AntitrustPage 4 Neelie Kroes reveals thoughts on review of Article 82 EC Treaty

Page 5 Business insurance and Retail Banking sector inquiries: Questionnaires sent out

Main Headlines

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Community CourtsPage 2 ECJ sanctions European Community's powers to legislate on

criminal law

Page 2 CFI confirms Commission decision prohibiting acquisition of GDP byEDP and ENI

State AidPage 12 New guidelines for state aid for regional airports and airlines adopted

National IssuesPage 13 Spain: First injunction by national court applying Article 82 of

EC Treaty.

Community Courts

Antitrust

Merger Control

State Aid

National Issues

European competition reviewAugust/September 2005

Merger ControlPage 6 Commission conditionally approves acquisition of Royal P&O

Nedlloyd by AP Møller

COMMUNITY COURTS

ECJ

ECJ sanctions European Community’s powers tolegislate on criminal law

On 27 January 2003 the Council adopted a frameworkdecision under Title VI of the EU Treaty imposing criminalpenalties for various environmental offences. Title VI dealswith police and judicial cooperation in criminal matters. TheEuropean Commission deemed this legal basis to beincorrect, submitting that the decision should instead havebeen be adopted under Article 175 of the EC Treaty, whichsets out the procedure for the adoption of the Communityenvironmental policy. Indeed the Commission had previouslybased a proposed Directive on this matter on Article 175.The European Court of Justice (“ECJ”) concurred with theCommission in a judgement delivered on 13 September2005. It held that, as the main purpose of the FrameworkDecision was to protect the environment, it could have beenadopted under Article 175 EC. Article 47 EU stipulates thatTitle VI must not affect the powers conferred on theCommunity under the EC Treaty. It therefore annulled theCouncil Framework Decision in its entirety. As this ECJdecision relates to the environment, its implications on theCommunity’s general power to legislate on criminal law, forexample in relation to competition, remains to be seen.However, the ECJ did grant the Commission the power toimpose criminal penalties for breach of EC rules in areaswhere none previously existed, thereby confirming itscompetence in a sector viewed by many Member States asexclusively intergovernmental. For more information, pleasesee Court Press Release.(13 September 2005 - Case C-176/03).

CFI

CFI confirms Commission decision prohibitingacquisition of GDP by EDP and ENI

On 9 December 2004, the European Commission prohibitedthe acquisition of joint control of Gas de Portugal SGOS S.A.(“GDP”) by Energias de Portugal S.A (“EDP”) and ENI. S.p.A.GDP and EDP are both Portuguese companies, with GDPsupplying gas and EDP supplying electricity. ENI is an Italiancompany involved at all levels in supply and distribution ofenergy. The Commission was concerned that the proposeddeal would distort competition in the gas and electricitymarkets and refused to allow it to go through. EDP wentbefore the Court of First Instance (“CFI”) to seek annulment ofthis decision. The Commission agreed that the decision was tobe reviewed according to the fast track procedure as importantissues were raised for the EU energy sector. EDP first claimed

that the Commission infringed Article 2(3) of the old MergerRegulation by failing to show that the creation or strengtheningof its dominance significantly impeded competition. The CFIheld that, while dominance was not the same as significantimpediment to competition, it could in some instancesconstitute proof in itself that competition was significantlyimpeded. In this case the elements used to prove thestrengthening of EDP’s and GDP’s dominance were oftenidentical to the elements showing that effective competitionwould be significantly impeded following the merger.Therefore, the failure of the Commission to specificallyexamine the significant impediment to competition did notmean that this criteria was not satisfied. EDP also claimedthat, as Portuguese gas markets are not open to competitionuntil April 2007 the Commission erred in its evaluation of themarket. The CFI confirmed that the Portuguese gas marketwas closed to competition at the time of the Commissiondecision and that the effects of a concentration on such amarket could not provide grounds for a prohibition. Thereforethe Commission erred by concluding a strengthening ofGDP’s pre-existing dominance on the gas market and aconsequent impediment of competition. However, itsassessments relating to the gas market before theconcentration, to the situation of this market when it opensand to the electricity markets before and after theconcentration were not vitiated by error. The CFI also upheldthe Commission’s conclusion that GDP had incentives to enterthe electricity market and that the merger would eliminate animportant potential competitor of EDP. The CFI concluded thaton the whole the Commission’s assessment was not vitiatedby manifest error. The decision that the concentration wouldstrengthen EDP’s dominance on the electricity markets andthat this would seriously impede competition was thereforeupheld. For more information, please see Court Press Release. (21 September 2005 - Case T-87/05)

ANTITRUST

Decisions

Commission fines EUR 43.497 million for thread cartel

Industrial thread producers in several EU countries have beenfined a total of EUR 43.497 million for restrictive businesspractices. A variety of industries use industrial thread for thesewing or embroidering of products such as clothes, homefurnishings, automotive seats and seatbelts, leather goods,mattresses, footwear and ropes. In November 2001, theCommission conducted an unannounced dawn raid at thepremises of companies in Germany, Belgium, France,Switzerland the United Kingdom. Three cartels have beendetected, stretching from 1990 to 2000 in Benelux and theNordic countries, in the United Kingdom and in the European

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Economic Area (“EEA”). Members of the cartels regularly heldmeetings to fix prices or price increases, to exchange sensitiveinformation and to allocate customers. For the full CommissionPress Release and individual amounts of fines, please see:EUROPA - Rapid - Press Release. (IP/05/1140, 14 September2005)

Pending cases

European Commission accuses chemical firms ofoperating a cartel

The European Commission has formally charged a number oflarge chemical firms with operating a cartel in the market formethacrylate, a substance used to manufacture consumergoods such as cell phones. A statement of objections hasbeen sent to the companies, which allegedly include Degussa,ICI, Lucite International, BASF, Arkema and Repsol YPF.Charges including price fixing, market sharing and exchangeof sensitive information. For more information, please see theBBC news website. (23 August 2005)

Dutch brewers charged with price-fixing

Following the fining of several breweries in recent years formarket sharing and price fixing, the European Commissionhas now sent a statement of objections to Dutch brewersHeineken, InBev and Grolsch, and has formally chargedthem with operating a cartel. The Commission claims thiscartel engaged in price fixing, division of markets and thesharing of market information and that these practices hadan impact on beer prices. The companies involved have twomonths to respond to the charges. For more information,please see the EU Business website. (2 September 2005)

Investigations launchedNothing to report

Statements, speeches, miscellaneous

Speeches

Neelie Kroes: Competition must drive Europeancompetitiveness in a global economy

The EU Commissioner for Competition, Neelie Kroes,delivered a speech in Italy on the importance of competitionfor competitiveness within the EU and at national level. This,she claims, is central to the agenda of the BarrosoCommission. Ms. Kroes first warns against the dangers ofprotectionism and emphasises the need to respect theprinciples of free movement and fair competition. She statesthat competition ensures effective operation of market forcesand that a regulatory framework that promotes competition isneeded to activate the potential of the European economy.Public policies must be tailored to suit different situationsand focus on what is needed, for example developing more

targeted state aid rules on innovation. She also refers tostrengthening of assessment of economic impacts oflegislation and to sectoral inquiries. She concludes byemphasising the importance of economic reform to ensure afuture for a strong European social model. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(SPEECH/05/477, 03 September 2005)

Neelie Kroes gives speech on European Competitionand Consumer Day in London

Neelie Kroes, the EU Commissioner for Competition,delivered a speech to mark the European Competition andConsumer Day. In it she outlines the main tools of currentcompetition policy. These, she says, are being developedagainst the backdrop of the renewed Lisbon Agenda andinclude sector enquiries into financial services, energy andthe professional services, and private enforcement. Shestates that the financial services inquiry will focus onpayments, retail banking and business insurance. Theenergy sector inquiry aims to improve new market entry aswell as transparency in market functioning and priceformation. A report is expected in 2006. Regarding the more“informal” professional services enquiry, she notes that theCommission would work with Member States and theprofessional bodies to review existing rules. She also notesthe importance of private enforcement of competition lawand says that a Green Paper is due by the end of this yearon improving the efficiency of damage actions forinfringement of Articles 81 and 82 of the Treaty. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(SPEECH/05/512, 15 September 2005)

