COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 161 final 
Brussels, 05.05.1994 
XXIIIrd COMPETITION REPORT FROM THE COMMISSION 
- 1993 -
XXIMrd COMPETITION REPORT - TABLE OF CONTENTS Pages 
INTRODUCTION and STRUCTURE OF THE REPORT <| 
PART ONE: MAIN DEVELOPMENTS IN COMPETITION POLICY 6 
Chapter I - Maintaining a competitive environment 6 
§1 . The contribution of competition policy to growth, competitiveness 6 
and employment 
§2. State aid 13 
§3. Liberalization and privatization 16 
§4. Merger control 22 
§5. Restrictive agreements and abuses of dominant positions 32 
§6. Consequences of the Maastricht Treaty 40 
Chapter II - The international dimension of competition policy 43 
§1. General 43 
§2. Promoting competition policy enforcement throughout Europe 44 
§3. A more daunting task: encouraging competition policy enforcement in 49 
non-European countries 
§4. Cooperation on enforcement in specific cases 52 
§5. The impact of the Uruguay Round on competition policy. 54 
Chapter III - Developments in the application of the competition rules to 56 
particular industries 
§1. Financial services - Insurance 
§2 
§3 
§4 
§5 
§1 
§2 
§3 
§4 
§5 56 
Telecommunications and postal services 59 
Energy 65 
Transport 68 
Audiovisual industry 72 
Chapter IV - Competition policy and other Community policies 75 
Completion of the internal market 75 
Industr iaI poI icy 73 
Environment §2 
Culture 37 
Commer c i a I poI i cy 90 
Chapter V - Application of the competition rules 92 
§1 . Transparency 92 
§2. Subsidiarity and decentralized application 95 
§3. Improvement of procedures 98 
§4. Commission activities (quantitative description) 111 
-ft--
PART TWO: COMPETITION RULES APPLICABLE TO ENTERPRISES 115 
Chapter I - Main decisions and measures taken by the Commission 115 
A. General 115 
§1. Horizontal agreements 115 
§2. Vertical agreements 117 
§3. Abuse of a dominant position ^ç 
B. Analysis of individual decisions and measures 120 
§1. Setting-up of joint ventures and other forms of cooperation 120 
Phi I ips-Thomson-Sagem 
- Alenia-HoneyweI I 
- International Private Satellite Partners (IPSP) 
- Intrax 
§2. Service sector 127 
- CNSD 
§3. Audiovisual sector ^29 
- EBU 
- Aud i te I 
§4. Energy 131 
Electricidade de Portugal/Pego project 
Logistical collaboration agreement between REPSOL and BPMED in 
the Canary Islands 
- D i sma 
- Texaco Ltd 
- Service station agreements in Spain 
- Service station agreements in the Canary Islands 
§5. Motor vehicles 142 
Cooperation agreements between Peugeot and Fiat involving the 
Sevel joint venture 
Rover Group 
Distribution of Fiat spare parts in Italy 
§6. Transport 1^7 
(a) Sea transport 
- East African Conference 
- Trans-Atlantic Agreement 
- Ir ish Club Rules 
(b) Port services 
- Sea Containers/SeaI ink 
(c) Ra i I transport 
- Decision on tariff structures in the combined transport of 
goods 
(d) Air transport 
- IATA - Currency Rules 
- IATA - Cargo Surcharge 
- SABRE/Air France and Iberia 
§7. Protection of the environment 158 
Spa Monopole/GDB 
§8. Case concerning intellectual property 160 
Becton-Dickinson/Cyclopore 
§9. Other sectors 161 
- Zera Montedison/Hinkens Stahler 
- Grundig's selective distribution system 
- Papeteries de Golbey 
Merger control *,j 
167 §1 . Scope of application 
(a) Community dimension (Article 1) 
(b) Calculation of turnover thresholds (Article 5) 
(c) Definition of concentration (Article 3) 
§2. Appraisal of concentrations 179 
(a) Determination of the relevant product market 
(b) Determination of the relevant geographic market 
(c) Assessment of compatibility 
§3. Application of Articles 9, 21 and 22 194 
(a) Application of Article 9 
(b) Application of Article 21(3) 
(c) Application of Article 22(3) 
§4. Application of Article 223 of the Treaty 197 
D. Main decisions in the steel industry 198 
§1. Main developments 198 
§2. Mergers . 199 
§3. Financial arrangements 201 
E. Substantive and procedural rules 203 
Application of the block exemption Regulations 
(a) Motor vehicle distribution 
(b) Application of the other block exemption Regulations 
Chapter II - Main cases decided by the Community lawcourts 208 
211 §1 . Interpretation of Article 3(f), the second paragraph of Article 5 208 
and Article 85(1) of the EC Treaty 
§2. Definition of an undertaking 
§3. Application of Article 85 to a horizontal agreement on prices 212 
§4. Interpretation of Commission Regulation No 1984/83 214 
§5. Interpretation of Commission Regulation No 123/85 215 
§6. Abuse of a dominant position 217 
§7. References for preliminary rulings 219 
§8. Procedure 221 
§9. Case-law relating to the Merger Control Regulation 228 
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PART THREE: PUBLIC ENTERPRISES AND STATE MONOPOLIES 231 
Chapter I - Main developments 231 
§1 . Telecommunicatrons and postal services 231 
§2. Energy 234 
§3. Transport 235 
Chapter II - Main decisions of the Court of Justice 239 
§1. Court Judgments concerning Article 90 of the EC Treaty 239 
§2. Interpretation of the Directive on telecommunications terminal 242 
equipment 
§3. Public enterprises and state aid 244 
PART FOUR: STATE AID 245 
Chapter I - Main decisions and developments in the policy of the Commission 245 
§1. General policy questions (including guidelines, procedural questions 245 
and international aspects) 
§2. Public enterprises and privatization 262 
§3. Horizontal aid: 273 
Investment aid 
Aid for environmental protection and energy conservation 
Export aid 
Aid to small and medium-sized enterprises 
Employment aid 
Aid for rescuing and restructuring firms in difficulty 
§4. Aid for research and development 287 
§5. Regional aid 291 
§6. Aid to sectors of industry subject to special Community rules on 298 
state aid 
(a) Aid to the steel industry 
- Steel covered by the ECSC Treaty 
- Non-ECSC steel sectors 
(b) Aid to shipbuilding 
(c) Aid to the motor vehicle industry 
(d) Aid to the synthetic fibres industry 
(e) Textile and clothing industries 
(f) Aid to the coal industry 
§7. Aid to other industries (including energy) ' 323 
§8. Aid in the transport sector 325 
§9. Aid to other service sectors 331 
§10. State aid in the agricultural sector 335 
§11. Aid in the fisheries sector 341 
-JL -
Chapter II - Main decisions of the Court of Justice 
PART FIVE: INTERNATIONAL DIMENSION 342 
345 
§1 . EFTA countries 345 
§2. Central and Eastern Europe 34g 
§3. North America 35g 
§4. Japan and Korea 351 
§5. Multilateral organizations 352 
PART SIX: CONTACTS WITH COMMUNITY INSTITUTIONS AND EXTERNAL ORGANIZATIONS 353 
§1. European Parliament 353 
§2. Economic and Social Committee 354 
§3. Advisory Committee on Restrictive Practices and Dominant Positions 355 
§4. Advisory Committee on Concentrations 356 
§5. Conference of national government experts 357 
§6. Contacts with the competition authorities in the Member States 358 
(a) Restrictive agreements, dominant positions and mergers 
(b) Aid 
§7. Competition law in the Member States 360 
§8. Other contacts 364 
ANNEXES 
Annex III : Decisions, notices and Judgments relating to individual cases 365 
A. Competition policy towards enterprises 365 
1. Case summaries 365 
B. Public enterprises and national monopolies 399 
Annex IV : The evolution of concentration and competition 401 
Introduct ion 401 
A. Takeovers (including mergers and majority acquisitions), 402 
minority acquisitions and joint ventures in 1992/1993 
B. The 1993 studies programme 433 
C. Statistical note on concentration operations notified under 441 
Council Regulation (EC) No 4064/89 
Intro, p. 1 
ooi 
<T4> Introduct ion 
1. The Annual Competition Report gives the Commission an opportunity to 
explain the main developments and cases of competition policy to the 
different Community institutions - the Parliament, the Economic and Social 
Committee, the Member States - as well as industry at large, which is 
directly concerned by its application, and the general public, which 
indirectly is the main beneficiary of its application. By presenting this 
Report in as non-technical language as possible, transparency is enhanced, a 
factor fundamental in any democratic society for the successful application 
of pol i cy. 
2. This year's activities have been marked by several major events in the 
Community's development - the entry into force of the Treaty on European 
Union, completion of the ratification of the European Economic Area 
Agreement, and the White Paper on growth, competitiveness and employment. 
This has given the opportunity in this Report, in addition to describing 
developments and activities during the year, to explore both how these three 
major landmarks will influence competition policy and conversely how 
competition policy is necessary to achieve the objectives these landmarks set 
out for the Community. This link between Community objectives and competition 
policy is a two-way process. It is inconceivable that competition policy 
could be applied without reference to the priorities fixed by the Community. 
But it is also important to realize how an effective competition policy will 
help to attain these goals. 
3. Whilst this principle is not in dispute, the application of policy in 
practice will require careful consideration. In fact all the policy 
implications of the abovementioned major events have not yet been worked out 
and it is hoped that this Report will contribute towards the rich debate on 
how to achieve the correct balance in the application of competition policy 
and priorities which usually follows its launch. In this respect, this year's 
Report is a little more forward-looking than usual, in that in a by no means 
exhaustive summary, it suggests some of the ways in which competition policy 
may be adapted to meet the new Community priorities. The full details of 
these implications and the adaptation of policy to a rapidly changing world 
is an on-going and continuous process. Of course there are underlying 
principles that remain, and these are enshrined in the Treaty, but they 
Intro, p. 2 
002 
cannot be applied mechanically without reference either to the context within 
which they have their impact or the main objectives and priorities of the 
Community. 
4. This reference to the context within which competition policy is applied 
is not a new phenomenon, but stems from the 'fact that competition is an 
instrument of Community policy. Since the beginning of the Community, 
competition policy has helped pursue fundamental Community goals. It has 
helped create, for example, a common market, a harmonious development of 
economic conditions and an accelerated raising of the standards of living. 
This role received a further boost with the Single European Act establishing 
the programme for a real internal market, where increased competition was 
seen as the mechanism by which many gains of this programme would be realized 
once the fiscal, administrative and other barriers were eliminated. Its role 
was further enhanced with the Communication of 1990 on industrial policy in 
open and competitive markets that gave an important role to competition 
policy in improving productivity of European industry in a rapidly changing 
world with increasingly globalized markets. 
5. The Maastricht Treaty has added new goals. Inter alia, it introduced and 
deepened industrial, cultural and environmental goals. It also made explicit 
the principle of subsidiarity. In fact these three objectives and the 
subsidiarity principle are discussed separately and in depth in this report. 
The White Paper clearly laid out the policies to achieve growth, 
competitiveness and, even more importantly, employment. The need for 
competition policy to achieve these objectives and how these objectives 
affect the application of competition policy are also discussed. These 
developments do not devalue competition policy, rather they enhance it and 
give it renewed vigour and importance. A competition policy that did not have 
an impact on these policies or was not influenced by them would be 
marginalized and of less relevance. 
6. In any year it is difficult and even dangerous to pick out any single 
points or policies to highlight in addition to the general and important 
considerations outlined above. The following remarks do not therefore in any 
way imply that any points not mentioned are not important. Rather they are 
meant to focus attention on arças that are seen as of growing relative 
importance. 
ntro. p. 3 
003 
The first of these is the introduction of competition to monopolized 
sectors, where a major advance has been made in the field of 
telecommunications, but where steady progress in liberalization was made 
in other monopolized sectors. This is mentioned because of the gains 
that can be made from introducing for the first time competition into 
these sectors and the positive impact on competitiveness and employment 
of trans-European networks highlighted so clearly in the White Paper. 
Second is the introduction of competition into other sectors, notably 
services, previously to a large degree sheltered. Whilst there has been 
no single event to compare with the liberalization in 
telecommunications, the advance in policy in this area has been 
maintained. Again the White Paper stressed the employment potential in 
the serv ice sector. 
Finally, the third area of growing relative importance to highlight is 
the international dimension of the Community's competition policy. This 
is particularly important this year because of the conclusion on 
15 December of the Uruguay , round in the GATT framework and the 
completion of the ratification process of the Agreement on a European 
Economic Area and hence its entry into force at the beginning of January 
1994. These developments, taken together with continuing negotiations 
with countries in East and Central Europe, constitute major steps to 
freeing international trade and therefore changing the competitive 
environment in which the Community's competition policy is applied. 
On the other hand it should also be stressed that the elimination of 
governmental barriers to trade such as tariffs and non-tariff barriers 
has made considerable progress in the past and that this pace is 
therefore unlikely to be maintained in the future. Further 
liberalization of regional or international trade flows therefore has to 
come in particular from the elimination of private obstacles to trade 
and other distort ions'of competition. 
Intro, p. 4 
004 
<T4> Structure of the Report 
7. The Report comprises six parts and a large number of annexes. This 
structure should enable readers to find readily the information they are 
looking for. 
8. Part One concerns the main developments in competition policy and is more 
general in scope than the other parts. It highlights developments in 
competition law in the year under review and also endeavours to forecast 
future trends. It covers all the aspects of competition policy and points up 
the cohesion that exists between these various aspects and between 
competition policy and other Community policies. 
9. Part Two examines the application of the competition rules to 
enterprises. These rules are Articles 85 and 86 of the EC Treaty, 
Articles 65 and 66 of the ECSC Treaty and the Merger Control Regulation. 
Whilst this part is more descriptive, it does not discuss all the cases dealt 
with by the Commission but only those of particular interest for one reason 
or another. Other cases are also summarized in the annexes. In addition, 
Part Two not only provides an analysis of Commission decisions but also 
examines the decisions of the Court of Justice and the Court of 
First Instance. 
10. Part Three is an innovation. Previously, developments concerning public 
enterprises and state monopolies were presented in the part dealing with aid. 
It seemed more appropriate to separate the two subjects, first because of the 
growing importance of competition policy towards such enterprises and, 
second, because the matters dealt with in this part are very mixed, relating 
to both the behaviour of the State and the behaviour of enterprises. 
Intro, p. 5 
005 
11. Part Four deals with the monitoring of aid and also discusses the main 
decisions of the Court of Justice on this subject. A traditional part of the 
Report, its importance needs no emphasis. 
12. Part Five is also new. It covers the international aspects of 
developments in competition policy, an area that is gaining in importance and 
must therefore be given greater prominence. 
13. Lastly, Part Six gives an account of the Commission's contacts with 
other Community institutions and with other international bodies. A 
traditional part of the Report, it describes the important part played by the 
primary addressees of the Report, the European Parliament and the Economic 
and Social Committee, in formulating Community competition policy. 
14. There are a number of annexes to the body of the text. The Commission's 
aim is that the Report provide as full a picture as possible of developments 
in competition law in the past year. The full text is therefore supplied of 
all legislation or documents of particular relevance such as the resolutions 
of the European Parliament and the Economic and Social Committee concerning 
the preceding report (Annexes I and II). Annex III, as stated above, 
contains a summary of the most interesting cases decided on the basis of 
Articles 85 and 86 of the EC Treaty. Point 2 of Annex III provides a list of 
press releases on competition issues. In the field of aid, the list of press 
releases is supplied together with the list of decisions. No references are 
given in the body of the text in order not to overload it. Readers seeking a 
text or a document should simply turn to the Annexes. 
15. Lastly, Annex V contains an analysis of the main developments in 
competition law in the Member States. 
16. To conclude, it should be noted that DG IV has decided to appoint an 
"information officer" to deaJ with public requests for information on 
compet i t ion poI icy . 
1.I.§1.p.1 
006 
<T5> Part One 
<T1> Main developments in competition policy 
<T4> Chapter I 
<T2> Maintaining a competitive environment 
<T3> §1 . The contribution of competition policy 
to growth, competitiveness and employment 
17., The present context of slower growth, a loss of competitiveness in 
certain sectors of the European economy and, especially, the particularly 
high level of unemployment calls for combined action on all Community policy 
fronts to meet these economic and social challenges. Competition policy has 
a central role to play in the Community's strategy for achieving a lasting 
recovery in growth and employment. The priorities which the Commission has 
set itself as regards competition are, therefore, largely determined by the 
contribution which competition policy can make to the Community's objective 
of growth, competitiveness and employment, as set out in the White Paper 
adopted by the Commission and presented to the first Council of the European 
Union in December 1993.(1) 
18. The White Paper sets out as a policy priority for the European Union the 
creation of 15 million new jobs. It recognizes that there is no miracle 
cure. It identifies the different areas where action is needed to tackle 
this problem. One of the main themes running through the White Paper is the 
need for fundamental restructuring of the European economy if it is to meet 
the objectives laid down. In this respect, the White Paper stresses the need 
for the resolute application of the rules of competition including those for 
state aid and highlights the role this policy plays in eliminating market 
rigidities and improving flexibility in an "increasingly dynamic economic 
context. This vigorous application of competition policy was also stressed 
by the summit of Heads of State or Government in December. 
(1) White Paper on "Growth, Competitiveness and Employment. The Challenges 
and Ways Forward into the 21st Century", COM(93)700 final, 
5 December 1993. 
1.l.§1.p.2 
007 
19. The stimulation of growth, competitiveness and employment has in fact 
always been one of the raisons d'être of competition policy. Competition 
encourages the efficient allocation of resources and stimulates research and 
development, innovation and investment. It is the mechanism by which 
resources and jobs are redirected towards growing sectors and away from ones 
with less promising futures. The importance of this traditional role of 
competition policy has been reinforced in recent years in two ways. 
Firstly, its part in making a reality of the internal market which will 
create jobs and stimulate growth and competitiveness is widely 
recognized.(2) Secondly, it is central to the Community's industrial 
policy.(3) The completion of a genuine internal market and an effective 
industry policy have received first priority in the White Paper. This in 
itself implies the need for renewed vigour in competition policy in areas 
where it complements and enhances these objectives. 
Even though this firm competition policy needs to be maintained, the White 
Paper throws down a new challenge. It is essential to examine how 
competition policy can be applied even more effectively in helping to create 
growth and employment and how it can enhances or complement the other 
Community policies set out in the White Paper. This chapter will examine 
the link between competition policy and the major structural changes that 
are necessary in the European economy if it is to meet the objectives of the 
White Paper. This Report does not present a definitive statement - this 
will have to await a full in-depth review - but instead some preliminary 
ideas of the future direction of thinking. 
20. One of the Commission's priorities is, by pursuing a clearly defined 
policy and reaching rapid decisions, to facilitate mergers and cooperative 
arrangements between firms that do not jeopardize effective competition and 
the dynamics of the market. Mergers can contribute to the restructuring of 
the economy, while cooperative arrangements may, for example, allow 
considerable economies of scale. These facilitate improved product quality, 
technological research and implementation of its results, and the entry of 
firms onto new markets. The White Paper emphasizes the efficiency-enhancing 
qualities as well as the fillip to research, innovation and product 
development that can come from cooperation between companies and can add to 
the competitive pressures on the market. It notes in particular how the 
(2) See points 149 to 154 of this Report. 
(3) See points 155 to 161 of this Report. 
1.I.§1.p.3 
008 
structure of competition must be seen in many sectors in an increasingly 
global context. This balance between the efficiencies of cooperation and the 
real competitive context within which cooperation takes place are essential 
elements to be taken into account in the assessment of this cooperation under 
the rules of competition.(4) 
21. If they are to become more competitive, European firms must also reduce 
costs and gain access to more efficient services in key sectors such as 
financial services and public services, particularly telecommunications, 
transport and energy. Only through liberalization will the full positive 
effects on productivity be achieved that stem both from the encouragement of 
private capital to participate in the construction of infrastructure and from 
the reduction of the price of goods and services offered via such 
infrastructures. These infrastructures, which need to be expanded into 
trans-European networks, will be able to contribute fully to the 
restructuring of the European economy and to bring about fundamental changes 
in investment and services only within a liberalized framework. In fact, 
trans-European networks are assigned a central role by the White Paper and 
the progressive introduction of competition in these fields remains a 
priority objective for the Commission.^) However, it should be noted that, 
when competition is first introduced in previously monopolized sectors, the 
prices of some goods and services may increase as hidden or cross-subsidies 
are eI iminated. 
Policy in this area and the reasons for the emphasis placed on it are best 
illustrated by the review of telecommunications which was completed this year 
and highlighted the growth potential of this sector, its importance to the 
competitiveness of the rest of industry as a vital input, its importance in 
terms of current jobs and job-creating potential, its demand for huge 
investment and advanced technology (hardware and software inputs) and, 
lastly, its social role via the universal service provisions. 
If successful, the bottlenecks relieved by investment in this and other 
trans-European networks will have a large and positive effect on growth, 
competitiveness and employment. This challenge can be met only if 
competition policy is coordinated with the other Community policies that must 
be implemented. 
(4) See points 74 to 89 of this Report. 
(5) See points 36 to 42 of this Report. 
1.l.§1.p.4 
009 
22. Another area highlighted in the White Paper as central to the creation 
of employment and the encouragement of flexibility is SMEs. SMEs have long 
received favourable treatment from the application of competition policy.(6) 
Further enhancement of this policy may be necessary to exploit even further 
both their job-creating potential and their ability to take up readily new 
and innovative technologies and to be quick to seize new market 
opportunities. Already, and in line with the White Paper, the state aid 
policy towards SMEs, as expressed in the aid framework, puts emphasis on 
"soft" aid designed to improve both labour flexibility (e.g. aid for 
training) and their technical and marketing potential ("soft" aid to 
technical and other knowledge-based inputs^7)). SMEs are also accorded 
preferential treatment in regard to investment incentives and aid for R&D and 
the env ironment. 
23. State aid policy in general has an important role to play in 
encouraging and facilitating the major structural changes identified in the 
White Paper. (8) in the first place, a firm policy must continue to be 
pursued in order to prevent individual Member States from using aid 
defensively and negatively to resist the necessaYy structural changes and 
from shifting the cost of adjustment in terms of output and jobs onto other 
Member States. On the other hand, aid can play a positive role in this 
restructuring. It can speed up change, encourage R&D and innovation, and 
alleviate the social consequences of large and sudden changes. Europe is 
often accused of having good basic research but a disappointing record of 
innovation, having a rigid labour market and poor job-creating potential 
despite long-term overall economic growth. State aid policy needs to be 
examined in the light of the White Paper to see whether it is working 
effectively and in particular whether there is a need to correct the bias in 
favour of capital investment and against investment in human, organizational 
and knowledge-based resources. 
Particular attention will have to be paid to ensuring that aid, in whatever 
form or for whatever factor of production, does not artificially prop up 
untenable jobs with no long-term future, but rather that it helps to 
restructure the economy in the direction of investment-generating viable 
jobs. Aid must not be used to second-guess the market because state 
intervention in this area has not always been successful. Rather, policy 
(6) Twenty-second Competition Report, points 78 to 79 
(7) See points 430 to 432 of this Report. 
(8) See points 27 to 35 of this Report. 
1.I.§1.p.5 
010 
needs to concentrate on horizontal measures and on areas where there is a 
failure of the market either to invest enough or to invest quickly enough 
(notably R&D, the environment, innovation and training). Central to the 
White Paper is the role of research, development and technology, and 
investment in human and non-physical capital in changing the growth, 
competitive and employment pattern of the Community. Competition policy in 
all its aspects must continue to play its role. 
24. Aid policy, along with policy towards enterprises, will have to be 
coherently developed and applied in areas where the competition rules are not 
yet applied in a fully effective manner. This is not only true for the 
regulated sectors mentioned above, but even more so for many service sectors, 
e.g. financial services and the audiovisual sector.(^) 
The fact that these sectors have long been sheltered from competition means 
that the gains from introducing effective competition are all the greater not 
only in terms of reducing prices to consumers but in terms of underpinning 
the competitiveness of the rest of industry, which needs as an input 
reasonably priced and innovative services from these sectors. Neither should 
the job-creating potential of these service sectors be ignored. For a long 
time, their contribution as a percentage of gross domestic product and to 
employment growth has been greater than that of industry. An increasingly 
dynamic service sector, underpinned by the effective application of 
competition policy, will inevitably continue to be one of the major sources 
of employment generation. This is best illustrated by a example from the 
White Paper. The audiovisual sector is thought to employ at least 1.8 million 
people. Recent estimates point to a doubling in the medium term of the share 
of household expenditure given over to audiovisual software products. If 
this growth is translated into jobs in Europe, it could create 2 million new 
jobs by the year 2000. Application of the competition rules in this sector 
must, however, take account of other Community policy objectives, notably as 
regards pluralism in the media and the promotion of cu I ture. (1<-*) 
25. Lastly, the White Paper underlines the international dimension of the 
problem of improving Europe's growth, competitiveness and employment. Europe 
is an integral part of an increasingly global economy. As trade is freed 
from governmental constraints and barriers, a movement given renewed impetus 
(9) See points 117 to 122 and 143 to 146 of this Report. 
(10) See points 90, 143 to 146 and 172 to 177 of this Report. 
1.I.§1.p.6 ^ ^ 011 
by the successful conclusion of the GATT Uruguay Round, the role of 
competition policy at international level becomes even more crue i a I . (1 "• ) 
This development of the Community itself illustrates the point that 
competition policy can facilitate economic integration. 
Whereas in most countries competition policy has traditionally been seen as a 
purely national prerogative, the Community was the first to practise a policy 
which tried to deal with the impact that distortions of competition had on 
trade. Originally only applied within the Community, this approach has been 
gradually extended to trade with the Community's main trading partners in 
Europe as well. Thus, competition policy has played a major role in 
furthering international trade and in particular the scope for our companies 
to export to other markets, hitherto sealed off by anti-competitive 
practices, state aid or public monopolies. 
Not all of the Community's main trading partners have followed a similar 
approach of applying their competition policies to open their markets to 
imports, however. Such policies are lacking in particular in a number of 
countries in East and South-East Asia, whose markets are closed not so much 
by tariffs and non-tariff barriers but mainly by anti-competitive practices. 
The "Keiretsu" in Japan and the closed distribution systems in several 
countries are but two important examples of this phenomenon. 
It is a Community priority to seek to establish rules governing these 
competition problems. Ideally, such rules should be agreed mu 11i lateraIly in 
order to give them the broadest coverage possible. The present GATT Round 
does not deal with the issue, even though certain codes (in particular the 
TRIPS and Services Codes) include provisions on restrictive business 
practices. The World Trade Organization, created as part of the Round's 
package, should cover competition policy issues as part of its immediate 
agenda, focusing especially on restrictive business practices and cartels. 
The aim should certainly be to agree on minimum substantive rules but, more 
importantly, to lay down procedures to ensure enforcement of these rules by 
each of the contracting parties. For it is only through their enforcement 
in individual cases that the positive market-opening effects can be achieved.. 
The right of recourse to GATT panels should be strengthened, as should the 
effectiveness of their adjudications. Bringing in effective rules of this 
(11) See points 96, 97 and 114 to 116 of this Report 
1. I .§1.p.7 
012 
kind will be difficult and time-consuming but it is high time to begin the 
process. 
26. In the short term, the first step is to agree on a system of 
consultation and cooperation with the competition authorities in 
non-Community countries so as to prevent any potential conflict. The 
Commission has concluded an agreement with the US competition authorities to 
limit any conflicts through a consultation, cooperation and coordination 
process. 
If the agreement, currently being examined by the Court of Justice, is 
accepted, it can serve as a model in other negotiations. Discussions along 
these lines have already been held with the Canadian authorities, and other 
countries could follow suit. Since one of their main objectives is to limit 
any conflicts to which their implementation might give rise, such agreements 
can be concluded only with those authorities that actually implement 
compet i t ion rules. 
1.1.§2.p.8 013 
<T3> §2. State aid 
27. The control of state aid is part of the essential regulatory framework 
which will underpin and facilitate achievement of the objectives of the White 
Paper on growth, competitiveness and employment. It is a measure of the 
acceptance state aid control at Community level has gained that in the White 
Paper it is taken for granted. The Heads of State or Government at the 
Brussels European Council on 10 and 11 December emphasized the importance of 
state aid policy in the context of the White Paper strategy. The year's 
developments in the state aid sphere bear this out. 
28. The control of state aid at Community level is vital, first of all, for 
the success of the single market programme, one of the factors that will 
improve the Community's competitiveness. Opening markets and keeping them 
open has always been one of the main functions of state aid control, as of 
competition policy genera I I y.(12) |n a more integrated market, the 
distortive effect of certain types of aid is magnified and so control of aid 
is even more important. This is especially obvious in industries with chronic 
structural problems, the so-called "sensitive sectors", which are subject to 
stringent aid frameworks. The policing of the aid rules in the steel, 
shipbuilding, synthetic fibre and motor industries was a high priority in the 
recession year 1993.^13^ Increased attention also has to be paid to 
potentially distortive aid in other sectors. The Commission was reminded by 
the Court of Justice that when in doubt it must check the market situation 
carefully before rejecting complaints from competitors.^14^ The concern to 
keep markets open and indeed to foster integration is also seen in many other 
areas of state aid work. National regional aid is controlled in such a way as 
to counteract the pull towards the most prosperous regions and encourage 
inward investment in the underdeveloped areas or in areas faced with 
industrial decline, in order to integrate these regions into the mainstream. 
Clearly, state aid also needs to be controlled closely in markets only now 
being opened up to competition such as energy and telecommunications. 
29. The White Paper sees resistance to structural adjustment from declining 
to expanding industries as part of the reason for Europe's poor recent record 
of growth and job creation. The sluggishness of European economies in 
(12) See point 157 of this Report. 
(13) See points 480 to 533 of this Report. 
(14) See point 533 of this Report. 
1...*.P.. Q 
adapting supply to demand has many causes: closed markets, a bloated public 
sector, labour-market rigidities, subsidies, etc. Fortunately, on many of 
these points the situation has vastly improved in the last ten years and is 
still improving. Trade barriers have been dismantled in the Community and are 
now falling between the Community, the rest of Europe and the rest of the 
world. Governments have rolled back state involvement in industry or are now 
doing so. As for subsidies, the Commission has always campaigned against 
state aid that simply allows firms to put off restructuring. This approach 
has been vindicated. Aid may be legitimate to ease restructuring, 
particularly its social consequences. Access to aid for this purpose can 
facilitate restructuring. But aid must not delay restructuring indefinitely. 
The events of the past year - the steel industry restructuring and the 
struggle over automatic guarantees of public-sector companies' debt^"15) -
underlined this message but only confirmed how hard it is sometimes to apply 
in pract ice.(16^ 
30. Stopping the waste of public money on businesses in need of 
restructuring has beneficial macroeconomic effects. It helps reduce budget 
deficits. As the White Paper points out, achieving the macroeconomic criteria 
for EMU, especially reduction of deficits, is an important condition of the 
growth strategy. This and the diversion of income from private consumption 
to investment will release the huge resources needed for trans-European 
networks and investment in growth sectors. 
31. The Commission has always emphasized its positive attitude towards 
certain kinds of aid as long as they remain within certain limits and 
contribute to Community objectives. Incentives for small and medium-sized 
enterprises are one such category. The White Paper places great hope in SMEs 
for Europe's development. In its state aid policy the Commission has long 
recognized this contribution. Its guidelines on aid to small and medium-sized 
enterprises of May 1992 are quite explicit about, for instance, the financing 
handicap of SMEs - a point emphasized at the 1992 Edinburgh and 1993 
Copenhagen summits with the proposed launch of loan guarantee and soft loan 
facilities - and the value of "soft" aid for training and consultancy. The 
Commission discussed the subject of aid for training and dissemination of 
information to SMEs at a multilateral meeting with Member States in 
(15) See point 374 of this Report 
(16) See point 23 af this Report. 
1 . I .§2.p.10 
015 
December.(17) In its new aid guidelines for environmental protection, the 
Commission also adopted a more favourable attitude towards support for SMEs. 
32. It is also the Commission's long-standing policy to look favourably on 
support for research and development (R&D) and protection of the environment, 
two more areas to which the White Paper attaches priority. The Commission 
allows national support to cover a relatively high proportion of the costs of 
projects, depending on the distance of the R&D from the market, which partly 
determines the risk, and on the form in which the support is provided.(1^) 
33. The policy towards aid for environmental protection was reviewed in 
1993. In the new aid guidelines,^19) further progress is made towards a 
wider application of the "polluter pays" principle and the Commission builds 
on experience which has shown the importance of incentives for investment 
that goes beyond mandatory requirements. Such investment may in future be 
aided at a higher rate than that which merely helps firms to adapt plant to 
new standards. Subsidies for buying environmentally friendly products, relief 
from new environmental taxes, and aid for recovery and recycling of waste are 
also now covered. The guidelines should contribute to realizing the hope that 
the White Paper has placed in environmental progress by increasing 
transparency and providing a broad policy framework for environmental 
subs idies. 
34. The Commission normally takes a positive attitude towards state aid for 
the audiovisual sector, another growth area identified by the White Paper. It 
has never objected to film industry support schemes, except those designed 
to remove discrimination. Discrimination against EC nationals cannot be 
allowed even for cultural reasons. New Article 92(3)(d), inserted by the 
Treaty on European Union, provides a specific exception for aids to cultural 
activities and the arts. 
35. It can be seen, therefore, that the Commission's state aid control is 
already furthering the objectives of the White Paper and the Treaty on 
European Union. By holding firm against distortive- and wasteful aid and by 
controlling other subsidies only to the extent necessary to avoid abuse, the 
Commission is helping to create the necessary conditions for this strategy to 
succeed. 
(17) See points 383 and 430 to 432 of this Report 
(18) See points 160 and 414 to 464 of this Report 
(19) See point 384 of this Report. 
1.I.§3.p.11 016 
<T3> §3. Liberalization and privatization 
36. There are two aspects to the Community competition rules. On the one 
hand, they are intended to maintain a competitive environment undistorted by 
firms or by state involvement. This is the role of Articles 85 and 86 of the 
EC Treaty, Regulation (EC) No 4064/89 on merger control, Articles 65 and 66 
of the ECSC Treaty, Articles 92 and 93 of the EC Treaty and, to some extent, 
Article 90 of the EC Treaty. On the other hand, they may also be used to 
introduce greater competition into certain sectors in which Member States 
have conferred monopolies on certain enterprises. Article 90 of the EC Treaty 
also allows the Commission to take action against such Member States where 
they grant exclusive or special rights to certain firms in breach of the 
rules laid down in the EC Treaty. Article 90(3) provides the Commission with 
two possible courses of action: either it can adopt directives, i.e. acts 
that are generally applicable, or it can address individual decisions to 
specific Member States. The provisions of the Treaty that may be infringed in 
this context are, for example, those governing the freedom to provide 
services, those relating to freedom of establishment and, once again, 
Art icles 85 and 86. 
However, the EC Treaty does not concern itself with the question of whether 
the enterprises enjoying such exclusive or special rights are publicly or 
privately owned. Article 222 of the EC Treaty stipulates clearly that the 
Treaty does not in any way prejudice the rules in Member States governing the 
system of property ownership. 
Parallel to such action vis-à-vis Member States, Article 90(2) provides that 
public undertakings and undertakings on which the state has conferred 
exclusive or special rights are not entitled to any preferential treatment in 
the implementation of the competition rules. The only exception concerns 
restrictions of competition that may be authorized where they are necessary 
for the performance of the particular tasks assigned to the undertakings. 
This is because certain undertakings are required to perform specific tasks 
on behalf of all consumers. Such tasks in the general economic interest may 
justify the granting of exclusive or special rights. The nature of the 
particular task varies according to the type of activity 
1 . I .§3.p.12 017 
concerned and, in practice, poses difficult problems of definition.(20) -rne 
exception provided for in Article 90(2) of the EC Treaty reflects the 
Community's intention of not obstructing the performance of such particular 
tasks. 
37. A look at the sectors in the Community in which such exclusive or 
special rights exist shows that the prices charged are often higher than 
those charged in countries in which such sectors are open to the forces of 
competition. This is particularly the case with transport, telecommunications 
and energy. Furthermore, the lack of competitive pressure means that there is 
sometimes no incentive to pursue technological innovations and, in 
particular, it deprives consumers of the ability to choose between different 
technologies. This sort of situation is prejudicial to the competitiveness of 
Community industry as a whole since firms in such sectors cannot take 
advantage of the benefits of a genuine internal market. As the Commission has 
pointed out in its White Paper on growth, competitiveness and employment, 
this has probably resulted in job losses in Community industry. Moreover, the 
effect is twofold: over and above the actual job losses borne by industry as 
a whole, the situation prevents more firms from operating in the relevant 
sectors, which arc themselves sources of employment. The introduction of 
competition will have beneficial effects in the medium and long term. 
However, in the short term, the introduction of competition, often 
accompanied by privatization, and the ensuing rationalization may cause a 
reduction in employment as a result of the shake-out associated with the 
anticipation of increased competitive pressures. 
Furthermore, consumers as a whole are certainly penalized by the lack of 
effective competition in such sectors. On the one hand, the costs of such 
services are higher for them and, on the other hand, they suffer the 
consequences of the loss of productivity for Community industry as a whole. 
It is for this reason that the Commission considers that the introduction of 
greater competition is essential if the productivity of Community industry as 
a whole is to be improved. A more detailed analysis of developments in these 
sectors is given in Part One, Chapter I I I of this Report. 
(20) See points 123 to 135 of this Report. 
1...S3.P.13 Q18 
38. In addition to the specific features mentioned, a number of other 
general points should be highlighted. Firstly, although the Commission has 
far-reaching powers under Article 90(3) of the EC Treaty, it prefers to adopt 
a consensual approach and pursue gradual liberalization, taking particular 
account of the time required to adapt the price structure and to ensure that 
the task of providing a universal service (i.e. one which is essential to all 
consumers) is fulfilled. The pace at which this is carried out will depend 
closely on the specific features of the relevant sector. The best example of 
this differentiated approach is telecommunications. Here, technological 
developments have made the de jure monopolies that exist in most 
Member States obsolete. Consequently, liberalization will take place more 
rapidly in this sector. 
39. Secondly, the gradual introduction of greater competition does not mean 
that all rules will eventually be abolished. Account must also be taken of 
the major objectives that have to be pursued in these sectors, objectives for 
which rules and regulations must be adopted. Thus, in transport, competition 
must not be to the detriment of passenger safety, and rules must be laid down 
to cover this. Similarly, in telecommunications and the postal sector, a 
universal service must be provided, without neglecting the social aspects of 
telecommunications, such as the help they provide for the elderly or the 
handicapped. In the energy sector, security of supply must be maintained, as 
must the universal service in the case of electricity. In all these 
instances, the aim must not be to replace one kind of bureaucracy by another, 
operating at Community rather than national level. If Community industry is 
to become more competitive, it must not be constrained by an over-rigid 
environment. However, basic standards designed to safeguard these objectives 
must be worked out at Community level. 
Lastly, in all these sectors, the major difficulty is to establish the 
dividing line between activities that can continue to be reserved for a given 
undertaking and those which must be freely accessible to other undertakings, 
1.1.§3.p.14 019 
without undermining the objective of market integration. The Commission 
recognizes that objectives legitimately pursued by Member States mean that, 
some activities must be shielded from all competition, at least temporarily. 
If this were not the case, there would be a risk that firms acting on the 
basis of strictly commercial criteria would carry out only the most 
profitable activities at the expense of the public-interest task which the 
Member States wished to see performed. This dividing line, and the duration 
of any protection granted, must be decided on a case-by-case basis in the 
light of the characteristics of each of the sectors concerned. However, the 
Commission considers that any areas thus reserved must be confined to what is 
strictly essential in order to perform such public-service tasks. 
40. The competition rules laid down in the EC Treaty will still have an 
important role to play once these sectors are liberalized. Steps must be 
taken to ensure that enterprises operating on these markets do not, through 
restrictive practices, abuses of dominant positions or mergers, deprive 
consumers of the benefits resulting from de-monopolization. The Commission 
will be particularly alert to any risks of infringement of Article 86 of the 
EC Treaty, which prohibits abuse of a dominant position. Even where there is 
de Jure liberalization of access to infrastructures, undertakings previously 
granted exclusive or special rights will undoubtedly remain in a de facto 
position of strength on such markets, at least for some time to come. It 
must therefore be ensured that they do not use this position to restrict 
competition either on the market in question or on others. 
As regards the first of these two concerns, the Commission will, in cases 
where infrastructure access is liberalized, certainly have to see to it in 
particular that third-party access to existing infrastructures does not 
entail any unwarranted restrictions. If competition is to be established, 
other undertakings must be able to benefit from such infrastructures on 
non-discriminatory terms. The Commission is aware that it may, in some 
instances, be difficult to draw up fair prices for infrastructure access. 
There may be grounds for requiring other undertakings enjoying access to 
existing infrastructures to pay the owner of the infrastructure. The owner 
has incurred and continues to incur certain costs for maintaining it. 
Furthermore, the owner has to continue to perform its universal service task, 
which imposes additional costs on it not borne by other undertakings. 
However, the price charged must not be such as to prevent any scope for real 
1 . I .§3.p.15 020 
access by other undertakings. In addition, such other undertakings will be 
endeavouring to penetrate a market which had hitherto been closed. One of 
the sectors within which the Commission is at present looking into such 
questions is telecommunications. 
Furthermore, there is certainly a risk that such undertakings may use their 
position of strength in the sector in which they had or still have a monopoly 
to subsidize their activities in other markets where they face fiercer 
competition. This danger of cross-subsidization is undoubtedly greater in 
the sectors to be deregulated, since transparency has rarely been a feature 
of the accounts of such undertakings. The reverse situation, in which 
profits earned in non-regulated sectors are used in part to comply with the 
universal service requirement, is not in principle objectionable. 
Lastly, the rules laid down in the Merger Control Regulation should ensure 
that undertakings to which exclusive. rights have been granted do not, through 
acquisitions, create situations in which competition from other firms is not 
in fact possible. However, the Commission does not intend to oppose such 
regroupings where their real purpose is to allow firms to cope with the new 
competitive environment, which may sometimes be worldwide. 
41. As stated above, the EC Treaty does not in any way prejudice the 
ownership of such undertakings. Nevertheless, the fact remains that the 
entry of new competitors onto the market, combined with the limited margin 
for growth in public expenditure in the Member States, will probably result 
in some privatization of these sectors, particularly if private enterprises 
can hope to benefit from an open environment. This is indeed one of the 
reasons why the Commission intends to promote the creation of genuine 
trans-European networks in certain sectors. The amount of investment 
required to gain effective access to such sectors will very probably entail 
forms of partnership between private-sector firms or between the public 
sector and the private sector. Such forms of cooperation will undoubtedly 
have to be examined in the light of the Community competition rules, either 
on the basis of Article 85 of the EC Treaty or on the basis of the Merger 
Control Regulation, so as to ensure that they do not result in the creation 
of new monopolies. Subject to this reservation, the Commission will very 
1 . I.§3.p.16 
02 1 
probably promote agreements of this kind if they help to meet its 
fundamental objective of introducing more competition into such sectors and 
allowing them to develop. 
42. In the case of privatizations, it is essential to ensure that any aid is 
strictly controlled. Aid can give the business privatized an unfair 
competitive advantage which prevents real competition developing and defeats 
the purpose of liberalization. Privatizations by stock-exchange flotation or 
open unconditional tender with the business being sold to the highest bidder 
do not normally raise state aid concerns. In all other cases, the Commission 
requires notification of the proposed sale to enable it to check whether aid 
is being granted. The purchaser must not receive the assets at a price below 
their true value. Nor must a business be kept going artificially with aid 
when it is in need of restructuring or indeed should be closed down. The 
principles the Commission applies in vetting privatizations under the state 
aid rules are described in the state aid chapter.(21) 
(21) See points 402 and 403 of this Report 
1 . I .§4.p.17 022 
<T3> §4. Merger control 
<T5> (a) Background to the review exercise 
43. After arduous negotiations, the Merger Control Regulation was 
unanimously adopted by the Council on 21 December 1989 and entered into force 
nine months later. The Regulation was to be reviewed after four years, i.e. 
in 1993. However, the review has not taken place, for the reasons set out 
below. Within the framework of the single market, it was essential to have an 
adequate legal instrument available both for maintaining effective 
competition that might be removed through acquisitions having cross-border 
effect and for facilitating the economic integration process. This objective 
is certainly still relevant, since the achievement of the internal market, 
and thus the need for firms to operate on much larger markets, is a 
phenomenon that will continue in future because of the various measures taken 
by the Community to extend the internal market in all sectors of activity. 
Some of the relevant measures are described in this report. 
44. Subject to certain exceptions reflecting the application of the 
subsidiarity principle and the justified need for Member States to be able to 
protect legitimate interests compatible with Community law, the essential 
feature of the Regulation is that it establishes an exclusive Community 
jurisdiction for the competition-based assessment of all concentrations where 
certain turnover thresholds are satisfied. On the one hand, the thresholds 
must not be so high that concentrations having a genuine Community dimension 
are excluded but, on the other, they must not be so low that operations of 
primarily national interest are caught. The subsidiarity principle does not 
mean that all mergers must be dealt with at national level but rather that 
each merger should be examined by the most appropriate authority, which may 
be a national authority in some instances but the Commission in others. In 
accordance with this «appI icat ion of the subsidiarity principle, there is a 
concomitant requirement to find the right level of thresholds for striking 
the best balance in the difficult exercise of allocating institutional 
jurisdiction. At the same time, having regard to the desirability of a 
relatively simple rule for establishing jurisdiction in the interests of 
transparency and legal certainty, it must be recognized that, even if the 
1 . I .§4.p.18 
023 
ideal balance is struck, there will inevitably be some borderline cases 
falling outside Community jurisdiction that would be better handled under the 
Regulation and vice versa. 
45. The technical difficulty of setting thresholds was compounded by the 
absence of experience as regards practical application of the Regulation. 
Consequently, the Council recognized this uncertainty by adopting a two-stage 
approach to the determination of thresholds and agreed to review the initial 
thresholds within four years of adoption of the Regulation, i.e. before the 
end of 1993.^22) Furthermore, the thresholds were to be reviewed on the 
basis of a Commission proposal requiring qualified-majority voting. 
46. At the time of the adoption of the Regulation, the Commission itself 
declared that, at the end of this initial stage of implementation, the main 
(i.e. world) turnover threshold should be reduced from ECU 5 000 million to 
ECU 2 000 million and that the Community turnover threshold of 
ECU 250 million should also be revised in the light of experience and any 
change in the main threshold. If the same proportionate reduction is applied 
to the Community threshold as to the main threshold, this would imply a 
revised Community threshold of ECU 100 million instead of the existing 
threshold of ECU 250 million. This is not to say that there would be no 
significant operations below these thresholds. Rather, the assumption is that 
below this level concentrations would principally have a national impact and, 
in accordance with the subsidiarity principle, would therefore be better 
handled at that level. 
47. As any change in the threshold would affect the jurisdictional 
allocation between the Member States and the Commission, it was also 
appropriate at the same time to review Article 9 of the Regulation, which 
governs the terms on which a Member State can ask that cases falling under 
the Regulation are nevertheless referred by the Commission to the competent 
national competition authorities.(23) Referral under Article 9 reflects the 
practical application of the subsidiarity principle although this finds its 
(22) Art icle 1(3). 
(23) Art icle 9(10) . 
1 . I .§4.p.19 
024 
principal expression in the level of the turnover thresholds, and in 
particular in the two-thirds exclusion rule for national turnover.(24) 
48. In addition to turnover thresholds and referral procedures, both the 
Council and the Commission had declared that other aspects of the Regulation 
should be examined, including turnover allocation for joint undertakings, a 
more precise concept of banking income and the arrangements for the 
publication of the opinions of the Advisory Committee. 
<T5> (b) Progress on implementation to date 
<T6> Summary of decisions and economic profile of cases 
49. In the three years and three months that the Regulation has been in 
force, 193 notifications have been received. Since the individual decisions 
arising from these notifications are commented on either in previous 
competition reports or in this year's report, only the essential features are 
summar i zed be low. 
1990 1991 1992 1993 Total 
Number of notifications 12 63 60 58 193 
Article 6(1)(a) decisions 2 5 
Article 6(1)(b) decisions 5 50 
Article 6(1)(c) decisions 0 6 9 
47 
4 4 
49 
4 20 
151 
14 
Article 8(2) decisions 
without conditions 
with cond i t ions 
Article 8(3) decisions 
Art icle 9 referra I 
(24) The Regulation provides that a merger does not have to be notified under 
it where each of the undertakings concerned achieves more than 
two thirds of its turnover in one and the same Member State. 
