Salomons

In last month’s Akzo Nobel v. Competition Commission, the Competition Appeal Tribunal treaded a number of fine lines to end up with what would have seemed at first glance to be a no-brainer of a result. Yes, the Competition Commission (“the CC”) has jurisdiction to forbid Akzo Nobel from acquiring a company called Metlac, given its finding that the merger would result in a substantial lessening of competition in the UK.

Judging from the language of the judgment, the difficulty of this question seems to have surprised everyone involved. The legal trickery involved is as follows: While the familiar question is whether the competition authorities have the right to look at a merger in the first place, here the question is only whether the CC has the right to impose this particular remedy. After all, parties did not dispute that the proposed merger might affect market conditions in the UK (par. 21), and that the relevant turnover exceeded the £ 70 million threshold of section 23 of the Enterprise Act 2002 (“the Act”). No-brainer.

Things went horribly awry, however, when the CC decided to forbid the merger, relying on section 41 and section 84 of the Act. Forbidding, per se, was not the problem. Forbidding an anticompetitive merger is the most obvious remedy imaginable, which is why it is listed first in Schedule 8 of the Act. No, the problem was whether the CC had the power to forbid Akzo Nobel from performing an agreement, given that arguably neither that company nor the agreement was located in the UK. The key language is in section 86 of the Act:

86 Enforcement orders: general provisions

(1) An enforcement order may extend to a person’s conduct outside the United Kingdom if (and only if) he is—

(a) a United Kingdom national;

(b) a body incorporated under the law of the United Kingdom or of any part of the United Kingdom; or

(c) a person carrying on business in the United Kingdom.

(…)

(3) An enforcement order may prohibit the performance of an agreement already in existence when the order is made.

(4) Schedule 8 (which provides for the contents of certain enforcement orders) shall have effect.

Given that the parent company Akzo Nobel Holding, the legal entity that would perform the offending agreement, is incorporated in the Netherlands and has its headquarters there, the only possible way for the CC to get at it is to show that Akzo Nobel Holding is carrying on business in the United Kingdom, something it didn’t have to show in order to get jurisdiction over the merger as such, and something it wouldn’t have to show if its remedy had instead focused only on Akzo Nobel’s conduct within the UK. (In other words, if they’d chosen a behavioural remedy instead of a structural one.) And that is a problem, because – as one would expect given the name – Akzo Nobel Holding NV doesn’t really carry on any real business whatsoever. (Although given the definition of section 129 of the Act, it carries on business in the Netherlands. Cf. par. 111.) The holding company just owns shares, directly or indirectly, in about 450 subsidiaries, several of which do carry on business in the UK.

Which brings us, much to everyone’s great surprise, to Salomon v. Salomon, an 1897 case so fundamental that every British and Irish law student – and probably many more in the rest of the world – has to study it on the first day of Introduction to Company Law. In that case, the House of Lords was asked to say that Salomon the majority shareholder was liable for the debts of Salomon Ltd, given that the company in question was nothing more than a sole proprietor shoe maker doing business as a company with the six other shareholders being nothing more than placeholders. (Under the Companies Act 1862 a company had to have at least seven shareholders.) The Lords, however, declined to “pierce the corporate veil” and held that plaintiff person and the defendant (bankrupt) company were distinct entities, meaning that the liquidator of the company could not recover the company’s debts from Mr. Salomon.

And now, 116 years later, the CC needed some way around that doctrine in order to be able to say that Akzo Nobel Holding NV – as opposed to its subsidiaries – was carrying on business in the UK. The solution was to take refuge in an idea that suggests that no piercing of veils is in fact happening, the idea of the “Single Economic Unit”. Like so many bits of creativity in English law, this one comes to us ultimately courtesy of Lord Denning, although the CAT does not cite him. The CC itself seems to have been reluctant to go there explicitly (cf. par. 99), but the CAT seizes on it with abandon. It lists several pages of authorities to the effect that the rule that a Single Economic Unit can be treated at law as such does not exist because the whole story amounts to nothing more than piercing the corporate veil in a way that is forbidden by Salomon (par. 100-107) before concluding that, in this case, none of those concerns matter. 