Neelie Kroes: Delivering Lisbon - The role ofcompetition policy

Neelie Kroes delivered a speech at the European LiberalDemocrat City Forum in London where she elaborates onthe renewed Lisbon strategy, which focuses on managingglobal change and accompanying people through it. Shecites competition policy as lying at the heart of this strategyand speaks of the European Commission’s plans to reviewunnecessary laws so as to minimise complexity andadministrative burdens. She lists medical devices, wastedisposal, type approval of motor vehicles, VAT and companylaw as examples of where this review is necessary. She alsorefers to the Commission’s sector inquiries, its state aidaction plan and private enforcement as central toencouraging markets to achieve their full potential. For thefull Commission Press Release, please see:EUROPA - Rapid - Press Release.(SPEECH/05/507, 14 September 2005)

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Neelie Kroes: Private enforcement of EC Competition rules

The EU Commissioner for Competition delivered a speech atthe Harvard Club in New York where she discusses thebenefits and scope for private anti-trust enforcement in theEU. She lists deterrence, promotion of a culture ofcompetition and compensation for loss as the main benefitsfor encouraging private enforcement and states that a GreenPaper is underway on the issue. She also refers to the factthat there is much for the EU to learn from the USexperience. For the full Commission Press Release, pleasesee: EUROPA - Rapid - Press Release.(SPEECH/05/533, 22 September 2005)

Neelie Kroes reveals thoughts on review of Article 82 EC Treaty

Neelie Kroes delivered a speech at the Fordham CorporateLaw Institute where she expresses her views on how abuseof dominance could be more effectively tackled. She firstconfirms that a radical change in enforcement policy is notenvisaged. She then proceeds to discuss dominance andabuse. Identification of dominance, she states, should not bebased solely on market share but should look to factors suchas market access and market position of buyers andcompetitors. Regarding abuse, she notes that the first roundof review would focus on exclusionary abuse and refers toECJ decision of Hoffmann-La Roche for a definition of thisconcept. This case, she says, focused on the effect of thebehaviour under review and on its potential to influenceresidual competition on the market. She then distinguishesbetween non-price and price based abuses. Inefficientcompetitors should not, in her opinion be protected from thelatter. She also considers the possibility of allowing dominantfirms to raise the “efficiency defence” under Article 82. Forthe full Commission Press Release, please see:EUROPA - Rapid - Press Release.(SPEECH/05/537, 23 September 2005)

Miscellaneous

Commission Communication calls on Member States totackle restrictions in professional services

The European Commission’s 2005 Report on Competition in Professional Services, whilewelcoming the progress of some Member States, remainscritical of continued regulatory restrictions in professionalservices. The professions under scrutiny are lawyers,notaries, engineers, architects, pharmacists and accountantsand restrictions at issue include advertising bans andminimum prices. The Commission notes that, whileDenmark, the Netherlands and the UK have engaged instructured regulatory reform, seven Member States have notreported any progress at all. The other Member States lie

somewhere in between. It hopes that more decisive actionwill be taken to tackle the anti-competitive effects ofunnecessary regulation. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1089, 5 September 2005)

Commission prepares case against Premier League forabuse of dominance in television rights for football games

The European Commission is preparing to send a statementof objections to the Premier League where it will outline itsconcerns relating to abuse of dominance in television rightsfor football matches. The Premier League grants exclusiverights to BSkyB to air its matches under a contract which willexpire in 2007. The Commission’s action seeks to ensurethat these rights will be shared between a minimum of twobroadcasters. Proposals made by the Premier League innegotiations with the Commission were not regarded assatisfactory. If a statement of objections is sent this willformally start an action against the Premier League andcould lead to financial penalties of up to one-tenth of itsannual turnover. For more information, please see BBC News Website. (12 September 2005)

Report published on development of competition in theEuropean postal sector

The Commission has published a report outlining thedevelopment of competition in the EU postal sector andconsidering its possible evolution. For more informationplease see Report - Development of competition in theEuropean postal sector. (July 2005)

Report renewing market definition in media marketspublished by Commission

A report prepared by the Institute of European Media Law onthe market definition in the media sector has been publishedby the European Commission. This definition refers to therelevant EU case-law and looks at the approaches taken bythe 10 new Member States. For more information please seeMarket Definitions in the Media Sector. Comparative LegalAnalysis. (July 2005)

Report on economic approach to Article 82

The Economic Advisory Group for Competition Policy hasprepared a report to assist DG Competition in its review ofabuse of dominant position under Article 82 of the ECTreaty. It is independent of the Commission review andargues in favour of an economic-based approach to Article82. For more information please see EACGP report:An economic approach to Article 82.(July 2005)

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European Commission publishes report on car prices

On 1 August 2005, the European Commission published itslatest report on car prices and pricing differentials throughoutthe EU. The report finds that price differences in the EU havebeen decreasing over the last years. For more information,please see: EUROPA - Rapid - Press Release.(IP/05/1027, 1 August 2005)

Commission publishes report on EU securities trading,clearing and settlement arrangements for bonds and equities

This report represents the first authoritative analysis of the EUsecurities trading, clearing and settlement markets and aims toenhance liberalisation in these fields. It acknowledges thecomplexity of this area and proposes close co-operation withnational authorities when analysing and possibly investigatingbarriers to competition. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1032, 2 August 2005)

Internal Market: 16 Member States pursued for non-implementation of legislation on financial services

The European Commission has launched infringementproceedings against 16 Member States in a bid to ensureimplementation of various Financial Services Directivesincluding the Market Abuse Directive (2003/6/EC) and itsthree technical implementing Directives, almost one yearafter they were due to be transposed. Requests to implementthe legislation have been sent to the countries in the form of“Reasoned Opinions”. These requests initiate the secondstage of infringement proceedings and the recipients havetwo months to respond. Failure to do so will allow theCommission to refer to the European Court of Justice. Forthe full Commission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1035, 3 August 2005)

Deutsche Telekom commits to reduction in wholesaleaccess fees

The European Commission announced that the Germantelecoms regulator “Bundesnetzagentur” has approved areduction in wholesale access fees charged by DeutscheTelekom, a formerly state-owned German dominant supplier ofbroadband access. The company had applied to the Germanregulator for permission to increase its charges back to thelevel they had been before it reduced its monthly line-sharingfee following a commitment to the European Commission.Following another intervention by the Commission, DeutscheTelekom complied with its commitments and reduced theapplication to the Bundesnetzagentur. For the full CommissionPress Release, please see: EUROPA - Rapid - Press Release.(IP/05/1033, 3 August 2005)

Business insurance and retail banking sector inquiries:Questionnaires sent out

The European Commission sent out questionnaires in Augustto insurance associations and to payment card networks tocollect information for its inquiry into the financial servicessector. Replies were to be sent by mid-September.Questionnaires had also been sent in July to a sample of 300banks in the same context, with replies due by mid-August.Preliminary findings will be published on the Commissionwebsite and comments from market participants andstakeholders will be accepted. For more information, pleasesee the Commission Competition website. (18 August 2005)On 22 June, the EFTA Surveillance Authority (EFTA countriesare Switzerland, Liechtenstein, Norway, and Iceland) decidedto open inquiries alongside the European Commissioninvestigation into the sectors for electricity, retail banking andbusiness insurance. For more information, please see theOfficial Journal. (OJ C 196/32, 11 August 2005)

Commission responds to French plans to restrict foreign takeovers

France indicated that it may publish a list of strategicallyimportant industry sectors which could be protected fromforeign takeovers. It also hopes the EU will implementlegislation giving national companies access to the sameanti-takeover instruments as are allowed in the country ofthe bidder. In response, the Commission emphasises itsopposition to protectionist tendencies and the importance ofcompetition to encourage economic growth and low prices.For more information, please see the Finfacts website.(20 September 2005)

European Commission approves French plans toimprove competition in fixed- line telephony

In July 2005, the French national telecom regulator Autoritéde Régulation des Communications Electroniques et desPostes (“ARCEP”) notified to the European Commission itsdecision to change its regulatory approach and enhance theuse of Voice over Broadband (“VoB”) products. Internettelephony is deemed to efficiently encourage competitionbetween internet carriers of telephone traffic and traditionaltelephone networks. ARCEP considers France Télécom tohold a dominant position on the market. However, it refrainsfrom imposing ex-ante obligations of Voice over Broadband,thereby limiting regulation to traditional telephone lines. Thisdecision follows an Article 7 - review procedure by ARCEP ofretail markets for national and international fixed linetelephony. The Commission consents with the decision. Forthe full Commission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1146, 15 September 2005, and MEMO/05/255,14 July 2005)

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“Location clause” in car making contracts to expire

