Brussels Brief - July 24, 2009

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Key Developments

Antitrust: Suppliers of calcium carbide and magnesium based reagents fined EUR 61 million for price fixing and market sharing

Mélanie Bruneau

The European Commission has fined several companies a total of EUR 61,120,000 for violating Article 81 EC. The companies concerned include Almamet, Donau Chemie, Ecka Granulate, Holding Slovenske elektrarne (for its former subsidiary TDR Metalurgija), Novácke chemické závody and its former parent 1.garantovaná, SKW Stahl-Metallurgie and its former parent companies Evonik Degussa and Arques industries.  Akzo Nobel also participated in the cartel but was not fined because it revealed the cartel’s existence to the Commission and applied for immunity. 

Between 2004 and 2007, the Commission found that the companies fixed prices, allocated customers and shared markets for calcium carbide powder, calcium carbide granulates and magnesium granulates in a substantial part of the European Economic Area. Calcium carbide powder and magnesium granulates are used in the steel industry for desulphurisation or deoxidation purposes, while calcium carbide granulates are used for the production of acetylene. 

 

State Aid/Energy: Commission Authorises EUR 170 million for Polish Energy Sector Projects

Lawrence Grabau

The European Commission has approved under Article 87(3)(c) of the EC Treaty two Polish aid schemes in the energy sector. On 3 February 2009 Poland notified the Commission of its plans to support two investment projects. The first project concerns the construction of electricity networks to enable several areas suitable for the production of renewable electricity to connect with existing distribution and transmission networks. The second project concerns the modernisation and replacement of electricity distribution networks with the aim of reducing energy losses. 

The proposed state aid consists of direct grants to operators of electricity networks of up to EUR 170 million. The Commission’s investigations concluded that the aid was compatible with Article 87(3)(c) of the EC Treaty because it targets the reduction of energy consumption and is intended to deliver this objective of common European Union interest.

 

Competition/Automobiles: Commission Proposes New Competition Rules for the European Car Industry

Philip Torbøl

The European Commission has published its competition policy suggestions regarding the future of the motor vehicle sector.  The European car sector has traditionally been partially exempt from general competition rules in the form of a Block Exemption Regulation, i.e. a set of competition rules specific to the sector.

The Commission proposes to align this Block Exemption Regulation to general EU competition rules on vertical agreements. It is, however, considering introducing guidelines against any possible foreclosure of new entrants, price discipline imposed by manufacturers and any market segmentation. In relation to aftermarkets (after-sales service and repairs), the Commission finds that competition is less intense and intends to apply general EU competition rules in conjunction with sector specific guidelines and/or an additional, more focused sectoral Block Exemption Regulation.

Interested parties can submit observations on the proposed policy options by 25 September 2009.

 

Mergers: European Court of Justice partially overrules damages arising from incorrect merger review

Contact Philip Bentley

The European Court of Justice has set aside a judgment of the European Court of First Instance granting damages for the loss incurred by a company arising from the Commission’s breach of the merger review procedure. 

In 2001, the European Commission blocked the merger between Schneider and Legrand because it would significantly impede competition in France.  The Commission also ordered Schneider to divest its existing interest in Legrand.  These decisions were annulled by the CFI, however, on the grounds that the Commission infringed the rights of defence. On reconsidering, the Commission again blocked the transaction and ordered Schneider to divest its interest in Legrand. Schneider subsequently sold its interest in Legrand.

In 2003, Schneider brought an action for damages of approximately EUR 1.7 billion against the Commission for the loss it claimed it had sustained because of the illegality of the original Commission decision.  The CFI found that there was cause for damages,  in particular for the costs incurred for the resumed merger procedure and for part of the reduction in the sale price that Schneider had to concede to the potential buyer to postpone the sale.

The ECJ, however, partially overruled this finding. As regards the loss of value of Schneider’s interest in Legrand, the ECJ found that no causal link existed between the claimed damages and the Commission’s decision. The timing of the sale was Schneider’s decision alone, and it was not relevant that the sale was subject to a private penalty agreement with the buyer if the sale did not proceed by a certain date.  The ECJ did, however, uphold the damages claim for the costs incurred in the renewed merger procedure such as legal costs. 

The judgment of the ECJ provides the Commission with legal protection to take merger decisions without facing potentially huge claims for damages in the event that those decisions are subsequently annulled.    

 

NEXT WEEK’S EVENTS

Monday 27 July – Friday 31 July 2009

 

COUNCIL MEETINGS

General Affairs and External Relations Council  (Monday 27 July 2009)

General Affairs and External Relations Council (Tuesday 28 July 2009)

 

COURT OF JUSTICE

No judgments or opinions scheduled for next week.

 

COURT OF FIRST INSTANCE

No judgments scheduled for next week.