8. 2. 88 Official Journal of the European Communities No C 35/11 
its view that a solution to the problem of different rates 
of tax in road transport is of major importance in the 
context of the elimination of distortions of competition 
in the internal market by 1992 and needs to be looked 
at urgently. 
Done at Brussels, 17 December 1987. 
1. Strengthening the cohesion of the Community — 
Key role of competition policy — Greater freedom 
of choice for consumers — Importance of social 
aspects — Internal market 
1.1. The Commission opens its sixteenth report, on 
competition in 1986, with a statement of the need to 
'strengthen the cohesion' of the Community of Twelve 
by completing the internal market. 
This declaration deserves wholehearted support. All 
initiatives in this direction, whether Community or 
national, should be more rigorously checked to make 
sure that they are compatible. 
The time has now come for words to be put into 
practice, bearing in mind that greater economic and 
political cohesion amongst the Member States is both 
a priority and a prerequisite. 
1.2. The internal market must lead now and in the 
future to greater efficiency and competitiveness in indi­
vidual firms and the Community as a whole. 3. The Committee expects the final Commission pro­
posal on road haulage rates to be submitted at a time 
when thorough discussion of the subject is possible and 
further thought has been given to road haulage policy. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT 
The new 'Community dimension' consists of a more 
coherent and convergent approach, with all policies 
playing a greater part in bringing about real integration. 
Competition policy has a key role to play in this process 
of integration: the main aim of unifying the market is 
to harness human, material and economic resources, in 
an environment of healthy national and international 
competition. 
1.3. Healthy and effective competition will, in turn, 
ensure that prices are competitive and that supply is 
transparent, thereby securing greater freedom of choice 
for the consumer without compromising the quality of 
products and services. 
1.4. Distribution and marketing anomalies will have 
to be tackled, as they seriously distort competition to 
the detriment of both consumers and producers. Opinion on the sixteenth report on competition policy 
(88/C 35/08) 
On 21 September 1987 the Commission of the European Communities decided to consult 
the Economic and Social Committee on the abovementioned report. 
The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the subject, adopted its Opinion on 4 November 1987. The 
rapporteur was Mr Bagliano. 
At its 251st plenary session (meeting of 16 December 1987) the Economic and Social 
Committee adopted the following Opinion by a large majority, with 2 votes against and 
8 abstentions: 
No C 35/12 Official Journal of the European Communities 8. 2. 88 
Measures to open up and improve access to transport 
throughout the Community, so that all regions and 
firms enjoy comparable opportunities in this respect, 
are also of great relevance to competition and the 
internal market. 
1.5. A barrier-free Community market should make 
it possible to unify the labour market. Effective compe­
tition between firms can stimulate employment and do 
much to steer jobs towards areas with a labour surplus. 
The social importance of free and effective competition 
is one of the Community's major tenets. It should be 
founded on full respect for social norms on the part of 
firms and governments. The construction and public 
works sectors require special vigilance here. 
1.6. All market operators should enjoy equal oppor­
tunities, if they wish to enter or withdraw from the 
market. These are the most delicate, but at the same 
time most vital, aspects of competition and scrupulous 
care must be taken to ensure that 'equivalence' prevails, 
above all in order to encourage an entrepreneurial spirit. 
Within this free market, correct behaviour must be 
exacted from all operators—whether private or public, 
and whether acting as individuals, associations or con­
sortiums—with regard to prices, levels of output, mar­
keting areas and other aspects of business agreements 
(licenses, cooperation etc.). 
No special theoretical knowledge is necessary in order 
to understand and evaluate this mechanism. However, 
clear and consistent rules are required in order to con­
done or condemn, to encourage or discourage. It is 
necessary and sufficient to have a policy which will 
provide a reference framework and establish an objec­
tive. 
The present objective is to complete the internal market. 
This always has been the Community's aim, as specified 
in the Treaty of Rome, but this objective is now 
stronger, more explicit and more binding. 
2. Legislative aspects 
2.1. What Community legislation on competition 
really needs is not so much new regulations (apart from 
the proposals already submitted) as consolidation and 
greater transparency, e.g. simplification and acceler­
ation of procedures in the light of experience (whilst 
continuing to pay close attention to developments in 
individual productive sectors, however). 
