COMMISSION OF THE EUROPEAN COMVTUNITIES 
C0M(93) 162 final 
Brussels, 5 May 1993 
XXIInd REPORT 
ON 
COMPETITION POLICY 
1992 
XXI Ind COMPETITION REPORT - TABLE OF CONTENTS 
INTRODUCTION 
PART ONE - MAIN DEVELOPMENTS IN COMPETITION POLICY 
Chapter I - Maintaining a competitive environment 
§1 - Restrictive agreements and abuses of dominant positions 
§2 - Merger control 
§3 - State aid 
§4 - Special or exclusive rights 
Chapter II - Application of the competition rules to particular industries 
§1 - Posts and telecommunications 
§2 - Financial services 
§3 - Energy 
§4 - Transport 
§5 - Cinema and television 
Chapter III - Competition policy and other Community policies 
§1 - Completion of the internal market 
§2 - Consumer protection 
§3 - Environment 
§4 - Small and medium-sized enterprises 
§5 - Regional policy 
Chapter IV - Community competition policy and developments in the rest of the 
wor Id 
§1 - General 
§2 - Competition policy as a tool to open up trade with third countries 
§3 - Structures in Europe 
§4 - United States 
§5 - Japan 
§6 - Competition policy in multilateral organizations 
Chapter V - Application of the competition rules 
§1 - Transparency 
§2 - Subsidiar i ty 
§3 - Adaptation of procedures 
§4 - Commission activities (quantitative description) 
- 2 - ^ 
PART TWO - COMPETITION POLICY TOWARDS ENTERPRISES 
Chapter I - Main decisions and measures taken by the Commission 
A. Restrictive agreements 
§1. Horizontal agreements 
- Establishment of Joint ventures 
a. Car Isberg/Courage 
b. CarIsberg/AIIied Lyons 
c. Fiat/Hitachi 
d. Ford/VW 
- Agreements in the financial services sector 
e. Assurpol 
f. Eurocheque: Helsinki Agreement 
- Agreements in the energy sector 
g. SHG/EDF and ENEL 
h. Jahrhundertvertrag 
- Agreements in the maritime transport sector 
i. French-West African shipowners' committees 
J. CEWAL Liner Conference 
- Agreements concerning fisheries and agriculture 
k. Scottish Salmon 
I. Milk Marketing Board 
- Agreements relating to intellectual property 
m. Chiquita/Fyffes 
- Agreements relating to charges connected with environmental 
protect ion 
n. VOTOB 
- Cartels 
o. Building and construction industry in the Netherlands 
§2. Distribution 
a. Newitt/Dunlop Slazenger International 
b. Mars/Langnese-Schôl1er 
c. Givenchy 
d. Viho/Parker Pen 
e. 1990 Football World Cup 
f. UIC 
g. Ford Agr iculturaI 
B. Abuse of a dominant position 
a. British Midland/Aer Lingus 
b. B&I/SeaI ink, Holyhead 
c. Gillette/Wilkinson Sword 
C. Merger control 
§1. Scope of application 
§2. Appraisal of concentrations (Article 2) 
§3. Restrictions ancillary to concentrations 
§4. Suspension of concentration (Article 7) 
§5. Referral to the competent authorities of the Member States 
(Article 9) 
- 3 - O 
D. Substantive and procedural rules 
§1. Block exemptions 
a. Regulation amending the block exemption Regulations 
b. Application of the block exemption Regulations 
c. Insurance block exemption 
d. Sea transport 
e. Motor vehicle distribution 
f. Air transport 
§2. Notices 
a. Cooperative joint ventures 
b. Cooperation between the Commission and national courts 
c. Contracts with commercial agents 
d. Application of the "de minimis" principle in exclusive beer 
supply arrangements 
§3 Interim measures 
Chapter II - Main cases decided by the Community lawcourts 
§1. Application of Article 85(1) to restrictive practices in the 
polypropylene sector 
§2. Application of Article 85 to a cooperative 
§3. Application of Article 85 to a selective distribution system 
§4. Non-applicability of Article 85 to statutory restrictions on 
imports and exports of electricity 
§5. Refusal to exempt a net price system for imported books 
§6. The concept of effect on trade between Member States 
§7. Abuse of a collective dominant position 
§8. Procedure 
§9. Art icle 90 
_ 4 - *T 
PART THREE - COMPETITION POLICY AND STATE INTERVENTION 
Chapter I - Main decisions and measures taken by the Commission 
A. State aid 
§1. General policy questions 
§2. Third survey on state aid 
§3. Aid for research and development 
§4. Aid to industrial sectors subject to a Community framework on 
state aid 
a. Shipbuilding industry 
b. Steel covered by the ECSC Treaty 
c. Non-ECSC steel sectors 
d. Aid to the coal industry 
e. Aid to the synthetic fibres industry 
f. Aid to the motor vehicle industry 
§5: Aid to other industrial sectors 
§6. Aid in the service sector 
§7. Horizontal aid schemes 
Aid for environmental protection and energy conservation 
General investment aid 
Other general investment aid schemes 
Aid examined in the context of privatizations 
Aid to small and medium-sized enterprises 
Aid for employment and training 
Rescue and restructuring aid 
§8. Regional aid 
§9. Aid in the transport sector 
§10. Aid in the agricultural sector 
§11. Aid in the fisheries sector 
B. Public enterprises and state monopolies 
§1. Telecommunications 
§2. Postal services 
§3. Energy 
§4. Transport 
§5. Other industries 
§6. Other aspects 
§7. Communication concerning public undertakings in the manufacturing 
sector 
Chapter II: Main decisions of the Court of Justice 
§1. Admissibility of applications lodged against decisions to 
initiate proceedings under Article 93(2) 
§2. Failure to comply with a decision under Article 93(3) 
- 5 -
PART FOUR - CONTACTS WITH COMMUNITY AND OTHER INSTITUTIONS 
Chapter I - The contribution from socio-economic and political circles 
§1. European Parliament 
§2. Economic and Social Committee 
§3. Advisory Committee on Restrictive Practices and Dominant Positions 
§4. Report on the Advisory Committee on Concentrations 
§5. Conference of National Government Experts 
§6. Other forms of cooperation with the authorities of the Member States 
§7. Other contacts 
Chapter II - International contacts 
§1. Implementation of the EC/US Agreement on the application of their 
competition laws 
§2. Countries of Central and Eastern Europe 
§3. Contacts with other countries 
§4. Multilateral 
Intro. 1 
NTRODUCTION 
Alongside the establishment of a common market, competition policy Is one of 
the two great strategies by which the Treaty of Rome sets out to achieve the 
Community's fundamental objectives: the promotion of harmonious and balanced 
economic development throughout the Community, an improved standard of 
living, and closer relations between the Member States. Competition policy 
cannot therefore be pursued in isolation, as an end in itself, without 
reference to the legal, economic, political and social context. 
Rapid changes in that context call for rigorous consistency and steadfastness 
in applying the competition rules, combined with greater flexibility in 
adapting to the new situation and staying in tune with the objectives which 
the Community has set itself for economic and social cohesion, industrial 
competitiveness, research and technological development, and the environment. 
In addition to the completion of the internal market, the progress being made 
in technology, and the globalization of markets, there are two new factors 
which competition policy must take into account: 
the slowdown in economic growth, with its social consequences, and 
the application of the principle of subsidiarity. 
These developments are combining to create an environment in which 
competition between firms is fiercer than ever, while the tendency to adopt a 
defensive and protectionist posture has never, been so strong. At the same 
time the Maastricht debate shows that the greatest possible clarity is needed 
in the Commission's efforts to ensure that competition is not distorted. 
This Report seeks to meet the demand for clarity and transparency by setting 
out in plain terms the Commission's thinking on competition. The policy 
Intro. 2 
7 
priorities detailed in previous reports remain unchanged; in particular, 
competition policy seeks to contribute to the achievement of a genuinely 
frontier-free area, and to economic and social cohesion, by throwing open 
markets which might otherwise be protected by exclusive rights, restrictive 
practices, the abuse of dominant positions, or state aid. This Twenty-
second Report sets out to explain how in a context which has changed 
radically the Commission proposes to draw the necessary distinctions between, 
on the one hand, behaviour on the part of firms or Member States which 
contributes to progress and .the restructuring of European industry and, on 
the other hand, behaviour which holds back the process of adaptation by 
partitioning markets, creating or strengthening dominant positions, or 
keeping firms alive when they are no longer viable, thereby damaging the 
dynamism and competitiveness of European industry. 
As far as the conduct of firms is concerned, the Commission continues to 
enforce the competition rules strictly: anti-competitive agreements and 
mergers based on the defensive sharing of markets, and restrictive practices 
which reduce long-term capabilities and competitiveness, are and must be 
prohibited. But the Commission hopes that more rapid decision-making and 
greater legal certainty will faciIitate those types of cooperation and merger 
which enable firms to adapt and to improve their overall competitiveness. 
The "one-stop shop" principle which was adopted in the Merger Control 
Regulation is a step in this direction. Further steps were taken in 1992 
with a Commission notice on cooperative joint ventures, the extension of 
several block exemptions, and the drawing up of a programme for the 
acceleration of procedures. 
The main challenges facing competition policy are without any doubt the 
introduction of competition into regulated sectors and the monitoring of 
state aid. State monopolies and exclusive rights have to be seen in their 
new context, which is the single market: change and competition are vital if 
the four fundamental freedoms are to be given practical effect, and the 
benefits of the single market are to materialize. This is particularly so 
as technological progress and the demands of users are removing the rationale 
of some monopolies, for example in telecommunications. But there has 
Intro. 3 
8 
to be a proper balance between this drive for economic efficiency and the 
need to take account of the social dimension and to maintain a universal 
service, or in the case of sectors such as gas and electricity to maintain 
security of supply as well. 
There is Just as delicate a balance to be observed in the field of state aid, 
particularly at a time when the economic going is difficult and strong 
pressure is being brought to bear on the public authorities by firms which 
face more intense competition and a slowdown in demand. The Commission 
looks at cases from a Community rather than a national angle, and seeks to 
distinguish aid whose harmful effect on competition is offset by its 
contribution to economic growth, to structural adjustment and to economic and 
social cohesion from aid which impedes development towards more efficient 
structures and serves merely to export problems to other Member States. 
The globalization of markets and the knock-on effects of certain anti­
competitive behaviour outside the Community mean that policy must broaden to 
take account of the international dimension. The scope of Community law is 
confined to conduct or measures implemented inside the Community. But some 
practices outside the Community may affect- the Community market; and 
Community firms may have to contend with anti-competitive practices on non-
Community markets. The main competition policy response to this situation 
is to seek to encourage the application of similar policies by the 
Community's main trading partners, by means of bilateral agreements or 
through multilateral negotiation. Unlike protectionism, a broadening of 
competition policy of this kind is ultimately in the interests both of the 
Community and of its partners. 
The transparency and subsidiarity debates have also highlighted the need for 
wider familiarity with the objectives of the rules and mechanisms of 
competition policy as a factor in industrial competitiveness. The policy 
cannot be effective if its objectives are not embraced by the business 
community. 
Intro. 4 
The Commission accordingly pressed ahead with its policy of transparency; it 
approved a considerable number of regulations and codes and published various 
explanatory booklets. Work also went ahead on the consolidation of existing 
rules. 
A successful competition policy depends very much on proper application of 
the principle of subsidiarity, with matters being handled at the level at 
which they can be dealt with most effectively. The Commission is firmly in 
favour of a decentralized application of competition law, which would allow 
the appropriate authorities in the Member States to deal with cases, whose 
implications are essentially domestic, leaving the Commission free to 
concentrate its resources on the cases which it alone is capable of 
resolving. The process should be facilitated by the notice which the 
Commission approved this year on cooperation between national courts and the 
Commission in applying Articles 85 and 86 of the EEC Treaty. The measures 
taken to improve transparency should help to ensure the wide awareness which 
decentralization will require. 
The general structure of the Twenty-second Competition Report is the same as 
that of its predecessor. A few changes have been made, however, in order to 
improve the content. 
In Part One, which outlines the main thrust of Community policy, the chapter 
on the relationships between competition policy and other Community policies 
contains new sections on the environment and on small and medium-sized 
enterprises; in the preceding report it concentrated on the completion of 
the internal market, industrial policy, technology development and economic 
and social cohesion. 
The main decisions of the Court of Justice regarding the application of 
Article 90 of the Treaty are now reviewed in Part Three, which deals with 
competition policy and state intervention, rather than in Part Two, which 
deals with competition policy towards enterprises. 
Intro. 5 
10 
Part Four includes several new sections describing the proceedings of the 
Advisory Committee on Restrictive Practices and Dominant Positions, the 
Advisory Committee on Concentrations, and the Conference of National 
Government Experts, and reporting on contacts between Commission departments 
and interested parties in the course of the preparation of legislation. 
The annexes continue to be an important part of the Report. The first, 
detailing reaction to the Twenty-first Report in Parliament and the Economic 
and Social Committee, now contains the Commission's reply to the Economic and 
Social Committee's opinion as well as its reply to Parliament's opinion. 
Annex II gives the full text of legislation which will allow readers to 
update the Compendium of European Community Competition Law; the Commission 
is to publish a revised version of the Compendium shortly. Annex III 
contains summaries of the main decisions not described in the body of the 
Report, and references for decisions, notices and Judgments relating to 
individual cases, but now adds a complete list of all Commission press 
releases on competition issues. 
Changes to the last two annexes await the next report: the annex on the 
development of concentration, competition and competitiveness will be using 
new sources of data for the year 1993 onward, and the scope of the annex on 
competition law in the Member States will be expanded to cover the 
decentralized application of the Community competition rules. 
1.l.§1. 1 
11 
<T1> PART ONE: MAIN DEVELOPMENTS IN COMPETITION POLICY 
<T2> Chapter I: Maintaining a competitive environment 
<T4> §1. Restrictive agreements and abuses of dominant positions 
1. The year was a very busy one for the Commission, which handled a great 
many individual cases and approved a large number of general measures as 
we 11. 
2. In the individual cases it dealt with the Commission continued to take 
vigorous action against restrictive agreements, both horizontal and vertical, 
and against the abuse of dominant positions. This has long been a key aspect 
of competition policy. The offending practices generally do damage of two 
kinds. They cause a loss of efficiency by preventing, restricting or 
distorting the competition which would otherwise spur business into a 
constant search for ways of improving efficiency. They also impede the 
integration of markets by restricting trade between Member States, and thus 
hold back the improvement in the economic efficiency of the Community's 
production structure which integration ought to produce. From the consumer's 
point of view the damage is reflected in higher prices and a narrower choice. 
3. In the year under review this policy was extended to a number of 
industries in which it had not previously had occasion to bite. Examples are 
sea transport, the building industry, and the organization of sporting 
events. The year also saw the first decision imposing fines in the banking 
sector. 
Policy continued to be strengthened in some areas where the Commission has 
already built up a considerable body of administrative precedent, such as the 
cosmetics trade, which provides a good illustration of the Commission's 
efforts to prevent distribution agreements from obstructing the integration 
of the common market. 
4. The practices which the Commission contests have the effect of reducing 
or removing the incentive to greater efficiency provided by competition. As 
a general rule they also set out to prevent rival firms from entering the 
1.l.§1. 2 
12 
market, or to drive them out. This means that they deprive the consumer of 
choice, and prevent him from optimizing the allocation of his Income. Their 
basic thrust is usually to prevent the dynamic development which would 
otherwise be generated by competition and the establishment of the single 
market, and to defend a status quo which favours the firms taking part in 
them. 
Similar considerations guide other aspects of competition policy, such as 
policy towards state aid or towards companies given special or exclusive 
rights. There is a fundamental consistency underlying these different areas 
of competition policy. 
Thus the Commission continued to take an active approach to regulated sectors 
such as energy, telecommunications and transport. It is vital that these 
Infrastructures adapt to the single market if the single market Is to deliver 
all the gains in efficiency which the Community is entitled to expect from 
it. 
The achievement of a single market requires that competition policy be 
energetically pursued in other regulated sectors too, and the Commission 
proposes to give greater attention to these. Services - primarily financial 
services but also legal and consultancy services - are a field where 
restriction can appreciably affect trade between Member States and 
competition in the common market. 
5. But some forms of cooperation between firms are desirable, for example 
because they facilitate the entry of new firms to the market, generate 
synergies conducive to technological progress, or permit economies of scale. 
The Commission stepped up its efforts to encourage cooperation of this kind, 
particularly through various general measures which it adopted in the course 
of the year. 
This was the thinking which prompted the Commission to broaden the scope of 
certain block exemption regulations. At the same time it approved a notice 
concerning the assessment of cooperative joint ventures. The two measures 
should improve the legal certainty available to firms by clarifying the rules 
with which they have to comply. This will facilitate certain kinds of 
cooperation between them, particularly those which promote R&D and the 
1.l.§1. 3 
13 
transfer of technology in Community industry. 
The Commission also reviewed its own internal procedures in order to see how 
they could be speeded up, particularly in cases which, while not involving a 
"concentration" within the meaning of the Merger Control Regulation, 
nevertheless have a structural dimension which requires rapid decision-making 
if the benefit of an agreement is not be held up by a long period of legal 
uncertainty.(1> 
The same desire for efficiency underlay the Commission's efforts to encourage 
the "decentralized" application of Community competition law, where the 
Commission hopes to arrive at as rational a division of tasks as possible 
between the national authorities and itself. The approach is in accordance 
with the principle of subsidiarity. 
Courts in Member States have an essential role to play here. In order to 
encourage the application of Community competition law by national courts the 
Commission published a notice on the subject, which spells out the assistance 
the Commission is prepared to provide in such cases.(2) 
6. Another aspect which will in all likelihood be growing more important in 
future is the international dimension of the policy of prohibiting 
restrictive practices. As markets become more international and trade 
expands, an anti-competitive practice on a non-Community market is more and 
more likely to have a damaging effect on firms or consumers in the Community. 
Provisions on this subject have accordingly been included in the EEA 
Agreements and the agreements with Central and East European countries. 
(1) See points 122 to 124 of this Report. 
(2) See point 299 of this Report. 
1.1.§2. 4 
14 
<T4> §2. Merger control 
7. Merger control occupies a central place in Community competition policy-, 
it aims to reconcile two imperatives. Firstly, the mergers envisaged by 
industry will generally help to adapt industrial structures to the single 
market so that the market can in fact generate the desired efficiency gains. 
The notifications which firms submit have to be dealt with efficiently and 
rapidly in order to avoid the harm which would be caused by a prolonged 
period of uncertainty. It is fair to say that that objective has been 
achieved, since at the first stage of inquiry the Commission is settling a 
large number of cases which raise no serious doubts from a competition point 
of view. Another fundamental consideration here is the principle of the 
"one-stop shop", which means that a merger is considered once, at Community 
level, and that firms do not find themselves having to approach a number of 
different authorities. 
8. Secondly it is likewise vital that mergers should not be allowed to 
establish dominant positions in the Community, with the holders of such 
positions no longer exposed to sufficient competitive pressure. They would 
not then need to pass on to consumers the benefit of the increased efficiency 
secured through the merger; instead they could exploit consumers' new 
dependence on them. In such cases the Commission must be able to take the 
measures necessary to maintain a competitive market structure in the 
Community, which is the only way of ensuring that the beneficial effects of 
the single market materialize in practice. 
9. This was the second full year of Community merger control, and for the 
most part the Commission continued with the policy followed in 1991. In the 
great majority of cases a decision not to oppose the merger was taken at the 
first stage in the procedure. It did not happen, as it had the previous 
year, that the original plans could not be adjusted satisfactorily and a 
decision to prohibit the merger had to be taken. There were in fact more 
cases in which the plans notified were amended in accordance with 
Article 8(2) of the Regulation in order to allow a favourable decision to be 
taken. This is a welcome development from the point of view both of the 
Commission and of business, since it produces a result which is at the same 
time in the interests of competition and acceptable to the firms involved. 
1.1.§2. 5 
15 
The conditions which the Commission imposed consisted mainly of obligations 
either to sell off part of the new group which the merger would create or to 
withdraw from particular markets where the new group would enjoy a dominant 
position. The Commission's objective was always to maintain a competitive 
structure on the relevant markets by preventing the establishment of a 
dominant position. This made it necessary to ensure proper market access for 
existing or potential competitors. 
10. There were several cases which presented novel aspects of some 
importance in the development of Commission merger control policy. The 
Mannesmann/Hoesch case is of special interest: the Commission there allowed 
the establishment of an enterprise holding a very significant share of a 
national market, because it was clear that the position would be only a 
temporary one given that Community directives liberalizing the market were to 
enter into force very rapidly. The case provides an example of the need to 
take a dynamic view of markets; analysis may reveal that a market which at 
present is still a national one is likely to become a Community market in the 
near future. This approach allows account to be taken of the probable 
developments which firms themselves seek to anticipate, and of those 
developments' probable impact on the firms. 
11. The Commission considerably clarified the scope of its merger control 
powers in its decision in the Nestlé/Perr ier case, where it stated the 
principle that the purpose of the Regulation, which was to maintain 
competitive structures, required that the Commission be able to prevent the 
creation or strengthening not just of a dominant position held by a single 
firm but also of a dominant position held jointly by a number of firms. Thus 
the Commission has power to prevent restrictions of competition resulting 
from the creation or strengthening of a duopoly or oligopoly. 
12. The first two legal actions challenging merger control decisions have 
now been brought before the Court of First Instance. 
13. Cooperation between the Commission and the authorities of the 
Member States was satisfactory, with regular and close contact being 
maintained between them. 
1.1.§2. 6 
16 
Another significant development came in the Steetley/Tarmac case.*3) The 
Commission for the first time agreed to refer aspects of a case to the 
national authorities on the ground that the relevant markets and the 
Implications of the transaction were clearly confined to parts of the 
territory of a Member State. The case was an exception in that the market 
affected was clearly limited to certain areas in the United Kingdom. At the 
time the Regulation was adopted both the Council and the Commission 
emphasized the exceptional nature of this procedure. The German authorities 
too made a request for referral in the Mannesmann/Hoesch case. The 
Commission implicitly refused that request when it initiated proceedings and 
subsequently took a final decision in the case. 
14. There will doubtless be further important developments in 1993, when the 
first review of the Regulation is to take place. The Regulation provides 
that the thresholds above which it is applicable and the mechanism for 
referral to the Member States are to be reconsidered. When the Regulation 
was adopted both Council and Commission commented that they were prepared to 
consider the method of calculating the turnover of joint ventures which is 
provided for in Article 5(5) of the Regulation, and possible inclusion of 
factors other than turnover. The Commission is preparing proposals. 
15. The business interests concerned are generally satisfied at the way 
merger control has been handled by the Commission. The Commission is also 
pleased to note that on the whole the application of the Regulation aroused 
less controversy this year than it did in 1991. In the Commission's view 
this shows that there is growing acceptance of its own position that the 
essential objective of merger control must be the maintenance of a 
competitive market structure in the Community, because a competitive 
structure is vital to any improvement in the competitiveness of Community 
(3) Another point to note here is that on 30 November the Commission 
received the first request made by a Member State under Article 22 of 
the Regulation, which allows a Member State to ask the Commission to 
look into a transaction which does not have a Community dimension in 
order to establish whether it creates or strengthens a dominant position 
on the market of that Member State (British Airwavs/Dan Air. OJ C 328, 
12.12.1992, p. 4). 
1.1.§2. 7 
17 
industry. An improvement of this kind is the main priority of Community 
industrial policy, and is crucial to success in other Community policies such 
as social and regional policy.^4) 
(4) Twenty-first Competition Report, point 45. 
1.1.§3. 8 
18 
<T4> §3. State aid 
16. The main developments in the state aid field this year can be summarized 
as fol lows. 
<T5> Strict control 
17. The Commission continued to exercise very strict control of state aid as 
the establishment of the single market progressed. A single market will make 
sense only if customs barriers and other trade restrictions are not replaced 
by increased state aid. The Commission continued its policy of eliminating 
general schemes of aid to investment, for which the Treaty offers no 
Justification, and taking a very tough line on schemes targeted at particular 
industries, which produce particularly acute distortions of competition. 
Like the Commission's established principle that regional aid should be 
concentrated in the regions which really justify it, and not granted in rich 
areas, this policy contributes to the Community's economic and social 
cohesion. The Third Survey on State Aid in the European Community, which was 
adopted this year, gives the Commission an overall picture of the effects of 
its state aid policy. It also allows the Commission to set priorities for 
the areas of work on which it will have to concentrate over the next few 
years. 
The Commission made full use of the Treaty provisions dealing with state aid 
and of the rules developed in the Judgments of the Court of Justice. It 
initiated the full inquiry proceedings provided for in Article 93(2) of the 
Treaty wherever a measure appeared on initial examination to be incompatible 
with the common market, or where the information supplied was insufficient, 
or where it had proposed appropriate measures to a Member State and the 
Member State refused to accept them. The Commission also invoked 
Article 93(1) in order to ask Member States to amend schemes it had 
previously approved. It brought proceedings before the Court of Justice 
under Article 169 of the Treaty in cases of failure to comply with earlier 
court judgments in state aid cases. It took one decision requiring that 
payment of aid be suspended in line with the Court of Justice's Judgment in 
Boussac. It began applying the communication on public undertakings in the 
manufacturing sector which it published on 18 October 1991. 
1.1.§3. 9 
19 
The Commission gave special attention to aid measures which had not been 
notified. As in the past it took up with the Member State concerned any 
cases where it learned from the press or from Parliamentary questions that 
state aid had been granted without the advance notification required by 
Article 93(3) of the Treaty. It also looked into complaints sent to It by 
Member States, by local and regional authorities, or by firms or trade 
associations. Such complaints are being made more and more often; they 
demonstrate the growing interest in the question of state aid among the 
parties concerned, and the confidence they are prepared to place in the 
Commission. In response to such complaints the Commission has had to look 
into areas of manufacturing or services not really explored hitherto and to 
intensify the supervision of assistance given by local authorities. 
The international dimension of the control of state aid must also be 
mentioned here. This aspect was reflected in the Draft Treaty on the 
European Economic Area, which was signed this year; under the Treaty the 
EFTA Surveillance Authority is to have powers similar to those of the 
Commission, and the two institutions are to cooperate. The Interim 
Agreements concluded on 1 March 1992 with Hungary, Poland and the Czech and 
Slovak Federal Republic also contain provisions on state aid. The Commission 
examined one individual case of aid to the motor industry in Austria; after 
discussion with the Austrian authorities the level of assistance was 
significantly reduced.<5) 
<T5> New aid codes 
18. If there is to be strict control of state aid there must necessarily be 
clear rules defining the types of measure which will qualify for exemption 
under Article 92(2) and (3). The Commission has set out rules of this kind 
in the form of codes, now always published in the Official Journal, which 
provide governments and firms with guidance on the approach which the 
Commission intends to take in determining whether aid is compatible with the 
common market. 
(5) See point 344 of this Report. 
1.1.§3. 10 
20 
A particularly important code which was adopted this year was the Community 
Guidelines on State Aid for Small and Medium-sized Enterprises (SMEs). These 
guidelines, which will be considered in more detail elsewhere in this 
Report,(6) define what is meant by an SME and distinguish between different 
types of assistance by their form and purpose. Other codes adopted were the 
new Code on Aid to the Synthetic Fibres Industry^7) and the Community 
Guidelines for the Examination of State Aid in the Fisheries and Aquaculture 
Sector;(8) the Commission decided not to amend the Community Framework for 
State Aid to the Motor Vehicle Industry.(9) 
The Commission made progress in the study of possible new codes, or 
amendments to existing ones, dealing with aid towards capital-intensive 
investment, aid for rescuing and restructuring firms in difficulty, aid in 
connection with export credit insurance, aid towards environmental 
protection measures and aid to the tourist industry. A new decision 
establishing Community rules for aid to the coal industry was submitted to 
the Council for its assent. 
The synthetic fibres and motor industry codes are designed mainly to provide 
guidance for the examination of individual cases in which aid is to be 
granted under regional schemes; the Commission plans to review the 
usefulness of these two codes should a code on aid to capital-intensive 
investment be approved. 
<T5> Control of aid in the former GDR 
19. The Commission took a large number of decisions on aid measures in the 
former German Democratic Republic, which comprised both regional measures 
and individual projects in industries such as steel, shipbuilding, motor 
vehicles and synthetic fibres. It took full account of the socio-economic 
situation in the regions concerned, which was a consideration particularly 
relevant to regional aid and the steel and shipbuilding industries. But it 
did not hesitate to apply the rules in force and to initiate investigation 
proceedings where necessary. 
(6) See points 78, 342 and 348. 
(7) See point 401 of this Report. 
(8) See point 510 of this Report. 
(9) See point 405 of this Report. 
1.1.§3. 11 
21 
The Commission adopted a decision on the activities of the privatization 
agency, the Treuhandanstalt. The decision is intended to ensure that the 
Commission is informed of certain measures planned by the agency and can thus 
form an opinion. The measures involved consist of loans and guarantees 
granted by the Treuhandanstalt to firms before privatization; the conditions 
of sale of groups of previously independent companies; compensation awarded 
to former owners repurchasing their firms, where it falls outside the scope 
of ordinary law; and sales at "negative prices". The obligation to notify 
is to apply only to fairly important cases; the Commission will deal with 
cases within specified deadlines which are shorter than those which normally 
apply.(10) 
<T5> Exemption from notification requirement for certain 
aid measures of minor importance 
20. The Commission decided that aid schemes which did not permit the grant 
of more than ECU 50 000 to one firm over a period of three years need no 
longer be notified. For a fuller account see Chapter V of this Report. 
(10) See point 349 of this Report. 
i.i.§4. 12 22. 
<T4> §4. Special or exclusive rights 
21. The policy of restricting monopolies has its basis in Article 90 of the 
Treaty, which states that competition law is to apply to "public undertakings 
and to undertakings to which Member States grant special or exclusive 
rights". The same goes for "undertakings entrusted with the operation of 
services of general economic interest... in so far as the application of such 
rules does not obstruct the performance, in law or in fact, of the particular 
tasks assigned to them". Even then, "the development of trade must not be 
affected to such an extent as would be contrary to the interests of the 
Community". 
22. Tackling monopolies is without any doubt one of the most fundamental 
challenges in competition policy. This is particularly true in the 
production and distribution of gas and electricity, in telecommunications, 
and in postal services. But the basic problems are the same in financial 
services or transport, where there are barriers to market entry as a result 
of national or local rules and regulations, and where access to networks or 
other vital facilities can be difficult. A broad outline of Commission 
policy is given here while the particular sectors are dealt with 
individually in Chapter II. 
23. In most of these areas there have for many years been monopolies 
operating extensive networks under a public service obligation which 
requires them to supply basic services across all or part of the territory of 
a Member State. The rules of the Treaty, the demands of the single market 
and legal, economic and technological factors all call for a review of this 
form of organization. 
24. The existing form of organization is based on a market divided along 
national lines and is therefore intrinsically incompatible with the Community 
competition rules, something which has become steadily clearer in the 
judgments of the Court of Justice. It is a structure which will often 
facilitate the abuse of a dominant position. It restricts freedom to supply 
services and the free movement of goods. It is often accompanied by 
discrimination on grounds of nationality. 
1.1.§4. 13 23 
25. Furthermore, the sectors involved are of vital importance to the quality 
of infrastructures in the single market. If Community businesses and 
consumers are to draw full benefit from the single market the regulated 
sectors must be made to match the scale of the single market in order to 
maximize the potential efficiency gains. Yet that result can be achieved 
only by establishing a competitive environment throughout the Community which 
will boost the volume and variety of supply and demand. The process of 
establishing a single market must encompass areas such as energy, posts and 
telecommunications. The competitiveness of the whole of the Community 
economy is at stake. 
26. These industries are at the same time going through a period of 
exceptional structural change, induced especially by technological progress. 
One result has been that in most cases consumers are demanding more and more 
diversified services, far more complex than the basic services which 
monopolies were traditionally expected to supply. The capital needed to 
modernize these industries has increased in proportion, at a time when the 
resources available from public budgets have been falling, and this has 
prompted the authorities to seek to bring in private capital. In some cases 
technological progress has actually done away with the original Justification 
for the monopoly. 
The Commission has a duty to take steps to identify the sectors concerned and 
to ensure that an open and competitive environment prevails to the full 
extent required by the Treaty. Clearly the Commission has to balance the 
general requirements of the Treaty against the arguments which may be put 
forward in Justification of a monopoly, such as security of supply or the 
maintenance of a universal public service, and it has to do so in the light 
of the principle of proportionality. But the Commission feels that the 
concepts invoked have now to be viewed not just in the national perspective 
but in a Community perspective too. 
These imperatives do not necessarily conflict with free competition: indeed 
the relationship is more likely to be complementary. An example is the 
desirability of a universal service, which by definition ought to be 
available to everyone throughout the Community: the service will be less 
1.1.§4. 14 
24 
expensive and its quality will be higher if there is competition to stimulate 
technical progress; this is particularly so because the introduction of 
competition into a regulated sector often leaves the old monopoly operator 
with part of its activity exposed to free competition while the rest, the 
universal service proper, continues to be its own reserved domain. But it is 
obliged to improve its efficiency in the competitive sector, and this can 
have beneficial effects in the monopoly section of its business. Thus 
competition can benefit a universal service rather than damage it. This is 
especially important in outlying regions of the Community, and consequently 
for the achievement of economic and social cohesion. 
27. Some of these sectors rely on networks whose establishment and 
maintenance require substantial investment; new market entrants must have 
access to these networks if real competition is to be possible. Free access 
to the network by outsiders is therefore a constant objective in Commission 
policy. Access must be fair: account has to be taken both of the costs 
borne by the operator of the network and of the new entrant's need for a deal 
which allows him to be competitive; the difficulty is rendered more acute by 
the fact that the new entrant will often be in competition with the network 
operator himself, which creates a need for proper clarity in the structure of 
the operator's costs. State aid policy and the prevention of the abuse of 
dominant positions must combine to help ensure fair market access. 
28. To ensure wide consultation in which all interested parties will have 
the opportunity to make their views known before any action on the 
Commission's part, the Commission published a review of the situation in the 
telecommunications services sector,(11) a communication on the 
telecommunications equipment industry,(12^ and a Green Paper on postal 
services.(13^ The basic question in these sectors is how to arrive at 
solutions which restrict competition and the fundamental freedoms of 
(11) SEC(92)1048 final. 
(12) SEC(92)1049 final. 
(13) C0M(91)476 final. 
1. I .§4. 15 25 
solutions which restrict competition and the fundamental freedoms of 
Community law as little as possible, while at the same time preserving a 
public service. A study has been launched of the accountancy problem in 
firms which operate both in reserved areas and in competitive ones. 
29. In a Judgment dealing with telecommunications services the Court of 
Justice confirmed earlier precedent allowing the Commission to take necessary 
measures in this sphere.14 
14 See point 333 of this Report 
1.ll.§1. 1 "Ko 
<T2> Chapter II: Application of the competition rules 
to particular industries 
<T4> §1. Posts and telecommunications 
30. Posts and telecommunications resemble one another in that they have both 
for a long time been protected from competition by monopolistic structures, 
and with the arrival on the market of new competitors and new services in 
recent years they have both been going through a far-reaching process of 
development. The Commission believes there is every reason to encourage 
these changes. 
The influence of technological progress is growing: this has considerably 
broadened the range of services on offer, and has helped to render some 
national monopolies obsolete. 
<T5> Telecommunicat ions 
31. The need to maintain a balance between liberalization and harmonization 
is central to the Commission's approach in this sector.1 Efforts to 
harmonize telecommunications equipment and services are thus going ahead 
alongside efforts at liberalization. 
32. Here too the Commission is trying to establish a competitive environment, 
which should substantially broaden the range of services on offer to 
consumers and at the same time ensure that prices reflect the lower costs 
engendered by competition and technological progress. The Commission 
believes that this objective is compatible with the maintenance of a public 
service accessible to all, and indeed that the two sets of requirements can 
complement one another. This objective is equally compatible with those of 
economic and social cohesion as long as the conditions expressed in paragraph 
26 are present. 
33. Several major steps have already been taken under this overall policy. 
The Council has approved harmonization measures in respect of open networks, 
and the Commission has so far adopted two liberalization directives dealing 
respectively with terminal equipment and telecommunications services. The 
See point 511 of this Report. 
1.ll.§1. 2 n 
Court of Justice has broadly upheld the lawfulness of these two directives, 
which had been contested by some of the Member States; the Judgment in the 
second case came this year.2 
Following the directives on open network provision (ONP) and 
telecommunications services, the Commission published a review of the 
situation in the industry.3 The Services Directive requires the abolition 
of exclusive rights in telecommunication services, with stated exceptions, 
such as voice telephony provided to the general public. The review considers 
the present situation with regard to these exceptions, and puts forward 
proposals for further action. It notes in particular that prices continue to 
be high, particularly for cross-border calls; the price of a call between the 
same two places varies depending on which place the call is made from, and 
this is causing growing deflection of traffic; and the range of services and 
prices offered is limited. 
34. The review concludes that of the available options the one which at this 
stage seems to conform most closely to the fundamental objectives of the 
Community is that of opening voice telephony between Member State to 
competition. That would allow the current price anomalies to be eliminated, 
without compromising the financial resources available to telecommunications 
organizations to meet their universal service obligations. The fact that 
these organizations would be exposed to competition in a segment of their 
business would increase their overall capacity to optimize their cost 
structures; and this should reduce the cost of supplying a universal service, 
so that the universal service can grow in volume, as has already happened in 
those countries which have made most progress towards liberalization. 
35. The Commission also adopted a communication on the telecommunications 
equipment industry, which shows the benefit to the industry of the 
liberalization of services arid market expansion which would ensue.4 For this 
to happen there must be continued progress towards the achievement of a 
single market, through harmonization and liberalization; liberalization would 
also take in state aid and government procurement. 
2 See point 333 of this Report. 
3 1992 Review of the Situation in the Telecommunications Sector 
(SEC(92)1048 final). 
4 The European Telecommunciation Equipment Industry: the State of Play. 
Issues at Stake and Proposals for Action - Communication from the 
Commission (SEC(92)1049 final). 
1.ll.§1. 3 28 
36. in 1993 the Commission will be continuing the wide-ranging process of 
consultation initiated in the review and communication Just referred to by 
seeking the views of the many interested parties. It will be devoting 
particular attention to ensuring that the legislation already adopted is in 
fact implemented. 
37. Current developments clearly show that the competition dimension is a 
vital component in a Community telecommunications policy based on a balance 
between liberalization and harmonization. The establishment of a genuine 
common market in telecommunications, in which the competition rules are 
properly applied and in accordance with the objective of economic and social 
cohesion, will permit an expansion of the market and an improvement in 
quality which will benefit producers and consumers wherever they may be in 
the Community. The policy also has an international aspect. The Community 
is seeking to have the same principles applied in its dealings with 
non-member countries, and to have their markets opened up in the same way as 
its own. 
<T5> Postal services 
38. The commission this year published a Green Paper intended to launch a 
debate on measures which might be taken in respect of postal servi ces.C5) 
The fundamental objective is to achieve first-rate postal services which are 
better able to meet users' needs and the demands of a single market. The 
Green Paper suggests a series of harmonization and liberalization measures. 
It envisages the liberalization of express delivery services, the delivery of 
publications, direct mall, and cross-border post. 
39. The Green Paper emphasizes the need for a universal service, a concept 
which has still to be defined. The Commission accepts that certain services 
could go on being reserved to monopoly organizations. But the business thus 
reserved should never be more extensive than it needs to be in order to 
ensure that a universal service can be provided, it could be defined by 
applying precise tests which give all the interested parties the legal 
certainty they need to be able to invest and compete on the market. It will 
be equally necessary to consider if the measures concluded on the basis of 
the 'Green Book' take fully into account the objective of economic and social 
cones i on. 
(5) See point 512 of this Report 
1.ll.§1. 4 <2q 
40. The Green Paper also draws attention to the advantages of better 
harmonization of postal services in the Community; this will require active 
participation on the part of users, operators and the national regulatory 
authorities, particularly with a view to technical harmonization and the 
improvement of services to users. 
41. With regard to state aid, the Commission began a careful re-examination 
of two complaints which had been lodged with it by competitors of La Poste, 
the public body that provides postal services in France; the complaints 
concerned the transport of valuables in armoured vehicle and express delivery 
services.6 The main allegation was that there was state aid to La Poste's 
monopoly business which ultimately benefited the sections of its business 
exposed to competition. The Commission's initial decisions were challenged 
in court, and this demonstrates the importance of the question, which must 
necessarily arise wherever the same organization is carrying on a monopoly 
business alongside other activities which are open to free competition: 
following the Green Paper, the Commission has taken up the two cases again. 
See point 438 of this Report 
1.11.§2. 5 
30 
<T4> §2. Financial services 
42. Financial services have traditionally been heavily regulated by 
government. In some Member States outside firms have had a strong 
competitive presence, but in others competition, and particularly outside 
competition, have played only a marginal role. Community integration has 
advanced very little. There are substantial changes ahead. The Directives 
adopted this year,(7) coming on top of the legislation already approved, 
mean that here too the single market is imminent, and will shortly be 
widening the range of services available to consumers while significantly 
increasing openings for market participants. 
43. Because more intense competition will now be possible in financial 
services it is essential that the Commission should exercise greater 
vigilance in its efforts to apply the competition rules, thereby ensuring 
that restrictive agreements between firms or the grant of unlawful state aid 
do not prevent competition from springing up and thus thwart the beneficial 
effects of the single market. 
44. The Commission has been active in various sectors. It continued its 
investigations into interest rates, where it concluded its study of the 
replies to its requests for information of the previous year. Certain 
agreements were abandoned or amended as a result, and a statement of 
objections was sent in one case. 
The Commission's current priority in the banking sector is the question of 
payment cards, an area which is in rapid expansion and is of great importance 
to traders and consumers. The antitrust authorities in different 
Member States have adopted strongly divergent solutions, making Commission 
intervention especially appropriate here. Problems identified so far include 
the usual matter of agreements on interbank commissions and that of the 
(7) The Third Non-life Insurance Directive, Council Directive 92/49/EEC of 
18.6.1992, OJ L 228, p. 1, and the Third Life Assurance Directive, 
Council Directive 92/96/EEC of 10.11.1992, OJ L 360, p. 1. 
1.11.§2. 6 
31 
trader's freedom to pass commissions on to customers. 
45. But the Commission is by no means opposed to all forms of cooperation 
between firms in this area, provided they satisfy the tests for exemption 
laid down in Article 85(3) of the Treaty. This is demonstrated, for example, 
by the block exemption regulation for insurance agreements which it adopted 
this year.*8) The regulation exempts categories of agreement covering a 
number of aspects: the calculation of "pure" premiums, that is to say the 
pure statistical cost of the risk, excluding expenses and profit; the 
establishment of standard policy conditions; the formation of co-insurance 
and co-reinsurance groups; and security devices. 
46. The Commission is currently investigating several complaints against 
state aid in postal banking services and public credit institut ions.(9) It 
is giving particular attention to the extent to which the special rules 
governing the organizations operating here might in some cases tend to 
generate state aid. The Commission will probably be making its findings 
known in the course of 1993. 
47. The Commission this year adopted one of its first state aid decisions 
concerning the banking sector. It applied the principle of the private 
investor operating in normal market economy conditions to the 
recapitalization of the Banco di Sicilia and of the Centrale di Risparmio 
("SiciIcassa").(1°) It initiated proceedings under Article 93(2) of the EEC 
Treaty against Italian tax measures specifically for banks and insurance 
companies in Trieste.*11^ 
(8) Point 274 of this Report. 
(9) Point 439 of this Report. 
(10) Point 440 of this Report. 
(11) Point 498 of this Report. 
1.11.§2. 7 
32 
48. These developments show that as the single market brings the terms of 
competition more closely into line, state aid policy is of growing relevance 
in areas where it has not intervened in the past. They also illustrate the 
importance of the role which competition policy in general can play in 
opening up markets, particularly at the present time, when the single market 
is spreading to new sectors. 
1.I I.§3. 8 
33 
<T4> §3. Energy 
49. Energy is an industry which has for long been shielded from competition, 
and the results run counter to the establishment of a single market: 
consumers are generally dependent on monopoly producers or distributors, or 
both; they are not offered any choice in the matter. Yet greater choice in 
all areas of economic activity is one of the objectives of the single market. 
Complaints are becoming more frequent, which is a factor the Commission 
cannot ignore. There is a failure to make the best possible use of 
production and distribution infrastructures, and this damages the 
competitiveness of the Community economy as a whole. There continue to be 
substantial price gaps between Member States, illustrating the absence of a 
Community market here. 
The Commission is determined to continue with its policy of liberalizing the 
energy market, in order to create a competitive environment which will 
generate efficiency gains to the advantage of both consumers and producers. 
It is well aware of the concern which is being expressed regarding security 
of supply and the maintenance of a public service accessible to all. The 
Commission remains convinced, however, that the application of the 
competition rules will make for better security of supply, by increasing the 
number of suppliers on the market, and that public service obligations can be 
met in a way compatible with the Treaty. Both of these concepts have in any 
event to be looked at in a Community context rather than a purely national 
one. 
50. The proposals which the Commission put forward this year under 
Articles 57(2), 66 and 100a with a view to the achievement of a single market 
in gas and electricity(12) are still the subject of a wide-ranging debate, 
and the Commission is currently studying the conclusions which can be drawn 
from discussion in the Council. The main objectives of the proposals are to 
abolish exclusive electricity generation rights; to create an open and 
non-discriminatory system for the grant of licences for the construction of 
electricity and natural gas lines; to apply the concept of "unbundling", 
(12) Proposal for a Council Directive concerning common rules for t 
internal market in electricity and proposal for a Council Directi.^ 
concerning common rules for the internal market in natural gas, OJ C 65, 
14.3.1992. he 
ve 
,.„.|3.. 34 
under which vertically-integrated enterprises are required to have 
production, transport and distribution handled by separate divisions with 
separate accounts; and to require transmission and distribution companies to 
allow outside access to their networks at a reasonable price (access would 
have to be available to large industrial consumers and distribution companies 
under certain conditions), subject to the availability of capacity. Access 
is vital to an increase in competition in both sectors, because new 
competitors cannot enter the market without it. At the Council meeting on 
energy held on 30 November there was an intense policy debate on the 
Commission proposals. The Council decided to continue the debate on the 
single energy market and to work towards more open, transparent, efficient 
and competitive electricity and gas markets. It asked the Commission to 
amend its proposals in the light of the Council discussions and of 
Parliament's opinion, which is expected at the beginning of 1993. 
The question of market access also underlies the proposal for a directive 
under Articles 57(2), 66, 100a and 113 on the conditions for granting and 
using authorizations for the prospection, exploration and extraction of 
hydrocarbons.13 
51. In putting forward these proposals inter alia under Article 100a, the 
Commission expressly reserved the right to exercise the powers conferred on 
it by the Treaty, and particularly by the competition rules. Thus the 
Commission initiated infringement proceedings against certain Member States 
regarding exclusive import and export rights, and also acted in the case of 
the independent generator Société Hydroélectrique de Grangeviei I le.14 The 
Treaty rules on the free movement of goods are applicable too: there was an 
example in the Corami ne case, which concerned a dispute between Electricité 
de France and Coramine regarding certain clauses which Electricité de France 
had included in its contracts. The Commission there put forward the view that 
13 See 0J C 139, 2.6.1992, p. 12. 
14 See points 142 et seq. of this Report. 
1.11.§3. 10 
35 
exclusive transport, distribution and marketing rights for electricity could 
infringe Articles 30 to 37 of the Treaty. The case has since been settled. 
52. The Commission continues to give favourable consideration to aid measures 
notified to it which are intended to promote energy efficiency, the 
development of new or alternative energy sources, or the diversity of energy 
supplies in the Community. It accepted the extension of the ERP scheme in 
Germany,(1^) the introduction of a new scheme to promote the production of 
wind energy in Denmark,(1®) and the grant of aid to Kraftwerke Ruhr by the 
authorities in Saxony-Anhalt in Germany for the construction of a 
lignite-fired power station.<17> But the Commission has always taken care to 
ensure that the objectives pursued do not conflict with the desire for a 
Community electricity market. It insisted that the aid to Kraftwerke Ruhr be 
substantially reduced from what had been proposed, and that no further aid of 
this kind be granted in Germany: by encouraging the consumption of lignite, 
which is produced locally, such aid is liable to distort trade in fuel and 
electricity within the Community. 
53. It is clear in any event that the energy sector is one in which there are 
going to be very important developments in competition policy over the next 
few years. 
(15) See point 453 of this Report. 
(16) See point 449 of this Report. 
(17) See point 433 of this Report. 
1.1 I.§4. 11 
36 
<T4> §4. Transport 
54. The Commission forcefully pursued its efforts to increase competition in 
transport. Here as elsewhere the achievement of the single market requires 
the establishment of structures which are competitive and consequently more 
efficient. The measures taken were concerned particularly with sea and air 
transport. 
<T5> Sea transport 
55. This year saw the first decision in a sea transport case.^1**) The 
Commission clearly demonstrated its determination to apply the block 
exemption strictly, and showed that it would combat efforts to circumvent the 
terms of the exemption, for example where liner conferences and non-member 
operators concluded agreements restricting competition in a particular trade. 
The decision is a first step in a vigorous policy intended to open the sea 
transport market to competition. Success here is vital to the interests of 
the Community; 95% of trade between the Community and the rest of the world 
is carr ied by sea. 
The Council this year granted the Commission powers to declare a block 
exemption for consortia, and the Commission began drafting a regulation. 
Consortia are a modern form of cooperation between liner shipping companies 
in which users receive a fair share of the benefit alongside the companies 
themselves. They enable shipowners to organize their services jointly, which 
gives users a better-quality service and allows the shipping companies to 
rationalize their activities. 
56. The Commission studied the desirability of amending the rules on aid to 
shipowners. In line with discussions in the Council it continued to work on 
the establishment of a Community shipping register. 
57. In several individual cases dealt with under Article 86, or under 
Article 90 in conjunction with Article 86, the Commission sought to ensure 
(18) See points 147 et seq. of this Report 
1.11.§4. 12 
37 
that the competitive environment would extend to access to ports and port 
services,(19) an aspect essential to free competition on the market in sea 
transport services. This objective also requires a vigilant policy on state 
aid. Financial relations between public authorities and the ports are 
generally lacking in transparency. 
<T5> Air transport 
58. The year 1992 also saw the adoption of the "third package" of measures to 
liberalize air transport.<2°) The package sets out to create a single market 
by 1 January 1993. There are to be exceptions, and a transitional period, 
but a solid start has none the less been made in the shape of the greater 
freedom airlines now have to set fares, and the freedom they will very soon 
have to offer their services throughout the Community. 
59. Among the advances included in the third package there is an extension 
of the Commission's powers to apply the Community competition rules to air 
transport inside a single Member State. The Council also authorized the 
Commission to declare block exemptions in air transport beyond the date of 
31 December 1992. 
The problem which still has to be resolved here is that of market access for 
new entrants, which can be rendered impossible by traffic congestion at 
certain airports. The Council adopted a regulation which will increase new 
entrants' chances of obtaining worthwhile slots at saturated airports.<21) 
60. The benefits of a single market must not be nullified by anti-competitive 
agreements between firms or by the abuse of dominant positions; both impose 
restrictions on competition which in practice take over from those which 
liberalization seeks to remove. Merger control also has a role to play here. 
The increase in competition is generating an increase in restructuring 
operations, which must not be allowed to establish new dominant positions. 
(19) See points 219 and 525 of this Report. 
(20) OJ L 240, 24.8.1992. 
(21) Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for 
the allocation of slots at Community airports, OJ L 14, 22.1.1993. 
1.1 I.§4. 13 
38 
61. One of the Commission's next policy objectives will be to extend the 
application of the competition rules to relations with non-member countries. 
62. If it is to have its full effect liberalization must be accompanied by a 
vigilant state aid policy. The Commission sent the Council and Parliament a 
report on measures to assist Community airlines. In addition, the 
Commission had to consider an increase in the capital of Air France, through 
the issue of convertible bonds and subordinated debt securities with no fixed 
maturity; it found that the measures were in line with ordinary commercial 
practice and that no aid was involved. The Commission also approved the 
increase in the capital of Iberia, which it considered compatible with the 
common market in view of undertakings given by the Spanish Government 
regarding the restructuring of the company. 
<T5> Road transport 
63. Lastly, the Commission initiated proceedings under Article 93(2) of the 
EEC Treaty in respect of aid to Italian road hauliers. The decision was 
deemed necessary given the liberalization of the road transport market from 
1 January 1993 onward.<22) 
(22) See point 500 of this Report 
1.1 I.§5. 14 
<T4> §5. Cinema and television 39 
64. The cinema industry is one in which the Commission has taken a 
sympathetic approach to state aid, particular in the light of the cultural 
policy being pursued by the Community. But the decisions taken in recent 
cases have made it clear that the special nature of the industry will not 
prevent the Commission from checking whether any aid granted is in accordance 
with the various branches of Community law, and whether it is liable to 
interfere with competition. 
65. The Commission this year took two decisions dealing with the French and 
German schemes of assistance to the cinema and television industries, in 
which it confirmed that it will not approve aid which does not comply with 
the fundamental principles of Community law, and particularly the principle 
that there is to be no discrimination on grounds of nationality.<23) The 
Commission had initiated proceedings under Article 93(2) of the Treaty in 
respect of the German scheme, which provided for example that aid could be 
granted towards the making of a film only if the director was of German 
nationality or from a German cultural background. The German authorities 
subsequently amended the legislation. The French scheme was likewise 
examined closely in this respect. 
66. The two decisions concerning France^24) show how competition policy 
considerations can apply in the cinema and television industry. The 
Commission held that a capital injection into Société Française de 
Production, which produces films and television programmes and provides other 
related services, constituted state aid, on the principle of the private 
investor operating under normal market economy conditions; but the 
Commission concluded that the aid was compatible with the common market, 
because it was linked to a restructuring plan which was likely to produce a 
financially viable company. With regard to the overall aid scheme for the 
cinema and television industry, the Commission indicated that it would be 
(23) See points 442 and 444 of this Report. 
(24) See points 443 and 444 of this Report. 
1.I I.§5. 15 
40 
carefully monitoring a clause under which a French television channel which 
had contributed to the support fund was to have the first broadcasting rights 
in a subsidized work. The Commission took the view that the clause was 
liable to restrict trade in television productions between the Member States. 
1.lll.§1. 1 
41 
<T2> Chapter III: Competition policy and 
other Community policies 
67. Competition policy is a vital dimension of several Community policies. 
It can make a decisive contribution to the achievement of their objectives. 
Application of the competition rules will prevent companies and governments 
from behaving in ways which in practice reconstruct the barriers the 
Community is trying to remove. 
But competition policy is not purely a matter of dissuasion or punishment. 
The mechanisms of competition have an indispensable role to play in 
facilitating dynamic developments such as the adaptation of the productive 
system to environmental requirements, the involvement of SMEs in the single 
market, or progress towards economic and social cohesion. It is competition 
which gives consumers a fair share of the benefits of the single market. 
<T4> §1. Completion of the internal market 
68. The completion of the internal market is the result of a combination of 
Community policies. The removal of borders has to be understood in a very 
broad sense. It refers not just to physical barriers but also to differing 
technical standards, tax barriers, or restrictions on access to public 
contracts. The removal of borders is not an end in itself; it is intended to 
clear the way for the growth of the Community economy, which will benefit 
firms and households alike. The process has to be monitored in order to 
ensure that its benefits are felt throughout the Community and that small and 
medium-sized enterprises play a full part. 
69. There is a growing consensus that the benefits of the single market will 
be real and durable only if they are backed up by vigilant enforcement of 
competition policy. The application of the competition rules prevents firms 
from partitioning markets between them, cancelling out the positive impact of 
1.1 II.§1. 2 
42 
integration by establishing new barriers whose effect is identical to that of 
the government restrictions removed by the single market. 
The ban on restrictive agreements is not the only aspect of competition 
policy which is relevant. The other competition rules make their own 
contributions to market integration. This is true of state aid policy and 
policy towards the abuse of dominant positions. A dominant firm must not be 
allowed to abuse its position and to partition the common market. Where 
trade between Member States might be affected the Commission polices the 
grant of aid to firms in order to protect the single market. And it is only 
in a competitive environment that firms are constantly spurred on to innovate 
and consequently to carry out the research and development necessary to 
reduce their costs or to improve their products. This benefits the consumer, 
because the pressure of competition obliges firms to pass on their 
productivity gains. Competition also induces firms to broaden their product 
ranges and improve quality. 
70. There is one area of competition policy which deserves special mention 
here. This is the Commission's handling of distribution and licensing 
agreements. Such agreements can lead to more efficient distribution. But 
they often include territorial clauses which may have the effect of dividing 
the common market. It has been the Commission's constant practice to exempt 
such agreements only if they do not restrict trade between Member States to 
an unacceptable degree. Parallel imports must continue to be possible if the 
distribution benefits of the agreements are not to be offset by a damaging 
fragmentation of markets. The Commission confirmed its practice this year in 
decisions in the perfumery trade and in measures in respect of the motor 
trade, where as yet there is clearly no single market. 
71. The policy of deregulating monopolies also merits a remark. Subjecting 
the existing monopolies to a measure of competitive pressure, by opening part 
of their business to competition, will oblige them to improve their 
1. I Il.§1. 3 
43 
efficiency, and this may be of benefit in their reserved business too. The 
result should be better services supplied at better prices, and faster 
development of infrastructures, reducing the cost of connections in terms 
both of time and of money. This should be particularly useful to outlying 
regions, because it will lower the costs occasioned by the distance between 
them and the central regions, and will thus improve cohesion. It is clear, 
therefore, that there need not be a clash between the objective of developing 
competition and the objective of strengthening economic and social cohesion, 
and that they may in fact complement one another. 
72. The contribution of state aid policy to the completion of the internal 
market is evident, as state aid policy seeks to ensure that particular firms 
are not given favourable treatment which might improve their capacity to 
export or curtail imports into the Member States in which they are 
established. The disappearance of state barriers to trade in the Community 
means that the distortion caused by unlawful state aid or infringements of 
Articles 85 and 86 is all the more serious, and strict control by the 
Commission is the only way of preventing damage to the operation of the 
single market. 
73. Thanks to the one-stop shop principle, which means that firms do not 
need to deal with a number of separate authorities, Community merger control 
facilitates the adaptation of industrial structures to the single market, 
while preventing mergers which would produce dominant positions liable to 
compartmentalize the common market. 
1. I I I. §2. 4 
44 
<T4> §2. Consumer protection 
74. Competition is basic to Community policy towards consumers, though 
consumer policy proper relies on other more specific measures. Competition 
policy may seem an abstract concept to the general public, but the benefits 
it brings to consumers are nevertheless substantial. Firms are forced to 
compete for consumers' favour. The single market and competition policy work 
together to allow consumers to choose between the goods and services offered 
by firms throughout the Community, at the best possible prices. Competitive 
pressure also provides a constant stimulus to firms to innovate and to reduce 
their costs in order to avoid losing their place on the market. They have to 
compete both in terms of quality and in terms of prices and the product 
ranges they offer. 
Action to challenge the abuse of dominant positions and anti-competitive 
agreements must be seen against this background. The Commission is the only 
authority in a position to combat Community-scale restrictive practices whose 
harmful implications for consumers are well known. The same is true of 
merger control, which seeks to prevent the establishment of dominant 
positions, and thus to maintain sufficient diversity on the supply side to 
ensure that the consumer has freedom of choice between several actual or 
potential competitors, and is not left dependent on a single dominant 
enterprise. The decisions in the Nestlé/Perr ier and Air France/Sabena cases 
illustrate this point very well; Nestlé/Perr ier also shows that the consumer 
has to be protected not only against the dominant position held by a single 
company but also against those established by several companies together. 
The need to maintain diversity of supply likewise guided the decision in 
ICI/Du Pont. which makes it clear that the party whose choice is to be 
preserved need not necessarily be the final consumer but may also be an 
intermediate purchaser or producer. 
The practical contribution made by competition policy to the integration of 
markets, and thus to freedom of choice for consumers, can be illustrated by 
three examples. Firstly there is the action taken by the Commission with 
regard to interest rates, where it requested information which helped it to 
1.lll.§2. 5 
45 
check whether restrictive agreements were being applied by banks or other 
financial institutions, preventing consumers from obtaining the best possible 
rates.(1> 
Another area where Commission action is of evident interest to consumers is 
the motor trade, where following a report on car prices in the different 
Member States the Commission reminded manufacturers of their obligation to 
guarantee the consumer's freedom to buy the vehicle of his choice wherever he 
wishes in the common market.<2) 
In the third place there is the area of exclusive rights. In some basic 
sectors there are monopoly rights granted by Member States which prevent the 
single market from having any practical impact, and leave households and 
firms with only a restricted choice or no choice at all. This situation is 
incompatible with the principles of market integration, and entails extra 
costs which are ultimately borne by the consumer whose choice is restricted. 
It is all the more serious as the sectors involved are basic sectors of which 
all consumers make considerable use. 
The same is true of transport, by land, sea or air, where the Commission is 
trying to intensify competition in order to increase the diversity of supply 
and to reduce prices. 
(1) See Annex IM.A.1 to this Report 
(2) See point 290 of this Report. 
1.I I I.§3. 6 
46 
<T4> §3. Environment 
75. Environmental policy, formally embodied into Community law by the Single 
Act, is a fundamental policy of the Community. The Article 130r which the 
Single Act inserted into the Treaty specifically requires Community action on 
the environment "to preserve, protect and improve the quality of the 
environment." The importance attached to the environment in our societies, 
and the legal constraints to which this has given rise, mean that the 
environment is a major concern with considerable financial implications, 
which firms have to incorporate into their cost structures, their pricing 
policies, and their general strategy. It is only natural, therefore, that 
there should be interaction between competition policy and environmental 
questions. The Commission this year examined several aid measures aimed at 
protecting the environment, and exempted them under Article 92(3)(c) of the 
Treaty. Three such measures deserve to be highlighted. 
Firstly, there were two cases in which energy-intensive industries were 
to be exempt from a tax on carbon dioxide emissions, in Denmark and the 
Nether lands. (3* Such a tax exemption is in line with the Commission's 
communication to the Council proposing the introduction of a carbon 
dioxide/energy tax, and the Commission decided that it constituted state 
aid compatible with the Treaty under Article 92(3)(c). 
The second example is that of a scheme to promote the recycling of 
manure in the Nether lands.(4^ The Commission had initiated 
Article 93(2) proceedings against this scheme in 1991, but finally 
approved it in 1992, on condition that the variable costs of the new 
body which was to collect, store and dispose of manure were covered by 
the price paid by farmers, as the scheme would otherwise become 
operating aid to those farmers. This decision shows that the Commission 
studies the implications of environmental aid in other policy areas, and 
approves it only if it does not distort competition unduly. 
(3) See point 451 of this Report 
(4) See point 450 of this Report 
1.1 II.§3. 7 
47 
76. The Commission made a thorough study of the possibility of recasting the 
Community code or framework which currently governs aid towards environmental 
protection. A draft was submitted to Member States' experts at meetings held 
during the year, and the Commission believes that new guidelines can be 
approved in the course of 1993. This move comes against the background of 
the Fifth Environment Programme, which puts forward a new strategy based on 
the principle of sustainable development. The strategy is aimed at achieving 
lasting economic and social progress which respects the environment and 
natural resources, with environmental objectives forming an integral part of 
other Community policies. The thrust of the draft guidelines on aid is as 
foI Iows: 
the "polluter pays" principle would be confirmed, particularly where 
additional environmental investment by firms was undertaken in order to 
meet legal requirements: the tightening of environmental standards 
should as far as possible be achieved without financial support from 
government, and law-making should therefore proceed in stages; 
aid could be granted at low intensities to facilitate and accelerate 
adaptation to standards by firms with plant already working for at least 
two years before the new standards enter into force-, 
aid could be granted at higher levels for environmental investment going 
substantially beyond the legal requirements, or in the absence of legal 
requirements: firms should be encouraged to make an extra effort, and 
should not be penalized if they do so by comparison with those who do 
not ; 
cases of operating aid would be examined case by case, and the concept 
of "aid to promote the execution of an important project of common 
European interest" would be interpreted strictly. 
77. As far as the application of Articles 85 and 86 is concerned, it is 
clear that agreements which restrict competition continue to be prohibited by 
Article 85(1) even if the parties invoke environmental protection in order to 
1.11 I.§3. 8 
48 
justify them.*5) Article 85(3) may however be applicable. The tests it lays 
down must of course be satisfied; in particular, sufficient competition must 
be maintained, and the restrictions must be indispensable to the alleged 
economic benefit. Another problem arises where measures are taken by public 
authorities which might compromise the effect of the competition rules, for 
example by requiring firms to engage in behaviour which restricted 
competition. Such measures can have a very appreciable effect on competition 
and trade between Member States. In such cases the Court has held that 
Article 85 may apply, in conjunction with Articles 5 and 3(f) of the Treaty. 
The Commission takes the view that the contribution which the competition 
rules make to environmental protection will grow in importance. The 
environment is a field where legislation is expanding and technology is 
advancing rapidly. The Commission's handling both of agreements between 
firms and of the rules being applied will have to develop too. The 
Commission is continuing its study of the matter. The following general 
points must be kept in mind. 
Commission environmental policy is founded on the "polluter pays" principle; 
the effectiveness of the principle depends in particular on the proper 
operation of the price mechanism, which ought to translate into costs the 
negative effects of a particular process on the environment, so that prices 
can perform their signalling function which forms the basis of the market 
economy. 
But if this is to happen the competition rules must be applied vigorously, so 
as to avoid the conclusion of agreements or the abuse of dominant positions 
which might prevent or restrict the operation of the price mechanism. 
(5) For an example see the VOTOB case, point 177 of this Report 
o 
1.I I I.§3. 9 
49 
If the price mechanism does perform its signalling function throughout the 
Community, thus enabling firms to convert the environmental cost of an 
economic activity into financial terms, competition will quite naturally 
generate the most efficient allocation of resources possible, by prompting 
businesses to reduce costs. This will benefit both the environment and the 
economy in general. 
1 . I I I .§4. 10 
50 
<T4> §4. Small and medium-sized enterprises 
78. The new Community guidelines on state aid for small and medium-sized 
enterprises (SMEs), which the Commission approved this year, are a 
translation into competition terms of the active policy towards SMEs which 
the Commission has been pursuing for many years.*6^ They acknowledge the 
principle that the existence of a large number of SMEs in an industry is a 
sign of healthy competition, and that SMEs are an engine of economic growth, 
as the European Council accepted in Edinburgh when it decided to set up the 
European Investment Fund. 
The Commission feels that the development of SMEs should be encouraged, and 
an effort made to overcome the specific handicaps they face as a result of 
their size: the guidelines therefore accept that SMEs may qualify for 
investment aid even in regions which are not eligible for regional aid. 
However, the intensity allowed is deliberately set fairly low, at 15% for 
small enterprises and 7.5% for medium-sized ones, to avoid frustrating the 
objective of cohesion.*7^ Such aid is also justifiable given the more 
limited impact SMEs can have on trade between Member States as compared with 
that of large companies. 
The Commission takes the view that SMEs need primarily to improve their 
financial base, to secure access to better expert advice, to improve the 
level of training among their staff, to obtain information or credit which is 
normally available only to large companies, and the like; it is here that 
their fundamental handicaps lie. The Commission accordingly takes a 
favourable view of aid for these purposes, even at relatively high rates. 
Like aid for consultancy services or aid towards the establishment of public 
guarantee funds, such aid is well upstream from the market-place, involves 
only small amounts of money, and has only limited effects on competition. 
Research is an activity which is often beyond the capabilities of SMEs. The 
Commission accordingly maintains the special clauses in the Community 
Framework for State Aids for Research and Development which authorizes 
(6) See also point 342 of this Report. 
(7) Higher intensities may be allowed on a case-by-case basis until the end 
of 1993 in areas which are not eligible for regional aid but do qualify 
for structural measures. 
1. I I I .§4. 11 
51 
higher rates of assistance for SMEs. It plans to include a comparable clause 
in the Community framework for state aid towards environmental protection. 
The Commission believes that the establishment and development of SMEs in 
areas eligible for regional aid makes a vital contribution to the development 
of those regions. It accepts that the rates of aid authorized may be 
increased by 10% in regions eligible under Article 92(3)(c) and by 15% in 
regions eligible under Article 92(3)(a), though of course the ceilings of 30% 
net grant equivalent and 75% net grant equivalent which are authorized there 
can never be exceeded. 
Schemes of assistance to SMEs existing in the various Member States are 
gradually to be adapted to these guidelines. 
79. The competition rules applying to firms take account of the fact that 
agreements which are on a small scale, as most agreements concluded by SMEs 
are, rarely restrict competition to an appreciable extent, even supposing 
that they do affect trade between Member States, something the Commission 
would have to prove. SMEs are particularly concerned by the Commission's 
efforts at transparency, and the Commission this year decided to publish a 
special brochure for their benefit.*8) The Commission's 1986 Notice on 
agreements of minor importance states that agreements between firms with a 
market share of no more than 5% and an aggregate annual turnover of no more 
than ECU 200 million need not be notified.*5*) This means that SMEs need not 
normally notify their agreements in order to ensure that they are compatible 
with the competition rules. Several block exemption regulations, including 
some of those which the Commission amended this year,*10) give more 
favourable treatment to agreements between parties whose market shares are 
below a certain threshold. In particular, the Commission clarified the 
application of the de minimis principle to beer distribution agreements.*11 ) 
The amendments which the Commission made to the block exemption regulations 
(8) To appear in the European Documentation series. 
(9) OJ C 231, 12.9.1986. 
(10) See point 265 of thise Report. 
(11) See point 301 of this Report. 
1 .I I I.§4. 12 
52 
in respect of R&D, specialization, patent licensing and know-how licensing -
amendments which are intended to make it easier to take advantage of the 
exemptions, particularly in the case of technology transfers and R&D projects 
- contain thresholds which allow for the fact that agreements between firms 
with only small market shares have a less restrictive effect on competition; 
this should benefit SMEs. Lastly, Article 86 protects SMEs against the abuse 
of a dominant position by a larger competitor. 
1.I I I.§5. 13 
53 
<T4> §5. Regional policy 
80. It is generally recognized that economic and social cohesion is a 
necessary corollary of the single market. It is reflected in the reform of 
the Structural Funds, which have now been coordinated to operate in 
accordance with six precisely-defined objectives, with the monies allocated 
to them doubled. Once the Treaty on European Union enters into force the 
process will continue with the establishment of the Cohesion Fund, which will 
assist only Greece, Ireland, Portugal and Spain, and will have a budget of 
about ECU 15 000 million for the period 1993-99. The Structural Funds 
themselves will be able to draw on more than ECU 161 000 million over the 
same period. Mention should also be made of the financing of large trans-
European networks, and of the fact that the EFTA countries are to participate 
in the Cohesion Fund. 
This policy is intended to enable the less-favoured regions in the Community 
to take full advantage of the single market, and to prevent the single market 
from widening the gap between them and the richest regions. 
81. The Commission began applying the guidelines it adopted in 1991 to 
ensure consistency between competition policy and the regional policy being 
followed at Community level through the Structural Funds. In the framework 
of the Delors II package it continued the preparation of a more coherent map 
of the regions eligible for the Structural Funds and for national regional 
aid schemes, with aid being concentrated geographically and differentiated in 
the light of the seriousness of the problems to be overcome. 
The Commission sought to reduce the scale of assistance in more prosperous 
areas, taking account of the changing socio-economic situation: a good 
example is the relative severity with which the Commission assessed aid in 
west Berlin, where the need for aid is now debatable. The logical 
consequence of this approach should be that aid will be concentrated on the 
less-developed regions; it shows how a strong competition policy can help to 
support economic and social cohesion. 
The importance of cohesion is reflected in the introduction of a regional 
component into most of the aid codes. The guidelines on aid for research, 
1 . I I I .§5. 14 
54 
and SMEs, for example, authorize higher rates of assistance in areas 
qualifying for regional aid. The same concern underlies the Commission's 
efforts to put an end to general or industrial aid schemes which are 
available without distinction throughout the territory of a Member State. 
Despite this, the Third Survey on State Aid in the Community shows that the 
share of total aid to industry accounted for by the four largest 
Member States is rising by comparison with the outlying countries, and that 
the four weakest among the outlying countries give less aid to industry per 
person employed than the Community average and a good deal less than the 
central and more prosperous States. This shows that the Commission's efforts 
must be cont inued. 
Lastly, the Commission departments have begun studying the possibility of 
limiting regional aid towards capital-intensity investment, whose 
contribution to regional development is sometimes insufficient to justify 
high rates of assistance. They have also begun work on recasting and 
consolidating the rules governing regional aid, some of which date back to 
1971 . 
1 .IV.§1 . 1 
55 
<T2> Chapter IV: Community competition policy and developments 
in the rest of the world 
<T4> § 1. Genera I 
82. As explained in last year's Report (Part One, Chapter IV, point 58), 
competition policy can play an important role in liberalizing trade and hence 
in promoting economic integration. This is why the Community generally 
negotiates the inclusion of competition rules in its bilateral trade 
agreements. Because the degree of integration sought varies from one 
bilateral relationship to another, the level of detail of the competition 
rules included in those agreements also varies, as does the degree of 
harmonization with the Community's own competition rules. 
The Agreement on the European Economic Area,*1) which was signed on 
2 May 1992, seeks to extend the single market to the EFTA countries and thus, 
in principle, to ensure between the Community and the EFTA countries in the 
areas covered by the EEA the same level of economic integration as exists 
within the Community. It was therefore decided that the same competition 
rules and policies had to apply throughout the EEA. It was felt that this 
situation even called for identical and largely parallel enforcement 
structures and procedures in the Community and in the EFTA countries. The 
entry into force of this Agreement had to be postponed after the Swiss 
referendum of 6 December, in which the Swiss people rejected ratification of 
the EEA. 
The Europe Agreements with Hungary, Poland, the Czech and Slovak Federal 
Republic, Romania and Bulgaria, as well as the Interim Agreements with those 
countries, the first three of which entered into force during the year under 
review, do not envisage the same degree of economic integration and therefore 
do not contain the same ambitious competition rules as the EEA Agreement. 
However, because the Europe Agreements aim at achieving greater economic 
integration than the association agreements concluded with the EFTA countries 
in 1972, their competition rules go beyond those contained in the latter. 
One of the main differences is that the 1972 agreements do not provide for 
any procedures for enforcing the principles laid down in the competition 
articles, while the Europe Agreements and the Interim Agreements provide for 
the establishment, by the Association Council, of implementing rules. 
Another important difference resides in the fact that, unlike the 1972 
(1) Twenty-first Competition Report, point 59. 
1.IV.§1 . 2 
56 
agreements, the Europe and Interim Agreements ensure in principle that the 
substantive rules applied to trade between each of those countries and the 
Community will be very similar to the Community's rules. 
Other bilateral relationships of the Community aim for even less economic 
integration, which is why competition rules are not as elaborate or are not 
provided for at all. In cases where existing agreements are being updated or 
renegotiated, the Commission intends to consider carefully whether 
competition provisions should be strengthened or inserted. 
