The European Commission has formally requested Cyprus to amend its legislation on depreciation scales for the calculation of excise duties on second-hand motorcycles because the current rules discriminate against imported motorcycles.

The investigation followed a tip-off by the German company, Henkel. The fines were discounted by 10% after the Unilever and Procter & Gamble admitted running a cartel. Unilever was fined 104m euros and Procter & Gamble was fined 211.2m euros. Henkel was not fined in return for providing the tip-off.

The EU Competition Commissioner Joaquin Almunia said in a statement: “By acknowledging their participation in the cartel, the companies enabled the Commission to swiftly conclude its investigation.”

Unilever sells Omo and Surf, Procter & Gamble makes Tide, and Henkel sells Persil in certain European countries.

The full press release of the European Commission can be found here.

The European Commission has today asked Cyprus to respect EU rules that give nationals from the EU, as well as from Iceland, Norway and Liechtenstein, the right to buy a second home in Cyprus without restrictions.

Since the accession of Cyprus to the EU in 2004, transitional measures were in force that could restrict such acquisitions but these measures expired in 2009. As Cyprus has not yet repealed these restrictions, the Commission is sending Cyprus a reasoned opinion, the second step in the infringement procedure. If the Cypriot authorities fail to take satisfactory measures to remedy the infringement of EU law within two months, the Commission may decide to refer the case to the EU Court of Justice.

What is the aim of the EU rule in question?

Free movement of capital is at the heart of the Single Market and constitutes one of its “four freedoms”. It allows for more open, integrated, competitive and efficient markets and services in Europe. For citizens it means the ability to undertake a range of operations abroad, such as opening a bank account, buying shares in nondomestic companies, or purchasing real estate. For companies it means the ability to invest in and own companies in other European countries, and to play an active role in their management.

How is Cyprus not respecting these rules?

According to the 2003 Accession Treaty, Cyprus was allowed to maintain transitional measures that imposed restrictions on buying second homes for EU/EEA nationals.

These measures would apply for five years after the Accession Treaty entered into force and thus expired on 1 May 2009. By that date, the Cypriot authorities were obliged to repeal the transitional measures. However, this has not been the case.

Since Cyprus has not adopted any new legislation repealing or amending the abovementioned restrictive rules, the Commission is of the opinion that Cyprus infringed its obligations under the EU Treaty rules on the free movement of capital. In this context, the Commission refers to the jurisprudence of the Court of Justice, according to which any incompatibility of national rules with Treaty provisions can only be redressed by adopting other binding domestic provisions, having the same legal force as those which require to be amended, and providing for sufficient legal certainty.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.

Further Property Law related information is available here.

The methods used by Insurance companies to calculate premiums have been thrown into turmoil following the European Court of Justice (ECJ) ruling of the 1^st of March 2011.

The case concerned Directive 2004/113/EC1 which prohibits all discrimination based on sex in the access to and supply of goods and services and prohibits the offering of different insurance premiums based on a person’s sex.  It has an exemption for “proportionate” differences, though, “where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data“.

The case was brought by the Belgian consumers’ association which challenged the different pricing structures for men and women – an established measure of risk for calculating premiums. They argued that gender must not be used as the basis for different pricing of products for men and women.

In the preliminary ECJ opinion on the case published in September of last year, Advocate General Juliane Kokott, said that the ECJ should eliminate the right to charge different prices based on the sex of the insured person.

She said that the different pricing did not meet the high standards set in the Directive’s exemption, and that equal treatment for the sexes was of such vital importance that it should not be undermined except in the clearest of cases.

“The exception in question does not relate to any clear biological differences between insured persons,” she said. “On the contrary, it concerns cases in which different insurance risks can at most be associated statistically with gender.”

“Strict standards must therefore be imposed in the present case. Differences in treatment could at most be justified by clearly demonstrable biological differences between the sexes,” said an ECJ statement outlining her opinion.

The opinions of advocates are in general only advice, but are followed in the majority of cases by the ECJ as has occured in the present case. This ruling states that this practice is discriminatory and contravenes equality rules and must therefore be phased out by December 2012. This effectively means that in the future men and women will be assessed in the same way when they apply for products such as car insurance, life cover and annuities.

The ruling will have a significant effect on the insurance industry which has used the system of gender based risk pricing to award discounts or to charge premiums.

The requirement for unisex insurance premiums and benefits will start on 21 December 2012, giving national governments and the European insurance industry time to adjust.

Following which time it is expected that women will see increased premiums costs for car insurance whilst men would see a reduction in annuity rates, and the cost of life insurance could increase for women but fall for men.

The insurance industry fears that the ruling could pave the way for a legal challenge to insurers’ reliance on their customers’ age in setting prices and payouts.

This post is password protected. To view it please enter your password below:

Password: