REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the application of the agreements between the European Communities and the Government of the United States of America and the Government of Canada regarding the application of their competition laws 1 January 2001 to 31 December 2001

1. UNITED STATES

1.1. Introduction

On 23.09.1991 the Commission concluded an Agreement with the Government of the United States of America regarding the application of their competition laws [1] (the "1991 Agreement"), the aim of which is to promote co-operation between the competition authorities. By a joint decision of the Council and the Commission on 10.04.1995 [2] the Agreement was approved and declared applicable from the date it was signed by the Commission.

[1] Agreement between the Government of the United States of America and the Commission of the European Communities regarding the application of their competition laws (OJ L 95, 27.4.1995, pp. 47 and 50)

[2] See OJ L 95, 27.4.1995, pp.45 and 46.

On 04.06.1998 another agreement, which strengthens the positive comity provisions of the 1991 Agreement, entered into force [3] (the "1998 Agreement"), after having been approved by a joint decision of the Council and the Commission of 29.05.1998.

[3] Agreement between the European Communities and the Government of the United States of America on the application of positive comity principles in the enforcement of their competition laws, OJ L 173, 18.6.1998, pp. 26-31.

On 08.10.1996 the Commission adopted the first report on the application of the 1991 Agreement for the period of 10.04.1995 to 30.06.1996 [4]. The second report completes the 1996 calendar year, covering the period of 01.07.1996 to 31.12.1996 [5]. The third report covers the whole calendar year 1997 [6], the fourth the year 1998 [7], the fifth the year 1999 [8] and the sixth the year 2000 [9]. The current report concerns the calendar year from the 01.01.2001 to 31.12.2001. This report should be read in conjunction with the first report which sets out in detail the benefits, but also the limitations of this kind of co-operation.

[4] Com(96) 479 final, see XXVIth Report on Competition Policy, pp. 299-311.

[5] Com(97) 346 final, see XXVIth Report on Competition Policy, pp. 312-318.

[6] Com(98) 510 final, see XXVIIth Report on Competition Policy, pp. 317-327.

[7] Com(1999) 439 final, see XXVIIIth Report on Competition Policy, pp. 313-328.

[8] Com(2000) 618 final, see XXIXth Report on Competition Policy, pp. 319-332.

[9] Com(2002)45 final, see XXXth Report on Competition Policy, pp. 291-307.

In summary, the 1991 Agreement provides for:

- notification of cases being handled by the competition authorities of one Party, to the extent that these cases concern the important interests of the other Party (Article II), and exchange of information on general matters relating to the implementation of the competition rules (Article III);

- co-operation and co-ordination of the actions of both Parties' competition authorities (Article IV);

- a "traditional comity" procedure by virtue of which each Party undertakes to take into account the important interests of the other Party when it takes measures to enforce its competition rules (Article VI);

- a "positive comity" procedure by virtue of which either Party can invite the other Party to take, on the basis of the latter's legislation, appropriate measures regarding anti-competitive behaviour implemented on its territory and which affects the important interests of the requesting Party (Article V).

In addition, the 1991 Agreement makes it clear that none of its provisions may be interpreted in a manner which is inconsistent with legislation in force in the European Union and the United States of America (Article IX). In particular, the competition authorities remain bound by their internal rules regarding the protection of the confidentiality of information gathered by them during their respective investigations (Article VIII).

The 1998 Agreement clarifies both the mechanics of the positive comity co-operation instrument, and the circumstances in which it can be availed of. In particular, it describes the conditions under which the requesting Party should normally suspend its own enforcement actions and make a referral.

1.2. EU/US cooperation during 2001

During 2001, the Commission continued its close cooperation with the Antitrust Division of the US Department of Justice (DoJ) and the US Federal Trade Commission (FTC) in an ever greater number of cases. Indeed, contact between Commission officials and their counterparts at the two US agencies is showing a marked increase in frequency. These contacts range from detailed case-related discussions to more general, sometimes theoretical, competition policy-related matters. Case related contacts usually take the form of regular telephone calls, e-mails, exchanges of documents, and other contacts between the case teams. High-level meetings and contacts also occur with reasonable frequency. The cooperation continues to be of considerable mutual benefit to both sides, in terms of enhancing the respective enforcement activity, avoiding unnecessary conflicts or inconsistencies between those enforcement activities, and in terms of better understanding each other's competition policy regimes.

1.2.1. Merger cases

The trend towards the globalisation of markets continued apace during the year, as most vividly illustrated by the record number and scale of transnational mergers: the year 2001 saw a continued large number of transactions notified to both the Commission and the US antitrust agencies. With regard to the investigation of these proposed mergers, staff-level contacts between DG Competition's Merger Task Force, on the one hand, and the US DoJ and FTC, on the other, take place virtually on a daily basis. Cooperation is most effective where the parties involved agree to permit the EU and US authorities to share the information they provide by means of a waiver. This now frequently occurs.

