Legal Practice Briefing No. 12

Number 12

17 June 1994

EUROPEAN UNION DEVELOPMENTS

Regulatory changes are occurring rapidly in Europe and
Australians must keep abreast of those changes in order
to adapt and succeed.

The Legal Practice through its European Office in Brussels
will publish regular issues of the Legal Practice Briefing to
keep clients informed of key EU developments.

European Economic Area (EEA)

The twelve European Union (EU) countries and the Scandinavian
and Alpine countries are rapidly changing their rules so
that trade and business can be done on much the same terms
throughout western Europe. The new European Economic Area
(EEA) agreement to form the world's largest free trade
area is now in force. The EEA will allow for the free movement
of goods, persons, services and capital throughout the
EU, Scandinavia and Austria. Trade, competition, business,
public procurement rules and rules on technical standards
will now be largely equivalent throughout western Europe.
Cooperation in a large range of policy areas, including
research and development, the environment and social and
consumer policy will be considerably enhanced.

European Union

In almost all cases, the opportunities and challenges
arising in Europe concern not only new rules but also a
shift in decision-making and regulatory power from individual
countries to the EU authorities in Brussels. The new EU
rules, the EU Commission and both the European Court of
Justice and national Courts will prevent a trader playing
by the old rules of individual country markets. At the
same time, the new rules and these same institutions are
more likely to be able to assist in solving problems in
Europe.

Standards

Differing Standards in Various EU States

Each EU country has standards for virtually every type
of industrial and electrical product and each EU country
has its own standards-setting body equivalent to the Australian
Standards Association. The best known are the DIN standards
body in Germany and the British Standards Institute in
the UK.

One of the objectives of the single internal market program
is to limit the extent to which standards restrict trade.
Until recently, products which satisfied the French standard
could not be sold in Germany unless they satisfied the
German DIN standard. After much debate it was recognised
that the purpose of a product standard was to satisfy certain
minimal functional, health and safety requirements in a
particular EU country. To overcome the problem of differing
standards the EU established for each category of products
certain minimum functional, health and safety requirements
for those products.

Minimum EU Requirements

If an Australian exporter's product satisfies the minimum
EU requirements, the product can be marketed throughout
the EU. If, however, a more detailed EU standard has been
established by either of the two main EU standards-setting
bodies 'CEN' for industrial standards and 'CENELEC' for
electrical standards or by a specific EU law, an Australian
exporter is presumed to comply with the minimum requirements
if the product complies with the detailed standard. The
clear advantage of these EU standards is that if a product
complies with the standard, it can be marketed throughout
the EU without having to comply with twelve standards and
obtaining certificates of conformity from the different
standards-setting bodies.

Options for Dealing with Obstacles

If an Australian product is prohibited from import or
sale in a particular EU country because the product does
not comply with the local standard a number of options
are open. The first is to apply to the local standards
authority for a certificate of compliance and cooperate
fully.

If the technical standard preventing import or sale is
one which has been introduced since 1984, it is important
to check with the EU Commission whether the particular
EU country concerned has notified the Commission of the
new standard. If the EU country's standard's authority
delays making a decision on an application or refuses to
grant a compliance certificate, a complaint should immediately
be made to the EU Commission.

If the country concerned did not notify the EU Commission
of the new standard, consideration should be given to taking
Court action seeking a declaration of non-enforceability
of the standard and possible damages for the loss of sales.

A second method of overcoming obstacles to trade is to
find out if there is a CEN or CENELEC standard for the
particular product. If there is, a certificate of conformity
should be obtained from another EU country which has introduced
the CEN or CENELEC standard. No EU country will then be
able to prevent the product being marketed on the ground
that it fails to comply with local standards.

Before exporting any product to the EU, a trader should
check whether there is an EU standard applying to the product.
The trader should ensure that the product complies with
the EU standard and should obtain a certificate of compliance
from one of the EU countries' standards bodies. Each EU
country's standards body is required to recognise the other's
certificates where the certificate is issued in respect
of a standard established by CEN or CENELEC.