At the same time, the Commission will continue to step up cooperation with 
other competition authorities, either through bilateral agreements of the 
type concluded with the United States in 1991 or on an informal basis. 
1.IV.§2. 3 
57 
<T4> § 2. Competition policy as a tool to open up trade with third countries 
83. The agreements referred to above, together with a number of others, thus 
lay down competition rules which apply to trade between the Community and 
many of its major trading partners. Although such agreements do not exist 
with all of the Community's trading partners, it has to be recognized that 
most of its major trading partners have competition rules and enforcement 
mechanisms. The existence of such rules and mechanisms both in the Community 
and in its trading partners should provide useful instruments for dealing 
with private-sector obstacles to trade between the two. The question is 
therefore not so much whether rules actually exist or the degree to which 
they cover all possible obstacles, but whether or not they are actively 
enforced. This is why emphasis has recently been placed by the Community on 
tightening the enforcement of competition rules both internationally and 
within the territories of its major trading partners. 
84. Most of the recently concluded trade agreements which contain competition 
rules are thus no longer confined to laying down principles and substantive 
rules, but also deal with the enforcement issue. This is true in particular 
of the EEA, where the EFTA Surveillance Authority will help ensure that the 
competition rules are applied throughout the EEA in much the same manner, and 
of the Europe and Interim Agreements, which allow for the establishment of 
implementing rules by the Association Council and the Joint Committee 
respect ively. 
With regard to countries with which no international competition rules have 
been agreed and where ant i-compet it ive practices will thus have to be dealt 
with on the basis of national competition rules, other procedures have to be 
fol lowed. 
One vehicle for doing this, as regards the OECD countries, is a provision 
(point I.B.4) in the 1986 OECD Recommendation on restrictive business 
practices (Sixteenth Report, point 14). This provision, now usually referred 
to as a "positive comity provision", is based on the recognition that 
anti-competitive practices in one OECD country may affect another country's 
important interests, e.g. by creating obstacles to market entry. In such a 
case, the country whose exporters are the victims of such practices can ask 
the other to apply its own competition rules in order to remedy the 
situation. The Commission would be more than happy to apply this positive 
comity principle in appropriate cases. 
1.IV.§2. 4 
58 
The Commission is seeking ways to strengthen this approach in both bilateral 
and multilateral forums. This has already led to the inclusion of a positive 
comity provision in Article V of the EC-US Agreement of September 1991 on 
cooperation in competition policy matters (Twenty-first Report, point 64). 
Similar provisions can also be found in several draft texts now being 
negotiated in GATT (services code, multilateral steel arrangement) and at 
regional level (European energy charter). 
Therefore, although a number of procedures exist under which the Commission 
can tackle private-sector obstacles to trade with third countries, their 
actual application depends on the availability of concrete and detailed 
information about such obstacles. The Commission therefore repeats the 
invitation which it made to companies at the end of point 65 of last year's 
competition report and would like to extend to other persons as well as to 
other countries. It would welcome information from any person about 
restrictive practices in any third country which affect trade between that 
country and the Community. Where the information is sufficiently detailed to 
warrant action under one of the aforementioned positive comity provisions or 
other rules, the Commission will be most interested in acting accordingly. 
1.IV.§3. 5 
59 
<T4> § 3. Structures in Europe 
85. Generally speaking, in its relations with other countries, the Community 
is seeking to establish a greater degree of economic integration in Europe 
than elsewhere in the world. During the reference period, the most important 
events having a bearing on competition in Europe were the signing of the 
EEA Agreement, the entry into force of the agreement with Norway and Sweden 
on civil aviation, the entry into force of the Interim Agreements with three 
Central European countries and the membership applications received from 
several European countries. 
<T5> - European Economic Area 
86. One of the main objectives of the EEA Agreement, apart from eliminating 
private-sector obstacles to trade, is to establish equal conditions of 
competition throughout the area. 
The substantive competition rules in the EEA Agreement are based on existing 
Community legislation. 
<T6> (a) Fundamental principles 
87. Monitoring and application of the EEA competition rules will be guided 
by two fundamental principles: the two-pillar approach and the 
"one-stop shop" principle. This means that there will be two surveillance 
bodies, viz. the Commission and an independent EFTA Surveillance Authority 
having equivalent powers and similar functions to those of the Commission. 
In the case of restrictive practices, this includes the power to carry out 
investigations and impose fines. As regards the granting of state aid, the 
EFTA countries will be subject to control by the EFTA Surveillance Authority 
on the basis of the same rules and procedures as those applied to Community 
Member States. Each surveillance authority will examine the legality of 
state aid both from the standpoint of its own territory and as regards its 
impact on other territories. 
1 . IV.§3. 6 
60 
To avoid any overlapping of responsibilities, the introduction of parallel 
procedures, and the danger that the two authorities may, on the basis of the 
same facts, adopt different decisions, the EEA Agreement establishes the 
principle of the "one-stop shop". This means that, in each individual case, 
it is either the Commission or the EFTA Surveillance Authority which assumes 
responsibility for the procedure and that the decisions taken will be valid 
and enforceable throughout the EEA. This approach has considerable 
advantages for the enterprises concerned as they will not need to refer the 
same case to two different authorities both of which may have jurisdiction in 
the matter. 
88. This principle of the "one-stop shop" makes it necessary to reach 
agreement on simple and transparent allocation criteria. Such criteria are 
easy to define for cases involving state intervention, such as state 
monopolies, public enterprises or the granting of state aid. Here, each 
authority is responsible for "its" member states. 
<T6> (b) Restrictive practices and abuse of dominant positions 
89. As regards the control of restrictive practices and dominant positions, 
the allocation of cases poses no problems where the effects of a particular 
case are limited to Community or EFTA territory. Such cases will be dealt 
with by the authority competent for the territory concerned. Difficulties 
arise, however, in "mixed" cases, which involve both territories and for 
which either authority could, in principle, claim jurisdiction. Before the 
Court of Justice delivered its first opinion, the solution envisaged in the 
EEA Agreement was based on the turnover of the enterprises concerned. 
However, following that first opinion, the allocation of responsibility had 
to be modified, with the result that the Commission will be responsible for 
all "mixed" cases affecting trade between Community Member States, except 
where such cases have no appreciable effect in the Community. In that event, 
the EFTA Surveillance Authority will be competent, provided that the 
enterprises concerned achieve at least 33% of their turnover on EFTA 
territory; the Commission will also deal with cases affecting trade between 
1.IV.§3. 7 
61 
a Community Member State and one or more EFTA States, provided that the 
enterprises concerned achieve over 67% of their EEA turnover on Community 
terr itory. 
<T6> (c) Merger control 
90. The Commission will continue to act in merger control cases where the 
criteria as to turnover laid down in the Community Regulation on the control 
of concentrations (Merger Control Regulation) are met by the enterprises 
concerned. 
However, under the EEA Agreement, the Commission will take account not only 
of the situation in the Community but also of that in the EFTA countries. 
Thus, in addition to the powers it enjoys under the Merger Control 
Regulation, it must prohibit a merger if it results in a dominant position on 
the market solely within the territory of the EFTA countries. 
Where the Commission has no jurisdiction under the above criteria, EFTA will 
apply its own merger control arrangements, without prejudice, however, to the 
rights of Community Member States in this area. 
<T6> (d) Cooperation between the surveillance authorities 
91. The proposed system for monitoring the competition rules of the EEA 
calls for close cooperation, on both state aid and restrictive practices, 
between the two surveillance authorities, the Community Member States and 
EFTA countr ies. 
<T7> . Cooperation in respect of restrictive practices and abuse of 
dominant positions 
92. Cooperation will be necessary for the "mixed" cases and will, in 
principle, cover all the stages of the procedure. The three main principles 
on which it will be based are: 
exchanges of information and mutual consultation on the cases 
concerned; 
cooperation in investigations; 
application of decisions. 
1.IV.§3. 8 
62 
A copy of the notification of all "mixed" cases will be sent to the other 
surveillance authority, which, together with the respective countries, will 
have the right to atte.ïc» *nd take part in hearings of the enterprises 
concerned and in meetings of tha advisory committees but will have no voting 
rights. Cases notified to the wrong surveillance authority will be referred 
to the competent authority. 
93. Cooperation on investigations is of particular importance. It may, for 
example, be necessary to carry out on-the-spot investigations on the 
territory of the other authority. In that event, the surveillance authority 
dealing with the case in question can ask the other authority to organize the 
investigation in accordance with its own rules. Representatives of the 
competent authority may be present when such investigations are being carried 
out and may play an active part in them. 
Lastly, cooperation will also take place in the matter of the payment of 
fines and other financial obligations. 
<T7> . Cooperation and merger control 
94. Cooperation in the field of merger control will generally follow the 
principles set out above. The aim is to set up the most efficient machinery 
possible. Cooperation will thus take place in the following cases: 
if the enterprises concerned achieve at least 25% of their EEA 
turnover on EFTA territory; 
if at least two of the enterprises concerned achieve a turnover in 
excess of ECU 250 million on EFTA territory; 
if there is a risk that a dominant position will be created or 
strengthened on EFTA territory or on a substantial part of that 
terr i tory. 
Cooperation will also take place if the EFTA countries claim a legitimate 
interest within the meaning of Article 21 of Regulation (EEC) No 4064/89 or 
if they invoke the existence of a distinct national market within the meaning 
of Article 9 of that Regulation. 
1.IV.§3. 9 
63 
Cooperation must take place within the very specific deadlines provided for 
in the Community rules and may not lead to any extension of those deadlines. 
<T7> . Cooperation on state aid 
95. With regard to state aid, the two authorities will exchange information 
and views on matters of general policy and will each provide or provide on a 
case-by-case basis, at the other's request, information on programmes and 
individual state aid cases. If one of the surveillance authorities considers 
that application of the rules of the EEA Agreement on state aid by the other 
surveillance authority is leading to distortions of competition, it may, 
after consulting the other authority, adopt interim measures and, if the 
dispute cannot be settled by the EEA Joint Committee, replace them with 
definitive measures limited to what is strictly necessary to remedy the 
effects of any such distortions. 
<T6> (e) State monopolies of a commercial nature 
96. Under Article 16 of the EEA Agreement, it is for the Commission and the 
EFTA Surveillance Authority to make the necessary adjustments. 
<T6> (f) Control by the courts 
97. Decisions adopted by the Commission will be subject to the control of 
the Court of First Instance and/or the Court of Justice, while appeals may be 
lodged with the EFTA Court against any decision taken by the EFTA 
Surveillance Authority. 
<T6> (g) Informing economic operators 
98. To ensure that economic operators are informed about the competition 
rules applicable to enterprises under the EEA Agreement, an information 
brochure has been prepared jointly by the Commission departments and EFTA 
experts. 
1.1V.§3. 10 
64 
99. The entry into force of the EEA Agreement was initially scheduled for 
1 January 1993 but was postponed following the Swiss referendum on 
6 December 1992. A diplôme*sc conference is planned for the beginning of 
next year in order to take stock of the new situation. 
<T5> - Civil aviation agreement with Norway and Sweden 
100. With the entry into force on 18 July 1992 of the civil aviation 
agreement between the EEC, Norway and Sweden, air transport and associated 
matters in these two countries became subject to the same competition rules 
as apply within the Community. The agreement does not, however, create a 
"second pillar" for Norway and Sweden, as will be the case under the 
EEA Agreement. 
The Norwegian and Swedish authorities must ensure that Articles 4 and 5 
(which are identical to Articles 85 and 86 of the EEC Treaty) are applied 
within their territories and enforced with the same effect as in the 
Community. With regard to state aid granted by Norway and Sweden in the 
aviation sector, the Commission will play an active role, in particular by 
keeping under constant review all existing aid schemes in those countries and 
by proposing that they take appropriate measures. 
Any cases of disagreement regarding the application of these provisions may 
be referred to a Joint Committee created by the agreement. The Joint 
Committee can take binding decisions by unanimity. 
<T5> - Central and Eastern European countries 
101. The Europe Agreements concluded on 16 December 1991 between the 
Community and its Member States, on the one hand, and Hungary, Poland and the 
Czech and Slovak Federal Republic, on the other, provide that the parties 
"shall gradually establish a free-trade area in a transitional period lasting 
a maximum of ten years".*2) 
These agreements naturally include provisions on competition that also form 
(2) Twenty-first Competition Report, point 63. 
1.1V.§3. 11 
65 
part of the Interim Agreements, which entered into force on 1 March 1992 
(Articles 26, 33 and 35).*3) 
102. These provisions go further than those of the association agreements 
signed in 1972 with the EFTA countries and have the following 
characteristics: 
(i) they concern both industry and service activities; 
(ii) they deal with ECSC products in a separate protocol; 
(ill) they include the traditional principle that restrictive practices, 
abuse of dominant positions and state aid affecting trade are 
incompatible with the Community law and refer to the criteria 
arising from the application of the principles set out in 
Articles 85, 86 and 92 of the EEC Treaty-, 
(iv) they set a three-year deadline for the adoption of rules 
implementing these principles, a five-year deadline for the 
adjustment of state monopolies of a commercial nature, and a 
three-year deadline for compliance by public enterprises or 
enterprises granted special or exclusive rights with the principles 
of the EEC Treaty; 
(v) they stipulate that, where state aid is concerned, the three 
countries in question will, for an initial period of five years, be 
regarded as Community areas as described in Article 92(3)(a); 
(vi) they do not contain any provisions on mergers. 
103. As regards the competition rules applicable to enterprises, and without 
prejudging any decisions of the Association Council, the aim is to eliminate 
anti-competitive practices affecting trade between the Community and the 
countries of Central and Eastern Europe without superimposing new regulations 
on those already in place. Articles 85 and 86 of the EEC Treaty will apply 
(3) See point 555 of this Report. 
1.1V.§3. 12 
66 
as in the past to practices affecting intra-Community trade (e.g. in 
situations similar to the "Wood Pulp" case, where the unlawful practices were 
carried out by enterprises outside the Community). 
104. As regards the rules applicable to state monopolies of a commercial 
nature, state aid and public enterprises or enterprises granted special or 
exclusive rights, the Association Council will be examining the necessary 
substantive and procedural rules for the proper operation of the Agreements. 
If progress is to be made, an inventory of the aid measures applicable in 
each of the Central and Eastern European countries will, therefore, have to 
be drawn up on the basis of the methodology developed by the Commission. One 
of the difficulties will be to determine which authority will be responsible 
for monitoring aid liable to distort trade between the Community and the 
Central and Eastern European countries, the task already performed by the 
Commission as regards aid affecting intra-Community trade. 
A similar exercise will have to be undertaken for state monopolies and 
enterprises granted special or exclusive rights. 
105. Under the agreements, the Community or the Central or Eastern European 
country concerned may, if implementing rules do not exist or do not allow a 
practice regarded as incompatible to be dealt with in the correct manner, 
adopt appropriate measures after consulting the Joint Committee. 
106. The agreements being negotiated with Bulgaria and Romania will include 
similar provisions on competition. 
<T5> - Accession of new Member States 
107. When Sweden, Malta, Finland and Cyprus submitted applications for 
accession, the Commission drew up for the Council an opinion, the most 
significant aspects of which concerned competition. 
As regards the three EFTA countries that have applied for membership, the 
Commission took particular note of their commitment to radical reforms in the 
national rules applicable to restrictive commercial practices. Sweden in 
1.1V.§3. 13 
67 
particular has made considerable progress in harmonizing its national rules 
with those of the Community, while the reform undertaken in Finland, although 
not as extensive, should also allow anti-competitive practices to be 
monitored more effectively. 
108. With regard to state aid, monopolies of a commercial nature and service 
monopolies, the Commission opinion identifies certain situations which will 
have to be brought into line with Community legislation, this being a task 
primarily for the EFTA Surveillance Authority pursuant to Articles 16, 59, 61 
and 62 of the EEA Agreement and the relevant provisions concerning ECSC 
products. 
The Commission took the same approach in its examination of the situation in 
Malta and Cyprus in order to identify potential difficulties as regards 
competition in the event of accession. 
It also examined the membership applications submitted by Switzerland and 
Norway. 
1.1V.§4. 14 
68 
<T4> § 4. United States 
<T5> - Agreement with the US antitrust authorities 
109. The period under review saw the completion of the first full year of 
application of the agreement between the Commission and the US Government 
which came into effect on 23 September 1991. 
The very positive results achieved during the first year are due essentially 
to the strengthening of the relationship of confidence between the respective 
competition authorities, through the meetings provided for in the agreement 
and less formal contacts as well as through cooperation in specific cases. 
110. The agreement calls for officials of the respective competition 
authorities to meet twice a year to exchange information and discuss matters 
of common interest. Such meetings took place in November 1991*4) and 
September 1992.*5) In addition, there were informal bilateral contacts in 
January 1992 in Washington as well as on the sidelines of other meetings. 
Experience has confirmed that, within the confines set by the agreement, and 
in particular the protection of confidentiality, there is much scope for 
useful exchanges of information regarding competition policies and 
enforcement activities when it comes to improving mutual understanding of 
policies and increasing their effectiveness. 
111. While the more specific procedures laid down in the agreement have not 
been triggered, there has been cooperation in a number of individual cases. 
These positive developments confirm the importance of close cooperation 
between competition authorities in the context of increasingly globalized 
economic activity and place future cooperation with the US competition 
authorities on a firm footing. 
(4) Twenty-first Competition Report, point 362. 
(5) See point 554 of this Report. 
1.1V.§5. 15 
69 
<T4> § 5. Japan 
112. Contacts with the Japanese Fair Trade Commission have become both more 
frequent and more substantive during the year under review. A formal 
bilateral meeting took place in Brussels on 6 October and covered a broad 
range of issues. The breadth of the discussions was such that the one day 
initially planned proved to be insufficient and a further meeting was held in 
Paris on 2 December.*6) In addition to these formal contacts, a number of 
informal contacts took place as well, both on general and on specific issues. 
These contacts have shown that the Japanese Fair Trade Commission is 
genuinely interested in a meaningful dialogue with the Commission. The 
Commission is pleased with these developments and hopes that they can make 
some contribution towards resolving the problem identified in the 
Commission's communication to the Council on "A consistent and Global 
Approach - A review of the Community's relations with Japan" as "the failure 
of competition and market mechanisms in many spheres". 
(6) See point 558 of this Report. 
1.1V.§6. 16 
70 
<T4> § 6. Competition policy in multilateral organizations 
113. The OECD, and in particular its Committee on Competition Law and Policy, 
has recently been increasing the scope and pace of work in areas which 
impinge upon the international dimension of competition policy. It has 
embarked on an important exercise looking at the scope for convergence in 
member countries' procedures and practices in the area of merger control. 
In line with the OECD's tendency to adopt a multidisciplinary approach to the 
issues of internationalization of markets and globalization of economic 
activity, the Committee on Competition Law and Policy has discussed the 
interface between competition policy and anti-dumping policy, on which a 
report is being prepared. It has also considered the wider interactions 
between competition policy and trade policy, in cooperation with the OECD's 
Trade Committee, with which joint meetings have been held at working party 
level. The Commission has taken an active role in the work of the OECD, 
including continued participation in the OECD Industry Committee's work on 
"subsidies and structural adjustment". 
114. During the year, efforts to conclude the Uruguay Round of GATT 
negotiations continued, through multilateral discussions as well as bilateral 
contacts with trading partners, in a bid to reach agreement on a number of 
outstanding issues. The Commission believes that it is vital to bring the 
Round to a successful conclusion so as to end the uncertainty surrounding the 
framework for international trade and investment and to put into effect the 
substantial improvements provided for in that framework. It takes the view 
that, after the conclusion of the current Round, the policy of encouraging 
the adequate enforcement of competition laws by trading countries should be 
complemented with new initiatives to promote international rules dealing with 
private anti-competitive conduct which distorts or restricts international 
compet it ion. 
1.V.§1. 1 
71 
<T2> Chapter V: Application of the competition rules 
<T4> §1. Transparency 
115. The interest generally paid to competition policy has grown considerably 
since the introduction of the Merger Control Regulation. Yet the only way 
that this policy will be understood and supported by economic operators, 
policymakers and the general public alike is to make it more transparent so 
that decisions and policy are better understood. The political events of the 
past year have shown that this is a problem affecting all Community policies 
as well as the European policies of Member States. The recent 
Sutherland report stressed the need to improve information and transparency 
in order both to increase the acceptability of Community policies and to make 
them more effective. For this, not only the national authorities in the 
broad sense but also individuals must be made aware of their rights and 
obi igat ions. 
Proper information is also a prerequisite if competition policy is to be 
decentralized in accordance with the principle of subsidiarity. An 
information campaign has, therefore, been running for a long time and is 
aimed as much at political and economic circles as at the general public 
since, clearly, competition policy must be accorded the broadest possible 
measure of support and understanding. In this connection, existing measures 
are being continued and new initiatives adopted. 
116. All Article 85/86 decisions are published in the Official Journal of the 
European Communities and summarized every month in the Bulletin of the 
European Communities. This is also the case for each stage of the procedure 
followed in cases dealt with under the Merger Control Regulation and for 
opinions of the Advisory Committee whenever publication is requested by a 
Member State. Also published in the Official Journal are the notices in 
which the Commission states the position it proposes to adopt on a case after 
a preliminary scrutiny under Regulation No 17 and invites comments from any 
Interested parties. An innovation in this area was introduced in 1992 in 
1.V.§1. 2 
72 
a particular case*1) when the Commission published a notice informing third 
parties of a notification and requesting them to submit comments. As a 
result, comments were received at the start of the Commission's 
investigation, speeding up the procedure. The intention is to apply this 
method more systematically in cases.involving "structural" cooperative Joint 
ventures.*2) 
Lastly, the Commission publishes press releases on all significant events. 
In addition, the annual Report on Competition Policy is designed to provide 
both an overview and a detailed picture of the Commission's activities. 
117. At the request of the European Parliament and the Council, the 
Commission pressed ahead with its efforts to increase the transparency of 
state aid. It adopted its third survey on state aid in the Community,*3) 
which covers the period 1981-90 and provides an overall view of all the aid 
granted in the various Member States to manufacturing, the coal industry, 
agriculture, fisheries, railways and inland waterways. It identifies certain 
trends, compares types of aid and objectives by Member State, assesses the 
progress made by the Commission in tightening its policy and maps out future 
areas of activity. It is targeted both at Member States and at any other 
interested part ies. 
118. Most of the Commission decisions on aid are reported in press releases 
as soon as they are adopted, and are also summarized in the monthly Bulletin 
of the European Communities. Aid decisions, like the decisions adopted under 
Articles 85 and 86 of the Treaty, are published in the Official Journal, with 
the exception of the less important ones, which are adopted by accelerated 
procedure. Publication is in the form of a brief description of the main 
facts of cases involving aid approved without a detailed examination and 
should make it easier for third parties to seek redress; all other types of 
decision are published in full. 
(1) CarIsbero/AII led case, see point 131 of this Report. 
(2) See point 122 of this Report. 
(3) See point 350 of this Report. 
1.V.§1. 3 
73 
119. Three multilateral meetings on state aid were held in 1992 with experts 
from the Member States.*4) The topics discussed included draft frameworks 
on aid for exports to third countries, aid for environmental protection, aid 
to the synthetic fibres industry and aid for the motor vehicle industry. 
Such meetings allow the Commission to take account, wherever possible, of 
Member States' comments and suggestions. They should also help 
Member states' administrations to gain a better understanding of the 
frameworks, thereby enhancing legal certainty. 
The Commission also continued to publish various notices and frameworks 
clarifying the rules applicable in such areas as aid to small and 
medium-sized enterprises, the application of Article 85 to cooperative joint 
ventures (Joint venture guidelines) and the application of the de minimis 
principle to beer contracts.*5) It also adopted a notice on the application 
of Community competition law by national courts*6) and is preparing another 
on the application of Article 85 to commercial agents. Lastly, it adopted a 
Regulation amending four existing block exemption regulations.*7) The 
number and variety of texts adopted make a major contribution to improving 
transparency. 
The Commission published its Green Paper on postal services,*8) a subject 
with implications both from a social and general economic standpoint and for 
competition policy. Its investigation into telecommunications also resulted 
in the publication of a document on services and another on equipment. In 
both cases, the documents are based on wide-ranging consultations. The 
Commission also started publishing general explanatory brochures aimed at 
providing the general public with essential information on competition 
policy.*9) 
There are also several reference works containing decisions taken pursuant 
(4) See points 339 to 341 of this Report. 
(5) See point 301 of this Report. 
(6) See point 299 of this Report. 
(7) See point 265 of this Report. 
(8) See point 512 of this Report. 
(9) The first is entitled "Competition policy in the European Community", in 
the European File series. 
1.V.§1. 4 
74 
to Articles 85 and 86 and under the Merger Control Regulation or the relevant 
body of rules. These publications are due to be updated and revised shortly 
as regards state aid. 
The desire to improve transparency is also reflected in the increasing 
presence of Commission officials at information events targeted at various 
audiences and in the number of civil servants and trainees from Member States 
and elsewhere working in the Directorate-General for Competition. 
1.V.§2. 5 
75 
<T4> §2. Subsidiar itv 
120. The principle of subsidiarity, currently the focus of wide-ranging 
discussions, is particularly relevant to competition policy. 
It is interesting to note that, well before this concept had acquired such 
prominence, it had influenced the drafting of the competition rules of the 
Treaty. Thus, Articles 85 and 86 allow the Commission to act only if 
competition is threatened in the common market and if the agreement or 
conduct in dispute affects trade between Member States. In its 1986 
de minimis notice, the Commission considered that the restriction of 
competition must be more than insignificant. 
The same observation can be made regarding the Merger Control Regulation, 
which provides for action by the Commission only where operations have a 
Community dimension, this being a function of the size of the enterprise 
concerned and the cross-frontier nature of its activities. Furthermore, even 
where the thresholds are exceeded, the Regulation allows the Commission to 
refer to the national authorities cases it regards as essentially the 
responsibility of Member states. 
The principle of subsidiarity can also be relevant to the application of the 
competition rules. The Commission is already cooperating with national 
authorities on the procedures for applying Articles 85 and 86 as well as the 
Merger Control Regulation. But it is possible to go further in this 
direction. The Commission is, in principle, in favour of the national 
authorities dealing with complaints having an essentially national impact 
under national or Community competition law. This allocation of 
responsibilities would enable the Commission to focus its limited resources 
on cases of Community importance while guaranteeing that all other cases were 
dealt with appropriately under the competition rules. The Court of 
First Instance confirmed that the Commission was entitled to define its 
1.V.§2. 6 
76 
priorities on the basis of the Community interest,*10) and the Commission 
has already gained some positive experience in applying this approach. 
It should also be noted that, while the national authorities can assist the 
Commission in carrying out this task, the converse is also possible. The 
Commission can, if necessary, use its specific powers to act in a case 
initially examined by a national authority, as it did in 1992 during an 
investigation into the prices of audiovisual products following contacts with 
the Danish competition authorities.*11) 
As noted in the Sutherland report, there are a number of factors currently 
militating in favour of greater involvement by national courts in the 
application of the competition rules. Articles 85 and 86 and the block 
exemption Regulations are directly applicable, and national courts can often 
respond rapidly to complainants' requests for interim measures. They can 
also rule on all aspects of a case at the same time, including any award of 
damages. To facilitate attainment of this objective, the Commission adopted 
a notice on the application of Community competition law by national 
courts.*12) The notice clarifies the various situations that might arise 
before national courts, which can also ask the Commission for assistance in 
obtaining any legal information or facts they require. The Commission has 
already satisfied such requests from national courts and is prepared to 
cont inue doing so. 
121. The control of state aid is an area where, by definition, the principle 
of subsidiarity plays only a minor role. It would be difficult to imagine a 
Member State monitoring in pursuance of the Community interest the aid it 
itself grants on its own territory. The Commission has nevertheless adopted 
certain measures allowing it to devolve responsibility for aid of minor 
importance. 
The Commission argues that, below a certain level, aid cannot affect trade 
between Member States and does not therefore distort competition at 
Community level. It follows that such aid measures are not caught by 
(10) Automec Judgment, see point 323 of this Report 
(11) See point 548 of this Report. 
(12) See point 299 of this Report. 
1.V.§2. 7 
77 
Article 92(1) of the Treaty and, consequently, it is for the Member States 
alone to decide whether to monitor the aid in accordance with competition 
criteria. The threshold was set at ECU 50 000 per firm over a three-year 
period. It is unlikely that the Commission will be able to develop this line 
of reasoning any further, although the scope of its notice should not be 
underestimated since the Commission acknowledged for the first time in a 
general instrument that certain aid measures were not covered by Article 92. 
In addition, Commission monitoring of aid is crucially strengthened by the 
action of national courts dealing with complaints from firms injured by the 
unlawful granting of aid to a competitor. 
The area of state aid, however, provides a good illustration of the second 
aspect of subsidiarity, namely, that action must be taken at Community level 
if it cannot be taken more effectively elsewhere. It should be noted here 
that the Community is responsible for the completion of the single market and 
that this requires uniform conditions of competition. In the final analysis, 
the only way of creating such conditions is by action that is sufficiently 
centralized. Clearly, therefore, the objectives of Community competition 
policy require that, in accordance with the principle of subsidiarity, the 
Commission should retain a central role in the application and definition of 
competition rules. Another example which comes to mind is afforded by 
horizontal agreements with a Community dimension, in respect of which only 
the Commission is empowered to conduct an investigation and to take the 
appropriate decision. In addition, the application of new Article 130b of 
the Maastricht Treaty will mean that decisions on state aid will have to take 
greater account of the need to strengthen economic and social cohesion. 
1.V.§3. 8 
78 
<T4> §3. Adaptation of procedures 
122. The policy of transparency both improves awareness and acceptance of the 
competition rules and increases their effectiveness. The same applies to the 
principle of subsidiarity, according to which those rules are applied by the 
authority best placed to perform this task. But the tighter application of 
Community law also means taking action at the level of the Commission itself 
in order better to equip it to carry out its responsibilities. 
123. The Commission intends to expedite the procedures for applying 
Articles 85 and 86 of the EEC Treaty. Although a substantial reduction in 
workload has been achieved in recent years through a rationalization of 
DG IV's activities, these procedures are still considered to be too 
time-consuming. This is a general problem and the Commission is looking into 
ways of resolving it by improving working methods. Specific measures to that 
end have already been adopted for "structural" cooperative joint ventures. 
124. This category comprises all forms of cooperation entailing major changes 
in the structures of the parties to the agreement. These are joint ventures 
pooling a significant number of assets, particularly in the production field 
and in connection with the manufacture and marketing of contract goods. Such 
arrangements should be dealt with rapidly and as a first priority. Only a 
speedy decision by the Commission on the agreement notified gives the parties 
concerned the legal certainty they need to carry out their plans. 
The new system will be modelled in part on the experience acquired in 
applying the Merger Control Regulation. Within two months of the date on 
which it received all the information concerning the notified case, the 
Commission will inform the parties in writing if their agreement gives rise 
to doubts concerning its compatibility with the competition rules. 
1.V.§3. 9 
79 
The content of the letter will vary according to the circumstances of the 
case: 
in cases not posing any problems, the Commission will send a comfort 
letter confirming that the agreement is compatible with Article 85(1) or 
(3); 
if a comfort letter cannot be sent because of the need to settle the 
case by formal decision, the Commission will inform the enterprises 
concerned of its intention to adopt a decision either granting or 
rejecting exemption; 
if the Commission has serious doubts as to the compatibility of the 
agreement with the competition rules, it will send a letter giving 
notice of an in-depth examination which may, depending on the case, 
result in a decision either prohibiting, exempting subject to conditions 
and obligations, or simply exempting the agreement in question. 
In cases where a formal decision is envisaged, the Commission will inform the 
parties of the proposed date of adoption of the final decision, and of any 
change in that date caused by the circumstances in which the procedure takes 
place. 
The new system, applicable since 1 January 1993, is based entirely on the 
principle of self-discipline by the relevant Commission departments. 
Internal instructions have been given for the implementation of the rules 
descr ibed above. 
The system should allow the Commission to produce decisions more rapidly, to 
improve the transparency of procedures, and to increase the degree of legal 
certainty. Its application to a specific category of notifications could, at 
the same time, serve as a test of whether procedures could be expedited 
without any increase in staff. The experience gained will also enable the 
Commission to determine whether the system could be extended to other types 
of agreement in restraint of competition. 
1.V.§4. 10 
8Q 
<T4> §4. Commission activities (quantitative description) 
125. On 31 December the Directorate-General for Competition had a staff of 
407 (national experts included). Of the available manpower, 44% was 
allocated to work under Articles 85 and 86 of the EEC Treaty, 12% to merger 
control cases, 3% to work under Article 90 of the EEC Treaty, 21% to state 
aid cases, 9% to international relations and coordination and 11% to data 
processing, documentation and other horizontal duties. 
126. On 31 December there were 1 562 cases pending under Articles 85 and 86 
of the EEC Treaty. As compared to the 2 287 cases pending on 1 January of 
that year, this represents a reduction of more than 30%; the effort to reduce 
the number of cases pending will be continued and is expected to benefit 
from more intense application of Articles 85 and 86 by national courts, which 
will be made easier by the new notice on the subject.*13) During the year a 
total of 399 cases were added to the Commission's workload; they comprised 
246 applications or notifications, 110 complaints and 43 own-initiative 
procedures; on the other hand, a total of 1 124 cases were terminated in 
1992. The Commission's workload under Articles 85 and 86 on 31 December 1992 
consisted of 1 064 applications or notifications, 287 complaints and 211 
own-in itiative proceedings. 
Of the cases terminated, 176 were closed by the sending of comfort letters, 
where the undertakings concerned had agreed to a written statement of 
position by the Directorate-General for Competition; a notice was published 
in accordance with Article 19(3) of Regulation No 17 in eight of these cases. 
A further 553 cases were settled because the agreements were no longer in 
force, their impact was too slight to warrant further consideration, the 
complaints had become moot or because investigation had not revealed any 
anti-competitive practices. In 1992 20 agreements or practices led to a 
formal decision on their compatibility with the competition rules. In five 
cases the Commission found that agreements infringed Article 85(1) without 
imposing a fine; in five further cases a fine was imposed. Four decisions 
granted a formal exemption to an agreement under Article 85(3) of the 
EEC Treaty. Finally, in three cases, the Commission found that an abuse of a 
dominant position under Article 86 of the EEC Treaty had been committed and a 
f ine was imposed. 
(13) See point 299 of this Report. 
(s 
1.V.§4. 11 
81 
In addition, the Commission adopted three decisions imposing a fine because 
of an undertaking's failure to comply with a verification decision. It also 
adopted seven formal decisions rejecting complaints. 
127. As regards the implementation of the Merger Control Regulation, 59 new 
cases were notified to the Commission during the year, while 61 cases were 
concluded by a final decision. 
In nine of the 61 final decisions, the Commission found that the notified 
operation was not a concentration within the scope of the Regulation 
(Article 6(1)(a) of Regulation (EEC) No 4064/89). In 47 cases, it found that 
the concentration was compatible with the common market and did not have to 
be opposed (Article 6(1)(b)). It adopted four decisions authorizing 
concentrations under Article 8(2) of the Regulation following the initiation 
of proceedings; in three of these, conditions and obligations were attached. 
Finally, one case led to a decision authorizing the concentration without 
conditions. There were seven cases pending on 1 January 1992 and eight on 
1 January 1993. 
128. The competition provisions of the ECSC Treaty gave rise in 1992 to one 
decision under Article 65 and 10 under Article 66. A further 17 cases under 
Article 65 were settled by means of an administrative letter and 
30 concentrations of minor importance benefited from an exemption under 
Decision 25/67. There is no backlog of cases under the ECSC rules. 
A total of 76 inspections were carried out on the declared production of 
coal and steel undertakings subject to the levy (Articles 49 and 50 of the 
ECSC Treaty). 
129. With regard to state aid, the figures in Table 1 show that the number 
of cases notified by the Member States in 1992 varied only slightly from the 
figure for 1991. On the other hand, the number of procedures initiated under 
Article 93(2) of the EEC Treaty and the number of negative final decisions or 
conditional decisions fell sharply. This confirms the trend noted last year 
and reflects the fact that Member States now take far more account than in 
the past in their notifications of the rules on competition and the case-law 
established by the Commission and the Court of Justice. The Commission's 
1.V.§4. 12 
82 
efforts to increase transparency and maintain strict control have thus borne 
fruit. Similarly, the increase in the number of projects notified and later 
withdrawn by Member States shows that they are responsive to the guidelines 
given by the Commission following its scrutiny and prefer, if the Commission 
informs them of its opposition, to avoid the initiation of proceedings and 
the adoption of a negative decision, with the consequences this will have for 
the enterprises concerned. 
In 1992 the Commission also registered 102 cases that had not been notified 
in accordance with Article 93(3) of the EEC Treaty. 
It did not raise any objections in respect of 71 cases of this type and 
initiated the Article 93(2) procedure in respect of 18 cases.*14). The 
number of unnotified aid cases is down on 1991 (145 cases). If the trend 
continues over the next few years, it will reflect better compliance by the 
Member States with Article 93(3), and this undoubtedly has something to do 
with the Commission's determination and the power to suspend unlawful aid 
conferred on it by the Court of Justice in the Boussac case. 
(14) The number of cases registered in 1992 does not necessarily correspond 
to the number of decisions taken. Certain cases registered in 1991 were 
decided on only in 1992. 
1.V.§4. 13 
Tabla 1 - Activity in the control of «tot* old (excluding old to ogrlculture. f I «hor I •• ond transQ»<3)) 
Act Ion token by the CommissIon I ! J 
Ysor Numbsr 
of proposals 
not if led No 
objsct ions 
rolsed In 11 iot ion 
of proceedings 
undsr Article 
93(2) EEC or 
Art ids 8(3) 
of Decision 
2320/81/ECSC Terminât ion of 
proceedings 
under Ar t icIe 
83(2) EEC or 
ArtIcle 8(3) 
of Dec I s Ion Fi no I decision 
under 
Art icle 93(2) 
EEC or 
Art icle 8(3) 
of Decision 
2320/81/ECSC<2) 2320/81/ECSC*3) Proposa I s 
not i fled 
ond later 
wIthdrown 
by Member 
States 
1981 92 
(of which steel 
- 18) 
1982 200 
(of which steel 
- 81) 
1983 174 
(of which steel 
- 4) 
1984 162 
(of which steel 
- 10) 
1985 133 
(of which steel 
-7) 
1986 124 
1987 326 
1988 375 
1989 296 
1990 429 
1991 472 
1992 459 79 
(of which steel 
- ID 
104 
(of which steel 
25) 
101 
(of which steel 
- 18)(0 
201 
(of which steel 
- 66)4 
102 
(of which steel 
-21)4 
98 
205 
311 
254 
352 
383 
393 
(N old) 
468 
(all E/N/NN 
aid) 30 
(of which steel 
- 9) 
86 
(of which steel 
- 56) 
55 
58 
(of which steel 
- 1) 
38 
(of which steel 
-1) 
47 
27 
31 
37 
33 
53 
26 
+ 2 under 
Art icle 6(2) 
of Decision 
322/89/ECSC 19 14 
(of which steel 
- 4) 
30 13 
(of which steel (of which steel 
- 13) - 1) 
18 
34 
31 
26 
32 
32 
27 
24 
25 
33 21 9 
(of which steel 
- 9) 
21(5) 6 
10 
10 
13 
16 
12 
9 
8 5 
1 
7 
2 
21 
25 
NB: The figures in the first column do not match those of the next four columns on occount of carry-overs 
from one yeor to the next and because, if proceedings under Article 93(2) EEC or Article 8(3) of 
Decision 2320/81/ECSC of inltioted, the Commission has to take two decisions, one to initiate 
proceedings ond then a finol decision terminating them. 
(1) For details, see the Annexes to this Report. Actions in respect of 
steel include both EEC and ECSC steel products and, because of the 
tranche system, the number of actions exceeds the number of 
not i f icat ions. 
(2) In most cases, after amendments have been negotiated during the 
proceedings to remove those aspects which a pr ior i made the proposal 
incompatible with the common market. 
(3) Published in the Official Journal. 
(4) Including tranches of aid released under the decisions of 29 June 1983. 
(5) Excludes the "conditional" decision on French investment aid (see 
Fourteenth Competition Report, point 253). 
2.I.A.§1.a.l 
84 
<T1> PART TWO; COMPETITION POLICY TOWARDS ENTERPRISES 
<T2> Chapter I; Main decisions and 
measures taken by the Commission*1) 
<T3> A. Restrictive agreements 
<T4> §1. Horizontal agreements 
<T5> - Establishment of Joint ventures 
<T6> (a) CarIsberg/Courage 
130. Carlsberg was among the first foreign brewers to enter the 
United Kingdom beer market. Initially it exported its lager beers directly 
from Denmark, subsequently establishing its own brewery in the United Kingdom 
in Joint ownership with the United Kingdom brewer Grand Metropolitan, and 
then in 1980 acquiring full ownership of that brewery. With sales 
outweighing its own United Kingdom production capacity, it entered at the 
same time into a ten-year partial production/distribution agreement with 
Grand Metropolitan. This arrangement was formally exempted by the 
Commission.*2) The Commission took into particular account the fact that 
Carlsberg did not have its own sales network in the United Kingdom and that, 
as a result of the direct ownership of a majority of the pubs by the 
United Kingdom brewers, it was practically impossible at that time for an 
outsider to supply the on-trade without the cooperation of one of the 
United Kingdom brewers. The expiry of this agreement coincided with the 
take-over by Courage of Grand Metropolitan's brewing business in 1991.*3) 
Carlsberg renewed its arrangement (on amended terms), but now with Courage 
(the second largest brewer in the United Kingdom). 
The arrangement with Courage involved extensive cooperation between the two 
parties. Courage acquired the right to brew for ten years some Carlsberg 
beer under licence, it received the exclusive distribution right for 
Carlsberg beers to the off-trade (supermarkets and other shops) for a period 
of five years, and a non-exclusive distribution right to the on-trade (pubs, 
(1) The cases not dealt with in this chapter are summarized in the annexes, 
which also give all the references. 
(2) Commission Decision in the Carlsberg case, OJ L 207, 2.8.1984. 
(3) Twenty-first Competition Report, point 86. 
2.I.A.§1.a.2 
85 
restaurants) for a period of ten years. Under the arrangement Courage was 
required to purchase minimum volumes of Carlsberg beers. 
Shortly after the conclusion of this arrangement Carlsberg announced its 
intention of amalgamating its entire brewing and beer sales activities in 
the United Kingdom - including its arrangement with Courage - with those of 
Allied Lyons in a Joint venture CarIsberg-Tetley("CT").*4) As a result of 
that transaction Carlsberg would not only jointly control with Allied Lyons 
the United Kingdom's third largest brewer, but also achieve direct access for 
its beers to the pubs owned by Allied. 
The Commission considered the two arrangements incompatible with one another. 
It informed the parties that it could not accept the exclusive distribution 
right for Courage (neither de Jure nor de facto) for the off-trade, as there 
was no justification for granting such a right to a competitor. This 
conclusion was further strengthened by the creation of CT, which had itself a 
strong position in off-trade sales. Whereas the arrangement for the on-trade 
was non-exclusive, in particular the minimum volumes involved - which ensured 
privileged access for Carlsberg to the pubs supplied by Courage - required 
continued cooperation between the two parties. The Commission considered 
that, in view of the position of CT as third largest brewer, Carlsberg would 
not require extensive cooperation with Courage for the sales of its beers to 
the on-trade. It considered that under these circumstances effectively only 
a very limited arrangement would be justifiable, namely only for the supply 
of those pubs which would otherwise not be accessible to Carlsberg. The 
Commission therefore informed the parties that their arrangement for the 
on-trade should be limited to the supply of Carlsberg beers to the pubs that 
were tied to Courage. This necessitated a halving of the minimum volume 
requirement and a reduction in the duration of the agreement, so that its 
termination would coincide with the date at which the pubs tied to Courage 
would become free houses.*5) The parties amended their agreements 
accordingly. As a result the Commission was able to close the file by way of 
an Article 85(3) comfort letter. 
(4) See point 131 of this Report. 
(5) As a condition to the approval of the Courage Grand Metropolitan 
takeover, the parties undertook to ensure that the supply of their pubs 
would be open to competition after a certain period of time. Those pubs 
continuing to be owned by Grand Metropolitan would become open to 
competition after four years, whereas their jointly owned pubs would be 
released from their tie seven years after the transaction. For further 
details, see point 86 of the Twenty-first Competition Report. 
2.I.A.§1.b.3 
86 
<T6> (b) Carisberg/AIIied Lyons 
131. At the end of 1991 Carlsberg and Allied Lyons publicly announced their 
intention of amalgamating their United Kingdom brewing and beer wholesale 
activities through the creation of a 50-50% Joint venture CarIsberg-Tetley 
("CT"). At the time, the five largest brewers accounted for almost 80% of 
United Kingdom beer production and slightly more in the case of lager. 
Following the establishment of CT, they would account for some 90% of 
United Kingdom lager production. CT would become the third largest brewer in 
the United Kingdom. 
132. It was envisaged that both parties would transfer to CT all related 
assets, business activities and relevant staff and management. Allied Lyons 
retail business was not included in the transaction. Its managed and 
tenanted retail estate would remain owned and controlled by its subsidiary 
Allied Retail. Carlsberg and Allied Lyons would furthermore each retain the 
ownership of their respective beer brands in the United Kingdom. CT would 
however receive an exclusive licence to brew and sell these products in the 
United Kingdom. In addition it would enter into a ten-year exclusive 
purchase agreement with Allied Lyons for certain wines and spirits, and with 
Britannia Soft Drinks (a joint venture between Allied Lyons, Bass and 
Whithread) for certain soft drinks. In turn CT would acquire a seven-year 
exclusive right to supply beer, wines, spirits and soft drinks to Allied 
Retail's on-trade estate of managed and tenanted houses. 
133. The first issue was whether this transaction would fall within the ambit 
of Regulation (EEC) No 4064/89 (the Merger Regulation) or Articles 85 or 86 
of the Treaty. 
134. Because Carlsberg and Allied Lyons would retain the ownership of their 
beer brands and have a final say in commercial policy with regard to their 
brands, the Commission considered CT would not constitute an autonomous 
economic entity, but rather a vehicle through which both parties would 
coordinate their market behaviour, and in particular their brand policies. 
The joint venture was therefore considered to be of a cooperative nature. 
The result of this view was that the British authorities were equally 
competent to vet it. 
135. The transaction was subsequently notified to the Commission under 
Regulation No 17. In view of its importance, and in order to be able to take 
2.I.A.§1.b.4 
87 
the views of third parties into consideration at as early a stage as 
possible, the Commission published a Notice in the Official Journal*6) 
requesting third parties' comments on the transaction. The Commission 
received a number of observations. 
136. Following an in-depth examination, the Commission concluded that the 
transaction would lead to the strengthening and further foreclosure of an 
already oligopolistic market (the United Kingdom lager market). The effects 
were considered particularly pronounced in the on-trade, which is 
characterized by a high degree of vertical integration (pubs being owned by 
breweries). The Commission informed the parties on 28 July of the conditions 
which it considered necessary in order for the transaction to be acceptable. 
The British authorities announced similar conditions at the same time. The 
conditions sought were: 
a reduction in the duration of the exclusive beer supply agreement 
between CT and Allied Retail from seven to five years; 
within two years, the pub tenants and lessees of Allied Retail should be 
free to purchase at least 50% of their total annual lager requirements 
from any supplier. 
137. In addition the Commission required that: 
the exclusive purchase agreement between CT and Allied Lyons for 
certain wines and spirits be reduced in duration from ten to five years; 
the exclusive purchase agreement between CT and Britannia Soft Drinks be 
amended so as to enable CT to acquire and resell carbonated soft drinks 
from any supplier, and its duration likewise be reduced from ten to five 
years; 
the exclusive supply agreement between CT and Allied Retail for wines, 
spirits, cider and soft drinks be reduced in duration from seven to five 
years. 
The relevant agreements were amended accordingly. However, the second 
condition, concerning the opening-up of Allied Retail's on-trade estate to 
(6) OJ C 97, 16.4.1992 
2.I.A.§1.b.5 
88 
competing lager beers, was subject to further negotiations. As a result the 
parties undertook instead to release, from the second year, a specific number 
of Allied Retail's pubs completely from their tie (for all beers). Since the 
estimated volume to be released as a result was equivalent to that under the 
second condition, the case was closed. CT and its associated supply 
agreements received an Article 85 (3) comfort letter. 
2.I.A.§1.c.6 
89 
<6> (c) Fiat/Hitachi 
138. On 21 December the Commission adopted a decision pursuant to 
Article 85(3) of the EEC Treaty with respect to the joint venture set up by 
Fiat and Hitachi for the production, distribution and sale of medium to large 
hydraulic excavators.*7) 
The agreements notified by the parties provide for the joint venture to begin 
trading by taking over the existing Fiat range of excavators and cylinders 
and to develop a new Fiat-Hitachi range using Hitachi technology. The 
parties agree not to compete with the JV in Western Europe (including the 
whole of the Community), the Mediterranean basin and Africa. 
After discussions with the Commission, the parties amended their agreements 
in such a way as to allow Hitachi, as far as the Community was concerned, to 
carry out passive sales in the Joint venture's exclusive territory. This 
means that, although Hitachi will not seek to sell to Community-based 
contractors, it will accept orders coming from such purchasers. 
The arrangements provide for the joint venture to buy ail its motors from 
Iveco (which is part of the Fiat group) and all hydraulics which it does not 
manufacture itself from Hitachi. Although these exclusive purchasing 
provisions foreclose sales opportunities for third party manufacturers of 
motors and hydraulics, this restriction results from the setting-up of the 
joint venture and appears to be reasonably necessary to its operation. 
(7) OJ L 20, 28.1.1993. 
2.I.A.§1.d.7 
90 
<T6> (d) Ford/VW 
139. The Commission exempted, by a formal decision under Article 85(3) of the 
EEC Treaty, an agreement between the car manufacturers Ford and Volkswagen 
(VW) to set up a Joint venture (JV) in Portugal for the common development 
and production of a multi-purpose vehicle (MPV). 
Ford and VW will build a plant near Setubal with a capacity of 190 000 units 
annually, which is to commence production in 1995. The MPVs produced by the 
JV will be sold in differentiated versions by Ford and VW under their own 
trade marks and through their separate sales networks. 
MPVs constitute a relatively new and distinctive market segment by virtue of 
their specific product features (designed to carry up to seven persons, 
considerable space for luggage, car-1 ike handling). The MPV segment in the 
Community is characterized by the strong leadership of the Renault 'Espace' 
(over 50% of the segment), which was conceived and is assembled by Matra SA 
(Matra). All other competing products are Japanese or US-produced vehicles. 
The Commission found that the conditions for an exemption under Article 85(3) 
of the Treaty were fulfilled as the cooperation will, inter alia, result in 
the production of a new, competitively priced, high quality product designed 
to meet the needs of the European consumer and enhance competition in the 
European MPV segment. Its decision to authorize the JV between two leading 
car producers also took into account the exceptional circumstances of this 
case, e.g. : 
the low volume of the MPV market segment; 
the fact that neither Ford nor VW have been a significant supplier in 
the MPV segment in Europe; 
the structure of the MPV segment, i.e. having one supplier in a strong 
leading position; 
- the fact that the vehicle will be produced in a purpose-built and modern 
plant ; 
However, in view of the existing high degree of cooperation in the car 
industry, the exemption was made subject to a number of strict conditions and 
2.I.A.§1.d.8 
91 
obligations, predominantly in order to limit possible "spill-over" effects of 
the cooperation which could damage competition between the partners in 
neighbouring sectors (e.g. estate cars, light vans) and to ensure that Ford 
and VW actively compete against each other by distributing separately. 
The Commission also rejected a formal complaint by Matra against the 
agreement as being contrary to Article 85. 
2.I.A.§1.e.9 
92 
-<T5> - Agreements in the financial services sector 
<T6> (e) Assurpol*8) 
140. On 14 January the Commission granted exemption under Article 85(3) of 
the EEC Treaty to the EIG Assurpol and its rules of procedure for a period of 
seven years. 
Assurpol is a co-reinsurance pool for the covering of environmental damage 
risks (accidental and gradual pollution) originating in certain industrial 
and commercial installations situated, notably, in France. The membership is 
made up of 50 insurance companies (the insurer-members) and 14 reinsurance 
companies (the participant-members). 
Insurer-members are not prohibited from placing reinsurance outside the pool 
and are free to withdraw at the end of each accounting year subject to three 
months' notice. Entry into the pool is open to any insurance or reinsurance 
company authorized to operate in France. 
The agreements exempted allow the insurer-members individually to underwrite 
the risks of liability for damage to the environment (accidental and gradual 
pollution) by providing them with a guarantee of the availability of 
reinsurance through the pool. 
Each member takes part in the co-reinsurance of the risks ceded to the pool 
by the insurer-members (90% of their liabilities) up to the amount of his 
share calculated on the basis of his capacity committed in relation to the 
total capacity of the pool (currently FF 131 million). 
At the Commission's request, a number of amendments were made to the notified 
agreements so as to ensure that premiums ceded by way of co-reinsurance no 
longer include commissions paid to intermediaries or the administration costs 
of insurer-members. Insurer-members therefore remain free to apply different 
commercial premiums for the Assurpol policies they underwrite, even if risk 
premiums and the contribution towards the co-reinsurance pool's operating 
costs are fixed in common. 
(8) OJ L 37, 14.2.1992; Bull. EC 1/2-1992, point 1.3.63 
2.I.A.§1.e.10 
93 
Exemption was possible in the present context of worsening ecological 
problems, even though the insurer-members taken together already cover 70 to 
80% of potential consumers regarding other liability risks, since Assurpol 
policies account for only 3% of the estimated amount of premiums in the 
environmental damage liability insurance market in France and since the pool 
is only a very minor player in the reinsurance market, which is a worldwide 
market. Furthermore, the restrictions of competition resulting from 
cooperation within Assurpol are counterbalanced by rationalization, an 
increase in financial capacity and the creation and development of a 
technique for improving the insurance of risks for which there is only very 
limited experience in providing cover. 
The decision shows that the setting-up of a reinsurance pool does not 
necessarily involve the Joint determination of commercial premiums for direct 
insurance contracts and that it is not essential for the participants to be 
totally prohibited from covering risks outside the pool. 
2.I.A.§1.f.11 
94 
<T6> , (f) Eurocheque: Helsinki Agreement*9) 
141. On 25 March the Commission adopted a decision in the "Eurocheque: 
Helsinki Agreement" case imposing a fine of ECU 5 million on the Groupement 
des Cartes Bancaires, which represents all the French banks which are members 
of the Eurocheque system, and a fine of ECU 1 million on Eurocheque 
International for concluding an agreement in 1983 and in force until 1991 
under which French banks charged French retailers the same commission for 
cashing foreign Eurocheques as they charged for payment by bank card. Not 
only did the agreement constitute a pricing agreement caught by the 
prohibition in Article 85(1), but it also infringed the Package Deal 
agreement of 1980, which the Commission exempted in 1984 on the understanding 
that a Eurocheque would be free of charge to the recipient, with the payee's 
bank receiving an interbank commission debited to the drawer's bank. 
The decision rejects the request for exemption submitted in 1990. 
This is the first time the Commission has imposed fines in the banking 
sector. The Commission bore this in mind when determining the amounts of the 
fines and also took account of the share of responsibility and the profit 
earned from the agreement by the participants. 
(9) OJ L 95, 9.4.1992; Bull. EC 3-1992, point 1.2.40 
2.I.A.§1.g.12 
95 
<T5> - Agreements in the energy sector 
<T6> (g) SHG/EDF and ENEL 
142. The Commission intervened in a dispute between an independent French 
generator and the French and Italian electricity monopolies, EDF and ENEL. 
143. The independent generator, whose power station was for geographical and 
technical reasons linked only to the Italian grid, could not sell its 
electricity direct to ENEL because of the exclusive export rights enjoyed by 
EDF. It was therefore obliged to sell its electricity to EDF, at the rate 
applying to French independent generators, although its output was intended 
for Italy. 
144. Since the prices paid to independent generators in France were lower 
than those in Italy, the owner of the power station was suffering a financial 
loss. 
145. The Commission's action in the case resulted in a compromise between 
the parties under which the French generator will be paid by EDF at rates 
based on those granted by ENEL to independent Italian generators, so as to 
take account of the power station's very specific situation, namely the fact 
that it can be linked up only to the grid of the Member State to which the 
electricity is exported. 
The Commission has thus made it clear that the competition rules laid down in 
Articles 85 and 86 of the EEC Treaty apply fully to the energy sector, 
irrespective of the measures taken by the Commission to complete the internal 
market in energy. 
2.I.A.§1.h.13 
96 
<T6> (h) Jahrhundertvertraa 
146. In its decision of 22 December approving the "Jahrhundertvertrag", the 
Commission again confirmed the applicability of competition rules in the 
energy sector. The Commission confirmed that the energy market must not be 
excluded from competition and that, against the background of further 
development of the internal market, restrictive measures must be limited to 
what is necessary to guarantee basic security of supply. 
The "Jahrhundertvertrag" (century contract) is a set of agreements by which 
private and public German electricity producers are obliged to purchase 
stipulated amounts of German coal for the purpose of electricity generation. 
The Commission found that these agreements fall under the competition rules 
of the EEC and the ECSC Treaty. The exclusive and long-term purchase 
obligation for German coal prevents German electricity producers from 
importing coal or other primary energy sources from other Member States and 
also impedes the import of electricity. 
In the decision the Commission again confirmed its policy that the proportion 
of input energy used for electricity generation which is obtained on a 
priority basis from domestic energy sources and is thus shielded from 
competition must be limited to the amount necessary to safeguard basic 
electricity supplies. The Commission exempted the agreements since it was 
satisfied that such was the case here. 
The Commission takes the view that at the end of 1995 this proportion should 
not exceed 20% of the input energy used to cover gross electricity 
consumption and that it must be reduced to 15% by the end of the millennium. 
The Commission emphasized that this decision did not prejudice its assessment 
of the compatibility of aid to the German coalmining industry with Community 
rules. 
2.I.A.§1.i.14 
97 
<T5> - Agreements in the maritime transport sector 
<T6> (i) French-West African shipowners' committees 
147. The Commission found that the "shipowners' committees" set up in 
respect of trade between France and eleven West African and Central African 
countries*10) constituted agreements which were contrary to the provisions 
of Article 85 of the EEC Treaty and that their practices were in breach of 
Article 86.*11) The decision followed a number of complaints lodged by 
independent shipowners against a whole set of practices the effect of which 
was to establish a cartel covering a large proportion of the bilateral trade 
between the Community and the West African and Central African countries. 
The Commission accordingly initiated procedures against four liner 
conferences*12) and the eleven shipowners' committees covered by the 
dec is ion. 
148. The purpose of the shipowners' committees was to apportion between 
their members all the freight carried by liners, with machinery to supervise 
this arrangement set up to cover each of the shipping lines. The members of 
the shipowners' committees systematically shared out between them, on a 
monthly basis, all the traffic between France and eleven African countries. 
Competition was accordingly eliminated, leading to excessively high freight 
rates. 
In addition, after seeking the adoption, by the authorities in the African 
countries concerned, of measures intended to reserve all freight traffic for 
them, the members of the shipowners' committees took a willing and active 
part in the implementation of such measures with a view to denying 
shipowners wishing to operate outside the committees access to the traffic 
concerned. 
149. The Commission pointed out that, in accordance with Council Regulation 
(EEC) No 4056/86 of 22 December 1986,*13) shipowners are entitled to be 
members of liner conferences that have been granted a block exemption. 
However, in adopting this decision, the Commission made it clear that it 
(10) The countries in question are: Benin, Togo, Congo, Senegal, Mali, 
Guinea, the Central African Republic, Cameroon, Gabon, Niger and Burkina 
Faso. 
(11) Decision of 1 April 1992, OJ L 134, 18.5.1992. 
(12) The Commission has reached a decision in one case (CEWAL) and is 
continuing to examine the other three. 
(13) OJ L 378, 31.12.1986. 
2.I.A.§1.1.15 Û0 
would take action against any attempts to establish a cartel in respect of 
the whole of a trade or a number of trades so as to hinder outsiders from 
securing access, with the object or effect of eliminating all effective 
compet i t ion. 
150. The infringement was deemed to be a major and serious breach of the 
law, and the Commission decided to impose fines totalling ECU 15 million on 
the Delmas Group, Société Navale de l'Ouest, Société Navale Caennaise and the 
Hoegh-SWAL Group. In fixing the level of the fine, the Commission took 
account of the fact that the Bol lore Group (which had subsequently purchased 
the Delmas and Hoegh groups) had given certain important undertakings that 
would ensure that active steps were taken to open up the market to intensive 
compet it ion. 
Lower fines (of between ECU 2 400 and ECU 56 400) were imposed on thirteen 
cross-traders who were members of the shipowners' committees; in fixing the 
level of these fines, the Commission took account of the fact that such 
shipowners, who were not signatories to the agreements setting up the 
shipowners' committees, played only an ancillary role within them. 
151. Lastly, the Commission emphasized that, leaving aside the decision, it 
was ready to enter into talks with the authorities in the West African and 
Central African countries with a view to helping those countries' carriers 
secure a greater share of the traffic generated by their external trade. 
2. I .A.§1 .J.16 
99 
<T6> (j) CEWAL Liner Conference 
152. The Commission imposed fines totalling ECU 10.1 million on four 
shipowners for anti-competitive practices on behalf of the CEWAL liner 
conference (Associated Central West Africa Lines). The Compagnie Maritime 
Belge (CMB) was fined ECU 9.6 million, while the remainder was imposed on 
Woermann Linie, Dafra Line (both currently owned by CMB) and Nedlloyd. 
In determining the size of the fines, the Commission took account of the 
minor role played by Woermann, Dafra and Nedlloyd, and their small market 
share, compared to the CMB. The fines also aimed to reflect certain 
mitigating circumstances which came to the Commission's attention. 
153. Following complaints from the Danish Government and from several 
shipowners, the Commission initiated proceedings against 11 shipowners' 
committees and four liner conferences (CEWAL, MEWAC, COWAC and UKWAL). 
Regarding the shipowners' committees, the Commission imposed a heavy fine in 
April 1992 for infringing the EEC Treaty (Articles 85 and 86) in traffic 
between France and 11 West and Central African countries.*14) 
154. This decision*15), the first against a liner conference, primarily 
concerned CEWAL, which groups together several shipping companies in order to 
provide a regular shipping service between Western European ports and the 
ports of Zaïre and Angola. The decision only applied to traffic between 
northern European ports (except the United Kingdom) and Zaïre. 
155. The Commission found that on these routes the members of CEWAL abused 
their dominant market position, in breach of Article 86, in three different 
ways in order to eliminate competition from their chief competitor, G & C (a 
common service between the Belgian shipowner Cobelfret and the Italian 
shipowner Grimaldi): 
1. They participated in a cooperation agreement with the Zaïrean maritime 
authorities (Ogefrem: l'Office Zaïrois de Gestion de Fret Maritime) 
under which all cargo on this line would be carried by CEWAL members. 
(14) Commission Decision of 1 April 1992, OJ L 134, 18.5.1992. 
See point 147 of this Report. 
(15) Decision of 23.12.1992, OJ L 34, 10.2.1993, p. 20. 
2.I.A.§1.J-17 
100 
2. They used the "fighting ships" method. If a competitor offered cheaper 
rates than those set by CEWAL, the conference would hold a meeting to 
undercut that competitor, and ensure that CEWAL members scheduled their 
sailings at or around the same time as those of the competitor in order 
to win over its customers. Charges equivalent to the losses incurred by 
the competitor would then be shared out among CEWAL members. 
3. CEWAL imposed 100% loyalty rebates, under which members would have to 
surrender all their cargo to the conference in order to qualify for a 
rebate. Blacklists would be drawn up with the names of shippers who 
broke the 100% rebate system. This went beyond the terms of the rules 
(Article 5(2) of the "block exemption" Regulation No 4056/86) exempting 
liner conferences from EC competition rules under certain conditions. 
In addition, the Commission found that all three conferences - CEWAL, COWAC 
and UKWAL - had infringed Article 85 of the EC Treaty by means of a 
market-sharing agreement. Through this agreement, each shipowner refrained 
from competing on the geographical territory of the two conferences other 
than its own. The Commission decided not to impose a fine for this 
particular infringement. 
2.I.A.§1 .k.18 
101 
<T5> - Agreements concerning fisheries and 
agr iculture 
<T6> (k) Scottish Salmon 
156. The Commission adopted a decision*16) condemning an agreement between 
Fiskeoppdretternes Salgslag (FOS - the Norwegian fish farmers' sales 
organization), the Scottish Salmon Farmers' Marketing Board Ltd (SSB), the 
Scottish Salmon Growers' Association Ltd (SSGA) and the Shetland Salmon 
Farmers' Association (SSFA) to fix minimum prices for farmed salmon. 
Producers in Norway and Scotland account for over 90% of farmed salmon 
supplied in the Community. 
157. The Commission's inquiry focused on the period at the end of 1989 when 
the salmon industry was in crisis. Despite a significant rise in consumption 
of farmed salmon in the Community, prices had been steadily declining. In 
December 1989, Community producers lodged a complaint with the Commission in 
respect of dumping in the EC of Norwegian salmon.*17) 
158. At the same time, FOS took steps to restore the effectiveness of its 
minimum price system. However, before implementing the new measures, FOS 
contacted the Scottish organizations to advise them of the new plan. On 
20 December 1989, FOS organized a telephone conference with producers of 
farmed salmon in Europe, the purpose of which was to secure their support for 
the new measures. Following the telephone conference, SSB/SSGA and SSFA sent 
circulars to their members urging them to bring their prices into line with 
the new Norwegian minimum prices and giving new Scottish prices based on the 
Norwegian minimum price plus the traditional Scottish premium of 5-10%. 
159. There were two aspects to the agreement - on the one hand, FOS measures, 
i.e. minimum prices backed by a freezing scheme and on the other hand, 
supporting measures taken by SSB, SSGA and SSFA to ensure price discipline on 
the part of their members. The agreement terminated at the end of 1991. 
(16) Decision of 30 July 1992, OJ L 246, 27.8.1992 
(17) A Commission Decision taken on 15 March 1991 found that Norwegian salmon 
was being sold in the Community with a dumping margin of 11.3%. 
2. I .A.§1 .k.19 
102 
160. The Commission's decision was aimed at establishing principles in 
respect of the relationship between anti-dumping proceedings and anti-trust 
proceedings, in particular in relation to the agriculturaI/fisheries sector 
having regard to the provisions of Council Regulation No 26/62. Undertakings 
or associations of undertakings, when confronted by a dumping practice are 
not permitted under Regulation No 26/62, either in addition to or instead of 
an anti-dumping procedure, to enter into a restrictive private agreement in 
order to remedy the situation. The same principle applies with regard to 
other similar procedures, such as safeguard clauses which are provided for in 
certain Community regulations to prevent market destabi Iization. 
2.I.A.§1.I.20 
103 
<T6> ( I ) Mi Ik Market ino Board 
161. The Commission has been in discussion with the United Kingdom 
authorities about the possible new milk marketing arrangements that could be 
put in place following abolition of the current statutory schemes. 
162. Under the current statutory arrangements virtually all dairy farmers in 
the United Kingdom have to sell their milk to one of the statutory Boards 
(one for England and Wales, three in Scotland, and one in Northern Ireland). 
Under the reform proposals, which have been submitted by all Boards to the 
United Kingdom Government, these constraints would disappear. Dairy farmers 
would be free to choose where they sell their milk. Similarly, dairy 
companies would be free to decide where they buy their milk and in particular 
would be free to negotiate directly with farmers. Each of the five statutory 
Boards would be replaced by a single producers' cooperative. Dairy farmers 
would be free to decide whether or not to join these new organizations. 
163. The United Kingdom Government has sought an indication of the 
compatibility of the reform proposals with Articles 85 and 86 of the EEC 
Treaty. 
164. With respect to the proposal of the Milk Marketing Board for England and 
Wales, it has been noted by the Commission that the arrangements now proposed 
are considerably less restrictive of competition than were earlier proposals. 
In particular, the complete separation of the current commercial subsidiary 
of the MMB for England and Wales, Dairy Crest Limited, and a substantial 
liberalization of the leaving terms for members of the future new cooperative 
are major improvements in the competitive structure of the proposed marketing 
arrangements. In the context of a single voluntary cooperative succeeding 
the existing England and Wales Board, which accounts for more than 80% of the 
total milk production, both aspects are essential elements in creating a 
competitive environment, and ensuring the compatibility of the new 
arrangements with EC competition rules. 
165. It was further noted by the Commission that full details of the new 
cooperative were not yet decided, and that it was still uncertain to what 
extent farmers will Join it and consequently what the exact competitive 
position of the new body on the United Kingdom milk market will be. This 
will become clearer only if and when the reorganization has had enough time 
to take effect and the industry started to adapt to the new situation. In 
2.I.A.§1.I.21 
104 
addition, the proposed leaving terms are significantly more liberal than 
those which the EC Commission accepted in the Campina case under Article 85 
of the EEC Treaty.*18) 
166. Against this background, it was concluded that there were no grounds for 
action under Articles 85 and 86 with regard to the proposed new cooperative, 
for an initial period of two years. During this initial period the market 
position of the new cooperative, and in particular the effects of the leaving 
terms on competition in the market, should be carefully monitored. If market 
developments did not sufficiently point in the direction of real competitive 
pressures, the Commission would have to decide whether or not the present 
proposed contract terms, in particular the 2% penalty payable on 3 months' 
notice, could still be justified. On the other hand, if they did, the 
Commission would be ready to consider proposals from the new cooperative, to 
be allowed greater freedom in the choice of contract terms to offer to milk 
producers. 
167. With respect to the other proposals relating to the Scottish area and 
Northern Ireland, the view has been taken that the competition problems 
related to these proposals, although in substance not different from the 
English and Welsh ones, did not have a real Community dimension. The future 
milk marketing arrangements in Scotland and Northern Ireland are likely to 
have only regional effects. In the absence of an appreciable effect on trade 
between Member States, these arrangements should be dealt with exclusively by 
the competent United Kingdom authorities. 
This case exemplifies the opening-up to competition of statutory structures 
in the agricultural sector. It has to be seen in parallel with the policy 
followed by the Commission concerning trade associations in the same sector, 
including the obligation imposed on them not to take discriminatory measures 
which deny market access to operators from other Member States.*19) 
(18) Twenty-first Competition Report, points 83 and 84. 
(19) See for instance the British Cattle and Sheep Breeders' Associations 
case in Annex I I I.A.1. 
2.I.A.§1.m.22 
105 
<T5> - Agreements relating to intellectual property 
<T6> (m) Chiquita/Fyffes 
168. On 4 June the Commission decided to terminate the proceedings which were 
initiated under Articles 85 and 86 of the EEC Treaty against Chiquita 
following a complaint by Fyffes PLC. 
169. In the past, Chiquita's banana sales in the United Kingdom were made 
through Fyffes Group Ltd, an English company which was until 1986 a 
wholly-owned subsidiary of Chiquita, trading bananas in the United Kingdom 
under the Fyffes name and trade mark. At the same time Chiquita Europe used 
the Fyffes trade mark, first as its main brand and after the introduction of 
the Chiquita brand as a secondary brand, for the sale of its bananas on the 
European mainland. In 1986 Fyffes Group Ltd was sold by Chiquita to the 
Irish company FM (now known as Fyffes PLC). In a subsequent agreement (the 
"trade mark agreement"), Fyffes Group Ltd granted Chiquita the exclusive 
right to use the Fyffes trade mark outside the United Kingdom and Ireland for 
a period of three years from 1986. The trade mark agreement also contained a 
provision (the "non-use clause") prohibiting Fyffes Group from using the 
Fyffes brand for the sale of fresh fruit, including bananas, outside the 
United Kingdom and Ireland until the year 2006, or such earlier date as might 
be decided solely by Chiquita. After the expiry of the three-year period in 
1989, Chiquita no longer used the Fyffes trade mark, but otherwise relied 
upon the non-use clause to prevent Fyffes from using the Fyffes trade mark in 
continental Europe. 
170. In its Statement of Objections of April 1991 the Commission considered 
that Chiquita, by preventing Fyffes from selling its bananas under the Fyffes 
trade mark on the EC continental banana markets, had infringed both 
Article 85 and Article 86 of the EEC Treaty. 
171. The Commission concluded that the non-use clause deprived Fyffes of the 
competitive advantage to be gained from selling its bananas Europe-wide under 
the strong Fyffes label. To the extent that the non-use clause applied 
beyond the initial three-year period following the transfer of the Fyffes 
Group business, it could not be considered to be a legitimate protection of 
Chiquita's continental goodwill attached to the Fyffes name and trade mark. 
This clause therefore constituted an anti-competitive agreement prohibited by 
Article 85(1) of the EEC Treaty. 
2.I.A.§1.m.23 
106 
172. Furthermore, the non-use clause was found to have an important effect on 
the structure of competition in the banana market. Although Fyffes was not 
restricted from selling bananas on the continental market, provided it used 
trade marks different from the Fyffes mark, the prohibition on using Fyffes 
as a strong single brand Europe-wide constituted a significant barrier for 
Fyffes to effectively compete with Chiquita on that market. Hence, it had 
the effect of protecting Chiquita's current dominant position in those EC 
Member States with non-protected dollar banana markets i.e. the Benelux, 
Denmark, Germany and Ireland. It was therefore concluded that Chiquita, by 
agreeing to the non-use clause, and by relying on it since 1989, abused its 
dominant position, contrary to Article 86 of the EEC Treaty. 
173. The fact that, both before and after 1986, in several of the continental 
Member States, Chiquita was the sole registered owner of the Fyffes trade 
mark did not affect this conclusion. In fact, the Commission considered 
that, having consented to the division of the ownership of the Fyffes trade 
mark in different Member States through a partial assignment in favour of 
Fyffes Pic, Chiquita would not be allowed under the Treaty rules on the free 
circulation of goods to rely on the trade mark legislation of certain 
Member States to oppose the importation of bananas which had lawfully been 
marketed by Fyffes in another Member State. 
174. On this basis, the Commission found moreover, in its supplementary 
Statement of Objections of December 1991, that Chiquita had also abused its 
dominant position by relying upon the Fyffes trade marks registered in its 
name in English legal proceedings, and by threatening Fyffes with the use 
thereof, to prevent Fyffes from selling its bananas bearing the Fyffes mark 
in continental Europe. This conclusion was all the more justified in this 
case since Chiquita had itself ceased using the Fyffes trade mark for the 
selling of its bananas by 1989 at the latest and had introduced a new 
secondary brand called Consul. Similar to Chiquita's reliance upon the 
non-use clause, such behaviour had a serious effect upon the structure of 
competition by its tendency to block Fyffes' entry as an effective competitor 
on the continental banana market. 
175. Following the Commission's objections, Chiquita agreed with Fyffes to 
cease blocking access for Fyffes' bananas bearing the Fyffes trade mark to 
the EC continental banana market. 
