Issue 20 - July 2014

Intro by John Kornblum
Of Counsel, Noerr LLP
former US Ambassador to Germany
Dear Reader,
Whether one is from business, the law, banking or government, making sense of the current state of world affairs is very difficult. Violence continues to plague several parts of the world, as does political and economic instability. European Parliamentary elections brought more uncertainty about the future of European institutions. A deep division over choice of the President of the European Commission led to tensions across the Union, especially with Great Britain. Not content with difficulties in Europe, the UK is now facing an uncertain referendum over Scottish independence. If that weren’t enough, the Centennial of the assassination of Archduke Ferdinand in Sarajevo turned up on June 29.
This is one of those periods in human history when maintaining the stability of our legal and political institutions is of highest importance. Another important event last month was the 800th anniversary of signature by King John of England of the Magna Carta, the first grant of democratic rights by a European Monarch. As we fight our way through the confusion of modern technology and globalization, it is important to keep this long history of Western struggles for human rights in mind. After centuries of battle, our societies have devised the best method yet seen to regulate with justice the basic relationships between individual and the state and between personal rights and the collective rights of the Community. Noerr salutes hit anniversary as the foundation of our work, for our clients and our society every day of the year.
Yours sincerely
John Kornblum
European Union
Medical Devices 
Online Gambling 
Energy Security 
Trade Secrets 
Financial Markets 
Energy Efficiency 
“Umbrella Effect” 
Product Regulation I 
Product Regulation II 
Selective Distribution 
Renewable Energies 
Embargo: Ukraine 
Hungary: Competition
Romania: Competition I
Romania: Competition II
Czech Republic: Emissions
Poland: Mining
Poland: Energy
European Union
Healthcare/Medical devices: Update on EU regulations on medical devices
In September 2012, the European Commission submitted its proposal for new EU Regulations on medical devices and in vitro diagnostics – followed by extensive discussions amongst interest groups and associations in order to mitigate detrimental effects on the industry sector. The on-going legislative process is still complicated by different perceptions in the Member States and, therefore definition of a common position concerning the legislative proposals cannot be predicted at present. In consequence, commencement of negotiations between Commission, Parliament and Council (“trilogue procedure”) is not expected before autumn 2014, entry into force of the Regulations will most likely not take place before 2017. Once in force, the Regulations will, however, be directly applicable in Member States without the need for implementation on national level.
The draft Regulations include measures of EU-wide standardisation, e.g. requirements for the labelling of medical devices and technical documentation, classification standards and the requirement to implement a unique device identification system. Some of these measures are still subject to controversial discussion (e.g. the proposals for the reprocessing of medical devices). On the contrary, the measures adopted by the EU Commission on 24 September 2013 to improve consumer safety by implementing stricter criteria for nomination and supervision of admission organs (“notified bodies”) have already been widely acknowledged by experts as appropriate means to reduce the amount of notified bodies.
Please contact Fabian Raddatz
Telecommunications: Will financial regulation soon be extended to mobile network operators?
A reform of the European Payment Services Directive (2007/64/EC) is on its way. By the end of this year, this reform could set an end to the regulatory holidays granted so far to mobile payment services provided by mobile network operators (“pay by smartphone” for ringtones, gaming, tickets, etc.).
The current draft directive grants only two exemptions from regulation, limited to the purchase of digital content. Firstly, transactions in which the network operators merely mediate between a content provider and a third party payment provider, secondly, transactions of minor value related to services ancillary to the operators’ core business. All other payment services provided by mobile operators could become subject to financial regulation requiring, e.g., statutory permissions and a constant demonstration of sufficient capital resources.
The reform requires mobile network operators to take strategic decisions now as mobile payments continue to gain importance in the mobile services portfolio.
Please contact Michael Bergmann
Online gambling: EU Commission recommends first principles
Online gambling is a fast growing service activity in the EU, with annual growth rates of almost 15%. Annual revenues in 2015 are expected to be in the region of €13 billion, compared to €9.3 billion in 2011. In the light of these fast pace developments, the European Commission has just recently (14 July 2014) adopted a Recommendation on online gambling services. The aim is to protect all citizens, and in particular the children, from the risks associated with gambling. The Recommendation encourages Member States to pursue a high level of protection for consumers, players and minors through the adoption of principles for online gambling services and for responsible advertising and sponsorship of those services.
The Commission’s Recommendation sets out a number of principles that Member States are invited to take up in their gambling regulations. For example basic information requirements for gambling websites, certain requirements for registration and authentication to ensure that minors are not able to gamble online, training requirements for employees of online gambling operators and rules to make advertising and sponsorship of online gambling services more socially responsible and transparent. Member States are invited to inform the Commission about the measures taken in light of the Recommendation 18 months after its publication and the Commission will evaluate the measures taken by Member States 30 months after publication. These Recommendations will not have a great impact on the – even stricter – German gambling legislations. But it needs to be closely monitored how the Recommendations affect todays liberal gambling regimes. And after all, the Recommendations are one first step of harmonization.
Please contact Christian A.  Mayer
Energy: European Energy Security Strategy
The European Commission adopted the European Energy Security Strategy which aims to increase the resilience of the EU energy system and to reduce the dependence on external suppliers. Among the main measures proposed there are completing the internal energy market, diversifying suppliers and routes, increasing domestic production, increasing energy efficiency and having a common external energy policy. The proposal will be discussed at the European Council on 26-27 June. The Commission also published an in-depth study of the security of the EU energy system.
Please contact Christof Federwisch or Giovanna Ventura
Trade: New framework for trade secrets protection
The Council of the EU agreed on a general approach for establishing a new legal framework for the protection of trade secrets. The new framework aims at making it easier for national courts to deal with the misappropriation of confidential business information, removing trade secret infringing products from the market and making it easier for victims to receive compensation for illegal actions. The agreement foresees a minimum harmonisation of the different civil law regimes, the establishment of common principles and a limitation period of six years for claims. Now the Council can start the negotiations with the European Parliament with a view to reaching an agreement at first reading.
Please contact Bärbel Sachs or Giovanna Ventura
Banking & Finance: Efficiency of the EU financial markets
The Council of the EU adopted new rules to promote the integration, competitiveness and efficiency of the European financial markets, amending and replacing the existing directive on markets in financial instruments (MIFID). They consist of a Regulation (MIFIR) which improves transparency and competition between trading activities and a Directive (MIFID) amending rules on the authorisation and organisational requirements for providers of investment services and on investor protection. The new legislation will also have effects on the energy sector, for example extending certain obligations to additional financial instruments, in particular emissions allowances and physically settled contracts traded on Organised Trading Facilities. The regulation and the directive, for the most part, will apply thirty months after entry into force.
Please contact Jens Kunz or Giovanna Ventura
Energy: Energy Efficiency Directive now applicable
On 5 June, the Energy Efficiency Directive (2012/27/EC) became applicable in all the Member States. The Directive establishes a framework for the promotion of energy efficiency, imposing binding EU-wide energy efficiency targets for 2020 that are expressed in maximum values of primary and final energy consumption. The Directive requires Member States to translate the EU wide targets into national indicative targets which vary from country to country and may become mandatory in the future. For the future, the Commission is expected to propose an increase of the energy efficiency targets for 2030.
Please contact Tobias Greb or Giovanna Ventura
Competition: Cartelists can be held liable for “umbrella effect”
Anti-competitive agreements such as price fixing typically lead to higher prices charged by the cartelists to the detriment of their customers. However, a cartel can also create an incentive for other companies that do not actively participate in the cartel agreements to raise their prices in order to adapt them to the market price resulting from the cartel ( “umbrella effect”).
On 5 June 2014, the European Court of Justice ruled that victims of this price increase (umbrella effect) must be able to claim full compensation for losses sustained from the members of the cartel (case C-557/12 – Kone and Others). According to the Court, as a consequence national law may not require a contractual link between the victim and the member of the cartel in order to grant compensation.
