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Competition: Market Sharing and Price-Fixing Cartel in Marine Sector
On 28 January 2009, five companies—Bridgestone, Dunlop Oil & Marine/Continental, Trelleborg, Parker ITR and Manuli—were fined EUR 131 million by the European Commission for participating in a cartel for marine hoses between 1986 and 2007 in violation of Article 81 EC and Article 53 of the EEA Agreement.
A sixth member of the cartel, Yokohama, applied for immunity under the 2006 Leniency Notice and thereby revealed the existence of the cartel to the Commission. As a result, the Commission conducted surprise inspections coordinated with several other jurisdictions in May 2007 and for the first time also inspected a private home.
The Commission concluded that the producers of marine hoses operated a worldwide cartel. The cartel members allegedly fixed prices for marine hoses, allocated bids and markets and exchanged commercially sensitive information. Cartel members are alleged to have referred to some markets as their "private markets" and agreed upon several pages of detailed rules to limit their conduct on the market.
In setting the fines, the Commission took into account the respective affected sales of the companies involved as well as the combined market share and the geographical scope of the cartel agreements. Consequently, Yokohama, the “whistleblower”, received full immunity from fines. Manuli’s cooperation with the investigation was rewarded with a 30 per cent reduction of its fine and two other participants’ fines were increased by 30 per cent because of their leadership of the cartel.
Taxation: Rules on Tax Deductibility of Gifts to Charitable Bodies
The tax legislation of many EU Member States provides for some type of tax deductibility for donations to charitable bodies. Often this deductibility is limited to a maximum amount and subject to strict procedures and formalities, yet must still respect free movement of capital or even the free movement of goods (in the case of donations in kind).
On 27 January 2009, the European Court of Justice (ECJ) ruled on whether these limitations and formalities are contrary to the free movement of capital (Persche v Finanzamt Lüdenscheid  C-318/07) and whether a Member State’s national requirements are sufficient to justify a difference in treatment between charitable bodies based on the national territory and others.
The ECJ decided that national legislators were indeed entitled to refuse the tax deductibility of gifts to charitable bodies established in other Member States if the former pursued objectives other than those advocated by the legislation of the Member State that would have to grant the deduction.
Furthermore, the ECJ did not see a threat to the effectiveness of a Member State’s fiscal supervision and enforcement, as long as sufficient proof of the donation is provided, as well as the conditions under it which was given.
This case shows that EU Member States cannot restrict the tax deductibility of gifts only to charitable bodies located in their national territories if the “foreign” organisation advocates goals for which it would have received charitable status under that Member State's national tax law and the reality of the donation can be proven.
Telecommunications – Competition: Commission Dawn Raids Slovak Telekom
The European Commission has conducted surprise investigations at the premises of Slovak Telekom, the leading telecommunications operator in Slovakia, in an investigation into alleged infringement of Article 82 EC which prohibits abuse of a dominant market position. The operator is suspected of refusing to supply rivals, margin squeezing and tying, possibly as part of an overall strategy to exclude competitors from the market. The raid is part of the Commission’s initial investigation. The Commission has no deadline for concluding the investigation; its duration depends on a number of factors including the complexity of the case and the exercise of rights of defence.
This investigation is taking place against an interesting background because in the early 2000s, the Slovak Competition Authority had already found that Slovak Telekom’s behaviour distorted competition in the market for electronic communication services. An initial fine was imposed in 2005 but was overturned by the Slovak courts. A second fine of EUR 29 million was imposed in 2008, which Slovak Telekom reportedly intends to appeal.
Energy: Commission Proposes EUR 5 Billion Investment in Strategic Infrastructure Projects
On 28 January 2009, the European Commission outlined a proposal to invest EUR 5 billion of unspent funds from the EU budget on key infrastructure projects. The proposal is in line with the EU recovery plan, which was endorsed by the European Council in December 2008.
EUR 3.5 billion of this investment will be allocated to the energy sector, with the remaining EUR 1.5 billion to be invested in Europe’s high-speed internet infrastructure and the Common Agricultural Policy. According to the proposal, the investment in the energy sector will be split between gas and electricity interconnection projects (EUR 1,750 million), carbon capture and storage programmes (EUR 1,250 million) and offshore wind projects (EUR 500 million). Each investment is designed to stimulate the European economy whilst reflecting the European Union’s strategic energy needs.
The proposal will now be submitted to Member States for approval. It is expected that the proposal will be discussed at the next General Affairs Council, due to take place on 23 and 24 February 2009.
NEXT WEEK’S EVENTS
Monday 2 February – Friday 6 February 2009
No Council meetings scheduled for next week.
COURT OF JUSTICE
Area of Freedom, Security and Justice
C-293/08 Commission v Finland
Environment and consumers
C-282/08 Commission v Luxembourg
C-478/07 Budejovicky Budvar
C-440/07 P Commission v Schneider Electric
C-498/07 P Aceites del Sur-Coosur v Koipe and Office for Harmonisation in the Internal Market
C-369/07 Commission v Greece
COURT OF FIRST INSTANCE
T-145/06 Omya v Commission