Exchange Controls and Measures To Enhance
Competition

Exchange Controls

Virtually all exchange controls between EU countries and
Australia have now disappeared. If a problem occurs in
sending money from an EU country to Australia, it is normally
quite easy to transfer funds to another EU country and
then transfer the funds to Australia. If the underlying
transaction concerns the sale of goods within the EU, no
EU country can prevent the transfer of funds within the
EU without specific authorisation from the EU authorities.

Unfair Competition

Australian traders should take great care when entering
into any agreement or arrangement with competitors, suppliers
or distributors which might restrict competition within
the EU. In particular, licensing or distribution arrangements
which prevent or restrict cross-border sales within the
EU should be avoided unless they comply strictly with the
EU rules providing for specific exemptions from the EU
competition regulations.

Non-compliance with EU competition rules can result in
the following consequences:

  • the agreement will be void and unenforceable;
  • the EU Commission can impose heavy fines of up to
    10 percent of worldwide turnover; and
  • competitors can claim damages in the Courts.

If a trader is finding it difficult to gain entry to one
of the EU markets because, for example, all available distribution
networks are tied-up, a trade fair will not allow products
to be exhibited, or prospective purchasers or suppliers
are demanding exactly the same unreasonable purchase or
supply terms, a complaint of unfair competition should
be made to the EU Commission. In some instances, the threat
of a complaint to the competition authorities will be sufficient
to gain entry to the market.

If the problem occurs in only one EU country a complaint
can also be made to that country's national competition
authorities. Competition laws similar to the EU wide rules
have recently been introduced in Ireland, the Netherlands,
Belgium, Italy and Spain.

Government Enterprises

If a competitor is a State-owned or State-controlled enterprise,
a trader who is being competitively disadvantaged can also
complain to the EU Commission where, for example:

  • subsidies or other benefits are being provided to
    the publicly owned competitor; or
  • there is discriminatory tax treatment; or
  • there is discriminatory regulatory treatment by other
    State bodies.

In many cases the EU Commission can force the State-controlled
enterprise to act and be treated in the same way as any
privately controlled company. In a number of cases the
EU Commission has forced private companies and State-owned
enterprises to repay large subsidies given to them by one
or other EU government.

Regulation of the Post

The EU Council has asked the Commission to propose legislation
opening up the postal services to competition. The objective
is to maintain a universal service, protect the financial
viability of service providers, introduce cost-based pricing
and harmonise technical standards. The Commission has also
been asked to define services which are 'reserved' in the
sense that they are to be protected from competition.

Measures to Protect Consumers

Overview

The consumer protection measures in the EU which might
restrict imports into the EU from Australia concern labelling
and packaging of products, misleading advertising, retail
marketing practices, unfair contract terms and product
liability rules. The most important measures are product
liability rules which impose strict liability on a producer
and importer for any damage caused by a defect in a product.
If an Australian trader is simply selling to an importer
who does all the labelling, packaging and marketing to
the consumer, the EU consumer protection rules will probably
be restrictive only to the extent that the importer will
want the product supplied to comply with any statement
made with respect to the product.

Defective Products

In the EU, a defective product is defined as being a product
which does not provide the safety a person is entitled
to expect while the product is being used for a purpose
for which it could reasonably be expected to be put. Australian
producers should take care that their European distributors
are advertising and distributing their products only for
uses for which they were intended. If not, there is a risk
of damages claims for perhaps millions of dollars. In any
event, an Australian trader should consider insuring against
the risk of product liability claims.

Unfair Contracts

If an Australian trader is selling products directly to
consumers under a standard terms contract, care should
be taken that the contract contains none of the unfair
contract terms set out in the EU Directive and that the
required labelling and indications appear on the product.
This is particularly important for products such as chemicals,
medicines, food, electrical appliances and toys.

Labelling

An example of where labelling requirements have led to
trade friction and trade barriers is the labelling of Australian
wines. To overcome this problem the EU and Australia have
entered into an agreement which will prohibit Australian
wine exporters from labelling their wines with names such
as 'Champagne' and 'Sancerre'. Wines which are not properly
labelled may be destroyed or the infringing labels removed.

Agency Agreements

A new EU Directive relating to self-employed commercial
agents came into force on 1 January 1994. Its impact is
likely to be greatest in the UK and Ireland since the Directive
establishes obligatory rules on:

  • payment of commissions
  • notices of termination
  • indemnity payments or damages on termination of the
    agency agreement
  • post-termination non-competition clauses

Most of these changes benefit the agent rather than the
person or enterprise contracting for the agent's services.