2.I.A.§1.m.24 
107 
176. This settlement fully meets the objectives pursued by the Commission's 
proceedings. It ensures effective access for Fyffes' bananas to the 
continental EC banana market, and hence contributes to an improved structure 
of the banana market by strengthening competition between different brands. 
The Commission therefore decided to terminate its proceedings. 
The case illustrates the limits competition law imposes on the exercise of 
intellectual property rights. 
2.I.A.§1.n.25 
108 
<T5> - Agreements relating to charges connected 
with environmental protection 
<T6> (n) VOTOB 
177. Although the Commission welcomes voluntary initiatives to improve the 
environmental conditions in a given sector, it has to ensure that 
undertakings competing in that sector do not resort to agreements which go 
beyond what is necessary to achieve that goal, to the detriment of 
compet it ion. 
178. This is the position maintained by the European Commission since 
commencing proceedings against a Dutch association of companies in the 
chemicals storage business. 
179. The association, Vereniging van OnafhankeIijke Tankopslag Bedrijven 
(VOTOB), groups six undertakings offering tank storage facilities (land 
tanks) in Amsterdam, Dordrecht and Rotterdam. They are independent 
operators, offering storage services for third parties only. They decided to 
increase prices charged by VOTOB members to their customers by a uniform, 
fixed amount as from 1 April 1990. This uniform "environmental charge" (to 
be applied for an undetermined period) was to cover, albeit in part only, the 
costs of investment required to reduce vapour emissions from members' storage 
tanks. VOTOB took this decision after concluding a covenant with the Dutch 
Government to improve environmental standards. However, this covenant made 
no mention of a uniform, fixed price increase, nor was there any obligation 
on VOTOB by the Dutch Government to adopt one. 
180. The Commission objected to this charge as being incompatible with 
Article 85 for three reasons. Firstly, it is fixed. All members are to 
apply it regardless of their own considerations. Secondly, it is uniform. 
Though varying from product to product, the increase is identical for all 
VOTOB members. Thirdly, it is invoiced to customers as a separate item, 
suggesting it is a "charge" imposed by the government. 
181. When a price or an element of it is fixed, competition on that price 
element is excluded. By fixing the charge and thus a source of recovery 
members have less incentive to make investments as cheaply and efficiently as 
possible. This has a knock-on effect on the market for undertakings 
providing reconstruction and improvement services. There will be less 
2.I.A.§1.n.26 
109 
incentive for members to contract with those undertakings which can achieve 
the best results for the least expenditure or effort. 
182. Uniform adoption of the charge ignores differences in each individual 
member's circumstances. The covenant with the Dutch Government stipulates an 
agenda for vapour emission reduction that spans the period 1990 to 2000. The 
first phase is to end in 1994. Some members are already very close to the 
1994 objectives, while others are not. Furthermore, members employ different 
techniques to reduce emissions, and do not expend investment costs 
simultaneously. The charge ignores this. In addition, all VOTOB members 
retain the proceeds of the charge individually. 
183. The Commission maintains that had there been no horizontal fixing of 
this particular cost element, individual members could have calculated the 
cost of necessary investment, decided whether to meet it from their own 
profit or to pass it on to their customers, and , if they decided to pass it 
on to their customers, determined by how much to increase their prices. 
This would have been done by the companies independently, having regard to 
prevailing market conditions and according to their own competitive position. 
184. Prior to the Commission's proceeding to a decision, VOTOB agreed to 
renounce its separate charging system as from 1 January 1993, taking account 
of the fact that contracts with customers are negotiated on a calendar-year 
basis, and to stop invoicing in this manner as from 1 July 1992 for new 
contracts. The uniformly fixed charge will no longer be applied as from 
1 January 1993. 
185. The case makes clear that the Commission is not opposed to the possible 
passing on to customers of "polluter pays" investment costs, since this makes 
them more aware of environmental problems and their implications. However, 
customers should not be barred from challenging price increases and shopping 
around for the smallest increase. A system whereby members invoiced a total 
price, stating that it included the additional environmental investment cost, 
would be acceptable to the Commission. Customers reluctant to accept a 
higher price would, while becoming environmentally aware, remain in a 
position to negotiate conditions. 
186. The Commission agreed to suspend proceedings and review the situation in 
the light of VOTOB's undertakings. 
2.I.A.§1.0.27 
110 
<T5> - Cartels 
<T6> (o) Building «n^. . -"struct ion Industry in the Netherlands 
187. On 5 February the Commission adopted a decision imposing fines totalling 
ECU 22.5 million on 28 construction associations in the Netherlands for 
having operated a cartel in the Dutch building and construction 
industry.*20) 
188. Under the auspices of their Joint federation SPO ("Vereniging van 
Samenwerkende Prijsregelende Organisâties in de Bouwnijverheid" 
Association of cooperating price-regulating organizations in the 
construction industry), a comprehensive set of complex and detailed 
regulations was adopted and implemented, their aim being to coordinate the 
competitive conduct of building and construction firms in the process of 
awarding contracts for projects put out to competitive or successive single 
tender, whether by public authorities or private individuals. 
189. The regulations include the so-called UPR (Uniform Price-regulating 
Rules) and Code of Honour, which primarily aim to arrange for the client to 
pay for the tendering costs incurred by all contractors competing for a 
particular bid and to designate one from among them as the so-called 
"entitled bidder"; this bidder is protected from any attempt by the client 
to negotiate or bargain the terms of the contract with other participants. 
To this effect, the rules provide for a system of pre-tender meetings, to be 
attended by all those building firms interested in competing for a 
particular work. During these meetings, the participants exchange 
information on the basis of which the costs of the contract are compared, 
the collective decision may be taken to increase the offers in order to have 
the costs of calculating their bids reimbursed by the client and the 
"entitled bidder" may be designated. Each participant at the meeting may 
ask for his bid to be given preference or may, upon having been informed of 
all intended offers, withdraw his bid. In particular in cases in which the 
participants fear strong outside competition, they may refrain from 
increasing the tender figures or from designating the "entitled bidder", 
thus organizing a collective and effective defence against this outside 
competition. The Code of Honour, in force since 1980, lays down penalties 
for breaches of the regulations and provides for a quasi-judicial procedure 
to examine such breaches. 
(20) OJ L 92, 7.4.1992 
2.I.A.§1.0.28 
111 
190. The Commission found that the regulations severely restrict competition 
as between participants, by effectively prohibiting each bidder from freely 
setting the price and other conditions of his offer. Clients are unable to 
freely choose between offers of several contractors, which result from 
exchange of information among the participants and from collective decisions 
as to significant elements thereof. Equally, the Commission found that 
competition as between participants and non-participants is severely 
restricted, the outside contractor being faced with a concerted and flexible 
response by the participants designed to limit or impede its ability to 
enter the market. 
191. The Commission considered that the regulations do appreciably affect 
intra-Community trade, both on the supply side and on the demand side. The 
28 member-associations of the SPO represent over 4 000 Dutch builders, 
including all of the large and most of the medium-sized firms. The SPO's 
rules are binding on these firms, whilst another 3 000 companies participate 
on a case-by-case basis. Among them are about 150 firms established in other 
Member States. The Commission's inquiry revealed that the implementation of 
the SPO's regulations covers virtually all contracts put out to tender in the 
Netherlands in the sectors of the construction industry to which the SPO 
rules apply. Since these regulations apply to any invitation to tender for a 
contract in the Netherlands, any foreign client wishing to put out to tender 
a construction contract in that Member State cannot escape the application of 
these regulations. 
192. The Commission-in i t iated inquiry focused on the period as from the end 
of 1980 (entering into force of the first uniform regulation, the Code of 
Honour). In the course of the inquiry, the SPO notified the Code of Honour 
and the UPR in its version as applied since 1 April 1987, thus replacing 
similar ones, adopted by its member-associations. The Commission held that 
the regulations did not satisfy the conditions for exemption under 
Article 85(3) of the EEC Treaty. Also in the course of the inquiry, the 
municipality of Rotterdam filed a complaint concerning some aspects of the 
régulât ions. 
2.I.A.§1.0.29 
112 
193. In determining the amount of the fines to be imposed, the Commission 
took account of the fact that this was the first case in the construction 
sector in which ArtU^ »*(!) of the EEC Treaty had been applied. 
Furthermore, the Commission h^id that the Dutch authorities had adopted 
certain measures which could lead cartel members to believe that their 
activities were condoned by the State. The Commission is currently bringing 
separate proceedings against the Netherlands in this matter under Article 169 
of the EEC Treaty. 
2.I.A.§2.a.1 
113 
<T4> §2. Distr ibut ion 
<T6> (a) Newitt/Dunlop Slazenger International*1) 
194. Dunlop Slazenger International Ltd (DSI), a subsidiary of the UK 
conglomerate BTR, is one of the main European and world producers of sports 
goods. More specifically, it is the market leader within the EEC for tennis 
and squash bai Is. 
Newitt Ltd, a UK distribution company, accused DSI of using various means to 
block its exports, mainly of tennis and squash balls, to other Community 
Member States. It alleged that DSI had first suspended deliveries and then 
applied discriminatory new tariffs in order to prevent it from remaining 
competitive in export markets. 
The investigation carried out following the complaint showed that DSI did 
indeed pursue a policy of restricting exports from the United Kingdom with 
the aim of protecting its sole distributors in other Community countries. 
This policy took the form primarily of a general ban on exporting imposed on 
British traders, a ban which dated from 1977 at least. 
This general ban on exporting was implemented, as from 1985 at least, by a 
series of concrete measures intended to prevent any exports to countries 
where DSI had sole distributors. In addition, the investigations showed 
that, at least as regards the Netherlands, the implementation of these 
measures was undertaken in collaboration with DSI's distributors in that 
country, and sometimes at their own instigation. 
The concrete measures identified by the Commission during its investigations 
were as fol lows: 
(1) OJ L 131, 16.5.1992; Bull. EC 3-1992, point 1.2.39 
2.I.A.§2.a.2 
114 
1. specific refusal to supply products intended for export; 
2. prices imposed on UK traders with a view to preventing them from 
remaining competitive in export markets; 
3. buying-in of low-price parallel exports with a view to preventing them 
from exerting pressure on the prices charged by 
Dunlop Slazenger International's exclusive distribution network; 
4. the marking of products with a view to establishing their origin and 
final destination; 
5. exclusivity for the DSI distributors in the use of the 
Dutch Tennis Federation's quality mark. 
These measures were clearly aimed at the implementation of DSI's general 
policy of preventing any export bound for a country where it had a sole 
distributor. 
It should be noted that, at the end of the Commission's investigations, DSI 
acknowledged that it had infringed the Community's competition rules in a 
number of ways and altered its practices to a large extent. 
However, barriers to exports resulting from agreements or concerted practices 
between companies have consistently been considered, in the case-law of the 
Commission and of the Court of Justice, as serious infringements of 
Article 85(1) of the EEC Treaty, as they challenge the free movement of goods 
and consequently the objective of economic integration pursued by the Treaty. 
The Commission consequently adopted a decision on 18 March prohibiting the 
measures under Article 85 of the EEC Treaty and imposing a fine of 
ECU 5 million on Dunlop Slazenger International and a fine of ECU 150 000 on 
All Weather Sports, its sole distributor of the Dunlop brand in the Benelux 
countries. 
2.I.A.§2.b.3 
115 
<T6> (b) Mars/Langnese & Schôller 
195. On 25 March the Commission imposed interim measures in order to prevent 
Langnese-lglo GmbH and Schôller Lebensmittel GmbH & Co. KG from enforcing 
contractual rights obliging retailers to purchase single-item ice-cream 
exclusively from them. The interim measures were imposed following a 
complaint by Mars GmbH, which alleged that these rights were damaging the 
sale of its own ice-cream bars in Germany.*2) 
On 23 December, the Commission gave its final rulings on the outlet 
exclusivity agreements operated by the two companies concerned in Germany. 
It: 
(a) found that the agreements concluded by Langnese and Schôller 
requiring retailers established in Germany to purchase single-item 
ice-cream for resale only from these undertakings infringe Article 85(1) 
of the EEC Treaty; 
(b) refused an exemption for the agreements referred to above under 
Article 85(3) of the EEC Treaty and withdrew the benefit of the block 
exemption declared by Commission Regulation (EEC) No 1984/83, in so far 
as these agreements would have qualified for that block exemption; 
(c) declared that Langnese and Schôller may not conclude agreements of 
the kind referred to above until after 31 December 1997. 
This decision clarifies the Commission's attitude towards exclusive 
purchasing agreements. In general, the Commission considers these agreements 
to be beneficial to competition in normal market conditions because they 
strengthen the position of the undertaking which has concluded the 
exclusivity agreement. If, however, access by other suppliers to the relevant 
market is impeded as a result of the market structure and other significant 
barriers to entry to this market, any further strengthening of that position 
by exclusivity agreements cannot be accepted. Such a situation arises in the 
present case, where Langnese and Schôller operate a duopoly and where access 
to the market is made particularity difficult as a result of freezer 
exclusivity arrangements.*3) 
(2) See point 309 of this Report 
(3) See point 309 of this Report 
2.I.A.§2.b.4 
116 
The Commission also made clear two important points of law concerning the 
application of Article 85 (1) of the EEC Treaty to exclusivity agreements 
having a cumulative effect on the market as well as the conditions under 
which the benefit of the block exemption under Regulation No 1984/83 will be 
withdrawn. 
As to the first point, the Commission applies a three-tier test: 
Does the agreement itself have an appreciable effect on competition or 
trade between Member States? 
If not, do all agreements of this kind entered into by the undertaking 
concerned have this effect? 
If not, do all agreements of this kind which exist in the relevant market 
have this effect? 
If one of these questions is answered in the affirmative, the conditions for 
the application of Article 85(1) are met. 
As to the second point, it is clear that the benefit of the block exemption 
can only be withdrawn by a decision following proceedings under Regulation 
No 17. In the present case it had been coupled with the finding of an 
infringement and an order to bring it to an end. In order to prevent the 
anticompetitive practices from reoccurring and to allow the opening up of the 
market, it was necessary to ban the conclusion of exclusive purchasing 
agreements by the undertakings concerned for five years. 
2.I.A.§2.c.5 
117 
<T6> (c) Givenchy 
196. The Commission adopted a formal decision under Article 85(3) of the 
EEC Treaty with regard to a standard-form selective distribution contract 
laying down the conditions for the marketing within the EEC of perfume, skin 
care and beauty products manufactured by the French company 
Parfums Givenchy.*4) The decision applies until 31 May 1997. 
197. The decision confirms and supplements the principles which the 
Commission had established in its Yves Saint Laurent Parfums decision of 
16 December 1991.*5) 
198. Following a general examination of selective distribution systems in 
the perfume sector, the Commission had commenced proceedings against 
Parfums Givenchy and against Yves Saint Laurent Parfums with a view to 
covering, in two basic decisions, all the pertinent legal issues and 
defining the principles of Community competition law applicable to all 
companies within this sector. 
199. In this context, the Commission decided to revise the position adopted 
in 1974*6) and to strengthen the application of the Community competition 
rules in this sector. In particular, the Commission challenged the 
acceptability of certain contractual clauses which had hitherto been 
tolerated in the sector. 
200. Compared with the clauses examined in the Yves Saint Laurent Parfums 
decision, Givenchy's selective distribution system contained one particular 
clause which made the retailer's inclusion or maintenance in the 
distribution network subject to his being authorized to sell a minimum 
number of competing brands included on a restricted list drawn up by 
Givenchy. Several companies in this sector had adopted a similar practice. 
(4) OJ L 236, 19.8.1992. 
(5) OJ L 12, 18.1.1992. 
(6) Fourth Competition Report, point 93. 
2.I.A.§2.C.6 
118 
201. The minimum number of four competing brands hitherto imposed by 
Givenchy was deemed to be a requirement which, without being excessive, made 
it possible to ensure that distribution was based on a variety of competing 
brands being sold alongside Givenchy products. However, the Commission 
opposed any restriction on the authorized distributor's choice of suitable 
brands to make up the required environment. In particular, the Commission 
considered that such a clause had the effect of limiting access to the 
distribution network for new retailers and, consequently, of restricting 
intra-brand competition. Furthermore, it was liable to limit the ability of 
new or lesser known brands to penetrate and establish themselves on the 
market, thereby also restricting inter-brand competition. 
202. Following the Commission's intervention, Givenchy deleted the clause, 
replacing it with a new provision which allowed each retailer the freedom to 
choose to sell any other luxury perfume brand alongside the contracted goods. 
203. Apart from the above-mentioned aspect, the Givenchy decision confirms 
the position which the Commission adopted in the Yves Saint Laurent decision 
of 16 December 1991 with regard to the abolition of purely quantitative 
selection criteria, the conditions for the admission of retailers to the 
distribution network, recognition of the freedom of the authorized 
distributor to determine its own retail prices, the liberalization of 
cross-supplies among authorized retailers and the conditions designed to 
ensure that the manufacturer did not impose on retailers excessive 
requirements regarding minimum purchases.*7) 
204. The decision is an example of the Commission's policy on selective 
distribution, which aims to ensure that the advantages of selective 
distribution are not undermined by the harmful effects of 
compartmentaIization of the common market. 
(7) Twenty-first Competition Report, points 134 to 136. 
2.I.A.§2.d.7 
119 
<T6> (d) Viho/Parker Pen*8) 
-205. On 15 July the Commission adopted a decision imposing a fine of 
ECU 700 000 on the British company Parker Pen and a fine of ECU 40 000 on 
Herlitz AG, its distributor in Germany, for having included an export ban in 
an agreement concluded between them. 
Following a complaint from the Dutch company Viho, it was found that 
Parker Pen and Herlitz AG had concluded an agreement in August 1986 on the 
distribution of Parker Pen products in Germany, under which all exports that 
did not have Parker's written consent were prohibited. The products 
concerned were Parker pens and similar articles in the medium price range, 
sold mostly in department stores. 
The Commission took the view that the infringement was such as to obstruct 
the achievement of a fundamental objective of the Treaty, namely the 
integration of the common market. 
The level of the fine imposed on Parker Pen took account, however, of 
Parker's cooperative behaviour during the investigation and the fact that 
Parker drew up a programme to ensure compliance with Community competition 
law. 
In the case of the fine imposed on Herlitz AG, the Commission took account of 
the fact that Herlitz's responsibility was less than that of Parker, since it 
could be supposed that Herlitz AG was merely complying with Parker's wishes. 
(8) 0J L 233, 15.8.1992; Bull. EC 7/8-1992, point 1.3.37. 
2.I.A.§2.e.8 
120 
<T6> (e) 1990 Footbal I World CUP 
206. On the basis of a complaint made by a travel agency, the Commission 
examined the general distribution system for tickets and package tours set up 
by the organizers of the football World Cup held in Italy in 1990. 
207. The Federazione Italiana Giuoco Calcio (FIGC) was appointed by the 
Federation of International Football Associations as organizer of the 1990 
cup. The FIGC, acting jointly with FIFA, set up a local "Organizing 
Committee" to carry out this task. This Committee established the system for 
distributing advance tickets to the event. 
208. The concerns of the Commission in this case focused on the method 
chosen by the Organizing Committee for distributing tickets to package tour 
operators. The Organizing Committee granted to an Italian tour operator, 
"90 Tour Italia", the exclusive right to sell entry tickets as part of a 
package tour. All other tickets were sold subject to the explicit condition 
that they are not resold to travel agencies. 
As a result of this, 90 Tour Italia acquired a monopoly in the organization 
and sale of package tours to the World Cup. Other tour operators were unable 
to compete, as they could not offer alternative packages, even at cheaper 
prices. Equally, travel agencies could only offer a limited choice of package 
tours to the World Cup, and were unable to "shop" between several tour 
operators in order to obtain more advantageous conditions for their 
customers. 
209. The Commission therefore considered that the agreement concluded between 
the organizers and 90 Tour Italia had restricted competition at the expense 
of the consumers who purchased package tours, and had thus infringed 
Article 85(1) of the EEC Treaty. 
210. In reaching this conclusion, the Commission examined very carefully 
whether the exclusive distribution system could be justified by the need to 
guarantee safety at the matches. However, it was clearly demonstrated that a 
number of other tour operators could have fully complied with the Organizer's 
requirements and would therefore have been able to offer competing package 
tours without in any way undermining safety. It is important to note that 
2.I.A.§2.e.9 
121 
this was accepted by the Organizing Committee representatives during the 
proceedings in this case. 
211. The following undertakings were considered by the Commission to be 
responsible for this infringement of the Community's competition rules: FIFA, 
the Federazione Italiana Giucco Calcio (FIGC), Col Italia (acting as a Joint 
agency of the FIFA and of the FIGC), 90 Tour Italia and CIT Spa/ltal iatour 
(as parent companies of 90 Tour Italia). 
212. This was the first time that the Commission adopted a formai decision 
under its competition rules concerning the sale of tickets at sporting 
events. In the light of this, and taking account of the fact that the 
infringement was of short duration, the Commission decided not to impose a 
fine in this case. 
213. However, the Commission intends to ensure that the distribution systems 
of major sporting events fully comply with its competition rules in future. 
In this way it can guarantee that consumers who wish to attend such events 
are able to purchase entry tickets or package tours on advantageous 
conditions as a result of competition between several distributors. 
2.I.A.§2.f.10 
122 
<T6> (f) UiÇ 
214. The Commission adopted a decision against the International Union of 
Railways for infringement of the provisions of Article 85 of the EEC Treaty. 
The UIC is a worldwide association of railway companies through which its 
members cooperate at a technical and commercial level. Within the framework 
of this organization the railways acted in concert to lay down the conditions 
for granting approval to travel agencies to sell railway tickets, and the 
conditions under which the agencies could sell such tickets. 
Under the terms of the provisions implemented by the UIC, the appointment of 
a travel agency in a Member State could only be made by the national railway 
company. Thus the railway could control the number of travel agencies which 
could compete with it for ticket sales, even though a higher number of 
approved agencies would probably have appreciably improved the service to the 
consumer. 
The railways also acted in concert to set a single rate of commission paid to 
the agencies for ticket distribution as well as uniform conditions for 
payment of the commission. These arrangements prevented the agencies from 
obtaining better conditions, conditions which might have proved beneficial to 
their consumers. 
In addition, the provisions adopted by the railways forbade the passing-on by 
the travel agencies of part of their commission to their customers. This 
infringement was particularly serious because its objective and effect was to 
prevent competition both between travel agencies, and between the travel 
agents as a group and the railway undertakings. This practice particularly 
penalized the consumer who could not benefit from a reduction in price which 
would have been possible if the passing on of commission was allowed. It 
must be pointed out that this practice was clearly identified as 
anti-competitive by the Court of Justice in a 1987 case. 
Generally, the Commission considered that the establishment of certain common 
conditions by the railways for the approval of travel agencies and for the 
sale of tickets by those agencies might indeed improve ticket distribution. 
However, in this case the Commission did not believe that the conditions 
established, limiting the commercial autonomy of the travel agencies and 
competition between ticket vendors, were to the benefit of the consumer. 
2.I.A.§2.f.11 
123 
The infringement was serious and took place over a prolonged period. 
However, the railway companies undertook to comply with Community law. The 
Commission therefore decided to impose only a moderate fine (ECU 1 million) 
on the international Union of Railways, the party responsible for the 
anti-competitive practices. 
This decision is an example of the Commission's determination to ensure the 
adoption of a dynamic and effective distribution system for railway tickets, 
so that rail will play a greater role in passenger transportation. 
2.I.A.§2.g.12 
124 
<T6> (g) Ford Agr icultural 
215. The Commission adopted a decision*9) concerning Ford New Holland, which 
included in relations with its dealers a prohibition on the import and export 
of tractors and a number of other provisions intended to hinder parallel 
trade. 
These relations formed part of a detailed system set up by Ford to prevent 
trade In its tractors. Firstly, Ford established a "tracking" system that 
enabled It to identify parallel imports, and to trace their sources. In the 
United Kingdom, for example, Ford made considerable use of the Information 
contained in the relevant vehicle registration documents, which were made 
available to the trade association for statistical purposes. 
Once a parallel import, and its source, had been identified, Ford threatened 
or carried out one of the following actions: 
- cancellation of the dealership; 
- delaying delivery when it was believed that the tractor was intended 
for export; 
- charged higher prices or reclaimed discounts; 
- made discounts conditional on registration within the territory; 
- made discounts conditional on the dealer obliging the purchaser not to 
re-selI the vehicle; 
- refused to honour guarantees for parallel imports; 
- sought to profit from differing safety regulations by refusing to 
supply operating manuals in the importers language. 
The dealership agreements signed by Ford were therefore, in these 
circumstances, a clear infringement of Article 85(1). 
(9) OJ L 20, 28.1.1993. 
2.I.B.a. 1 
/Ï2.5 
<T3> B. Abuse of a dominant position 
<T6> (a) British Midiand/Aer Li nous 
216. Following a complaint by British Midland, the Commission found that Aer 
Lingus had abused its dominant position by terminating its interline 
agreement with British Midland. The Commission imposed a fine of ECU 750 000 
on Aer Lingus and ordered it to resume its interline1 relationship with 
British Midland during a limited period. 
Aer Lingus is the dominant airline on the London-Dublin route. After 
British Midland announced its intention in 1989 to start its own service on 
that route and to compete with Aer Lingus, the latter terminated its 
interline relationship with British Midland. As a result of that action, 
passengers holding British Midland tickets could no longer change flights on 
to Aer Lingus services and travel agents could no longer issue tickets 
combining flights by both airlines. 
The withdrawal of interline facilities made British Midland's flights less 
attractive to travellers - in particular business travellers who prefer thé 
higher-priced fully flexible tickets - and to travel agents. By terminating 
its interline relationship, Aer Lingus made it more difficult for British 
Midland to compete during the initial period of its presence on the route 
with an increased number of flights. British Midland was deprived of 
Twentieth Competition Report, points 73-76. Interlining is essentially 
based on an I ATA agreement pursuant to which most of the world's 
airlines have authorized the other signatories to sell their services. 
As a result travel agents can offer passengers a single ticket providing 
for transportation by different carriers (e.g. leaving on the airline 
issuing the ticket and returning on another airline serving the same 
route, or continuing to destinations not served by the issuing airline). 
In addition, airlines recognize each other's authority to change a 
ticket so that passengers can change reservations, routings on airlines 
after the ticket has been issued. These changes would normally require 
the consent of the airline indicated on the ticket for the sector 
concerned ("endorsement"), but most airlines have agreed to waive this 
requirement in practice. 
As a result the interline system benefits airlines, travel agents and 
passengers alike; it enables the issuing of travel documents for complex 
Journeys and allows flexible uses of these documents with minimal 
constraints. It is a very significant part of the worldwide air 
transport system and is of particular value to business travellers. 
2.I.B.a. 2 hlh 
significant revenue and forced to incur higher costs in order to overcome the 
handicap imposed on it. 
217. The Commission found that Aer Lingus had infringed the conditions 
governing participation in tariff consultations designed to ensure that they 
are compatible with Article 85 of the EEC Treaty. The applicable block 
exemption2 requires airlines discussing tariffs with their competitors to 
interline with all other airlines operating intra-European services. 
218. This decision is evidence of the Commission's determination to act 
against airlines holding dominant positions, if they attempt to prevent the 
development or maintenance of competition. At a time when the European air 
transport industry is being liberalized, airlines making use of the new 
opportunities for competition should be given a fair chance to develop and 
sustain their challenge to established carriers. 
Airlines holding dominant positions should not penalize this competition. 
They should not withhold facilities which the industry traditionally provides 
to all other airlines, and they should take care to compete strictly on the 
merits of their own services. 
The Commission consequently took the view that Aer Lingus should resume its 
interline relationship with British Midland. However, it also accepted that 
new entrants should not be able to rely indefinitely on frequencies and 
services provided by their competitors, but must be encouraged to develop 
their own frequencies and services. Therefore the duration of a duty to 
interline should be limited to the time period which was objectively 
necessary for a competitor to become established on the market. Taking into 
account the fact that three years had lapsed since British Midland started 
its new services, the duty to interline imposed by the decision was limited 
to two years, subject to review in the light of the development of 
competition on the relevant route. 
Article 4 of Commission Regulation (EEC) No 2671/88 of 26 July 1988, 
OJ L 239, 30.8.1988, since replaced by Article 3 of Commission 
Regulation (EEC) No 8491/90 of 5 December 1990, OJ L 10, 15.1.1991. 
2.I.B.b. 3 
<T6> (b) B&l/Sealink. Holyhead m 
219. Following a complaint by B&l (an Irish ferry operator), the Commission 
found that Seal ink (a British ferry operator which is also the port authority 
at Holyhead, Wales) had, prima facie, abused its dominant position in breach 
of Article 86 of the EEC Treaty. In its capacity as port authority at 
Holyhead, Seal ink permitted changes to its own ferry sailing times which 
might have caused serious damage to B&l. The Commission ordered interim 
measures against Seal ink which obliged it to alter some of its sailing times. 
In this context it is important to stress that a port, an airport or any 
other facility, even if it is not itself a substantial part of the common 
market, may be considered as such in so far as reasonable access to the 
facility is indispensable for the exploitation of a transport route which is 
substantial for the purposes of the application of Article 86 of the EEC 
Treaty. The Commission recalls that, in the case British Midland/Aer Lingus 
(mentioned above), it was the route that was taken into account and not 
solely Heathrow airport. 
Seal ink and B&l use different berths at Holyhead, B&l using a berth in the 
mouth of the harbour. Due to the port's limitations, when a Seal ink vessel 
passes a moored B&l ship, the water in the harbour rises. As a result, the 
ramp to the B&l ship must be disconnected for safety reasons and loading or 
unloading of the vessel is interrupted. 
In October 1991 Seal ink informed B&l that it intended to introduce new 
sailing times on 9 January 1992, which would involve the movement of two 
ships past the B&l vessel while it was in its berth. In the past only one 
vessel passed a B&l ferry while it was loading. B&i asked the Commission to 
adopt interim measures to prevent the implementation of Seal ink's new 
schedule on the grounds that its services would be severely disrupted due to 
the reduced time available in which to carry out its loading and unloading 
operat ions. 
The Commission considered that a company which both owns and uses an 
essential facility - in this case a port - should not grant its competitors 
access on terms less favourable than those which it gives its own services. 
This consequence of Article 86 is of essential importance in the context of 
deregulation, which regularly raises the problem of market access for new 
entrants. On 11 June the Commission adopted a decision ordering Seal ink 
2. I.B.b. 4 m 
either' to return to its original schedule or to adopt any other schedule 
which would not lead to two vessels passing a B&l ferry during loading. The 
aim of the interim measures was to prevent irreparable damage to B&l's 
business while the Commission continued its examination of the case, and the 
duration of the interim measures was therefore limited to the peak summer 
season (27 September) or until the date of coming into force of any schedule 
agreed by both parties. The parties subsequently reached an agreement and 
notified the Commission accordingly on 8 July. As a result of this agreement, 
Seal ink withdrew its application for suspension and annulment of the 
decision, which it had made to the Court of First Instance. 
2.I.B.b. 5 
129 
<T6> (c) GlIiette/WiIkinson Sword 
220. The Commission adopted a decision under Articles 85(1) and 86 of the 
EEC Treaty*3) ordering Gillette, the US razor group, to dispose of its 
interest in Eemland, the parent company of Wilkinson Sword and Gillette's 
main competitor in the market for wet shaving products. Gillette was also 
required to reassign to Eemland the Wilkinson Sword businesses in all the 
EFTA countries as well as the former German Democratic Republic, 
Czechoslovakia, Hungary, Poland, Turkey and the former Yugoslavia. Gillette 
was given a fixed period from the adoption of the decision to carry out the 
disposal and reassignment. 
Gillette occupies a dominant position in the Community's wet shaving market, 
which is a highly oligopolistic market in which the combined market shares of 
Gillette and Wilkinson amounted to nearly 85%. The decision found that 
Gillette's holding in Wilkinson Sword, its principal competitor in the 
Community, constituted an abuse of its dominant position. Gillette, which 
had acquired all of Wilkinson's businesses before being obliged to dispose of 
them, acquired a substantial equity stake in Eemland as well as becoming one 
of its principal creditors. Though lacking many of the usual minority 
shareholder's rights, Gillette acquired pre-emption and conversion rights and 
options in Eemland, which prompted the Commission to conclude that Gillette 
would be able to exercise some influence over the commercial policy of 
Eemland. The change in the structure of the wet shaving market brought about 
by the link between Gillette and Eemland would weaken competition. 
Consequently, Gillette's involvement in the overall arrangement constituted 
an abuse of its dominant position. 
Furthermore, the agreements between Gillette and Eemland relating to the 
geographical separation of the Wilkinson Sword trade mark between the 
Community and neighbouring countries would have necessitated commercial 
cooperation between the respective owners of the trade mark. There were also 
supply arrangements between the parties whereby Gillette would obtain 
Wilkinson Sword products from Eemland for sale outside the Community, and 
this would have constituted another element of cooperation. 
(3) Decision of 10 November 1992, not yet published 
IP(92)909, 11.11.1992. 
2.I.C.§1. 1 
130 
<T3> C. Merger control 
221. A number of new points were established this year in implementing the 
Merger Control Regulation. As part of its policy of transparency, the 
Commission is therefore giving a detailed analysis of the decisions taken in 
1992. 
222. The analysis of a case implies dealing with two questions: first of all, 
one has to assess whether the notified operation falls within the scope of 
application of the Regulation; secondly, one has to assess its compatibility 
with the common market i.e. to determine whether or not it creates or 
strengthens a dominant position as a result of which effective competition 
would be significantly impeded in the common market. 
<T4> §1. Scope of application 
<T5> 1. Community dimension (Article 1) 
223. The Commission continued its established practice of considering the 
economic substance of an operation rather than accepting the chosen legal 
form as decisive. In Eucom/Digita I. the notified operation was the creation 
of a new company to be jointly controlled by Digital and Eucom. However, 
Eucom is a holding company that develops specific value added network 
services by cooperating with other partners or by investing in existing 
companies. It is a 50/50 Joint venture between France Télécom and Deutsche 
Bundespost Telekom. The Commission therefore looked through Eucom and treated 
its two parent companies as undertakings concerned within the meaning of 
Article 1. Theirs were therefore the turnovers to be taken into account to 
calculate whether the concentration had a Community dimension. 
<T5> 2. Calculation of turnover thresholds (Article 5) 
224. The Regulation only applies if the undertakings concerned reach a 
certain turnover. There are special rules in Article 5(3) for the 
calculation of the equivalent of turnover for credit and other financial 
institutions and for insurance undertakings. In Torras/Sarr io. the Commission 
concluded that the holding of fixed interest securities, which was part of 
the investment activity of the Kuwait Investment Office, should be treated as 
a means of giving credit to third parties. Consequently, fixed interest 
2.I.C.§1. 2 
131 
securities constitute loans and advances within the meaning of Article 5(3) 
and should therefore be included when turnover is calculated. On the other 
hand, in GECC/Avis. it was held that Article 5(3) does not apply to operating 
leases under which Avis provided full service vehicle contract hire. These 
leases, under which the risk of ownership is retained by the lessor and 
ownership is not transferred to the lessee at the end of the lease term, were 
distinguished from financial leases which function primarily as a loan. For 
interbank lending, the Commission decided in Honk Kong & Shanghai 
Bank/Midland Bank that loans and advances should be attributed geographically 
to the country in which the borrowing bank branch is located even though in 
risk assessment, which is at the heart of lending decisions, banks take into 
account the place of incorporation of the borrowing bank. The location of the 
branch of the bank to which the loan is made is presumptively the place at 
which the loan will be used. 
225. The second subparagraph of Article 5(2) provides that two or more 
transactions which take place within a two-year period between the same 
persons or undertakings are to be treated, for the purpose of calculating 
turnovers, as one and the same concentration arising on the date of the last 
transaction. It was invoked for the first time in the Volvo/Lex(2) case. 
Volvo acquired the operating assets of an Irish subsidiary of Lex, having 
previously acquired the assets of its UK subsidiary.*1) 
<T5> 3. Definition of concentration (Article 3) 
226. The Commission has continued to develop its practice in defining a 
concentration. In particular, the Commission has been mindful of the need to 
clarify the distinction between concentrâtive joint ventures which fall under 
the Merger Regulation and cooperative joint ventures which are to be examined 
under Articles 85 and 86 of the Treaty.*2) There is a concentration when an 
undertaking acquires sole control of another undertaking, or of a joint 
venture which it previously controlled jointly with another party; or when 
several undertakings jointly acquire control of an undertaking, or create 
one. 
(1) See Volvo/Lex decided on 21.5.1992 and Volvo/Lex(2) decided on 3.9.1992. 
(2) See the notice on concentrâtive and cooperative joint ventures. 
Twentieth Competition Report, p. 304. 
2.I.C.§1. 3 
132 
<T6> (a) Sole control 
227. The acquisition of more than half of the capital of a company is the 
usual means of acquiring sole control. However, it is possible for a minority 
shareholder to exercise sole control. In CCIE/GTE, the acquiring company 
obtained only 19% of the voting rights in the target company, but in addition 
it will have a permanent seat on the board and will appoint the Chairman and 
CEO. The director appointed by the acquirer will have a veto over all 
significant decisions of the target company and it was therefore concluded 
that the acquiring company will be able to exercise sole control. 
228. In ABB/Brei . sole control was obtained by ABB which had previously had 
Joint control of Brel. There was thus a change of control which was treated 
as a concentration following established practice.*3) This practice was also 
applied in Solvay-Laporte/Interox where the division of a joint venture was 
considered to be two concentrations. Each parent company took over a distinct 
part of the Jointly controlled business, thereby acquiring sole control of 
it. The Commission reached its conclusion notwithstanding that the operation 
was governed by one master agreement which related to the division of a 
single undertaking (i.e. the joint venture). The economic and legal result of 
the operation is that two independent undertakings each move from a position 
of joint to sole control for two different sets of specific assets and 
products. The Commission noted in its decision that there may be situations 
where the division of an undertaking between its owners could give rise to an 
operation that might be considered as one whole.*4) 
229. Several operations were considered as one single concentration in 
Mannesmann/Hoesch. The parties brought together their precision steel tube 
business through the establishment of a Joint venture to which they 
transferred their existing business, and Mannesmann acquired a 50% holding in 
an existing Hoesch subsidiary. In addition Hoesch transferred ownership of 
one of its subsidiaries to Mannesmann. Since these operations were carried 
out by the same parties and relate to the same sectors of an industry with 
each operation representing part of an overall agreement between the parties 
to restructure their steel tube activities, they were treated as one single 
concentrât ion. 
(3) See ICI/Tioxide. Twentieth Competition Report, point 149 
(4) See Campsa, Twenty-first Competition Report, p.352. 
2.I.C.§1. 4 
133 
<T6> (b) Joint control 
230. The most common situation of Joint control is where two undertakings 
each hold half of the share capital of a joint venture, and there is no 
shareholders' agreement which confers control on either of the undertakings. 
If there is an agreement between the shareholders, joint control can be 
established despite unequal shareholdings. In Thomas Cook/LTU/West LB. the 
two shareholders had respectively 90% and 10% of the shares of Thomas Cook, 
but they also entered into a shareholders' agreement which provides that the 
consent of both parties is required for important strategic decisions 
relating to the joint venture, which the Commission therefore concluded was 
jointly controlled. Likewise in Eucom/Digita I. a shareholding of 74.9/25.1% 
was accompanied by a shareholders' agreement providing for joint control.*5) 
By way of contrast a 59.5/40.5% split in Pepsico/GeneraI Mills did not allow 
the minority shareholder to exercise joint control. It is possible, of 
course, for more than two shareholders to exercise Joint control.*6) 
These cases are to be distinguished from a situation where there can be 
changing alliances in the decision-making process, as in Eureko and 
Koioe-TabacaIera/EIosua. Although the matter was not decisive in either of 
these cases, changing alliances are generally inconsistent with the existence 
of a mecanism or a procedure guaranteeing joint control. 
In a pre-existing Joint venture company where there is a change of control, 
as in James River/Rayne. with one shareholder being replaced by a new 
shareholder, the transaction constitutes a concentration since the new 
shareholder acquires Joint control. 
<T6> (c) Concentrâtive loint venture 
The two conditions which must be fulfilled under the second subparagraph of 
Article 3(2) for a joint venture to be regarded as concentrâtive are that it 
must perform on a lasting basis all the functions of an autonomous economic 
entity and that it must not give rise to coordination of the competitive 
behaviour of the parties amongst themselves or between them and the joint 
venture. These two conditions are illustrated below. If they are not 
(5) See also Ahold/Jer6nimo Martins. Air France/Sabena. Br it ish Airways/TAT. 
Er icsson/Ascom. Linde/Fiat. Northern Telecom/Matra and Rhône-
Pou lenc/SNI A. 
(6) See Avesta/British Steel/NCC/AGA/Alex Johnson. 
2.I.C.§1. 5 
134 
fulfilled, the Joint venture is not a new competitor on the market, but 
rather a vehicle through which two competitors cooperate, and may therefore 
fall under Article 85. 
<T6> (i) Fuli-function loint venture established on a lasting basis 
In Elf Atochem/Rohm & Haas, the parties set up a new Joint venture company to 
which they transferred their activities relating to the production of acrylic 
glass. The operation was treated as a merger because the joint venture 
constituted an autonomous economic entity for the following reasons: 
the physical and human resources necessary for the production and sale 
of the product where transferred to the Joint venture and the 
construction of a new factory was to start soon thereafter; 
the parent companies granted exclusive and irrevocable licences to the 
joint venture in respect of all the intellectual property rights needed 
for the production of the acrylic glass concerned; 
- the joint venture will have its own research and development facilities; 
the joint venture will have its own distribution network; 
there will be a guaranteed supply of raw materials for the joint 
venture, but it will be free to choose its suppliers; 
the agreement is for a period of 99 years. 
By contrast in Flachglas/Vegla. the Commission concluded that the proposed 
joint venture company set up to recycle scrap glass would not be an 
independent buyer or seller on the market in the future. It would only 
perform an auxilliary function for its parent companies and, because it could 
not be considered as an autonomous economic entity, the operation did not 
constitute a merger. 
<T6> * » • ) Absence of coordination 
Where the parent companies setting up a joint venture will not be active in 
its markets, and remain neither actual nor potential competitors of each 
other or of the Joint venture, there will normally be no coordination of 
competitive behaviour so the operation can be treated as a concentration. For 
example, in Péchiney/Viag. both parent companies transferred their existing 
cored wire business to the joint venture, including the means of production, 
thereby making their re-entry into this market very unlikely. The Joint 
venture operation was therefore a concentration. Likewise in Saab/Er icsson. 
2.I.C.§1. 6 
135 
both parties pooled their space activity in the joint venture and withdrew on 
a lasting basis from this market. In Ahold/Jerônimo Martins, concerning food 
retailing in Portugal, one of the parent companies, Ahold, retained important 
food retailing operations in other geographic markets (the Netherlands and 
the USA) but had no operations in Portugal. The Commission concluded that 
since there is no interaction between these different geographic markets, 
there was no risk of coordination of competitive behaviour between Ahold and 
the joint venture in the Portuguese food retail market. Furthermore, there 
were no indications that either of the parent companies could enter this 
market independently in the foreseeable future. Their agreement not to 
operate in the Portuguese general food retail market except through the joint 
venture was additional evidence of their permanent withdrawal from this 
market.*7) The operation was therefore a concentration. 
A limited and insignificant presence of the parent companies on the same 
product or geographic market as the joint venture is generally not sufficient 
to bring about coordination and so does not exclude the application of the 
Merger Regulation.*8) The Commission also considers any vertical 
relationships between the parties and any possible spill-over effects on 
markets retained by the parent companies. In James River/Rayne. the joint 
venture was active in the tissue paper market and James River retained small 
subsidiaries in the Community which produce printing and writing paper and a 
50% stake in a joint venture which manufactures table top products (paper 
plates and cups) and Rayne retained a company producing packaging material. 
The Commission took the view that it is improbable that the parties' limited 
presence on different neighbouring markets would result in concerted market 
strategies in the paper sector. In Saab/Er icsson. it was concluded that there 
would be no appreciable spill-over effects from the joint venture in the 
space business even though the parent - companies remain active in the 
electronic industry and the defence sector. Vertical relationships were 
examined in Volvo/At las where between 5% and 11% of the products produced by 
the joint venture were sold to its parent companies, on arm's length terms. 
Since these sales represent less than 0.05% and 0.5% of the purchases of 
Volvo and Atlas respectively, the vertical relationships were considered to 
be insignificant. 
(7) See also Er icsson/Ascom and Thomas Cook/LTU/West LB. 
(8) See Del Monte/Royal Foods/Anglo-American. 
2.I.C.§1. 7 
136 
The Commission has observed in a number of cases that where one parent 
company remains a significant player on the same market as the joint venture, 
and assumes a leading role in the management of the Joint venture, the 
operation will be treated as a concentration. In such cases, it would not be 
appropriate to be concerned about any coordination of the competitive 
behaviour of this parent company and the joint venture because there is no 
room for the coordination of the competitive behaviour of undertakings which 
remain independent. For example, in Linde/Fiat. a joint venture was 
established in the field of forklift trucks and warehouse equipment. It was 
considered highly unlikely that Fiat would re-enter the markets of the joint 
venture since it would not be economically reasonable for it to do so. 
However, Linde continues to operate on these markets and will assume the 
overall responsibility for the commercial strategy and the day-to-day 
management of the joint venture, since it has considerable experience and 
expertise in the markets concerned. Linde and the joint venture are present 
not only on the same product markets but also on the same geographic market, 
but in view of the leading role which Linde will have in the joint venture, 
the operation was considered to be a concentration. 
In Er icsson/Koibe. the parties established a Joint venture in the field of 
public digital transmission. Kolbe transferred all its business in this field 
to the joint venture, but Ericsson remains a competitor of the joint venture 
and will not withdraw from the transmission markets. The Commission came to 
the view that Ericsson will assume the overall industrial responsibility for 
the joint venture, and that Kolbe's interest in the joint venture company 
will become financial rather than commercial in nature over time. 
Consequently, it appears that there is no room for the coordination of the 
competitive behaviour of undertakings which remain independent within the 
meaning of Article 3(2) of the Regulation and the operation was treated as a 
concentrât ion.*9) 
The Commission also examined a number of joint venture operations which it 
decided did not fall within the scope of the Merger Regulation because the 
operation had as its object or effect the coordination of competitive 
behaviour. In most of these cases, the parent companies remained actual or 
potential competitors of each other and the joint venture. So in Sunr ise. for 
example, the Commission concluded that the joint venture arrangement would 
(9) See also Air France/Sabena. British Airwavs/TAT. Er icsson/Ascom. 
Fort is/La Caixa, Northern Telecom/Matra. 
2.I.C.§1. 8 
137 
give rise to coordination in the sale of television advertising between the 
regional broadcaster parents and between them and Sunrise, the joint venture. 
Even at the lowest regional level, the arrangement linked the principal 
commercial broadcasters in the London region. 
In Herba/IRR. the parties established a Joint venture to produce and sell 
rice. One of the parent companies, Herba, remains a competitor of the Joint 
venture in the rice market, but the other parent, IRR, currently has no rice 
interests. However, IRR is part of the Ferruzzi group, which has considerable 
interests in the food sector, where new entry is relatively easy, and 
therefore it was considered to be a potential competitor of the joint venture 
and Herba. For this reason the joint venture was considered to fall outside 
the scope of the Merger Regulation.*10) 
In BSN-NestIé/CokoIadovny. the Commission considered the risk of vertical 
coordination between the parent companies and the joint venture. BSN, which 
is a major producer of biscuits, and Nestlé, which has a significant position 
in the production of chocolate, acquired joint control of Cokoladovny, which 
manufactures and markets sugared chocolate biscuits as well as sugared and 
chocolate confectionery in Czechoslovakia. The Commission took into account 
the similarity of the respective products concerned and the prospective 
opening of the markets of the Community and the markets of Central and 
Eastern Europe and concluded that it could not rule out that the parents may 
coordinate their competitive behaviour with that of the joint venture. 
Consequently, the operation did not fall under the Merger Regulation. 
(10) See also Eureko. Koipe-Tabacaiera/EIosua and VTG/BPTL 
2.I.C.§2. 9 
<T4> §2. Appraisal of concentrations (Article 2) 138 
231. Once an operation has been defined as a concentration within the meaning 
of the Regulation, its compatibility with the common market must be 
assessed.This generally includes three steps of analysis: the determination 
of the relevant product market, the determination of the relevant geographic 
market and the assessment of the compatibility of the merger with the common 
market, in particular the question of dominance. The relevant product and 
geographic markets determine the scope within which the market power of the 
new entity must be assessed. The Commission often leaves open the question of 
the precise relevant product or geographic market if it can find that, even 
on the basis of the narrowest possible market definition, no dominant 
position is created or reinforced. 
<T5> 1. Determination of the relevant product market 
232. The various decisions illustrate that the Commission has employed two 
basic criteria for determining product markets: substitutabiIity and 
conditions of competition. 
<T6> (a) Subst itutabiIity 
233. The Commission has employed the 'classical' criterion of demand-side 
substitutabiIity whereby a product market comprises "all those products which 
are regarded as interchangeable or substitutabie by the consumer, by reasons 
of the products' characteristics, their prices and their intended use". In 
Du Pont/ ICI. the Commission held that there was a distinct market for nylon 
fibres, as against other fibres, for the purpose of carpet manufacture, given 
the superior performance characteristics of nylon and its substantially 
higher price. Again, in Nestlé/Perr1er. the Commission concluded that the 
market for bottled source waters was distinct from that for soft drinks, in 
view of substantial differences in consumption patterns and present and 
historic price levels, despite a limited substitutabiIity in terms of 
funct ionality.*11) 
234. The Commission has also considered the implications of supply-side 
substitutabiIity, that is, in particular, whether suppliers have the facility 
to switch production to the product field in question. 
(11) See also Torras/Sarrio. Henkel/Nobel. Linde/Fiat and Air France/Sabena. 
2.I.C.§2. 10 
139 
In some cases, notably Du Pont/ICI and Nestlé/Perr ier. the Commission has 
cited the absence of supply-side substitutabiIity, in conjunction with the 
absence of demand-side substitutabiIity, as evidence of a narrow product 
market. 
In other cases, the Commission has considered situations in which products 
have been substitutable from the point of view of suppliers, but not from the 
point of view of customers (demand). In Torras/Sarr io. coated papers were 
considered to be a separate market from uncoated papers because of limited 
demand-side substitutabiIity, even though it was relatively easy for a 
producer to switch from one to the other,*12) the latter fact being still 
relevant for the assessment of dominance. However, in Steetley/Tarmac, 
despite the fact that substitutabiIity between different types of bricks 
regarding end-use was limited, the Commission held that it was inappropriate 
to distinguish separate markets because technical and marketing costs 
incurred by producers in switching production would not be significant.*13) 
<T6> (b) Conditions of competition 
235. Products which are technically substitutable may nevertheless be 
classified as belonging to separate markets in view of different structures 
of supply or demand; conversely, quite heterogeneous products may be 
considered as a group when marketed along the same channel of distribution. 
In Accor/Waoons-L its, the Commission considered motorway restaurants to 
constitute a separate market from other types of restaurant since, on the 
demand-side, customers are restricted to motorway travellers and, on the 
supply-side, quite distinct operating conditions apply.*14) 
In Inchcape/IEP. the Commission decided that the product market concerned was 
the wholesale motor vehicle distribution service. Since, for a given marque, 
a model range covering different market segments (e.g. small, medium and 
large) is normally distributed along the same channel, the Commission 
(12) See also Péchinev/Viag. 
(13) See also Elf Atochem/Rohm & Haas and Avesta/Br i t i sh SteeI/NECC/AGA/AxeI 
Johnson. 
(14) See also Viroin/EMl and Thomas Cook/LTU/West LB. 
2.I.C.§2. 11 
140 
considered it unnecessary to analyse distribution channels by product market 
segments of vehicles distributed.*15) 
<T5> 2. Determination of the relevant geographic market 
236. The Commission has found local, national, regional, Community and world 
markets in the various product markets considered. The determination of the 
relevant geographic market within which suppliers compete is an economic 
assessment. It is important to stress that the assessment to be made is a 
dynamic one, taking into account in particular the effect of market 
intégrât ion. 
237. The Commission has defined the relevant geographic market as 'the area 
where the undertakings concerned are involved in the supply and demand of 
products or services, in which the conditions of competition are sufficiently 
homogeneous and which can be distinguished from neighbouring areas because 
conditions of competition are appreciably different in those areas'. 
In the decisions, emphasis is laid on supply and demand characteristics. 
Factors considered in the analysis of conditions of competition in geographic 
markets include both general indicators, and factors exerting a possible 
determining influence on market delineation: 
geographical distribution of market shares*16) 
geographical distribution of relative prices*17) 
geographical location of major suppliers*18) 
shipment patterns*19) 
cross-border imports/exports*20) 
barriers to entry (fiscal, technical, regulatory, cultural)*21) 
(15) See also Promodes/BRMC. 
(16) See Solvav-Laporte/lnterox. Péchiney/Viag and Nest ié/Perr ier. 
(17) See Nestlé/Perr ier. So Ivav-Laoor te/Interox and Generali/BCHA. 
(18) See Torras/Sarr io. Thomas Cook/LTU/West LB. Linde/Fiat and Sextant/BGT-
VDO. 
(19) See Steetley/Tarmac. Torras/Sarr io. Volvo/At las and Elf Atochem/Rohm & 
Haas. 
(20) See Nestié/Perrier. Du Pont/ICI. Torras/Sarrio. Solvay-Laporte/lnterox. 
Elf Atochem/Rohm & Haas and Rhône-Pou Ienc/SNIA. 
(21) See Du Pont/ICI. Elf Atochem/Rohm & Haas. Rhône-Pou Ienc/SNIA. 
L inde/Fiat. Voivo/Atlas. Accor/Waoons-L its. Thomas Cook/LTU/West LB and 
Waste Management International pIc/SAE. 
2.I.C.§2. 12 
141 
consumer preferences*22) 
transport costs*23) 
distribution systems*24) 
product differentiation (brands)*25) 
the impact of forthcoming changes, e.g. in the technical or regulatory 
environment.*28) 
238. It may in general be observed that in the decisions the extent of the 
geographic market was determined by certain of the above factors, or certain 
combinations of these factors. 
239. Thus, transport costs or distribution systems were determining factors 
in the establishment, of local markets. In Steetley/Tarmac, local markets for 
bricks were established, since bricks are both heavy and bulky and transport 
represents a signficiant percentage of total selling price, in Promodes/BRMC. 
the geographic market for retail distribution of consumer food and related 
products was held to be local, since consumers are unwilling to travel more 
than a certain distance to make such purchases.*27) In Waste Management 
International olc/SAE. the market for the disposal of non-hazardous waste was 
deemed to be probably local in nature, given high transport costs, and also 
in view of national and local regulatory constraints. 
240. Distribution systems and transport costs are also important in the 
determination of national markets. In Inchcaoe/1EP (contract hire and leasing 
of passenger cars) and Torras/Sarr io (paper distribution), the necessity for 
close proximity between supplier and customer was held to indicate markets at 
most national in scope.*28) In Nest ié/Perr ier. the fact that bottled water 
is a low value/high volume product which cannot bear transport costs over 
long distances was among the factors limiting the relevant geographic market 
(22) See Nest ié/Perr ier. Solvay-Laoorte/Interox. BTR/Pirel I i . Accor/Waoons-
Lits. Promodes/BRMC. Thomas Cook/LTU/West LB. Generali/BCHA. 
Du Pont/ICI. Inchcaoe/IEP and Sextant/BGT-VDO. 
(23) See Nestlé/Perr ier. Steetley/Tarmac. Elf Atochem/Rohm & Haas. 
Du Pont/ICI. Torras/Sarr io. Volvo/At las. Péchiney/Viag. BTR/PirelIi and 
Waste Management International pic/SAE. 
(24) See Nestlé/Perr ier. Torras/Sarr io. inchaoe/IEP. Generali/BCHA. 
Promodes/BRMC and SPAR/Dansk Supermarket. 
(25) See Nestlé/Perr ier and Pepsico/GeneraI Mills. 
(26) See Mannesmann/Hoesch. 
(27) See also SPAR/Dansk Supermarket and Avesta/Br i t ish SteeI/NCC/AGA/AxeI 
Johnson. 
(28) See also Thomas Cook/LTU/West LB and Generali/BCHA. 
2.I.C.§2. 13 
142 
to France, combined with the fact that regulations require the product to be 
bottled at the site of production. 
In the decisions, other factors which determined national markets were 
barriers to entry, consumer preferences and product differentiation (national 
brands). Thus, in Accor/Wagons-L its, the relevant market for motorway 
restaurants was held to be France in view of the regulatory barriers which 
made it more difficult for non-French enterprises to operate in this sector. 
In Nestlé/Perr1er. different consumer preferences for bottled water as 
between different countries was among the factors determining a market 
limited to France.*29) Again, in Nestlé/Perr ier. the existence of 
long-established brands of bottled water indicated a national market.*30) 
241. The existence of Community-wide markets was established in several 
decisions, and such markets were normally characterized by a combination of 
some of the following factors: 
a high level of intra-Community shipments, 
the presence of major suppliers in several Member States, with 
significant market shares, 
little variation in price between Member States, 
European-wide purchasing policies on the part of consumers, 
relatively low transport costs, 
relatively low trade levels between the Community and the rest of the 
world, and the existence of an EC external tariff. 
Thus, for example, in So Ivay-Laoor te/1nterox. the Commission found that in 
the persalts market, all major suppliers had significant market shares in 
several Member States, there was a significant degree of market 
interpénétration, large customers had a pan-European centralized purchasing 
policy, there was little price variation between Member States, but there was 
a low level of imports into the Community which levies a 7% external import 
tariff.*31) 
(29) See also Thomas Cook/LTU/West LB. Accor/Wagons-L its. Pepsico/General 
Mi I Is and Generali/BCHA. 
(30) See also Pepsico/Genera I Mills. 
(31) See also Torras/Sarr io. Elf Atochem/Rohm & Haas. Péchiney/Viag. 
Volvo/Atlas. Linde/Fiat. Rhône-Pou Ienc/SNIA. BTR/Pirel I i and 
Du Pont/ICI. 
2.I.C.§2. 14 
14Ô 
242. A world market for equipment for civil aircraft was found in 
Sex t ant/BGT-VDO. given the physical presence or activities of the same 
suppliers throughout the world, and a worldwide purchasing policy on the part 
of aircraft manufacturers. 
243. In its analysis of conditions of competition in geographic markets, the 
Commission has taken into account future structural developments, in 
particular the likely elimination of remaining barriers to trade. This 
dynamic approach must be balanced with the potential damage to competition 
and consumers. 
Thus, in BTR/PirelIi. the Commission held that there was a Community market 
for rubber-based car components despite a transitional import duty currently 
levied by Spain, which will be abolished from the beginning of 1993. However, 
in Accor/Wagons-L its, the Commission decided that the effects of the 
Community public procurement Directive would not be sufficient in the 
short-term to warrant a geographic market definition of motorway restaurants 
wider than France. In Mannesmann/Hoesch. the Commission held that the 
effectiveness of the Community public procurement Directive would increase 
with the completion of the technical harmonization process for gas line 
pipes, but that in the short-term, it was proper to relate the assessment of 
the concentration to the German market.*32) 
<T5> 3. Assessment of compatibility 
244. In 1992 the Commission authorized 47 notified mergers in the first phase 
of proceedings (Article 6(1)(b) decisions). In four cases, it had serious 
doubts about the compatibility of the merger with the common market and 
started in-depth examination known as second phase proceedings. Out of the 47 
phase I cases, certain mergers*33) raised serious doubts and were cleared 
only after legally binding and irrevocable commitments were entered into by 
the undertakings concerned vis-à-vis the Commission so as to change the 
factual basis on which the merger could be assessed and declared compatible 
with the common market. In phase II, no prohibition decision was adopted in 
1992. The Commission authorized [one] merger*34) without attaching 
conditions and obligations to its decision (Article 8(2) subparagraph 1 
(32) See also ABB/Brel. 
(33) See Grand Metropolitan/Cinzano. If int/Exor. Elf Aouitaine/Minol. 
Air France/Sabena and British Airways/TAT. 
(34) See Mannesmann/Hoesch. 
2.I.C.§2. 15 
144 
decision). In three other cases, the Commission concluded that the creat ion 
of a dominant position would result from the merger. Dominant positions were 
found in Accor/Waoons-L i ts (catering services on motorways in France), 
Nestlé/Perr ier (sale of bottled water in France) and Du Pont/ICI (sale of 
nylon carpet fibres in the EEC). However, such dominant positions were 
removed by modifications of the original concentration plan which enabled the 
Commission to adopt a declaration of compatibility subject to certain 
conditions and obligations (Article 8(2) subparagraph 2 decisions). In one 
case (Siemens/Phi Iips). the parties abandoned the transaction after the 
initiation of proceedings. 
245. In the Nestlé/Perr ier case, the Commission interpreted for the first 
time Article 2(3) of the Merger Regulation as covering both single firm and 
Joint obiigopolistic dominance. This interpretation is based on the principle 
that Article 3(f) of the EEC Treaty and Article 2(3) of the Merger Regulation 
pursue the maintainance of effective competition. Effective competition may 
be significantly impeded as the result of the exercise of market power by 
either one firm behaving alone or more firms behaving jointly to an 
appreciable extent independently of other competitors and of consumers. If 
oligopolistic dominance was not covered by the Merger Regulation, this would 
create a loophole in the fundamental Treaty objective of maintaining 
effective competition at all times in order not to jeopardize the proper 
functioning of the common market. 
246. In its assessment of mergers, the Commission generally follows the 
classical four-step analysis, i.e.: 
(i) the market position of the merged firm (market share and other 
advantages over competitors); 
(ii) the structure of supply (the strength of remaining established 
compet it ion); 
(iii) the structure of demand (the buying power of customers); 
(iv) the potential competition (new market entry or entry by the 
manufacturer of a neighbouring product or capacity expansion by 
established competitors). 
247. For the assessment of single firm dominance, the level of the market 
share of the merged firm is a significant, but not determinative factor. The 
importance of the market share varies according to the structure of the 
2.I.C.§2. 16 
145 
market in relation to supply, demand and future potential competition. In 
1992 the highest market share accepted for clearance amounted to 48% in the 
whole of the Community and 79% in one Member State. The lowest market share 
giving rise to a creation of dominance was 43% in the EEC and 53% in one 
Member State. 
248. For the assessment of oligopolistic dominance, market shares are 
relevant for the determination of the degree of concentration of the market 
concerned, which is one important factor in the analysis of the question of 
whether or not, in conjunction with all other market structures and 
conditions, the exercise of joint market power by the merged firm and a 
limited number of other firms is possible and likely to occur. 
249. The Commission also examines the past and likely future evolution of 
market shares. The strength of the merged firm differs according to whether 
its market share is increasing, stable, declining*35) or uncertain, for 
example due to the size of the contracts or to dual or triple sourcing policy 
of buyers.*38) The strength of the merged firm also increases or decreases 
in direct proportion to the gap between its market share and that of the next 
competitor. Equally, the closer the eliminated competitor is in terms of 
competition (identical products, similar or better quality, lower prices, 
high volume of sales), the stronger is the reduction of competition and the 
increase in power for the merged firm.*37) 
250. The assessment also has to take into account other competitive 
advantages or disadvantages of the merged firm compared to remaining 
competitors such as: the financial power of the merged firm,*38) scale 
economies,*39) other cost advantages,*40) product range,*41) access to 
technology,*42) position in terms of quality and technology,*43) brand 
image resulting from long standing and high advertising,*44) vertical 
integration,*45) etc. Without holding such competitive advantages against 
(35) See SPAR/Dansk Supermarket. Torras/Sarr io. Accor/Wagons-L i ts. 
Péchiney/Viag. EIf Acgu i ta i ne/M i no I. 
(36) ABB/BREL and Du Pont/ICI. 
(37) See Du Pont/ICI and Nestlé/Perrier. 
(38) See Accor/Wagons-L i ts and Laoorte/Interox. 
(39) See Accor/Wagons-L its. 
(40) See Du Pont/ICI. 
(41) See Nestlé/Perrier. Du Pont/ICI. 
(42) See Laoorte/Interox. 
(43) See Du Pont/ICI. 
(44) See Nestlé/Perrier. Du Pont/ICI. 
(45) See Du Pont/ICI. 
2.I.C.§2. 17 
146 
the merged firm, one has to take into account that they can contribute to the 
erection of entry barriers for other competitors and therefore lead to the 
creation of market power in the hands of the merged firm. If this is not the 
case and barriers to entry are low, these competitive advantages are 
generally pro-competitive and, under the pressure of competition, the merged 
firm will have to allow consumers a fair share of the resulting benefit. 
251. The three factors which can create a countervailing power by bringing 
competitive pressure to bear on the merged firm are remaining established 
competition, buying power and potential competition. These three factors were 
carefully examined in all major cases decided in 1992. They will be 
highlighted in the following summary of individual cases. Hereafter seven 
cases will be described, three which did not create any dominance and four 
which created either single firm or oligopolistic dominance. 
<T6> (a) Cases where no dominance was created 
<T7> . THORN EM I/VIRGIN (Phase I case) 
252. This case concerned the acquisition by Thorn EMI, one of the five major 
record companies worldwide, of Virgin, a competing record company. The main 
effects of this merger lay in the markets of music recording and music 
pub Iishing. 
Given the market share of the merged firm and the presence of other major 
competitors, the merger raised no problem of single firm dominance in either 
music recording or music publishing. However, the structural features of the 
market for recorded music (90% pop) could indicate a situation of 
oligopolistic dominance among the five major record companies, i.e. Thorn 
EMI, Sony, Polygram, Warner and Bertelsmann (BMG). In order to address this 
question, the Commission examined both the intensity of actual and potential 
competition between these five companies and the actual and potential 
competition from outside that oligopoly.*48) 
As to competition between the five major record companies, the Commission 
considered the following elements: 
(46) See also HenkeI/NobeI and Linde/Fiat 
2.I.C.§2. 18 
147 
On the one hand: 
High degree of concentration before the merger: the top five 
companies had a market share of 77% for the EEC as a whole and 70 to 
80% in individual Member States. The merger increased this degree of 
concentration to 83% in the EEC and 70% to 95% in individual Member 
States. 
The market shares of the five major companies were fairly 
comparable. 
Their market shares have remained stable over the past and their 
combined market share, as a group, had increased at the expense of 
the smaller record companies. 
There existed a number of cooperative agreements involving the five 
major companies relating to record compilations, distribution, 
electronic ordering and rack jobbing. 
On the other hand: 
The market for recorded music is characterized by the heterogeneous 
nature and short life cycle of its products, the constant change in 
consumer preferences and the significance of individual artists or 
hit records to a record company's profitability rather than the 
development of brand loyalty to individual record labels on the part 
of the consumer. 
The main parameters for competition in the market for recorded music 
are the promotion of records through advertising and the provision 
of a wide variety of artists and types of music through new releases 
and signing up new artists to meet the demand for constant changes 
in music tastes and fashion. Thus, the scope for price competition 
seemed to be limited. 
The Commission also examined past market behaviour of the main 
participants in the market. There was no sign that the market was 
performing in an anti-competitive way. 
As to competition from outside the oligopoly, the Commission observed the 
following elements: 
The smaller competitors lacked a large and varied collection of titles 
in their catalogues which provides the major record companies with a 
source of income enabling them to make higher investments and to take 
2.I.C.§2. 19 
148 
higher risks in the Investment in artists. Only the major companies are 
able to compete for major artists. 
Over the last five years, there had been numerous entrants to the record 
music business in the EEC but none had become a significant market 
force. However, MCA, a major record company, had started business in the 
United Kingdom, Ireland and Germany. 
The music recording industry has grown significantly in value (around 
10% annually) and volume since the introduction of the compact disc. 
This growth rate is expected to continue at least in value terms. 
On the basis of the above factors, in particular the nature of the products 
and the parameters of competition in the market concerned, the Commission 
concluded that the increase in the degree of concentration resulting from the 
merger would not, on its own, imply a perceptible lessening of competition in 
the market. 
<T7> . RHÔNE POULENC/SNIA (Phase I case) 
253. Rhône-Poulenc and SNIA created a joint venture for all their fibre 
activities used for carpets, textile applications and industrial 
applicat ions. 
In the field of fibres for carpets, the combined market share of the joint 
venture in the EEC (below 25%) and the market shares of two other competitors 
(Du Pont and ICI) which were similar in size to that of the joint venture led 
the Commission to the conclusion that no single firm dominance was created. 
However, since the three leading firms held approximately 66% of the EEC 
market for carpet fibres, the Commission also investigated the question of 
oligopolistic dominance. The Commission concluded that the structure of the 
market was such that parallel behaviour resulting from oligopolistic 
interdependency could not be expected for the following reasons: 
existence of a large variety of differentiated products; 
importance of innovation and development of new products to satisfy 
specific demands of carpet manufacturers; 
unequal position of the three leading firms: Du Pont and ICI enjoyed 
clear competitive advantages in R&D, product range and reputation for 
qua Iity. 
2.I.C.§2. 20 
149 
As a result of this market structure, oligopolistic interdependency between 
the three leading firms was not likely to occur. 
In the field of fibres for textile and industrial applications, the joint 
venture would in each field of application achieve an important market share 
in the EEC (between 40 and 50%). However, there remained in each market at 
least one strong competitor with a market share of 20 to 30%. Furthermore, in 
both markets potential competition in the form of product substitution was 
very strong. Producers of carpet fibres use the same basic technology as 
producers of textile fibres or industrial fibres. A change of production from 
carpet fibres to these two other types of fibres could be carried out very 
rapidly (within less than one day) and at very low cost. Thus, a price 
increase in textile fibres or industrial fibres by the merged firm could 
provoke quick product substitution and thus make the price increase 
unprofitable. As a consequence, no single firm dominance could be created by 
the merger. Oligopolistic dominance was excluded for the same reasons as for 
carpet fibres. 
<T7> . MANNESMANN/HOESCH (Phase II case) 
254. Mannesmann and Hoesch created two Joint ventures, one for their 
precision steel tube businesses and one for their non-precision steel tube 
businesses. The competition problem only arose in the sector of gas line 
pipes in Germany, the relevant geographic market. In that market, the parties 
held a very high market share (over 70%). 
The next biggest competitor had a market share of below 15% and all other 
competitors were below 5%. However, among these competitors were important 
steel producers such as Klôckner, Hoogovens, I I va, British Steel and Usinor 
Sacilor. The merged firm had no significant competitive advantages compared 
with these large West European competitors. 
The demand was rather fragmented, but, given the high market share of the 
merged firm, the larger customers, e.g. the German gas utilities, have an 
incentive to seek alternative sources of supply by involving the major West 
European suppliers. They will also have an obligation to respect the 
requirements of the Public Procurement Directive, which enters into force on 
1 January 1993 and which obliges the utilities to practise open and public 
tender ing. 
2.I.C.§2. 21 
150 
Entry into the German market of gas line tubes is at present still difficult 
due to legal and technical barriers resulting from different specification 
requirements. However, the incentives for future market entry or increased 
participation of West European suppliers in the German market were considered 
to be significant, in particular for the following reasons: 
high overcapacities for steel tubes throughout Europe, 
very high level of demand on the German market, 
entry into force of the Public Procurement Directive on 1 January 1993 
followed by gradual technical harmonization, 
the potential competitors, i.e. Ilva, British Steel and Usinor Sacilor, 
are amongst the largest steel producers: they are already active in 
Germany on neighbouring tube markets and they already have regulatory 
approval for part of their product range, 
market entry does not involve substantial sunk costs. 
Specific circumstances existed which led the Commission to take into account 
a longer period of time for the assessment of the impact of potential 
competition than in other cases. Although full harmonization of technical 
standards at European level will not be achieved before 1996, the Commission 
considered that the Community steel suppliers would anticipate the 
progressive structural change resulting from the implementation of the Public 
Procurement Directive in 1993 and the following harmonization of standards. 
Given these specific circumstances, the Commission considered that there 
existed a high probability that potential competition from West European 
suppliers would have a perceptible impact on the German market before full 
harmonization was completed. 
On the basis of these elements, the Commission came to the conclusion that, 
even if there was a strong indication that the merger would create a dominant 
position at the outset of the concentration, this position would only subsist 
for a limited period of time because of the high probability of new 
competition which would quickly erode the position of the merged firm on the 
German market for gas line tubes. 
This case exemplifies the importance of the dynamics of the single market, 
the effect of which will be to increase significantly potential competition, 
which is a factor to be included in order to qualify an assessment of 
dom i nance. 
2.I.C.§2. 22 
151 
<T6> (b) Cases where single firm or oligopolistic dominance was created 
<T7> . ACCOR/WAGONS-LITS (Phase II case) 
255. This case concerned a public bid by Accor, a French group active in 
catering and hotel services, for the totality of the shares of Wagons-Lits, a 
Belgian group active in catering, hotel and tourist services. The merger 
created a dominant position of Accor only in the field of catering services 
on French motorways, a field which is composed of two separate markets, i.e. 
catering services stricto sensu and light catering services ("croissanteries" 
and Iight meals). 
256. The merger would have raised Accor's market share to over 80% for 
catering services stricto sensu and to over 60% for light catering services. 
These market shares were not likely to decrease in the near future given the 
limited number of catering establishments on motorways and the long duration 
of the licenses for such establishments. Accor would also have had much 
stronger financial power than its competitors and would have improved its 
purchase power and its coverage of French motorways in terms of subsequent 
catering establishments. 
Competitors were much smaller and very dispersed. No one exceeded a market 
share of 5%. 
Barriers to entry were very considerable: legal barriers for establishment, 
long duration of licenses, heavy administrative burdens for small 
undertakings, limited number of motorways, uncertainty about the development 
of the French motorway network and difficulty for foreign firms to penetrate 
the French market. 
Accor claimed that the merger contributed to the development of technical and 
economic progress, in particular through the modernization of certain 
activities. In reply to this claim, the Commission observed that: 
the claim of Accor was too vague; 
possible efficiencies resulting from the merger might be eliminated by 
increased costs resulting from the bigger size of the merged firm; 
the claimed technical and economic progress, if it existed, could be 
obtained by other means, and 
2.I.C.§2. 23 
152 
the dominant position of Accor was so substantial that it would have no 
incentive to pass the claimed efficiencies on to consumers. 
All these elements led the Commission to the conclusion that the new firm 
would acquire a dominant position within the meaning of Article 2(3) of the 
Merger Regulation in respect of catering services on French motorways. 
However, Accor entered into a commitment vis-à-vis the Commission to divest 
all the acquired activities of Wagons-Lits in the field of catering services 
on French motorways. Accor thus modified its original concentration plan in 
such a way that no addition of market shares occurred on the markets 
concerned. Therefore, the Commission declared the merger compatible with the 
common market subject to the obligation to divest within a fixed time period 
according to certain conditions agreed upon with the Commission. 