The ‘location clause’, which allows car dealers to divide theirnetwork territorially, is due to expire on 1 October 2005 underthe Block Exemption Regulation. The European Commissionhas stated that, while carmakers may retain the clauseindividually they must be able to show that they are makingtheir dealer networks more competitive. The Commissionhopes removal of the clause will help increase cross bordertrade and harmonise prices. However, the European dealertrade association has warned this could push smallbusinesses out of the market. For more information, pleasesee the Irish Times website. (31 August 2005)

Internal electricity market discussed at Florence Forum

The EU Commissioner for Energy, Andris Pielbags waspresent at the European Electricity Regulatory Forum to hearthe views of stakeholders on the functioning of the electricitymarkets and on potential improvement of the regulatoryframework. The discussions will contribute to the Commissionreport on the functioning of electricity and gas markets whichis due by the end of 2005. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1098, 2 September 2005)

DG Competition publishes paper on waste managementsystems

A paper has been published by DG Competition with theobjective of identifying competition issues in wastemanagement sector. It confirms that markets are to bedefined on a case-by-case basis. These markets includepackaging waste, end-of-life vehicles and waste electricaland electronic equipment. For more information please seeDG Competition paper - competition in waste managementsystems. (22 September 2005)

Commission report on market trends in privatereinsurance

The European Commission has published a report on markettrends of private reinsurance in the field of export creditinsurance. The report defines “marketable risks” for privateinsurers and is based on interviews with stakeholders as wellas the Commission’s 1997 Communication to the MemberStates on the application of Articles 92 and 93 of the Treatyto short-term export credit insurance, as amended in 2001.Until now, the definition of “marketable risks” affected onlyexport credit insurers operating with the support of the Stateas defined in the 1997 Communication. Private insurers werenot affected by the Communication. The report providestechnical information to the Commission on the currentactivities of export credit insurers and on the market forexport credit insurance with a view to assessing thepracticality and desirability of revising the current definition ofmarketable risks. For more information, please see theCommission Report. (July 2005)

ERGEG publishes an introductory roadmap towards asingle competitive European gas market

The European Regulators Group for Electricity and Gas(“ERGEG”) is a platform for co-operation consisting of allenergy regulators from the EU Member States and acts asan advisory group for the European Commission. It haspublished an introductory paper on its long term vision andprogress in the development of a roadmap for a singlecompetitive European market for gas. The roadmap analysesthe current state of the market and identifies barriers, recentchanges and long term goals of a single market for gas. Formore information, please see the ERGEG website.(16 September 2005)

DVD makers claim patents being used to keep prices high

A complaint has been made by independent makers of DVDsto the European Commission that patent pools are beingabused by companies who license the technology to forcehigher prices. EU rules distinguish legal patent pools fromillegal cartels and the licensing companies claim they are infull compliance the requirements of competition law. TheCommission has made no comment. For more information,please see the Reuters website. (12 August 2005)

Public consultation on commitments made by Dutch andBelgian collecting societies

In April 2004, the European Commission sent a statement ofobjections to BUMA and SABAM, the Dutch and Belgianmusic copyright collecting societies where it outlined itsconcern that monopolies held in the offline world would betransposed to the internet world. Collecting societies monitorthe use made of works protected by copyright. In response tothe commission's objections, the societies issued a number ofcommitments aimed at ending restrictions on the cross-licensing of online music. The Commission has now launcheda public consultation into these commitments. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1056, 17 August 2005)

MERGER CONTROL

ProhibitionsNothing to report

Mergers cleared with undertakings

Commission conditionally approves acquisition of RoyalP&O Nedlloyd by AP Møller

AP Møller has been allowed to go ahead with its acquisition ofRoyal P&O Nedlloyd (“PONL”) subject to certain conditions,creating the largest shipping company in the world. Both

DLA Piper Rudnick Gray Cary Group Competition Law

companies are involved in the container shipping business andto a lesser extent in the terminal services business. TheCommission investigation centred on the shipping trade lanesto and from Europe to determine whether the acquisitionwould lead to shared markets and increased prices. Althoughliner conferences have benefited from antitrust immunity for 20years, the Commission issued a White Paper in October 2004where it concluded that this exemption should be abolished.The merger creates links between Maersk, which is owned byAP Møller and the conferences and consortia to which onlyPONL is a member. Therefore, where the combined marketshare raises competition concerns, the Commission subjectsthe merger to the condition that PONL withdraw from theseconferences and consortia. The Commission also finds thatthe merger would give Maersk and PONL a combined share of50% in the transport of goods in reefer containers betweenEurope and South Africa. Maersk has therefore agreed todivest PONL’s cargo transport operating between Europe andSouth Africa. For the full Commission Press Release, pleasesee: EUROPA - Rapid - Press Release.(IP/05/1026, 29 July 2005)

Commission clears takeover of Guidant Corporation byJohnson & Johnson, subject to conditions

Johnson and Johnson (“J&J”) and Guidant Corporation areboth US-based companies involved in the business ofvascular medical devices. They compete directly in a variety ofareas and the proposed acquisition by J&J of Guidant raisedconcerns for the Commission. Its investigation focused ondifferent issues including coronary drug eluting stents (“DES”).There are currently only two major world-wide suppliers ofDES, J&J and Boston Scientific and the entrants to this marketinclude Guidant. However, the loss of competition in the DESmarket resulting from this acquisition would be compensatedfor by the imminent entry of two other entrants, Medtronic andAbbott. The investigation also examined the market for stentsused in peripheral parts of the body, of which Guidant andJ&J hold a large share. The Commission found thatcompetition would be impeded by the acquisition in this marketand in the market for cardio-vascular devices. Therefore, itallows the deal to go through on condition that the companiessell some cardiovascular medical treatments. Specifically thecompanies are to sell either J&J or Guidant’s endoscopicvessel harvesting products, plus Guidants endovascularbusiness and J&Js steerable guidewires business. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1065, 25 August 2005)

Mergers cleared without undertakings

Commission clears acquisition of Nokia’s ProfessionalMobile Radio Business by European Aeronautic Defenceand Space Company

The European Aeronautic Defence and Space Company(“EADS”) is involved in commercial and military aircraftbusiness and sells various related products. It is also involvedin the Professional Mobile Radio (“PMR”) business through itsTETRAPOL technology. It proposes acquisition of Nokia,which also develops “PMR” systems. Nokia, unlike “EADS”bases its “PMR” on TETRA standards. The Commissioninvestigation concludes that sufficient competition exists on themarket to constrain the merged entity. Moreover, the market for“PMR” is one where consumer’s have significant buyer powerand the merger will allow “EADS” to compete more efficiently.The acquisition is therefore approved. For the full CommissionPress Release, please see: EUROPA - Rapid - Press Release.(IP/05/1019, 29 July 2005)

Commission approves of Solvus acquisition by UnitedServices Group

Solvus N.V. is a Belgian company that like Dutch UnitedServices Group N.V. operates in the temporary employmentservices business. Both companies are active in variousEuropean countries and have overlapping activities mainly inBelgium and the Netherlands. The Commission inquiry intothe deal mainly focused on the markets for temporaryemployment services in these countries. For reason ofstrong competition on the market and only a moderatemarket share of the combined entity in the market, theCommission cleared the deal. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1038, 4 August 2005)

Commission clears acquisition of Pinnacle by Avid

The European Commission inquiry into the effects of theplanned merger of US-based Pinnacle Systems Inc.(“Pinnacle”) and Avid Technology Inc. (“Avid”) showed nonegative impact in the relevant markets. Avid produces digitalaudio and video software as well as hardware products forthe professional media industry on a world-wide scale.Pinnacle also creates digital video products and mainlyfocuses on consumers. The concentration has an impact onthe markets for professional non-linear editors (“NLEs”) andthe narrower high-end and low-end segments of this marketin more than three Member States. Also, the markets forintegrated editing systems for newsrooms and broadcastingservices will be affected. Due to the presence of a numberof competitors and Pinnacle’s limited shares of sales andcompetitive force in these markets, the Commission clearedthe transaction. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release.(IP/05/1039, 5 August 2005)

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Commission approves TPV’s acquisition of PhilipsMonitors business

