European Commission notice that it has approved, under the EC State aid rules, on a temporary "rescue" basis pending a liquidation or restructuring plan (to be provided within six months), the funding provided by the UK Government to Bradford & Bingley's mortgage lending business. The Commission found that Santander (which bought the savings business) received no aid.

The European Commission's notice states that:

By September 2008, the bank had fallen into difficulties and its licence to accept deposits was withdrawn by the UK Financial Services Authority.

There is some more information on this at the bottom of this FSA/HM Treasury notice.

OFT invitation (2 paragraphs) to comment on the proposed merger of HBOS with Lloyds TSB.

The ground for the Government's proposed intervention (subject to parliamentary approval) in the merger control process is formulated as “the stability of the UK financial system”.

Responses invited by Wednesday 8 October 2008. The OFT has been asked to report to ministers by Friday 24 October 2008.

Trivia: The OFT notice links to the Government announcement dated 9 am 18 September 2008 that it intends to intervene (see report and Franck's comment). This notice has in the right sidebar a link to the ministerial intervention notice (1 page, 6.1M PDF) dated 18 September 2008. There was no such link on that web page at 1:11 pm on 18 September 2008. The PDF of the intervention notice was apparently made at 3:23 pm on 18 September 2008 (by someone who did not have much of a clue about scanner settings, given the size of the file).

Draft guidance (26 pages, PDF) from the European Commission on the enforcement of EC State aid law by the courts.

Scottish Government consultation (26 pages, PDF) on proposals for Scotland to deviate from UK-wide policy on subsidies to renewable energy projects, in particular by introducing higher subsidy bands for marine (tide and wave) energy, replacing a Scottish scheme (which has not been used so far as no projects have met the qualifications).

This is the statutory consultation before regulations are made, and follows an April 2008 consultation. Responses by Friday 12 December 2008.

Note: Some apparent links in the PDF to supporting information reports do not work. I cannot find the reports in question. Franck

UK Government notice (2 paragraphs) stating that the Government intends, subject to Parliamentary approval, to add something related to the “stability of the UK financial system” to the list of grounds under which ministers can intervene in the merger control process and take the final decision instead of the OFT or Competition Commission. The Government intends to invoke these new provisions in relation to the possible merger of HBOS with Lloyds TSB.

There would still be an independent review of the transaction by the OFT and, if referred, by the Competition Commission, with a published report advising ministers on both competition and public interest aspects.

There is no reason to doubt that the ministerial decision would be subject to judicial review (at the Competition Appeal Tribunal) under section 120 of the Enterprise Act 2002, in the same way as a merger control decision made by the independent competition authorities. The only ministerial decision that has been made under the Enterprise Act 2002's public interest regime for mergers (which the new proposals would extend) is the order for Sky to reduce its shareholding in ITV, and this is currently under appeal at CAT.

The right of appeal ensures that, if the grounds for the eventual ministerial decision are not clear and well reasoned, any aggrieved customers or competitors will be able to overturn the decision, or to force the Government to establish publicly its exact purposes about financial stability and the proportionality of any decision that it might make to allow a lessening of competition in order to meet these purposes.

Comment. There is a big gap between this proposal and the Chancellor's statement (or audio from BBC radio, 5:07-5:20) that the Government “will waive the competition requirements in relation to these two banks”. This discrepancy does not reflect a difference between Government departments: HM Treasury's press notice is consistent with the announcement reported above, not with the Chancellor's words. Franck

Preliminary ruling (about 10 pages) of the European Court of Justice on a reference from the English High Court about the application of the special rules for public authorities in Article 13(1) of The VAT Directive (formerly Article 4.5 of the sixth VAT directive).

In line with the Advocate General opinion, the court held that:

• The test is whether offstreet car parking in general is an economic activity subject to competition — not whether there is competitive pressure for a particular car park.
• Potential competition is enough: no evidence of actual competition is needed.

The court also held that "significant distortions of competition" meant any distortions that were not negligible. (The Advocate General had thought that it meant "out of the ordinary".)