<T7> . NESTLE/PERRIER (Phase II case) 
257. This case concerned a public bid by the Swiss company Nestlé for the 
acquisition of 100% of the shares of Perrier, the leading supplier on the 
French bottled water market with various famous brands. Nestlé's bid was 
supported by BSN, the second main supplier on the French bottled water 
market. Prior to its bid, Nestlé had granted BSN an irrevocable option to 
acquire one of the main water sources of Perrier, i.e. the Volvic source, if 
Nestlé acquired control over Perrier. The acquisition of Perrier by Nestlé 
led to the elimination of the main supplier of bottled waters on the French 
market and to the sharing of Perrier's activities between BSN and Nestlé who 
were respectively the second and third supplier on that market. 
Given the option granted to BSN, the Commission examined the proposed 
acquisition of Perrier on the basis of two possible situations: one where 
Volvic was not transferred to BSN and one where BSN was to acquire Volvic. 
The Commission came to the conclusion that if Volvic stayed with Nestlé, the 
acquisition of Perrier would create a single-firm dominant position, while if 
Volvic was sold to BSN, the acquisition of Perrier would create an 
oligopolistic dominant position exercised jointly by Nestlé and BSN. 
Without the sale of Volvic to BSN. Nestlé would have acquired the power to 
behave a lone to an appreciable extent independently of its competitors and 
its customers on the French bottled water market for the following reasons: 
2.I.C.§2. 24 
153 
acquisition of the leading supplier on the French water market owning by 
far the biggest capacity reserves and sales volumes and the biggest 
portfolio of well-known brands, 
a combined market share exceeding 50% in value and volume of the total 
French water market exceeding more than twice the market share of the 
next biggest competitor (BSN), 
the only other national supplier, BSN, was facing capacity restraints in 
the medium and long term which limited its ability to respond to an 
increase in demand in the future, 
other water suppliers were small regional suppliers which could not 
significantly constrain the scope of action of Nestlé, 
the buying power of retailers/wholesalers was limited because they would 
have been largely dependent on the well-known brands of Nestlé, 
there was no sign of price-constraining potential competition from 
newcomers which could quickly and effectively enter the French water 
market. 
With the sale of Volvic to BSN. Nestlé and BSN would have acquired the power 
to behave jointly to an appreciable extent independently of their competitors 
and their customers on the French bottled water market. Before coming to this 
conclusion, the Commission examined the existing and likely future 
competition both between Nestlé and BSN and from outside this group of 
suppliers. 
As to the competition between Nestlé and BSN, the Commission considered the 
following elements: 
(a) the very high degree of concentration on the French bottled water 
market: two suppliers would hold 94.1% of the market for all mineral 
waters; their combined market shares were relatively stable over the 
last 5 years; 
(b) the reduction of the number of national water suppliers from three to 
only two (duopoly); 
(c) after the merger, the two remaining national suppliers would have had 
similar capacities and similar market shares: a symmetric duopoly in 
which there was a strong common interest and incentive to maximize 
profits by engaging in anti-competitive parallel behaviour; 
(d) due to a low cross-price elasticity of demand between national mineral 
waters which enjoy a very high consumer loyalty and local spring waters, 
a small but significant price increase (for instance 5%) was not likely 
2.I.C.§2. 25 
154 
to lead to losses in volume which would offset the result of the price 
increase; there was thus an incentive and possibility for Nestlé and BSN 
to Jointly maintain high prices or even further increase prices because 
this would result in the maintenance or increase of total revenue and 
profits; this possibility had already been recognised by Perrier, Nestlé 
and BSN because they had constantly increased their prices in real and 
nominal terms in a parallel way since at least 1987 (past price 
parallelism); there were strong indications that prices for mineral 
water distributed by Perrier, BSN and Nestlé were already at a very high 
supra-competitive price level; 
(e) neither Nestlé nor BSN had a significant cost advantage which could have 
given either one of them an incentive for aggressive competitive action 
vis-à-vis the other; 
(f) in the bottled water market, no significant technological development 
could be expected which might quickly erode acquired market positions 
and reduce the interdependency between the two major suppliers by 
allowing effective competition on parameters other than price; 
(g) the Joint reaction of Nestlé and BSN to the bid of the AgnelIi group and 
the agreement between Nestlé and BSN to share Perrier (sale of Volvic to 
BSN) were signs of cooperative rather than competitive behaviour by 
these two companies on the French water market; 
(h) the high market transparency: there existed various practices which 
permit each supplier to follow and control the evolution of the market 
positions of the others. 
From all these elements, the Commission concluded that already before the 
merger the French water market was characterized by a narrow oligopoly of 
three suppliers between whom price competition was considerably weakened and 
that the elimination of Perrier strongly increased the likelihood of anti­
competitive parallel behaviour between Nestlé and BSN. 
As to competition from outside the duopoly Nestlé/BSN, the Commission 
observed the following: 
(a) imports to the French water market were négligeable (between 1-2%); 
(b) local water suppliers were not able, at least not in the short term, to 
provide significant competition; 
2.I.C.§2. 26 
155 
(c) retailers and wholesalers had some purchasing power due to their 
purchase volumes; however, this was only true to a degree for some of 
them. Moreover, it was counterbalanced by their dependency on the 
well-known brands, built up over years, of Nestlé and BSN; 
(d) there existed significant barriers and risks to entering the French 
bottled water market for the following reasons: 
moderate growth rate of the French water market compared to other 
EEC markets, 
mature market in terms of number of brands and products; difficulty 
of introducing an additional brand in retail stores, 
established suppliers grant volume rebates linking the whole range 
of their products; this strategy raises barriers to entry for 
newcomers which would have to offer much higher rebates to induce 
retailers to sell their products, 
the high reputation of the established brands of Perrier, BSN and 
Nestlé: 
the establishment of a new brand is very costly, time-consuming and 
risky; in case of failure , all the investment is lost; moreover, 
newcomers cannot recuperate these costs on high current sales 
voIumes, 
effective entry could only be made through the acquisition of a 
major source all of which were however foreclosed following the 
acquisition of Perrier by Nestlé and BSN, 
Nestlé and BSN had engaged in clear joint deterrence action 
vis-à-vis newcomers by jointly opposing the public bid of the 
Agnelli group and by sharing Perrier between themselves. 
On the basis of all these elements, the Commission considered that there did 
not exist sufficiently strong potential competition from outside the duopoly. 
The Commission stressed that meaningful and effective potential competition 
supposed that entry could and would be likely to take place on a volume and 
price basis which would quickly and effectively constrain a price increase or 
prevent the maintenance of a supracompetitive price. The entry would have to 
occur within a time period short enough to deter the companies concerned from 
exploiting their market power.*47) 
(47) Compare with the test in the decision of 
Aérospatiale-Alenia/de Havilland : "strong evidence of high probability 
of strong and quick market entry."; see also Accor/Waoon-Lits, 
collective catering services in Germany and Spain : new entry was 
possible, likely and successful. 
2.I.C.§2. 27 
156 
Given this market structure, the Commission concluded that the merger between 
Nestlé and Perrier, followed by the sale of Volvic to BSN, would create an 
oligopolistic dominant position enabling Nestlé and BSN to jointly maximize 
profits and to act to an appreciable extent independently of other 
competitors and of customers. 
In order to avoid a prohibition decision, Nestlé entered into a commitment 
vis-à-vis the Commission by which it undertook to divest a number of sources 
and brands, the total of which will amount to 3 000 million litres water 
capacity. This capacity represents approximately 20% of the total capacity 
previously held by Nestlé, Perrier and BSN. The divestiture must be made to a 
strong purchaser to be approved by the Commission and create a viable 
competitor able to effectively compete with Nestlé and BSN on the French 
water market. Subject to the compliance with this commitment, the Commission 
declared the merger compatible with the common market. In case of failure to 
divest to a credible buyer, the Commission may revoke its decision in 
accordance with Article 8(5)(b). 
<T7> . DU PONT/ICI (Phase II case) 
258. This case concerned the acquisition by Du Pont, the world leader in the 
nylon industry, of the nylon activities of ICI, the leading European producer 
of nylon fibres. The merger raised a problem of dominance only in the field 
of nylon fibres used for carpets (EEC market). 
After the merger, the new entity would have had an EEC market share exceeding 
40%, which was about twice that of its next competitor, Rhône-Pou Ienc/SNI A. 
Du Pont and ICI also had a number of other competitive advantages such as: 
leading companies in terms of quality of products and technological 
development: they sell high-value branded fibres; 
both companies have a very large product range; 
both companies are integrated nylon fibre producers; 
Du Pont is the lowest cost producer in the world and one of the world's 
largest chemical companies. 
ICI was Du Pont's closest competitor. The merger would thus lead to a 
considerable reduction of competition, in particular with regard to 
competition in product development. 
2.I.C.§2. 28 
157 
The established competitors of Du Pont/ICI did not cover the whole range of 
fibres supplied by Du Pont and ICI and were not likely to develop a 
significantly broader range of high-quality fibres before a considerable 
period of time. Product differentiation is however a key element of 
competition in this market. 
The customers, the European carpet manufacturers, were said to follow a 
strategy of multiple supply to avoid dependency on one supplier. Following 
the merger between Du Pont and ICI there could thus occur some shift of 
demand to another supplier. Some carpet manufacturers had also integrated 
backwards into nylon fibre production which gave them some buyer 
leverage.*48) 
Potential competition from new entrants was unlikely. The industry is 
characterized by overcapacity. Over the last decade, there was no 
significant entry into the EC nylon fibre industry, which has undergone a 
trend of concentration with the exit of a number of firms. There was no 
indication that the very limited imports from outside the EEC (less than 5%) 
would increase in the foreseeable future. However, there was a certain 
degree of indirect competitive pressure on the merged firm arising from the 
retail price of carpets made from other fibres, in particular polypropylene 
f ibres. 
The Commission concluded on balance that, in spite of some constraint on 
Du Pont resulting in particular from Rhône-Pou Ienc/SNIA and the possibility 
for carpet manufacturers to switch to other suppliers, the merger would 
considerably reduce competition in product development which had existed 
between Du Pont and ICI before the merger. Since this competition is a key 
element in the market concerned, the Commission considered that it was 
reasonable to assume that the position of Du Pont after the merger would be 
such as to enable it to act to an appreciable extent independently of its 
competitors and customers. 
In recognition of the Commission's concerns, Du Pont entered into 
commitments vis-à-vis the Commission by which it undertook: 
(48) See also BTR/PlreiIi. 
2.I.C.§2. 29 
158 
to reserve capacity and LO manufacture up to 12 Kt per annum of nylon 
fibre for a period of five years (renewable) for the benefit of an 
independent third party who must be a supplier of nylon fibres; 
to transfer to such third party a free-standing carpet research and 
development facility; 
to license exclusively or assign to such third party ICI's trademark 
"Timbrel le". 
In the opinion of the Commission, the modifications of the original 
concentration plan would enable a third party to replace ICI partially as a 
supplier of high-quality fibres. The transfer of the research and development 
facility would also significantly improve the competitiveness of the third 
party, in particular as regards its product range and future product 
development. This will substantially reduce the likelihood that Du Pont could 
be able to determine alone the degree of product development and innovation 
in the market. The Commission thus cleared the merger subject to the 
fulfilment by Du Pont of its commitments. 
<T7> . AIR FRANCE/SABENA (Phase I case) 
259. This case concerned the acquisition of 37.58% of the shares of Sabena by 
Air France giving the latter joint control with the Belgian State over 
Sabena. The competition problems arose only in respect of certain air 
transport routes and in respect of the planned creation of a "hub and spoke" 
basis at the Belgian airport Zaventem. 
The merger would have created a monopoly on three routes between Belgium and 
France: BrusseIs-Lyon, Brussels-Nice and Brussels-Paris. This monopoly was 
not likely to change in the near future for the following reasons: 
stagnant demand making new entry difficult: new entry would require a 
minimum of frequencies; 
the strong positions held by Air France and Sabena on their respective 
national airports; 
given this situation, the freedom of access established by the third 
package of liberalization measures in Community air transport was not 
likely to lead to effective competition before a long period of time; 
the possible substitution between plane and train on the route 
Brussels-Paris is imperfect and will only be improved by the TGV after a 
long per iod of t ime. 
2.I.C.§2. 30 
159 
The position of Air France/Sabena would further be strengthened by their 
planned introduction of a shuttle service between Brussels and Paris and by 
the creation of a "hub and spoke" basis at the Belgian airport which would 
serve 75 European destinations. These two projects would increase the number 
of flights of Air France/Sabena between Belgium and France and thus make 
entry by newcomers even more difficult. 
However, the Commission received commitments from the parties and from the 
French and Belgian Governments which eliminated the risk of creation of a 
dominant position on the three routes concerned: 
as regards BrusseIs-Lvon and Brussels-Nice: withdrawal from these routes 
by one of the parties if a competitor wants to enter any of these 
routes; 
as regards Brussels-Par is: guarantee to other airlines of a number of 
flights equal to those of Air France/Sabena; this may imply a transfer 
of slots from Air France and Sabena to other airlines; a withdrawal by 
Air France or Sabena from the Bruxelles-Paris route was not possible 
because this would have endangered the creation of the shuttle service 
on that route which was to the benefit of consumers. 
The merger also created very high market shares on certain routes to Turkey 
and Hungary and on certain routes to Africa. These situations were equally 
resolved by commitments to open up these routes to other airlines either by 
"mult ides I gnat ion" or by a reduction in flights by Air France or Sabena to 
the benefit of newcomers. 
Finally, the planned creation of a "hub and spoke" basis at Zaventem would 
have been likely to render access by other airlines to the Belgian airport 
much more difficult by reducing the number of available slots and by 
foreclosing the Belgian airport on a "hub and spoke" basis to competing 
airlines. In order to prevent these effects from occurring, the parties have 
committed themselves to limit their slot share at Zaventem to a certain 
percentage leaving a guaranteed percentage of slots to competitors (35%). In 
addition, the French Government committed itself to allow the creation of a 
competing "hub and spoke" basis at an airport presenting similar advantages 
to that of Zaventem. In the light of these commitments, the Commission 
decided to clear the merger in the first phase. 
2.I.C.§3. 31 
160 
<T4> §3. Restrictions ancillary to concentrations 
260. The last sentence of the second subparagraph of Article 8(2) of Council 
Regulation (EEC) No 4064/89*49) states that "the decision declaring the 
concentration compatible shall also cover restrictions directly related and 
necessary to the implementation of the concentration". 
261. The Commission considers that this provision, which reiterates the 
terms of the twenty-fifth recital in the preamble to the Regulation,*50) 
applies to both first-stage and second-stage decisions in which the 
Commission finds that a concentration is compatible with the common market. 
262. The concept of ancillary restriction is also dealt with in a Commission 
notice*51) in which, after having explained the principles underlying its 
evaluation, the Commission indicates what it considers to be "common 
ancillary restrictions" meeting the criteria set out in the Regulation in the 
case of transfers of undertakings, joint acquisitions and concentrâtive joint 
ventures. This is an important aspect of Commission policy. 
263. A look at the 51 decisions adopted by the Commission in 1992*52) shows 
three key features in the Commission's decision-making practice regarding 
ancillary restrictions. 
Mergers involving ancillary restrictions account for almost half of the 
decisions adopted: 24 out of the 51 decisions included an assessment of 
such restrictions. 
All the mergers involving ancillary restrictions fell within one of the 
categories defined in the notice. 
(49) OJ L 395, 30.12.1989. 
(50) OJ L 395, 30.12.1989. 
(51) OJ C 203, 14.8.1990. 
(52) From 1.1.1992 to 31.12.1992 
2.I.C.§3. 32 
161 
Only one decision, of a rather specific nature from this point of 
view,*53) concerned a demerger under which an undertaking was divided 
in two and which the Commission broke down into two separate 
operations. Of these, only the Solvay merger fell within the scope of 
the Merger Regulation. It was only the ancillary restrictions 
relating to it that had to be examined by the Commission. 
In its decision, the Commission based itself on point III of the 
notice, which deals with acquisitions, recognizing as constituting 
ancillary restrictions various agreements designed to ensure the full 
value of the acquisitions by ensuring their viability. Such 
agreements included various contracts on the provision of services, 
purchases and supplies, a non-competition clause covering a period of 
three years and an undertaking not to make public or use business 
information or information on the know-how involved in the activity 
retained by the other party. On this latter point, the Commission 
accepted that the term of the agreement should not be limited in time. 
The vast majority of the restrictions ancillary to the mergers examined 
by the Commission relate to one of the "common restriction" categories 
set out in the notice,*54) as may be seen from the breakdown in the 
following table based on the 24 decisions that included an analysis of 
ancillary restrictions.*55)*58) 
(53) Solvay-Laporte/Interox decision of 30.4.1992. 
(54) OJ C 203, 14.8.1990. 
(55) The total number of ancillary restrictions (51) differs from the number 
of decisions involving such restrictions (24), since each decision deals 
with a varying number of ancillary restrictions. 
(56) Where in one and the same decision a number of agreements deemed to be 
ancillary restrictions related to one and the same category, they were 
counted only once in the table. 
2.I.C.§1. 33 
Non-competition 
cIause Licences of 
industr ial 
and commercial 
property rights 
and of know-how Purchase 
and supply 
agreements 162 
Other 
restr ict ions 
Transfer 
Joint venture 14 
With regard to the ancillary restrictions falling within one of the 
common restriction categories set out in the notice (i.e. 37 out of 44), 
it should be stressed that, on various occasions, the Commission granted 
the agreements between the parties the status of ancillary restriction 
for only a limited period, less than that for which they had been 
concluded. Examples included the inchcape/lEP case (decision of 
21 January 1992), the Thomas Cook/LTU/West LB case (decision of 
14 July 1992) and the GECC/Avis Lease case (decision of 15 July 1992). 
264. The decisions relating to ancillary restrictions not belonging to any 
of the categories mentioned in the notice may be classified as follows: 
in three decisions (the inchcaoe/IEP and Solvay-Laporte/Interox 
decisions mentioned above and the BTR/PirelIi decision of 
17 August 1992), the Commission agreed to consider a clause ruling out 
the poaching of employees to be a restriction ancillary to an 
acquisition; 
in the Inchcape/lEP and Solvay-Laoorte/Interox decisions, the Commission 
also considered the ban imposed on the seller, for an unlimited period, 
on making public or using business secrets concerning the entity sold to 
be an ancillary restriction; 
in its BRT/PirelIi decision of 17 August 1992, the Commission considered 
the clause requiring the seller not to change the substance of the 
activity of the entity transferred between the date on which the 
agreement was concluded and that on which it was implemented to be an 
anciIlary restr ict ion; 
2.I.C.§3. 34 
163 
in two decisions relating to the chemicals industry (the 
Elf Atochem/Rohm & Haas decision of 28 July 1992 and the 
Rhône-Pou Ienc/SNIA decision of 10 August 1992), the Commission 
considered that contracts designed to lay down the mutual obligations of 
the parties where the productive capacities of the joint venture are 
integrated within an industrial complex which remains the property of 
one of its parents were acceptable. 
Thus, in the Rhône-Pou Ienc/SNIA decision, the agreements providing for 
the occupation of certain sites and the provision of utilities 
physically linked to the occupation of such sites were considered to 
form an integral part of the concentration; 
this approach fits in with the Commission's general approach of 
distinguishing in each individual case the restrictions ancillary to the 
contractual arrangements forming part of the elements making up the 
concentrât ion. 
Thus, in its CCIE/GTE decision of 25 September 1992, the Commission 
considered various loan, research and development and supply contracts 
assessed together with the concentration under Article 2 of the 
Regulation to be substantial and an integral part of the concentration; 
lastly, in its British Airways/TAT decision of 27 November 1992, the 
Commission agreed to the use of joint computer services between TAT and 
TAT E.A. and the use by the latter of the TAT trade mark. Such 
agreements were regarded as necessary to the viability of the joint 
venture TAT E.A., formerly under the sole control of TAT. 
2.I.C.§1. 35 
<T4> §4. Suspension of concentration (Article 7) 164 
In three cases, the Commission had to adopt a decision pursuant to 
Articles 7(2) and 18(2) of the Merger Regulation to continue the suspension 
of a notified concentration until adoption of a final decision in the 
case.*57) In a number of other cases, the parties voluntarily and 
irrevocably agreed to suspend their operation until the Commission's final 
decision on the substance of the case. 
In two cases, the Commission granted a derogation from the suspensive effect 
imposed by Article 7(1) of the Merger Regulation pursuant to Article 7(4) of 
the Regulation. In Nestlé/Perr ier. a derogation was requested by Nestlé with 
respect to the exercise of the voting rights in the ordinary annual 
shareholders' meeting of Perrier. The derogation was granted in relation to 
three resolutions which were very specific and limited in scope and in time 
because they related only to the previous fiscal year. 
In Elf Aou i ta i ne-Thyssen/M i no I . a request was made by Elf Aquitaine which 
was acquiring Minol from the Treuhandanstalt. Pending completion of the 
acquisition the Treuhandanstalt agreed that Minol should enter into an 
agreement under which Elf Aquitaine would assist the board of directors of 
Minol in the management of the company. Although the Commission considered 
that the management agreement represented the beginning of the implementing 
of the proposed concentration, it was satisfied as to the need for 
management assistance, and therefore granted the application for a 
derogation from suspension of the operation. 
(57) See Du Pont/ICI. Ifint/Exor and Nestié/Perrier 
2. I.C.§5. 36 
165 
<T4> §5. Referral to the competent authorities of the Member States 
(Article 9) 
The Commission received three communications from Member States pursuant to 
Article 9 during the year. The United Kingdom authorities informed the 
Commission that the proposed Joint venture Steetlev/Tarmac threatened to 
create or strengthen a dominant position as a result of which effective 
competition would be impeded on the market for bricks (or sub-markets within 
the brick sector) in local markets in the North-East and South-West of 
England, and in the market for clay tiles in Great Britain. The new joint 
venture would have obtained high market shares in the markets concerned, 
which have significant barriers to entry. The Commission therefore concluded 
that since the brick markets were local in nature and the competition issues 
identified were limited entirely to the territory of the United Kingdom, a 
reference should be made. In. the case of the clay tile market, the Commission 
decided to refer this market too, since although it covered the whole of 
Great Britain, the low level of trade flows for clay tiles between Great 
Britain and the rest of the Community resulted in the economic consequences 
of the merger being materially limited to the United Kingdom. The Commission 
cleared the remaining aspects of the merger in the first phase of 
proceedings. 
In Mannesmann/Hoesch. the German authorities requested a referral, which was 
subsequently amended to include only the market for gas line pipes. The 
Commission did not have to decide on the request because it took in time the 
preparatory steps (communication of a statement pursuant to Article 18) in 
order to deal with the case itself. Following further investigation, the 
Commission resolved the serious doubts which it had had about this 
operation's compatibility with the common market and adopted a final decision 
pursuant to Article 8(2), clearing the merger. 
In Siemens/Phi Iips. the Commision received a request from the German 
authorities in relation to the markets for copper cables for local subscriber 
networks, optical fibre cables, switching cable and broad band communication 
cables. The Commission decided to carry out a detailed second phase 
investigation of the case but the operation was subsequently abandoned by the 
parties, so that no decision was needed. 
2.I.D.§1. 1 
166 
<T3> D. Substantive and procedural rules 
<T4> §1. Block exemptions*1) 
<T6> (a) Regulation amending the block exemption Regulations 
265. The thinking which prompted the Commission to adopt the notice on 
cooperative joint ventures also lay behind its adoption of the Regulation*2) 
amending Commission Regulations (EEC) Nos 417/85, 418/85, 2349/84 and 556/89 
on the application of Article 85(3) of the Treaty respectively to categories 
of specialization agreements,*3) research and development agreements,*4) 
patent licensing agreements*5) and know-how licensing agreements.*8) 
Like the notice on cooperative joint ventures and the programme for speeding 
up procedures, the amending Regulation is intended to facilitate cooperation 
between firms and to bring the treatment of cooperative joint ventures, 
assessed under Article 85 of the Treaty, as much as possible into line with 
that of concentrâtive joint ventures, which are covered by the Merger 
Regulation. The amending Regulation accordingly broadened considerably the 
scope of application of the block exemption Regulations, to the benefit of 
Joint ventures amongst other things. The Regulations on research and 
development agreements and on specialization agreements now no longer exclude 
from the benefit of exemption cooperative joint ventures that perform all the 
functions of a normal enterprise, including selling. Similarly, the 
Regulations on patent licensing and know-how licensing agreements now also 
apply to the licences granted by the joint venture's parents in respect of 
i ts act ivit ies. 
266. Regulation (EEC) No 417/85 now also applies to contracts under which a 
number of firms forgo manufacture of certain products in favour of a joint 
(1) All the new Regulations are published in full in the Annexes. 
(2) OJ L 21, 29.1.1993, p. 8. 
(3) OJ L 53, 22.2.1985. 
(4) OJ L 53, 22.2.1985. 
(5) OJ L 219, 16.8.1984; corrigendum OJ L 280, 22.10.1985. 
(6) OJ L 61, 4.3.1989. 
2.I.D.§1. 2 
167 
venture which they set up. This arrangement may apply to products already 
being manufactured or to products to be manufactured in the future. The 
setting up and the activity of the joint manufacturing venture are exempt 
from the ban on restrictive agreements provided that the combined market 
share of the undertakings concerned does not exceed 20%. 
Agreements under which the parents also entrust the distribution of the 
contract products to a joint venture are similarly covered by the block 
exemption Regulation, though subject to stricter conditions. The combined 
market share of the undertakings concerned must not exceed a maximum of 10%. 
In addition, for the duration of the contract, the parent companies must 
withdraw from the product market of the joint venture and may not exercise 
any distribution or production activity on it. 
The Commission thought it appropriate to extend automatic exemption to cover 
specialization agreements involving undertakings of a certain size and 
accordingly raised from ECU 500 million to ECU 1 000 million the turnover 
figure linked to the opposition procedure, which will be maintained. 
267. Regulation (EEC) No 418/85 provides for an exemption for joint R&D 
ventures, whose activity may extend as far as including the joint 
exploitation of the results of the research. The concept of exploitation 
includes the manufacture of the new or improved products and the use of the 
new or improved processes, the marketing of the products of the research and 
development activity and the granting of production, utilization or 
distribution licences to third companies. 
This Regulation also makes exemption from the ban on restrictive agreements 
subject to quantitative conditions. Cooperation between the parent 
companies in a joint venture whose activity includes research, development, 
production and licensing policy is allowed up to a limit of a combined market 
share of 20%. However, if the parent companies entrust the distribution of 
the contract products to a joint venture, the block exemption applies only if 
the market shares do not exceed 10%, rather than 20%. 
268. Regulation (EEC) No 2349/84 is also applicable to agreements under 
which a parent company grants a licence to the joint venture in so far as 
2. I . D. § 1 . 3 
168 
such agreements relate to the activity of the joint venture. If the parent 
companies are competitors, the block exemption applies only if the combined 
market shares do not exceed a specified limit. This is 20% if the joint 
venture is entrusted only with production and 10% if it is also responsible 
for distributing the licensed products. The Regulation exempts the granting 
to the joint venture of exclusive production or distribution licences for a 
specified territory, the protection of the territory granted to the Joint 
venture or reserved to one of the parent companies against active or passive 
competition from the partner company throughout the duration of the contract, 
and the protection of the territory granted to the joint venture against 
competition from other licensees. 
269. Regulation (EEC) No 556/89 on the application of Article 85(3) of the 
Treaty to certain categories of know-how licensing agreements contains 
similar rules, but the territorial protection in relations between the joint 
venture and the parent companies is limited to ten years, as from the day on 
which the first know-how licensing agreement entered into in respect of 
territories within the Community is concluded. That day also marks the 
beginning of the period in which the joint venture may be protected against 
active competition (ten years) and passive competition (five years) from 
other Iicensées. 
270. The amending Regulation is one aspect of the overall policy being 
pursued to help Joint ventures, the other two being the speeding up of 
procedures for some of them, namely those involving structural changes, and 
the notice on the treatment of cooperative joint ventures.*7) Thanks to 
the notice and to the amending Regulation, all cooperative Joint ventures 
will now enjoy increased legal certainty. In addition, those which do not 
fall within the scope of a block exemption Regulation and which are notified 
to the Commission will benefit from the accelerated procedure, if they have 
structural effects.*8) 
(7) See point 294 of this Report. 
(8) See point 122 of this Report. 
2.I.D.§1. 4 
169 
<T6> (b) Application of the block exemption Regulations 
<T7> Specialization and research and development 
271. The Commission received only one notification in 1992 under the 
opposition procedure provided for in Article 7 of Regulation (EEC) No 418/85 
on research and development agreements.*9) The case is at present still 
under examination. 
As far as Regulation No 417/85 on specialization agreements*10) is 
concerned, the opposition procedure provided for in Article 4 still continues 
to be little used. No notifications under Article 4 were received in 1992. 
<T7> Patent licensing and know-how licensing 
272. During the period covered by the report, the Commission received one 
notification in which the parties requested application of the opposition 
procedure provided for in Article 4 of Regulation (EEC) No 2349/84 on patent 
licensing agreements*11) and one notification under Article 4 of Regulation 
(EEC) No 556/89 on know-how licensing agreements and mixed know-how and 
patent Iicensing agreements.*12) 
In the first case, the Commission was not able to agree to the request for 
application of the opposition procedure, since the information provided by 
the parties in their notification was incomplete and since in particular 
there was no indication of which clauses in the agreement were to be covered 
by the opposition procedure. In the second case, the six-month period has 
not yet ended, and the case is still under examination. 
In addition, In two of the cases notified in 1991 under Article 4 of 
Regulation No 556/89, the parties amended their agreements in such a way as 
to make them compatible with Article 85, so that the Commission was able to 
terminate the procedure by sending a comfort letter. 
(9) OJ L 53, 22.2.1985. 
(10) OJ L 53, 22.2.1985. 
(11) OJ L 219, 16.8.1984; corrigendum OJ L 280, 22.10.1985. 
(12) OJ L 61, 4.3.1989. 
2.I.D.§1. 5 
170 
<T7> Franchising agreements 
273. During the year, the Commission received two notifications asking for 
application of the opposition procedure provided for in Article 6 of 
Regulation (EEC) No 4087/88.*13) In one case, the Commission ruled that the 
opposition procedure was not applicable, firstly because the agreement 
included a clause explicitly not exempted by the Regulation, namely a 
restriction preventing the franchisee from determining the selling prices of 
the franchised goods and secondly because the condition provided for in 
Article 4(a) of the Regulation, namely that the franchisee should be free to 
purchase the products from other franchisees or from another network of 
authorized distributors, was not fulfilled. Examination of the case is 
continuing on the basis of Regulation No 17. In the other case, examination 
is st iI I under way. 
(13) OJ L 359, 28.12.1988. 
2.I.D.§1. 6 
<T6> (c) Insurance block exemption 171 
274. The Commission has adopted a block exemption for the insurance sector by 
making use of the powers granted to it by the Council, in order to facilitate 
certains forms of cooperation which the Commission feels are justified in 
this sector. 
Council Regulation (EEC) No 1534/91 of 31 May 1991*14) empowers the 
Commission to exempt, by means of a Regulation and in accordance with 
Article 85(3) of the Treaty, categories of agreements between undertakings, 
decisions of associations of undertakings and concerted practices in the 
insurance sector which have as their object cooperation with respect to: 
(a) the establishment of common risk premium tariffs based on collectively 
ascertained statistics or the number of claims; 
(b) the establishment of common standard policy conditions; 
(c) the common coverage of certain types of risks; 
(d) the settlement of claims; 
(e) the testing and acceptance of security devices; 
(f) registers of, and information on, aggravated risks, provided that the 
keeping of these registers and the handling of this information is 
carried out subject to the proper protection of confidentiality. 
275. The Commission has acquired sufficient experience to make use of such 
power in respect of the categories of agreements specified in points (a), 
(b), (c) and (e) of the list. It has in particular adopted decisions 
concerning tariff recommendations,*15) standard policy conditions*18) and 
co-reinsurance pools.*17) It has examined a large number of other cases on 
such types of agreements which have been notified to it, but on which it has 
not yet taken a decision. It has also made an analysis of agreements 
(14) OJ L 143, 7.6.1991. 
(15) Decisions of 5 December 1984 in Case IV/30.307 - Fire insurance in 
Germany, OJ L 35, 7.2.1985, and of 20 December 1989 in Case IV/32.265 -
Concordato Incendio, OJ L 15, 19.1.1990. 
(16) Decision of 20 December 1989 in Case IV/32.265 - Concordato Incendio, 
loc. cit. 
(17) Decisions of 30 March 1984 in Case IV/30.804 - Nuovo Cegam, OJ L 99, 
11.4.1984; of 16 December 1985 in Case IV/30.373 - P & I Clubs, 
OJ L 376, 31.12.1985; of 20 December 1989 in Case IV/32.408 - TEK0, 
OJ L 13, 17.1.1990; and of 14 January 1992 in Case IV/33.100 - Assurpol, 
0J L 37, 14.2.1992. 
2.I.D.§1. 7 
172 
relating to the approval of security devices in connection with the granting 
and conditions of insurance cover, notably in relation to a petition lodged 
with the European Parliament (No 783/90). 
276. With regard to agreements relating to the settlement of claims 
(point (d)) and registers of aggravated risks (point (f)), the Commission 
does not as yet have sufficiently broad information to make an overall legal 
assessment of the restrictions which they involve and to establish the 
conditions which such types of agreement should comply with in order to 
qualify for automatic exemption. It was therefore not opportune to include 
them within the scope of the Regulation, though appropriate proposals will be 
drawn up once sufficient experience has been gained to allow conclusions to 
be drawn. 
277. The Commission has always recognized that the specific characteristics 
of the insurance sector justified certain forms of cooperation designed to 
improve knowledge of risks and share costs. In many cases, such 
collaboration goes beyond what the Commission, in its notice concerning 
cooperation between enterprises,*18) regarded as not being covered by the 
prohibition in Article 85(1). 
278. This cooperation must therefore be examined from the perspective of its 
compatibility with the four conditions for exemption specified in 
Article 85(3) (improving economic and technical progress, benefit to 
consumers, indispensabiIity of the restriction to the attainment of the 
objective pursued, and maintenance of effective competition in the markets 
concerned). The Regulation spells out these conditions for four of the 
categories of agreement listed above. 
279. The block exemption covers cooperation between insurance undertakings or 
within associations of undertakings in respect of the compiling of statistics 
on the number of claims, total amounts paid in respect of claims or the 
amount of capital insured, and their use to establish indicative pure premium 
tariffs - defined as corresponding to the average cost of covering the 
risks -or, in the case of insurance involving capitalization, mortality 
tables. Joint studies on the probable impact of extraneous circumstances 
that may influence the number or size of claims are also exempted. The 
Regulation also reflects the case-law of the Court of Justice and the 
previous decisions taken by the Commission by stipulating that concerted 
(18) OJ C 75, 29.7.1968; corrigendum OJ C 84, 28.8.1968. 
2.I.D.§1. 8 
173 
practices on commercial tariffs, i.e. the premiums actually charged to 
policyholders and comprising a loading to cover administrative and commercial 
costs are not exempted and that even a pure premium tariff can have only 
reference value. 
280. The establishment of common standard policy conditions has the advantage 
of improving the comparability of cover for the consumer and of allowing 
risks to be classified more uniformly, which facilitates both the compiling 
of statistics and the sharing of risks by means of co-insurance. However, 
it must not lead either to the standardization of products or to the creation 
of too captive a customer base. Accordingly, the Regulation exempts the 
establishment of common standard policy conditions provided that they are not 
binding, but serve only as models, that they do not contain any systematic 
exclusion of particular types of cover without providing for the express 
possibility of including that cover by agreement and that they do not provide 
for the contractual relationship with the policyholder to be maintained for 
an excessive period or go beyond the initial object of the policy. 
Moreover, the Commission reserves the right to withdraw the benefit of 
exemption when it finds that common standard policy conditions contain 
clauses which create, to the detriment of the policyholder, a significant 
imbalance between rights and obligations. 
281. In addition, so as to ensure that there is real transparency for 
consumers, the Regulation stipulates that the common standard policy 
conditions must be accessible to any interested person. 
282. The establishment of co-insurance or co-reinsurance pools must be viewed 
favourably in so far as it allows a greater number of undertakings to enter 
the market and, as a result, increases the capacity for covering risks that 
are difficult to cover because of their scale, rarity or novelty. 
283. However, so as to ensure effective competition, the Regulation makes 
exemption of such pools subject to the condition that the participants must 
not hold a share of the relevant market in excess of a given percentage. The 
percentage is 15% in the case of co-reinsurance pools. It is reduced to 10% 
in the case of co-insurance pools. The reason for this is that residual 
2.I.D.§1. 9 
174 
competition between members of a co-insurance pool is particularly limited. 
These percentages apply only to the insurance products brought into the 
group, where this group covers catastrophe or aggravated risks. The mechanism 
of co-insurance requires uniform policy conditions and commercial tariffs, 
and the Regulation allows this restriction in respect of pools operating in 
this way. 
284. In the case of co-reinsurance pools, the Regulation covers the common 
determination of the probable cost of covering the risks, the operating cost 
of the co-reinsurance and the remuneration of the participants in their 
capacity as co-reinsurers. 
285. Making pool cover subject to the application of common or accepted 
conditions of cover, the requirement that agreement be obtained prior to the 
settlement of large claims, Joint retrocession, and the ban on retroceding 
individual shares are allowed in both cases. The requirement that all risks 
be brought into the pool is not accepted. 
286. Pools are free to define the conditions governing participation in them, 
their areas of business and their mode of operation. However, the 
Commission reserves the right to withdraw the benefit of exemption if they 
are used or managed in such a way as to give one or more participating 
undertakings the means of acquiring or reinforcing a dominant influence in 
the relevant market or if they result in market sharing. 
287. The Commission recognizes the usefulness of cooperation in the testing 
of security devices, in so far as it removes the need to grant repeated 
approval of individual devices. Accordingly, the Regulation lays down the 
conditions for exempting the establishment of technical standards and the 
procedures for assessing and approving security devices and persons 
installing them. The purpose of such conditions is to ensure that all 
manufacturers may apply for approval and that approval is granted on the 
basis of criteria that are objective, qualitative and in proportion to the 
level of protection sought. 
288. Lastly, such agreements must not result in a limitative list, and each 
undertaking must remain free to accept devices not approved under the common 
procedure. 
2.I.D.§1. 10 
175 
<T6> (d) Sea transport 
Consort ia 
289. As announced in the Twenty-first Competition Report, the Council 
adopted the Regulation*19) authorizing the Commission to issue a block 
exemption for agreements, decisions and concerted practices between liner 
shipping companies; such arrangements, known as consortia, are aimed mainly 
at supplying Jointly organized services. 
The Commission was authorized under the Regulation to grant a block exemption 
to consortia only in respect of their sea transport activities and not in 
respect of their land transport activities. 
On this basis, the Commission is at present drawing up, for discussion with 
the Member States and the parties concerned, an initial draft block exemption 
Regulation that will specify the conditions and obligations which consortia 
must comply with under Article 85(3) of the Treaty in order to qualify for 
the block exemption. 
(19) Council Regulation (EEC) No 479/92 of 25 February 1992 on the 
application of Article 85(3) of the Treaty to certain categories of 
agreements, decisions and concerted practices between liner shipping 
companies (consortia): OJ L 55, 29.2.1992. 
2.1.D.§1. 11 
176 
<T6> (e) Motor Vehicle Distribution 
<T7> - Regulation (EEC) No 123/85*2°) 
290. On 6 May 1992 the Commission published a report on car price 
differentials in the common market.*21) This investigation was to measure 
the extent of car price differentials in the Community. The report revealed 
very large price differentials on certain models over some of the time 
periods examined in the investigation. Selective distribution systems, as 
they currently operate, contribute to sustaining such differentials, in so 
far as they limit trade between Member States and thereby reduce effective 
pressure on manufacturers to align prices more closely. 
Accordingly, the Commission decided on a twofold strategy of practical action 
in order to increase public confidence that the selective distribution system 
is compatible with a single market, as well as to reduce price differentials. 
Firstly, the Commission has asked manufacturers to confirm to their 
distributors that distributors are free - in accordance with 
Regulation No 123/85 - to sell to other approved distributors throughout the 
single market as well as to end-users in other Member States, and to 
intermediaries representing them, and to ensure that cars will be made 
available to fulfil such demand. There have already been positive results in 
this area. The number of complaints received from individual consumers 
wishing to purchase a car in another Member State has decreased over the 
months since the report was published. This is especially so in the case of 
right-hand-drive models, which in the past were the subject of the most 
numerous complaints. 
Secondly, the car manufacturers have been asked to publish price lists which 
enable consumers to compare prices beween different Member States for models 
with the same specification. 
The car manufacturers - through their industrial organization ACEA - have now 
acknowledged this as a useful step, especially in view of the single market. 
The ACEA has agreed for its members to take the following action: 
(20) Block exemption Regulation covering the selective distribution system 
for motor vehicles. 
(21) See point 121 of Twenty-first Competition Report for details of results. 
di 
2.I.D.§1 . 12 
177 
Every six months car manufacturers will compile, on a standard form, 
comparable pricing data for one widely sold model in each car line. Details 
of the recommended retail price will be supplied in local currencies, with 
prices quoted both before and after tax. The relevant conversion rate to 
ecus will be given to facilitate comparison between prices in different 
Member States. 
This form will, in particular, show the prices for right-hand-drive versions 
and for the major options (air conditioning, automatic gearbox, power 
steering and Automated Breaking System), as well as information concerning 
the duration of the warranty. The standard form will state whether roadside 
assistance and delivery costs are included in the recommended retail price. 
The agreed price information will be given, for all Member States, to the 
Commission, which will pass on the information to consumer associations and 
to the specialized motor press. It is hoped that at a later stage the 
manufacturers will disseminate the information directly. 
The figures which are made public in this way will not include the prices in 
Denmark and Greece, because both these countries levy car taxes of over 100%, 
which tends to drive down pre-tax prices. It was therefore accepted in 
Regulation No 123/85 that cars from these markets would be available for 
trade into other Member States only at the price available in the next 
cheapest market. In these circumstances it would mislead consumers to 
publicize the prices available within Greece and Denmark. 
The Japanese manufacturers have expressed their wish to cooperate fully. 
291. During the year under review the Commission received a number of 
complaints concerning the refusal of dealers to carry out guarantee work on 
cars imported from other Member States. These cases almost exclusively 
concerned the new German "Lander" and were predominantly due to a lack of 
information on the part of dealers in the newly established distribution 
network regarding the relevant provisions of Regulation No 123/85. The 
problems were finally resolved with the car producers concerned. 
2.I.D.§1. 13 
178 
292. Following the Peugeot/Eco System decision*22) and the publication of a 
notice outlining the scope of activity of a car intermediary operating in the 
common market,*23) a substantial improvement in this area has been observed. 
Any difficulties which have since been communicated to the Commission by 
intermediaries were resolved without having to resort to administrative 
proceedings. 
<T6> (f) Air transport 
293. In air transport, Regulation (EEC) No 3618/92 extended until 
30 June 1993 the block exemptions for computer reservation systems and 
agreements between airlines provided for in Regulations Nos 83/91 and 84/91. 
The block exemption for ground handling services provided for in Regulation 
(EEC) No 82/91 expired on 31 December 1992. 
(22) Twenty-first Competition Report, points 104 and 122 
(23) OJ C 329, 18.12.1991. 
2.I.D.§2. 14 
179 
<T4> §2. Not ices 
<T6> (a) Cooperative joint ventures 
294. Following intensive consultations with the Member States and 
representatives from business and industry, the Commission adopted at the end 
of 1992 a notice on the assessment of cooperative as opposed to concentrâtive 
joint ventures.*24) 
According to Article 3(2) of Regulation (EEC) No 4064/89,*25) a joint 
venture is cooperative in nature if it does not constitute an autonomous 
economic entity or if, though constituting such an entity, it gives rise to 
coordination of competitive behaviour by the parents in relation to each 
other or to the joint venture. 
Cooperative joint ventures are outside the scope of the provisions of the 
Merger Regulation, but must be assessed under Article 85(1) and (3) of the 
Treaty. 
In its competition policy, the Commission has always endeavoured to 
facilitate cooperative arrangements that make economic sense, provided they 
take appropriate account of the interests of consumers, do not impose 
disproportionate restrictions on the undertakings concerned and do not 
jeopardize the maintenance or development of effective competition. This 
basically favourable attitude has been reflected in numerous decisions and 
notices in individual cases. 
In the new notice, which contains numerous references to its administrative 
practice to date, the Commission has tried to specify the categories of 
cooperative Joint ventures that are compatible with Article 85, so as to 
provide the necessary legal certainty in this area and encourage the setting 
up of Joint ventures that have a beneficial economic impact without 
significantly affecting competition. The notice forms the counterpart to 
the notice regarding concentrâtive and cooperative operations*28) and 
(24) OJ C 43, 16.2.1993, p. 2. 
(25) OJ L 395, 30.12.1989; corrigendum in OJ L 257, 21.9.1990 
(26) OJ C 203, 14.8.1990. 
2.I.D.§2. 15 
180 
the notice on restrictions ancillary to concentrations,*27) which clarify 
the Merger Regulation. Links between undertakings other than joint ventures 
are not dealt with in the new notice, even though they often have the same 
effect on competition in the common market and on trade between 
Member States. On the basis of the Commission's experience to date, however, 
no generally applicable conclusions can yet be drawn. 
295. The Commission begins by referring back to earlier notices in which it 
listed categories of joint ventures that by their nature did not entail 
restrictions of competition*28) or which had no appreciable impact on market 
condi t ions.*29) 
As far as other cooperative joint ventures liable to be caught by 
Article 85(1) are concerned, the Commission states that their impact on 
competition must be assessed in the light of various factors, including 
competition between the parent companies, competition between the parent 
companies and the Joint venture, and the effects of the joint venture on the 
position of third parties. Competition will not be restricted if the 
parents are not actual or potential competitors and if the joint venture is 
to operate on a market on which neither of the parents is present. The 
assessment of potential competition must be carried out on the basis of the 
realistic approach set out in the Thirteenth Competition Report. 
However, competition between the parents and the joint venture may be 
restricted if the joint venture carries out its activity on the same markets 
as the parents or if it operates on a market upstream or downstream or on an 
adjacent market. Serious restrictive effects on the position of third 
parties may arise if the joint venture confines itself to selling and 
purchasing on behalf of the parents, with the result that the parents no 
longer operate as purchasers or suppliers. 
296. If the joint venture performs only certain auxiliary functions 
vis-à-vis its parents - for example, in the areas of research and 
development, purchasing, production or sales - the Commission will apply the 
(27) OJ C 203, 14.8.1990. 
(28) OJ C 75, 29.7.1968; corrigendum in OJ C 84, 28.8.1968 
(29) OJ C 231, 12.9.1986. 
2.I.D.§2. 16 
181 
assessment principles laid down for cooperation agreements having the same 
purpose which do not take the form of a joint venture. 
However, if cooperative joint ventures perform on a lasting basis all the 
functions of an autonomous economic entity, the Commission believes that they 
generally represent a factor making for greater competition. Consequently, 
such Joint ventures will qualify for favourable treatment under 
Article 85(3). 
Such joint ventures are exempted from the ban on restrictive agreements where 
they fulfil the conditions laid down for block exemption. The block 
exemption Regulations amended this year by the Commission*30) allow 
cooperation between firms within a joint venture for the purposes of 
specialization and Joint research and development. Under the Regulations on 
patent licensing and know-how licensing agreements, certain restrictions of 
competition in respect of technology transfer by the parents to the joint 
venture are exempted from the ban on restrictive agreements. 
297. Cooperative Joint ventures intended either to develop new technologies, 
or to facilitate entry to new markets, or to extend or rationalize existing 
production, may be assessed favourably even where they do not fulfil the 
conditions laid down by the block exemption Regulations, provided they are 
not a cover for price-fixing, quota and market-sharing agreements or do not 
serve as an instrument for coordinating the investment policy of the parents. 
However, since the cooperation includes distribution in such cases, 
particular care must be taken to ensure that the combining of all the 
business functions and the simultaneous merging of the resources of the 
parents do not create or strengthen a dominant position. Thus, if the 
aggregate market shares of the undertakings concerned do not exceed a maximum 
of 10%, the Commission considers that full-function joint ventures may be 
deemed in general acceptable. Beyond that threshold, a more detailed 
examination is necessary. 
298. This policy stance adopted by the Commission will help to reduce the 
existing imbalance between concentrâtive and cooperative joint ventures 
(30) See point 265 of this Report 
2.I.D.§2. 17 
182 
resulting from the fact that concentrâtive joint ventures are subject to the 
more rapid merger control procedure, whereas cooperative joint ventures are 
subject to the Regulation No 17 procedure. The same result may be expected 
from the Commission's general approach to ancillary restrictions. The 
Commission makes a distinction between restrictions of competition which 
arise from the creation of a joint venture and additional agreements which 
would, on their own, constitute restrictions of competition. Additional 
agreements which are directly related to the Joint venture and necessary for 
its existence must be assessed together with the Joint venture. Thus, if a 
joint venture does not fall within the scope of Article 85(1), than neither 
do any additional agreements ancillary to it. Additional agreements which 
are not ancillary to the joint venture normally fall within the scope of 
Article 85(1), even though the joint venture itself may not. The notice 
lists various restrictions, stating whether or not they may be regarded as 
anciIlary. 
2.I.D.§2. 18 
<T6> (b) Cooperation between the Commission and national courts 183 
299. The Commission also adopted a notice on cooperation between the 
Commission and national courts in applying Articles 85 and 86 of the 
EEC Treaty.*31) The purpose of the notice is to facilitate the application 
of Community competition law by national courts. It sets out the principles 
governing relations between national courts and the Commission, proposes 
specific cooperative measures and stipulates how the Commission will take 
account of the powers of national courts in deciding on its priorities in 
deaIi ng w i t h i nd i v i dua i cases. 
The powers of national courts in applying the Community competition rules 
derive from the direct effect of Articles 85(1) and (2) and 86 and from the 
regulations laying down block exemptions under Article 85(3) of the 
EEC Treaty. The purpose of such powers is to safeguard the individual 
rights of parties subject to Community law. 
The Commission, whose actions in the competition area are governed by public 
interest considerations, has for a number of years been seeking to encourage 
decentralized application of Article 85 and 86, notably by national courts, 
which had not hitherto performed their role here in a satisfactory manner. 
This objective was spelt out in 1983*32) and was reaffirmed on a number of 
occasions thereafter.*33) The new notice marks a first step towards 
achieving this policy. Its aim is to get Articles 85 and 86 applied more by 
the national courts. 
Increasing the role of national courts brings a number of advantages. There 
are firstly procedural advantages for individuals. Cases brought before 
national courts give individuals the chance to obtain adequate compensation 
(31) OJ C 39, 13.2.1993, p. 6. 
(32) Thirteenth Competition Report, points 217 and 218. 
(33) Fifteenth Competition Report, points 38 and 43, Sixteenth Competition 
Report, points 41 and 42; Seventeenth Competition Report, points 55 and 
56; Twentieth Competition Report, point 4 and introduction, p. 16; 
Twenty-first Competition Report, points 69 to 71. 
2.I.D.§2. 19 
184 
for infringements of Community law through injunctions, interim measures and 
damages. Secondly, a more active and reliable role by the national courts 
enables the Commission to restrict its action to cases involving sufficient 
Community interest and to pursue a more coherent competition policy. 
Lastly, greater effectiveness on the part of the national courts has a 
general advantage in that it reflects the spirit of the principle of 
subsidiarity. Community law will be implemented at a level close to the 
individual. The individual will be more aware that Community law is not 
merely the concern of remote administrative bodies, but something that 
directly confers subjective rights on him. 
The notice will soon be supplemented by an explanatory brochure concerning 
the procedural rules in Member States governing the implementation of 
Articles 85 and 86 by national courts. The Commission intends thus to 
create the conditions for improving the sharing of tasks between the 
Commission and the courts in the Member States, which, in conjunction with 
the planned speeding up in the Commission's internal procedures, should 
improve considerably its speed of action. 
,.,.D.,2.20 
<T6> (c) Contracts with commercial agents 
300. In 1992 the Commission continued its work on updating the notice on 
contracts with commercial agents.*34) It drew up a new amended version of 
the draft submitted to government experts in 1990.*35) 
(34) OJ 139, 24.12.1962. 
(35) Twentieth Competition Report, point 4. 
2.I.D.§2. 21 
186 
<T6> (d) Application of the "de minimis" principle in exclusive 
beer supply arrangements 
301. Following its 1990 beer market review*38) and a ruling of the European 
Court of Justice,*37) the Commission has now adopted a notice setting out 
criteria under which exclusive beer supply contracts may be considered to be 
of minor importance and thus not be caught by Article 85(1) of the 
EEC Treaty. The notice will clarify the status of agreements concluded by 
smaller breweries, thus reducing red tape and providing legal certainty. 
302. Such contracts, whether they are "loan ties" or "property ties" (within 
the meaning of Articles 6 and 8 of Regulation No 1984/83)*38) will, in 
principle, fall outside the scope of Article 85(1) if three conditions are 
met : 
the brewery's market share on the national market for the resale of beer 
on premises (i.e. in pubs, hotels, restaurants) is not higher than 1%; 
the brewery does not produce more than 200 000 his of beer per year; 
the duration of the contracts does not exceed 7Yi years, if they are for 
the exclusive supply of both beer and other drinks, or 15 years, if they 
cover only beer. 
303. These criteria take account of the case-law of the Court and reflect the 
concern to ensure - particularly by setting the 200 000 his threshold - that 
not too large a segment of the beer market (i.e. the part represented by 
smaller breweries) will be taken out of the scope of Article 85(1) and thus 
possibly closed to both domestic and foreign competition. 
304. The Commission's intention is to define as precisely as possible - for 
all national markets characterized by the existence of networks of similar 
agreements having a cumulative effect on competition - those agreements which 
do not significantly contribute to that effect and are therefore not caught 
by EC competition rules. However, even if larger breweries' beer supply 
agreements are caught by Article 85(1) because the thresholds for minor 
importance are exceeded, such agreements may still continue to benefit from 
(36) Twentieth Competition Report, points 84 and 395. 
(37) Case C 234/89 "Delimitis/Henninger Bràu" of 28 February 1991, 
Report 1991, I, p. 935. 
(38) 0J L 173 of 30.6.1983. 
2.I.D.§2. 22 
187 
the block exemption provided for in Regulation No 1984/83, so long as the 
conditions it lays down are met. 
305. The same principles apply for beer supply contracts concluded by 
wholesalers, but taking into account the position of the brewery whose beer 
is the main subject of the agreement in question. 
306. Beer supply contracts involving breweries which exceed the above 
thresholds, may, in individual cases, nevertheless be considered to be of 
minor importance, particularly if the number of tied outlets is limited in 
relation to the total number of outlets on the market. 
307. This notice fills a gap in the Commission's 1986 notice on agreements of 
minor importance,*39) which does not apply to agreements which are part of 
networks of similar agreements having a cumulative effect on the market. It 
is clear, however, that agreements concluded by companies - whether breweries 
or wholesalers - which individually exceed the thresholds set in that notice 
(5% market share and ECU 200 million turnover) are liable to be caught 
individually by Article 85(1) to the extent that they contain restrictive 
clauses. 
308. Finally, it should be remembered that, where agreements are considered 
to be of minor importance with no real effect on intra-Community trade and 
therefore to fall outside the scope of Community law, it is up to national 
legislation to provide such measures as appear necessary. The objective of 
the notice is not to give preferential treatment to smaller brewers, but to 
come to a reasonable allocation of responsibility between the Community and 
the Member States in line with the Commission's policy on subsidiarity. 
(39) 0J C 231, 12.9.1986. 
2. I .D.§3. 23 
188 
<T4> §3. inter im measures 
<T5> - Mars I 
309. The Commission imposed interim measures following a complaint by Mars, 
which alleged that its access to the German market for single-item ice-cream 
was iI legal I y barred. 
310. The relevant product is distributed in Germany through various 
channels, including the "traditional" retail trade, comprising small and 
medium-sized sales outlets. The marketing of the ice-cream involves two 
types of contractual arrangements. Firstly, there are the freezer 
exclusivity arrangements under which a producer provides the retailer with a 
freezer which remains his property and in which the retailer undertakes to 
stock only ice-cream manufactured by the producer. Secondly, there are 
sales outlet exclusivity contracts under which a retailer undertakes to sell 
only the products of the manufacturer with which he has a contract. 
311. Mars, which is seeking to penetrate the market using the name of its 
well-known chocolate products, based its complaint on the argument that the 
two largest undertakings operating on the market, Langnese (Unilever group) 
and Schôller, had such a network of exclusivity contracts that Mars was 
unable to find a sufficient number of retailers to market its products. 
312. The Commission took the view that the contractual arrangements in 
question did significantly restrict access to the market and that there was 
therefore a presumption of an infringement of Article 85 of the Treaty. In 
addition, the Commission considered that, unless it took immediate action, 
Mars would suffer serious and irreparable harm, through being prevented from 
penetrating the market at a time when competitors were about to introduce, or 
had recently introduced, new products comparable to its own. 
Since, in the Commission's view, the conditions specified by the Court in its 
"La Cinq SA" Judgment were fulfilled, the Commission, having weighed the 
interests involved, imposed interim measures that were confined to the sales 
2.I.D.§3. 24 
189 
outlet exclusivity arrangements. Langnese and Schôller were prohibited from 
using such exclusivity to prevent retailers thus bound to them from selling 
Mars products in competition with their own. By Order of 16 June, the 
President of the Court of First Instance, to which Langnese and Schôller made 
application concerning the interim measures, limited Mars' access to petrol 
stat ions alone. 
2.ll.§1. 1 
190 
<T2> Chapter II: Main cases decided by the Community lawcourts 
This Report covers a total of li judgments delivered by the Court of Justice 
or the Court of First Instance.*1) With certain exceptions, it does not 
cover orders made by the President of either Court. 
<T4> §1. Application of Article 85(1) to restrictive 
practices in the polypropylene sector 
313. Having delivered seven judgments in the polypropylene case in 1991,*2) 
on 10 March the Court of First Instance gave judgment on the six remaining 
applications (Cases T-9/89 Hiils: T-10/89 Hoechst: T-12/89 Solvay; T-13/89 
ICI ; T-14/89 Montedipe; and T-15/89 Chemie Linz). The grounds of the latter 
set of Judgments broadly correspond to those of the judgments delivered in 
1991. However, a number of new points had to be considered. 
One of the applicants denied involvement in the infringement. Shell 
maintained that the Decision could not be addressed to it as it was not a 
producer capable of fixing polypropylene prices and sales volumes. The 
Decision should have been addressed to one of the operating companies in the 
Shell group. The Court did not accept this argument; it held that Shell and 
the operating companies constituted a single undertaking for purposes of the 
Community rules on competition. 
Another aspect is the calculation of fines. Where undertakings involved in a 
competition proceeding display a cooperative attitude it is the Commission's 
practice to take that into consideration in determining the amount of the 
fine. That is why the Commission had reduced the fines imposed on ICI by 
10%. The Court found that this did not go far enough. At the Commission's 
request, ICI had furnished highly detailed information which concerned not 
(1) The references are given in the Annexes. 
(2) Twenty-first Competition Report, point 143 
2.I I.§1. 2 
191 
only its own conduct but also that of the other undertakings. Without that 
information the Commission's investigation would have been much more 
difficult. ICI had thus contributed to bringing the infringement to an end. 
The Court accordingly reduced ICI's fine from ECU 10 million to 
ECU 9 mi I I ion. 
2.I I.§2. 3 
192 
<T4> §2. Application of Article 85 to a cooperative 
314. In its judgment of 2 July ir> Case T-61/89 Dansk PeIsdyravlerforening v 
Commission the Court of First Instance set forth the principles governing the 
application of Article 85(1) to cooperative associations. The Commission had 
by Decision imposed a fine on Dansk Pelsdyravlerforening on account of 
various clauses in its Rules and certain concerted practices which restricted 
competition between the association, whose business is the sale of skins, and 
third parties, and also between the association's members themselves. 
After pointing out that the products concerned were not mentioned in Annex II 
to the Treaty, which rendered Regulation No 26 inapplicable here, the Court 
considered whether the no-competition clauses, the supply obligations and the 
concerted practices to which the Commission took objection in its Decision 
were actually restrictive of competition. 
The Court accepted most of the Commission's arguments, but annulled some of 
the articles of the Decision for lack of proof or sufficiently precise 
reasoning. 
2.1 I.§3. 4 
193 
<T4> §3. Application of Article 85 to a selective distribution system 
315. In 1985, the French cosmetics manufacturer Vichy notified to the 
Commission its system of distributing its products in France exclusively 
through dispensing chemists. 
In 1988, following various decisions by the French authorities declaring the 
system to be contrary to Article 85 of the EEC Treaty, Vichy revised it, 
thereby rendering the notification null and void. 
In 1989 a new system was notified, applicable to all Member States with the 
exception of Denmark. In France the grant of approval as a distributor of 
Vichy products was subject to possession of a diploma in pharmacy, whereas in 
the other Member States distributors had to be practising dispensing 
chemists. 
The Commission sent Vichy a statement of objections concerning the 
distribution system in Member States other than France, giving it an 
opportunity to submit its observations, and subsequently adopted a Decision 
under Article 15(6) of Regulation No 17. It was that Decision which was the 
subject of the application. It was a preliminary Decision whereby the 
Commission withdrew the benefit of the immunity from fines which attached to 
the not i f icat ion. 
In its Judgment*3) the Court summed up the case law of the Court of Justice 
on selective distribution. It declared that, in the present case, the 
criterion for approval was quantitative in nature and that by all estimates 
it was disproportionate and had affected trade between Member States by 
eliminating parallel imports. As far as Article 85(3) was concerned, the 
applicant had not proved that assistance could be given to customers only by 
practising dispensing chemists and not by a qualified chemist who was not 
practising. To that extent, the consumer would not receive a fair share of 
any benefit. 
(3) Judgment of 27 February 1992, Case T-19/91, not yet reported 
2. I I.§4. 5 
194 
<T4> §4. Non-applicability of Article 85 to statutory restrictions 
on imports and exports of electricity 
316. In Rendo and Others v Commission*4) the applicants asked the Court of 
First Instance to annul in part the Commission Decision in the Iisselcentrale 
case,*5) which concerned restrictions on imports of electricity into 
the Netherlands for supply to the public and on exports of electricity from 
the Netherlands, to the extent that the Commission had refrained from 
applying Article 85 to the import and export prohibitions imposed on 
generators in the area of public supply on the ground that they originated in 
a legislative measure. The Decision did not look into the question whether 
the restrictions on imports were justified in the light of Article 90(2), as 
that would have meant examining the relevant Dutch Act, which was not the 
Decision's purpose. The Commission had, however, indicated that proceedings 
would be brought under Article 169 of the Treaty against the Dutch Government 
for the latter's failure to fulfil its obligations. 
317. The Court found that, although Rendo's complaint concerning electricity 
imports had not been rejected but had remained pending during the Article 169 
proceedings, the application was admissible. The complainants' procedural 
rights would be more circumscribed in Article 169 proceedings, so that their 
legal position had indeed been affected, which was sufficient grounds for 
them to be able to bring an action for annulment. 
The application was, on the other hand, inadmissible as far as it related to 
the restrictions on exports in the area of public supply. Although the 
question had been raised in the Decision's recitals, the substantive 
provisions, which were the only part that was relevant, did not give any 
indication as to what the Commission's definitive position was. 
The fact that the complainants were mentioned in the Decision did not allow 
them to contest it as a whole when the scope of their complaint was narrower, 
as they were not individually concerned by matters outside their complaint. 
(4) Judgment of 18 November 1992 in Case T-16/91, not yet reported 
(5) Decision of 16 January 1991, OJ L 28, 2.2.1991, p. 32. 
2. I I .§4. 6 
195 
The Court stressed it had no power to issue direct orders to the Commission. 
On the substance of the case, the Court held that the Commission was not 
obliged to act on a complaint that an infringement had been committed unless 
the subject of the complaint fell within its exclusive jurisdiction. That 
was not the case with Article 90(2), which could be applied by national 
courts. Moreover, where a complaint concerned an undertaking entrusted with 
the operation of services of general economic interest, the Commission was 
a fortiori not obliged to act if the investigation of the complaint led to a 
national law's compatibility with the Treaty being assessed. 
Where a restriction stemmed from the existence both of a national law and of 
an agreement between undertakings, the law had to be examined first, applying 
the procedure for failure to fulfil an obligation, as the agreement could not 
have any practical effects except in so far as the restrictions it laid down 
exceeded those arising from the law. In that event, the complainant might, 
of course, be adversely affected, but the priority given to the failure to 
fulfil the obligation meant that the complaint would remain pending before 
the Commission and hence would be investigated subsequently. 
In the present case, the Commission had not considered whether the 
restrictions on imports were justified under Article 90(2). They therefore 
constituted an infringement of Article 85 as long as that question had not 
been settled. The Court did not accept the complainants' argument that the 
agreement was provisionally valid as long as Article 90(2) had not been 
dec Iared i nappIi cab Ie. 
2.II.§5. 7 
196 
<T4> §5. Refusal to exempt a net price system for imported books 
318. In Publishers Association v Commission*8) the Court of First Instance 
had to consider whether the Commission's refusal to exempt a set of 
agreements notified by the Publishers Association was justified. The 
Association, which represents the vast majority of publishers in the 
United Kingdom, had introduced a system for the sale of books in the UK at 
collectively fixed prices. The Commission had taken the view that, in so far 
as they applied to trade in books between Member States, the agreements were 
contrary to Article 85(1) of the Treaty and did not qualify for exemption as 
they involved restrictions which were not indispensable.*7) 
The applicant's main contention was that the reasoning on which the Decision 
was based was incorrect. This contention was rejected by the Court, which 
upheld the Decision in its entirety. 
In its judgment, the Court stated that it was for those making a notification 
to prove that their agreement satisfied all the conditions laid down in 
Article 85(3) of the Treaty, whereas the Commission was entitled at any time 
before the definitive adoption of the Decision to find that any one of the 
conditions was not met. 
The Commission had been right to maintain in the present case that there was 
no need for the net price system to be collective. Both publishers and 
booksellers could carry on their activities in a system where each publisher 
formulated individually its own conditions of sale. 
(6) Judgment of 9 July 1992, Case T-66/89, not yet reported. 
(7) Decision of 12 December 1988; Eighteenth Competition Report, point 52 
2.I I.§6. 8 
197 
<T4> §6. The concept of effect on trade between Member States 
319. In the flat glass case,*8) the Court of First Instance held that an 
agreement between the leading Italian flat-glass producers dealing with 
prices and conditions of sale was necessarily capable of affecting trade 
between Member States. 
320. In the context of criminal proceedings against a driving instructor who 
had broken a law prohibiting the giving of driving lessons in a district 
other than that in which the driving school was situated, the Lisbon Court of 
Appeal asked the Court of Justice to give a preliminary ruling on the 
question whether Article 85(1) of the Treaty precluded such a restriction. 
The Court replied in the negative,*9) ruling that, although Member States 
were required under the second paragraph of Article 5 of the Treaty to 
refrain from enacting or maintaining in force any measure capable of 
rendering the competition rules ineffective, Article 85 applied only to the 
extent that the anti-competitive practices were capable of affecting trade 
between Member States. This condition was fulfilled only if it was 
established that the national legislation had the effect of denying new 
entrants access to the market, which was not the case with the legislation 
in quest ion. 
(8) Judgment of 10 March 1992, Joined Cases T-68/89, T-77/89 and T-78/89 
Société Italiano Vetro. Fabbricca Pisana et PPG Vernante Pennitalia v 
Commission. not yet reported. 
(9) Judgment of 19 March 1992, Case C-60/91 Batista Morais v Ministério 
Publico, not yet reported. 
2.II.§7. 9 
<T4> §7. Abuse of a collective dominant position 198 
321. The fiat glass case*10) concerned a Commission Decision of 
7 December 1988.*11) 
In its Decision the Commission had found that three Italian flat-glass 
producers were infringing Article 85 of the Treaty by participating in 
concerted practices relating to their prices and conditions of sale to the 
principal Italian wholesalers, the Fiat group and another customer, by fixing 
quotas for the last two customers and by exchanging products with a view to 
sharing the market. The Commission had also found that the firms occupied a 
collective dominant position in so far as they denied customers the 
possibility of bringing price competition into play between suppliers and 
fixed quotas for the automotive market. 
The main lesson to be learned from the Judgment delivered by the Court of 
First Instance (paragraphs 357 to 360) is that the Court has acknowledged 
that Article 86 can be infringed by a collective dominant position. This can 
be the case where two or more independent economic entities are united by 
such economic links in a specific market that together they hold a dominant 
position vis-à-vis other operators. The Court cited as an example of such 
links the case where such undertakings jointly have, through agreements or 
licences, a technological lead over their competitors. The Court found 
support for its interpretation in the wording of Regulation (EEC) No 4056/86, 
which provides that liner conferences are incompatible with Article 85(1). 
However, to establish an infringement of Article 86 of the Treaty, it is not 
sufficient to "recycle" the facts constituting an infringement of Article 85. 
In the present case the Court found that not all the infringements that were 
alleged to have taken place had been established, and it annulled the 
Decision in its entirety in respect of one undertaking and partially in 
respect of the other two, reducing the fines accordingly. There is another 
lesson to be learned from this judgment, namely the extreme importance of 
documentary evidence and the way it is presented in a Commission decision. 
(10) Referred to above. 
(11) Eighteenth Competition Report, point 48 
2.1 I.§8. 10 
199 
<T4> §8. Procedure 
<T6> (a) Non-existence of a decision 
322. The PVC cases*12) turned on the interpretation of the Commission's 
Rules of Procedure. Article 12 of those Rules provides that acts adopted by 
the Commission are to be authenticated in the language or languages in which 
they are binding by the signatures of the President and the 
Executive Secretary. 
The Court of First Instance held that the Rules had been infringed in these 
cases. 
Firstly, the draft Decisions submitted to the Commission on 14 December 1988 
in English, French and German differed from the Decisions ultimately served 
upon the companies. The differences were more than just linguistic and 
affected both the reasoning on which the Decisions were based and the 
Decisions' substantive provisions. They therefore violated the principle 
that a measure was unalterable once it has been adopted, and infringed 
Article 190 of the EEC Treaty.*13) 
Secondly, the Member of the Commission responsible was not competent to issue 
the contested Decisions. It was clear from the minutes of the Commission 
meeting that the Decisions had not been adopted in Dutch and Italian, which 
were authentic texts within the meaning of Article 12 of the Rules of 
Procedure. In the Court's view, Article 27 of the Rules did not allow the 
Commission to delegate the preparation of such instruments. The Member of 
the Commission therefore had no authority to sign the Decisions in those 
languages. Nor was he competent to sign rat lone temporis. When, on the last 
day of his term of office, he signed the letters notifying the contested 
measures, the various language versions of those measures had not yet been 
finalized and could therefore not be notified. This defect could have been 
remedied had the Commission proved that he had signed only copies of the 
Decisions notified to the undertakings and that the originals had been 
signed by a duly authorized person. However, the Commission was unable to 
produce the original versions. 
(12) Judgment of 27 February 1992, Joined Cases T-79, 84, 86, 89, 91, 92, 94, 
96, 98, 102 and 104/89; E.C.R. I I-499 seq.. 
(13) Case 131/86 United Kingdom v Council [1988] ECR 905. 
2.1 I.§8. 11 
200 
The textual alterations and the lack of competence of the authority issuing 
the measures could have been considered grounds for annulling the Decisions. 
However, the Court examined instead the applicants' arguments as to the 
measures' non-existence. In the Court's view a measure may be declared non­
existent where it is vitiated by particularly serious and manifest defects. 
The plea of non-existence concerns a matter of public interest which may be 
relied upon at any time during the proceedings and which a court must raise 
of its own motion. In the light of the serious defects already found to 
exist, the Court called upon the Commission to produce the Decisions in their 
original, authenticated form. The only documents submitted by the Commission 
were the draft Decisions in the three languages, two extracts from minutes 
and a letter dated 5 January 1989 signed by a Member of the Commission. 
The Court held that, under the circumstances, it could not be established 
that Article 12 had been complied with. That provision was of fundamental 
importance as a means of creating legal certainty for those subject to 
measures adopted by the full Commission, because only adoption by the full 
Commission and authentication by the minutes of the meeting made it possible 
to be certain of a measure's existence and of its content and to be sure that 
it corresponded exactly to the Commission's intentions. The importance of 
authentication was borne out by the fact that natural and legal persons could 
rely upon the institution's Rules of Procedure in so far as the provisions 
thereof created rights and contributed to legal certainty for such persons. 
The Court referred in this connection to Article 192 of the Treaty, which 
empowers national courts to verify the authenticity of Community measures. 
The Court considered that, as a result of the lack of authentication in the 
present case, it was impossible to determine precisely the date and content 
of the measures and the authority issuing them. It concluded that the 
measures could not be regarded as decisions within the meaning of Article 189 
of the Treaty. Hence the applications had been made in respect of non­
existent decisions and were dismissed as inadmissible. 
The Commission disagrees with virtually all the Court's findings and has 
appealed against the judgment. 
2.I I.§8. 12 
201 
<T6> (b) Commission's power to reject complaints 
323. Underlying the Automec case*14) is a decision by BMW Italia not to 
renew its agreement with Automec for the distribution of BMW vehicles in the 
Italian province of Treviso. Automec complained to the Commission, alleging 
that BMW's conduct infringed Article 85 of the Treaty. Automec considered 
that BMW's distribution system was a selective distribution system within the 
meaning of Regulation (EEC) No 123/85 and that Automec fulfilled the criteria 
laid down. As a result, Automec asked the Commission to issue an injunction 
requiring BMW to execute the orders Automec had placed and to authorize 
Automec to use the BMW trade marks. 
The complaint was rejected on 28 February 1990 by decision of the Member of 
the Commission responsible for competition matters, on the ground inter alia 
that the case was one which could be dealt with by a national court. It was 
against that decision that Automec lodged this application, which the Court 
of First Instance dismissed as inadmissible. 
The Court had first of all to decide whether the Commission had a 
discretionary power to reject complaints submitted to it, or, on the 
contrary, whether it was required to open an investigation whenever it 
received a complaint. 
The practical significance of this question is considerable. 
The Court found that the Commission was not obliged to investigate every 
complaint. Complainants were not entitled to a decision as to the existence 
or otherwise of the infringement they alleged had been committed, except 
where the subject-matter of the complaint fell within the Commission's 
exclusive jurisdiction, as was the case, for example, with the withdrawal of 
an exempt ion. 
The Commission was therefore free to define priorities in dealing with 
complaints. 
Of course, it had always to examine carefully the points of law and fact to 
which the complainant had drawn its attention. In the present case the 
Court held that this condition had been satisfied. 
(14) Judgment of 18 September 1992, Case T-24/90, not yet reported 
2.1 I.§8. 13 
202 
The second question which the Court considered in this context was no less 
important: was the Commission, in determining the degree of priority to be 
applied to the examination of alleged infringements, Justified in referring 
to the Community interest of the case? 