Hong Kong based TPV Technology Limited (“TPV”) is activein monitor display technology and designs and manufacturescathode ray tube (“CRT”) and liquid crystal display (“LCD”)monitors. The company also designs and manufactures LCDand plasma display panel (“PDP”) flat screen televisions.TPV plans to establish and solely control a new companythat comprises of part of Dutch Royal Philips Electronics NV.“Philips Monitors” provides computer monitors and flatscreen televisions to Original Equipment Manufacturer(“OEM”) customers. The product range includes CRT andLCD monitors, flat screen televisions and related OEM sales.For reason of strong competition on the relevant market forOEM computer monitors the Commission cleared thetransaction. For the full Commission Press Release, pleasesee: EUROPA - Rapid - Press Release.(IP/05/1045, 8 August 2005)

Commission approves joint venture between LockheedMartin and Boeing to create a United Launch Alliance

Boeing and Lockheed are both involved in the provision ofspace launch services to governmental and commercialconsumers. The companies wish to establish a joint venture,United Launch Alliance (“ULA”) which envisages combiningexpertise associated with the government launches ofBoeing and the rockets of Lockheed in order to serve the USgovernment market for launch services. There would be nodirect impact on consumers in the EEA. Both companies willretain services on the commercial market outside of the jointventure. However, the Commission concludes coordinatedbehaviour on this market is not more likely following ULA.The Commission has therefore decided to allow the ventureto go ahead but will continue to monitor the market. For thefull Commission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1049, 9 August 2005)

Acquisition of Edison by EDF and AEM approved byEuropean Commission

Edison is an Italian based electricity generator. EDF is theFrench electricity incumbent and AEM is Italian. EDF andAEM wish to acquire joint control of Edison. TheCommission’s investigation into the concentration wasconducted in close cooperation with the Italian EnergyRegulator. It examined the possible impact on variouselectricity markets and the risk of coordination between theconcentration and the first Italian electricity generator, Enel. Itconcludes that the transaction would not impact significantlyon competition in the market. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1055, 12 August 2005)

Commission clears Rheinmetall’s acquisition of 50%shareholding in AIM

AIM is a leading German manufacturer of infraredcomponents, used mainly for production of military goods.Rheinmetall is also based in Germany and is involved inautomotive and defence. While Rheinmetall does not currentlycompete with AIM, the Commission investigation considersthat infrared components are used as inputs in the productionof defence products. This merger will give Rheinmetall directaccess to these components. However, the investigationshows that competitors of Rheinmetall recently used infraredcomponents of AIM’s potential competitors outside Germany.Moreover, defence companies often cooperate on largeprojects. Foreclosure of competitors is therefore unlikely andno significant anti-competitive effects are anticipated. For thefull Commission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1058, 19 August 2005)

Commission allows joint venture between NYK Reefersand Lauritzen

NYK Reefers owns and operates bulk refrigerated (“reefer”)vessels and belongs to Japanese NYK Groups. Lauritzen, aDanish shipping group, is involved in the transportation ofgoods. Its subsidiary LauCool does not own any reefervessels but charters what it needs from Lauritzen. Thistransaction involves the acquisition by NYK Reefers of 50%of the shares in LauCool from Lauritzen. At the same timeNYK Reefers will transfer its business commercial andoperational management to LauCool joint venture, creatingthe second largest bulk reefer vessel operator in the world.The Commission concludes that LauCool will nonethelesscontinue to face strong competition and therefore allows thedeal to go through. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release.(IP/05/1059, 22 August 2005)

Commission approves acquisition of Flint by Xsys

Aster is the holding company for Xsys Print Solutions and isbased in Luxembourg. Flint Ink Corporation is based in theUS. The activities of both companies overlap in sectors suchas paste and liquid inks for publication and liquid inks forpackaging. The Commission investigation found otherimportant competitors operating in this market at both EEAand local level and on this basis cleared the deal. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1067, 25 August 2005)

Commission clears acquisition of StorgageTek by SunMicrosystems

The European Commission inquiry into the effects of theplanned merger between two US-based companies, Storage

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Technology Corp. (“StorageTek”) and Sun Microsystems(“Sun”) does not reveal any competition concerns. Sunprovides network computing products and services andStorageTek provides a variety of data storage solutions. Theinquiry shows that overlaps are limited and strong competitionremains in the market. As regards storage solutions, theCommission does not feel the transaction will materially affectthe choice of purchasers. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1070, 26 August 2005)

Commission approves of acquisition of RuhrgasIndustries by CVC Capital Partners

German Ruhrgas Industries (“RI”) is an international groupcurrently lead by E.ON Ruhrgas AG that produces industrialfurnaces, and meters for gas, electricity and waterconsumption and offers related services. CVC CapitalPartners S.a.r.l. (“CVC”) is a Luxembourg investment andmanagement advice group acting on behalf of investmentfunds. Part of CVC is a company that reads, records, collectsand processes consumption data in relation to meters.However, competition on the market for the supply of meteringservices was found to be sufficiently active. The Commissionexamination found no other overlaps in the relevant marketsand the deal was cleared. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1094, 6 September 2005)

Commission clears joint acquisition of SPE, ALGNegoce SA and Luminus by Gaz de France and Centrica

Gaz de France International S.A. (“GDF”) and UK-basedCentrica plc (formerly part of British Gas plc) both produce,trade and supply gas and electricity. Up to now, they controlledBelgian suppliers of gas and electricity ALG Negoce S.A.(“ALG”) and Luminus NV respectively. Belgian-based SPE alsosupplies electricity and to a lesser extent gas to the Belgianmarket. GDF and Centrica will jointly control a newly foundedcompany, New SPE, that embraces the three Belgiancompanies. The Commission investigated into the markets forthe supply of electricity to large industrial eligible customers;the market of electricity to small industrial and commercialeligible customers; the market for the supply of electricity toresidential eligible customers; or any combination of these thecustomer groups in one market. It considered the market forgas in each of the above groups as national markets and foreligible residential customers as regional in Belgium (Flanders,Wallonia, Brussels). However, due to strong competition fromcompetitors inside and outside Belgium and the small size ofthe joint venture in relation to other markets, the Commissionraised no concerns in either the markets for gas, or forelectricity in or outside Belgium. It cleared the deal. For the fullCommission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1109, 8 September 2005)

Commission approves BenQ’s takeover of Siemensmobile device business

BenQ is a Taiwanese producer of communication andmultimedia devices. The transaction joins BenQ’s mobiletelephone business with the mobile device business ofSiemens, which comprises the activities of several Siemenscompanies. While BenQ mainly sells to telephone producersand only to a small extent under its own brand label, Siemensis active on broader basis in the research, development,production and sale of mobile devices (mobile telephones,accessories, related services and spare parts). AlthoughSiemens has a large market share in Europe, the mergedentity will face strong competition from a number of othercompetitors in both the markets for mobile telephones and forthe design and manufacturing services for mobile telephones.The Commission found no significant overlaps in othermarkets and cleared the transaction. For the full CommissionPress Release, please see: EUROPA - Rapid - Press Release.(IP/05/1107, 8 September 2005)

Commission approves acquisition of parts of Versatelby Tele2

The European Commission cleared the takeover of the Dutchand Belgian parts of Versatel by Tele2 after an investigationinto the markets for fixed and mobile telecommunications. Itraised no competition concerns as a result of limited overlapsbetween the activities of both parties. Swedish Tele2 A.B.produces and provides services in fixed and mobile telephony,internet, data network and cable TV ain 25 Europeancountries. Versatel owns telecommunications networks andoffers business and residential customers with voice, data andinternet services. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release.(IP/05/1108, 8 September 2005)

Commission clears joint venture betweenHeidelbergCement and De Hoop Terneuzen

Both partners to the deal, Dutch De Hoop Terneuzen B.V.and German HeidelbergCement, produce concrete that isreadily mixed for direct use at building sites. WhileHeidelbergCement produces cement, aggregates and drymortar, De Hoop is active in aggregates, concrete products,building materials and retail of Do-It-Yourself buildingmaterials. Both companies, HeidelbergCement actingthrough its Belgian subsidiary Inter-Beton NV, jointly acquirecontrol of the Belgian company Mermans Beton N.V. that iscurrently a wholly-owned subsidiary of De Hoop. MermansBeton owns and operates a ready-mixed concrete plant inBelgium and sells its products in Belgium and TheNetherlands. The Commission investigation did not raise anycompetition issues. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release.(IP/05/1163, 20 September 2005)

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Commission clears Tŕineke Zelezárny’s take-over of VVT

Tŕineke Zelezárny is a Czech based holding company, ownedby Astonia and supplying iron products to the steel-makingindustry in Central and Eastern Europe. It proposed a take-over of VVT, a Czech steel making company that is part ofMoravia steel group. No horizontal overlaps were found by theCommission. Regarding vertical overlaps, as TŕinekeZelezárny already supplies nearly 60% of VVT’s requirementsof semi-finished steel an increase in this share would notsignificantly alter the market structure. For the full CommissionPress Release, please see: EUROPA - Rapid - Press Release.(IP/05/1176, 22 September 2005)

Mergers cleared under the simplified procedureA&C ADIVAR-COMIFAR / PHOENIX (Case M.3881 - 10 August 2005)

ADVENT/ HERLITZ (Case M.3921 - 22 September 2005)

AMI / IPIC / OMV (Case M.3854 - 2 August 2005)

APAX / PANRICO (Case M.3924 - 20 September 2005)

APAX / VERSATEL (Case M.3915 - 7 September 2005)

AVIAPARTNER / 3I (Case M.3913 - 5 September 2005)

BARCLAYS PRIVATE EQUITY / NEUMAYER (Case M.3929- 6 September 2005)

BIDVEST / DELI XL (Case M.3912 - 1 September 2005)

CHANNEL 5 / BERTELSMANN (Case M.3907 - 29 August 2005)

CLERICAL MEDICAL / MLP-LIFE INSURANCE (Case M.3887 - 6 September 2005)

CRH / QUESTER (Case M.3938 - 16 September 2005)

DEUTSCHE BANK / HARDT / TRAFALGAR / KUNERT(Case M.3933 - 21 September 2005)

DEXIA-KOM / KF / DEXIA CL / KOMMUNALKREDIT (Case M.3799 - 5 August 2005)

DONG / ELSAM / ENERGI E2 (Case M.3868 - 22 September 2005)

EMALSA / VALORIZA / SAUR (Case M.3841 - 2 August 2005)

G+J / VECERNIJI (Case M.3850 - 1 August 2005)

GOLDMAN SACHS ET AL. / CMP FONDS (Case M.3917 -16 September 2005)

IMCD / ABN AMRO (Case M.3908 - 1 September 2005)

INDUSTRI KAPITAL / BONNA SABLA (Case M.3927 - 22 September 2005)

KWIK-FIT / PAI (Case M.3875 - 17 August 2005)

LEICA MS / DANAHER (Case M.3899 - 23 August 2005)

LEHMAN COMMODITIES / SYSTEM CAPITALMANAGEMENT (Case M.3952 - 20 September 2005)

MOELLER / DHC (Case M.3918 - 6 September 2005)

OTOR / CARLYLE (Case M.3870 - 10 August 2005)

PEL / PHL (Case M.3895 - 17 August 2005)

PIHL / 3I (Case M.3906 - 31 August 2005)

SITA / FLUGHAFEN DÜSSELDORF / FDITG (Case M.3857 -1 August 2005)

SPOHN CEMENT / HEIDELBERGCEMENT (Case M.3926 -7 September 2005)

TREOFAN / GOLDMAN SACHS (Case M.3830 - 1 August 2005)

TRIDONICATCO / TOYODA GOSEI / LED JV (Case M.3784- 22 September 2005)

VITERRA / DAIG (Case M.3873 - 3 August 2005)

WAVIN / CVC (Case M.3900 - 31 August 2005)

WEBASTO / STARCK / STAXERA (Case M.3855 - 2 September 2005)

WEST LB / NORD LB / SHINSEI / FLOWERS / SGK (CaseM.3897 - 6 September 2005)

NotificationsADM POLAND/ CEFETRA/ BTZ (Case M. 3884 - 9 September 2005)

ADVENT / CCS (Case M.3941 - 5 September 2005)

AMER / SALOMON (Case M.3765 - 5 September 2005)

AMI / EUROTECNICA (Case M.3923 - 7 September 2005)

AP MOELLER-MAERSK / KERR-MCGEE (Case M.3950 - 6 September 2005)

ASTER 2 / FLINT INK (Case M.3886 - 1 August 2005)

BARCLAYS PRIVATE EQUITY / ALSTOM POWERCONVERSION (Case M.3960 - 8 September 2005

BERTELSMANN / CHANNEL 5 (Case M.3907 - 8 August 2005)

BAYERISCHE LANDESBANK / SPEED (Case M.3892 - 13 September 2005)

CORMAN / GLANBIA CONSUMER FOODS / JV (Case M.3742 - 7 September 2005

CVC / MINIT GROUP (Case M.3937 - 9 September 2005)

DIESTER INDUSTRIE / BUNGE / JV (Case M.3876 - 5 September 2005)

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DOUGHTY HANSON / MOELLER (Case M.3918 - 5 August 2005)

ELECTRA / CVC / CPI (Case M.3939 - 31 August 2005)

FIMAG / ZÜBLIN (Case M.3864 - 6 September 2005)

GDF / CENTRICA / NEW SPE (Case M.3883 - 9 August 2005)

HEIDELBERGCEMENT / DE HOOP TERNEUZEN /MERMANS BETON / JV (Case M.3902 - 23 August 2005)

LBO / TERREAL (Case M.3945 - 31 August 2005)

LBO / WHEELABRATOR ALLEVARD (Case M.3930 - 4 September 2005)

METINVEST / LEMAN COMMODITIES (Case M.3952 - 23 August 2005)

ML GLOBAL / BACP / N&W GLOBAL VENDING (Case M.3962 - 31 August 2005)

NOMURA / KAMPS FOOD RETAIL INVESTMENTS /NORDSEE (Case M.3951 - 6 September 2005)

OMYA / J.M. HUBER PCC (Case M.3796 - 13 August 2005)

PERMIRA-KKR / SBS BROADCASTING (Case M.3961 - 13 September 2005)

SUN / STORAGETEK (Case M.3866 - 28 July 2005)

TELE2 / VERSATEL (Case M.3914 - 12 August 2005)

TRANSGOURMET / PRODIREST (Case M.3931 - 4 September 2005)

TRINECKE / VVT (Case M.3865 - 31 August 2005)

TRW AUTOMOTIVE / DALPHI METAL ESPAÑA (Case M.3972 - 15 September 2005)

TUI / CP SHIPS (Case M.3863 - 31 August 2005)

UPS / LYNX (Case M.3925 - 31 August 2005)

VERIZON / MCI (Case M.3752 - 9 September 2005)

Pending casesNothing to report

Miscellaneous

Editions Odile Jacob brings further appeal in relation toLagadere/Edits merger

Editions Odile Jacob SAS (“EOJ”) has brought an action forannulment of the Commission’s decision refusing access tocertain documents relating to a Commission investigation intothe acquisition of part of Edits by Lagardere (Case T-237/05).In January 2004, the Commission conditionally approved theacquisition, requiring Lagardere to divest Edits and retain only

certain approved assets amounting to 40% of Edits turnover.In January 2005, EOJ requested access to certain documentsrelating to this merger investigation but was refused all butone. The Commission claimed the remainder came under theexceptions listed in Article 4(2) of Regulation 1049/2001, i.e.that disclosure could undermine protection of commercialinterests, court proceedings and legal advice, or the purposeof inspections and audits. The current action seeks annulmentof this decision. For more information please see Official Journal. (OJ 2005 C 205/32, 20 August 2005)

STATE AID

Prohibitions

Italian tax breaks for certain investment vehiclesdeclared illegal

The European Commission has prohibited an Italian schemewhich envisaged reducing the substitute tax on the earningsof certain investment vehicles. Although the schemeappeared general, an investigation revealed that it favouredvehicles specialised in holding stocks of small and mediumcapitalised companies listed on regulated EU stockexchanges, along with certain financial intermediaries. TheCommission ordered recovery of any aid received as a resultof the tax break. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release.(IP/05/1103, 7 September 2005)

Commission prohibits Greece from granting aid toOlympic Airlines and Olympic Airways

Restructuring aid for Olympic Airways had been authorisedbetween 1994 and 2000. However, in December 2002, anyfurther aid was prohibited and repayments were ordered. In2003 Greece established a new company, Olympic Airlineswhich continued to receive aid. The Commission decisionconcludes that this new company was a successor toOlympic Airways and that continued granting of aid to eithercompany remained illegal and circumvented Greece’sobligation to recover the aid. Any illegal payments wereordered to be repaid. For the full Commission Press Release,please see: EUROPA - Rapid - Press Release. (IP/05/1139,14 September 2005)

Commission authorises the following state aidschemes this month

Commission approves state aid for GermanLandesbanken HSH Nordbank, Bayen LB andLandesbank Hessen-Thüringen

The European Commission has authorised state aid for threeGerman Landesbanken. Capital increases will be granted totwo and one will receive a special fund, to be transferred as

DLA Piper Rudnick Gray Cary Group Competition Law

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silent participation. The Commission concluded that theanticipated return on the investments corresponded to what aprivate investor would accept. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1096, 6 September 2005)

Opened Investigations

Investigation of restructuring aid for Kliq Holding N V inThe Netherlands.

