Opinion of the Economic and Social Committee on the "Communication from the Commission relating to the revision of the 1997 notice on agreements of minor importance not covered by the provisions of Article 81(1) of the EC Treaty"

(2002/C 36/02)

On 16 May 2001 the Commission decided, under Article 262 of the Treaty establishing the European Community, to consult the Economic and Social Committee on the above-mentioned communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 September 2001. The rapporteur was Mr Pezzini.

At its 385th plenary session (meeting of 17 October 2001) the Economic and Social Committee adopted the following opinion unanimously.

1. Introduction

1.1. The process of modernising the competition rules and the approach of decentralising responsibilities, adopted as a result of the debate initiated by the Green Paper, are proceeding smoothly together in the Commission's work and can also be found in the Communication under consideration. The Commission, in tackling this review of agreements of minor importance, takes account of the judgments issued by the Court of Justice in recent years and of the need - to which the ESC has referred earlier - to provide judges and authorities in the Member States with guidelines (not necessarily binding ones).

1.2. It should also be emphasised that the present Communication, although it covers "agreements of minor importance", still has considerable significance, both in terms of the enormous number of cases covered and in terms of the complex task of identifying the nature of the agreements.

2. Comments

2.1. The new Commission Notice relating to the revision of the 1997 Notice on Agreements of Minor Importance is to be welcomed. It contains a number of significant improvements upon its predecessor. Yet the Committee thinks it desirable to emphasise and bring out certain points of special interest.

2.2. Market share maxima

2.2.1. In the 1997 Notice, the Commission had introduced a distinction between "horizontal" and "vertical" agreements and stated that since vertical agreements posed less of a threat to and risk for competition in the internal market they can be treated more leniently than horizontal agreements. The 1997 Notice defined "vertical" agreements as agreements between undertakings at different levels of production or distribution and adopted a market share maximum of 10 %, below which such agreements were regarded as not caught by Article 81(1) even if they were involved in trade between the Member States. It defined "horizontal" agreements as agreements between undertakings at the same level of production and distribution and adopted a market share maximum of 5 % for such agreements.

2.2.2. The new revised Notice in point 8 replaces the definition of "vertical agreements" with the wider category of "agreements between non-competitors" defined as "agreements between undertakings which are not actual or potential competitors on any of the affected relevant markets". This new definition is wider because it would include, for example, two manufacturers engaged in two different lines of manufacture who enter into a distribution agreement as long as the machinery of both cannot be adapted to the contract goods.

2.2.3. This new wider category of agreements will normally be viewed as not appreciably affecting competition within the meaning of Article 81(1) if the market share of each of the parties to the agreement does not exceed 15 %.

2.2.4. The Committee welcomes both the wider definition of low risk agreements between undertakings and the higher market share maxima unequivocally because they recognize the economic realities that such agreements do not pose an appreciable threat to competition in the meaning of Article 81(1). The Committee also applauds the decision in this case too not to make use of a turnover maximum since the relationship of the undertaking to the relevant market rather than its size is the key to competition concerns, with reference to Article 81.

2.2.5. For similar reasons, the Committee welcomes the new Notice's proposed narrower category of "agreements between competitors", defined as "agreements between undertakings which are actual or potential competitors on any of the affected relevant markets". It also welcomes the Notice's adoption of a higher market share maximum of 10 % of the aggregate market share held by all the parties to the agreement because at such market shares even agreements between competitors cannot represent any appreciable threat to competition in the meaning of Article 81(1).

2.2.6. The Committee also welcomes the Notice's proposal in point 8 to raise the market share maximum from 5 % to 10 % for agreements difficult to classify since this logically follows from the previous changes.

