REPORT FROM THE COMMISSION - XXXth Report on competition policy 2000

TABLE OF CONTENTS

Introduction

Statistics on Commission activity in applying Community competition law in 2000

Box 1: European Competition Day in Lisbon and Paris

I - Antitrust: Articles 81 and 82; state monopolies and monopoly rights: Articles 31 and 86

A - Modernisation of the legislative and interpretative rules

1. New Commission competition rules in the field of vertical restraints

2. New Commission competition rules in the field of horizontal cooperation agreements

2.1. Introduction

2.2. The block exemption regulations

2.3. The guidelines

3. Proposal for a new regulation implementing Articles 81 and 82 of the EC Treaty

3.1. More efficient enforcement

3.2. Regulating the relationship between Articles 81 and 82 and national competition laws

3.3. Cooperation in the network between the Commission and the national competition authorities

3.4. Enhanced cooperation with national courts

3.5. Ensuring an appropriate level of legal certainty for companies

3.6. State of play in the legislative process

B - Enforcement of Articles 81, 82 and 86

1. Article 81

1.1. Cartels

1.2. Other forms of agreement

1.2.1. Airline alliances

1.2.2. Distribution agreements

1.2.3. Environmental agreements

2. Articles 82 and 86

Box 2: The impact of competition policy on consumers

C - Sector-based survey

1. Basic industries, consumer and investment goods

1.1. Motor vehicles

1.1.1. Application of the block exemption regulation in 2000: infringements

1.1.2. General assessment of the application of the regulation

1.1.3. Structural change in the sector

1.2. Motor fuel

2. Network industries

2.1. Gas

2.2. Electricity

2.3. Telecommunications

2.3.1. Consolidation of the liberalisation directives

2.3.2. Sixth report on the implementation of the directives

2.3.3. Communication on voice on the Internet

2.3.4. Monitoring of the implementation of directives

2.3.5. Communication and sector inquiry on local loop unbundling

2.3.6. Initial results of the sector inquiry on leased lines

2.3.7. Sector inquiry on roaming

2.3.8. Individual cases dealt with under Articles 81 and 82

2.3.9. Cases dealt with under the Merger Regulation

2.4. Postal services

2.4.1. Commission proposal for further market opening

2.4.2. Monitoring of the REIMS II agreement

2.4.3. Interception and surcharging of cross-border mail

2.4.4. Mail order parcels

2.4.5. New postal services

2.5. Air transport

2.5.1. Alliances

2.5.2. Airports

2.5.3. Reservation systems

2.6. Maritime transport

2.6.1. Block exemption for liner shipping consortia

2.6.2. Grand Alliance Consortium

2.6.3. FETTCSA

2.7. Railways

Box 3: Services of general interest in Europe and competition

3. Services

3.1. Financial services

3.2. Information society and the Internet

Box 4: Web-based business-to-business (B2B) trading and B2B electronic marketplaces

3.3. Media

3.4. Professions

3.5. Sport

D - Statistics

II - Merger control

A - Introduction

Box 5: The simplified procedure

B - Application of the dominance test

1. Single dominance

Box 6: MCI WorldCom/Sprint

2. Collective dominance

3. Potential competition

C - Remedies

D - Cooperation

1. Cooperation with Member States

2. The international dimension of merger control

2.1. Cooperation with the United States and Canada

2.2. Cooperation with EFTA countries and applicant countries

E - Other procedures

1. Fines; Articles 14-15 of the Merger Regulation

2. Prevention of barriers to cross-border mergers; Article 21 of the Merger Regulation

F - Statistics

III - State aid

A - General policy

1. Modernising state aid control

2. Increased transparency

3. Aid for environmental protection

B - Concept of aid

1. Origin of resources

2. Advantage to a firm

3. Specificity

4. Effect on trade between Member States

C - Assessing the compatibility of aid with the common market

1. Horizontal aid

1.1. Small and medium-sized enterprises

1.2. Research and development aid

1.3. Employment and training

1.4. Environment

1.5. Rescue and restructuring aid

2. Regional aid

3. Sectoral aid

3.1. Sectors subject to specific rules

3.1.1. Shipbuilding

3.1.2. Steel

3.1.3. Coal

3.1.4. Motor vehicle industry

3.1.5. Synthetic fibres industry

3.1.6. Transport

3.1.6.1. Inland waterway transport

3.1.6.2. Air transport

3.1.6.3. Road transport

3.1.6.4. Combined transport and rail transport

3.1.6.5. Maritime transport

3.1.7. Agriculture

3.1.8. Fisheries

3.2. Specific sectors not subject to special rules

3.2.1. Public health

3.2.2. Financial sector

3.2.3. Exceptional occurrences

D - Procedures

1. Rights of third parties

2. Recovery of aid

Box 7: State aid to the Magefesa group - Recovery of aid

3. Protection of legitimate expectations

4. Non-execution of previous Commission decisions

5. Commission's obligation to start proceedings

6. Preliminary notification obligation

7. Other provisions of the Treaty

E - Statistics

IV - International activities

A - Enlargement

1. Accession negotiations

2. Progress in alignment of competition rules

3. Implementing rules under the Europe Agreements

4. Extension of Article 87(3)(a) status under the Europe Agreements

5. Technical assistance to the applicant countries

6. Turkey

B - Bilateral cooperation

1. United States

2. Canada

3. Japan

4. Other OECD countries and the EEA

5. Mediterranean countries

6. Latin America

7. Russia, Ukraine, Moldova and the other NIS

C - Multilateral cooperation

1. WTO: Trade and competition policy

2. OECD

3. UNCTAD

4. International Competition Forum

V - Outlook for 2001

1. Legislative and regulatory activities

2. Supervisory activities

3. Mergers

4. State aid

5. International activities

Annex - Cases discussed in the Report

Introduction

1. Competition policy is one of the pillars of the European Commission's action in the economic field. This action is founded on the principle, enshrined in the Treaty, of "an open market economy with free competition". It acknowledges the fundamental role of the market and of competition in guaranteeing consumer welfare, in encouraging the optimum allocation of resources and in granting economic agents the appropriate incentives to pursue productive efficiency, quality, and innovation. However, the principle of an open market economy does not imply an attitude of blind faith or, possibly, indifference towards the operation of market mechanisms; on the contrary, it requires constant vigilance aimed at preserving those mechanisms. This is particularly true in the present context of markets evolving at a fast pace and becoming increasingly integrated at global level. Besides, at a European level, the 2000 Review of the Internal Market Strategy adopted on 3 May gave a fresh impetus to the creation of a regulatory and institutional framework which stimulates innovation, investment and economic efficiency. [1] Promoting competition by improving the business environment is also one of the targets set out in the strategy.

[1] COM(2000) 257 final, 3.5.2000.

2. Both technological developments and policy initiatives are reshaping the economic environment. Economies are increasingly based on knowledge, as evidenced by the growth of the service sector. Information systems have forced companies to re-evaluate and adapt their commercial relationships with both customers and suppliers and have enabled them to adopt more tightly managed and efficient business practices. We are now beginning to see the emergence of business-to-business (B2B) exchanges that are in the process of revolutionising the management of supply chains. Institutional changes have been added to technological developments. The single market programme culminated in the adoption of a single currency, further integrating markets and enhancing competition between firms. The liberalisation of the network industries has opened many crucial sectors previously closed to competition. These developments affect all aspects of competition policy.

3. The year was marked by intense activity aimed at adapting the rules and practice of competition policy to the new environment. This activity has led to the adoption of new block exemption regulations in the field of horizontal agreements, supplemented by a set of guidelines, while further progress was made towards modernising the rules implementing Articles 81 and 82. New guidelines were issued on vertical restraints to supplement the block exemption regulation adopted in December 1999. More particularly, in the area of car distribution, an evaluation report was issued on the present regulation, [2] which will serve as the basis for a review of the car distribution regime in the near future. In the merger field, a simplified procedure for certain categories of cases not giving rise to competition concerns, as well as a notice on remedies, were adopted by the Commission. The Commission also introduced three regulations on the application of the de minimis rule to state aid, on aid to small and medium-sized enterprises and on aid to training. Finally, considerable progress was made with Japan in the preparation of a cooperation agreement in the area of competition policy. It is expected that the agreement will be concluded during 2001.

[2] Commission Regulation EEC No 1475/95 of 28.6.1995.

4. Enforcement of competition rules reflected the reality of new markets and business practices. The creation of electronic marketplaces and the use by certain industries of voluntary agreements with environmental aims are just two examples of emerging practices led to Commission decisions. A large part of the Commission's enforcement activity in 2000 was focused on recently liberalised markets, where a competitive environment is not yet fully established.

5. Competition has as its corollary the constant reallocation of resources from declining firms or sectors to the emerging and fast growing ones. In the realm of the "new economy" - characterised by its largely intangible nature and by its foundation on knowledge and technology - this process has become extremely rapid. It is of paramount importance that this reallocation should not be hindered and that transformation and restructuring should be allowed to take place smoothly, through mergers, joint ventures and acquisitions. This process is, however, not without danger. Mergers may result in a market structure that is too concentrated, with poorer choice for the consumer and greater scope for collusion between a few remaining producers.

6. In a context where markets are tending to become wider and where the critical mass that is necessary to be an active player is tending to increase, the number and complexity of mergers and alliances that fall under the Commission's scrutiny have been constantly growing during the last few years. In 2000 the Commission took 345 decisions, up by 18% on 1999. A number of these cases raised substantive issues, which led to developments in the Commission's analytical tools, in particular in the practical application of economic theory.