This investigation follows notification by the Dutch authoritiesof its plan to grant aid in the form of equity capital,transformed from a state-granted loan and interest, to Kliq.Such aid should allow the company to compete in the marketon its own merits. Given that Kliq was declared bankrupt inFebruary 2005 its long-term viability will be examined closelyby the Commission before the measure is authorised. For thefull Commission Press Release, please see:EUROPA - Rapid - Press Release.(IP/05/1044, 5 August 2005)

Inquiry launched into tax reductions in Sicily

This inquiry will investigate a measure providing two financialincentives to companies based in Sicily. The first is a 5-yearexemption from the Italian tax on regional production activitiesfor certain undertakings. The second establishes a Euro-Mediterranean Centre of Finance and Insurance Services.This Centre would provide a number of financial benefits forsubsidiaries of finance and insurance companies doingbusiness with non-EU countries subscribing to the November1995 Barcelona Declaration. For the full Commission PressRelease, please see: EUROPA - Rapid - Press Release.(IP/05/1102, 7 September 2005)

Investigation opened into restructuring aid for Frenchmanufacturer, Ernault

France notified the Commission of its intention to grantrestructuring aid to Ernault. Rescue aid for the company hadalready been approved earlier in the year. An investigation isnow underway to see whether the measure complies with theCommunity guidelines on state aid for restructuring andrescuing firms in difficulty. The Commission will examine inparticular the appropriateness of the private contribution tothe funding, the ability of the restructuring plan to restore thecommercial viability of Ernault and the anti-competitiveeffects of the measure. For the full Commission pressrelease please see: EUROPA - Rapid - Press Release.(IP/05/1111, 8 September 2005)

Miscellaneous

Invitation to participate in European Commission reviewof Guidelines for State Aid for Environmental Protection

The Guidelines on state aid for environmental protectiondetermine how the European Commission is to review state

aid granted for the protection of the environment. Thecurrent guidelines are due to expire at the end of 2007 andtherefore need to be revised by the Commission. To helpwith this task, feedback is sought from Member States andother interested parties on their experience with theseGuidelines. The Commission has drafted a questionnairewhich can be used as a starting point for any contribution.The questions are broad and information outside the scopeof the questionnaire is welcome. For a copy of thequestionnaire please see: Revision of the guidelines for stateaid for environmental protection; Questionnaire. (Replies tothe questionnaire must be submitted by 10 October 2005)

New guidelines for state aid for regional airports andairlines have been adopted by the European Commission.

The European Commission has adopted guidelines for stateaid for airports and airlines. These guidelines aim tomodernise the financing of air travel and encouragedevelopment of regional airports and mobility in Europe. Thiswill be done primarily through increased transparency inagreements between airports and airlines and ensuring non-discrimination in the treatment of start-up airlines at regionalairports. Conditions for the granting of state aid to airlinesoperating new routes from regional airports are set out andguidance for the public financing of airports is provided. Forthe full Commission press release please see:EUROPA - Rapid - Press Release.(IP/05/1097, 6 September 2005)

Commission to consult public on measures to improvestate aid for innovation

This Communication on State Aid for Innovation follows the re-launch of the Lisbon strategy in February 2005 (seeIP/05/130), which cited innovation as central to the economic,environmental and social development of the EU. Theconsultation looks at the appropriateness of the generalprinciples as developed by the Commission and at itsproposed state aid rules supporting innovation. It invitessubmissions from interested parties on these issues andhopes to integrate the response into the existing rules. For thefull Commission press release please see:EUROPA - Rapid - Press Release. (IP/05/1169, 21 September2005) More information may also be found at Consultation onstate aid for innovation - Frequently Asked Questions.(MEMO/05/195, 7 June 2005)

DLA Piper Rudnick Gray Cary Group Competition Law

NATIONAL ISSUES

Spain

First injunction by national court applying Article 82 ofEC Treaty.

An injunction (interim measures) has been obtained for thefirst time in the application of Article 82 of the EC Treaty bya national court in Europe. The measures were obtained inSpain against two companies within one week for abusingtheir dominant position in the market. In the first case,Audiovisual Sport SL (an 80% owned subsidiary ofSogecable, Spain’s principal pay-TV operator) stoppedsending TENARIA (a regional Spanish cable TV operator)the TV signals for the Spanish football league matches forthe 2005/2006 season in June, following a pay dispute. Thisdispute related to the execution by TENARIA of anarbitration award issued by the Spanish Telecoms Regulator,which obliged Sogecable and AVS to adapt a clause(minimum purchase) of the contracts signed with TENARIAfor the acquisition of the TV rights regarding Spanish leaguematches. According to the regulators, the contents of thatclause were unfair and contrary to some commitmentssubmitted in the past by Sogecable (on its behalf and onbehalf of AVS) to the European Commission, in the contextof an investigation file (Case COMP/C-2/37652, AVS-II).TENARIA sought legal advice, as AVS’ decision to terminatethe contract would prevent them broadcasting this season’smatches. It was argued that Audiovisual Sports had adominant position as it holds, on a monopoly basis, theSpanish football league’s TV broadcasting rights and that itabused its position by unilaterally terminating its licenseagreement with TENARIA, violating Article 82 of the ECTreaty. Furthermore it was argued that Sogecable abused itsdominant position in the pay TV market by preventing itssubsidiary AVS from sending the signal to a company whichcompetes with it in the Spanish pay TV market. The Spanishcourt ruled in favour of TENARIA and ordered AudiovisualSports to grant the regional cable operator immediateaccess to the broadcasting signal for Spanish football leaguematches for the 2005/2006 season. The second case wassimilar to the first one, although it involved companies in theenergy sector. The competition issues also related to abuseof dominant position by a supplier of an essential service tothe plaintiff. The enormous impact that stopping supply couldhave had on the plaintiffs financial situation led the judge toadopt interim measures, holding that such a decision may beconsidered as an abuse of dominant position, contrary toarticle 82 of the EC Treaty. DLA Piper Madrid act forTENARIA and for the plaintiff of the second action.

FOR FURTHER INFORMATION ON THE SPANISH ITEMS,PLEASE CONTACT:Antonio Creus (antonio.creus@dlapiper.com)

Norway

Battle for competition in Norwegian Aviation market continues

With its recent decision to impose a fine of NOK 20 million onScandinavian air-carrier SAS for predatory pricing on theOslo-Haugesund route, the Norwegian Competition Authority(“NCA”) shows that efforts for maintaining competition in themarket for inland aviation in Norway will continue. The NCAhas also notified SAS that a similar decision should beexpected on the Oslo Ålesund route. On both routes, SAS hasmet competition from other carriers, whereas it maintains itsmonopoly position on the vast majority of inland routes inNorway. The Norwegian aviation market has seen a series ofdevelopments over the last four to five years, under whichcompetition-policy makers have struggled to maintain a certaindegree of competitive pressure on incumbent SAS. Under thefinal phase of price-regulation, SAS and its competitorsBraathens SAFE and Color Air engaged in a destructivecapacity-competition, which ended with the withdrawal fromthe market by Color Air, and the take-over by SAS ofBraathens SAFE, in 2000 and 2001. In what has beencriticised as a very SAS-friendly decision, the NCA approvedSAS’ takeover of its beaten competitor, with reference to thefailing firm doctrine, in 2001. This left SAS with a monopoly onpractically all domestic routes. In 2002, the NorwegianGovernment initiated a series of decisions that helped restorecompetition, such as abolishing the frequent flyer programEurobonus, repealing the air passenger tax on all nationalflights, and using the Governments buyer-power in a strategicmove to help establish competition on the most profitableroutes, by designing a split-tender for the purchase of airtravels for State employees and facilitating bids from carriersother than SAS on the largest inland routes. Partly as a resultof this policy, the carrier Norwegian Air Shuttle developed itselfas a small but significant competitor to SAS on domesticroutes in Norway, leading to an overall price-drop of 20 %, in afew months. The recent decisions by the NCA were initiatedfollowing allegations that SAS met its competitor withpredatory pricing, and according to the NCA this has beenfound to be the case on two routes. The decision regardingOslo-Haugesund has been brought before the Oslo City Courtfor review of its legality. In addition to its decisions onpredatory pricing, the NCA has put certain other obligationson SAS in order to avoid that the group engages in abuse ofits dominant position in the future.

