A4-0316/97

Resolution on the XXVIth report by the Commission on competition policy - 1996 (SEC(97)0628 - C4-0209/97)

The European Parliament,

- having regard to the XXVIth report by the Commission on competition policy - 1996 (SEC(97)0628 - C4-0209/97),

- having regard to the report from the Commission on the Fifth Survey on state aid in the European Union in the manufacturing and certain other sectors (COM(97)0170),

- having regard to its resolutions of 13 November 1996 ((OJ C 362, 2.12.1996, p.135.)) on the XXVth report on competition policy and of 18 July 1997 ((Minutes of that Sitting, Part II, Item 7.)) on the Commission's Green Paper on vertical restraints in EC competition policy,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinion of the Committee on Legal Affairs and Citizens' Rights (A4-0316/97),

A. whereas the stated objective of the EU's competition policy is 'to ensure that markets acquire or maintain the flexibility they need to allow scope for initiative and innovation and to allow an effective and dynamic allocation of society's resources',

B. whereas the free play of market forces alone cannot, in an imperfect market, achieve certain priority objectives of the European Union, namely economic and social cohesion, an adequate level of research and development, environmental protection, the growth of SMEs and structural adjustment,

C. whereas the proper development of competition and the quest for equal opportunities for all businesses constitute essential preconditions for the smooth functioning of the internal market,

D. whereas free-market competition is hampered as a result of the changing role of the State, the interdependence of national economies and the need to preserve regional and social cohesion,

E. whereas monetary union demands a higher degree of control of competition distortion to safeguard the internal market, in particular of the state aids given by Member States sharing the same currency,

F. whereas the existing structures and resources of the Commission to control practices prejudicial to fair competition are neither adequate, nor sufficient,

G. whereas safeguarding competition inside the Monetary Union requires further coordination within the Commission services responsible for the various Community policies concerned (competition, industrial, commercial and internal market policy) and between those services and the different Member States' competition authorities, in order to establish a common EU system to safeguard fair competition,

H. whereas the allocation of state aid in breach of the EC Treaty is counter- productive in that it favours the inefficient over the efficient, distorts competition between regions and companies and imposes an excessive burden on public budgets,

I. whereas competition policy should be used as an instrument to promote healthy, fair competition between the United States, the EU and Japan,

J. whereas at the Singapore Conference of 11 December 1996 a working group was set up within WTO to 'study issues relating to the interaction between trade and competition policy, including anti-competitive practices',

K. whereas merger control activity once again expanded substantially (by about 15%) compared with the preceding year, the increase being accounted for primarily by high-technology growth sectors, i.e. sectors of particular strategic importance (media, telecommunications, etc.); whereas this trend is likely to take root, in view of globalization and growing economic liberalization; whereas, furthermore, the increasingly international nature of concentrations poses a special challenge to Community competition policy,

1. Welcomes the XXVIth report on competition policy and considers it a useful document upon which the accountability of the Commission in pursuing its Treaty duties and responsibilities could be exercised, thus bringing Community competition policy closer to the public; in this context, supports the Commission's DG IV in its endeavour to be equipped with adequate human resources and transparent investigative instruments;

2. Encourages the Commission and the Member States to coordinate and integrate their resources better in order to establish an efficient EU system and structure to safeguard fair competition; repeats its call for closer cooperation among the Commission departments concerned, an aim which could be achieved most effectively by setting up a separate department within the Commission to evaluate the costs and benefits - especially in terms of employment - arising when the four above-mentioned policies (competition, industrial, commercial, and internal market policy) are framed and implemented, and to draw up recommendations to the Commission, set out in an annual policy coordination report that should also be submitted to the European Parliament and the Council;

3. Hopes that the Commission's approach to concentrations will take account of non-technical matters such as the impact of concentration on consumers, employment, cultural diversity and freedom of expression, or the local industrial system; calls for the above points to occupy a prominent place in the decisions taken, in keeping with the economic and/or social appraisal referred to in recital 13 of Council Regulation (EEC) No 4064/89;