7. In an ever more competitive and integrated environment, it is particularly important that state aid should not introduce unwarranted distortions into the functioning of markets. In addition to the initiatives to update and rationalise the legislative framework described above, the Commission is convinced of the need to increase transparency in this field and to introduce, to this end, a public register of state aid and a scoreboard. In parallel with the new initiatives, the Commission has focused on the correct application of its decisions, notably concerning the recovery of illegal aid.

8. Two considerations on the international dimension of competition policy are worth noting: first, the fact that the geographical scope of competition cases is widening means that more commercial transactions are falling within the jurisdiction of the growing number of countries that have adopted competition rules. To analyse these cases properly and avoid conflict, the Commission often has to liaise closely and exchange information with other competition authorities. Secondly, the Commission has to pay close attention to the competition aspects of the forthcoming enlargement. Enlargement should not create a major imbalance in terms of state aid or competitiveness. Hence the importance of working with the applicant countries and making sure that the same rules apply with equal effectiveness throughout an enlarged Union.

Statistics on Commission activity in applying Community competition law in 2000

9. In 2000, the total number of new cases was 1 206, comprising 297 antitrust cases (under Articles 81, 82, and 86), 345 merger cases, and 564 state aid cases. Comparable figures for 1999 were a total of 1 249 new cases, comprising 388 antitrust cases, 292 merger cases, and 569 state aid cases. The slight decrease in the overall number of cases was, therefore, due to the reduction in the field of antitrust, while the number of state aid cases remains stable and that of merger cases continues to increase and has doubled in the course of the last three years.

10. The remarkable reduction in the number of new antitrust cases can be attributed to recent policy developments. The new block exemption on vertical restraints has drastically reduced the need for notification of this type of agreement. Similarly, the new guidelines on vertical agreements and the publicly debated proposals for new rules on horizontal agreements have clarified the framework for assessment under the competition rules and may have reduced the need for bringing cases to the Commission's attention.

11. A second factor in the reduction of new cases is the drop in the number of complaints. However, the number of complaints has fluctuated widely over the years (112 in 2000, 149 in 1999, 192 in 1998, 177 in 1997, 159 in 1996, 114 in 1995, 170 in 1994 and 110 in 1993), so it is difficult to draw any conclusions.

12. It is interesting to note that almost 30% of the new cases were opened ex officio. In absolute terms, moreover, ex officio procedures increased over the previous year (from 77 to 84). Taken together with the reduction in notifications, this development is in line with the policy objective of dealing with standard agreements through legislative action, while using the available resources to pursue a more proactive policy and concentrate on the most dangerous anticompetitive practices.

13. The total number of cases closed was 1 209, comprising 379 antitrust cases, 355 merger cases, and 475 state aid cases. [3] Comparable figures for 1999 were 1 321 cases closed, comprising 582 antitrust cases, 279 merger cases and 460 state aid cases. [4] The intense legislative action and some resource-intensive cartel cases had the effect of slowing down the antitrust activity; nevertheless, the number of cases closed (379) was considerably higher than that of new cases (297), further reducing the backlog.

[3] The figure for state aid is based on the number of decisions taken by the Commission. Given that some decisions cover more than one case, the figure is a slight underestimate of the number of state aid cases closed by Commission decision.

[4] The figure for state aid in 1999 was revised after the 1999 Competition Report was published.

14. As witnessed already in 1999, the globalisation of markets, the introduction of the euro, the completion of the single market and the forthcoming enlargement continued to generate high levels of merger activity in Europe. Overall, 345 new cases were notified during 2000 (+18%) and in total, 345 formal decisions were taken during the year, 28% up on 1999.

15. In the field of state aid, the number of notifications remained remarkably stable compared with 1999 (469 in 1999 and 2000); this was also true of the number of proceedings initiated (67 against 68 in 1999) and negative final decisions (26 against 33 in 1999). The number of cases pending, however, has increased significantly (564 against 428 in 1999), which can be partly explained by the numerous proceedings initiated since 1997 taking up a large amount of resources.

Box 1: European Competition Day in Lisbon and Paris

When he took up office, Commissioner Monti informed Parliament of a series of measures to provide the public with more information on competition policy and to make Commission activities more transparent and accessible to consumers, savers, public service users and employees in the Community. The public needed to be better informed about the benefits that competition policy could bring them in terms of diversity of supply, improved product and service quality and a downward trend in prices. This was the background to the decision to hold a European Competition Day every six months in the country holding the Council Presidency.

European Competition Day in Lisbon (9 June 2000)

The first European Competition Day took place in Lisbon in June 2000, and was deemed a success by its organisers.

It formed part of a larger event concerning competition policy which lasted two days, the first day being devoted to national issues.

The first round table followed on from Mr Monti's opening address devoted to the positive impact of competition policy on the day-to-day lives of EU citizens. A speech by Ms Randzio-Plath, Chair of the European Parliament Committee on Economic and Monetary Affairs, expressed strong support for the views expressed by Mr Monti. She put particular emphasis on the part played by suppliers of general interest services in a market economy in which competition rules applied.

Matters of a more specific nature were also discussed at the European Day, i.e. motor vehicle distribution in Europe and the application of competition rules to the professions.

Some 250 people attended, representing the groups usually interested in competition policy, e.g. lawyers, business representatives, competition authorities, embassy staff, etc. Consumer associations were less well represented.

This inaugural event made it possible to introduce the public to several information tools: a video on competition policy, explanatory posters and display panels and a new information brochure for the general public entitled "Competition policy in Europe and the citizen".

European Competition Day in Paris (17 October 2000)

The second Competition Day took place in Paris on the morning of 17 October 2000.

Commissioner Monti opened the event by calling on consumers and their associations to be responsible players in the market. Paraphrasing Pierre Mendès France, he said that "To consume is to choose. Freely and responsibly".

The first round table on the liberalisation of telephony assessed the positive effects of opening-up the sector to competition, apart from the controversial impact of the increase in telephone subscription charges. A very broad consensus was reached on the view that competition and solidarity were not incompatible. And that regulated competition was the best guarantee for Union citizens. Lastly, some anxiety about the convergence between telecoms, the media and the Internet was expressed by consumers.

The second round table dealt with retail products. One of the major points arising out of the discussion was the negative impact on the individual consumer of the increase in the purchasing power of the retailing and distribution industry: curtailed supplies, standardised goods, etc.

The amphitheatre at the conference centre was filled with over 300 people. A good half of those present was composed of representatives of consumer associations. The Belgian, Swedish, United Kingdom and German authorities attended the discussions, as did a representative of BEUC (European Bureau of Consumers' Unions).

The representatives of the consumer associations played an active part in the discussions. They made statements and asked a number of questions. The number and vigour of the statements lent a decidedly "consumerist" tone to the exchanges with participants, even if the questions did not always concern the "competition" aspects but "consumer protection".

I - Antitrust: Articles 81 and 82; state monopolies and monopoly rights: Articles 31 and 86

A - Modernisation of the legislative and interpretative rules

16. On 27 September the Commission adopted a proposal for a regulation designed to modernise the procedural rules for implementing Articles 81 and 82 of the Treaty, which lay down the Community competition rules applicable to restrictive practices between businesses and abuses of a dominant position. This is the most important legislative initiative in Europe in the competition field since the adoption of the Merger Regulation in 1989. It will greatly facilitate the strengthening of a common competition culture in the EU.

17. Clarification and review of the substantive rules is an essential pillar in the overall reform process. The review is aimed at simplifying the rules and reducing the regulatory burden for companies, especially companies lacking market power, while ensuring more effective control of agreements implemented by companies holding significant market power. The Commission has recently completed work in the field of vertical agreements with the adoption of a new block exemption regulation and guidelines concerning distribution. These cover all sectors with the exception of car distribution.

18. In the area of horizontal agreements the Commission has adopted revised block exemption regulations for research and development agreements and specialisation agreements. These regulations are complemented by guidelines on the applicability of Article 81 to horizontal cooperation agreements. The horizontal guidelines recognise that companies need to respond to increasing competitive pressure and a changing marketplace driven by globalisation, the pace of technological progress and the generally more dynamic nature of markets. Cooperation can often be a way of sharing risk, saving costs, pooling know-how and launching innovation faster.

1. New Commission competition rules in the field of vertical restraints

19. On 22 December 1999 the Commission adopted Regulation (EC) No 2790/1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices. [5] The new block exemption regulation has a wide scope and block exempts, up to a market share threshold of 30% and subject to a limited number of conditions and the exclusion of "hardcore" restrictions, all vertical agreements and concerted practices between two or more undertakings. [6] Above the 30% threshold, agreements are not presumed to be illegal but may require individual examination. In order to assist undertakings in carrying out such an examination, the Commission approved on 24 May a set of guidelines on vertical restraints. [7]

[5] OJ L 336, 29.12.1999.

[6] See points 8-19 of the 1999 Competition Report.

[7] Commission notice - guidelines on vertical restraints (OJ C 291, 13.10.2000).