This decision will increase the cartelists’ risk of higher compensation claims in the future, although in practice it will be difficult for victims to prove losses they suffered from the umbrella effect. In any case, the Court’s ruling is likely to further enhance private enforcement by strengthening the position of cartel victims in court proceedings but in particular also in settlement negotiations.
Please contact Sebastian Janka or Gustav Schubert
Environment: Amendments to regulations on Environmental Impact Assessment
The newly amended Environmental Impact Assessment (EIA) Directive (2014/52/EC) entered into force on 15 May 2014. The main aim of amendments was to introduce clearer rules for conducting the EIA in respect of better protection of human health and the natural environment as well as to simplify the EIA procedures.
During the EIA, new factors are to be considered, such as biodiversity or climate change. In respect to prospecting, exploration and production of shale gas, the authorities would have to consider the risk to human health of contamination to water and soil as well as the regenerative capacity of underground water resources. The amendments also ensure easier participation of citizens (via central Internet portal) and limitation of conflicts of interest. The EIA reports also have to contain information about the number of conducted projects in the area in order to avoid practices of dividing large projects to avoid exceeding the imposed limits.
Member States of the EU will have to apply these rules as from 16 May 2017 at the latest and must communicate the adopted amendments to the EC.
Please contact Paweł Żelich
Biocidal Product Regulation: Transitional period for treated articles clarified
The Biocidial Product Regulation (EU) No. 528/2012 (BPR) is applicable since 1 September 2013 but only with Regulation (EU) No 334/2014 of 11 March 2014 have transitional measures for treated articles been clarified. The amendment applies retroactively from 1 September 2013. The BPR, for the first time, contains specific provisions regarding marketability of treated articles, i.e. articles treated with biocidal products. The original text of the BPR created an unintended ban on treated articles that were not on the market on 1 September 2013 because transitional periods did not apply to treated articles placed on the market after that date. The amended text of Article 94 BPR governing transitional periods for treated articles removes this market barrier.
For all treated articles, however, an application for approval of the active substance relating to the specific product type must be submitted by 1 September 2016 unless the active substance is already included in the review programme or approved. If an application for the approval of the active substance is not made by 1 September 2016, the treated article must be taken off the market by 1 March 2017. And even if an approval is granted, the treated article can stay on the market only until the approval expires. In case the application is rejected, articles treated with biocidal products containing that active substance can only remain on the market for a period of 180 days after the decision.
Please contact Martin Ahlhaus
Biocidal Product Regulation: New procedural rules for the renewal of authorisation
On 4 June 2014 Commission Delegated Regulation (EU) No 492/2014 of 7 March 2014 supplementing Biocidal Product Regulation (EU) No 528/2012 (BPR) entered into force providing supplementary rules for the renewal of authorisations that are subject to or granted through mutual recognition. The new rules apply in case a Member State has granted an initial authorisation for a biocidal product and a different Member State has granted an authorisation through mutual recognition of the first authorisation. An application for renewal of an authorisation shall be made by using the R4BP application form.
The new procedures ensure that a single application for renewal sent to the competent authorities of the reference Member State, i.e. the Member State that has granted the initial authorisation, covers all linked national authorisations. As with all national authorisations, companies have to submit an application for renewal at least 550 days before the expiry date of the authorisation. Product authorisations can be granted for an initial maximum period of 10 years and the renewal should not be granted for a longer period than the initial authorisation.
Please contact Martin Ahlhaus
Competition: Fine of €1.06bn imposed by the EC on Intel confirmed
The Commission found that Intel’s market share, between 1997 and 2007, was around 70% and that it used this dominant position to grant exclusivity rebates and premiums. Between 2002 and 2007, Intel firstly granted manufacturers a rebate, provided they exclusively or almost exclusively purchased from Intel. In addition, Intel paid chain stores for selling only computers with Intel processors. In addition, manufacturers also received payments if they delayed, limited or refrained sales of computers with processors from Intel’s competitor AMD.
Both the rebates and the payments contributed, in the view of the Commission and the Court, to restricting the market for computer processors by reducing the incentive for PC manufacturers to install processors of competitors. The Court underlined in a number of respects the strict standard applied by the Commission on exclusivity strategies pursued by market-dominant companies.
The decision is in line with previous Court judgments and the Commission decisions according to which discounts granted by dominant companies can be abusive if they go beyond pure quantity and functional rebates.
Please contact Alexander Israel
Infrastructure: New rules to support important projects of common European interest
As part of the Commission's State Aid Modernisation initiative, the European Commission has set out criteria under which Member States can support transnational projects of strategic significance for the EU and for the achievement of Europe 2020 objectives. The communication will enter into force on 1 July 2014.
It aims at encouraging Member States to channel their public spending to large projects that make a clear contribution to economic growth, jobs and the competitiveness of Europe. Where private initiatives fail to materialise because of the significant risks and the transnational cooperation such projects entail, Member States may fill the funding gap to overcome such market failures and boost the realisation of projects that otherwise would not have taken off.
Typical but non-exhaustive examples of important projects of common European interest are the joint development of a research infrastructure in the area of R&D, as well as trans-border transport projects.
Please contact Maria König
Competition: German Federal Cartel Office sees Asics’ selective distribution system presumably in breach of competition law
The clauses hinder Asics’ retailers (i) from selling Asics shoes via online market places like Amazon and eBay, (ii) from supporting price comparison engines and (iii) using Asics’ brand names on the website of third parties. In sum, they constitute a de-facto ban on internet sales according to the FCO’s preliminary assessment.
The FCO set Asics a deadline until 10 June 2014 to comment on the findings.
In parallel proceedings against Adidas, on 7 May 2014, the FCO started to conduct a web-survey of approximately 3000 retailers, which offer Adidas products off- and online.
Please contact Lita Silje Schmitz
Energy: Future promotion scheme for electricity from renewable energies in Germany
The German promotion scheme for electricity from renewable energies (EEG) is currently under revision. The revised scheme will most likely enter into force on 1 August 2014.
The revision aims at an on-going attractive promotion of renewables, while trying to curb the costs for the general public at the same time. As a consequence, the financial support pursuant to the revised scheme will be focussed on wind energy as well as solar energy. For all major energy sources, annual goals for new installed capacity will be implemented (e.g. 2,500 MW for solar and onshore wind energy). These goals are enforced by a variable reduction of the financial support.
The financial support for wind energy and solar energy in particular remains attractive. For this reason, many renewable energy projects in Germany will continue to be interesting investment opportunities – in particular as the financial support will still be granted for a period of 20 years (plus the year of commissioning).
However, the next change is already on the horizon. From 2017, the financial support for electricity from renewable energies shall be based on a bidding process. While no details have been made public yet, this model might lead to more complex and challenging financing structures for renewable energy projects. For this reason, the intended change has been heavily criticized in the public debate.
Please contact Christof Federwisch
Environment: ECHA must amend procedures regarding use of language
On 21 May 2014, the German Board of Appeal decided that ECHA breaches the principle of sound administration by not using an official language of the specific Member State in which a registrant under REACH is resident. In the present case, ECHA had conducted a verification of the enterprise size of the registrant. As ECHA found that the company was not entitled to the reduced registration fee for small and medium size enterprises, an additional registration fee was levied upon the registrant. ECHA conducted the procedure in English only whereas the registrant involved was a company with its registered offices in France.
The Board of Appeal decision found that ECHA is obliged to initiate and conduct procedures vis-à-vis a registrant in accordance with Article 104(1) of Regulation (EC) No. 1907/2006 (REACH) and Article 3(1) of Regulation No. 1 of 15 April 1958 ECHA and, thus, in an official language applicable in the Member State in which the registrant is resident. The Board’s decision will have a tremendous effect not only on future SME verification procedures following the end of the 3rd transitional period for registration on 1 June 2018, but also on dossier and substance evaluation procedures, authorisation procedures and any other procedure initiated by ECHA under REACH.
Please contact Martin Ahlhaus
Trade: The EU and Germany impose Ukraine-related embargo measures
Following the events on the Crimean Peninsula, the European Union as well as Germany decided to take action and applied a number of restrictive measures against Russian and Ukrainian citizens by the end of March 2014. The EU imposed travel restrictions and the freezing of funds and economic resources of certain persons seen as responsible for actions that undermine or threaten the territorial integrity and sovereignty of Ukraine have come into effect. The list of natural or legal persons, entities or bodies has been amended several times, most recently in May 2014. In addition, the German government has decided not to issue export licences regarding the delivery of armaments to Russia anymore. Beyond that, the proper agency – BAFA – currently also takes more time than usual for licensing procedures regarding dual use goods. As the German Minister of Economic Affairs Sigmar Gabriel declared, the approval of those supplies needs more time than usual since in the Ukraine crisis it would essential to make sure dual use goods will not be used in the military sector. From a legal point of view, this last measure is unsatisfactory: In practice, German undertakings can currently not deliver dual use goods to Russia while at the same time it is harder than usual to prove a case of force majeure, as, theoretically, export licenses can still be issued.

Please contact Bärbel Sachs

Gambling Regulation: Important judgment on current German gambling regime
In Germany, the organization and facilitation of games of chance on the Internet and the advertising therefor on television, the Internet and via telecommunications networks are, in principle, prohibited. It is in principle up to each Federal State to decide on its gambling laws. But in practice all States have today established one common gambling regime, laid down in the Inter-State Treaty on Gambling (Glücksspielstaatsvertrag - GlüStV).
But, from 1 January 2012 until 8 February 2013, the organization and facilitation of games of chance on the Internet was authorized by more liberal gambling laws in Schleswig-Holstein. That authorization was granted to any person who, in the EU, met certain objective conditions – and over 50 licenses, valid for six years, were granted during that time. With reference thereto, the Court of Justice was asked whether the more liberal policy adopted by Schleswig-Holstein for more than one year may affect the compliance of the prohibition on games of chance in the other Federal States with the rules on the freedom to provide services under EU laws. Although permitting Member States to limit that fundamental freedom in relation to games of chance, EU law requires that any restriction must be appropriate to achieve the public interest objectives justifying its adoption.
In its recent judgment dated 12 June 2014 (C-156/13 – Digibet & Albers), the Court of Justice of the European Union responded to these questions. The Court of Justice declared that the more liberal policy adopted temporarily by the Land Schleswig-Holstein on games of chance does not damage the consistency of the stricter policy pursued by the other German States. The Court of Justice holds that the German legislation on games of chance is capable of being proportionate to the public interest objectives it pursues and, therefore, of being compatible with the freedom to provide services. However, it is for the national courts to verify whether the legislation at issue satisfies all the conditions of proportionality which are laid down in the case-law of the Court of Justice. Although the recent judgment is clearly in favour of the current GlüStV, it is not at all a “free ticket” on EU laws. There are still reasonable doubts concerning the justification of the current GlüStV - as well as the latest decision thereon by the Court of Justice. There is hope that this judgment does not change the current rather liberal enforcement practice.
Please contact Christian Mayer
Air Transport: Constitutional court hearing on German departure tax
On 20 May 2014, the Federal Constitutional Court in Karlsruhe heard the case concerning the constitutionality of the Air Transport Tax Act (Departure Tax) brought forward by the State of Rhineland Palatinate. In the hearing the court seemed to be mostly concerned about the very rough tax tariff scheme which is based on the distance to the main airport of a destination. The court seemed to prefer a more detailed scheme taking into account exact distances. A date of the delivery of judgement will be announced soon.
Please contact Uwe Erling or Tim Uschkereit
Central & Eastern Europe
Hungary: Statement of settlement in antitrust cases
The Hungarian Competition Act will be significantly changed as of 1 July 2014. One of these changes is the introduction of the option for settlement in antitrust cases.
