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State Aid: Aid Scheme for Sardinia Shipping Companies Illegal
The European Commission has decided that the aid scheme set up by Sardinia aiming to foster regional development of the shipping sector is illegal. The scheme allows shipping companies to obtain loans and leases at preferential conditions for the acquisition, conversion and repair of their vessels. The Commission had already declared the same scheme incompatible with the Common Market, but its Decision was annulled in 2000 by the European Court of Justice on the grounds of insufficient proof that intra-Community trade was affected. The Commission has now confirmed its previous Decision despite the fact that the scheme was modified in the meantime by the Sardinian Authorities. The Commission’s view is that the changes are contrary to the Community Guidelines on aid to maritime transport which were in force at the time.
Mergers: CFI Finds Commission Liable for Breach in Merger Review Procedure
Contact Philip Bentley
The European Court of First Instance (CFI) has found the European Commission liable for damages for a breach in procedure in its review of the Schneider/Legrand merger in 2001. The Commission’s prohibition of the proposed merger was quashed in an earlier Judgment by the CFI on the grounds that the Commission’s reasoning was deficient and the rights of the defence had been breached. Schneider sued the Commission for damages alleging deficient reasoning and breach of procedural rights. The CFI upheld Schneider’s claim but only insofar as it related to damages arising from a breach of its procedural rights. The CFI stated that the Commission enjoyed a wide margin of discretion in carrying out its review of a merger and even deficient reasoning in this analysis may not give rise to a claim for damages. The CFI awarded damages for the cost of suspending the divestment of Legrand by Schneider and re-notification of the merger. (Case T-310/01)
State Aid: Ryanair Takes Commission to Court Over Subsidies to Rival Airlines
The Irish low-cost carrier, Ryanair, has announced its intention to sue the European Commission for not having taken action against alleged State aid to some of its rival airlines. More than a year ago, Ryanair complained to the Commission that aid involving hundreds of millions of euros was granted by the French, German, Italian and Greek Governments to Air France, Lufthansa, Alitalia and Olympic Airways respectively. In the complaints, Ryanair claims that the aid was given in the form of reduced airport fees, unprofitable airport investments and restructuring aid. Should Ryanair’s action before the Court of First Instance be successful, the Commission will be forced to open a formal investigation into the contested grants.
Media: Commission Warns Spain for Breaching Television Without Frontiers Directive
Following an independent inquiry, the European Commission has sent Spain a letter of formal notice for not complying with the advertising rules in the Television Without Frontiers Directive. According to the Directive, channels are not allowed to exceed the limit of 12 minutes per hour of advertising and teleshopping. The inquiry reveals that Spain adopted an overly restrictive definition of “spot advertising”. As a consequence, it appears that Spanish television channels frequently exceed the 12 minute cap. The inquiry concludes that those channels also breached the Directive by not ensuring the mandatory period of 20 minutes between advertising breaks. Spain now has two months to respond to the Commission’s letter.
State Aid: Commission Investigates Aid to Several EU Airports
The European Commission has launched a formal investigation inter alia into low airport fees charged by Flughafen Dortmund GmbH to airlines including AirBerlin, easyJet, Germanwings and Wizzair. Flughafen Dortmund GmbH is a publicly owned company that operates the Dortmund airport. In 2004, the company put in place an incentive scheme called NERES (New and Existing Route Expansion Scheme). NERES offers airlines that satisfy its criteria more favourable airport charges than those generally applied and provides these airlines with marketing grants. The Commission considers that NERES may constitute illegal State aid. Investigations on similar and other grounds have also been launched by the Commission against the Luebeck and Berlin Schoenefeld airports in Germany and the Tampere Pirkkala airport in Finland.
State Aid: Commission Approves Greek State Financing of Thessaloniki Submerged Tunnel
The European Commission has decided not to raise objections to the concession agreement concluded by the Greek Government concerning the construction of the Thessaloniki submerged tunnel. The agreement includes EUR 96 million of State financing. The financing of infrastructure through State resources does not constitute State aid if the infrastructure remains public property, is open without discrimination to all users and does not confer an advantage to any category of users. The Commission concluded that the concession agreement follows this principle in that State financing was limited to the lowest price offered in a competitive procedure for award of the contract. The Thessaloniki submerged tunnel aims to alleviate congestion in the historic city centre whilst linking the populated south-east metropolitan area with the economically strong north-west area.
Competition: CFI Annuls Commission Decision on Commitments in De Beers Case
In a landmark ruling, the Court of First Instance (CFI) has annulled the European Commission’s Decision which required De Beers to end its purchases of rough diamonds from Alrosa as of 2009. These commitments were offered unilaterally by De Beers to end the Commission’s investigation into an abuse of dominance. The CFI held that the Decision went further than that which the Commission could have required had it adopted a full infringement decision against De Beers. Consequently, as there were no exceptional circumstances justifying such a position, the CFI considered that the Commission had breached the proportionality principle. There were less restrictive alternatives available to resolve the competition issues than a ban on contractual relations between the two companies. The CFI also held that Alrosa had a right to be heard on the individual commitments offered by De Beers and had not been given the opportunity to exercise that right fully. (See Brussels Brief of 24 February 2006)
State Aid: Municipality’s Involvement in Marketing Fund for Norrköping Airport Not State Aid
The European Commission has approved the participation of the Norrköping municipality in a marketing and business development fund aimed at encouraging airlines to fly to the municipally owned airport. The Commission found that the Swedish municipality’s involvement is not State aid because the public authority acts in the same way as a private investor. This conclusion was supported by the following: (i) the municipality invests the same amount, on the same terms as the private investors in the fund; (ii) the fund will be administered by a marketing company which is owned 50 per cent by the municipality and 50 per cent by seven private entities and companies; (iii) the private entities have board control over the marketing company; (iv) the fund and the marketing company are motivated to maximise profits; and (v) the financial risks to the public authority are similar to those of a market investor.
NEXT WEEK’S EVENTS
Monday 16 July – Friday 20 July 2007
Agriculture and Fisheries Council (17 July 2007)
COURT OF JUSTICE
Approximation of laws
C-50/07 Commission v Spain
Area of Freedom, Security and Justice
C-26/07 Commission v Greece
Common Customs Tariff
C-310/06 F.T.S. International
C-402/06 Op - en Overslagbedrijf Van der Vaart
C-382/05 Commission v Italy
C-399/05 Commission v Greece
C-155/06 Commission v United Kingdom
C-119/05 Lucchini Siderurgica
Environment and consumers
C-326/05 P Industrias Químicas del Vallés v Commission
C-61/07 Commission v Luxembourg
Freedom of establishment
C-231/05 Oy AA
C-134/05 Commission v Italy
Freedom of movement for persons
C-182/06 Lakebrink and Peters-Lakebrink
C-460/05 Poland v Parliament and Council
Freedom to provide services
C-490/04 Commission v Germany
C-501/04 Commission v Spain
C-517/06 Commission v Austria
Law governing the institutions
C-503/04 Commission v Germany
Police and judicial cooperation in criminal matters
C-277/05 Société thermale d'Eugénie-Les-Bains
C-294/06 Payir and Others
Justice and Home Affairs
Law governing the institutions
C-64/05 P Sweden v Commission and Others
C-167/05 Commission v Sweden
C-314/06 Société Pipeline Méditerranée and Rhône
COURT OF FIRST INSTANCE
Judicial vacation of the Court of First Instance from 16 July 2007 and 2 September 2007 inclusive.