Brussels Brief - July 17, 2009

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Key Developments

Competition / Cartels:  Archer Daniels Midland Wins Appeal Before European Court of Justice

Andrea Hamilton

The European Court of Justice (ECJ) has ordered that a fine imposed on Archer Daniels Midland (ADM) in connection with a 2001 European Commission decision be reduced by over EUR 10 million. 

In the 2001 decision, the Commission imposed fines on five firms, including ADM, for their participation in an alleged cartel on the citric acid market.  ADM appealed the Commission’s decision to the European Court of First Instance (CFI), seeking to annul the decision or reduce the fine imposed.  In 2006, the CFI rejected ADM’s appeal. 

ADM subsequently appealed to the ECJ and this time the Court agreed with ADM.  The ECJ annulled the CFI’s decision and also found that the Commission had erred.  In particular, the ECJ concluded that the Commission had unlawfully characterised ADM as a “leader” of the cartel, which would warrant a higher fine.  As such, the CFI erred as a matter of law in upholding the fine on ADM and its decision was set aside.  Rather than send the case back to the CFI, the ECJ rendered a final judgment reducing the fine on ADM from EUR 39.69 million to EUR 29.4 million.

 

State Aid / Transport:  Commission Opens In-Depth Investigation into La Poste After Court Annulment of Previous Approval

Lawrence Grabau

The European Commission has opened an in-depth investigation under the State aid rules into the Belgium postal operator, La Poste.  The investigation follows the annulment by the Court of First Instance (CFI) of the Commission’s decision in 2003 to approve State aid measures in favour of La Poste.

The investigation will verify whether the compensation for public service obligations paid to La Poste by the Belgian Government is in line with the EU framework for State aid in the form of public service compensation.  The Commission will also examine a series of other non-notified measures in favour of La Poste.  The Commission wishes to examine comprehensively whether all of the State aid measures granted in favour of La Poste since its incorporation can be considered to be compatible with the single market.

The investigation will give third parties the opportunity to comment on the measures under examination by the Commission.

 

Finance:  Proposal on Further Revision of Banking Regulation Targets Stricter Banking Rules

Jacques Pieters

The European Commission has launched a proposal for further revision and tightening of the rules on bank capital, position disclosure and remuneration policies.  The proposal aims to deal with these factors which, in the view of the Commission, lie at the root of the financial crisis.

The new proposal imposes higher capital requirements for banks in cases of re-securitisations.  This is intended to ensure that banks conduct a proper risk assessment when they invest in such products.  The higher capital requirements will limit the amounts they can spend on re-securitisations. 

New and stricter disclosure rules on trading book positions/risks and therefore the level of risk to which banks expose themselves, are aimed at increasing market confidence and inter-bank borrowing.

Finally, the new rules on remuneration policies and pay incentives should prevent excessive risk taking from being rewarded or encouraged.  Banking supervision authorities will have the power to sanction banks with non-compliant remuneration policies and/or practices.

 

Antitrust:  Court of First Instance Judgment Reduces Fine in Parallel Exports Case

Teresa Arnoni

The European Court of First Instance (CFI) has reduced a fine imposed in 2005 on Automobiles Peugeot SA and Peugeot Nederland N.V. by the European Commission  The Commission found in 2005 that the companies had implemented, between 1997 and 2003, a strategy designed to prevent exports by Dutch dealers, infringing Article 81 of the EC Treaty.     

The CFI confirmed that an agreement between a car manufacturer and its dealer, aimed at preventing sales of cars in other Member States, violates Article 81 of the EC Treaty even if the dealer does not comply with the agreement and tries to export vehicles. 

While confirming the violation, the Court decided to reduce the fine from EUR 49.5 million to EUR 44.55 million.  Automobiles Peugeot SA and Peugeot Nederland N.V. may now appeal the judgment before the European Court of Justice. 

 

Energy / Competition:  Commission Market Tests Impact of Commitments by GDF Suez on Gas Market

Contact Philip Bentley

The European Commission is inviting comments from interested parties on commitments offered by the French energy company, GDF Suez, on access to gas import infrastructure into France.  The commitments are being offered to remedy concerns raised by the Commission that GDF Suez was abusing a dominant market position by preventing competitors from obtaining access to gas import infrastructure (such as pipelines and terminals) in order to import gas into France.  Without access to such infrastructure, the Commission considered that competitors could not get access to customers, no matter how competitive they may be. 

GDF Suez has committed to releasing a large share of its long term reservations of gas import and then to continue to reduce its share of these reservations to below 50%.  The Commission considers that these commitments could have a significant impact upon competition in the market.

If the market testing concludes that the remedies being offered would provide a satisfactory solution, the Commission can adopt a "commitments decision" making the commitments legally binding upon GDF Suez.   Comments must be received by the Commission by 9 September 2009. 

 

NEXT WEEK’S EVENTS

Monday 20 July – Friday 24 July 2009

 

COUNCIL MEETINGS

No Council meetings scheduled for next week.

 

COURT OF JUSTICE

No judgments or opinions scheduled for next week.

 

COURT OF FIRST INSTANCE

No judgments scheduled for next week.