20. The guidelines explain:

- which vertical agreements generally do not distort competition and therefore fall outside Article 81(1). This concerns in particular agreements between SMEs, true agency agreements and agreements where neither the supplier nor the buyer holds a significant degree of market power;

- which vertical agreements benefit from the safe haven created by the block exemption regulation. This is achieved by describing the conditions for application of the regulation;

- which circumstances may require the benefit of the block exemption regulation to be withdrawn by the Commission or by Member State authorities. Withdrawal may in particular be necessary when access to the relevant market is significantly restricted by the cumulative effect of parallel networks of similar vertical agreements applied by competing suppliers or buyers. It may also be required when, in the context of exclusive supply or exclusive distribution, the buyer has significant market power on the downstream market where he resells the goods or provides the services;

- a number of market definition and market share calculation issues that may arise when companies apply the 30% market share threshold for application of the block exemption regulation;

- the enforcement policy of the Commission in cases above the 30% market share threshold not covered by the block exemption regulation. A general framework of analysis is provided and applied to the most important specific vertical restraints, such as single branding, exclusive distribution and selective distribution.

2. New Commission competition rules in the field of horizontal cooperation agreements

2.1. Introduction

21. On 29 November the Commission adopted Regulation (EC) No 2658/2000 on the application of Article 81(3) of the Treaty to categories of specialisation agreements, [8] Regulation (EC) No 2659/2000 on the application of Article 81(3) of the Treaty to categories of research and development agreements, [9] and guidelines on the applicability of Article 81 of the Treaty to horizontal cooperation agreements. [10], [11] The new regulations replace the two existing block exemption regulations on specialisation agreements [12] and on research and development (R&D) agreements, [13] which expired on 31 December 2000. The guidelines, while replacing two existing notices (these provided guidance on certain types of cooperation agreement falling outside Article 81 [14] and the assessment of cooperative joint ventures [15]), cover a wider range of the most common types of horizontal agreement and complement the block exemption regulations on R&D and specialisation.

[8] OJ L 304, 5.12.2000.

[9] OJ L 304, 5.12.2000.

[10] OJ C 3, 6.1.2001.

[11] The two block exemption regulations and the guidelines are available on the Competition DG's website at: http://europa.eu.int/comm/competition/antitrust/legislation/.

[12] Commission Regulation (EEC) No 417/85 of 19 December 1984 on the application of Article 85(3) of the Treaty to categories of specialisation agreements (OJ L 53, 22.2.1985), as last amended by Regulation (EC) No 2236/97 (OJ L 306, 11.11.1997).

[13] Commission Regulation (EEC) No 418/85 of 19 December 1984 on the application of Article 85(3) of the Treaty to categories of research and development agreements (OJ L 53, 22.2.1985), as last amended by Regulation (EC) No 2236/97 (OJ L 306, 11.11.1997).

[14] Commission notice concerning agreements, decisions and concerted practices in the field of cooperation between enterprises (OJ C 75, 29.7.1968).

[15] Commission notice concerning the assessment of cooperative joint ventures pursuant to Article 85 of the EEC Treaty (OJ C 43, 16.2.1993).

22. Companies need to respond to increasing competitive pressure and changes in the marketplace driven by globalisation, the pace of technological progress and the generally more dynamic nature of markets. Cooperation can be a means of sharing risk, saving costs, pooling know-how and launching innovation faster. In particular for small and medium-sized enterprises, cooperation is an important means of adapting to the changing marketplace. Consumers will share these gains, provided that effective competition is maintained in the market. This review was necessary not only to adapt the rules to new market developments and economic thinking but also, in the context of modernisation, with a view to giving clear guidance to courts and national authorities. The common objective is to simplify the rules and reduce the regulatory burden for companies, especially companies lacking market power.

23. The new rules embody a shift from the formalistic regulatory approach underlying the current legislation towards a more economic approach in the assessment of horizontal cooperation agreements. The basic aim of this new approach is to allow collaboration between competitors where it contributes to economic welfare without creating a risk for competition.

2.2. The block exemption regulations

24. Compared with the existing regulations, the new regulations have been revised to make them more user-friendly and to increase their scope and clarity. The old block exemptions for R&D and specialisation not only defined categories of agreements that were covered, but also listed the exempted clauses. These so-called "white lists" are deleted from the new block exemption regulations, which instead exempt all R&D and specialisation agreements, subject to certain conditions and the exclusion of hardcore restrictions. The new instruments thus move away from a clause-based approach and give the parties to such agreements greater contractual freedom.

25. In addition to this increase in flexibility, the following principal changes have been incorporated in the new R&D block exemption regulation:

(1) deletion of the requirement to draw up a framework programme prior to entering into R&D agreements;

(2) increase in the market share threshold for exemption from 20% to 25%. This increase recognises that R&D collaboration is particularly conducive to the creation of efficiencies, while on the other hand restrictive effects are less likely than for other types of cooperation;

(3) if the agreement provides for joint distribution of products that have been jointly developed, the market share threshold will be increased from 10%, as at present, to 25%;

(4) increase in the safety margin for market share fluctuations from 2% to 5%;

(5) increase in the period during which joint exploitation of jointly developed products is covered irrespective of market share. This period has been increased from five to seven years in view of the fact that there are a number of industries where R&D investments are unlikely to be recouped within five years. The same seven-year period is allowed for certain restrictions that accompany joint exploitation;

(6) deletion of the non-opposition procedure. This procedure is no longer necessary as all non-hardcore restrictions are exempted subject to certain conditions;

(7) a provision has been added which allows the withdrawal of the block exemption in those cases where an agreement would eliminate effective competition in R&D on a particular market. This is necessary to protect competition in innovation, as it would not be feasible to apply the normal market share thresholds of the regulation to totally new products.

26. As regards the new specialisation block exemption regulation, the principal changes are as follows:

(1) extension of the scope of the regulation to cover unilateral specialisation between competitors. This is a form of outsourcing, where one party agrees to cease manufacture of certain products and to purchase them from another party, who agrees to manufacture and supply them. Unilateral specialisation between competitors has been covered because of its increased importance in many industries and its potential to create efficiencies. Unilateral specialisation between non-competitors is, subject to certain conditions, covered by the vertical block exemption regulation; [16]

[16] Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices (OJ L 336, 29.12.1999).

(2) in the case of reciprocal specialisation, there is a requirement to incorporate a cross-supply obligation so that no party leaves the market downstream of production. This is necessary to prevent parties from partitioning markets under the guise of a reciprocal specialisation agreement;

(3) deletion of the turnover threshold;

(4) increase in the safety margin for market share fluctuations from 2% to 5%, as in the R&D block exemption regulation;

(5) possibility of exclusive supply or exclusive purchase obligations.

27. Both regulations provide for a transitional period of 18 months during which agreements which do not satisfy the conditions of the new regulations but which satisfy the conditions for exemption provided for in the old regulations continue to be covered.

2.3. The guidelines

28. The guidelines complement the block exemption regulations. They describe the general approach which should be followed when assessing horizontal cooperation agreements. They are thus applicable to R&D and production agreements not covered by the block exemptions as well as to all other common types of competitor collaboration. The following types are covered: R&D, production, purchasing, marketing, standardisation and environmental agreements. The guidelines describe the general approach which should be followed when assessing horizontal cooperation agreements and set out a common analytical framework. This will help companies to assess with greater certainty whether or not an agreement restricts competition and, if so, whether it would qualify for an exemption.

29. All types of horizontal cooperation agreement covered are analysed according to a common analytical framework. This framework can be summarised as follows: a horizontal cooperation agreement is only able to restrict competition if it is likely to reduce competition in the market to such an extent that negative market effects as to prices, output, innovation or the variety or quality of goods and services can be expected. To cause a restriction of competition the parties normally need appropriate tools to coordinate their behaviour and a degree of market power. Consequently, cooperation has to be assessed in its economic context taking into account both the nature of the agreement and the parties' combined market power, which determine - together with other structural factors - the capability of the cooperation to reduce overall competition to such a significant extent.

30. These two criteria normally have to be assessed together. There are, however, some instances where the nature of the cooperation indicates from the outset that it is caught by Article 81(1). This concerns primarily agreements that have the object of restricting competition by means of price fixing, output limitation or sharing of markets, customers or sources of supply. These so-called "hardcore" restrictions are considered to be the most harmful, because they directly interfere with the outcome of the competitive process. It can therefore be presumed that these restrictions have negative market effects and do not result in any efficiency gains or benefits to consumers. They are therefore almost always prohibited.

31. On the other hand, there are also some horizontal agreements regarding which it can be said from the outset Article 81(1) does not generally apply. These include agreements between non-competitors, agreements between competing companies that cannot independently carry out the project or activity covered by the cooperation, or cooperation concerning an activity which does not influence the relevant parameters of competition. These cooperation agreements could only come under Article 81(1) if they involve firms with significant market power and are likely to cause foreclosure problems vis-à-vis third parties.

32. All other agreements need to be examined in the light of each of the two criteria (nature of the agreement and market power and market structure) in order to decide whether they fall under Article 81(1).

33. The discussion by category of agreement makes it easier to take account of specific competition problems related to the different forms of cooperation. It also addresses the most common types of combination, e.g. joint R&D with subsequent joint production.

34. In the absence of hardcore restrictions and below a certain level of market power, defined in terms of market share, the guidelines provide so called "safe havens" for purchasing agreements and marketing agreements. Similar to coverage by a block exemption regulation, once inside these safe havens, economic operators do not normally have to assess the impact of their agreements on the market.

35. In the case of purchasing agreements, while recognising that there is no absolute threshold which indicates that buying cooperation creates some degree of market power and thus falls under Article 81(1), the guidelines stress that in most cases it is unlikely that such market power exists if the parties to the agreement have a combined market share of less than 15% on the purchasing market(s) as well as a combined market share of less than 15% on the selling market(s). Where an agreement below these market share thresholds falls under Article 81(1), the guidelines state that below those levels of market share it is likely to fulfil the conditions of Article 81(3). [17]

[17] See paragraph 130 of the guidelines.