FOR FURTHER INFORMATION ON THE NORWEGIANITEMS, PLEASE CONTACT:Nils Ola Widme (nils.ola.widme@dlanordic.no)

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Italy

Antitrust gives approval for ENEL’s sale of Wind toWeather Investments.

The Italian Competition Authority, at its meeting of 27 July2005, decided to authorize the consolidation resulting fromthe sale by Enel of 62,75% of Wind to Weather InvestmentsII. The acquiring party is a vehicle company specificallyincorporated in view of the operation and is controlled by MrNaguib Sawiris. However, the filing of the merger has beenrequired, given that the Egyptian entrepreneur also controlsthe Orascom Group. The Orascom Group, active in thetelecommunication field in a considerable number of nonEuropean countries, mainly in the Mediterranean arearealised in 2004 a consolidated turnover equal toapproximately USD 2017 million. As the result of theoperation notified, which is rather complex, Wind will becontrolled by Enel SpA for 37.67% and by a vehicle companycontrolled by Naguib Sawiris by means of other vehiclecompanies for the remaining 62.33%. The parties to theoperation also entered into Sale and Purchase OptionAgreements and other agreements by virtue of which, in2006 Wind will be indirectly controlled for 100% by WeatherInvestments S.r.l., which in its turn will be controlled byWeather Investments II S.a.r.l. and by Enel S.p.A. for 73.9%and for 26.1% respectively. However, this further step has notbeen evaluated by the Authority. It has to be said that theoperation has not raised any competition concerns. As for MrSawiris, it is his first operation in Italy and since theacquisition of Wind entails the mere replacement of oneoperator with another in the same market, the operation isunlikely to negatively affect competition in the relevantmarket. For more information, please see the Italian Competition Authorities website. (text in Italian) (Case no. 14514 C7096 30 September 2005)

Conditional Approval of the acquisition of 29,99% ofTerna by CDP

T.E.R.N.A. S.p.A. – (National Net Electricity Transmission-“TERNA”) is an Italian company owning more than the 90%of the national electricity grid and specialised in the running,maintenance and development of the grid. On 4 August2005, the Italian Competition Authority approved theacquisition by the company Cassa Depositi e Prestiti (“CDP”)from Enel, the Italian major company active in the energysector, of 29,99% of the share capital of Terna and of thebusiness concern of the company Gestore della Rete diTrasmissione Nazionale (“Grtn” - Administrator of theNational Transmission Net), subjected to the followingconditions: (a) temporarily: at least 6 of the 7 CDP membersin the Board of directors of T.E.R.N.A. (assuming that theBoard were composed of 10 members) must be nominatedindependently in order to grant a fair and impartial managing

of the company, with no discrimination of users. The sameproportion will have to be maintained regardless of how theboard is constituted. (b) temporarily: the ConsultancyCounsel, a specific counsel provided by the decree of thePresident of the Ministry Board dated 11 May 2004 will berequired to express a non binding opinion on the final projectof development of the National Electricity Grid (“RTN”) priorto the presentation to the Board of directors. The Counselwill also be able to verify the state of art of the developmentplan. (c) permanently: as from 1 July 2007 and within thefollowing 24 months, CDP will be required to transfer itsparticipation in Enel, equal to 10,2% of the share capital.The operation is inserted in a major reallocation plan in thenational power sector providing for the reunification of theproperty (Terna) and the management (Grtn) of the powernet, and the following public control over the entity which willbe created by the reunification. According to the Authority,the conditions imposed are justified by the necessity toprevent the creation of a possible conflict of interests due tothe fact that CDP will retain control over Terna-Grtn and aconsistent share in Enel’s share capital. Following theAuthority decision, on 15 September 2005 the partiesinvolved in the transaction resolved to execute the operationaccording to the terms and condition of the Agreementbetween Enel and CDP of 23 May 2005. The Board ofDirectors of CDP resolved for the possibility to appealagainst the Authority’s decision of conditioned approval ofthe operation before the Competent Regional AdministrativeCourt. For more information, please see the Italian Competition Authorities website. (text in Italian) (Case no 14542 C7065 30 September 2005)

Italian Competition Authority authorises Unipol-BNL Merger

Unipol Assicurazioni SpA is the company at the top of theUnipol Group, active in the insurance sector in Italy. BNLS.p.A. (“BNL”) is the head company of the BNL Group, activein Italy in the banking and financing in the leasing andfactoring sector as well as in the insurance sector by meansof BNL Vita S.p.A., a company jointly controlled by BNL andUnipol. The Italian Competition Authority, at its meeting on 6September 2005, approved the takeover of BNL by theUnipol Assicurazioni SpA. The Authority judged that thisoperation would not represent the strengthening of adominant market position. In particular, the Authorityevaluated the investment management markets (mutualinvestment funds and individual wealth management) andbranches I, III and V of the life insurance market. As regardsthe investment management markets in particular, theAuthority decided that the concentration would notsignificantly modify the existing structural status. As for theinsurance markets, the Authority held that the merger wouldmerely consolidate at Group level an already existing

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production and distribution arrangement using BNL Vita (thecompany which is jointly controlled by BNL and the UnipolGroup, whose products are sold through BNL branches) asthe vehicle. The Authority also approved the forwarding ofthe opinion to the Bank of Italy as to the merger’s effects onthe banking industry. In the Antitrust Authority’s view, thelimited consequences of the operation on competition arenot such as to substantially affect the retail banking market.For more information, please see the Italian Competition Authorities website. (text in Italian) (Case no. 14677 C7220 30 September 2005)

FOR FURTHER INFORMATION ON ITALIAN ITEMS,PLEASE CONTACT:Francesca Sutti (francesca.sutti@dlapiper.com)

The Netherlands

NMa tries new economic approach in hospital mergers case

After an extensive investigation, the Dutch CompetitionAuthority (NMa) has granted permission to the HospitalGooi-Noord and the Hospital Hilversum to merge. In thecourse of the investigation, the NMa interviewed doctors andinsurance companies. The NMa also conducted a survey ofpatients. Upon concluding the investigation, the NMadetermined that the hospitals would not have a dominantposition after the merger. Originally, the NMa had determinedthat a permit was required for the merger. The NMa believedthat the hospitals would have a dominant position resultingfrom high market shares. The high market shares werebased on the fact that both hospitals are located in the Gooiarea and that most of their patients come from this region.There are no other hospitals in the immediate vicinity. TheNMa used the Elzinga-Hogarty test (EH test) for thedetermination of the relevant geographic market in the case.The EH test works by measuring two criteria: (1) The LOFIlevel (‘little out from inside’) which pertains to the export ofhospital services to patients living outside of the region, and;(2) The LIFO level (‘little in from outside’) which pertains tothe import of hospital services within the region. In its initialdecision, the NMa indicated that there was reason toassume that the levels of LOFI/LIFO came out above 90%. Ifthis conclusion would hold on further investigation, this couldserve as evidence that the hospitals were not experiencingmuch competition from outside the region. In the decisiongranting the hospitals permission to merge, the NMaobserved that the EH test is often too static in itsdetermination of the geographic market because it does nottake into account future changes in consumer behaviour. Forexample, higher prices or reduced product availability mayresult in consumers being willing to travel further. The NMaalso observed that the 90% level it mentioned in the initialdecision is rather arbitrary. While the NMa appears to have

taken these problems into account in the second decision, itis unclear if the NMa continued to use the EH test in itsevaluation of the merger. Upon further review of the merger,the NMa found that a small percentage of patients are willingto travel outside of the Gooi area for hospital care.Furthermore, it turned out that patients from overapproximately 200 different cities and towns travel to theGooi area for care. These considerations led the NMa tobelieve that the relevant geographic market was larger thanthey first thought and the merger was permitted. For moreinformation, please see the Netherlands Competition Authority Website. (Text in Dutch)

NMa ends its investigations into the Dutch energy sectorand (ship) salvage companies