It must be said that if ever there was a case where the Single Economic Unit argument fit like a glove, it was this one. Akzo’s de facto organisational structure involved an Executive Committee and a slew of Business Areas, Business Units and Sub-Business Units, none of which corresponded even remotely to the legal structure of the group (par. 49-50). Individual corporations tended not to have individual strategies, or even natural persons as directors or secretaries. But then again, much the same could be said for A. Salomon & Sons Ltd; while it at least had human beings for shareholders, its corporate strategy was determined entirely by its majority shareholder. By checking against the Salomon case, it becomes clear that the CAT comes dangerously close to distinguishing the Salomon precedent – and the many other precedents that build on it – on no firmer basis than that the Akzo case involves shareholders who are themselves corporations. And even though from an economics point of view, that might be sensible, legally it is extremely dicey. As the CAT itself said:

82. In our judgment, the appeal to the economic purposes of the Act and the apparent irony in that context of allowing technical legal concepts to limit the achievement of those purposes is, in the present context, misconceived. It is, of course, true that the subject-matter of the Act comprises the assessment and regulation of economic issues but that subject-matter is realised through a legally constituted framework of procedure and enforcement. (…) There can be no special dispensation from those general principles, in the absence of any statutory provision to the contrary, simply because the substance of the issues under consideration is economic.

There is another reason why the CAT’s reasoning might be considered weak. The quoted language comes from a discussion of why the jurisdictional basis for considering a merger in the first place should be different from the jurisdiction to forbid it. Essentially the Tribunal’s reply is that the different language used in the two provisions is quite deliberate, that Parliament had clearly made the distinction on purpose, and that therefore Parliament’s will should be respected: Not all mergers that are within the jurisdiction of the CC can be forbidden by the CC.

And yet, looking at this Single Economic Unit approach, it is not obvious that there are in fact many cases left that fit that description. As the CC itself concluded, Akzo’s governance structure is typical for large multinationals (cf. par. 66). And small multinationals that operate in a UK market will normally have a more direct presence there. So, realistically, does the CAT’s interpretation of section 86(1)(c) really preserve the difference with section 23? A disinterested reader may well conclude that the CAT in fact did the opposite of what it said it would do in par. 82: it put the economic logic of the case, and of merger review in general, before the law.

For this reason, if I were advising Akzo Nobel, I would suggest taking this case to the Court of Appeals. Given that this case touches on important issues of jurisdiction over mergers and company law, with the former being tackled in this case for the first time (par. 74), there is no reason why the CAT or the Court of Appeals should not give leave to appeal.

This Week and Last Week in Luxembourg

The Grand Chamber (Judge Juhász) reaffirmed that in competition law the actual facts on the ground are all that matter, regardless of anyone’s intentions. In this case, both the lawyers and the Austrian Kartellgericht said that the cartel in question was permitted, but that does not prevent the Austrian authorities from fining them anyway 15 years later. Bundeswettbewerbsbehörde and Bundeskartellanwalt v. Schenker et al. Cf. European Law Blog

The Grand Chamber (Judge Ó Caoimh) also gave the Czech Republic a € 250.000 lump sum fine for failure to comply with an – otherwise boring – infringement judgment. Commission v. Czech Republic

Guillermo Cañas’s attempt to marshal the forces of EU competition law against the world anti-doping agency WADA and against the ATP failed before the Court of Justice (Judge Bay Larsen) as it had before the Commission and the General Court. The problem continues to be that the applicant, having retired, no longer has an interest in fact in the dispute. Cañas v. Commission (FR)

In Impacto Azul Lda v. BPSA 9 et al., the Court (Judge Lõhmus) held that art. 49 TFEU allows national legislation that “excludes the application of the principle of the joint and several liability of parent companies vis-à-vis the creditors of their subsidiaries to parent companies having their seat in the territory of another Member State”, because the parent can easily contract around this.

The Court (Judge Rosas) agreed with AG Mengozzi that Luxembourg had discriminated impermissibly against foreign students in its system for financial aid. However, the way it got there was quite different. Giersch et al. v. Luxembourg Cf. Eutopia Law blog

Now that all the easy cases on mutual recognition of professional qualifications are dealt with, it’s time to move on to more difficult situations. In Nasiopoulos v. Ipourgos Igias kai Pronoias we have a German-trained Greek medical masseur-hydrotherapist (‘Masseur und medizinischer Bademeister’) who wants to work as a physiotherapist in Greece. While the Court (Judge Levits) agrees that that is a bit of a stretch, it thinks he should at least be allowed to practice that part of the profession that he is actually qualified for.

In the joined cases VG Wort v. Kyocera et al. and Fujitsu and HP v. VG Wort, the Court (Judge Malenovský) gave some guidance on art. 5(2)(b) and 6 of Directive 2001/29, the copyrights directive. As it turns out, printer manufacturers can be sued for some of the total “fair compensation” owed for all those naughty internet users printing off books in their attics, but not all of it.

The Court (Judge Jarašiūnas) signed off on a Maltese excise duty on mobile telephone use, concluding that neither art. 12 nor art. 13 of the Authorisation Directive applied to such a “consumption tax”. Vodafone Malta et al. v. Avukat Ġenerali et al.