After the final investigation report the Competition Council must interview the client and disclose to the client the illegal conduct of which it is accused, the evidence underlying the charges and the fine that may be imposed for such infringement, showing the minimum and maximum amounts. If the client and the Competition Council reach a common position, the Competition Council must request the client to submit a statement of settlement.
The statement of settlement shall contain inter alia (i) the client’s statement clearly admitting participation in the illegal activity, (ii) the highest amount of the fine the client deems acceptable, (iii) the client’s waiver of his right to appeal the resolution.
The statement of settlement may be withdrawn if the Competition Council’s resolution differs on the merits from what is contained in the statement of settlement, including the case where the amount of the fine imposed exceeds the offered amount. In that case, the statement of admission will not be admissible as evidence.
Please contact Ákos Bajorfi
Romania: Romanian Competition Council adopted the guidelines on co-investment agreements and shared use of mobile electronic communications networks
The Romanian Competition Council has published the “Guidelines on co-investment agreements, or on shared use of mobile electronic communications networks”. The document presents the general framework that must be observed by undertakings that want to cooperate in order to develop and together use their assets, so that they do not fall under the competition rules and relevant restraints.
The scope of the Guidelines is to provide an overview on how to approach this type of horizontal agreements, the particular issues being addressed are based on specific case law.
Please contact Luiza Bedros
Romania: Secondary Romanian competition legislation under revision
The Romanian Competition Council continues the review and update of its secondary legislation related to rules for access to the Competition Council file, the leniency programme, rules for acceptance of commitments, the investigation procedure and penalizing anticompetitive practices.
The proposed amendments were under public debate until 3rd of June 2014. These updates aim to align the Romanian legislation with the latest updates at EU level.
Please contact Luiza Bedros
Czech Republic: Transfer of emission ceilings among small power and heat producers
An amendment to the Czech Clean Air Act aims to remove the discrimination against small power and heat producers compared with large-scale enterprises. The amendment became effective on 1 June 2014. The legislation effective until 31 May 2014 enabled the transfer of emission ceilings only among stationary sources owned by one power/heat producer. That means that the producer had to run at least two stationary sources in order to be able to transfer parts of emission ceilings between them. The amendment now sets out that, subject to certain terms and conditions, all power/heat producers are allowed to mutually exchange parts of emission ceilings among them.
Please contact Petr Hrncir
Poland: Planned amendments to the geological and mining law
The Polish government has recently adopted two draft regulations concerning the production and taxation of minerals, including e.g. hydrocarbons.
In the bill regulating the production and issuance of licenses, the main changes affect the possibility of conducting geophysical surveys only upon notification, without the need to obtain a license. Instead of various types of licenses, there would be one joint license for all mining rights granted for 10 to 30 years. Licenses will be awarded in tenders where investors can bid after passing the pre-qualification process. The applicant would prepare joint geological and investment documentation. The main environmental procedures will also be conducted in the final phase before commencement of the production phase.
The bill regulating the taxation of minerals, including hydrocarbons, introduces a system of taxation of mined minerals and provides for an overall tax rate of 40%. The system should be effective as of 2020.
The draft regulations were passed to the lower chamber of the Polish Parliament and may be amended during further proceedings.
Please contact Paweł Żelich
Poland: Support system for high-efficiency cogeneration extended until 2018
As of 30 April 2014, the Polish support system for high-efficiency cogeneration power plants producing simultaneously electric energy and heat (HEC) has been extended until the end of 2018.
The support for HEC has been urgently awaited since the former support system for HEC ended on 31 March 2013. Although the Polish government prepared the relevant regulation in good time, the support provisions being public aid had to be notified to the European Commission.
HEC is one of the most effective ways of processing primary energy, providing more than 10% primary energy savings compared to the generation of heat and power in separate systems. The cogeneration support is one of the tools for implementing the Polish and European energy policy, which contributes to the reduction of CO2 emissions, energy conservation, development of electricity production from renewable energy sources and improving energy security.
Please contact Paweł Żelich
In addition to the contacts named above, the heads of our Regulatory & Governmental Affairs Department are happy to answer any questions relating to the issues covered in this Newsletter or regulatory matters in general.

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