Time-Share Marketing Practices

The EU Council has agreed on a proposal for restricting
the conduct and marketing of time-share holidays. Information
must be given to a buyer before a contract is signed and
strict procedures for cancellation and withdrawal must
be followed if the buyer changes his or her mind after
signing. There is a 'cooling-off' period of 10 days, and
a time-share company cannot take advance payment during
the cooling-off period.

Tourist Services

Strict rules exist about the provision of tourist services
in Europe, in particular relating to the information to
be provided to a prospective purchaser, the contents of
brochures and the contents of the mandatory written contract.
Sellers of travel packages in the EU must now be insured
and consumers have greater rights to redress in case of
failure to provide the advertised service. The Australian
travel industry must therefore provide a consistent standard
of service to European tourists, or European retailers
of travel packages will be faced with compensation demands
from disappointed tourists, which may result in a reluctance
to continue offering travel packages from Europe to Australia.

The Netherlands, Ireland and the UK have introduced new
rules complying with the EU Directive on packaged travel.
Under these rules travel agents and tour operators must
give detailed information and provide for compensation
to consumers if a travel package does not meet the advertised
service and standard.

Public Procurement - Government Contracts

Potential opportunities exist for Australian businesses
in Europe with the opening up of government contracts for
virtually all goods and services. New rules have been introduced
for a more transparent and strict system of calling for
tenders, common rules on the qualifications and selection
criteria for contractors, as well as appeal and enforcement
rules if proper procedures are not followed.

The new rules do not apply to contracts below a certain
value, to air and maritime transport, or to oil, gas and
coal exploration and extraction. They do, however, apply
to port and airport facilities and the supply of energy
products. The EU Government procurement market is estimated
to be worth some 15 per cent of the EU's GNP more than
800 billion Australian dollars.

The cosy government supplier arrangements which exist
in some EU countries are now being challenged both within
the national governments and in the EU Courts. Although
Australia is not a signatory to the GATT Public Procurement
Code, the rules applicable to a bid for an EU Government
tender will apply equally to an Australian enterprise and
an EU enterprise.

It might be noted that the rules on EU Government procurement
must also be followed by privatised companies with a special
or exclusive right granted by a public authority (for example,
British Telecom).

Tariffs

Imposition

A customs tariff based on the customs value of the goods
is imposed on most goods originating in Australia and entering
the EU. As a matter of law the same customs tariff is supposed
to be applied to imports into the EU regardless of which
EU country is the first country of import. However, this
does not always happen and, although it is theoretically
not possible, some EU countries still classify goods under
different customs headings and so apply higher or lower
customs tariffs. It is possible therefore, since the removal
of internal border controls in January 1993, to export
products to an EU country applying a lower tariff and then
transport them internally to other EU markets.

If one EU country's customs authorities apply a very high
tariff and another a lower tariff, a complaint may be made
to the EU Commission. If the complaint to the EU Commission
is unsuccessful, the complainant may apply to the appropriate
Court in the EU country where the goods were first entered.
This Court could then ask for an interpretative ruling
from the EU Court of Justice. It should be noted, however,
that the Court option is likely to be more expensive and
time consuming than making a complaint to the EU Commission.

Reduced and Suspended Tariffs

Australian traders who are using EU origin inputs or components
in the product they make and export to the EU, may reduce
their customs bill by a mechanism known as the 'outward
processing arrangements'. The procedure is as follows:

The EU input product, to be incorporated into another
product in Australia, is declared to the EU customs at
the time it is exported to Australia. It is declared as
being destined for incorporation into goods which will
later be imported into the EU from Australia. When the
processed goods are exported to the EU, the customs tariff
is reduced in proportion to the value of the EU inputs
contained in the goods.

A similar mechanism called 'inward processing arrangements'
is also available for Australian inputs entering the EU
for processing into another product before the processed
product is exported to a country outside the EU. Under
the inward processing arrangements, the customs tariff
normally imposed on the imported Australian inputs is suspended.
As soon as the processed product incorporating the Australian
inputs is exported from the EU, the suspension of customs
duties becomes permanent.

