Proposal for a Council Regulation (EC) amending Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (96/C 350/09) (Text with EEA relevance) COM(96) 313 final - 96/0224(CNS)

(Submitted by the Commission on 13 September 1996) THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 87 and 235 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Economic and Social Committee,

Whereas it should be possible for the Council acting in accordance with Article 145 of the Treaty to adjust the thresholds establishing the Community dimension of a concentration in order to ensure that concentrations with significant cross-border effects continue to be covered by Community merger control;

Whereas the rules governing the referral of concentrations to and from the Member States must be reviewed at the same time as the thresholds establishing the Community dimension of a concentration; whereas these rules protect the competition interests of the Member States in an adequate manner and take due account of legal security and the 'one-stop shop` principle; whereas, however, certain aspects of the referral procedures should be improved or clarified;

Whereas, in particular, the Commission can declare a concentration incompatible with the common market only if it impedes effective competition in a substantial part thereof; whereas, the application of national competition law is, therefore, particularly appropriate where a concentration affects competition on a distinct market within a Member State that does not constitute a substantial part of the common market; whereas in this case it should not be necessary to demonstrate, in the request for referral, that the concentration threatens to create or to strengthen a dominant position on this distinct market;

Whereas it should be expressly provided that two or more Member States may make a joint request pursuant to Article 22; whereas to ensure effective control, provision should be made for the suspension of concentrations referred to the Commission by one or more Member States;

Whereas it is appropriate to define the concept of concentration in such a manner as to cover operations bringing about a lasting change in the structure of the undertakings concerned; whereas in the specific case of joint ventures, it is appropriate to include within the scope and procedure of Regulation (EEC) No 4064/89 all full-function joint ventures; whereas, in addition to the dominance test, it must be provided that the Commission shall apply the criteria of Article 85 (1) and (3) of the Treaty to such joint ventures, to the extent that their creation results in an appreciable restriction of competition between undertakings that remain independent; whereas, if the effects of such joint ventures are primarily structural, it can be presumed that Article 85 (1) does not apply; whereas, Article 85 (1) may apply if two or more parent companies remain active in the market of the joint venture, or, if the creation of the joint venture gives rise to the coordination of the parents' activities in upstream, downstream or neighbouring markets; whereas, in this context, the appraisal of all competition aspects of the creation of the joint venture must be made within the same procedure;

Whereas, for the purposes of calculating the turnover of credit and financial institutions, banking income is a better criterion than a proportion of assets, because it reflects more accurately the economic reality of the whole banking sector;

Whereas the Commission may declare a concentration compatible with the common market in the second phase of the procedure, following modifications to the original concentration plan that are proportional to and would entirely eliminate the competition problem; whereas, it is also appropriate to accept modifications to the concentration plan in the first phase of the procedure where the competition problem is readily identifiable and can easily be remedied; whereas, it should be expressly provided that in these cases the Commission may attach to its decision conditions and obligations; whereas transparency and effective consultation of Member States and interested third parties should be ensured in both phases of the procedure;

Whereas to ensure effective control, concentrations should be suspended until a final decision has been taken; whereas, on the other hand, it should be possible to waive a suspension, where appropriate; whereas, in deciding whether or not to grant a waiver, the Commission should take account of all pertinent factors, such as the nature and gravity of damage to the undertakings concerned or to third parties, and the threat to competition posed by the concentration;

Whereas it should be expressly provided that decisions taken at the end of the first phase of the procedure cover restrictions directly related and necessary for the implementation of a concentration;

Whereas it should be possible to suspend exceptionally the period within which the Commission must take a decision within the first phase of the procedure;

Whereas the Commission should be given the power to adopt implementing provisions where necessary,

HAS ADOPTED THIS REGULATION:

Article 1 (1)

Regulation (EEC) No 4064/89 is hereby amended as follows.

1. In Article 1, a new paragraph 5 is inserted reading:

'5. The thresholds laid down in paragraphs 2 and 3 may be adjusted by the Council acting by a qualified majority on a proposal from the Commission, in order to ensure that concentrations with significant cross-border effects continue to be covered by this Regulation.`.

2. In Article 2, a new paragraph 4 is inserted after paragraph 3 reading:

'4. To the extent that the creation of a joint venture constituting a concentration pursuant to Article 3 has as its object or effect the coordination of the competitive behaviour of undertakings that remain independent, such coordination shall be appraised in accordance with the criteria of Article 85 (1) and (3) of the Treaty, with a view to establishing whether or not the operation is compatible with the common market.`.

3. In Article 3, paragraph 2 is amended as follows:

(a) the first subparagraph is deleted;

(b) the phrase 'which does not give rise to the coordination of the competitive behaviour of the parties amongst themselves or between them and the joint venture` is deleted from the second subparagraph.

4. In Article 5, paragraph 3 (a) is replaced by the following:

'(a) for credit institutions and other financial institutions, as regards Articles 1 (2) (a) and (b), 1 (3) (a) and (b) and the final parts of Article 1 (2) and (3), the sum of the following income items as defined in Directive 86/635/EEC:

(i) interest income and similar income;

(ii) income from securities:

- income from shares and other variable yield securities,

- income from participating interests,

- income from shares in affiliated undertakings;

(iii) commissions receivable;

(iv) net profit on financial operations;

(v) other operating income.

The turnover of a credit or financial institution in the Community or in a Member State shall comprise the income items, as defined above, which are received by the branch or division of that institution established in the Community or in the Member State in question, as the case may be.`.

5. Article 6

(a) In paragraph 1, a new subparagraph is inserted after point (b) reading:

'The decision declaring the concentration compatible shall also cover restrictions directly related and necessary to the implementation of the concentration.`;

(b) Paragraph 1 (c) is amended as follows:

'Without prejudice to paragraph 2, where the Commission finds that the concentration notified falls within the scope of this Regulation and raises serious doubts as to its compatibility with the common market, it shall decide to initiate proceedings.`;

(c) Paragraph 2 is replaced by the following:

'Where the Commission finds that, following modification by the undertakings concerned, a notified concentration no longer raises serious doubts within the meaning of paragraph 1 (c), it may decide to declare the concentration compatible with the common market pursuant to paragraph 1 (b).

It may attach to its decision under paragraph 1 (b) conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered into vis-à-vis the Commission with a view to modifying the original concentration plan.`;

(d) A new paragraph 3 is inserted reading:

'3. The Commission may revoke the decision it has taken pursuant to paragraph 1 (a) or (b) where:

(a) the decision is based on incorrect information for which one of the undertakings is responsible or where it has been obtained by deceit; or

(b) the undertakings concerned commit a breach of an obligation attached to the decision; or (c) the coordination of the competitive behaviour of undertakings that remain independent, within the meaning of Article 2 (4), affords such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.`;

(e) A new paragraph 4 is inserted reading:

'4. In the cases referred to in paragraph 3, the Commission may take a decision under paragraph 1, without being bound by the deadlines referred to in Article 10 (1).`;

(f) Former paragraph 2 becomes paragraph 5.

6. Article 7

(a) Paragraph 1 is amended as follows:

'For the purposes of paragraph 2 a concentration as defined in Article 1 shall not be put into effect either before its notification or until it has been declared compatible with the common market pursuant to a decision under Article 6 (1) (b) or Article 8 (2) or on the basis of a presumption according to Article 10 (6).`;

(b) Paragraph 2 is deleted;

(c) Former paragraph 3 becomes paragraph 2 and is amended as follows:

The phrases 'Paragraphs 1 and 2` at the beginning of the paragraph and 'under paragraph 4` at the end of the paragraph are replaced by the phrases 'Paragraph 1` and 'under paragraph 3` respectively;

(d) Former paragraph 4 becomes paragraph 3 and is amended as follows:

'The Commission may, on request, grant a derogation from the obligations imposed in paragraphs 1 or 2. The request to grant a derogation must be reasoned. In deciding on the request, the Commission shall take into account inter alia the effects of the suspension on one or more undertakings concerned by a concentration or to a third party and the threat to competition posed by the concentration. That derogation may be made subject to conditions and obligations in order to ensure conditions of effective competition. A derogation may be applied for and granted at any time, even before notification or after the transaction.`

(e) Former paragraph 5 becomes paragraph 4 and is amended as follows:

The phrase 'or 2` is deleted from the first and the last sentence of the paragraph.

7. In Article 8 (5), the following text is inserted after point (b):

'or;

(c) the coordination of the competitive behaviour of undertakings that remain independent, within the meaning of Article 2 (4), affords such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.`.

