No C 116/14 Official  Journal  of the European  Communities 30.9.74 
Opinion  on the 'Commission  Communication  to the Council  concerning  "Multinational 
undertakings  and  Community  Regulations"  ' 
The text  referred  to the Committee  has npt been  published  in the Official  Journal  of the 
European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 23 November  1973,  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Article  198  of the  Treaty 
establishing  the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the above  matter  at its 
121st  plenary  session,  held  in Brussels  on 26 and 27 June  1974. 
The full  text  of the Opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE: 
Having  regard  to the  request,  dated  29 November 
1973,  from  the  Council  of  the  European 
Communities  for  an opinion  on the  'Commission 
Communication  to  the  Council  concerning 
"Multinational  undertakings  and  Community 
Regulations" 
Having  regard  to  Article  198  of the  Treaty 
establishing  the European  Economic  Community; 
Having  regard  to the Decision  taken  by its Bureau  on 
28 November  1973  instructing  the  Section  for 
Industry,  Commerce,  Crafts  and Services,  in the first 
instance  to prepare  an opinion  and  a report  on the 
matter; 
Having  regard  to the  Opinion  delivered  by the 
Section  for Industry,  Commerce,  Crafts  and  Services 
at its meeting  on 5 June  1974; 
Having  regard  to  the  supplementary  Opinion 
delivered  by the Section  for Social  Questions  on 16 
May  1974; 
Having  regard  to the  report  submitted  by  Mr 
Margot; 
Hiving  regard  to the discussions  at its 121st  plenary 
session  held  on 26 and  27 June  1974,  sitting  of 26 
June  1974; Whereas  the  Commission  Communication  to the 
Council  calls  attention  to the problems  posed  by the 
development  of multinational  undertakings  and 
proposes  a set of measures  to be taken  in the context 
of Community  Regulations; 
Whereas  these  measures  are not  intended  to impede 
the development  of a phenomenon  whose  economic 
and social  advantages  the  Commission  recognizes, 
but to guard  the Community  against  harmful  effects 
thereof; 
Whereas  the Commission  lists  in its Communication 
a number  of measures  for  which  it has  already 
submitted  formal  proposals  and  which  have 
subsequently  been  dealt  with  in Committee  Opinions, 
as well  as other  measures  which  are in preparation; 
Whereas  in order  that  these  measures  may  be carried 
out as part  of a coherent  whole,  the  Commission 
requests  the Council  to adopt  a draft  resolution  on 
the steps  the Community  must  take  to resolve  the 
problems  raised  by the development  of multi-national 
undertakings, 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 61 votes  to 28 and 4 abstentions: 
Subject  to the general  and  specific  comments  set out 
below,  the Economic  and  Social  Committee  approves 
30.9.74 Official  Journal  of the European  Communities No C 116/15 
the Communication  and the annexed  draft  resolution. 
No position  is taken  on the analysis  attached  to the 
Communication  for information  purposes,  since  this 
analysis  is incomplete  and  gives  rise  to numerous 
observations  and objections. 
1. GENERAL  COMMENTS 
1.1. It  is noted,  first  of all,  that  in the 
Communication  the Commission  does  not dispute  the 
economic  and  social  advantages  of the  growth  of 
multinationals  and  even  refers  to the views  expressed 
in its memorandum  on industrial  policy,  where  it 
regretted  the  fact  that  too  many  industrial 
undertakings  in Europe  were  still national  in the scale 
of their  activities  and  were  slow  to adapt  themselves 
in both  size  and the location  of new  plant  to the new 
European  economic  area. 
1.2. The  Committee  agrees  with  the statement  that 
multinationals  can  play  a part  in improving  living 
conditions  throughout  the  world  and  overcoming 
selfish  national  attitudes. 
1.3. On  the other  hand,  the Committee  recognizes 
that,  largely  because  of the disparities  between  the 
Member  States  as regards  economic  and  monetary 
situation  and  laws  and  regulations  in the economic 
and social  fields  and  on taxation,  the  growth  of 
multinational  undertakings  does  give  rise  to certain 
problems. 
1.4. Moreover  at world  level  there  are  no 
international  rules  and  no international  authority  for 
enforcing  such  rules. 
1.5. The  Committee  is appreciative  of the efforts 
the Commission  has made  to point  the way  with  its 
suggestions  and  proposals  to a solution  of these 
problems. 
1.6. The  Committee  approves  in principle  of the 
Commission's  efforts  to look  at the problems  as a 
whole  and  incorporate  the measures  being  prepared 
in an overall,  coherent  policy. 