A complete suspension of customs duties is available to
traders selling to the EU either electronic components
or specialist chemicals used in the manufacture of other
products where the goods are in short supply or not available
in the EU.

Customs Value

Traders who export computer software to the EU should
be careful when invoicing their clients to record as separate amounts
the value of the software and the value of the media upon
which the software is recorded. An invoice or receipt in
which there is recorded only the total value of
the software together with the value of the media upon
which the software is recorded should never be issued.

Border Controls

Since the removal of EU internal border controls on goods,
it is now possible to enter goods into a neighbouring EU
country and deliver them indirectly to the target market.
If this is done on a large scale, restrictions may still
be imposed on the diverted goods before they enter the
target market. An EU authorisation can be granted to the
country where problems are being encountered. It should
also be noted that the EU can authorise a restriction on
all such exports to the EU, regardless of which EU country
they first enter.

The basic principle now, however, is that if a trader
is having difficulty sending goods directly to a target
EU market, there is no legal impediment preventing the
trader from sending the goods via a neighbouring EU country.

Pharmaceuticals and Medicines

Present Position

In 1992, Australia's medical and pharmaceutical exports
to the EU were worth some $85 million. To market a particular
pharmaceutical in the EU it is necessary to seek prior
authorisation in each of the twelve EU countries. Recognition
of certain tests and trial data, the introduction of common
detailed standards and rules on information about the pharmaceutical
has made the authorisation process a little easier, but
twelve authorisation procedures still remain.

A Single Agency for Importation and Sales

An Australian exporter of pharmaceuticals will soon be
able to apply to a single agency for authorisation to import
and sell medical products into any EU country. At the end
of 1992, the EU countries agreed that a new system for
authorisation would be introduced to be in place within
the next two years. Essentially, the system will be:

  • For most medicines, an authorisation granted in one
    EU country will be recognised by all EU countries unless
    a serious objection is raised. The national authorities
    will seek a solution to any objection and if no agreement
    is concluded, the matter will be referred to the new
    European Agency for the Evaluation of Medicinal Products
    (EAEMP) for its opinion. Once the EAEMP's opinion is
    ratified by the EU Commission, the opinion will be binding
    throughout the EU.
  • For biotechnology products, there will be a centralised
    authorisation by the EAEMP which will be ratified by
    the EU Commission.

This system would still allow for national authorisations
where the product is limited only to the EU country of
authorisation. Instead of twelve authorisations, however,
only one will be needed. The EAEMP will supervise the authorising
of pharmaceuticals submitted to one EU country's regulatory
body. Once authorisation has been granted by that EU country,
all other EU countries will have to recognise the authorisation.

Food Products

Health Protection

In order to protect the general health of its population,
an EU country will often restrict the importation of food
products. Where an EU country is attempting, either directly
or indirectly, to stop the import or sale of a food through
restrictions on trade across internal EU borders a trader
has a number of options.

The first step should always be to attempt to resolve
the problem with the national food authorities. If no satisfaction
is obtained from the national authorities a complaint may
be made to the EU Commission. If there has been a particularly
blatant and unwarranted abuse of national health and safety
rules, the EU Commission may take over the case and commence
European Court proceedings in the EU Court against the
country concerned.

Alternatively, a trader may simply import and sell the
product and wait for the national health authorities to
prosecute. The national Court could then refer the issue
to the European Court. National authorities may also restrict
indirect imports via another EU country on grounds such
as:

  • unfair competition and consumer protection
  • environmental protection and public policy
  • protection of the health of plants and animals

Court action will probably be lengthy and may be unsuccessful.
Sometimes the risk is very high because the intentional
infringement of public health legislation is often a criminal
offence.

Factors for a Trader to Consider

A trader who is faced with a restriction on the import
and sale of food should take into account the following
factors:

First, if there is an EU rule which permits the conduct,
the EU country cannot prevent the indirect import on the
grounds that the conduct infringes the national rules of
the country concerned.

Second, if there is no EU rule permitting the conduct
and a less trade restrictive mechanism can be used to protect
the health and safety of consumers, the less trade restrictive
mechanism should be used. For example, if the same objective
can be achieved by better labelling or providing more information
with the food product, the information and labelling requirements
should be enhanced rather than a blanket ban being imposed
on the import or sale of the food product.

