules
The European Commission has announced that it will refer Germany to the European Court of Justice (ECJ) for its new telecoms law giving Deutsche Telecom (DT) a “regulatory holiday” with regard to DT’s new fibre-optic network (see Brussels Brief of 2 March 2007). The German Government exempted DT from obligations to guarantee its competitors access to the network at fair conditions. The Commission has repeatedly stated its objections to Germany’s position, but Germany has been unwilling to amend its telecoms law to address the Commission’s concerns. As Germany and the Commission maintain different interpretations of EU telecoms rules, the Commission has decided to refer the case to the ECJ.
Customs: Council Agrees on Modernised Community Customs Code
Reform of the Community Customs Code is progressing following agreement at Council level. The aim of this legislation is to simplify customs legislation and to streamline processes and procedures. Electronic customs declarations will become the general rule. It is expected that convergence between the IT systems of the 27 Member States will be improved and the concept of centralised clearance will be promoted. This will allow traders to declare goods electronically and pay customs duties at their place of establishment, regardless of the Member State of entry or consumption. As soon as the text is formally adopted as a common position, it will proceed to the European Parliament for a second reading.
Public Procurement: Parliament Agrees on Directive on Review Procedures Available to Rejected Bidders
The European Parliament has reached an agreement at first reading on the European Commission’s proposal for a directive reviewing EU rules on remedies in the area of public procurement. The objective is to improve the effectiveness of national review procedures for the award of public contracts. The proposed directive would require public authorities to wait ten days, known as a “standstill period”, before concluding a public contract. This would give rejected bidders the opportunity to examine the decision and decide whether it is appropriate to initiate a review procedure. If this standstill period is not respected, national courts can, under certain conditions, set aside a signed contract. National courts will also be able to review public contracts awarded without a tender process.
VAT: Public Auction of UMTS Rights Exempt From VAT
The European Court of Justice (ECJ) has concluded that the allocation by auction of universal mobile telecommunications system (UMTS) rights does not constitute an economic activity subject to VAT. Thus the ECJ overruled the view held by the UK and Austrian mobile phone service providers. The ECJ confirmed the principle that only economic activities are subject to VAT, and specified that the allocation through auction of these rights to operators allows them to offer services on the mobile telecoms market. Such allocation is a precondition for the access of service providers to the mobile telecoms market and falls exclusively within the competence of EU Member States. Therefore, the ECJ concluded that the auctioning of such rights by a Member State is exempt from VAT.
State Aid: Commission Conditionally Authorises State Guarantee in Favour of BAWAG-PSK as Restructuring Aid
BAWAG-PSK is the fourth largest bank in Austria. In spring 2006 depositors withdrew large amounts of money from saving accounts. To avoid a severe liquidity crisis, the Austrian Parliament adopted a law providing for a financial guarantee worth EUR 900 million to BAWAG-PSK. BAWAG-PSK was sold to a consortium led by the US private equity group Cerberus Capital Management in May 2007. The European Commission has assessed the restructuring plan endorsed by the new owners of the bank, and considers that it will allow the bank to return to long term viability. Compensatory measures to be implemented by the bank, including asset disposal and limitation of some commercial activities, are intended to keep the distortion of competition to a minimum.
Internal Market: Initiative to Boost Research for Nanoelectronics
The European Commission has adopted its proposal to launch a Joint Technology Initiative to boost research in nanoeletronics, called the European Nanoelectronics Initiative Advisory Council (ENIAC). Joint Technology Initiatives are a new type of Europe-wide public-private-partnership that pools industry, Member State and Commission resources. These partnerships target research programmes in critical industries where the existing mechanisms cannot deliver the scale and speed of response to keep the EU ahead of global competition. The ENIAC initiative will be run through a joint undertaking that will come into operation at the beginning of 2008. The expected budget for ENIAC is EUR 3 billion. The funds for this new initiative will come from industry, Member States and the Commission.
NEXT WEEK’S EVENTS
Monday 2 July – Friday 6 July 2007
No meetings scheduled for next week.
COURT OF JUSTICE
Approximation of laws
C-327/05 Commission v Denmark
Joined Cases C-145/06, C-146/06 Fendt Italiana
Environment and consumers
C-255/05 Commission v Italy
C-340/06 Commission v Austria
Freedom of establishment
C-522/04 Commission v Belgium
Freedom to provide services
C-430/05 Ntionik and Pikoulas
C-317/06 Commission v Spain
C-181/06 Deutsche Lufthansa
C-280/06 Autorità Garante della Concorrenza e del Mercato
Freedom of movement for persons
Free movement of capital
C-194/06 Orange European Smallcap Fund
C-240/06 Fortum Project Finance
COURT OF FIRST INSTANCE
T-475/04 Bouygues and Bouygues Télécom v Commission