Brussels 3 - 14 July 2006
Brussels Monitor
Competition
Article 81
The European Court of Justice (ECJ) has clarified the conditions under which an individual can
bring a claim in national courts to declare an agreement or practice prohibited under Article 81 EC
invalid and claim compensation.
It noted that as Article 81 EC has direct effect in relations with individuals, third parties can invoke
the invalidity of an anti-competitive agreement and, where there is a causal relationship between the
agreement or anti-competitive practice and the harm suffered, claim damages for that harm.
It is up to each member state to designate the courts and tribunals having jurisdiction and to
prescribe the detailed procedural rules governing those actions. Such rules must not be less
favourable than those governing actions for damages based on an infringement of national
competition rules and they may not render the right to seek compensation practically impossible or
excessively difficult. The prescribed limitation period for seeking compensation and the criteria
used in determining the extent of the repayment must respect the principles of equivalence and
effectiveness. A period that is too short, without the possibility of suspension, may not be
compliant. Individuals must be able to seek compensation not only for actual loss but also for loss
of profit plus interest.
This case is the latest in a series of cases making it easier for individuals to bring damage claims for
infringements of competition rules.
Financial Services Sector Inquiry
The Commission has published the second part of its preliminary findings in its financial services
sector inquiries. This part of the report analyses the competitive situation in the sector for core retail
banking services, including current accounts and related services:
The Commission concluded that:
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Overall retail banking markets remain fragmented along national lines and there are
significant entry barriers, including access to payment systems and credit databases.
The clearing systems for inter-bank payments are highly fragmented across the EU. A
bank operating in different Member States has to join the various national systems, adapt
to different standards and face varying membership costs. Fee structures and
membership rules can be used to deter new entrants from providing retail banking
services in some Member States.
Customer mobility is low. Consumers hold their personal current account with the same
bank for around 10 years on average, compared to nearly 8 years on average for SMEs.
This may, among other factors, be due to high switching costs and cross-selling
For further information please contact the Brussels office:
Martin Baker, Peter Willis, Marco Hartmann-Rüppel, Marc Picat or Andrea Iber +32 2 289 6060
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practices. On average banks are more profitable in markets where customer mobility is
low.
While the scope of direct state intervention in the retail banking sector has narrowed,
Member States continue to intervene in banking markets in several ways. This ranges
from the promotion or preferential treatment of certain bank products, the protection of
certain bank types or the prevention of cross-border market entry.
Based on the report the Commission may launch individual investigations into infringements of
companies operating in this sector.
A copy of the report is at:
http://ec.europa.eu/comm/competition/antitrust/others/sector_inquiries/financial_services/interim_re
port_2.pdf
Merger Control – Sony BMG
The European court of First Instance (CFI) has annulled the Commission decision authorising the
Sony/BMG merger. Sony and Bertelsmann envisaged merging their global recorded music activities
into three new companies operated together under the name Sony BMG. The Commission cleared
the proposed merger after it concluded that the merger would not lead to the creation or
strengthening of a collective dominant position. The CFI ruled that the Commission could not
merely rely on the lack of transparency of the market or on the absence of evidence that retaliatory
measures had been used in the past in order to conclude that no collective dominant position
existed or that the merger did not entail a risk that a collective dominant position would be created.
This is the first time a merger clearance by the Commission has been overturned by the CFI. The
case demonstrates the difficulty the Commission faces in attempting to assess whether or not a
dominant position may arise.
Microsoft
The Commission has ruled that Microsoft has failed to fully comply with its 2004 antitrust decision
and imposed a fine of EUR 280.5 million. This is equal to a daily penalty payment of EUR 1.5
million a day, which represents around 1.8% of Microsoft's daily turnover. The Commission already
announced that if Microsoft continues to fail to comply with its obligations it would raise the level of
the daily penalty payment to EUR 3 million as of 31 July unless Microsoft had met its obligations by
then.
Article 24 of Regulation 1/2003 entitles the Commission to impose such penalty payments not
exceeding 5% of average daily turnover in the preceding business year per calendar day to compel
companies to put an end to infringements of EC anti-trust rules, where an infringement has been
established by a previous Commission anti-trust decision. The Commission's 2004 decision found
that Microsoft had abused its dominant position in the PC operating system market and ordered it to
disclose complete and accurate interface information which would allow competitors to interoperate
with Windows, and to make that information available on reasonable terms.
According to the Commission, Microsoft is only half way to provide all the documents necessary to
evaluate whether its requests have been complied with. Unsurprisingly, Microsoft has announced
that it will also appeal the Commission's decision on penalty payments. Its appeal against the 2004
anti-trust decision is currently pending before the CFI and a decision is expected next year.
Car sector study
The European Commission has published a report by London Economics, produced for DG
Competition, on developments in the car sector since the entry into force of the new car block
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exemption. The overall conclusion seems to be that the regulation brought about some changes
but so far the Commission's objectives have not been met.
The report focuses on the competition implications of the motor vehicle block exemption rules for
the distribution of new cars, the car service and repair sector, and the market for automotive spare
parts. It covers developments in twelve Member States, namely Denmark, Germany, Estonia,
Spain, France, Italy, Hungary, the Netherlands, Poland, Portugal, Sweden, United Kingdom. The
report shows particular concern in the servicing and spare parts sectors. Independent repairers still
do not seem to gain sufficient access to technical information and the cost of specialist diagnosis
tools remain high. In addition, most of the spare parts are still bought from manufacturers and their
authorised partners. It can be expected that the Commission will keep a particularly close eye on
these sectors to ensure that the block exemption is being complied with.
European Union
Presidency
As from 1 July Finland has taken over the Presidency of the EU. The priorities of the Finnish
Presidency will be the development of the internal market (Services Directive, energy), investment
in R&D, implementation of an innovation roadmap with recommendations for the future towards the
end of 2006 and the adoption by the end of the year of the REACH chemicals legislation.
Intellectual Property
Patent Enforcement
The ECJ has officially condemned pan-European cross-border jurisdiction practice in two recent
patent rulings. It held that all proceedings relating to the registration or validity of a patent,
irrespective of whether the issue is raised by way of an action or a plea in objection, will have to be
brought before the courts of the country where the patent is registered, e.g. only a French court
tribunal can rule on the validity of a French patent. This means that courts in countries other than
where the patent is registered may only decide in "pure" infringement proceedings.
This will mean that companies may be forced to challenge patent infringements and the validity of
the patent separately in each country, which will result in an increase of legal costs. Up to now
some national courts, in the course of infringement proceedings, have independently formed a view
on the validity of patents in the course of infringement proceedings and issued EU-wide injunctions.
The judgment, however, might bring to an end the so-called "Belgian torpedo" tactic. Using this
tactic, an alleged infringer of a European patent brings a suit before Belgian courts, which are
known for the slowness of their legal process, and asks for a cross-border declaration that the
products, services or processes do not infringe the patent.
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