The Dutch Competition Authority (NMa) recently ended itsinvestigations into the Dutch energy sector and (ship)salvage companies after failing to come up with anyevidence pointing to a competition infringement. Due to thestructure of both markets and the limited number of playerson each market, the NMa will continue to keep a close eyeon both sectors. The NMa remarked that if it receives newinformation concerning either sector, it will reopen theinvestigations. The NMa began looking into (ship) salvagecompanies in 2003 after it noticed signals indicating possiblecartels. In March, 2004, the NMa visited various (ship)salvage companies and interviewed various parties active onthe relevant market. The investigation into the Dutch energysector began in June, 2004, after various municipalitiescomplained about the small number of tenders for the publicprocurement of electricity. The NMa determined that thiscould be explained by the fact that many parties did not havethe expertise needed for participation in public procurementprocedures. Furthermore, the Dutch electricity companiesare currently dealing with a number of problems resultingfrom the liberalization of the market for electricity which istaking up a great deal of their attention. For moreinformation, please see the Netherlands Competition Authority Website. (Text in Dutch)

District court quashes NMa decision for lack of evidence

After a judgement from the District Court in Rotterdam, theDutch Competition Authority (NMa) has decided not to fineTexaco and Texaco gas stations. The District Court ruled thatthe NMa had not sufficiently proved that Texaco and Texacogas stations had agreed to lower prices to drive theircompetitor Tango out of the market. The District Court ruledthat the NMa’s observation that a number of Texaco gasstations offered similar discounts to consumers based onTexaco’s advice, did not support the NMa’s conclusion thatthere was a horizontal cartel between the gas stations. Thecourt reasoned that parallel behaviour alone is not enough toestablish a concerted practice. The parties to the agreement

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DLA Piper Rudnick Gray Cary Group Competition Law

must mutually share the intention to illegally coordinate theirbehaviour and they must exhibit parallel behaviour. The NMahad not established that the gas stations were coordinatingtheir behaviour in order to drive Tango off the market. In July2002, the NMa fined Texaco EUR 1,000,000 and also finedTexaco gas stations between EUR 25,000 and EUR 48,500 fortheir roll in the suspected violation. On July 23 2005, theDistrict Court ordered the NMa to take a new administrativedecision in the case. In the new decision, the NMa decided notto fine Texaco and the Texaco gas stations involved. The NManotes that it will continue to keep a close eye on the gasolinemarket and it will publish its third report on the gasoline marketin the first quarter of 2006. For more information, please seethe Netherlands Competition Authority Website. (Text in Dutch)(17 August 2005)

FOR FURTHER INFORMATION ON THE DUTCH ITEMS,PLEASE CONTACT:Leon Korsten (leon.korsten@dlapiper.com)

United Kingdom

CAT sets aside OFT decision to close investigation intoRobert Wiseman

In 1999 Express Dairies plc (“Express”), a leading processorof fresh processed milk, complained to the OFT that RobertWiseman, the largest processor of fresh milk in Scotland,had been engaging in anti-competitive practices againstClaymore Dairies Limited, a Scottish milk processingcompany of which Express owned 75%. The OFT began aninvestigation into the alleged Chapter II infringements byRobert Wiseman. In 2001 the OFT accepted some informalassurances from Robert Wiseman that it would, for example,ensure that the prices charged in certain areas covered thecosts in servicing those areas. In 2002 the OFT decided toclose the investigation on the grounds that it did not thinkthat a decision on infringement was sufficiently promising towarrant more resources. Claymore asked the OFT to vary orwithdraw its decision under the then section 47 of theCompetition Act. The OFT responded that its letter was notan appealable decision within section 46(3) of theCompetition Act. Claymore and Express appealed the OFT’sdecision to CAT. CAT held that the OFT had made a decisionwithin section 46(3) of the Competition Act that Wisemanhad not infringed the Chapter II prohibition. CAT also statedthat it had serious doubts about the adequacy of the OFT’sfindings in its investigation. However, it decided that, giventhe historical nature of the dispute and the fact that themarket had changed following Express’s merger with Arlathat it should be for the OFT to decide what, if any, actionshould be taken. Further information on this case can befound on the CAT website. (02 September 2005)

The Consumers’ Association specified as a body able tobring monetary claims before the CAT

On 1 October 2005 the Specified Body (Consumer Claims) Order 2005(SI 2005/2365) will come into force. Under the Order theConsumers’ Association is specified for the purposes ofsection 47B of the Competition Act 1998 as a body that isentitled to bring a claim to which section 47A of theCompetition Act applies. Section 47B of the Competition Act,which was inserted by section 19 of the Enterprise Act 2003,allows specified bodies to bring proceedings before theCompetition Appeal Tribunal on behalf of two or moreindividuals to seek monetary damages for an infringement ofthe Chapter I or II prohibition of the Competition Act and/orArticles 81 or 82 of the EC Treaty. This is in addition to theConsumers’ Association right to bring a “super-complaint”before the OFT regarding infringement of competition law.(See, for example, the item below). (05 September 2005)

OFT decides that MasterCard fee arrangement is anti-competitive

The OFT has announced its decision that the collectiveagreement between members of MasterCard UK MemberForum Limited on the multilateral interchange fees (“MIFs”)applicable to UK domestic transactions using MasterCardbranded consumer credit and charge cards (between 1March 2000 and 18 November 2004) infringed the Chapter Iprohibition of the Competition Act 1998 and Article 81 of theEC Treaty. The interchange fee is the fee charged by theissuing bank and paid by the retailer’s bank for processing acredit card transaction. The OFT stated that although theagreement relating to MIFs had appreciably restrictedcompetition it did not consider it appropriate to imposefinancial penalties on the parties as the agreement has nowended. However, the OFT noted that it still has concernsabout the MIFs applied by MasterCard since November 2004as it is concerned that the new fees may still allow recoveryof extraneous costs. Therefore, unless MasterCard amendsthe existing multilateral interchange fees, the OFT is likely toopen a new investigation. More details can be found in theOFT press release. (06 September 2005)

OFT receives super-complaint in relation to paymentprotection insurance

On 13 September 2005, the OFT announced in a statementthat it has received a super-complaint from Citizens Advice inrelation to payment protection insurance. The OFT has fast-tracked this complaint and will announce within 90 days whataction, if any, it plans to take. No further information is yetavailable. For more details see OFT press release.(13 September 2005)

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Competition Commission publishes provisional findingsin store card market investigation

Further to its investigation into the supply of store cardservices to retailers, the Competition Commission hasreached the preliminary conclusion that the supply ofconsumer credit through store cards has an adverse effecton competition. The Competition Commission decided that anumber of factors (such as lack of competitive pressure fromretailers in relation to level of APRs and late payment feesas well as a lack of awareness of customers on theseissues) had the combined effect of insulating the provision ofconsumer credit through store cards and associatedinsurance from competitive pressures that would otherwiseexist (in particular from competition between store cards andstore credit cards). In light of its findings the CompetitionCommission is now consulting on possible remedies. Theseinclude: the provision of full information on statements, anAPR warning on statements and the offer of payment,purchase and price protection insurance each being madeseparately. The Competition Commission is inviting thirdparty comment on its preliminary findings and on theproposed remedies until 11 October 2005. Further detailscan be found in the Competition Commission press release.(14 September 2005)

OFT Property Searches Study

Following a number of complaints about access to propertyinformation and competition in the market as a whole, theOFT launched a study into property searches in December2004. People use property searches when purchasingproperty to discover information about the property and the

surrounding area that might affect the value/saleability of theproperty. In its study on the topic the OFT found that theprice of property searches provided by local authoritiesvaries greatly, with consumers often paying too much. It alsofound that some local authorities restrict access to theproperty information that they hold. In light of these findings,the OFT made recommendations aimed at improvingcompetition and liberalising access to property information.These include: requiring local authorities to give access tocertain information; providing local authorities with clearerguidelines on setting prices for the provision of propertyinformation; and agreeing revised timescales for theprovision of property information. The introduction of thehome information pack in 2007 will change the way thatproperty information in England and Wales is provided andwill provide an opportunity for reform of the propertysearches market. The study can be viewed at Property Searches. (21 September 2005)

FOR FURTHER INFORMATION ON UK ITEMS,PLEASE CONTACT:

Alexandra Kamerling (alexandra.kamerling@dlapiper.com) or

Martin Rees (martin.rees@dlapiper.com)

The European Competition Review is intended as a generaloverview and discussion of the subjects dealt with. It is notintended, and should not be used, as a substitute for takinglegal advice in any specific situation. DLA Piper RudnickGray Cary will accept no responsibility for any actions takenor not taken on the basis of this publication.

DLAPRGC 8949/09.05

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