8. Article 9

(a) Paragraph 2 is amended as follows:

'2. Within three weeks of the date of receipt of the copy of the notification a Member State may inform the Commission, which shall inform the undertakings concerned, that:

(a) a concentration threatens to create or to strengthen a dominant position as a result of which effective competition will be significantly impeded on a market within that Member State, which presents all the characteristics of a distinct market; or

(b) a concentration affects competition on a market within that Member State, which presents all the characteristics of a distinct market and which does not constitute a substantial part of the common market`;

(b) In paragraph 3, point (b) is amended as follows:

'(b) it shall refer the whole or part of the case to the competent authorities of the Member State concerned with a view to the application of that State's national competition law.`;

(c) A new subparagraph is added at the end of paragraph 3 reading:

'In cases where a Member State informs the Commission that a concentration affects competition in a distinct market within its territory that does not form a substantial part of the common market, the Commission shall refer the whole or part of the case relating to the distinct market concerned, if it considers that such a distinct market is affected.`;

(d) Paragraph 10 is replaced by the following:

'10. This Article will be reviewed at the same time as the thresholds referred to in Article 1.`.

9. Article 10

(a) In paragraph 1, the following text is added at the end of the second subparagraph:

'or where, after notification of a concentration, the undertakings concerned propose modifications to the original concentration plan pursuant to Article 6 (2), which are intended by the parties to form the basis for a decision pursuant to Article 6 (1) (b).`;

(b) The phrase 'The period set by paragraph 3` at the beginning of paragraph 4 is replaced by the phrase 'The periods set by paragraphs 1 and 3`.

10. Article 22

(a) Paragraph 2 is amended as follows:

'2. Regulations No 17, (EEC) No 1017/68, (EEC) No 4056/86 and (EEC) No 3975/87 shall not apply to concentrations as defined in Article 3, with the exception of joint ventures that do not have a Community dimension and have as their object or effect the coordination of the competitive behaviour of undertakings that remain independent.`;

(b) Paragraph 3 is amended as follows:

'3. If the Commission finds, at the request of a Member State or at the joint request of two or more Member States, that a concentration as defined in Article 3 that has no Community dimension within the meaning of Article 1 creates or strengthens a dominant position as a result of which effective competition would be significantly impeded within the territory of the Member State or the States making the joint request, it may, in so far as the concentration affects trade between Member States, adopt the decisions provided for in Article 8 (2), second subparagraph, (3) and (4).`;

(c) Paragraph 4 is amended as follows:

'4. Articles 2 (1) (a) and (b), 5, 6, 8 and 10 to 20 shall apply. Article 7 shall apply to the extent that the concentration has not been put into effect on the date on which the Commission informs the parties that a request has been made.

The period within which proceedings may be initiated pursuant to Article 10 (1) shall begin on the day following that of the receipt of the request from the Member State or States concerned. The request must be made within one month at most of the date on which the concentration was made known to the Member State or to all Member States making a joint request or effected. This period shall begin on the date of the first of those events.`;

(d) In paragraph 5, the phrase 'or States` is inserted after the phrase 'within the territory of the Member State`;

(e) Paragraph 6 is deleted.

11. In Article 23:

(a) The phrase 'fees for` is inserted after the phrase 'concerning the form, content,`;

(b) The phrase 'time limits pursuant to Article 10` is replaced by the phrase 'time limits pursuant to Articles 7, 9, 10 and 22, paragraphs 3 to 5`;

(c) A new subparagraph is inserted reading:

'The Commission shall have the power to lay down the procedure and time limits for submitting modifications to a notified concentration plan pursuant to Articles 6 (2) and 8 (2).`.

Article 2

This Regulation shall enter into force on . . . .

Article 3

This Regulation shall not apply to any concentration which was the subject of an agreement or announcement or where control was acquired within the meaning of Article 4 (1) before the date of this Regulation's entry into force and it shall not in any circumstances apply to any concentration in respect of which proceedings were initiated before that date by a Member State's authority with responsibility for competition.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) When this proposal makes reference to Articles of Council Regulation (EEC) No 4064/89 of 21 December 1989, it should be read in conjunction not only with the current text of this Regulation, but also with Commission proposal No . . . of . . . .