The Court answered this question too in the affirmative: the Commission was 
an administrative authority which had to act in the public interest. 
The Court said that such reference to the Community interest could not be 
made in an abstract manner. The Commission was required to set forth the 
factual and legal considerations which prompted it to conclude that there was 
insufficient Community interest. It should take into account inter al ia the 
impact of the alleged infringement on the functioning of the common market, 
the probability of being able to establish its existence and the extent of 
the necessary investigation measures. 
The Commission was also entitled to take into account the real possibility 
that the intervention of a national court might enable proper effect to be 
given to Article 85(1). 
Lastly, the Court pointed out that the existence of a block exemption 
Regulation, assuming it was applicable, was a factor the Commission could 
take into account in assessing the Community public interest in carrying out 
an investigation. The principal objective of block exemptions was to limit 
the need for notification and individual scrutiny of the contracts employed 
in the area of activity concerned. The existence of such Regulations also 
facilitated the application of competition law by national courts. 
The Court's detailed analysis of the Commission's power to reject a complaint 
afforded it an opportunity to reaffirm, in the light of previous judgments, 
in particular that in Delimitis.*15) the major role national courts could 
play in applying Community competition law. This development is taken fully 
into account by the Commission in its Notice on the subject. 
(15) Case C-234/89 [1991] ECR I-935 
2.II.§8. 14 
203 
<T6> (c) Application for a finding that, by rejecting a complaint, the 
Commission had improperly failed to act 
324. In Asia Motor France the Court of First Instance pronounced on the 
admissibility of an action for failure to act, with an application for 
compensation for that failure.*18) The applicants claimed that the 
Commission was at fault for not acting on their complaint concerning the 
existence of a restrictive agreement between the French importers of five 
makes of Japanese car. The agreement, which had been concluded under the 
auspices of the French Government, sought to prevent the importation into 
France of other makes of Japanese car. The Commission had rejected the 
complaint on the ground that the undertakings whose conduct was put in 
question had no operational leeway in the matter. But the Commission's 
rejection of the complaint had come after the action for failure to act had 
been brought. The Court held that the nature of such an action was to 
require the defendant institution to act, in pursuance of Article 176. 
Consequently, the action became devoid of purpose if, as in the present case, 
the institution had acted after the commencement of proceedings but before 
delivery of the judgment. 
The Court dismissed the claim for compensation as the applicants had not 
substantiated the loss they alleged they had sustained. On the other hand, 
it ordered the Commission to pay most of the costs owing to the lateness of 
its act ion. 
<T6> (d) Commission's power to adopt interim measures 
325. By its Judgment of 24 January in Case T-44/90 La Cine the Court of 
First Instance annulled the Decision whereby the Commission had refused to 
take interim measures in response to a complaint by a French television 
channel, La Cinq, alleging that the conduct of the European Broadcasting 
Union (EBU) infringed Articles 85 and 86. 
La Cinq submitted that it satisfied the criteria for membership of the EBU 
(which would have afforded it access to the Eurovision network for news and 
sport), but that the EBU had rejected its application in a discriminatory 
manner. 
The Commission had refused to act upon the complaint on the grounds, firstly, 
(16) Judgment of 18 September, Case T-28/90 Asia Motor France and Others v 
Commission, not yet reported. 
2.1 I.§8. 15 
204 
that it did not appear prima facie from a summary consideration of the facts 
that any infringement had been committed, and secondly, that no irreparable 
damage had been suffered by La Cinq, which had at all events been able to 
join the EBU network on a contractual basis. 
In its judgment the Court made the preliminary observation that only two 
conditions had to be met before interim measures could be granted: the 
existence of practices which were prima facie likely to constitute a breach 
of the competition rules, and a risk of serious and irreparable damage. In 
the Court's view, the concept of urgency was included in the second 
condit ion. 
The Court went on to state that, in the present case, the Commission had 
committed two errors of law. 
Firstly, contrary to what the Commission had maintained, the first condition 
did not mean that the existence of a clear and flagrant infringement had to 
be established at the stage of the mere prima facie assessment. The 
requirement of a prima facie infringement could not be equated with the 
requirement of certainty which a final decision had to satisfy. 
Secondly, the second condition should not be interpreted as meaning that only 
damage which could not be remedied by a subsequent decision could be regarded 
as irreparable. It was sufficient that it should no longer be possible to 
remedy it by any decision which the Commission might take at the end of the 
administrative procedure. The Commission had also committed a manifest 
error of Judgment when it considered that the possibility for La Cinq to 
secure contractual access to Eurovision film was equivalent to membership of 
the EBU. It followed that the Commission had failed to fulfil its 
obligation to take into account all the relevant facts in the present case in 
order to determine the existence of a risk of serious and irreparable damage. 
Although it annuls the Commission Decision, the judgment actually increases 
the scope for Commission interim measures in future, in that it interprets 
the conditions laid down in the Camera Care Judgment*17) less restrictively 
than the approach which the Commission has followed so far. 
(17) Case 792/79R Camera Care Ltd v Commission [1980] ECR 119. 
2.1 I.§8. 16 
205 
<T6> (e) Cooperation with national authorities 
326. In its Judgment in the Spanish banks case,*18) which was delivered in 
response to a reference for a preliminary ruling from the Spanish Competition 
Court, the Court of Justice set forth the conditions under which national 
competition authorities may use information supplied to them by the 
Commission under Article 10 of Regulation No 17. 
That Article provides that the Commission shall forthwith transmit to the 
competent national authorities a copy of the applications and notifications 
lodged with it by undertakings in accordance with Articles 2, 4 and 5 of 
Regulation No 17, together with copies of the most important documents sent 
to it and of any requests for information addressed to the undertakings under 
Article 11 of the same Regulation. 
In the present case, the Spanish banks considered that the competition 
authority, the DGDC, had initiated proceedings against them for infringing 
Spanish law on the strength of information obtained, not by that body itself, 
but by the Commission. 
The court making the reference asked whether the national authority 
responsible for applying Articles 85 and 86 could use information obtained by 
the Commission following a request for information or a notification where 
the authority applied either national competition law or Community 
competition law, or both national and Community competition law. 
In its reply the Court did not draw any distinction based on the nature -
whether national, Community or both - of the rules applied. 
Basing its considerations on the general scheme of Regulation No 17, it 
replied in the negative in all three cases. It pointed out in particular 
that the information furnished to national authorities by the Commission was 
communicated under a Regulation which was not concerned with proceedings 
conducted by Member States' competent authorities, even where the purpose of 
those proceedings was to implement Articles 85(1) and 86. The proceedings 
(18) Judgment of 16 July 1992, Case C-67/91 Direcciôn de Defensa de la 
Competencia (DGDC) v Asociaciôn Esoanola de Banca Privada and Others, 
not yet reported. 
2.I I.§8. 17 206 
conducted by those authorities were distinct from those conducted by the 
Commission and the gathering of evidence by those authorities was governed by 
national law. Even the implementation of Articles 85(1) and 86 by national 
authorities was subject to national procedural rules. 
Regulation No 17 required Member States' competent authorities and their 
officials to refrain from communicating confidential information. That 
provision thus implemented in its field of application the general obligation 
of professional secrecy imposed by Article 214 of the Treaty. In addition, 
the rights of the defence would not be observed if an authority other than 
the Commission could use information acquired under Regulation No 17 as 
evidence in proceedings which were not governed by that Regulation. 
The Court moderated the force of its prohibition, however, by acknowledging 
that such information could be treated by the national authorities receiving 
it as evidence capable of justifying the initiation of a national proceeding. 
But in order that facts mentioned in such material might validly form the 
subject of a national proceeding, proof of their existence had to be 
established, not by the documents gathered by the Commission, but by evidence 
which was appropriate to national law and which observed the guarantees laid 
down by that law. 
<T6> (f) Conditions governing the application of Article 15(6) 
of Régulât ion No 17 
327. The Judgment of the Court of First Instance in Vichy*19) confirmed the 
extent of the Commission's power under Article 15(6), while clarifying in 
certain respects the procedures for applying that provision. 
The Court held that the measure adopted on the basis of Article 15(6) was 
indeed a decision capable of forming the subject of an action for annulment. 
The application of Article 15(6) to the only company to have notified its 
agreement, while other producers operated the same system without informing 
the Commission, was in no way discriminatory. The only effect of the 
(19) Referred to above. 
2. I I.§8. 18 
207 
decision taken under Article 15(6) had been to restore Vichy to the position 
in which it would have remained had it not notified its agreement. 
The opinion of the Advisory Committee did not have to be sought before a 
decision was taken under Article 15(6), as that body had to be consulted only 
during the final stage of the proceeding (paragraphs 1 and 3 of Article 10 of 
Regulation No 17, read together). 
The fact that any consultation of the Advisory Committee had necessarily to 
be preceded by a hearing did not mean that, conversely, any hearing had to be 
followed by consultation of the Advisory Committee. 
Similarly, the fact that a decision was involved did not automatically mean 
that the Advisory Committee had to be consulted. 
A decision based on Article 15(6) had to respect the company's fundamental 
rights, and in particular its right to a fair hearing. A statement of 
objections therefore had to be sent to the company. Consultation of the 
Advisory Committee served a different purpose, and did not form part of that 
body of fundamental rights. Vichy had been granted a hearing, so the 
question whether a hearing was obligatory did not arise in this case. The 
judgment stated only that the company must be given an opportunity, as 
required by Article 19(1) of Regulation No 17, to defend its viewpoint 
regarding the Commission's objections. 
In checking whether there had been a serious and manifest infringement of the 
competition rules which justified a decision under Article 15(6), the 
Commission could rely on a combination of factors, even if each of them on 
its own might be insufficient to establish the serious and manifest nature of 
the infringement. 
<T6> (g) Commission's lack of power to issue an injunction 
on the basis of Regulation No 17 
328. Automec afforded the Court of First Instance an opportunity to answer 
the question whether the Commission had the power to enjoin an undertaking to 
execute orders placed by an intending distributor. Such a power might have 
.....I..» 208 
been based on Article 3(1) of Regulation No 17, which authorizes the 
Commission to require undertakings to bring any infringements it establishes 
to an end, read in conjunction with Article 85(1). The Court answered the 
question in the negative. The Treaty provided only that an agreement which 
infringed Article 85(1) was null and void, this being laid down in 
Article 85(2). The further consequences flowing from a breach of Article 85 
were a matter to be determined by the national courts. Consequently, only 
national courts could oblige an economic operator to contract with another 
economic operator, if that was appropriate and in accordance with national 
law. 
This judgment is also based on the principle that freedom of contract has to 
remain the rule. The principle is all the more essential where there are 
other means of bringing an infringement to an end, as is the case with 
infringements resulting from the operation of a distribution system. 
<T6> (h) Procedure before the Court of First Instance 
329. Before the Court delivered judgment in the polypropylene cases, the 
applicants requested that the oral procedure be reopened so that an inquiry 
could be conducted. They argued that the contested Decision was non-existent 
within the meaning of the Court's Judgment in PVC. as the Commission's 
decision-making practice in the present case was the same as that described 
in that judgment. It therefore had to be determined whether the Commission 
had actually adopted a Decision concerning them. The Court held, however, 
that there were no grounds for ordering the reopening of the oral procedure 
for that purpose.*20) Only if the parties furnished sufficient evidence of 
the non-existence of the contested measure did it have to consider the 
question as a matter of course. In the present case the applicants' 
arguments were not sufficiently compelling. An alleged breach of the rules 
on languages and a general presumption that the Commission had amended its 
Decision after the event were not enough to refute the measure's apparent 
legality. 
330. The Dutch banks case*21) involved a Commission Decision of 
19 July 1989 relating to several agreements and provisions adopted by Dutch 
banking associations. 
(20) Order of 26 March 1992, Case T-4/89 Rev. BASF v Commission and Order of 
4 November 1992, Case T-7/89 Rev. DSM v Commission, not yet reported. 
(21) Judgment of 17 September 1992, Case T-138/89 NBV and NVB v Commission. 
not yet reported. 
u: 
2.I I.§8. 20 
209 
The Decision had granted both negative clearance and an exemption. 
The associations concerned were not satisfied, however, and sought the 
partial annulment of the Decision pursuant to Article 173 of the Treaty. 
The application was directed more specifically at the Commission's reasons 
for finding that there were no grounds for taking action under Article 85(1) 
against an agreement concerning bank charges for handling certain charitable 
transactions. In the Commission's opinion, the agreement was restrictive of 
competition but had no appreciable effect on trade between Member States. 
The applicants challenged the view that their agreement restricted 
compet i t ion. 
The Court of First Instance held, firstly, that an action under Article 173 
could be brought only against a measure liable to affect a specific legal 
position. Only the substantive provisions of a Decision were capable of 
having such a legal effect. The reasons on which the Decision was based 
could be subject to judicial review, but only inasmuch as they formed the 
essential basis for the contested substantive provisions. 
Secondly, the Decision in question gave satisfaction to those requesting it 
and was therefore inherently incapable of changing their legal position. 
Negative clearance, on the other hand, could adversely affect the economic 
interests of a third party. Such a measure could therefore be contested by 
a third party with a legitimate interest. The position of the interested 
third party and that of the addressee of the Decision should therefore not be 
confused. 
Thirdly, an economic operator had to show evidence of a real and immediate 
interest in having the contested measure annulled. That was not the case 
here, for two reasons. Firstly, the applicants had only a hypothetical 
interest, that is to say the possibility of an action before a national court 
and the supposition that that court might reach a different conclusion from 
the Commission concerning the effect on trade between Member States. 
Secondly, should a change in circumstances result in the agreement in 
question affecting trade to an appreciable extent, that change might Justify 
a review of the case and prompt the Commission to reconsider the grant of 
negative clearance. The applicants could still assert their right in that 
eventual i ty. 
2.II.§8. 21 JL^O 
In the light of these considerations the Court declared the application 
inadmissible. 
331. In flat glass*22) the Court of First Instance stated that it did not 
have Jurisdiction to remake a contested decision (except, of course, with 
regard to fines): it could only annul it, In whole or in part. The 
assumption by the Court of such Jurisdiction could disturb the inter-
institutional balance established by the Treaty and would risk prejudicing 
the right of defence. 
332. Actions for the suspension of a contested act or for the grant of 
interim measures have been numerous this year. They have been brought not 
only against final decisions adopted by the Commission, but also against 
procedural steps and provisional measures taken by it. 
The President of the Court of First Instance was asked to order interim 
measures under Articles 185 and 186 of the EEC Treaty in connection with an 
action for the annulment of a Commission decision; the Commission had 
refused to communicate various documents requested by the applicants with a 
view to their exercising their right of defence against a Statement of 
Objections (Order of 23 March 1992 in Joined Cases T-10/92, T-11/92, T-12/92, 
T-14/92 and T-15/92R cement). The President rejected the requests 
essentially on the grounds that the application was manifestly inadmissible 
in so far as it was directed against a purely procedural act (a statement of 
objections which was notified solely to the parties as those concerned) and 
in addition because no irreparable harm existed because, if the Court were to 
find in favour of the applicants in the main action the Commission would be 
obliged to recommence the administrative procedure, paying due regard to the 
requirements relating to access to the file. Such an approach is probably 
valid for most actions brought against procedural measures taken by the 
Commission before it adopts a final Decision. It was confirmed, moreover, 
by the Court in its Judgment on the substance of the case, in which it 
declared the applications lodged inadmissible on those grounds.*23) 
(22) Referred to in point 321 of this Report. 
(23) Joined Cases T-10/92, T-11/92, T-12/92 and T-15/92 SA Cimenteries CBR. 
Blue Circle Industries pic. Syndicat National des Fabriquants de Ciments 
et de Chaux. and Fédération de l'Industrie Cimentière asbl v Commission. 
2.I I.§8. 22 
211 
The Langnese and Schol1er case involved an application for the suspension of 
interim measures adopted by the Commission (Order of 16 June 1992, Case T-
24/92R). The President of the Court of First Instance weighed the balance 
of interests at stake in the same way as he would have done on an application 
for interim measures against a final Commission Decision. 
In an Order made in SPO and Others v Commission*24) the President of the 
Court of First Instance dismissed most of an application for interim relief, 
but suspended the operation of part of the contested Decision so as to enable 
the applicant association SPO to continue functioning. The SPO amended its 
rules following delivery of the Order. 
(24) Order of 16 July, Case T-29/92R, not yet reported. 
212 2.I I.§9. 23 
<T4> §9. Art icle 90 
<T6> (a) Commission's powers under Article 90 
333. The Court of Justice delivered its second judgment in a case involving a 
Directive adopted by the Commission under Article 90(3) in the 
telecommunications field,*25) namely Directive 90/388/EEC of 28 June 1990 on 
competition in the markets for telecommunications services. 
The Court basically reaffirmed the position it had already taken in its first 
télécoms Judgment.*28) This may be summed up as follows. 
Article 90(3) gives the Commission the power to lay down general rules 
specifying the obligations incumbent on Member States with respect to the 
undertakings referred to in that Article. This power is not confined to 
simply monitoring the application of existing Community rules, and is not 
restricted by the fact that the Council has acted or may act under 
Articles 100a and 87. This holds true even if the Directive at issue gives 
further substance to Article 59 of the Treaty and no instrument has been 
adopted by the Council concerning freedom to provide services in the 
telecommunications sector. For the Commission to be able to act, it is 
sufficient that Article 59 be directly applicable. 
The Commission did not exceed its powers by laying down a rule of law 
relating to Article 86 (the requirement that the person exercising the powers 
of authorization, control and supervision be distinct from the 
telecommunications organizations) while leaving Member States free to choose 
the means of complying therewith. 
It was not necessary for the Commission to carry out a detailed inquiry into 
the conduct of telecommunications organizations before adopting the 
Directive. An extension without any objective reason of the monopoly over 
the establishment and operation to telecommunications services is in itself 
incompatible with Articles 90 and 86. 
(25) Judgment of 17 November 1992, Joined Cases C-271/90, C-281/90 and C-
289/90 Spain and Others v Commission, not yet reported. 
(26) Judgment of 19 March 1991, Case C-202/89 France and Others v Commission. 
not yet reported; Twenty-first Competition Report, point 153. 
2.I I.§9. 24 
213 
The Court nevertheless partly annulled the Directive, inasmuch as it did not 
define in detail the special rights to which it related and inasmuch as it 
applied to certain behaviour which in reality was adopted by undertakings on 
their own initiative. 
334. In another case the applicants sought the annulment of a Commission 
Decision of 20 December 1989 concerning the provision in the Netherlands of 
express delivery services.*27) The Commission had considered that the Dutch 
Act which reserved to PTT Post BV the express delivery of letters weighing up 
to 500 grammes at a price below a set level was contrary to the Treaty. 
Consequently the Commission Decision, which was adopted under Article 90(3) 
of the Treaty, stated that the Act was incompatible with Article 90(1) read 
in conjunction with Article 86. 
The applicants argued first of all that the Commission did not have the power 
to establish infringements of the Treaty by means of decisions under 
Article 90(3). 
The Court rejected this argument on the following grounds. 
Article 90(3) authorized the Commission to act by way of directives, that is 
to say to lay down general rules specifying the obligations which the Treaty 
imposed on Member States in relation to the undertakings referred to in 
Article 90(1). It also authorized it, however, to take decisions finding 
that a particular national measure was incompatible with the Treaty and 
specifying the measures which the addressee state had to adopt in order to 
comply with its obligations under Community law. 
The Court compared this power to take decisions with those which the 
Commission had under Article 93. In both cases the Commission had the power 
to intervene, not vis-à-vis the undertaking which had been placed in a 
position where it could flout the competition rules, but vis-à-vis the 
Member State responsible for the impairment of competition. 
(27) Judgment of 12 February 1992, Joined Cases C-48/90 and C-66/90 Kingdom 
of the Netherlands. Koninklilke PTT Nederland NV and PTT Post BV v 
Commission, not yet reported. 
2.I I.§9. 25 
214 
It is important to note that the Court clearly confirmed here the 
Commission's power to take decisions under Article 90(3) to bring to an end 
specific infringements of the Treaty. 
<T6> (b) Procedure to be followed in taking a decision 
under Art icle 90(3) 
335. In the same case*28) the applicants maintained that the Commission had 
not respected the general principle of the defendant's right to a fair 
hearing. The Court of Justice agreed with them on this point and 
consequently annulled the Commission's Decision. 
The Court held that the principle required that, before a Decision was 
adopted, the Member State in question be sent a precise and full summary of 
the objections the Commission intended to formulate regarding it, and that it 
be given an opportunity to make known its views on any comments submitted by 
interested third parties. These two conditions had not been met in the 
present case, and the Dutch Government's right to be heard had therefore been 
infr inged. 
This also applied to the franchisees. As the direct beneficiaries of the 
contested national measure, being named therein and expressly mentioned in 
the Commission Decision, the economic consequences of which they bore 
directly, they likewise had a right to be heard. Despite this, they had had 
only informal talks with the Commission, and the latter had never told them 
precisely what it was in the national measure that it objected to. 
(28) Referred to above. 
3.I.A.§1. 1 
215 
<T1> PART THREE - COMPETITION POLICY AND STATE INTERVENTION 
<T2> Chapter I - Main decisions and measures taken by the Commission 
<T3> A. State aid 
<T4> §1. General policy questions 
<T5> - Main developments 
336. The completion of the single market programme and a series of other 
developments, imminent or longer-term, are making increasing demands on state 
aid policy. In the single market, the control of aid needs to be tighter. 
This is necessary not only to prevent distortions of competition between 
firms and industries, but also to foster balanced development of the 
Community's regions, in the interests of economic and social cohesion, a key 
objective of the Community. Aid to public enterprises must also be dealt 
with. Other demands arise from the constantly widening coverage of state aid 
work to newly deregulated sectors, especially services,*D the moves towards 
economic and monetary union, the European Economic Area Agreement and the 
prospective enlargement of the Community to new countries. 
In all these areas, mentioned in last year's Report,*2) further progress was 
achieved in 1992. In May the Commission issued Community guidelines on aid to 
small and medium-sized enterprises,*3) which codify and somewhat tighten up 
policy towards this widespread type of aid. A revised framework was issued 
for aid for synthetic fibres,*4) while work continued on a revision of the 
framework for environmental aid*5) and on guidelines for aid to 
capital-intensive investment projects*8) and export credit insurance.*7) 
The Commission dealt with many cases of capital injections into public 
enterprises, monitored privatizations in the former eastern Germany, Greece 
and Portugal,*8) and analysed the first year's batch of reports on financial 
transfers to state-owned firms under the reporting system introduced in 
(1) See points 438 to 447 of this Report. 
(2) Twenty-first Competition Report, point 158 
(3) See point 342 of this Report 
(4) See point 401 of this Report 
(5) See point 448 of this Report 
(6) See point 480 of this Report 
(7) See point 339 of this Report 
(8) See points 464 to 466 of this Report 
3.I.A.§1. 2 
216 
1991.*9) With a view to the future constraints of EMU, the Commission kept 
up the pressure on Member States with large budget deficits to reduce their 
aid spending. The third survey on state aid in manufacturing, published in 
July,*10) again showed how large a factor aid expenditure is in such 
deficits. With the agreement setting up a European Economic Area between the 
European Community and the EFTA countries due to enter into force in 1993, 
the Commission prepared for its wider responsibilities under the agreement. 
These will include taking into account the effects of aid in the EC on EFTA 
countries and vice versa and for this purpose consulting and providing 
information to its counterpart, the EFTA Surveillance Authority.*11) 
Finally, the Commission analysed the state aid situation in the EFTA and 
other countries that have applied for membership of the Community. Reports on 
the aid situation in Austria, Finland, Sweden and Switzerland were 
Incorporated in the opinions on their accession applications which the 
Commission has sent to the Council. 
337. To cope with the increasing demands on its resources, the Commission is 
following two main routes codification of rules and simplification of 
procedures. The first route is reflected in the frameworks and guidelines, 
which cover a growing proportion of state aid control work. The second is 
shown in moves to reduce the work generated by minor aid schemes that have 
little, if any, effect on competition and trade and by minor amendments of 
existing authorized schemes. Following its adoption of the SME aid 
guidelines in May, the Commission issued a revised notice on the accelerated 
clearance of aid schemes for SMEs and of amendments of existing schemes.*12) 
The notice widens the scope of the accelerated procedure, under which 
following a pro forma notification, clearance is obtained virtually 
automatically within 20 working days of notification, to many more schemes 
for SMEs than previously as the limits on the size of businesses covered have 
been raised to those in the SME aid guidelines.*13) 
A more far-reaching simplification of procedures has been introduced by the 
SME aid guidelines themselves. A de minimis facility removes altogether the 
obligation on Member States to notify to the Commission aid schemes which 
(9) Twenty-first Competition Report, points 167 to 172, and points 528 to 
531 of this Report. 
(10) See points 350 to 353 of this Report. 
(11) See points 82 to 84 and 343 and 344 of this Report. 
(12) OJ C 213, 19.8.1992. This procedure was formerly referred to as "aid of 
minor importance", see OJ C 40, 20.2.1990. 
(13) See point 342 of this Report. 
3.I.A.§1. 3 
217 
limit a firm to ECU 50 000 of aid for a particular broad class of expenditure 
(such as investment or training) over three years. Like the accelerated 
procedure, the de minimis facility is a move towards subsidiarity as well as 
a means of concentrating the Commission's resources on the more important 
cases. However, further relaxations of state aid control are not considered 
appropriate at present. This is an area, par excellence, where a strong 
central control authority is required. 
338. The Commission continued to improve the transparency of the state aid 
rules. Three multilateral meetings were held at which the Commission 
discussed policy papers with Member States.*14) Progress was made on 
standardizing notification forms and reporting obligations and on preparing a 
new edition of the collection of source materials on the state aid 
rules,*15) which will come out in 1993. The new edition will, for the first 
time, contain a simple guide to procedures in state aid cases. 
<T5> - Multilateral meetings 
339. A multilateral meeting between experts from all the Member States' 
Governments and Commission officials was held in February to discuss two 
sets of draft guidelines on export aid.*18) One of the papers proposed 
stricter controls on aid to public or state-backed export credit insurers 
that are in competition with private insurers for business in underwriting 
"marketable risks" (i.e. short-term commercial risks) within the Community; 
the other laid down rules for the level of interest subsidies on export 
credits in extra-EC trade. Reactions to the short-term export credit 
insurance paper were broadly favourable, but were more mixed towards the 
export subsidies proposal. Therefore, the Commission is considering 
pursuing only the former proposal under Article 92 of the EEC Treaty and 
leaving the latter area to a Council directive under Article 113. Action on 
interest subsidies was in any case much less urgent as a tightening of the 
OECD Consensus had much reduced the scope for such subsidies in trade with 
developed countries. 
(14) Twenty-first Competition Report, point 162. 
(15) EC Commission, Competition Law of the European Communities, 
Volume II: The State aids rules, Brussels/Luxembourg, 1993. 
(16) Twenty-first Compétition Report, point 166. 
3.I.A.§1. 4 
218 
340. In October a second multilateral meeting was held on a draft revised 
framework on aid for environmental protection and revised guidelines for aid 
to the synthetic fibres industry. The new environmental aid framework will 
replace the framework that has been in force in virtually unchanged form 
since 1974. The new rules are not merely a continuation of the existing 
framework, but take account of new developments in Community environmental 
policy and of experience gained in dealing with environmental aid cases that 
were not covered by the previous framework. The draft was discussed again at 
a third multilateral meeting in December, where disagreements emerged on some 
issues. In view of this, the Commission decided to extend the current 
framework for a further six months until 30 June 1993. The revised synthetic 
fibres aid code, however, received broad support at the October meeting and 
was adopted by the Commission in December.*17) 
341. The third meeting, in December, was mainly devoted to the future of the 
car aid framework, including the question whether the rules should be 
extended to certain basic components. However, it was decided simply to renew 
the framework.*18) The Commission also discussed with Member States how the 
de minimis facility should be used and monitored.*19) It plans to issue 
guidance on these technical matters early in 1993. 
<T5> - Aid to small and medium-sized enterprises 
342. In May the Commission issued guidelines on state aid to small and 
medium-sized enterprises.*20) The guidelines, the first-ever detailed 
codification of policy on aid to the vitally important SME sector, were 
finalized after further consultations with the Member States in February-
March through correspondence and at bilateral meetings. The rationale of the 
Commission's policy towards aid for SMEs was described in last year's Report. 
In the guidelines, a number of basic rules have now been established and will 
be applied to all SME aid schemes. 
The def init ion of small and medium-sized enterprise is an enterprise which: 
(17) See point 401 of this Report. 
(18) See point 405 of this Report. 
(19) See point 337 of this Report. 
(20) OJ C 213, 19.8.1992; Twenty-first Competition Report, point 165. 
3.I.A.§1. 5 
219 
- has no more than 250 employees and 
either 
an annual turnover not exceeding ECU 20 million, 
or 
a balance sheet total not exceeding ECU 10 million, 
and 
is not more than 25 % owned by one or more companies not falling 
within this definition, except public Investment corporations, 
venture capital companies or, provided no control is exercised, 
institutional investors. 
"Small" enterprises, which receive preferential treatment under the 
guidelines with respect to the permissible levels of investment aid in 
non-assisted areas, are similarly defined as firms with up to 50 employees, 
turnover of up to ECU 5 million or a balance sheet total of up to 
ECU 2 million, and a maximum 25 % dependence on a larger company. 
Besides the definition, the guidelines set maximum permissible intensities of 
aid to SMEs for investment in both non-assisted and assisted areas and for 
consultancy, training and similar activities that are relatively distant from 
the market place ("soft aid"). For the maximum levels of aid for other 
purposes, such as R&D, the guidelines refer to the relevant special 
framework, which likewise allow higher rates of aid for SMEs.*21) The 
maximum levels of investment aid in non-assisted areas, i.e. areas not 
eligible for national regional assistance independently of Structural Fund 
programmes, are 7.5 % gross for all SMEs and 15 % gross for small 
enterprises. In areas which are eligible for national regional aid, the rule 
is that in Article 92(3)(c) areas up to 10 percentage points of aid can be 
added to the prevailing rate of regional aid, and in Article 92(3)(a) areas 
15 percentage points. However, the absolute ceiling on investment aid in the 
two areas is 30 % and 75 % net respectively. In parts of the Community that 
have been designated as eligible for aid from the Structural Funds under 
Objective 2 or 5b but are not areas eligible for national regional aid, the 
Commission will decide the level of investment aid allowed for SMEs on a 
case-by-case basis until the end of 1993. "Soft aid", that is aid to 
encourage firms to enlist the help of consultants or to obtain training in 
areas such as management, finance, new technology and pollution control, can 
generally be authorized at rates of up to 50 %. 
(21) See R&D framework, OJ C 83, 11.4.1986. 
3.I.A.§1. 6 220 
Existing SME aid schemes authorized in the past will remain valid until 
reviewed by the Commission under Article 93(1) of the EEC Treaty. Such 
reviews have already commenced.*22) 
<T5> - The European Economic Area agreement 
343. The agreement on the European Economic Area (EEA), which should enter 
into force between the EC and the EFTA States except Switzerland in 1993 
after renegotiation, covers the field of state aid in its Articles 61 to 64 
and in a number of Annexes and Joint declarations and provides that the same 
rules on state aid as are applicable within the Community will also be 
applied by the contracting EFTA States. The agreement will be without 
prejudice to the existing Treaty rules on state aids, but as soon as state 
aid granted by an EC Member State affects or can affect trade and competition 
within the EEA, the EEA agreement provisions are applicable. This also 
applies for the EFTA, which through an independent EFTA Surveillance 
Authority will be responsible for dealing with all state aid granted by the 
EFTA member countries to their industries. 
344. Before the EEA agreement entered into force, state aid cases continued 
to be dealt with under the bilateral EC/EFTA country agreements. Thus, in 
November, a compromise was agreed between the Commission and the Austrian 
Government on aid for an automobile plant at Graz building a Chrysler 
multi-purpose vehicle. The Austrian Government agreed to reduce the aid 
intensity to 14.4% from the 33% originally proposed. 
<T5> - Lessons to be drawn from Commission practice and the 
case-law of the Court of Justice 
<T6> (a) Questions of substance 
<T7> * Aid in connection with sales of factory or office building sites 
345. The aid involved in the sale of land on preferential conditions by a 
local authority is difficult to quantify. Recent decisions show that, in 
examining individual cases, the Commission now systematically asks 
(22) See point 468 of this Report 
3.I.A.§1. 7 
221 
Member States to send it an independent expert's report on the market value 
of the land so that it can determine whether the price does not contain an 
aid element. 
<T7> * Guarantees provided by public authorities 
346. The Commission has traditionally been opposed to operating aid, 
particularly that which artificially allows ailing firms to stay in business 
without any prospect of a return to viability. It does not therefore accept 
guarantees granted to credit institutions by public authorities where such 
guarantees have no other purpose than to prop up firms which would otherwise 
be obliged to shut down. However, the Commission's current practice is to 
accept such guarantees where they are limited to six months and are intended 
to allow the firm to draw up and implement a restructuring plan, provided 
that the general rules on public guarantees are complied with. This approach 
is soon to be codified in the guidelines on aid for rescuing and 
restructuring firms in difficulty. 
<T6> (b) Procedural Questions 
<T7> * Scope now available to Member States to apply to the Court of Justice 
for annulment of decisions initiating 
Article 93(2) proceedings 
347. The main development this year as far as procedures are concerned was 
undoubtedly the two judgments delivered by the Court of Justice on 30 June 
declaring admissible appeals lodged against decisions to initiate proceedings 
under Article 93(2) of the Treaty.*23) The Court held in its Judgments that 
the decision to initiate proceedings involved a choice on the part of the 
Commission as to the nature of the aid and hence the procedure relating to 
it, since such a decision had different effects depending on whether the aid 
was deemed to be new aid within the meaning of Article 93(3) or existing aid 
subject to the rules of Article 93(1). 
(23) See point 532 of this Report 
3.I.A.§1 . 8 _ _ 222 
<T7> * Accelerated procedures for aid schemes for SMEs and for 
amendments to existing schemes 
348. The Commission extended to SMEs, as defined in the new SME aid 
guidelines, the benefit of the accelerated examination procedure (20 working 
days), leading virtually automatically to clearance, for certain aid 
schemes.*24) 
<T7> * Derogation from the procedural deadlines for certain aid 
granted by the Treuhandanstalt 
349. So as to take account of the difficult socio-economic situation in the 
former German Democratic Republic and of the specific nature of the 
Treuhandanstalt's activity, the Commission agreed that some of the aid 
granted by the TreuhandstaIt*25) should be examined within shorter 
deadlines than usual. The aid proposals will normally be decided on within 
15 working days of being notified, though in exceptional cases the German 
Government may request that the period be reduced to ten working days. 
Similarly, the Commission may exceptionally indicate that it needs an 
additional five working days to analyse the notification. If the 
notification proves to be incomplete, a request for supplementary 
information can be sent. Every effort will be made to avoid sending such a 
request. Once it has received the information, the Commission will have 
15 further working days. These deadlines are appreciably shorter than the 
30 working days that apply to individual aid awards notified under approved 
schemes. 
(24) See point 337 of this Report. 
(25) See point 19 of this Report. 
3.I.A.§2. 1 
223 
<T4> §2. Third survey on state aid 
350. In July the Commission published its third survey on state aid in the 
Community. The survey covers aid to manufacturing industry, agriculture, 
fisheries, coal-mining and transport (railways and inland waterways). It 
updates for the period 1988-90 the data compiled in the previous surveys, 
which covered the period 1981-88.*1) 
351. The main purpose of the survey is to describe, in as transparent a 
manner as possible, the present structure of state aid to firms in the 
Community, to make an overall assessment of the progress achieved in the 
Commission's tightening of its state aid policy, and to identify the areas on 
which the Commission's future policy could focus more. 
352. Total aid granted in the twelve Member States averaged ECU 89 billion 
in the period 1988-90 as against ECU 92 billion in the period 1986-88. Of 
this total amount, 40% went to manufacturing industry, detailed analysis of 
which is central to the survey; its amount also remained considerable, with 
annual expenditure between 1988 and 1990 amounting to ECU 36 billion. 
Although the figures show that, at Community level, aid to manufacturing 
industry decreased between 1986 and 1990, a slight increase at the end of the 
period, in 1990, suggests that the Commission must keep a very close watch on 
its trend, so that it does not Jeopardize the general downward trend in state 
aid in the Community. 
Leaving aside Greece, for which the figures available are only provisional, 
the highest aid levels (expressed as a percentage of value added) in 
manufacturing industry are found in Italy, Portugal and Ireland. The lowest 
levels are in Germany, Denmark and the United Kingdom. Taking the four 
largest European economies, the level of aid in Italy measured as a 
percentage of value added is three times as high as in the United Kingdom, 
more than twice as high as in Germany and more than one and a half times as 
high as in France. This shows clearly that the disparities between 
Member States remain considerable. 
(1) Eighteenth Competition Report, points 162 and 163; Twentieth Competition 
Report, points 188 to 192. 
3.I.A.§2. 2 224 
In addition, the figures show that the total amount of aid per person 
employed granted in the peripheral regions with limited budgetary resources 
remains relatively low compared with that granted in the four most prosperous 
countries in the Community. The ratios for Greece, Spain, Ireland and 
Portugal are below the Community average and much lower than in most of the 
richer and more central countries. Similarly, in manufacturing, government 
aid granted in the four largest Community economies accounted for 75% of the 
aid granted to industry in the Community between 1986 and 1988. This figure 
rose to 79% between 1988 and 1990. 
353. The fact that the relative level of support for industry in the most 
prosperous Member States is increasing to the detriment of the peripheral 
countries must be seen as a serious danger to cohesion. The Commission will 
therefore continue to do all it can to limit the adverse effects of this 
trend on competition and on economic convergence and if possible to reverse 
it. Through its policy on state aid, it will thus help to ensure greater 
cohesion in the Community. 
u< 
3.I.A.§2. 3 
225 
State aid to manufacturing industry 
Annual averages 1988-90 and 1986-88 (in brackets) 
I 1 1 1 1 
| | as a percentage of | ECU per person | ECU million* | 
| | value added | employed | | 
I I I I I I I I 
| | (1986-88) | 1988-90 | (1986-88) | 1988-90 | (1986-88) | 1988-90 | 
| Belgium | (4.3) | 4.1 | (1606) | 1655 | (1175) | 1211 | 
| Denmark | (1.9) | 2.1 | (593) | 634 | (316) | 333 | 
| Germany | (2.7) | 2.5 | (994) | 984 | (7869) | 7865 | 
| Greece | (24.3) | 14.6 | (2983) | 1502 | (2074) | 1072 | 
| Spain | (6.8) | 3.6 | (1749) | 936 | (4491) | 2499 | 
| France | (3.8) | 3.5 | (1437) | 1380 | (6479) | 6106 | 
| Ireland | (6.4) | 4.9 | (2114) | 1734 | (447) | 368 | 
| Italy | (6.2) | 6.0 | (2139) | 2175 | (10760) | 11027 | 
| Luxembourg | (2.3) | 2.6 | (988) | 1270 | (37) | 48 | 
| Netherlands | (3.1) | 3.1 | (1215) | 1327 | (1101) | 1225 | 
| Portugal | (2.2) | 5.3 | (302) | 758 | (245) | 616 | 
| United Kingdom | (2.6) | 2.0 | (770) | 582 | (4101) | 3133 | 
| EUR 12 | (4.0) | 3.5 | (1325) | 1203 | (38835) | 35503 | 
* 1986-88 averages at 1989 prices 
Source: Third survey 
3.I.A.§3. 1 
226 
<T4> §3 - Aid for research and development 
<T7> General policy developments 
354. The Commission still bases its assessments of national R8cD programmes 
and projects on the criteria laid down in the Community framework for state 
aid for research and development,*1) which was adopted in 1986. 
355. Point 8.2. of the framework stipulates explicitly that R&D aid must have 
as its effect the encouragement of additional effort in the R&D field over 
and above the normal operations which firms carry out in their day-to-day 
operations or must enable them to respond to exceptional conditions for which 
their own resources are too limited. In other words, the Commission must 
ensure that the aid does not simply replace the firm's own R&D expenditure, 
i.e. it should have an incentive effect. 
The Commission's view is that, as a result of the aid received, firms should 
carry out more research than they would have done if they had not received 
the aid. 
In order to verify this criterion in the case of individual projects, the 
Commission examines the structure and the evolution of the R&D costs of a 
given company over the past years, notably R&D expenditure, R&D as a 
percentage of the turnover and, when the information is available, the 
number of employees working on R&D. 
356. On 17 July the Agreement concerning the application of the GATT 
Agreement on trade in civil aircraft for large capacity planes (over 100 
seats) was signed between the United States and the European Community. The 
core of the Agreement is the possibility of granting direct government 
support (in the form of repayable advances) for the development of future 
large civil aircraft programmes up to 33% maximum when a reasonable 
expectation of recovering the outlay within 17 years from the date of first 
disbursement is established. Repayments have been made dependent upon the 
actual delivery of aircraft. 
(1) OJ C 83, 11.4.1986 
3.I.A.§3. 2 
227 
The Article 92(3)(b) exemption was used only for Eureka projects HDTV (EU95), 
Jessi (EU127), ESF (EU43) and Eurolaser (EU 226), since the aid given to 
companies participating in these projects promotes the execution of an 
important project of common European interest.*2) 
Some of the more interesting*3) decisions are described below. 
<T8> Denmark 
357. In October the Commission authorized the Danish Government to allocate 
ECU 132 million to a fund to finance product development. The fund, called 
the Industrial Development Fund, will be managed by an independent board and 
will be self-financing after the initial capital injection, as it will cover 
the losses on its lending operations - the loans are only repayable if the 
project is successful - from income from financial investments. The 
authorized intensity of aid is 40% in case of failure of the research. 
Otherwise the loans have to be repaid with interest at market rate. 
<T8> Germany 
358. A major programme was approved by the Commission in February. It 
concerns the "Fôrderungsprogramm Biotechnologie 2000" with a budget of 
ECU 749.3 million for the years 1990-95. The aid, in the form of outright 
grants, will go to industry (ECU 163.3 million of the total budget) and to 
universities and research institutes. Public research institutions 
conducting fundamental research may be financed at 100%, no state aid being 
involved in such cases. For basic industrial research an intensity of 50% 
was approved and for applied research 25%. An enhancement of 10% was 
considered to be allowable for the former GDR in line with point 5.4 of the 
Community framework for state aid for research and development,*4) which 
a I lows for a 
(2) Twenty-first Competition Report, point 180 and 0J C 83, 11.4.1986. 
(3) The full list of the aid decisions adopted by the Commission this year 
is given in the Annexes. The list is broken down by type of decision. 
The Official Journal reference of each decision or decision summary is 
given where it was available when the Report went to press, as is the 
number of the aid so as to enable the reader to obtain the relevant 
press release if there was one. Some of the decisions are summarized in 
one of the Annexes. 
(4) 0J C 83, 11.4.1986. 
3.I.A.§3. 3 228 
higher aid intensity for projects taking place in the least favoured regions. 
The latter three percentages refer to companies as well as to research 
institutes, in so far as they are engaged in collaborative research. 
359. For the programme "PhysikaIische Technologien" the German Government 
notified a budget of ECU 233.2 million, of which ECU 103.1 million was meant 
for industry. The Commission found in February that the aid intensities for 
the different stages of research were in line with its policy and 
consequently raised no objections to the aid under the exemption provided for 
in Article 92(3)(c) of the EEC Treaty. 
360. The same exemption was used in March in the case of the notified 
programme "Materialforschung" with a budget amounting to ECU 376.8 million 
for 1989-94. The aid intensity of 50% for basic industrial research by firms 
and research institutions with an extra 10% for the former GDR*5) was 
approved. 
361. In July, the Commission decided to terminate the procedure provided for 
in Article 93(2) of the EEC Treaty with regard to the German aid for research 
into solid-state lasers (Eureka project 226)*6) and it allowed the aid under 
the exemption provided for in Article 92(3)(b) of the EEC Treaty. The 
Commission was able to do so since it became clear that the intensities 
calculated on the basis of new information were in line with the limits which 
are laid down by the R&D guidelines. 
362. The aid programme "Luftfahrtforschung und Luftfahrttechnologie" was 
given the green light in October. The programme has a budget of 
ECU 86 million for 1989-91 and supports applied research conducted by 
companies and research institutes. Taking into account the particular 
features of the aerospace industry, the Commission applied point 5.4 of the 
Community framework for state aid for research and development, which allows 
for a higher aid intensity in cases of very high specific risks. The aid 
intensity amounted to 50% gross. 
(5) See point 5.4 of the Community framework for state aid for research and 
development (OJ C 83, 11.4.1986), which allows for a higher aid 
intensity for projects taking place in the least favoured regions. 
(6) Twenty-first Competition Report, point 185. 
3.I.A.§3. 4 
229 
<T8> Spain 
363. In March the Commission granted authorization under the derogation 
provided for in Article 92(3)(c) of the EEC Treaty for an aid scheme to 
encourage research and industrial development by firms in the Valencia 
region. 
The programme, which has a four-year budget of ECU 15 million, provides for 
grants of 50% in net grant equivalent of eligible costs for basic research 
and 25% for applied research and development. An increase of 10% is allowed 
for SMEs in line with point 5.4 of the Community framework for state aid for 
research and development. The Commission took the view that the regional 
authorities were right to encourage cooperation between firms, create the 
necessary infrastructures and develop a policy that would broaden research, 
development and innovatory activities in firms, given the nature of the 
industrial base in the Valencia region, consisting of small firms producing 
low-technology, labour-intensive consumer goods. 
<T8> France 
364. In the period from January to July the Commission examined the 1992 
refinancing of the research aid schemes Anvar, "Major Innovative Projects", 
Puma and the Research and Technology Fund, which are the main schemes in 
force in France. These schemes were allocated a total budget of 
ECU 490 mi I I ion in 1992. 
365. In July the Commission decided to terminate the Article 93(2) 
proceedings initiated against Bull in respect of aid put at ECU 380 mi I I ion 
which the French Government proposed to provide to finance its R&D 
programme.*7) The programme, labelled a "technical project", covers a 
period of four years with a budget of some ECU 2 billion. 
The aid intensity amounts to 27% in net grant equivalent of the eligible 
costs. 
(7) Twenty-first Competition Report, point 259. 
3.I.A.§3. 5 
230 
It was verified that the aid met all the criteria relating to aid intensity, 
additionality and eligibility of expenditure.*8) 
<T8> Italy 
366. In June the Commission terminated the Article 93(2) proceedings 
initiated against the pharmaceuticals company Sigma-Tau.*9) The effective 
aid rates (31.6% net grant equivalent for the project as a whole) proved to 
be much lower than the Commission had thought when the procedure was 
initiated and were in line with the framework on research aid. 
367. In July, applying the derogation provided for in Article 92(3)(b) of 
the EEC Treaty regarding the execution of an important project of common 
European interest, the Commission authorized aid by the Italian Government 
for SGS-Thomson Microelectronics Sri, which is participating in the 
Eureka 127/T1 project (Jessi), for the development of 16 megabit programmable 
memories (Eprom). The project, covering a period of four years, represents 
an investment of ECU 96 million for the Italian participant and comprises 
aid, in the form of a capital grant, of ECU 36.6 million. 
The grant will be provided under Laws 46/82 (Fondo Spéciale Ricerca 
applicata) and 22/87 (Eureka projects), and its intensity (38.2% net grant 
equivalent) is in line with the Community framework for state aid for 
research and development. 
The aid intensity, bearing in mind very strong intra-Community competition in 
the sector, seemed too high for the research project, in view of its distance 
from the market. 
Additional information received by the Commission showed that basic research 
accounted for around 30% of the project and that, consequently, the intensity 
of the aid was permissible. 
(8) The capital injections into Bull approved with the research aid are 
dealt with in point 425 of this Report. 
(9) Twenty-first Competition Report, point 184. 
"•'•*••••• 231 
The project, which is in the medical field, provides for investment of 
ECU 30 million, a six-year research period and aid of ECU 9.4 million In the 
form of a capital grant and low-interest loan. 
<T8> Netherlands 
368. In May the Commission approved the Dutch industrial R&D programme for 
the gasification of coal. The objective of the programme is to enlarge 
technological knowledge in the field of electricity generation by means of 
coal gasification in combination with steam and gas turbines. 
The budget up to the end of 1996 amounts to approximately ECU 13 million. The 
mixture of 36% basic industrial research and 64% applied research is funded 
at an aid intensity of 31% gross. 
369. The Dutch D2TV foundation received aid amounting to ECU 15 million for 
the period up to and including 1996. The Commission approved in May the aid 
on the basis of Article 92(3)(c) of the EEC Treaty because of its permissible 
intensity of 10.8% gross but also because it allows development activities 
aimed at broadcasting, decoding and receiving transmissions in the HD-MAC and 
D2-MAC standards. The decision was in line with the Commission's policy on 
high-definition television. 
370. In September the Commission used the exemption of Article 92(3)(b) of 
the EEC Treaty to clear the way for around ECU 20 million granted to Philips 
in 1992 for its participation in Eureka projects JESSI (EU 127) and HDTV 
(EU 95). 
371. The Dutch steel enterprise Hoogovens participates in the Eureka project 
CARMAT (EU 13). It carries out specific parts of basic industrial research 
for which the Netherlands Government proposed a subsidy of ECU 1.23 million. 
As the aid intensity was 25% gross, the Commission in October did not raise 
any object ions. 
The aid was also assessed under Commission Decision No 3855/91/ECSC of 
27 November 1991*1u) which established Community rules for aid to the steel 
industry. 
(10) OJ L 362, 31.12.1991. 
<T8> United Kingdom 
372. In July the Commission raised no objections to the refinancing of four 
UK R&D aid schemes. ATP, LINK and GICP encourage projects of collaborative 
research between companies, universities and research institutions. The 
Eureka Initiative stimulates British participation in Eureka projects. The 
total amount of the budgets was ECU 139 million. 
373. The UK authorities also notified state aid in the form of an outright 
grant to different companies, research organizations and universities 
participating in the Eureka project 194 (Industrial application of evaluation 
of high power lasers). The budget for the period 1991-96 amounts to around 
ECU 2.5 million. The aid was found to be compatible with the common market 
under Article 92(3)(c) of the EEC Treaty, the intensity being 37.9% for basic 
industrial research and 13.9% for applied research. 
374. In December the Commission raised no objections to the aid scheme 
"collaborative research in the construction sector". The aid is tied to an 
R&D contract concluded with industrial firms on the basis of a competitive 
bidding procedure. All rights in the results are vested Jointly in the Crown 
and in the contractor. Since the results do not accrue exclusively to the 
State but also to the participating firms, the Commission considered the 
scheme to fulfil the conditions of Article 92(1) of the EEC Treaty. On the 
basis of aid intensity, additionaIity and common interest, the scheme was 
approved under the exemption of Article 92(3)(c) of the EEC Treaty. 
,.,.*.*... i 233 
<T4> §4 - Aid to industrial sectors 
subject to a Community framework on state aid 
<T5> - General 
375. A number of industrial sectors are covered by frameworks on state aid. 
These are sectors which are undergoing or have undergone major restructuring 
that has resulted or is liable to result in the short term in considerable 
Job losses. In addition, all of them are subject to particularly intense 
international competition. 
In view of this situation, the Commission felt that even stricter control of 
aid was necessary and that certain or indeed all aid proposals should be 
notified, even where the aid was to be granted under schemes that had already 
been approved. The Commission considers that with such a system it is 
better able to assess the sectoral impact of aid granted and to prevent 
competition between Member States for mobile investment projects. The 
guidelines and rules laid down in the frameworks also give greater legal 
certainty to Member States and firms. 
Except in the sectors covered by the ECSC Treaty, which are dealt with by 
Commission decisions requiring the assent of the Council, and shipbuilding, 
where directives have been adopted by the Council on the basis of 
Article 92(3)(d) of the Treaty, the Commission makes use of Article 93(1). 
This allows the Commission to recommend to Member States as an "appropriate 
measure" a framework amending the schemes approved in the sector concerned. 
In the event of disagreement, the Commission can initiate Article 93(2) 
proceedings culminating in a decision requiring the Member State to comply 
with the framework, subject to any derogations which the national authorities 
have been able to obtain during the proceedings. 
The utility of these frameworks could be reexamined if guidelines on aid to 
highly capital-intensive investments were adopted. 
3.I.A.§4.a. 2 
234 
<T6> (a) Shipbuilding industry 
<T7> . Amendment to the Seventh Directive (ex-GDR) 
376. On 20 July the Council adopted Directive 92/68/EEC amending the Seventh 
Directive 90/684/EEC*1) on aid to shipbuilding. Whereas the Seventh 
Directive forms the general framework for such aid, the new Directive creates 
a special transitional arrangement for the former German Democratic Republic 
in order to allow it to restructure and become competitive. Under the new 
Directive, up until 31 December 1993 operating aid for the shipbuilding and 
ship-conversion activities of these yards may not exceed a ceiling of 36% of 
the yards' reconstructed turnover before aid. This ceiling is considerably 
higher than the one prevailing for other Community yards. In exchange, the 
German Government, before 31 December 1995, has to achieve, according to a 
timetable accepted by the Commission, a genuine and irreversible net capacity 
reduction amounting to 40% of the capacity of 545 000 cgt existing in the 
former German Democratic Republic on 1 July 1990. The implementation of the 
above will be closely monitored by the Commission and reported to the Member 
States. 
The Commission also decided to maintain in 1993 the shipbuilding aid ceilings 
that applied in 1992. 
<T7> . Specific aid schemes 
<T8> Germany 
377. In July the Commission decided to prohibit a development aid package 
proposed by Germany for the Chinese shipping company C0SC0, after having 
initiated, in October 1991, the procedure provided for by Article 93(2) of 
the EEC Treaty to enquire whether development aid proposed by Germany should 
be treated as permissible development aid to China or as operating aid to the 
German shipyards where the ships would be built. The Commission found that 
the proposed aid did not constitute genuine development aid but rather 
operating aid to the Bremer Vulkan (West Germany) and Mathias-Thesen (former 
German Democratic Republic) yards where the orders were to be placed and that 
the notified aid should be prohibited. 
(1) OJ L 380, 31.12.1990; Twentieth Competition Report, points 181 to 183. 
3.I.A.§4.a. 3 
235 
378. In December the Commission decided to approve the release of a first 
tranche of aid for the Meeres-Technik-Werft, former Mathias-Thesen-Werft 
(MTW) in Wismar, Mecklenburg-Western Pomerania (former German Democratic 
Republic). The first tranche consists of ECU 93.2 million operating 
aid,ECU 46.2 million investment aid and ECU 8.8 million closure aid. The 
release of further tranches is conditional on the German Government 
demonstrating to the Commission's satisfaction that the aid will continue to 
respect the rules laid down in the Seventh Directive on aid to shipbuilding 
and more specifically the new Directive 92/68/EEC providing a derogation from 
the Seventh Directive to allow the extra aid needed for the restructuring of 
the yards in the new Lander. 
<T8> Greece 
379. In December the Commission decided to terminate Article 93(2) 
proceedings on the aid schemes on operating aid in Greece for repairs and on 
aid granted to the Neorion shipyard. 
At the same time, under Article 10 of the Seventh Directive on aid to 
shipbuilding, the Commission approved aid in the form of debt write-offs for 
financial restructuring linked to the sale of four publicly owned shipyards. 
The Greek Government undertook to ensure that if all the yards were not 
disposed of by sale by 31 March 1993 the yards would be closed and that this 
closure would be irreversible as provided for by Article 7 of the Directive. 
One of the yards, Shipyards of Elefsis, had already been sold. The other 
three yards, Neorion Shipyards of Syros, Hellenic Shipyards and Nafsi 
Shipyard, were all under special liquidation proceedings according to 
existing Greek legislation. For Neorion, an open bidding procedure had 
resulted in an agreement for sale to the highest bidder, but it was still to 
be finalized. For Nafsi an open bidding procedure was under way. Hellenic is 
expected to close down its commercial shipbuilding activities. It will 
continue its naval shipbuilding activities which represent no more than 51% 
of the value of the company as provided by Article 10(3) of the Seventh 
Direct ive. 
3.I.A.§4.b. 4 
236 
<T6> (b) Steel covered by the ECSC Treaty 
<T7> Steel aid code 
380. On 1 January the new steel aid code (Decision No 3855/91/ECSC) entered 
Into force for a five-year period expiring on 31 December 1996,*2) with 
certain amendments as compared to the previous code. Apart from the 
modification of Article 2 (aid for research and development), the main 
amendment relates to aid granted under general regional Investment aid 
schemes to steel undertakings in the territory of the former German 
Democratic Republic. 
381. Under Article 2, aid granted for R&D may be deemed compatible with the 
common market if it is in compliance with the rules laid down in the 
Community framework for state aid for research and development, thus bringing 
the provisions for the steel sector more into line with those for other 
sectors. 
382. Under Article 5 of the code, investment aid may be allowed to steel 
undertakings in the former German Democratic Republic, provided that the aid 
is accompanied by a reduction in the overall production capacity of that 
territory. In the Commission's decision in the first major aid case involving 
"Walzwerke llsenburg GmbH", the Commission more closely specified its 
interpretation of Article 5. It decided to require an overall reduction in 
capacity of hot-rolled finished products in the order of 10% of the capacity 
Installed in 1990 (the year of German unification), and to take this 
condition into account in the examination of each individual case of state 
aid to steel undertakings in the former German Democratic Republic. 
383. In this respect, Article 5 equally stipulates the period within which 
such regional aid may be granted in the former German Democratic Republic 
(until 31 December 1994 and until 31 December 1995 for the special tax 
concessions), which departs from the general period of validity of the code. 
This is due to the exceptional character of regional investment aid and the 
appropriate period for the modernization of the steel plants concerned, which 
is set at three years. 
(2) Twenty-first Competition Report, point 208 
3.I.A.§4.b. 5 
237 
<T7> C02~tax in Denmark and the Netherlands 
384. In July, after obtaining the Council's assent, the Commission amended 
the steel aid code in order to allow aid to Danish and Dutch steel firms in 
the form of relief from new C02/energy taxes introduced in the two 
countries. 
385. Both countries had notified these tax arrangements to the Commission in 
accordance with Article 93 of the EEC Treaty. The Commission decided not to 
oppose the granting of the aid*3) in general. However, aid for this purpose 
is not provided for by the steel aid code and is therefore prohibited under 
Article 4(c) of the ECSC Treaty. Because the additional costs incurred by 
Danish and Dutch steel firms as a result of the tax will affect their 
competitiveness vis-à-vis foreign competitors, which would be an unjustified 
effect, the Commission also decided to authorize the aid in these sectors by 
an amendment to the steel aid code. 
<T8> Germany 
386. In February the Commission approved the application of several regional 
aid schemes to the ECSC steel industry in the territory of the former German 
Democratic Republic. The decision concerns the largest regional scheme, the 
Joint Federal Government/Lander programme for improving regional economic 
structures (20th outline plan), giving the possibility of granting an 
investment subsidy. The Commission also approved the application of the tax 
allowance for investment (InvestitionszuIagengesetz 1991) and the use of the 
special depreciation schemes to the steel industry in the former 
German Democratic Republic. 
387. Within this framework, it has become possible to use regional aid to 
assist productive investment in the steel sector up to an intensity of 23% 
gross. This aid may be combined with different forms of investment aid or 
other assistance, up to a maximum of 12%, so that the aggregate assistance 
for a single investment project may not exceed an intensity ceiling of 35%, 
as approved by the Commission in accordance with the provisions of the EEC 
Treaty. 
(3) See point 451 of this Report 
3.I.A.§4.b. 6 
238 
388. The Commission examined the sale by the Treuhandanstalt of the Stahl-und 
Walzwerk Brandenburg GmbH and the Hennigsdorfer Stahl GmbH, two steel 
companies in the forme. —^sn Democratic Republic, to the Italian steel 
group Riva. The purpose of the investigation was to establish the 
compatibility of the operation both with the Commission's decision of 
September 1991 on the activities of the Treuhandanstalt, and with the 
Community's steel aid code. However, in April the Commission cleared the 
privatization, considering that the operation contained no aid elements, 
given the ample international publicity that preceded the sale and the fact 
that Riva had submitteu the best offer. 
389. In June the Commission took a decision on the first important investment 
project in the East German steel industry involving public aid, approving the 
granting of investment aid to Walzwerke IIsenburg GmbH under two regional aid 
schemes which it had approved in February. The Commission considered the 
proposed aid in the light of Article 5 of the steel aid code, and established 
that the investment did not increase production capacity of the IIsenburg 
plant and was accompanied by a sharp reduction in capacities for crude steel 
and hot-rolled finished products as compared to 1990. This reduction was 
achieved through definitive closures of some plants in 1990, and through the 
gradual reduction of old capacities which would not be fully replaced by new 
ones. 
390. In September the Commission approved the extension of the 21st outline 
plan of the Joint Federal Government/Lander programme for improving regional 
economic structures to the steel industry in the new German Lander. 
391. In December the Commission approved the extension of the application of 
the "Invest itionszulagengesetz 1992" (tax allowance for investment), which 
replaces the "Investitionszulagengesetz 1991", to the ECSC steel industry in 
the territory of the former German Democratic Republic. In particular, this 
approval covers the possibility of granting a tax allowance with an intensity 
of 8% for investments in that territory started before the end of June 1994 
and terminated before the end of 1996, and a tax allowance with an intensity 
of 5% for those investments started and terminated within the period from 
1 July 1994 to 31 December 1996. The Commission has requested the German 
authorities to ensure that each individual aid applied for under the said 
scheme is notified to the Commission pursuant to Article 6 of the steel aid 
3.I.A.§4.b. 7 
239 
code (Decision No 3855/91/ECSC of 27 November 1991). Each individual aid 
project notified will have to be evaluated by the Commission as to its 
compatibility with the provisions, and in particular Articles 5 and 1 of the 
Decision. 
<T8> Spain 
392. In July 1991 the Commission initiated the procedure under Article 6(4) 
of the steel aid code to investigate certain aid granted to the Spanish 
special steels producer Acenor enabling the company to continue to operate 
despite its financial difficulties. 
393. In November the Commission sent a communication to the Council 
recommending that aid totalling up to ECU 505 million in support of a 
restructuring plan for Sidenor, incorporating Acenor and Foarsa, be approved 
under Article 95 of the ECSC Treaty. The restructuring involved a 31% 
reduction in capacity and a 39% reduction in the workforce. 
394. At the same time the Commission sent a communication to the Council 
concerning the proposed restructuring plan for the Spanish public integrated 
steel company, Corporaciôn de la Sidérurgia Integral (CSI), incorporating 
Ensidesa and Altos Hornos de Vizcaya. The Commission considered that the plan 
was viable and represented a courageous and constructive approach to the 
restructuring of the Spanish steel industry. However, in the light of the 
difficulties on the Community steel market, the Commission took the view that 
the relation between the aid intensity (aid totalling up to 
ECU 3 986 million, most of which was incompatible with the steel aid code and 
could only be approved through recourse to Article 95 of the ECSC Treaty) and 
the extent of the restructuring proposed needed to be improved. The Industry 
Council, at its meeting on 24 November 1992, was not prepared to agree to the 
Spanish proposals and further discussion was deferred until early 1993. 
<T8> Italy 
395. In July the Commission decided to initiate the procedure set out in the 
steel aid code (Article 6(4) of Decision No 3855/91/ECSC*4) in order to 
investigate possible aid to the publicly owned Italian steel company llva. 
Ilva's shareholder, the state-owned holding company IRI, has decided to 
increase Ilva's capital by ECU 421 million in two instalments. The first 
(4) OJ L 362, 31.12.1991. 
240 
capital increase of ECU 227 million will take the form of the inclusion of an 
IRI company, Sofin Spa, into llva, while the second increase will come 
directly from IRI. 
396. The capital increases are part of a wider plan to improve the financial 
situation of the company. Under a plan put to the Commission earlier this 
year llva would sell off a variety of assets which are not part of Its core 
business thereby raising at least a further ECU 421 million and would raise 
ECU 647 million by selling shares on the stock exchange. 
397. However, since in June 1992 llva announced a loss on its 1991 
operations, the raising of ECU 554 million from Ilva's flotation on the stock 
exchange could not take place as previously envisaged since in Italy only 
companies which have made profits in three consecutive years prior to 
flotation can be quoted on the stock exchange. The Commission considered 
that IRI could have known, at the time it put forward its plan, that the 
company risked making a loss in 1991 and that it would not be possible to 
sell Ilva's shares on the stock exchange in 1993 as envisaged. 
398. In these circumstances, it is doubtful that a commercial investor would 
go ahead with the rest of the plan or without developing a better alternative 
before committing further capital to the company. Therefore the Commission 
considered that the capital increase could contain state aid. 
3.I.A.§4.C. 9 
241 
<T6> (c) Non-ECSC steel sectors 
399. In March the Commission approved the granting of investment aid to 
Mannesmann-Rôhrenwerke Zeithain/Sachsen, a producer of seamless steel tubes 
in the former German Democratic Republic, under two regional investment aid 
schemes (investment subsidy and tax allowance) it had approved in February. 
3.I.A.§4.d. 10 
242 
<T6> (d) Aid to the coal industry 
400. In 1992 the Commission continued its examination of aid in the light of 
Decision No 2064/86/ECSC establishing Community rules for state aid to the 
coal industry*5) and the provisions of the ECSC Treaty. 
Financial measures planned by Member States for the coal industry were 
authorized only where they were in line with the objectives and application 
criteria of the Decision and with the specific objectives laid down in 
Articles 2 and 3 of the ECSC Treaty. 
The Commission made its authorization subject to the requirement that the 
Member States' planned aid for the Community coal industry should be 
sufficiently degressive and accompanied by restructuring, modernization and 
rationalization plans. 
By decisions of 11 December 1991 and 30 September 1992 the Commission 
authorized the 1992 aid proposals for Belgium*6) and France.*7) By 
decision adopted on 30 September 1992,*8) the Commission authorized a number 
of direct financial measures to assist the coal industry in the 
Federal Republic of Germany. 
On 25 November 1992*9) the Commission authorized for 1991 and 1992 the 
financial assistance provided by Germany in the form of compensation to 
electricity generators under the third Law on electricity produced from 
Community coal. In its decision, the Commission also ruled on supplementary 
financial assistance under the above mentioned Law for 1989 and 1990 and on 
financial measures in the form of compensation between mining areas and 
compensation for coal with a low volatile matter content for 1990, 1991 and 
1992. For the compensatory payments the Commission restricted its 
(5) 0J L 177, 1.7.1986. 
(6) 0J L 22, 31.1.1992. 
(7) 0J L 310, 27.10.1992 
(8) 0J L 310, 27.10.1992 
(9) OJ L 21, 29.1.1993. 
3.I.A.§4.d. 11 
243 
authorization to the payment intended to cover current expenditure both for 
1991 and 1992 and for the amount of 1990. 
On 23 December 1992*1°) the Commission authorized for 1992 financial 
compensation to electricity generators under the Spanish Ofico scheme. In 
another decision adopted on the same date*11) the Commission also decided on 
various other financial measures taken by the Spanish Government for 1991, 
1992 and 1993. 
On 23 December 1992*12) the Commission authorized for 1992 financial 
measures to assist the Portuguese coal industry. 
Lastly, the Commission adopted a general decision setting out the new rules 
for aid to the coal industry, which it sent to the Council for assent. 
(10) Awaiting publication. 
(11) Awaiting publication. 
(12) Awaiting publication. 
Stote oid to the cool industry 
Aid for current production in 1991 ond 1992 
(ECU million) CO 
I I 1 1 1 1 1 1 I 
| | Belgium | Germany | Spain | France | Portugal | United kingdom | Community | 
| j , 1 , 1 , 1 , 1 , j , 1 , 1 
| | 1992 | 1991 | 1992 | 1991 | 1992 | 1991 | 1992 | 1991 | 1992 | 1991 | 1992 | 1991 | 1992 | 1991 | 
| Aid under Decision I I I I I I I I I I I I I l I 
| No 2064/86/ECSC I I I I I I I I I I I I I I I 
| 1. Di rect aid | | | | | | | II I I I I I I 
j - Article 3 j 33.5 j 53.4 j 177.7 j 209.6 j 379.7 j 390.0 j 186.9 | 165.3 j 5.0 j 4.5 j - j - j 782.8 j 822.8 j 
j -Article 4 j - j - j 1624.6 j 1656.7 j- j - | -j - | -j - | - j - I 1624.6 j 1656.7 j 
| -Article 5 j - j _ j - j - j - j 11.3 j _j _| _j _j_ |_ j -j 11.3 j 
j - Article 6 j - | - j 65.6 j 66.8 j - j | - | - | - j j j - j 65.6 j 66.8 j 
| -Other j j j - j - | 66.3 j 217.6 j - j - j 0.8 j j j - j 67.1 j 217.6 j 
| Total j 33.5 j 53.4 j 1867.9 j 1933.1 j 446.0 j 618.9 j 186.9 j 165.3 j 5.8 j 4.5 j - | - j 2540.1 j 2775.2 j 
j ECU/Per tonne j 90.54 j 84.36 j 25.73| 26.55 j 23.47 | 34.00 j 19.27j 16.36 j 21.48 j 19.40 j - j - j 13.62j 14.37 j 
j 2. Indirect aid j 7.4 j 7.8 j 2466.7 j 2569.6 j 17.3 j 48.50 j -j -j -j -j- j- j 2491.4 j 2625.9 j 
j Total j 40.9 j 61.2 j 4334.6 j 4502.7 j 463.3 j 667.4 j 186.9 j 165.3 j 5.8 | 4.5 j - j - | 5031.5 j 5401.1 j 
j ECU/Per tonne j 110.54 j 96.68 j 59.71j 61.85| 24.38 j 36.66| 19.27| 16.36 j 21.48 j 19.40 j - j - j 26.98| 27.95 j ro 
3.I.A.§4.e. 13 
245 
<T6> (e) Aid to the synthetic fibres industry 
Extension of the aid code 
401. In the synthetic fibres industry, the Commission, after having extended 
until 31 December 1992 the framework that was to have expired on 
18 July 1992, drew up a new framework that will be applicable from 
1 January 1993 to 31 December 1994. The new guidelines develop and 
reinforce the rules which have been applied since 1977. 
The scope of the new guidelines as regards industrial processes is extended 
to include polymerization where this is integrated into production in terms 
through the machinery used. 
In assessing aid proposals, the Commission will focus on the requirement that 
prospective recipients of aid must reduce their production capacity 
significantly. 
The reduction will be assessed in the light of the specifics of each 
proposal, including the intensity of the aid, the amount of the investment, 
its location, its contribution to regional development and the trend of the 
average rate of capacity utilization of the industry, the firm and the group 
to which the firm belongs. 
<T8> Germany 
402. The Commission examined aid to firms situated in the new Lander. It 
adopted decisions approving the aid in view, in particular, of its regional 
impact: 
by decision of 30 September it authorized two aid proposals for 
Hoechst Guben and Màrkische Faser, both situated in Brandenburg; 
- by decision of 28 October the Commission similarly approved aid 
proposals for Thiiringische Faser/Schwarza, in Thuringia. 
3.I.A.§4.6. 14 
246 
<T8> Italy 
403. In May the Commission decided to initiate Article 93(2) proceedings in 
respect of proposed aid of ECU 80 million for SNIA-Fibres. 
The Commission took the view that the positive impact of the proposed aid in 
terms of its expected regional effects (job creation in the Mezzogiorno) 
could be cancelled out by its sectoral implications. The synthetic fibres 
industry is faced with growing overcapacity, prompting the Commission to 
assess aid proposals for firms in the industry in the light of the trend of 
their productive capacity and their rate of capacity utilization. 
As the firm is to reduce its productive capacity by 10% by 1995, the 
Commission authorized the proposed aid in a final decision adopted in 
December. 
<T8> Luxembourg 
404. In September the Commission terminated the proceedings initiated in 
October 1991*13) in respect of proposed aid of ECU 370 000 for 
Technofibres SA. It took the view that the proposed aid was aimed at 
improving product quality without leading to an increase in the firm's 
output, which would have been contrary to the requirements of the framework. 
The Commission also took the view that the aid would contribute to the 
development of the region concerned. 
(13) Twenty-first Competition Report, Annex III.B.1. 
3.I.A.§4.f. 15 
247 
<T6> (f) Aid to the motor vehicle industry 
405. In December 1988 the Commission first introduced, on the basis of 
Article 93(1) of the EEC Treaty, the Community framework on state aid to the 
motor vehicle industry for a period of two years with effect from 
1 January 1989, at the end of which its activity and scope would be 
reviewed.*14) In December 1990 the Commission decided to renew the 
framework without setting a time-limit on its application. However, the 
Commission undertook to review it after two years and decide on possible 
amendments, or its repeal, following consultation with the 
Member States.*15) 
As promised in December 1990 the Commission reviewed the framework with the 
Member States during a multilatéral meeting which took place on 
8 December 1992. During the meeting a large majority of Member States 
expressed their satisfaction with the present application of the framework 
and wished to see it continuing over the years ahead. Member States had, 
however, opposing views as to the Commission's proposals for amendment or 
extension of the present framework. 
Therefore, the Commission decided in December not to amend the framework. 
It will remain in force until next reviewed by the Commission. 
406. The Commission took the following decisions pursuant to the framework 
on state aid to the motor vehicle industry. 
<T8> Be I g i urn 
407. In February the Commission decided to approve aid for innovation 
(ECU 0.6 mi 11 ion grant and exemption from property tax) and for 
environmental protection (ECU 1.7 million grant and exemption from property 
tax) for investment by Volvo Europe Car NV in Ghent. The overall intensity 
of the aid, to be provided under the 1959 Law on Economic Expansion by the 
Flemish Regional Government, is around 6.5% in net grant equivalent. In the 
case of aid for innovation, the gross rate is 8%. The projects involve 
innovation at European level with a high commercial risk. In the 
(14) Nineteenth Competition Report, point 127 
(15) Twentieth Competition Report, point 251. 
3.I.A.§4.f. 16 
248 
case of the aid for environmental protection, the gross rate of 15% is in 
line with the Community framework on environmental aid. The Commission took 
account of the fact that the project will not entail any increase in 
capacity, but will improve the firm's flexibility and productivity. 
<T8> Germany 
408. In April, following the initiation of Article 93(2) proceedings on 
27 February 1991,*16) the Commission took a decision on the purchase by 
Daimler-Benz AG of a site in Berlin.*17) It found that the difference 
between the price at which the site was sold by the Berlin Senate and the 
valuation made by an independent expert, i.e. ECU 43.8 million, constituted 
aid within the meaning of Article 92(1) of the EEC Treaty. Some of the aid, 
i.e. ECU 26.8 million, qualified for the derogation in Article 92(2)(c) ("aid 
granted to the economy of certain areas of the Federal Republic of Germany 
affected by the division of Germany, in so far as such aid is required In 
order to compensate for the economic disadvantages caused by that division"), 
since it was granted before German unification and compensated for the 
additional costs borne by Daimler-Benz because of the urban planning 
requirements implicitly imposed by the local authorities as a result of the 
division of the city. The remaining aid, i.e. ECU 17 million, qualified for 
none of the derogations provided for in the Treaty and had to be repaid. 
This decision, following that on the establishment of Toyota in the 
United Kingdom in 1991,*18) shows that the Commission is paying growing 
attention to aid for the purchase of land and tends to take its decisions 
after having asked the national authorities to send it a report, drawn up by 
an official and independent valuer, on the market value of the land. 
409. In December the Commission terminated the Article 93(2) proceedings 
initiated in December 1991*1^) in respect of proposed aid for investment by 
Opel AG in Eisenach (former German Democratic Republic). The regional 
(16) Twenty-first Competition Report, point 255. 
(17) OJ L 263, 9.9.1992. 
(18) Twenty-first Competition Report, point 239. 
(19) Twenty-first Competition Report, point 235. 
3.I.A.§4.f. 17 
249 
assistance involved, which had an intensity of 28.9% in gross grant 
equivalent, was acceptable as it served to cover the extra cost due to the 
location. It should also have a substantial impact on the new Lander, where 
the socio-economic situation is difficult, most notably by creating 2 000 
Jobs directly and a further 2 500 indirectly. Environmental aid intended to 
reduce pollution from the paintshop was likewise acceptable as the project 
went further than previous efforts in this field. 
<T8> Italy 
410. In September the Commission decided to approve state aid to Iveco for 
the development of its new truck engine and transmission series, codenamed 
Elena. The aid was notified by the Italian Government under the Community 
framework for state aid to the motor industry and will be awarded under 
Law 46/82 on aid for industrial innovation. Elena is a Joint venture Eureka 
project being carried out mainly by Iveco in association with a pan-European 
network of manufacturing companies, mainly motor component suppliers, and 
laboratories. The project will take place over the period 1990 to 1995 at a 
total cost - to Iveco - of ECU 144.9 million. 
The proposed aid will take the form of a soft loan of ECU 80.1 million. The 
state aid element entailed in the loan is estimated to be equivalent to 17.4% 
of the eligible cost in gross grant equivalent terms. 
In approving the aid the Commission took account in particular of the highly 
innovative nature - by Community standards - of the development expenditure 
entailed in the project. The proposed aid also meets the criteria set out in 
the Community framework on state aid for research and development. A further 
positive aspect of the project is that the results of the research and 
development being carried out should be disseminated widely considering that 
a broad range of motor component firms are involved in the joint venture. 
411. In December the Commission decided to terminate the Article 93(2) 
proceedings which it initiated in October 1991*2°) in respect of aid to the 
Fiat group in support of its second Mezzogiorno investment plan. The 
(20) Twenty-first Competion Report, point 236 
3.I.A.§4.f. 18 
25û 
regional aid component amounted to ECU 2 903 million (an intensity of 30.5% 
in gross grant equivalent), and the R&D aid was in the form of a low-interest 
loan of ECU 455 million (17% in gross grant equivalent). The regional aid 
was acceptable as it corresponded to the extra cost to Fiat of building 
plants in the south rather than in the north of Italy. It should also have 
a substantial impact on one of the least developed regions of the Community 
where regional aid ceilings run from 59% to 74% in gross grant equivalent. 
The R&D aid was likewise acceptable given the highly innovative and ambitious 
nature of the project. 
<T8> Netherlands 
412. In February the Commission decided to initiate proceedings to 
investigate possible aid elements contained in agreements between the 
Dutch State, Volvo Car Corporation and Mitsubishi Motor Corporation on the 
ownership, development plans and future financing of Volvo Car BV (VCBV). 
The aspects to be investigated during the proceedings were to include the 
price and terms on which Mitsubishi would acquire a holding in VCBV, the 
interest-free loan by the Dutch State to VCBV and a number of clauses in the 
agreements between the parties. 
<T8> United Kingdom 
413. The Commission decided to initiate Article 93(2) proceedings in respect 
of aid to British Aerospace for its purchase of the Rover Group in 1988. 
The decision was in response to the Judgment of the Court of Justice of 
4 February 1992*21) annulling the Commission Decision of 17 July 1990,*22) 
which required British Aerospace to repay ECU 60 million to the 
United Kingdom Government.*23) The Court found in particular that before 
deciding that an aid measure was incompatible with the Treaty, the Commission 
always had to initiate proceedings under Article 93(2) of the 
(21) See point 533 of this Report. 
(22) Twentieth Competition Report, point 260. 
(23) 00 C 21, 29.1.1991. 
3.I.A.§4.f. 19 251 
EEC Treaty in order to give interested parties the opportunity to submit 
their observations to it or to bring the case before the Court of Justice. 
The Commission took the view that the ECU 60 million constituted state aid 
granted in breach of the terms of Decision 89/58/EEC,*24) and was 
consequently incompatible with the common market. 
(24) OJ L 25, 28.1.1989; Eigthteenth Competition Report, point 233. 
3.1.A.§5. 1 
252 
<T4> §5. Aid to other industrial sectors 
414. The decisions adopted this year by the Commission confirm its basically 
unfavourable attitude to sectoral aid, which creates significant distortions 
of competition, while being of highly doubtful effectiveness. 
<T8> Be I g i urn 
415. In June the Commission took a final negative decision on unnotified aid 
granted by the Government of the Region of Brussels to Siemens SA. This 
decision was the result of the investigation under Article 93(2) initiated in 
July 1991 in respect of 17 awards of grants totalling ECU 8 million by the 
regional government under the general aid scheme established by the Economic 
Expansion Law of 1959.*1) None of the awards in question had been notified 
to the Commission pursuant to Article 93(3) of the EEC Treaty. 
The grants were made to assist several items of expenditure by Siemens. 
After detailed examination of the aided expenditure programmes, the 
Commission came to the following conclusions: 
aid of ECU 1.9 mi 11 ion granted towards investments of Siemens in 
equipment for internal use and in building acquisition was legally 
awarded within the limits authorized by the Commission for the operation 
of the Economic Expansion Law; accordingly, the Commission had no 
further comments on these aids; 
aid of ECU 500 000 towards expenditure on training was illegally awarded 
in breach of Article 93(3) since such expenditure was not eligible for 
aid under the Economic Expansion Law; however, after examination of the 
aided programmes, the Commission decided to approve the aid pursuant to 
the exemption laid down in Article 92(3)(c); 
(1) Twenty-first Competition Report, Annex I N.B.3 
3.1.A.§5. 2 
253 
aid of ECU 6.3 million towards expenditure on equipment rented to 
clients, publicity campaigns and market surveys, was also illegally 
awarded in breach of Article 93(3) since such expenditure was not 
covered by the Economic Expansion Law; after detailed appraisal of this 
operating assistance, the Commission concluded that it did not meet any 
of the conditions for such aid to be compatible with the common market. 
The Commission therefore took a negative decision on this aid and asked 
the Belgian authorities to recover it from the company. 
The Economic Expansion Law of 1959 was repealed by the Belgian 
authorities, with effect from 31 July 1991, as proposed by the 
Commission pursuant to Article 93(1) of the EEC Treaty.*2) 
<T8> Germany 
416. In December the Commission decided to initiate Article 93(2) proceedings 
against aid granted by the Treuhandanstalt (THA) to Buna AG for its 
production and marketing of butac (butyl acetate), a product used by the 
paint industry. 
Following complaints by another manufacturer of butac, the Commission 
investigated the prices at which Buna sold butac in the Community, and the 
financing of the company by the THA, to which it belongs. 
On the basis of information provided by the German Government, the Commission 
concluded that guarantees and loans provided by the THA to Buna had been 
misused, allowing this company to continue to produce and sell butac on 
conditions that would not be profitable even to its more modern and efficient 
compet itors. 
A request by the Commission to the German Government to cease this misuse not 
having been replied to, the Commission decided to initiate proceedings under 
Article 93(2). 
(2) Twentieth Competition Report, point 247. 
3.1.A.§5. 3 
<T8> Spain 254 
417. In March the Commission took decisions on capital injections made to 
three companies (Imepiel, Hytasa and Intelhorce) by the state agency, 
'Patrimonio del Est ado', during the period 1986 to 1989, and upon the 
companies' privatization in 1989 and 1990. The Commission had initiated 
Article 93(2) proceedings against Imepiel in December 1989 (extended in 
July 1990), and against Hytasa and Intelhorce in July 1990.*3) 
418. Imepiel, a footwear manufacturer, is located in the Valley d'Uxo and 
received ECU 46 million between 1986 and 1988 and a further ECU 65 million 
on privatization. The price at which it was sold by the State was 
ECU 0.75 mi I I ion. 
419. Hytasa, a cotton and wool textiles producer, has its production 
facilities at Seville. The company received ECU 55 million before 
privatization; a further capital increase of ECU 33 million was made in 
July 1990 when the company was privatized. This company also was sold for 
ECU 0.75 mi I I ion. 
420. Intelhorce, a cotton textiles producer, is based at Malaga and received 
ECU 60 mi 11 ion before privatization with a further ECU 45 million in 
August 1989, the date of its sale into private ownership at a price of 
ECU 9.3 mi I I ion. 
421. All three companies operate in sectors where there is intense 
competition. These industries are also characterized by the presence of a 
growing number of producers from developing countries. 
Before reaching final decisions, the Commission analysed data supplied by the 
Spanish authorities and took account of submissions by various Member States 
and interested parties. 
The Commission employed the market economy investor principle in assessing 
whether the various capital injections involved aid; in addition, it 
reviewed the various restructuring plans submitted by the Spanish authorities 
to ascertain whether the proposed changes to the companies' operations would 
lead to their long-term viability. The Commission decided that aid 
(3) Twentieth Competition Report, points 270 and 272 
3.1.A.§5. 4 
255 
was involved in all three cases. The aid was to be considered as "rescue 
aid", i.e. money paid to a company in difficulty which simply enables it to 
continue trading without carrying out comprehensive restructuring in order to 
return it to commercial viability. 
In its decisions the Commission took account of the fact that since 1986 many 
sectors of Spanish industry have been faced with the need to carry out 
restructuring in order to adjust to the requirements of Community membership. 
Consequently, it found the capital injections into the three companies prior 
to privatization compatible with the Treaty under Article 92(3)(c). 
However, the capital injections at the time of privatization were 
incompatible with the Treaty since they were not accompanied by restructuring 
plans which ensured the viability of the companies. Moreover, production 
levels in the companies were maintained, which increased the risk that the 
aid would distort competition to the detriment of competitors. Consequently, 
the Commission requested the Spanish Government to recover this part of the 
aid granted to the companies. 
An appeal against the decisions has been lodged with the Court of Justice. 
422. In July the Commission decided to initiate proceedings against a 
proposal by the Basque authorities to provide aid for the restructuring of 
La Pape I era Espanola, a group of companies producing and processing pulp and 
paper. The aid was to be given in the form of a guarantee for seven years on 
loans totalling ECU 34 million. The Commission took particular account of the 
fact that the restructuring plan would increase the group's sales and its 
market share in Spain and that the plan did not take account of the group's 
worsening performance. 
423. In July the Commission opened Article 93(2) proceedings against a loan 
guarantee granted by the Basque Government to Esmaltaciones San Ignacio, SA 
(ESISA). ESISA is a producer of cookware and gas bottles located at Vitoria 
(Alava). 
The guarantee covered a credit line of ECU 7.5 million at market interest 
rates that would be available for 
3.1.A.§5. 5 _ _ 256 
nine years (1992-2000) with a three-year grace period. 
The restructuring planned by ESISA appeared to be aimed at reviving the 
company's operations, but the Commission doubted whether the programme would 
return it to long-term viability. 
The Commission therefore decided to initiate proceedings against the 
nine-year loan guarantee, but not to object to a loan guarantee limited to 
six months. This second decision was based on the Commission's present 
approach on rescue and restructuring aids. This allows Member States to 
grant rescue aid in the form of loan guarantees during a limited period of 
six months while the beneficiary draws up necessary and feasible recovery 
measures. This period should enable the Basque Government and ESISA to submit 
a revised restructuring plan that may be assessed by the Commission while the 
proceedings are pending. 
424. The Commission decided in September not to object to aid granted in 1991 
by the Spanish Government to Grupo de Empresas Alvarez (GEA), a manufacturer 
of crockery in Galicia. The Commission found that the sale of GEA by the 
state-owned industrial holding company INI in that year involved aid of 
ECU 24 mi 11 ion which had not been properly notified pursuant to 
Article 93(3). This aid had served to clean up GEA's balance sheet and to 
facilitate its restructuring and privatization. On the basis of GEA's 
restructuring plan, which significantly reduced the company's production 
capacity while restoring its profitability, and taking into account the 
regional problems in Galicia, the Commission decided that the aid was 
compatible with the common market. 
<T8> France 
425. In July the Commission decided to terminate the Article 93(2) 
proceedings in connection with Bull, the French state-owned computer 
manufacturer, which had been initiated in July 1991.*4) 
(4) Twenty-first Competition Report, point 259; OJ C 202, 1.8.1991 
3.1.A.§5. 6 
257 
In its decision the Commission assessed both the capital injections of 
ECU 570 million and the aid of ECU 380 million for research and development. 
It concluded that both these amounts represented aid but that in both cases 
the aid was compatible with the common market. 
It was clear that the capital injections involved aid because the historic 
performance of Bull, its future prospects and level of indebtedness would not 
have led a private investor to make this investment. However, Bull's 
restructuring plan allowed for reductions in capacity through the closure of 
production facilities and cuts in the workforce. The reductions should lead 
to a fall in Bull's future market share. Moreover, Bull's future prospects 
were enhanced by the acquisition of minority stakes by NEC and IBM. On this 
basis the Commission decided that the capital injections were compatible with 
the state aid rules. 
The research and development aid was assessed in relation to the Commission's 
guidelines. It met all of the criteria with regard to intensity, 
additionality and eligibility of expenditure. It was therefore approved.*5) 
France has appealed the decision to the Court of Justice.*6) The appeal 
alleges that the Commission was wrong to consider the capital injections to 
involve aid and that it also exceeded its powers in calling for the 
notification of all future capital injections. 
In December the Commission approved the aid granted by the French Government 
to the VEV group in view of the financial and industrial restructuring 
undertaken by the group in order to restore its competitiveness. 
<T8> Italy 
426. in March the Commission decided to open an investigation under 
Article 93(2) of the EEC Treaty against the injection of ECU 22 million of 
new capital by the state-owned group lta I imp i ant i into its subsidiary 
(5) See point 365 of this Report 
(6) Court case 367/92. 
3.1.A.§5. 7 
258 
Costruzioni Metalliche Finsider (CMF) SUD SpA. CMF SUD is a wholly-owned 
subsidiary of the I ta I impianti Group, which in turn is a wholly-owned 
subsidiary of the Italian public holding IRI. CMF SUD designs and builds 
steel products and structures and also operates as a construction company. 
The capital injection, decided in May 1991, was intended to cover all the 
company's accumulated operating losses and to reconstruct the company's 
capital base so that it could continue operating. The Commission employed 
the commercial investor principle in assessing whether the capital injection 
was aid. It found that CMF SUD had a very poor record of profitability with 
an average return on net assets of minus 42% during the period 1986-90. In 
these circumstances, the Commission doubted whether a private investor would 
have invested ECU 22 million of new money in the company without taking 
remedial action to restructure its activities or to reduce its exposure to a 
level commensurate with the risk and potential return on its investment. 
The Commission also took into consideration several complaints received from 
Community competitors reporting prices allegedly charged by CMF SUD for 
public contracts, which were considered unrealistic and below normal cost-
based prices. In this connection, the fact that the capital injection was 
partially to cover operating losses could mean that the Italian State was in 
fact covering negative margins on construction projects undertaken by the 
company. 
In the light of the observations submitted by the Italian Government during 
the Article 93(2) proceedings, in September the Commission decided to extend 
the investigation to cover new aid to CMF SUD. This included capital 
injections of ECU 33 million that had been used to offset 1991 operating 
losses and a proposed new injection of ECU 10 million to reconstruct the 
company's capital base again. 
427. In April the Commission decided to terminate the Article 93(2) 
proceedings initiated in June 1991*7) against aid the Italian Government had 
granted to Vifan, a manufacturer of oriented polypropylene 
(7) Twenty-first Competition Report, point 258 
3.1.A.§5. 8 
259 
fibre. The Italian authorities had provided sufficient data to demonstrate 
that the aid to Vifan fell within the scope of Law 183/76 concerning regional 
aid. 
428. In May the Commission closed the Article 93(2) proceedings initiated in 
April 1991 against the REL scheme.*8) The investigations had shown that the 
temporary maintenance of shareholdings and other measures had supplemented 
the restructuring plan approved in 1984 and in 1985 and had not entailed any 
increase in the budget. The Commission therefore no longer had any 
object ions. 
429. In December the Commission opened Article 93(2) proceedings against a 
scheme introduced by the Lazio region in Italy to assist the ceramics sector. 
The scheme financed promotion of sanitaryware and crockery produced in Lazio 
and also offered grants covering 25% of investment costs for the 
manufacturers of the products to improve quality. The budget of the scheme 
was ECU 3.5 mi 11 ion. 
The Commission felt that the scheme, which had not been properly notified to 
the Commission before it was adopted by the regional authorities, would 
distort competition and affect trade to the detriment of manufacturers of 
ceramic sanitaryware and crockery elsewhere in the Community. On the basis of 
the information available to it, the Commission could find no justification 
for the aid, and therefore decided to carry out a full investigation. 
<T8> Portugal 
430. In December the Commission closed Article 93(2) proceedings against aid 
to the public-sector petrochemicals company CNP. The proceedings were 
initiated in October 1991.*9) 
(8) Twenty-first Competition Report, point 253; OJ C 184, 16.7.1991 
(9) Twenty-first Competition Report, point 262. 
3.1.A.§5. 9 
260 
The aid was intended to remedy a situation which predated Portugal's 
accession to the Community. It formed part of an overall restructuring plan 
which should allow a return to viability. The company is of major 
importance in employment and regional terms, being located in the province of 
Alentejo, one of the worst-off parts of Portugal and of the Community as a 
whole. The aid was accordingly deemed to be compatible with the common 
market. 
<T8> United Kingdom 
431. In July the Commission opened Article 93(2) proceedings against a 
proposal of the UK Government to provide ECU 28.5 million of investment aid 
to SCA Aylesford, a manufacturer of newsprint. The Commission noted that 
Aylesford was not in an assisted area and considered that the UK Government 
had failed to demonstrate that the investment would not take place without 
the aid. 
432. In December the Commission closed the proceedings. It had established 
that SCA intended to set up and finance the collection of 350 000 tonnes of 
post-consumer waste paper annually, in addition to 100 000 tonnes of pre-
consumer waste. Most of this would be collected by SCA Recycling Maybank, the 
remainder being purchased from other waste paper merchants. The Commission 
noted that all the cost of this operation would be financed by SCA itself, 
whereas in many Member States local authorities contributed to waste paper 
collect ion costs. 
The Commission also noted that the investment project, involving the 
refurbishment of one paper making machine and the installation of a new 
machine, both of which would exclusively use waste paper as raw material, had 
been on hold for several years in view of the cost and risk involved. Other 
sites in assisted regions in the Community had been considered and rejected 
by the company, because the additional commercial risk there outweighed any 
regional aid offered. Aylesford had the advantage of being located in the 
vicinity of large potential supplies of waste paper and a major concentration 
of newspaper publishers. Consequently, the proposed ECU 25 million aid under 
the Assistance for Exceptional Projects scheme was necessary for the project 
to take place at all. 
3.1.A.§5. 10 
261 
The Commission also took into consideration the fact that SCA had shut down 
two newsprint machines in Sweden in 1990, the capacity of which will be 
replaced by part of SCA's additional production capacity. 
The Commission concluded that the aid proposed by the UK Government qualified 
for the derogation provided for in Article 92(3)(c) of the EEC Treaty in 
favour of aid to facilitate the development of certain economic activities, 
without adversely affecting trading conditions to an extent contrary to the 
common interest. 
<T5> Aid to the energy sector 
433. In July the Commission authorized the Government of Saxony-Anhalt in the 
former German Democratic Republic to pay an ECU 291 million subsidy to Veba 
Kraftwerke Ruhr to build an 800 MW ECU 1310 million power station at Schkopau 
which will use locally-mined lignite. The grant will cover the bulk of the 
extra cost of the lignite station by comparison with the coal-fired plant 
that the operators originally intended to build on the site. Originally a 
grant of ECU 334 million had been offered. The Commission considered that the 
reduced subsidy was Justifiable on environmental and technological grounds, 
because the continuation of active lignite mining would facilitate the 
extensive reclamation work needed in old lignite workings and the advanced 
power station would have technological spin-offs. However, it made it clear 
that it would not allow any further aid in Germany that directly or 
indirectly subsidized the use of lignite for electricity generation in 
preference to other fuels. Such aid would be an obstacle to the integration 
of the Community electricity market. The Commission aims to limit the 
protection of indigenous fuels in each Member State to a maximum of 20% of 
final electricity demand. In Germany this quota is taken up by the 
protection for hard coal.*10) This principle is reflected in a provision of 
the Commission's proposal for opening up the electricity market.*11) 
(10) Point 146 of this Report. 
(11) C0M(91) 548 final - SYN 384-385 
3.1.A.§5. 11 
262 
<T8> Netherlands 
434. On 7 April 1984 the Commission terminated the Article 93(2) proceedings 
initiated in respect of a special tariff known as tariff F for supplies of 
gas to Dutch nitrate fertilizer producers. It took the view that the 
savings achieved by Gasunie, the Dutch gas distributing company, on gas 
supplies to large consumers exceeded 5 cts/m3 and justified the 
introduction of tariff F. Following an appeal to the Court of Justice 
lodged by the French competitors of the Dutch nitrate fertilizer producers, 
the Court of Justice annulled in July 1990 the Commission's decision 
terminating the proceedings. On the basis of a report drawn up by experts, 
the Court found that the savings on supplies achieved by Gasunie under 
tariff F amounted to 0.5 cts/m3 at the most and that consequently the 
Commission had made a clear error of assessment. 
435. The Commission accordingly had to reexamine the case and take a new 
decision with regard to tariff F. It again concluded that tariff F did not 
fall within Article 92(1) and decided in December to terminate the 
proceedings. It found that tariff F was justified on commercial grounds. 
436. The Commission found that the prices of gas to Dutch nitrate fertilizer 
producers were no lower than those at which other Community producers could 
obtain gas supplies in the other Community countries. Tariff F did not 
therefore place the Dutch producers at an advantage over producers in other 
Member States. 
437. On 1 January 1992 Gasunie introduced new tariffs that no longer 
included tariff F. The Commission has not for the time being opposed the 
introduction of the new tariffs, but has decided to reexamine a review clause 
which they contain. 
263 3.I.A.§6. 1 
<T4> §6. Aid in the services sector 
<T5> - Mail and special delivery services 
438. Following the adoption of the Green Paper on the development of the 
single market for postal services*1) the Commission is continuing to monitor 
developments in the various segments of the market, notably as regards the 
public monopolies' activities in the sectors subject to competition. It 
commissioned a general study on the problem of cross-subsidization, which 
should be available in 1993 and will allow the problems in this sector to be 
ident if led. 
The Commission examined and rejected two complaints by competitors of the 
French Post Office concerning the transport of valuables in armoured 
vehicles, which is managed by the Post Office subsidiary Securipost, and 
express delivery services, managed by the Post Office subsidiary SFMI.*2) 
After the decisions rejecting the complaints were appealed to the 
Court of Justice,*3) the Commission decided, in view of certain elements in 
the appeals, to withdraw the decisions and to examine the matter further. 
The cases are currently under examination. 
<T5> - Banking and insurance 
439. Numerous articles in the press and a number of cases brought to its 
attention by operators in the sectors concerned prompted the Commission to 
examine the situation of the various actors on the market for financial 
services and in particular those enjoying special status as subsidiaries of 
state monopolies or public institutions governed by provisions exempting them 
from ordinary law. This includes in particular post office banking services 
and public credit institutions. 
Since this is an area in which experience in applying the rules governing 
state aid is limited, work on an appropriate approach to the problems that 
(1) C0M(91) 476, 11.6.1992. 
(2) The express courier services have now been reorganized through the 
setting-up of a joint venture by the German, Canadian, French, Dutch and 
Swedish Post Offices, which was authorized by the Commission on 
2 December 1991 under Regulation No 4064/89. 
(3) Cases C 117/92 (Securipost) and C 222/92 (SFMI). 
3.I.A.§6. 2 
264 
arise must necessarily take account of the interests of all the actors 
involved and of changes in competitive conditions, arising in particular from 
Community legislation to establish a single market in financial services. 
Consequently, the Commission has not yet taken any formal decisions on these 
cases; it is, however, continuing to study the situation and to seek new 
information to enable it to take up a position on some of the issues in the 
near future. 
440. The Commission did, however, adopt an initial decision in this area in 
May, finding that the recapitalization of the Banco di Sicilia and of the 
Cassa Centrale di Risparmio ("SiciIcassa") did not involve aid under 
Article 92(1) of the Treaty. Applying the commercial investor principle, 
the Commission noted that the banks concerned had never been in financial 
difficulty and that the recapi tal izat ion was required by the change in the 
banks' status to ordinary companies. 
<T5> - Aid to the audiovisual industry 
441. The decisions taken in 1992 reflected the Commission's long-standing 
practice that aid schemes can only be approved if they comply with all 
aspects of Community law (and, in particular, if they do not contain 
discrimination based on nationality) and do not affect trading conditions and 
competition in the Community to an extent contrary to the common interest. 
<T8> Germany 
442. In January the Commission initiated proceedings under Article 93(2) of 
the EEC Treaty against a bill amending the Film Industry Support Act 
("FiImfôrderungsgesetz"). The Act governs support for film productions and 
film distribution which is financed from a levy on the turnover of cinemas, 
television stations and video distributors. Objection was taken not to the 
aid scheme itself - the Commission has always had a favourable view of 
financial support for the European film industry, given its cultural 
importance - but solely to the discriminatory provisions of the draft 
legislation. Contrary to an understanding reached with the Commission in 
3.I.A.§6. 3 
265 
1986 that the last discriminatory conditions would be abolished by the end of 
1992, the German Government wished to maintain a requirement, for example, 
that the director of an aided film must be a German national or from a 
"German cultural background". Similar nationality restrictions were imposed 
for coproductions. To continue to accept such restrictions would run counter 
to the established policy of the Commission.*4) In October the Commission 
was able to terminate the proceedings as the German Government had agreed to 
do away with all discrimination by treating nationals of other EC countries 
like Germans for the purposes of funding under the amended legislation, which 
has applied since 1 January 1993. 
<T8> France 
443. In March the Commission agreed to an injection of ECU 45 million of new 
public funding into the Société Française de Production, which provides 
audiovisual services and produces films and television programmes. The 
Government had already written off the debts of SFP in 1990-91. The 
Commission took the view that the capital injection was aid in view of the 
company's financial situation, but that the aid, like that given the previous 
year, was compatible with the common market as it would help finance a 
restructuring plan intended to return the company to viability. The French 
Government undertook that it would not step in to help the company again. 
444. In July the Commission approved the support arrangements for film and 
television programmes production. The schemes subsidize the production of 
films and high-quality television programmes through the proceeds of special 
levies on cinema admission tickets and on television station revenue. The 
Commission considered that the eligibility conditions for the aid were 
consistent with Community law, and in particular the principle of non­
discrimination. However, it felt that the requirement that the first 
broadcasting rights for an aided production must be held by a French 
television station that had contributed to the levy was liable to retard the 
integration of the Community's audiovisual production industry, and the 
announced that it would keep the situation under review. 
(4) Nineteenth Competition Report, points 191-194; Twenty-first Competition 
Report, Annex III.B.1. (Netherlands). 
3.i.A.je. 4 ^55 
267 
<T8> United Kingdom 
445. In December the Commission closed an investigation into the promotion on 
BBC television of magazines published by the BBC's publishing subsidiary, BBC 
Enterprises. The publishers of rival magazines had claimed that the free 
advertising was an unfair subsidy to BBC Enterprises magazine titles. Under 
pressure from the Commission and the United Kingdom competition authorities, 
the BBC agreed to curtail its promotion of the magazines and the complainants 
settled legal proceedings pending in the United Kingdom and withdrew their 
complaint to the Commission. 
<T5> - Aid for tourist and craft activities 
446. In line with the position it has consistently adopted in this sector, 
the Commission approved various Spanish and Italian aid schemes to promote 
tourist and craft activities. The Commission takes a favourable view of such 
schemes because they are important for diversifying and maintaining economic 
activity and for increasing employment, notably in less favoured areas, and 
are usually intended for SMEs. Most of the schemes approved in these sectors 
help to finance projects that may be part-financed by the ERDF within the 
framework of Community regional development programmes. 
<T5> - Aid for the cooperative, mutual and non-profit sector 
447. The Commission continued in 1992 to support the cooperative, mutual and 
non-profit sector by approving various Spanish aid schemes to promote 
investment, training and technical assistance for cooperatives and limited 
companies whose shares are mainly held by their employees. Such aid 
measures, which help job creation (notably among the worst-off sections of 
the population), are in line with the Commission's objectives set out in its 
communication on businesses in the "Economie Sociale" sector.*5) 
(5) SEC(89)2187 final. 
268 3.I.A.§7. 1 
<T4> §7. Horizontal aid schemes 
<T5> - Aid for environmental protection and energy conservation 
448. The current framework on aid for environmental protection was extended 
until 30 June 1993, pending the adoption of a new code next year.*1) 
449. The Commission continued its policy in favour of aid schemes to 
encourage use of renewable energies. Among the schemes authorized in 1992 
was a scheme to stimulate investment in wind power in Denmark. The scheme 
guarantees private windmill operators a price of 85% of the local electricity 
companies' pre-tax selling price to domestic consumers. Together with a grant 
amounting to ECU 0.02 per kWh authorized by the Commission as part of the 
C02 tax package in April,*2) the private windmill operators will receive 
an average price subsidy of around 55%. The total annual budget is expected 
to be ECU 15.8 million in 1992. The scheme also provides that the costs 
connected with the enlargement and/or reinforcement of the grid are to be 
borne by the electricity companies. At present private windmills with a total 
capacity in 1992 of 670 MW produce only approximately 2.5% of total Danish 
electricity production. 
450. In March the Commission took a final decision on a scheme to promote the 
recycling of surplus manure. Article 93(2) proceedings had been initiated in 
May 1991.*3) The Dutch authorities had set up a national manure bank 
(Stichting Landelijke Mestbank), which was to collect manure from farmers, 
store it and deliver it to processing plants. Part of the cost was to be met 
from a levy charged to farmers on surplus manure. The Commission considered 
that the protection of the environment, which was, the main objective of the 
scheme, justified a compulsory levy to meet the manure banks' fixed costs. 
Variable costs, however, should be met out of the fee paid by farmers, as the 
scheme would otherwise 
(1) See point 76 of this Report. 
(2) See point 451 of this Report. 
(3) 0J C 189, 20.7.1991; Twenty-first Competition Report, Annex I N.B.3 
3.I.A.§7. 2 
269 
subsidise their operating costs. The Commission therefore made its approval 
of the scheme subject to the condition that the variable costs should not be 
met from the levy after 1994. For the period 1992 to 1994 the Commission 
agreed that variable costs could also be covered by the levy in view of the 
innovative character of the scheme and the need to allow farmers to become 
famiIiar with it. 
451. In April the Commission authorized Denmark and the Netherlands to 
introduce new C02/energy taxes with partial relief for energy-intensive 
firms. The relief counted as state aid as it was targeted at particular 
firms and went against the logic of the tax, which is of course intended to 
reduce energy consumption and C02 emissions. However, the tax relief was 
exemptible because the overall tax burden had been increased and without 
relief the firms concerned would have suffered a sharp loss of 
competitiveness. Similar reliefs or exceptions are proposed in the 
Commission's proposal for a Community-wide C02/energy tax.*4) As the steel 
aid code does not allow such aid for the steel industry, the Commission 
obtained the Council's assent to grant the necessary exemptions from the code 
for the two countries' steel firms*5). In addition, the Commission approved 
in December, also in Denmark, a scheme offering incentives to private firms 
to carry out energy conservation measures. The scheme is part of the package 
of measures to reduce energy consumption and C02 emissions. The level of 
subsidy for energy conservation is between 30 and 50% and the annual budget 
of the scheme is ECU 25 million. 
452. In May the Commission approved the draft contract between the city of 
Wiesbaden (Germany) and Apura. Over a five-year period, Apura will qualify 
for a reduction in the waste-collection tax paid to the city of Wiesbaden in 
return for its commitment to purchase from the city, at current market 
prices, all waste paper collected. The Commission regarded the tax reduction 
as aid, but as compatible with the common market given the commitments made 
by Apura to the city of Wiesbaden. 
(4) C0M(92)226 final. 
(5) Commission Decision 92/411/ECSC of 31 July 1992, OJ L 223, 8.8.1992; see 
points 384 and 385 of this Report. 
3.I.A.§7. 3 
270 
453. The Commission approved, also in May, pending a review in relation to 
the new environmental aid framework,*6) the German SME aid schemes for 
effluent treatment, waste management, air pollution control and energy 
conservation that are operated as part of the ERP (European Recovery 
Programme) subsidized loans programme.*7) 
<T5> - General investment aid 
<T6> (a) Review of existing schemes under Article 93(1) of the EEC Treaty 
454. The benefits of reviews were described in last year's Report.*8) The 
current exercise continued to receive high priority, but was widened from 
general investment aid schemes to investment aid schemes for SMEs following 
the issue of the guidelines for SME aid.*9) Progress on the main investment 
aid cases is reported below. 
<T6> (b) Main decisions 
455. The Commission considered the separate aid programmes proposed by the 
Flanders, WalIonia and Brussels regions to replace the Economic Expansion Act 
which was repealed in 1991. 
456. In November the Commission terminated the proceedings under 
Article 93(2) of the EEC Treaty which it initiated in respect of the draft 
order of the Brussels Region providing for various types of aid to promote 
economic growth, some of the aid having been deemed incompatible with the 
common market. As a result of the substantial amendments made to the initial 
draft, the Commission authorized its implementation on the basis of the 
derogation provided for in Article 92(3)(c) of the EEC Treaty. 
457. Aid under the Brussels scheme may now be granted only where it is for a 
project that is co-financed by Community aid, fulfils the conditions laid 
down by the Community frameworks on state aid, notably the guidelines on aid 
for SMEs, or supports participation 
(6) See point 76 of this Report. 
(7) See point 468 of this Report. 
(8) Twenty-first Competition Report, points 240-241 
(9) See point 342 of this Report. 
......p.. 27 
in important projects of common European interest within the meaning of 
Article 92(3)(b) of the EEC Treaty. 
458. The provision for R&D aid was withdrawn from the draft order. 
459. The Flemish and WalIonian programmes are stiI I under consideration. 
460. The Commission terminated the proceedings initiated in July 1990*1°) in 
respect of the Italian scheme providing interest subsidies for SMEs and 
various measures. However, it began a review under Article 93(1) of the aid 
to ailing firms under Law No 95 of 1979 ("legge Prodi"). The review may 
result in the Commission's proposing appropriate measures required by the 
development or functioning of the common market. 
461. The Commission completed its review of the activities of the Luxembourg 
state-owned banking institution, the Société Nationale de Crédit et 
d'Investissement. Closing the case in February, the Commission found that 
the low-interest loans arranged by the bank mainly for small and medium-sized 
companies involved only a low degree of subsidy. Its other activities were 
on a fully commercial basis. 
462. In December the Commission authorized the implementation by the 
Luxembourg Government of a draft framework-1 aw intended to replace the Law of 
14 May 1986 and comprising four aid schemes.*11) Two of the schemes are new 
(scheme for SMEs and scheme relating to environmental protection), while the 
third is an amended form of the existing aid scheme for research and 
development; the fourth scheme is an unamended codification of the regional 
investment aid scheme already authorized by the Commission. 
After examining the new and amended aid schemes in relation to the 
requirements of Articles 92 and 93 of the EEC Treaty, and, in particular, 
their compliance with the Community codes on aid for SMEs, research and 
(10) Twentieth Competition Report, Annex I 1.2. 
(11) Twenty-first Competition Report, point 247 
3.I.A.§7. 5 
272 
development and environmental protection, the Commission concluded that the 
schemes qualified for the exemption under Article 92(3)(c). 
<T6> (c) Other general investment aid schemes 
463. In July the United Kingdom Government agreed to reconsider its 
notification of a new budget allocation for the Assistance for Exceptional 
Projects scheme first authorized in 1989. The Commission had indicated that 
it would be unlikely to be able to authorize the scheme again, given its 
general investment character, although the United Kingdom authorities would 
be free to notify proposed awards of aid individually under Section 8 of the 
Industrial Development Act 1982.*12) However, proceedings under Article 
93(2) of the EEC Treaty were opened against one proposed award.*13) There 
was no objection to the R&D part of the AEP scheme. 
<T5> - Aid examined in the context of privatizations 
464. The Commission this year again examined a number of cases of aid granted 
in connection with the privatization of companies. It applied the criteria 
established over recent years and set out in last year's Report:*14) aid in 
such cases does not qualify for preferential treatment and no specific 
exemption is applicable to it; the sale of public enterprises may give rise 
to aid if it is not carried out in a fully transparent manner and in 
particular if bids are not invited or if conditions are imposed on the sale 
by the public authorities. 
465. The Commission examined Law 11/90 of 5 April 1990 relating to the 
Portuguese privatization programme. It decided in December not to raise any 
objections to the Law, which provides, in most instances, for a transparent 
transfer procedure based on public bids in which the highest bidder is 
accepted and the principle that the value of the enterprises should be 
established by independent consultants. However, it: 
(12) Twenty-first Competition Report, point 242. 
(13) See points 431 and 432 of this Report. 
(14) Twenty-first Competition Report, point 248. 
3.1.A.§7. 6 
273 
asked the Portuguese authorities to notify it of all cases covered 
by Article 6(3)(a) and (c) of the Law, which provide for specific and 
non-transparent procedures; 
initiated Article 93(2) proceedings in respect of Article 13(3) of 
the Law, whose nationality clause appears to be in breach of Articles 52 
and 67 of the Treaty. 
466. Throughout the year the Commission closely followed the operations of 
the Treuhandanstalt (THA) in the former German Democratic Republic on the 
basis of the decision of September 1991.*15) It also took a general 
decision under Article 93(1) of the Treaty, discussed earlier in this 
Report.*16) 
Apart from the cases described elsewhere in this Report,*17) the Commission 
investigated various other privatizations and also looked at the financing 
of certain companies still held by the THA. 
<T5> - Aid to small and medium-sized enterprises 
467. Schemes to aid the development of small and medium-sized firms 
continued to account for a large proportion of the Commission's state aid 
control work. In future the work generated by them should decline as many 
of the smaller schemes are no longer notifiable or can be cleared rapidly 
and virtually automatically.*18) However, major schemes will still require 
close scrutiny under the new guidelines for state aid to SMEs approved this 
year,*19) especially to check their conformity with the limits for 
investment aid in non-assisted areas. 
<T8> Germany 
468. In July the Commission reviewed the detailed conditions of the various 
ERP (European Recovery Programme) schemes in Germany in the Iight of the 
guidelines on state aid to SMEs. The schemes provide loans at a low aid 
intensity mainly for business start-ups, pollution control and energy 
(15) Twenty-first Competition Report, point 249. 
(16) See points 19 and 349 of this Report. 
(17) See points 388, 417 et seo. and 424 of this Report. 
(18) See point 337 of this Report. 
(19) See points 78 and 342 of this Report. 
3.I.A.§7. 7 
274 
conservation investment, and venture capital. Since reunification the bulk 
of the funds (ECU 4.85 billion out of ECU 6.8 billion in 1992) has been spent 
in the new eastern German states. In terms of the intensity of aid for 
investment in non-assisted areas, the schemes were found to be well within 
the guideline limits. The German Government undertook to bring the 
definitions of small and medium-sized enterprises into line with the 
guidelines by 1993 and duly did so in the 1993 programme which the Commission 
approved in December. 
<T8> France 
469. In February the Commission approved a large package of tax reliefs and 
other measures for SMEs, some of which did not involve state aid. The main 
measure, a tax credit of up to 25% on capital increases of up to ECU 290 000 
for firms that reinvest profits in the business, was authorized for 1992 
only, although it was due to be offered also in 1993, because firms larger 
than the Commission's then definition of SMEs - later broadly confirmed in 
the SME aid guidelines - were eligible, namely those with sales of up to 
ECU 71 mill ion. 
<T8> Ireland 
470. In November the Commission approved a scheme providing temporary help to 
SMEs to adjust to the currency changes that had taken place in the ERM since 
mid-September and had caused the Irish pound to appreciate sharply against 
the pound sterling. The Commission considered that the heavy dependence of 
Irish manufacturers on sales in competition with United Kingdom firms on the 
United Kingdom and Irish markets justified one-off temporary support to 
maintain employment white the Irish firms were adjusting to the new 
situation. The development of Ireland would suffer a serious setback if many 
of these firms went bankrupt, pushing up the rate of unemployment, which was 
already the highest in the Community. The scheme, time limited to the end of 
March 1993, had a budget of ECU 66 million. 
<T8> Italy 
471. In December the Commission initiated Article 93(2) proceedings against 
the package of SME aid measures provided for by Law 317 of 
5 October 1991.*2°) The Italian Government had continued to grant 
(20) Twenty-first Competition Report, point 269 
3.I.A.§7. 8 
275 
investment aid under the legislation after the Commission's authorization 
expired at the end of April, and the level of aid, at 20% or 25%, was above 
that permitted in non-assisted areas by the SME aid guidelines. The 
Commission also had insufficient information on several of the other schemes 
to judge whether they were in line with its policy on aid for SMEs. 
<T5> - Aid for employment and training 
472. As in previous years, the Commission took a generally favourable view of 
the aid schemes introduced or extended by a number of Member States to 
promote the employment of certain categories of workers experiencing 
particular difficulties in entering the labour market, either as employees, 
self-employed, or workers in the cooperative, mutual and non-profit sector. 
473. Member States have developed a variety of active labour market policies, 
programmes and measures to raise the quality of their labour forces and 
improve the flexibility of their labour markets. The growth problem in the 
last two years following a period of improvement in the late 1980s, has also 
resulted in a series of special measures targeted on the unemployed. 
It is accepted within Community competition policy that vocational training 
is eligible for public financial support in all regions. However, some of the 
labour market schemes developed by governments - for example, assistance to 
the unemployed to become self-employed, or support for particularly 
disadvantaged categories of people such as the long-term unemployed - have 
raised issues which need to be resolved in order that they do not, 
inadvertently, create distortions. 
The Commissions's review of such schemes would aim at a more coherent 
approach to the treatment of the wide range of manpower measures currently 
employed by the Member States and supported through the Structural Funds in 
many cases, so as to ensure that the wider objectives of economic and social 
cohesion can be pursued, both between and within Member States, and any 
competition problem avoided. 
3.I.A.§7. 9 
276 
<T8> Italy 
474. The Commission initiated Article 93(2) proceedings against of a draft 
Italian Law providing for aid to any firm managed by a majority of women and 
to bodies providing advice, technical assistance or training mainly for 
women. Since the aid could be combined with any other national, regional or 
Community aid, it was possible for the assistance for a project to cover as 
much as 80% of costs. 
Although not having any objections in principle to aid to promote women's 
employment, the Commission felt that, except for the aid for training, the 
legislation was not exemptible because it was too broad in scope and offered 
levels of aid that were too high. Provided the minimum percentage of women 
was complied with, the aid was available to any firm irrespective of size or 
location and could reach considerable sums. The scheme was therefore liable, 
in the Commission's view, to have adverse effects in the Community by 
counteracting regional aid schemes both in Italy and in other Member States 
in the competition for mobile investment. 
<T5> - Rescue and restructuring aid 
<T8> Italy 
475. In July the Italian State holding company, EFIM, was placed in 
liquidation by the Amato Government. Subsequently, several Decree Laws were 
issued which introduced a number of measures to assist EFIM. These included 
an advance of ECU 120 million from the Cassa dei Deposit i e Prestiti, a 
guarantee for the totality of the group's debts and a reduction in 
electricity tariffs for Alumix. Most importantly, the Decree Laws did not 
include any indication as to how transparency would be ensured in the 
liquidation process. 
3.I.A.§7. 10 
277 
476. EFIM was in liquidation before the above assistance was granted, leading 
the Commission to conclude that aid was involved in these measures. Moreover, 
the presence of the group in both Community and world markets, and 
specifically the SIV, Alumix and Agusta operations, would mean that such 
measures would distort trade. 
477. Consequently, due to the lack of information with which to assess the 
measures' compatibility, the Commission decided to initiate Article 93(2) 
proceedings in December. 
478. At the same time the Italian Government notified further measures to 
assist EFIM, including an increase in the advance to ECU 2.3 billion. 
Therefore, the Commission decided, in January 1993, to extend the proceedings 
to take account of these subsequent measures. 
3.I.A.§8. 1 278 
<T4> §8 - Regional aid 
<T5> - General developments 
<T7> . Cohesion 
479. The Commission continued to direct its regional aid policy towards the 
strengthening of cohesion.*1) Its reviews of national regional aid schemes 
were aimed at increasing the concentration of aid and its decisions reflected 
the need to improve the coherence between economic and social cohesion policy 
and competition policy, in accordance with the general approach pursued by it 
since December 1991.*2) 
480. It also continued to study the impact on intra-Community trade of aid 
towards capital-intensive investments. It will consider whether to propose 
measures to the Member States in this respect. 
<T8> Belgium 
481. In May the Commission approved a scheme for the redevelopment of 
derelict industrial sites in the Brussels Capital Region. 
The aid is granted to the owners of such land, either in the form of a 
contribution to the cost of studies and redevelopment work or in the form of 
an exemption from property tax for five years following site rehabilitation. 
It is available only to small and medium-sized enterprises and must not 
exceed the aid intensities provided for in the Commission rules on aid to 
SMEs.*3) 
(1) See point 80 of this Report. 
(2) Twenty-first Competition Report, point 56 
(3) See point 342 of this Report. 
3.I.A.§8. 2 
279 
<T8> Germany 
482. The policy of the Commission is essentially to concentrate aid in the 
new Lander and to limit aid in regions that are not in urgent need of 
assistance, notably West Berlin. 
483. In December the Commission initiated the procedure under Article 93(2) 
of the EEC Treaty in respect of certain provisions of the Investment 
Allowance Law aimed at promoting investment in the new Lander and in 
West Berlin ("Invest itionszulagengesetz 1991").*4) The Law, which has an 
budget of some ECU 6 billion, offers aid for investment in plant and 
machinery begun before the end of 1992 and completed before the end of 1994. 
The German authorities had implemented the Law without complying with the 
obligation to give prior notification pursuant to Article 93(3) of the 
EEC Treaty. 
In June, in view of the difficult socio-economic situation in the new Lander. 
the Commission decided to close the case as far as the investment allowances 
in the former GDR were concerned. 
However, in July the Commission prohibited investment allowances in 
West Berlin altogether in respect of investments made after 31 December 1992 
and limited the allowances to 8% for investments made there after 
31 December 1991. It required the allowances in excess of 8% to be repaid. 
In its decision, the Commission considered that West Berlin did not meet the 
criteria set out in its method for the application of Article 92(3)(a) and 
(c) to regional aid*5) and was not therefore eligible for regional aid under 
those two exceptions, and that no other exceptions provided for in the 
EEC Treaty could be applied. It also took the view that the granting of new 
aid to West Berlin would have the effect, given the considerable advantages 
the city enjoyed in terms of infrastructure and skilled manpower and its 
(4) Twenty-first Competition Report, point 290 
(5) OJ C 212, 12.7.1988. 
3.I.A.§8. 3 
280 
unique geographical position, of attracting new businesses and stimulating 
the expansion of existing firms. This would make it more difficult for 
firms in the new eastern German states to adjust and would simply slow down 
the catching-up process. 
484. in December 1991 the Commission had initiated Article 93(2) proceedings 
in respect of Section 6 of the Assisted Areas Law ("Fôrdergebietsgesetz"), 
which provides for tax-exempt reserves to promote investment in West Berlin 
and in the new Lender.. The scheme had been put into effect without prior 
not if icat ion.*6) 
As in the case of the "Invest itionszulagengesetz", and for the same reasons, 
the Commission decided in June to terminate the procedure as regards the aid 
to the new Lander and declared in July that the parts relating to the 
creation of tax-exempt reserves for investments in West Berlin were illegal 
and incompatible with the common market. The aid already granted would have 
to be recovered within two months. 
485. In May, and again for the same reasons as set out above, the Commission 
decided to initiate proceedings in respect of the application in West Berlin 
of a regional soft loan scheme ("ERP-Aufbauprogramm") for investments in the 
new Lander and in West Berlin. This scheme, too, had been put into effect 
before authorisation, contrary to Article 93(3) of the EEC Treaty. 
486. In November the Commission decided to authorise an amendment and 
extension of the investment allowance scheme in the new eastern German 
states. Application of the scheme to the new Lander had been approved in 
June. The old scheme covered investments begun before the end of 1992 and 
completed before the end of 1994 and provided for allowances of 12% for 
investments completed before the end of June 1992 and of 8% for later 
investments. As a result of the change in the Law, an allowance of 8% will 
also be available for investment in the new Lander begun before the end of 
June 1994 and 
(6) Twenty-first Competition Report, point 291. 
3.I.A.§8. 4 
281 
completed before the end of 1996, and investment begun and completed in the 
period from 1 July 1994 to 31 December 1996 will qualify for an allowance of 
5%. The extended scheme involves additional aid of ECU 8.85 billion on top 
of the ECU 5.5 billion earmarked initially. 
487. In July and September, the Commission approved the 21st Outline Plan 
for the Joint Federal Government/Lander scheme for improving regional 
economic structures. The list of assisted regions and the arrangements 
for granting the aid had already been approved in 1991 for the period from 
1 January 1991 to 31 December 1993.*7) 
The 1992 budget for the scheme totals ECU 3 415 million in payment 
appropriations and ECU 4 400 million in commitment appropriations, of which 
ECU 2 730 million and ECU 4 100 million are earmarked for the former GDR, 
reflecting the priority given at Federal level to the development of the 
former GDR. The part of the scheme relating to the former GDR is part-
financed by the structural Funds, providing an additional ECU 500 million a 
year. 
<T8> Spain 
488. In July the Commission approved a regional aid scheme run by the 
national Government for Objective 1, 2 or 5(b) areas in which employment in 
textiles accounts for at least 10% of industrial employment. The aid takes 
the form of grants for training, studies, R&D, design and quality, and the 
setting-up of associations. It covers the period from 1992 to 1996 and has 
a total budget of ECU 129 million. 
As well as the scheme's contribution to regional development, the following 
other factors influenced the Commission's decisions: the R&D aid complied 
with the Community framework; the impact of the other aid 
(7) Twenty-first Competition Report, point 289 
3.I.A.§8. 5 
282 
measures on competition was limited; some of the aid to firms larger than 
SMEs could not be granted after 31 December 1993; the scheme provided only 
for certain aid for the acquisition of equipment which was limited to SMEs 
and would be discontinued by 31 December 1993 in areas not covered by 
national regional aid schemes. 
<T8> France 
489. In April the Commission decided to initiate the Article 93(2) procedure 
in respect of aid apparently granted illegally in the canton of Modane. 
490. The aid had not been notified to the Commission and consisted chiefly 
in a reduction granted by the Savoie General Council of up to 25% of the 
price of electricity for a period of not more than five years. 
491. The procedure was terminated in December, the Commission having 
determined that most of the aid in question came under schemes that had 
already been approved. As regards the electricity price reductions, the 
French authorities communicated to the Commission a draft decree stipulating 
that the reductions could not exceed ECU 50 000 per enterprise and per three-
year period, in accordance with the de minimis rule laid down in the 
Commission communication on aid for small and medium-sized enterprises.*8) 
The new decree must be implemented by 1 March 1993. 
492. In September the Commission decided to approve a diversification scheme 
for areas dependent on the textile and clothing industry. In its scrutiny 
of the scheme, the Commission checked in particular that the terms of its 
recent communication on aid for small and medium-sized enterprises*9) had 
been met, in particular as regards aid intensity and the size of eligible 
enterpr ises. 
493. In November the Commission decided to approve a draft law providing for 
the creation of two special investment areas in Nord/Pas-de-Calais. Firms 
setting up in one of these areas will benefit from a tax credit on profits of 
(8) See point 337 of this Report. 
(9) 0J C 213, 19.8.1992; see point 342 of this Report. 
3.I.A.§8. 6 
283 
up to 22% of the investment made during their first three years in operation. 
The scheme is to apply for five years from the creation of the area. 
The Commission noted that the areas in question were eligible for regional 
aid. It checked that the scheme did not involve operating aid and that the 
aid intensity did not exceed the ceilings applicable to central regions of 
the Community. 
<T8> Italy 
494. In May the Commission initiated the Article 93(2) procedure against 
grants provided under an agreement between Val le d'Aosta and the 
Société di Servizi (SDS SpA). However, the procedure was terminated in 
December, the Italian authorities having informed the Commission that they 
had withdrawn the agreement in view of the initial position taken by the 
Comm i ss i on. 
495. The Commission also decided in May to propose appropriate measures 
under Article 93(1) of the EEC Treaty in respect of the aid scheme applicable 
in the free zone of Gorizia which had been in existence since before the 
EEC Treaty. 
The scheme provided in particular for various tax exemptions for both private 
individuals and firms in Gorizia. As regards aid to individuals, the 
Commission considered that the entire population of Gorizia could not be 
regarded in view of the socio-economic indicators for the area as in need of 
social aid. Aid to firms in the nature of operating aid can be granted only 
in the least-favoured areas of the Community, yet the economic indicators for 
Gorizia did not allow it to be classified among those areas. 
The Commission reached the preliminary conclusion that the scheme was not 
compatible with the common market and proposed that the Italian Government 
abolish it. 
In December it nevertheless decided to approve the scheme under 
Article 92(2)(a) and (3)(c) after the 
3.I.A.§8. 7 
284 
Italian authorities had made certain changes which will enter into force on 
1 January 1994. The changes consist in limiting the quotas of tax-free 
products reserved for the population and bringing the rules on aid for firms 
into line with the Community frameworks in force, thereby abolishing all 
operat ing aid. 
496. In June the Commission decided to initiate the Article 93(2) procedure 
against the proposed new budgets for: 
the scheme of regional investment incentives provided for by 
Mezzogiorno Law (ECU 14.35 billion); 
the general reductions in firms' social security contributions in the 
Mezzogiorno provided for in the same Law (ECU 4 393 million); 
the selective higher relief of social security contributions for 
enterprises in the Mezzogiorno (ECU 2 727 million). 
The Commission has traditionally taken a favourable view of development aid 
for the Mezzogiorno and in 1988 approved the aid scheme under the Mezzogiorno 
Law until the end of 1993 in view of the clearly defined conditions for 
grant ing the aid. 
However, the Italian authorities had failed to comply with the obligation 
imposed by the 1988 decision to provide the Commission with a report on all 
the tax reliefs granted. The Commission was therefore unable to assess 
their impact and, consequently, to assess the compatibility of the proposed 
new budgets. 
The Commission also considered that the provisions of the Decree-Law 
allocating the new budgets were vague as regards both the duration of the 
scheme and the precise budget allocated. It also found that the reductions 
in social security contributions exceeded those authorized and that the 
scheme would in future be targeted at specific sectors and had been 
implemented before the Commission had taken a decision. 
For these reasons, the Commission felt that on the basis of the information 
in its possession it was unable to determine whether the measures in question 
were compatible with the common market. 
3.I.A.§8. 8 
285 
The Italian authorities subsequently informed the Commission that the 
provisions governing the continuation of the general reductions in social 
security contributions and the special higher rates of relief had lapsed and 
were now contained in a new draft law. The Commission therefore closed the 
proceedings opened in June against these two provisions and in October opened 
proceedings under Article 93(2) in respect of the new draft law. 
On the other hand, in December the Commission was able to terminate the 
proceedings against the new ECU 14.35 billion budget for regional incentives 
for 1993. The Italian Government had adopted a new approach in this matter 
which was set out in Decree-Law No 415 of 22 October 1992. The new 
legislation limits the aid to certain ceilings depending on the degree of 
development of the region and the size of the recipients, in line with the 
rules in other Community regions with a similar level of economic 
development. In addition, the tax exemptions will be converted into tax 
credits. Up to ECU 6 billion of aid can be granted under the old rules for 
aid applications pending on 14 August 1992. 
497. In September the Commission approved under Article 92(2)(b) of the EEC 
Treaty various aid granted for the reconstruction of La Valtellina and to 
compensate firms that suffered damage during the 1987 flooding. 
However, it opened Article 93(2) proceedings against other aid (grants, low-
interest loans, tax reductions and exemptions, etc.) providing general 
support for business activity in the region and going beyond the mere 
restoration of firms damaged by natural disasters. 
498. In November the Commission examined Law No 19/91 on the development of 
Friuli-Venezia Giulia and other areas adjacent to the former Yugoslavia. 
On the basis of the information in its possession, the Commission considered 
that the tax measures concerning the Trieste Financial and Insurance 
3.I.A.§8. 9 
286 
Services Centre were incompatible with the common market and initiated the 
Article 93(2) procedure. It considered that the measures involved operating 
aid and were not justified by the economic situation of the region, that 
financial and insurance services did not normally require aid and that the 
intense competition in these sectors meant that aid would have a particularly 
distort ing effect. 
<T8> United Kingdom 
499. In March the Commission approved the setting-up of an enterprise zone 
in North Lanarkshire, Scotland. New investment in this area will enjoy the 
same advantages as in other enterprise zones in the United Kingdom, such as 
accelerated tax depreciation for industrial buildings, exemption from local 
taxes and charges, and more streamlined administrative procedures. Like the 
others, the enterprise zone has been set up for ten years. The specific aid 
granted to it does not constitute operating aid and complies with the 
regional aid ceilings for the region. 
The region in question is a development area with a very high level of 
unemployment due to the decline of traditional industries, in particular the 
steel industry. 
287 
<T4> § 9. Aid in the transport sector 
<T6> (a) Land transport 
500. The bulk of the aid granted in the land transport sector is still that 
allocated to national railways, either as compensation for public service 
obligations under Regulation (EEC) No 1191/69,*1) as amended by Regulations 
(EEC) Nos 1893/91*2) and 1192/69,*3) or as aid within the limits laid down 
by Regulation (EEC) No 1107/70.*4) Most member countries are considering a 
fresh definition of the financial relationship between the State and the 
railways, within the framework of Directive 91/440/EEC of 29 July 1991 on the 
development of the Community's railways. The Commission informs the Council 
of the scale of such aid in the two-yearly reports provided for in Council 
Decision 75/327/EEC. As a result of the new possibilities created by that 
Directive, the Commission is currently considering the position for the 
future. 
On 10 June 1992 the Commission adopted a communication to the Council 
concerning the creation of a European combined transport network and its 
operating conditions (C0M(92) 230), Annex 4 to which contains the latest 
report on the granting of aid for combined transport under Regulation (EEC) 
No 1107/70 and a proposal amending that Regulation. On 7 December 1992 the 
Council adopted Regulation (EEC) No 3578/92.*5) The Regulation, which amends 
Regulation (EEC) No 1107/70, extends the period for granting aid until 
31 December 1995 and increases the scope of admissible aid. 
The opening-up of the transport market as from 1 January 1993 will have 
consequences for competition in the road transport sector. The Commission 
will have to increase its monitoring of subsidies that could unfairly benefit 
particular operators. At the same time, the assessment of specific state aid 
measures is becoming increasingly complex. 
(1) OJ L 156, 28.6.1969. 
(2) 0J L 169, 26.6.1991, p. 1. 
(3) 0J L 237, 24.8.1991. 
(4) OJ L 130, 15.6.1970 
(5) 0J L 364, 12.12.1992, p. 11 
3.I.A.§9. 2 288 
The Commission initiated the Article 93(2) procedure in respect of an Italian 
Decree of 28 January 1992 introducing a tax credit for Italian road hauliers. 
The procedure should enable the Commission to determine whether the aid in 
question is compatible with the common market. 
In the inland waterway sector, the scrapping operation begun in 1989 under 
Council Regulation (EEC) No 1101/89 of 27 April 1989 on structural 
improvements in the industry was supplemented in 1991 by measures involving 
vessels in the new German Lander and was completed in 1992. All the vessels 
available for withdrawal from the market were scrapped before 
1 December 1992. 
3.I.A.§9. 3 
289 
<T6> (b) Sea transport 
501. The Commission ex... -d a number of state aid cases and continued its 
work on adjusting the "Guidelines for the examination of state aids to 
Community shipping companies", which it had adopted on 3 August 1989 to take 
account of market developments. 
In addition, it intensified its efforts to develop further its proposal for 
the establishment of a Community ship register (EUROS).*6) This register 
would provide a transparent, common framework for state aid to Community 
shipowners, thereby eliminating the need for Member States to introduce or 
maintain national schemes, including second registers, which risk distorting 
competition between Community fleets. In-depth discussions on EUROS are being 
held within the Council. The Commission intends to reassess its proposal in 
the light of these discussions. 
As regards ports, the Commission authorized state aid of ECU 115 million for 
workers made redundant in connection with the restructuring of ports in the 
United Kingdom. The restructuring was provided for in the Dock Work Act 
1989, which the United Kingdom authorities notified to the Commission. 
The question of transparency of financial relations between public 
authorities and ports will be the subject of a study being commissioned from 
an independent expert. 
The intention is to recommend a form of financial statement which ports will 
be required to complete and to include in their annual accounts. 
(6) OJ C 19, 25.1.92, p. 10 
3.I.A.§9. 4 
290 
<T6> (c) Air transport 
502. The Commission presented to the Council and Parliament a report on the 
evaluation of aid schemes for Community air carriers (SEC(92) 431 final). 
The document summarizes inter alia the main features of the liberalization 
process and competition policy in the aviation sector, as well as the 
criteria, set out in Memorandum No 2 on the common transport policy, for 
assessing aid schemes under the rules of the Treaty. 
The report also contains a table showing aid granted by Member States to the 
air transport sector and lists the aid measures being closely scrutinized by 
the Commission. 
The aid in question is granted in a variety of forms, and not just in the 
form of the usual financial injections by the state such as capital 
increases, preferential tax schemes or general guarantee schemes for loans to 
carriers. The Commission found that certain carriers benefited from aid 
specific to the sector in question, such as grants for the operation of 
certain routes. It requested the Member States concerned to provide further 
information on all these aid measures so that it could assess their 
compatibility with the Treaty rules. 
In the light of the third air transport package, the Commission has started 
work on updating the guidelines, in accordance with Articles 92 and 93 of the 
Treaty, for the assessment of aid to air carriers. 
The Commission took a decision on the second and third tranches of the 
capital increase for Air France, namely the issue of convertible bonds and 
undated subordinated loan instruments. Following a thorough examination, it 
decided that the operations could be regarded as normal financial 
transactions. 
The Commission decided not to raise objections to the increase in the capital 
of Iberia in view of the firm undertakings given by the Spanish authorities 
to the effect that : 
3.1.A.§9. 5 291 
it would be the last capital injection involving state aid; 
the resources would not be used to acquire shares in other Community 
air Iines; 
the Spanish Government would replace the nationality clause in Iberia's 
statute with a Community clause conforming to the provisions of the 
third air transport package. 
The Commission did not raise any objections, pursuant to Article 92(3)(c), to 
a proposal to grant aid to two United Kingdom airlines, New Air and 
Cumbria Aero Club, operating out of Carlisle Airport. The aid for New Air 
would be in the form of a grant, while that for Cumbria Aero Club would be in 
the form of a low-interest loan. 
3.I.A.§10. 1 
292 
<T4> §10. Aid in the agricultural sector 
503. The scope of Commission activity under Articles 92 to 94 of the EEC 
Treaty continues to be determined, in the agricultural sector, by the Council 
(Article 42 of the EEC Treaty). For most products in Annex II, Articles 92 to 
94 apply. Any aid which is liable to disturb Community market mechanisms 
(for example, aid per unit of input or output) is considered not to be only 
at variance with state aid provisions but also illegal under the terms of the 
Council Regulations establishing the common market organizations. Recent CAP 
reform has not changed this situation. 
A number of instances of such aid were encountered, and in all cases the 
Commission decided to initiate Article 93(2) proceedings. The Italian 
authorities proposed aid for a supplementary harvest in the nuts sector, the 
total cost of which was to be ECU 7 million. The Commission was of the view 
that it appeared to constitute an operating aid to which none of the 
exceptions of Article 92 of the EEC Treaty apply and at the same time an 
infringement of the common market organization for fruit and vegetables and 
Council Regulations (EEC) Nos 789/89 and 2159/89 concerning specific measures 
for nuts and carobs. The Italian authorities subsequently withdrew the aid 
plan. A similar position was adopted by the Commission with regard to Italian 
aid for the private storage of a maximum total of 45 000 tonnes of carrots 
for a period of four months. The Commission thereafter adopted a final 
negative decision on this measure. Article 93(2) proceedings were initiated 
in respect of further Italian aid for short-term private storage of table 
wine and grape must, whereupon the measure was withdrawn. Italian aid for 
producer groups and unions in the olive oil sector - total budget of 
ECU 4 million for a period of one year - was also considered by the 
Commission to be in breach both of state aid rules and of the common market 
organization for fats and oils. A final negative decision was taken on 
Italian aid for exports of citrus fruit to the countries of Eastern Europe 
and the former USSR. In the sugar sector, the Italian authorities notified 
aid totalling ECU 50 million to beetgrowers. One part of the measure sought 
to compensate growers for loss of income as a result of lower prices paid to 
them by industry than those laid down in Community rules. A second aspect 
concerned aid designed to contribute to the financing of storage costs by 
compensating for the effects of exchange-rate fluctuations in Italy. The 
common market organization for sugar provides facilities in this area under 
precise conditions, which appeared not to be respected in this instance. 
3.I.A.§10. 2 
293 
Turning to France, aid was notified for preventive distillation of wine to 
supplement that authorized by the Community. Although the French authorities 
argued that, in their view, a level playing field no longer existed in 
Community wine production, the Commission deemed that the objective of the 
measure was to increase incomes of producers in France to a level above that 
provided for by virtue of the common market organization for wine. The 
Commission came to the view that the aid constituted a breach of Treaty 
provisions and was in conflict with the common market organization for wine; 
it initiated Article 93(2) proceedings and called upon France not to grant 
the aid. It may be noted that the Council subsequently decided to allow this 
aid under the terms of the third subparagraph of Article 93(2) of the EEC 
Treaty on the grounds that exceptional conditions were present - a criterion 
which the Commission is not permitted to invoke in its assessment of state 
aid. 
German aid for the distillation of wine in the Rhine land-Pa I atinate region 
was the subject of a negative decision. The Commission came to the view, 
which was not contested by the German authorities under Article 93(2) 
proceedings, that the aid, payable per litre of wine distilled, constituted a 
breach of Treaty provisions and was in conflict with the common market 
organization for wine. The Commission also initiated Article 93(2) 
proceedings in respect of further aid of this nature planned by Rhine land-
Palatinate and called upon Germany not to grant the aid. 
Although it has been Commission policy systematically to rule out state aid 
for activities provided for in Community Regulations laying down common 
market organizations, a particular case arose in Italy concerning aid for 
producer groups handling nuts where, although aid for such groups is laid 
down in the relevant common market organization, the Commission raised no 
objections. The Commission took this position on the grounds that the aid, 
which involved improved marketing arrangements, was of a structural and not 
an operational nature and that the provisions of the relevant market 
organization are not exhaustive with respect to producer groups. 
504. With regard to operating aid to state-owned or parastatal enterprises in 
the agricultural sector, Article 93(2) proceedings were initiated in one 
instance and a final negative decision taken in another in respect of two 
Spanish grants of aid to the Merco Group. The policy issue arising from them 
is whether the state, in providing equity capital or debt relief, is acting 
in the same way as would a private investor in the market. Only if the 
3.I.A.§IO. 3 294 
Commission comes to the view that this is the case will the measures in 
question, in principle, be considered not to constitute state aid. In 
determining how a private investor would be likely to behave, the Court of 
Justice has specified that the Commission's assessment must take account 
inter al la of the situation of the company, the restructuring to be carried 
out and market prospects. 
The Commission decided to initiate Article 93(2) proceedings in respect of 
aid in the form of a capital injection which was apparently decided upon, and 
in part granted, by the Spanish authorities to the Merco Group in 1992. On 
the basis of the information available to the Commission, this measure was 
considered to be operating aid having no durable effect on the sector in 
question. A final negative decision - with the requirement to refund the 
aid - was taken against an earlier injection of capital totalling 
ECU 44 million awarded by the Spanish authorities to the Merco Group in 1990. 
Not only had the Spanish authorities failed to notify this aid under Article 
93(3) of the EEC Treaty, but the Commission held, as to the substance, that 
the aid served exclusively to absorb losses which the group had accumulated 
and thus fulfilled the conditions of Article 92(1) of the EEC Treaty without 
qualifying for any of the exceptions of Articles 92(2) and (3). 
505. In agricultural structures policy, as in market policy, the scope of 
Commission intervention under Articles 92 to 94 of the EEC Treaty is 
determined by the Council. In the case of aid at holding level, Council 
Regulation (EEC) No 2328/91 authorizes such intervention only in specified 
areas laid down in Article 35 of that Regulation. Those areas include, 
amongst others, per hectare aid for the introduction or maintenance of 
farming practices which are compatible with environmental protection. 
The Commission decided not to raise objections to a sweeping programme of 
environmental aid measures in the German region of Baden-WUrttemberg designed 
to provide comprehensive protection for the agricultural landscape, the water 
table and certain endangered species of livestock. In contrast to previously 
authorized programmes to compensate farmers for pegging agricultural 
activities at low levels of intensity, this package was not focused on a 
strictly circumscribed area within the region nor on certain specific farming 
activities, but was broader in scope and ambition. Individual headings 
include aid, granted on a per hectare basis, for preserving pastureland and 
3.I.A.§10. 4 ^ ^ 295 
characteristic, naturally extensive orchards, and aid to compensate for use 
of certain low-output crop production techniques. 
Environmental measures are part and parcel of the CAP reform agreed by the 
Council in May 1992. Council Regulation (EEC) No 2078/92*1) sets new 
parameters for Community intervention in this area whilst permitting Member 
States, as under Regulation (EEC) No 2328/91, to propose alternative 
conditions of aid under Articles 92 to 94 of the EEC Treaty. In this 
connection, Commission state aid policy continues to be determined by 
fundamental criteria governing the award of Community aid. In the event that 
these criteria were to be modified in relation to those of Regulation (EEC) 
No 2328/91, due account would be taken in the assessment of state aid. The 
Commission is also aware of the need to strike a balance between competition 
policy considerations and environmental constraints and objectives. In this 
context, the Commission has noted the observations made by Parliament's 
Committee on Agriculture, Fisheries and Rural Development in its opinion on 
the Twenty-first Report on Competition Policy.*2) 
506. In structures policy for investments at processing and marketing level, 
Council Regulation (EEC) No 866/90 allows Member States in principle to 
introduce unilateral measures, under the terms of Articles 92 and 93, in all 
areas covered by the Regulation. 
In practice, this freedom is circumscribed by the Commission policy of 
excluding from state aid the same investments which are excluded from 
Community cofinaneing under point 2 of the Annex to Commission Decision 
90/342/EEC of 7 June 1990. 
It should be noted that, for investments where the Commission Decision of 
7 June 1990 does not exclude or limit aid (and the rate of aid does not 
exceed the maximum permitted by the Commission), it is Commission practice 
not to raise objections even when the scale of investment is large. Thus, the 
Commission cleared Portuguese aid to Laprovar-Pepsico for the manufacture of 
snacks falling within Annex II of the EEC Treaty, involving aid of 
ECU 8 million for the products in question. 
(1) OJ L 215, 13.7.1992 
(2) PE 202.500. 
3. I .A.SIU. * 
3.I.A.§10. 5 
507. With regard to parafiscal charges (levies), the Commission took a 
decision which represents a change in the application of its policy. It 
decided that French aid financed through parafiscal charges levied also on 
products imported from other Member States was compatible with the common 
market subject to strictly defined conditions being observed. In the case in 
point, the yield from the charge is used to finance marketing controls 
imposed by Community directives and therefore serves to achieve objectives 
that are of Community interest and not exclusively national in character. 
In the various cases it has examined to date, the Commission has taken the 
view, in accordance with the Court's case law, that aid financed through 
parafiscal charges levied also on products imported from other Member States 
is in principle incompatible with the common market because the charge levied 
on imported products has a protective effect which goes beyond aid properly 
so-called. Even if equality of treatment is assured between national and 
imported products on a legislative level, such aid is more favourable to 
national operators on a practical level since the measures taken inevitably 
stem from national specializations, needs and deficiencies. The case 
referred to above concerned aid for financing controls imposed by Community 
directives for the marketing of seeds and seedlings, irrespective of their 
origin. Aid for controls carried out under such conditions pursues a 
Community objective; its aim is therefore not to benefit national operators 
alone. For that reason, the Commission accepted that in this case parafiscal 
charges could be applied also to seeds and seedlings imported from other 
Member States for the purpose of financing marketing control measures imposed 
at Community level. The Commission's approach takes account of the Court's 
judgments which show that Member States cannot be denied scope for levying a 
charge on products from other Member States for financing controls provided 
two conditions are met: the controls must be imposed by Community 
legislation and the amount of the charge levied on products imported from 
other Member States should not exceed the real cost of such controls. The 
French aid for 1991 meets these two conditions, and the French authorities 
have undertaken to ensure that they are met in subsequent years and to 
provide the Commission each year with a financial report on the preceding 
year. 
3.I.A.§10. 6 297 
The Commission decided to initiate Article 93(2) proceedings in respect of 
Belgian aid measures financed through parafiscal charges in the cattle, 
sheep, goat and horse sectors. The aid was granted for promoting the sale of 
products of the sectors in question (advertising, fairs, exhibitions, etc.). 
While the Commission had no comment to make on the purpose of the aid, it 
judged it to be incompatible with the common market because of the method of 
financing it. That method involved the imposition of compulsory levies on 
animals imported from other Member States at the slaughtering stage, on the 
purchase of beef, veal and sheepmeat, on the recording of horses in stud-
books, and on semen imported from other Member States for the initial 
insemination of cattle. 
The Commission also initiated Article 93(2) proceedings in respect of Belgian 
aid for promoting the raising of poultry and small livestock, not because of 
the purpose of that aid but because of the method of financing it. This 
involved the imposition of a compulsory levy at the slaughtering stage which 
was also imposed on live animals imported from other Member States. 
Furthermore, it involved the imposition of a compulsory levy also on 
specialist importers of compound feedingstuffs imported from other 
Member States; "specialist importers" are those whose business activity is 
restricted to importation and which import compound feedingstuffs only from 
the Member States. The notification concerned a draft royal decree amending 
the Royal Decree of 31 July 1989 and designed, on the one hand, to extend the 
existing arrangements to the products of laying birds and table fowl and, on 
the other, to prolong the period of application of the Royal Decree 
indefinitely. The Commission decided to initiate Article 93(2) proceedings 
with respect to the extension of the aid for an indefinite period in view of 
its incompatibility with the common market as previously demonstrated by the 
fact of the charge applying also to products imported from other 
Member States. The Commission took the view that the extension of the 
parafiscal charge to laying birds and table fowl did not alter the positive 
assessment of the aims of the aid provided for in the Royal Decree of 
31 July 1989, since the purpose of the aid financed in this way has not 
changed. Furthermore, the method of levying the charges on these two 
products does not raise problems as regards imported products since they are 
levied only on the basis of national productive activity. However, the 
,.,.*.,10.7 • 
charges levied are paid into a common fund which is also fed by compulsory 
levies imposed on products imported from other Member States. Aid financed 
through this fund is therefore regarded by the Commission as not being 
consistent with Community legislation. 
With regard to Danish aid and parafiscal charges channelled to business funds 
In the milk and poultry sectors, the Community decided not to raise any 
objection regarding aid for insurance covering product liability. This is a 
collective insurance scheme covering the liability of producers and traders 
in each of the two sectors. In adopting its position, the Commission took 
into account the collective nature of this type of insurance and the large 
number of producers concerned by liability for any harm suffered by final 
consumers. It also took into account the fact that the aid is funded 
entirely by the business sector as a whole from the yield from earmarked 
charges levied exclusively on Danish products. 
508. With regard to the aid scheme provided for farmers in Germany since 1984 
to compensate for losses sustained as a result of monetary changes in the 
1980s, Parliament's Committee on Economic and Monetary Affairs and Industrial 
Policy, in its report on the Twenty-first Competition Policy Report,*3) 
requested the Commission to examine whether this aid scheme had caused 
distortions of competition between farmers in Germany and those elsewhere in 
the Community. On this point, the Commission would invite the Committee to 
refer to its reports to the Council and to Parliament regarding application 
of the aid paid to farmers in Germany through the VAT system. As stated at 
point 4.2 of the report relating to 1985,*4) it is virtually impossible to 
assess the effect of the dismantling of German MCAs on 1 January 1985 and of 
compensation by means of VAT in isolation from other factors affecting the 
market. Subsequent Commission reports record that examination of agricultural 
prices and trade indicated that trends in Germany have been in line with 
those in other Community countries and that the Commission possesses no 
evidence to suggest that the granting of special aid in Germany has affected 
the functioning of Community agricultural markets. The Commission is not in a 
position to give a more comprehensive assessment than that given in these 
(3) PE 202.323. 
(4) C0M(87)292 final 
3...A.J10. 8 299 
reports. However, it is clear that the justification for any form of aid to 
compensate for the effects of monetary events in the 1980s diminishes over 
time. This factor will be taken into account by the Commission in any 
subsequent proposals it may make in this area. 
509. The same report of the Committee on Economic and Monetary Affairs and 
Industrial Policy observes that the agricultural sector has been the victim 
of differential treatment in that, until a few years ago, this sector was not 
mentioned in the Commission's annual reports on competition policy. A link 
is also established by the Committee between the erstwhile absence from 
competition reports of a section relating to agriculture and the vigour with 
which competition rules are applied in this sector. Whilst the nature of any 
such link is not clear to the Commission, it should be noted that the 
Committee itself, in its report on the Commission's Nineteenth Competition 
Policy Report,*5) called for the exclusion of agriculture from the 
competition report. In the Commission's view, any such exclusion would be 
deleterious to the necessary transparency in this area, it will endeavour to 
respond positively to suggestions which add to this transparency. 
(5) PE 144.495 
3.I.A.§11. 1 
<T4> §11. Aid in the fisheries sector 300 
510. In 1992 the Commission registered 33 new aid schemes and one aid scheme 
notified after its adoption by the Member State in question. 
The Commission decided not to oppose the implementation of 28 aid schemes. 
During 1992 the Commission initiated Article 93(2) proceedings in relation to 
ten aid measures (nine in France and one in Italy). During the same period, 
the Commission decided to terminate Article 93(2) proceedings with regard to 
nine aid measures introduced by France, the Netherlands and Italy. 
The table below gives an indication of the evolution of the number of aid 
schemes adopted in the fisheries and aquaculture sector which have been 
examined by the Commission and the number of decisions taken by the 
Commission concerning the compatibility of these aid measures with the 
competition rules and Community fisheries legislation. The data are based on 
the date of the decision and do not necessarily reflect the number of aid 
measures registered or examined. 
I 1 II 
| | | Decision by the Commission | 
l l I 1 1 1 1 
| Year | Total | No objection |Initiation of Article 93(2)| Termination |Negative decision) 
||| | proceedings | of | | 
| | | | | proceedings | | 
I H 1 H— 1 1 1 
| 1990 | 23 | 12 | 2 | 2 | 1 | 
| 1991 | 45*1) | 18 | 7 | 4 | - | 
| 1992 | 33*2) | 28 | 10 | 9 | - | 
I I I I I I __J 
The new guidelines for the examination of state aid in the fisheries sector 
were published in Official Journal C 152, 17.6.1992. 
(1) Seven registered aid measures were subsequently withdrawn from the 
register of aid before the examination process commenced. 
(2) One registered aid measure was subsequently withdrawn from the register 
of aid before the examination process commenced. 
301 3.1.B.§1 1 
<T3> B. Public enterprises and state monopolies 
<T4> §1. Telecommunicat ions 
<T5> Community legislation 
511. On 21 October the Commission adopted a review of the situation in the 
telecommunications services sector*1) as provided for in Council 
Directive 90/387/EEC and Commission Directive 90/388/EEC. This review, 
which is contained in a communication to the Council and to Parliament, 
identifies current problems in the sector and examines a number of possible 
options for future legislation as well as the justification for existing 
exclusive and special rights. 
The options considered are as follows: 
(i) maintenance of the present regulatory environment; 
(ii) Community regulation of tariffs and investments; 
(Mi) opening-up to competition of voice telephony services; 
(iv) opening-up to competition of voice telephony between Member States. 
The review concludes that the last option would seem to be the one most 
likely to achieve the objectives of the Community. 
All interested parties are, however, requested to make known their 
observations so that the Commission is able to take a final decision and to 
draw up the necessary regulatory measures. 
(1) SEC(92)1048 final. 
302 3.I.B.§2 2 
<T4> §2. Postal services 
<T5> Green Paper 
512. The Commission adopted the Green Paper on the development of a single 
market for postal services on 13 May.*2) The Green Paper examines the 
current situation of the Community's postal services and presents a series of 
options for their future development. 
The Green Paper accepts as an absolute policy fundamental the need to ensure 
the continuation of the universal service, which must be provided at an 
affordable price, have good quality of service and be accessible to everyone. 
In order to preserve the universal service, a set of reserved services may 
need to be established for which special or exclusive rights may be granted 
to particular enterprises. However, the scope of the reserved area must not 
exceed what is strictly necessary to achieve the universal service objective. 
Outside this reserved area, all services should be provided under conditions 
of free competition. 
The Green Paper proposes a balanced approach comprising both harmonization 
and liberalization measures. It proposes a free market in express and 
publications services, parcels services having already been liberalized in 
all twelve Member States. The liberalization of cross-border mail and 
a or ior i direct mail is envisaged on the basis of the analysis contained in 
the Green Paper, which does, however, accept that their liberalization should 
not undermine the universal service. 
The publication of the Green Paper on 11 June launched a period of public 
consultation during which the Commission invited the comments of all 
interested parties on its policy options. At the end of this process, it is 
intended to put forward a plan of action for the Community's postal services. 
(2) C0M(91) 476 final. See also Twentieth Competition Report, point 61, and 
Twenty-first Competition Report, point 325. 
3. I .B.§3 3 
303 
<T4> §3. Energy 
<T5> Gas and electricity 
513. The Commission examined the replies to the letters of formal notice 
concerning exclusive rights to import or export gas and electricity.*3) It 
decided to continue proceedings under Article 169 of the EEC Treaty and to 
send reasoned opinions to the six Member States whose legislation allows 
exclusive rights (Denmark, Spain, France, Ireland, Italy and the 
Netherlands). 
The Commission is convinced that the abolition of exclusive import and export 
rights in these sectors is an essential step in the process of establishing a 
genuine single market in energy. 
514. At the same time, the Commission continued its efforts to secure 
adoption of its proposals for harmonization directives based inter ai ia on 
Articles 57(2), 66 and 100a of the EEC Treaty. 
<T5> Oi I 
<T8> Greece 
515. In January Greece adopted new legislation which resolves the bulk of the 
problems previously identified.*4) 
516. Doubts persist, however, regarding the compulsory storage arrangements 
provided for in the new legislation. This problem is being examined in the 
light of Article 30 of the EEC Treaty. 
<T8> Spain 
On 22 December Spain adopted new regulations abolishing the exclusive legal 
rights in favour of CAMPSA (the company operating the monopoly) in the 
monopoly service-station network. Meanwhile, existing exclusive rights, 
particularly for fuel oil and LPG, have been adjusted in accordance with the 
(3) Twenty-first Competition Report, point 328. 
(4) Twenty-first Competition Report, point 330. 
3.I.B.§3 4 
304 
obligations incumbent on Spain under Article 37 of the Treaty. 
These new regulations represent a significant adjustment in the legal Spanish 
oil monopoly, which has existed since 1927. 
However, the Commission is now examining, on the basis of Articles 85 and 86 
of the Treaty, the conditions governing access by the various independent 
operators to the CAMPSA logistical network and the exclusive agreements 
concluded by Spanish refineries with service-station owners in the old 
monopoly network. 
<T8> Portugal 
517. The exclusive rights granted to the public corporation Petrogal for the 
distribution of diesel fuel for farmers, which had been the subject of a 
complaint,*5) were finally amended by the Portuguese authorities to allow 
any distribution company access to this sector of the market. 
(5) Twenty-first Competition Report, point 331 
3.I.B.§4 5 
3C5 
<T4> §4. Transport 
<T5> Air transport 
518. The Commission continued to examine the various arrangements concerning 
existing exclusive or special rights in the Member States for the provision 
of services to assist passengers, aircraft and goods at public airports, in 
this connection, the Commission considers it vital that - as recommended by 
I ATA - at the very least the right of airlines to organize their own 
assistance services either individually or jointly (system of self-help) 
should be respected. Moreover, it is studying the opening-up of this market 
to effective competition as a means of improving quality and reducing the 
costs of services while respecting national regulations where these are 
strictly necessary to guarantee a complete and permanent service, airport 
security and the protection of users. 
519. As a result of a number of complaints, the Commission noted numerous 
instances of restrictions on competition in connection with the provision of 
assistance during stopovers at airports in several Member States. The 
replies by the Member States to the questionnaire sent by the Commission 
allowed it to make a preliminary examination of the legal position in this 
field in the Community. 
It transpires that there are in a number of Member States restrictions on 
competition resulting from the granting to certain companies of exclusive or 
special rights to provide assistance to third parties during stopovers. In 
some cases, these restrictions also prevent airlines from organizing 
assistance themselves during stopovers. 
These obstacles restrict competition in the provision of assistance during 
stopovers and, indirectly, in the air transport sector. It is, therefore, 
essential that the liberalization of air transport should not be impeded by 
the continued unjustified existence of monopolies in this related sector. 
The Commission is examining how far the above-mentioned legal restrictions 
are compatible with Article 90(1), read in conjunction with a number of 
other provisions of the EEC Treaty. In the light of the outcome of this 
process, during which consultations will be held with Member States and with 
(i 
3.1.B.§4 6 
"06 7 P. 
the operators in question, it might decide to take measures under the powers 
granted by Article 90(3). 
<T8> Germany 
520. The airline British Midlands has submitted a complaint against the 
refusal by the German authorities to allow SAS to provide assistance to the 
plaintiff during stopovers at Frankfurt Airport. 
This ban allegedly results from national provisions stipulating that foreign 
companies can provide such services only if reciprocal treatment is granted 
to German carriers in the country of origin. The German authorities point 
out in this connection that Lufthansa is subject to similar restrictions in 
Denmark and the other Scandinavian countries. Since such a rule on 
reciprocal treatment may be incompatible with Article 90(1), read in 
conjunction with a number of other provisions of the EEC Treaty, the 
Commission asked the German authorities for an explanation. 
<T8> Spain 
521. As regards a number of complaints submitted on behalf of various Spanish 
charter companies and relating to exclusive rights granted to Iberia which 
allegedly prevented them from organizing their own assistance,*6) the 
Commission, after being informed by the Spanish authorities that 
self-assistance is a legai activity subject to prior authorization and that 
they were not aware of any refusal to grant authorization to the airlines in 
question and after unsuccessfully requesting the plaintiffs to provide proof 
of such refusal by the authorities, decided to file the complaints in 
question because of a lack of evidence. 
In spite of a formal undertaking by the Spanish authorities, the reduction of 
65% in the charges for assistance at airports granted to Spanish airlines*7) 
(6) Twenty-first Competition Report, point 335 
(7) Twenty-first Competition Report, point 336 
3.I.B.§4 7 
30/ 
was only partly abolished from 1 November. The Commission is studying the 
measures that need to be taken to do away with this discriminatory reduction 
completely. 
<T5> Sea transport 
<T8> Denmark 
522. Following a complaint lodged by a private shipping line concerning the 
refusal by the Danish Government to grant it access to Rtfdbyhavn*8) to 
operate a regular ferry service between that port and the German port of 
Puttgarden, the Commission sent a letter of formal notice to that Government 
on the basis of Article 90(3) of the EEC Treaty. 
In the Commission's opinion, the effect of this refusal is to protect the 
monopoly enjoyed by Danish (DSB) and German (DB) railways, which jointly 
operate a ferry link on this route. Such a refusal would be incompatible 
with Article 90(1), read in conjunction with Article 86 of the Treaty. 
<T8> Spa i n 
523. As regards the complaint against further discrimination on grounds of 
nationality on the part of Transmediterranea, the public-sector sea transport 
company,*9) the Commission held that, contrary to the view taken by the 
Spanish Government, the existence of a 20% reduction in the company's fares 
for certain trips made by pensioners and people over the age of 60, provided 
they are of Spanish nationality, is not based on strictly commercial 
cr iter ia. 
In reality, through the conduct of its public company, the State was 
continuing to pursue the social, but discriminatory objective (fare 
reductions only for elderly people of Spanish nationality) that it had set 
itself in the legislation which had already formed the subject of the 
Commission decision on 22 June 1987.*1°) 
(8) Twenty-first Competition Report, point 337. 
(9) Twenty-first Competition Report, point 334. 
(10) Boletin Oficial del Estado No 312, 30.12.1981; Law amended by the 
Finance Act, No 33/1987; Boletin Oficial del Estado, 24.12.1987. 
Eighteenth Competition Report, point 309. 
3.I.B.§4 8 
3C8 
This led the Commission to conclude that the Spanish State, which has a 95% 
holding in Transmediterranea, at the very least failed to act to put an end 
to a measure within the meaning of Article 90(1) of the EEC Treaty which 
clearly conflicts with Article 7 of the Treaty. 
The Commission therefore felt compelled to initiate infringement proceedings 
against the Spanish Government under Article 90(3) of the EEC Treaty. 
3.I.B.§5 9 
309 
<T4> §5. Other industries 
<T8> Italy 
524. In its judgment of 10 December 1991 (Case C-179/90, Porto di Genova). 
the Court of Justice held that the monopoly of port handling operations in 
Italy was incompatible with Article 90(1) of the Treaty, read in conjunction 
with Articles 30, 48 and 86. 
By letter dated 31 July the Commission, in accordance with Article 90(3), 
gave the Italian Government notice to communicate within two months the 
measures it intended to adopt in order to bring the laws and regulations 
governing the monopoly of port handling operations in Italy into line with 
Community law. The Commission made specific reference to the major ports 
where, in its view, the volume of trade was liable to affect trade between 
Member States. 
In the course of the procedure, the Commission was informed that the Italian 
Council of Ministers had adopted on 15 October new provisions on dock work in 
the form of a decree-law.*11) 
The decree-law abolishes both the last paragraph of Article 110 of the 
Shipping Code, which had established the dock-work monopoly, and the last 
paragraph of Article 11 of the Code, which requires the firm holding the 
concession to use a port company composed exclusively of nationals to carry 
out dock work. 
The new provisions thus immediately abolish the main points condemned by the 
Court (Judgment of 10 December 1991) and challenged by the Commission in its 
letter of 31 July. 
However, certain provisions of the decree-1 aw, which must be converted into 
law within sixty days, still give cause for concern, in particular as 
(11) Decree-Law No 409 of 19 October 1992, Gazetta Ufficiale del la Repubblica 
Italiana. General Series No 246 of 19 October 1992. 
3.I.B.§5 10 3/(0 
regards possible obstacles to freedom of establishment and freedom to provide 
services. The Commission called on the Italian Government to amend those 
provisions. 
<T8> Portugal 
525. The Commission examined whether Portuguese authorities had adopted and 
published all the measures necessary to ensure that, in accordance with 
Article 208 of the Act of Accession, no discrimination exists between 
nationals of the Member States regarding the conditions under which goods 
subject to the monopoly in alcohol (ethyl alcohol of agricultural origin, 
ethyl alcohol of non-agricultural origin and wine spirits for use in the 
making of port wine) are procured and marketed. 
The Commmission initiated proceedings against the Republic of Portugal on 
10 December 1990, i.e. before the end of the transitional period, seeking to 
establish that by failing to carry out the gradual adjustment of this 
monopoly from 1 January 1986, the Portuguese Republic had failed to comply 
with its obligations pursuant to Article 208(1) of the Act of Accession of 
the Kingdom of Spain and the Republic of Portugal (case C-361/90); the same 
monopoly was subsequently the subject of a request for a preliminary ruling 
from the Portuguese Supremo Tribunal Administrative 
On January 19, 1993, the Court of Justice has given Judgement in these two 
cases. The Court rejected the application of the Commission on the grounds 
that the Portuguese Government had effectively begun the process of 
progressively adjusting the monopoly and that the Commission had not 
demonstrated that the measures taken by the government were not of such a 
nature to achieve the objectives set out by Article 208 of the Act of 
Accession. 
Both in the framework of case C-361/91 and in reply to the request for a 
preliminary ruling in case C-76/91 the Court stated that the opening of 
quotas for import was not the only way to proceed to the adjustment of the 
monopoI y. 
3.I.B.§6 11 
311 
<T4> §6. Other aspects 
526. With a view to the forthcoming entry into force of the Agreement on the 
European Economic Area, the Commission decided to remind Member States of 
their obligations concerning monopolies of a commercial character and 
undertakings granted special or exclusive rights. 
All the Member States were therefore asked to inform the Commission whether 
they had maintained in force, in relation to the EFTA countries, any 
monopolies of a commercial character and, if so, to specify the products 
covered by such monopolies, the exclusive rights concerned (in particular 
exclusive rights to import, export, market or sell) and any adjustment 
measures already taken or planned. 
Without prejudice to the provisions of the Agreement granting temporary 
derogations to certain EFTA countries, monopolies must in principle be fully 
adjusted not later than the date of entry into force of the Agreement. 
527. At the same time, as regards the "undertakings granted special or 
exclusive rights" referred to in Article 59 of the Agreement and in Section H 
of Annex XIV, the Member states were asked to confirm that the measures 
already taken to comply with the requirements of Commission 
Directives 88/301/EEC of 16 May 1988 and 90/388/EEC of 28 June 1990 on 
competition in the market for telecommunications terminal equipment and for 
telecommunications services did not require the adoption of further measures 
in order to comply with the obligation arising out of the Agreement (see 
Chap. XIV). 
3.I.B.§7 12 
312 
<T4> §7. Communication concerning public undertakings 
in the manufacturing sector*12) 
<T5> Background 
528. Following the adoption of this communication in 1991, the Commission has 
endeavoured to apply it, firstly, as a general instrument in the 
identification of aid measures in routine cases and, secondly, as the tool it 
was designed to be in ascertaining the existence of aid on the basis of the 
review of undertakings' financial and related statements. 
<T5> Appeal to the Court of Justice 
529. In December 1991 the French Republic appealed*13) to the Court of 
Justice against the communication. 
The Court is expected to hand down its ruling in 1993. 
<T5> Implementat ion 
530. Data were received in respect of 1989 and 1990 for undertakings covered 
by the communication. For the financial year 1991, information was provided, 
to a greater or lesser extent, by the Member States concerned. 
<T5> ADD Iication 
531. The principles set out in the communication were applied consistently 
during the vetting of state aid cases, a leading case being the Bull decision 
adopted by the Commission in July.*14) 
The principles were also applied in a number of cases concerning public-
sector undertakings: e.g. the proposed privatizations of ENI and IRI; the 
liquidation of EFIM;*15) asset acquisitions and disposals by Péchiney and 
the capital increase in Aerospatiale. 
(12) OJ C 273, 18.10.91. 
(13) Case C 325/91 French Reoublic v Commission. 
(14) OJ C 244, 23.9.1992. 
(15) The Commission decided to initiate the Article 92(2) procedure in 
respect of EFIM on 23 December 1992. See points 475 et sec, of this 
Report. 
3.I.B.§7 13 
313 
The Commission analysed much of the data received in respect of 1989 and 1990 
and identified a number of cases of aid granted to public undertakings 
without prior approval. Accordingly, it is anticipated that, in the coming 
months, the Commission will take formal action under Article 93(2) of the EEC 
Treaty in respect of those cases. 
3. I I. 1 314 
<T2> Chapter II: Main decision of the Court of Justice 
<T4> §1. Admissibility of applications lodged against decisions 
to initiate proceedings under Article 93(2) 
532. In two judgments delivered on the same day*1) the Court of Justice 
ruled on the admissibility of two applications lodged against Commission 
decisions to initiate proceedings under Article 93(2) of the EEC Treaty. 
The Court rejected the Commission's plea of inadmissibility based on the 
claim that the letter initiating proceedings in each case was only a measure 
forming part of the preparatory investigation leading up to the adoption of a 
final decision, and as such was not an act adversely affecting the applicant 
capable of being contested under Article 173 of the EEC Treaty. 
The decision to initiate proceedings implied a choice on the part of the 
Commission, which had to classify the aid and determine the procedure 
appropriate to it, as such a decision had different effects according to 
whether the aid was considered new aid within the meaning of Article 93(3) or 
existing aid subject to Article 93(1). 
The Court stated, however, that when it came to consider the substance of the 
two cases it would confine itself to establishing whether aid granted in the 
circumstances constituted new aid in respect of which the Commission could 
have initiated the Article 93(2) procedure. 
(1) . Judgment of 30 June 1992, Case C 47/91 Italy v Commission 
(Italgrani), not yet reported. 
Judgment of 30 June 1992, Case C 312/90 Spain v Commission 
(Cenemesa and Others), not yet reported. 
3.11. 2 
315 
<T4> §2. Failure to comply with a decision 
under ArtIcle 93(3) 
533. In the Rover Case*2) the Court had to consider the relationship between 
two successive Decisions. 
The second Decision, which had been adopted without first initiating the 
procedure provided for in Article 93(2) and which was challenged by the 
applicants, found that an additional UKL 44.4 million of aid had been paid to 
Rover and British Aerospace in breach of the earlier Decision of 
13 July 1988, and called upon the United Kingdom authorities to recover it 
from the recipients. 
The Court accepted the applicants' main contention, namely that the only two 
options open to the Commission were: 
the adoption of a new decision to initiate Article 93(2) proceedings on 
the ground that the UKL 44.4 million of financial concessions 
constituted new aid; and 
the institution of proceedings directly before the Court, by virtue of 
the second subparagraph of Article 93(2), for the failure of the 
United Kingdom authorities to comply with the Decision of 13 July 1988. 
(2) . Judgment of 4 February 1992, Case C 294/90 British Aerospace and 
Rover Group v Commission, not yet reported. 
4.I.§1. 1 316 
<T1> PART FOUR: CONTACTS WITH COMMUNITY AND OTHER INSTITUTIONS 
<T2> Chapter I: The contribution from socio-economic and political circles 
<T4> §1. European Parliament 
534. During the year Parliament continued to pay lively attention to 
competition matters. Its support and constructive remarks are greatly 
appreciated by the Commission, which effectively seeks to maintain a regular 
dialogue with, and to inform, Parliament on important competition policy 
issues. 
535. It adopted its resolution on the Twenty-first Competition Report on 
17 December 1991. This resolution and the Commission's response are annexed 
to the present Report.*1) 
536. On 17 December Parliament also adopted an own-initiative resolution on 
the Commission's proposal for a block exemption in the insurance sector.*2) 
in this resolution, Parliament welcomes the presentation of the proposal, 
which is generally considered to be on the right lines. 
However, it also raised a number of specific questions relating to individual 
provisions of the block exemption and asked for clearer definitions of 
certain terms. In its revised final version of the Regulation, the 
Commission has taken account of a large number of these observations. 
537. In the air transport sector, Parliament adopted on 8 April a resolution 
on the Commission's proposal amending Regulation (EEC) No 3975/87*3) and on 
10 July a resolution on the amendments to Regulation (EEC) No 3976/87. 
538. Several other resolutions were adopted which have a bearing on 
competition. 
On 9 July Parliament adopted a resolution on the proposed changes to the 
Seventh Shipbuilding Directive.*4) It adopted on 29 October a resolution on 
(1) See Annex I.A to this Report. 
(2) OJ C 207, 14.8.1992, p. 2. 
(3) OJ C 225, 30.8.1991, p. 9. 
(4) OJ C 155, 20.6.1992, p. 20. 
4.l.§1. 2 
317 
the situation of the steel industry in Europe and on 19 November a resolution 
on the situation of coal-mines in the United Kingdom. At committee level, 
several important meetings were held, including a discussion on 13 April with 
the then President of the Bundeskartellamt within the Economic and Monetary 
Affairs Committee and a conference in Dresden on 18-20 May on the work of the 
Treuhandanstalt. 
539. In the field of international relations, Parliament gave its assent on 
12 March to the Agreement on Civil Aviation concluded between the Community, 
on the one hand, and Norway and Sweden,*5) on the other, and on 28 October 
to the Agreement on the European Economic Area, which also includes 
substantive rules on competition.*6) it further gave its assent to the 
Europe Agreements concluded by the Community with Poland and Hungary on 
16 September.*7) 
540. During the year Members of Parliament submitted 141 written questions on 
competition to the Commission (169 in 1991); a further 66 questions were 
submitted for oral reply (75 in 1991). 
(5) See point 100 of this Report. 
(6) See point 85 of this Report. 
(7) See point 101 of this Report. 
4.I.§2. 1 
318 
<T4> §2. Economic and Social Committee 
541. On 25 November the Economic and Social Committee delivered its opinion 
on the Twenty-first Report on Competition Policy. The opinion and the 
Commission's response are reproduced in the annex. 
The Commission will take these observations into account. 
542. Also on 25 November the Committee delivered an additional opinion on the 
Commission's proposed block exemption in the insurance sector.*1) While 
endorsing the Commission's initiative, it raised a number of more specific 
questions. The Commission took these comments into account in the final 
version of the block exemption proposal. 
543. The Committee took a position on a number of other competition-related 
issues. On 29 April it adopted an opinion on the proposed amendment*2) to 
Regulations (EEC) Nos 3975/87 and 3976/86 in the field of air transport. On 
1 July, it delivered an opinion on the proposal*3) for a Council Directive 
providing for changes to the Seventh Council Directive on aid to shipbuilding 
and on 19 November on the proposal*4) for new Commission block exemptions in 
the field of air transport. 
544. The Commission welcomes the constructive remarks made by the Economic 
and Social Committee and looks forward to continued good working relations 
with the Committee. 
(1) OJ C 207, 14.8.1992, p. 2. 
(2) OJ C 225, 30.8.1991, p. 2. 
(3) OJ C 155, 20.6.1992, p. 20. 
(4) OJ C 253, 30.9.1992, p. 5. 
4.I.§3. 1 
319 
<T4> §3. Advisory Committee on Restrictive Practices and Dominant Positions 
545. The Advisory Committee met nineteen times to examine preliminary draft 
Commission decisions in individual cases involving the application of 
Articles 85 and 86 of the EEC Treaty, of which three were preliminary draft 
decisions granting interim measures. The meetings included one meeting of 
the committee specializing in land transport, four meetings of the committee 
specializing in sea transport and one meeting of the committee specializing 
in air transport. 
In its various compositions, the Committee delivered a total of twenty-six 
opinions. It was also consulted in eight cases where the Commission was 
considering sending comfort letters to enterprises following publication of a 
notice pursuant to Article 19(3) of Regulation No 17. It was also kept 
informed of progress in several major cases. 
In addition, one meeting was devoted to questions of procedure. 
The Committee held six meetings on matters concerning legislation. Two of 
them (17 July and 13 November) dealt with preliminary draft Commission 
regulations amending, as regards Joint ventures of a cooperative nature, four 
block exemption regulations relating to patent licensing and know-how 
agreements and to specialization and R&D agreements. On the same dates, the 
Committee also studied the draft Commission regulation on a block exemption 
in the insurance sector. Also on 13 November the three specialized advisory 
committees on transport gave their views on the draft Commission regulation 
amending inter al ia the regulations on land, sea and air transport, the 
purpose being to modify the application forms for negative clearance and 
notification so as to reflect the new situation created by the entry into 
force of the Agreement on the European Economic Area. On 31 August the 
appropriate specialized committee examined the draft block exemption 
regulations in the field of air transport. 
4.I.§4. 1 
320 
<T4> §4. Report on the Advisory Committee on Concentrations 
546. The work of this Committee represents the culmination of the close and 
constant liaison with Member States as regards the application of the Merger 
Control Regulation. The Committee met six times to discuss four cases*1) and 
twice to discuss general policy issues. In all the cases in which a decision 
was taken, the Committee requested that its opinion be published together 
with the final decision, and the Commission acceded to its requests. 
For the first time, the Committee was recalled at very short notice in two 
cases, Nestlé/Perrier and Du Pont/ICI, to consider revised final decisions 
that were proposed following offers by the companies concerned to modify 
their proposed merger in order to remove anti-competitive elements which the 
Commission had analysed. These offers were made at a late stage in the 
procedures after proposed final draft decisions had been examined by the 
Advisory Committee. As these changes substantially altered the original 
draft decisions, further consultation with the Advisory Committee was 
considered desirable. 
The formal consultation of the Advisory Committee on Concentrations is in 
addition to the ongoing contact and exchange of information between the 
members of the Merger Task Force and the relevant officials in the 
Member States. 
Lastly, the Committee examined on 13 November the draft Commission regulation 
amending inter alia its 1990 Regulation on the notification of concentrations 
and aimed at adapting the annexed form (form CO) to the new situation created 
by the entry into force of the Agreement on the European Economic Area. 
(1) Accor/Wagons-Lits, Nestlé/Perrier, Du Pont/ICI, Mannesmann/Hoesch. 
4.I.§5. 1 321 
<T4> §5. Conference of National Government Experts 
547. During the year, the Commission called five meetings of the national 
government experts in competition. The first, held on 29 September, was the 
annual meeting of the Directors-General for Competition of the Member States, 
which dealt with the activities of the Commission relating to mergers in 
1991-92, the international dimension of Community competition policy, the 
European Economic Area (enterprises and state aid), and agreements with 
certain central European countries. 
On 20 January, at a more technical level, the government experts gave their 
opinion on the draft Commission notice modifying the notice on its 1983 block 
exemption regulations on exclusive distribution and exclusive purchasing in 
connection with brewery agreements of minor importance. 
They also discussed cooperative joint ventures on two occasions. On 6 and 
7 February their deliberations were based on a Commission paper on the future 
treatment of such enterprises; on 20 November they exchanged views on a draft 
Commission communication on the treatment of such enterprises pursuant to 
Article 85 of the Treaty. 
On 19 November the experts examined a draft Commission regulation amending 
inter al ia Regulation No 27/62 and aimed at adapting form A/B, used for 
applications for negative clearance and notifications, to the new situation 
created by the entry into force of the Agreement on the European Economic 
Area. 
(2 
4.I.§6. 1 322 
<T4> §6. Other forms of cooperation with 
the authorities of the Member States 
548. Having been informed by the Danish competition authorities that, in 
their view, Danish prices for audiovisual products were high because of 
restrictive practices on the European market, the Commission carried out a 
survey of prices of audiovisual products on the EC market. 
In the autumn of 1989, the Danish Monopoly Supervision Authority published a 
report on the market in audiovisual products. The report referred to an 
investigation carried out by the EBCU, which showed that Denmark was by far 
the dearest country in the EC for audiovisual products. The investigation 
took account of the rates of VAT and tax in the various countries. The 
Authority followed this up with an examination of import prices in four 
European countries, which tended to indicate that Danish import prices were 
generally higher than import prices in the United Kingdom or West Germany for 
instance. 
Informed by the Danish authorities, the Commission carried out a survey in 
the course of which it examined data from a number of major producers 
relating to prices of selected audiovisual products in five Member States 
(Denmark, Belgium, Germany, the United Kingdom and Italy) for the years 1989, 
1990 and 1991. The examination encountered difficulties in that the models on 
the various markets were different and were marketed at different times, but 
the Commission did not discover any evidence of a consistently higher level 
of prices for imports to Denmark. 
The Commission concluded that the reason for the high level of prices in 
Denmark is to be sought in the conditions prevailing on the Danish market and 
that subsequent surveys of differences in price levels between Denmark and 
other countries should focus on Danish factors. 
This case provides an illustration of the possibilities of cooperation 
between the Commission and national authorities in the enforcement of 
competition rules. The Commission expects its cooperation with national 
4. I. §6. 2 323 
authorities, as well as its assistance to national courts, to intensify 
considerably in the wake of both the Automec II case*1) and its notice on 
the application of Community competition law by national courts.*2) This 
trend should enhance the effectiveness of the implementation of the Community 
compet it ion rules. 
(1) Judgment of 18 September 1992, in Case T-24/90, Automec v Commission 
Not yet reported. 
(2) See point 299 of this Report. 
4.I.§7 1 
324 
<T4> §7. Other contacts 
549. In connection in particular with the preparation of its legislative 
work, the Commission continued in 1992 to have close contact, in addition to 
the institutionalized contacts described above, with the organizations 
representing consumers, employers and other relevant groups. Such contacts 
were about the Commission's preliminary drafts of new Council regulations and 
new interpretative notices, and general competition policy. 
<T5> EBCU 
550. On 4 June a meeting was held between Commission officials and members of 
the European Bureau of Consumers' Unions (EBCU). The meeting allowed the 
EBCU to put across the point of view of consumers on subjects of particular 
importance to them, including the state of competition in the motor vehicle 
industry, air transport, insurance and telephone and postal services, 
competition and intellectual property, and the international dimension of 
competition policy. 
<T5> UN I CE 
551. Written and oral contacts took place with the Union of Industrial and 
Employers' Confederations of Europe (UNICE) on the Commission's main 
legislative projects, including insurance, cooperative joint ventures 
(regulations and notice) and the draft notice on cooperation between national 
courts and the Commission in implementing Articles 85 and 86. 
<T5> ICC 
552. Written and oral consultations took place with the International Chamber 
of Commerce on the drafts relating to Joint ventures and cooperation with 
national courts. 
4.I.§7 2 325 
<T5> National representative organizations 
553. For the first time, the Commission officials met a delegation from the 
"Conseil national du patronat français" (CNPF). The matters discussed 
included the drafts on cooperative joint ventures, the Commission's policy on 
merger control and its practice in implementing the various regulations in 
force. 
A meeting was also held with the "Bundesverband der Deutschen Industrie" 
(BDI). It covered the same subjects as those discussed with UNICE. 
Meetings were also held with the United Kingdom and Spanish employers' 
organizat ions. 
4.II.§1. 1 326 
<T2> Chapter II : International contacts 
<T4> § 1. Implementation of the EC/US Agreement on the 
application of their competition laws 
554. The second semestrial meeting under the Agreement took place on 
23 September 1992 in Washington, between the Commission's Directorate-General 
for Competition, the US Federal Trade Commission and the Antitrust Division 
of the US Department of Justice. The parties discussed the operation of the 
agreement and in particular joint studies which could be carried out, for 
example to explore how cooperation between competition authorities might be 
enhanced. 
In this context, the meeting also reviewed progress with a study co-financed 
by the Community, the United States, Canada and the OECD, into the scope for 
cooperation in merger control. Information on recent cases and policy 
initiatives of the parties was exchanged as well as views on present and 
future initiatives to promote the strong enforcement of competition rules 
internat ionally. 
The heads of the three authorities (FTC and Antitrust Division on the US 
side) also met informally in January in Washington and in December in Paris. 
4.1 I.§2. 1 327 
<T4> § 2. Countries of Central and Eastern Europe 
555. A growing number of steps were taken in the competition area both in the 
context of the entry into force of the Europe Agreements (Interim Agreements) 
and in connection with the assistance which the Community provides for the 
countries of Central and Eastern Europe.*1) 
As part of the technical assistance in this field, the Commission's 
Directorate-General for Competition (DG IV) welcomed trainees from various 
antitrust offices in the Central and Eastern European countries, DG IV 
experts took part in an international seminar in Warsaw on the control of 
state aid and programmes were drawn up, using external consultants, to help 
various countries with economies in transition adopt legislation and 
administrative structures to ensure the proper functioning of competition. 
(1) See point 101 of this Report. 
4.I I.§3. 1 328 
<T4> § 3. Contacts with other countries 
556. Formal bilateral meetings were organized with the Canadian Bureau of 
Competition (Ottawa, 27 January) and with the Japanese Fair Trade Commission 
(Brussels, 6 October and Paris 2 December). In addition a number of informal 
contacts took place with these and other countries, including Indonesia and 
Mex ico. 
557. The talks with Canada covered a range of issues including discussions on 
current enforcement practices, on strategies towards the creation of an 
international framework for competition policy enforcement and on the 
relationship between trade and competition policies. The main topic of 
discussion with the Canadian authorities was, however, on ways and means of 
strengthening cooperation and coordination between the two authorities; 
agreement was virtually reached on an administrative arrangement between the 
Commission and the Canadian Government along the lines of the Agreement 
concluded with the US authorities on 23 September 1991.*2) 
558. During the meeting with the Japanese Fair Trade Commission exchanges 
were held on current enforcement activities and priorities, changes in the 
legal frameworks on both sides, structural issues and responses to 
developments in the competition policies of third countries. 
559. The increase in the number of contacts with other countries shows the 
growing interest in the principles of competition and more generally of 
market economy around the world. The Commission is fully aware of its 
responsibility in helping these countries, a responsibility which flows from 
its status as one of the main competition policy authorities in the world. 
However, its capacity to provide technical assistance in such cases is 
restricted by its limited personnel resources. 
(2) Twenty-first Competition Report, point 64. 
4.I I.§4. 1 
329 
<T4> § 4. Mult ilateral 
<T5> - OECD 
560. The Committee on Competition Law and Policy met in May and 
December 1992. Additional sessions at working party level also took place in 
February and September. The work of the Committee can mainly be placed under 
the headings of convergence and cooperation and of inter Iinkages between 
competition and trade policies. Under the former, the Committee in 
particular launched a study into process convergence in merger control. This 
is looking at a number of mergers or acquisitions which were considered by 
the competition authorities of several countries, with a view to ascertaining 
to what extent they cooperated or could have done so. In connection with 
inter Iinkages, the OECD commissioned an empirical study on the extent to 
which anti-dumping action in a number of countries and sectors may be 
regarded as having protected competition. The Committee also undertook work 
with the OECD's Trade Committee, at working party level. Joint meetings 
considered specific instances of interaction between trade and competition 
policies, as well as a general framework document on the subject. 
The Committee also adopted a report on competition policy and broadcasting, 
considered legislative initiatives in several countries and held seminars on 
the objectives of competition policy and on strategic alliances. 
561. The General Working Party of the Industry Committee continued its work 
on subsidies and structural adjustment. The Commission contributed to this 
work in furnishing all necessary information on the Community's financial 
support to industry and in making available, in the meetings held by the 
Experts Group on Subsidies, its expertise in questions of defining and 
calculating subsidies. 
<T5> - UNCTAD 
562. The work of UNCTAD VI I I (February 1992 - Cartagena de las Indias, 
Colombia) resulted in new tasks being set for UNCTAD and in corresponding 
institutional changes. 
However, it was agreed to maintain the status quo for the International Group 
of Experts on Restrictive Business Practices as regards both its terms of 
reference and status. 
4.I I.§4. 2 
330 
it was also decided to set up a working group on comparative experience with 
privatization. 
At its first meeting following the conference in Cartagena de las Indias 
(Geneva, 23 to 27 November), the work of the Intergovernmental Group of 
Experts on Restrictive Business Practices took on new impetus. This was due 
in large part to two factors, namely the abandonment of the system of 
regional groups and the increased interest of several countries, notably from 
the former group of 77, in developing a serious and active competition 
poIi cy. 
The Commission welcomes these developments, which will allow greater 
liberalization of trade, notably between the developing countries and between 
such countries and the countries of the industrialized world. This will 
allow fuller application of the approach advocated in the "Set of 
multilateral agreed principles and rules for the control of restrictive 
business practices", namely the elimination of restrictive business practices 
impeding or cancelling out the advantages created by the liberalization of 
tariff and non-tariff barriers. 

331 
ANNEXES 

Annex lll.A.1. 1 
332 
<T2> ANNEX III: Decisions, notices and Judgments 
relating to individual cases 
<T3> A. Competition policy towards enterprises 
<T4> 1. Case summar ies 
<T5> - Restrictive agreements 
<T6> * Horizontal agreements 
<T7> a) UTC (Pratt & Whitney)/MTU 
562. On 28 October the Commission published a notice pursuant to 
Article 19(3) of Council Regulation No 17 concerning a collaboration 
agreement between United Technologies Corporation (Pratt & Whitney Group) 
(P&W) and MTU Motoren- und Turbinen-Union, which, through Deutsche Aerospace 
(DASA), forms part of the Daimler-Benz group, in the area of commercial 
aircraft engines. 
P&W is one of the world's three largest full-range aircraft engine 
manufacturers, while MTU is mainly a manufacturer of aircraft engine parts 
and components. 
Under the agreement, the parties undertake to coordinate and extend their 
cooperation agreements in respect of specific engine programmes, providing in 
particular for risk and revenue sharing. 
The Commission considers that the collaboration between the two manufacturers 
is beneficial to competition because of the degree of technology transfer 
involved. However, it made it clear that it intends to exempt only specific 
cooperation projects and not general, non-specific collaboration schemes. 
This is the first time the Commission has given an assessment of cooperation 
in this sector. The situation with regard to the agreement in question will 
accordingly be reviewed after ten years. 
Annex III.A.1. 2 
<T7> b) GEC Alsthom - Fiat Ferroviaria 
563. The agreement in question is a framework agreement between GEC Alsthom 
and Fiat Ferroviaria relating to broad cooperation on railway rolling stock 
and covering technical, industrial and commercial matters. 
A joint standing committee is responsible for taking any operational 
decision, thus committing not the joint subsidiary which it is planned to set 
up, but which does not yet exist, but the parties to the agreement directly. 
The Commission refused to take a decision on the grounds that the 
notification covers only the framework agreement, which is so vague that the 
Commission cannot tell what the companies are going to do; it therefore 
asked them to notify individually any agreement taken or decision or 
concerted practice adopted by the committee. 
Annex 111.A.1. 3 _ 
334 
<T7> c) Quantel Internat ional-Cont inuum/Quantel*1) 
564. On 27 July the Commission decided to refuse to exempt agreements 
ancillary to a demerger between two companies supplying lasers for scientific 
research. 
The agreements, which contained market-sharing provisions, prevented the US 
company Continuum over a long period from having access to the Community 
market, which Quantel SA, its former parent company, had reserved for itself. 
Altough some protection of their respective markets might have been justified 
for a limited time after the sale, to prevent the unfair contracting away of 
each other's customers for example, the Commission considered that the length 
of the protection (eight to nine years depending on the products) was 
unjustified. The agreement on the sale of the company and the protocol 
attached to It therefore constituted a barrier to entry to the common market 
for a company outside the Community, which would isolate the Community 
technologically and commercially, as far as laser products were concerned, 
from a non-Community country. 
(1) OJ L 235, 18.8.1992; Bull. EC 7/8-1992, point 1.3.38 
Annex III.A.1. 4 335 
<T7> d) The National British Cattle and Sheep Breeders' Associations 
565. The Commission achieved identical undertakings from the British National 
Sheep and the British National Cattle Breeders' Association to ensure non­
discriminatory access to the economic activities of their 200 affiliated 
Breeders Societies. 
566. The Commission, acting on a complaint by a French sheep breeder of the 
Bleu du Maine variety, came to the conclusion that the relevant UK Sheep 
Breeders' Society had sought to restrict the import of such pure-bred 
breeding sheep. The Society, being the recognized holder of that breed's 
flock-book in the UK, forbade the resale of imported pure-bred breeding sheep 
which it had registered, for a period of 18 months after such registration. 
Moreover, it rejected, without explanation, the French breeder's request to 
become a member of the British Society. This was significant, since all 
functions fulfilled and economic activities organized by the Society were 
open only to its members. Therefore, a membership bar effectively meant that 
those rejected could not register their sheep in the UK*2) as being pure­
bred, nor sell them at the special pure-bred auctions, which were organized 
by the Society. 
567. Following the intervention of the Commission the 18 months' rule was 
repealed by the Society. In addition, the two Associations agreed to impose 
on their affiliated Breeders' Societies the obligation to establish objective 
membership criteria; to ensure that reasons for a rejection of any 
application would be given, and that such rejections could furthermore be 
subject to appeal. The Associations confirmed that such appeal would cover 
the application of the principle of non-discrimination. 
(2) This issue was resolved by Commission Decision 90/255/EEC which laid 
down the criteria governing entry in flock-books for pure-bred breeding 
sheep and goats, OJ L 145, 8.6.1990. 
Annex III.A.1. 5 336 
<T7> e) Infonet*3) 
In the Infonet case, the Commission terminated proceedings by sending a 
comfort letter stating that the agreement satisfied the conditions for 
individual exemption. However, the agreement, a summary of which was 
published pursuant to Article 19(3) of Regulation No 17, could not be deemed 
compatible with Article 85(3) until Infonet's shareholders, which include 
Community telecommunications organizations enjoying exclusive and special 
rights on certain markets, had undertaken not to grant it any cross-
subsidies or any terms and conditions that would discriminate against 
possible competitors. In general, the Commission will watch closely to see 
whether the various forms of technical and commercial cooperation in the 
telecommunications sector are compatible with the competition rules, notably 
in the case of agreements concluded between telecommunications organizations 
enjoying exclusive and special rights. 
(3) OJ C 7, 11.1.1992. 
Annex III.A.1.6 1 ~? n 
<T7> f) Closure of examination of the situation regarding interest rates 
568. In its decisions adopted in 1986*4) and 1989*5) on agreements 
concluded within various national banking associations, the Commission 
reserved its position on interest rates. 
However, at the end of 1989, *6) it took the view that interest rate 
agreements between banks restricted competition in the same way as agreements 
on prices and should therefore be avoided or abandoned. 
In this context, the Commission began in June 1991*7) an examination of the 
situation in each Member State, sending the national banking associations 
and, in certain cases, other credit institution associations formal requests 
for information so as to update its information in this matter. 
In the spring of 1992, the Commission completed examination of the sometimes 
lengthy replies to its letter and drew the following conclusions*8): 
all the organizations questioned confirmed that no agreements or 
recommendations on interest rates existed among them; 
some associations (for example, the Belgian and Italian banking 
associations) took advantage of the opportunity provided by the 
Commission's requests for information to end legally, of their own 
accord, agreements which were virtually no longer applied, but still 
ex isted on paper ; 
lastly, at the Commission's request, another association (the Luxembourg 
banking association) abandoned a system of recommended debtor and 
creditor interest rates. 
(4) Concerning Irish, Belgian and Italian banks 
(5) Concerning Dutch banks. 
(6) IP (89) 689, 16.11.1989. 
(7) IP (91) 520, 5.6.1991. 
(8) IP (92) 625, 24.7.1992. 
Annex III.A.1. 7 338 
Examination of the answers also revealed, in the case of the Belgian banking 
association, the dangers that may be involved in the standardized 
presentation of banking terms and conditions, even if such presentation may 
in general help the customers of banks to choose between comparable services. 
in the case in point, the association had sent its members a standardized 
list of charges in which the amounts had been left blank, except for 
Eurocheques drawn abroad, with the result that, in the case of such 
Eurocheques, the indication of the charge could be regarded as a 
recommendation amounting to a price agreement. 
As soon as it had received the statement of objections sent to it, the 
association in question sent a corrigendum to its members and assured the 
Commission that what was involved was an error on its part, and the matter 
was accordingly considered closed. 
Annex I I I.A.I. 8 339 
<T7> g) UK Agricultural Tractor Registration Exchange*9) 
569. On 17 February the Commission adopted a decision prohibiting a system 
for exchanging information on retail sales and market shares in respect of 
agricultural tractors sold in the United Kingdom. The Community's main 
tractor manufacturers participated in the information exchange, which was set 
up in 1975. 
The Commission took the view that exchanges of information identifying the 
sales of each competitor in a highly concentrated market in which there was 
no significant competition from outside the Community, restricted 
compet it ion. 
The prohibited information exchange system posed two major risks to the 
maintenance of effective competition: 
the elimination of any hidden competition through the creation of an 
artificial and undesirable degree of transparency in a highly 
concentrated market; 
- an increase in barriers to market entry for non-members, since the 
exchange allowed its members effectively to keep out new entrants and 
check any expansion by suppliers who were not members of the exchange. 
The decision follows the guidelines on information exchanges published in the 
Commission's Seventh Competition Report and provides an illustration of the 
application of those guidelines. 
It should be emphasized that the oligopolistic structure of the 
United Kingdom tractor market cannot be compared with the motor vehicle 
market, where imports from non-Community countries are an important source of 
competitive pressure and the heterogeneity of products is appreciably 
greater. 
An appeal against the decision has been lodged with the Court of First 
instance. 
(9) OJ L 68, 13.3.1992; Bull. EC 1/2-1992, point 1.3.62 
Annex III.A.1. 9 
<T7> h) DSB-SFL and DSB-SJ agreements 
570. The agreements, notified in accordance with the opposition procedure 
provided for in Article 12 of Regulation No 4056/86, concern the joint 
operation of a ferry service between the Danish port of Helsingor and the 
Swedish port of Helsingborg. They provide that Scandinavian Ferry Lines 
(SFL), owned by the Statens Jërnvager (SJ) group, and Danske Statsbaner (DSB) 
will set up a joint venture, owned in equal part by them, to operate the 
route. This involves Joint operation of the ferry services previously 
provided on the route, separately by SFL on the one hand and jointly by DSB 
and SJ on the other. 
571. The Commission took the view that, although the Joint operation of the 
ferry service under the agreements imposed restrictions of competition on the 
parties, it would help to improve the services provided and promote technical 
and economic progress while allowing consumers a fair share of the resulting 
benefit. Passengers would be offered more frequent sailings on new, larger 
vessels, thus allowing an improvement in the quality of service compared with 
that currently provided. The arrangements would also allow capacity to be 
better matched to demand, leading to a reduction in costs and in prices 
charged. 
The Commission further considered that the agreements did not afford the 
parties the possibility of eliminating competition in respect of a 
substantial part of the products in question, since the parties remained 
subject to sufficient competition on the relevant market. Though noting that 
the parties held a very strong position in the northern Oresund, the 
Commission considered that the relevant geographic market for the purpose of 
assessing the real effect on competition of the notified agreement was wider. 
A large proportion of the traffic between Sweden and Denmark was through-
traffic going to Germany, so that the position of the parties had also to be 
assessed in the light of both the ferry links between Sweden and Denmark, 
i.e. in the Kattegat and the southern 0resund, and the direct ferry links 
between Sweden and Germany. 
Annex III.A.1. 10 
At the request of the Commission, which was anxious to prevent any further 
increase in their cooperation, the parties deleted from their agreements a 
clause requiring them to cooperate if one of them set up or operated a new 
ferry service between Sweden and Denmark. 
572. The Commission therefore decided to allow the ninety-day period in 
which the agreement could be opposed to expire. The agreements notified were 
thus exempted under Article 85(3) of the EEC Treaty for a maximum period of 
six years. The Commission reserved the right, however, to review the 
situation after two years and to require the parties to notify it annually of 
the fares charged on the link so as to enable it to monitor the effect of the 
agreements on such fares. 
This is the first time Community competition law and Regulation No 4056/86 
have been applied to ferry services. 
Annex III.A.1. 11 
342 
<T7> i) Procter & Gamble / Finaf 
573. The Commission examined the Joint venture agreements between Procter & 
Gamble and Finaf S.p.A notified in December 1990. They concerned the creation 
of Joint ventures in Italy, Spain and Portugal in the sector of sanitary 
protection products as well as the acquisition by P&G of a Finaf company 
producing baby nappies in the UK. Following complaints from another 
manufacturer, the Commission took initially a cautious attitude and requested 
the parties to suspend implementation of the agreements. 
574. The Commission found that the agreements, as notified, contained clauses 
that could allow the parties involved to coordinate their competitive 
behaviour and could lead to market-sharing liable to restrict competition and 
affect trade between EC countries. The Commission made its doubts known to 
the parties and requested them to modify the agreements. After taking into 
account the amendments to the initial agreements and the undertakings offered 
by the parties, the operation in question could qualify for exemption under 
Article 85(3). A notice pursuant to Article 19(3) of Regulation No 17/*1°) 
invited interested third parties to comment on this. 
575. In response to the notice the Commission received a significant number 
of observations emanating from national authorities of certain Member States, 
a European consumer association and several competitors of the parties. Fears 
were expressed that due to P&G's steady growth in this market over the last 
three years and the continuing positive trend in its favour, the operation 
with Finaf would create serious competition problems. The Commission, whose 
figures corroborated that view, made public its intention to proceed 
accordingly unless the parties came up with satisfactory proposals. 
576. After negotiations the parties announced their intention to withdraw 
Finaf's baby nappies from the operation in question and to proceed to the 
sale of its activities in this sector as soon as possible and in any case 
within a reasonable period of time taking into account the specificity of the 
divestiture. To this effect a deadline has been agreed with the Commission. 
In case it would not be possible to complete the divestiture of Finaf's baby 
nappies activities in the EC within the agreed period of time, the parties to 
(10) OJ C 3, 7.1.1992. 
Annex III.A.1. 12 
the agreements, P&G and Finaf Spa, undertook to exclude baby nappies 
completely from the transaction within the same period of time. 
577. During the transitional period before the divestiture of Finaf's baby 
nappies activities, from 1 June 1992 and up to the above-mentioned deadline 
agreed with the Commission, the parties undertook to submit a detailed time 
schedule for the total separation of the baby nappies activities of Finaf 
from those of the joint ventures. They gave further undertakings designed to 
ensure that competition would not be jeopardized on the babies nappies 
market. The Commission will monitor implementation of the undertakings and of 
the separation and divestiture measures by the parties. 
578. Following this solution the complaint against the operation was 
withdrawn. As it has been modified, the operation between P&G and Finaf can 
benefit the consumer without restricting competition in the relevant market . 
Given the parties' commitment to the above changes, the Commission confirmed 
its favourable attitude regarding the restructured operation. Nevertheless, 
the Commission reserves its final position, which will depend on the outcome 
of the divestiture and the definitive form the P&G/Finaf transaction will 
take at the end of the transitional period. 
Annex III.A.1. 13 
^^ 344 
<T7> J) Lloyd's Underwriters' Assocation and the Institute 
of London Underwriters*11) 
579. On 4 December the Commission adopted a decision approving certain 
arrangements entered into and notified by Lloyd's Underwriters' Association 
(LUA) and the Institute of London Underwriters (ILU). These agreements are 
known as the Joint Hull Understandings (JHU) and the Respect of Lead 
Agreement (RLA). They both relate to marine hull and machinery insurance. 
ILU and LUA represent the majority of underwriters active in marine insurance 
in London accounting for approximately 90% of the UK's total marine insurance 
capacity. 
The JHU as notified consisted for the most part of a series of guidelines 
on the technical detail of policy renewals. Three clauses were found to be 
unacceptable because they limited the freedom of the members of ILU and LUA 
to determine their own prices. At the request of the Commission these clauses 
were deleted. A fourth clause required that, unless specifically agreed, 
reinsured business should be restricted to vessels whose country of 
registration, ownership, and management was the same as that of the 
reinsured. This clause was satisfactorily amended at the request of the 
Commission. 
The RLA provided essentially that the same leaders who first underwrote hull 
business should be allowed to continue as leaders when the policy came up for 
renewal. In other words other underwriters could not compete for renewal 
business. This agreement was also abandoned by LUA and ILU at the 
Commission's request and has been replaced by a new text which allows for a 
competing team to bid for renewal business. 
(11) OJ L 4, 8.1.1993. 
Annex III.A.1. 14 
<T7> k) ASTRA*12) 
580. This decision taken on 23 December concerns joint venture agreements 
between British Telecommunications pic (BT) and Société Européenne des 
Satellites S.A. of Luxembourg (SES) for the sale of capacity on SES's Astra 
IA satellite to UK television programme providers. 
Until December 1988, the satellite sector in Europe was the sole domain of 
the telecommunications organizations (TOs). The advent of the privately-owned 
Astra IA meant that television programme providers would for the first time 
have had an alternative source of supply to the TO-run satellites. However, 
with respect to the UK market, SES did not offer its new product directly to 
customers, but in 1987 entered into arrangements with BT whereby BT would 
conclude contracts with UK television programme providers comprising both the 
uplink to and the capacity on the Astra IA satellite. These arrangements were 
notified to the Commission, which found that SES and BT were direct 
competitors in the markets for both satellite capacity and uplinking 
services. The arrangements with BT denied UK customers the possibility of 
having direct contracts with SES covering the satellite capacity only and 
furthermore contained provisions which served to align the pricing policies 
of the two competitors, and restricted their commercial freedom with respect 
to other, future satellites. For these reasons, Article 85(1) was applicable. 
The conditions for exemption under Article 85(3) were not fulfilled, in 
particular as SES could have entered the UK market independently of its 
competitor, BT. With regard to SES's concern that its customers would not be 
assured of the necessary upl inking services by BT, then the only de facto 
uplink provider in the UK, the general principle expressed in the "Guidelines 
on the application of the EEC competition rules in the telecommunications 
sector" applies: any satellite owner whose satellite fulfils technical 
requirements should be assured that customers will get the necessary 
uplinking service from the licensed operator which enjoys a monopoly for that 
service. 
During the course of the procedure in this case, BT and SES terminated the 
joint venture agreements between themselves. The Commission's decision is 
thus declarative for the past and furthermore indicates that customers who 
(12) OJ L 20,28.01.1993, p. 23 
Annex I 1 I.A.1. 15 
DG IV-B 3Zt6 
concluded still existing contracts with BT for the transmission of their 
television programmes via the Astra IA satellite during the period the Joint 
venture arrangements were intact may if they wish readjust their position to 
take account of this decision. This decision has been appealed by BT. 

Annex I I I.A.1. 16 
347 
<T6> * Distr ibut ion 
<T7> I) Agreements between tour operators and travel agents 
(Center Pares) 
581. Following the Commission's intervention, the tour operator Center Pares 
has agreed to change its contracts with travel agents. 
If they wish to do so, holiday-makers can now book a vacation in one of 
Center Pares' villages through a travel agent or through a Center Pares 
reservation office in another Member State than their own at the prices which 
are applicable in that other Member State. A booking cannot be refused on 
the grounds that the customer should go to his local travel agent or 
reservations office. This will enable holiday-makers to shop for lower prices 
than those which are charged in their own Member State. 
The Commission has also ensured that travel agents who wish to do so can pass 
on part of their commission to customers. 
These changes bring Center Pares' contracts in line with Community 
competition law.*13) Under these rules, tour operators are not allowed to 
stop travel agents from selling to customers in other Member States. Travel 
agents must also be authorized to discount holidays or travel by splitting 
commission with customers. 
(13) Case 311/85 Vereniglng van Vlaamse Reisbureaus v Sociale Dienst voor de 
Plaatseliike en GewesteliJke Overheidsdiensten. 1987 [ECR] 3801. 
Annex I I I.A.1. 17 
348 
<T7> m) Magneti Mare I Ii/STEA 
582. STEA, which is an n.^..^«ndant distributor of carburettors, mainly Weber 
and So lex carburettors manufactured by subsidiaries of the Magneti Mare I Ii 
group, lodged a complaint against the group on the grounds that it was 
pursuing a discriminatory pricing policy. Magneti Marelli, which is Europe's 
leading carburettor manufacturer, had organized its distribution system in 
France by separating sales to motor vehicle manufacturers, which were direct 
sales at preferential prices, from sales to distributors, which were handled 
by another of its suosidiaries specializing in distribution and charging 
higher prices. While the Commission was examining the system, 
Magneti Marelli reorganized its distribution so as to include STEA, and STEA 
accordingly withdraw its complaint. 
Annex III.A.1. 18 
<T7> n) Halifax/Standard Life*14) 
On 22 May the Commission published an Article 19(3) notice regarding a "tied 
agency" agreement between Halifax Building Society and the Standard Life 
Assurance Company. By virtue of the agreement Halifax becomes an agent of 
Standard Life and agrees to deal exclusively in the latter's products. 
Under the Financial Services Act (FSA) 1986 anyone wishing to sell Insurance 
policies was (and is) required to obtain authorization. This requirement 
did (and does) not apply to those who opted to become the appointed 
representative of a person or company which is already authorized under the 
Act. This was the option chosen by Halifax and by many other banks and 
building societies in the UK. An appointed representative may act 
exclusively for one principal only. This exclusivity produces anti­
competitive effects in that this exclusive agent will not endeavour to find 
the best insurance product for his client from among the range available 
among all insurance companies. 
By contrast the independent agent who does make such a selection from across 
a range of insurance companies helps to promote competition between 
insurance companies. The decision by Halifax to become tied had therefore an 
anti-competitive effect on the insurance market in the UK. This decision, 
taken by the largest building society in the UK, was but one example of some 
100 such decisions taken by other banks and building societies in the few 
years after the adoption of the FSA. The decision as manifested in the 
agreement between Halifax and Standard Life, therefore fell within 
Article 85(1). However, an exemption was considered to be merited in view of 
the efficiency benefits involved in becoming "tied" to a single insurance 
company, which benefits could be passed on to the consumer in the form of 
lower costs. 
The notified agreement contained two clauses which the Commission considered 
to be restrictive of competition within the meaning of Article 85 and to be 
unjustifiable under Article 85(3). The first was a clause which prohibited 
Standard Life from appointing other building societies as its agent. The 
second clause contained a prohibition against rebating its commissions. At 
the request of the Commission these restrictive clauses were deleted. 
Consequently the Commission was able to inform Halifax by administrative 
letter that the agreement did not run counter to Article 85. 
(14) OJ C 131, 22.5.1992, p.2 
Annex III.A.1. 19 
wm~ 350 
<T7> o) Parker Pen Ii 
583. In the Viho/Parker r„. ' ' case, the Commission adopted a formal decision 
rejecting a complaint. 
In its Decision of 15 July 1992 in the Viho/Parker Pen I case,*15) following 
a complaint for refusal to sell lodged by Viho (Netherlands), the Commission 
found that Parker Pen and Herlitz AG (its distributor in Germany) had 
infringed Article 85(1) of the EEC Treaty by including an export ban in an 
agreement they had concluded, and it imposed fines on the two companies. 
However, the complainant claimed that the requirement imposed on Parker 
subsidiaries that, in distributing Parker products, they must confine 
themselves to the territory allocated to them was caught by the loan laid 
down in Article 85(1). It thus raised the problem of the application of the 
ban on restrictive agreements to internal agreements within a group. 
The Commission took the view that Parker's various European subsidiaries were 
strictly controlled by their parent company and were bound to comply with its 
instructions. This meant that the subsidiaries formed, with the parent 
company, a single economic unit within which they could not determine 
independently their conduct on the market. The conduct of the subsidiaries 
was therefore the responsibility of the parent company. 
The Commission considered that the integrated distribution system for the 
sale of such products in Spain, France, Germany, Belgium and the Netherlands 
through the wholly-owned subsidiaries established in those countries 
satisfied the conditions laid down by the Court of Justice for the non-
application of Article 85 (see Centrafarm v Sterling Drug 1974 [ECR] 1147, 
Hvdrotherm v Compact 1984 [ECR] 2998 and Bodson v Pompes funèbres des régions 
Iibérées 1988 [ECR] 2479). 
(15) OJ L 233, 15.8.1992, p.27 
Annex 111.A.1. 20 
Subsidiaries are particularly dependent where, as in this case, the parent 
company gives them specific business policy instructions which they then 
apply through their actions. The fact that all of Parker's subsidiaries are 
wholly and not partially controlled by the parent company reinforces this 
argument. For the rest, it is sufficient for the parent company to have the 
right to give instructions to its subsidiary or for it to have other equally 
effective means at it disposal (for example, control or decisive influence 
over the staffing policy of subsidiaries) to be able to impose its will. 
Annex III.A.1. 21 
<T7> p) Br it ish Gypsum 
584. Four notices pursuant to Article 19(3) of Regulation No 17 were 
published in the Official Journal*16) in cases concerning rebate schemes 
operated by British Gypsum and, in the case of two of them, by 
Gypsum Industries. The notices reflect the result of negotiations with the 
parties concerned that made it possible, at least in one of the cases, to 
avoid adopting a formal decision banning the scheme. 
In the case relating to the "Super Stockist Scheme", a statement of 
objections had been sent to British Gypsum. The Commission's objections 
related essentially to the fact that the rebate scheme as notified by 
British Gypsum in October 1988 was discriminatory, hybrid in character 
(covering quantities purchased and quantities stocked) and tended to make for 
a captive clientele. Following the hearing which took place on the case in 
February, three new rebate schemes having also been notified, the Commission 
thought it appropriate to conduct negotiations with the parties Jointly on 
the four cases. 
Certain practices engaged in by British Gypsum and its parent company 
BPB Industries had earlier been prohibited under a Decision of 
5 December 1988*17) which imposed fines of ECU 3 million on British Gypsum 
and ECU 150 000 on BPB for infringements of Article 86 of the EEC Treaty. 
The Commission took the view that it was necessary in the four new cases to 
get British Gypsum and Gypsum Industries to bring their rebate schemes into 
line with Community competition law rather than to adopt immediately a formal 
decision prohibiting them. 
The Commission was particularly aware of the economic backcloth to the four 
cases. While BPB's market share in plasterboard in 1985 and 1986 fluctuated 
between 98% and 96% in Great Britain and between 100% and 92% in the 
Republic of Ireland and Northern Ireland, the situation has changed in recent 
years. In particular, in its 1990 report on plasterboard supplies in 
Great Britain, the Monopolies and Mergers Commission stated that BPB's market 
(16) OJ C 321, 8.12.1992. 
(17) OJ L 10, 13.1.1989. 
Annex II I.A.1. 22 
share in the United Kingdom had fallen from 96% to 65% in two years and found 
that there was now competition on the market with the entry of two new 
competitors, Knauf and Lafarge. 
Substantial amendments having been made to the schemes as a result of the 
negotiations, the Commission expressed its intention of taking a favourable 
view of the four rebate schemes as amended and invited third parties to 
submit their comments by 8 January 1993. 
Annex III.A.1. 23 
354 
<T5> - Abuse of a dominant position 
<T7> q) BEMIM and others/SACEM*18) 
585. In line with the principle of decentralization in monitoring compliance 
with the competition rules, the Commission dismissed and referred back to the 
French courts and administrative authorities a number of complaints lodged 
several years ago by discotheque proprietors against SACEM (Société des 
Auteurs, Compositeurs et Editeurs de Musique), the performing rights society 
for the French music business. In their complaints, the discotheque 
proprietors alleged that SACEM was abusing its dominant position by charging 
excessive fees for the public performance of music on their premises. In 
1989 the Court of Justice of the European Communities, which had been 
requested to give a preliminary ruling on the matter, stated that, in order 
to determine whether there was any abuse, a comparison had to be made with 
the fees collected by performing rights societies in other Member States. 
The Commission carried out such a comparison, but since the effects of any 
abuse by SACEM would be felt chiefly in France, it decided, in the interests 
of cooperation and burden-sharing with the national courts and authorities, 
to refer the complaint back to them together with its report comparing the 
fees charged. Under Council Regulation No 17, national authorities are 
competent to deal with abuses of dominant positions as long as the Commission 
has not initiated any proceedings. In the grounds of its decision, the 
Commission stressed that it had considerable discretion, as confirmed by the 
Court of First Instance of the European Communities in the "Automec II" 
case,*19) in deciding on the priority to be attached to matters brought to 
its attention, in the light of their importance for the Community. 
The Commission also stressed that it mattered little whether the national 
courts, rather than itself, carried out the comparison of fees and drew the 
appropriate conclusions as to whether or not the rules had been breached, 
since the national courts were not in any case bound by the Commission's 
opinion. 
Lastly, it underlined the fact that it had no powers under Community law to 
award damages where an infringement of the competition rules had been 
established; only the national courts had such powers. 
(18) IP(92) 977, 27.11.1992. 
(19) See point 323 of this Report. 
Annex I I I.A.1. 24 
<T7> ' r) Howden/MT Group 
586. The case is about a contract obtained by MT Group for construction of a 
road/rail link in Denmark - The "Storebslt Project" - which involves, in 
particular, boring a tunnel of some 14 km. MT awarded a contract to Howden 
for supply of four tunnel boring machines (TBM) and the two groups are now in 
dispute over the delivery and performance of those TBMs. MT wishes to call 
two performance guarantee bonds lodged by Howden and claims damages of some 
ECU 100 mi I I ion. 
MT Group consists of four of the largest European construction companies 
(Denmark, France and Germany) together with one US company. Some thirty 
companies worldwide are capable of this type of work. 
Howden is a UK-based engineering group with a turnover of some UKL 
300 million UKL, which has tunnelling machinery subsidiaries in Scotland and 
Germany. 
Howden lodged a complaint under Article 86 and a request for interim 
measures. 
Howden alleges that MT Group is using its (supposedly) dominant position to 
ensure that Howden obtain no further contracts worldwide for TBMs, and that 
MT seeks to call the bonds in order to destroy Howden. The bonds account for 
some 4% of Howden's turnover, or a little over half last year's profits. The 
Commission has still to take a definitive position on the complaint. 
In view of the relatively small percentage of turnover represented by the 
bonds and doubts as to the situation on the market in question, the 
application for interim measures was rejected. 
Annex III.A.1. 25 
mm^ 356 
<T5> - Decisions relating to investigations 
<T7> s) The United Kingdom West Africa Lines Joint Service (UKWAL) 
587. On 6 April, the Commission adopted a decision imposing a fine of ECU 
5 000 on the shipping liner conference United Kingdom West Africa Lines Joint 
Service (UKWAL) for having refused to submit to an investigation pursuant to 
Article 18(3) of Council Regulation (EEC) No 4056/86 of 22 December 1986 
laying down detailed rules for the appl icat ion of Articles 85 and 86 of the 
Treaty to maritime transport. 
The decision was adopted following a number of complaints concerning the 
activities of UKWAL in the liner trade between ports situated in the United 
Kingdom and the Republic of Ireland on the one hand and West Africa on the 
other. A preliminary examination of the complaints and the serious nature of 
the alleged infringements (behaviour incompatible with Article 85(1), not 
covered by the block exemption and not exemptable under Article 85(3); a 
breach of the provisions of Article 86) led the Commission to consider an 
investigation without prior notice. 
On 28 June 1989 the Commission proceeded to carry out the investigation but 
was unable to go ahead owing to UKWAL's refusal to allow the investigation to 
take place. The national authorities were requested to assist the Commission 
officials and an order was obtained from the High Court in London. The 
investigation was carried out on 29 June at the offices of UKWAL. 
The Commission considered that the above facts constituted a serious 
infringement of Article 18 of Regulation No 4056, obstructing the 
effectiveness of the investigation, which could not be carried out on UKWAL's 
premises on the day envisaged. The level of the fine, the maximum permissible 
(ECU 5 000) reflects the intentional nature of the infringement and the 
behaviour of UKWAL during the investigation. 
Annex III.A.1. 26 
<T7> t) The Mediterranean Europe West Africa Conference (MEWAC) 
The Commission imposed a fine of ECU 4 000 on the shipping liner conference 
Mediterranean Europe West Africa Conference (MEWAC) in a decision which found 
that MEWAC had refused to submit to an investigation in accordance with 
Regulation (EEC) No 4056/86, which applies the EC competition rules to 
maritime transport. 
In 1987, the Commission received a number of complaints concerning the 
activities of MEWAC in the liner trade between Europe and West and Central 
Africa. A preliminary examination of the complaints and the serious nature of 
the alleged infringements led the Commission to organize an investigation 
without prior notice. 
On 28 June 1989 the Commission proceeded to carry out the investigation. 
Having produced the necessary decision and documents, explaining the rights 
and duties of MEWAC, the Commission officials were not allowed to go ahead 
with the investigation. MEWAC said the investigation could not take place 
until its Secretary General returned from Paris to Marseille, the location of 
the conference's secretariat. MEWAC was informed that this amounted to a 
refusal to comply with the Commission decision, thereby obstructing the 
effectiveness of the investigation, which could not be carried out on MEWAC's 
premises on the day envisaged. 
With the assistance of the French authorities, appropriate steps were taken 
to seal the premises of MEWAC and the investigation started the next day in 
the presence of the Secretary General. 
MEWAC is an association of undertakings within the meaning of Article 18 of 
Regulation No 4056. It is therefore obliged to submit to an investigation 
ordered by decision of the Commission pursuant to Article 18(3) and to comply 
with the date and time fixed therein. 
In determining the amount of the fine to be imposed, the Commission took 
account of the fact that while MEWAC objected to the investigation being 
carried out without the presence of the Secretary General, it did consent to 
the investigation the following day. Therefore, its refusal was not outright 
and the maximum amount of fine (ECU 5000) was not imposed. MEWAC was fined 
ECU 4 000. 
Annex 11I.A.1. 27 
""• 358 
<T7> u) CSM 
588. During an investigation ordered by the Commission under Article 14(3) of 
Regulation No 17, the Dutch company CSM prevented the Commission's inspectors 
from making copies of documents on the first day, and allowed copies to be 
made of only some of the documents on the fol lowing day. It was not until 
after it had imposed periodic penalty payments (Article 16(1) of No 17) that 
the Commission was allowed to copy the remaining documents. 
589. The reason given by CSM for its refusal was that the documents had no 
bearing on the investigation. In its decision of 7 October the Commission 
drew attention to the powers conferred on it by the rules governing 
investigations and the obiigation on undertakings to submit to investigations 
ordered by decision. 
590. A company which is being investigated is in no position to Judge whether 
a document should or should not be handed over and may not therefore obstruct 
Commission officials in the performance of their duties as they alone know 
which documents they need to see straight away. Companies that are subject 
to investigations can appeal to the Court of First Instance of the European 
Communities, which monitors the Commission's conduct. 
591. The Commission imposed a fine on CSM under Article 15(1) of Regulation 
No 17 for infringement of Article 14 of that Regulation. 
Annex III.A.1. 28 
mmmm 359 
<T5> - Decisions relating to interim measures 
<T7> v) EBU-Eurovision System 
592. On 31 July the Commission rejected a request for interim measures 
submitted by the television channel TESN (The European Sports Network) 
concerning access to broadcasting rights for the summer Olympic games 
acquired by members of the EBU (European Broadcasting Union). Within the 
Eurovision system, EBU members purchase jointly exclusive broadcasting rights 
for major sporting events such as the Olympic games. The Eurosport channel, 
which is a joint subsidiary owned by a consortium of EBU members and by the 
French channel TF 1 (which is also an EBU member), participates in this 
system and has direct access to a I I the rights acquired. 
TESN, which is not a member of the EBU and is in direct competition with 
Eurosport, requested access to the relevant broadcasting rights on an equal 
footing with Eurosport. Although the Commission took the view that the EBU 
rules on the joint purchasing of broadcasting rights infringed Article 85(1) 
of the Treaty, it nevertheless rejected the request for interim measures on 
the grounds that there was insufficient evidence of serious and irreparable 
damage. 
Annex III.A.1. 29 360 
T7> w) Phoenix/IBM 
593. Phoenix International (Computers) Ltd lodged a complaint, together with 
a request for interim measures, against IBM for infringement of Article 86, 
alleging that IBM had abused its dominant position on the market for the 
maintenance of its 3090 series computers. 
According to the complainant, IBM had unlawful I y suddenly refused to cover, 
under the standard maintenance contract concluded with its customers, 
"reworked" memory cards marketed by Phoenix, on the pretext that they 
Infringed the IBM trade mark. 
The 3090 memory cards which Phoenix sold as original IBM products had been 
modified by third parties so as to increase their memory capacity, without 
IBM's prior agreement. This practice involves major re-assembly of the cards 
produced by IBM, a process which is liable to damage them and over which IBM 
has no control. However, the request for interim measures was based in part 
on the allegation that IBM had for years been aware of the existence of the 
reworked cards in general and of the 3090 series cards in particular and that 
IBM had knowingly maintained them under its standard maintenance contract. 
IBM had thus, it was alleged, given its tacit acquiescence to the reworked 
cards. 
Without entering into the question of whether such a refusal of maintenance 
might have constituted an abuse of a dominant position, the Commission 
rejected the request for interim measures due to a lack of any "prima facie" 
evidence of infringement of Article 86. 
Annex III.A.1. 30 
361 
<T7> x) TESN/FootbalI authorities 
594. On 2 December the Commission rejected a request for interim measures 
submitted by the television channel TESN (The European Sports Network) 
concerning the application of Article 14 of the UEFA statutes, which seeks to 
protect attendance at football matches by allowing the national football 
associations (UEFA members) to prohibit the televising of foreign matches on 
their territory. The Commission examined the substance of the case but 
rejected the request for interim measures on the grounds that there was 
insufficient evidence of serious and irreparable harm suffered by the 
complainant. 
III.B.1. 1 
362 
<T3> B. Competition policy and government assistance to enterprises 
<T4> §1. Case summaries 
<T5> - Aid cases in which the Commission raised no oblection 
<T6> a) Aid to the service sector - Tourism 
<T8> Spain 
605. The Commission approved two central government programmes introducing 
aid for investment projects and promotion campaigns by SMEs in tourism. 
Totalling ECU 25 million for 1992, the planned assistance forms part of an 
overall plan to boost the competitiveness of the Spanish tourism industry. 
<T6> b) Horizontal aid - Aid to small and medium-sized 
enterprises 
<T8> Denmark 
606. The Industrial Development Fund which the Commission authorized in 
October*1) also provides conditionally repayable loans for SMEs seeking to 
build up a capability for exporting to new markets in or outside the EC. As 
the aid was limited to preliminary planning and training, it was deemed to 
qualify for "soft aid" treatment under the SME aid guidelines. 
<T8> Spain 
607. The Commission authorized a programme to improve industrial design in 
SMEs. Under the programme, which is to run for four years (1992-95) and 
which had a budget of ECU 17.9 million in 1992, grants will be made towards 
investments and towards training and advisory services with a view to 
introducing and improving design technologies in Spanish SMEs. 
608. The Commission approved a scheme with a budget of ECU 155.5 million 
under which guarantees are available for ailing industrial enterprises (SMEs 
with a maximum of 250 employees and a turnover of ECU 20 million or, by way 
of exception, enterprises with up to 500 employees the closure of which would 
(1) Point 357 of this Report. 
363 
have a damaging social Impact in the areas in which they are located) to 
enable them to raise the funds they need to devise a detailed rescue and/or 
restructuring plan. 
<T8> Italy 
609. in keeping with its favourable attitude towards measures to improve the 
environment in which SMEs operate, the Commission authorized several schemes 
provided for under Italian regional legislation, including two in Marche and 
Liguria designed to encourage joint initiatives by cooperatives and 
associations of SMEs to improve their efficiency and marketing. 
<T6> c) Horizontal aid - Employment aid 
<T8> France 
610. In March the Commission approved a scheme to encourage businesses to 
relocate away from the Paris area into the provinces. It offers grants of 
ECU 3 600 per employee recruited at the new location. A separate scheme 
subsidizes the removal costs of employees moving with the firm. In assisted 
areas, the regional planning grant ("PAT") ceilings would be applicable. For 
1992 the relocation scheme had a budget of ECU 14.5 million. 
<T5> - Aid cases in which the Commission decided to close the 
Article 93(2) EEC procedure 
<T6> a) Horizontal aid - Investment aid 
<T8> Italy 
611. The Commission opened Article 93(2) proceedings against low-interest 
loans under Italian laws which had lapsed and which had not been notified to 
the Commission under Article 93(3). It found, however, that the aid 
intensity was not sufficient to affect market conditions and accordingly 
considered that the schemes qualified for exemption under Article 92(3)(c) 
and closed the procedure. 
7 64 
<TG> b) Horizontal aid - Aid to small and medium-sized 
enteror ises 
<T8> Italy 
612. Various Sicilian provisions introducing aid for SMEs enagaged in 
retailing and the advertising of typical products of the region were approved 
following their scrutiny under Article 93(2), the Commission having received 
an assurance that they would be applied in a manner consistent with the 
Treaty and the relevant guidelines. 
<T6> c) Regional aid 
<T8> Spain 
613. In July the Commission decided to close the procedure it had opened In 
October 1991 in respect of aid granted by the autonomous government of 
Catalonia.*2) The aid, totalling ECU I5*.t8 million, was granted between 1988 
and 1990 on the basis of the following regional provisions: Order 
of15 April 1988, Law 9/1989, Order of 27 July 1989 and Order of 19 June 1990. 
The Commission took the decision after checking, in the light of information 
furnished by the Spanish authorities, that the aid qualified for exemption 
under Article 92(3)(c). 
<T5> - Aid cases in which the Commission decided to open 
the Article 93(2) EEC procedure 
<T6> a) Horizontal aid - General investment aid 
<T8> Italy 
614. A decision was taken to open the Article 93(2) EEC procedure In respect 
of a number of special measures to assist Sicilian industry, the opacity of 
the legal provisions notified to the Commission having given rise to doubts 
as to the measures' compatibility with the Treaty. 
(2) Twenty-first Competition Report, point 293. 
h£S 
<T2> Annex IV: The development of concentration. 
competition and competitiveness 
<T3> A. Mergers and acouisitions involving 
Communitv-scale firms in 1991/92 
615. Annual reports on competition policy have traditionally included this 
section presenting statistical information on mergers, acquisitions of 
majority and minority holdings and joint ventures. The raw information for 
the compiling of these statistics has been provided by an internal database 
of the European Commission called DOME. This will be the last year in which 
this section will be based on DOME data as this database has been stopped. 
Next year's edition of the annual report on competition policy will maintain 
this section, but its structure and the source of statistical information 
will be different. The DOME database was started in 1971 and its basic 
methodology was last modified in 1981. The main objective of the database was 
to provide realistic information about the changes in the pattern of 
competition. The database was drawn from information on mergers, takeovers, 
acquisitions of minority holdings and joint ventures published in the 
specialist economic press. For each entry, information regarding the combined 
turnover and nationality of the firms involved, relevant industrial sector, 
type of operation and publicized reasons for the operation was collected. The 
tables presented in this section of the Annual Report were drawn up using the 
data corresponding to those operations involving the 1 000 leading industrial 
firms of the Community (ranked according to their turnover) and the 500 
largest industrial firms worldwide and the largest firms in the distribution, 
banking and insurance sector. The annual data presented in each report 
included all the operations which had taken place in the twelve-month period 
ending on 1 June of each year. 
<T4> §1. Overview (Tables 1 and 2) 
616. Following the trend started after 1990, the total number of financial 
operations fell from 1009 in 1990/91 to 871 in 1991/92. However, this 
downward trend has slowed down with respect to the previous year. The 
decrease in the number of operations between 1990/91 and 1991/92 was just 
14%, while one year before, between 1989/90 and 1990/91, the number of 
operations fell by 27% with respect to 1989/90 figures. The recent trend in 
the total number of operations shows a cycle with a peak in 1990/91 and 
relatively similar figures in 1986/87 (708) and in 1991/92 (871). It is 
366 
important to notice that the maximum reached in 1989/90 almost doubled the 
number of operations for 1986/87. Several reasons have been put forward to 
explain this remarkable upsurge in the number of financial operations. The 
wave of corporate acquisitions that these figures show is not exclusive to 
Europe. However, there are some reasons that can help to explain the 
specific features of the European case. As stated in the Twenty-first 
Competition Report, the 1992 programme must be considered as an important 
factor stimulating the external growth of corporations, both internal and 
external to the EC. Internal firms were compelled to expand their Community 
basis to enable them to compete in the European market opening up to them on 
1 January 1993. Foreign firms were also interested in reinforcing their 
European presence before that date. In both cases the booming markets of the 
second half of the 1980s provided the necessary liquidity which enticed firms 
to opt for external growth as a fast way of achieving the goals created by 
1993 and the single market. 
The entry into force of the Merger Regulation in September 1990 could have 
had an influence on the peak figure attained in 1989/90, as one could argue 
that firms might have been prompted to consummate the operations before the 
date of entry into force of the Regulation so as to avoid being caught by it. 
However, the data that we have for the two years since the Merger Regulation 
entered into force do not seem to confirm that hypothesis. The number of 
large mergers, acquisitions and joint ventures falling under the scope of the 
Regulation (i.e. those involving firms with a turnover greater than 
ECU 5 000 million) has decreased by less than the number of smaller 
operat ions. 
It is important to notice that the trend of large operations after 1989/90 is 
not the same for national, Community and international operations. The number 
of Community-scale operations fell quite sharply after 1989/90 to around two 
thirds of the figure reached in that year. The number of national operations 
kept on growing after 1989/90, decreasing slightly in the last year. However, 
international deals grew considerably after 1990/91 compared with the 
previous year and then dropped drastically in 1991/92 to barely 50% of the 
1990/91 level. 
(2 
TABLE 1: National, Community and international mergers, acquisitions of minority holdings and joint ventures in the Community in 
1991/92 
Industry 
Distribution 
Banking 
Insurance 
Total NATIONAL1 
Minor Joint 
Mergers Acquis it. Ventures 
175 60 29 
31 8 2 
73 36 6 
9 8 8 
288 112 45 COMMUNITY2 
Minor joint 
Mergers Acquis it.Ventures 
119 34 33 
4 0 4 
17 22 10 
19 13 7 
159 69 54 International3 
Minor Joint 
Mergers Acquis it. Ventures 
49 27 41 
1 0 1 
7 8 3 
3 3 1 
60 38 46 Total 
Minor Joint 
Mergers Acquis it. Ventures 
343 121 103 
36 8 7 
97 66 19 
31 24 16 
507 219 145 Total 
number of 
Operations 
567 
51 
182 
71 
871 
Source : Data gathered by the Commission from the specialist press 
1) Operations of firms from the same Member States. 
2) Operations of firms from different Member States. 
3) Operations of firms from Member States and third countries with effect on the Community market 
Source : Data gathered by the Commission from the specialist press. 
1) Operations of fins from the sane Member States. 
2) Operations of fins froa different Member states. 
3) Operations of fIris froi Member States and third countries with effect on the Community market. Table 2 : Breakdown of national, Community and international majority acquisitions (including mergers), in industry, distribution, banking and 
insurance (combined turnover greater than ECU 1. 2, 5 and 10 billion) 
Industry 
86/87 
87/88 
88/89 
89/90 
90/91 
91/92 
Distribution 
86/87 
87/88 
88/89 
89/90 
90/91 
91/92 
Banking 
86/87 
87/88 
88/89 
89/90 
90/91 
91/92 
Insurance 
86/87 
87/88 
88/89 
89/90 
90/91 
91/92 
Total 
86/87 
87/88 
88/89 
89/90 
90/91 
91/92 National1 
>1 >2 >5 >10 >1 
111 73 42 18 52 
135 84 48 24 86 
163 118 60 29 148 
183 117 66 44 212 
158 118 75 42 145 
155 114 72 36 102 
19 12 6 1 2 
15 11 6 2 5 
21 17 8 0 1 
13 11 3 2 6 
14 11 6 1 4 
17 14 12 5 1 
9 6 5 3 2 
19 14 7 4 10 
22 15 3 1 11 
22 19 14 10 10 
15 12 9 3 12 
15 13 8 4 12 
5 3 2 2 1 
110 0 7 
5 5 3 0 3 
10 0 0 9 
5 4 2 14 
11117 
144 94 55 24 57 
170 110 61 30 108 
211 155 74 30 163 
219 147 83 56 237 
192 145 92 47 165 
188 142 93 46 122 Community2 
>2 >5 >10 >1 
42 24 13 8 
61 34 22 47 
110 72 53 62 
158 102 70 118 
107 65 37 94 
86 57 37 48 
2 2 0 0 
3 10 2 
110 1 
3 3 12 
4 3 11 
10 0 0 
2 119 
10 8 4 7 
9 4 2 8 
9 7 2 5 
12 10 8 4 
10 9 5 0 
0 0 0 2 
6 1 0 8 
3 2 0 4 
6 3 12 
4 112 
6 4 11 
46 27 14 19 
80 44 26 64 
123 79 55 75 
176 115 74 127 
127 79 47 101 
103 70 43 49 International 3 
>2 >5 >10 >1 >2 
3 2 0 171 118 
40 28 15 268 185 
60 38 24 373 288 
109 56 26 513 384 
89 60 37 397 314 
45 30 16 305 245 
0 0 0 21 14 
2 2 0 22 16 
1 1 0 23 19 
2 2 1 21 16 
1 1 0 19 16 
0 0 0 18 15 
7 5 3 20 15 
5 4 2 36 29 
8 5 4 41 32 
4 1 0 37 32 
4 2 1 31 28 
0 0 0 27 23 
10 0 8 4 
3 1 0 16 10 
3 2 0 12 11 
1 0 0 12 7 
1 1 1 11 9 
1119 8 
11 7 3 220 151 
50 35 17 342 240 
72 46 28 449 350 
116 59 27 583 439 
95 64 39 458 367 
46 31 17 359 291 Total 
>5 >10 
68 31 
110 61 
170 106 
224 140 
200 116 
159 89 
8 1 
9 2 
10 0 
8 4 
10 2 
12 5 
11 7 
19 10 
12 7 
22 12 
21 12 
17 9 
2 2 
2 0 
7 0 
3 1 
4 3 
6 3 
89 41 
140 73 
199 113 
257 157 
235 133 
194 106 
<T4> §2. Takeovers (including mergers and majority acquisitions), 
minority acquisitions and Joint ventures in industry 369 
Tables 1 and 2 show that the impact of the 1992 programme on merger and 
takeover activities has been important from a structural point of view. Now 
that 1991/92 figures show levels similar to the period previous to the Single 
European Act, we can see that the present structure of mergers, acquisitions 
and Joint ventures according to their national, Community or international 
dimensions resembles more closely the 1989/90 structure than that of 1986/87. 
International and, in particular, Community-wide operations have increased 
their importance considerably while national operations have lost ground. In 
1986/87, over 63% of operations took place within national borders, in 
1991/92 that percentage fell to 51%. Operations of Community dimensions went 
from 20% to 32% in the same time interval. Although the percentages for 
extra-national operations were even higher in 1989/90, it seems that the 
changes introduced by the 1992 programme will persist somewhat over time. 
<T4> 
TABLE 3: National, Community and international acquisitions of majority holdings (including mergers) in the Community (Breakdown by industrial sector) 
Sector (1) National Community International Tota 
1987/ 1988/ 1989/ 1990/ 1991/ 1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 1988 1989 1990 1991 1992 
"51 76"—Toi 71 BT 
"55—TTT7—TIB" TOI 5T 1. Food 
2. Chem, IF 
12" IF 
1T IT 
IF IF 
IT IF 
TT TF 
IF IT 
IF TT 
7F 15—2T 
"51—2T 
11 F T 
TF TT TT 
IF IF 6^ 
TF 
3. Elec. 
4. Mech. TT IT 
IF 
IT 1F 
IT TF TF TF 16 41 4T "41 2T IF 
If IF 
IF TT TF 
TT T TT 
"T IF 
T IF 
T IF 
T IF IF 
T 5. Comput TF 
F Metal. 
7. Transp, T 
IF IF IF IF IF TF IF i—r 
T6—TT IS 35 6T 17 4T 
"T 
IT IF TT TF 
If "T 
IF T 
TT TF 
IT TT 
"6T IF TT 
TF TT 
17" 8. Paper TF 
If IF 763T TT 7F 
11 ft T9 ft TF 
"TO 21 ft ft—TF 9. Extrac. 
10. Textile TT 
TT IF T 
TT 
11. Constr. 
12. Other If 
T 13 31 3T T7 4T IT IF 
T TF 
TF TS 27 TF 
~F TF TT IT 
T ""21 ft 21 T5 TF 
181—416—m 415—3TF "ToTÂT F0 7 T5 4 F 
IT!—231—2TT—TIB—T7F T 
TT! T9T—557 170 119 FF 15—T2l 91 4T 
Source: Data gathered by the Commission from the specialist press. 
(1) Key: 
Food Chem. Elec. Mech. Comput. Metal. Food and drink. Chemicals, fibres, glass, ceramic wares, rubber. Electrical and electronic engineering, office machinery. Mechanical and instrument engineering, machine tools. Computers and data-processing equipment. Production and preliminary processing of meta is, metal goods. Transp. Paper Extrac. Textile Constr. Other Vehicles and transport equipment. Wood, furniture and paper (Including printing and publishing) Extractive industries. Textiles, clothing, leather and footwear. Construction. Other manufacturing industry. 
TABLE 4: Breakdown of national, Community and international acquisitions of majority holdings by Industrial sector In 1991/1992 and 
by combined turnover of fins involved (ECU >1, >2, >5, >10 billion) < 
> 
to* 
Sector (1) National (2) Community (3) International (4) Total 
>1 
IF >2 
IF >5 
TF 10 
"T >1 
IF >5 >10 
T5 TF >1 >2 >5 >10 >1 
"5T >2 
TT >5 >10 
13 2T 1. Pood 
2. Chem. T8 TF TF 
T TF 
T TT TT IF 
IT TT 
IT "21 TT 
12 TF 3. Elec. 
4. Mech. IF 
T IF 
T TF 
T TF 
T T 
TF 
T 5. Comput, 
6. Metal. TF 
T TF 
IF 
T IF 
"T TF TF TF IF 
TF IF 
TF m—TF 
1 F 7. Transp. 
8. Paper TT TF 
"T TF 9. Extrac. 
10. Textile T 
IT T 
TT T 
TF T 
TF 11. Constr. 
12. Other TT IF IT 
TF 
TOTAL 155 114 72 36 102 86 58 37 48 45 30 16 305 245 160 89 
Source: Data gathered by the Commission from the specialist press. 
(1) Key: See Table 3, note 1. 
(2) Mergers of firms from the same Member State. 
(3) Mergers of firms from different Member States. 
(4) Mergers of firms from Member States and third countries with effects on the Community market. 
^3 
<T6> a) Takeovers (see tables 3 and 4) J 
<T7> General 
Mergers and acquisitions of majority holdings remained the main type of 
operation in 1991/92. However, the number of mergers and takeovers has 
fallen more sharply than the total number of operations and consequently, 
their relative importance has been reduced in the last year. Mergers 
accounted for 45% of the total number of operations in 1989/90 and in 
1990/91, while in 1991/92 they accounted for 39,4% of the operations carried 
out in that year. 
The total number of mergers and acquisitions of majority holdings in industry 
decreased in 1991/92 at a slightly lower rate than in 1990/91. However, 
national, Community and international operations did not behave in the same 
way. Community operations continued falling at a rate similar to the 1990/91 
rate (over 30%). On the other hand, international operations decreased more 
sharply in 1991/92 (50%) than in 1990/91 (20%). However, the reduction in 
the number of national operations was very small compared to the previous 
year (23% in 1990/91 and 6% in 1991/92). 
This trend seems to indicate that cross-border operations are more sensitive 
to variations in the level of takeover activity than national operations. It 
is worthwhile mentioning, though, that the moderate fall in the number of 
national deals reflects an important increase in takeover activity in the 
five new German Lander which we will see below. 
For the first time since 1987/88, the number of operations involving firms 
from different countries was smaller than the number of national operations. 
However, extra-Community takeover activity seems to be more volatile than 
intra-Community cross-border activity. 
<T7> Big operations 
The distribution of takeovers and mergers by size has remained remarkably 
stable with respect to last year. As one should have expected, cross-border 
operations tend to involve firms of larger size than national operations. 
The only thing to notice in this respect is a small relative increase in the 
proportion of Community-wide operations involving firms with a combined 
V.A.§2. 9 
373 
turnover greater than ECU 5 000 million. The opposite occurs in the case of 
operations involving firms from third countries. As in previous years, large 
operations tend to concentrate in a few sectors only. The food, electrical 
engineering, chemical and metal sectors account for almost two thirds of the 
operations with a combined turnover above ECU 5 000 million. It is important 
to notice that this concentration is more acute in Community and 
international than in national deals. For instance, the food and drink 
sector accounted for 40,5% of the Community deals involving firms with a 
combined turnover above the ECU 10 000 million threshold. A similar 
phenomenon occurs with international deals, where the chemical group accounts 
for 37,5% of transactions in the same size bracket. In the national category 
concentration ratios were below 20% in all size groups. 
<T7> Sectors 
For the first time in many years the food and drink sector has replaced the 
chemical group as the leading sector in takeover activity. The relative 
importance of the food sector has been increasing steadily since 1987/88 
while the number of operations in the chemical sector has been decreasing at 
a high rate during the last three years. Takeover and mergers in the food 
sector have a more domestic profile than in the chemical sector. Over 50% of 
the operations in the food sector were of a national nature while Community 
and international deals were a majority in the chemical group. 
Construction has become the third sector in terms of total number of deals. 
While takeover activity declined in all the other sectors in the last two 
years, it continued increasing in the construction sector in 1990/91, 
accounting for a total of 48 operations in 1991/92. Those deals are 
predominantly national and Community-wide. Electrical and electronic 
engineering and computers and data-processing equipment showed the sharpest 
reduction in takeover and merger activity in 1991/92. These sectors were 
particularly active during 1990/91 but the number of operations was reduced 
to one half last year. This reduction was concentrated in trans-national 
operat ions. 
In textiles, clothing, footwear and leather and in the metal sector, takeover 
activity remained more or less the same. All the other groups followed the 
general downward trend in the number of mergers and acquisitions of majority 
holdings. 
.V.A.12.10 374 
<T7> Activities in Member States (see Table 5) 
In 1991/92 Germany and France continued to be the two countries where most of 
the mergers, takeovers and acquisitions of majority holdings took place. The 
level of geographic concentration has increased considerably and in 1991/92 
63% of the operations took place in those two countries. However, while the 
number of operations of this kind fell sharply in France, it increased 
considerably in Germany, which in fact increased the degree of geographic 
concentration. The number of firms acquired in France fell from 115 to 64 
between 1990/91 and 1991/92. In the same period, the number of firms 
acquired in Germany grew from 111 to 155 i.e. three times more than in 
1987/88. German firms also replaced French companies as the most active in 
acquiring firms elsewhere, going from 88 operations in 1990/91 to 181 in 
1991/92. 
This upsurge in takeover activity by German firms is mainly due to the 
process of acquisition by German firms of companies privatized in the five 
new German Lender. This process was already started last year and increased 
considerably in 1991/92, taking the total number of internal operations in 
Germany from 60 to 93 in just one year. It is important to notice too that 
the number of German firms acquired by non-German firms has also increased 
with respect to last year, but on a smaller scale. In this regard, the 
increase in takeover activity by French companies in Germany is remarkable, 
reaching a total of 19 operations in 1991/92. Two thirds of these were 
acquisitions and 6 out of those 19 took place in Eastern Germany. 
The process of privatization of firms located in the former GDR has had an 
important influence on the profile of takeovers and acquisitions carried out 
by German firms. While in 1990/91 37% of the German operations had their 
target company beyond German borders, this percentage was drastically reduced 
to 15% in 1991/92. 
The UK has had an important decrease in takeover and acquisition activities, 
cutting down by half the number of operations with origin or target in the 
UK. This reduction of activity has been quite balanced across the board 
affecting domestic and external operations in similar proportions. 
Other countries which were important as targets for these types of operations 
in the recent past such as Spain and Italy have also experienced important 
reductions in takeover activity. The decline has been more remarkable in the 
case of Spain where the number of acquired firms went from 74 in 1989/90 to 
IV.A.§2. 11 
375 
just 18 last year. This number is equivalent to the 1986/87 figure. A 
similar trend is seen in Italy where the 1986/87 level has been 
re-established. However, that level remains higher in absolute terms in the 
case of Italy with 38 operations as against only 18 in Spain. Another 
important difference between these two countries is the relatively high 
number of domestic operations taking place in Italy, which is not the case in 
Spain. 
<T7> International operations (see Table 5) 
The acquisition of majority holdings and takeovers in which the purchasing 
firm was of non-EC origin also fell by half during last year. The 
United States maintained its leading position with 25 operations in which EC 
firms were targeted. This represents an important reduction with respect to 
1990/91 figures. Japanese firms have cut down drastically their activity, 
going from 13 operations last year to 2 operations only in 1991/92. 
Countries integrated in the EFTA group have maintained their EC takeover 
activities, which were already noticeable last year.C) 
It is also worthwhile mentioning that there has been a substantial 
modification in the nationality of the companies targeted by these non-EC 
firms. The UK was the preferred destination in 1990/91 with 27 operations. 
Last year, only 7 UK firms were bought by non-EC firms. This was not the 
case with France and, even less, Germany, which are now second and first 
choice respectively. By industrial sector, chemicals and electrical and 
electronic engineering were the favourite targets for operations of non-EC 
origin. Those two sectors accounted for 33 of the total 52 operations. 
(1) It should be noticed that these figures exclude establishment of new 
subsidiaries in the EC by non-EC companies. 
IV.A.§2. 12 
376 
* Difference to above due to take-overs by joint ventures jointly owned by 
firms from different countries. Source : Data gathered by the Commission from the specialist press. TABLE 5 : Breakdown of majority acquisitions (incl. mergers) by Member State and for 1991/92 by 
nationality of acquiring firm in industry 
acquired/ 
acquiring firm 
TOTAL 
1986/87 303 
1987/88 383 
1988/89 492 
1989/90 622 
1990/91 455 
1991/92 347 
B 4 
DK 4 
D 109 
E 2 
F 71 
GR 0 
1 30 
IRL 2 
L 0 
NL 24 
P 0 
UK 48 
Total 294* 
AUSTRIA 1 
FINLAND 2 
JAPAN 2 
S. AFRICA 1 
SWEDEN 8 
SWIT. 14 
USA 25 
Total 53* 
Total 347* B 
3 
11 
18 
21 
9 
5 
0 
0 
2 
0 
0 
0 
0 
0 
0 
1 
0 
2 
5 
0 
0 
0 
0 
0 
0 
0 
0 
5 DK 
1 
2 
2 
16 
14 
3 
0 
0 
0 
0 
0 
0 
1 
0 
0 
2 
0 
0 
3 
0 
0 
0 
0 
0 
0 
0 
0 
3 D 
69 
51 
90 
124 
111 
155 
1 
0 
93 
0 
19 
0 
2 
0 
0 
9 
0 
9 
133 
0 
0 
1 
1 
2 
9 
9 
22 
155 E 
20 
27 
65 
74 
35 
18 
0 
1 
1 
2 
9 
0 
1 
0 
0 
3 
0 
1 
18 
0 
0 
0 
0 
0 
0 
0 
0 
18* F 
63 
122 
112 
101 
115 
64 
3 
0 
4 
0 
33 
0 
3 
1 
0 
2 
0 
5 
51 
1 
1 
0 
0 
1 
4 
6 
13 
64 GR 
0 
0 
0 
3 
8 
3 
0 
0 
0 
0 
0 
0 
2 
0 
0 
0 
0 
1 
3 
0 
0 
• 0 
0 
0 
0 
0 
0 
3* I 
35 
40 
49 
73 
51 
38 
0 
0 
3 
0 
4 
0 
19 
0 
0 
0 
0 
3 
29 
0 
0 
0 
0 
5 
0 
4 
9 
38 IRL 
2 
6 
8 
3 
2 
5 
0 
0 
0 
0 
0 
0 
0 
1 
0 
0 
0 
3 
4 
0 
0 
0 
0 
0 
0 
1 
1 
5 L 
1 
0 
4 
3 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 NL 
19 
16 
23 
28 
21 
11 
0 
0 
1 
0 
2 
0 
2 
0 
0 
4 
0 
1 
10 
0 
1 
0 
0 
0 
0 
0 
1 
11 P 
0 
2 
10 
8 
7 
1 
0 
1 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1 
0 
0 
0 
0 
0 
0 
0 
1 
1 UK 
90 
106 
111 
168 
82 
44 
0 
2 
5 
0 
4 
0 
0 
0 
0 
3 
0 
23 
37 
0 
0 
1 
0 
0 
1 
5 
7 
44* 
IV.A.§2. 13 
377 
<T6> b) Detailed analysis of two industrial sectors 
As in the previous year, the chemical and food sectors have been chosen for 
this analysis due to their high level of activity in mergers, takeovers and 
acquisitions of majority holdings. 
<T7> Food 
In 1991/92 the food and drink sector registered the highest figure of 
takeovers, mergers and acquisitions of majority holdings, replacing the 
chemical sector which traditionally has held that top position. Mergers and 
takeovers accounted for the large majority of operations of this kind with 52 
out of a total of 61 deals. 
Compared with the previous year, the most important development was the sharp 
decline in the number of operations in which the purchasing company was of 
non-EC origin. The drop in the number of international operations was in 
itself sufficient to explain the fall in the level of activity, since 
national and Community-wide deals remained practically unchanged. 
Switzerland remains the main non-Community country of origin of mergers and 
takeovers in this sector. 
One of the unusual characteristics of merger and takeover activities in this 
sector is the homogeneous geographic distribution that they show across the 
board. With the sole exception of Luxembourg, there was at least one 
operation in each Member State during 1991/92. Furthermore, there is not a 
high level of concentration of operations in just one country and the three 
largest countries of the Community, Germany, France and the United Kingdom 
have similar levels of activity (between 18 and 12 operations). 
Nevertheless, there are substantial differences in the nature of operations 
carried out in the three largest Member States. In Germany, most of the 
takeover activity that took place in the food and drink sector during last 
year was related with the former GDR. Eight out of the thirteen cases 
registered in Germany during that period had as their target a company 
located in the five new Lander. It is interesting to note that the 
purchasing company was often a German subsidiary of another company of 
non-German origin. Nestlé and Unilever are examples of this. In the case of 
France, two thirds of the deals were domestic operations. The domestic 
character of the transactions in this sector was even more clear in the case 
of the United Kingdom. Only one of the 12 mergers and takeovers which 
•v...,,." 3?8 
targeted UK-based companies had an international dimension. It is also 
worthwhile mentioning here the great activity deployed by British holding 
companies in the food and drink sector. Three British companies, Grand 
Metropolitan, Hillsdown Holdings and Northern Foods, accounted for 14 of the 
52 takeovers and mergers registered in the EC in 1991/92. Grand Metropolitan 
by itself was the acquiring company in 7 out of the 19 takeovers and mergers 
of Community dimension which took place last year. Hillsdown Holdings and 
Northern Foods accounted for almost two thirds of the domestic operations 
registered in the United Kingdom. 
As regards the size of the operations in this sector, the high number of 
operations registered in which the combined turnover of the companies 
involved was above the ECU 10 000 million mark is noteworthy. 
<T7> Chemicals 
The general reduction in the level of takeover activity affected the chemical 
sector in a very significant way. We have to go back to 1985/86 to find a 
figure comparable to the number of operations which took place last year. 
This is equivalent to one third of the activity which was registered in 
1989/90. 
However, this reduction did not take place evenly across the board. For 
instance, the number of operations in Germany remained virtually unchanged in 
the last two years with 21 operations in 1990/91 and 20 in 1991/92. 
Something similar occurred in Italy with 13 and 11 operations and in Spain 
where no operations were registered last year, while in 1990/91, 2 operations 
took place. The United Kingdom and the Netherlands also experienced 
important reductions in activity. As a result of this, takeover activity was 
highly concentrated in the four largest countries of the Community with less 
than 5% of the operations taking place elsewhere. 
International activity remained quite important during 1991/92 with the 
United States maintaining its leading position as an investor in chemicals in 
Europe. As a matter of fact the number of international takeovers and 
mergers fell less than national and Community operations. It is this latter 
group which experienced the most important reduction. 
The relatively lesser importance of national operations was more remarkable 
in France, Italy and the United Kingdom than in Germany where one half of the 
20 operations registered took place within German borders. None the less, we 
IV.A.§2. 15 379 
have to point out that the five new Lander were once more the primary target 
of those operations. 
The average size of takeovers and mergers in the chemicals sector as measured 
by the combined turnover of the companies involved was smaller than in the 
food and drink sector. Only 12 operations were above the ECU 10 000 million 
threshold. 
<T6> c) Acquisitions of minority holdings (see Table 6) 
The decrease in the total figure of operations compared with last year was 
relatively smaller for acquisitions of minority holdings than for joint 
ventures and majority acquisitions. The relative weight of this particular 
type of operations has remained quite stable over the last five years 
(between 21 and 23% with the exception of 1987/88 when it reached almost 27% 
of the total of industrial operations). 
The food and drink sector more than doubled the number of minority 
acquisitions in 1991/92 compared with the previous year's figures, which 
could be considered atypical ly low if we look at the time series for this 
sector. The construction and metal sectors rated second and third 
respectively. The biggest fall took place in chemicals with only one third 
of the previous year's figure. 
The country where the acquisition of minority holdings was most frequent was 
France with a total of 44 operations, which accounts for 35% of the European 
total. Approximately half of these operations were of a domestic nature, but 
a significant 32% of the total were of non-Community origin, the 
United States being the main country in this type of operation. France was 
also the main protagonist acquiring minority holdings in 17 firms located in 
other Member States, which represented 50% of the total. Germany, Italy, the 
United Kingdom and Spain were also important as target countries for 
acquisitions of minority holdings in 1991/92. 
In all these countries minority acquisition activity was widespread over many 
sectors. In France, food and drink and construction were the most active 
sectors. In the other four countries there was a wide dispersion of 
acquisition activity by sector. The same applies to the distribution by 
sector of the deals in which the acquiring company was of non-EC origin. 
TABLE 6: National, Community and international acquisitions of minority holdings in the Community in industry by sector 
Sector (1) 
1. Food 
2. Chera. 
3. Elec. 
4. Mech. 
5. Comput. 
6. Metal. 
7. Transp. 
8. Paper 
9. Extrac. 
10. Textile 
11. Constr. 
12. Other 
Total National 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
17 15 13 8 12 
9 10 7 5 4 
8 18 7 11 5 
10 7 4 - 2 
1 - 1 
11 6 9 10 7 
6 4 3 2 3 
19 15 Ô 7 9 
5 11 8 1 2 
5 5 4 12 
15 6 8 13 13 
7 5 12 1 
115 102 73 60 60 Community 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
9 4 9 2 6 
6 5 5 4 4 
4 5 8 15 3 
1 3 12 
1 
2 7 3 6 4 
113 8 2 
7 9 5 10 1 
2 2 4 14 
1-235 
5 2 20 5 3 
-----
37 37 62 55 34 International 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
9 2 4 - 4 
2 2 11 5 6 
3 2 9 4 2 
3-343 
12-2 
2 3 1 4 4 
3 6 4 3 
3 15 4-
A$|5 11-2 
1 1 4 
1 2 2 1 
11-11 
29 20 45 31 27 Total 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
31 21 26 10 22 
17 18 23 14 14 
15 25 24 30 10 
13 8 10 5 7 
12 3-2 
15 16 13 20 15 
9 8 12 14 8 
29 25 18 21 10 
12 14 13 2 8 
6 6 7 8 7 
21 10 30 19 16 
8 6 13 2 
181 159 180 146 121 
Source : Data gathered by the Commission from the specialist press. 
(1) Key : see Table 3, note 1. 
IV.A.§2. 17 
381 
<T6> d) Joint ventures (see Table 7) 
The number of industrial joint ventures has declined more slowly than 
takeovers and mergers in the last year. The sectoral distribution of new 
Joint ventures created during 1991/92 did not show many substantial 
variations compared with the previous year's distribution. The most 
remarkable change took place in the electrical and electronic engineering 
sector where there was a substantial decline after the high figures attained 
in 1988/89 and 1990/91. This decline was to some extent offset by the sharp 
increase in the number of Joint ventures registered in the metal sector after 
an abnormally low level reached in 1990/91. 
As already indicated in previous reports, joint ventures have a predominantly 
cross-border character. Community and international operations still 
accounted for 72% of the total in 1991/92. France is the country in which 
most operations of this type took place last year. Out of the 32 operations 
concluded in that country only 12 were national. Germany was the country 
with the second-highest number of joint ventures (29) followed by the 
United Kingdom and Italy each with 16. 
The United States was the non-Member State having the most active role in the 
field of joint ventures with European firms. It should also be noted that 
Japan rated second in this group with 13 agreements. This seems to be the 
type of deal clearly preferred by Japanese firms to increase their presence 
in Europe by external growth. In both cases, the chemicals sector was 
preferred by United States and Japanese firms to enter into joint venture 
agreements with European firms. The electronics sector rated second in the 
group of international Joint ventures. It is also worthwhile mentioning that 
the small reduction in the number of international deals is not due to a 
slowdown in joint venture activity having its origin in Japan and the 
United States. On the contrary, the number of deals originating in those two 
countries increased slightly compared with the previous year's figures. 
In Community Joint ventures, the chemicals sector was still the field of 
preference for this type of operations between Community firms. 
TABLE 7: Joint ventures In the Community in Industry by sector < 
> 
ro 
oo Sector (1) Nationa Community Internationa Tota 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
1. Food 10 11 10 10 
2. Chem 
3. Elec, 12 11 12 12 11 16 13 24 28 37 28 21 
12 14 13 12 2F 
T 29 23 27 14 
4. Mech. 10 12 
5. Comput 
6. Metal. ~F 
TF 
7. Transp. 10 16 10 14 
8. Paper 12 22 TT 12 
9. Extrac. 14 10 
10. Textile "5T 
11. Constr. 
12. Other 11 
Total 45 56 41 33 29 31 36 55 49 33 35 37 60 45 41 111 129 156 127 103 
Source : Data gathered by the Commission from the specialist press 
(1) Key : see Table 3, note 1. 
Ch4 
OO 
IV.A.§2. 19 383 
<T6> e) Main motives for mergers and Joint ventures 
(see Graph 1 and Table 8) 
The information presented in Table 8 and Graph 1 has been gathered from the 
publicized motives given by the companies or by the specialist press. In 
some cases, the real motive of the operation may not be revealed by the 
companies. Moreover, the aggregate data presented here could in fact include 
under the same category quite different motives. Finally, several reasons 
are given in many operations and it is not possible for us to assess their 
relative importance. For all these reasons, it is necessary to interpret 
these data with some caution. 
<T7> Mergers 
The main structure for the motives leading to mergers, takeovers and 
acquisitions of majority holdings which is reflected in Table 8 is basically 
similar to last year's. The strengthening of market positions, expansion of 
commercial activities and synergy are the three main motives behind these 
types of operations. This seems to confirm the existence of some regularity 
underlying the declining trend started after 1989/90. However, there has 
been a relatively important increase in the frequency of motives such as 
rationalization. Although this is still taking place on a small scale, if 
this tendency is confirmed in the future, rationalization and restructuring 
could take on a more important role among the motives for takeovers, mergers 
and acquisitions of majority holdings. 
<T7> Joint ventures 
The ambiguity of the concept of Joint venture makes even more difficult the 
task of trying to determine the motives behind them. As in the case of 
mergers and takeovers, Table 8 and Graph 1 show a profile quite similar to 
last year's. However, there are some significant differences between the 
motives for these two groups of operations. 
Cooperation between firms, synergy and the sourcing of new technology are 
very important reasons for the creation of joint ventures, while their 
importance for the creation of more permanent links such as those resulting 
from takeovers or mergers is smaller. 
Graph 1 o < 
Acquisitions of Majority Holdings Joint Ventures 
Other 
Expansion 
Rationalisation 
Synergy 
Integration Strengthen m.p. Non specified 
Diversification 
Cooperation 
Non specified Other 
k Synergy 
Rationalisation 
Expansion 
R&D 
Strengthen m.p. < un 
> • 
OJ o 
Source: Data gathered by the Commission OJ 
CO 
IV.A.§2. 21 
385 
Table 8: Main motives for mergers and joint ventures in industry 
in 1991/92 
Motive Acquisitions 
of majority 
holdings Including 
mergers 
(in % of replies) Joint ventures 
Strengthening of 
of market position 
Expansion 
Diversification 
Integration 
Research and 
Development 
Cooperation 
Rationalization 
Synergy 
Other 
Not specified 107 
78 
5 
7 
0 
3 
9 
30 
2 
123 24 
11 
1 
0 
4 
21 
3 
14 
3 
31 
Total*) 364 112 
*) In some cases, more than one motive was given 
IV.A.I3. 22 386 
<T4> §3. Mergers, acquisitions and Joint ventures in services 
Contrary to what happened in the industrial sector, there was an upsurge in 
takeover and acquisition activities in the service sector compared with the 
previous year's figures. This is in sharp contrast with the change that took 
place between 1989/90 and 1990/91 when there was an important fall in the 
number of financial operations registered in the service sector. 
As Table 1 shows, the banking sector was responsible for most of this 
increase, which did not take place in the distribution sector. It is 
worthwhile mentioning that the insurance sector maintained the level of 
activity of 1990/91. Although the banking sector is still below the all time 
peak of 239 operations registered in 1989/90, the 182 financial operations 
registered in 1991/92 are comparable to the already high figure attained in 
1987/88 (189) and double the 1986/87 figure. 
It is clear from these figures that the industrial and distribution sectors 
showed a similar trend in the period under consideration, while the sectors 
providing financial services, i.e. banking and insurance, followed a separate 
trend of their own. 
Looking back at Table 1 we can see that national and, in particular 
Community-wide operations increased in importance considerably compared with 
the previous year. The importance of international operations has been 
steadily decreasing since 1989/90, but this decline has been more than offset 
by national and Community operations. Despite the high proportional increase 
in Community operations, national deals account for most of the operations in 
the service sector. 
<T6> a) Takeovers (including acquisitions of majority holdings and mergers) 
in services (see Table 9) 
With the exception of the distribution sector, takeover activity increased 
considerably in the service sector in 1991/92. The number of financial 
operations involving a firm of non-EC origin declined considerably, but there 
were very significant increases in mergers and takeovers at Community level. 
It is worthwhile mentioning the variations that took place in insurance at 
Community level and in banking at national level. 
V.A.§3. 23 
387 
In the banking sector, there was very intense domestic activity in France and 
Italy in 1991/92. Italy alone accounted for more than one third of the total 
number of national deals that took place in the banking sector in that period 
of time. France and Italy together accounted for 60% of that total. 
However, there was a basic difference with regard to the type of operation 
most frequently used in each of these two countries. In Italy mergers were 
the preferred type of operation while in France two out of three of the deals 
were acquisitions of majority holdings. 
Another country with significant activity in this area in 1991/92 was Spain 
with 9 national transactions (mergers and takeovers). Spain was also the 
country with the highest number of Community-wide transactions in that year. 
However, these types of operations were evenly distributed across all the 
Member States. 
In the insurance sector, there was a fall in the number of national 
operations. In this sector, Community-wide operations are more than twice as 
numerous as national deals.. There is quite a lot of geographical dispersion 
of Community deals, although Spain had quite a high level of activity in this 
area in 1991/92. 
As was pointed out above, the distribution sector experienced a generalized 
drop in takeover activity in 1990/91, and this continued in 1991/92. 
Although the number of deals remained practically unchanged last year, 
cross-border operations were reduced to a minimum (one out of seven). 
TABLE 9: National, COMunIty and International acquisitions of Major ity holdings (including lergers) In the ComunIty in services 
Nationa Community Internat ional Total 
Sector 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
1. Distribution 4(5 53 3l 28" < 
> 
to» 
ro 
31 17 57 58 52 38 36 
2. Banking 3351 65 51 73 12 16 23 13 17 13 16 25 11 78 83 113 75 97 
insurance 14 15 16 15 14 18 19 12 10 12 40 33 46 28 31 
TOTAL 107 119 112 94 113 34 28 58 28 40 34 27 41 19 11 175 174 211 141 164 
Source ; Data gathered by the Commission from the specialist press 
TABLE 10: National, Community and international acquisitions of minority holdings In the Community in services 
National Community International Total 
Sector 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
1. Distribution—ft 8" 
2. Banking 55 3T IT T0" 
IT "T 
15" T 
IT ~T 
"55" TT 
"5T T 
"2T 
IT TT T 
IT "TT TT 
"8T TT 
3. Insurance TT 
IT ^T TT W 
IT 75 2T -ft 29(*) 44 3T W 
"2T T3^ 7 77JTT 
TOTAL 59 49 68 48 52 23 38 59 36 35 40(*) 26 34 17 11 122(*)113 161 101 98 
(*) Figures In the Eighteenth Competition Report amended. 
Source : Data gathered by the Commission from the specialist press, 
<J4 
CO 
OO 
IV.A.§3. 25 7 0Q 
<T6> b) Acquisitions of minority holdings in services (see Table 10) 
Acquisitions of minority holdings in services remained almost constant in 
total number compared with the 1990/91 figures. However, the behaviour of 
the three service sectors was not the same. There was a sharp decline in the 
number of deals in distribution, in which no cross-border operation was 
registered. Banking showed an increase from 57 to 66 operations between 
1990/91 and 1991/92. While there was no major change in cross-border deals, 
national acquisitions of minority holdings increased considerably. In 
insurance, there was a drop in the figure of national and international 
operations, with Community-wide operations remaining practically unchanged. 
<T6> c) Joint ventures in services (see Table 11) 
The total number of joint ventures in the service sector is relatively small 
and has not shown any substantial change in the last few years. In 1991/92 
there was a slight increase compared with the previous year. Community-wide 
operations accounted for 50% of the total, and 1991/92 registered the highest 
frequency in this type of operations for the last five years. 
By sector, banking accounted for the greatest number of deals closely 
fol lowed by insurance. 
TABLE 11: Joint ventures in the Community in services < 
> 
to> 
w 
ro 0) Nationa Community Internationa Tota 
Sector 
1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 1987/ 1988/ 1989/ 1990/ 1991/ 
1988 1989 1990 1991 1992 
1. Distribution 14 13 
2. Banking 16 11 10 7 6 12 7 10 30 24 30 16 19 
3. Insurance 10 8 16 16 11 14 16 
TOTAL 30 26 20 17 16 13 15 20 16 21 10 13 14 53 54 54 39 42 
Source : Data gathered by the Commission from the specialist press 
NO 
o 
IV.A.§4. 27 391 
<T4> §4. Conclusions 
617. On the basis of the information provided by the DOME database and 
presented above, the following main conclusions can be drawn: 
i) The downward trend which began after 1989/91 continued this year with a 
significant fall in the total number of operations. This seems to 
complete a cycle which started in 1986/87 and which was very probably 
influenced by the Internal Market project. 
ii) The upsurge in financial activity as measured by the total number of 
operations seems to have had an important impact on the structural 
profile of mergers, takeovers, joint ventures and other forms of 
external growth. At the present stage in the cycle, national operations 
have decreased their relative weight in the total while Community-wide 
operations have become more important. 
iii) In 1991/92, financial operations having as targets companies located in 
the five new German Lander increased considerably, thus confirming a 
trend initiated last year. Most of these operations were domestic, with 
Western German companies acquiring facilities in the East. However, 
there were also cases in which the company making the investment came 
from another Member State, France in particular, or from a non-Community 
country. There were also cases in which non-EC companies carried out 
the investment through a subsidiary based in Western Germany or another 
Member State. 
iv) The takeover and merger behaviour of companies providing financial 
services was quite distinct from industry and distribution. 1991/92 saw 
an important upsurge in takeover and acquisition activities. This was in 
contrast with the downturn suffered the previous year. This activity was 
heavily concentrated in France, Italy and Spain. From this evidence it 
seems apparent that the reasons motivating takeover activity in these 
sectors differ from those underlying the trend in the manufacturing 
sector. 
,V.A.§4.23 ^2 
v) It is very difficult to assess the impact of these trends on 
competition. One might be tempted to think that the smaller the number, 
the smaller the impact on competition. However, we must bear in mind 
that, as these figures show, the process of external growth which has 
taken place in Europe during the last few years has been heavily 
influenced by the 1992 programme. As a result, an important number of 
operations may have been motivated by efficiency considerations. In the 
last two years, when the economic boom of the late 1980's gave way to 
the present recession, rationalization may have been the explanation for 
a good number of operations. Finally, the significant acquisition 
activity which is taking place in Eastern Germany is just part of a 
process of economic normalization of the economic situation in the new 
Lander, and it will be possible to assess the impact of these deals on 
competition only when the process is completed. 
Annex IV.B.1 
J/ J 
<T3> B. The programme of studies and its results 
<T4> §1. The 1992 programme of studies 
618. Every year, the Directorate-General for Competition commissions a 
limited number of studies from external and independent consultants. The 
main purpose of these studies is to provide technical support for the 
implementation of competition policy. In most cases, the studies are 
necessary to provide technical and economic information required to take 
decisions concerning antitrust or state aid cases. This is for instance the 
case with the studies carried out to assess the viability of the 
restructuring of the Spanish steel companies CSI and Sidenor commented on 
below. None the less, in other cases, the studies are needed to facilitate 
the internal management and decision-taking process of the 
Directorate-General. Two studies of this nature were completed in 1992: the 
Guide to procedures in State aid cases and the study on the Steel Databases. 
619. Two of the studies completed in 1992 will be published. The rest of the 
studies carried out last year are not intended for publication, either 
because of the confidentiality of the information they contain or because of 
their instrumental nature. 
Annex IV.B.2 _ ^ 394 
<T4> §2. Studies published or intended for publication 
<T5> - New entrant airlines - a case study 
620. This study relied on interviews with the managers of a number of 
existing and failed new entrants in the airline industry, backed up by 
interviews with industry organizations and regulatory authorities. 
621. The purpose of the study was to identify the various obstacles 
encountered by small and medium-sized airlines opening up new services. 
* In practical terms regulatory and financial fitness requirements remain 
a difficult obstacle to new entry. The timescale and costs associated 
with the licensing process can be significant. Gaining and maintaining 
investor confidence is viewed as a key factor in the early stages of 
development of a new entrant airline and it is important that it is seen 
an integral and critical part of the process. 
* New entry in air transport will remain virtually impossible for those 
entrants that want to establish scheduled services on dense routes 
between major European capital cities. Some form of intervention will be 
necessary for the provision of slots and suitable ground handling 
facilities if new entry at major hub airports is to take place. 
* Although there are notable exceptions many new entrants do not seek 
competitive confrontation with national carriers. They are seeking to 
develop niche markets either independently or in conjunction with a 
major carrier. Many are also trying to identify partners and would not 
be averse to this being a national or foreign airline. This type of 
consolidation appears to be a process gathering momentum. 
* The dominance of the national carriers, particularly where they remain 
state owned, and their influence on the market-place should not be 
underestimated in any way. Their abilitity to swamp with capacity and 
sandwich with frequency the new entrant is considerable, as is their 
ability to develop commercial arrangements with the travel trade that 
disadvantage the new entrant. 
Annex IV.B.3 
T O. r-
* Most airlines feel that they are vulnerable to hostile takeovers, 
particularly from national carriers. They believe that in the absence of 
a clear EC airline merger policy this adds to the general feeling of 
uncertainty. 
* As the market differentiation between scheduled and charter is reduced, 
the charter airlines are seeking to develop scheduled services in 
conjunction with their leisure traffic. Changes in consumer behaviour 
and new aircraft types with longhaul capability are providing a new 
market opportunity that the charter airlines believe the EC should 
support in order to promote real competition. 
<T5> - The geographical dimension of market dominance 
in the European single market 
622. One of the main problems in the assessment of market competition in one 
antitrust case is the proper delimitation and definition of the relevant 
market, both from the point of view of the product and its geographical 
dimension. The importance of geographical market definition is enhanced by 
the process of economic integration of European markets which was started by 
the Single European Act in 1987 and which has reached its maximum momentum 
after 1 January of 1993. The objectives of this study are to examine the 
geographical dimension of market dominance as interpreted in European 
Community competition policy, and to design a framework for analysis of the 
geographical dimension in applications of this policy. Therefore, this study 
aims at the definition of criteria to be used in practice for the analysis of 
cases arising from the application of Articles 85 and 86 of the Treaty as 
well as the Merger Control Regulation. 
623. The study suggests a different approach for the analysis of: 
a) cases of abuse of dominance (Article 86) and Article 85 cases 
relating to concentration or collective restriction of competition 
in the past ; 
b) cases of re-notified agreements (Article 85); 
c) the application of the Merger Control Regulation. 
Annex IV.B.4 
624. The study defines and discusses the relevance for the geographical 
definition of markets of a series of factors which must be analysed in each 
case. Based on this ana.,..'*», t^e study proposes a checklist of factors to 
be considered at each stage. Tnese include (in correlative order): 
1. the definition of the market in terms of current demand 
subst itut ion; 
2. price tests as direct measurement of market interdependence; 
3. the consideration of potential competition-, 
4. the effects of single-market legislation on obstacles to trade and 
barriers to entry in geographically segmented markets-, 
5. barriers not directly affected by single-market legislation. 
Annex IV.B.5 
^"^ 397 
<T4> §3. Summaries of studies not intended for publication 
<T5> - Guide to procedures in State aid cases 
625. The Guide sets out the procedural law governing the control of State aid 
by the EC Commission in a simple, easily digestible form for the use of 
governments, businesses and legal practitioners. The sources of this law, 
judgments of the European Court of Justice and notices issued by the EC 
Commission, are fully referenced. This study will be the basis of a new 
section on procedures in the new edition of Competition Law of the European 
Communities. Volume II the State aid rules which is to be published in 1993. 
The chapters of the Guide deal with : 
1. Notification : scope of the notification requirement, the prohibition 
against granting aid without authorization by the Commission, the time 
limit for the Commission to make its determination on a case, and the 
requirements of decisions to authorize the aid without opening the 
procedure under Article 93(2) of the EEC Treaty; 
2. Formal investigations under Article 93(2) procedure, "due process" 
rights of Member States and interested parties, and final decisions 
closing Article 93(2) proceedings; 
3. Unnotified aid definition of "unnotified aid", powers of the 
Commission, including injunctions, recovery orders and the charging of 
interest ; 
4. "Existing aid" : definition of "existing aid", proposal of "appropriate 
measures", subsequent use of the Article 93(2) procedure; 
5. Finally, the Guide contains a chapter on complaints, the practice of the 
Commission in publishing its decisions, judicial review of Commission 
decisions by the Court of Justice (types of decisions appealable, 
standing, time limits), and the reporting obligations of Member States 
following the Commission's approval of an aid scheme. 
The Commission believes that the Guide will help clarify the law and practice 
in what is becoming an increasingly important and litigious area of Community 
law. 
Annex IV.B.6 
^™• 398 
<T5> - Study on the Steel Data Base (SDB) 
626. The Commission exan,. - mergers in the steel industry in terms both of 
production and of distribution. 
627. The Commission's information on ECSC undertakings derives from the ECSC 
questionnaires received by Eurostat and the Directorate-General for Credit 
and Investments with figures on production, supply, capacity and investment; 
in addition, the Directorate-General for Competition has information on the 
holdings of financial groups in steel companies. 
628. In the context of the SDB project, the aim of which is to assemble 
complete and coherent information in a Steel Data Base, it was necessary to 
analyse the functions of the base in order to meet the specific needs of 
application of the competition rules laid down in the ECSC Treaty. 
629. The information contained in the SDB of relevance to the application of 
the competition rules is as follows: 
the SDB's information unit is the steelworks. The management of the 
direct or indirect links between groups, companies and steelworks with 
their holdings and the definition of control parameters are two functions 
that can be included into the base; 
the figures in the ECSC questionnaires, recorded by individual 
steelworks, are available at company, group, country or European level 
through permanent or dynamic aggregation of the base data; 
the real or hypothetical market share of the various groups involved in a 
merger can be quantified through new search table options. 
Following analysis, the SDB has been modified to include new functions 
allowing the structure of steel groups to be displayed, the tonnage produced 
by a group to be calculated (for example, in order to establish whether the 
merger is exempt from the prior authorization requirement) and the percentage 
which such tonnage represents in respect of a country, a group of countries 
or the Community to be determined. 
(2 
Annex IV.B.7 
<T5> - Study of the shipbuilding market in 1992 
630. The objective of this study is to compare the cost structures of the 
most competitive Community yards and world market prices (with particular 
regard to the market segments in which the Community yards remain relatively 
most competitive). The study findings are used to inform the Commission of 
the prevailing cost/price gap for the purposes of setting the maximum ceiling 
of aid to shipbuilding under the Seventh Council Directive, which must be 
reviewed at least every 12 months. 
631. As in previous years, the study, which was conducted with full 
collaboration from the EC industry, concentrates on ship types which are most 
commonly constructed within the Community and for which EC yards are in most 
direct competition with international producers. II ship types were covered 
in this year's study and 22 EC shipyards participated in the cost quotations. 
World market prices were established on the basis of data collected from 
var ious sources. 
632. The conclusion of the study is that there has been a general widening of 
the cost/price difference compared with last year. However, according to the 
consultant, the effects of differences in world inflation rates and currency 
fluctuations have been significant factors in the apparent decline in 
competitiveness of EC shipbuilders. 
<T5> - Monitoring study of the restructuring plan 
for the shipbuilding industry in Spain 
633. As provided by Article 9 of the Seventh Council Directive on aid to 
shipbuilding, an independent consultant has been jointly commissioned by the 
Commission and the Spanish Government to submit six-monthly monitoring 
reports on implementation of the restructuring plan for the Spanish 
shipbuilding industry during the period 1991-92. 
634. In October a report was submitted covering the first six months of 1992 
which raises doubts whether the industry will attain the planned level of 
competitiveness. Article 9 provides that in such circumstances the Spanish 
Annex IV.B.8 
400 
Government will take measures to reinforce the restructuring of the sector 
which are accepted by the Commission as capable of rectifying the situation. 
The Spanish Government is expected to submit its proposals shortly. 
<T5> Studies of Restructuring Plan 
for Spanish Integrated Steel Company CS1 and Sidenor 
635. Three studies related to restructuring plans for the Spanish steel 
industry, as follows: 
- a study conducted by an independent consultant jointly appointed by the 
Spanish Government and the Commission to assess the viability of the 
proposed restructuring plan for the Spanish integrated steel company 
CSI, incorporating Altos Hornos de Vizcaya and Ensidesa; 
a study conducted by an independent consultant Jointly appointed by the 
Spanish Government and the Commission to assess the viability of the 
proposal restructuring plan for the Spanish special steels company 
Sidenor, incorporating Acenor and Foarsa; and 
- a study carried out on the Commission's behalf by an independent 
consultant to examine possible alternatives to the CSI plan. 
The purpose of the studies was to provide information to the Commission to 
help it decide whether to recommend to the Council that it should give its 
assent for the aids involved in the restructuring plans to be authorized 
under Article 95 of the ECSC Treaty. 
On the basis of the consultants' findings, the Commission concluded that the 
CSI plan was viable aut that the relation between the aid intensity and the 
extent of the restructuring needed to be improved. The Commission also 
concluded that the Sidenor plan was viable and decided to propose that the 
aids should be authorised subject to certain conditions. 
The Commission's views were presented to the Industry Council at its meeting 
on 24 November. The Council was not prepared to agree to the Spanish 
proposals and further discussion was deferred pending bilateral contacts. 
IV.C.1 
<T3> C. Statistical note on concentration operations 
notified under Council Regulation (EEC) No 4064/89 
<T4> §1. Introduct ion 
636. Council Regulation (EEC) No 4064/89 on the control of concentrations 
entered into force in September 1990. The Twenty-first Competition Report 
included a short statistical notice of the cases analysed during 1991. This 
section has the objective of presenting a more detailed statistical analysis 
of all the cases dealt with in the application of the Regulation to 
September 1992. 
637. Under the Regulation only large concentrations have to be notified to 
the Commission. Only those cases in which the combined aggregate worldwide 
turnover of all the companies involved is above ECU 5 000 million, the 
aggregate Community-wide turnover of each one of them is more than 
ECU 250 mi I I ion and no more than two thirds of this aggregate Community 
turnover come from just one Member State, have to be notified. These strict 
criteria have limited the number of cases handled by the Commission to 
approximately fifty per year. 
638. The tables presented below give a statistical description of the cases 
dealt with under the Regulation and the decision taken until now. The cases 
have been classified by the type of concentration, their geographic 
dimension, the economic sectors involved and the nationality of the firms 
concerned. 
639. Cases officially notified to the Commission but. not falling within the 
scope of the Regulation have been excluded from the sample. Cancelled or 
withdrawn notifications have also been excluded. 
640. Cases have been grouped in two periods of time (1990-91 and 1991-92). 
Each group covers not if icat ions (or decisions) made (or taken) from September 
to September. This grouping, which is determined by the date of entry into 
force of the Regulation, does not coincide exactly with the periods used in 
part A of this annex. 
IV.C.2 _ 
<T4> §2. Type of operation and geographic dimension 
of the concentrations (Table 1) 
641. Table 1 shows the breakdown of the operations that took place in 1990-91 
and 1991-92 by type of operation and by the geographic dimension of the deal. 
With respect to this latter criterion, four groups have been defined: 
national deals, which are those involving two or more companies from the same 
country (not necessarily a Member State), deals of Community dimension are 
those involving companies from at least two different Member States; the 
third category includes deals between at least one company from one 
Member State and at least one company from a non-EC country; finally, 
extra-Community deals are those involving companies from at least two 
different non-EC countries and without any participation of companies from 
any Member State. 
642. In Table 1, cases have been grouped under six different types of 
concentrations. The heading "Joint ventures" includes joint ventures of a 
concentrâtive nature, i.e. those which do not give rise to coordination of 
the competitive behaviour of the parties involved. The heading "Mergers" 
includes Just "pure" merger cases in which at least two independent companies 
merge into a new one leaving no residual entities from the merging companies. 
"Majority acquisitions" includes cases in which one or more undertakings 
purchase securities or assets by contract or by any other means, thereby 
acquiring direct or indirect control of the whole or parts of one or more 
undertakings. However, those cases where the acquisition takes place under 
the form of a public offer for the securities of the acquired company have 
been excluded from the "Majority acquisitions" heading. Those public-bid 
cases have been further divided into those in which the bid has been 
contested by the acquired firm and those cases in which the bid was commonly 
agreed. The group "Others" includes a cross-shareholding deal in 1990/91 and 
one demerger case in 1991/92. 
643. In the first year of enforcement of the Regulation, Community-wide 
agreements were the most frequent ones (38% of total), but closely followed 
by mixed agreements between EC and non-EC firms (34%). This order was 
inverted last year however (33% and 35% respectively). Notified deals 
between firms of the same nationality and concentrations between firms from 
different non-EC countries were less important and accounted for a constant 
but not insignificant proportion of the total number of operations notified 
in both years (17% and 14% respectively in 1991/92). 
IV.C.3 
403 
644. Acquisitions of majority holdings and concentrâtive joint ventures were 
by far the most frequent types of operations in 1990/91 and 1991/92. In 
fact, the number of concentrâtive Joint ventures notified during 1991/92 was 
particularly high. Meanwhile, the number of notified acquisitions of 
majority holdings dropped during the second year of the implementation of the 
Regulation. Pure merger cases were reduced to a minimum level. It is 
remarkable though that two out of the three cases of this type examined in 
the two years concerned foreign firms only. 
IV.C.4 
mmiim»» 404 
<T4> §3. Economic sectors of the operations (Table 2) 
645. Notified cases are classified by the NACE code of the main economic 
activity of the concentration resulting from the operation. This sectoral 
breakdown is further analysed by the geographic dimension of the 
concentration. 
646. As Table 2 shows, although most of the notified cases of concentrations 
took place in the manufacturing sectors (61%), there were significant numbers 
of cases notified in areas such as transportation, commerce and financial 
services (with 11% each).<1> 
647. In 1990/91, the broad categories 2 and 3 of the NACE classification 
accounted for about 50% of the cases. The two-digit level of the NACE, 
sector 34 - Manufacturing of motor vehicles - had the highest frequency with 
four cases in 1990/91 (8%). Three out of these four cases involved firms 
from inside and outside the EC. The nationalities of the companies involved 
in those cases were France, Japan, Germany and Sweden. 
648. There were several two-digit subsectors with 3 operations involved in 
1990/91. Those could be found in refining, machinery and equipment, office 
machinery and computers, electrical machinery and computer-related 
act ivit ies. 
649. In 1991/92, manufacturing activities still maintained their leading 
position (57%), but followed very closely by financial services (21%). There 
were six operations in the chemical sector and five in motor vehicles. Four 
operations were registered in the manufacture of food and beverages. 
However, four operations were also, registered in insurance and pension funds 
and three in financial intermediation. 
(1) All percentages for 1990/91 
IV.C.5 
m^m 405 
T4> §4. Operations by nationality of the companies involved 
650. Table 3 includes information regarding the nationality of the firms 
involved in the operations. Given that two or more companies of the same or 
different national origin can be involved in the same deal, this information 
can be presented in different ways. In Table 3 we present the frequencies of 
the different "couples" or combinations of nationalities. The upper 
right-hand side of the matrix shows the data corresponding to 1990/91 and the 
lower left-hand side gives the information for 1991/92. The main diagonal of 
the matrix shows the frequencies of cases in which two firms of the same 
nationality took part in a certain deal (either alone or with other 
companies), separating with a "\" the 1990/91 figure (right-hand side) from 
the (left-hand side) 1991/92 figure. 
651. The last column in the table gives the frequency with which a firm of a 
certain nationality was involved in one deal in 1990/91. For instance if two 
firms of the same nationality merged in that year, and there were no more 
operations involving firms of the same nationality, the frequency for that 
country would be two. The last row in the matrix gives the same total for 
the 1991/92 per iod. 
652. This table shows that French companies were by far the most active 
during the 1990/91 period with 32 operations with at least one French company 
involved. These concentrations were not concentrated geographically. They 
took place in four EC countries other than France as well as in four other 
non-Member States. Behind France, three countries show approximately the 
same frequency in the number of deals involving firms from that national 
origin and it is interesting to note that there is one non-EC country among 
them: Germany (18), USA (17) and the United Kingdom (16)i *? 
653. This seems to indicate that the Regulation has had an important impact 
not just on European firms but also on large companies operating worldwide 
and with a non-European origin. 
654. This high level of internationalization of the activities failing under 
the scope of the Regulation was continued in 1991/92, although there was less 
concentration by nationality in that year. For instance, in this second 
year, there were more cases involving Swedish firms than cases affecting 
Italian firms. It is also interesting to point out the high diversity of the 
countries included in the group of those affected by the enforcement of the 
régulât ion. 
IV.C.6 
406 
655. It is also interesting to note that in 1991/92, the frequency of cases 
involving French companies is similar to those of the other large 
Member States. Finally, in 1991/92, there were no cases involving Japanese 
firms. This fact, together with the very low frequency of 1990/91 (5 cases) 
seems to reflect a strategy of Japanese firms quite different from that shown 
by USA or Swedish firms for instance. 
656. In terms of "pairs" or binary combinations, it is important to mention 
the high frequency of cases in which a French and a Germany company were 
involved (six in 1990/91 and five in 1991/92). In 1991/92 it is also 
worthwhile mentioning the number of times in which two firms of the same 
nationality took part in the same deal, particularly for the cases of Germany 
and the UK. 
IV.C.7 
407 
T4> §5. Statistical analysis of the decisions 
657. Most of the notified cases falling under the scope of the Regulation did 
not reach the second stage of the procedure. In 1990/91, 43 out of the 47 
cases notified falling under the scope of the Regulation were declared 
compatible with the common market after the first stage of the investigation. 
In 1991/92 that figure rose to 54 out of 57 cases. 
658. The four cases reaching the second stage of the investigation in 1990/91 
were later on cleared as it was found that they did not significantly impede 
effective competition in the common market. However, in three of these cases 
conditions were imposed by the Commission on the undertakings to ensure that 
the agreement was not going to imply restrictions of competition in the 
common market or in a significant part of it. The three cases cleared 
subject to conditions did not involve any company from any Member State while 
in the case cleared without conditions all the companies were from non-EC 
countries (Sweden and Switzerland). The sectors concerned were machinery, 
electrical machinery and radio, television and communications equipment. 
659. In 1991/92 a smaller percentage of notified cases reached the second 
stage of the procedure, but only in one case did the Commission declare the 
concentration incompatible with the common market. This was the proposed 
acquisition of the Canadian aircraft manufacturer De Havilland by the French 
Aerospatiale and the Italian Alenia. 
That year there were two clearances of concentrations subject to conditions. 
Contrary to the previous year, these operations were acquisitions, not joint 
ventures, with one agreed and one contested bid. 
The legal analysis of all these decisions can be found in the Twenty-first 
Competition Report and in Chapter I.C. of Part II of this Report. 
IV.C.8 
408 
Table 1 Operations by type of concentration and geographic dimension 
1990/91 
Type of concentration A B C D Total 
Acquisition of majority 
holding 5 11 8 2 26 
Agreed pub Iic bid 
Contested public bid 
Merger 
Other 
Total 0 0 112 
0 0 112 
Joint venture/Control 2 7 5 1 15 
0 0 0 11 
0 0 10 1 
7 18 16 6 47 1991/92 
A B C D Total 
6 6 9 1 22 
0 2 10 3 
0 0 10 1 
3 10 9 6 28 
10 0 12 
0 10 0 1 
10 19 20 8 57 
A* nat ional 
B- Community 
C» Community plus non-EC 
D- extra-Community 
Source: MTF Database 
IV.C.9 
409 
Table 2 Operations by economic sector and geographic dimension 
NACE code 
1. Food, textiles and 
clothing 1990/91 
A B C D Total 
2 12 0 5 
2. Wood, paper, refining 3 6 1 1 11 
chemicals, metal & 
machinery 
3. Elect, and transport 2 3 6 2 13 
equipment & furniture 
4. Public utilities and 0 10 0 1 
construct ion 
5. Wholesale, trade 0 4 10 5 
hotels & restaurants 
6. Transport, commun. 0 3 0 2 5 
& financial services 
7. Real estate, computer 0 0 5 0 5 
services and prof. 
services 
8. Education and public 0 0 0 0 0 
health 
9. Community, social 
and personal serv. 
Total 
A- nat ional 
B- Community 
C- Community plus non-EC 
D- extra-Community 
Source: MTF Database. 0 0 11 
7 18 16 6 47 1991/92 
A B C D Total 
0 2 114 
3 5 7 3 18 
2 2 5 2 11 
10 0 0 1 
2 5 10 8 
1 4 5 2 12 
1110 3 
0 0 0 0 0 
0 0 0 0 0 
10 19 20 8 57 
Table 3 Operations by nationality of the companies involved 
(1990/91 in upper right-hand side of the main diagonal and in 1991/92 lower left-hand side) < 
91-2\90-1 
1 B 
DK 
D 
E 
F 
Gr 
Irl 
L 
NI 
P 
UK 
Can 
Fin 
Jap 
Swe 
USA 
Swi 
Au I 
AUS 
SAf 
Hok 
Vir 
Kuw 
Total 3 1 
91/92 B DK D 
\ 
\ 
1 6\3 Gr Irl I L 
6 
2\1 3 
1 2\4 
1 
29 10 26 0 1\1 
1 
11 1 NI P 
1 
1 
\ 
1 \ 
1 UK Can Fin Jap Swe USA Swi Au I Aus SAf Hok Vir Kuw 
2 
1 
4 1 
7 2 5\2 
3 1 
4 
1 
1 
1 
1 
29 6 0\1 2 
3\0 1 
3\2 
1 1\1 
1 \ 
16 17 5 \ 
1 \ 
3 1 \ 
\ 
2 1 Total 
90/91 
1 
0 
18 
6 
32 
0 
0 
7 
0 
3 
0 
16 
2 
1 
5 
3 
17 
5 
0 
0 
0 
0 
0 
0 
Source: MTF Database. 
4^ 
O 
Table 4 Breakdown of final decisions resulting from proceedings Initiated under Article 6(1)(c) of Council Regulation 4064/89 < 
o 
No of cases 
Type of 
operation 
Geographical 
Dimension 
NACE code 
Nationality 
of fins Involved 1990/91 
Article 8(2) decisions 
Kith cond. 
3 
Acq. maJ. (2) 
JV/control (1) 
Nat. (1) 
COM. (2) 
31 (2) 
32 (1) 
F/l (2) 
0/0 Without cond. 
1 
Acq. maj. 
Extra-EC 
29 
Swe/Sw1 Article 8(3) decisions 
0 1991/92 
Article 8(2) decisions 
With cond. 
2 
Agreed bid 
Contest, bid 
CoMunlty (1) 
CoM/non-EC (1) 
15 
55 
B/F 
F/Swl Without cond. 
0 Article 8(3) decisions 
1 
Acq. maj. 
CoM/non-EC (1) 
35 
Can/F/lt 
NACE codes 
15 Manufacturing of food products and beverages 
29 Manufacturing of machinery and equipment N.E.C. 
31 Manufacturing of electrical machinery and apparatus N.E.C. 
32 Manufacturing of radio, television and communications equipment 
35 Manufacturing of other transport equipment 
55 Hotels and Restaurants 
Source: MTF Database. 
ISSN 0254-1475 
COM (93) 162 final 
DOCUMENTS 
EN 08 
Catalogue number : CB-CO-93-185-EN-C 
ISBN 92-77-54813-4 
Office for Official Publications of the European Communities 
L-2985 Luxembourg