1.7. The  Committee  has  noticed,  however,  that 
this overall  approach  runs  up against  a great  number 
of difficulties  which  stem  partly  from  the complexity 
of the  phenomenon,  which  has  a worldwide 
dimension,  and  partly  from  the existence  of differing 
and often  contradictory  viewpoints  about  which 
policy  should  be followed  in the sphere  of economic 
development.  Even  the  concept  'multinational 
undertaking',  which  the  Communication  fails  to 
define  clearly,  is open  to discussion. 
1.8. Undertakings  of  European  origin  which 
operate  solely  on Community  territory,  though  in several  individual  Member  States,  are multinational 
solely  because  economic,  monetary  and  political 
union  has  not  yet  been  achieved  and  the 
abovementioned  disparities  between  the  Member 
States  still exist. 
1.9. It  is important,  in the Committee's  view,  to 
ensure  that  Community  ^regulations  do not  tend  in 
practice  to  discriminate  against  European 
undertakings  by  comparison  with  multinational 
undertakings  based  outside  the Community. 
1.10.  To  remove  all danger  of discrimination,  the 
Committee  considers  that  the  action  taken  by the 
Community  must  not  be  aimed  explicitly  and 
exclusively  at  multinationals,  but  rather  at 
questionable  or reprehensible  behaviour  on the part 
of any company  or individual  that  involves  bypassing 
regulations  or evading  tax  obligations  or that,  by 
abusing  a position  of economic  power,  sacrifices  the 
public  interest  or that  of workers  or consumers  to 
private  interests. 
1.11.  The  Committee  is thus  generally  in favour  of 
the measures  proposed  in the  Communication;  it 
accepts,  on the  other  hand,  that  owing  to the 
Community's  limited  scope  for action  these  measures 
are insufficient  to solve  the world-wide  scale  of the 
problems. 
1.12.  Action  taken  by the Community,  like  that  at 
national  level,  has only  a relative  value.  This  action 
must  be given  a broader  basis  through  negotiations 
with non-member  countries  and  the involvement  of 
appropriate  international  organizations,  including  the 
OECD  and the specialized  UN agencies. 
2. SPECIFIC  COMMENTS  ON  THE 
COMMUNICATION 
2.1. Regarding  the  general  trend  of  the 
Commission  proposals,  the  Committee  does  not 
think  that  the idea  of a code  of conduct  should  be 
rejected  out of hand  as the Communication  seems  to 
imply.  Such  a code  could  doubtless  have  a useful 
effect,  even  if only  used  as an experiment.  The 
descriptions  of the individual  measures  envisaged  call 
for the following  comments. 
2.2. Protection  of the public  interest 
2.2.1.  Harmonization  of  tax  systems  could 
certainly  help  to solve  the tax problems  referred  to in 
the Communication  at Community  level.  Given  that 
harmonization  of taxation  systems  will  not  be 
possible  in the short  term,  however,  the Committee 
No C 116/16 Official  Journal  of the European  Communities 30.9.74 
agrees  with  the  objectives  set by the  Commission 
with respect  to these  problems  though  it has 
reservations  about  some  of the terms  the Commission 
uses and the concrete  measures  proposed. 
2.2.2.  The  Committee  considers  that  the problems 
of security  of supply,  which  the  energy  crisis  has 
brought  to a head  and  which  are not  incidentally 
solely  attributable  to the multinationals,  must  be seen 
in a broader  general  policy  framework. 
2.2.3.  As  far as monetary  problems  are concerned, 
the Committee  agrees  that  there  is a need  for more 
information  and  is in favour  of studying  statistical 
data to find  out more  about  the factors  that  influence 
the balance  of payments.  The  problem  of disturbing 
capital  movements  must  be solved,  as far as the 
Community  is concerned,  in the context  of economic 
and monetary  union. 
2.2.4.  The  problem  of competition  in state  aids, 
which  the  Commission  also  brings  up  in the 
Communication  because  of the important  role  played 
by international  investment  in regional  development 
policy,  must  be judged  in the light  of the facts.  At all 
events,  the Committee  is in favour  of the Commission 
expanding  its efforts  towards  the  coordination  of 
harmonization  of state  aids,  especially  aids  for 
regional  development,  and  accepts  the  need  to 
promote  the efficiency  of European  undertakings  in 
the advanced  technology  sectors  which  have  hitherto 
been  dominated  by certain  multinational  groups. 
2.2.5.  The  aspect  of protection  of shareholders  and 
others  will  be dealt  with  in due  course  in the 
Committee's  opinion  on the proposal  on the law  on 
groups  of companies  announced  by the Commission. 