AG Jääskinen, quoting pre-Supreme Court Louis Brandeis, argued that there is no general “right to be forgotten” under existing EU data protection law. The defendants wanted an allegedly incorrect search result deleted from Google. Google v. Agencia Española de Protección de Datos (AEPD) and Mario Costeja González Cf. UK Human Rights Blog and European Law Blog

AG Mengozzi has a state aid case in national court, where Deutsche Lufthansa complained about alleged state aid from Frankfurt-Hahn airport to Ryanair. As a result of this litigation, the Commission decided to get interested, with the result that the standstill clause of art. 108(3) TFEU came into effect. Given that the German court doesn’t necessarily agree that there is unlawful state aid here – the case was initially rejected by the Landgericht – the question is what the distribution of responsibilities and obligations is between the Commission, the national court and, potentially, the ECJ. Deutsche Lufthansa v. Flughafen Frankfurt-Hahn (NL, DE, FR)

For whatever reason, they let AG Kokott near one of those classic legal basis & common commercial policy cases. (Cf. my LL.M. thesis, long ago, here.) The case is about this Council of Europe convention. The Commission wants the EU to ratify it based on the normal rules of the common commercial policy under art. 207 TFEU, while the Council prefers a mixed agreement based on art. 114 TFEU. Curiously, the AG argues – correctly – that art. 3(2) TFEU codifies the ERTA doctrine, but then uses that to conclude that the EU’s competence in this area is not only exclusive, but also based on art. 207 TFEU. Commission v. Council

The General Court rejected two action for annulment in the Aluminium Fluoride cartel case. Most creatively, one of the applicants – ICF from Tunisia – tried to plead art. 36 of the Euro-Mediterranean agreement between the EU and Tunisia from 1998 as a grounds of invalidity. Unsurprisingly, the Court did not go for that one. ICF v. Commission (FR) and Fluorsid SpA and Minmet Financing v. Commission

This Week and Last Week in Luxembourg

The British system of special advocates for national security immigration cases survived a challenge under the free movement directive this week. While the Grand Chamber (Judge Von Danwitz) set some limits, those are the same as the limits already set by the ECtHR and the UK Supreme Court: Only when it is strictly necessary, and in any event the “essence” of the case must be disclosed. ZZ v. Secretary of State for the Home Department Cf. UK Human Rights Blog and Eutopia Law Blog

The big competition case last week was Bundeswettbewerbsbehörde v. Donau Chemie et al., where the Court (Judge Tizzano) held that access to a competition case file cannot be made subject to a right of veto of the parties. Even in cases of leniency submissions, the national court has to assess the balance of interests. Note that the new Commission proposal for a Directive on private damages suits in competition law forbids access to statements made in leniency submissions and settlement negotiations categorically. COM(2013) 404 Cf. Kartellblog and, on the Proposal, Recent Developments in European Consumer Law Blog

In January 2012, the General Court (Judge Forwood, of course) held that there was no longer any need to adjudicate the asset freeze case of Ayadi v. Commission, because Mr. Ayadi had since been removed from the asset freeze list. The Court (Judge Rosas) affirmed last month’s Grand Chamber judgement in Abdulbasit Abdulrahim v. Council (also by Judge Rosas) to hold that that was wrong. Ayadi v. Commission

In the Sardinian Hotel Aid case of HGA et al. v. Commission, the Court (Judge Arabadijev) signed off on the use by the Commission of a “corrective decision” in order to update a state aid procedure in mid-stream in light of new information provided by the Italian authorities (don’t ask). In so doing, the Court upheld the General Court’s decision in Regione autonoma della Sardegna et al. v. Commission (NL, DE, FR).

If one public authority hires another to clean its offices without any kind of (traditional) collaboration being established between them, that constitutes a public service contract under Directive 2004/18, meaning that it should have been tendered. Piepenbrock Dienstleistungen GmbH & Co. KG v. Kreis Düren

Ryanair lost its appeal in the Alitalia state aid case. The Commission’s decision finding that the loan provided by the state constituted unlawful state aid while the state’s other measures did not now stands. Ryanair v. Commission

As it turns out, just because you didn’t mention jurisdiction when opposing a the European order for payment, doesn’t mean you’ve forfeited the right to do so in the regular procedure under Regulation 44/2001. Goldbet Sportwetten v. Sperindeo

AG Mengozzi is proposing that, for a change, the Swiss should not end up holding the short end of the stick in a dispute about the tax-free amount for German inheritance tax. Welte v. Finanzamt Velbert

AG Kokott delivered an opinion on the rights of the citizen taxpayer when a Member State asks another Member State for information. She concluded that, as far as EU law is concerned, the citizen has no rights in this context. Jiří Sabou v. Finanční ředitelství pro hlavní město Prahu (NL, DE, FR)

The facts in the unfair commercial practices case of CHS Tour Services v. Team4 Travel make for a pretty interesting case, but tragically the ECJ’s portion of it is pretty straightforward. Defendant describes its arrangement as “exclusive” based on its contract with the hotel in question, plaintiff manages to book there anyway, and therefore challenges the use of “exclusive”. Result, according to AG Wahl: “Where a commercial practice falls within the scope of art. 5(4) of Directive 2005/29, it is of no relevance whether the criteria under art. 5(2)(a) and/or art. 5(2)(b) are also fulfilled.” So the plaintiff wins. Cf. Recent Developments in European Consumer Law Blog

According to AG Mengozzi, the requirement that you have to provide your fingerprints for your passport does not violate art. 8 Charter. Schwarz v. Stadt Bochum (DE, FR)

AG Jääskinen made some pointed remarks about the brevity with which the French Cour de Cassation formulated its prejudicial question (par 19), before concluding that the questions posed are irrelevant for the dispute at bar and therefore inadmissible. The case concerns the locus delicti of a case of alleged music piracy under Regulation 44/2001. Pinckney v. KDG Mediatech AG (NL, DE, FR)

The General Court (Judge Martins Ribeiro) handed down an interesting access to documents judgment last week. In Stichting Corporate Europe Observatory v. Commission, it held that the fact that certain documents about the EU-India free trade negotiations had been provided to trade associations – i.e. potentially to large numbers of people – did not mean that the Commission had essentially already made those documents public.

Fyra

In his weekly column, which is usually unique among opinion pieces in being both carefully reasoned and highly insightful, Bas Heijne tore into a slew of targets yesterday. The reason why he lost his calm like that? Fyra.

Fyra is - or rather: was - the high-speed train between Amsterdam and Brussels. There is also a high-speed from Amsterdam to Brussels and then on to Paris, the Thalys, but that train works just fine and is not the topic of this story. Fyra, on the other hand, is an unmitigated disaster. It was launched on December 9, last year, and by the time I took the highspeed (Thalys) to Brussels in early January, it already had a reputation for offering at best an even chance of reaching its destination. Later that month, it was taken out of service, as reported by the BBC here. On May 31, the Belgian railways announced they were cancelling the Fyra service permanently, and a few days later the Dutch followed suit.

So who's to blame? Bas Heijne mentions a few people, but he seems mostly interested in talking about Parliament. However, let's start at the beginning:

• The supplier of the train, the Italian company AnsaldoBreda, seems to have supplied a train that was not fit for purpose.
• NS and NMBS took delivery of a train that was not fit for purpose.
• NS and NMBS contracted with AnsaldoBreda in the first place.
• The Dutch and Belgian governments are the only shareholders of NS and NMBS respectively, so clearly they dropped the ball.
• Likewise, there are some things wrong with the regulatory system. More on that below, but again it is the governments of the two countries that are responsible for that one.
• And finally, Mr. Heijne notes how Parliament (the Dutch one) seems to spend all of its time either screaming at the government about something that was on the front pages of the newspapers the day before, or screaming at the government because of some mess that resulted from the government giving it what it asked for. While that is quite correct, I'm not sure if it is such a relevant consideration in this particular instance. I don't recall any screams from Parliament about how we urgently needed a highspeed connection with Belgium. The government seems to have originated that idea all on its own.

So who's really to blame? Well, it may be my professional background, but I think the issue is one of regulation, not politics. Remember the issue of NS: Like Schrödinger's cat, it is two things at once. It is a state-owned for-profit company that contracts with another state-owned for-profit company for access to the network, which it is entitled to because of a concession it was granted by its owner, the state. All the money it makes running trains and avoiding taxes it pays out to the state in dividends.

In the 1990s, this schizophrenia infected even the state. The Treasury department viewed NS as a for-profit subsidiary and advocated treating it as such until its privatisation, which was to happen sooner rather than later. The Transport department, on the other hand, viewed it as a state-owned enterprise that should be encouraged to run the trains as wisely as possible based on the government's instructions without being burdened with such nuisances as competition or privatisation. The former was run almost exclusively by the liberal VVD party between 1994 and 2007, mostly through the highly influential Deputy-Prime Minister and occasional party leader Gerrit Zalm, while the latter ministry was traditionally a bastion of Christian-Democrats and Socialists. And so, with the ebbs and flows of power between parties and between ministries, the government's policy goals with regard to the railway sector changed as well. That is how the country ended up with a fully unbundled railway sector with competitive tenders in large parts of the system, but also with a state-owned incumbent who is given the most important concession outright every few years. (The last time until 2025.)