In the Metso/Svedala case, which concerned rockcrushing equipment, the Commission and the FTC fully and intensely cooperated not only with respect to the substantive assessment of the case but also to the suitability of the remedies. The operation was finally approved by both authorities subject to undertakings. Likewise, in the Nestle/Ralston Purina case, which concerned pet food, the Commission and the FTC closely cooperated during the negotiations of remedies. In the CVC/Lenzing case the Commission and the FTC remained in close and mutually beneficial contact all along the procedure by sharing information, and by discussing and developing consistent analysis of the main substantive issues. After the Commission had prohibited the operation, the FTC closed its file. In the GE/Honeywell case the operation was finally approved by the DoJ and prohibited by the Commission. Although the Commission reached a divergent outcome from that of the US DoJ, this did not result from a lack of transatlantic cooperation. Indeed, cooperation between the Commission and the DoJ was very intense and started early in the process, that is well ahead of the actual notification of the transaction to the Commission.

1.2.2. Non-merger cases

During the course of the year, there has been a notable increased level of contact between the Commission and the US antitrust agencies in non-merger cases, in particular in cartel cases. About eleven cartel investigations that both the Commission and the US DoJ had been investigating were discussed between the two agencies. Most contacts were established via telephone and e-mail. In certain cases visits took place. In the Fine Art Auction Houses case cooperation between the agencies was productive. It lead, amongst others, to a coordinated timing of the investigatory steps of both agencies. This had to do, amongst others, with the criminal investigation and trial before the District Court of the Southern District of New York, against former Sotheby's chairman Taubman. Also, one company involved provided a waiver, which permitted the two agencies to exchange views regarding confidential evidence. The Commission's investigation had not yet been concluded at the end of 2001. Also in other cases the DoJ and the Commission were able to coordinate there investigations e.g. the timing of surprise inspections at the companies concerned.

1.3. Administrative Arrangements on Attendance (AAA)

The Commission adopted on March 31, 1999 a text setting forth administrative arrangements between the competition authorities of the European Communities and of the United States concerning reciprocal attendance at certain stages of the procedures in individual cases involving the application of their respective competition rules [10]. These arrangements were concluded in the framework of the agreements between the European Communities and the government of the United States concerning enforcement of their competition rules, and in particular the provisions regarding co-ordination of enforcement activities. In May of 2001, representatives from the US DoJ attended the oral hearing in the GE/Honeywell case.

[10] Bulletin EU 3-1999, Competition (18/43); 1999 Report COM(2000) 618 final, p. 5.

1.4. EU/US Mergers Working Group

The work of the joint EU/US Mergers Working Group has continued. During the course of 2001, there were extensive tri-partite (Commission/DoJ/FTC) discussions, including a number of tele/video-conferences. At the occasion of the bilateral meeting of 24 September 2001 it was decided to expand and to intensify the activities of the working group.

1.5. High-level contacts

There were numerous high-level bilateral contacts between the Commission and the relevant US authorities during the course of 2001: Commissioner Monti paid a visit to Washington in March, and used the occasion to meet inter alia with key members of the Administration. On the 24 September Commissioner Mario Monti met in Washington the newly appointed heads of the US antitrust agencies, Assistant Attorney General Charles James of the Antitrust Division of the DoJ and Chairman Timothy Muris of the FTC for the annual bilateral EU/US meeting. The meeting coincided with the 10th anniversary of the EU-US bilateral agreement on competition policy. Meetings also took place during the course of the year between the Commission and other US agencies, e.g., the US Department of Transportation (which has some responsibility for the management of competition policy issues ).

1.6. Statistical information

a) Number of cases notified by the Commission and by the US authorities

There was a total of 84 formal notifications made by the Commission during the period between 1 January 2001 and 31 December 2001. The cases are divided into merger and non-merger cases and are listed in Annex 1.

The Commission received a total of 37 formal notifications from the US authorities during the same period. A list of these cases is found in Annex 2, again broken down into merger and non-merger cases.

Merger cases made up the majority of all notifications in both directions. There were 71 merger notifications made by the Commission and 25 by the US authorities.

The figures given represent the number of cases in which one (or more) notifications took place and not the total number of individual notifications. Under Article II of the Agreement, notifications may be made at various stages of the procedure and so more than one notification may be made concerning the same case.

b) Notifications by the Commission to Member States

The text of the interpretative letter sent by the European Communities to the US as well as the Statement on Transparency made by the Commission to the Council on 10 April 1995, provides that the Commission, after notice to the US Competition authorities, will inform the Member State or Member States, whose interests are affected, of the notifications sent to it by the US antitrust authorities. Thus, when notifications are received from the US authorities, they are forwarded immediately to the relevant sections in DG Competition and at the same time copies are sent to the Member States, if any, whose interests are affected. Equally, at the same time that DG Competition makes notifications to the US authorities, copies are sent to the Member State(s) whose interests are affected.

