Last reviewed 4 June 2012

UK mobile operators joint venture under EU spotlight

The European Commission has opened an in-depth investigation under the terms of the EU Merger Regulation into a proposed joint venture (JV) in the UK between Vodafone, Telefónica and Everything Everywhere. Preliminary checks have indicated potential competition concerns in the emerging markets of mobile payment applications supply (so-called mobile wallets), mobile advertising and related data analytics services, where the JV may have very high market shares. Together with its three parent companies, it may have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to UK customers, or to affect the quality of these competing services so that they become less attractive.

The Commission, which has until 27 August 2012 to take a final decision on whether the proposed transaction would reduce effective competition, has stressed that the opening of an inquiry does not prejudge the final result of its investigation. It has the duty to assess mergers and acquisitions involving companies with a turnover above the thresholds laid down in the Merger Regulation and to prevent those that would significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. The EEA comprises the Member States plus Iceland, Liechtenstein and Norway, the countries that apply EU Single Market legislation in return for certain privileges regarding free movement of goods and people.

EU Advocate General unimpressed with health claims for wine

EU Regulation 1924/2006 on nutrition and health claims made on foods seeks to protect consumers from misleading and/or untruthful claims. As regards alcoholic drinks containing more than 1.2% by volume of alcohol, the regulation prohibits the use of health claims generally, ie irrespective of whether the beneficial effect implied is truthful. A case (C-544/10) being heard by the EU's Court of Justice (CJEU) has arisen out of a dispute between Deutsches Weintor, a wine-growers’ co-operative in Rheinland-Pfalz, and the State authorities.

The latter have objected to the use of the word "bekömmlich" (wholesome, easily digestible) on wine produced by the co-operative. In this context, the Federal Administrative Court, Germany, has submitted a series of questions to the CJEU regarding the interpretation of the regulation. As is the usual practice in the EU Court, the case has been given to an Advocate General, one of its leading lawyers, who will produce an "Opinion". This is not binding but is prepared, in complete independence, as a legal solution to the case. The Judges of the Court will now begin their deliberations in this case, armed with the Opinion, and judgment will be given at a later date.

Advocate General Ján Mazák has confirmed that advertising for a wine suggesting a temporary beneficial effect on the stomach is prohibited. This applies also to claims that suggest that, owing to reduced acidity, the adverse effects of the wine on physical well-being are more limited than is usually the case with wines of that kind.

EU/USA in joint recognition of trusted traders

Certified trusted traders in the EU and the United States will enjoy lower costs, simplified procedures and greater predictability in their transatlantic activities, as a result of a recently signed mutual recognition decision. The two sides have formally agreed to recognise each other's safe traders, allowing these companies to benefit from faster controls and reduced administration for customs clearance. Importantly, the European Commission has explained, mutual recognition will also improve security on imports and exports, by enabling customs authorities to focus their attention on real risk areas. There are currently some 5000 companies approved as Authorised Economic Operators (AEOs) in the EU and the number is still growing.

The EU and US are strategic trade partners, with imports and exports accounting for almost €500 billion in 2011. The new decision will further boost trade opportunities and contribute to the smooth flow of goods between both sides, without compromising the high security standards on either side of the Atlantic. The joint decision will start to be implemented from 1 July 2012. AEOs in the EU will receive benefits when exporting to the US market, and the EU will reciprocate for certified members of the US Customs-Trade Partnership against terrorism (C-TPAT).

The Commission said that mutual recognition of respective trade partnerships would improve the protection of citizens against terrorist attacks, lead to more effective container inspection and provide important cost saving for companies.

Commission seeks to resolve the VAT treatment of vouchers

In VAT terms, a voucher is an instrument that gives the holder a right to goods or services, or to receive a discount or rebate in relation to a supply of goods or services. Neither the Sixth VAT Directive (77/388/EEC) nor the VAT Directive (2006/112/EC) provide rules on the treatment of transactions involving vouchers. However, uncertainty about the correct tax treatment can cause problems for cross-border transactions and for the commercial distribution of vouchers.

The absence of common rules has obliged Member States to develop their own solutions, which are inevitably unco-ordinated. The resultant mismatches in taxation cause problems such as double or non-taxation, but also contribute to tax avoidance and form barriers to business innovation. A Commission proposal puts forward changes to the VAT Directive as follows: defining vouchers for VAT purposes; clarifying the time of taxation; providing rules for distribution; and establishing rules with regard to discount vouchers. The proposal concerns both single-purpose (SPVs) and multi-purpose vouchers (MPVs).