1 . I .§4.p.20 
025 
50. A total of 6 requests have been received under Article 9(2) and in one 
case a Member State has requested the application of Article 22(3), which 
permits the assessment under the Regulation of a concentration having no 
Community dimension. 
51. The majority of cases notified were in the manufacturing sector, e.g. 
food and drinks, chemicals and motor vehicles, although there was also a 
large number of operations in service activities such as retailing and 
wholesaling, computing, banking and insurance. By far the greatest number of 
notifications concerned undertakings from Germany, the United Kingdom and 
particularly France. 
52. Reflecting the aims of the Merger Control Regulation, nearly 
three quarters of notifications concerned undertakings from different 
Member States or from a non-member country. A similar number of cases related 
to geographical reference markets that were either Community-wide or extended 
over more than one Member State. 
<T6> Effectiveness and efficiency of application 
53. Over the last three years, the Commission has applied the Regulation in 
conformity with its fundamental objectives: allowing concentrations which 
bring about necessary corporate reorganizations in the Community as a result 
of the opening of national markets to Community and world markets, while 
prohibiting or modifying concentrations which are likely to produce lasting 
damage to effective competition in the common market or in a substantial part 
of i t. 
54. Although the Commission has taken only one prohibition dec i s ion(25)' anCj 
although, in one other case,(26) the notification was withdrawn as a result 
of Phase II proceedings being initiated, the scope of Commission intervention 
is much wider than suggested by these bald statistics. 
55. The very existence of EC merger control legislation, supplemented by the 
considerable amount of informal guidance given to undertakings by the 
Commission's departments, has had a significant preventive effect on 
ant i-compet i t i ve business strategies >i,n the Community. Moreover, of the 
(25) IV/M.052 - Aerospatia le/A I enia/De Havilland. 
(26) IV/M.238 - Siemens/Philips. 
1 . I .§4.p.21 
026 
Phase II cases, closed by means of a decision under Article 8, eight were 
cleared only after the Commission had attached conditions and obligations 
modifying the original concentration plan. Furthermore, in an additional 
seven Phase I cases, the Commission cleared the concentration only after the 
parties had entered into commitments to remedy identified competition 
problems. 
56. In these cases, effective competition was preserved and developed mainly 
through three types of remedy, namely, the removal of entry barriers, the 
ending of capital, personal or structural links and the divestiture of assets 
or shares. 
57. If parties had not been willing to modify the original concentration 
plan, then inevitably there would have been a greater number of cases where 
proceedings would have been initiated or a prohibition decision taken. 
58. Current implementation of the Regulation has been widely regarded as 
successful. The speed, legal certainty and one-stop regulatory control 
provided by Commission decisions have been greatly valued by the business 
community and by legal practitioners. At the same time, the Regulation 
creates a level playing-field for major acquisitions in the Community since 
these operations are subject to the same rules applied on a Community-wide 
basis. This is a further example showing that the establishment of a genuine 
internal market requires uniform and effective competition rules. 
<T6> Link between Community and national merger control policies 
59. With the growing integration of EC markets, there are fewer and fewer 
markets of purely national dimension. This trend towards integration of 
national markets is in itself pro-competitive and is reflected partly in the 
high number of clearance decisions. Nearly all Member States have introduced 
national merger control for mergers below the threshold set by the 
Regulation. This development is welcomed by the Commission since it 
guarantees a complete system for maintaining effective competition both at 
the national and at the Community level. 
I.'.KP.» 027 
60. However, the greater the degree of integration, the more desirable it is 
that business should be able to conduct its corporate acquisition strategy on 
a Community-wide basis subject to a common set of rules. It is therefore 
essential that the objectives, methodology and procedures of national and 
Community merger policies converge as far as possible. Even if the turnover 
thresholds of the Merger Control Regulation are reduced, there remains an 
enduring need for increasing harmonization in a single market. It is not 
feasible for all mergers to be made subject to a single control procedure. 
National laws will therefore at all events still have a role to play. 
<T5> (c) Scope for revising the Regulation 
<T6> Thresholds and Article 9 referrals 
61. In accordance with the requirements laid down in the Regulation, the 
Commission has examined the case for revision of turnover thresholds and 
referral procedures. It considers that there are strong arguments in favour 
of threshold reduction. 
62. One consequence of the advent of additional national systems of merger 
control is that the number of regulatory stops has increased for 
concentrations having a genuine Community dimension but falling below the 
existing thresholds. At the same time, the single market programme has 
triggered an unprecedented wave of cross-border merger activity within the 
Community, while the crisis situation confronting Community industry has led 
to restructuring operations between firms that may take the form of mergers. 
Although the level of merger activity since 1985 has fluctuated in line with 
the overall level of economic activity, analysis of the general data 
collected by DG IV shows there has been a doubling in the number of 
cross-border mergers in the Community. Indeed, in pre-notification meetings, 
the Commission has encountered many cases having a strong impact on 
competitive conditions in the Community but falling below the existing 
thresholds. Consequently, the advantages of the one-stop shop and the need 
for a level playing-field caused by increasing integration are even greater 
today than in 1989. 
63. In order to investigate the practical impact of threshold reduction, the 
Commission conducted a special survey among nearly 300 of the Community's 
largest businesses as well as among associations representing the business 
1. I .§4.p.23 
028 
community. Although merger activity fluctuates a great deal, the survey 
results indicated that, if the world and Community thresholds were lowered to 
ECU 2 000 million and ECU 150 million respectively, the Commission would have 
to handle some 110 cases per year compared to about 60 per year so far. More 
significantly, the great majority of extra cases would also have genuine 
cross-border effects. 
64. There is also institutional support for threshold reduction from 
Par Iiament(27) and the Economic and Social Committee.(28) Although industry 
is broadly in favour of lower thresholds, views in Member States differ 
signficantly, with the national industry associations in northern Europe 
generally in favour but those in southern Europe holding a more reserved 
opinion. 
65. In particular, among national competition authorities there is 
considerable hesitancy not only as regards threshold reduction but also as 
regards any legislative change to the Regulation at the present time. They 
consider that insufficient experience has been acquired with the application 
of what is admittedly still a relatively new Regulation and that cases 
currently falling below existing thresholds could be adequately dealt with by 
the national authorities. Moreover, they point to the fact that in the period 
since adoption inflation has already reduced the real level of thresholds and 
to the impact of the future enlargement of the Community. 
66. Bearing in mind these differing views, the Commission considers it 
premature to propose a reduction in ,. thresholds at the present time. It is 
especially concerned that, without more broadly based support from national 
authorities and business, a proposal requiring substantive changes in the 
balance of jurisdiction between the Member States and the Community may 
jeopardize the existing consensus and commitment built up around the 
Régulât ion. 
67. With regard to the referral procedure, since it is now the general 
position of the Commission either to refer a case to the national authorities 
or to open Phase II proceedings where a justified request has been lodged, it 
(27) Point 26 of the Resolution on the Nineteenth Report on Competition 
Policy, 24.1.1991. See Annex I to the Twentieth Competition Report. 
(28) Point 1.3.2 of the Opinion on the Twenty-first Report on Competition 
Policy, 25.11.1991. See Annex I to the Twenty-second Competition Report. 
1.I.§4.p.24 
029 
is generally considered that the current terms of Article 9 provide an 
adequate instrument if existing turnover thresholds are maintained, although 
these terms would have to be re-examined if thresholds were lowered. 
68. Given that no change is proposed at this stage to the principal 
substantive issues of the review (i.e. threshold and referral procedures), 
the Commission considers that the examination of other possible improvements 
requiring an amendment of the Regulation, including the implementation of the 
concept of banking income for threshold calculation, should be deferred and 
re-examined in the context of any proposal for amendment that the Commission 
may make, in particular in relation to thresholds, between now and the end of 
1996. 
<T5> (d) Cone lus ion 
69. Although the Commission holds the view that there are sound 
administrative, economic and legal arguments in favour of threshold 
reduction, it considers that a proposal to lower thresholds at the present 
time would be inappropriate and might prove counter-productive. Furthermore, 
some additional experience with the application of the ReguI at ion would be 
useful and helpful. 
70. Nevertheless, the Commission is of the opinion that the case for 
threshold reduction will become stronger. The advantages of the one-stop shop 
will be highlighted in future cross-border mergers and, with further 
integration in the single market, the need for and logic of lower thresholds 
can only strengthen and become increasingly visible. 
71. Therefore, although no proposal has been submitted, the Commission has 
invited the Council to undertake the formal review provided for in Article 
1(3) and Article 9(10) of the Merger Control Regulation by the end of 1996 at 
the latest. 
72. The report on the implementation of the Merger Control Regulation 
prepared by the Commission has been submitted to the Council, Parliament and 
the Economic and Social Committee. 
1.1. §4.p.25 
030 
<T5> (e) Improvements in transparency and procedures 
under the existing Regulation 
73. Within the scope of the review report and aided by the case-experience 
already acquired, the Commission has been able to identify some improvements 
that would promote greater transparency and procedural efficiency. These 
improvements, which will be implemented by the Commission without any change 
to the Merger Control Regulation, concern the following areas: 
- Phase I commitments: In the past, the Commission has accepted 
commitments made by the notifying parties to remedy clear-cut 
competition problems within its initial one-month (Phase I) 
examination. While this remains an efficient course of administrative 
action, it tends to result in some loss of transparency. In 
particular, other competitors and undertakings do not enjoy an 
opportunity to comment on the adequacy of the commitments offered. 
Transparency can be improved by the prior publication of proposed 
commitments, although the commitments will be required to be offered 
early in the procedure if the original deadline is to be maintained; 
- Phase II commitments: Similarly, subject to the protection of valid 
business secrets, commitments offered by parties in Phase II cases 
will also as a general rule be subject to prior publication; 
- Commission guidance statements: To improve transparency, the 
Commission intends to issue guidance statements covering technical and 
legal aspects such as jurisdiction (including a new notice on 
cooperative and concentrâtive joint ventures), calculation of turnover 
and the concept of concentration; 
- Less stringent notification requirements for mi nor joint ventures: 
Some minor joint ventures fall under the Regulation merely because of 
the size of the parents, while others have no direct or indirect 
effects on markets in the Community. The Commission proposes to accept 
substantially reduced notifications for such operations that are 
consistent with the need to demonstrate that there is no impact on 
competitive conditions in the Community. However, the information 
requirements waived will generally have to be first agreed with the 
„§4„e Q 
Commission, through the now normal practice of pre-notification 
information meetings; 
Advisory Committee: The Advisory Committee, which is composed of at 
least one representative of each competent national authority, is 
obliged to deliver an opinion on all draft Commission decisions 
closing cases where Phase II proceedings have been initiated. Unlike 
the regulations implementing Articles 85 and 86 of the EC Treaty, the 
Merger Control Regulation provides for the possibility of publishing 
such opinions at the Committee's request. While the Commission is not 
legally required to publish the opinion, current practice has been to 
follow the request made by the Committee and to publish it 
simultaneously with the formal decision in the Official Journal. Owing 
to the need for translation, such publication normally takes place 
several months after the date of the binding Commission decision, by 
which time the case may have lost some of its initial interest. 
Transparency can be promoted by making the opinion of the Advisory 
Committee public at the same time as the Commission's decision, and 
this would also place greater emphasis on the importance of the views 
of the Member States. 
1...55.P.27 032 
<T3> §5. Restrictive agreements and abuses of dominant positions 
74. A large number of cases described in Part Two of the report were 
examined under Articles 85 and 86 of the EC Treaty. This reflects the 
fundamental role which the competition rules have to play as an instrument 
underpinning other Community policies. Thus, the achievement of a genuine 
internal market means ensuring that private-sector obstacles to trade do not 
replace the previous public-sector ones. Furthermore, anti-competitive 
practices must not be allowed to damage the productivity of Community 
industry and thus penalize European consumers, while at the same time 
preventing employment from growing normally. The role which competition 
policy is thus called upon to play is described in Part One, Chapter IV, of 
the report. 
75. A number of trends can be highlighted. Some of them are a continuation 
of developments noted previously. 
76. The first is the increasingly generalized application of the competition 
rules in all sectors of economic activity. The transport sector is 
particularly significant in this respect, with the Commission having for the 
first time applied the competition rules to rail transport and once again 
taking action in several instances against restrictive practices by sea 
transport operators. While the application of the competition rules in this 
sector can take some of its specific features into consideration, the fact 
remains that the advantages of a genuine system of competition must also be 
available, particularly since the sector is important to Community industry 
as a whole. The same applies to the energy sector, where several cases 
provided the Commission with an opportunity of clarifying its approach to 
this sector. Certain types of conduct in the professions were also the focus 
of the Commission's attention. Lastly, the competition rules played an 
important role in the audiovisual sector. The role of competition policy 
will probably increase here because of the importance of this sector for the 
Community and because of its rapid, steady development. 
77. Decisions were taken this year on the first cases involving cooperative 
joint ventures covered by the new procedure adopted at the end of last year. 
The Commission has made clear its intention of dealing with such cases 
1.1.§5.p.28 033 
within a period of two months following their notification and has 
endeavoured to honour this undertaking.(2Q) This change must be seen in a 
wider context. While cartels must clearly be strictly prohibited, many forms 
of cooperation between undertakings must be encouraged since they increase 
the efficiency of Community industry by promoting the dissemination of new 
technologies. For the Commission, however, the important point is the effect 
such cooperation may have on the market rather than the legal arrangement 
used by the parties. As long as certain types of operation were eligible for 
rapid processing under the Merger Control Regulation while others remained 
subject to the slower procedure under Article 85 of the EC Treaty, there was 
a risk that firms would organize their cooperation merely to suit their own 
interests but also in such a way as to benefit from certain procedural 
advantages. This was certainly something to be avoided since it could lead 
to situations that were in some ways artificial. It is for this reason that 
the Commission considers that, over and above the legal structures chosen by 
the parties, which must not be neglected, it is important above all to place 
such operations in their context and to look at their effects on competition 
in the relevant markets. If they have the object or effect of reducing 
competition, they must be prohibited. Conversely, the Commission intends to 
encourage all those which allow cooperation that is beneficial to all. 
78. The third phenomenon is the number of cases in which the undertakings 
concerned decided to abandon practices deemed anti-competitive by the 
Commission without awaiting any formal Commission decision on the matter. 
This situation explains the relatively small number of decisions. The aim of 
an effective competition policy is to have a direct effect on the conduct of 
undertakings rather than to create a multiplicity of lengthy procedures. 
This does not mean that the rights of the defence are not fully observed, 
since the undertakings in question can always refuse to alter their conduct 
in the absence of any decision. 
(29) See points 193 and 194 of this Report. 
1.I.55.P-.29 
0Ô4 
79. The fourth feature is that the globalization of markets and the 
existence of worldwide competition in many sectors are being taken into 
account. The Phi I ips/Thompson/Sagem case is particularly illuminating in 
this respect. Although the parents of this joint venture were the main 
Community producers of the relevant product, their agreement was authorized 
because the product market was clearly worldwide and there were major 
competitors in non-Community countries. Each type of conduct should be seen 
in context, taking all the economic and factual aspects into consideration. 
Technological developments and the gradual opening-up of markets outside the 
Community, notably because of the liberalization resulting from the bilateral 
or regional agreements concluded by the Community or from the GATT 
negotiations, mean that many markets are expanding. The Commission is aware 
of this and is determined to take account of it in analysing the agreements 
or restrictive practices it has to deal with. By thus placing the conduct of 
Community firms in this wider context, the Commission is able to judge 
whether agreements can be accepted on the ground that they allow Community 
industry to improve its competitiveness. 
80. Lastly, a feature shared by a number of cases dealt with this year was 
that they related to situations involving access to infrastructure. There 
are many instances in which a firm or a group of firms enjoys preferential 
access to an infrastructure that is essential to its competitors. As 
explained above, this question is particularly sensitive in sectors where 
exclusive or special rights were previously granted to certain undertakings, 
but it also arises in other circumstances. If genuine competition is to 
exist in such situations, infrastructure access must be open in an objective 
and non-discriminatory manner to all the competing firms. This question is 
obviously important in cases where the undertaking owning the infrastructure 
is in a dominant position, but it is also relevant in cases where Article 85 
of the EC Treaty applies. The Disma case is an example of the second 
category. The Commission took action in this case in order to ensure that 
all oil companies could enjoy non-discriminatory access to the equipment for 
transferring fuel direct from the depot to aircraft, via underground 
pipelines, that had been installed by Milan/Malpensa airport in cooperation 
1.I.§5.p.30 035 
with certain oil companies, through the Disma joint venture. 
81. Quite apart from these trends in Community competition law, developments 
in national competition law should also be noted. As part of the policy on 
subsidiarity, the Commission encourages decentralized application of the 
competition rules. However, there is no obligation on Member States to adopt 
national competition legislation that is in line with the rules laid down in 
the EC Treaty. Even so, it is evident that the most recent legislative 
provisions are modelled to a great extent on the principles contained in 
Articles 85 and 86 of the EC Treaty. This is notably the case with the 
Belgian Law that entered into force this year. The Commission can only 
welcome such spontaneous harmonization of competition laws. Even though 
similar texts may be interpreted differently by the Community authorities and 
by the authorities in the Member States, the fact remains that closer 
aj ignment of laws makes for greater coherence for firms and thus for a more 
clearly defined environment in which they have to operate. This phenomenon 
does indeed extend beyond the frontiers of the Community, and similar trends 
are evident in countries which have concluded with the Community agreements 
in which competition rules feature prominently, such as the Agreement 
establishing the European Economic Area or the Europe Agreements, concluded 
with the countries of central and eastern Europe. 
It is thus no longer unrealistic to believe that, in the not too distant 
future, a huge area will exist in which corporate conduct will be assessed on 
the basis of common principles. However, if we wish to ensure that Community 
industry continues to grow, we must go beyond this stage. The White Paper on 
growth, competitiveness and employment observes that, if the productivity of 
Community industry is to improve, Community firms must be able to operate on 
non-Community markets without being subject to any discrimination there. For 
its part, the Community is open to firms from outside the Community since, on 
the one hand, it complies with the rules laid down under GATT and, on the 
other, it applies its own competition rules effectively to conduct aimed at 
compartmentalizing markets. The architects of the EC Treaty were aware that 
the creation of a genuine internal market meant eliminating both 
public-sector and private-sector obstacles to trade. At international level, 
1.I.§5.p.31 036 
leaving aside the above-mentioned agreements concluded by the Community, the 
only approach adopted has been that of eliminating government obstacles. The 
example of the Community shows that this is not enough and that there must 
also be rules governing corporate conduct whose object or effect, direct or 
indirect, is to ensure the protection of national industry. Furthermore, as 
explained in the following Chapter, such rules must be applied effectively. 
In other words, a genuinely level playing-field must also be created at 
international level so that Community industry can enjoy effective access to 
markets outside the Community without coming up against private-sector 
obstacles with which firms in such countries do not have to contend when they 
wish to penetrate the Community market. 
<T4> - Cr is is carte Is 
82. One of the consequences of the current crisis has been the renewed 
interest in crisis cartels (which were last seen in the early 1980s following 
the second oil shock) as a way of dealing with structural overcapacity. In 
some industries the problems of structural overcapacity with fundamental 
reductions in demand have been exacerbated both by the current recession and 
by increased global competition, which not only increases supplies on the EC 
market but often takes away traditional markets outside the Community. In 
many cases, the individual firms involved, when faced with substantial 
structural as opposed to cyclical reductions in demand, unilaterally reduce 
capacity. In a free-market economy this is, in fact, the most common way of 
dealing with such significant reductions in the rates of capacity utilization 
and with falls in output accompanied by substantial operating losses. In 
some industries, however, such mechanisms do not necessarily guarantee 
elimination of the least efficient capacity. Not only has competition often 
been distorted by state aid (e.g. regional aid) aimed at creating capacity 
but, when industries have high fixed costs and relatively low operating 
costs, old and inefficient, but fully depreciated, plant can continue 
operating as long as its operating costs are covered. This can cause very 
large reductions in price, which may be good for consumers in the short run, 
but it undermines the capacity of the industry in the long and medium term to 
invest and undertake R&D. The consumers may therefore suffer in the long 
term. 
1.I.§5.p.32 037 
83. Some sectors therefore would like to conclude either bilateral or 
multilateral restructuring deals to reduce capacity and put the industry on a 
healthy long-term footing. Such agreements are usually caught by Article 85. 
The Commission's policy in such matters is clearly laid out in earlier 
competition reports(3°) but the principles remain valid and are worth 
repeating in extenso. 
84. The Commission may be able to condone agreements in restraint of 
competition which relate to a sector as a whole, provided they are aimed 
solely at achieving a coordinated reduction of overcapacity and do not 
otherwise restrict free decision-making by the firms involved. The necessary 
structural reorganization must not be achieved by unsuitable means such as 
price-fixing or quota agreements, nor should it be hampered by state aid 
which leads to artificial preservation of surplus capacity. 
85. The Commission will be able, however, to authorize sectoral agreements 
where it is satisfied that the other conditions of Article 85(3) of the EC 
Treaty are met, notably in the following circumstances: 
(i) production can be considered to be improved if the reductions in 
capacity are likely in the long run to increase profitability and 
restore competitiveness and if the coordination of closures helps to 
mitigate, spread and stagger their impact on employment. For this 
purpose, the agreement must contain a detailed and binding programme 
of closures for each production centre which ensures, on the one hand, 
that overcapacity is irreversibly dismantled and, on the other, that, 
while the plan is in operation, no new capacity is created, except for 
replacement capacities provided for in the reorganization programme; 
(ii) consumers can be considered to enjoy a fair share of the benefits 
resulting from the agreement if, at the end of the agreement, they are 
able to rely on a competitive and economically healthy structure of 
supply in the Community, without having been deprived during its 
operation, despite the effects of the capacity cutbacks, of their 
freedom of choice or the benefit of continued competition between the 
part i c i pat i ng f i rms; 
(30) Thirteenth Competition Report, points 56 to 61; 
Fourteenth Competition Report, points 80 to 85. 
1.1.§5.p.33 _-, 
0ô8 
(iii) the restrictions of competition which the agreement involves can be 
considered to be indispensable to the objective of the planned 
restructuration if the agreement is concerned solely with reducing 
surplus capacity and is limited from the outset to the period 
necessary for the technical implementation of the planned programme of 
cutbacks. The creation of a system for exchanging information in 
order to check that promised reductions of capacity are being 
implemented is admissible provided it does not in any way help to 
coordinate policy on the utilization of remaining capacity or to align 
condi t ions of sa le; 
(iv) the parties to the agreement will not be afforded the possibility of 
ultimately eliminating competition for the following reasons: firstly, 
since the orderly reduction of excess capacity is only one element, 
albeit an important one, of the competitive strategy of the 
participating undertakings, they will not have surrendered all freedom 
of action in the marketplace with the result that a degree of internal 
competition will be maintained. Secondly, the presence in the market 
of firms not party to the agreement and the fact that the Community is 
open to imports from third countries will usually provide a source of 
external competition. Lastly, as the agreement is from the outset to 
run for a limited period only, the certainty of a return to completely 
unfettered competition in the near future will prompt the undertakings 
concerned to take account, in the decisions they make even during the 
course of the agreement, of the fact that in due course they will 
again become full competitors. 
86. As an alternative to such sectoral agreements, the Commission can also 
envisage agreements between a small number of firms providing for reciprocal 
specialization which would enable them to close down excess capacity. 
87. Whatever type of solution is chosen, the Commission will always have to 
satisfy itself that, after the reorganization programme is completed, there 
will still be a sufficient number of Community manufacturers left to maintain 
effective competition in the Community. This condition is necessary to 
ensure that the economy as a whole, and users and consumers in particular, 
will also benefit from the positive results of the arrangements. 
1.1.§5.p.34 Q39 
88. Reorganization operations should also be such as to stabilize and secure 
the employment situation within the sector concerned. 
89. This Commission has in fact maintained the policy in the two cases under 
consideration. The first case concerns steel.(31^ In the second case, it 
has published a notice under Article 19(3) of Regulation No 17 announcing its 
intention of adopt a favourable opinion for a crisis cartel among brick 
producers in the Netherlands. 
In the Netherlands there has been a structural reduction in the demand for 
bricks, in particular common bricks, which have been replaced by a wide range 
of alternative building and finishing materials, in particular concretes, 
aluminium, steel, plastics and wood. Although the cyclical situation in the 
construction industry had exacerbated the reduction in demand, several 
indicators clearly pointed to long-term, underlying structura I overcapacity. 
The fall in price and resultant losses were accentuated by the cost structuré 
of production with relatively high fixed costs. The original agreement 
notified to the Commission contained, in addition to the measures proposed to 
remedy the structural overcapacity, several restrictions of competition which 
went beyond what was necessary and beyond the conditions set out above. In 
particular, there were arrangements to fix production quotas backed by a 
system of fines and resulting in a quantitative share-out of virtually the 
entire output of bricks in the Netherlands. 
In response to a statement of objections by the Commission, the parties 
agreed to drop these further restrictions. The Commission was therefore able 
to adopt a preliminary favourable opinion because the parties limited their 
agreement to what was strictly necessary to reduce capacity without agreeing 
on price or output. The new agreement was therefore in line with the 
principles laid out above. 
(31) See points 481 and 482 of this Report 
1.1. §6.p.35 
040 
<T3> §6. Conséquences of the Maastricht Treaty 
90. The Maastricht Treaty entered into force on 1 November 1993. It 
provides for only two changes to the competition rules laid down in the 
EC Treaty, both relating to the control of state aid. First, the Commission 
may now in principle declare compatible with the EC Treaty "aid to promote 
culture and heritage conservation where such aid does not affect trading 
conditions and competition in the Community to an extent that is contrary to 
the common interest". Second, the European Parliament will have to be 
consulted by the Commission if it intends to propose to the Council any 
appropriate regulations for the application of Articles 92 and 93 of the 
EC Treaty. These changes do not fundamentally alter the structure of the 
EC Treaty, so that the Commission's role as the institution responsible for 
applying the competition rules is not challenged by the new Treaty. Nor is 
this surprising since the establishment of a genuine European Union calls for 
a neutral arbiter to monitor the behaviour of business. This does not mean, 
however, that the Maastricht Treaty does not have any other implications for 
compet i t ion pol icy. 
91. In the first place, the Treaty is more explicit on certain objectives 
than the EC Treaty was. The first of these is environmental policy. 
Although it was mentioned for the first time in Article 130r of the 
Single Act, the Maastricht Treaty extends its scope. This raises the 
question of the extent to which the application of the competition rules will 
be affected. 
The new guidelines on aid for environmental purposes issued by the Commission 
in 1993 already reflect this increased emphasis on the environment. In the 
guidelines the Commission recognizes the place of subsidies in environmental 
policy, a fact brought home by its recent experience in dealing with aid 
schemes in Member States, which the old framework dating from 1974 did not 
cover. The new guidelines thus place aid control at the service of 
environmental policy while ensuring that such aid does not distort 
competition to an extent contrary to the common interest. 
Furthermore, it must be emphasised that the Commission can exempt an 
agreement restricting competition but having a favourable impact on 
environmental policy only if the agreement meets the 
1.1.§6.p.36 04 I 
four conditions laid down in Article 85(3) of the EC Treaty. Article 85(3) 
was not amended to include any specific environmental considerations. The 
fact remains, however, that the terms of Article 85(3) are sufficiently broad 
to include other policy objectives, and more specifically environmental 
protection objectives. This question is discussed in greater detail 
be low.(32) 
Cultural policy is one of the new provisions contained in the 
Maastricht Treaty. This actually involves a direct change to the 
competition rules since, as indicated above, express provision is made for a 
new exception to the ban on aid. 
92. The Maastricht Treaty expressly refers to industrial policy for the 
first time. As explained below,(33) the concept of industrial policy was, 
however, already inherent in the approach adopted by the Community in 
general and by the Commission in particular. 
93. However, the consequences of the Maastricht Treaty go beyond the 
changes in Community policies which have just been described. The 
Maastricht Treaty also marks a step towards greater involvement of 
Parliament in the decision-making process, with the co-decision procedure, 
and hence greater democratic control. Competition policy cannot ignore this 
development. 
The Commission is aware that it is necessary to get Member States, 
businesses and other relevant parties to accept the need for an effective 
competition policy. In order to achieve this, the Commission must take 
certain measures. It must firstly define its priorities and be consistent 
and effective in applying them. Clearly, the principles set out in the 
Maastricht Treaty will have a major influence on the choice of such 
priorities. The Commission must then inform the public of its priorities. 
For this purpose, it has continued to organize annual meetings with the 
national competition authorities at which such objectives are explained and 
discussed. Furthermore, one of the objectives of this Report is to inform 
(32) See points 162 to 171 of this Report 
(33) See points 155 to 161 of this Report 
1 . I .§6.p.37 042 
Parliament and the Economic and Social Committee, and subsequently the 
public at large, of the Commission's priorities. 
Secondly, the Commission's policy must be as transparent as possible so that 
economic agents are fully aware of the framework within which they are 
supposed to operate. The Report contains a more detailed analysis of the 
measures which the Commission has taken or intends to take in pursuit of this 
objective.(34) 
Lastly, there must be optimum cooperation between the Commission, the 
national authorities and the courts in the Member States. 
94. The concept of subsidiarity is often cited as one of the changes 
introduced by the Maastricht Treaty. It was in fact already applied in 
Community competition law, as explained below.(35) it must continue to 
guide the Commission's work, which must concentrate on cases involving a 
genuine Community interest, leaving it to the national authorities or law 
courts to decide the other cases. 
95. In conclusion, the Maastricht Treaty will certainly have important 
repercussions for. competition policy. However, this is not a one-way 
process: competition policy will also play a fundamental role in the 
implementation of other Community pol icies.(36) 
(34) See points 182 to 188 of this Report 
(35) See points 189 to 191 of this Report 
(36) See points 149 to 181 of this Report 
1.11 .§1. p. 1 
043 
<T4> Chapter I I 
<T2> The international dimension of competition policy 
<T3> §1. Genera I 
96. During the year under review the international dimension of the 
Community's competition policy was marked by three main events, all of which 
took place in December. The Community and its Member States completed the 
ratification process of the European Economic Area Agreement. Because the 
five participating EFTA States had already done so, this enabled the EEA to 
enter into force on 1 January 1994. On 15 December, after seven years of 
often complicated negotiations the contracting parties of the GATT managed to 
conclude the so-called Uruguay Round of Multilateral Trade Negotiations. 
Finally there was the presentation by the Commission of its White Paper on 
growth, competitiveness and employment. As described above, this White Paper 
contains an important statement on the international dimension of competition 
poI i cy. 
97. These three events can be seen as marking the end of an era where the 
Community's policy on international competition issues focused essentially on 
the inclusion in international trade agreements of rules against 
anti-competitive practices, structures and state aid. They also marked the 
beginning of a policy which is based much more on taking steps to ensure that 
such rules are actively enforced and that enforcement is carried out in a 
manner similar to the way in which the Community has used the competition 
rules as a tool to foster intra-Community trade. 
Thus there has been a certain shift from an essentially rules-based approach 
to a policy-based approach. This has affected the Community's relations with 
all of its trading partners, regardless of the actual rules governing them. 
Thus the Commission has used the rules of the 1972 Free Trade Agreements with 
countries in Europe to ensure enforcement of the competition rules in trade 
with the Community. It has also worked towards the creation of enforcement 
practices by the EFTA Surveillance Authority (ESA) similar to those of the 
Commission. But even with countries such as Japan, with which at present no 
specific rules on competition policy have been concluded, it has put in 
efforts to promote effective competition policy enforcement .in order to open 
up trade opportunities. 
1.M.§2.p.2 044 
<T3> §2. Promoting competition policy enforcement throughout Europe 
<T4> - EFTA 
98. The Commission has strengthened its efforts to bring about changes in 
state aid granted by EFTA countries in violation of the competition rules 
included in the Free Trade Agreements concluded in 1972. After the successful 
resolution of the state aid case involving the Eurostar joint venture between 
Chrysler Motors Company and Steyr Nutzfahrzeuge, (1) the Commission's 
attention was brought to four further state aid cases involving Austria and 
one involving Finland. 
99. On 22 July the Comission found that the aid which the Austrian federal 
and regional authorities proposed to grant to General Motors Austria and the 
aid granted to Steyr Nutzfahrzeuge AG, like the subsidy which the Vienna 
municipal council had paid in May 1991 and June 1992 to Grundig Austria GmbH, 
were incompatible with Article 23 of the Agreement. Article 23(1)(iii) of 
the Agreement provides that any public aid affecting trade between the 
Community and Austria which distorts or threatens to distort competition by 
favouring certain undertakings or the production of certain goods is 
incompatible with its proper functioning. In accordance with a statement 
made by the Community when the Agreement was signed, the assessment of such 
practices is based on the criteria applied in implementing Article 92 of the 
EC Treaty. 
Tha Austrian authorities planned to grant General Motors Austria public aid 
amounting to 15% for investment intended to extend the production of 
gearboxes, camshafts and cylinder heads at its Asperne/Vienna plant. 
Gearboxes alone are exported to the Community for assembly by General Motors, 
while the engine components are exported to Hungary. In the case of Steyr 
Nutzfahrzeuge AG (a subsidiary of MAN), Steyr, public aid amounting to 15.1% 
is granted for the rationalization and extension of its heavy goods vehicle 
production at Steyr, most of which is intended for the Community market. As 
far as Grundig Austria GmbH is concerned, the public subsidy granted for the 
rationalization and extension of the production of television sets is 10%, 
(1) Twenty-second Competition Report, point 344 
1.11.§2.p.3 045 
with a ceiling of OS 100 million for an OS 1 billion programme at its Vienna 
factory. 
In each of these cases, the firms receiving the aid are in competition with 
Community firms. In the Commission's view, the aid would not be acceptable 
on the basis of the criteria applied in implementing Article 92(3)(a) and (c) 
of the EC Treaty, notably because the Vienna conurbation, within which 
Grundig and General Motors are situated, would not be deemed eligible for 
regional aid. 
Since no mutually satisfactory solution could be found between the Community 
and Austrian authorities within the Joint Committee or after discussions 
between experts by a deadline which had been set, the Commission sent the 
Council, on 22 September, three proposals on the withdrawal of tariff 
concessions on the relevant General Motors, Steyr Nutzfahrzeuge and Grundig 
products, pursuant to Article 27(3) of the Agreement. In the case of General 
Motors and Grundig, the Commission proposed that duties at a level equal to 
that of the customs duties which would have been applicable if the Free Trade 
Agreement had not entered into force be reintroduced. Such duties would be 
maintained until such time as the Council concluded that the aid in question 
was no longer having any harmful effects on competition and trade, or at the 
very most for a period equivalent to the average tax depreciation period. A 
fourth case, relating to an investment project in the motor vehicle industry 
(BMW) in the Steyr region, is being examined. 
As part of the close contacts entertained with the Austrian authorities, a 
solution was found for the Steyr Nutzfahrzeuge case in the context of the 
Austrian regional aid scheme being examined in preparation for enlargement. 
In the Grundig case, the Council decided by a qualified majority, on 
21 December, to adopt the Regulation proposed by the Commission. The next 
day, the Austrian authorities agreed to recover the OS 67 million as 
requested by the Commission, prompting the Community to waive introduction of 
the abovementioned duties. 
In the General Motors case, the Council also decided by a qualified majority 
to adopt the Regulation proposed by the Commission. Accordingly, a 4.9% 
1.11.§2.p.4 A4' 
04b 
duty will be charged on imports from Austria of F15 gearboxes produced by 
General Motors Austria. 
100. All of the cases which have been dealt with so far under the 
competition provisions of the 1972 Free Trade Agreements have demonstrated 
the difficulties which are inherent in the procedural rules of those 
agreements. In the case of five of the EFTA countries these difficulties 
should be solved for future competition cases with the entry into force of 
the European Economic Area on 1 January 1994. However, with regard to other 
countries the Community has decided that an efficient competition policy 
requires more viable procedures. 
<T4> - Countries in Central and Easten Europe 
101. In the case of the Europe and Interim Agreements concluded with a number 
of countries in Central and Eastern Europe/2) this new approach has not 
only led to adoption of more elaborate substantive competition rules. The 
most innovative aspect of the competition provisions of these Agreements is 
that they also provide for the establishment of implementing rules within 
three years of the entry into force of the Agreements. These implementing 
rules should bring effective and reasonably efficient enforcement procedures. 
Thus, the Commission and the competent authorities in the relevant countries 
have begun drawing up such rules within joint committees set up under each of 
the Interim Agreements. It should be stressed that, as stated in the 
previous Report,(3) it is not considered necessary to adopt competition 
rules that would be superimposed on the parties' existing legislation. 
102. As regards the competition rules applicable to enterprises, cases should 
be dealt with mainly on the basis of the rules existing in the Community and 
in the associated country by the authorities responsible for their 
application. Situations might therefore arise in which each of the two 
authorities would have jurisdiction in one and the same case. It is also 
probable that, in cases where only one authority is competent, the measures 
taken by it might affect major interests of the party whose national 
(2) See points 563 and 564 of this Report. 
(3) Twenty-second Competition Report, point 103. 
1.11.§2.p.5 
047 
authority is not competent. Equally, a case might fall outside the 
competence of the authorities of both parties. It is mainly to deal with 
such situations that the adoption of enforcement rules is necessary. 
A draft has been drawn up jointly by the Polish authorities, and more 
particularly by the Polish Antimonopoly Office, and by the Commission in 
accordance with the above guidelines. The draft has been sent to the 
co-chairmen of the Community-Poland Joint Committee for examination and 
discussion. The Commission intends to adopt the same approach in working 
with the other countries concerned so as to draw up similar procedural rules 
with them. 
103. As regards state aid, work has not yet progressed very far. The 
Commission considers that the procedural rules could be based oh a 
classification of aid into three categories: aid subject to the requirement 
of financial transparency, aid which should be notified to the other 
contracting party and aid which is not subject to the notification 
requirement, but on which discussions could be held at the request of the 
other party. During the period under review, work began on drawing up aid 
inventories in some of the countries in question. The inventories should 
help the parties in formulating the implementing rules. 
104. Since the Europe Agreements contain a provision on the approximation of 
laws, the six countries began bringing their competition law provisions into 
line with those in the Community. No deadline has been set for doing so, but 
it must be regarded as a matter of priority, notably in order to facilitate 
the establishment of the rules for enforcing the agreements, since their 
implementation is based principally on the national rules. For this purpose, 
technical assistance must be provided to the countries in question. 
Technical assistance is also being considered for the drawing-up of a report 
on the situation regarding state aid, national monopolies, public enterprises 
and enterprises granted special or exclusive rights. The report will 
facilitate the implementation of the agreements and the provisions on the 
gradual adjustment of state monopolies of a commercial nature and 
implementation of the principles laid down in Articles 90 and 92 of the 
EC Treaty. 
1.11.§2.p.6 ^ a 
048 
Frequent contacts have been held between the Commission and the authorities 
of the relevant countries on such technical assistance. Some of the 
countries have asked that the assistance be provided under the Phare 
programme and accordingly be financed out of its budget. However, faced with 
a growing number of requests for technical assistance which it does not have 
the necessary staff to deal with, the Commission has had to entrust the task 
in part to outside consultants. Technical assistance clearly offers a unique 
means of assisting the relevant countries in the implementation of an active 
compet i t ion policy. 
,M.§3.P.7 049 
<T3> §3. A more daunting task: encouraging competition policy enforcement 
in non-European countries 
105. In Europe the Community's wish to promote competition policy enforcement 
has greatly benefited from the fact that new agreements have been negotiated 
or are currently being negotiated with almost all European non-member states. 
Most, if not all of those agreements have included provisions on trade 
aspects and have allowed the Community to follow through on its two-track 
approach to trade liberalization. This approach consists in eliminating not 
only state obstacles to trade, but also obstacles stemming from private 
business practices. 
106. The same situation has not existed with regard to most of its non-
European trading partners. Trade relations with those countries will be 
affected of course by the new GATT agreement. However, this agreement will 
still not endow the GATT with a two-track approach to trade liberalization. 
During the year under review there have therefore been renewed calls for the 
inclusion of competition rules in GATT as part of the post-Uruguay Round 
agenda. Such calls have come from private groups such as the "International 
Antitrust Code Working Group", consisting of competition policy experts from 
Europe, the US and Japan, which published a "Draft International Antitrust 
Code as a GATT-Multi latera I Trade Organization Plurilateral Trade Agreement" 
in Munich in July. They can also increasingly be heard in governments. Thus 
the OECD Committees on Competition Law and Policy and on Trade have organized 
a series of joint meetings to discuss the convergence of trade and 
competition policies. 
107. Although a multilateral competition policy instrument concluded in the 
GATT framework seems to offer the best chances for dealing with 
anti-competitive practices which restrict international trade, it seems 
obvious that such a solution will require complicated, and therefore possibly 
time-consuming discussions. In its White Paper the Commission has recommended 
that establishing such multilateral rules be a Community priority, but it 
does not plan to sit idly by while waiting for their results. This is why, in 
the meantime, it is concentrating on certain of the Community's major trading 
partners in order to find ways of addressing anti-competitive practices and 
structures which create obstacles to trade with those countries. 
1....J3.P-. 05G 
108. The agreement concluded in 1991 between the Commission and the US 
Government already contained a provision aimed at dealing with this type of 
problem. Article V of that agreement lays down a so-called positive comity 
rule. Under this rule a Party whose important interests are affected by 
anti-competitive practices within the other Party's territory may request the 
latter to examine those practices. The Party on whose territory the practices 
are allegedly taking place may investigate the matter and take any measure it 
deems appropr iate. 
This procedure can obviously be applied in particular when anti-competitive 
practices in one country create market access barriers for imports from 
another country. Such practices may otherwise not be dealt with because the 
country where the alleged problem exists is not aware of its existence, or if 
it is, has not ranked it high on its list of priorities. 
109. The procedure is therefore intended not just to promote competition 
policy enforcement in general, but also try to focus such enforcement 
specifically on those cases in which other countries are particularly 
interested. This is especially important when a country has an elaborate set 
of competition rules as well as an active policy of enforcing them, but is 
concentrating on anti-competitive practices whose main impact is domestic, 
leaving unsolved problems which are being felt mainly in other countries. The 
reason for this is often that a country sees the objective of its competition 
policy in terms of maximizing its national rather than global welfare. 
Although the Commission has not, for the time being, concluded agreements 
similar to the one with the US with other countries, it is not entirely 
deprived of the positive comity tool in relation to other major trading 
partners. Indeed, a positive comity type provision has been included in the 
Revised Recommendation of the Council of the OECD of 21 May 1986, concerning 
international trade. The Commission has therefore invited any person affected 
by anti-competitive practices in other OECD countries to inform the 
Commission thereof so that it can raise the issue under the positive comity 
prov is ions. 
110. In other cases the Commission has used even less formal means to promote 
competition policy enforcement in its trading partners. Thus on 4 November 
the Commission organized a seminar on competition policy in Tokyo, together 
with the Japanese Fair Trade Commission, which is responsible for competition 
policy enforcement in Japan. Its purpose was to compare EC and Japanese 
1.11.§3.p.9 051 
approaches to a number of competition issues which have a particular 
relevance to international trade. Thus discussions took place on 
distribution, mergers and acquisitions, deregulation and on the international 
dimension of competition policy. The Commission speakers underlined in 
particular the way in which competition poI icy had been used in the Community 
to eliminate private obstacles to intra-Community trade and to establish a 
level playing field within the EC. They argued that similar policies should 
be followed with regard to international trade. It has been decided to 
organize a follow-up conference in Europe in the course of 1994. 
111. Finally one should mention that in a number of countries, and in 
particular in the US and Japan, there have been political developments during 
the period under review which have led to increased enforcement. Since the 
new US Administration took office at the beginning of the year, US antitrust 
policies have seen a return to more stringent enforcement, including in areas 
which for 12 years had all but disappeared from the agenda. Thus the US 
Assistant Attorney-General decided to once again start enforcing the 
antitrust laws against vertical restraints. 
In Japan the new government which came into office halfway through the review 
period made deregulation one of the cornerstones of its economic policies. 
This deregulation will be accompanied by increased enforcement of the 
Anti-Monopoly Act, inter alia, through a reduction in the number of excluded 
sectors. 
Similar developments are taking place in a number of other countries, 
including Turkey, the Republic of Korea, Taiwan and several countries in 
Central and South America. The Commission welcomes these developments and 
tries to encourage them where it can. It firmly believes that it is through 
active competition policies that markets can be successfully opened around 
the world and a level playing field created for Community and other firms 
a I ike. 
1.11 .§4.p.10 
052 
<T3> §4. Cooperation on enforcement in specific cases 
112. All of the policy initiatives mentioned above which were taken during 
the period under review should help bring about more enforcement of 
competition rules in the Community's main trading partners, especially 
against private practices which affect trade with the Community. In a number 
of cases such private practices or structural changes may also be caught by 
the Community's own competition rules. It would seem to be important, 
therefore, to try and cooperate with the competition authorities of the third 
countries concerned in order to ensure that a coherent approach is taken on 
both sides. Such cooperation is in the interest of the enforcing authorities, 
as it may avoid duplication of cost and effort. It is also in the interest of 
the companies which are the subject of the enforcement action as cooperation 
may avoid the imposition of two sets of remedies whose combined effect would 
be larger than strictly required to solve whichever competition problems 
ar ise. 
Both the EC-US Agreement of . 23 September 1991 and the 1986 OECD 
Recommendation on Cooperation on Restrictive Business Practices offer a 
framework for such cooperation. However, confidentiality requirements such as 
those contained in Article 20 of Regulation No 17 greatly reduce the 
possibilities for a useful exchange of information and thus for cooperation 
between the authorities concerned. 
113. This is why the Commission and the US Department of Justice took the 
initiative in December of the year under review to ask an undertaking which 
was being investigated by both authorities whether it agreed to waive the 
benefit of the confidentiality requirements and thus to allow DG IV and the 
Antitrust Division of the Department of Justice to exchange information and 
to cooperate in this particular enforcement case. 
In its request the Commission pointed out that information which it might 
receive from the Department of Justice would not be used directly in the 
proceedings based upon Regulation No 17. However, the Commission reserved the 
right to obtain such information by using its own means of investigation. The 
Commission also indicated that it would ask the Department of Justice to 
undertake that any information which the Commission might send to the 
Department would not be disclosed to third parties, except where such 
information could be disclosed had it been obtained by the Department itself. 
1.11 .§4.p.11 
053 
The Commission intends to use this procedure for requesting specific waivers 
of confidentiality in other appropriate cases. It is convinced that, as long 
as the existing confidentiality requirements are not amended, such waivers 
form a very useful tool to enable cooperation with other competition 
authorities, in the interest both of the companies in question and the 
enforcing authorities themselves. 
1. I I .§5.p.12 
054 
<T3> §5. The impact of the Uruguay Round on competition policy 
114. As indicated above, the Uruguay Round did not really offer an overall 
solution for the problems in international trade which result from private 
practices and structures. This does not mean, however, that the Round was 
without significance for the application of competition rules. The Final Act 
which was agreed in principle in December in Geneva contained an important 
Agreement on Subsidies and Countervailing Measures, which brought the GATT 
rules in this area more closely into line with the Community's state aid 
provisions even though differences between the two regimes still remain. In 
addition, the General Agreement on Trade in Services contains a positive 
comity clause, which was included at the initiative of the Community. 
115. Particular mention should be made of the Uruguay Round negotiations 
re I at ing to state aid. 
The final version of the Agreement comprises new elements in this area, 
mainly as regards the "green list" of subsidies deemed to be 
"non-actionable". In the case of aid for research and development, the 
Agreement regards as non-actionable aid whose intensity is substantially 
higher than that allowed by the Community guidelines both for basic research 
and for applied research and development. 
Aid for environmental protection is included in the green list only where it 
relates to investment for the adaptation of plant and equipment to new 
regulations, subject to certain conditions relating to the intensity of the 
aid (20% of the adaptation costs). 
Aid for the development of the least prosperous regions is also included in 
the "green I ist". 
116. The General Agreement on Trade in Services is the first mu11iIateraI I y 
agreed legal instrument which contains a positive comity clause. Article IX 
of the Agreement first entails the recognition that certain business 
practices of service suppliers may restrain competition and thereby restrict 
trade in services. It then goes on to provide for a procedure under which 
each member shall, at the request of any other member, enter into 
1.11.§5.p.13 
055 
consultations with a view to eliminating restrictive business practices. 
Although the only further obligation is to "accord full and sympathetic 
consideration to such a request" and to "cooperate through the supply of 
publicly available non-confidential information", this procedure still seems 
to offer an interesting opportunity to help bring about more enforcement in 
the services area, in the markets of the Community's trading partners. 