Block exemption regulations 
2.2. Many sectors are now covered by a block 
exemption regulation. In the initial stage this has reduced the Commission's workload and made for 
greater clarity and legal certainty. Despite this, it would 
be misguided to believe that the answer to every prob­
lem is to issue a regulation. 
Each sector of the economy has a different structure 
and (nowadays) a different rate and manner of trans­
formation and change. The emphasis should be on 
understanding of individual problems, rather than 
introducing new rules and constraints. 
If competition policy is to be truly 'active', the necessary 
vigilant and guaranteed protection of free competition 
must be based first and foremost on a thorough under­
standing of the facts. 
Know-how licensing agreements 
2.3. The Commission is right to insist on holding 
consultations before adopting the draft block exemp­
tion regulation on know-how licensing agreements. 
This complex contractual point is almost always 
included in broader agreements. 
The Commission's work should not be simplified by 
assuming that the regulation on know-how agreements 
has much in common with that on patent licensing 
agreements. In practice the two types of agreement are 
not always comparable, precisely because the 'know-
how' contract has special economic, technical, commer­
cial and legal features of its own. The Committee will 
be issuing an Opinion, on this draft Regulation, in 
which it will give its verdict on the details. 
Franchising 
2.4. Similarly, the franchising agreements, as the 
Commission itself points out, constitute a special type 
of agreement which is not comparable to exclusive 
distribution contracts. 
The Commission, by holding consultations, has made 
laudable efforts to understand this new type of agree­
ment and to define it in a few clear, simple rules. The 
Committee will also be issuing an Opinion on this draft 
Regulation. 
Mergers 
2.5. The Commission intends to find a way out of 
the Council's stalemate on the draft Regulation on 
mergers. 
The Committee among other parties has submitted 
general and detailed comments on this repeatedly-
amended proposal. These comments have not been 
taken into consideration by the Commission. 
8. 2. 88 Official Journal of the European Communities No C 35/13 
The Committee is pleased to see that the impasse finally 
seems to have been overcome, and hopes that problems 
will be swiftly appraised in the light of short- and long-
term changes in the Community and elsewhere. 
At a time when all components of the market are 
extremely active mergers for rationalization or restruc­
turing purposes must be evaluated against the back­
ground of a global Community policy and in the light 
of all the other factors influencing the international 
scenario, while ensuring proper respect for social 
values. 
The need to safeguard employment deserves special 
mention here; Community measures and retraining may 
be required during the transitional stages of mergers. 
Joint ventures 
2.6. Supervision of mergers is linked to that of joint 
ventures, for which a clear definition is required. The 
forthcoming guidelines should be in line with the Com­
mission's stance on merger supervision, the aim being 
once again to enhance the legal certainty of the environ­
ment in which firms must compete. 
Parameters should in any event be fixed with due regard 
to competition from outside the Community, covering 
a wide variety of considerations such as the number of 
operators, the level of output and advanced technology, 
synergy and economies of scale. 
Here too the Committee hopes that appropriate consul­
tations will be held. 
Community law and national legislation 
2.7. It is precisely because of the Community and 
international scenario that the competition laws of the 
Member States should not conflict and should not be 
discriminatory. 
In this connection, and with a view to completing the 
internal market in conformity with Article 8 A of the 
Treaty, it is the Commission's duty to uphold and 
enforce the principle that Community law takes pre­
cedence over national legislation. 
The Commission should therefore take action to elimin­
ate any discrimination which distorts competition, as 
it is totally at variance with the concept of a large 
barrier-free market. 3. Industrial policy in the context of an active compe­
tition policy — State 'aid' 
3.1. Although the Treaty of Rome makes no pro­
vision for a common industrial policy, any distortion 
in competition is clearly incompatible with a common 
industrial area. 
For this reason competition policy should take account 
of the industrial policy gradually built up by the Com­
mission through measures ranging from intervention 
in ailing sectors, to regional policies in support of 
industrialization, and Community support for indus­
trial research and innovation. 
Restructuring and development measures in declining 
sectors and temporary protection to tide sectors over 
short-term difficulties offer a vital stimulus and are 
consistent with the active and energetic competition 
policy which the Committee has repeatedly called for. 