The court accepted (for the purpose of the case) the view of the UK courts that the provision of off-street car parking was part of the public authority functions of local government.

The matter now returns to the High Court, which will presumably allow HMRC's appeal against the VAT Tribunal judgment.

Preliminary ruling (about 11 pages) of the European Court of Justice on a series of references from a Greek court about the application of Article 82 to attempts by GSK to restrict parallel exports of its products from Greece. The dispute is related to the Syfait case in which the European Court declined jurisdiction.

In line with the Advocate General opinion, the court held that the supply restrictions imposed by GSK in this case were abusive unless objectively justified, and that the attempts at justification put forward by GSK to the ECJ were not valid.

The only circumstance endorsed by the court as capable of justifying a refusal to supply is if GSK “is confronted with orders that are out of the ordinary in terms of quantity”. This is drawn from United Brands. The question of whether the orders that GSK refused were out of the ordinary is left for the Greek court to determine.

Summary (7 pages, PDF) of the Competition Commission provisional finding that the merger of BOC and Ineos Chlor would lead to a substantial lessening of competition. The only remedy consulted on (2 pages, PDF) is prohibition. Responses by Tuesday 30 September 2008.

DG Competition decision (12 pages in French, PDF) allowing the French Government to give EUR 150 million of additional capital to the State television broadcaster France Télévisions. The decision was made on 16 July 2008, five weeks after the French Government's formal notification on 11 June 2008.

The transaction is found to amount to State aid under Article 87(1), as the Altmark criteria are not satisfied, and the additional capital would not have provided by a private investor.

The clearance is on the basis of Article 86(2). The aid was found to be justified by a French Government's plan (announced in January 2008) to reduce the amount of advertising on State television, eventually down to zero. The aid is to be used to produce programming to replacing airtime formerly used for advertising, and to plug the gap left by lost advertising revenue in 2008. The Commission's view appears to have been that the EUR 150 million injection does not exceed the total net cost of the advertising reduction plan in 2008 (but the data underpinning this view are redacted from the published decision).

Grounds (339 pages, PDF) for the European Commission's decision of 3 October 2007 to clear the Sony/BMG joint venture for a second time. The Commission's first clearance decision (60 pages, PDF) was annulled by the CFI but the CFI's order has in turn been set aside by the ECJ (after the second decision was made).

Preliminary ruling (about 24 pages) of the European Court of Justice on questions referred by a Spanish court about the possibility of illegal State aid in the Basque country's corporation tax arrangements, which lead to a lower tax burden than the regime in the rest of Spain.

In line with the principles set out in the Azores judgment, the court's response is that a tax measure established by a devolved Government is not a State aid provided that three conditions are met:

• Institutional autonomy. The devolved Government is an independent institution.
• Procedural autonomy. The central Government cannot intervene in the devolved decision-making process. (Formal limits on the powers of the devolved Government, or obligations to engage in consultation or conciliation, do not amount to intervention.)
• Economic autonomy. There is no mechanism which reduces the extent to which the devolved Government bears the financial consequences of its tax policy decisions. (The existence of transfers between the Governments does not matter; what matters is how these transfers are affected by tax policy decisions.)

In the case of the Basque country, the information in the judgment implies that the first two conditions are satisfied, but the position on the third condition is not clear due to the “particularly complex” nature of the financial arrangements for devolution in Spain. In any event, it is for the Spanish court to examine the evidence and make its decision on the case before it.

The European Commission intervened in support of a view that there was insufficient financial autonomy. The UK intervened in the case in support of the proposition that there was financial autonomy (and therefore no constraint from State aid law). This presumably implies that the UK Government would consider its own devolution arrangements for Scotland, Northern Ireland and Wales, to be protected from interference on State aid grounds (but the current UK Government has shown no sympathy for differential rates of business taxation in the devolved nations).

ECJ Advocate General opinion (about 25 pages in French, translated from Slovenian; no English version) in a dispute between the Swedish music copyright collection society STIM and the Swedish television broadcasters TV 4 and Kanal 5.