1.111.§1.p.1 
056 
<T4> Chapter I I I 
<T2> Developments in the application of the competition rules 
to particular industries 
<T3> §1. Financial services - Insurance 
117. In the European Community, like almost everywhere else, markets for 
services, which should particularly benefit from being opened up to 
competition, have long remained sheltered from competition, due to lack of 
mobility of services across markets and firms within markets. 
Market services play a considerable role in the economy. Today they 
represent the most important sector of economic activity, accounting for over 
50% of Community GDP. A substantial proportion of market services is made up 
of financial services, which are thus a major contributor to general wealth. 
The competition rules are consequently bound to play an increasingly 
important role. Leg islation(1) has helped to change the position of the 
sector: a true internal market is gradually taking shape. 
118. The low degree of competition in services appears to have two causes: 
the intrinsic nature of services and government regulation. 
According to a recent Commission study,(2) prior to the launching of the 
1992 programme competition was particularly weak in banking and insurance 
owing to the two factors described above. In addition, the high degree of 
imperfection in the transmission of information about quality and reliance on 
established reputation confer advantages on those already present. 
This general assessment of the sector naturally masks differences between the 
types of transaction concerned: within the financial system, some markets 
(e.g. mortgage credit) are more competitive than others. 
(1) Twenty-second Competition Report, points 42 to 48. 
(2) "Market Services in the Community Economy", European Economy, 
Supplement A, May 1993. 
1 . I I I .§1.p.2 
057 
Since the mid-1980s, service markets in the Community have undergone 
important changes as a result not only of the internal market programme 
(freedom of establishment and liberalization of the movement of factors of 
production) but also of technological change. The impact of the changes is 
particularly strong in banking. 
119. As regards the practical application of the competition rules to the 
financial sector, it should be borne in mind that this sector has special 
features and that : 
its economic importance is not limited to its direct economic weight. 
Firstly, through cross-effects, the performance of the financial sector 
is crucial to the competitiveness of the other productive sectors and to 
the well-being of consumers. Secondly, from a macroeconomic standpoint, 
the institutional role of the banking sector is that of a conduit for 
monetary poI icy; 
in the case of certain products, the operation of the market can bring 
financial operators into contact independently of their will: operators 
carry out the orders of their customers, and there is consequently no 
direct relationship between supply and demand; for instance, when an 
operator issues a cheque, the creditor's bank is obliged to have 
dealings with the debtor's bank; 
operators can participate in the market for a given product both on the 
demand and the supply side. To take any means of payment as an example, 
banks act in the market both as creditors and debtors. Thus each 
operator contributes at any moment to the determination of both supply 
and demand. 
120. Correct assessment of these factors is crucial if a competition policy 
is to be developed that is effectively based on the realities of this 
part icular market. 
1 . I I I .§1.p.3 
058 
Several cases are currently being investigated to determine whether certain 
banking practices are compatible with the competition rules. The Commission 
is also looking into the question of bank payment cards and will be defining 
its position on this subject. 
121. State aid cases frequently involve state banks either as lenders, 
investors(3) or as deposit-taking institutions in competition for savings 
with private banks.(4) 
122. In the insurance sector, Commission Regulation (EEC) No 3932/92 of 
21 December 1992 exempting(5) certain categories of agreements in the 
insurance sector from the ban in Article 85(1) was adopted at the end of 1992 
and entered into force on 1 April 1993. The Commission wrote to the 
associations or enterprises which had notified a little over 200 agreements 
within these categories before the Regulation entered into force, and gave 
them six months to check that their agreements conformed. The parties were 
told that if the Commission did not receive any specific applications within 
that period, it would consider that the associations or enterprises did not 
wish their original notifications to be followed up individually. Several 
associations have already informed the Commission of their decision to 
discontinue their agreements. 
Other agreements are being amended to satisfy the conditions for exemption 
laid down by the Regulation. As no replies were received, the files on a 
large number of notifications have been or will be closed. 
(3) Twenty-first Competition Report, point 221. 
(4) See points 540 and 541 of this Report. 
(5) OJ L 398, 31.12.1992; points 274 to 288 of this Report 
1 . I I I .§2.p.4 
059 
<T3> §2. Telecommunications and postal services 
<T4> Telecommun icat ions 
123. In October 1992 the Commission publ ished the "1992 Review of the 
situation in the telecommunications service sector"(6) called for by 
Commission Directive 90/388/EEC.(7) The publication set in motion a period 
of intensive consultations. The aim of the consultations was to see whether 
the remaining exclusive rights for the provision of public voice telephony 
were still justified and how best to create the required competitive 
environment for telecommunications services. 
During the consultations the Commission heard the views of more than 
130 organizations and businesses at five different hearings and received more 
than 80 written comments on the "1992 Review". The participants in the 
consultation included Community telecommunications operators, users, service 
providers and potential market entrants, equipment manufacturers, trade 
unions and consumer organizations. 
The "1992 Review" had proposed four options(8^ and the Commission had 
expressed a preference for opening up to competition voice telephony between 
Member States (Option Four). However, as a result of the consultation, 
Option Three, opening-up to competition of all voice telephony services, was 
chosen as the preferred one. This new approach therefore goes much further 
than was originally anticipated, but requires more time for preparation and a 
larger framework of supporting measures. 
This represents considerable progress along the path to a true internal 
market in a sector whose importance has already been underlined elsewhere in 
this Report. The first to benefit will be European consumers, all of whom 
are telecommunications users. In addition, Community industry will benefit 
from more efficient and cheaper means of communication. Finally, the sector 
is set to expand considerably and will thus generate employment, whilst 
requiring major technological development. 
(6) SEC(92)1048 final . 
(7) Twenty-second Competition Report, points 33 to 36 
(8) Twenty-second Competition Report, point 511. 
1.NI.§2.p.5 Q6Q 
124. Based on the conclusions flowing from the consultations the Commission 
adopted its "Communication to the Council and the European Parliament on the 
consultation on the review of the situation in the telecommunications service 
sector" (C0M(93) 159 final) on 28 April 1993. In the week prior to this the 
European Parliament debated the matter and adopted a resolution which 
supported the position of the Commission on further liberalization. 
In this Communication the Commission set out a timetable for the full 
liberalization of telecommunications services by 1 January 1998 in all 
Member States. An additional two-year transition period, where justifiable, 
would be available to those countries experiencing specific difficulties. A 
Green Paper on mobile/personal communications was scheduled for the end of 
1993 and another on public network telecommunications infrastructure before 
1995. 
The Communication addressed all the issues raised in the consultation, in 
particular those related to universal service; the necessary adaptations 
required for a competitive market; and the situation in the peripheral 
regions and small or less-developed networks. 
It proposed special measures in the context of Community support frameworks, 
complementing funding from own resources, to accelerate network development 
and universal service in peripheral regions. The Communication emphasized 
the need for the rapid adoption of pending proposals on the application of 
Open Network Provision to voice telephony; the mutual recognition of 
licences; and satellite communications which were previously excluded from 
compet i t ion. 
The Communication proposed the use of alternative infrastructure and cable TV 
infrastructure for telecommunications services already liberalized. Such a 
development would strengthen the implementation of existing legislation, 
which itself was identified in the consultation as a major objective. 
125. At its meeting on 16 June 1993 the Council adopted a resolution, which 
largely supported the proposals of the Commission's communication of 
28 April 1993, on the main policy goals, principles and timetable for the 
necessary legislation. The most important point of the resolution adopted by 
1. I I I .§2.p.6 061 
the twelve Member States was the agreement to liberalize public voice 
telephony by 1 January 1998 at the latest, as proposed by the Commission. 
However, the Council considered that four countries - Spain, Portugal, Greece 
and Ireland - should be granted, if necessary, the possibility of an 
extension of the deadline to 2003. The Commission has undertaken to help 
these countries develop their networks and to implement the necessary 
adaptations. At the request of Luxembourg, the Council considered that very 
small networks should be granted an extension until the year 2000 where this 
i s just i f ied. 
The Commission's proposal on the use of alternative infrastructure for 
telecommunications services already liberalized did not figure in the 
Council's resolution although four Member States - France, Germany, the 
Netherlands and the United Kingdom - supported the Commission's position. 
The Commission is studying the impact of its proposed liberalization of 
alternative infrastructure, including cable television networks. 
The Council resolution recognized the importance of maintaining the financial 
stability of the sector, preserving jobs, developing training, channelling 
Community resources into the peripheral regions, promoting the creation of 
trans-European networks in the interests of strengthening economic and social 
cohesion, and formulating a coherent approach to infrastructure. It also 
addressed the issue of the financing of universal service with the option of 
charging for access. The Council also foresaw the necessity of progressively 
rebalancing tariffs, maintaining the balance between liberalization and 
harmonization, recognizing the importance of cooperation between 
telecommunications operators, demanding equivalent market access to third 
countries, and coordinating national and Community measures in accordance 
with the principle of subsidiarity.(Q) 
The overall approach adopted, which combines liberalization and 
harmonization, shows that the liberalization of an economic sector does not 
require the removal of all rules but, on the contrary, calls for a regulatory 
framework so as to avoid harmful distortions. 
(9) Council Resolution of 22 July 1993, OJ C 213, 6.8.1993 
1 . I I I .§2.p.7 
062 
126. The Economic and Social Committee gave its support to the broad thrust 
of the positions of the Commission and the Council, whilst questioning 
whether the date of 2003 was not too late for full liberalization in certain 
Member States.(1°) 
127. At the request of the Belgian Presidency, the Commission prepared a 
communication on universal service which emphasized its fundamental 
importance whilst recognizing the positive contribution of competition to the 
fulfilment of universal service.^1) It paid particular attention to the 
need for tariff rebalancing. 
The communication also addressed two further issues. Firstly, drawing on 
Open Network Provision legislation, it defined the scope of universal 
service. Secondly, it addressed the central issue of how to finance 
universal service where a service would not normally be provided to a 
particular customer on a commercial basis by the operation of market forces 
alone. Tariff and access charges paid by new operators were all seen as 
having a role to play. Lastly, it proposed funding under the Community 
support framework from the Structural Funds, subject to national priorities, 
for the particular problems of the peripheral regions with respect to 
universal service issues. 
On 7 December the Council adopted a Resolution on the principles of universal 
service in telecommunications which is based essentially on the Commission 
Communication. The Resolution stresses that the development of universal 
service is a key factor for the future development of telecommunications in 
the Community and calls on the Member States to establish an appropriate 
regulatory framework and set appropriate targets in order to ensure universal 
service throughout their territory. It recognizes that, in numerous cases, 
market forces would be expected to lead to universal service being provided 
on a commercial basis. Where voice telephony can be provided only at a loss, 
it should be possible to finance it through internal transfers, access 
charges or other mechanisms compatible with the competition rules of the 
Treaty. 
(10) ESC Opinion No 1166/93 on documents C0M(93)159 and SEC(92)1048 of 
24 November 1993. 
(11) C0M(93) 543. 
1 . I I I .§2.p.8 063 
128. By 1998, the Commission will take the measures necessary to bring about 
the scheduling and structural adjustments in the peripheral regions required 
in order to achieve full liberalization, decide on the regulatory framework 
for public infrastructure and implement the measures necessary to ensure the 
full liberalization of public voice telephony. 
129. The liberalization of the sector has prompted established firms or those 
seeking access to conclude agreements in order to adapt to the new situation. 
The agreements set up various forms of cooperation, from strategic alliances 
to cooperative joint subsidiaries and, sometimes, even mergers. The 
competition rules, especially Articles 85 and 86 of the EC Treaty, and the 
Merger Control Regulation, are essential instruments in distinguishing 
between transactions resulting in more competition in the sector and those 
aimed at maintaining the status quo and slowing down the process of 
I iberaIizat ion. 
<T4> Postal services 
130. In the postal sector, the Commission has sought to maintain the momentum 
created by the adoption of the Green Paper on the development of the single 
market for postal services last year. The importance to the Community of 
achieving high quality services, through a combination of harmonization and 
liberalization measures, has been the motivating force. Here too the 
sector's vital role in achieving economic and social cohesion within the 
Community cannot be overlooked. 
131. Following the publication of the Green Paper on the postal sector in 
1992,(12) the Commission adopted a Communication to the Council and to the 
European Parliament13) on 2 June 1993, entitled Guidelines for the 
development of postal policy. 
The Communication takes account of the trends which emerged during the course 
of the public consultation following the publication of the Green Paper and 
sets out a series of guidelines for the further development of the 
Community's postal services. 
(12) Twenty-second Competition Report, point 38. 
(13) C0M(93) 247 final . 
1 . I I I .§2.p.9 
064 
By the end of the formal public consultation, over 200 written submissions 
had been received by the Commission departments and a summary of these 
contributions is annexed to the Communication. 
In general terms, the Guidelines relate to the definition of the universal 
postal service at Community level; the maintenance of a reserved area-, the 
establishing of quality of service standards; measures to encourage 
harmonization; the separation of regulatory powers and operational functions; 
terminal dues and the international aspects of the postal sector. 
More specifically, the Guidelines reflect the consensus reached on the basic 
concept of the universal service and propose a definition which reflects the 
obligations of the Member States under the Universal Postal Union Convention. 
They record agreement on the need to maintain a reserved area for the benefit 
of the universal service but note the divergence of views on the effect that 
specific liberalization measures, such as inward cross-border and direct mail 
services, will have on the economic viability of the universal service as 
well as problems relating to control. 
132. In this regard, the Commission, while maintaining its preference for 
liberalization, has undertaken to carry out a more detailed analysis of the 
implications of the latter measures for the provision of the universal 
service. 
The Guidelines also reinforce the Green Paper position as regards, firstly, 
the need to broaden and deepen the separation of regulatory and operational 
functions in the postal sector and, secondly, the importance of introducing a 
cost-based system of terminal dues into the rational development of postal 
policy in the Community. 
The Commission's harmonization proposals received support during the 
consultation, and the Guidelines pay particular attention to the need to 
introduce measures to improve quality of service through the fixing of 
standards at Community level, the monitoring of progress in this regard and 
the publication of results. They also propose that the harmonization of 
conditions of sale should be reinforced as well as technical standardization 
in the handling, transport and delivery of mail. 
1.1 M.§3 p.10 06 5 
<T3> §3. Energy 
133. The establishment of a single energy market, in accordance with 
Article 7a of the Union Treaty, continues to be a Commission priority despite 
the difficulties of introducing the dynamics of competition into a sector 
that has long been shielded from competition and the application of the 
Treaty rules. 
The proposals for Directives which the Commission put forward in 1992 under 
Articles 57(2), 66 and 100a concerning common rules for the internal market 
in electricity(14^ and gas(15^ continued to be the subject of wide-ranging 
d i scuss ions. 
At its meeting on 30 November 1992, the Council concluded that it was 
essential to work towards "more open, transparent, efficient and competitive" 
electricity and gas markets. Whilst noting that obstacles to the single 
market had yet to be eliminated and further progress achieved, the Council 
invited the Commission "to consider modifications to its proposals in the 
light of the Council discussions and of the Opinion of the European 
Par I iament". 
The Council meeting on 25 June 1993 confirmed these conclusions. Parliament 
delivered its opinion at its plenary sitting on 17 November 1993. On 
10 December 1993, on the basis of the Council discussions and the numerous 
amendments proposed by Parliament, the Commission presented the Council with 
amended proposals for Directives on electricity and gas. The main changes 
are as fol lows: 
first, gas and electricity generators will have the right to negotiate 
access to the network. This replaces the regulated access envisaged in 
the initial proposals. Provision is made for dispute resolution 
procedures in the event of difficulties in negotiating or performing 
contracts, although the procedures may not take the place of the redress 
available under Community law; 
(14) Proposal for a Council Directive, OJ C 65, 14.3.1992, p. 4. 
(15) Proposal for a Council Directive, 0J C 65, 14.3.1992, p. 5. 
1 . I I I .§3 p.11 066 
second, the proposals now include a detailed work schedule which will 
enable the Commission to draw up the necessary harmonization proposals 
for the smooth operation of the market without prejudice to the 
application of Community law. 
The amended proposals also introduce, in the electricity sector, tendering 
procedures for the award of new network transmission and generating 
capacities as an alternative to the licensing system originally envisaged. 
An open and non-discriminatory .system for the grant of licences to 
own-generators and independent producers is also established. Lastly, the 
network operating rules have been simplified. In its White Paper on growth, 
competitiveness and employment, the Commission undertook to encourage, where 
appropriate by mobilizing Community funding (grants and loans), the 
construction of new interconnected gas and electricity networks in the 
European Union. It will, however, see to it that the conditions governing 
access to and use of these new networks, as well as existing ones, are 
consistent with the principles deriving from the EC Treaty and, where 
applicable, the abovementioned proposals for Directives. 
133a. The Commission is pressing ahead with its policy of creating a more 
competitive and open intra-Community energy market through the application of 
the competition rules. Thus it authorized an agreement, notified on 
26 January 1993, between E lectricidade de Portugal, National Power Pic (UK), 
Empresa Nacional de EIectricidad, SA (Spain) and Electricité de France 
concerning the acquisition and operation of a coal-fired power station at 
Pego (Portugal) made up of two units. The agreements, chiefly as a result of 
amendments incorporated at the Commission's request, is in line with the 
liberalization of electricity generation provided for in the abovementioned 
proposals for Directives. 
134. The Commission is also pressing on with its policy of liberalizing the 
oil industry, in particular the transport, distribution and sale of motor and 
jet fuels. To that end, it checked the conformity with the relevant rules of 
service station agreements between Spanish refineries and service station 
operators from the recently abolished monopoly network, C6) ancj 0f a 
franchise system in the United KingdomC17) for service stations 
incorporating retail outlets for consumer goods. 
(16) See point 226 of this Report. 
(17) See point 225 of this Report. 
i.iii.§3 p.12 067 
The Commission also authorized an agreement on the joint operation by British 
Petroleum and Repsol SA of logistical facilities for storing and handling oil 
products in the Canary Islands,(18^ and another agreement on the setting-up 
of a joint venture to deal with fuel-distribution logistics at Milan's new 
airport. In assessing these cases, the Commission looked into whether 
interested third parties had access to the network under objective and 
non-discriminatory conditions, in so far as access was a prerequisite for 
participation in the market. 
135. In December, after long negotiations in the Council and the Parliament 
which had led it to amend its initial proposal presented in 
December 1992,C9) the Commission adopted a Decision unanimously agreed by 
the Council laying down new rules for the authorization of aid to the 
Community coal industry in the per iod 1994-2002, when the ECSC is due to 
expire.. The new aid code(2°) is closer to the code it replaced than the 
original proposal as it no longer sets an upper limit on the production 
costs on which subsidies can be paid to bridge the gap vis-à-vis world 
market prices. Originally it was proposed that production aid should be 
limited to the gap between average Community production costs and world 
market prices. However, an innovation introduced by the code is the 
requirement for notification and approval of aid before it is granted. Apart 
from coal, the other state aid decisions by the Commission in the energy 
sector all concerned aid for renewable energy. (21) The promotion of energy 
from renewable sources received fresh impetus with the adoption of the 
ALTENER programme.(22) 
(18) See point 226 of this Report. 
(19) Twenty-second Competition Report, point 400. 
(20) See Annex II to this Report. 
(21) See points 532 and 533 of this Report. 
(22) Council Decision 93/500/EEC of 13 September 1993, 0J L 235, 18.9.1993 
068 1 . I I I .§4.p.13 
<T3> §4. Transport 
<T4> Air transport 
136. Since 1 January 1993, air transport in the Community has constituted a 
single market from the regulatory standpoint in a largely liberalized 
system.(23) Carriers now have access to virtually all intra-Community 
routes, and fares are no longer subject to prior control, thus considerably 
increasing the opportunities for dynamic commercial strategies and enhancing 
competition in this sector. 
Although liberalization of the internal market encourages the development of 
competition, certain forms of cooperation between airlines have their place 
in the new structure. A favourable view is still taken of cooperation where 
it benefits users and improves the competitive position of the firms taking 
part, especially smaller carriers without a large network. The Commission 
also adopted new block exemptions^4) for the joint planning of schedules, 
the joint operation of air services on new or less busy routes, slot 
allocation at airports and tariff consultations on fares with a view to the 
granting of interline fac i I. i t i es.C25) it has, however, made it clear that 
it will be closely monitoring the development of the interlining system to 
see whether tariff consultations should continue to be exempted. Lastly, 
the block exemption concerning computer reservation systems was amended(26) 
following the adoption by the Council of new rules on the operation of such 
systems.(27) 
137. The Commission also noted that increased competition in air transport 
revealed more clearly the existence of ground handling monopolies in most 
European airports. The associated restrictions of competition are liable to 
jeopardize some of the beneficial effects of transport liberalization. 
Having received a fair number of complaints, the Commission decided to 
initiate wide-ranging consultations, on the basis of a working paper it had 
adopted on 15 December 1993, with Parliament, national authorities, air 
carriers and the institutions and parties concerned. The consultations 
(23) Twenty-second Competition Report, point 58. 
(24) Commission Regulation (EEC) No 1617/93, OJ L 155, 26.6.1993 and 
OJ L 177, 29.6.1993. 
(25) Twentieth Competition Report, points 73 and 74. 
(26) Commission Regulations (EEC) Nos 1618/93 (OJ L 155, 26.6.1993) and 
3652/93 (OJ L 333, 31.12.1993). 
(27) Council Regulation (EC) No 3089/93, OJ L 278, 11.11.1993. 
1 . I I I .§4.p.14 069 
should enable the Commission to identify the measures required and the type 
of legal instrument to be used. The Commission is currently examining within 
the framework of the goals set out on this subject in the 22nd Report, the 
observations received during the process of consultations. 
The measures could consist, on the one hand, in the abolition of the 
monopolies for the various services provided (and full liberalization of some 
of them) and, on the other hand, in measures guaranteeing effective 
competition, e.g. impartial approval and tendering procedures, or transparent 
and non-discriminatory conditions of access for new entrants. 
This important sector provides an illustration of the principles underlying 
the action taken by the Commission in areas which are in the hands of 
monopolies. 
138. Norway and Sweden concluded an agreement with the Community which makes 
them part of the Community single market in civil aviation and also entails 
application of the competition rules.(28) The agreement was updated in order 
to bring it into line with developments in Community legis I at ion.(29) 
139. With the airline industry in Europe and elsewhere in recession and often 
loss-making, the Commission had to deal with several major cases of state aid 
to national flag-carrying airlines. These cases, notably Air France and 
Aer Lingus, are reported below.(30) 
<T4> Sea transport 
140. The Commission continued to apply Articles 85 and 86 of the EC Treaty in 
this sector, which enabled it in particular to clarify the scope of block 
exemption Regulation (EEC) No 4056/86. It may also prepare a document next 
year setting out the principles it regards as fundamental to the application 
of the competition rules in this sector. 
(28) OJ L 200, 18.7.1992. 
(29) OJ L 212, 23.8.1993. 
(30) See points 536 to 539 of this Report 
1. I I I.§4. p. 15 070 
141. The Commission approved a draft block exemption regulation which 
specifies the categories of consortium agreements in the liner trade likely 
to be authorized under Article 85(3). The draft will now be discussed with 
the parties concerned in accordance with the procedures laid down in the 
enabling Regulation^31) 
Consortia are agreements between liner shipping companies for the joint 
operation, to varying degrees, of maritime transport services involving 
various technical, operational and/or commercial arrangements. 
For the reasons given in its communication of June 1990,(32) the Commission 
is in favour of this modern form of organizing liner services, a response to 
conta iner izat ion. 
The growth of container services and the scale of the investment needed 
(mostly in ships) to operate such services has increased the need for 
cooperation between shipowners. This cooperation usually takes the form of 
consortia agreements. 
These agreements vary considerably as the degree of cooperation and extent of 
the joint activities they cover differ according to operators' needs and the 
situation prevailing on a particular route, and so the Commission was anxious 
to prepare a balanced and flexible framework for a block exemption instrument 
which took account of the special features of maritime transport. The 
Regulation should allow shipping lines to operate under the various 
agreements in full legal certainty and ensure that shippers receive a fair 
share of the resulting benefits. 
Under the draft Regulation, the block exemption will apply for an initial 
period of five years and covers both consortia operating within a liner 
conference and non-conference consortia. 
The conditions set out in the new Regulation are modelled on previously 
published guideI ines,(33) adjusted to ensure that consortia operate under 
conditions of effective competition. 
(31) OJ L 55, 29.2.1992. 
(32) C0M(90)260, 18.6.1990. 
(33) Twenty-first Competition Report, Annex I 1.4. 
1.III.§4.p.16 
To that end, the Regulation specifies the maximum share of the trade that 
makes consortia qualify automatically for block exemption. 
The draft Regulation, examined for the first time in December by the 
Member States at Advisory Committee level, was published at the beginning of 
1994 with a view to obtaining the comments of other interested parties. 
<T4> Rai I transport 
142. This has traditionally been a highly regulated sector with each national 
railway holding a monopoly in its territory. On 1 January 1993 Council 
Directive No 91/440 of 29 July 199l(34) on the development of the 
Community's railways entered into force. It represents a very important 
stage in the liberalization of railways since it authorizes railway 
undertakings, under certain conditions, to use rail infrastructures in other 
Member States in order to operate international passenger and goods trains. 
Thus it is no longer possible to reserve rail infrastructure, which is just 
as much an essential facility as a seaport or an airport, solely for the 
nat ionaI operator. 
These new market operation arrangements clearly facilitate competition 
between existing railways and should make it easier for new operators to 
enter the market. 
Nevertheless, certain forms of cooperation between railway undertakings may 
still be necessary. The Commission Decision of 24 February 1993 granting an 
exemption in the field of the combined transport of goods fits into this 
context; it has allowed the Commission to clarify certain principles which 
it will reinforce in its decisions On other cases pending. 
More generally speaking, the Commission intends to apply an active policy 
over the next few years in order to encourage this form of transport and make 
it more competitive, especially in relation to road transport. 
(34) OJ L 237, 24.8.1991., p. 25 
1 . I I I .§5.p.17 
072 
<T3> §5. Audiovisual industry 
143. The audiovisual industry is undoubtedly a key area in the improvement of 
the productivity of Community industry. It is, however, necessary to 
distinguish between the situation in television and that in film production 
and distr ibut ion. 
Television is in full expansion with an ever-growing number of channels; new 
channels may differ from the traditional channels in that they take the form 
of single-subject channels, subscription channels or "pay per view" channels, 
where only what is watched is paid for. These developments have been made 
possible by constant technological progress. The arrival of digital 
compression should greatly increase the number of satellite TV channels. A 
further consequence of technological progress is that competition is 
increasingly becoming worldwide. 
In the case of films, most Community countries are experiencing a decline in 
the number of cinema-goers and very strong competition from non-Community 
producers and distributors. Here, the trend in television feeds through to 
developments in the film industry. 
Worldwide competition clearly makes it more necessary than ever to establish 
a level playing field to ensure that the conditions applied to the Community 
industry in third countries are not worse than those enjoyed by those 
countries' industry in the Community. 
144. Whilst the growth of television is itself a source of employment, it 
also has repercussions on the whole of Community industry. As the 
White Paper on growth, competitiveness and employment noted, the 
dissemination of information is essential in enabling enterprises to adjust 
rapidly to a competitive environment. 
Yet television is also a special sector, inasmuch as its openness to 
competition is recent, the emergence of modern technology having allowed 
television programmes to be broadcast over far larger areas. Current 
technical progress could indeed mean that viewers will soon be able to select 
their own menu of programmes. 
1 . I I I .§5.p.18 073 
145. Finally, it is also necessary to consider the aspects relating to 
pluralism in the media. A Green Paper(35) adopted by the Commission formed 
the basis in 1993 for a vast consultation programme with all the parties 
concerned. The purpose of the Green Paper is to consider whether, taking 
account of the objectives of the single market, it is necessary to propose 
Community-1 eve I approximation of the rules on media ownership as laid down by 
the Member States to ensure pluralism. The Commission will decide on the 
need for Community action by the spring of 1994. It should be noted that the 
Merger Control Regulation is certainly an effective instrument for monitoring 
developments in this sector, even though none of the cases notified this year 
under the Regulation concerned the audiovisual industry. It should also be 
remembered that one of the exceptions to the "one-stop shop" principle 
concerns the media-, although in theory mergers meeting the threshold criteria 
are examined only under the Merger Control Regulation, Article 21(3) of that 
Regulation allows Member States to take measures against concentrations that 
jeopardize the plurality of the media, even if they would not be creating a 
dominant position liable to restrict competition within the meaning of the 
Regulat ion. 
146. The desire to give real impetus to competition in television in its new 
environment explains the attitude the Commission has adopted in the year 
under review and intends to take in the future. On several occasions it had 
to decide on agreements between television stations aimed in practice at 
giving the parties to the agreements exclusive rights whilst preventing 
others from re-transmitting or distributing their pictures. In each case, 
the Commission required the parties to amend their agreements to allow third 
parties non-discriminatory access to the markets concerned. The EBU-
Eurovision System case is particularly interesting in this connection. It 
concerned the joint acquisition of the radio-broadcasting rights to certain 
events. Initially, the agreement granted such rights only to members of a 
body named Eurovision. However, only public or private stations with public 
(35) "Pluralism and media concentration in the internal market - An 
assessment of the need for Community action" C0M(92)480 final. 
1 . I I I .§5.p.19 
074 
service obligations could join that body. The machinery thus completely 
prevented private channels from retransmitting the events in question. The 
Commission eventually exempted the agreement only after the parties had 
agreed partially to open their agreement to third parties. 
This approach was similar to that taken in other areas where the question of 
access to essential infrastructures arises. 
147. The situation in the cinema industry, on the other hand, is more 
difficult. In the past, the Commission had approved the setting-up by three 
US producers of a joint venture, United International Pictures (UIP), for the 
joint distribution of their films. An application for renewal of the 
exemption was received in 1993. But the Commission's concern in this 
industry too is to ensure that third parties have equal access to markets on 
equitable terms, and at the same time to maintain a level playing field. 
<T4> State aid 
148. As stated above, the Commission has always taken a sympathetic approach 
to state aid for the audiovisual industry (feature films and television 
productions) because of the difficulties facing it and because of its 
particular cultural importance. It intervened only in respect of 
infringements of other provisions of the Treaty such as discrimination 
against the nationals of other Member States.(36) 
Following complaints from a number of private television channels, the 
Commission is investigating the financing of public channels in several 
Member States (Spain, France and Portugal). To enable it to assess the 
various rights and obligations that determine the financing of public and 
private broadcasters in the Member States, together with their transnational 
repercussions, if any, it has commissioned a study from outside consultants. 
(36) Twenty-second Competition Report, points 441 to 444 
1.IV.§1.1 
075 
<T4> Chapter IV 
<T2> Competition policy and other Community policies 
149. Competition policy is an instrument which complements the Community's 
other policies. This chapter of the Report therefore looks at the role which 
competition policy can play in the implementation of such other policies. 
However, the links described below are not the only ones that exist, since 
competition policy is also relevant to the pursuit of policies not dealt with 
in this Report, such as regional policy and consumer protection. The 
policies highlighted in this Report have thus been selected to reflect 
significant developments during the year, but this does not mean that the 
links between competition policy and other policies not mentioned are of any 
lesser importance. 
<T3> §1. Completion of the internal market 
150. The 1993 year marked the beginning of a new stage in the development of 
the internal market. In accordance with Article 7a of the EC Treaty 
(formerly Article 8a of the EC Treaty, as added by the Single European Act), 
virtually all the measures aimed at establishing the internal market by 
1 January 1993 were adopted. This legislative work led to the removal of 
internal frontiers to the free movement of goods, services and capital. 
Nevertheless, the Commission is aware that it is not sufficient to adopt such 
a legislative framework for an area to emerge in which there is free 
competition across internal frontiers. Recognizing the need for ongoing 
monitoring of the way in which the basic rules function, the Commission 
adopted the Strategic Programme on the Internal Market. (1) 
151. The strategic programme identifies the guidelines and measures that are 
necessary for the internal market to operate and to allow competition between 
i 
operators at Community level.(2) Key importance is attached to developing 
(1 ) C0MC93) 632 final . 
(2) The annual report on the internal market describes the main Community 
measures affecting the operation of the internal market. The first 
report was published in March 1994. 
1.IV.§1.2 
076 
the interaction between competition policy and establishment of the internal 
market. Such interaction springs from the fact that these Community policies 
serve the same fundamental objective - reinforcing the wealth-creating 
capacity of the Community economy through improved allocation and more 
efficient use of productive resources. Strict application of the competition 
rules is an essential complement to the drive to remove legal and 
administrative obstacles to trade within the Union. It will help to ensure 
that any anti-competitive practices by companies or national authorities do 
not inhibit the dynamics of competition that must be the key to achieving the 
economic advantages which completion of a single market should bring. A 
strong competition policy will ensure that firms trying to tap the openings 
created by the internal market do not see their efforts frustrated by such 
pract ices. 
152. First of all, Member States may be tempted to grant aid to firms that 
are facing greater competition as a result of the single market programme. 
This may provoke similar measures in other richer Member States that wish to 
protect their firms. This type of chain reaction inevitably leads to an 
escalation in aid that in the end benefits the richest Member States, i.e. 
those that were the most developed in the first place. It is therefore 
essential that the Commission continue to play its role of arbitrator and 
that it applies strictly the principles laid down in the Treaty so as to 
maintain aid discipline and ensure cohesion. 
There may also be some resistance to the non-discriminatory liberalization of 
competition at national and Community level' in sectors which were 
traditionally managed on the basis of exclusive or special rights. This is 
particularly true of those sectors that involve certain basic infrastructures 
such as transport, energy and telecommunications. This policy is, however, 
prejudicial in the long run to the interests of such Member States and thus 
to the Community as a whole. If there is no competitive pressure, 
enterprises will not necessarily be induced to improve their productivity. 
The result is inefficiencies that are harmful to such enterprises, and hence 
to society as a whole. Furthermore, other businesses in such Member States 
which often depend on access to such infrastructure will be penalized in 
1. IV.§1 .3 
077 
their competitive relationships with firms in other Community or 
non-Community countries. Here again, the Commission's intention, in ensuring 
gradual liberalization in such sectors, is to give everyone a greater chance 
of benefiting from the advantages of a genuine internal market. 
153. Secondly, firms may be tempted to protect themselves against competition 
from firms in other regions. What is involved here is not government action 
but private practices. Firms may attempt to achieve these ends by entering 
into agreements or by abusing dominant positions. Such types of conduct must 
be banned, since they do not allow firms to capitalize fully on their 
competitive advantages. They act moreover as a brake on the development of 
certain regions by obstructing improved exploitation of regional comparative 
advantage. Once again, by penalizing severely such practices, competition 
policy can help in ensuring economic and social cohesion, without which the 
internal market cannot function properly in the long term. Merger control 
pursues the same objectives, since it seeks to prevent firms from acquiring, 
through mergers, positions such that they no longer have to fear competition 
from other f i rms. 
154. Competition policy will therefore remain an essential means of ensuring 
that completion of the internal market brings Community industry as a whole 
and consumers all the benefits which a Community-wide market affords. 
Another example is provided by the various block exemption regulations 
adopted in respect of exclusive distribution and exclusive purchasing 
agreements. This is not a new idea, since one basic reason why the EC Treaty 
includes competition rules is the desire to ensure that private obstacles to 
trade do not replace the government obstacles which the EC Treaty set out to 
eI iminate. 
1.1V.§2.4 
078 
<T3> §2. Industr iaI policy 
155. Competition policy and industrial policy have sometimes been portrayed 
as opposites. However, to understand the real extent of this supposed 
conflict, it is important to define first what is meant by industrial policy. 
All Member States have an industrial policy, but the term covers a wide 
variety of situations. At one end of the spectrum are those Member States in 
which government intervenes in life all the time, while at the other are 
those in which the state's role is confined to basic functions, such as 
education and the maintenance of law and order. Clearly, competition policy 
is not possible in a completely interventionist state. Yet all the other 
types of organization of the economy provide a role for competition policy, 
some greater, some smaller, that links up with industrial policy. 
156. The Commission first expressed its position on industrial policy in its 
communication entitled "Industrial policy in an open and competitive 
environment".(3) Similar ideas found their way into the Maastricht Treaty. 
It contains a new Title XIII entitled "Industry" (Article 130). From the 
Community's viewpoint, as defined in the Maastricht Treaty, industrial policy 
rather seeks to create the essential conditions for the rapid development of 
an efficient Community industry. The idea is not therefore for the Community 
to take the place of businesses themselves, but to act as a catalyst in 
encouraging innovation and creating an appropriate and stable environment. 
Seen in this way, the main achievement is certainly the completion of the 
internal market, which should allow Community industry to benefit from 
economies of scale, while at the same time exposing it to greater competitive 
pressures, which can only boost its productivity. 
This general approach shows up in more specific measures. Thus, the 
Commission has adopted documents relating to various sectors that stress the 
role of competition. Furthermore, several measures are mentioned in the 
White Paper on growth, competitiveness and employment. Examples include 
(3) COM(90)556 
1.1V.§2.5 
079 
measures to promote the development of infrastructure, such as the creation 
of trans-European networks, the speeding-up of technological advances, 
notably in biotechnology, and the opening-up of markets to non-Community 
countries. 
157. Against this background, the Commission considers that, far from being 
the direct opposite of industrial policy, competition policy is an essential 
instrument, with clear complementarity between the two policies. The 
approach in the Maastricht Treaty is no different. On the one hand, 
competition policy continues to be a fundamental objective, as Article 3(g) 
makes clear. On the other, the newly added Article 130 states that Community 
action to promote the competitiveness of Community industry must be "in 
accordance with a system of open and competitive markets". Lastly, 
Article 3a confirms that Community economic policy must be conducted in 
accordance with the principle of an open market economy with free 
competition. The Treaty lists a number of measures that may be taken, 
notably by the Commission. Competition policy therefore has an important 
role to play with respect to each of them. 
158. The Treaty calls firstly for a speeding-up of industry's adjustment to 
structural change. Such adjustment requires firms to take advantage of the 
existence of a large internal market by way of integration. Such integration 
may take place through mergers. The Merger Control Regulation is a valuable 
instrument which enables the Commission to control corporate mergers so as to 
ensure that they do not result in situations that are prejudicial to the 
market and, above all, to authorize all mergers that do not pose any such 
danger. The discussions on the lowering of thresholds have shown that firms 
would prefer to deal with a single competition authority rather than having 
to meet the requirements of several national authorities. 
Other forms of cooperation between firms may prove beneficial without 
necessarily resulting in a full merger. Thus, firms may decide to set up a 
joint venture, or indeed simply to conclude a cooperation agreement. Such 
forms of cooperation may enable the partners to become more efficient and to 
1.IV.§2.6 
080 
stand up to competition, which is increasingly worldwide. These types of 
agreements may be authorized under Article 85(3), despite the fact that they 
restrict competition. Use was made of this possibility on numerous occasions 
this year. However, the Commission must in all cases react speedily: if 
firms cannot implement their decisions rapidly, they risk being overtaken by 
events in a changing environment. It is because it is aware of this 
requirement that the Commission has undertaken to work to tight deadlines in 
cases involving structural changes. 
159. The Maastricht Treaty also provides for the encouragement of small and 
medium-sized businesses. As noted elsewhere in this Report, the Commission 
gives preferential treatment to small and medium-sized businesses in its 
control of state aid. 
In handling the competition rules applicable to firms, the Commission has for 
many years given preferential treatment to small and medium-sized businesses 
and has decided that it will not normally concern itself with the conduct of 
smaller businesses. More generally, the application of the competition rules 
has often resulted in the prohibition of agreements or practices that were 
harmful to small and medium-sized businesses. 
160. Lastly, Community industrial policy also comprises all the measures to 
encourage research and development. A clear and supportive policy towards 
aid for R&D was laid down by the Commission in its 1986 guideI ines.(4) 
Acting under Article 85 of the EC Treaty, the Commission is ready to 
authorize agreements involving a restriction of the parties' freedom of 
action if such restriction is necessary in order to achieve technological 
innovation that is beneficial to all. One case decided on this year, 
Becton-Cyc lopore, is a good example of this approach. It should also be 
remembered that, in 1984, the Commission adopted a block exemption Regulation 
authorizing certain joint research and development agreements. The 
Regulation was followed up by another which entered into force this year and 
which, subject to certain conditions, exempts such agreements where the 
parties decide to exploit jointly the results of their research by setting up 
a joint subsidiary to market the products. 
(4) OJ No C 83, 11.4.1986. See also points 454 to 464 of this Report 
1. IV.§2.7 
081 
161. An important part of the business environment are services, such as 
transport and telecommunications which are discussed elsewhere in this 
Report, and the availability of a trained labour force. This makes 
we I I-developed infrastructures and efficient constantly updated training 
systems major instruments of industrial policy. The public financing of 
infrastructure that is to be accessible to all service providers is generally 
not considered state aid. 
1.IV.§3.8 
082 
<T3> §3. Env i ronment 
162. This year has been an important one for the relationship between 
environment and competition policies. With the entry into force of the 
Maastricht Treaty the environment has been given greater prominence. 
Article 130r(2) provides that "environmental protection requirements shall be 
a component of the Community's other policies". This principle of 
integrating environmental considerations into other Community policies was 
also a basic element in the fifth Community action programme on the 
environment "Towards sustainabiIity"(5) and was given substance in the 
Communication in June on "Integration of environmental objectives into other 
policies".(6) Competition must therefore, as much as any other Community 
policy, take account of environmental considerations. 
163. However, this effect of environmental considerations on competition 
policy is not a one-way street. Competition policy when put into its proper 
framework has a very important role to play in achieving environmental 
object ives.(7) 
164. In the first place, one of the fundamentals of Community environmental 
policy is the "polluter pays" principle. When applied, this allows the price 
mechanism, which ought to translate into costs the negative effects of a 
particular process or good on the environment, to perform its signalling 
function which forms the basis of a market economy. This pushes firms to 
convert environmental costs into financial terms. The pressure of competition 
will therefore be one of the mechanisms which will prompt businesses to 
reduce emissions in particular by using less polluting production and 
disposal techniques. In the longer term these price incentives stimulate 
research to develop environmentally friendly products or production 
technologies, thereby putting the economy on a structurally less polluting 
path. 
165. This approach of relying on' competition and the market mechanism is 
found in all environmental policy. In its Communication on "Industrial 
competitiveness and protection of the environment",(8) the Commission 
( 
(6) SEC(93) 785/5 of 28.5.1993. 
(7) Twenty-second Competition Report, points 75 to 77 
(8) SEC(92) 1986 final. 
1.IV.J3.9 083 
clearly calls for a vigilant competition policy. It states that "whenever 
possible [integration of competitiveness and the environment requires a 
strategy that] should be built around solutions based on the competitive 
functioning of markets. This implies in particular emphasis on 
market-related instruments of environmental policy". A similar philosophy 
underlies other recent policies in the environmental field. The Green Paper 
on civil liability for environmental damage^) puts the responsibility for 
environmental damage on the polluter and consumer . The draft Directive on the 
prevention of pollution and integrated pollution control10) leaves a role 
for competition in determining the Best Available Technology (B.A.T.) to meet 
established standards. 
166. The "polluter pays" principle is taken a step further in the new 
environmental aid guidelines which set out the principles by which the 
Commission will judge state aid for environmental protection.^1) Clearly 
subsidies towards the cost of dealing with pollution are not a 
straightforward application of the principle, which would require all such 
costs to be borne by the polluter. But they may be a second-best solution. 
The difficulty of applying the "polluter pays" principle fully and at once 
has been recognized ever since the first framework was issued in 1974, but 
over time the levels of subsidy have been progressively reduced. The new 
guidelines further cut back on aid for adapting existing plant, but, again in 
recognition of the "second-best" solution that subsidies may represent, 
allows a higher rate of aid (up to 30 %) for investment that goes 
significantly beyond current environmental requirements. By establishing 
clearer rules in these and other areas, the new guidelines will contribute to 
a more effective conduct of environment policy in the Member States. 
167. Just as important as state aid policy is cooperation between companies 
that can have effects that need to be analysed with respect to the 
competition rules. For example, an increasing number of Member :.^ato-;;; ar3 
legislating in the field of packaging waste to take them out of the public 
waste disposal system for household waste. This objective is to ensure that 
(9) C0M(93) 47. 
(10) C0M(93) 423 of 14.9.1993. 
(11) See points 419 to 426 of this Report. 
1-iv.§3.10 084 
waste or other products at the end of their useful life need to be either 
recycled or reused. C2) 
168. Cooperation between companies is often the only way for them to meet 
these norms and run collection and retrieval systems privately. Several 
important cases are currently under investigation. The DSD (Duales System 
Deutschland) allows participating companies who pay a fee to place a "Griiner 
Punkt" on their products, showing that the packaging will normally be sorted 
and can be recycled. This case has been the object of a number of complaints 
which raise several important issues. In particular the question must be 
asked whether it is necessary that there be only one system, which gives rise 
to risk of monopoly power, and whether participation in the system is a 
de facto necessity for producers, particularly from outside Germany, to enter 
the German market, in other words whether the system could be used as a 
barrier to entry to new competition. 
Similar issues are raised in another case under investigation relating to 
re-usable plastic crates for the transport of fresh fruit and vegetables. In 
return for a fee, IFCO (International Fruit Container Organization - set up 
by food traders) undertakes to produce, supply, take back and clean these 
crates so as to permit their re-use. The food traders informed their fruit 
and vegetable suppliers they would "whenever possible, buy only goods 
delivered in I FCO crates". They also notified the system to the Commission. 
National and European association groupings, on the one hand, of producers 
of carton board packages and, on the other hand, of fruit and vegetable 
producers complained against the IFCO system. The Commission is still 
examining the case but in early June 1993 it issued a press release in order 
to clarify one specific 'quest ion. The letter by which the traders had 
informed their suppliers of the existence of the IFCO system differed from 
the notification of that system in so far as it created the impression that 
the traders would only accept IFCO crates. According to the notification, 
the traders merely committed themselves to promoting the IFCO-crates by using 
the minimum number of such crates judged necessary for the safe start-up of 
the IFCO system. In its press release the Commission informed the public at 
(12) The Court of Justice has confirmed that obstacles to free movement of 
goods within the meaning of Article 30 can be justified on environmental 
grounds in particular where no Community measures have yet been adopted 
(Case 240/83 [1985] ECR 531 and Case 302/86 [1988] ECR 4607). 
I.IV.§3.II, 085 
large that, at its request, the traders had written a second letter to their 
suppliers clarifying this point.(13) 
169. Another case that was decided this year is very interesting in showing 
the Commission's thinking in this complicated area. It concerns agreements 
between water bottlers to standardize bottles so as to enable them to comply 
with legislation requiring these bottles to be re-usable if a system for 
their recycling did not exist.(14) A standard bottle has efficiency 
advantages, notably at the retail level for sorting. With the introduction of 
the new German legislation, membership of this system of standard bottles, 
whilst not a de jure requirement for access to the German market, became a 
de facto necessity. Following a statement of objections in which the 
Commission highlighted the discriminatory conditions of access to the system 
for non-German mineral water producers, which seriously impeded their entry 
into the German market, the system was changed. This contrasts with the 
situation several years earlier when the Commission rejected a similar 
complaint because at that time other possibilities for distributing mineral 
waters existed and membership of the system was not necessary to have access 
to the market. 
170. This case shows clearly that the Commission will examine carefully all 
agreements between companies to see if they are indispensable to attain the 
environmental objectives. It will be particularly vigilant to ensure that 
such agreements do not foreclose market entry to outsiders and that where 
membership of the system is necessary for market access because there is no 
viable alternative, then this membership will be given on non-discriminatory 
terms. In this respect membership is treated in a similar way to access to 
essential facilities in regulated sectors or transport (e.g. ports).(15) 
The Commission in its analysis of individual cases will have to weigh the 
restrictions of competition in the agreement against the environmental 
objectives that the agreement will help attain, in order to determine 
whether, under this proportionality analysis, it can approve the agreement. 
(13) Press release IP(93)430, 3.6.1993 
(14) See point 240 of this Report. 
(15) See point 234 of this Report. 
1.IV.§3.12 086 
171. Finally as regards the environment, the White Paper gives it a 
prominent place in the new development model for the Community. The underuse 
of labour-based resources is contrasted with the overuse of environmental 
resources and capital-intensive methods of production. The development path 
laid out builds on elements already being established in environmental policy 
but with renewed vigour and focus. The necessary role of competition policy 
in carrying out the policy of sustainable development and the impact of this 
latter on the application of competition policy will therefore be a further 
enhancement of the two-way influence between environment and competition 
described in this chapter. 