So too are measures to help sensitive and 'locomotive' 
industries, small business, advanced technologies and 
sectors of the future. 
Fiscal policy is no less important. The problem is not 
just technical: it is essentially political, as fiscal policy 
is an integral part of the 'single market' project. The 
Committee has repeatedly warned of the serious impli­
cations for competition of the Member States' disparate 
tax, global and budgetary structures. 
The Commission's attempt to harmonize or approxi­
mate the laws and taxes of the Member States is 
endorsed. We should not draw the line at indirect 
taxation. 
State aid 
3.2. The degree of responsibility of the Member 
States for safeguarding free competition is expressed, 
perhaps most clearly, in their national policies on busi­
ness 'aid'. 
Every year a chapter is included on State aid. This is 
a yardstick for the credibility of the Commission's 
competition policy as a whole. 
The strengthening of existing procedures and the guide­
lines issued in recent years by the Commission consti­
tute a valuable legal reference and source of information 
for both Member States and business. The prime aim 
is to regain control over national instruments/initiatives 
which have sometimes turned out to be a subterfuge 
for subsidies. 
No C 35/14 Official Journal of the European Communities 8. 2. 88 
Whilst there is still broad agreement on the condition 
that 'aid' should not lessen a firm's sense of responsi­
bility, the Commission deserves even greater encourage­
ment in its role as watchdog, with the task of checking 
whether a 'Community interest' to be safeguarded genu­
inely exists, especially in sensitive sectors where compe­
tition is tougher and the imbalance between supply and 
demand is more apparent, with related social conse­
quences. 
Once again the Commission should, in this delicate 
area, take the 'single market' as its over-riding goal. 
Just how 'single' and competitive the market is will 
depend on the extent to which its internal competition 
mechanism operates fairly. 
4. Free competition and protectionism — Trade policy 
and multilateral negotiations 
4.1. Protectionist tendencies worldwide show no sign 
of abating. We need a flexible but clearcut and resolute 
competition policy covering trade inside and outside 
the Community. 
Many different factors have contributed to the rise of 
protectionism, but the main causes are unequal rates 
of world economic growth, the 'volatility' of exchange 
rates and the structural changes in the world economy. 
Some factors are closely linked to the 'tide of events', 
i.e. to developments in the economy, whereas others 
can be influenced by governments and by international 
negotiations between States. 
The Commission is authorized to act on the 'mandate' 
of twelve European countries in this sphere. 
International trade is, thanks to the role of competition, 
the best way of promoting economic efficiency and 
growth. It is therefore worrying that obstacles to an 
open, multilateral trade system have proliferated. 
Done at Brussels, 16 December 1987. It is absolutely essential to reverse the tendency to adopt 
deliberately discriminatory measures; the multilateral 
dimension of trade relations must be strengthened, and 
rapid progress must be made in the General Agreement 
on Tariffs and Trade (GATT) negotiations. 
Respect for the rules and stricter, more efficient settle­
ment of disputes is another issue needing to be faced. 
4.2. Credit for widespread and substantial tariff 
reductions worldwide must go to the seven rounds of 
GATT trade talks. 
The first round dates back to 1948, ten years before 
the birth of the Community. It immediately set about 
dismantling internal customs barriers—a target which 
was achieved ahead of schedule. 
Problems have however, multiplied above all as a result 
of the recession and the high level of unemployment. 
This has triggered off a defensive protectionist response 
in many countries, not just European ones. 
The issue of the freedom of international trade has now 
become more complicated, and multilateral talks on the 
subject will have to be conducted with great technical 
and political expertise, as well as with courage and 
imagination; we are no longer just 'observers'. 
The Community's competition policy—aimed specifi­
cally at unifying the internal market, but without losing 
sight of the international competition scenario—is also 
under an obligation to provide clear suggestions for 
prompt and fruitful negotiations, without impairing the 
economic and social validity of the Community as a 
whole. 
4.3. EEC competition policy cannot disregard the 
international environment and the practices of non-
EEC countries concerning agreements, dumping and 
State aid to the various sectors of the economy. 
The Economic and Social Committee hopes that the 
Commission will append to its annual report an analysis 
of proven instances of unfair competition practices in 
non-EEC countries and their effects on trade with the 
Community. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT