Business in Brief

Higher pay for long service needs justification

EU employers will no longer be able to pay workers higher salaries solely on the basis of long service, following a European Court of Justice (ECJ) judgement on Tuesday (3 October). The ruling was welcomed by equal rights campaigners backing UK complainant Bernadette Cadman, a government health and safety inspector, who had taken legal action after discovering that male colleagues in the same grade were being paid substantially more. Employers will now have to justify paying extra to more experienced employees, male or female.

France’s La Poste loan

The Commission recommended yesterday (4 October) that France end a privileged loan guarantee arrangement with La Poste. Under the terms of the agreement, the postal operator can borrow money on favourable terms from the state. The Commission said that the situation was tantamount to an unlimited state guarantee that distorted competition. On 18 October, Internal Market Commissioner Charlie McCreevy will announce proposals to extend EU-wide liberalisation of the postal market.

Italy’s Irap tax cleared

The ECJ ruled on Tuesday that an unpopular Italian business tax levied on turnover (irrespective of profit) was compatible with EU law. Irap, or the regional tax on production, raises over €30 billion a year, or 2% of gross domestic product, for the Italian government. Had the court ruled against the tax, the government, which faces severe budget deficit problems, would have had to refund tens of billions of euros to companies.

Whistleblower laws

The European Commission proposed on Friday (29 September) changes to leniency laws for cartel whistleblowers. The laws, dating from 2002, cover immunity and reductions of fines. They would be brought into line with the revamped policies of national competition authorities. Revisions would include flexibility over when whistleblowers should terminate participation in cartel activities.

Liability of audit firms in litigation cases

The Commission yesterday announced an independent study arguing for caps on the financial liability of audit firms in litigation cases. The study will be welcomed by major accountancy firms wishing to avoid the same fate suffered by Arthur Andersen, which crumbled as a result of an Enron-related indictment in 2002. Middle-tier accountancy firms would be unlikely to fill the gap left if one of the ‘big four’ firms collapsed, said Internal Market Commissioner Charlie McCreevy.

More A380 delays

EADS, the parent company of Airbus, again pushed back delivery of the A380 super-jumbo on Tuesday. The €235 million double-decker planes will now be delayed by another year due to problems with the installation of wiring. Companies such as Singapore Airlines and Virgin Atlantic will be forced to review their growth plans. EADS shares fell sharply yesterday.

Euro area unemployment rising

Eurozone unemployment stood at 7.9% in August 2006, up by 0.1% from the previous month, according to a report issued on Tuesday by the EU statistics office Eurostat. EU25 unemployment remained unchanged at 8%. It estimated that 11.5 million men and women were unemployed in the euro area in August 2006, and 17.5 million in the EU25.

Music licensing

The Commission has made legally binding under EU competition rules a voluntary agreement between five music publishers and 13 collecting societies on licensing deals. Under the agreement, record producers will secure income from collection societies on royalties paid via central licensing agreements.

Finance ministers sceptical about the European Commission’s carrot-and-stick approach to opening up competition in the securities sector may try to push for a stricter regulatory approach at next week’s Ecofin meeting (10 October).