1 . IV.§4.p.13 087 
<T3> §4. Culture 
172. The Maastricht Treaty introduced an innovation by devoting a specific 
title to culture. This new Community policy has direct consequences for the 
competition, rules: Article 92(3) of the EC Treaty now provides that, where 
aid to promote culture and heritage conservation does not affect trading 
conditions and competition in the Community to an extent that is contrary to 
the common interest, it may be considered to be compatible with the common 
market and therefore authorized. This important new provision will enable the 
Commission to strike the necessary balance between the requirements of 
cultural and heritage promotion and the openness of trade and competition in 
the s ingle market. 
173. While the provision of an explicit legal basis in trie Treaty for state 
aid policy in the cultural field is welcome, this should not be taken to 
imply that the Commission pursued a different policy in the past. The 
Commission's consistent practice has been to authorize state aid to promote 
culture and heritage conservation as long as competition is not unduly 
distorted and that the other single market rules a*e fully complied with. The 
Commission position with regard to cinema and television was set out in last 
year's Report.(16) 
There are many local, regional and indeed national cultural subsidies which 
do not distort competition or affect trade between Member States to any 
significant extent, in such cases, Article 92 of the EC Treaty does not apply 
and the Commission has no cause to intervene. Where a subsidy does have 
distortive effects, those effects are analysed in the light of the national 
and Community policies being pursued and the impact on the beneficiaries' 
competitors. This analysis pays particular attention to the principle of 
proportionality. The Commission must ask whether the subsidy does no more 
than is necessary to meet the objectives of the policy being pursued and 
whether the harm to competitors outweighs the benefit of meeting the relevant 
policy object ives. 
(16) Twenty-second Competition Report, points 64 to 66. 
1-,v-§4-p-14 088 
174. Culture, it is often said, is not a vulgar product like any 
other. This may be so, but artists, producers, distributors and indeed all 
the participants in the process of cultural creation and heritage 
conservation frequently find themselves in competition with each other for 
audiences, advertisers and outlets. Accordingly, it is as important in this 
field as in any other that the Commission should ensure that competition is 
not unduly distorted and that wasteful subsidy races are avoided. 
In recent years, the Commission has taken a number of decisions which 
clarify its position on cultural aid. Maintaining culturaI diversity has been 
accepted as a justification for support of the film industry, for subsidizing 
production of television programmes in regional languages, for promoting the 
plastic arts and for supporting the export of books to countries where the 
language of the book is not widely spoken. Ways of reconciling cultural 
preservation and non-discrimination have been found. Now that the EC Treaty 
has been amended in the way described above, further clarifications may be 
expected without, however, any fundamental shift in policy. 
175. Protection of culture is also a concern that has always been borne in 
mind in applying the competition rules that affect businesses. Although 
culture is not mentioned by name in Articles 85 and 86 of the EC Treaty, the 
Commission takes account of the cultural dimension when investigating cases 
in the light of those provisions. Yet the aim is not to frame a policy on 
culture or to make value judgments in applying the provisions, but rather to 
assess business practices with due regard to the repercussions they could 
have on the Community's cultural policy. 
176. One example of this concern has already been mentioned in the part of 
this Report devoted to the audiovisual industry. Here, as elsewhere, the 
Commission's action is of course aimed in the first place at ensuring that 
competition between firms is not distorted and that some firms do not try to 
oust others through anti-competitive practices. The Commission's action thus 
also has the effect of preserving some plurality in the media, and this is 
undoubtedly an effective means of promoting European culture. By stopping, 
for example, certain operators restricting others from transmitting certain 
pictures, the Commission wishes to see them disseminated as .widely as 
1.IV.§4.p.15 089 
possible and is thus contributing indirectly to their distribution across 
the Community. 
177. To take another, perhaps more striking example, the Commission is 
currently investigating several cases involving resale price maintenance 
systems for books. This is machinery set in place by publishers in several 
Member States to prevent active price competition between publishers and 
between booksellers. Without at all prejudging its final conclusions in 
these cases, the Commission has in the past repeatedly stated that it could 
regard such resale price maintenance arrangements for books as compatible 
with the competition rules provided that they are individual and purely 
vertical. In other words, while the Commission cannot agree to prices, 
pricing methods or conditions of sale being established collectively by all 
publishers, it can, on the other hand, countenance a system whereby an 
individual publisher lays down the conditions of sale and retail prices of 
his books in the bookshops. In taking such a stance, the Commission is of 
course conscious of the need to afford some form of protection to publishers 
of books produced in smaller print runs, a consideration which influences its 
analysis of the conditions of competition. A system of individual resale 
price maintenance protects booksellers offering ranges of books of more 
limited appeal, and therefore produced in smaller print runs. This is 
another important example of how the Commission reconciles the concerns of 
cultural policy with application of the competition rules. 
1.1V.§5.p.16 
090 
<T3> §5. Commere i a I poI i cy 
178. The links between competition policy and commercial policy, and more 
specifically anti-dumping measures, have long been the subject of 
discussions. It has even been proposed on occasion that the anti-dumping 
rules be replaced by the competition rules. This means, however, that the 
latter are viewed only in terms of their application to business practices 
within the Community. 
The Commission does not share this view. In its White Paper on growth, 
competitiveness and employment, it stresses the need to protect Community 
industry against unfair practices in the Community by firms based in 
non-member countries, by tightening application of the anti-dumping rules. 
There are therefore no moves at present to replace the instruments of 
commercial policy with the competition rules. 
179. This does not mean, however, that the competition rules will not have to 
play a key role in future in this area. Application of anti-dumping measures 
does not enable Community industry to gain access to markets in certain 
non-member countries where domestic manufacturers often organize themselves 
in such a way that foreign firms are to all intents and purposes excluded. 
Furthermore, anti-dumping measures in the form of undertakings secured from 
manufacturers or import quotas can even backfire by boosting the profits of 
non-Community firms, because the products are sold in the Community at higher 
prices. If a lasting solution is to be found to the difficulties facing 
Community industry in this area, other instruments must therefore be used. 
180. In the Commission's view, the competition rules can constitute such an 
instrument. The example of the Community itself serves to show that 
competition rules form an essential complement to the removal of state 
barriers to trade. This is why the Community has always made it a special 
point to challenge business practices that hinder market integration. 
However, at the present time, the efforts to liberalize world trade concern 
only state barriers and not private barriers to trade. In the Commission's 
view, it is therefore essential that global competition rules be developed, 
and above all effectively applied, if Community firms are to be able to 
operate under similar conditions to their competitors. 
1.IV.§5.p.17 09 I 
181. There are many possible approaches, and they are not mutually exclusive 
in the Commission's view. The most ambitious solution would undoubtedly be 
the adoption of an international competition code, backed up by effective 
means of enforcement. The Commission is also anxious to see competition 
rules included in agreements it concludes with non-member countries. Lastly, 
it has concluded or is planning to conclude certain specific agreements in 
the competition field with the competition authorities of some 
non-member countries. These are essential preconditions if Community 
industry is to gain unhindered access to third country markets. The new 
situation would stop firms in those countries earning the large profits they 
currently make because their domestic market has been closed off. An end 
would thus be put in the long run to the economic conditions that allow them 
at present to engage in unfair competition within the Community: if they 
were to continue to sell at extremely low prices, either their products could 
be re-exported to their country of origin, or Community firms could sell more 
cheaply than them on their home markets. The economic conditions allowing 
dumping to take place would thus disappear. 
1.V.§1. p.1 
092 
<T4> Chapter V 
<T2> Application of the competition rules 
<T3> §1. Transparency 
182. The Commission has for a number of years been making special efforts to 
ensure that businesses and the public can gain easy and effective access to 
the information they need to understand the Community's competition policy 
and, in the case of businesses, comply with its requirements on a day-to-day 
basis. With respect to state aid in particular it is vital that the 
Member States' governments and local authorities have access to the 
information necessary to ensure that any plans they elaborate regarding the 
grant of aid comply with the Community's relevant procedural and substantive 
rules. This need for clear information is regarded as one of the Commission's 
priorities in the area of competition policy. The Community's competition 
policy will be fully supported by business, policymakers and the general 
public only if it is widely understood. To achieve this aim the Community's 
approach in this area must be fully transparent. 
In 1993 the Commission continued to take a number of measures to ensure that 
this policy remains effective. 
183. First, it appointed an information officer within the 
Directorate-General for Competition, to whom companies and Community citizens 
may address enquiries. The information office aimé to present an accessible 
information point both for general enquiries on competition policy and for 
specific questions on points of law. The unit can be contacted by telephoning 
Brussels (32) 2-295 00 94 or by fax, Brussels (32) 2-295 54 37. 
184. Second, the Commission has continued its efforts to increase the range 
of publications and other sources of information that can be made available. 
In addition to the publication in the Official Journal of the full texts of 
formal decisions taken by the Commission pursuant to Articles 85 and 86, all 
major developments in individual cases and on questions of general policy are 
reported by press release. These press releases are generally available, and 
can be consulted through an on-line database, named RAPID, accessible by 
subscription with the Commission. Furthermore a summary of these press 
1.V.J1.P.2 . 
releases appears monthly in the Bulletin of the European Communities, as 
well as annually in the Competition Report. The Commission published for the 
first time in 1993 a long press release outlining its activities in applying 
the competition rules over the first half of the year. Another press 
release, covering the second half of the year, was also published in early 
1994. 
A number of other projects are also nearing completion. A variety of 
brochures on the Community's competition policy are under preparation and 
will be available during the course of 1994. Furthermore, a quarterly 
newsletter is planned, which will update the business and legal community on 
recent developments in an easily readable format. 
185. Third, the Commission has been taking a number of measures aimed at 
increasing the input from industry and consumers on cases under active 
consideration by the Commission. Thus, in merger cases and cases regarding 
structural joint ventures falling under Article 85(1), the Commission 
publishes a short notice in the C series of the Official Journal as soon as 
it receives the notification, outlining the operation in question, and 
inviting third parties to comment. In cases where the Commission is 
considering the adoption of a formal exemption or negative clearance 
decision, it continues to publish a fairly detailed notice under 
Article 19(3) of Regulation No 17 outlining the proposed transaction and its 
likely effect on the market in question and inviting third parties to comment 
before it adopts a final decision. 
186. Fourth, the Commission has been furthering its policy of inviting 
companies and their representatives to contact the Directorate-General for 
Competition for consultations on individual cases prior to notification or 
the lodging of a complaint. Such contacts are now standard procedure for 
cases falling under the Merger Control Regulation, and the practice has been 
widely welcomed by those involved. The Commission has therefore been 
informing companies of this facility, in particular in cases involving 
structural joint ventures, where the new internal deadlines followed by the 
Commission make close collaboration between the Commission and the companies 
in question indispensable. 
1.V.§1. p.3 
094 
187. Lastly, special mention should be made of transparency in the 
field of state aid. A new set of policy guidelines was issued in 1993 laying 
down the principles that will guide the Commission when assessing the 
compatibility of state aid for environmental protect ion.C ) The Commission 
also adopted a notice which standardizes the formats of notifications and the 
reporting requirements on authorized aid schemes.(2^ Commission staff met 
twice with experts from all twelve Member States in multilateral meetings. 
188. The Commission also took practical steps, by issuing instructions to its 
departments, to make legislative work more transparent. If there is to be an 
active dialogue with the sectors and interests concerned and, more generally, 
with European citizens, all these groups must be more thoroughly informed of 
preparatory work prior to the adoption of legislative instruments. 
The Commission is under a legal obligation to publish draft legislation it is 
preparing only in the case of block exemption regulations.(3) it has 
undertaken to publish in future all proposals for Council directives or 
regulations and all draft directives, regulations or interpretative or policy 
notices which it intends to adopt in the field of the competition rules 
applicable to enterprises. 
These drafts will normally be published in the Official Journal; texts other 
than draft block exemption regulations will be published at the same time as 
they are sent to the Member States. This will enable the Commission already 
to take account of the reactions of 'interested parties when it holds 
consultations with the national authorities. 
(1) See point 384 of this Report. 
(2) See point 385 of this Report. 
(3) See the Council enabling regulations: Articles 5 and 6 of Regulation 
No 19/65/EEC (OJ 36, 6.3.1965, p. 533) and Articles 5 and 6 of 
Regulation (EEC) No 2821/71 (OJ L 285, 29.12.1971, p. 46). 
1.V.§2. p.4 095 
<T3> §2. Subsidiarity and decentralized application 
189. The principle of subsidiarity, which is enshrined in the new Article 3b 
of the EC Treaty, has from the outset been at the heart of the rules designed 
to ensure that fair, effective and undistorted competition is maintained and 
developed both in the Member States and at Community level. In the field of 
restrictive agreements and dominant positions, Articles 85 and 86 of the 
EC Treaty have always existed alongside similar provisions of national law. 
The agreements and practices concerned are caught by the Community rules only 
where they are liable to affect trade between Member States. A similar 
approach has been taken by the Community legislator in allocating 
responsibilities for merger control between the Community and the 
Member States: Regulation (EEC) No 4064/89 provides for control by the 
Commission only where the operations have a Community dimension.(4) 
While the principle of subsidiarity is well established in competition 
policy, the way it is put into practice is not always satisfactory, because 
the demarcation between matters that should be the responsibility of the 
Commission and those that should be dealt with by the Member States is not 
always ideal. This applies particularly to the dividing line drawn by the 
Merger Control Regulation between the respective fields of application of 
Community law and the domestic law of the Member States. Experience in 
applying the Regulation has shown that very many operations which fall below 
the current thresholds do have a genuine European dimension and therefore 
ought to be subject to control by the Community.(fi) 
The Commission will accordingly continue to press for a revision, in 1996, of 
the turnover thresholds laid down in Article 1 of the Merger Control 
Regulation, which determine whether a merger is deemed to have a Community 
dimens ion. 
190. As far as action under Articles 85 and 86 is concerned, the actual 
wording of the provisions prevents the Commission investigating restrictive 
agreements or abuses of dominant positions whose foreseeable effects do not 
(4) Twenty-second Competition Report, point 120. 
(5) See the part of this Report on merger control. 
1.V.§2. p.5 no -
extend beyond the confines of a single Member State: this is an area 
reserved for the national authorities, which apply their domestic laws. On 
the other hand, neither the Community nor the Commission is exclusively 
competent to deal with restrictive agreements and abuses of dominant 
positions that produce their effects in several Member States and 
consequently affect intra-Community trade. The national authorities can 
apply their domestic law in such cases; as long as the Commission has not 
initiated any proceedings, they can even apply the prohibitions laid down in 
Article 85(1) and Article 86. The power to grant individual exemptions under 
Article 85(3) is nevertheless reserved for the Commission (Article 9 of 
Régulât ion No 17). 
This pattern of responsibilities requires constant close cooperation between 
the Commission and the national authorities to prevent overlapping 
investigations that might lead to inconsistent or even conflicting 
decisions. It also points to the need for a better division of labour 
between the Community and the national competition authorities. The 
Commission takes the view that restrictive agreements and abuses of dominant 
positions which, albeit appreciably affecting intra-Community trade, produce 
most of their effects on the market of a single country should be dealt with 
by the competition authorities of the Member State concerned under the 
subsidiary powers conferred on them by Article 9(3) of Regulation No 17. In 
accordance with that provision, the national authorities could apply the 
prohibitions laid down in Article 85(1) and Article 86, either on their own, 
or in conjunction with similar provisions of their domestic law. Conversely, 
cases with a significant impact on competition either throughout the 
Community or in a part of it that extends well beyond the confines of a 
single Member State would be dealt with by the Commission alone. 
Such a division of labour would not impinge on the Commission's exclusive 
powers under Article 9(1) of Regulation No 17 to grant individual exemptions 
in pursuance of Article 85(3). National courts and authorities may be 
allowed to apply Article 85(3) only for types of agreement that do not 
greatly jeopardize effective competition and are covered by block exemption 
regulations. In other cases, which must be examined individually, the grant 
1.V.§2. p.6 U9/ 
of a derogation from the ban on restrictive agreements requires assessment 
of complex economic situations and the exercise of considerable discretionary 
power, particularly where different objectives of the EC Treaty are involved. 
This task can only be performed by the Commission. 
191. The so lut ion advocated above is fully in line with the policy of further 
decentralizing the application of Articles 85 and 86 which the Commission has 
been pursuing for several years. A first step in this direction was taken 
with the adoption of a notice on cooperation between national courts and the 
Commission.(^) The Commission will henceforth endeavour to step up 
cooperation with the competent national authorities in order to prepare the 
ground for their regular application of Community law. The annual conference 
of the Directors-General for Competition of the Member States, held in 
Brussels on 15 October, was devoted exclusively to this topic. Discussions 
are continuing within an ad hoc working party composed of representatives of 
the national authorities and of the Commission, which has the task of 
examining what steps should be taken in order to: 
make competition policy towards enterprises more effective throughout 
the Community; 
involve the competent national authorities more closely in implementing 
that pol icy ; 
improve Community procedures; and 
share out the case load more satisfactorily between the Commission and 
the Member States. 
The Commission is convinced that these aims can be achieved without amending 
Regulation No 17. The practical steps to be taken in this area will be set 
out in a notice published in the Official Journal. 
(6) OJ C 39, 13.2.1993, p. 6; Twenty-second Competition Report, point 299 
1.V.J3.P.7 Q98 
<T3> §3. Improvement of procedures 
192. The Commission is continuing to look for ways of streamlining and 
speeding up its procedures. This involves, firstly standardizing the 
requests, notifications and reports submitted by the parties and the letters 
dispatched by the Directorate-General for Competition and, secondly, 
improving the flow of information on which the Commission bases its 
decisions. During the year, considerable progress was made along these lines 
in connection with both the monitoring of state aid(7) and the application 
of Art icles 85 and 86. 
<T4> "Structural" cooperative Joint ventures 
<T5> (a) Aims 
193. On 23 December 1992 the Commission adopted new internal procedures to 
speed up its handling of "structural" cooperative joint ventures.(Q) These 
are cooperative joint ventures (JVs) whose creation entails major changes in 
the structure of the participating firms. The joint venture must therefore 
be more than a mere legal arrangement chosen in order to coordinate the 
parties' commercial policies: it must have an existence in its own right 
because it pools a significant number of assets transferred to it by the 
parent companies, particularly in the production field and in connection with 
the manufacture and marketing of certain goods. 
It was necessary to speed up the Commission's procedures in these cases in 
order to give the firms concerned the degree of legal certainty they need 
when making major investments as part of a medium- or long-term industrial 
and commercial strategy. Under the Commission's new internal rules, DG IV 
will therefore, within two months of full notification of the agreement, 
inform the parties of the outcome of its initial analysis and the probable 
duration of any administrative procedure it intends to initiate. 
(7) See point 385 of this Report. 
(8) Twenty-second Competition Report, points 122 to 124.' 
1.V.§3. p.8 099 
194. This extremely short deadline can be met only if in-house measures taken 
by the Commission are backed up by other rules on dealings between the 
relevant Commission departments and businesses. The basic aim is to ensure 
that "structural" cooperative JVs notified to the Commission are handled 
efficiently. This is all the more necessary as the number of such 
notifications is on the increase. A sound economic and legal assessment can 
be made within two months only if the Commission has, right from the start of 
its investigation, full information on a number of factors to be taken into 
account, in particular the activities of the firms taking part and of the 
groups to which they belong, their, size and market shares, the nature, role 
and importance of the joint venture and the structure of competition on the 
relevant markets. 
<T5> (b) Planned measures 
195. These aims cannot be achieved through normal administrative practice 
developed under the procedural rules currently in force (and followed up to 
the end of 1992 in the case of "structural" cooperative JVs too). 
The present version of form A/B is drafted too imprecisely to guide notifying 
firms towards the essential questions on which a joint venture is assessed in 
the light of Article 85(1) and (3). The administrative procedure is all too 
often prolonged unnecessarily because DG IV has to draw up additional 
questionnaires for the firms concerned and await their replies. 
In order to make a correct analysis of the structure of the relevant markets 
and the conditions of competition prevailing on them, DG IV often has to 
request information also from third-party firms, which causes further delays. 
Publication of the main points of the notification under Article 19(3) of 
Regulation No 17 does not provide a solu'tion to the problem: it cannot take 
1.V.§3. p.9 
100 
place until the end of the investigation, since it presupposes that the 
Commission has already come to an (albeit provisional) view of the case. 
Publication of this notice, which is intended to elicit comments from 
competitors and business partners of the firms concerned and from consumers 
and consumer associations, therefore falls too late to help the case officer 
in his preliminary investigation. 
196. The answer to the problem lies in changes both to administrative 
practice and to some of the underlying rules. The procedure for handling 
"structural" cooperative JVs should be modelled on the merger control 
procedure, which also requires a swift economic and legal analysis. Much 
depends here on the firms concerned showing an open and cooperative attitude. 
In the interests of speeding up procedures, the Commission is prepared to 
allow contacts between its departments and firms even before a notification 
is made. Where appropriate, preparatory meetings can prove useful in 
enabling DG IV to plan its investigation more effectively. The Commission 
has also extended to "structural" cooperative JVs its practice of publishing 
in the Official Journal a summary of the notification shortly after receiving 
it. The publication of such summaries is modelled on that required by 
Article 4(3) of the Merger Control Regulation and is intended to prompt third 
parties to react: it is important for DG IV to have any comments from them 
at the beginning of its investigation. The legitimate interests of the firms 
concerned must of course be protected; the notice will therefore be confined 
to a short factual description of the agreement, without any comment on its 
merits, and will be published only with the consent of the parties. 
Other measures need to be taken to ensure that notifications fully serve 
their purpose and to streamline the administrative procedure. To those ends, 
the current rules must be changed. The Commission intends to adopt a new 
regulation to replace Regulation No 27, which will be broadly similar to 
Regulation (EEC) No 2367/90 on merger notifications, and to draw up a new 
version of form A/B based on form CO. 
1.V.§3. p.10 101 
197. In view of the importance of these measures both for the business 
community and for the competition authorities, the Commission is currently 
engaged in extensive consultations with the Member States and the interests 
concerned. It has also requested the EFTA Surveillance Authority (ESA) to 
give its opinion. An initial exchange of views with the Member States was 
held in early December at a meeting of the Conference of National Government 
Experts, which representatives of the ESA attended as observers. Parallel 
consultations are continuing with business and trade interests. The 
Commission hopes to be able to adopt the new regulation together with the 
revised form A/B during the first half of 1994, after second reading of the 
texts by the Conference of National Government Experts. 
The Commission intends to streamline its procedures in areas other than 
cooperative joint ventures too. DG IV's experience in applying the planned 
rules will be decisive in determining to what extent the new system for 
handling "structural" link-ups can be extended to other individual cases. 
<T4> The right to be heard 
198. As part of an ongoing review of its procedures in applying the 
competition rules the Commission has given special consideration in 1993 to 
those that guarantee the right to be heard. The Commission has been examining 
how its existing procedures can be improved, and has had three principal 
objectives in mind. F i rst. to ensure that undertakings that are the subject 
of proceedings under the competition rules have the fullest possible 
opportunity of expressing their views on any objections raised by the 
Commission; second. to ensure that the Commission is fair and objective in 
carrying out these procedures and is seen to be fair and objective by the 
undertakings concerned; and third, to reduce to the minimum the 
administrative burden placed both on' the companies concerned and the 
Commission. 
1.V.§3. p.11 102 
Although the existing procedures have worked well in the past, and problems 
have arisen in very few cases, areas have been identified where there is room 
for improvement. These areas concern the information given to parties on 
documentary evidence in the Commission's possession (access to information) 
and the role of the Hearing Officer. 
<T4> Access to information 
199. The disclosure to the parties of any relevant information is an 
essential part of the procedure that guarantees the right to be heard.(9) In 
a number of cases over the years the European Courts have emphasized the 
importance, when granting access to such information, of 
ensuring that all the documents on which the Commission relies in its 
Statement of Objections are disclosed to the interested parties;(1°) 
ensuring that, as part of the effective exercise of the right to be 
heard, the Commission not only reveals the documents that are used as 
evidence against the undertaking, but also those in its favour^11) 
the need to take particular care in handling confidential 
informat ion.C2) Article 20 of Council Regulation No 17 requires that 
"without prejudice to the provisions of Articles 19 and 21, the 
Commission and the competent authorities of the Member States, their 
officials and other servants shall not disclose information acquired by 
them as a result of the application of this Regulation and of the kind 
covered by the obligation of professional secrecy". 
The Commission(13) has highlighted the difficulty in reconciling this 
requirement in certain cases with that of access to all relevant 
information. The Commission notes that confidential information 
includes not only documents containing business secrets but also other 
(9) Case 85/76 Hoffmann-La Roche [1979] ECR 461, paragraphs 9 to 11. 
(10) For example, Cases 43 and 63/82 VBVB and VBBB v Commission [1984] 
ECR 19; Case 62/86 AKZO [1991] ECR I-3359. 
(11) Case T-7/89 Hercules v Commission [1991] ECR 11-1711, paragraph 54; 
Case T-10/89 Hoechst v Commission [1992] ECR II-629, paragraph 54. 
(12) Case 53/85 AKZO/professionaI secrecy [1986] ECR 1965 paragraphs 26 to 
30-, Sixteenth Competition Report, point 126; Joined Cases 142 and 156/84 
BAT v Commission [1987] ECR 4487, paragraph 21. 
'13) Eighteenth Competition Report, point 43. 
1.V.§3. p.12 103 
proprietary documents belonging to an undertaking which may not wish to 
make them accessible to third parties or parties involved in the 
proceedings. It was emphasized that extensive protection for 
confidential information is necessary, but, exceptionally, that the 
confidential nature of documents does not preclude their disclosure 
where the Commission relies upon the information in question as 
necessary evidence of an alleged infringement of the Community 
rules.(14) In principle, therefore, given the need to ensure the 
confidentiality of the information supplied to it, the Commission 
considers that documents it receives pursuant to its powers under 
Regulation No 17 should be disclosed only where they are necessary to 
enable the undertakings in question effectively to exercise their right 
to be heard. Such documents include those containing information 
favourable to the party concerned. 
200. In the Eleventh Competition ReportC5) the Commission indicated its 
willingness to allow undertakings access to the file on the case, and in the 
Twelfth ReportC6) clarified the rules applicable to such access: 
"Undertakings are informed of the contents of the Commission's file by means 
of an annex to the statement of objections or to the letter rejecting a 
complaint, listing all the documents in the file and indicating documents or 
parts thereof to which they may have access. 
They are invited to come and consult these documents on the Commission's 
premises. If an undertaking wishes to examine only a few of them the 
Commission may forward copies. However, the Commission regards the documents 
listed below as confidential and accordingly inaccessible to the undertaking 
concerned: 
(i) documents or parts thereof containing other undertakings' business 
secrets; 
(ii) internal Commission documents, such as notes, drafts or other 
working papers; 
(14) Case 85/76 Hoffmann-La Roche [1979] ECR 461, paragraphs 13 to 14 
(15) Points 22 to 25. 
(16) Points 34 to 35. 
1.V.§3. p.13 -] Q 4 
(iii) any other confidential information, such as documents enabling 
complainants to be identified where they wish to remain anonymous, 
and information disclosed to the Commission subject to an obligation 
of conf ident iaI i ty. 
Where an undertaking makes a justified request to consult a document which is 
not accessible, the Commission makes a non-confidential summary available." 
In the Eighteenth Report the Commission further developed these rules with 
respect to multi-handed cartel cases, specifying that documents "can be made 
accessible to parties to proceedings, either by access to the file or by the 
sending of copies, according to the circumstances". 
In CBR and others v Commiss ion^7) the Court of First Instance stated that 
the "procedure for access to the file in competition cases is intended to 
allow the addressees of a Statement of Objections to examine evidence in the 
Commission's files so that they are in a position effectively to express 
their views on the conclusions reached by the Commission in its Statement of 
Objections on the basis of that evidence". 
201. In the light of its experience in individual cases since the 
Eighteenth Report and recent Court judgments on this matter, the Commission 
has decided to consolidate and clarify its practice. 
First, it has found that the practice of sending copies of all the documents 
or information that are to be made accessible to undertakings which are 
subject to Commission proceedings with the Statement of Objections offers 
advantages over the examination of the file at the Commission's premises. 
Undertakings in any event almost invariably take copies of all the documents 
available to them, and thus the procedure of sending a copy of the documents 
that are to be made available saves time and expense. This practice will 
therefore be the general rule in future. 
Second, the practice of sending a list of all the documents in the 
Commission's file with an indication of documents or parts thereof to which 
the undertaking in question may have access, whilst not indispensable to 
ensure that companies receive all the documents necessary for them to make 
their views known on the Commission's objections, is useful. Thus, in all 
(17) Joined Cases T-10, 11, 12 and 15/92 [1992] ECR II-2667, paragraph 38 
1.V.§3. p.14 
105 
future cases the Statement of Objections will be accompanied by the 
documents available to the undertaking in question, together with a list of 
all documents on the Commission's file. This list will indicate the number of 
the document on the file, identify its nature and state whether access to the 
document is being given. 
Third, the Commission has found that the description of the documents that 
can be disclosed to the undertakings contained in the Twelfth Competition 
Report is insufficiently precise, and has led to a degree of confusion, 
particularly in cases involving a number of different undertakings. This 
confusion has resulted partly from the imprecision of the term "the file". 
When access to files was introduced, in 1982, "the file" consisted of the 
documents passed from the Inspection Directorate within DG IV to the 
operational Directorate, responsible for further processing the case. The 
file therefore contained only the information considered necessary and 
relevant for further scrutiny of the case in question. Access to files 
therefore related to a limited number of documents; the documents irrelevant 
or unnecessary to the Commission's case had already been separated from "the 
file" by the Inspection Directorate. In 1984 this system changed, and the 
operational Directorates within DG IV became responsible for all aspects of 
preparing cases. The term "the file" thereafter applied to all the documents 
in the possession of the Commission that were collected during the 
invest igat ion. 
202. In almost all infringement cases the Commission collects a large amount 
of documentation during its investigation. Only a small fraction is normally 
used as evidence of an infringement, and much of it may be irrelevant to the 
case in question. Furthermore, much of the information in the file, having 
been gathered using the Commission's powers under Regulation No 17, is 
confidential in nature. Many of the documents will be confidential vis-à-vis 
some of the undertakings in question, but not others. Experience over the 
last few years has shown that since the nature of "the file" has 
fundamentally changed, as it now contains a number of irrelevant documents, 
it is no longer practicable to apply the categorization of documents that can 
be disclosed to undertakings during access to file set out in the Twelfth 
1.V.§3. p.15 . , 
1 Ob 
Competition Report. This applies particularly to cases involving a 
significant number of undertakings^18) 
In such cases, therefore, the Commission has been following the guidelines 
set by the European Courts regarding access to files in the cases mentioned 
above. With the Statement of Objections the Commission sends a copy of all 
the documents on which it is relying to establish the existence of an 
infringement. It also sends any documents that, on the basis of a careful 
examination of the file, appear to go against or contradict the Commission's 
case (known as "exculpatory" documents). If an undertaking thereafter makes a 
reasoned request that the Commission re-examine its file to determine whether 
it has any further documents which concern a specified matter that the 
undertaking considers useful to its defence, the Commission will do so, and 
forward any such documents. In any case, before granting access to files, the 
Commission will have particular regard to the legitimate interest of 
undertakings in the protection of their business secrets. As to other 
confidential information, the Commission will ensure that the identity of 
informants who wish to remain anonymous vis-à-vis the parties is kept secret, 
and that sensitive commercial information is not disclosed if disclosure 
would have a significant adverse effect on the supply of such information. 
Given this experience, and the need to apply a single procedure, the 
Commission will henceforth adopt the abovementioned practice in all cases. 
The Commission is convinced that this procedure, whilst being efficient and 
practical, will give undertakings all the necessary opportunities to exercise 
fully their right to be heard. 
<T4> The role of the Hearing Officer 
203. The post of Hearing Officer was created in 1982.(1Q) This has been 
widely welcomed, and is generally seen as an important addition to the 
mechanisms that ensure the fairness and objectivity of the handling of cases 
by the Commission and also reassure undertakings that they will be treated 
(18) The Commission's right to exclude irrelevant documents was expressly 
recognized by Advocate-General Warner in Case 30/78 Dist i Ilers Company 
[1980] ECR 2229. 
(19) Twelfth Competition Report, points 36 to 37. The mandate of the Hearing 
Officer was revised in 1990 to take account of the adoption of the 
Merger Control Regulation (Twentieth Competition Report, Annex). 
1.V.§3. p.16 107 
objectively and fairly. This point was repeatedly emphasized by 
participants at the conference on procedures held by the Commission in 
September 1993. 
In the light of the views expressed during the conference, and of the 
modification in the procedure for granting access to file explained above, 
the Commission has reconsidered the role of the Hearing Officer. 
204. Although the rules ensuring that the firms concerned and third parties 
have the right to be heard have worked satisfactorily on the whole, the fact 
remains that there is still room for improvement. By transferring 
decision-making powers concerning the rights of the defence to the most 
appropriate level, namely the Member of the Commission with special 
responsibility for competition, who would in turn delegate them to the 
Hearing Officer, the Commission could lend greater efficiency to its 
procedures in the competition field and enhance legal certainty for 
businesses. 
205. The role of the Hearing Officer should therefore be significantly 
extended, to cover the following areas: 
Deadline for reply to the Statement of Objections. An undertaking may 
consider that the deadline imposed upon it for reply to the Statement of 
Objections is too short. In such a case, the Hearing Officer should 
decide whether or not an extension to this deadline should be granted. 
Access to relevant information. It is important that undertakings should 
be confident that the Commission carries out its responsibilities 
regarding access to information carefully, fairly and objectively, and, 
subject to the obligations imposed upon it regarding confidentiality, 
discloses all documents that may be favourable to the undertakings 
concerned in preparing their defence. The Hearing Officer can play a 
useful role in this respect. Whilst it is neither possible nor 
appropriate that the Hearing Officer should carry out the initial 
examination of the file to determine which documents can and should be 
sent to the undertakings concerned,(20) he or she should exercise the 
functions of an arbiter once these documents have been sent, and access 
to the file has therefore taken place. If, on the,basis of the list of 
(20) See points 199 to 202 of this Report 
I.V.JS.p.1.7 108 
documents in the Commission's file sent together with the Statement of 
Objections and of its own knowledge of the case, the undertaking has 
reasonable grounds to believe that it should receive additional 
documents, the Hearing Officer should examine any such request and 
decide on its merits. Requests would, however, need to be reasoned and 
sufficiently specific to enable the Hearing Officer to carry out this 
function. 
Right of third parties to be heard. The Hearing Officer should also be 
given the right to decide whether third parties should be allowed to 
intervene in procedures concerning individuals, businesses or 
associations of businesses. Under the present rules, natural or legal 
persons proving sufficient interest have the right to be heard. The 
Hearing Officer is undoubtedly in the best position to decide on their 
requests. 
Hear ings. The right to be heard is one of the fundamental principles of 
Community law. However, the different legislative instruments laying 
down the organizational arrangements^1) start from the principle that 
those concerned and third parties must submit their comments in writing 
within the period specified by the Commission; hearings are only an 
additional possibility. Except where the Commission intends to impose 
fines or periodic penalty payments, the persons, businesses or 
associations of businesses concerned by the procedure must supply proof 
of a specific interest in support of their request to be given an 
opportunity to put their case orally. This means, conversely, that 
cases can arise where there is no longer any point in granting the 
parties such a possibility, particularly where they have already had 
ample opportunity to explain their position in writing and there has 
since been no significant change in the facts of the case or the legal 
position. As regards the right of third parties to be heard, it is 
(21) See Article 7 of Regulation No 99/63/EEC, Article 7 of Regulation (EEC) 
No 1630/69, Article 11 of Regulation (EEC) No 4260/88, Article 10 of 
Regulation (EEC) No 4261/88, and Articles 13(1) and 15 of Regulation 
(EEC) No 2367/90. 
1.V.§3. p. 18 
109 
usually sufficient to give them an opportunity to submit written 
comments.(22) These may, however, exceptionally have a legitimate 
interest in developing their views orally; the Commission is 
furthermore fully entitled to grant of its own initiative interested or 
third parties an opportunity to make oral statements at a hearing. 
Since the Hearing Officer is responsible for organizing hearings, logic 
dictates that he should also have the task of deciding who is to be 
allowed to speak at hearings. 
Business secrets and other confidential information. In performing the 
abovementioned tasks, the Hearing Officer should also be able to decide 
which items of information supplied by a firm and contained in the 
Commission's file can be communicated to other firms or published. 
Access for interested and third parties to the information contained in 
files held by the Commission is limited by its obligation to protect 
firms' legitimate interest in their business secrets not being divulged. 
This is a general principle of Community law which has been given 
practical expression in all the competition regulations. Other 
information of a confidential nature provided by firms is made available 
by the Commission only in so far as it is essential to enable other 
persons or firms fully to exercise their right to be heard. The 
Commission endeavours above all to protect sensitive commercial 
information which, if divulged, would cause significant prejudice to its 
originator. 
The Hearing Officer is seen as the most appropriate person to decide what may 
be divulged to third parties, while compI ying with the procedure laid down by 
the Court of Justice in AKZO.(23) 
206. It is expected that the mandate of the Hearing Officer will be amended 
in early 1994 to reflect these changes.(24) 
(22) Joined Cases 209 to 215 and 218/78 Fedetab [1980] ECR 3125, 3232. 
(23) Case 53/85 [1986] ECR 1985. 
(24) On ... 1994 the Commission did decide to amend the mandate of the 
Hearing Officer along these lines. The new mandate was published in 
OJ C 1994, p. .. . 
1.V.§3. p.19 
110 
<T4> Standardization of deadlines for replies 
207. In order to strike a reasonable balance between, on the one hand, 
sufficient protection of the rights of the defence and the Commission's 
obligation to have infringements ended swiftly and, on the other hand, the 
need to make allowance for the Commission's staffing shortage and also the 
availability of executives of the firms involved and their lawyers, DG IV has 
now decided to "standardize" the deadlines for replying to statements of 
objections. 
The first situation concerns the main procedure. In cases of average 
importance, a general period of two months will be granted, and for 
complicated cases, a period of three months. An extra two weeks will 
automatically be allowed when these general periods fall at Christmas or 
Easter, and an extra one month will be granted automatically where the 
periods include all or part of the month of August. At the most, then, a 
maximum period of four months will be set from the outset in complicated 
cases that fall within the holiday period. Nevertheless, unlike practice 
followed in the past, these fairly long periods will not normally be 
extended. 
The second situation concerns expedited procedures, for example where interim 
measures are being considered. These cases must be handled extremely quickly 
in the interests of the parties concerned. Only the minimum period of two 
weeks provided for in Article 11 of Regulation No 99/63 will therefore be 
granted here, and without any extension. 
1.V.§4. p.20 
111 
<T3> §4. Commission activities (guantitative description) 
208. On 31 December 1993 the Directorate-General for Competition had a staff 
of 411, of which 51% were A grade staff (including 24 national experts 
seconded to the Commission). Of the manpower available, 44% was allocated to 
work under Articles 85 and 86 of the EC Treaty, 12% to merger control cases, 
3% to work under Article 90 of the EC Treaty, 21% to state aid cases, 9% to 
international relations and coordination and 11% to data processing, 
documentation and other support duties. The total number of staff employed 
had increased by 1% from its level on 31 December 1992, as a result of the 
allocation of new posts and a new procedure for converting appropriations 
into posts. 
<T5> (a) Articles 85 and 86 of the EC Treaty 
On 1 January 1994 there were 1 231 cases pending under Articles 85 and 86 of 
the EC Treaty: over 300 less than on 1 January 1993. The reduction is due to 
DG IV's continued efforts to clear the backlog. Of the "backlog" cases, all 
of which had been pending for several years, half had been overtaken by 
events (for example, because the agreement notified was no longer in force), 
and the other half were notifications of insurance agreements that proved 
compatible with the block exemption regulation adopted by the Commission in 
late December 1992. Now that the backlog-clearing exercise is more or less 
complete, the number of cases pending cannot be expected to fall in future-, 
it may even rise. Speedier handling of notifications, particularly in the 
case of "structural" cooperative joint ventures, could, for example, 
encourage firms to notify their agreements more frequently. 
The reduction in the number of cases pending chiefly concerned notifications; 
the proportion of complaints and own-initiative procedures grew slightly. 
The Commission's workload on 1 January 1994 consisted of a little over 60% 
notifications (749) and slightly more than 25% complaints (335), while the 
remainder (147) were the subject of an own-initiative procedure. The number 
of complaints has remained roughly at the 1992 level and has therefore not 
been affected by the judgment of 18 September 1992 in Automec I I 
(Case T-24/90), in which the Court of First Instance stated that the 
Commission has considerable discretion to reject complaints. The Commission 
1.V.§4. p.21 112 
uses this discretion with moderation; it admittedly refers complainants to 
national authorities or courts more often than before, particularly where 
is sure that these channels will enable their problem to be solved, but 
does continue to handle with all fhe necessary care complaints in which 
sees an important Community dimension. Complaints, being necessariI 
controversial, also normally take longer to deal with than notifications: i 
is revealing to note that while the total number of cases concluded in 1993 
(832) was twice as high as the number of new cases registered (404), the 
proportion is reversed as far as complaints are concerned, since 37 cases of 
this kind were terminated (of which five by formal decision) and 107 new 
complaints were received. 
A total of 12 cases were closed in 1993 by formal decision. Apart from the 
definitive rejections of complaints already mentioned (five in all), these 
comprised three prohibitions (Zera/Montedison-Hinkens/Stah1er, AICAI/CNSD and 
Auditel), three exemptions (Eurovision, charging structures for combined 
transport and. Grundig) and one negative clearance (Institute of London 
Underwriters). A request for interim measures was rejected in the Seal ink 
case. 
Since the beginning of 1993, some 25 notifications of "structural" 
cooperative joint ventures have been handled by means of an expedited 
procedure. Under this procedure, DG IV informs the parties concerned of its 
(provisional or definitive) assessment within two months of receiving the 
notification. (The two-month period does not start to run until the 
notification is complete.) The new version of notification form A/B, a draft 
of which is currently being discussed with the national authorities and 
business circles, is intended to enable firms to submit all the necessary 
information to DG IV immediately on notification. Along the lines of the 
standard practice followed in cases falling within the scope of the Merger 
Control Regulation, notifications of "structural" cooperative joint ventures 
will systematically be summarized in a notice published in the Official 
Journal, inviting comments from third parties. 
1.V.§4. p.22 113 
Some of the 25 cases notified since the beginning of 1993 are still pending 
because DG IV requested the notifying parties to supplement the information 
they had already supplied. Most of the other cases were settled within the 
two-month period. In six cases, however, DG IV made only a provisional 
assessment within the period: in three of these, it had to send a warning 
letter to the parties (Potacan, Pasteur-Mérieux and Coca Cola/Nestlé); in two 
other cases, it published a notice in the Official Journal under 
Article 19(3) of Regulation No 17, announcing that it intended to take a 
favourable view of the notified agreements (Eurosport Mark III and 
International Private Satellite Partners); in a sixth case, it informed the 
parties of its intention to publish such a notice (Fujitsu + AMD). 
<T5> (b) Mergers 
As far as work under the Merger Control Regulation is concerned, a total of 
58 cases were closed during the year (60 in 1992). The vast majority of 
mergers (50) were cleared at the end of the first phase (46 in 1992). Three 
mergers were given the go-ahead at the end of the second phase (5 in 1992): 
while authorization of the Pi Ikington/SIV merger was not subject to 
conditions or obligations, the Commission attached conditions to its decision 
to allow the KNP/Buhrmann/URG and KaI i+SaIz/MDK/Treuhand operations. The 
four remaining cases were found not to constitute concentrations within the 
meaning of the Regulation (9 in 1992), but three of these were subsequently 
examined in the light of Article 85 under the expedited procedure 
(Phi I ips-Thomson-Sagem, Pasteur-Mérieux/Merck and BT/MCI). One case was 
referred to the national authorities (McCormick). 
Of the 50 cases closed at the end of the first phase, 24 were found to be 
concentrâtive joint ventures, a number comparable to that of the structural 
joint ventures examined under Article 85 of the EC Treaty. 
Lastly, the Commission authorized nine mergers under Article 66 of the 
ECSC Treaty. 
1.V.§4. p.23 
1 I 4 
<T5> (c) State a id 
In the state aid field, some 435 cases were concluded by a decision (502 in 
1992). These can be broken down into 399 decisions to raise no objection 
(455 in 1992) and, of those cases in which the Article 93(2) procedure had 
been initiated, 19 positive final decisions (31 in 1992) and seven negative 
final decisions, including two partly negative or conditional decisions (6 in 
1992). The remaining ten measures (the same number as in 1992) include 
decisions to refer matters to the Council under Article 95 of the 
ECSC Treaty, one injunction under Article 88 of the ECSC Treaty (llva) and 
one appropriate measure under Article 93(1). 
The Commission initiated the Article 93(2) procedure in some 30 cases (as in 
1992). 
The Commission registered 561 new cases during the year (558 in 1992), of 
which 475 concerned notified aid (452 in 1992), 85 non-notified aid (102 in 
1992) and one an existing aid scheme (8 in 1992). The reduction in the 
number of unnotified aid cases is heartening because it shows that the 
Member States are fulfilling more scrupulously their obligation under 
Article 93(3) of the EC Treaty to notify all planned aid to the Commission. 
The above figures of course relate only to aid cases handled by DG IV.(25) 
(25) For a table giving overall statistics on the work of DG IV and the other 
departments handling aid cases (DGs VI, VII and XIV), see Annex I I I,C to 
this Report. 
2.I.A.§1. p. 1 
115 
<T5> Part Two 
<T1> Competition rules applicable to enterprises 
<T4> Chapter I 
<T2> Main decisions and measures taken by the Commission 
<T9> A. Genera I 
<T3> §1. Horizontal agreements 
209. Horizontal agreements, i.e. those concluded between firms at the same 
production and marketing stage, may take many forms. They may range from 
price-fixing or market-sharing agreements between manufacturers to agreements 
designed to promote joint research and development of new products. The 
Commission is determined to take vigorous action against genuine cartels, the 
effect of which is to deprive consumers of the benefits of undistorted 
competition. This attitude has been reflected once again this year in the 
investigations being carried out in a number of economic sectors against 
firms that have been involved mostly in market sharing. It should be noted, 
however, that the identification and combating of such practices requires a 
major effort on the part of the Commission, notably in terms of manpower. It 
is for this reason that such procedures are sometimes very lengthy. None the 
less, since cartels must be eliminated completely, the Commission is resolved 
to deploy all the resources necessary to take effective action against them. 
210. The Commission takes a different attitude to agreements designed to 
establish forms of cooperation between firms that allow them to improve their 
productivity, while at the same time benefiting society as a whole. The 
clearest example of such cooperation is agreements under which the parties 
set up a joint venture. While it is aware that, in certain instances, this 
type of operation may be a means of concealing a cartel, the Commission is in 
favour of such agreements because of their advantages. It has moreover 
2.I.A.§1. p. 2 
116 
introduced an accelerated procedure for dealing with such cases.(1) As 
explained earlier, the aim was also to ensure that parties did not opt for a 
particular legal structure because of the procedural advantages they could 
derive from it in their dealings with the Commission, rather than basing 
their decision solely on the operation in question. The key element in 
assessing the compatibility of such forms of cooperation with the Community 
competition rules must be their effects on the relevant market rather than 
the nature of the agreement. 
(1) See point 77 of this Report 
2.I.A.§2. p. 3 117 
<T3> §2. Vertical agreements 
211. Article 85(1) of the EC Treaty does not make any distinction between 
horizontal and vertical agreements. Vertical agreements are agreements 
between firms at different stages in the production and marketing process. 
From the very outset of the implementation of Regulation No 17, the 
Court of Justice has made it clear that vertical agreements could infringe 
Article 85 of the EC Treaty. Since then, numerous Commission decisions have 
been taken against such types of agreements. However, a number of block 
exemption regulations have also been adopted for agreements of this type. 
There is no disputing that vertical agreements are an appropriate instrument 
for enabling certain firms to enter new markets. Distribution agreements may 
help to increase competition between different brands, without requiring 
massive investments by the new entrant. The benefits which vertical 
agreements can provide explains the support given to them in the block 
exemption regulations. However, they can also be used to restrict market 
access for other firms. The Commission has accordingly always adopted a 
cautious attitude to such agreements. The Grundig case dealt with this year 
illustrates this approach. In this case, the Commission agreed to renew an 
individual exemption for the selective distribution network set up by Grundig 
for the sale of certain electronic equipment. In its analysis, the 
Commission took account of the impact which the agreement could have on 
consumers, but also of the fact that there was competition on this market 
between the various brands. 