As regards the application of Articles 85 and 86

4. Agrees with the Commission's new Regulation on block exemption regarding technology transfer agreements (Regulation (EC) No 240/96 of 31 January 1996) but recalls the four advantages upon which the Commission had based its decision, namely the clarification of what is and is not exempted, the specific obligations to be respected, the procedure of notification and approval and the licensee's market share threshold of 40% when applied to SMEs;

5. Deplores the lack of a genuine internal market relating to the distribution and servicing of motor vehicles, as numerous complaints from consumers prove; calls on the Commission to ensure once and for all a free market where consumers can without any problems buy a car outside their own Member State and where no obstacles to parallel trade exist;

6. Urges the Commission to take the first steps to decentralize control of collusive practices; considers that cooperation between national competition authorities and the Commission with a view to enforcement of Articles 85 and 86 of the EC Treaty should gradually lead to approximation of the relevant national laws, enabling the subsidiarity principle to find clear expression;

7. Encourages the Commission to seek additional instruments in its campaign against harmful types of secret cartels which either fix prices or set production and sales quotas or seek to share markets;

8. States that it can accept neither the contents nor the form of the Commission's notice on the non-imposition or reduction of fines in cartel cases; calls upon the Commission to take measures aimed at introducing a legally binding instrument with an appropriate legal basis; expresses the wish that this legally binding instrument duly take account of the legal traditions of the majority of the Member States;

9. Requests the Commission to report to Parliament in its forthcoming competition report on whether the economic and legal grounds underlying the revision of the Notice of the Commission concerning agreements of minor importance ((OJ C 29, 30.1.1997, p. 3.)) actually justified its revision;

10. Agrees with the content of the Commission Notice on the internal rules of procedure for processing requests for access to the file of an enterprise ((OJ C 23, 23.1.1997, p. 3.)) but recalls its aforementioned resolution of 13 November 1996 on the XXVth competition report as regards openness, transparency and accountability, and asks the Commission to be meticulous in distinguishing between non-communicable and communicable documents;

11. Reiterates its position as stated in its aforementioned resolution of 18 July 1997 on the Commission's Green Paper on vertical restraints;

As regards the abuse of a dominant position

12. Recognizes that imperfect competition is the order of the day and that the most commonly used practices employed by dominant firms to eliminate competition are: access to an essential technology or infrastructure, predatory pricing, exclusionary dealing agreements, discrimination among suppliers and exclusionary rebate schemes; hence encourages the Commission to pursue its fight against these abusive practices exercised by certain enterprises;

13. Recalls its position as stated in its aforementioned resolution of 13 November 1996, and in particular paragraphs 2, 3 and 4 thereof, and requests the Commission to examine, on the basis of the ownership criterion, predatory pricing and other unfair practices, regulatory and non-regulatory barriers in the fields of telecommunications in both mobile and satellite communications as well as on-line services, of media, of air transport and of the banking and financial sectors;

As regards State monopolies and the Amsterdam Treaty

14. Requests the Commission to submit a report on the implications for the competition policy of the Treaty of Amsterdam, and in particular, Article 7d on services of general economic interest, the Protocol on public broadcasting in the Member States and the declaration on credit institutions in Germany, paying particular attention to the definition and meaning of services of general economic interest, public obligations, universal service, equality of treatment, quality of public services and the principle of common interest;

15. Recognizes the need for a new government role in the sectors of: telecommunications, energy, postal services, transport and broadcasting, stressing the aspects of establishing standards for both the private and the public sector and the new partnerships between the public and private sectors;

16. Supports the efforts of the Commission to liberalise gradually the electricity market and expects that the Commission will apply with determination the common rules for the internal market for gas still to be adopted by the European Parliament and the Council;

17. Equally supports the efforts of the Commission to introduce an element of competition in the management of airport and port infrastructure and in the access to essential infrastructure;

18. Is concerned that the increasing concentrations arising through mergers or cross-border alliances have blurred the definition of the 'Relevant Market'; the geographic aspects, legal barriers of entry, security, transport costs and other factors should be used for an operational definition based on the concept of substitutability of goods and services;