36. In the case of marketing agreements which do not involve the fixing of prices, the guidelines stress that, in most cases, it is unlikely that a sufficient degree of market power exists if the parties to the agreement have a combined market share of less than 15%. Where an agreement below this level of market share falls under Article 81(1), the guidelines state that below this level of market share it is likely to fulfil the conditions of Article 81(3). [18]

[18] See paragraph 149 of the guidelines.

3. Proposal for a new regulation implementing Articles 81 and 82 of the EC Treaty

37. On 27 September the Commission adopted a proposal for a new regulation implementing Articles 81 and 82 of the EC Treaty. [19] The new regulation is designed to replace Regulation No 17 of 1962 as well as the procedural rules contained in Regulations (EEC) Nos 1017/68, 4056/86 and 3975/87 regarding transport. The implementation of the competition rules in the agricultural sector is to remain governed by Regulation No 26 of 1962.

[19] COM(2000) 582, not yet published.

38. The proposal for a new implementing regulation follows on from the Commission's White Paper of 28 April 1999 on the modernisation of the rules implementing Articles 85 and 86 (now Articles 81 and 82) of the EC Treaty, [20] which launched a large-scale public and academic debate. While preparing the proposal, the Commission consulted a large number of interested parties. In particular, the Commission held in-depth discussions on a range of topics related to the implementation of the White Paper proposals with a working group of experts from the Member States' competition authorities. Experts from the EFTA Surveillance Authority and the EFTA member countries' competition authorities were included in the consultations. In drafting the proposal, the Commission also took into account the results of the public consultation following the White Paper and, in particular, the views expressed on the White Paper in the resolution adopted by the European Parliament on 18 January 2000 and the opinion delivered by the Economic and Social Committee on 8 December 1999. Both institutions supported the Commission's approach in the White Paper while underlining the importance of ensuring consistent application of Community competition law in a system of parallel powers and maintaining an adequate level of legal certainty.

[20] COM(1999) 101 (OJ C 132, 12.5.1999).

39. The general thrust of the proposal for a new implementing regulation is based on the White Paper. In particular, the Commission's proposal aims at bringing about the transition from the notification and authorisation system of Regulation No 17, which has become inefficient for the protection of competition in the Community, to an implementing system based on the direct applicability of Article 81 as a whole. The changeover to the new system is provided for in Articles 1 and 6 of the proposal: Article 1 lays down the principle of the direct applicability of Article 81 as a whole, and Article 6 confers on national courts the power also to apply Article 81(3) when Article 81(1) is invoked.

40. In the light of the large-scale debate and taking into account concern about the risk of "renationalisation" of competition law (voiced in particular by the European Parliament) as well as fears about legal certainty for companies in the new system, the Commission refined its proposals in a number of respects. As a result, the proposed new regulation focuses on three major objectives:

- more efficient enforcement;

- a more level playing field in the single market;

- an appropriate degree of legal certainty for companies.

3.1. More efficient enforcement

41. The proposed system will result in increased enforcement of Community competition rules. A larger number of enforcers will apply the rules as - following the removal of the Commission's exclusive powers to take an exemption decision under Article 81(3) - not only the Commission, but also national competition authorities and national courts will be able to apply Articles 81 and 82 in their entirety. In addition, the abolition of the notification and authorisation system will allow the Commission to focus on the detection and prosecution of the most serious infringements.

42. Specific elements of the proposal are aimed at reinforcing the overall effect of the transition to a legal exception system. For example, the Commission's proposal makes provision for more efficient enforcement by national authorities through horizontal cooperation. Article 12 of the proposal creates a legal basis for the exchange of all kinds of information between the Commission and the Member States' competition authorities, and for using such information as evidence in proceedings which apply EC competition law.

43. In order to guarantee the protection of competition, it is also necessary to ensure that the Commission's powers of investigation are sufficient and effective. From the time the White Paper was published and in the light of the reactions it elicited, the Commission's thinking in this area has evolved on several points. The proposal contains three main improvements to ensure more effective application of Articles 81 and 82.

44. First, it is proposed that the powers available to Commission officials in carrying out inspections should be adapted. The experience of the national competition authorities and the Commission shows that incriminating documents are more and more frequently kept at and discovered in private homes. Under the proposed regulation, Commission inspectors will therefore be empowered, subject to judicial authorisation by the responsible national court, to search the private homes of company employees if it is suspected that business documents are being kept there. It is further proposed that Commission inspectors should be empowered to seal cupboards or offices in order to ensure that documents are not removed and destroyed during inspections. Finally, Commission inspectors should be entitled to ask oral questions relating to the subject-matter of the inspection.

45. Secondly, abandoning the idea set out in the White Paper of centralised judicial review by the Court of First Instance, the Commission now proposes to codify the rules governing judicial orders at national level. This will apply in circumstances where an undertaking refuses to permit the Commission to carry out an inspection, and will clarify the scope for intervention by national judges in accordance with the limits already established by the Court of Justice.

46. Thirdly, as announced in the White Paper, the Commission proposes to adapt the fines for breaches of procedural rules and the periodic penalty payments, which were set in absolute terms in the 1960s. A system based on turnover percentage figures is considered the appropriate solution.

3.2. Regulating the relationship between Articles 81 and 82 and national competition laws

47. The public consultation as well as Parliament's resolution and the Economic and Social Committee's opinion identified the need to ensure a level playing field throughout the single market as a major challenge of the reform.

48. In the light of these concerns and taking into account the scope for more efficient enforcement, the Commission has proposed a new article, on the basis of Article 83(2)(e) of the EC Treaty, to regulate the relationship between Articles 81 and 82 and national competition laws (Article 3 of the proposal). This article stipulates that when an agreement or practice is capable of affecting trade between Member States, only Community competition law applies.

49. The rationale behind this article in the proposal is as follows: in the present system, the same agreement or conduct may be subject to Community competition law and several national competition laws. In accordance with the principle of primacy of Community competition law, established by the Court of Justice in Walt Wilhelm, [21] national law can be applied only in so far as it does not prejudice the uniform application of the Community competition rules throughout the single market. The primacy principle resolves clear conflicts in favour of Community law. It is not, however, effective in preventing inconsistencies and differences in the treatment of agreements and practices affecting trade between Member States under different national laws.

[21] Case 14/68 [1969] ECR 1.

50. Article 3 ensures that agreements and practices capable of affecting cross-border trade are scrutinised under a single set of rules, thereby promoting a level playing field throughout the Community and eliminating the costs which the parallel application of Community law and national laws create for both competition authorities and business. The provision does not limit the scope for action by national competition authorities, which will be able to apply Community law. Experience gained at national level can contribute to the development of Community competition policy within the network of competition authorities.

51. The article also ensures that all cases concerning agreements and practices affecting trade between Member States are subject to the cooperation machinery inside the network, and eliminates the risk that the proper functioning of the network might be jeopardised by the concurrent application of Community competition law and national competition law.

3.3. Cooperation in the network between the Commission and the national competition authorities

52. With regard to national competition authorities, the creation of a network in which all members apply the same law and policy will greatly promote efficiency, consistency and a level playing field throughout the single market. The formal basis for establishing the network is to be found in Article 11 of the proposed regulation.

53. The Commission is confident that close cooperation in the network will foster the development of a common competition culture throughout the Community. Given the crucial importance of consistent application, certain formal mechanisms have additionally been proposed. Article 11(4) of the proposed regulation requires national competition authorities to consult the Commission before adopting prohibition decisions, decisions accepting commitments and decisions withdrawing the benefit of a block exemption regulation. All such decisions have direct repercussions for the addressees. It is therefore important to ensure that they are consistent with the general practice of the network. In the event of substantial disagreement within the network, the Commission retains the power to withdraw a case from a national competition authority by itself initiating proceedings in that case.

54. The Commission has no intention of using the mechanisms of the proposed Article 11 as a basis for becoming involved in the detail of Member State competition authorities' decisions in a systematic manner. These mechanisms are intended as a safety net to detect and remedy serious problems of inconsistent application.

55. In order to clarify further the basis for cooperation in the network, the Commission is in the process of preparing a draft notice on cooperation in the network, including in particular clear but flexible arrangements for case allocation based on the concept of the best-placed authority. This will replace the notice currently in force. Subsequently, an in-depth discussion with the Member States' competition authorities should lead to the adoption of a commonly shared understanding that will enable the network to start functioning.

3.4. Enhanced cooperation with national courts

56. The Commission's proposal is also aimed at reinforcing cooperation between the Commission and national courts in order to promote consistent application of Articles 81 and 82.

57. Article 15 of the proposed regulation entitles national courts to obtain information in the Commission's possession which they need for the purpose of applying Articles 81 and 82. They can also ask the Commission for an opinion on questions relating to the application of the Community competition rules. The Commission will set out detailed rules on its practice in this field in a notice, to replace the existing notice on cooperation between national courts and the Commission. These rules will include a deadline within which the Commission must reply to requests from national courts.

58. The same article would introduce a right for the Commission and national competition authorities to make submissions to national courts in written or oral form. In the case of national competition authorities, the power is limited to the courts of their own Member State. The Commission may act under this provision only in the Community public interest (as amicus curiae), i.e. not in the interest of one of the parties. This provision is aimed in particular at permitting the Commission and national competition authorities to draw the courts' attention to issues of considerable importance for the consistent application of Community competition law. Using this mechanism the Commission would for example be able to bring to the attention of the courts cases from other Member States in which an identical or a similar problem was raised. The national courts are not bound to follow an opinion expressed by the Commission or a national competition authority. The information from the Commission may however be useful to courts when considering whether to make a reference to the European Court of Justice.

3.5. Ensuring an appropriate level of legal certainty for companies

59. Under the existing Regulation No 17 an agreement or decision caught by Article 81(1) can become valid, i.e. enforceable before a civil court, only if it is notified to and exempted by the Commission. In practice, most notified cases are closed by a non-binding administrative letter from the Commission departments ("comfort letter").

60. The proposed regulation removes the bureaucratic obstacles connected with the notification and authorisation procedure while maintaining an adequate degree of legal certainty. In particular, under the proposed new system agreements and decisions which satisfy the conditions of Article 81(3) are valid and enforceable ab initio with no administrative decision to that effect being required. Undertakings can therefore rely on civil enforceability as an element of improved legal certainty independently of any action by an administrative authority.

61. The proposed regulation does not remove the need for undertakings to assess their business transactions in order to verify whether they are in compliance with the competition rules. Under the present Regulation No 17, this analysis is carried out by undertakings when preparing a notification. The proposal treats the application of the Community competition rules in the same way as other areas of law where undertakings are required to ascertain themselves that their behaviour is lawful.

62. In the field of Community competition law, the companies' task of assessing their behaviour is facilitated by block exemptions and Commission notices and guidelines clarifying the application of the rules. Alongside the current reform, the Commission commits itself to making an even greater effort in this area. In this context, Article 28 of the proposed regulation confers on the Commission a general power to adopt block exemption regulations. This power will ensure that the Commission is in a position to react sufficiently swiftly to new developments and changing market conditions.

63. In addition, under the new system, with a larger number of decision-makers applying Article 81(3), case-law and practice on the interpretation of that provision will rapidly develop where it does not yet exist, thereby inherently reinforcing the framework for assessment. The Commission will further contribute to this development by continuing to set policy through its own decisions in individual cases. In addition to prohibition decisions, the proposed regulation provides that in cases where it is in the Community public interest to do so, the Commission, acting on its own initiative, can adopt decisions finding that no infringement has been committed. This will permit the Commission to set out its position in a landmark case so as to clarify the law for all companies that find themselves in similar situations.

64. To address the rare situations in which a genuine problem of legal predictability arises, the Commission will remain open to discussing specific cases with undertakings where necessary. In appropriate cases the Commission envisages furthermore to provide guidance to companies in the form of opinions. This possibility must remain at the discretion of the Commission so as not to jeopardise the intended refocusing of the Commission's enforcement activities. The Commission is in the process of preparing a notice on the mechanism for further guidance that will set out the criteria under which the Commission will examine requests for opinions as well as the practical arrangements for these requests.

3.6. State of play in the legislative process

65. The Commission proposal has been transmitted to the Council, the European Parliament and the Economic and Social Committee.

66. A Council working group has been discussing the proposal since the beginning of October. On 5 December the Industry Council took note of progress in the working group. Work will continue under the Swedish presidency in 2001.

67. The European Parliament has referred the proposal to its Committee on Economic and Monetary Affairs, and Mr Evans (PPE/UK) has been appointed rapporteur. The Committee on Economic and Monetary Affairs held a first exchange of views on 21 November. A public hearing took place on 27 February 2001. The European Parliament expects to adopt its resolution in June 2001.

B - Enforcement of Articles 81, 82 and 86

1. Article 81

1.1. Cartels

68. Cartels are secret horizontal agreements concluded by the main economic operators in a given market in order to eliminate competition between them, artificially raise prices and restrict output. These attempts to replace a competitive environment - the driving-force of a market economy - with coordinated and centrally controlled regulation of the market are by far the most destructive infringements of competition law.

69. Cartel participants conspire to maintain an illusion of competition while in reality customers have no effective choice and must pay higher prices. This has an immediate effect on the whole chain of supply and ultimately affects the end consumer. International cartels are estimated to represent a drain of hundreds of millions of euros on the European economy. Moreover, since cartel prices are commonly fixed in line with the costs of the least competitive producer, they create disincentives for more efficient companies to improve product quality, technology and generally rationalise production and sales methods.

70. In a context of economic globalisation where the potential damage caused by cartels is increasingly severe, the Commission reaffirmed its commitment to detecting and punishing them with the utmost determination. In this respect, after the creation of a specialised cartel unit in December 1998, the far-reaching reform of Regulation No 17, currently under discussion, will be a major element in stepping up the European Community's fight against cartels. Indeed, the Commission is proposing a significant reinforcement of its powers of investigation so as to be better equipped to meet the challenge of increasingly active and sophisticated cartels.

71. Since 1998, the number of cartel cases investigated by the Commission has increased dramatically. Most of these investigations were still ongoing in 2000 and are likely to result in prohibition decisions in the course of 2001. This significant increase in the number of cases is largely due to the positive effects of the Commission's 1996 notice on the non-imposition or reduction of fines in cartel cases (the "leniency notice"). [22] An increasing number of companies that are or have been involved in hardcore anticompetitive activities are now considering the benefits they could receive through the leniency programme by cooperating with the Commission.

[22] OJ C 207, 18.7.1996.

72. While cartel investigations remain in principle confidential until a final decision is adopted, press releases may be issued in specific circumstances, where appropriate. The Commission may, for instance, do this when an investigation was triggered by complaints, and/or when it wants to bring a case to third parties' attention. In this respect, the Commission confirmed in July the existence of an ongoing cartel investigation in the vitamins sector. It also announced in the same month the opening of proceedings against nearly 120 banks and banking associations with regard to their possible participation in price-fixing activities concerning charges applicable to the exchange of currencies in the euro zone.

73. Three formal decisions prohibiting cartels were adopted in 2000, in the maritime sector, the animal feed industry and the chemicals industry.

FETTCSA

74. On 16 May the Commission imposed fines totalling just under EUR 7 million on fifteen liner shipping companies for agreeing not to offer discounts on their published tariffs. The companies were members of the now defunct Far East Trade Tariff Charges and Surcharges Agreement (FETTCSA) and comprised the members of the Far Eastern Freight Conference (FEFC) liner shipping conference as well as the FEFC's principal competitors. They included Hapag-Lloyd (Germany), Maersk Sealand (Denmark) and P&O Nedlloyd (UK). The addressees of the decision discussed possible ways of aligning their commercial practices concerning charges and surcharges. This led to an agreement not to discount public tariffs. [23]

[23] OJ L 268, 20.10.2000.

75. The Commission found that that agreement infringed the cartel prohibition enshrined in Article 81 of the EC Treaty and rejected the companies' contention that FETTCSA was merely a "technical agreement" permitted under the competition rules applicable to shipping services.

76. The Commission calculated the fines with reference to its published guidelines. However, whereas a horizontal price agreement between competitors with high market shares should normally be considered a "very serious" infringement attracting fines of at least EUR 20 million per company, it was found appropriate in this case to class the infringement as simply "serious". An agreement not to discount was ultimately considered less harmful than actually fixing prices. The fact that any harmful effects were likely to have been of short duration was also taken into account.

77. The Commission also took account of the fact that the FETTCSA agreement was abandoned immediately after the companies received a statement of objections in 1994 and that no more meetings had taken place after a warning letter was sent to the companies by the Commission in 1992. Further considerations were the fact that the Commission had received a limited amount of cooperation from the parties and the length of the proceedings, due largely as this was to the existence of other, more important, cases in this sector.

The lysine cartel

78. On 7 June the Commission imposed fines totalling EUR 110 million on five companies for operating a global price-fixing cartel for lysine, the most important amino acid used in animal foodstuffs for nutritional purposes (amino acids are the building blocks of proteins). The Commission's investigation found that Archer Daniels Midland Co (United States), Ajinomoto Co (Japan), Cheil Jedang (Korea), Kyowa Akko (Japan) and Sewon (Korea) fixed lysine prices worldwide, including in the European Economic Area. In order to maintain the fixed prices, the five companies also fixed sales quotas and exchanged sensitive information from at least July 1990 to June 1995. [24]

[24] Commission press release IP/00/589, 7.6.2000.

79. The interest of the decision lies primarily in the methodology that the Commission followed to set the fines at the above levels. This is borne out by the fact that the major part of the decision's legal assessment deals with the question of fines and the arguments advanced by the parties concerning this issue. In the decision, the Commission not only applied the principles set out in its 1998 guidelines concerning the method of setting fines (the "methodology guidelines"); [25] it also applied for the first time its 1996 notice on the non-imposition or reduction of fines in cartel cases (the "leniency notice"), to take account of cooperation offered by two cartel participants from the very beginning of its investigation, as well as lesser degrees of cooperation later offered by the other participants. [26]

[25] OJ C 9, 14.1.1998.

[26] OJ C 207, 18.7.1996.

80. The conspiracy prohibited by the Commission's decision is a straightforward, hardcore price and sales quota cartel that is per se illegal. None of the companies actually contested the facts. They operated the cartel from at least July 1990 to June 1995. Two participants joined the cartel only in mid-June 1992 (ADM and Cheil Jedang). The Commission started its investigation in July 1996, shortly after the US antitrust authorities had charged several cartel participants with engaging in an illegal conspiracy. It did so when one of two ringleaders of the cartel (Ajinomoto, the other one being ADM) decided to inform the Commission about the existence of the cartel between June 1992 (when ADM entered the EEA lysine market) and June 1995.

81. In order to set the basic amount of the fines, the Commission first of all assessed the gravity of the infringement. In this respect, it classes the cartel as a very serious infringement with a real impact on the relevant EEA market in so far as it has led to price levels which were higher than would have been the case under normal conditions of competition. The Commission explains, however, that there are grounds for differential treatment of the five cartel participants. It indeed takes account of the considerable disparity between their size and thus between their capacity to cause significant damage to the EEA customers. Worldwide turnover is taken as the basis for comparing their relative size because it is this turnover that enables the Commission to assess the real resources and importance of the companies involved. On this basis, the Commission groups together, on the one hand, ADM and Ajinomoto and, on the other hand, the other three, much smaller, companies. In the context of gravity, the Commission also explains that it does not take account of the criminal fines imposed by the US and Canadian antitrust authorities because - according to the information provided by those authorities - those fines only took account of the anticompetitive effects that the worldwide cartel produced in their own areas of jurisdiction. Apart from gravity, duration is, according to the 1998 guidelines, the other parameter for setting the basic amount of the fine. In the present case, the duration is medium (three to five years), each extra year adding a further 10% - again according to the 1998 guidelines - to the amount of the fine.

82. As far as aggravating and mitigating circumstances are concerned, the Commission's observations are as follows. It takes the view that both ADM and Ajinomoto have been ringleaders. This aggravating factor leads to an increase of their fine by 50%. The Commission identifies few mitigating circumstances in the decision. Cheil Jedang's passive role in the final stages of the cartel earns that company a small reduction of its fine and all cartel participants obtain a decrease of 10% for having terminated the infringement as soon as a public authority (in this case the US antitrust authorities and the FBI) intervened.

83. Under the leniency notice, the Commission can decide not to impose or to reduce the fines for parties who have cooperated with it in the course of the proceedings. In the present case, the companies cooperated with the Commission at different stages of the investigation and in relation to different periods covered by the investigation into the infringement. For reasons explained at length in the decision, none of the companies meets the conditions for obtaining immunity from fines, a "very substantial" reduction of the fine (i.e. at least 75%) or even a "substantial" reduction (i.e. between 50% and 75%). All companies obtain, however, a "significant" reduction of their fine (i.e. between 10% and 50%) for their cooperation.

84. Ajinomoto and Sewon are the two companies which cooperated most with the Commission. Ringleader Ajinomoto handed over decisive (though not complete) information about the cartel before the Commission had started its investigation. Sewon came in later and furnished complete, decisive evidence, essentially in response to the Commission's formal request for information. For these reasons, the Commission grants both companies the highest possible reduction of the fine, i.e. 50%.

85. Kyowa Hakko Kogyo and Cheil Jedang also provided some material, though not decisive, evidence of the cartel's existence. This earns them a 30% reduction in the fine.

86. Finally, ADM did not cooperate with the Commission during the fact-finding phase of the procedure. Following the receipt of the Commission's statement of objections, however, it informed the Commission that it did not substantially contest the facts set forth in that document. The Commission considers that ADM qualifies for a reduction in the amount of the fine of 10%.

87. Since the adoption of the decision, all the companies involved except Ajinomoto have brought an action for annulment before the Court of First Instance. [27]

[27] Cases T-224/00 ADM, T-220/00 Cheil, T-223/00 Kyowa and T-230/00 Sewon.

Re-adoption of decision annulled on procedural grounds

88. On 13 December the Commission re-adopted a decision imposing a fine of EUR 3 million on the Belgian company Solvay SA for its participation in the soda ash cartel in the late 1980s. Soda ash is a chemical used in the manufacture of glass. During the period considered, Solvay had concluded an agreement with a German company guaranteeing the latter a minimum volume of sales, with Solvay itself buying up any unsold quantity, so as to keep the price of soda ash artificially high in Germany. This constituted an infringement of Article 85 (now 81) of the EC Treaty. [28]

[28] Press release IP/00/1449, 13.12.2000.

89. The original decision imposing a fine on Solvay and the German company was adopted on 19 December 1990, but was finally struck down by the Court of Justice on purely procedural grounds: the decision was authenticated by the signatures of the Commission's President and Secretary-General only after its notification to the addressees. When a decision is annulled by the Court on purely procedural grounds, the Commission is entitled to re-adopt the decision as far as it remains substantively unchanged. The Commission therefore re-adopted the decision imposing the fine on Solvay. The German company did not appeal against the original decision and has paid its fine of EUR 1 million.

1.2. Other forms of agreement

90. Article 81 deals not only with cartels, but also with other forms of agreement between undertakings that restrict or distort competition. This can be the case with cooperation agreements between competitors or distribution agreements between producers and retailers. While such agreements could nevertheless be exempted from the ban imposed by Article 81 - if the conditions set out in Article 81(3) are fulfilled - there are cases when the advantages to consumers of such agreements are not enough to justify the loss of competition that they entail. In those cases the Commission would ask the parties to modify or withdraw their arrangements. Ultimately the Commission may require the arrangements to be dismantled if they have been already implemented, as well as impose fines.

1.2.1. Airline alliances

91. The airline sector is characterised by a number of alliance agreements. This can be explained by the regulatory barriers that currently make it difficult for airlines from different Member States to merge their activities in other ways. The Commission has carried out a number of investigations into agreements between European airlines leading, in the year 2000, to formal steps in the case of the Qualiflyer alliance and the cooperation between Lufthansa and SAS and Austrian Airlines. These cases are discussed in greater detail in the air transport section of this report. [29] The Commission's investigations into a number of other airline alliances are continuing, including some of the transatlantic airline alliances.

[29] Section I.C, Chapter 2.5.1 on air transport.

1.2.2. Distribution agreements

92. In the case of distribution agreements, the Commission is particularly concerned with the risk that they may result in partitioning of the EU market, thereby jeopardising the single market objective.

Opel

93. The right for consumers to buy products more cheaply in other Member States is one of the main benefits of the single market. The Commission showed its determination to guarantee this right by deciding to impose a fine of EUR 43 million on Opel Nederland. [30] The Dutch importer of cars of the Opel brand obstructed exports of new cars to final consumers from other Member States, between September 1996 and January 1998. This is the second major Commission decision, following that taken in Volkswagen in January 1998, where complaints from consumers have prompted the Commission to investigate practices of car manufacturers and their importers and to impose heavy fines. [31] It was therefore confirmed that measures taken by undertakings that undermine the proper functioning of the single market constitute a very serious infringement of European competition rules and are dealt with severely.

[30] Decision of 20 September (OJ L 59, 28.2.2001); IP/00/1028, 20.9.2000. On 1 December Opel brought an action for annulment of the Commission's decision before the Court of First Instance (Case T-368/00).

[31] See also Section I.C, Chapter 1.1.1 on motor vehicles.

JCB

94. On 21 December the Commission adopted a decision finding that the company JCB Service, the parent company of the UK-based JC Bamford Group, had infringed Article 81 of the EC Treaty. [32] The distribution agreements for JCB construction and earthmoving equipment concluded between the JCB Group and its network of exclusive distributors were aimed at walling off the French, UK, Irish and Italian markets within the Community. The agreements included a number of measures designed to restrict sales by distributors outside their exclusive territories. The Commission decision requires JCB Service to put an end to the infringement and to pay a fine of EUR 39.6 million.

[32] Press release IP/00/1526, 21.12.2000.

1.2.3. Environmental agreements

CECED

95. Article 6 of the EC Treaty stipulates that Community policy on the environment must be integrated into the other Community policies. Environmental concerns are in no way incompatible with competition policy, provided that restrictions of competition are proportionate and necessary for achieving the environmental objectives pursued.

96. This principle is clearly illustrated by the CECED decision, [33] in which the Commission approved for the first time an agreement to stop production with a view to improving the environmental performance of products. The participants in the agreement, nearly all the European producers and importers of domestic washing machines, will stop producing or importing into the EU the least energy-efficient machines in order to reduce the energy consumption of such appliances and thereby reduce pollutant emissions from power generation.

[33] F-1/36.718; OJ L 187, 26.7.2000; press release IP/00/148, 11.2.2000.

97. Although participants restrict their freedom to manufacture and market certain types of washing machine, thereby restricting competition within the meaning of Article 81(1) of the EC Treaty, the agreement fulfils the conditions for exemption under Article 81(3): it will bring advantages and considerable savings for consumers, in particular by reducing pollutant emissions from electricity generation. The Commission decision to exempt the agreement takes account of this positive contribution to the EU's environmental objectives, for the benefit of present and future generations.

2. Articles 82 and 86

98. Article 82 prohibits undertakings in a dominant position on a given market from abusing this situation to the detriment of third parties. Such abuse consists, inter alia, in limiting production, charging excessive, discriminatory or predatory prices, tying sales, and imposing supplementary obligations unrelated to the product or service sold. The Commission takes the view that undertakings which are free from competitive constraint commit a particularly dangerous abuse when they block or delay - through unfair practices - the entry of competitors into the market. For this reason the Commission is particularly alert to the effects of dominant positions in recently liberalised markets, where there is a danger that the behaviour of the incumbent company will deny the benefits expected from these processes in terms of restructuring, innovation or job creation.

99. Article 86 specifies that competition rules also apply to public undertakings and undertakings to which Member States grant special or exclusive rights, in sofar as the application of such rules does not obstruct the performance of the particular tasks assigned to them.

100. Details of decisions adopted or formal proceedings opened in pursuance of Article 82, and Article 86 read in conjunction with Article 82, are given in the sectoral part of this report on postal services [34] and air transport. [35]

[34] Section I.C, Chapters 2.4.3, 2.4.4 and 2.4.5.

[35] Section I.C, Chapter 2.5.2.

Selective rebates in the chemical industry: re-adoption of decision

101. On 13 December the Commission re-adopted two decisions, one imposing a fine of EUR 20 million on the Belgian company Solvay SA and the other a fine of EUR 10 million on the UK company Imperial Chemicals Industries (ICI) plc, with respect to their abuse of their dominant position on the soda ash market during the 1980s. Soda ash is a chemical used in the manufacture of glass. During the period in question, Solvay and ICI had established a system of rebates designed to avoid any danger of real competition in their respective "territories", that is to say western continental Europe in the case of Solvay and the United Kingdom and Ireland in the case of ICI.

102. ICI and Solvay each set up a system of what were called "top-slice" rebates aimed at keeping competitors off the market. Most glass manufacturers, the major users of soda ash, have one main supplier for their core requirements, but like to have a second supplier so as not to be completely dependent on the first. To minimise the competitive impact of second suppliers of this kind Solvay and ICI developed a two-tier pricing system. The core tonnage was sold at the normal price, but the additional quantities that the customer might otherwise have bought from another supplier - the "top slice" - were offered at a substantial (and secret) discount.

103. In some cases this meant that Solvay and ICI offered the marginal tonnage at virtually half price. It was made clear to customers that the special price for the top slice depended on their agreeing to take most, if not all, of their requirements from the dominant producer. The effect was to prevent other producers from entering into genuine competition with Solvay and ICI. In order to compete, they would have had to offer very large discounts on their entire sales volume, whereas Solvay and ICI were doing this only on the top slice. The Commission took the view that these were very serious infringements of Article 86 (now Article 82) and adopted on 19 December 1990 two decisions imposing what were considered heavy fines at the time. The Court of Justice annulled these decisions on purely procedural grounds: in such cases the Commission is entitled to re-adopt the decision as far as it remains substantively unchanged. [36]

[36] See also point 88.

Box 2: The impact of competition policy on consumers

Consumers are not the only beneficiaries of competition policy, but they can be regarded as important ones. When competitive conditions are in place, producers try to attract customers by offering them a lower price, higher quality or better service than their competitors. Consumers also benefit in the long run when efforts made by firms to overcome their competitors eventually lead to greater innovation and efficiency in the production of certain goods or services. However, it is not always easy or, indeed, possible to quantify the impact on consumers of competition policy decisions. As pointed out, firms compete not only on prices and there are many other ways in which consumers could gain from certain policy decisions, e.g. by way of greater product variety or better contractual terms. In other cases, competition policy decisions concern an intermediate stage of production, so that the final consumer is not directly involved. When that is the case, antitrust decisions may increase competition in the input markets, creating the conditions for lower end-product prices; it is, however, hard to quantify how much the final consumer is likely to gain.

In this report the reader will find references to many antitrust and merger decisions. Here below we would like to point out a few of them which we believe can illustrate the sort of benefits that consumers can expect from competition policy.

The decision against Opel Nederland [37] is the second main case concerning obstacles to parallel trade in cars, after that taken in Volkswagen in 1998. [38] The decision requires the Dutch importer of Opel cars to lift measures preventing or restricting consumers from other Member States from buying new cars of the Opel make for immediate re-export. This decision is aimed at guaranteeing the right for consumers to buy a car without impediment in the Member State where prices are low. Should parallel imports attain a substantial level, they will exert some pressure on car manufacturers to reduce prices for cars in those Member States where they are higher. Parallel imports would also create the incentive for car dealers to improve service and provide other benefits.

[37] See also point 106.

[38] OJ L 124, 23.4.1998.

In the Telefónica/Sogecable/Audiovisual Sport case, [39] involving the market in pay-TV rights to football matches in Spain, the Commission's action has put an end to the agreement to fix the price for watching football matches in Spain in pay-per-view. In the early days of September 2000, when the new football season began, there was evidence of very strong competition between the broadcasters in the form of promotions based on the transmission of football matches. While these offers focused on new subscribers, there was also evidence that some cable operators reduced significantly the prices they charged all categories of customer. Later, the Spanish digital terrestrial operator cut pay-per-view football prices by up to 50%. Thanks to the Commission's action consumers will also benefit from a much broader choice: football rights previously available only to digital satellite operators will be accessible also to other broadcasters, giving rise to a wide range of football transmissions on all three digital delivery systems (satellite, terrestrial and cable).

[39] See also point 220.

In the case of the merger between the German electricity companies Veba and Viag, [40] the operation was made conditional on full compliance with strict divestment undertakings by the parties. This was to ensure that competition in the recently liberalised German electricity market would not be impeded by a dominant duopoly between Veba/Viag and their biggest competitor RWE. In dealing with the case, the Commission cooperated closely with the German Bundeskartellamt, which had to investigate the parallel merger of RWE and VEW and cleared it under similar conditions. As a result, German electricity consumers will continue to benefit from competition in electricity supply, which has already led to significant price cuts for both industrial and household consumers since regional monopolies of power utilities were legally abolished two years ago. Without the far-reaching conditions imposed by the Commission and the Bundeskartellamt, the two mergers would have led to a situation where, in the absence of effective competition, prices in Germany would have been likely to increase again towards the previous level, cancelling out the benefits of liberalisation. Enhanced competition in electricity supply as a result of liberalisation may also lead to improvement of the services offered by utilities (e.g. multi-utility services, more consumer choice as regards sources of supply - "green" power, etc.).

[40] See also point 261.

The Commission has also imposed conditions on the merger between TotalFina and Elf Aquitaine, [41] which would have risked impeding effective competition on several product markets in France. These included such vital markets for consumers as the wholesale market in domestic heating fuel, the retail market in liquefied petroleum gases (LPG) and the sale of motor fuel on French motorways. The required sell-off of a large proportion of the merged entity's investments in transport and storage logistics will allow non-integrated producers to remain competitive in the retail market for domestic heating fuel and for LPG and, therefore, exert downward pressure on prices. On the market for motor fuel on motorways, the required divestment of 70 petrol stations will preserve conditions of effective competition and allow the entry of a large retail operator (Carrefour) in a sector traditionally monopolised by energy groups. This latter aspect should develop competition not only on prices, but also on the supply of additional services to consumers.

[41] See also point 257.

C - Sector-based survey

1. Basic industries, consumer and investment goods

1.1. Motor vehicles

104. Under Regulation (EC) No 1475/95 [42] motor vehicle distribution agreements between manufacturers and dealers for vehicle sales and servicing are exempted from the ban enshrined in Article 81. The method of distribution covered by the regulation is a combination of exclusive and selective distribution. Vehicles are only sold through authorised dealers, who are allocated an exclusive sales territory (or a territory in which the number of other dealers belonging to the same network is limited), and sales to intermediaries who are not authorised by the manufacturer are prohibited. The block exemption was granted on the assumption that inter-brand and intra-brand competition was effective in the motor vehicle sector, that the commercial independence of distributors would be strengthened and that the system would be advantageous to consumers. The exemption granted by the regulation expires on 30 September 2002.

[42] Commission Regulation of 28 June 1995 on the application of Article 81(3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements (OJ L 145, 29.6.1995).

105. The regulation contains many provisions aimed at stepping up competition in the distribution of vehicles and spare parts in order to enable consumers to take advantage of all the potential benefits of the single market, in particular by being able to make cross-border purchases.

1.1.1. Application of the block exemption regulation in 2000: infringements

106. Despite these provisions, the Commission found in Opel Nederland [43] that motor vehicle distribution agreements are not always advantageous to consumers. Between September 1996 and January 1998, the importer of Opel cars in the Netherlands, Opel Nederland BV, a subsidiary of General Motors Nederland BV, put into effect measures restricting or preventing export sales by its dealers to both final customers and intermediaries, thereby very seriously undermining the proper functioning of the single market, one of the Community's fundamental objectives. Given the seriousness and duration of the infringement, the Commission fined Opel Nederland EUR 43 million. Coming after the Volkswagen case, [44] this is the second major decision finding against a motor vehicle manufacturer since Regulation 1475/95 came into force.

[43] Decision of 20 September 2000 (OJ L 59, 28.2.2001); press release IP/00/1028, 20.9.2000. On 1 December Opel brought an action for annulment of the Commission's decision before the Court of First Instance (Case T-368/00).

[44] Decision of 28 January 1998 (OJ L 124, 25.4.1998); press release IP/98/94, 28.1.1998.

107. In its judgment of 6 July in Volkswagen [45] the Court of First Instance confirmed the seriousness of infringements of this kind, which prevent consumers from benefiting fully from the advantages offered by the single market. The CFI upheld the substance of the Commission decision but found that it had not adduced sufficient proof of the existence of two of the five measures with which it found fault. The CFI based its assessment of the fine on a duration of three years instead of the ten years taken into account the decision, and reduced the fine from EUR 120 million to EUR 90 million.

[45] Case T-98/273 (press release IP/00/725, 6.7.2000). On 14 September Volkswagen submitted an appeal against the CFI's decision to the Court of Justice (Case C-338/00).

108. In the same vein, the Commission is continuing to investigate other cases involving motor vehicle manufacturers to whom it sent statements of objections in 1999, and is also investigating other cases in which measures were taken to prevent or restrict cross-border trade.

109. One distinctive feature of the Opel and Volkswagen cases and of the other investigations in hand is that they were prompted by complaints. Each year, the Commission receives hundreds of letters from consumers and authorised intermediaries complaining of difficulties encountered when buying a motor vehicle in another Member State. The Commission has performed several surprise inspections at the premises of various manufacturers on the basis of information supplied by these complainants.

1.1.2. General assessment of the application of the regulation

110. Article 11 of Regulation 1475/95 requires the Commission to evaluate the impact of the exempted system of distribution on price differentials between the different Member States and to draw up a report on the evaluation of the regulation before the end of 2000.

111. As regards the differences between the pre-tax prices charged in the various EU Member States, the Commission produces a twice-yearly report [46] assessing these differentials on the basis of information supplied by the manufacturers in May and November each year. The Commission found that, over the period from November 1999 to May 2000, there were still large differences in pre-tax prices for new cars within the European Union, amounting on average to around 20%.

[46] Available from the Commission's offices in the Member States and on the car sector page on the Competition DG's website: http://europa.eu.int/comm/competition/car_sector/

prices. The Commission also publishes press releases setting out its findings on the evolution of price differentials (IP/00/121, 7.2.2000; IP/00/781, 13.7.2000).

112. The Commission also carried out its evaluation of the block exemption regulation, adopting its report on 15 November. [47] The aim of the evaluation is to determine whether the assumptions which prompted the Commission to adopt the regulation are still valid and to assess the impact of the exempted system of distribution on the evolution of price differentials, on the quality of service offered to consumers and, more generally, on the functioning of the single market for the sale and servicing of new cars.

[47] Report on the evaluation of Regulation (EC) No 1475/95 on the application of Article 85(3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements (COM(2000) 743 final, 15.11.2000). Also available on the car sector page on the Competition DG's website: http://europa.eu.int/comm/competition/car_sector/.

113. The evaluation report was drafted on the basis of replies to questionnaires that the Commission sent to vehicle manufacturers, consumer associations, associations representing dealers, independent repairers, independent importers and intermediaries, producers of spare parts and certain businesses operating on the Internet. It also drew on recent studies of the motor industry and motor vehicle distribution, on its twice-yearly report on price differentials between EU Member States and on its experience in dealing with the competition problems it has encountered while monitoring the application of Articles 81 and 82 of the Treaty. [48]

[48] See also 1999 Competition Report, points 145 and 146.

114. The evaluation report finds that the block exemption regulation has only partly achieved the expected results. Some of the assumptions which led the Commission to adopt the regulation are furthermore open to debate. The report also sees the exempted system as liable to considerably impede the emergence of new methods of distribution, in particular via the Internet.

115. Following the adoption of the report, all interested parties were invited to give their views; in particular at a hearing held on 13-14 February 2001. The Commission also invited all interested parties to comment on two studies of motor vehicle distribution carried out by consultants. [49]

[49] Available on the car sector page on the Competition DG's website: http://europa.eu.int/comm/ competition/car_sector/. The study entitled 'The natural link between sales and service' was carried out by Autopolis and the study 'Car price differentials in the European Union: An economic analysis' by Hans Degryse and Frank Verboven (K.U. Leuven and CEPR).

116. Before the end of 2001, the Commission intends to publish, proposals for new rules on the distribution and servicing of new vehicles, which will take effect when Regulation 1475/95 expires.

1.1.3. Structural change in the sector

117. The motor vehicle sector is also the focus of increasingly frequent linkups between manufacturers. For example, General Motors and Fiat, notified a reciprocal exchange of shareholdings, as well as plans to cooperate in the powertrain field, in the joint purchase of car components and spare parts, in the organisation of financial services to their dealers and customers, and in the development of common platforms and R&D programmes linked to the production of passenger cars and light commercial vehicles. The Commission took the view that the conditions for exemption from the Community competition rules were met. [50]

[50] Press release IP/00/932, 16.8.2000.

118. This process of structural change is also evident from the number of mergers and acquisitions and new joint ventures between component suppliers, [51] as well as from the continuing trend towards consolidation among motor vehicle manufacturers. [52] Another noteworthy development is the establishment of Internet business-to-business (B2B) platforms between vehicle and component manufacturers with a view to achieving the best possible economies of scale in purchasing, as well as optimising the supply chain and production processes on both the component production and vehicle assembly sides. For example, the Covisint platform will group together General Motors, Ford, Daimler Chrysler, Renault, Nissan and Toyota, on the one hand, and BASF, Delphi Automotive, Federal Mogul, Johnson Controls, Lear Corporation and Yazaki International, on the other. Given that significant players and in particular major motor manufacturers are involved, the creation and operation of Covisint will be carefully scrutinised by the Commission.

[51] Merger cases M.1870 ZF/Brembo/DFI, M.1929 Magneti Marelli/Seima, M.2036 Valeo/Labinal, M.2046 Valeo/Robert Bosch, M.2066 Dana/Getrag and M.2102 Magneti Marelli.

[52] Merger cases M.1998 Ford/Land Rover and M.1847 GM/Saab.

1.2. Motor fuel

119. The dramatic increase in the price of motor fuel during the year sparked a public debate on competitive conditions in the sector. The Commission and the national competition authorities met and discussed application of the competition rules in this sector at national and Community level. A first meeting was held on 29 September at which the national authorities and the Commission exchanged details of their experiences, and this was followed by a second meeting on 29 November. [53] The national authorities in several Member States took action during the year against competition law infringements in the motor fuel sector within their territories. The Italian and Swedish competition authorities both carried out successful cartel prosecutions and the German competition authority adopted a decision concerning discriminatory pricing. [54]

[53] Memo/00/55, 20.9.2000; press releases IP/00/1090, 29.9.2000; IP/00/1391, 30.11.2000.

[54] Fuller details of these investigations may be found in the reports of the national competition authorities concerned.

120. It was agreed that national authorities should focus on cartel prosecution since experience shows that, where price cartels exist in this sector, they operate at national or regional level. The national competition authorities were also invited to examine the issue of vertical restraints in their national markets, and in particular the level of foreclosure. The motor fuel sector in Europe is characterised by exclusive supply agreements between retailers and suppliers. The cumulative effect of these contracts may prevent new entrants and non-integrated, independent companies from entering the market (foreclosure effect). The new block exemption regulation on vertical restraints [55] has shortened the maximum duration of non-compete clauses from ten to five years, and it is hoped that this will help to open up the market. The Commission and the national authorities will cooperate in this assessment.

[55] See also Section I.A, Chapter 1.

121. For its part, the Commission, started an investigation with a view to assessing the position of non-integrated independent companies in several Member States. It is important to ensure that independent companies are genuinely able to enter the motor fuel markets, since markets where independent companies have a significant presence (e.g. France, United Kingdom and Germany) are more competitive than retail markets where vertically integrated suppliers have a strong presence.

2. Network industries

2.1. Gas

122. Significant progress was made during the year towards the creation a single gas market. The gas directive (Directive 98/30/EC) had to be transposed into national law by 10 August. Amongst other things, it provides for:

- the abolition of monopoly rights (such as import monopolies);

- the introduction of a third party access regime (allowing eligible gas customers to use the existing gas network);

- the gradual opening-up of the market (at least 20% of the total annual consumption of the national gas market had to be liberalised by August 2000),

- the unbundling of vertically integrated companies (the minimum requirement being that a gas undertaking keeps separate internal accounts for transmission, distribution and storage).

123. The aim of liberalisation is to introduce competition in the gas markets by making it possible for customers to switch suppliers. This opening-up of gas markets in the Community will have an impact on competition policy equivalent to that which followed the liberalisation of electricity markets. Community competition policy will complement internal market policy so that liberalisation becomes a reality for consumers.

124. Eleven of the fifteen Member States implemented the gas directive on time. Three did not fulfil their obligation at all (France, Luxembourg and Portugal) and one did not implement the directive completely (Germany). The Commission therefore decided to initiate proceedings against those four Member States.

125. Of the Member States which transposed the directive, most chose its procompetitive options with regard to access to the network. The majority chose a regulated third party access (TPA) regime, while the remaining Member States opted for negotiated TPA or a combination of both systems.

126. Many Member States opened up their markets to a greater extent than the minimum required by the directive. Instead of the 20% minimum requirement, countries like the UK and Germany committed themselves to 100% market opening. In the coming years a number of Member States, namely Austria, Belgium, Italy, the Netherlands, Spain and Sweden, are expected to follow this example and open up their markets completely. As of August 2000, on average, approximately 80% of total gas demand was liberalised.

127. However, although a promising start has been made in gas market liberalisation and a high average level of market opening is an encouraging sign and a very important first precondition for customers to be able to exercise their right to choose their supplier, it is not in itself a guarantee that a competitive gas market will be achieved in Europe, and not enough to ensure that customers will benefit fully from liberalisation. Much work therefore remains to be done to make the single European gas market a reality.

128. Most Member States have decided in favour of creating an independent regulator to monitor the gas industry and in particular TPA. The Commission is closely collaborating with these newly created authorities. Along the lines of the Florence Forum, it established an EU Gas Regulatory Forum, which met twice in Madrid in the course of the year. The Forum brings together representatives from all Member States, national regulators, transmission system operators and gas companies and provides the framework for discussions on the harmonisation of industry standards and regulatory practice. During the year the Forum dealt mainly with the creation of an independent European association of transmission system operators and with network issues, such as TPA services and cross-border tarification as well as technical interoperability questions. The Forum also decided to create a working group in order to step up the discussions on, among other things, transmission fees, balancing and access to storage.

129. At its meeting in Lisbon on 23 and 24 March the European Cou