Third, the onus is on the national health authorities
to show that there is a real scientific basis for a trade
restriction on the grounds of protecting health.

Finally, there must be a mechanism by which the national
authorities can assess whether the restriction on internal
EU trade is justified.

New Rules on Traditional Foodstuffs

Agreement has been reached in the EU Council to allow
EU countries to prohibit the use of additives in traditional
foodstuffs. EU countries may maintain restrictions or prohibitions
on the use of additives in traditional foodstuffs if these
restrictions existed on 1 January 1992. The production
and sale of all other foodstuffs produced in conformity
with Union rules on additives must also be permitted in
the particular country.

The Maastrict Treaty and the European
Monetary System

General Implications

The Maastricht Treaty has now come into force. This occurred
at the same time as a partial collapse of the European
Monetary System (EMS).

Most provisions of the EMS are spelt out in the Maastricht
Treaty and are supposed, among other things, to fix the
exchange rates of each EU currency before the introduction
of a single currency by the target date of 1 January 1999.

EU countries are to coordinate their economic policies
and avoid excessive government deficits. EU countries must
prohibit loan facilities at the Central Bank as well as
prohibit non-commercial guarantees by the State. Privileged
access to finance by government or government bodies must
also be prohibited.

At the same time a European System of Central Banks (ESCB)
and the European Central Bank (ECB) will be established
with the exclusive power to authorise the issue of banknotes
in the EU. The primary objective of these two bodies is
to 'maintain price stability'.

Questions of monetary policy including interest rates,
foreign exchange operations, management of foreign reserves
and regulation of payment systems will be the responsibility
of the ESCB. The Maastricht Treaty also envisages that
the ECB will take over the supervision of banks and other
financial institutions, although not insurance enterprises.

Effects on Australian Traders

These changes will directly affect Australian bankers,
brokers, investment enterprises and foreign exchange dealers
active in the EU. Instead of being supervised by the Bank
of England or the Bundesbank, the transactions will be
supervised by the European Central Bank.

While it may be some time before these changes actually
occur, they are clearly on the way and even if the target
of January 1999 is not reached, the gradual movement towards
a single currency in Europe is continuing. The Maastricht
Treaty will be one of the motors forcing Europe in that
direction.

In other areas also the Maastricht Treaty might have implications
for Australian traders. Capital movements between the EU
and Australia will be liberalised allowing easier investment
in both the EU and Australia. An EU-wide visa system will
be introduced for Australians and other non-EU citizens
and it will not be necessary to obtain separate visas for
Spain and France. Those in the air and maritime transport
sectors will probably be granted licences on an EU-wide
basis rather than under a bilateral arrangement with each
EU country.

New business opportunities ought to arise in areas where
the EU authorities have new competences under the Maastricht
Treaty. Areas where Australia has significant expertise,
for example, distance education, public health, long distance
transport, telecommunications and energy supply and the
interoperability of the utilities networks, are potentially
huge markets for Australian businesses. The new emphasis
on and extra funds being provided for environmental protection
and funds for the less developed regions, particularly
in Southern Europe, is another potentially lucrative source
of business for Australians.

A trader doing business in or with Europe whose funds
are even partly being provided through the EU authorities
would be wise to deal through a European partner, agent
or distributor. If this is not possible, a company should
be established in Europe to be responsible for all dealings
with European authorities. This is particularly important
if funds for a project are being paid directly from the
EU. EU authorities are unlikely to fund an Australian enterprise
if they can fund a Portuguese, Greek or Irish enterprise.

Cooperation in Law Enforcement and Defence Matters

The Maastricht Treaty contains two other matters which
will probably not directly affect Australian traders, but
which are of general interest.

The first is that there will be much greater cooperation
between police in criminal matters and in relation to controls
concerning people entering the EU. Asylum seekers and refugees
are likely to be subject to much stricter controls.

The second is in the area of foreign and security policy.
EU countries are now obliged to cooperate fully in foreign
policy and will act more as a block in defence matters.
Defence cooperation with Australia is now more likely to
be made through the Western European Union as well as bilaterally
and in NATO. Those involved in the defence industry, particularly
with products which can be used for both civil and military
purposes, are likely to see import and export controls
in Europe being determined by EU authorities rather than
individual EU country controls.

Financial Services

Credit Institutions and Insurers

Banks and insurers with a licence in one EU country may
now conduct business anywhere in the Union in the same
way as local banks or insurers. However, different consumer
protection and advertising rules in each EU country may
apply. A similar system will soon be extended to providers
of investment services and stockbrokers as well. Australian
investment service providers should note that there are
now strict rules on insider trading throughout the EU.

Australian credit institutions licensed to do business
in the EU will need to comply with new rules on large exposures,
as well as limits on shareholdings in a non-financial institution.

One of the clear advantages of these changes for Australian
traders is that they can now use the same financial institution
or insurer for all their European business there will be
no need for an intermediary in each EU country.

Cross-Border Payment Systems

The EU Commission has announced an action plan aimed at
enhancing the efficiency and transparency of cross-border
payments. The voluntary code of conduct is to be studied
again to determine whether it has remedied the high cost
and lack of transparency in cross-border payments.

Should the Commission study find that no real improvements
have occurred, the Commission will probably introduce a
draft Directive to force compliance by financial institutions.

Export Credit Insurance

New rules have been proposed on non-marketable risk in
the field of export credit insurance. The rules are designed
to ensure that EU exporters have the same carriage coverage
available throughout the EU at a similar cost. They are
also aimed at eliminating State-sponsored guarantees for
short-term risk.

The proposed Directive will harmonise the methods by which
EU countries assess the real and political risk of exporting
to a particular country.

Legal Status of Directives

EU authorities have the power to issue Directives, Regulations
and Decisions.

Decisions and Regulations

Decisions are addressed to particular legal persons and
are used to adopt individual administrative acts. Regulations
are non-individualised, are of general application and
are binding in all respects. Most importantly, Regulations
are directly applicable in each EU country and require
nothing further to be enforceable by or before any arm
of Government, the administration or the Courts.

Directives

Directives are, however, not directly applicable in EU
countries. A Directive is binding in relation to the result
to be achieved for each EU country to which it is addressed,
but each EU country has the freedom to choose the form
and method of achieving the required result. For example,
the Directive on Product Liability sets out the basic result
strict liability which must be achieved through a change
in the laws of each EU country. Most countries passed new
laws while others introduced administrative regulations.
The Directive also gives EU countries an option for the
strict liability regime to apply to agricultural products
or not. No such option would be in a Regulation.

A Directive is only ever directed to an EU country and
invariably has a date by which it must be implemented.
Any action on a Directive can only be taken against the
EU country which has wrongly implemented or failed to implement
the Directive.

Recent cases have shown that an individual can obtain
compensation for the failure of an EU country to properly
achieve the clear result required by implementation of
a Directive. Private parties have begun to take further
action on the basis of this recent expression of the law
by the European Court.

Intellectual Property Rights

EU Trademark Introduced

Following an agreement that the EU's trademark office
be established in Alicante in Spain, the EU Council has
agreed on a new regulation establishing a Union trademark.
The Union mark will automatically be valid throughout the
EU and it is expected to extend to the Scandinavian and
Alpine countries also. The mark will confer on its owner
the exclusive right to prohibit any third party from using
the trademark without his or her consent. Existing national
trademark systems will continue, but a trademark will not
be able to be registered simultaneously under both a national
system and the Union system.

Copyright Protection

A new Directive has been adopted on the duration of copyright
and neighbouring rights. In general, copyright will be
protected for 70 years after the death of the author, while
neighbouring rights will be protected for 50 years from
publication of a work. If the work is protected in at least
one EU country on 1 July 1995 the copyright owner can benefit
from the 70-year or 50-year protection period.

Restrictive Practices

In principle, the protection of the specific subject matter
of a copyright entitles the copyright-holder to reserve
the exclusive right to reproduce the protected work. The
copyright cannot, however, be used in such a way that it:

  • pursues an aim which is manifestly abusive of a dominant
    position in the market (EC Treaty Article 86); and
  • is no longer exercised in a manner which corresponds
    to its essential function which is to protect moral rights
    in the work and to ensure a reward for the creative effort.