2.3. Protection  of workers'  interests 
2.3.1.  As  regards  security  of employment  and 
income: 
— when  a subsidiary  or new  establishment  is set up 
in a Member  State,  it should  comply  with  the 
rules  in force  in that  country  for ensuring  stability 
of employment,  those  for recruitment  procedures, 
and those  laying  down  pay  and  other  working 
conditions.  These  same  rules  should  also  apply  in 
respect  of the vocational  training  and  retraining 
of workers  after  transfers,  dismissals  and closures 
of establishments; — it is also  expedient  to foster  as much  as possible 
the research  and  study  facilities  already  existing 
locally  rather  than  have  research  and  studies 
carried  out in the country  where  the multinational 
is based; 
— in cases  where  production  is temporarily 
discontinued  or  cut  back  there  should  be 
compliance  with  the  'income  guarantee'  rules 
applicable  to workers  who  are  dismissed  or 
affected  by a temporary  reduction  in working 
hours,  or by a temporary  cut-back  in production. 
2.3.2.  As  regards  the  regulation  of  labour 
relations: 
— the activity  of a multinational  in a country  other 
than that  of its headquarters  should  not give  rise 
to discrimination  between  its own  workers  and 
those  employed  by the  national  firms.  It is 
essential  that  the  subsidiaries  of multinationals 
should  be integrated  in the social  structure  of the 
host country; 
— multinationals,  like  other  undertakings,  are 
bound  by local  labour  laws  and  by current  or 
future  collective  agreements  regulating  the matters 
which  the law  leaves  to the discretion  of the two 
sides  of industry  (e.g.  level  of remuneration  and 
other  working  conditions); 
— it would  be desirable  if labour  and  employment 
offices  were  in a position  to supply  information 
about  working  conditions  in host  countries. 
2.3.3.  As  regards  the  transparency  of multi-
nationals'  activities,  the following  steps  are called  for: 
— establishment  — or improvement  where  they 
already  exist  — of arrangements  for providing 
extensive,  comprehensive  information  at certain 
regular  intervals,  so that  workers  know  not only 
about  the  structure  of  the  multinational's 
decision-making  bodies  and  its  internal 
organization,  but  also  about  its  production 
programmes,  the  economic  and  social  reasons 
which  determine  them,  and  their  effects  on 
employment; 
— introduction  and  operation  of  bodies  at 
undertaking  and  inter-undertaking  level,  so as to 
establish,  maintain  and  develop  normal,  fruitful 
labour  relations; 
— workers'  participation  in the  activities  of the 
undertaking  by  means  of  a system  of 
representation  which  would  allow  them  to 
30.9.74 Official  Journal  of the European  Communities No C 116/17 
express  their  views  and take  a stand  on matters  of 
most  concern  to them,  such  as employment, 
working  conditions,  pay,  the protection  of health, 
. prevention  of accidents  at work  and  policy  oil 
accommodation  for workers  and managerial  staff, 
etc.; 
— contacts  and cooperation,  on the basis  of a system 
of reporting  and  regular  meetings,  between 
representatives  of workers  employed  in the 
various  establishments  belonging  to the  same 
multinational  and located  in Member  States; 
2.3.4.  As  regards  recognition  of the role  of trade 
unions  and  employers'  associations,  the Committee 
considers  that: 
— the right  to associate  and take  part  in trade  union 
activities  and  the  right  to negotiate  collective 
agreements  should  be recognized  and  applied  in 
practice  with  respect  to multinationals; 
— the recognition  of the role  of trade  unions  and 
employers'  associations  by the multinationals  and 
good  relations  between  these  parties  are the basic 
requirement  for the attainment  of the economic 
and social  objectives  of the Treaty  of Rome. 
2.4. , The  maintenance  of competition 
2.4.1.  Concerning  the  incompatibility  with  the 
common  market  of certain  concentrations  between 
undertakings  and  the measures  proposed  for tackling 
this problem,  the Committee  refers  to its Opinion  of 
28 February  1974  on the 'Proposal  for a Regulation 
on the  Control  of  Concentrations  between 
Undertakings'. 
2.4.2.  The  Committee  accepts  that  the  special 
character  of multinationals  might  warrant  'particular 
attention'  as regards  the oligopoly  situations  listed  in 
Articles  85 and  86 of the Treaty;  on the other  hand, 
it thinks  that  one  must  not  be any  less  vigilant  in 
ensuring  that  the rules  of competition  are observed 
by national  undertakings,  since  they  too  can  abuse 
dominant  positions. 
2.5. Purchasing  of undertakings 
2.5.1.  The  Committee  is in favour  of drawing  up 
and applying  a code  of practice  to buying  up 
undertakings. 
2.5.2.  It  accepts  that  it would  be  useful  to 
introduce  regulations  for public  takeover  bids  and  to work  out  a number  of rules  of conduct  for stock 
exchange  operations. 
2.5.3.  On  the  other  hand,  the  Commission's, 
suggestion  that  'objective  rules'  should  be drafted  and 
imposed  by common  agreement  of the  Member 
States,  seems  too ambitious  an aim  and  not one  that 
would  be feasible  in the short  term. 
2.6. Equality  of reception  conditions 
2.6.1.  The  Committee  approves  in principle  the 
Commission's  objectives  which  are intended  to secure 
the same  conditions  for investments  by foreign  firms 
in non-member  countries  as  are  available  in 
Community  countries. 
2.6.2.  It  is rather  sceptical,  however,  about  the 
feasibility  of these  aims,  though  in favour  of 
continuing  the efforts  which  are already  being  made 
in this  direction  particularly  through  the OECD  and 
the specialized  UN  bodies. 
2.7. Conditions  of establishment  of multinational 
companies  in developing  countries 
2.7.1.  The  Committee  refers  to the discussion  of 
this aspect  in its Opinion  of 28 February  1974  on the 
'Proposal  for  a Council  Regulation  establishing  a 
Community  guarantee  system  for private  investments 
in third  countries'. 
2.8. Better  provision  of information 
2.8.1.  The  Committee  supports  the  principle  of 
trying  to build  up a better  information  system  but 
feels that  the Commission  is being  over-optimistic  in 
thinking  it can  'assuage  the  fears  felt  in many 
quarters'  by 'simple  means'. 
2.8.2.  It  is a pity  that  the Commission  does  not 
give more  details  about  how  it intends  to bring  this 
improvement  in information  about. 
3. DRAFT  RESOLUTION  OF THE  COUNCIL  ON  THE 
MEASURES  TO  BE  TAKEN  BY  THE  COMMUNITY 
IN ORDER  TO  RESOLVE  THE  PROBLEMS  RAISED 
BY THE  DEVELOPMENT  OF  MULTINATIONAL 
UNDERTAKINGS 
3.1. The  draft  resolution  annexed  to  the 
Communication  forms  the latter's  conclusion. 
No C 116/18 Official  Journal  of the European  Communities 30.9.74 
3.2. The  draft  resolution  confirms  the Council's 
intention  to act,  within  the time  limits  laid  down  in 
the various  programmes,  on the proposals  on mass 
dismissals,  the protection  of the  existing  rights  of 
workers  in the  case  of mergers,  concentrations  or 
rationalization,  guarantees  for investments  in third 
countries,  internal  company  mergers^  the Statute  for 
the European  Company,  the  structure  of socidtes 
anonymes  and the control  of concentrations. 
3.3. It  also  lists  a number  of decisions  which 
should  be  taken  and  notes  the  Commission's 
intention  to submit  as soon  as possible  proposals  on 
the protection  of workers  in the event  of takeovers, 
the introduction  of Community  rules  concerning  in 
particular,  stock  exchange  operations  and  the origin 
of funds  for investment,  a scheme  for cooperation 
between  the  national  bodies  responsible  for  the 
supervision  of  s stock  exchange  operations, 
arrangements  for  international  assistance  and 
cooperation  in the  field  of tax  information, 
monitoring  and  recovery,  including  in particular 
development  of a common  system  of transfer  prices 
Done  at Brussels,  26 June  1974. and licence  fees,  and  finally  the law  on groups  of 
companies  and  the  collection  of  adequate 
information  on  the  international  activity  of 
undertakings. 
3.4. Subject  to  its  comments  on  the 
Communication,  the Committee  approves  in principle 
the broad  outlines  of the draft  resolution. 
3.5. Although  the recitals  of the draft  resolution 
meet  with  the  Committee's  approval,  there  are 
divergences  of opinion  about  many  of the practical 
measures  envisaged. 
3.6. Not  wishing  to bring  up  again  certain 
problems  which  have  already  been  discussed  in its 
Opinions  on drafts  submitted  by the Commission,  the 
Committee  would  merely  refer  to and  confirm  these 
earlier  opinions. 
3.7. As  to the  new  proposals  which  are  now 
announced,  the Committee  will  give  its opinion  on 
these  proposals  when  it is consulted. 
The Chairman 
of the Economic  and  Social  Committee 
Alfons  LAPPAS 
Opinion  on the 'Proposal  for a Council  Directive  concerning  the approximation  of the 
laws  of the Member  States  relating  to the composition  of petrol  — Problem  of the lead 
content  of petrol' 
The text  referred  to the Committee  has been  published  in the Official  Journal  of the 
European  Communities  No C 8 of 31 January  1974  page  28. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 18 December  1973,  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Article  100  of the  Treaty 
establishing  the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the above  matter  at its 
121st  plenary  session,  held  in Brussels  on 26 and 27 June  1974. 
The full text of the Opinion  is as follows: