Notice published pursuant to Article 19(3) of Council Regulation No 17

Case COMP.F.1/37.893 - CECED Water Heaters

(2001/C 250/03)

(Text with EEA relevance)

1. INTRODUCTION

1. On 20 June 2000, the Conseil européen de la construction d'appareils domestiques (CECED), notified an agreement ("the agreement") dated 19 November 1999 committing some of its members to improve the energy efficiency of water heaters. CECED is applying for an exemption under Article 81(3) of the EC Treaty and Article 53(3) of the EEA Agreement.

2. THE PARTIES

2. CECED is an association based in Brussels comprising manufacturers of domestic appliances and trade associations. CECED members and other participants who have signed the agreement include Atlantic Group, Baxi SpA, Bosch Siemens Hausgeräte GmbH, Electrolux Productline Home Comfort/AEG Hausgeräte GmbH/, Fagor Electrodomésticos S.Coop. Heatrae Sadia Heating Ltd, Lorenzi Vasco SpA, Merloni Termosanitary SpA, Siemens Heiztechnik, Société Thermique de Valence, Stiebel Eltron Gmbh & Co. KG, Technoterm GmbH and Joh. Vaillant GmbH & Co. All of them manufacture and sell various domestic appliances in several Member States.

3. RELEVANT MARKET AND POSITION OF THE PARTIES

3. The agreement concerns domestic electric storage water heaters (hereinafter "DESWH") used for the purposes of supplying hot water for use in private homes. Besides DESWH, different appliances or systems are generally used in the EU, such as instantaneous gas-fuelled heaters (either natural gas or liquefied petroleum gas), storage gas heaters, gas or diesel-fuelled "combi boilers" and central or district heating systems. CECED argues that price and installation costs for each of these products vary considerably, so that they may not be easily substitutable with each other. On the supply side, manufacturers are, according to CECED, not active throughout the full range of these appliances. The predominance of a particular alternative in a given Member State allegedly relies very heavily on the availability of the various primary sources of energy for domestic use, policies in this respect and national or even regional patterns of housing. On this basis, CECED argues that the various appliances and systems which supply hot water for use in private homes, including DESWH, cannot be deemed to constitute a single product market.

4. According to CECED, virtually no EU manufacturer of DESWH is active throughout the EU; sales in other Member States are allegedly minor and, if at all, far lower than in the manufacturer's own country. CECED argues that although the geographic dimension of the DESWH market seems, therefore, predominantly national, the question needs not to be settled definitively in this case. Whatever the geographic definition, EC-wide or national markets, the parties' market shares and the volume of production concerned are important enough to warrant that the agreements have, at least, appreciable effects in the market(s) concerned, according to CECED.

5. According to CECED, DESWH are relatively unsophisticated products and sales volumes are stagnating or declining in most national markets, which are allegedly rather concentrated. The parties to the agreement are allegedly among the market leaders in their Member State of incorporation. CECED states that the parties' combined market shares in most Member States are higher than 60 % and that, for the EC as a whole, their sales account for approximately 65 % of the total.

4. THE AGREEMENT

6. The agreement basically covers three sets of objectives concerning: (i) production and imports of DESWH; (ii) monitoring and reporting; and (iii) promotion of technological development as well as consumer awareness. The agreement will last until 31 December 2003.

7. The parties have mainly agreed the following:

Production and imports: following an undertaking to provide public declarations stating the standing losses of their DESWH:

- after 31 December 2000 - each party stops producing for and importing into the community DESWH, the standing losses of which, expressed in kWh per 24 hours, exceed the maximum allowable values set forth in the agreement. Such values vary for small (volume of 25 to 45 litres), vertical (45 to 220 litres), horizontal (45 to 220 litres) DESWH(1);

- by 1 January 2002 - each party undertakes to reduce the weighted average standing losses of its production to certain thresholds for each of the above categories of DESWH, except vented DESWH in the UK, where these thresholds should be attained by the end of 2002(2).

Monitoring and reporting: CECED will set up and maintain a database containing an analysis of all models of DESWH placed on the community market by all participants. It will be available to the European Commission and national authorities. The fulfilment of the objectives of the agreement will be monitored by a notary who will report annually to CECED and the Commission. CECED itself will submit an annual report to the Commission including aggregated data as to the fulfilment of these objectives. Individual data will not be disclosed to other parties, including CECED members.

Consumer awareness and technological advancement: the participants have agreed to enhance consumer and installer awareness about energy savings and to develop insulation and other methods to further reduce standing losses.

5. ARGUMENTS FROM CECED

8. According to CECED, even though the agreement may restrict competition within the meaning of Article 81(1), the agreement will contribute to technological progress, since more efficient DESWH, which provide the same service with less energy consumption, are likely to replace those no longer allowed. According to CECED, the agreement will improve the efficiency of DESWH sold in the EC by 29,1 %, when fully implemented. Reduced stand-by losses of DESWH in the EC as a result of the full implementation of the agreement will, in turn, allegedly diminish electricity consumption by 9,8 TWh per year in the long run compared with a business-as-usual scenario. According to CECED, as individual purchasers, consumers will obtain savings through reduced electricity bills, which allow for recouping higher purchase costs.

9. CECED stresses that the agreement leaves manufacturers free to use whatever methods they choose in order to meet their obligations and that the various provisions in the agreement are necessary to obtain the benefits highlighted above. According to CECED, various technical alternatives are readily available to the manufacturers concerned. The agreement will allegedly not directly restrict the parties as to other competitive factors such as price, brand image and technical performance, which have more weight in purchase decisions than energy efficiency, according to CECED.

6. INTENTION OF THE COMMISSION

10. Pursuant to its "Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements"(3), the Commission intends to take a favourable view towards the notified agreement. Before doing so, it invites all interested third parties to submit their observations within 30 days of the publication of this notice, quoting reference COMP.F.1/37.893 - CECED Water Heaters, to: European Commission Directorate-General for Competition

Directorate F - Consumer goods and capital goods industries

Rue de la Loi/Wetstraat 200 B - 1049 Brussels.

(1) The maximum allowable values are as follows: (a) small unvented: 0,1474 + 0,0719 × Volume 2/3, small vented: 0,1561 + 0,0802 × Volume 2/3; (b) vertical unvented: 0,224 + 0,0663 × Volume 2/3, vertical vented: 0,236 + 0,074 × Volume 2/3; and (c) horizontal unvented: 0,939 + 0,0104 × Volume, horizontal vented: 1,034 + 0,0116 × Volume.

(2) The thresholds are as follows: (a) small: 0,13 + 0,0553 × Volume 2/3; (b) vertical 0,2 + 0,051 × Volume 2/3; and (c) horizontal: 0,75 + 0,008 × Volume.

(3) OJ C 3, 6.1.2001, p. 3, in particular, chapter 7 "Environmental agreements", points 180, 186, 189-90 and 194 to 197.