Member Article

The European Commission has adopted a temporary state aid framework, designed to help tackle the spiralling negative effects of the 'credit crunch' on the real economy. Under the framework, Member States can - after notifying the Commission - put into effect a range of aid schemes aimed at helping otherwise sound companies that are finding it difficult to access funding. Approvable schemes include state guarantees for loans at a reduced premium, subsidised loans (particularly for green products), and increased risk capital funding for SMEs. The UK - along with France, Germany and Portugal - has already made use of the framework, obtaining Commission approval for a 'crisis aid' scheme, under which companies in financial difficulty because of the credit crunch may be eligible for a one-off grant of up to €500,000.

The Government has also used the framework to develop a package of aid measures for the automotive industry. According to Commissioner Kroes: "[the] measure will help alleviate the difficulties faced by UK businesses affected by the current situation, without giving rise to disproportionate distortions of competition." Whether or not the scheme can make any real impact on the difficulties being faced by businesses remains to be seen.

Commission issues new Statement of Objections to Microsoft

The European Commission has continued to lock horns with Microsoft, issuing the company with a fresh Statement of Objections (SO).

It alleges Microsoft has abused its dominant position by tying its Internet Explorer web browser to its dominant client PC operating system Windows.  According to the Commission, selling the two products as a bundle means that Internet Explorer is artificially protected against competition from other web browsers, which is likely to stifle innovation and, ultimately, harm consumers.  Microsoft has eight weeks to respond to the SO. If the Commission's case is well founded, Microsoft will be likely to end up paying another hefty fine. The Commission would also be likely to replicate the remedy imposed in the Windows Media Player case, and order Microsoft to offer customers a version of Windows without Internet Explorer.

Commission fines marine hose cartel

The Commission has become the latest competition authority to take action against the participants in a worldwide marine hose cartel, fining five companies a total of €131.5m for their role in illegal price fixing and information exchange agreements.

Three UK businessmen have already been jailed for their part in the cartel - the first to be successfully prosecuted for the so-called "cartel offence"

Commenting on the fines, Competition Commissioner Kroes said: "For 20 years, this cartel added to the prices consumers paid for their oil deliveries. I will not tolerate illegal cartels, and will continue to impose heavy fines on those companies found guilty of this kind of serious malpractice."

High Court rules on OFTs case closure decision

The High Court has ruled on an application for judical review by Cityhook, challenging a decision by the Office of Fair Trading (OFT) to close an investigation.

In his judgment, Mr Justice Foskett held that the OFT did not act unreasonably in closing its file, on the basis that the case was not an administrative priority. He also found that it was not unlawful for the OFT to set out prioritisation criteria (without which it would be swamped by the number of competition law complaints it received).

However, the judge did criticise certain aspects of the OFTs reasoning, and directed that the regulator should consider transferring the case to Ofcom. The case - although critical of the OFT to some extent - shows that a complainant will have a high hurdle to jump if it wishes to overturn an OFT decision to close a case.

Commissioner Kroes hosts MVBE roundtable

On 9 February, Competition Commissioner Kroes hosted a roundtable discussion on the motor vehicle block exemption (MVBE), which is due to expire in 2010.  The discussion was attended by consumers, car manufacturers, dealers, roadside assistance operators and independent repairers.  All the indications were that the Commission was preparing to scrap the MVBE, and instead subject the sector to the general competition regime. But it now appears to be undecided, which may provide some comfort to retailers. Commissioner Kroes noted that consumer welfare was paramount, and that whatever solution was settled on, the rules had to be designed for the medium and long term, rather than aimed at tackling the effects of the current economic crisis. She also stressed that she was not "tied to any particular outcome, and [was] well aware that the situation today is different from when we began this process".

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