The copyright collection society currently sets royalties for TV 4 and Kanal 5 as a percentage of income. Separate royalty rates for advertising and subscription income are set by reference to the proportion of airtime devoted to music, using a banded structure.

In the case of the State-funded broadcaster SVT, which has no advertising or subscription revenues, the music royalty is calculated on the basis of a notional advertising income and an estimate of the proportion of airtime devoted to music.

In the case of smaller broadcasters, royalties are based on audience figures and the proportion of airtime devoted to music.

TV 4 and Kanal 5 complained to the Swedish competition authority but their complaints were rejected. They took the matter to the relevant Swedish tribunal, which referred four questions to the ECJ about the application of Article 82. The questions seek advice on whether particular methods for the calculation of royalties would be abusive: the claimant broadcasters are asking for a prohibition on categories of hypothetical methods, not a decision specific to STIM's current method.

TV 4 and Kanal 5 argue that royalties calculated by a method such as STIM's are abusive because:

• They fail to take account of available information about the actual use made of the copyright licenses by the broadcasters. Music is typically broadcast at periods of low audience, to which little advertising revenue is attributable. And there is little use of music in sports programming (which presumably drives subscription income to a significant extent).
• They discriminate between them and the State broadcaster SVT (which presumably implies an allegation that there is a relevant form of competition between SVT and the commercial broadcasters).

The UK intervened, arguing that the questions to be determined were whether charges are sufficiently linked to use and whether public and private broadcasters compete with each other, and that both were matters were for the Swedish court rather than the ECJ to decide.

The Advocate General proposes that:

• The law on exploitative abuse (e.g. whether the dominant enterprise has acted "to reap trading benefits which it would not have reaped if there had been normal and sufficiently effective competition") governs the broadcasters' claims about the lack of link between use and royalties.
• Charging a fixed proportion of turnover without any reference to the amount of music broadcast would be abusive: administrative simplicity could not justify a method that would potentially lead to unreasonable charges for some broadcasters.
• In order to find a charging method to be abusive due to an alleged lack of link between the royalties and the benefits to the broadcaster of using music, it is necessary to identify an alternative method that would provide more accurate link, and to reject any objective justification of the less accurate method by reference to, for example, administrative costs. In general, no conclusion about the abusive character of a charging method can be reached in the abstract.
• As regards discriminatory abuse, the ECJ should leave it to the Swedish court to decide (i) whether the difference in calculation methods is actually discriminatory and (ii) whether SVT competes with private broadcasters in a "downstream market for television". The opinion does not discuss whether competition for audiences without a commercial purpose on the part of SVT would be a relevant form of competition for this purpose.

Note on ECJ Advocate General opinions

Court of First Instance judgment (about 25 pages) rejecting a claim by MyTravel (Airtours) for financial compensation following the annulment of a European Commission's decision prohibiting a merger.

The court ruled that the errors in DG Competition's analysis, whilst sufficient to invalidate that decision, did not amount to a “manifest and grave disregard for the limits on [the Commission's] discretion” and did not give rise to a right to compensation.

Footnote: MyTravel had recovered just under £0.5 million of litigation costs after the annulment action.

DG Competition decision (35 pages, PDF) prohibiting proposed State aid for digital terrestrial television on Germany.

The decision was announced on 24 October 2007 but the document was only published on 3 September 2008.

Competition Appeal Tribunal notice (2 pages, PDF) that Freightliner has filed a claim for damages against EWS following the ORR's 2006 decision (not contested by EWS) that EWS had abused a dominant position in coal transport.

Freighliner is seeking damages for loss of market share attributable to EWS' alleged infringements including predatory pricing directed at Freightliner between July 2002 and December 2003 and EWS' maintenance of exclusionary agreements with major customers.

Special limitation rules apply for follow-on damages claims for damages: claimants have two years after the infringement decision becomes final — see paragraph 6.68 of the CAT guide (73 pages, PDF).