1.7. Conclusions

2001 witnessed a further intensification of EU/US cooperation in all areas of competition law enforcement. 2001 saw a record number of merger transactions notified both to the Commission and the US authorities.. The increase of cooperation in 2001 with respect to the combating of global cartels is noteworthy, also the authorities on the two sides of the Atlantic are taking increasingly convergent approaches to the identification and implementation of remedies, and to post-merger remedy compliance monitoring. The Commission, DoJ and FTC also continued to maintain an ongoing dialogue on general competition policy/enforcement issues of common concern.

2. CANADA

2.1. Introduction

The EU/Canada Competition Co-operation Agreement [11] is designed to facilitate cooperation between the European Communities and Canada with respect to the enforcement of their respective competition rules. The agreement was signed at the EU/Canada Summit in Bonn on 17 June 1999 and entered into force at signature.

[11] Agreement between the European Communities and the Government of Canada regarding the application of the competition laws OJ L 175, 10.7.1999, p. 50

The Agreement provides for, among other things: (i) reciprocal notification of enforcement activities by either competition authority, where such activities may affect the important interests of the other party; (ii) one competition authority rendering assistance to the competition authority of the other party in its enforcement activities; (iii) coordination by the two authorities of their enforcement activities; (iv) requests by a party that the competition authority of the other party take enforcement action (positive comity); (v) one party to take into account the important interests of the other party in the course of its enforcement activities (traditional comity); and (vi) the exchange of information between the parties, subject to applicable domestic laws to protect confidential information. The report on cooperation between 17 June 1999 and 31 December 2000 was published together with the sixth report on cooperation with the United States. [12] The current report concerns the calendar year from 1 January 2001 to 31 December 2001.

[12] Com(2001)45 final, see XXXth Report on Competition Policy, pp. 291-307.

2.2. Cooperation

An increasing number of cases is being examined by the competition authorities on both sides resulting in increased and enhanced cooperation. Contacts between the Commission and the Canadian Competition Bureau have been frequent and fruitful. Discussions have concerned both case related issues, and more general policy issues. Case related contacts usually take the form of telephone calls, e-mails, exchanges of documents, and other contacts between the case teams. Case related contacts comprised all areas of competition law enforcement. Merger cases included GE/Honeywell and Nestle/Ralston Purina and Bayer Aventis. There was a notable increase in cooperation in cartel cases, about eight cartel investigations that both the Commission and the Canadian Competition Bureau were dealing with were discussed between the two authorities.

Policy related issues were discussed at the occasion of visits and through video conferences. Two bilateral meetings, as foreseen in the Cooperation Agreement, took place in February 2001 in Brussels and September 2001 in Ottawa at which the heads of the respective competition authorities participated. In addition, the merger and cartel units from the respective authorities met to discuss issues specific to their areas of enforcement.

2.3. Statistical information

a) Number of cases notified by the Commission and by the Canadian Competition Bureau

There was a total of 8 formal notifications made by the Commission during the period between 1 January 2001 and 31 December 2001 (Annex 3). The Commission received 10 formal notifications from the Canadian Competition Bureau (CCB) in 2001 (Annex 4).

b) Notifications by the Commission to Member States

As foreseen in the agreement, the Commission has informed the Member State or Member States, whose interests are affected, of the notifications sent to it by the Canadian Competition Bureau. Thus, when notifications are received from the Competition Bureau, they are forwarded immediately to the relevant sections in DG Competition and at the same time copies are sent to the Member States, if any, whose interests are affected. Equally, at the same time that DG Competition makes notifications to the Competition Bureau, copies are sent to the Member State(s) whose interests are affected.

2.4. Conclusion

The Agreement has lead to a closer relationship between the Commission and the Canadian Competition Bureau, as well as to a greater understanding of each other's competition policy. An increasing number of cases are being examined by both competition authorities, and there is consequently a growing recognition of the importance, on the one hand, of avoiding conflicting decisions and, on the other, of coordinating enforcement activities to the extent that this is considered mutually beneficial by both parties. The increase of cooperation in 2001 with respect to the combating of global cartels is also noteworthy. The Commission and the Canadian Competition Bureau also continued to maintain an ongoing dialogue on general competition policy/enforcement issues of common concern.

ANNEX 1 [13]

[13] Due to confidentiality requirements or to protect the secrecy of ongoing investigations, this list names only those investigations or cases which have been made public

Notification by the European Commission to the US Authorities 01.01.2001 -31.12.2001

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ANNEX 2

Notification by the US Authorities to the European Commission 01.01.2001 -31.12.2001

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ANNEX 3 [14]

[14] Due to confidentiality requirements or to protect the secrecy of ongoing investigations, this list names only those investigations or cases which have been made public

Notification by the European Commission to the Canadian Authorities 01.01.2001 -31.12.2001

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ANNEX 4

Notification by the Canadian Authorities to the European Commission 01.01.2001 -31.12.2001

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01 // Graphite & Carbon Products

02 // Supply and Service of Post-tensionning Systems to the Hibernia Platform

03 // Graphite & Carbon Products

04 // General Electric/Honeywell

05 // Bulk vitamins and Related Products

06 // Carbon & Graphite Products

07 // Carbon & Graphite Products

08 // Bulk vitamins and Related Products

09 // *

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