212. To get a clear understanding of this attitude, which has been endorsed 
by the Court of Justice, it is important to see the competition rules laid 
down in the EC Treaty in their overall context. They are aimed not only at 
protecting an economic system, but they are also an instrument for promoting 
the establishment of a genuine internal'market. Their purpose is to ensure 
that private obstacles to trade do not replace the government obstacles that 
have gradually been removed. As far as vertical agreements are concerned, 
the Commission's approach has accordingly always been based on a two-stage 
analysis under Article 85 of the EC Treaty. Firstly, the exclusive nature of 
a contractual relationship between a producer and a distributor is viewed as 
restricting competition, since it limits the parties' freedom of action on 
2...M2.P.4 118 
the territory covered. Secondly, the agreement may normally be exempted 
under Article 85(3) of the EC Treaty if it does not contain any provisions 
that create absolute territorial protection for the distributor or, at any 
rate, does not objectively have such an effect. This reflects the 
fundamental concern of the Treaty to ensure genuine freedom of movement for 
goods in the single market. The analysis carried out by the Commission thus 
goes beyond discussion of the merits of vertical agreements in terms of 
competition. One of the cases dealt with this year is particularly revealing 
in this respect. In the Zera-Montedison case, an exclusive dealing agreement 
together with national approval procedures resulted in the prevention of all 
parallel imports into Germany. The Commission took action in the case 
because the situation created ran counter to the achievement of a genuine 
internal market, since, through their agreement, the parties wanted to use 
the differences between national legislative provisions to prevent any scope 
for consumers to take advantage of cheaper prices in other Member States. 
2.I.A.§3. p. 5 1 1 Q 
<T3> §3. Abuse of a dominant position 
213. A review of the decisions taken by the Commission and of the judgments 
delivered by the Court of First Instance confirms a trend noted earlier. 
There is increasing evidence that conduct which is in principle accepted when 
it relates to firms having limited market shares may become objectionable 
where the relevant firms are in a dominant position. Such firms must 
therefore be particularly careful if they are to avoid infringing the rules 
laid down in Article 86 of the EC Treaty. 
The point might even be made that, in certain situations, a firm in a 
dominant position is actually under an obligation to cooperate with its 
competitors. As explained earlier,(2) the owner of essential infrastructure 
must, in certain cases, allow other firms non-discriminatory access to the 
infrastructure so that effective competition can take place. Any other 
arrangement would mean that the dominant firm would maintain its privileged 
position, making it virtually impossible for other firms to obtain market 
access. Consequently, while it is true that Article 86 of the EC Treaty does 
not challenge the existence of dominant positions, it is also true that the 
concept of abuse is defined broadly, which restricts appreciably the types of 
action in which a dominant firm can engage. 
Though it draws a distinction between firms in a dominant position and those 
which are not, this approach cannot be described as discriminatory. If one 
looks at the effects which such behaviour can have on competition, it is 
clear that the behaviour of a dominant firm, because of its market power, can 
have a much greater impact than that of a smaller firm. There are therefore 
grounds for requiring dominant firms to be more cautious in their conduct. 
(2) See point 40 of this Report 
2.I.B.§1.p.1 . ÎJi) 
<T9> B. Analysis of individual decisions and measures 
< T 3 > §1. Setting-up of joint ventures and other forms of coopérat ipn 
214. The first cases covered by the new accelerated procedure for assessing 
cooperative Joint ventures were dealt with this year. It will be recalled 
that, in addition to the amendments made to a number of block exemption 
regulations last year, the Commission stated that it would endeavour to give 
firms an indication of whether or not their agreement was compatible with 
Article 85 of the EC Treaty within two months of notification. A number of 
the cases mentioned below benefited from such accelerated processing. As 
indicated earlier, 25 cases were handled this way.(1) Only some of them are 
discussed in this chapter, but others are summarized in Annex III.A.1. 
<T6> Phi Iips-Thomson-Sagem 
215. The Commission cleared the creation of a joint venture company caI led 
Flat Panel Display BV (FPD) under Article 85 of the EC Treaty. The parents of 
the joint venture are Philips Electronics N.V., Thomson Consumer 
Electronics S.A. and Sagem. 
FPD will be active in the development, design, manufacture and sale of active 
matrix liquid crystal displays (AM-LCD). AM-LCDs are used inter alia for 
direct view TV modules, consumer and professiona I project ion displays and 
datagraphic modules. 
AM-LCDs belong to a family of technologies currently referred to as Liquid 
Crystal Displays (LCD), which, in turn, are one of the alternative 
technologies, under various degrees of development, generally known as flat 
screen technologies. 
FPD will be the first European company capable of producing very large series 
of screens. It was expected FPD would start mass-production in 1993. It will 
have its own process and product development departments, facilities and 
personnel. Its production will be made available to third parties worldwide. 
1) See point 208 of this Report 
«...M1.P.2 121 
The share capital of FPD will be held by Philips (80 %), Thomson (10 %) and 
Sagem (10 %). However, in spite of its majority, Philips alone will not be in 
a position to adopt a number of strategic decisions without the support of at 
least one of the other shareholders. In addition, the parties envisage other 
companies joining as new shareholders in FPD. 
The agreement establishing FPD was originally notified under the provisions 
of the Merger Control Regulation on 8 December 1992. However, by formal 
decision issued on 18 January 1993, the Commission decided that FPD did not 
constitute a concentration within the meaning of Article 3 of the Merger 
Control Regulation. Subsequently, and at the request of the parties, the 
notification was converted into a notification within the meaning of 
Article 4 of Council Regulation No 17. 
The Commission, therefore, assessed the proposed joint venture from the 
point of view of the application of Article 85 of the EC Treaty and came to 
the conclusion that the notified cooperative joint venture fell under the 
scope of Article 85(1). 
This conclusion was mainly supported by the fact that the parent companies, 
given their remaining activities within the AM-LCD field, in the LCD field in 
general and in respect of other types of flat screens, as well as in respect 
of cathode ray tubes (where Thomson and Philips are very important players on 
a worldwide basis), have to be considered as being potential and even actual 
competitors either among themselves or in respect of the joint venture. 
However, the Commission considered that the conditions for the granting of an 
individual exemption to FPD were fulfilled in the present case. 
In particular, the Commission ascertained that the joint venture is going to 
be a means for the parent companies to develop and sustain mass-production in 
Europe of new high technology products in a field where competition from 
foreign suppliers (mainly Japan) is strong, where production and marketing 
within a tight time schedule on an economically viable scale is essential and 
where the technical and industrial framework is uncertain. 
2.I.B.§1.p.3 122 
In addition, screens manufactured by FPD will be sold to sophisticated 
buyers (i.e. consumer electronics manufacturers, car manufacturers and 
telecommunications equipment manufacturers) to be integrated either in 
existing families of products or in completely new ones that will enlarge the 
range of products offered to consumers. 
This aspect is also important because such purchasers can represent an 
effective counterweight to the joint venture. 
Finally, the Commission was convinced that the joint venture is not a means 
for the parent companies to eliminate competition either in respect of 
displays in general or AM-LCDs in particular. In respect of the latter, it 
can be said that a new technology will be put into production in the EC. 
More importantly, this is a sector in which the market is worldwide. 
Consequently, the important position acquired by the joint venture in the 
Community must be seen in a global context. In this instance, it is apparent 
that the new entity will not have a dominant position on the market. 
For the reasons mentioned above and given the urgency of the case, which is 
part of a wider programme supported by the Commission under the ESPRIT III 
programme, the case was closed by means of a comfort letter sent to the 
part ies. 
This important case was one of the first in which the new internal rules for 
the assessment of cooperative joint ventures of a structural nature were 
appI ied. 
2.I.B.§1.p.4 
123 
<T6> AI en ia-HoneyweI I 
216. Under the new internal procedure for the accelerated assessment of 
cooperative Joint ventures of a structural nature, the Commission also 
cleared the setting-up of a cooperative joint venture company created in 
Italy between AIenia Spa, an Italian company specialized in aeronautics, and 
Honeywell Inc., a US enterprise manufacturing computers, under Article 85 of 
the Treaty of Rome. The new company, Space Controls AI enia-HoneyweI I (SCAH) 
will design, develop, manufacture, sell and support four space control 
products based on Honeywell's technology. Those products will be sold to 
subcontractors who will integrate them into subassemblies. These will then be 
further integrated by prime contractors to form a complete satellite. 
The share capital of SCAH will be held 60 % by Alenia and 40 % by Honeywell. 
The management board of SCAH will consist of 5 members, 3 appointed by Alenia 
and 2 by Honeywell. Although decisions on the ordinary course of business 
will be adopted by simple majority, unanimity will be required in respect of 
the business plan and the operational and R&D budgets. 
The Commission considered that although the joint venture had all the 
characteristics of a normal firm, it was mainly an instrument in the hands of 
the parent companies to serve a number of strategic purposes. Alenia will 
become a more vertically integrated prime contractor in the field of 
satellites, and Honeywell will break into the European space market. 
The Commission, therefore, assessed the joint venture under Article 85 of the 
EC Treaty and came to the conclusion that the creation of SCAH qualified for 
negative clearance because the parent companies were not actual or potential 
competitors either in the satellites field in general or in the components 
market in particular. In fact, they operate at different levels in the market 
place. 
However, the Commission raised objections against a number of very stringent 
non-compete post-termination obligations and asked the parties to modify 
and/or delete them. Indeed, these obligations were not ancillary to their 
agreement since they were not necessary to the realization of the operation. 
Once they did so, a comfort letter was sent to them. 
2...B..1.P.. 124 
<T6> International Private Satellite Partners (IPSP) 
217. The Commission sent a letter of intent to the parent companies of IPSP, 
a joint venture company that was set up in the form of a limited partnership 
organized under US Law. The parent companies of ISP are, on the one hand, 
subsidiaries of companies specializing in the manufacture or launching of 
satellites and, on the other, subsidiaries of telecommunications companies. 
IPSP's aims are twofold. Firstly, it provides international business 
telecommunications services to businesses in Europe and North America using 
its own satellite system on a "one-stop shop" basis. Secondly, it offers bulk 
transmission capacity to third parties, to the extent that the capacity of 
the satellites is not fully utilized by IPSP or its partners. 
The first of these markets has developed because of the need of multinational 
firms to have rapid telecommunications between their various subsidiaries. 
IPSP will operate on the second market only if demand for services on the 
first is lower than anticipated. 
In its letter of intent, sent in the framework of the new accelerated 
procedure for the assessment of cooperative joint ventures of a structural 
nature, the Commission informed the parties of its preliminary conclusion 
that the notified agreements might qualify for negative clearance under 
Article 85 of the EC Treaty. Subsequently, it published a notice pursuant to 
Article 19(3) of Regulation No 17. 
2.I.B.§1. p.6 
125 
<T6> INTRAX 
218. The Commission cleared the arrangements whereby PTT Telecom B.V., the 
public telecommunications operator (TO) in the Netherlands, and Nederlands 
Omroepproduktie Bedrijf N.V. (NOB), the main television facilities house in 
the Netherlands, have set up a joint venture company, Intrax B.V., to provide 
"Satellite News Gathering" services both within and outside the Netherlands: 
satellite news gathering involves the use of transportable equipment allowing 
for the rapid audio-visual registration and transmission of television 
signals via satellite from remote locations not served by the terrestrial 
network. This case was notified before the new procedure for accelerated 
decisions was set up by the Commission. 
This case illustrates an increasingly common phenomenon whereby TOs join 
together with companies not operating in the telecommunications area in order 
to venture into new, not strictly telecom-related business activities. In 
each case of this type, on top of the traditional analysis of cooperative 
joint ventures under the competition rules, the Commission must examine 
whether the still existing special and/or exclusive rights of the TO in 
question cause its participation in the joint venture company to place the 
latter in an unjustifiably favourable position vis-à-vis competitors. 
In the case at hand, the Commission found that satellite news gathering 
service providers who wish to compete with Intrax on the Dutch market are not 
faced by any major barriers to entry. 
The uplinking of signals to satellites, traditionally an activity 
reserved exclusively for the TOs, was I iberaIized in the Netherlands in 
1991 as far as satellite news gathering is concerned. 
Furthermore, as far as capacity on satellites is concerned, PTT Telecom 
has assured the Commission that as Signatory to international TO-run 
satellite-operating consortia such as Eutelsat, it will deal with Intrax 
on the same footing as competing companies. 
Even when upl inking in the Netherlands these companies are free to 
acquire capacity on Eutelsat satellites via the Signatories in at least 
2. I .B.§1. p.7 
126 
France, Germany and the United Kingdom. As a third possibility, 
capacity is available on independent satellites not belonging to the T0-
run consort ia. 
In countries other than the Netherlands, Intrax will be subject to the 
same operational constraints relating to uplinking and satellite 
capacity as its competitors. 
In view of these circumstances, the Commission published its favourable 
attitude to the operation in the Official Journal which did not give rise to 
any comments. The Commission has now closed the file by means of an 
administrative "comfort" letter (negative clearance type), after consultation 
of the national competition authorities. 
2.I.B.§2. p.8 A r) j 
<T3> §2. Service sector 
<T6> CNSD 
219. On 30 June the Commission took for the first time a decision finding 
that the adoption by a trade association of a tariff that had to be applied 
by its members when they provided services, even if their activity is 
considered to be a profession, constitutes an infringement of the Community 
compet i t ion rules. 
The Commission received several complaints from Community firms in respect of 
difficulties encountered in Italy in carrying out customs clearance 
operations. One of the complaints related to the decision by the "ConsJglio 
Nazionale degli Spedizionieri Doganali" (CNSD-NationaI Council of Customs 
Agents) of 21 March 1988 setting the tariff to be applied by customs agents 
when providing services linked to customs clearance operations. 
The occupation of customs agent is regulated in Italy by Law No 1612 of 
22 December 1960 and by various implementing measures. 
In order to operate as a self-employed customs agent, authorization is 
necessary and registration in the national register is compulsory. 
Administration of the national register is entrusted to the CNSD, which draws 
up the agents' tariff. It thus established, on the basis of suggestions from 
the departmental Councils, the tariff of 21 March 1988, which replaced the 
tariff approved on 16 April 1970, and all the increases made to that tariff 
between 1970 and 1988 through a coefficient of increase. 
The restrictions of competition resulting from the CNSD decision of 
21 March 1988 on the market for the services provided by customs agents to 
firms importing or exporting in Italy are as follows: 
the setting of a tariff of fixed minimum and maximum rates, from which 
individual operators may not derogate, for each transaction carried out 
by customs agents; 
B.§2. p.9 128 
the imposing of mandatory invoicing arrangements, such as separate 
invoices. 
Although the tariffs set by the CNSD are subsequently approved by ministerial 
decree, such approval does not in any way alter the fact that the CNSD's 
decisions are decisions by an association of undertakings. Decisions 
derogating from the tariff, for example, do not require the Minister's 
approval, which shows that the tariff is set autonomously. 
An appeal against this decision has been lodged before the Court of First 
Instance. 
The Commission is now examining the conformity of Italian Law No 1612 of 
22 December 1960 with Community law and, in particular, with Articles 3(f) 
and 5 read in conjunction with Article 85 of the EC Treaty and has decided to 
send a letter of formal notice to Italy on the matter. The aim is to verify 
the extent to which the Law might have infringed the provisions of the 
EC Treaty by obliging the CNSD to conclude anti-competitive agreements. 
2.I.B.§3. p.10 12 9 
<T3> §3. Audiovisual sector 
<T6> EBU 
220. The Commission granted an exemption under Article 85(3) of the EC Treaty 
to the Eurovision system operated by the European Broadcasting Union (EBU). 
The EBU is the association of European broadcasters entrusted with providing 
a service in the public interest. Its members are mostly public-sector 
television or radio broadcasting organizations. Although some private 
broadcasters belong to it, they are subject to a number of obligations 
reflecting the public interest task assigned to them. Purely commmercial 
broadcasters are not admitted as members. 
The Eurovision system operated by the EBU and its members consists of 
exchanges of television programmes, especially sports programmes, and the 
joint purchasing of the relevant broadcasting rights. The joint purchasing 
of broadcasting rights for international sporting events restricts 
competition, because of the combined purchasing power enjoyed by EBU members 
in joint negotiations. However, the system makes for a number of 
improvements, notably rationalization and cost savings, which benefit members 
from small countries in particular, allowing them to show more sports 
programmes and programmes of better quality than would otherwise be the case. 
In addition, cooperation between members facilitates cross-border 
broadcasting, which contributes to the development of a genuine European 
broadcasting market. 
The EBU members also agreed to grant non-member channels contractual access 
to the sports programmes in question under a new scheme of rules submitted to 
the Commission on 26 February 1993. The new scheme allows non-member 
channels access not only for deferred transmissions and the broadcasting of 
extracts, but also for live transmissions of sporting events which the EBU 
members do not themselves broadcast live. More restrictive clauses in a 
previous scheme which had given rise to criticism from non-members were 
removed at the request of the Commission. As a result, access is now easier 
for th i rd part ies. 
2.I.B.§3. 11 13 0 
<T6> Audi te I 
221. On 24 November the Commission adopted a decision finding that the 
agreement between Auditel's shareholders to use only the Italian television 
audience ratings measured by the company infringed the Community competition 
rules. 
The decision was adopted in response to a notification by Auditel of the 
system it had established in Italy for measuring and disseminating television 
audience ratings. Auditel's shareholders are divided into three groups: 
the public television channel, 
the private television channels, 
the associations of the following operators: advertisers, advertising 
agencies and organizations dealing in advertising techniques. 
The cost of the operation is borne by the first two groups. 
Article 11 of the agreement setting up Auditel provided that shareholders 
must, in their activities, with regard to overall audience ratings (audience 
share figure for a specific time period), use exclusively Auditel's 
measurements, the sole aim being to avoid disagreements on audience shares 
and distortions in the information provided to the public by the press, radio 
or television. In practice, Article 11 seemed to be intended to prevent a 
ratings war between the main Italian television channels. 
This requirement constituted a restriction of competition in that it deprived 
shareholders of any freedom to use other figures. The ratings are the basis 
on which advertisers and operators decide on the size of their advertising 
budgets, how to allocate them between the different media and for which media 
of the same type to opt. 
The exemption requested was refused because the restriction contained in 
Article 11 was not indispensable and led to the total elimination of 
competition. Auditel deleted Article 11 of the agreement shortly before the 
decision was adopted. 
2.I.B.§4. p.12 1 3 1 
<T3> §4. Energy 
<T6> Electricidade de Portugal/Pego project 
222. On 26 January E lectr icidade de Portugal S.A. (EDP) notified to the 
Commission a number of agreements concluded in 1992 between EDP, National 
Power PLC, Electricité de France and Empresa Nacional de Electricidad S.A. 
and their respective subsidiaries, concerning the purchase and operation of a 
coal-fuelled station at Pego. 
The notification concerned a project for the purchase and operation - on a 
build, own, operate and transfer basis - of a coal-fuelled power station 
(consisting of two units) at Pego, Portugal, whereby the Generator, to be 
jointly owned by National Power PLC (United Kingdom), Electricité de France, 
Empresa Nacional de Electricidad S.A. (Spain) and Electricidade de Portugal 
S.A., agreed to purchase the project from EDP and to supply power from units 
1 and 2 to EDP. 
The power station is expected to have an installed capacity of 614 megawatts 
and each of units 1 and 2 to have a capacity of 307 megawatts. The selection 
of the Generator has been the result of a call for tenders at an 
internat ionaI level. 
After having examined the notified agreements, the Commission informed the 
parties in March that it was unable to accept the clause providing for an 
exclusivity of supply for 28 years on the ground that for the full duration 
of the contracts the Generator would be prevented from delivering electricity 
to consumers other than EDP either in Portugal or in other Member States. 
The exchange of views that followed that letter resulted in EDP proposing 
significant modifications which it subsequently agreed to implement. 
The principal changes were: 
the capacity and output of the power station will be provided 
exclusively to EDP for the first 15 years; 
2.I.B.§4. p.13 
132 
there will be a "first option" system for the remaining 13 years of the 
contract, allowing the Generator to sell to third parties outside the 
franchise system if there is surplus capacity which is not required by 
the Grid. Under this "first option" system the Generator will compete 
with the Grid in seeking to find an outside market (either in the 
Portuguese free system or in another Member State) for its capacity. 
On 30 September 1993 the Commission published a notice pursuant to Article 
19(3) of Council Regulation No 17 announcing that as a result of these 
modifications and having regard to the expected development of electricity 
supply conditions in Portugal stemming from Decree Laws 99/91 and 7/91, the 
Commission intended to take a favourable position in respect of the 
agreements. No observations from third parties were received. 
The result of the examination by the Commission's Directorate-General for 
Competition was that the parties had provided sufficient justification for an 
exemption to be granted by the Commission in accordance with Article 85(3) of 
the EC Treaty taking into account the significant modifications introduced 
into the agreements originally notified and the legal possibilities for the 
introduction of competition in the energy sector offered by the new 
regulation in force in Portugal for the electricity sector (Decree Laws 99/91 
and 7/91). 
The arrangements reflect Portugal's policy of introducing competition in 
electricity generation through a competitive bidding process. 
The new legal framework distinguishes between two types of electricity 
systems, one serving a franchise market and one serving a free market. 
Franchise customers (who may buy electricity from only one source) will be 
differentiated from free market customers (who may purchase from any 
available source) by an electricity consumption threshold. 
At present in the franchise system EDP (which has a public supply obligation) 
carries out the functions of generation, transmission, distribution and 
supply. The Generator under the Pego agreements wi I I be fully integrated in 
the franchise system. 
2.I.B.§4. p.14 
133 
The free market system envisages free access to the transmission and 
distribution systems. A free market system is developing. Since the 
adoption of Decree Law 99/91 establishing the broad lines of the future 
organization of the electricity sector in Portugal, a number of small 
producers and auto-producers have managed to gain a total market share of 
around 5%. In the very long term, the free market system is expected to 
cover 20-25% of the market. The possibility of establishing the free market 
system would result essentially from the fact that other producers could be 
in a position to supply energy under better conditions than EDP. 
It should be noted that customers will be free to leave one system in favour 
of the other. Initially only the largest consumers will be allowed to move 
from the existing system to the free one. The distribution companies will be 
entitled to buy a percentage of their needs (initially 10-15%) on the free 
system. It will also be possible for generators to build their own 
transmission lines. This system offers competition in both the generation 
and the supply of electricity. Free market customers are entitled to 
contract freely for their electricity supplies with different generators or 
other suppliers who can compete for their custom. Moreover, free market 
customers will have the possibility of open and transparent access to the 
existing transmission and distribution grids. 
Under the "first option" system introduced into the agreement the Generator 
would not be prevented from delivering electricity to consumers other than 
EDP either in Portugal or in other Member States after the first 15 years and 
for the remaining 13 years of the contract. 
It was considered that the notification under consideration could be dealt 
with by means of an administrative letter based upon the conditions of 
Article 85(3) of the EC Treaty. 
.B.§4. p.15 134 
<T6> Logistical collaboration agreement between REPSOL and BPMED 
in the Canary Islands 
On 14 April, by standard comfort letter, the Commission authorized an 
agreement notified on 2 March by REPSOL S.A. and BPMED S.A. on the joint 
operation by them of logistical plant for the storage and handling of 
petroleum products. Through the intermediary of a new company, Terminales 
Canarios S.A., in which REPSOL S.A. and BPMED S.A. each have a 50% stake, new 
facilities for the storage and transport of petroleum products are available 
in the Canary Islands, not only for these two companies, but also for any 
other companies that might be interested. 
In view of the particular characteristics of this market, which is supplied 
almost exclusively by the Canary Islands' only refinery, the Commission took 
the view that the agreement made it easier for new operators to set up there, 
by increasing the logistical facilities available and, in particular, imports 
of petroleum products from the Spanish mainland and/or other Member States. 
2.I.B.§4. p.16 135 
<T6> Disma 
223. Under an agreement between certain oil companies and the managing 
company of Milan's Malpensa Airport, a joint venture was created under the 
name Disma for the installation and operation of equipment for storing jet 
fuel and transferring it to supply points on the site of the new airport. 
The Commission demanded, and obtained, certain changes needed to guarantee 
non-discriminatory access for the companies operating on this market. 
The agreement envisages the creation on the site of the airport of a new 
fixed aircraft-refuelling installation essentially comprising a fuel and 
lubricant depot directly linked via underground pipelines to supply points. 
This will enable fuel to be transferred direct from the depot's pipelines and 
pumping equipment without the use of the traditional tankers. Once it has 
been completed, this equipment will be the only means of refuelling aircraft 
at the new a i rport. 
224. At the outset, the Commission acknowledged that the technological 
characteristics of the Disma installations would enable jet fuel to be stored 
and transported advantageously in terms of Community environmental 
legislation, particularly with regard to traffic and air pollution. 
Moreover, the advantages benefit not only the oil companies but also the 
customer airlines and their users. 
However, the initial version of the agreements notified to the Commission 
contained clauses preventing non-Disma companies from having access on 
non-discriminatory terms to the joint venture's services. For one thing, the 
almost insurmountable obstacles making impossible in practice the transfer of 
holdings in Disma to third parties prevented the latter from gaining access 
to the market. The founding members had also agreed to impose significantly 
higher charges on non-members. Some users of Disma's installations and 
services were thus forced to accept unequal conditions for equivalent 
services, and this placed them at a competitive disadvantage. 
2.I.B.§4. p.17 
1o6 
In view of the foregoing considerations, and given the more important role 
that Milan Malpensa Airport is likely to play as regards air transport in the 
Community, a sector which is gradually being liberalized, the Commission 
initiated proceedings with a view to eliminating these unjustified barriers 
to access and ensuring neutrality and equality of treatment for all users of 
Disma's installations, it being borne in mind that all oil companies, whether 
or not members of the joint venture, have to use these installations to 
supply their customers. The members of Disma have therefore proposed a 
uniform tariff although actual charges are on a sliding scale according to 
the quantities of jet fuel supplied. The principle of a sliding scale can be 
justified by the existence of fixed costs associated with the services 
supplied to each customer. 
The parties to the agreement finally agreed that access by firms not 
participating in the capital of Disma should be made easier once Malpensa's 
static refuelling system is operational. 
The Commission took the view that the agreements concerning the Disma joint 
venture were then compatible with the common market. Accordingly, it adopted 
a favourable position in their regard and terminated the proceedings by 
standard comfort letter. 
2.I.B.§4. p.18 
137 
<T6> Texaco Ltd 
225. In November 1992 Texaco Ltd notified an agreement establishing a service 
station franchising system. It requested that agreements concluded with 
managers for the operation of service stations and integrated on-site shops 
be cleared under Regulation (EEC) No 4087/88 granting block exemption for 
franchising agreements. 
Texaco wanted not only to sell fuels and petroleum products marketed under 
its name, to which Regulation (EEC) No 1984/83 on the application of 
Article 85(3) of the Treaty to categories of exclusive distribution 
agreements could have applied, but also to organize a network of service 
stations and shops that would distribute foodstuffs, tobacco, newspapers and 
car-related articles using a common name and presenting the contract premises 
in a uniform manner, would possess know-how and would receive commercial and 
technical assistance. 
The Commission took the view that the contracts complied with all the 
conditions laid down in Article 1 of Regulation No 4087/88. The contract 
provides in particular for obligations relating to the use of a common name 
or shop sign, a uniform presentation of contract premises and the 
communication by the franchisor to the franchisee of substantial know-how, 
including training and substantial information relating to management, 
administration and finances and to the promotion, storage and presentation of 
products to consumers. The requirement laid down in the contracts that only 
Texaco fuel be sold is also in line with the exemption criteria provided for 
in the Regulat ion. 
With regard to the on-site shops, the Commission took the view that the 
requirement that the franchisees must always have available certain brand 
products specified by Texaco was lawful. For each category of product sold, 
the franchisee is required to sell Texaco's specified brand product, while 
remaining free to sell competing products of his choice, provided that such 
products comply with minimum quality criteria. The franchisor may require 
part of the shop's shelf-space to be reserved for the display of such brand 
products. 
a...B.S4.p.19 
Texaco has also set up a centralized purchasing system for the designated 
products. Under the system, Texaco negotiates purchasing terms with 
manufacturers and wholesalers and identifies those with the lowest prices. 
It can obtain much cheaper purchasing terms than those which could be offered 
individually to franchisees. If franchisees decide to participate in this 
system, they are then required to purchase all the products selected from 
Texaco's designated suppliers. However, they are free to purchase other 
products from suppliers of their choice. 
Following discussions with the Commission, Texaco made it clear that the 
purchasing system was optional and that it was not automatically linked to 
the franchising contract. The system has advantages in terms of discounts 
and rebates, but the franchisee is free to participate in it or not as he 
wishes and can withdraw from it at any time. 
On the basis of these clarifications the Commission took the view that the 
agreement notified by Texaco, including its motor vehicle fuel distribution 
aspect, complied with the provisions of Regulation (EEC) No 4087/88/CEE. 
2 . I . B . §4. p.20 
139 
<T6> Service station agreements in Spain 
226. With regard to the application of Regulation No 1984/83 (concerning 
exclusive purchasing agreements) to service stations, the Commission was 
able, on several occasions, to clarify and define more closely certain 
aspects of the scope of the exemption and, in particular, the restrictions of 
competition that ruled out its application. 
In the particular context of the recent abolition of the Spanish oil 
monopoly,(2) the Commission examined the contracts negotiated by the 
Spanish refineries with service station operators under the former 
monopolized network when it was still legally reserved to Spanish refiners' 
products. The contracts were exclusive supply contracts entered into for a 
period of ten years as from the date of abolition of the monopoly. 
The Commission took the view that the contracts were not compatible with 
Regulation (EEC) No 1984/83: as the service station operators were legally 
and economically dependent, the entry into force of the contracts at a 
different time from that at which they were signed meant de facto that they 
were concluded for an indefinite duration or for a period of more than the 
ten years provided for in the Regulation. The Commission also challenged the 
arrangement whereby the exclusive supply requirement covered not only motor 
vehicle fuels, but also lubricants sold in the service stations concerned. 
Since the Spanish refineries demonstrated their willingness to amend their 
agreements so as make them compatible with the Regulation and since, for this 
purpose, the ten-year period for the exclusivity arrangements will commence 
on the date the agreement was signed and will apply only to motor vehicle 
fuels, except in cases where the supplier has made a lubrication bay or other 
lubrication equipment available to the service station operator, the 
Commission decided that it would probably close the case, by means of a 
standard comfort letter. 
(2) See point 362 of this Report. 
2. I .B.§4. p.21 
1 4 U 
<T6> Service station agreements in the Canary Islands 
226(a). In response to a complaint lodged by the Association of 
Petroleum Product Distributors in the Canary Islands against Texaco 
Petrolifera S.A., challenging the compatibility with the relevant Community 
rules(3) of the exclusivity agreements signed by that company in the^Canary 
Islands, the Commission sent Texaco Petrolifera S.A. a statement of 
objections on 23 December 1991. In the Commission's view, the exclusive 
purchasing agreements negotiated by the company with service station owners 
in the Canary Islands constituted an infringement of Article 85(1) of the 
EC Treaty, since some of the clauses (notably those concerning the duration 
and scope of the exclusivity arrangements relating to the sale of motor 
vehicle fuels and the arrangements for setting the pump prices of the 
products) went beyond the limits set by Regulation (EEC) No 1984/83. 
On 28 January 1992 Texaco Petrol ifera S.A. replied to the Commission's 
statement of objections. 
At the same time, the Commission sent requests for information pursuant to 
Article 11 of Council Regulation No 17 of 6 February 1962(4) to all the 
established oil companies that had negotiated exclusive purchasing agreements 
with service station operators in the Canary Islands similar to those 
negotiated by Texaco Petrol ifera S.A. These included Shell Espana S.A., 
Distribuidora Industrial S.A. (DISA) and Mobil Oil Espana S.A. 
As a result of the Commission's representations, both Texaco Petrolifera S.A. 
and the other companies that had signed exclusive purchasing agreements 
indicated that they were prepared to bring their agreements into line with 
the Community rules applicable. For this purpose, the companies proposed 
(and the service station operators agreed) that addenda be signed to adjust 
the clauses in the agreements that the Commission had objected to. 
Since most of the service station operators concerned signed such addenda and 
since, consequently, they had once again demonstrated their willingness to 
(3) Commission Regulation (EEC) No 1984/83 of 22 June 1983 on the 
application of Article 85(3) of the Treaty to categories of exclusive 
purchasing agreements. 
(4) First Regulation implementing Articles 85 and 86 of the Treaty, amended 
and supplemented by Regulation No 59, by Regulation No 188/63/EEC and by 
Regulation (EEC) No 2822/71. 
2.I.B.§4. p.22 14 
continue their business relationships with the company of their choice for a 
period not exceeding ten years in accordance with the conditions provided for 
in Regulation No 1984/83, it was decided on 8 February 1993 to close the 
case. In the situation described there was less need to continue examining 
the case at Community level, and so the competent national authority took up 
the complaint. 
It is thus the Spanish competition authority that will deal with the case of 
the small number of station operators who have refused to renew the 
agreements put forward by the companies. Furthermore, since Article 85(1) 
has direct effect, there is nothing to prevent the complainant from raising 
before the national judicial authorities the problems of compatibility with 
Community law of exclusive purchasing contracts that are not exemptable under 
Regulation (EEC) No 1984/83. This case provides a good illustration of the 
subsidiarity and decentralization policy pursued by the Commission. 
2. I.B.§5. 23 
142 
<T3> §5. Motor vehicles 
<T6> Cooperation agreements between Peugeot and Fiat 
involving the SeveI Joint venture 
227. The Commission continued its scrutiny of the agreements concluded by 
Fiat and Peugeot for the joint production of vehicles intended for specific 
segments of the automobile market. The agreements concern the manufacture 
at two plants of three types of vehicle. Sevel Val di Sangro produces 
medium commercial vehicles, while Sevel Nord produces light commercial and 
multi-purpose vehicles. 
The medium commercial vehicles are the fruit of an initial collaborative 
venture agreed on 29 June 1978, to build the Peugeot J5, Citroën C25 and 
Fiat Ducato, with the vehicles still to be marketed separately through the 
parties' own distribution networks. The Commission approved this agreement 
by administrative letter on the ground that it was aimed at promoting 
research into and the development of a new product. A subsequent agreement 
was concluded to enable the firms to replace the abovementioned vehicles with 
new products better suited to a changing market. The Commission proposes to 
approve the extension of the collaborative venture to include thé new 
products by a formal decision, to which it intends, however, to attach 
conditions designed to ensure the maintenance of genuine competition between 
Fiat and Peugeot in the distribution of such vehicles throughout the common 
market. It has already published a notice in the Official Journal seeking 
the views of interested parties. 
The joint production of multi-purpose vehicles and of light commercial 
vehicles is a new venture covered by a more recent agreement. It concerns 
not only the chassis, which is common to all models, but also the engines and 
bodies. Following a detailed examination of the notification which was made 
by the two parent companies as a precautionary measure, the Commission found 
.B.§5. 24 143 
that the agreement was covered by Regulation (EEC) No 418/85, which exempts 
under Article 85(3) of the EC Treaty certain agreements concerning joint 
research and development: the two firms can therefore continue the research 
undertaken jointly, and subsequently entrust to Sevel Nord the manufacture of 
the vehicles in question. 
B.55. 25 H 
<T6> Rover Group 
228. Between 1986 and 1990 Rover Group operated a system in the 
United Kingdom by which it set a ceiling on the amount of discount that a 
customer should receive on some of its models. Rover Group's authorized 
Rover dealers were allowed the normal dealer margin of 15%, but a further 2% 
margin (payable for compliance with dealership standards) was not paid over 
in the event of the dealer exceeding fixed discount levels. This practice 
was a clear breach of EC competition rules because it restricted price 
competition between dealers. 
Rover's senior management terminated the practice, following which they 
voluntarily notified the changes they introduced to the United Kingdom's 
Office of Fair Trading and subsequently to the Commission. In order to 
remedy the situation Rover informed its dealers that the discounting policy 
previously pursued had been abandoned. Furthermore, the Rover Group undertook 
to reimburse dealers any margin which had been withheld from them. Finally, 
after discussions with the Commission, Rover agreed to contribute the sum of 
UKL 1 million to the funding of two projects designed to benefit consumers 
who purchased motor vehicles in the United Kingdom. However, this does not 
affect the rights of individual consumers to claim compensation against Rover 
or any Rover dealer, or prevent the UK authorities from taking action under 
nat ionaI law. 
Under the circumstances the Commission does not propose to initiate official 
proceedings in this case. 
2. I.B.§5. 26 ... 
1 4s 
<T6> The Commission sees to reorganization of the distribution of Fiat 
spare parts in Italy 
229. Acting on a complaint from Cicra, the Italian association of 
manufacturers of spare parts and accessories, the Commission contacted 
Fiat Auto to lead it to modify its system of distributing spare parts for its 
cars in Italy. 
Under Italian law a motor manufacturer may obtain a legal monopoly over body 
parts for which it seeks registration as industrial designs. Fiat Auto 
availed itself of this opportunity and was therefore entitled by law to the 
exclusive supply of certain parts. Moreover, the discounts granted to 
distributors of spare parts for all Fiat products were closely bound up with 
the discounts offered on spare parts covered by the monopoly. These 
discounts also depended on a purchasing threshold accepted by each 
distributor. 
Alongside its motor vehicle distribution network, organized in conformity 
with Commission block exemption Regulation (EEC) No 123/85, Fiat had set up a 
system of exclusive distribution through a network of 315 dealers 
specializing in the distribution of spare parts. The Regulation covers the 
distribution of parts only in so far as it is linked to the distribution of 
motor vehicles. Fiat had ceased to have such a homogeneous system of 
exclusive and selective distribution and therefore lost the benefit of the 
block exemption, at least as regards the spare parts sector. 
Following the Commission's intervention, Fiat decided to modify its system of 
discounts as from 1 January 1994 to bring it into line with the competition 
rules. In particular, it proposed to abandon the discount intended to deter 
distributors from selling to customers from outside their area, scrap the 
LIT 99 million purchasing threshold that distributors had to reach before 
they qualified for discounts, and abolish any link between the discounts 
granted on parts covered by an industrial design right and the discounts 
granted on other spare parts. The effect of these discounts was to limit 
access by third parties to the market in spare parts for Fiat vehicles. 
2. I.B.§5. 27 146 
Fiat also decided to abolish the network of distributors specializing in the 
sale of spare parts. There are some 750 such distributors in Italy, 315 of 
whom have been appointed "authorized Fiat distributors" in return for their 
agreeing to tie themselves to Fiat through an exclusive dealing agreement 
known as the "CSR". Because of their number the Commission granted Fiat a 
five-year grace period in which to terminate these exclusivity agreements as 
and when they come up for renewal. This new policy of Fiat's will mean more 
competition in the market for spare parts because independent spare parts 
manufacturers will be able to sell to a group of customers to which they were 
hitherto denied access. 
2.I.B.§6. p.28 147 
<T3> §6. Transport 
<T5> (a) Sea transport 
<T6> East African Conference 
230. In September the Commission terminated the proceedings it had initiated 
in 1991 against the liner conference operating in trade between Europe and 
East Africa (the EAC) and member shipping companies in respect of the length 
of notice companies wishing to leave the conference had to give. 
The Commission had acted originally in response to a complaint lodged in 
June 1989 by Compagnie Maritime Belge (CMB) against the EAC in respect of the 
obstacles the conference had placed in the way of CMB's introduction of a 
non-conference service. The dispute between the parties dates back to the 
time when CMB decided it was not going to serve the trade in question any 
longer as a member of the conference, and offered a new liner service 
competing directly with that provided by the EAC. 
The EAC thereupon went to court and also referred the matter to arbitration 
in an attempt to prevent the service from being introduced before 
31 December 1990, the date on which it considered that the notice given by 
CMB could have the effect of releasing that company from the various 
obligations and geographical restrictions contained in the conference 
agreement. 
CMB argued that the clause in the agreement relating to the length of notice 
to be given in order to leave the conference was not covered by the block 
exemption granted to liner conferences.(5) The clause provided for a 
minimum period of notice of 12 months, such notice to expire only at the end 
of a calendar year. 
The Commission found that the current arrangements for giving not ic'; :.' 
restrict, for a period of up to two years less one day, the freedom u; a 
(5) Article 3 of Council Regulation No 4056/86, OJ L 378, 31.12.1986 
B.§6. p.29 148 
member shipping company wishing to leave the conference in order to offer a 
non-conference service as an outsider. 
It acknowledged that the requirement of the giving of notice to leave a 
conference was a normal contractual provision: conferences involved a certain 
amount of coordination of schedules and capacity, and the withdrawal of one 
of the members could cause disruption. It found, however, that in the 
present case the period of notice provided for in the conference agreement 
was unreasonably long and constituted a restriction of competition. As the 
provision in question did not satisfy the conditions necessary for it to 
benefit from the block exemption granted to liner conferences or from an 
individual exemption, it was therefore automatically void under Article 85(2) 
of the EC Treaty. 
231. In the Commission's view, the notice-giving clauses in conference 
agreements are closely linked to effective non-conference competition from 
outsider companies, which constitutes the main counterweight to the block 
exemption granted to liner conferences. The Commission must ensure not only 
that existing outsiders are not hampered by restrictive practices on the part 
of conferences benefiting from exemption, but also that a company belonging 
to a conference can become, within a reasonable period, an outsider offering 
a service competing directly with that offered by the conference. 
The Commission considers that the maximum period of notice required of a 
member before it can leave a conference without incurring any penalty should 
not as a rule exceed six months and in some cases might even be shorter, and 
that it should be possible for such notice to be given at any time. 
The EAC having amended its conference agreement as requested by the 
Commission, the Commission decided to terminate the proceedings without 
adopting a formal decision. 
<T6> Trans-Atlantic Agreement 
232. Almost all shipping lines in the Europe/US trade are parties to this 
agreement, which has the objective of freezing capacity on that trade. 
2.I.B.§S. p.30 . 
149 
According to these lines, the trade has suffered during the last two years 
from overcapacity and heavy losses for most members. 
The agreement entered into force on 31 August 1992. It allows the members of 
the TAA to fix prices in common in relation not only to the sea transport 
segment but also to the land-based segment. In addition, the TAA established 
a management programme for the capacity offered by members which enables them 
to reduce by up to 25% the amount of capacity previously offered to shippers 
by the non-utilization of some of the space available on their vessels. The 
programme extends only to westbound traffic and therefore mainly covers 
Community exports to the United States. 
The Commission has received numerous complaints from shippers (transport 
users) regarding this agreement. Following the announcement by the members of 
the TAA of substantial rate increases for 1993 (between 30% and 100%), the 
British and French shippers' councils lodged applications for interim 
measures asking the Commission to suspend implementation of the agreement. 
On 14 April the Commission sent a statement of objections to the TAA's 
members with a view to adopting interim measures such as suspension of the 
agreement. Following the written reply and the hearing it became apparent 
that the elements of serious and irreparable harm to the complainants were 
insufficient to justify such a decision. 
On 10 December the Commission sent to the TAA's members a statement of 
objections on the substance of the case. This statement of objections is 
based on presumed infringements of Articles 85 and 86 of the EC Treaty and 
envisages a prohibition of the agreement. 
2.I.B.§6. 31 
150 
<T6> Irish Club Rules 
233. The Commission received a request for individual exemption under 
Article 12 of Regulation (EEC) No 4056/86 for an agreement known as the Irish 
Club Rules concluded by six small and medium-sized shipping companies 
providing liner services for the carriage of cargo between the Continent, on 
the one hand, and Ireland and Northern Ireland, on the other. According to 
the parties, the agreement was neither a conference nor a consortium 
agreement. 
As part of the scrutiny procedure, the Commission published in June 1991, 
pursuant to Article 12(2) of Regulations (EEC) Nos 4056/86 and 1017/68, a 
notice summarizing the essential content of the agreement and of the request 
for exemption. 
Following publication of the notice and the receipt of numerous comments from 
interested third parties voicing their opposition to the granting of an 
individual exemption to the agreement as it stood, in September 1991 the 
Commission sent, in accordance with Article 12(3), a letter to the shipping 
companies concerned expressing serious doubts as to the applicability of 
Article 85(3) of the EC Treaty to the Rules. Its main objection was that 
the Rules' scope included the land-based segment of the transport service. 
During subsequent talks between it and the parties, the Commission pointed 
out that the Rules could not be exempted on the strength of any stabilizing 
effect they might have, as this was acknowledged by Regulation 4056/86 as 
being a sufficient ground only in the case of liner conferences (eighth 
recital of the Regulation); such an effect was produced primarily by 
cooperation between shipping companies on freight rates leading to the 
adoption of a common tariff, a feature lacking here. 
In May 1993 the parties again notified their agreement, as amended to take 
account of the serious doubts and other points raised by the Commission. 
2. I.B.§6. 32 . (- . 
Subsequently, the Commission, in accordance with Article 23(3) of 
Regulation 4056/86, published a notice^) announcing its intention of 
adopting a favourable decision on the Rules. The notice contained a summary 
of the serious doubts raised, of the amendments made to the agreement and of 
the main reasons why the Commission considered it could grant the Rules an 
individual exemption. 
Since no new factor capable of modifying the Commission's assessment was 
brought to its attention following publication of the second notice, the 
Commission closed the file on the case. 
An Article 85(3) comfort letter was accordingly sent to the parties. 
(6) OJ C 263, 29.9.1993, p. 6 
B.§6. p.33 152 
<T5> (b) Port services 
<T6> Sea Containers/SeaI ink 
234. The Commission rejected an application by Sea Containers (a company 
which, amongst other activities, operates high-speed ferries between 
Great Britain and France and Ireland) for interim measures against Stena 
Seal ink (a British ferry operator which is also the port authority at 
Holyhead, Wales), after the companies had come to an arrangement following 
Commission intervention. 
Sea Containers complained to the Commission in April that Stena Seal ink was 
refusing to grant it access to the port of Holyhead for the purpose of 
commencing a high-speed ferry service, thereby protecting its own ferry 
service from competition. Sea Containers asked the Commission to adopt 
interim measures against Stena Seal ink obliging it to grant access to the 
port. In July the Commission issued a statement of objections to 
Stena Seal ink in which it said that it considered that Seal ink's behaviour 
constituted an abuse of its dominant position as owner and operator of the 
port, contrary to Community competition rules, in particular Article 86 of 
the EC Treaty. The Commission indicated that it intended to order interim 
measures against Stena Seal ink obliging it to grant access to Holyhead to 
Sea Containers. 
In October Stena Seal ink offered Sea Containers access to the port on terms 
which the Commission considered to be reasonable and non-discriminatory. 
Sea Containers later accepted the offer, after the Commission had indicated 
that it considered that the necessary conditions for ordering interim 
measures were no longer fulfilled (i.e. urgency, arising from the likelihood 
of serious and irreparable harm to the applicant). 
The Commission decided to adopt a formal decision in the case in order to 
clarify the legal position for the benefit of the companies and other 
interested parties. In its decision the Commission said that Sea Containers 
was not entitled, by way of interim measures, to more than Seal ink had 
offered. However, it made clear that it considered that Seal ink had 
prima facie abused its dominant position at the port of Holyhead. In its 
2. I .B.§6. p.34 153 
view, a company which both owns and uses an essential facility such as a 
port, and which refuses its competitors access to that facility, or grants 
access only on terms less favourable than those it gives its own services, 
infringes Article 86 of the EC Treaty if there is an effect on trade between 
Member States. 
The Commission believes that, when a company is in a position such as that of 
Seal ink in this case, it cannot normally expect to fulfil satisfactorily its 
duty to provide non-discriminatory access and to resolve its conflicts of 
interest unless it takes steps to separate its management of the essential 
facility from its use of it. This could involve, for example, having 
different employees responsible for the management of the port than for the 
management of the ferry service, the establishment of a non-discriminatory 
code of practice, a consultation procedure involving other port users, and 
arrangements for independent arbitration in the event of disputes. 
2.1.B.§6. p.35 15 4 
<T5> (c) Ra i I transport 
<T6> Decision on tariff structures in the 
combined transport of goods 
235. The Commission adopted a decision authorizing an agreement establishing 
a common tariff structure to be applied by the main railway companies in the 
Community. Railway companies only exceptionally sell combined transport 
services (i.e. services involving more than one means of transport such as, 
for instance, rail and sea transport) direct to consignors. In the vast 
majority of cases, such transport services are sold through specialized 
operators, which may be either subsidiaries of railway companies or 
independent f i rms. 
The agreement establishes a tariff price structure for the sale of rail 
haulage to these operators. It defines a grid of coefficients to be used in 
calculating prices, but it does not lay down the prices themselves. 
236. The Commission took the view that the agreement would restrict 
competition, because without it each railway company could adopt its own 
tariff to attract traffic operating on competing combined transport routes. 
In addition, the agreement was not a technical agreement within the meaning 
of Article 3 of Council Regulation (EEC) No 1017/68, which authorizes 
agreements the sole object and effect of which is to apply technical 
improvements or to achieve technical cooperation. 
The Commission nevertheless came to the conclusion that the negative effects 
of the agreement would be offset by the fact that it would be easier to set 
international prices and by the fact that operators purchasing haulage from 
the railways could compare different international routes more readily and 
thus take advantage of competition between them. A common tariff structure 
that would be in force for several years also gave operators the stability 
they needed to invest. 
The Commission accordingly decided to authorize the agreement for five years 
but attached conditions to its authorization to protect combined transport 
operators from abuse of the agreement by the railways. 
2. I.B.§6. p.36 
155 
<T5> (d) Air transport 
<T6> IATA - Currency Rules 
237. The rules governing the terms and conditions for the issue of airline 
tickets are contained in a number of resolutions by IATA Tariff Coordination 
Conferences. One of these resolutions restricted the freedom of passengers 
to purchase tickets outside the country of travel origin. 
IATA was informed that, in the Commission's view, the rule amounted to a form 
of market segmentation and appeared to prevent the consumer from obtaining 
the best terms for his or her transport arrangements. The adoption of the 
.resolution by IATA airlines therefore appeared to restrict competition in the 
Community, and would thus fall within the scope of Article 85(1) of the 
EC Treaty. 
Following discussions with IATA, the resolution was modified by an IATA 
conference so that the provisions were no longer applicable to t rave I., wi th in 
the EC, Norway and Sweden. 
<T6> IATA - Cargo Surcharge 
238. The annual round of talks on cargo tariffs between airlines within IATA 
Tariff Coordinating Conferences is permitted under Commission Regulation 
(EEC) No 1617/93 on the ground that the discussion of, but not the agreement 
on, tariffs may contribute to general acceptance of interlining to the 
benefit of carriers and air transport users alike. 
On two separate occasions during the course of the year IATA adopted 
resolutions providing for the imposition of a worldwide fixed surcharge of 15 
US cents per kilo on all air freight movements. The increase in the intra-EC 
revenues of carriers applying the surcharge was estimated at ECU 100 million. 
IATA considered that the adoption of the surcharge fell within the scope of 
the block exemption because the surcharge formed part of an inter Unable 
tar iff. 
The Commission did not accept that a global surcharge, the main purpose of 
which was to raise revenue and not to facilitate interlining and which failed 
to take account of the different impact of cost trends of individual 
2.I.B.§6. p.37 1 5.^ 
carriers, could benefit from block exemption. Even if it could, it appeared 
to have effects that were contrary to Article 85(3) of the Treaty. 
IATA abandoned its first attempt to impose a surcharge following the 
Commission's expression of concern that the IATA resolution did not meet the 
conditions for exemption or for an individual exemption. 
At a subsequent conference IATA again adopted a surcharge resolution, but 
this time it was slightly different. The new resolution allowed individual 
carriers more discretion in applying the surcharge. However, evidence in the 
market-place indicated that most carriers were treating the surcharge as 
binding, and the main purpose was to increase revenue rather than 
interlining. In these circumstances, the Commission's view remained 
unchanged, and IATA was informed accordingly. In the light of the 
Commission's reaction, IATA withdrew the surcharge. 
<T6> Sabre/Air France and Iberia 
239. The Commission received a complaint from the Sabre computerized 
reservation system (CRS) concerning the refusal of the subsidiaries of two 
major airlines (Air France and Iberia) in the Community to participate to an 
adequate extent in its distribution facilities. It considered that a CRS 
could not provide effective competition in the national markets in which it 
operated, if it was not able to distribute the services of the domestic 
airlines. CRSs provide information on schedules, availability and fares for 
air transport. The two national carriers are shareholders of a rival CRS. 
The airlines considered that their own CRS, which held over 80% of their 
respective national markets, provided all the distribution facilities they 
required. Furthermore, they considered that Sabre, which is a "hosted" system 
(the internal reservation system of the owner, American Airlines, is 
integrated in the CRS itself), discriminated against them in that it provided 
a better quality of service for American Airlines than for non-hosted 
carriers. 
Eventually, a settlement was reached between the various parties which led to 
the domestic subsidiaries of Air France and Iberia participating in Sabre. 
2. I .B.§6. p.38 15 7 
As a result of the above complaints, in both the amendment to the Code of 
Conduct for CRSs(7) and the revised block exemption for CRSs,(8) the 
requirements for parent carriers to participate in rival CRSs and the non­
discriminatory operation of hosted CRSs have been strengthened. 
(7) Council Regulation (EEC) No 3089/93, OJ L 278, 11.11.1993, p. 1. 
(8) Commission Regulation (EC) No 3652/93, OJ L 333, 31.12.1993, p. 37 
2.I.B.§7. p.39 15 8 
<T3> §7. Protection of the environment 
<T6> Spa Monopole/GDB 
240. Following the unanimous decision of the general assembly of the 
Genossenschaft Deutscher Brunnen (GDB) on 29 April to afford access to its 
pool of multi-way glass bottles to mineral water producers from other 
Member States, the Commission decided to terminate the proceedings initiated 
under Articles 85 and 86 of the EC Treaty in 1989 against the GDB in response 
to a complaint by a Belgian water producer which wanted to use GDB bottles to 
sell its products in Germany. The complaint has now been withdrawn. 
The Belgian mineral water producer Spa submitted a formal complaint in 1989 
against the GDB's refusal to grant access to a pool of standardized 
refi liable glass bottles and crates which operates in Germany. A similar 
complaint by Belgian and French mineral water producers was rejected by the 
Commission in December 1987. According to the Commission at that time the GDB 
agreement and the ensuing exclusion of foreign water producers did not have 
an appreciable negative effect on the position of third parties or on 
inter-state trade in particular because alternative packaging, such as PVC or 
one-way glass, had free access to the German market. In fact, up to 1988 
mineral water exports to Germany particularly from France and Belgium were 
increasing rapidly. 
Nevertheless, the Commission at that time stated its intention of 
reconsidering the situation if compulsory legislation were to be adopted with 
regard to the use of disposable bottles for mineral water. Plastic PVC/PET 
bottles were in fact the most popular packaging used for exports of mineral 
water to Germany until the end of 1989. 
By means of a statement of objections in December 1992, the Commission asked 
the GDB to open its pool to mineral water producers from the rest of the 
Community. It was argued essentially that conditions in the German market for 
mineral water had been changed to such an extent that the only way for 
non-German producers to remain competitive in that market was for them to be 
able to bottle their products in GDB bottles. Access to the pool was 
therefore essential to them. What had happened was that German waste 
management legislation which entered into force in 1989 had resulted in the 
removal of plastic one-way bottles from the market. Alternative packaging 
2. I.B.§7. p.40 1 59 
such as recyclable plastic or one-way glass bottles had not shown itself to 
be a viable substitute for one-way plastic bottles. Moreover, following the 
entry into force of the new "packaging" regulation (VerpackVO) at the 
beginning of 1993, disposable glass bottles (one-way glass) and other one-way 
packaging are no longer permitted either if a system for their recycling does 
not exist. The use of any non-ref i I lable container is subject to the 
obligation on the part of the producer/distributor to take a deposit. On the 
other hand, refiIlable glass bottles compete directly with the GDB. Starting 
a new pool of such bottles is not, however, a realistic proposition for 
those outside the GDB, since most water wholesalers and supermarkets do not 
wish to introduce a second pool besides the GDB. This would result in 
considerable additional handling and stocking costs for them. 
It must be noted that in this case the Commission did not question the German 
anti-pollution legislation. It stated however that, in view of the evolution 
of the German mineral water market since 1990 - particularly the adoption of 
compulsory legislation concerning the use of disposable bottles for mineral 
water and the reaction of the retail trade to this legislation and its 
effects on EC exports to Germany - the GDB agreement and its operation in 
practice was capable of acting as a barrier to entry. Thus, the agreement 
hindered access by foreign water producers to the German market, restricting 
competition and appreciably affecting inter-state trade within the meaning 
of Articles 85 and 86 of the EC Treaty. Furthermore, in view of the dominant 
position of the GDB in the market for mineral water containers, its refusal 
to grant foreign EC water producers access to its pool, despite the fact that 
such access was essential in order to be able to compete effectively in the 
mineral water market, constituted an abuse of a dominant position within the 
meaning of Article 86 of the EC Treaty. 
Under the amended system, water producers from other Member States .who wish 
to enter the GDB pool must sign a contract ("Beitrittsvertrag" ) with the GDB. 
The contract stipulates among other things that the new member accepts the 
existing rules and regulations of the GDB and will use the bottles for 
exports to Germany only. Foreign water producers should use labels which make 
clear to the German consumer the origin of the mineral water and the place 
where it was bottled. The Commission believes that this is enough to avoid 
any confusion which might otherwise result from the utilization of GDB 
bottles by producers in other Member States. 
2.I.B.§8. p.41 1 g Q 
<T3> §8. Case concerning intellectual property 
<T6> Becton Dickinson/Cyclopore 
241. The Commission issued an Article 85(3) comfort letter for a licensing 
agreement with exclusive supply and purchasing obligations between Cyclopore, 
an independent Belgium-based firm which has close links with the Université 
Catholique de Louvain (UCL), and the US medical supply company Becton 
Dickinson and Company Inc. 
Cyclopore produces membranes based on a patent licence granted by UCL. The 
membrane is a very thin transparent film with over 100 000 pores per square 
centimetre. Becton Dickinson has developed a technique to weld these 
membranes into tissue culture products. These products are used specifically 
for culturing mammalian and insect eel Is in vi tro. 
Under the agreement Cyclopore grants Becton Dickinson the exclusive worldwide 
right to manufacture and sell its membranes for use in tissue culture 
products for as long as Becton Dickinson purchases a minimum quantity, and 
Becton Dickinson undertakes to purchase exclusively from Cyclopore all its 
microporous track-tech membranes for use in tissue culture. Furthermore, the 
agreement contains an exclusive supply obligation on Cyclopore. This 
obligation has been limited, following intervention by the Commission, in 
order to permit Cyclopore to sell its membranes for use in tissue culture 
also to other parties after five years. 
The agreement is interesting since it ensures the commercialization of 
university spin-off technology, whilst enabling, after a transitional period, 
access by competitors to this innovative product. 
16 1 2.I.B.§9. p.42 
<T3> §9. Other sectors 
<T6> Zera Montedison/Hinkens Stahler 
242. By a decision under Article 85 of the EC Treaty, the Commission ruled 
that it is an infringement of competition law for a manufacturer to grant a 
distributor absolute territorial protection by seeking, under the agreement 
between them, to have products which often differ only slightly from one 
another approved in the various Member States. Such differentiation between 
products requiring national approval makes parallel imports impossible if the 
imported products do not meet the approval requirements of the Member State 
of importation. 
In the present case, two firms, Farmoplant and Montedison Deutschland, used 
the method described above to grant absolute territorial protection for the 
herbicide Digermin to their German exclusive distributor (Stàhler) between 
1983 and 1988. In this way, they prevented German parallel imports of 
Digermin, which is sold at much lower prices in other Member States (but not 
approved in the same composition by the German authorities). 
Under German law on product approval, a product can be imported only if the 
importer provides the authorities with proof that it is identical to the 
product approved in Germany. Any changes, however slight, in the 
composition of the product thus mean that it cannot be imported, despite the 
fact that it was obtained lawfully in another Member State. 
In the Commission's view, the parties had infringed Article 85 of the Treaty 
by agreeing to grant absolute territorial protection in Germany for Digermin 
through product differentiation in order to protect themselves against 
parallel imports from other Member States. 
The case will serve as a landmark since product differentiation is also 
practised in other sectors where official product approval is required. 
2.I.B.§9. p.43 . , 
Until such time as there is mutual recognition of national approval or a 
uniform approval system at European level, national provisions can be used by 
firms to impede and indeed prevent trade in a product between Member States 
through a slight change in the product's composition or brand name. As a 
result, price differences between Member States cannot be exploited to the 
benefit of the consumer. 
2. I .B . §9. p.44 163 
<T6> Grundig's selective distribution system 
243. On 21 December the Commission adopted a decision extending, under 
Article 85(3) of the EC Treaty, an exemption for Grundig's selective 
distribution system. 
Grundig, which is incorporated in Germany, is one of Europe's largest 
manufacturers of consumer electronics equipment. Since 1984 Grundig's 
manufacturing operations have been managed by the Dutch company 
Philips Electronics, which recently took full control of Grundig by buying 
out the other shareholders. 
Grundig operates a system of selective distribution, that is to say it 
distributes its products through specialist wholesalers and retailers whom it 
selects on the basis of certain criteria (availability of trained sales 
personnel, ability to advise customers and to display and demonstrate 
products, provision of an after-sales service, etc.). In the present case, 
the agreement contained two clauses already considered restrictive of 
competition in the original exemption decision of 10 July 1985. One 
concerned the obligation on wholesalers and retailers to stock the entire 
range of Grundig products, and the other, the obligation on retailers to 
display a representative selection of those products. 
As established by past Commission decisions and the case law of the 
Court of Justice, such systems are nevertheless compatible with Community 
competition law where they are justified by the specific nature of the 
products concerned. The original exemption granted on this basis expired on 
28 March 1989. At Grundig's request, it has now been extended until 1999. 
However, in the interests of better consumer protection, the Commission asked 
Grundig to amend its warranty terms so that, even where a defective item was 
purchased in another Member State, a consumer could have it repaired under 
B.§9. p.45 164 
warranty in the Member State in which he lived. To that end, Grundig 
intends to introduce a uniform, Europe-wide, contractual comprehensive 
warranty and has begun building up an appropriate network of repair shops. 
It has undertaken, pending completion of the network, to honour all 
cross-border warranty claims on an ex gratia basis. 
B.§9. p..46 165 
<T6> Papeteries de Go I bey 
244. The Commission examined a number of agreements notified by Norske 
Skogindustrier AS, E. Holtzmann & Co AG, SA Papeteries Matussière et Forest 
and Papeteries de Golbey SA, relating to the setting-up of a joint venture 
(Golbey) for the construction and operation of a greenfield paper-mill in 
Golbey., France, the distribution of the paper (i.e. newsprint) produced by 
the joint venture, and the purchase of raw materials (i.e. waste paper and 
wood) by the joint venture. 
In the form in which they were originally notified, the agreements conferred 
on the joint venture all the functions of an undertaking, placed at its 
disposal all the existing resources of the parents for the marketing and 
distribution of its products, and provided for a long-term territorial 
division of the market for Golbey's products between Norske Skogindustrier 
and Holtzmann (through exclusivity clauses). 
The Commission found that the agreements could allow the parties to 
coordinate their competitive behaviour and could lead to market sharing 
liable to restrict competition and affect trade between EC countries. It 
made its misgivings known to the parties and reguested them to change the 
arrangements for the marketing and distribution of Golbey's products. In 
view of the Commission's opposition, the parties finally undertook to change 
the distribution model and Papeteries de Golbey will function in future as a 
mere production Joint venture. 
If anything, the joint venture is likely to offer more effective competition 
to existing European groupings; the additional capacity will increase supply 
relative to demand and will help keep prices down. 
As far as production is concerned, the operation will be of benefit both to 
the parties and to the consumer. Through the exchange of technical know-how 
between the parties, the new mill at Golbey uses highly sophisticated waste 
paper de-inking technology and the manufacturing processes have been rendered 
"environmentally friendly". 
2. I .B.§9. p.47 
166 
After taking into account the notified amendments to the original 
agreements, which limit the risk of market sharing and minimize the 
restrictive effects on competition, the Commission was able to inform the 
parties by comfort letter that the operation qualified for exemption under 
Article 85(3). 
2.I.C.§1.a.p.1 167 
<T9> C. Merger control 
245. This chapter begins by looking at the operations which were declared to 
be caught by Regulation (EEC) No 4064/89 on the control of concentrations 
(the Merger Control Regulation). It then goes on to examine how the criteria 
for assessing the compatibility of such operations with the Regulation have 
been appI ied. C) 
<T3> §1. Scope of application 
246. For an acquisition to be caught by the Merger Control Regulation, the 
parties must first meet certain conditions as to their turnover, particularly 
their turnover within the Community.(2) Second, the transaction must amount 
to a concentrât ion. 
<T5> a. Community dimension (Article 1) 
247. One of the fundamental aims of the turnover thresholds in Article 1 of 
the Regulation is to act as a screen to identify transactions with a 
Community interest. For example, in Fletcher ChaIlenge/Methanex where a 
New Zealand and an EC company moved to a position of joint control over a 
Canadian one, the turnover obtained by the parties in the EC was none the 
less sufficient to trigger the Article 1 thresholds. This case illustrated 
the need for the Commission to examine such operations because in fact the 
joint venture had significant effects in the EC. 
248. The rules set out in Article 1 are also intended to draw a clear 
dividing line between cases that should be dealt with by the Commission on 
the one hand and by Member States on the other, in order to safeguard the 
one-stop shop principle. A refinement of this principle is contained in 
Article 22(3) of the Regulation which provides that a Member State may ask 
the Commission to examine the effects in its territory of a concentration 
(1) A complete list of the decisions taken under the Merger Control 
Regulation is given in the Annex. 
(2) Under the current figures, the combined aggregate worldwide turnover of 
all the undertakings concerned must be more than ECU 5 billion, while 
the Community-wide turnover of at least two of the undertakings 
concerned must be more than ECU 250 million. 
2.I.C.§1.a.p.2 168 
without a Community dimension, insofar as the concentration also affects 
trade between Member States. Thus the Commission may, on request, act for the 
competent authority of a Member State and apply the Merger Regulation in 
assessing the impact of a non-notifiable transaction within that 
Member State's territory. 
249. For the first time since the entry into force of the Regulation a 
request pursuant to Article 22(3) was received in the case of Br i t ish 
Airways/Dan Air. Since British Airways acquired only the non-charter 
operations of Dan Air, the turnover attributable to the latter did not attain 
the EC threshold and this was therefore a case to be dealt with by the 
national authorities concerned. Following, however, the request from the 
Belgian Government, the Commission examined the effects of the transaction in 
the territory of Belgium. 
2.I.C.§1.b.p.3 169 
<T5> b. Calculation of turnover thresholds (Article 5) 
250. Article 5(4) sets out the method for determining the economic grouping 
to which an undertaking concerned belongs for the purposes of calculating 
turnover. In respect of state-owned enterprises, Article 5's provisions 
should be read in conjunction with Recital 12 of the Regulation. This states 
that, in order to avoid discrimination between the public and private sector, 
account should be taken "of undertakings making up an economic unit with an 
independent power of decision ..." in calculating the turnover of the 
state-owned undertakings. In the case of AI can/InespaI/PaIco. Inespal is a 
wholly-owned subsidiary of INI, a Spanish state holding company, and it 
planned to sell a 50 % stake in its subsidiary, Palco, to Alcan. In 
accordance with Recital 12, the turnover to be taken into account in respect 
of Inespal was deemed to include that of INI alone(3)not that of all the 
entreprises held by the state. The same rule was applied in the concentration 
KaIi +SaIz/MdK/Treuhand where Kali & Sa Iz, a subsidiary of BASF, and the 
Treuhand acquired joint control of the potash company MdK. The Treuhand is a 
public-law institution intended to restructure the former GDR's state-owned 
companies. The Commission considered that in the case in question, the 
Treuhand was itself an undertaking with a direct interest in the operation 
but at the same time it did not exclude the possibility of regarding the 
different organizational units within the Treuhand (up to the level of 
directorate) as economic units with independent power of decision within the 
meaning of the 12th Recital. Even assuming that hypothesis, the turnover 
attributable to the directorate responsible for extractive industries 
exceeded the EC turnover threshold. 
251. Furthermore, in determining whether the thresholds of the Regulation are 
met, it is necessary to allocate turnover geographically both between the EC 
and the rest of the world and between individual Member States. In the case 
of the purchase by Alcatel Cable S.A. of the submarine telecommunications 
systems (i.e. undersea cab le-laying) business of STC Limited, however, there 
was no immediately obvious way in which to do so. 
252. The Commission rejected the approach of the parties which was to take 
the turnover generated from all contracts where the cable laid had at least 
(3) This same idea of economic independence also underlies the Commission's 
attitude to concentrations between public entities. 
2.I.C.§1.b.p.4 170 
one landfall in the EC, and thus where at least one EC telecom operator (TO) 
would earn revenue from traffic using the system, as EC turnover. This 
approach was not followed since the parties' business was the laying of 
undersea cables and not the service subsequently provided through them by 
TOs. 
253. Cables are laid primarily in international waters and sold to 
international purchasing consortia mostly comprised of TOs. The circuits 
contained in these cables are apportioned to the TOs according to their 
participation in the purchasing consortium. The Commission concluded that in 
allocating the turnover geographically, it was important to establish where 
competition for the contracts occurred and the place of establishment of the 
purchasers of the cable was taken as a sufficient surrogate in this 
particular case. Furthermore, since there was more than one purchaser per 
cable, the turnover generated by a contract was allocated to the operators 
according to their participation in the consortium. 
2.I.C.§1.C.p.5 
17.1 
<T5> c. Definition of concentration (Article 3) 
254. For there to be a concentration within the meaning of the Regulation, 
there must be acquisition of sole or joint control of a firm by one or more 
other companies. The difference between sole and joint control also has 
implications for the method of calculating turnover. In the case of joint 
control, the turnover of all the companies concerned must be taken into 
account, while in the case of sole control only the firm holding such control 
is taken into account. 
<T6> Sole control 
255. Sole control frequently results from the acquisition by one undertaking 
of more than 50% of the capital of another undertaking. If there are no 
other elements of fact or of law, it does not matter very much, for control 
to be found to exist, whether the holding acquired is 50% + one share, as in 
Crédit Lyonnais/BFG Bank, or 100%, as in Sara Lee/BP Food Division. Sole 
control may also be obtained through the purchase of assets, notably, as in 
Zur ich/MMI. when it relates to a part of an undertaking not constituted as a 
legal entity. 
256. In accordance with well-established practiced4) the Commission took 
the view, in VW AG/VAG UK and West LB/Thomas Cook, that the acquisition by 
one of the parties of sole control over an undertaking previously held 
jointly was a concentration within the meaning of the Regulation. 
257. In Société Générale de BeIgique/Générale de Banque the Commission took 
the view that the increase from 20.94% to 25.96% in the stake which the 
Société Générale de Belgique held in the Général de Banque gave the former 
sole control over the latter. In reaching this conclusion, the Commission 
carried out a projection of attendance at the future general shareholders' 
meeting of the Générale de Banque based on participation of all shareholders 
holding more than 0.06% of the capital. It deduced from this that the holding 
of the Société Générale de Belgique in the Générale de Banque will in all 
probability give it a majority of votes at the shareholders' general meeting 
amongst those present and represented and that, in view of the wide 
dispersion of shareholdings, this de facto majority would persist. The 
(4) Twentieth Competition Report, point 149; Twenty-second Competition 
Report, point 228. 
2.I.C.§1.c.p.6 172 
Commission also examined whether the provisions of Belgian law intended to 
ensure the autonomy of banking and laid down in a Protocol, called into 
question the de facto control normally resulting from a majority at the 
shareholders' general meeting. It concluded that this was not the case, 
applying competition policy analysis, given the powers conferred on the Board 
of Directors. A majority of the Board may consist of representatives of the 
shareholders that were signatories to the act separate from the Protocol on 
banking. The Société Générale de Belgique is one such signatory. 
<T6> Joint control 
258. Joint control may arise where each of the parties has an identical stake 
in the joint venture. In such cases, it is not necessary for there to be any 
particular statutory rules or a specific shareholders' agreement. If such is 
the case, however, such rules or agreement must, as in Matra/Cap Gemini 
Soget i. AI can/InespaI/Pa Ico and Rhône-Pou Ienc/Sna i(I I). confirm that each 
partner cannot act independently from the other partner(s) within the joint 
venture because, for example, all have the same number of representatives on 
the representative and/or management bodies and that none of the 
representatives has a casting vote. 
259. The key to determining whether there is joint control is to establish 
whether the different partners have necessarily to be in agreement on the 
strategic decisions taken by the joint venture. There is consequently no need 
for each of the partners to have the same holding in the share capital or the 
same powers: in Ericsson/Hewlett Packard. Ericsson held 60% of the capital 
and was entitled to appoint four directors, whereas Hewlett Packard held 40% 
of the capital and was entitled to appoint three directors; however, all 
major decisions had to be taken unanimously. Similarly, in Aegon/Scott i sh 
Egu i table. Aegon had initially 100% of the capital and 40% of the voting 
rights, whereas the other partner, Trustco, had 60% of the voting rights: 
however, the stategic and business decisions and the appointment of directors 
were carried out by common agreement.^) 
(5) See also JCSAT/SAJAC and Costa Crociere/Chargeurs/Accor 
2.I.C.§1.c.p.7 173 
260. The rights of each of the partners must, however, be sufficient and must 
go beyond those normally conferred on the minority shareholders of an 
undertaking. In Si ta-RP/Scor i. the Commission took the view that the rights 
conferred on some of the parties were insufficient to give them joint 
control, since they had no right of veto in matters of business policy, 
strategy, budgets and corporate planning. Similarly, in Dasa/Fokker. the 
Dutch state's holding was deemed not to give it joint control, since it could 
not on its own block any decision and had of its own accord limited its right 
of objection, and had done so even though there were few instances in which 
Dasa was able to act alone (i.e. without the support of an independent member 
or of the Dutch state). 
261. Joint control does not necessarily mean that the parties sharing it must 
hold all of the capital of the joint venture: a shareholders' agreement, as 
in Costa Crociere/Chargeurs/Accor or BHF/CCF/Charterhouse. may do instead. 
262. In accordance with established practice,^) which is in line with 
paragraph 41 of the Commission notice regarding the concentrâtive and 
cooperative operations under Council Regulation (EEC) No 4064/89,(7) the 
simultaneous creation, as part of one and the same operation, of several 
joint ventures between the same parties is to be deemed a single 
concentration. This principle was appI ied in Harrisons & CrosfieId/Akzo. 
263. In For t i s/CGER-ASKL. analysis of all the factual and legal circumstances 
prompted the Commission to conclude that the operation resulted in sole 
control as regards the "insurance" aspect and in joint control as regards the 
"banking" aspect. Through this operation, Fort is, which is controlled by the 
Belgian group AG and the Dutch Amev, acquired 49.9% of ASLK-CGER Banque and 
ASLK-CGER Assurance. This holding was sold to it by ASLK Holding NV/CGER 
Holding SA ("Holding"), the pub I ic-interest banking holding of the Belgian 
state. Holding also retains 49.9%. The rest is held by the company itself 
or through an ASLK/CGER Assurance cross-holding in ASLK/CGER Banque. 
(6) Twenty-second Competition Report, point 229. 
(7) OJ C 203, 14.8.1990; Twentieth Competition Report, point 25 
2. I..C.§1.c.p.-8 A n . 1 /4 
264. Account was taken from the outset of the equal shareholdings and 
representation of the two parties within the new entities, and of the spirit 
of partnership that guides them, notably with the setting up of a 
"Consultation Committee". However, in insurance (Fortis's main activity), 
the simple majority rule applying in voting on the Board, combined with a 
casting vote given to Fortis in the event of persistent deadlock within the 
"Consultation Committee", led the Commission to recognize here that Fortis 
had sole control (the "power of the final say"). Conversely, in banking 
(ASLK/CGER's main activity), in addition to the nine votes held by Fortis 
(one double vote) and the eight votes held by Holding, account had to be 
taken of the fact that Fortis must, in proposing strategic decisions, obtain 
the agreement of the six members of the Management Committee (whose 
composition is subject to approval by the Banking Commission) in order to 
obtain the required qualified majority of 15 out of the 23 votes. Since the 
possibility cannot be ruled out that just one of the members of the 
Management Committee might vote with Holding in order to block a Fortis 
proposal and that Fortis must therefore take this eventuality into account in 
drawing up its proposals to the Board of Directors, it was concluded that 
Fortis and Holding had joint control. 
265. In Ph i I ips/Grundig. the Commission took the view that, prior to the 
transaction, Grundig was jointly controlled by Philips and by three banks. 
In concluding that the three banks held joint control, even though there was 
no shareholders' agreement between them, the Commission based itself mainly 
on the fact that the three banks had to approve the appointment of one of the 
two managing directors of the company managing Grundig - the other being 
appointed by Philips -, that they would normally follow the advice of that 
director in view of their lack of relevant experience and that, being 
financial institutions and given their objectives, they would tend to act in 
the same way. 
<T6> Concentration between public undertakings governed by 
one and the same public agency 
266. In line with its practice, notably in ECSC cases, and in accordance with 
the twelfth recital of the Regulation, the Commission confirmed that 
concentrations between public undertakings governed by one and the same 
public agency (central government, regional or local authorities) must be 
2.I.C.§1.c.p.9 
175 
examined under the Regulation, provided that such undertakings each make up 
an economic unit with an independent power of decision. This principle was 
applied in CEA-lndustr ie/France Te lecom/F inmeccanica/SGS-Thomson. In 
Fort is/ASLK-CGER. in concluding that there was no risk of coordination of 
competitive conduct, the Commission took the view that the "Office Central de 
Crédit Hypothécaire", although owned by the state, was pending its sale 
managed by the "Crédit Communal", a banking institution which was dependent 
on the municipalities and provinces. 
<T6> Concentrâtive joint venture 
267. Article 3(2) of Regulation (EEC) No 4064/89 sets out the two conditions 
which must be fulfilled for the setting up of a joint venture (JV) to be 
regarded as constituting a concentration. Under the terms of the first 
condition, referred to as the positive condition in the abovementioned 
Commission notice, the JV must perform on a lasting basis all the functions 
of an autonomous economic entity. Under the terms of the second condition, 
referred to as the negative condition in the notice, the JV must not give 
rise to coordination of the competitive behaviour of the parent companies 
amongst themselves or between them and the JV. If one of these conditions is 
not met, the agreement between the parties may be examined under Article 85 
of the EC Treaty. It will then normally be covered by the accelerated 
procedure introduced for this type of operation.^) 
<T8> First condition: Autonomous economic entity 
established on a lasting basis 
268. In Phi I ips/Thomson/Sagem, the parties had set up a joint venture for the 
manufacture of liquid crystal displays, mainly to meet their own supply 
requirements. Although the Commission made no express comment on the 
question of autonomy, it follows from the decision that, although the parties 
are to acquire only some 30% of the JVs production, it cannot be ruled out 
that this percentage might increase in future. The JVs autonomy could then 
be placed in jeopardy. This reasoning, which is in line with the terms of 
paragraph 16 of the abovementioned notice, and with the Commission's previous 
decisions on the subject (see in particular FlachgIas/Vegla) was also 
appl ied in Br i t ish Telecom/MCI. 
(8) See points 193 and 194 of this Report. 
2.I.C.§1.c.p.10 
176 
269. In Pasteur-Mér ieux/Merck, the two parent companies, which are 
respectively the third and second largest world producers of human vaccines, 
pooled their activities in this sector in Western Europe. Pasteur-Mérieux 
(PM) transferred to the JV all its distribution infrastructure in 
Western Europe, thus enabling the JV to carry out the distribution of all the 
products previously distributed separately by the parties. However, since 
the geographical scope of activity of the JV was restricted to 
Western Europe, the parties did not transfer to it their research and 
development (R&D) activities, their production activities or all of their 
intellectual property rights. All these aspects taken together prompted the 
Commission to conclude that the JV was not autonomous, and it was 
consequently assessed under Article 85 of the EC Treaty. 
The parent companies were to retain all of their R&D activities, with the JV 
having access to them only through the intermediary of a development 
committee. Consequently, the JV could only make "recommendations" as to the 
research to be carried out for the improvement of products already marketed. 
In the case of new products, the JV had an independent power of decision only 
at the stage when a business decision relating to its territory was to be 
taken and not at the upstream stages of research. While recognizing that the 
specific features of the sector could make it difficult to transfer R&D 
activities, the Commission found that, for the reasons set out above, the JV 
would not have a decisive influence at each stage of the R&D process. In 
view of the importance of R&D in the vaccine industry, the Commission 
concluded that this lack of any decisive influence would not allow the JV to 
behave as an independent player on the market. 
The Commission reached the same conclusion as regards the non-transfer of 
production activities to the JV, while the scope of the JV to turn to 
independent suppliers appeared extremely limited, both legally and 
economica My. 
2.I.C.§1.c.p.11 
177 
Lastly, neither PM nor Merck was transferring patents for existing products, 
while patents for future products were transferred only if the parent 
companies could manufacture and sell outside the JVs territory. The 
Commission concluded that these provisions would enable the parent companies 
to re-enter the market rapidly if the JV were dissolved. 
<T8> Second condition: Absence of coordination 
of competitive behaviour 
270. First in 1991 (in Thomson/P iIk ington). then in 1992 (in Del Monte/Royal 
Food/Anglo American), the Commission made it clear that a very limited 
residual presence of the parent companies on the same market as the JV was 
not generally sufficient to give rise to coordination of competitive 
behaviour and was not therefore a bar to the application of the 
Merger Regulation. The Commission reaffirmed this position on several 
occasions in 1993. In Aegon/Scottish Equitable and Toyota Motor Corp./Walter 
Frey/Toyota France. Allied Signal/Knorr-Bremse and Fort is/ASLK-CGER. one of 
the parent companies was marginally active on the same market as the JV 
without that preventing the link from being regarded as concentrâtive. 
Coordination of competitive behaviour may also result from the activity of 
the parent companies on neighbouring product markets that are linked to the 
market on which the JV is active. The Commission reaches its decisions in 
each individual case on the basis of a specific assessment. Thus, in 
Phi Iips/Thomson/Sagem. the Commission considered that the degree of 
interdependence between the markets for the different types of screen 
(plasma, liquid crystals, cathode ray tubes, etc.) was such that coordination 
of competitive behaviour was extremely likely, both between the parent 
companies and between them and the JV. Conversely, in Harr isons & 
Crossf ieId/Akzo, the Commission took the view that, although there was some 
product overlap between the JV and the parent companies, there was no 
foreseeable risk of coordination since the JVs products and those of the 
parents were intended for very different applications one from another. 
2.I.C.§1.c.p.12 178 
271. In S i ta/RPC/Scor i , the parent companies acquired joint control of an 
existing enterprise (Scori) engaged in the treatment of special industrial 
wastes, while they were already operating on the same product and geographic 
market through another joint subsidiary (Ter is). The Commission noted on 
this occasion that, since it was established that Scori and Ter is would 
permanently come under a single economic management, regardless of the legal 
structure of the group, there was no possible coordination between the two 
joint ventures. In the same decision, the Commission made the point that if 
Scori was, in respect of part of its activity, acting on behalf of one of the 
parent companies under an agency contract, this was not likely to give rise 
to any coordination of competitive behaviour since Scori did not in fact have 
any real autonomy in this context. 
2. I .C.§2.a.p.13 17 9 
<T3> §2. Appraisal of concentrations 
272. The substantive appraisal of concentrations generally includes three 
steps of analysis: the determination of the relevant product market, the 
determination of the relevant geographic market and the assessment of the 
compatibility of the merger with the common market. The relevant product and 
geographic markets determine the scope within which the market power of the 
new entity must be assessed. The Commission may, in its Article 6 decisions, 
leave open the question of the precise relevant product or geographic market 
if it can find that even on the basis of the narrowest possible market 
definition, no dominant position is created or reinforced. 
<T5> a. Determination of the relevant product market 
273. The decisions illustrate that the Commission's methodology is heavily 
orientated towards demand-side substitutabi I ity, whereby a product market 
comprises "all those products which are regarded as interchangeable or 
substitutable by the consumer, by reason of the products' characteristics, 
their prices and their intended use". This implies an economic factual 
assessment. Sometimes the Commission finds it appropriate to distinguish 
separate product markets, for the same product group, which correspond to 
different categories of customers having distinct demand characteristics. The 
Commission may also investigate whether it is appropriate that supply-side 
substitutabi I ity (the facility of other manufacturers to switch production to 
the merging parties' products) should be integrated into the product market 
definition. Finally, the Commission may examine price evidence (levels, 
elasticity and correlations) to determine to what extent such evidence may 
complement findings based on the other criteria. 
274. Demand-side substitutabi I ity has been used to define product markets in 
several decisions. In Procord i a/Erbamont , different medicines are considered 
to belong to different product markets not only because of their intr>r^u 
properties, but also because they serve to treat different i I Inesses.(9) 
(9) See also Costa Croc i ere/.Çhargeurs/Accor , Thomson/Shor t , Rhôr.e 
Poulenc/SNIA I I , Fletcher C h.ajje nge/ Met h a n e x , KNP/BT/VRG and Zur_ich/MMl 
2...C.,2...p,4 
275. The existence of separate customer categories or market segments is 
mentioned too in some decisions. In Costa Crociere/Chargeurs/Accor. the 
Commission focused on the cruise market as a distinct segment within the 
package holiday market because it found that a significant proportion of 
customers (around half) were "captive" to cruises and insensitive to 
significant price increases (although the Commission did not go as far as 
investigating the possibility of price discrimination by the cruise operators 
against these captive customers). In Nest lé/1 taIgel. the ice-cream market was 
found to be divided into three separate markets namely 'impulse', 
'take-home', and 'catering' categories of customers. In 
Ericsson/Hewlett Packard, telecom network management systems were found to be 
evolving, in response to télécoms deregulation, to cater for an increasingly 
wider range of customers, beyond the traditional public-sector clients. 
276. Supply-side substitutabi I ity is normally considered by the Commission 
under its assessment of possible dominance (that is, as potential 
competition). However, it is sometimes mentioned under product market 
definition, but is not generally a sufficient condition for extending the 
definition of the relevant market. Thus, in KNP/BT/VRG. graphic board was 
found to constitute a separate market because of its end-use characteristics 
and higher price, despite the existence of multi-purpose equipment allowing 
manufacturers to produce both graphic board and board used for packaging 
purposes. 
277. Price factors are also considered in some decisions. An attempt to 
investigate price elasticities was made in the Costa Crociere/Chargeurs/Accor 
case, where a widespread enquiry among customers, tour operators and travel 
agencies revealed that a 10% increase in the price of cruises would depress 
demand from about half of consumers, but would not affect the other half. In 
Thomson/Shorts. very short-range missiles, short-range missiles and 
medium-range missiles were each held to constitute separate product markets 
because, i nter alia, for each range of rocket prices were significantly 
higher than those of the range below. 
C.§2.b.p.l5 
181 
<T5> b. Determination of the relevant geographic market 
278. The Commission has found local, national, regional, Community and world 
markets in the various product markets considered. The determination of the 
relevant geographic market within which suppliers compete is an economic and 
factual assessment (see Article 2(1)(a)). 
279. The Regulation has defined the relevant geographic market as 'the area 
where the undertakings concerned are involved in the supply and demand of 
products or services, in which the conditions of competition are sufficiently 
homogeneous and which can be distinguished from neighbouring areas because 
conditions of competition are appreciably different in those areas'.CO) 
In the decisions, emphasis is laid on supply and demand characteristics. 
Factors considered in the analysis of conditions of competition in geographic 
markets include both these general indicators, as well as factors exerting a 
possible determining influence on market delineation. General indicators 
include the geographical distribution of market shares and relative prices, 
and the location of major suppliers. On the demand-side, which is not likely 
to be directly influenced by single-market legislation, the Commission 
examines factors influencing consumer preferences, such as language and 
cultural differences as well as brand loyalty, and consumers' final 
purchasing patterns. On the supply-side, where single-market legislation may 
be of considerable importance, the Commission examines barriers to entry 
(quotas, tariffs, technical standards and public procurement preferences), 
transport costs, distribution systems and general evidence on trade flows. 
280. The use of general indicators is illustrated by several decisions. In 
Rhône-Poulenc/SNIA II, the absence of price differences for an intermediate 
product (nylon textile fibres) was held to indicate a market as wide as 
Western Europe. Conversely, in Nest Ié/1 taIgeI. price differences between 
countries were considered as indicating a predominantly national market for a 
consumer product (ice-cream). In Harrisons & GrosfieId/AKZO, the geographical 
market for three industrial product groups was held to be Community-wide in 
view of, i nter alia. the presence of major suppliers in several 
(10) See Art icle 9 (7) 
2. I.C.§2.b.p.16 182 
Member States, with significant market shares. In Thomson/Shorts. the 
presence of a national supplier for defence equipment was held to be 
sufficient for the establishment of a national market, absence of a national 
supplies indicating international or even worldwide competition^11) 
281. As far as specific demand factors are concerned, the relevance of 
inherent customer preferences and the effect of advertising was noted in 
cases involving final consumer products. In Nest lé/1 taIgeI. ice-cream markets 
were held to be predominantly national in view of national consumer profiles 
and consumption habits, and national brand loyalty. In 
Costa Crociere/Chargeurs/Accor, markets for cruises and package holidays were 
held to be national because of, inter alia, national differences in 
consumption patterns (cruises being much more popular in France and Germany 
than in Spain, for example), the need for brochures to be published in 
several different languages, and the existence of advertising campaigns 
targeting national audiences. Again, consumers' final purchasing patterns 
were found to be an important factor for the delimitation of geographical 
markets. For intermediate goods, this is illustrated by the KNP/BT/VRG case, 
where the market for the distribution and servicing of printing presses was 
found to be national, principally because customers (printers) insist that 
distributors have a well developed local service network for maintenance and 
repairs; again, in the Pi I kington-Techint/SIV case, rapid response times and 
the quality of local service for the supply of certain kinds of glass used in 
the building trade seemed to suggest national or even regional markets. 
Conversely, a European-wide purchasing policy was taken to indicate the 
emergence of EC-wide markets for car components in Cont i nentaI/KaI i cko/DG-
Bank/Benecke. For consumer goods, local catchment areas constituted the 
relevant geographic markets in the two retail cases Ki ngf i sher/Darty and 
AhoId/Jeronimo Martins/Inovaçao. 
282. As far as specific supply factors are concerned, the presence of 
significant trade flows was considered to indicate at least Community-wide 
markets for industrial goods in Harrisons & GrosfieId/AKZO. F letcher 
ChaI lenge/Methanex and Rhône Poulenc/SNIA II. Conversely, in the Ka I i und 
Sa Iz/MdK/Treuhand case, an insignificant level of imports of potash into 
Germany was held to indicate a distinct market. A low level of transnational 
Mi) See also Fletcher ChaIlenge/Methanex. KNP/BT/VRG and Costa 
Croc ière/Chargeurs/Accor. 
2.I.C.§2.b.p.17 183 
trade (under 10% of total consumption) was taken to indicate national 
markets for a consumer product (ice-cream) in Nest lé/I taIge I . 
283. Concerning barriers to entry (another supply-side factor), the existence 
of an EC external tariff was taken to indicate Community-wide markets for 
industrial goods in Harrisons & GrosfieId/AKZO and FI etcher 
Cha I lenge/Methanex. whereas the absence of barriers was taken to indicate 
worldwide aircraft markets in DASA/Fokker. Other barriers to entry are 
technical standards and public regulation, the presence of which was taken to 
indicate national markets in the pharmaceutical sector in Gehe AG/OCP SA and 
in the insurance sector in Zur ich/MMI and Fort is/CGER. On the other hand, 
harmonization of technical standards was taken to indicate EC-wide markets 
for electronics products in Ph i I ips/Grund ig. The problem of estimating the 
time-frame over which regulatory barriers may be eroded by single-market 
legislation was alluded to in American Cyanamid/She LL: national regulatory 
schemes, which encourage national marketing of crop protection products, were 
replaced in July 1993 by EC directives establishing mutual recognition of 
national authorizations, but it was held that the ease of Community-wide 
trade in such products was not likely to occur in the short term.(12) 
284. Significant transport costs were considered as a factor likely to 
constrain the scope of geographic markets for liquid petrochemicals in 
Fletcher ChaI Ience/Methanex. for packaging board in KNP/BT/VRG. and for 
industrial rubber products in Synthomer/YuIe Cat to. Conversely, in the 
Pi Ikington-Techint/SIV case, markets for some kinds of flat glass were held 
to be EC-wide since transport costs were found to be relatively low in 
relation to the high-value-added products transported. National differences 
in distribution channels for car exhaust components were held to suggest 
national markets in Arv in/Sogef i and Knorr-Bremse/AI I ied Signal. 
(12) See a I so JHoecjTsJ/S_cher_mg. 
2.I.C.§2.c.p.18 
184 
<T5> c. Assessment of compatibility 
285. In 1993 the Commission authorized 49 notified mergers in the first phase 
of proceedings, because it had no serious doubts as to their compatibility 
with the common market (Article 6(1)(b) decisions). In one Phase I case, 
British Airways/Dan Air, the Commission examined for the first time the 
effects of a concentration of non-Community dimension on competition within 
the territory of a Member State, following Belgium's request pursuant to 
Article 22(3) of the Merger Regulation. In 4 cases, the Commission went into 
the second phase of proceedings in order to carry out an in-depth 
investigation of mergers that raised serious doubts (Article 6(1)(c) 
decisions). Out of these 4 cases, the Commission authorized one merger 
(P iIk inson-Tech int/SIV) without attaching conditions and obligations to its 
decision, because it concluded that no dominance was created or strengthened 
(Article 8(2) subparagraph 1 decision). In two other cases 
(Kal i+SaIz/MdK/Treuhand and KNP/BT/VRG). the Commission considered that the 
merger would lead to dominance. However, following undertakings given by the 
parties, a decision of compatibility subject to conditions and obligations 
was finally adopted (Article 8(2) subparagraph 2 decision). In one of these 
two cases (KaI i +SaIz/MdK/Treuhand). the Commission set the criteria on the 
basis of which a merger should exceptionally not be considered as the cause 
of dominance if the dominant position would have been created or strengthened 
even in the absence of the merger. The last of the four Phase II cases 
(Mannesmann/VaIlourec/lI va) was still pending at the end of 1993. 
286. In the Nestlé/Perr ier decision adopted in 1992, the Commission 
interpreted Article 2(3) of the Merger Regulation as covering collective or 
oligopolistic dominance. During the course of 1993, the possible creation or 
strengthening of collective dominance was examined in a number of cases, four 
of which are summarized below (Rhône-Pou Ienc/SNIA.' AI I ied S ignaI/Knorr 
Bremse. KaI i +SaIz/MdK/Treuhand and P i Ikington-Tech int/SIV). In its 
assessment, the Commission analysed the market structures and conditions in 
order to establish: (i) the likelihood of anti-competitive parallel behaviour 
by the members of the oligopoly group which may require the assessment of a 
variety of factors including in particular, market transparency, respective 
market positions or possible structural links; and (ii) the possible 
constraints on such behaviour exerted by competitive elements outside the 
ol igopoly group. 
2.I.C.§2.c.p.19 13 5 
<T6> Rhône-Poulenc/SNIA (Phase I case) 
287. Rhône-Poulenc and SNIA created a joint venture, Europa, to which they 
contributed all their activities in the field of nylon filament for textile 
applications. The two companies had already pooled their activities in 
related sectors (fibres used for carpets, textile and industrial 
applications) in a joint venture authorized by the Commission on 
10 August 1992.(13) 
288. Although Europa will have a significant* share of the market for nylon 
filament for textile applications in the EC (around 42%), the Commission 
considered that the operation would not lead to the creation of single 
dominance. because of the presence of strong competitors, in particular 
Du Pont, the world leader in the field, with a market share of 23% in the EC, 
the existence of overcapacities and the lack of long-term links between 
suppliers and customers. 
289. In view of a significant increase of the degree of concentration in the 
EC market for nylon textile filament as a result ai the operation leading to 
a combined market share of around 66% for Du Pont and Europa, the Commission 
also examined whether the concentration would create or reinforce a position 
of oligopolistic dominance. It concluded that the following structural 
characteristics of the market made parallel behaviour resulting from a 
situation of oligopolistic interdependence unlikely: 
- the product is not homogeneous; 
- the competitive environment is not stable due to the high degree and 
speed of innovation leading to the development of new products that 
are generally not patented; 
- there is a general lack of transparency in prices due to the existence 
of individual negotiations between suppliers and customers; 
- the existence of structural overcapacity in the market and competitive 
pressures from outside the EC constrain the two players' ability to 
raise prices; and 
(13) Twenty-second Competition Report, point 258 
2.I.C.§2.c.p.20 „ 
I o b 
- there are no durable links between suppliers and customers. 
290. The past behaviour of the players in the market for nylon textile 
filament was highly competitive leading to price reductions in recent years. 