As regards State aid

19. Considers it unacceptable that the Commission is unable to provide state aid surveys concerning recent years;

20. Recalls the main findings of the Vth Survey on State aid in the EC of Twelve over the period 1992-1994:

(a) the overall aid, on average per year, was more than ECU 95 billion, representing 1.7% of GDP, a ECU 713 subsidy for each person employed, and 3.3% of government expenditure;

(b) overall state aids given by some Member States are extremely high (reaching 88% of their budget deficit);

(c) about 45% of overall aid (i.e. ECU 42 639 million per year on average) went to industry, which if expressed as a percentage of intra-Community exports of manufactured goods gives a clear indication of the potential for distorting competition;

(d) State aid to industry was distributed as follows: 30% for horizontal objectives (i.e. R& D, environment, SMEs, trade, energy saving etc.), 17% for shipbuilding, steel and other sectors, and 53% for regional objectives;

(e) aid to agriculture, fisheries, transport and coal mining accounted for approximately 55% of the overall aid although the exact amount is not known due to lack of complete information;

21. Reaffirms its support for State aid deemed to be in the common interest, such as aid for the regions, R& D, SMEs, training, energy saving and the environment; notes however that such aid has been decreasing while aid granted to individual enterprises has been rising;

22. Believes, nevertheless, that a significant proportion of aid in the Community indicates a stable tendency which distorts fair competition, is incompatible with the internal market, undermines the EU's commitment to a free world market and will become a source of potential friction between Member States participating and those not participating in EMU; points, however, to the need to employ the 'alignment clause' concept (mentioned in connection with State aid for research and development ((OJ C 45, 17.2.1996, p. 5.))) to ensure that Community industry is not penalized on account of self- restraint not imposed on non-European firms, as the Commission itself implied in its response to Parliament's aforementioned resolution of 13 November 1996 when it observed that a provision of this type, in a globalized economy, should not be used so widely as to disturb the balance between competitiveness and free competition;

23. Proposes that stability and convergence programmes including State budget objectives should also be considered from the point of view of competition;

24. Proposes that all State aid, irrespective of its form or purpose, should be governed by rules making for transparency and supervision and that a code of conduct should accordingly be drawn up along the lines of the Commission's proposed code on tax-related subsidies;

25. Is concerned that the proposed Regulation for a block exemption on certain categories of State aid will create market distortions; recalls that certain national markets are more characterized by small and medium-sized enterprises (SMEs) than others; urges the Commission to watch closely the implementation of the Regulation in order to ensure that SMEs can be protected in the event of abusive aid being given to competitors;

As regards international cooperation

26. Believes that the determining factors of globalization: technological progress, deregulation of markets, liberalisation of key sectors and intensification of trade in goods and of capital markets have reduced the effectiveness of the traditional policies of the State, one of them being competition policy;

27. Believes, in view of globalization, that future reports on competition policy should include a chapter on the state of competition law in the other economic regions;

28. Is of the opinion that the interdependence resulting from globalization of production, distribution and trade and the markedly international dimension of competition problems necessitate a new approach to EU competition policy;

29. Believes it essential to strengthen and continue the close and careful cooperation with the applicant countries with a view to establishing effective competition policies and competition authorities; stresses that the applicant countries must comply with the EU competition rules in order to avoid undermining the Union's own foundations;

30. Favours an increasing role for the World Trade Organisation (WTO) in international competition policy; welcomes the fact that a working party on international competition law has been set up within the WTO; considers that the EU needs to play a more active role in order to achieve results rapidly and avert ruinous competition; asks therefore the Council to mandate the Commission - while taking account of the Agreement between the EU and the US Government regarding the application of their competition laws - to pursue the following objectives:

(a) adoption of common competition principles at international level to deter the 'most harmful practices', providing in particular for a ban on price and area cartels and for anti-trust legislation;

(b) creation of the means of cooperation between competition authorities;

(c) adapting of the WTO rules for the settlement of disputes to the competition rules;

31. Instructs its President to forward this resolution to the Commission and to the Council.