The EU Court of First Instance has indicated that agreements
(for example, transferring copyright or granting reproduction
rights) which restrict or distort competition will only
be permitted if the restrictions on competition are inherent
in the protection of the actual substance of the intellectual
property right. This suggests that any ancillary or unrelated
restriction on competition, which arises out of the exercise
of the intellectual property right, will be contrary to
EU law.

In previous cases EU Courts have found that holders of
trade marks, patent rights or registered designs cannot
enter into agreements so as to prevent parallel imports
within the EU thereby distorting competition in the common
market.

In Brief

Employment and Education

Working Hours

A controversial 'working time' Directive which guarantees
minimum daily, weekly and annual rest periods has been
adopted by the EU Council. The average working week will
be limited to 48 working hours, including overtime. Night
work is to be limited to an average of eight hours per
night. The UK has said that it intends to bring a Court
action challenging the legal basis of the Directive.

Sex Discrimination

The EU Court has ruled that an employer must justify the
existence of differences in pay between male and female
employees doing work of equal value. In Enderby the
court held that where there is prima facie evidence of
discrimination the burden of proof shifts from the employee
to the employer so as to give employees effective means
of enforcing their rights under EU law.

Rail Transport

Third Party Access

Following an earlier Directive on the separation of rail
track ownership and rail transport services, it is proposed
by the EU Commission that the principle of 'third party
access' be applied to the EU's rail network. The proposal
is designed to ensure that track access conditions are
non-discriminatory, equitable and transparent, as well
as to establish minimum standards for private railway companies.

Taxation

An EU Commission paper proposes to reform the existing
tax system so as to include environmental taxes. It is
proposed that taxes which create distortion and hinder
competition, such as national insurance and value added
tax, could be replaced by so-called 'green' taxes. It is
considered that the introduction of taxes on, for example,
land fill sites or packaging, would benefit the environment
while permitting a reduction of the existing tax burden.
This tax is one of a number of proposed environmental taxes,
including a tax on fossil fuels such as coal and natural
gas.

Joint Ventures

The EU competition authorities have introduced an accelerated
procedure for clearance of cooperative joint ventures (JVs)
so that the treatment of cooperative JVs is substantially
the same as that for concentrative JVs. (The EU Commission
considers that JVs are concentrative when the parents withdraw
from the market, as well as from upstream and downstream
markets, and at the same time establish an autonomous economic
entity in the JV.) The purpose is to seek to have enterprises
make decisions on the structure of their JV arrangements
independently of the procedural rules followed by the EU
Commission.

The Environment

New Packaging Rules

The EU Environment Council agreed on a compromise solution
for the problem of packaging and packaging waste. Initial
targets have been set for recovering between 5060 per cent
of packaging of which 2545 per cent should be recycled.

Environmental Subsidies

The EU Commission has adopted new rules for assessing
the compatibility of environmental State aids (subsidies)
with provisions of the EU treaty. Running costs subsidies
may be permitted if they are limited in time and are necessary
to implement new costly policies such as the treatment
of waste. Subsidies to assist in the purchase cost of environmentally
friendly products may also be allowed but only if there
is no discrimination between suppliers and the EU rules
on free movement of goods are respected.

Telecommunications

New Action on Satellites

The EU Commission has approved a draft Directive aimed
at the compulsory opening of satellite equipment and service
markets in the EU countries. This would amend the Commission's
1990 Telecommunications Services Directive, banning the
granting to preferred operators of 'exclusive' or 'special'
rights to provide satellite telecommunication services.

Satellite Broadcast Copyright Convention Adopted

The Council of Europe has adopted a Convention to end
years of controversy over copyright in works broadcast
by satellite. The Convention will solve disputes arising
when a program is composed in one country and transmitted
to a satellite in another country by providing that copyright
in works broadcast by satellite will be governed by the
law of the State where the transmission originates. The
Convention was signed on 11 May 1994 and will come into
effect after its ratification by seven States.

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

The material in this briefing is provided
for general information only and should not be relied
upon for the purpose of a particular matter. Please contact
the Legal Practice before any action or decision is taken
on the basis of any of the material in this briefing.

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