This history of the market also led the Commission to conclude that no 
oligopolistic dominance existed before the operation. In view of the 
structural factors described above it was not expected that the competitive 
situation would change as a result of the concentration. 
<T6> Allied Signal/Knorr Bremse (Phase I case) 
291. Knorr Bremse, a German company, and the US conglomerate Allied Signal 
created a worldwide joint venture in which they pooled their interests in air 
brake systems for medium and heavy trucks, buses and trailers. Air brake 
systems are divided into actuation systems that create and control the 
braking power and foundation brakes that apply the braking power to the 
wheel. The product range of the concentration included both kinds of air 
braking systems as well as related products. 
292. The Commission examined the effects of the concentration in the 
following product markets: components for air actuation systems, including 
ABS, for commercial vehicles over six tons-, air foundation braking systems 
for commercial vehicles over six tons; levelling control components; 
operating cylinders; clutch servos; independent aftermarket of replacement 
parts for air braking system components. 
293. With regard to air actuation system components, in all markets, except 
for ABS, the joint venture would strengthen the parties' market position 
vis-à-vis the current market leader, Wabco, belonging to the Westinghouse 
group, and in respect of air compressors and air dryers, the joint venture 
would become the market leader with a share of around 50%. In view of the 
presence of Wabco and other significant competitors with expertise and high 
reputation for innovation in all areas of air actuation system components, 
the buying power of truck manufacturers and potential competition from 
players in neighbouring markets where technology and manufacturing processes 
were similar, the Commission concluded that the concentration would not 
create or strengthen a single dominant position for the joint venture. 
2.I.C.§2.c.p.21 18 7 
294. At the same time, however, the operation would increase the level of 
concentration in the component markets creating a combined market share of 
more than two thirds for the joint venture and Wabco with the two players 
being more equal than was previously the case. As a result, the Commission 
examined whether the operation would create or reinforce a position of 
oligopolistic dominance on those markets. Despite the high degree of 
concentration, the Commission concluded that this would not be the case for 
the following reasons: 
- the lack of transparency in prices resulting from the fact that 
suppliers negotiate individually with vehicle manufacturers, the 
importance of non-price criteria and the lack of stability of the 
competitive environment due to rapid technological progress would make 
coordinated behaviour extremely difficult; and 
- the buying power of truck manufacturers and potential competition from 
players in neighbouring markets would effectively constrain the market 
power of the joint venture and Wabco. 
295. With regard to the independent aftermarket for replacement parts for air 
braking system components, although the degree of concentration would be 
significantly increased, the Commission concluded that no single or 
oligopolistic dominance would be created or reinforced, because the ability 
of components manufacturers to raise prices in the independent aftermarket 
would be limited by the prices at which replacement parts are sold through 
the truck manufacturers' own concessionnaires. In the other markets affected 
by the operation, the concentration did not give rise to serious doubts as to 
its compatibility with the common market, in view of the low combined market 
share of the parties and the presence of significant competitors. 
296. Notwithstanding the Commission's decision to authorize the merger in 
view of the specific features of this case, the Commission will be closely 
following competitive developments in the vehicle component markets in the 
light of the increasing degree of concentration in this sector. 
2. I.C.§2.c.p.22 18 8 
<T6> KaIi +SaIz/MdK/Treuhand (Phase I I case) 
297. This case concerned the concentration of the salt and potash activities 
of Kali+Salz (K+S), a BASF subsidiary, and MdK, a former GDR state-owned 
company. The concentration took the form of a joint venture between K+S and 
MdK's sole current shareholder, the Treuhandansta11, a public institution 
charged with MdK's privatization. 
298. The centre of gravity of the concentration lay in the area of potash 
products used in agriculture. The Commission examined the effects of the 
operation on two distinct geographical markets for agricultural potash, 
namely the German market and the EC market outside Germany. 
299. With regard to the German market for agricultural potash, the Commission 
considered that following the concentration, K+S's dominant position would be 
strengthened. Competition outside the K+S/MdK group would be insignificant 
and new entry was not likely due to high entry barriers. 
300. Nevertheless, the Commission concluded that the reinforcement of K+S's 
dominant position on the German market would take place even in the absence 
of the merger. The concentration could not therefore be considered as the 
cause of this deterioration in the market structure. According to this line 
of argument, in exceptional cases, a merger, which should normally lead to 
the creation or reinforcement of a dominant position, cannot be regarded as 
causing that result, if: 
the acquired undertaking would, in the foreseeable future, disappear 
from the market if not taken over by another undertaking; 
its market share would go to the acquirer; and 
acquisition by another undertaking that would be less anti-competiti ve 
in its effect can be ruled out. 
In this case, there was sufficient evidence to consider that these three 
requirements were met. This particular outcome would also be in line with the 
fundamental objective of strengthening the Community's economic and social 
cohesion referred to in Recital 13 of the Merger Control Regulation. The 
Commission, therefore, considered that the operation should, in this respect, 
be declared compatible with the common market. 
C.§2.c.p.23 18 9 
301. With regard to the EC market outside Germany. following the 
concentration, K+S/MdK and SCPA, the French potash supplier, would control 
about 60% of potash sales. The Commission concluded that supply outside this 
leading group was fragmented and that the remaining producers did not appear 
to be able to constrain its market power I 
302. Moreover, structural features of the market, namely homogeneous product, 
transparent market conditions and lack of technological innovation, combined 
with the record of past behaviour of K+S and SCPA also indicated that the 
concentration would lead to a situation of collective dominance by K+S/MdK 
and SCPA. However, the particular feature of this case and the main reason 
for assuming an absence of real competition between the members of the 
leading group was the existence of exceptionally close links between K+S and 
SCPA. In particular, the two undertakings had a joint venture in Canada, 
Potacan, with an output equivalent to a large part of SCPA's total 
production. This joint venture would be particularly important for SCPA in 
the future, because its potash reserves would soon be depleted. K+S's and 
SCPA's cooperation within the export cartel Kali Export GmbH in Vienna also 
appeared to restrict effective competition between them in the Community. 
Finally, K+S had a long-established supply relationship with SCPA as a result 
of which K+S did not act as an independent competitor on the French market to 
any significant extent. 
303. In order to sever the I inks between K+S and EMC/SCPA and thus remedy the 
negative effects of the concentration on the Community market outside 
Germany, the parties offered the following commitments: 
K+S and the joint venture between K+S and the Treuhandsta 11 would 
withdraw from Kali Export GmbH; 
K+S would establish its own distribution network for its potash products 
in the EC, and in France in particular; and 
with regard to Potacan, K+S has undertaken to adapt the structure of 
Potacan in such a way as to enable each partner to market the potash 
obtained from Potacan independently of the other in the Community. 
304. The Commission considered that the first two commitments met the 
concerns arising from K+S's and SCPA's links in the export cartel and with 
regard to supplies to the French market. It therefore attached obligations to 
2. I,C.§2.c.p.24 19 0 
its decision to ensure compliance with these commitments. As to the third 
commitment, the Commission decided not to impose it as a formal obligation, 
because any appropriate arrangement regarding Potacan could be reached only 
in agreement with EMC. The Potacan joint venture is already the object of 
proceedings under Article 85 to which, unlike the merger proceedings, EMC is 
also party. In the event that K+S is not able to reach agreement with EMC 
despite K+S's best efforts, an appropriate solution is to be found in the 
course of the Article 85 procedure. 
<T6> KNP/BT/VRG (Phase I I case) 
305. This case concerned the merger between two Dutch paper, board and 
packaging groups, KNP and BT, and a Dutch distributor of paper and printing 
systems, VRG. The merger raised a problem of dominance in the markets for 
distribution and servicing of printing presses in Belgium and the 
Netherlands. 
306. With regard to the manufacture of waste paper based board and the 
distribution of graphic paper, the Commission concluded that the merger would 
not lead to dominance. Although the parties would attain market shares above 
25% in some segments of these markets, no dominance would be created or 
reinforced given inter alia the presence of other strong competitors, the 
existence of spare capacity and the views of customers contacted by the 
Commission that alternative sources of supply will be readily available. 
307. With regard to pr int ing presses, prior to the merger BT and VRG 
distributed and serviced on an exclusive basis printing presses manufactured 
by the two main European suppliers, Heidelberg and MAN-Roland respectively 
and competed against each other in Belgium and the Netherlands. As a result 
of the merger, the new entity would have a market share of more than two 
thirds in each of these countries. 
308. The Commission considered the following elements in order to decide 
whether the merger would lead to dominance with regard to printing presses: 
- distributors of other printing presses such as the Japanese company 
Komor i who currently compete with the parties in Belgium or the 
Netherlands have a very small share of the market. They lack an 
extensive service network and the printing presses they distribute do 
C.§2.c.p.25 1 9 1 
not have the long established reputation of Heidelberg and MAN-Roland in 
Europe; 
- with regard to maintenance and after-sales service, the few existing 
independent providers in Belgium and the Netherlands could not 
significantly constrain the market power of the merged entity in view 
of their small size and lack of technological expertise; 
- successful new entry into the Belgian and Dutch markets for 
distribution of the printing presses would depend on the quality and 
reputation of printing presses to be distributed. Given the very small 
number of well established makes, potential entry into the 
distribution market is therefore extremely limited; 
- customers are small and dispersed and could not be expected to be able 
to constrain the parties' market power. Moreover, they would have 
difficulties in switching to another make of printing presses, if they 
were not satisfied with the service offered by the parties. 
309. In view of these elements the Commission concluded that the merger would 
lead to dominance in the markets for distribution and servicing of printing 
presses in Belgium and the Netherlands. Given the structure of the markets 
concerned this dominant position was not likely to be quickly eroded. It was 
therefore not merely temporary and would significantly impede effective 
compet i t ion. 
310. However, the parties entered into a commitment vis-à-vis the Commission 
to terminate their distribution relationship with either Heidelberg or MAN-
Roland for Belgium and the Netherlands. In addition, they undertook to divest 
themselves of all assets related to the distribution and servicing of 
printing presses for which the relationship will be terminated, including the 
transfer of staff and existing servicing contracts, in order to ensure that a 
third party is able to establish itself as an independent distributor in the 
Belgian and Dutch markets. 
311. On the basis of these undertakings the combination of the distribution 
and servicing activities that would have resulted from the merger will not 
2.I.C.§2.c.p.26 19 9 
actually take place. Therefore, the Commission declared the operation 
compatible with the common market subject to fulfilment of the obligations 
accepted by the parties. 
<T6> PiIkington-Techint/SIV (Phase I I case) 
312. This case concerned the acquisition of joint control by Pilkington and 
Techint in SIV, a flat and automotive safety glass producer previously owned 
by the I talian state. 
313. The Commission analysed the effects of the concentration on the float 
glass market at two levels: (i) level 1, which corresponds to the production 
and sale of primary raw flat glass; (ii) level 2, where raw flat glass is 
subject to further processing before sale to the final user (automotive trade 
or general trade). 
314. Following the concentration, over 90% of the float glass market in the 
Community would be supplied by five producers: St-Gobain, the market leader, 
followed by PiIkington/SIV, the US-owned companies PPG and Guardian and the 
Japanese-owned company Glaverbel. In view of the market shares and strength 
of the other producers, in particular St-Gobain, the Commission concluded 
that the concentration would not lead to the creation or strengthening of 
single dominance for Pi Ikington/SIV. However, the acquisition of SIV by 
Pi Ikington/Techint would further increase the degree of concentration in a 
sector that was already highly concentrated and subject to high entry 
barriers. Consequently, the Commission also examined whether the notified 
operation would create or strengthen a position of collective dominance by an 
oligopoly group of five producers. 
315. With regard to the possible creation or strengthening of collect ive 
dom inance. the Commission considered that competition outside the group of 
the five Community producers would not be significant and that potential 
entry was not likely in the medium term. Nevertheless, it concluded that the 
following market characteristics undermined the likelihood of parallel 
anti-competitive behaviour by the members of the oligopoly group: 
increasing excess capacity coupled with low price elasticity; 
2. I.C.§2.c.p.27 . n ..7 
i y ô 
product innovation and differentiation; 
asymmetries in the market position and the degree of vertical 
integration of the five producers; 
insufficient price and sales volume transparency; 
strong incentive to renege on parallel behaviour due to the economies of 
float glass production, i.e. relatively low variable costs resulting in 
high marginal profits from additional sales; 
considerable purchasing power of vehicle manufacturers. 
316. In assessing the possible creation or strengthening of collective 
dominance, the Commission also examined the operation of Joint ventures 
between the five Community float glass producers. The most important of these 
was considered to be the Flovetro joint venture, which following the 
concentration would be jointly operated by PiIkington/SIV and St-Gobain. The 
Commission concluded that the continued operation of Flovetro would not 
significantly impede effective competition because it was a pure production 
joint venture whose output represented a very small percentage of Community 
sales. Moreover, Flovetro did not involve the other 3 float glass producers 
and no other production links existed in the sector. 
317. In view of the above, the acquisition of SIV by P i Ik ington/Tech int was 
declared compatible with the common market. 
2.I.C.§3.a.p.28 . 
I y 4 
<T3> §3. Application of Articles 9. 21 and 22 
<T5> a. Application of Article 9 
318. A request for referral was received from the German authorities in the 
McCormick/CPC/Rabobank/Ostmann case. As a general rule, when the substantive 
conditions under Article 9 are met, the Commission may either deal with the 
case itself or refer it to the competent authorities of the Member State 
concerned, taking into account the public interest of ensuring that 
competition in the common market is not distorted. 
The Commission had the intention of dealing with this case itself, taking 
into account both the threat to the distinct market in Germany and any 
foreseeable effects of the concentration on other markets within the 
Community. This option was however foreclosed as a result of an error in the 
calculation of the legal deadlines provided for in Article 10(1), second 
sentence. Nevertheless, the possibility of referral under Article 9 was still 
open pursuant to Article 10(6) read in conjunction with Article 9(4)(a). The 
Commission therefore concluded that it was appropriate to refer the case to 
the competent authorities of the Federal Republic of Germany for the purposes 
of carrying out a proper competition assessment. 
319. From the point of view of substance, several factors indicated that the 
herb and spice market remained national, in particular in Germany. The 
stability of demand and saturation of the market in Germany, together with 
the specificity of distribution and merchandising and the relatively high 
costs of entering the market created an important barrier to entry to the 
German market. 
320. In the Commission's practice, a referral of a case affecting a whole 
national market would only take place in exceptional circumstances, when this 
market constitutes a substantial part of the common market. In this 
particular case, the fact that herbs.and spices require a specific and very 
wide distribution and service system, which has resulted in more than 85 000 
sales points in Germany, showed that local conditions were a crucial factor. 
From this perspective, the German authorities were probably in a good 
position to carry out a detailed examination. 
2.I.C.§3.b.p.29 
195 
<T5> b. Application of Article 21(3) 
321. Article 21(3), which allows Member States to take appropriate measures 
to protect legitimate interests in respect of mergers covered by the 
Regulation, was applied for the first time in IBM France/CGI. which was 
authorized by the Commission on 19 May. The transaction involved a public 
exchange offer as a result of which IBM France obtained control of the French 
public limited company Compagnie Générale de l'Informatique (CGI). The 
French authorities informed the Commission that they had taken certain 
appropriate measures relating to two CGI subsidiaries forming part of the 
merger that worked in particular with the French Ministry of Defence. The 
measures were taken in order to protect French legitimate interests linked to 
public security, pursuant to the second subparagraph of Article 21(3). 
2. I .C.§3.c.p.30 196 
<T5> c. Application of Article 22(3) 
322. The first request pursuant to Article 22(3) of the Regulation, which 
entitles a Member State to request the Commission to examine a merger without 
Community dimension, was made in the British Airways/Dan Air case and raised 
a number of new issues. These mostly stemmed from the fact that although the 
procedural rules are essentially the same as for a notified transaction, no 
notification had been lodged. In this case, the Commission considered that 
the Belgian request did not provide sufficient information to allow it to 
proceed with an investigation and thus the time period started to run only 
when additional information was received from the Belgian Government. 
323. On a point of substance, it is important to stress that, under 
Article 22(3), the Commission is entitled to intervene only "in so far as the 
concentration affects trade between Member States" and that its scope of 
action in terms of the measures to be taken is restricted to the territory of 
the Member State concerned. In this respect, the acquisition of the 
non-charter services of Dan Air clearly affected air transport between 
Belgium and the United Kingdom. However, the only route concerned was 
Brussels/London, where the Commission concluded that the operation would not 
lead to the creation or strengthening of a dominant position. 
2.I.C.§4.p.31 
197 
<T3> §4. Application of Article 223 of the Treaty 
324. On 17 March the French authorities informed the Commission that, on the 
basis of Article 223 of the Treaty, they had requested the parties involved 
not to notify a merger having a Community dimension. The sector concerned 
was the manufacture of engines for missiles. 
325. The Commission pointed out that Article 223 could be invoked for this 
purpose by a Member State in respect of mergers that were limited to military 
activities not having any civilian application. However, in such a case, 
the Member State concerned had to enable it to check that the conditions for 
the application of Article 223(1)(b) were met and that the merger would not 
have any adverse effects for the suppliers of the undertakings concerned, any 
intermediate consumers and final consumers (defence ministries) in other 
Member States. It also reserved the right to apply the first paragraph of 
Article 225 of the Treaty. 
326. The French authorities provided the necessary information on 20 October, 
namely the reasons for which non-notification was necessary for the 
protection of the essential interests of the security of the country, the 
precise nature of the activity showing that it was covered by Article 223(2), 
the lack of any spill-over effects on non-military products and the impact of 
the merger on suppliers, intermediate consumers and defence ministries in the 
other Member States. The Commission informed the French authorities on 
29 October that it had no comments. 
2.1. D. p.1 
198 
<T9> D. Main decisions in the steel industry 
<T3> §1. Main developments 
327. The crisis affecting the Community steel industry continued in 1993. A 
total of 55 coal and steel cases were dealt with during the year. The number 
of specialization agreements and Joint ventures increased, while the number 
of mergers fell appreciably. As a result, six decisions were taken under 
Article 66 of the ECSC Treaty, while nine cases were settled by means of an 
exemption letter under Decision No 25/67. By contrast, 14 cases were dealt 
with by means of a comfort letter pursuant to Article 65 of the ECSC Treaty. 
2.1. D. p.2 
199 
<T3> §2. Mergers 
<T5> (a) Mannesmann - Hoesch 
328. The Commission authorized Mannesmannrôhren Werke AG and Hoesch AG to set 
up a joint venture, Mannesmann Hoesch Prazisrohr GmbH, and authorized 
Mannesmannrôhren Werke to acquire 50 % of Gebr. Fuchs GmbH, a subsidiary of 
Hoesch. 
The decision covered only ECSC products. A parallel decision was adopted 
under Regulation (EEC) NO 4064/89 to cover those aspects of the merger 
involving EEC products. 
<T5> (b) Sol lac - Bamesa 
329. The Commission authorized Usinor Sacilor, through its subsidiary Sol lac, 
to acquire a 30 % stake in the capital of the ECSC products distributor 
Barcelonesa de Meta les (Bamesa). 
<T5> (c) Profilarbed - Unimetal 
330. The Commission authorized the merger of the heavy section and machine 
wire production and distribution activities of Arbed and Usinor Sacilor, in 
the long products sector. The merger completes the process of rationalizing 
and integrating production that was begun when EuroprofiI was authorized. 
<T5> (d) Ensidesa - Velasco 
331. The Commission authorized Ensidesa to acquire a stake in the capital of 
the holding company Cosimet, which, together with the Riberas family, 
controls the Spanish ECSC products distribution group Velasco. 
<T5> (e) Thyssen Kohletechnik RAG - Fechner 
332. The Commission authorized Thyssen Schachtbau Kohletechnik GmbH (Thyssen 
Schachtbau GmbH group, Mulheim/Ruhr) and Bruno Fechner GmbH & Co. KG 
(RUhrkohle AG group), to set up a joint venture, Micro Carbon 
2.1. D. p.3 200 
Brennstofftechnik GmbH and. authorized the latter to acquire Techno 
Carbon GmbH. The new undertaking will produce and sell pulverized coal for 
cement and lime-burning kilns. 
<T5> (f) Laubag - Espag 
333. The Commission authorized Lausitzer Braunkohle AG (LAUBAG) to acquire 
all the capital of Energiewerke Schwarze Pumpe AG (ESPAG), a major 
distributor of lignite briquettes. Following the transaction, the Treuhand, 
which holds the capital of the two undertakings, will divide LAUBAG into two 
companies, one of which will group together the profitable divisions under 
the name "Braunkohlenwerke Brandenburg-Sachsen AG" with a view to future 
privatization. 
D. p.4 20 1 
<T3> §3. Financial arrangements 
334. In response to the crisis in the steel industry, the Commission put 
forward measures under Article 53 of the ECSC Treaty. 
Three groups of undertakings, comprising numerous firms, producing hot-rolled 
wide coils and strip, heavy plate and heavy sections notified agreements 
establishing common financial arrangements pursurant to Article 53(a) of the 
ECSC Treaty,(1) the main arrangements being as follows: 
the parties to the financial arrangements that neither reduce nor close 
down capacity will contribute to the financing of the capacity 
reductions of the parties that opt for closure; the aim is to reduce 
heavy section capacity by 2.5 million tonnes, hot-rolled wide coils and 
strip capacity by 6 million tonnes, and reversing-mi I I plate capacity by 
2 mi I I ion tonnes, 
plant closures will be deemed permanent when they are carried out in 
accordance with Article 8 of Commission Decision No 3010/91/ECSC.(2) 
Any export of plant for reassembly at a location where exports to the 
Community market would be improbable could be deemed a permanent 
closure, 
parties opting for closure will undertake, for five years, not to 
increase their residual capacity for the products in question that are 
covered by the financial arrangements on pain of a fine, payable to the 
other parties, of ECU 100 per tonne of increased capacity. For a period 
of five years, capacity increases stemming from maintenance work or 
current productivity investment are limited to 2 % per year. Investment 
in new technologies is not excluded where it replaces existing capacity 
without leading to a net increase in capacity, 
individual capacity closure programmes will be notified to the 
Commission with details of the plant to be closed. In principle, 
closures should take place before 31 December 1994. 
(1) Commission Decision of 21.12.1993 (OJ L 6, 8.1.1994). 
(2) OJ L 286, 16.10.1991. 
p.5 202 
The Commission made its authorization subject to one condition designed to 
ensure that competition was maintained within the common market. This was 
that the companies must not, under the financial arrangements, establish any 
agreement or concerted practice or make unilateral declarations concerning 
prices, rates of capacity utilization or the level of production remaining 
under the control of each of the parties following the closures, and that the 
parties will not, for the duration of the arrangements, participate in any 
concerted practice or agreement for exchanging information that could 
restrict competition without first informing the Commission. In addition, 
each company must present its plant closure programme within three months of 
notification of the Decision of 27 October 1993, and all the companies must 
submit to any checks deemed necessary by the Commission. 
d 
<T9> E. Substantive and procedural rules 
<T3> Application of the block exemption Regulations 
<T5> (a) Motor vehicle distribution 
<T6> Regulation (EEC) No 123/85 
335. The year under review has seen the first bi-annual submissions of price 
data to the Commission by the 23 leading European and Japanese car 
manufacturers. This has come about in response to action taken by the 
Commission in 1992 to improve price transparency for cars in the EC.(1) 
The car manufacturers furnished information relating to the prices (on 
1 May 1993 and 1 November 1993) of 55 European and 17 Japanese top-selling 
car models, based on recommended retail prices, adjusted for equipment 
differences, and given in local currencies before and after tax. 
The main conclusion to be drawn is that there were notable exchange rate 
movements in 1993 which must be taken into consideration. This is especially 
relevant with regard to Spain, Portugal and Italy where devaluation occurred, 
and which were the lowest price markets during this period with Germany, 
having a strong DM, being the highest. Nevertheless the following comments 
can be made : 
In November 1993, overall price differences were slightly greater than 
in May. Approximately 80% of the prices for cars produced by* European 
manufacturers and 90% of Japanese models showed price differentials of 
less than 20%. 
However, by excluding monetary fluctuations (by using the May ecu rate 
for the November analysis), it became clear that car manufacturers had 
tended to reduce price differentials for most of their models. 
By market segment there were, between May and November 1993, virtually 
no alterations in the ranking with respect to the cars constituting the 
highest percentage share of the overall car market (i.e. segments B, C, 
D). Medium and large cars (segments C and D) showed small price 
(1) Twenty-second Competition Report, point 290 
2.I.E...P. 2 2Q4 
disparities (85% of models had less than 20% differentials), while small 
and mini cars (segments B and A) had the greatest differences (only 67% 
and 58% respectively of all models with price differences of less than 
20%). 
The Commission notes that between May and November 1993 a general 
downward trend for car prices in the EC has occurred (taking the 
recommended retail prices at the appropriate ecu exchange rates). 
Surveys of car prices in the Community will be carried out in this manner 
every six months and will allow the Commission to go beyond the present 
exercise of improving price transparency. They will enable it to assess the 
trend in price differentials, which it expects to see diminish following the 
initiative which it launched in May 1992, and to take these trends into 
consideration in its reflections on the future of Regulation (EEC) No 123/85, 
which is due to expire in June 1995. 
In 1992, as a further part of its action to deal with car price differentials 
between Member States, the Commission asked car manufacturers to make it 
clear to their dealers that the manufacturers would fill orders which the 
dealers receive from customers and approved dealers in other Member States. 
The car manufacturers have cooperated by sending circulars to their 
dealers, and judging by the significantly reduced number of complaints 
received from individual consumers in 1993, this action has been useful. 
However, the Commission has again received, in 1993, complaints from 
consumers regarding the failure of dealers to carry out guarantee work on 
cars purchased in other Member States. These difficulties have been 
resolved by the intervention of the Commission and subsequent action on the 
part of the manufacturers to remind their dealers that such guarantee work is 
required by the provisions of Regulation (EEC) No 123/85. 
In the year under review the Commission confirmed to manufacturers that 
Regulation (EEC) No 123/85 refers only to vehicles of three wheels or more 
and therefore is not applicable to the distribution of motorcycles within the 
Community.(2) The manufacturers can adapted their distribution contracts to 
(2) Twenty-first Competition Report, point 123 
2.I.E.a.p. 3 
205 
the provisions of Regulation (EEC) No 1983/83 concerning exclusive 
distribution in order to benefit from the exemption by category or may 
introduce a request for individual exemption if they consider that this 
regulation does not correspond to the requirements of motorcycle 
distr ibut ion. 
336. During the year under review, the Commission also continued to ensure 
that intermediaries operating within the common market are not excluded from 
the supply of vehicles provided that they show clearly that they are acting 
as suppliers of services on behalf of a third party. 
In addition, the Commission defined its position on the applicability of 
Regulation (EEC) No 123/85 to contractual clauses that restrict dealers' 
freedom to supply leasing companies. The problem arises in two references 
for preliminary rulings within the meaning of Article 177 of the EC Treaty 
that are currently before the Court of Justice. Taking the view that 
Article 13(12) - which ranks leasing as a form of distribution - concerns 
only relations between producers and dealers, the Commission concluded that 
Regulation (EEC) No 123/85, as it currently stands, is not applicable to 
relations between dealers and leasing companies. 
206 2.I.E.b. p.4 
<T5> (b) Application of the other block 
exemption Regulations 
<T6> Exclusive purchasing 
337. With regard to the application of Regulation (EEC) No 1984/83 to service 
stations, the Commission was able, on several occasions, to clarify and spell 
out certain aspects of the scope of the exemption and, in particular, the 
restrictions of competition that prevented its application. 
The Commission examined in particular the contracts negotiated by the Spanish 
refineries with service station operators under the former monopolized 
network when it was still legally reserved to Spanish refiners' products.(3) 
<T6> Specialization and research and development agreements 
338. The Commission received only one notification in 1993 under the 
opposition procedure provided for in Article 4 of Regulation (EEC) No 417/85 
on specialization agreements.(4) The six-month period has not yet expired, 
and the case is at present still under examination. 
As far as Regulation (EEC) No 418/85 on research and development agreements 
is concerned, the opposition procedure provided for in Article 7 continues to 
be little used. No notifications under Article 7 were received in 1993. 
<T6> Patent licensing and know-how licensing agreements 
339. During the year, the Commission received only one notification in which 
the parties requested application of the opposition procedure provided for in 
Article 4 of Regulation (EEC) No 556/89 on know-how licensing agreements.(5) 
The six-month period has not yet expired, and the case is still under 
examination. The Commission did not receive any notifications in 1993 under 
Article 4 of Regulation (EEC) No 2349/84 on patent licensing agreements.(6) 
(3) See point 226 of this Report. 
(4) OJ L 53, 22.2.1985. 
(5) OJ L 61, 4.3.1989. 
(6) OJ L 219, 16.8.1984. 
2.I.E.b. p.5 207 
The Commission was able to terminate proceedings by sending a comfort letter 
in two cases notified respectively in 1990 and 1991 under the two 
Regulations, after the parties had amended their agreements in such a way as 
to make them compatible with Article 85. 
<T6> Franchising agreements 
340. During the period covered by the Report, the Commission received three 
notifications in which the parties requested application of the opposition 
procedure provided for in Article 6 of Regulation (EEC) No 4087/88.(7) 
In one of the three cases, the Commission found that the agreement did hot 
appreciably affect competition in the common market or trade between 
Member States. The opposition procedure was not therefore applicable, since 
the agreement was not caught by Article 85(1) of the EC Treaty. The two 
other notifications are still under examination. 
The Commission was able to terminate examination of the two notifications^) 
received in 1992 under Article 6 of Regulation (EEC) No 4087/88. In one 
case, the Commission found that the agreement did not appreciably affect 
competition within the common market. In the other, it found that the 
agreement now met the conditions required to be eligible for the block 
exemption, the parties having in particular removed the restriction 
preventing the franchisee from determining the selling prices of the 
franchised products and having expressly given the franchisee freedom to 
purchase the products from other franchisees. Mention should also be made of 
the Texaco case described earlier.(§) 
(7) OJ L 359, 28.12.1988. 
(8) Twenty-second Competition Report, point 273 
(9) See point 225 of this Report. 
2.I I.p.1 
208 
<T4> Chapter I I 
<T2> Main cases decided by the Community lawcourts 
341. This Report covers a total of 12 judgments and 5 orders. 
<T3> §1. Interpretation of Article 3(f). the second paragraph of 
Article 5 and Article 85(1) of the EC Treaty 
342. In its important judgments of 17 November in Meng. Ohra and Re i f f. the 
Court of Justice, in response to a reference for a preliminary ruling, 
defined the limits of its case-law on the interpretation of Article 3(f) 3(g) 
since the entry into force of the Treaty on European Union) and Articles 5 
and 85 of the EC Treaty. 
The Meng and Ohra cases concerned German (Meng) and Dutch (Ohra) regulations 
which prohibit insurance companies (Ohra) and/or insurance intermediaries 
(Ohra and Meng) from granting certain financial benefits, in particular in 
the form of the rebating of commissions in full or in part to clients. 
The Rei ff case concerned German regulations on the fixing of tariffs for the 
long-distance transport of goods by road. 
343. In all three cases the Court applied the formula summing up its earlier 
case-law set out in its judgment in Van Eycke (Case 267/86 [1988] ECR 4769, 
at paragraph 16). Hence it rejected the interpretation that national 
legislation having the same anticompetitive effect as a concerted practice 
prohibited by Article 85 is contrary to the provisions referred to above, 
where there are no agreements between enterprises. 
The Court first observed that Article 85 of the Treaty per se is concerned 
only with the conduct of enterprises and not with national legislation. For 
that reason, the Court made the preliminary observation in Meng that the 
measures at issue did indeed have an official character by reason of the 
P.2 209 
administrative status and the controlling and rule-making powers of their 
author, the German insurance supervisory office. 
The Court went on, however, to qualify that statement by pointing out that 
Article 85, read in conjunction with Article 5 of the EC Treaty, requires 
Member States not to introduce or maintain in force measures, even of a 
legislative nature, which may render ineffective the competition rules 
applicable to enterprises. Such would be the case, either if a Member State 
were to require or favour the adoption of agreements, decisions or concerted 
practices contrary to Article 85 or to reinforce their effects, or if it were 
to deprive its own legislation of its official character by delegating to 
private traders responsibility for taking decisions affecting the economic 
sphere. 
344. In response to the question put by the court making the reference, the 
Court first considered, in Re i ff. whether the German rules in question 
pointed to the existence of an agreement within the meaning of Article 85 of 
the EC Treaty. Under those rules, tariffs are fixed by tariff boards made up 
of persons from the relevant branches of the road transport sector. The 
Court had previously held that an agreement existed where it was negotiated 
and concluded by persons who, although appointed by the public authorities, 
were proposed for appointment by the trade organizations and who consequently 
must be regarded as representing those organizations.^) It pointed out, 
however, that in the present case the members of the tariff boards were 
acting as experts independently of the enterprises or associations which had 
proposed them to the Federal Minister for Transport and were required to take 
account of the interests of other sectors when fixing the tariffs. The Court 
therefore replied in the negative to this question. 
As regards reinforcing the effects of an agreement, the Court rejected the 
argument put forward in Meng that the rules at issue had increased the scope 
of an agreement prohibiting the rebating of commissions in the life insurance 
sector by applying it to other classes of insurance. The Court considered 
that rules applicable to a particular sector consolidated the effects of a 
previous agreement only if they did no more than reproduce theterms of an 
agreement between operators in the sector. 
(1) Case 123/83 BNIC v Clair [1985] ECR 391 
2.i,.P.3 210 
Lastly, in Rei ff. the Court was asked to state whether the public authorities 
had delegated their powers to private economic operators. Here, too, it 
replied in the negative. It found that the German rules on the fixing of 
road transport tariffs required the Federal Government to approximate the 
conditions of competition between means of transport in order to avoid unfair 
competition between road, rail and inland waterway transport. To that end, 
the Federal Minister for Transport could himself attend, or be represented 
at, meetings of the tariff boards, and could also fix tariffs himself if he 
considered that those adopted by a board were not in the general interest. 
2. I I.p.4 
21 1 
<T3> §2. Definition of an undertaking 
345. In two actions (Joined Cases C-159 and 160/91) between Chr ist ian Poucet 
and the Caisse Mutuelle régionale du Languedoc-RoussiI Ion (Calmurac) and the 
AGF on the one hand and Daniel Pistre and the Caisse autonome nationale de 
compensation de l'assurance vieillesse des artisans (Cancava) on the other, 
the Court of Justice delivered a judgment on 17 February on the question 
whether a body entrusted with the management of a special social security 
scheme is an undertaking within the meaning of Articles 85 and 86 of the 
EC Treaty. 
To answer this question, the Court referred to its judgment of 
23 April 1991(2) in which it defined the concept of an undertaking: "in the 
context of competition law, the concept of an undertaking encompasses every 
entity engaged in an economic activity, regardless of the legal status of 
the entity and the way in which it is financed". 
The Court also pointed out that the social security schemes in question 
performed a social function and operated on the basis of the principle of 
solidarity; in view of the compulsory nature of membership, maintaining 
solidarity and financial equilibrium were essential factors. 
On the basis of these considerations, the Court ruled that sickness 
insurance schemes or bodies entrusted with the management of a social 
security scheme as a public service fulfil an exclusively social function. 
That activity is based on the principle of national solidarity and is not 
profit-making. The benefits which are paid are statutory benefits and are 
independent of the amount of the contributions. It followed that the 
activity was not an economic activity and consequently the bodies entrusted 
with it did not constitute undertakings' within the meaning of Articles 85 
and 86 of the EC Treaty. 
(2) Case C-41/90 Hôfner and Elser v Macrotron [1991] ECR 1-1979 
212 
<T3> §3. Application of Article 85 to a horizontal agreement on prices 
346. On 31 March the Court of Justice delivered a judgment in response to an 
application contesting a Commission decision(3) that 40 wood pulp producers 
and three of their trade associations had infringed Article 85(1) of the 
EC Treaty by concerting on prices (announced price and/or transaction price) 
(the "Wood Pulp" cases - Ahlstrom and Others v Commission). In the course of 
the proceedings, the Court had already delivered a judgment concerning the 
Community's jurisdiction to apply its competition rules to undertakings 
outside its territory.(4) 
The Court annulled a number of provisions of the contested decision. It did 
this for two main reasons: infringement of the rights of the defence, and the 
fact that the Commission had failed clearly to establish general concertation 
on announced prices. 
According to the Court, the system of quarterly price announcements for wood 
pulp did not in itself constitute an infringement of Article 85(1) of the 
Treaty. 
Furthermore, as the Commission had also been unable to prove satisfactorily 
that prior concerted action had taken place, the Court endeavoured to 
determine whether the system of quarterly price announcements; the 
simultaneity or near-simultaneity of the announcements; and the fact that 
announced prices were identical in the period 1975-1983 constituted serious, 
detailed and consistent evidence of prior concertation. The two expert 
reports commissioned by the Court revealed, however, that: 
those factors could be explained otherwise than by concerted action; 
a more plausible explanation for the uniform prices was that they 
resulted from the normal operation of the market rather than from 
concerted act ion. 
Since the Commission had not established concerted action on announced 
prices, the Court annulled Article 1(1) of the decision. 
(3) Decision 85/202/EEC of 19 December 1984 
(4) [1988] ECR 5193. 
2. I I.p.6 ^ M 
213 
Consequently, it also annulled the provisions of the undertaking annexed to 
the decision in so far as they imposed obiigations other than those resulting 
from the findings of infringements made by the Commission which had not been 
declared void by the Court. 
The Court found, however, that all the other provisions of the decision were 
val id, namely those which establish: 
concertation on the fixing of "KEA recommended prices" by the members of 
that association (no fine had been imposed); 
participation by the Finnish association Fincell in the concerted action 
(f ine upheld); 
the existence of contractual clauses banning exports and reselling (fine 
reduced to ECU 20 000 in view, in particular, of the termination of the 
infr ingement). 
2. I I .p.7 214 
<T3> §4. Interpretation of Commission Regulation No 1984/83 
on the application of Article 85(3) to categories 
of exclusive purchasing agreements 
347. In its judgment of 10 November in PetrogaI (Case C-39/92), delivered in 
response to a reference for a preliminary ruling from the Lisbon civil court 
(Tribunal Civel da Comarca), the Court of Justice gave a ruling on the 
interpretation of a specific point in Commission Regulation (EEC) No 1984/83 
of 22 June 1983 on the application of Article 85(3) of the Treaty to 
categories of exclusive purchasing agreements. 
The main action was between the Portuguese company PetrogaI and the owner of 
a service station who had unilaterally terminated a contract in 1990 which 
had been concluded in 1982 for 15 years and under which he had undertaken to 
purchase fuel and oil from Petrogal. The court making the reference 
considered that the legal assessment of such conduct depended on how the 
provisions of Regulation 1984/83 concerning service station agreements were 
interpreted. 
Article 10 of the Regulation states that Article 85(1) of the Treaty does not 
apply to the service station agreements which it defines. To qualify for 
block exemption, such agreements must satisfy the conditions of Articles 11 
to 13 of the Regulation. Article 12(1)(c) provides that agreements do not 
qualify for exemption where they are concluded for an indefinite duration or 
for a period of more than 10 years. As the contract in question had been 
signed for 15 years, it would normally be caught by that provision. 
However, the Regulation makes special provision for Spain and Portugal, 
specifying that, of the conditions set out in Articles 10 to 13, the 
condition relating to the maximum duration of the agreements referred to in 
Article 10 is not applicable to agreements in force in Spain and Portugal on 
the date of their accession to the Community. 
Consequently, such agreements qualify for exemption under Regulation 1984/83 
in so far as their terms meet the requirements of Articles 10 to 13 of the 
Regulation, with the exception of that relating to duration. 
2.I I.p.8 ^ ^ 
215 
<T3> §5. Interpretation of Commission Regulation (EEC) No 123/85 
of 12 December 1984 (motor vehicles) and the 
Commission notice of the same date concerning that Regulation 
Concept of authorized intermediary 
348. In its judgment of 22 April in Peugeot (Case T-9/92), the Court of First 
Instance defined the meaning of the term "authorized intermediary". 
The origin of this case is a complaint made in 1989 by Eco System against 
Peugeot and three of its authorized dealers in Belgium which were preventing 
parallel imports of motor vehicles by Eco System acting as intermediary on 
behalf of French consumers. The Commission initially adopted interim 
measures at the request of Eco System, followed by a decision.(5) It is 
this decision that was being contested in the present case. 
The decision found that a circular letter dated 9 May 1989 from Peugeot to 
its dealers in France, Belgium and Luxembourg, together with the 
implementation of the circular by those dealers, had the effect of suspending 
deliveries of Peugeot vehicles to Eco System and"was therefore contrary to 
Article 85(1) and not exempted by Regulation (EEC) No 123/85 on the 
application of Article 85(3) of the Treaty to certain categories of motor 
vehicle distribution and servicing agreements. 
In support of its application, Peugeot essentially relied on paragraph 11 of 
Article 3 of the Regulation, which allows exemption where the dealer is 
obliged not to sell vehicles to final consumers using the services of an 
intermediary unless the latter has "prior written authority" to purchase a 
vehicle and take delivery. 
Peugeot also referred to the Commission Notice of 12 December 1984 concerning 
the Regulation, which states that undertakings within the distribution system 
can be obliged not to supply new motor vehicles within the contract programme 
to or through a third party who represents himself as an authorized reseller 
(5) Decision of 4 December 1991, OJ L 66, 11.3.1992, p. 3 
2. I I .p.9 
216 
of new vehicles or carries on an activity equivalent to that of a reseller 
(paragraph 3). 
In dismissing the application, the Court clarified the concept of 
intermediary with written authority, pointing out that the only condition 
imposed on intermediaries by the Regulation was that they should have prior 
written authority from the final consumer. It followed that, provided an 
intermediary was duly authorized, he could not be denied this status under 
the Regulation on the sole ground that he was pursuing an occupational 
activity. Such exclusion would have the effect of impeding parallel imports 
and would run counter to the objective of achieving a single market. 
The Court also ruled that the applicants could not rely on the above-
mentioned Notice as it simply interpreted the Regulation and hence could not 
modify the tatter's meaning as far as the concept of intermediary was 
concerned. 
2. I I .p.10 217 
<T3> §6. Abuse of a dominant position 
349. The "plasterboard" case (Case T-65/89 BPB and British Gypsum) afforded 
the Court of First Instance an opportunity to decide, by Judgment of 1 April, 
that several practices constituted abuses of dominant positions. 
The case concerned two enterprises in a dominant position: BPB, the British 
holding company of a group that controls about half of plasterboard 
production capacity in the Community, and its subsidiary, British Gypsum. 
On 5 December 1988 the Commission decided that British Gypsum had abused its 
dominant position in the supply of plasterboard in Great Britain and that 
BPB, through its subsidiary British Gypsum, had also abused its dominant 
position in the supply of plasterboard in Ireland and Northern Ireland. 
BPB and British Gypsum then brought an action for annulment of the decision 
and for a reduction in the fines imposed. 
The Court rejected the contentions of the applicants relating first to 
infringement of the right to a fair hearing (see paragraph 8(c)) and secondly 
to various abuses of a dominant position. 
It acknowledged that the practice of making promotional payments, even when 
linked to an undertaking by the recipient to purchase exclusively from the 
supplier, is common in vertical distribution systems and that, in a market 
subject to effective competition, such arrangements may be in the interests 
of both parties and may not, in principle, be prohibited. Such 
considerations are not, however, unreservedly applicable in a market where 
competition is already restricted owing to the dominant position of one of 
the part ies. 
An enterprise in a dominant position is under a special duty not to 
jeopardize nor distort effective competition in the common market. The Court 
held that British Gypsum had abused that position by tying purchasers -
aIbe i t at the i r 
2. I I.p.11 218 
request - by a commitment or promise on their part to purchase all or a 
large part of their requirements exclusively from it, this being an 
unacceptable barrier to market entry. Referring to the Court of Justice 
judgment in Hoffmann-La Roche.(g) the Court said that an abuse may occur 
independently of any fault in view of the objective nature of that concept, 
and that therefore the applicants' contention that British Gypsum had never 
intended to weaken competition was invalid. 
Furthermore, the fact that, it was possible at any time to break the contract 
with an enterprise in a dominant position did not alter the abusive nature of 
the conduct, since a dominant undertaking has the power to oblige its 
customers not only to conclude but also to maintain such contracts. 
The Court also found that the criteria for according priority in meeting 
orders in times of shortage constituted an abuse, although no fines had been 
imposed. 
Lastly, it observed that enterprises in a dominant position are free to act 
in defence of their own interests provided such action is not aimed at 
strengthening and abusing their dominant position. 
It considered, however, that British Gypsum's conduct in Ireland and 
Northern Ireland, as a supplier in a dominant position on which its customers 
depended to a fairly marked degree, clearly had the object of penalizing 
merchants intending to import plasterboard and of dissuading them from doing 
so, thus further strengthening its position. 
(6) Case 85/76 [1979] ECR 461 
(i 
p.12 219 
<T3> §7. References for preliminary rulings - Particular 
need for precision in the competition field 
350. On two occasions the Court of Justice held that it was not necessary for 
it to give a preliminary ruling on questions referred to it concerning the 
interpretation of the Treaty competition rules. 
a) It gave its first ruling' to that effect in its Judgment of 26 January in 
Telemars icabruzzo. delivered in response to a reference from the 
Magistrate's Court, Frascati (Vice Pretore di Frascati), Italy. 
The Italian court's questions concerned the interpretation of the 
Treaty's provisions on competition, in particular Articles 85(3) and 86, 
with a view to determining the compatibility with Community law of 
Italian rules which reserve the use of certain television channels for 
the Government, thus preventing the private sector from using them. 
The questions arose in connection with a dispute between certain 
television broadcasting companies on the one hand and the Italian 
Ministries for Posts and Telecommunications and the Defence on the 
other. The court making the reference fai led to specify the factual and 
legal framework which would have allowed the purpose of the questions to 
be identified and simply stated that Article 86 prohibits all 
monopol ies. 
The Court therefore reminded national courts of their obligation to set 
out the factual and legal context of their questions and at the very 
least to explain the factual assumptions on which those questions were 
based. It added that these requirements applied particularly to 
competition where complex legal and factual issues often arose. 
Although the file sent by the national court and the Court proceedings 
had produced some information, it was too fragmentary to allow the Court 
to interpret the Community competition rules with regard to the subject 
of the proceedings. 
2. I I .p.13 220 
b) The second case(7) was dismissed on 26 April, without oral hearing, by 
an Order declaring the application manifestly inadmissible. 
The Order answers the questions put by the court supervising the 
liquidation of Monin Automobiles, an importer of Japanese motor vehicles 
into France whose business had been restricted by the French 
government's policy of regulating imports of vehicles from the Far East 
and the resulting quota-sharing cartel between the five main Japanese 
manufacturers. Monin had lodged a complaint with the Commission for 
infringement of Articles 30 and 85 of the EC Treaty, which the 
Commission had rejected.(Q) 
In the meantime, Monin went bankrupt. The court responsible for the 
liquidation asked the Court of Justice for a preliminary ruling on 
several questions, essentially whether the French policy described above 
and the position taken by the Commission in that respect were compatible 
with Community law. 
The court making the reference had failed, however, to define the 
factual and legal background to its questions. The Court of Justice 
repeated that such a definition was an essential requirement, especially 
in the field of competition where complex legal and factual 
considerations often are at issue. Observing that it was therefore 
unable to establish a relationship between the questions and the 
substance of the case, the Court ruled that the questions were 
inadmiss ibIe. 
(7) Case C-386/92 Monin Automobiles. 
(8) Judgment of 18 September 1992, Case T-28/90 Asia Motor France and 
Others v Commission: not yet reported. 
2.M.P.14 
<T3> §8. Procedure 
<T5> (a) Orkem case-law restricted to Commission procedure 
351. The Court of Justice Judgment of 10 November delivered in response to a 
reference for a preliminary ruling from the Amsterdam District Court 
(Arrondissementsrechtbank Amsterdam) concerns the question whether the Orkem 
case-law extends to proceedings before a national civil court.(Q) In Orkem. 
the Court had held that observance of the rights of the defence, as a 
fundamental principle of Community law, prevented the Commission, in the 
course of a request for information under Article 11(5) of Regulation No 17, 
from compelling an undertaking to provide it with answers which might involve 
an admission on its part of the existence of an infringement which it is 
incumbent upon the Commission to prove. 
In Otto v Postbank. the Court held, firstly, that the application of 
Articles 85 and 86 by national courts was in principle governed by national 
law and that therefore, provided that the fundamental principles of Community 
law were observed, the rights of the defence may differ from those applicable 
in Community proceedings. 