Highspeed South, which includes both Fyra and Thalys, is a wonderful example of this schizophrenia at work. When the Treasury was powerful, it pushed through a competitive tender for this concession. NS was so paranoid about letting any foreign company onto the Dutch market that they went crazy and overbid massively. As Mr. Heijne's own newspaper, the NRC, discovered in 2011, the company's internal bid team thought that €120 - 130 million per year would be the maximum realistic bid. The board, however, added to that in a series of meetings until they ended up with € 148 million, a sum € 18 million higher than the € 130 million that the Transport Ministry had estimated as the maximum. The bid was so high that the government went back and encouraged them to re-evaluate, but in the end the bid was accepted. (No other company even came close to bidding € 100 million, much less € 148 million, so NS's concern was entirely unwarranted.)

When High-Speed Alliance, the NS-KLM joint venture tasked with running the trains, went bankrupt in 2011, the Treasury had long since lost its influence. So the liberal approach to railway regulation was unceremoniously replaced by a conservative approach: The Dutch company gets to keep its concession. Instead of re-tendering, the highspeed service was added to NS's regular concession and granted outright, at a reduced price of € 108 million per year. (Ironically, since 2010 the Transport Minister was a liberal.) Nationalism and bureaucracy instead of competition.

In my view, that is how we ended up with this Fyra debacle. As NRC wrote in January, the reason why in 2004 NS and NMBS bought the AnsaldoBreda trains instead of rolling stock from another manufacturer was purely a matter of price. They compromised on speed (which you wouldn't need anyway given how close together the stops are) and quality in order to get the cheapest possible train. That decision made sense from the point of view of a company that was in over its head, having bid way too much in a competitive tendering process. The trouble only arrived now, long after all the responsible railway executives and government ministers have retired.

To review:

• 2001: The government screws up the tender by accepting a bid that was unrealistically high. (Tenders are hard.)
• 2004: NS and NMBS buy the cheapest trains they can get their hands on.
• 2011: HSA collapses and is rescued by the Dutch state.
• 2013: The trains start running and then break down. 

This is not a problem that started in Parliament. They wrote a law that is fundamentally sound. It just leaves a little too much room for shenanigans, so shenanigans is what we got. The solution seems to be that NS should be privatised post haste. A company that makes € 300 million profit per year should fetch a handy sum, which should please the orthodoxy, and theoretically privatisation should remove any further temptation for the Transport Ministry to do anything stupid. Let a private NS run the trains it has contracted to run, and let the Transport Ministry and the Regulator ACM fine them up the wahzoo if they screw it up.

Lone Voice of Sanity Successfully Silenced

Ever since the beginning of the current economic crisis, the government's orthodoxy that cutting expenditure to match tax receipts is the only option has been echoed by all official voices - the Treasury, the National Bank - except one. The CPB, the state agency responsible for analysing the economic impacts of government policy through advanced economic modelling, consistently insisted on pointing out that reducing expenditure doesn't do anyone any good if that reduces GDP more than debt. If contractionary austerity is, well, contractionary - and the CPB's models show it is -  maybe it should be left for better economic times.

Insiders knew, however, that the secret of the CPB's sucess was fickle. After all, like every government agency there is a limit to its independence, and that limit is the term of appointment of its chief. Coen Teulings, the man who was director of the CPB from 2006 until last April, took responsibility for the unpopular findings of his staff, resisting pressure from the government to downplay the results of the agency's modelling. Now that is term is over, however, he has been replaced by Laura van Geest, someone who comes straight from the heart of orthodoxy: the Treasury Ministry. Following the appointment of former top-Treasury civil servant Klaas Knot to the Presidency of the National Bank last year, this is the second time that an independent agency's conformity to orthodoxy is safeguarded by putting a Treasury staffer in charge.

The most surprising thing is how little time it took for this decision to matter. Teulings left on May 1, but Van Geest's appointment doesn't start until August 1. In the interim, however, the mood has already changed. This week, the CPB released a Policy Brief called "Prudent debt level: a tentative calculation", which magically finds that the prudent (maximum) level of debt is in the 61%-86% range. Above that, the authors claim, "the gains of holding a larger buffer to ward off negative shocks [exceed] the cost of transitioning to a lower debt level", the cost of transitioning being evaluated at a 8-year time horizon.

While this has the merit of not being prima facie stupid (it doesn't have a Reinhart-Rogoff-style threshold level of debt above which bad things start to happen immediately), it misses one thing: it uses an average/ordinary 8-year time horizon, based on the way the economy has historically worked, which is very much not the same as the current 2013-2021 time horizon. The next 8 years are likely to be decidedly not average, just like the last 6 years weren't. The authors recognise this, to some exent. That is why they make caveats such as this one:

In the press release:

Caution is advised in using these debt levels as anchors for policy, as the costs of deviating from these numbers are small in this range while the benefits may be significant.

And in the brief itself:

Caution is advised in using these prudent debt levels to anchor policy. Note for example that, by Table 1, an increase in debt of a 10% from such a prudent level reduces lifetime earnings by just a few percentage points. This is relatively small if the debt increase averts a financial crisis. Also, adverse economic circumstances may lead to temporarily higher debt levels, which can be prudent.

[Footnote:]  This can be understood by seeing that the cost of debt reduction increase in a recession. Then, the prudent debt level, that at which the gains of debt reduction equal the costs, rises as well.

Result: We end up with a study that is not so much stupid as it is misguided, but that conveniently ends up supporting the orthodox line that the Netherlands should get to work cutting its expenditures in order to reduce its debt down to the 60% of the Stability and Growth Pact. So yes, we're still all doomed.

This Week and Two Weeks Ago in Luxembourg

The Grand Chamber (Judge Rosas) this week again concerned itself with the issue of asset freezes. In this case, it held that the General Court had erred by holding that Abdulbasit Abdulrahim no longer had standing to sue to have his name removed from the sanctions list because, since he commenced proceedings, his name had already been removed from the sanctions list. The Grand Chamber argued that the applicant had a separate interest in the retroactive effect that a victory in court would produce, as well as in the support such a judgment would offer for any damages suit. Abdulbasit Abdulrahim v. Council

The Court (Judge Šváby) upheld a General Court finding that the Commission failed to act in a state aid case brought by Ryanair against Italy. I must say that the two years between the initial complaint and the action before the General Court seems short to me, given how long the Commission usually takes to handle competition cases. Commission v. Ryanair

In its 1^st Railway Package cases, the Commission achieved another (partial) win, this time against Poland. The Court (Judge Borg Barthet) agreed that the Polish system for access pricing left somewhat to be desired. Commission v. Poland

In one of the more optimistic trademark actions I’ve ever seen, You-Q BV litigated all the way up to the Court of Justice in order to win the right to use Beatle as a trademark. Just like OHIM and the General Court, the Court found for Apple (the record company, that’s irony right there). In fact, the case was summarily dismissed as in part manifestly inadmissible and in part manifestly unfounded. You-Q v. OHIM

The Italian public procurement case of Consulta Regionale Ordine Ingegneri della Lombardia e.a. v. Comune di Pavia (FR), where the city of Pavia gave a contract for the provision of services to the local university without a public tender, does not seem so obvious to me that it could be handled in an order, but the court disagreed. The City (probably) loses.

For people who are amused by the mess that can occur when different Member States have different rules for deciding where an alleged tort was committed there is this month’s Melzer v. MF Global (Judge Safjan), which is handled by a court in Berlin even though the most straightforward locus delicti is London. The Court held that the case should be moved to the UK. Cf. Regulation 44/2001.

“A decision by which a national authority extends to all traders in an agricultural industry an agreement which, (…) introduces the levying of a contribution in an inter-trade organisation recognised by that national authority, thus rendering that contribution compulsory, in order to make it possible to implement publicity activities, promotional activities, external relations activities, quality assurance activities, research activities and activities in defence of the sector’s interests, does not constitute State aid.” (Judge Juhász) Doux Élevage SNC and Coopérative agricole UKL-ARREE v. Ministère de l’Agriculture and Comité interprofessionnel de la dinde française (CIDEF)

The Court (Judge Lõhmus) spent some time on the obligation to assess the suitability or appropriateness of the service to be provided under art. 19(9) of the financial instruments directive 2004/39. Genil 48 et al. v. Bankinter et al.

The Court (Judge Ilešič) also considered the issue of detention for illegal aliens pending their return to their home country. It held the illegal immigrants Directive 2005/85 does not apply to an alien who has asked for asylum, meaning that detention is precluded under Directive 2003/9 unless abuse of right can be shown. Arslan v. Policie ČR, Krajské ředitelství policie Ústeckého kraje, odbor cizinecké policie

In more asylum law, the Court (Judge Bay Larsen) held that nothing in Regulation 343/2003 (Dublin II) forbids a Member State from considering a given application for asylum. It is not required, however, to ask for the opinion of the Office of the United Nations High Commissioner for Refugees about the decision whether or not to consider the application, or whether to send the asylum seeker back to Greece. Halaf v. Darzhavna agentsia za bezhantsite pri Ministerskia savet

The Court (Judge Berger) applied the unfair consumer contract terms directive 93/13 to a tenancy agreement. It ended up aligning the procedural implications of that directive with national rules regarding the public policy exception in contract law. However, when it comes to remedies it rejected the Dutch court’s approach of reducing the contractual damages owed, requiring instead that no damages award be imposed at all. Asbeek Brusse and De Man Garabito v. Jahani BV Same directive, same judge: Jőrös v. Aegon Magyarország Cf. Recent developments in Eurpean Consumer Law Blog

The Court (Judge Lõhmus) imposed a € 3 million penalty on Sweden for non-compliance with a previous judgement. The original case was about Directive 2006/24. Commission v. Sweden Cf. Verfassungsblog and the e-comm blog

In Jeremy F. v. Premier Ministre (FR), the Court (Judge Silva de Lapuerta) did a nice nuts & bolts EAW judgment. Cf. this article and Courthouse news. 

AG Bot proposed holding for the Parliament in its dispute with the Council over the way budgets should be decided. The problem is that the preamble and section 9 of art. 314 TFEU appear to envisage different ways in which the procedure is to be concluded. On balance, the AG placed more weight on section 9 and argued that no single legislative act, signed by the presidents of both institutions, was necessary. Council v. Parliament (NL, DE, FR)

Commission v. Portugal (NL, DE, FR) is the first ever case about the implementation of a penalty payment imposed under art. 260 TFEU. The Commission decided that Portugal should pay 142 days x € 19.392 = € 2.753.664, but this decision was annulled by the General Court. AG Jääskinen agreed, both with the General Court’s interpretation of its authority under art. 260 TFEU and with its interpretation of the original judgment.

Discussing the right of the Council to refuse access to certain legislative documents (things that show which delegations submitted which amendments, as always), AG Cruz Villalón spent most of his time on the General Court’s balancing of interests. In the end, he concluded that the General Court had been right to find for the plaintiff. Council v. Access Info Europe

That AG also gave an opinion on some issues to do with the liquidation of Landsbanki. Société Landsbanki Islands HF v. Kepler Capital Markets SA and Frédéric Giraux

AG Wahl took the concept of a Regulation 44/2001 mess to a whole new level in a case where the German courts are trying to decide which of two conflicting Romanian decisions to enforce. Theoretically, art. 34(4) of the Regulation offers a solution to this kind of situation, but the AG argues – not implausibly – that this article does not apply to a situation where the two conflicting judgements are from the same Member State. Salzgitter Mannesmann Handel GmbH v. SC Laminorul SA

AG Wahl also gave his opinion in a case that might strike the reader as a bit unfair: Peter Brey sues the Austrian Pensionsversicherungsanstalt because they refuse to given him – a German citizen – the compensatory supplement to his pension that Austrians would receive, and the Pensionsversicherungsanstalt turns around and argues that, as someone claiming social assistance, Mr. Brey has no right to live in Austria in the first place. AG Wahl started by citing AG Jacobs in Konstantinidis but ended up concluding that the Pensionsversicherungsanstalt was right to call the supplement “social assistance”. Fortunately, he also concluded that that doesn’t matter until Austria actually throws Mr. Brey out. Brey v. Pensionsversicherungsanstalt Cf. (the end of) this Open Europe Blog post

In litigation about the German Volkswagen Law, AG Wahl is sufficiently uncertain about his conclusion that Germany complied with the Court’s judgment in Case C-112/05 that he discusses financial penalties as well. That is actually the most interesting part, because he discusses how the fact that the original judgment is potentially unclear and the fact that the Commission took its sweet time brining this action should be taken into account. (Par. 63-88) Commission v. Germany

Italy, because it’s Italy, has a stricter limit for the amount of advertising allowed to pay-tv than for free-to-air. AG Kokott concluded that that is (probably) in violation of art. 4(1) of Directive 2010/13, but not a violation of free market law in general. Sky Italia

AG Mengozzi concluded that the Swedish rule for punishing people who are tardy surrendering their ETS credits is overly harsh. Billerud v. Naturvårdsverket (NL, DE, FR)

In a stack of litigation involving state aid to Dutch “woningcorporaties”, AG Wathelet argued that the General Court was wrong to hold that some of them were inadmissible, especially given that that court had not examined the possibility of applying the new standing rule of art. 263(4) TFEU. For the cases that had been examined substantively by the General Court, the AG generally proposed upholding the judgment. Stichting Woonlinie et al. v. Commission (NL, DE, FR) and Stichting Woonpunt et al. v. Commission (NL, DE, FR)

AG Sharpston proposed holding that the General Court took too much time for the industrial bags cartel case, without however proposing any immediate consequences for that fact. Rather than reducing the fine, she argues that the better approach is to have the applicants bring a separate action for damages. Groupe Gascogne SA v. Commission, Gascogne Sack Deutschland v. Commission and Kendrion v. Commission

According to AG Kokott, it is perfectly fine for Finland to regulate a given product as a medicinal product under Directive 2001/83 while every other Member State considers it a medical device under Directive 93/42. Laboratoires Lyocentre

The General Court again annulled a set of asset freezes in Trabelsi et al. v. Council. In Parker v. Commisison, MRI v. Commission (NL, DE, FR) and Trelleborg v. Commission it partially (a small part) annulled two Commission decisions in the marine hoses cartel case.

This Week and Last Week in Luxembourg

The biggest case this week is probably Joined Cases Libert et al. v. Flemish Government and All Projects & Developments NV et al. v. Flemish Government, where the Court (Judge Tizzano) answered a number of questions coming from the Belgian Constitutional Court. (There's 12 of them, and I honestly don't know what the common thread is supposed to be.) Most notably, it declared the Flemish system for controlling who gets to buy immovable property incompatible with the Common Market.

A Nigerian student studying for his doctorate in Edinburgh may still have the right to have his Nigerian mother in the country with him – his own right of residence rests on art. 12 of Regulation 1612/68, given that his father is an EU citizen – but only if he can convince the national court that he “remains in need of the presence and care of [his mother] in order to be able to continue and to complete his (…) education”. Alarape and Tijani v. Secretary of State for the Home Department

In a related case, the Court (also by Judge Silva de Lapuerta) paid lip service to the genuine enjoyment doctrine while reiterating the holding of Dereci and McCarthy that Member States can all but do as they like to their own citizens who have never exercised their right to free movement. Ymeraga et al. v. Ministre du Travail, de l’Emploi et de l’Immigration


On the day that the Netherlands traded in its formidable Queen for a lightweight King, AG Cruz-Villalón opined that the City of Hilversum was not allowed to include a price regulation term in the contract of sale it concluded with UPC for the city’s cable television network. He argued that the 2002 telecoms package applies to this kind of regulation, and that the contract term in question is contrary to art. 13 of the Access Directive. Only art. 106(2) TFEU might save the city’s regulations. UPC v. Municipality of Hilversum (NL, DE, FR) Cf. e-comm blog

On the same day, AG Bot concluded that International Jet Management, which carries out flights from Russia and Turkey to, amongst others, Germany, can do so using its Austrian license without needing a German license as well. The German rule to the contrary is contrary to art. 18 TFEU. International Jet Management (NL, DE, FR)

A week later that same AG proposed slapping down a plainly discriminatory rule regarding which kinds of certificates of origin (cf. art. 5 of Directive 2001/77) are accepted for the purposes of a renewables quota in Flanders. More through inaction than anything else, the Flemish wound up accepting only Flemish certificates, which is obviously not OK. Essent Belgium v. Vlaamse Reguleringsinstantie voor de Elektriciteits‑ en Gasmarkt (NL, DE, FR) Cf. GAVC Law Blog and European Law Blog

AG Bot was more supportive, however, of the Walloon system for promoting biomass energy, even though it might be considered as discriminating between generation from wood and generation from other biomass. Industrie du bois de Vielsalm & Cie (IBV) SA v. Walloon Region (DE, FR)

AG Kokott did a bit of insolvency law, arguing that honouring an obligation “for the benefit of a debtor” in art. 24 of Regulation 1346/2000 includes a case where a bank pays a debt on behalf of a bankrupt account holder. Christian van Buggenhout en Ilse van de Mierop (liquidators of Grontimmo SA) v. Banque Internationale à Luxembourg (NL, DE, FR) Cf. GAVC Law Blog

This Week in Luxembourg

The Grand Chamber (Judge Ilešič) slapped down the appeal by Laurent Gbagbo and his friends against the General Court’s order dismissing their action for annulment of their asset freeze as manifestly unfounded. The problem was that the applicants were out of time. The Court discussed the general theory of binding time limits before concluding that Gbagbo c.s. hadn’t argued anything specific to substantiate their appeal to force majeure. Gbagbo et al. v. Council

The Romanian gay rights NGO Accept decided to go for broke. They brought an employment discrimination case under Directive 2000/78 against Steaua Bucharest. If that wasn’t ambitious enough, the factual basis of the claim was an interview given by Gigi Becali, the main shareholder and “patron” of the club, which may or may not be enough to consider his statements as representing the club. All three answers of the court favour the applicant. Asociaţia ACCEPT v. Consiliul Naţional pentru Combaterea Discriminării Cf. Journal du Marché Intérieur Blog

In Jyske Bank Gibraltar v. Administración del Estado, Gibraltar banking secrecy clashed with Spanish and EU legislation to combat money laundering (specifically, Directive 2005/60) and the war on money laundering won.

Because Galileo is organised, under Regulation 876/2002 as a Joint Undertaking, i.e. an EU-level PPE, the EU’s staff regulations do not apply. Bark v. Galileo Joint Undertaking

(There was also a whole stack of boring and easy infringement cases.)

In the General Court, the baby seals won in the suit brought by the Canadian fur producers. The ban on seal products was lawfully enacted on the basis of art. 95 EC. The General Court rejected art. 133 EC as an additional legal basis by relying on the titanium dioxide case. The Court also spent some time on proportionality & subsidiarity, on art. 1 P1 and on the United Nations Declaration on the Rights of Indigenous Peoples, but to no avail. Inuit Tapiriit Kanatami v. Commission Cf. European Law Blog