Opinion on the XXIIIrd Report on Competition Policy (94/C 397/21)

On 25 May 1994, the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the XXIIIrd Report on Competition Policy.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 30 November 1994. The Rapporteurs were Mr Luís Morales and Mr Ataíde Ferreira.

At its 321st Plenary Session (meeting of 21 December 1994), the Economic and Social Committee adopted the following Opinion unanimously.

1. General comments

1.1. The ESC would like to begin by stressing the importance it attaches to the Report on Competition Policy compiled annually by the Commission. This document is of considerable interest; since it was first published it has helped clarify the main lines of Community policy in this area.

1.2. The 23rd Report once again contributes to the dialogue between the Commission and the other Community institutions, and to transparency and legal certainty in relations with firms, Member States and consumers, who are the main interested parties in Community competition policy.

1.3. The ESC recognizes the Commission's efforts to propagate information, displayed not only in its wide-ranging 23rd Annual Report but also in the burgeoning series of complementary documentation which should be brought more up to date and whose publication should be maintained at the same rate, if not stepped up. The ESC welcomes the initiative of setting up an information service; it would be valuable in the future to know the results of this experiment by means of a periodical report of the questions asked and answers given.

1.4. As usual, the Report contains not only an analysis of the Commission's activities but also key indications as to the way the Commission intends to act in the future. The Committee has always welcomed publication of these guidelines, since they allow the main interested parties to make timely adjustments and trigger the public debate necessary for the success of Community policy. The Committee asks the Commission to continue and improve, as far as possible, the provision of indications about future developments in competition policy, which it feels would be valuable for the economic operators involved.

1.5. The Committee views with considerable interest the way in which the Commission places competition policy in the context of the major challenges facing the Community today: achieving its growth, competitiveness and employment objectives; carrying out the new policies acknowledged in the Maastricht Treaty; integrating the European economy in the framework of increasingly liberalized world trade.

1.6. The Commission's constant awareness, throughout the Report, that competition policy is not an end in itself merits acknowledgement. The Commission views competition policy more as an instrument for achieving the Community's objectives: economic growth, industrial development, internal and international competitiveness and employment.

1.7. Finally, the ESC is satisfied at the way in which the Commission responded to its Opinion on the 22nd Report (). It is clear, both from the Commission's analysis of the ESC's Opinion and the way it has drafted the 23rd Report, that it is keen to maintain dialogue with the Committee on those aspects of the Commission's action which the Committee has gone into in more depth and possibly in a more critical fashion. The ESC sees this as a most positive attitude and hopes that it will be maintained in the future and will prove valuable.

1.8. The Community and its competition policy can only benefit from a) the indirect impact which economic and social interest groups' concerns might have on the Commission, and b) dialogue with these groups, be they represented by the ESC or by bodies representing individual groups. Firms, workers and consumers are particularly sensitive to competition policy options, in the sense that these options have an impact on competitiveness, employment, working conditions and the quality and price of goods and services.

2. Competition policy and the objectives of the European Union

2.1. The competition rules set out in the EC Treaty, initially conceived purely as instruments for achieving the Single Market, have gradually come to be seen as providing the basis for a genuine and separate competition policy. Although the impact of these rules on intra-Community trade remains the criterion for deciding at which level decisions on competition should be made, it is the Treaty's objectives which, in addition to simply achieving the Single Market, determine how these rules are applied.

2.2. Consequently, the need to link up competition policy with the Union's new objectives is highlighted by the Commission, with special focus on industrial, cultural and environmental policies, where it is hoped that Community action will be developed in more depth, not forgetting regional and social policy.

2.3. Against the background of a constantly changing Community, and faced with the Union's objectives, the ESC recognizes the role of competition rules in completing the single market. The repressive aspect of competition policy in both a) censuring agreements restricting competitive practices and abuses of dominant position and b) providing rules on aid, is still important, particularly as an instrument for countering the risks of inflexibility and inadaptability of company structures.

2.4. Both the ESC and the Commission agree that competition policy is not, however, limited to this negative perspective or to simple monitoring activities. The ESC calls on the Commission to improve further the coordination and integration between competition policy and other policies, particularly with non-protectionist industrial policy. Competition policy also has to be viewed mindful of the fact that European firms are subject to unequal competitive opportunities and disparate competitive environments, both within the Community and in relation to its main trading partners.

2.5. In the 23rd Report, the Commission particularly stresses competition policy's contribution to growth, competitiveness and employment and relates this contribution to the White Paper's objectives. It above all highlights the role which a clear-sighted aid policy can play in restructuring the European economy to help SMEs, research and development and long-term job creation.

2.6. It underlines the impact of rules on cartels and other abuses and their contribution to boosting rational economic behaviour and to improving allocation of resources. It stresses the importance of merger control and inter-firm cooperation in liberalizing financial services, telecommunications, transport and energy and in their integration in trans-European networks.

2.7. As pointed out above, the ESC welcomes the fact that the Commission has demonstrated its awareness of the links between competition policy and achievement of the growth, competitiveness and employment objectives. In this connection, the ESC's interpretation is that the Commission itself recognizes that a repressive approach to competition policy cannot on its own meet these challenges.

2.8. It is doubtful whether growth, competitiveness and employment challenges can be met simply by completing the Single Market, deregulation, exemption of forms of cooperation which are categorically banned and expanding competition to sectors hitherto sheltered from it.

2.9. It is clearly imperative to remove all obstacles to the operation of the single European market. However, it is also necessary to bear in mind that disparities still remain between the competitive environments of the various Member States, and that European firms' horizons, like those of their North American and Japanese counterparts, are limited by world competition conditions which, as stated above, are far from being exempt from distortion.

2.10. Consequently, the ESC does not deem a) competition and competitiveness, and b) competition and employment to be automatically linked. Competitiveness has less to do with competition than with the legal, administrative, political and social environment in which businesses are operating.

2.11. The Commission is the first to recognize that Community standards of living must not be jeopardized by the requirement for competitiveness and that its assertion as an economic power has to be achieved chiefly by other means. Competition policy has helped cooperation between SMEs, favouring restructuring and mergers of European firms, promoting a balance between national aid policies, confident that effective competition on the European market is a condition for European firms' success on the world market.

2.12. However, it is necessary to establish a specific, dynamic link between competition and competitiveness on both Community and national markets. Liberalization of world trade has not been definitively established, but must be gradually achieved. Competition policy therefore has to be shaped according to a) developments in removing barriers to entrance to the Community market, b) the opportunities opening up and the degree of equality of opportunity on the markets of the Community's main trading partners and c) the comparison of key competitiveness factors between the various operators on the world market.

3. Links with various Community policies

3.1. The conflict between competition policy and industrial policy is a point frequently raised, all the more so since industrial policy is still the preserve of Member States and is therefore difficult to dissociate from protectionist notions. The Maastricht Treaty, in recognizing the need for a Community industrial policy, has underlined the role of competition policy as an industrial policy instrument.

3.2. Although some aspects of competition policy - such as moves to promote mergers, inter-firm cooperation and support for SMEs and R& D, as set out in Treaty Article 130 - clearly assist those industrial policy aims intended to boost competitiveness, Community industrial policy cannot be limited to competition policy aims alone. This means that industrial policy should be able to influence competition policy options regarding cooperation between firms.

3.3. The Community's competition policy is effectively based on prohibition rules, although these are attenuated by allowing for exemptions or licences. However, upholding or promoting competition is not enough to solve competitiveness problems. The Community is part of an expanding market where the impact of other countries' rules and practices is considerable, directly or indirectly impeding European firms' action.

3.4. The socio-economic models which the Community is competing with are often out of step with circumstances and standards in the Community. It is against this background that European firms have to make their mark. Clear industrial policy options - nowadays not necessarily synonymous with protectionism - should guide the adjustment of European business structures to world-market conditions, particularly since liberalization of this market has been achieved in a climate of considerable uncertainty.

3.5. The Commission has made use of its powers so as to transform its policy of exemptions, acceptance of mergers and aid into a decisive, guidance instrument which is clearly propitious to cooperation between SMEs and to improving European firms' competitiveness. The ESC recognizes the positive results of this policy. However, as in the case of mergers, not all Community rules and regulations are adapted to reality, and this unfortunately restricts the Commission's action.

3.6. The Community views itself as an open market, but cannot determine the fairness of world-trade liberalization. This means that it has to manage its competition policy according to a) guarantees obtained, within the framework of its trade policy, from its trading partners that they will open up their markets, b) the support that these countries directly or indirectly give their firms, c) the effectiveness of the protection they provide for the operators in their jurisdiction.

3.7. For all the above reasons, the ESC feels that autonomy for the Community's industrial policy better serves the ultimate objectives of competition policy. Numerous situations where firms have cooperated or concluded agreements between themselves are in fact defensive and are the result of the prevailing economic climate; they are neither pursuing nor have to pursue objectives aimed at structural reorganization or at re-attaining international competitiveness. Each situation has to be assessed realistically, according to a) the individual specific circumstances of each industry and b) international competition conditions, which are often unconnected with any background of coordinated capacity reduction.

3.8. Competitiveness cannot be gauged outside a standardized socio-economic, legislative environment and from this viewpoint, a clear industrial policy and could provide a valuable framework of reference for competition policy. The ESC recognizes the complementary nature of competition and industrial policy; this presupposes a clear definition of the nature, objectives and instruments of industrial policy, which is a precondition for the two policies to be coherent and effective.

3.9. Along the same lines as its comments on industrial policy, the ESC in general advocates coordination between competition policy and other Community policies. In some cases, competition policy only makes a modest contribution to their success. As the Commission has pointed out, this is the case in environmental protection, where a) the need to reduce costs and b) the benefits of access to aid mechanisms both provide an incentive to reduce polluting emissions.

3.10. In other cases, competition policy is determined by the specific nature of some areas of Community action. This is true of cultural policy where the ESC recognizes, as does the Commission, the need to strike a balance between condemning discrimination and monopolization on the one hand and policies designed to maintain cultural diversity on the other.

3.11. In countering 'dumping' practices and protectionist cartels in third countries, the ESC urges the Commission not only to improve the effectiveness of anti-dumping rules as part of the new Uruguay Round agreement in application of Article VI of the GATT and to seek agreements on competition rules from the relevant authorities of its main trading partners, but also to take account of the possibility of such behaviour in third countries when evaluating the concerted response of European firms.

3.12. As regards employment policy, the ESC urges the Commission to continue to bear in mind the social aspects relating both to aid policy and to cooperation between firms, without overlooking the fundamental objectives of competition policy.

4. International dimension of competition policy

4.1. The ESC attaches considerable importance to the emphasis which the Commission places on the international dimension to competition policy and on recognition of the impact of globalization of markets on Community competition policy guidelines. This has repeatedly been a matter of concern to the Committee.

4.2. In previous Opinions the Committee has drawn attention to the need to view Community competition policy in the context of the world market. From this point of view it indeed appears vital to accept without reservation cooperation between European firms, including between those firms whose economic capacity and market position place them in a key role, so as to help them to cope with competition both on the Community market and with third countries.

4.3. The pressing need for Community firms to be competitive world-wide may not be easy to reconcile with the need to maintain effective competition in the common market. However, it is important not to establish a priori inflexible precedents in this area, flowing from the unconditional priority attached to competition on the common market. All the more so, since only when dealing with each individual case and mindful of the context in which non-Community firms operate from their own countries, particularly as regards incentives, is it possible to define suitable conditions for Community firms to be internationally competitive and for safeguarding competition on the common market.

4.4. It has been difficult to dovetail trade policy with competition policy in relations with GATT countries. Efforts in the direction of a multilateral agreement to protect competitive practices have not met with success and it is expected that several years will pass before this is achieved. The ESC deems it vital to persevere with efforts to implement a multilateral solution to the problem and, in the meantime, endorses finalization of bilateral agreements with the major trade partners such as the USA and to refine their application; it is confident that pressures exerted on the major trading partners urging strict application of their own rules for protecting competitive practices will begin to take effect. It would stress, however, that multinational or bilateral cooperation is only acceptable on the basis of absolute reciprocity and provided that adequate safeguards exist for the confidentiality of information exchanged.

4.5. As long as it is not possible to reach a consensus on a series of effective international rules and to adopt a genuine international code for upholding competition, attempts should be made to draw up a series of minimum key principles capable of guiding and harmonizing national legislation (). Harmonization of legislation is not however a sufficient objective unless the criteria for applying competition rules are consistent with one another. The ESC therefore deems it necessary to keep a close watch on the application of competition rules by its main trading partners, even those countries whose rules and regulations are similar to the Community's.

4.6. The ESC is aware that the fragile economic situation in Central Europe warrants a certain amount of flexibility. Despite the parallels between the EC Treaty's rules and the measures set out in the agreements concluded with these countries, they will probably have neither the capacity nor the conditions for strict application of competition policy based on these principles.

4.7. However, it should not be forgotten that production conditions in countries hallmarked by a high level of state interventionism and the way they organize their exports can have unacceptable consequences for some business sectors in the Community whose competitiveness under normal circumstances is indisputable.

4.8. The ESC therefore urges the Commission also to keep a close eye on commercial links with these countries under current agreements, taking appropriate and speedy action within the GATT framework, and to view any type of defensive cooperation which may develop between Community firms in this light.

5. Subsidiarity and decentralization

5.1. The Commission's competence is limited to restrictive competition practices which are likely to influence trade between Member States significantly. This is a traditional delimitation of responsibilities which the Maastricht Treaty did not alter. The ESC recognizes that successive enlargements, the increasing importance of competition policy and merger control have all presented the Commission with mammoth challenges to which it has sought to respond effectively in spite of scarce resources.

5.2. It is therefore natural that the Commission should focus its attention on those aspects of competition policy which, because they are so important and provide an example for other areas, are best able to contribute to achieving the Community's objectives. As interpretation and application of Community competition rules becomes more commonplace and firmly established, and as national legislation is harmonized, a greater role should be assigned to national authorities and national jurisdictions.

5.3. The ESC therefore agrees with the Commission when it states a) that Member States should adapt their competition rules to Treaty measures and b) that national authorities and jurisdictions can and must play a greater role in applying rules which, although they might be of relevance to the Community, are mainly domestic issues; this, moreover, corresponds to the desire which the Commission and national authorities share for decentralizing application of Community legislation.

5.4. The Committee feels that application of Community and national competition law should be seen as complementary to one another, bearing in mind that they have a common objective and that only thus is it possible to invoke the subsidiarity principle. It also believes that situations where restrictions on competition are of mainly national impact, which can be regulated by Member States' authorities and jurisdictions using national legislation, must not be confused with others where Community-level restrictions can be dealt with effectively by national authorities and jurisdictions applying Community law.

5.5. There are considerable merits in using national law, in the name of subsidiarity, to solve problems of Community interest and to decentralize application of Community law, providing an incentive for national authorities and jurisdiction to act on the basis of this law. Nevertheless, this process should not jeopardize uniform application of Community law nor should it allow situations to arise where it is left to Member State authorities to discipline conduct which clearly runs counter to the Treaty's competition rules.

5.6. This risk is all the more serious since national authorities and jurisdictions are often unable to halt some types of anti-competitive practices and in other cases deregulation and the abolition of national monopolies has a traumatic effect and triggers, at least in an initial phase, restrictive practices which are tolerated or deliberately ignored by the Member States' bodies responsible.

5.7. The Committee therefore thinks that the Commission should carefully weigh up the elements of each specific case before putting complaints on ice or referring them to Member States' authorities to be dealt with; it should also indicate that it is ready to reopen procedures where a satisfactory outcome is not forthcoming in good time.

6. Liberalization, privatization and removal of monopolies

6.1. The ESC recognizes that the limited competition in the transport, telecommunications and energy sectors in many cases continues to provide little incentive for technological innovation and triggers high service costs. In this connection boosting competition can help improve the conditions under which these services are provided. However, it must be kept in mind that competition in traditionally excluded sectors can entail risks for the normal provision of key services and reduce the resources which previously depended on the capacity for technological innovation.

6.2. It should be borne in mind that traditional state intervention in these sectors also contained positive aspects. Public finance has on many occasions compensated for insufficient private investment, contributing to technological progress or helping to ensure that the supply of socially essential services to the general public is feasible even though not commercially viable. The process of deregulation and liberalization must therefore reconcile the international competitiveness of European firms with adequate public services.

6.3. On the other hand, as the Commission has pointed out, liberalization has highlighted the importance of a) access to infrastructures and b) market access for new operators. Rules governing abuse of dominant market positions and mergers will have to prove effective in these areas without jeopardizing the adjustments needed to cope with competition on the world market.

6.4. The ESC deems it highly important to further develop the application of competition rules in five specific sectors: finance and insurance; telecommunications and postal services; energy; transport and audiovisual.

6.5. The financial sector especially is important not only because of its size but above all because of the influence it has on the competitiveness of other production sectors.

6.6. Liberalization of the communications sector has triggered cooperation agreements and strategic alliances and the establishment of joint subsidiaries, all of which have been analyzed by the Commission.

6.7. In the air transport sector liberalization will have to be extended to cover monopoly situations which the Commission has recorded in ground handling services.

6.8. For intra-Community maritime transport, competition policy should be coordinated with transport policy. 'Cabotage' should be able to complement and back up land transport insofar as existing or planned infrastructures are inadequate to the needs of developing trade between Member States.

6.9. As regards television, the Committee urges the Commission to encourage by appropriate means greater access by operators to agreements between television stations, so as to discourage agreements designed to secure exclusive rights for parties to the agreements and to hinder third party access.

7. Rules on cartels and abuse of dominant market positions

7.1. The ESC confirms that the Commission is continuing its policy to boost cooperation between SMEs and to help develop joint R& D initiatives, and that it is maintaining its line on crisis cartels, permitting inter-firm agreements aimed exclusively at coordinated reductions of excess production capacity in given sectors, promoting specialization and allowing surplus capacity to be closed down.

7.2. For the reasons set out above associated with advocating a competition policy which will boost European firms' competitiveness, the ESC asks the Commission to continue to apply this policy and to adopt an even more flexible approach to horizontal and vertical cooperation between firms, particularly in matters pertaining to licensing agreements on the production and distribution of goods and services.

7.3. In the ESC's view, the Commission should continue to support business cooperation in the form of defensive cartels or cartels set up in response to changing economic conditions, especially whenever the demands of world competition or market cycles warrant an easing-up of competition between European firms. In many circumstances, sometimes because of unfair or privileged competition positions enjoyed by non-Community firms, more or less sophisticated forms of cooperation arise which should be accepted on a temporary basis provided they do not aim to 'share out' the Community market but to seek joint solutions for short-term production surpluses.

7.4. The Commission should also closely monitor shifts in the balance of power between industry and distribution, particularly as a result of distribution centres being set up and mergers between retail sales firms. There is an increasing risk of not only industrial and agricultural SMEs losing their viability - they may encounter increasing difficulties in negotiating conditions for sales outlets for their products - but also commercial SMEs themselves, which are vital to the commercial fabric.

7.5. The ESC also feels that it is necessary to consider a) the burden on consumers caused by some types of cooperation for environmental purposes, as well as b) the effectiveness of access conditions required by the Commission for exemption from exclusive concession agreements. This problem is particularly acute in the liberalized and deregulated sectors and it is necessary to verify how effective these conditions are and how they are actually complied with. Finally the Committee is looking forward to the public debate on revision of Regulation 123/85.

8. Merger control

8.1. In line with its Opinion of 6 July 1994 (), the Committee reiterates its position on the need to review Regulation EEC No 4064/89 () on merger control. The Community is facing historic challenges hallmarked by a distinct globalization of markets and increased economic interdependency and internationalization. The Community's challenges are effectively the same as those faced by firms operating within it.

8.2. Intensified competitive pressure demands cooperation between European firms and their restructuring, and the Community must be able to respond. The consequent benefits for growth, competitiveness and competition must be speedily and uniformly gauged and the Community system for controlling and backing up mergers must be able to react appropriately to this kind of situation.

8.3. It is true that the laudable and spontaneous efforts to harmonize national competition legislation in an increasing number of Member States have helped establish within the Community a series of reference standards which are not only uniform but also consistent with Community legislation. However, it is no less true that Member States apply their laws in line with their own considerations which do not always respond to the requirements of European competition and international competitiveness, which are often sought through mergers. Thus European firms are still faced with a multiplicity of prior controls and the need to satisfy a broad diversity of assessment criteria which in the main are geared to the narrow perspective of national circumstances.

8.4. The fact that successive cases of mergers involving firms from two or more Member States should continue to be examined by each national authority, is deemed by the ESC to be incompatible with a) achieving the single market, b) attaining growth and competitiveness objectives and c) competition policy in its capacity as an instrument for achieving the Treaty's objectives. Multiple national controls, in addition to creating the risk of contradictory decisions, entail costs, generate unnecessary administrative work and upset the deadlines laid down by firms.

8.5. European firms keen for cooperation and restructuring run the ridiculous and unnecessary risk of being confronted with divergent decisions and excessively long evaluation procedures. The persistence of national controls on mergers which have a cross-frontier impact reveals Member States' resistance to the Community dealing with situations which they are often unable to regulate effectively because of insufficient resources or the limits inherent in their own powers. The ESC urges the Commission to continue to try to break down this kind of resistance which cannot legitimately be justified by invoking decentralization policy and the subsidiarity principle.

8.6. The ESC acknowledges the Commission's success in applying EEC Regulation 4064/89 and the moves to encourage its revision have not passed unnoticed. For this very reason the ESC feels that the Commission should keep up its initiatives for finalizing improvements to the scheme for controlling mergers in the Community, persuading Member States that changes to the current system would not jeopardize guarantees for maintaining effective competition at national and Community level. Resistance here only prejudices European firms' capacity to adjust to the new world dimension of markets and does not give Member States any genuinely useful, effective prerogative in protecting competition on their markets and improving national firms' competitiveness.

8.7. Consequently the ESC reiterates its previously expressed views that the Commission's competence should be extended by lowering the thresholds for determining Community relevance of mergers and by abolishing the 'two-thirds rule'. Such an extension of the Community's sphere of action meets the requirement to deal with increasingly important sectors in a uniform fashion, such as services and those sectors covered by national deregulation and privatization measures. The Committee also feels that the extent of exceptions to the Commission's exclusive competence should be maintained as it stands and the possibility of devolving responsibility for these issues to national authorities should continue to be on an exceptional basis.

8.8. In accordance with its Opinion () on the Report from the Commission to the Council on the Implementation of the Merger Regulation, the ESC believes that increased transparency and protection of third parties' rights must not jeopardize one of the more positive aspects of current Community rules: swift procedures. Finally, the ESC calls on the Commission to maintain merger control as an instrument for preserving effective competition on the Community market without losing sight of the need to improve European firms' competitiveness and globalization of competition at world level.

9. State aid

9.1. The ESC agrees with the Commission's view that the policy of controlling State aid is fundamental. The opening-up of markets has made the European economy more sensitive to the effect of subsidies, and the recession has revealed the importance of support for particularly badly affected sectors.

9.2. Against this backdrop, the resistance of declining sectors to structural adjustment must be overcome and disincentives for aid policy not associated with firms' restructuring devised.

9.3. On the other hand, the increase in intracommunity competition has led to the introduction of national support measures which should be judged carefully, given that Member States do not all have the same financial capacity.

9.4. The ESC believes it necessary to have better information not only on the scale and impact of State aid, but also on Community aid and to examine its impact. The 23rd Report does not contain any indication which would allow the extent of this aid to be quantified, even roughly. Economic interest groups require information on this and the ESC eagerly awaits the publication of a report with an up-to-date list of state and Community aid.

9.5. On the other hand, the ESC urges the Commission to improve its performance in the difficult task of controlling aid granted by Member States' regions and local authorities, which enjoy a considerable amount of autonomy in such matters. The impact of this aid is on the increase and notwithstanding the need to ensure that such instruments of regional development are not jeopardized, they should still be monitored closely.

9.6. With a view to inserting the European economy in the broader context of the world market, the ESC stresses the need to be alert to the aid which third countries grant, particularly the Community's main trading partners. This type of incentive, which is more or less discreet, is tending to increase and the Community will lose its legitimacy for countering its own Member States' aid policies if it neglects to keep a watch over the same type of measures adopted by third countries.

9.7. The ESC therefore supports the Commission in its moves to pinpoint incentives granted by these countries which affect the competition conditions in key markets for Community firms and calls for a list to be compiled of the current main aids of this type.

10. Improvement of procedures and defence rights

10.1. The ESC endorses the idea that an effective competition policy can be achieved by simplifying and speeding up procedures and that cooperation between firms is particularly likely to benefit from moves to cut back bureaucracy.

10.2. It therefore supports the new procedures designed to speed up the handling of structural cooperative joint ventures which present a certain similarity with mergers and which consequently warrant improved dialogue between the Commission and interested firms so as to clarify all the implications of each individual case.

10.3. The ESC is aware that the Commission's resources are limited. In this context, it is in theory unnecessary to adopt formal decisions whenever firms voluntarily abandon the restrictive practices of which they are accused.

10.4. However, the ESC feels that the practice of shelving proceedings when a complaint has been discontinued or when there has been a unilateral change in the restrictive practices, should not dispense with the need for a summary evaluation of the conditions in which the firms involved will continue to operate. In fact, solutions which are satisfactory to the parties involved are not always compatible with the requirements of free competition, particularly when market domination lies at the root of the problem.

10.5. The ESC would emphasize the importance of recent Court of First Instance case-law, which has confirmed the protection of diffuse rights and interests in the Community and warned of the need to defend competition even when restrictions are founded on normal practices which are known to, or tolerated by, national authorities (see paragraph 5.6 above).

10.6. The Committee deems it vital to safeguard defence rights in the application of the Community's competition rules. Commission practice needs to be further improved in connection with clarity of accusations, deadlines for reply, access to documentary evidence and hearings before the Hearing Officer.

10.7. The Committee feels that the right to see all documents on which an accusation is based - be they favourable or unfavourable - should prevail except when the requirement to safeguard confidentiality of business secrets is genuinely jeopardized.

10.8. Under the current hearing system, the Commission must continue to play the role of arbiter in this conflict. For this very reason, the Committee calls on the Commission to take account of the fact that its role is both to investigate and decide on cases, and to improve defence safeguards, in particular by strengthening the role of the hearing officer.

11. Conclusions

11.1. The ESC would urge the Commission, when defining its competition policy, to take into consideration the concerns voiced in this Opinion by the representatives of the various economic and social sectors.

11.2. Increased competition is not in itself enough to solve the Community's competitiveness and employment problems: in addition, particular efforts should focus on the legal, administrative, political and social environment in which businesses operate and competition policy is implemented.

11.3. An independent industrial policy does not represent a threat to competition policy, and the search for ways round possible conflicts between them does not necessarily mean making the former subordinate to the latter.

11.4. Competition policy in the European Union must be viewed in the context of liberalized world trade and the position adopted in this field by the Community's chief trading partners: it is therefore essential that progress be made in aligning competition rules and policies within the WTO framework.

11.5. If the principle of subsidiarity is to be put into practice, Member States must act more effectively. In the area of competition policy, whether this is the case or not can only be judged on a case-to-case basis.

11.6. Standardized merger control policy is essential for European companies. From this point of view, the scope of Community powers and action must be broadened when the current EEC Regulation No 4064/89 is reviewed.

11.7. Aid granted by Member States or by local or regional authorities, together with that in third countries, undermines competition conditions in the Community. Vigilance must therefore be maintained, and up-to-date information published on the nature and impact of such aid, to provide the best possible guidance for economic actors. More information on the impact of Community aid is also necessary.

11.8. Lastly, the ESC calls upon the Commission to guarantee a fair balance between defence rights and the protection of commercial secrets, and to maintain a watchful and active role in defending Community competition. Bodies representing the various economic and social sectors should be recognized as essential to the protection of legitimate interests and the achievement of the Community's aims.

Done at Brussels, 21 December 1994.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 34, 2. 2. 1994.

() Opinion CES 1028/94 of 15. 9. 1994 on the Effects of the Uruguay Round Agreements.

() CES 855/94.

() OJ No L 395, 30. 12. 1989.

() CES 855/94.