September 2015 – What’s app in Europe?

What’s going on in Brussels? This section aims to provide the reader with an overview of some of the most significant issues being addressed by the EU institutions and the main topics that have been discussed in the last month.

Public consultation on tax rules on beer, wine and other alcoholic beverages

On 28 August 2015 the Commission launched a public consultation to assess whether some of the rules on excise duty on beer, wine and other alcoholic beverages should be amended in order to fight tax fraud and reduce the sale of counterfeit alcohol. The Commission also wants to verify whether small and home producers of alcohol could benefit from simpler rules and lower excise duties.^[1]

This consultation is part of the Better Regulation agenda aiming to simplify EU laws to reduce regulatory costs and protect consumers. It ends on 27 November 2015.

Italian tax reductions for companies in areas affected by natural disasters also benefitted companies that suffered no damage incompatible with EU State aids rules

On 14 August 2015 the Commission found that certain Italian measures reducing company taxes and social security contributions in areas affected by six natural disasters between 1990 and 2009^[2] also benefitted companies that suffered no damage from natural disasters and overcompensated companies beyond the damage suffered.

In particular, the Commission found that the measures did not require companies to show that they had suffered any damage at all. As a result, a company located in an eligible area could benefit from the aid irrespectively of whether it actually suffered damage from a specific natural disaster. In addition, the measures did not require companies to establish how much damage they had suffered. The measures gave those companies an undue economic advantage over their competitors, who have to operate without such public financing, and amounts to incompatible state aid under EU rules.

As exception to EU state aids rules, for natural disasters that occurred more than ten years ago (namely, all the disasters excluding the 2009 earthquake in Abruzzo), the Commission has not required recovery from companies that had an economic activity in the disaster zone. This is because in Italy companies do not have an obligation to keep records for more than ten years, which makes it impossible to establish the amount of overcompensation a company with economic activity in the affected area would have received at the time. Therefore, Italian authorities will have to recover only the aids granted to  companies that could not have suffered any damage at all because they had no economic activity in the area.

€1.4 million from Globalisation Fund for former workers of Alitalia

On 7 August 2015 the Commission offered to give to Italy with €1.4 million from the European Globalisation Adjustment Fund (EGF) to help 184 former workers of Alitalia to find new jobs by providing them with skill assessment and active job-search support, training, reimbursement of mobility cost to attend training and hiring incentives. These job losses resulted from the decrease of EU market share in international passenger air transport that occurred between 2008 and 2014. The total estimated cost of the package is €2.3 million: the EGF would provide €1.4 million, while Italian sources will cover the remaining. The proposal will now need to be approved by the Council and the EU Parliament.

EU – Viet Nam FTA

On 4 August 2015, the EU and Viet Nam reached an agreement in principle for a free trade agreement (FTA), after two and a half years of negotiations. EU Trade Commissioner Cecilia Maelstrom and Vietnamese Minister of Industry and Trade Vu Huy Hoang agreed on the substance of the deal, reaching a mutually beneficial and balanced package. The FTA will remove almost all tariffs on goods traded between the two economies. On the basis of this principle agreement, the negotiators will now carry on the process, settle some remaining technical issues and finalise the legal text. The agreement will then need the approval of the Council and the EU Parliament.

Safety net measures extended for the EU dairy, fruit and vegetables sectors

On 30 July 2015 the Commission stated that safety net measures for the EU dairy, fruit and vegetables sectors will be extended into 2016. Aid for the dairy sector will be continued until 26 February 2016, while aid for the fruit and vegetables sector will be prolonged until 30 July 2016. The Commission is committed to give support EU farmers hit by Russia’s ban on imports of fruit, vegetables, meat poultry, fish, milk and dairy products.^[3]

Halloumi/Hellim: an (hopefully) historical step forward

On 28 July 2015 the Commission published the application to register the names ‘Χαλλουμι’ (Halloumi)/‘Hellim’, in Greek and Turkish, as PDO for a cheese produced in the whole island of Cyprus. The publication in the OJ is an important step in the process that would grant GI protection for these names in the EU.

The internationally accredited body Bureau Veritas would be appointed to carrying out the official controls under Regulation (EU) No 1151/2012.^[4] The Commission also adopted a Proposal to modify the Green Line Regulation.^[5] Both are the necessary measures to apply the common understanding on a temporary solution for Halloumi/Hellim, to be implemented pending the reunification of Cyprus, reached under the visit of President Juncker on 16 July 2015 in Nicosia.

