The Exxon-Mobil group is opposing the EU’s plan to siphon off particularly high profits made by oil and gas companies as a result of the energy crisis. Two European subsidiaries of the Texan group, Exxon-Mobil Producing Netherlands BV and Mobil Erdgas-Erdöl GmbH, have filed a lawsuit before the European Union Court (EuG) in Luxembourg, Exxon-Mobil announced on Wednesday.
In September, the EU governments decided on a package of measures to cushion the consequences of the rapidly rising energy prices. This included, among other things, a special levy on particularly high profits – so-called excess profits – that oil and gas companies make as a result of the unexpectedly high prices. The profits of companies that have generated electricity cheaply from wind or solar energy and then sold it at a much higher price because it is linked to the gas price should also be skimmed off in this way. However, Exxon-Mobil expressly does not take action against this part of the package of measures. According to the EU Commission’s plan, the individual countries should use the money raised by the new taxes to subsidize the energy costs for needy citizens and companies at home.
Specifically, the EU decided that oil and gas companies must pay a special levy of 33 percent on all profits that are more than 20 percent above a four-year average. Depending on the country, these profits may come from fiscal year 2022 or 2023. During negotiations on the plan in the autumn, the EU Commission calculated that the member states of the Union could take in around 25 billion euros to help private and commercial energy customers.
Exxon-Mobil’s lawsuit does not deny that the group made significantly higher profits because of the energy crisis triggered by the Ukraine war. The group is still questioning the right of European governments to use these profits to support citizens and companies groaning under high electricity and gas prices. Instead, the lawsuit addresses two formal points.
First: The EU gave its special levy the friendly-sounding title “Solidarity Contribution”. According to Exxon-Mobil, this is de facto nothing more than a new tax. Taxes, on the other hand, should only be levied by the individual member states, not by the European Union. According to the group, the European subsidiaries of Exxon-Mobil and European industry would be disadvantaged by the new tax. “This tax will undermine investor confidence, deter investment and increase dependence on imported energy and fuel products,” Exxon-Mobil said in a statement.
It could be years before a verdict is reached in the case
Second, Exxon-Mobil believes that the administrative process by which the new levy was created was not legal. The European Commission and the European Council – the representation of the member states – used Article 122 of the EU Treaty for this purpose. This provides that in emergency and crisis situations, European laws can be passed without the participation of the EU Parliament and without unanimity in the Council. A proposal from the Commission, which finds a so-called qualified majority in the Council, is then sufficient to enact a law.
However, Exxon-Mobil believes that this article does not apply to the new levy. “The profit tax will not eliminate any bottlenecks in the supply of energy, and it will not have any short-term consequences either,” the group said. “In this respect, it was wrong for the Commission and the Council to use their extraordinary powers under Article 122.”
However, the lawsuit does not stop the entry into force of the levy. It could also be several years before a verdict is reached in the case. In any case, the EU Commission was unimpressed by the lawsuit. “The Commission remains of the view that the measures in question are fully in line with EU law,” a spokeswoman for the agency wrote in an email to the internet magazine Politico Europe. The levy should “ensure that the entire energy industry pays its fair share in these difficult times”.