2.3. Parallel networks and foreclosure effects

2.3.1. The Committee also welcomes the introduction of a new quantitative market share test of 5 % in point 9 for the agreements by a single supplier or distributor where competition in a market may be restricted by the cumulative effects of parallel networks of agreements for the sale of goods and services. Some examples of such networks are offered by the pubs tied to breweries in Belgium and in the United Kingdom or ice cream freezer agreements between suppliers and retailers in Germany and Eire. This marks a big improvement on the complicated tests provided in the 1997 Notice which relied on qualitative criteria set out in various judgements of the Court of Justice. The proposed new quantitative test will provide greater legal certainty to suppliers and distributors.

2.3.2. The Committee welcomes the Commission's provision in point 10 to allow the market shares in all of the above cases to be exceeded by one percentage point during two successive calendar years. The Committee does wonder however why the allowance for incremental growth has been changed from the 10 % allowed in the 1997 Notice, since the new rule encourages agreements between competitors (15 % plus one percentage point makes 16 %; adding 10 % of 15 % makes 16.5 %).

2.4. Relevant market

2.4.1. The Committee notes that the advice offered by the Notice on the crucial question of calculating market shares in point 11 consists solely of referring parties to agreements (and national courts and competition authorities) to the Commission's Notice on the definition of the relevant market for the purposes of competition law(1). The Commission makes no mention of its Notice "Guidelines on Vertical restraints"(2) or its Notice "Guidelines on the Applicability of Article 81 of the EC Treaty to Horizontal Cooperation Agreements"(3), despite referring elsewhere in the document to both of these Guidelines.

2.4.2. For the sake of clarity, the Committee thinks that the Commission should specify whether or not the Guidelines in the two block exemptions are relevant.

2.5. Hardcore restrictions and definitions of agreements

2.5.1. The Committee's first concern about the Commission's treatment of hardcore restrictions in point 12 is its sudden introduction of three new categories of agreements: "horizontal agreements"; "vertical agreements"; and "vertical agreements entered into between actual or potential competitors" in the middle of the Notice. The Committee feels that the concepts in the Notice of relevant market, market thresholds etc. are sufficiently complex without having to deal with different definitions of agreements in the same Notice.

2.5.2. The Committee would urge the Commission to rethink its approach and use the same definitions of categories of agreements throughout the Notice.

2.6. Small and medium-sized enterprises

2.6.1. The Committee approves of the treatment of SMEs envisaged by the Commission in the new Communication. It appreciates the constant attention given to SMEs by the Commission, in the context of competition policy, because of the importance of this sector in the European economy. It also agrees with the principle expressed in point 12 of the new Communication, in the context of the hardcore restrictions: "Agreements between small and medium sized undertakings, as defined in the Annex to Commission Recommendation 96/280/EC, are rarely capable of affecting trade between Member States". If, exceptionally, agreements between SMEs do affect interstate trade, this still leaves open the possibility that, if the said agreements also exceed the market thresholds given in the Communication, they would be subject to Article 81 of the Treaty. The Committee would point out, however, that most agreements between SMEs do not influence trade between States, and that many of those that do would not come within the scope of Article 81, because of the increase in market thresholds envisaged in the Communication. Moreover, the Commission itself, in the European Charter for Small Enterprises, has called for - and stressed the importance of - the creation of networks and agreements between small firms, to ensure better production and marketing of their products.

2.7. The Communication and national competition laws

2.7.1. The Committee would draw attention to the Commission's comment in point 7 of the Communication: "This Notice is without prejudice to the application of national competition laws". The Committee points out that this provision will have to be reviewed once the legislative reforms on modernisation have been implemented.

3. Conclusions

3.1. The communication is part of the process of updating competition policy law. The Committee highlights the major improvements over the previous communication: the establishment of "categories", the raising of existing thresholds, the establishment of a new threshold, improved legal certainty.

3.2. The Committee calls for further thought to be given to the concept of "relevant market", and for further simplification of the categories of agreement giving rise to hardcore restrictions of competition policy and greater uniformity in the leeway allowed in the event of the market share laid down being exceeded.

Brussels, 17 October 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) OJ C 372, 9.12.1997.

(2) OJ C 291, 13.10.2000.

(3) OJ C 3, 6.1.2001.