EU Customs Procedures Modernisation

On 28 July 2015 the Commission adopted a delegated act aiming to introduce a simpler, more modern and integrated EU customs system to support cross-border trade and provide for more EU-wide cooperation in customs matters. The delegated act implements the new Union Customs Code adopted in 2013.

The delegated act include the following issues: i) simplifications of the customs procedure inward processing; ii) clearer rules to ensure equal treatment of operators in the EU; iii) wide-ranging provisions allowing customs decisions and authorisations to be valid across the EU; iv) establishing common data requirements as the basis for new IT systems linking Member States’ customs administrations; v) improvements in risk management to reinforce the fight against trade in illicit and prohibited goods, terrorism and other criminal activities.

The basic customs regulations were modified in 2013. Implementing acts must be adopted so that the new rules can be applied as of 1 May 2016.

EU Strategy for the Alpine Region

On 28 July 2015 the Commission launched the EU Strategy for the Alpine Region (EUSALP), the fourth EU macro-regional strategy. This strategy concerns Austria, France, Germany, Italy and Slovenia, Liechtenstein and Switzerland (these two not being EU Member States) overall involving 48 regions. The expected closer cooperation between these regions and countries should bring benefit in terms of research and innovation, SME support, mobility, tourism, environmental protection and energy resources management.

Merger in the small delivery sector under Commission’s scrutiny

On 31 July 2015 the Commission opened an in-depth investigation to assess whether the proposed acquisition of TNT Express by FedEx Corporation is in line with the EU Merger Regulation.^[6] These companies are major global players in the small package delivery sector. The Commission has concerns that the merged entity would face insufficient competitive constraints from the only two remaining players (UPS and DHL) on a number of EU markets for international express and regular small package deliveries. The in-depth investigation will last. In any event this opening does not prejudge the outcome of the investigation.

France referred to the Court of Justice for failure to recover incompatible aid from airlines…

On 27 July 2015 the Commission referred France to the Court of Justice for failing to recover incompatible aid received by Ryanair and its subsidiary Airport Marketing Services (AMS) for using Pau, Nimes and Angoulême airports, as well as Transavia for using Pau airport.

In July 2014, France was ordered to recover almost €10 million euro of incompatible state aid from Ryanair and Transavia. These airlines were found to pay less than the additional costs linked to their presence in the airport, and thereby to benefit from an undue economic advantage that may distort competition.

Although the French authorities sent out the recovery orders, they have not been able to execute them under national law because they are under appeal by the beneficiaries. Under French law, recovery orders are automatically suspended in case of appeal. However, this provision is not in compliance with EU case-law on the implementation of recovery decisions, which does not allow national courts from applying such provisions when deciding on appeals against recovery orders.

In order to ensure the full implementation of its state aid decisions, the Commission has therefore decided to bring France before the Court of Justice.

…and ordered to recover incompatible aids from EDF

On 22 July 2015 the Commission decided that Électricité de France (EDF), the main electricity provider in France, had been granted tax breaks incompatible with EU State aid rules. In 1997 France did not levy all the corporation tax payable by EDF when certain accounting provisions were reclassified as capital. That tax exemption conferred on EDF an undue economic advantage, and thereby distorted competition on the relevant market. EDF has now to repay that aid. The Commission reopened its investigation in 2013 following annulment of an earlier decision by the Court of Justice.

Energy Summer Package

As part of its European Energy Union Strategy announced last February, on 15 July 2015 the Commission presented a package of energy-related proposals. The Energy Summer Package include the following acts: i) Communication from the Commission on a New Electricity Market Design; ii) Communication from the Commission on Delivering a New Deal for Energy Consumers; iii) Commission legislative proposal to implement the structural reform of the EU Emissions Trading System (ETS); iv) Commission legislative proposal for the revision of the Energy Labelling Directive; and v) Commission Regulation on establishing a guideline on capacity allocation and congestion management. The Commission has also opened a public consultation on the new electricity market design and a proposed regulation on security of electricity supply.

The Summer Energy package is an important step towards the implementation of the Energy Union strategy with a forward looking climate change policy.

Statement of Objections to MasterCard on cross-border rules and inter-regional interchange fees

On 9 July 2015 the Commission sent a Statement of Objections to MasterCard. The Commission has taken the preliminary view that MasterCard’s rules prevent banks from offering lower interchange fees to retailers based in another Member States, where interchange fees may be higher. As a result, retailers cannot benefit from lower fees elsewhere and competition between banks cross-border may be restricted. The Statement of Objections also alleges that MasterCard’s interchange fees for transactions in the EU using MasterCard cards issued in other regions of the world breach EU antitrust rules insofar as they set an artificially high minimum price for processing these transactions. The sending of a Statement of Objections does not prejudge the outcome of the investigation.

General Court on access to documents relating to competition infringements

On 15 July 2015, the General Court (GC) delivered its judgments on the actions brought by Pilkington^[7] and AGC Glass,^[8] two undertakings found to participate in the car glass cartel. The GC rejected the actions against the 2010 Commission Decision to disclose a more detailed version of the Car Glass Cartel Decision one year after the publication of a provisional non-confidential version. The GC upheld that disclosure of more information of the decision would not infringe the principles of legitimate expectations and equal treatment. In addition, rights of the undertakings involved would not be undermined since the information disclosed was historical and already known by third parties. Finally, leniency rules do not prevent the Commission to disclose information concerning the description of the infringement once the investigation has been closed.

On 7 July 2015, the GC largely confirmed that the Commission could was entitled to deny Axa, a claimant in a follow-on action, access additional information in the Commission’s car glass file.^[9] The GC considered that the Commission was justified in denying Axa access to a large amount of documents, consisting of the full Commission file, on the basis of general presumptions of confidentiality. The GC nevertheless found that the Commission should have better justified its denial to disclose the index of the case file by balancing the specific interest of Axa and the need to guarantee its leniency policy.

These cases basically confirm the Commission’s approach to access to documents as laid down in its Guidance on the preparation of public versions of Commission Decisions adopted under Articles 7 to 10, 23 and 24 of Regulation 1/2003.^[10]

2016 EU budget

On 9 July 2015 the Permanent Representatives Committee of the Council agreed its position on the draft 2016 EU budget. The Council backed the funds proposed by the Commission for a number of priority areas. The priority areas include the European fund for strategic investments (EFSI) aimed at reinforce the economy, measures to manage migration flows, humanitarian aid and Erasmus. According to the Council, €153.27 billion in commitments and €142.12 billion in payments would allow the EU to reach its policy objectives in 2016. This is €563.6 million in commitments and €1.4 billion in payments less than what the Commission proposed.

The Council will formally adopt its position at the beginning of September. This position will serve as a mandate to the Luxembourg presidency to negotiate the 2016 EU budget with the EU Parliament.

[1] Excise duties are indirect taxes on the sale or use of specific products, such as alcohol. They are usually applied as an amount per quantity of the product and are collected by EU Member States. Existing EU rules on the harmonisation on excise duties on alcohol and alcoholic beverages are set out in Directive 92/83/EEC (‘Alcohol Excise Structures Directive’). This Directive – inter alia – specifies the method for calculating the duty on alcoholic products, and the criteria under which certain alcohol products may qualify for reduced rates or exemptions, such as for denatured alcohol which is not for human consumption but used to make products such as perfume, anti-freeze and bio-fuels.

[2] The six natural disasters are the following: 1990 earthquake in Sicily, 1994 floods in Northern Italy, 1997 earthquakes in Umbria and Marche, 2002 earthquakes in Molise and Puglia, and 2009 earthquake in Abruzzo, and 2002 volcanic eruption and earthquake in Sicily.

[3] Since August 2014 Russia has banned the import of certain foods and drinks originating from the EU as a response to Western sanctions over Ukraine’s crisis. As a reaction to the Russian food ban, the Commission started using agricultural funds to help EU producers hit by the trade restrictions. Russia is the second most important destination for EU agri-food exports after the United States, representing in total a value of about € 11.8 billion in 2013, or roughly 10% of all EU agri-food export.

[4] Regulation (EU) No 1151/2012 of 21 November 2012 on quality schemes for agricultural products and foodstuffs, OJ L 343, 14.12.2012, p,1.

[5] Council Regulation (EC) No 866/2004 of 29.4.2004 on a regime under Article 2 of Protocol No 10 of the Act of Accession as amended by Council Resolution (EC) No 293/2005 of 17 February 2005, and subsequent modifications.

[6] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ L 24, 29.1.2004, p.1.

[7] Case T-462/12, Pilkington Group Ltd v European Commission, judgment of 15 July 2015, not yet published.

[8] Case T-465/12, AGC Glass Europe SA and Others v European Commission, judgment of 15 July 2015, not yet published.

[9] Case T-677/13, Axa Versicherung AG v European Commission, judgment of 7 July 2015, not yet published.

[10] This document can be accessed at the following link: http://ec.europa.eu/competition/antitrust/guidance_on_preparation_of_public_versions_antitrust_04062015.pdf