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European Union

Amsterdam Council meeting

The Intergovernmental Conference, which had the task of reviewing the Maastricht Treaty, reached an agreement on a draft Treaty at the Amsterdam European Council on June 16 and 17. The draft Treaty is due to be signed in October 1997, at Amsterdam.

Member states appear to have reached a compromise on the problem of enlargement of the EU reducing the influence of larger member states. Larger member states now have two Commissioners each and the smaller states one, making 20 in total. Enlargement of the EU could lead to further increases in the size of the Commission which might reduce its efficiency, especially given that earlier proposals to limit the number of Commissioners to 15 or 20 regardless of the number of member states appear to have been shelved.

The draft Treaty now states that, after the first enlargement, the Commission will be made up of one national of each of the member states, provided that by that date a new formula for qualified majority voting has been agreed on. A new intergovernmental conference will be convened, however, "at least one year before membership of the EU exceeds 20", to review the composition and organization of the Commission, to reconsider the formula for the weighting of votes in the Council and the decision-making process generally.

Meanwhile, the Amsterdam Council confirmed that it wishes to deal with the question of enlargement of the EU in accordance with the timetable laid down at the Madrid Council. Accordingly, it intends to examine the Commission's opinions on applications for accession, as well as the Commission's so-called 'Agenda 2000' on enlargement during the course of the December meeting of the European Council in Luxembourg.

The draft Treaty also simplifies the collective decision-making procedure and expands the scope of its application to encompass employment and social policy. In addition, the Treaty contains a 'Schengen Protocol' authorizing the 13 member states wishing to proceed with the gradual abolition of controls at common frontiers to do so. The special position of Ireland and the UK in this respect was recognized.

As expected, the Amsterdam European Council has endorsed the 'Stability and Growth Pact' aimed at ensuring budgetary discipline in Economic and Monetary Union. It also adopted a Resolution setting out the fundamental elements of a new Exchange Rate Mechanism (ERM2) and endorsed the choice of the design for the Euro coins.

Distance contracts and consumer protection

The Directive on the protection of consumers in respect of distance contracts came into force on June 4 1997. It applies to 'distance contracts', which are defined as contracts between suppliers and consumers under an organized system of sales concluded through means of 'distance communication'.

The Directive contains a non-exhaustive list of types of distance communication: catalogues, letters and printed communications, telephone calls and e-mail, and video shopping and teleshopping systems. Suppliers are required to provide (on a 'durable medium available and accessible' to consumers and before completion of the contract) information on the identity of the supplier and goods or services being sold and their overall price; the arrangements for payment, delivery or performance; the period during which the offer remains open and the minimum duration of the contract, if it is a contract to be performed recurrently.

Consumers must be given at least seven working days to withdraw from the contract. This right of withdrawal does not apply to the supply of goods or services whose price is dependent on fluctuations in financial markets outside the supplier's control. 'Inertia selling', in which an article is sent without the consumer's consent, is prohibited, and failure to reply in such offers is not to be taken as acceptance on the part of the recipient.

The Commission had proposed initially that the Directive's scope of application encompass distance contracts for the provision of financial services. The Council and the Parliament, however, considered that financial services are already covered by other Community legislation and excluded them from the scope of the Directive. The Commission intends shortly to propose a new Directive specifically aimed at the distance selling of financial services.

Member states have three years to implement the Directive.

Record fine for Irish Sugar

On May 14 1997 the Commission announced that it had imposed on Irish Sugar a fine of Ecu8.8 million (US$7.8 million) for infringements of Article 86. It found that the Irish Sugar had abused its dominant position in the Irish sugar market, where it has a share of around 95%.

The Commission found that, in order to restrict imports of French and Northern Irish sugar, Irish Sugar offered low prices to importers of French sugar and to customers located near the border with Northern Ireland. It also offered 'sugar export rebates' for bulk sugar purchasers exporting part of their final products, charged high prices for the bulk sugar it supplied to small Irish packers, and offered discounts to retailers and wholesalers, thereby restricting their ability to enter the market.

In setting the fine, the Commission took into account the seriousness of the infringements, the fact that these had taken place since 1985, and the fact that the practices had resulted in the price of sugar being higher in Ireland than in the rest of the Community.

Michael Reynolds
Allen & Overy

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