Secondly, on the basis of the differences between an administrative 
procedure, as in the Orkem case, and a procedure exclusively concerning the 
private relationships between individuals which cannot lead directly or 
indirectly to the imposition of a penalty by a public authority, it ruled 
that Community law did not require that a party should have the option of 
refusing to give answers which might admit the existence of an infringement 
of the rules of competition. 
In response to the argument that such an answer would allow the Commission to 
obtain, through national proceedings, information which it could not have 
obtained directly, the Court pointed out that the Commission and, indeed, a 
national authority, could not use such information (which it may legitimately 
receive from any interested party) as a means of proof of an infringement 
(9) Case 374/87 Orkem v Commission [1989] ECR 3283 
2. I I .p.15 222 
of the competition rules in the context of proceedings capable of leading to 
penalties, or as evidence justifying the initiation of an enquiry prior to 
such proceedings. 
The judgment contains two interesting points. First, it reflects the 
legitimate concern of the Court to ensure that the Commission cannot obtain 
by roundabout means information it is unable to obtain directly. Secondly, 
it reaffirms the Court's desire to draw a clear line between national and 
Community procedures, as evidenced by its ruling in the Spanish banks 
case.(1°) The Postbank judgment places even more restrictions on the 
Commission than the Spanish banks judgment places on national authorities, 
as the latter allowed, under certain conditions, information in the 
possession and which the Commission sends to national authorities to be used 
by the latter as evidence justifying the initiation of national proceedings. 
<T5> (b) Lack of clarity in statements of objections -
infringement established on the basis of documents obtained subsequently 
352. In its abovement ioned judgment (see paragraph 3, supra) in the Wood 
Pulp cases (Ahlstrom and Others), the Court of Justice found that the rights 
of the defence had been infringed in several respects. 
First, the Commission's statement of objections was not worded sufficiently 
clearly to enable the applicants to know exactly what conduct was being 
objected to (in respect of transaction prices) and hence to defend 
themselves effectively during the administrative procedure. 
The Court also annulled Article 1(3) of the contested decision in so far as 
it concerned the infringement relating to transaction prices committed by 
members of one of the associations involved. The Commission had relied 
(10) Case C-67/91 [1992] ECR-I 4785. 
I .p.16 223 
essentially on documents obtained after the statement of objections was 
drawn up, thus preventing the members of the association from expressing 
their views on the documents. 
Lastly, the Court annulled Article 1(4) of the decision in so far as it 
related to the producer St Anne, which had not been able to learn of the 
objection concerning its participation in the meetings at which the 
concertation was arranged. 
<T5> (c) Right to a fair hearing 
353. In its Plasterboard judgment (Case T-65/89 BPB and British Gypsum) 
referred to above (see paragraph 6 supra), the Court of First Instance 
specified the documents which the Commission could refuse to communicate to 
parties under the rules on access to the file. 
Under these rules, firms usually receive, in an annex to the statement of 
objections, a list of all the documents in the Commission's possession with 
an indication of the documents or parts of documents to which they may have 
access. This is to enable them to respond appropriately to the conclusions 
reached by the Commission. Among the documents regarded as confidential, and 
therefore inaccessible, are internal Commission documents such as memoranda, 
drafts and other working papers. Information which identifies complainants 
who wish to remain anonymous is also confidential, as is information given to 
the Commission on condition that it remains confidential. 
In the PI asterboard case, the Court held that the applicants had failed to 
demonstrate that these rules had not been complied with. In particular, the 
Commission could not divulge the contents of correspondence with third 
parties to the applicants. A firm in a dominant position to which a 
statement of objections had been sent could take retaliatory action against 
competitors, suppliers or customers who had cooperated in the Commission's 
invest igat ion. 
2. I I .p.17 224 
<T5> (d) Rejection of complaint - inadmissibility of an action 
against the communication of preliminary comments 
354. In Rendo I I (Case T-2/92), the Court of First Instance was afforded the 
opportunity to answer this point by Order of 29 March. It originated in a 
complaint by the applicants against certain measures taken by SEP, (a Dutch 
company serving as a vehicle for cooperation between electricity companies in 
the Netherlands), and by those electricity companies. A Commission decision 
of 16 January 1991 concerning some of the points raised in the complaint had 
been unsuccessfully contested by the applicants before the Court.(11) In 
their new action, they were contesting a letter of 20 November 1991 from a 
Director in the Directorate-General for Competition stating that it was not 
possible as yet to act on their complaint in view of the decision already 
taken and the ongoing proceedings. 
The Commission contended that the action was inadmissible as the letter did 
not constitute an act which could be reviewed under Article 173 of the 
EC Treaty. 
The Court examined each paragraph of the letter and concluded that it was not 
a communication within the meaning of Article 6 of Commission Regulation 
No 99/63/EEC as it did not inform the applicants of the reasons for rejecting 
their complaint and did not fix a time-limit for them to submit their 
comments. 
Nor was the letter a fresh Commission decision having legal effects and hence 
capable of being the subject of an application for annulment. Its content 
was confined to repeating certain information and making certain assessments 
which did not at any point take the shape of a new Commission decision. Nor 
did it in any way indicate that the full Commission had discussed the 
complaint a second time and adopted a decision thereon. 
(11) Judgment of 18 November 1992 in Case T-16/91 Rendo and Others v 
Commiss ion. not yet reported. 
2. I I .p.18 225 
The Court thus appears to establish a new formal criterion of admissibility: 
a measure may be non-contestable because it is not in the form of a 
Commission decision. 
The Court quickly dismissed the Commission's second argument to the effect 
that the applicants should instead, before instituting proceedings, have 
asked the Commission for a communication under Article 6 of Regulation 99/63 
and then for a decision definitively rejecting the complaint. In its view, 
the admissibility of the action was not dependent on the availability of 
other recourses of appeal. 
<T5> (e) Rejection of complaint - legality of grounds for 
rejection - manifest error of assessment 
355. In order to understand the implications of the judgment of the Court of 
First Instance of 26 June in Asia Motor (Case T-7/92), it should be noted 
that in 1988 several French importers of Japanese cars had complained to the 
Commission that the official importers of the five leading Japanese makes had 
acceded to the French authorities' request that they limit their sales to 3% 
of the French market and had arranged to share this quota among themselves. 
The Directorate-General for Competition had sent letters pursuant to 
Article 11 of Regulation No 17 to the importers in question. No replies were 
received as the French Ministry for Industry had instructed them not to 
answer. The Commission departments then requested information from the 
French authorities, which replied that the questions related to regulations 
made by the public authorities and that the importers had no say in managing 
the quota. 
The Commission accordingly rejected the parallel importers' complaint by 
decision of 5 December 1991 on the ground that the contested behaviour was a 
direct result of the policy of the French authorities and hence the official 
importers had no freedom of manoeuvre. Furthermore, the complainants' 
position would not be remedied by applying Article 85 as the 
2.II.p.19 0 , 
lib 
French regulations did not allow any importers other than those forming the 
subject of the complaint to be included in the quota allocation. 
The Court took the view that some of the documents submitted in evidence by 
the complainants to the Commission pr ima facie constituted strong evidence of 
real freedom of action by the five importers in question as regards market 
sharing. In the light of that evidence, which essentially related to dealers 
in Martinique, the Court concluded that the decision was vitiated by a 
manifest error in the assessment of the facts. 
The second ground for rejecting the complaint was also invalid as the 
parallel importers could import vehicles into France and could thus be 
included in the 3% quota. A ban on the concertation aimed at sharing the 
quota would therefore have given them access to the French market. 
Following this judgment, the first to have annulled a decision rejecting a 
complaint, the Commission again requested information under Article 11 of 
Regulation No 17 from the French authorities and from the importers of 
Japanese cars allowed into France. 
<T5> (f) Involvement of a parent company in an 
infringement committed by a subs id i a r y 
356. In its judgment of 1 April in BPB and British Gypsum (plasterboard), 
already referred to in another context (see paragraph 6 and 8(c)), the Court 
of First Instance referred to earlier judgments in which it had held that the 
conduct of a subsidiary may be attributed to the parent company where the 
subsidiary does not decide independently upon its own conduct in the market 
but carries out, in all material respects, the instructions given to it by 
the parent company. 
More specifically as regards Northern Ireland, neither the dominant position 
nor the abuse thereof could be attributed specifically to any particular BPB 
subsidiary. British Gypsum sold plasterboard in that market which had been 
produced by the Irish subsidiary of BPB, so that the subsidiary increased its 
2. I I .p.20 _ 
227 
deliveries to British Gypsum in direct relation to the effectiveness of the 
abuses committed by British Gypsum in Northern Ireland. Thus the BPB group 
as a whole benefited from the practices of British Gypsum in the province. 
It was therefore Justifiable to attribute the practices of British Gypsum in 
Northern Ireland to BPB and to impose the contested fine. 
2. I I .p.21 
228 
<T3> §9. Case-law relating to the Merger Control Regulation 
<T4> Applications by bodies representing 
the employees of the firms concerned 
On 22 July 1992 the Commission decided that the acquisition of Perrier by the 
Nestlé group was compatible with the common market, provided that Nestlé sold 
a number of spring water companies formerly owned by Perrier to a competitor 
approved by the Commission. The employees of those companies were anxious 
about their position, with the result that on 3 February their 
representatives brought an action for annulment of the Commission decision. 
By separate appIication, they also sought suspension of the decision under 
Articles 185 and 186 of the EC Treaty in so far as it required the springs in 
question to be transferred (Case T-12/93 R Comité Central d'Entreprise de 
Vittel ). 
In an Order of 2 April, the second decision handed down by a Community court 
in a merger case governed by Regulation No 4064/89, the President of the 
Court of First Instance held that the application lodged by the employees' 
representatives was not manifestly inadmissible, notably in the light of 
Article 18(4) of Regulation No 4064/89 which gives employees of the 
undertakings concerned the right to be heard. He considered however that it 
was too early to give a ruling on the application for suspension as the 
transfer of the springs had not yet been finalized: the approval of several 
French authorities had yet to be obtained. He therefore ordered the interim 
suspension of the decision until such time as the Commission notified him of 
such approvaI. 
In June the Commission informed the Court that the obstacles to the sale of 
the springs had been removed and that the transfer could go ahead. The 
President was thus able to decide on the application for interim measures. 
In an Order of 6 July the President observed that the damage the employees 
claimed to have suffered was not serious and irreparable. They had not shown 
why the transfer of their company would result in damage to the maintenance 
of their jobs. By virtue of Directive 77/187 on the safeguarding of 
2"P-22 229 
employees' rights in the event of transfers of undertakings, the rights and 
obligations by which a transferor is bound under an employment contract or an 
employment relationship existing at the date of the transfer were transferred 
to the transferee. In addition, under the French Employment Code, the 
collective agreement in force could be terminated at any time - not 
necessarily as a result of a transfer. It followed that the decision could 
not directly result in the alleged damage, namely the loss of the advantages 
acquired under the collective agreement. 
The President of the Court accordingly dismissed the application for interim 
measures. 
<T4> Inadmissibility of an application by minority shareholders 
for the reopening of proceedings 
On 28 October the Court of First Instance delivered its first judgment in a 
merger case under Regulation No 4064/89. The case concerned a question of 
procedure. The Court ruled as inadmissible an application lodged by minority 
shareholders in General i, an Italian insurance company, against a refusal to 
reopen the proceedings that had resulted in a Commission decision under 
Article 6(1)(a) of the Regulation. The decision had concluded that the 
increase in Mediobanca's stake in General i from 5.98% to 12.84% was not 
covered by the Regulation as Mediobanca would not be in a position, as a 
result of the transaction, to exercise a decisive influence over General i. 
On 26 June 1992 the minority shareholders had requested the reopening of 
proceedings following the publication, on 19 March of that year, in an 
Italian daily newspaper of the text of a hitherto secret agreement signed in 
1985 by Genera I i , Mediobanca and Lazard, whose Eurolux subsidiary was the 
second main shareholder in General i. 
By letter dated 31 July 1992, the Director-General for Competition had 
rejected the applicants' request on the ground, inter alia, that the 
Commission had known of the 1985 agreement and had taken it into account when 
making its decision. 
The Court observed, first, that there was no specific provision in Regulation 
No 4064/89 for requests to the Commission to reopen proceedings. 
Article 8(5)(a) does, however, enable the Commission to revoke a decision 
2.II.p.23 0 23 0 
declaring a concentration compatible with the common market where, in 
particular, it is based on informat ion that is incorrect or has been obtained 
by deception. 
The application was declared inadmissible, essentially because the applicants 
were third parties in relation to the decision whose annulment they were 
seeking - their request that proceedings be reopened would have led to the 
revocation of that decision - and because actions by third parties were 
admissible only if those third parties were individually and directly 
concerned by the decision. 
The Court held that only in specific circumstances could a shareholder be 
regarded as directly and individually concerned by a measure capable of 
affecting relations between the shareholders of a company. 
No such circumstances existed in the present case. In the first place, the 
Commission finding that the increase in Mediobanca's holding in General i did 
not fall within the scope of the Regulation did not alter the substance or 
extent of the rights of shareholders. Secondly, the finding affects the 
applicants in the same way as any other of the 140 000 or so shareholders of 
that company. Finally, the court did not accept the applicants' contention, 
in support of their contention that they were individually concerned by the 
decision, that, if they had sought to intervene in the proceedings which 
resulted in the adoption of the decision (which they would have done if they 
had been aware of the matters subsequently disclosed) they would have had a 
right of action. The Court considered that the legal certainty of traders 
and the shortness of the time-limits which was a feature of Regulation 
No 4064/89 would require that a request for the reopening of proceedings on 
the ground of the discovery of an allegedly new fact should be submitted 
within a reasonable period. 
It held that the application of 26 June 1992 was late, given that the 
applicants had themselves stated that they had learned of the alleged new 
fact at the end of March or early April of that year. 
§1.p.1 231 
<T5> Part Three 
<T1> Public enterprises and state monopolies 
<T4> Chapter 1 
<T2> Main developments 
357. The principles underlying the Commission's approach to liberalization in 
certain sectors were dealt with in Part One of this Report.(1) This chapter 
reviews the measures adopted in the various sectors. 
<T3> §1. Telecommunications and postal services 
<T4> Community legislation 
358. The main achievement this year was undoubtedly the Resolution of 
22 July 1993 in which the Council of Ministers accepted the liberalization of 
public telephone services by 1 January 1999 at the latest.(2) The Council 
thus took the view that the enforcement of existing Community legislation on 
telecommunications services is one of the main Community policy objectives in 
the telecommunications sector. 
359. In furtherance of this objective, the Commission pursued bilateral 
discussions during the year with a number of Member States on the application 
of Directive 90/388/EEC of 28 June 1990 on competition in the markets for 
telecommunications services. The main subject covered by the discussions was 
the extent of the reserved telephone service, which the Directive defines 
very strictly, which means that telephone services offered to closed user 
groups cannot be subject to monopoly arrangements. 
360. Following such bilateral discussions, Germany liberalized its voice 
telephony services provided for "Corporate Networks" on 15 January, while 
Ireland undertook by letter of 22 July to stick strictly to the terms of the 
(1) See points 36 to 42 of this Report. 
(2) See points 123 to 129 of this Report. 
3.I.§1.p.2 232 
Commission's definition.. The Belgian Government confirmed, by letter dated 
15 June, that, in Belgium, telephone traffic between third parties is 
authorized via fixed links provided that it does not consist of voice 
switching between two public switched network termination points or is not 
available to the public. However, the relationship between the third parties 
must be one that involves more than merely the need to make telephone calls 
to one another; an example of an acceptable relationship would be that 
between a parent company and its subsidiary. Denmark undertook by letter 
dated 16 September to liberalize fully telephone traffic via fixed links in 
1994, rather than defining reserved and liberalized telephone services. The 
Commission continues to monitor the application of this aspect of the 
Directive and will continue to take action in the event of complaints. 
The Commission was also called upon to define the application of the 
competition rules to the mobile telecommunications sector, which is excluded 
from the scope of application of the Directive. Such exclusion does not mean 
that the Member States could extend the monopoly enjoyed by their public 
operator to mobile radio telephony, for example. Following the intiation of 
proceedings against Italy, that country undertook on 1 October to grant a 
second licence for the operation of GSM radio telephony on its territory. 
Similar proceedings were initiated against Belgium, while discussions are 
taking place with Ireland. 
The Commission also asked those Member States which were planning to begin 
procedures for the granting of additional licences to mobile operators to 
submit the proposed conditions to it so as to avoid any future disputes 
should such procedures fail to be objective and without discriminatory 
effects. By letter dated 31 March the Commission accordingly presented a 
number of comments on the preliminary draft which the Dutch Government had 
subm i tted to it. 
361. On 1 December the Commission adopted, on first reading, a draft 
Directive(3) amending Directives 88/301/EEC and 90/388/EEC. The draft 
Directive is intended to extend to the satellite communications sector the 
(3) SEC(93)1891 final. 
3.l.§1.p.3 2i3 
the liberalization already introduced with regard to telecommunications 
terminals and services. The Commission decided to await any comments from 
the Council, Parliament and the Economic and Social Committee before formally 
adopting the draft Decision. 
234 3.I.§2.p.4 
238<T3> §2. Energy 
<T4> Spanish oiI monopoly 
362. With the entry into force on 14 January of Law No 34 of 22 December 1992 
on the oil industry, the Spanish oil monopoly established in 1927 ceased 
legally to exist. This removed the last remaining statutory obstacle, namely 
the exclusive retail marketing rights enjoyed by the company formerly 
operating the monopoly (Campsa) and, by extension, by the Spanish refineries 
in the monopolized service-station network. In view of the scope of the new 
Law, the Commission decided to terminate the infringement proceedings it had 
ini t iated. 
Nevertheless, the Commission will be careful to ensure that the full effect 
of the rules adopted is not neutralized and that the previous statutory 
restrictions of competition are not replaced by contractual ones(4) or 
restrictions that prevent the effective opening-up of the market. 
<T4> - Exclusive rights for the importation and exportation of electricity 
and gas 
363. The Commission received the national authorities' replies to the six 
reasoned opinions sent in November 1992. The Commission had initiated 
infringement proceedings under Article 169 of the EC Treaty against French, 
Italian, Spanish, Dutch, Danish and Irish statutory provisions granting 
exclusive rights for the importation and exportation of electricity and gas. 
Some of the Member States involved reported that they were planning to 
embark on a period of reflection and discussion with a view to adopting 
legislative changes that would bring about some opening-up of the sector; 
however, none of these Member States came up with any specific plans for the 
abolition of the monopolies which had been challenged. 
On the basis of these replies, and in the light of likely developments within 
the Member States, the Commission finally decided at the beginning of 1994 to 
refer the matter to the Court of Justice. 
(4) See point 226 of this Report. 
3.I.§3.p.5 _ 235 
<T3> §3. Transport^) 
<T4> Sea transport 
<T7> Spain 
364. As regards the further discrimination on grounds of nationality by 
Transmediterranea, the public-sector sea transport company, referred to in 
last year's Report,(6) the Spanish Government finally informed the 
Commission, in response to the letter of formal notice sent on 
24 November 1992 pursuant to Article 90 of the EC Treaty in conjunction with 
Article 7, that it had, as from June 1992, put an end to the discrimination 
objected to. In future, according to the information provided by the 
Spanish Government, the discount for which only certain categories of Spanish 
nationals were previously eligible will be granted both to Spanish nationals 
and to nationals of other Member States. 
<T4> Air transport: ground-handling services 
365. The opening-up of air transport to greater competition as a result of 
the third package of liberalization measures is obliging transport 
undertakings to improve the quality of their services and to pay more 
attention than ever to their cost levels. Ground-handling services provided 
to airlines at airports, such as baggage handling, passenger check-in, 
passenger transportation from terminals to aircraft, in-flight catering, 
fuelling and aircraft maintenance, represent a substantial part of the 
airlines' costs and are a key factor in their image. 
However, unlike air transport, ground-handling services are in most 
Member States still controlled by firms that are shielded from competition 
and that are accordingly able to charge more than the quality of the services 
provided would justify. This is the case where national laws allow airports 
to be the sole providers of such services or where they grant such exclusive 
(5) See points 136 to 142 of this Report. 
(6) Twenty-second Competition Report, point 523 
§3.p.6 236 
rights to an undertaking, frequently the dominant carrier on the national 
market. The limits imposed on self-handling at many airports are a 
particularly serious illustration of the anti-competitive nature of the 
present system.(7) 
366. An example of such restrictions was the refusal by the German 
authorities to allow British Midlands to receive the ground-handling services 
at Frankfurt airport which SAS was prepared to provide to it.(8) 
This ban stemmed from national provisions stipulating that foreign airlines 
could provide such services only if reciprocal treatment was granted to 
German carriers in such foreign airlines' countries of origin. The German 
authorities pointed out in this connection that Lufthansa was subject to 
similar restrictions in Denmark and the other Scandinavian countries. 
Since the imposition of such a reciprocity requirement on a Community 
operator was clearly illegal, the German authorities agreed, following 
representations by the Commission, to allow the complainant to receive the 
ground-handling services provided by SAS. 
367. The Commission received many complaints in 1993 in respect of 
ground-handling services at several German, Italian, Portuguese and Spanish 
airports. Such complaints reflect the size of the problem and the risk that 
the expected benefits of air transport liberalization will be undermined by 
restrictions of competition in ground-handling services. 
368. The Commission found that Spain had not put an end to discrimination in 
the form of reductions granted to Spanish airlines in charges for 
ground-handling services.O) 
On 14 June the Commission therefore sent a letter of formal notice to the 
Spanish Government challenging the reductions which the airline Iberia, as 
(7) Twenty-second Competition Report, point 518. 
(8) Twenty-second Competition Report, point 520. 
(9) Twenty-second Competition Report, point 521. 
3.I.§3.p.7 
237 
concessionaire of such services throughout Spanish territory, was obliged to 
grant. The measures imposed by the Spanish authorities on Iberia requiring 
it to grant such reductions were viewed as infringing the provisions of 
Article 90(1) of the EC Treaty read in conjunction with Articles 7 (which 
prohibits discrimination on grounds of nationality), 59 (which prohibits 
restriction on the freedom to provide services) and 86 (which prohibits 
abuses of dominant positions, including the application of dissimilar 
conditions to equivalent transactions with other trading parties). 
369. Over and above the normal pursuit of examination of individual cases, 
the Commission considers that the scale of the problem calls for the adoption 
of general measures.(1°) 
<T4> Ports 
370. The Danish Government did not respond to the request to grant access to 
the port of Rridbyhavn to a company wishing to establish a sea link with the 
German port of Puttgarden.d1) The Commission accordingly adopted a 
decision under Article 90(3) of the EC Treaty.(12) 
371. Following the formal abolition by decree-law of the monopoly of port 
handling operations enjoyed by port companies and groups(13) in Italy, the 
Commission noted that the decree-law had not been converted into law within 
the deadlines set, so that the Italian Government had been obliged to extend 
its effects through the successive adoption, up to the present date, of a 
series of decree-laws. 
It is thus apparent that, since the Court's judgment of 10 December 1991 
(Case C-179/90 Porto di Genova) declaring the monopoly to be incompatible 
with the provisions of Article 90(1) of the EC Treaty, read in conjunction 
with Articles 30, 48 and 86, a satisfactory solution had still not been found 
several months after the initiation of infringement proceedings^14) 
(10) See point 137 of this Report. 
(11) Twenty-second Competition Report, point 522. 
(12) See Annex I I I.B to this Report. 
(13) Twenty-second Competition Report, point 524. 
(14) Twenty-second Competition Report, point 524. 
3.I.§3.p.8 
238 
The Commission considers that repeated reliance on temporary emergency 
measures has not established the conditions of legal certainty which alone 
would allow interested economic operators, whether Italian or from other 
Member States, to enter the market and undertake appropriate investment. 
This situation of uncertainty has consequently, in the Commission's view, 
frustrated the requirement that effective competition be established among 
the firms operating in the port. 
3. I I.§1 .p.1 
239 
<T4> Chapter I I 
<T2> Main decisions of the Court of Justice 
<T3> §1. Court Judgments concerning Article 90 of the EC Treaty 
372. In its judgment of 19 May in Case C-320/91 Corbeau, the Court of Justice 
defined more closely the conditions for the application of Article 90(1) and 
(2) of the EC Treaty. Article 90(1) requires Member States not to enact or 
maintain in force any measure contrary to the rules contained in the 
EC Treaty in favour of public undertakings and undertakings to which they 
grant exclusive rights. Article 90(2) provides that undertakings entrusted 
with the operation of services of general economic interest are subject to 
the rules contained in the EC Treaty, in particular the competition rules, in 
so far as the application of such rules does not obstruct the performance, in 
law or in fact, of the particular tasks assigned to them. 
The facts underlying the judgment relate to the activities of a person 
(Mr Corbeau) who, in Liège and the surrounding areas, provides a service 
consisting of the collection of mail from the home of the sender and its 
delivery by midday the following day, provided that the addressees reside 
within the town. If they reside elsewhere, Mr Corbeau collects the mail from 
the sender's home and dispatches it by post. 
As a result of these activities, Mr Corbeau was brought before the Liège 
criminal court accused of having contravened Belgian law on the postal 
monopoly, which provides that the post office, which is a corporate body 
governed by public law, has the exclusive right, throughout Belgium, to 
collect, transport and deliver all mail, the infringement of which is subject 
to penal sanctions. However, the criminal court questioned whether the 
monopoly was compatible with Article 90 of the EC Treaty. 
In its reply, the Court noted firstly that the Belgian post office was an 
undertaking enjoying an exclusive right within the meaning of Article 90(1). 
However, the holding of a statutory monopoly within a substantial part of the 
common market may give rise to a dominant position within the meaning of 
3.II.§1.p.2 
240 
Article 86. The Court pointed out that, although Article 86 prohibits only 
abuse of a dominant position by undertakings and is not applicable to 
government measures, the Member States are nevertheless required not to take 
any measures that might thwart the full effectiveness of that provision. 
In the Court's view, Article 90(1) must be read in conjunction with 
Article 90(2), whose content it reiterated. In the case in point, it 
considered that the post office was indisputably entrusted with the operation 
of a service of general economic interest within the meaning of 
Article 90(2), consisting of the duty to collect, transport and deliver mail, 
on behalf of all users, throughout the territory of the Member State 
concerned, at uniform prices and under similar conditions of quality, 
regardless of particular situations and the degree of economic profitability 
of each individual operation. 
The Court then went on to examine how far a restriction of competition, or 
indeed the elimination of any competition, was necessary in order to allow 
the holder of the exclusive right to perform its task of general economic 
interest and, in particular, to operate under economically acceptable 
condi t ions. 
The Court took the view that, if it were to perform its task in a profitable 
manner, the undertaking entrusted with the operation of a service of general 
economic interest must be able to offset its losses in one sector of activity 
by profits in another. Ensuring that this was so, meant that there was 
justification for restricting competition from private undertakings in the 
sectors that were economically profitable. Otherwise, such undertakings 
could concentrate their business in the profitable sectors and offer cheaper 
prices there than the undertaking entrusted with the operation of the service 
of general economic interest, since they would not have to offset any losses 
incurred in non-profitable sectors. 
However, in the Court's view, banning competition is not justified where what 
is involved are specific services which are dissociable from the service of 
general interest, meet particular requirements of economic operators, and 
call for certain additional services that the postal service does not 
provide, such as home collection, more rapid or more reliable delivery or the 
3.I I.§1.p.3 
241 
ability to specify a different addressee during delivery, and to the extent 
that such services do not undermine the economic equilibrium of the service 
of general interest provided by the holder of the exclusive right. 
The Judgment means that, where any extension of an exclusive right is not 
Justified by Article 90(2), the undertaking enjoying the exclusive right is 
committing an abuse of a dominant position in breach of Article 86. 
The Judgment also confirms the direct applicability of Article 90(2), which 
the court requesting the preliminary ruling accordingly had to apply itself. 
3.I I.§2.p. 4 242 
< T 3 > § 2. Interpretation of the Directive on te Ie communicat ions 
terminal eouipment 
On 27 October the Court of Justice delivered three judgments interpreting 
Article 6 of Commission Directive 88/301/EEC of 16 May 1988 on competition in 
the markets in telecommunications terminal equipment, which requires 
Member States to ensure that the formalization of technical specifications, 
monitoring of their application and approval of equipment are carried out, as 
from 1 July 1989, by a body independent of public or private undertakings 
offering competing goods or services in the telecommunications sector. Two 
of the judgments were in response to requests for preliminary rulings by 
French courts (Case C-69/91 Decoster and Case C-92/91 Tai Ilandier). In the 
third judgment, the referral for a preliminary ruling came from a Belgian 
court (Joined Cases C-46/90 and C-93/91 Lagauche, Evrard and others). All 
the cases related to proceedings instituted against traders who had sold 
telecommunications terminal equipment (fax machines and cordless telephones) 
that had not received type-approval. The parties had argued before the 
national court that the national laws requiring such approval were 
incompatible with the EC Treaty and the Directive, since there was no 
competent independent body to grant such approval. 
In France, at the time of the facts to which the cases related, approval was 
granted by the general regulations department in the Ministry of Posts and 
Telecommunications, while commercial operation was the responsibility of 
France Telecom, which reports to the same Ministry. In the first two 
judgments, the Court of Justice thus had to assess whether organizational 
separation within one and the same Ministry was sufficient to comply with the 
requirement laid down in Article 6 of the Directive. The Court held that 
different departments within one and the same administrative authority could 
not be deemed to be independent. If this were not so, uniformity of 
application of the Directive in all Member States would be undermined. It is 
not yet clear whether giving responsibility to two different administrative 
authorities (or two different Ministries) would be sufficient to meet the 
independence criterion. In any event, the Decoster and Taillandier judgments 
mean that the measures taken by Member States to comply with this provision 
must be looked at again. 
In the third judgment, in Joined Cases Lagauche-Evrard. the Court did not 
have to examine the question of independence, since the Belgian Government 
3. II.§2.p.5 243 
acknowledged at the hearing that such division of activities had not been 
carried out in Belgium. 
However, the significance of this judgment lies in the legal implications 
which the Court attached to the date of 1 July 1989 referred to in Article 6 
of the Commission Directive. The Court held, firstly, that Article 90 of the 
EC Treaty read in conjunction with Article 86 did not prevent regulatory and 
operational roles from being combined within one and the same undertaking 
provided that the function of such undertaking was confined to examining 
approval applications submitted to the Ministry, such function being merely 
incidental to the exercise of Ministerial power, and, secondly, that, as 
regards equipment falling within the scope of application of 
Directive 88/301/EEC and in so far as the facts related to the period after 
1 July 1989, Article 6 of the Directive was a bar to any requirement that 
terminal equipment be approved by a public undertaking offering goods or 
services in the telecommunications sector. 
Consequently, the combining of functions was, in the Court's view, compatible 
in certain circumstances (subsidiary role of the operator, possibility of 
appeal) with Community law prior to 1 July 1989, but was no longer compatible 
after that date. This would appear to mean that a Directive based on 
Article 90(3) can do more than simply spelling out the requirements that 
already flow from the provisions of the EC Treaty. 
By drawing a distinction between the legal situation before and after the 
entry into force of Article 6 of Directive 88/301/EEC, the Lagauche judgment 
thus invalidates the narrow interpretation of Article 90(3). Even if, in 
itself, the granting of regulatory functions to an operator is not contrary 
to Article 90 read in conjunction with Article 86, the Commission does 
nevertheless have the power to prohibit 'such combining of activities on the 
basis of the task conferred on it by Article 90(3) if it considers, subject 
to review by the Court of Justice, that such combining of activities could in 
some cases conflict with the rules laid down in the EC Treaty. 
The Lagauche judgment thus underlines the Commission's powers to take 
preventative measures in order to ensure equality of opportunity on the 
markets on which public undertakings or undertakings having preferential 
rights operate. It highlights the Commission's particular responsibility to 
carry out the task conferred on it by Article 90(3) on such markets. 
3. I I .§3.p.6 244 
<T3> §3. Public enterprises and state aid 
<T4> Communication on public undertakings 
373. Giving judgementC) on an appeal by France, the Court of Justice 
annulled the Commission's 1991 communication on public enterprises, in which 
Member States were asked to supply the Commission with annual reports on 
their financial relations with large public enterprises in the manufacturing 
sector.(2) 
The Commission had based this requirement on Article 5 of its Directive 
(No 80/723/EEC) on the transparency of financial relations between the Member 
States and public undertakings. Paragraph 2 of this article provides that the 
Commission can ask the Member States to supply certain financial data on 
particular public enterprises whenever it deems this necessary. The 
Commission argued that Article 5(2) was a sufficient legal basis for the 
reporting requirement contained in the 1991 communication; the communication 
merely specified an existing obligation to supply the data on request. 
Dismissing this argument, the Court held that a general obligation to supply 
reports systematically on a I I state-owned manufacturing enterprises above a 
certain size threshold, as the Commission was asking the Member States to do 
in the communication, was not covered by Article 5(2). Therefore, the 
communication was effectively imposing a new legal obligation on Member 
States, without an appropriate legal basis, and was null and void. The Court 
indicated that such a new obligation altering the requirements of 
Article 5(2) could only be imposed under Article 90(3) of the Treaty, like 
the original Directive. 
In accordance with the Court's ruling, the Commission has now incorporated 
the reporting requirements in a new Directive amending that of 1980 and has 
reissued the communication minus the reporting requirement as a statement of 
policy on financial flows to public enterprises.^) 
(1) Judgment of 16 June 1993, Case C-325/91 France v Commission, not yet 
reported. 
(2) Twenty-first Competition Report, points 167 to 172. 
(3) See points 399 and 400 of this Report. 
4. i. §1.1 245 
<T5> Part Four 
<T1> State aid 
<T4> Chapter I 
<T2> Main decisions and developments in the policy of the Commission 
<T3> §1. General policy Questions 
<T4> Main developments 
374. In 1993 the conduct of state aid policy was dominated by the crisis in 
the steel industry. One of the deepest recessions since the 1930s, pressure 
from imports and more difficult exporting conditions compounded the long-term 
decline in steel use to create an urgent need for further capacity cuts.(1) 
The Commission was prepared to play a coordinating role in bringing about 
these capacity reductions and in March the Council pledged EC funds to 
support the cost of closures. But first it was necessary to resolve a number 
of cases of aid Member States wanted to give to state-owned steel producers. 
The Commission's task was to ensure that, in return for the aid, the 
producers contributed their fair share to the restructuring. Agreement was 
finally reached in December, when the Council gave its approval for aid 
totalling some ECU 6.8 billion to six producers in return for 
5.5 million tonnes of capacity cuts. The difficulty of this first step in the 
restructuring can be gauged from the fact that several meetings of the 
Council were needed to achieve it and that in July the Commission, for the 
first time, had to go to the lengths of issuing an injunction under 
Article 88 of the ECSC Treaty to prevent Italy writing off ECU 4 billion of 
the debts of llva, one of the six aided producers, which the Italian 
Government maintained did not involve aid at all. 
375. Tight control also continued to be required on aid to the car 
industry.(2) Many of the cases involved rescues and restructuring. With 
overcapacity growing, aid for motor industry investment in Austria also came 
under close scrutiny and led to the imposition of countervai I ing duties.(3^ 
(1) See points 29 and 481 of this Report. 
(2) See points 505 et sea, of this Report 
(3) See point 506 of this Report. 
4. I .§1 .2 246 
In shipbuilding the situation did not permit the ending of the special aid 
arrangements, and the Seventh Directive was extended for a further year.(4) 
Rescues and restructuring accompanied by aid packages were also the order of 
the day in many other industries, from engineering to airlines.(5) As 
always, cases involving publicly owned companies or privatizations posed the 
greatest problems from the point of view of aid control. But developments on 
state guarantees^) and the new legal basis for the reporting obligations on 
public enterprises^) promise to make such control easier in future. The 
Court of Justice also reiterated the duty of the Commission to carry out a 
full analysis of the impact of proposed aid on competitors.^) 
376. A more routine but none the less important part of state aid control 
work is the processing of notifications of types of aid that pose fewer 
problems for competition and can therefore be approved fairly easily provided 
certain limits and conditions, often laid down in frameworks and guidelines, 
are respected. For such aid too, the Commission is the sole aid control 
authority and Member States need its approval before they can give the aid. 
The Commission has a duty to provide such regulatory approvals within a 
reasonable time.(Q) In a recession a fast service is especially important. 
377. On national regional aid, the Commission pursued the established policy 
of limiting the coverage of assisted areas so as' to increase the 
effectiveness of aid and maintaining differentials between the more-developed 
and the less-developed areas.(1u) The Commission also continued work on aid 
given for capital-intensive investment projects. 
(4) See point 497 of this Report. 
(5) See points 531 et sea, and 536 et sea, of this Report. 
(6) See points 386 and 401 of this Report. 
(7) See point 399 of this Report. 
(8) See point 395 of this Report. 
(9) Judgment of 11 December 1973, Case 120/72 Lorenz v Germany [1973] ECR 
1471, 1481 (para. 4). 
(10) See points 465 and 466 of this Report. 
4.I .§1 .3 
247 
378. Incentives for genuine job creation, for training and for 
small-firm development were given the sympathetic treatment they 
deserve.(11) The Commission virtually completed its reviews of existing aid 
schemes for small and medium-sized enterprises following the issue of the 
SME aid guidelines in 1992.d2) in another area of increasing importance, 
the environment, the Commission issued new aid guidelines which are 
considerably more detailed and comprehensive then those they replace.d3) 
It continued its work to ensure a level playing-field between public or 
publicly backed and private export credit insurers insuring short-term 
commercial risks in intra-EC and intra-OECD trade. A framework is expected 
to be adopted short I y.(14) Work also continued on possible distortions of 
competition through aid in other financial service sectors and in 
television. In the latter area the Commission launched an EC-wide study to 
help it in assessing the growing number of complaints from private 
broadcasters.(15) 
379. At international level, state aid matters figured prominently in the 
accession negotiations with the Nordic countries (Finland, Norway and 
Sweden) and with Austria.(16) In the meantime, after the European Economic 
Area Agreement enters into force on 1 January 1994, these countries, and 
Iceland, will have the EC state aid rules applied to them by the EFTA 
Surveillance Authority. Given the need for close cooperation with the 
Authority, the Commission has devised arrangements under Protocol 27 to the 
Agreement for liaising with it on pending cases and for informing it of 
final decisions before they are published.(17) State aid provisions are 
also contained in the Europe Agreements signed with several dentral and 
eastern European countries(18). The Commission was involved in the talks 
which resumed within the OECD on an international agreement on shipbuilding 
and in the ongoing discussions about a Multilateral Steel Agreement. It 
played an active part in negotiating the new subsidies code in the GATT.C19) 
(11) See points 430 and 439 of this Report. 
(12) Twenty-second Competition Report, point 342. 
(13) See point 384 of this Report. 
(14) See point 427 of this Report. 
(15) See point 546 of this Report. 
(16) See point 561 of this Report. 
(17) See point 557 of this Report. 
(18) See points 101 and 563 of this Report. 
(19) See point 114 of this Report. 
4. I .§1 .4 
248 
380. The single market, now in place, and the plan for economic and 
monetary union make state aid control more important than ever and increase 
the need for the Commission to use its finite resources efficiently. The 
procedural improvements described in last year's report(20) continued with 
the adoption of standard aid notification and report formats.(21) The trend 
towards codification of practice was maintained with the new environmental 
aid guidelines. Such frameworks increase the transparency and predictability 
of policy and boost confidence in the consistent enforcement of rules. They 
also facilitate the evaluation of the compatibility of many individual awards 
of aid of a relatively straightforward kind. The Commission discusses 
proposed new policy statements and other general issues at regular 
multilateral meetings with Member States. Two such meetings were held in 
1993.(22) A "Wise Men's" group of prominent business economists and 
competition law experts was set up to discuss and advise on state aid policy. 
Publication of the new edition of the collection of source materials on the 
state aid rules, announced last year, was however postponed until 1994 to 
enable the latest papers (environmental aid guidelines, guide to procedures, 
etc.) to be included. 
381. On 1 August the European Court of First Instance (CFI) was given 
jurisdiction to hear appeals brought by firms against state aid decisions. On 
that date eleven cases pending before the Court of Justice but not yet at 
the report stage were transferred to the Court of First Instance. Appeals 
from decisions of the CFI to the Court of Justice will I ie on points of law 
only. Jurisdiction to hear appeals brought by Member States and to hand down 
preliminary rulings under Article 177 of the EC Treaty will remain with the 
Court of Just i ce. 
(20) Twenty-second Competition Report, point 337. 
(21) See point 385 of this Report. 
(22) See point 382 of this Report. 
4.I.§1.5 
249 
<T4> Multilateral meetings 
382. A multilateral meeting between experts from Member States' Governments 
and Commission officials(23) was held in June to discuss revised proposals 
for environmental aid guidelines and short-term export credit insurance(24) 
and new papers on aid in the tourism sector, R&D aid and the reference 
interest rates used in calculating aid intensities. The reception of the 
completely new draft of the environmental aid guidelines was relatively 
favourable and the guidelines were subsequently adopted by the 
Commission.(25) on export credit insurance, the discussion focused on 
remaining points of substance. A useful exploratory discussion also took 
pTace at the meeting on aid for tourism and on the Commission's practice 
towards aid for research and development when the aid is provided as a loan 
that is repayable if the project is successful but not if it fails. Finally, 
the Member States welcomed the proposal to change the reference interest 
rates used in the calculation of aid intensities more frequently to match 
fluctuations in market rates. As a result, the Commission revised the 
reference interest rates with effect from 1 July 1993 instead of the usual 
annual revision.(26) 
383. A discussion of further improvements to the reference interest rate 
system was held at a second multilateral meeting in December. The 
delegations agreed to the proposal that in future the reference rates for 
the following year should be based on the average of the three months 
September to November, instead of on the average for the whole year, and 
that in the course of any year the reference rate would be revised if the 
rates on which it was based changed by more than 15%, instead of by 
2 percentage points as previously. These changes were subsequently adopted 
by the Commission^27) 
The meeting also discussed cooperation with the EFTA Surveillance Authority 
under the European Economic Area Agreement. There was a consensus that the 
Authority should be invited to attend future multilateral meetings as an 
observer and that the Commission should send it monthly lists of pending aid 
cases. The handling of complaints lodged by firms and Member States in the 
(23) See point 583 of this Report. 
(24) Twenty-second Competition Report, points 339 and 340. 
(25) See point 384 of this Report. 
(26) See point 398 of this Report. 
(27) See point 398 of this Report. 
250 
Community and EFTA against state aid in the other's territory was likewise 
cons idered.(28) 
The meeting went on to discuss the question of the definition of "soft" aid, 
i.e. aid for training, consultancy help and similar purposes, which is 
allowed up to already high levels because of its beneficial effects on the 
general competitiveness of small and medium-sized businesses. The paper on 
"soft" aid was welcomed by most delegations and, after refinement of the 
definitions, the subject will be discussed again at the next multilateral 
meeting. Finally, the meeting considered the record of the Commission in 
securing the recovery of aid granted illegally and found to be ineligible for 
exemption. It emerged from a table of cases in which recovery had been 
ordered that conflicts with national procedural law were one of the main 
causes of delays in recovering aid.(29) in order to avoid such conflicts, it 
was necessary for Member States to begin proceedings to recover the aid 
immediately, even if the recovery decision was appealed, in accordance with 
the non-suspensive effect of legal action against Commission decisions. 
<T4> State aid for environmental protection 
384. The new environmental aid guidelines, adopted by the Commission in 
December, set out future policy in this area.(3°) The guidelines they 
replace had been virtually unchanged since their introduction in 1974.(31) 
Many aid measures were not covered by them and had to be assessed on an 
ad hoc basis. The new guidelines codify the intervening developments in the 
Commission's practice and provide a more comprehensive and user-friendly 
frame of reference than hitherto, while maintaining progress towards full 
application of the "polluter pays" principle and reflecting the increased 
emphasis found in the Fifth Environmental Action Programme on "sustainable 
development" so as to prevent environmental problems arising. 
(28) See point 98 of this Report. 
(29) The table is reproduced as Annex ... to this Report. See point 396 of 
this Report. 
(30) OJ ...; see point 166 of this Report. 
(31) Fourth Competition Report, points 175 to 179; Tenth Competition Report, 
points 222 to 226; Sixteenth Competition Report, point 259. Pending the 
adoption of the new guidelines, the existing Framework, which was due to 
expire at the end of 1992, was extended to cover the first and second 
halves of 1993 in December 1992 (see Twenty-second Competition Report, 
point 448) and June 1993 respectively. 
(i 
4. I .§1 .7 25 
The guidelines lay down the rules or principles that should be observed in 
each type of financial instrument used in environmental policy. The most 
precise provisions concern aid for investment, where the rules are as 
fol lows: 
For investment undertaken to adapt existing plant to new environmental 
standards or other new mandatory requirements imposed to protect the 
environment, firms can receive aid equal to 15% gross(32) 0f the cost 
of the investment strictly required for this purpose. Existing plant is 
defined as plant in existence for at least two years when the new 
standard or requirement comes into force. Plant newer than that may not 
be aided. Aid may be granted for a limited period around the time the 
new standards or requirements are introduced; 
For investment in new or existing plant which allows higher levels of 
pollution control or other environmental parameters to be achieved than 
are required by standards or other legal obligations, firms can receive 
up to 30% gross of the investment cost strictly required for this 
purpose. If several standards are in force, e.g. a Community standard 
and special national or local provisions, it is the stricter of the 
standards that must be exceeded. The actual level of aid must be in 
proportion to the environmental improvement achieved and the scale of 
the investment required to achieve it; 30% is the maximum. Aid of up to 
30% gross can also be authorized for entirely voluntary investment which 
helps protect the environment where there are no standards or mandatory 
requirements governing firms' behaviour; 
Small and medium-sized enterprises may receive an extra 10 percentage 
points of aid on top of the two limits mentioned above; 
In assisted areas the maximum level of aid is either the maximum 
allowable rate of aid for environmental investment or the prevailing 
rate of regional aid authorized by the Commission for the area, 
whichever is the higher; 
If an investment project partly involves adaptations to standards and 
partly exceeds standards or requirements, the limits are applied 
pro rata. 
(32) That is to say, before tax. Under the previous framework, aid of 15% net 
(i.e. after tax) could be allowed for this purpose. 
252 
Besides investment, the following other activities are covered by the 
gui de Iines: 
dissemination of information; 
provision of training and consultancy help which benefit individual 
firms can be aided at rates of up to 50% for SMEs, as under the SME aid 
guidelines,(33) or up to the prevailing regional aid rate, if higher, 
in assisted areas; 
incentives for purchasing environmentally friendly products; 
collection, treatment and recycling of waste and relief from new 
environmental taxes to avoid unsustainable losses in competitiveness. 
The guidelines cover all sectors, including those subject to special 
Community rules on state aid in so far as these rules do not provide 
otherwise, which is the case for some forms of investment in agriculture. 
They will also be applied to aid for energy conservation, except that here 
the cost reductions the firm achieves will be taken into consideration. 
The guidelines will be in force from 1 January 1994 until the end of 1999, 
when the Fifth Environmental Programme ends, but will be reviewed in 1996. In 
order to bring existing environmental schemes into line with the new rules, 
the Commission will, before 30 June 1995, review under Article 93(1) all 
existing schemes that are not voluntarily renotified. It also decided to 
monitor application of the guidelines in 1994 to see whether or not it should 
be made a rule for Member States to notify all large individual aid awards 
under authorized schemes. 
(33) OJ C 213, 19.8.1993. 
4.I.§1 .9 253 
<T4> Standardized notifications and reports 
385. The Commission adopted a system of standardized notifications and 
reports that will make it easier for Member States to notify aid and will 
improve the flow of information which it receives on state aid. Aid 
proposals will in future have to be notified on the basis of a standardized 
questionnaire specifying the information which the Commission deems necessary 
for examining them. The new system should result in a considerable reduction 
in the number of requests for supplementary information which the Commission 
sends and should thus shorten the time needed to take decisions. As part of 
this process of streamlining administrative procedures, the Commission also 
decided that Member States would no longer be required to notify the 
refinancing of schemes that were authorized for an indefinite period or for a 
specified period that had not yet expired, if the new annual budget did not 
exceed by more than 20% the budget originally notified. In addition, the 
establishment of a system for the submission of standardized reports using a 
set layout will enable the Commission to check more effectively, pursuant to 
Article 93(1), whether the implementation of an aid scheme previously 
authorized subject to certain socio-economic conditions continues to meet the 
eligibility criteria for one of the exemptions provided for in Article 92. 
So as not to impose too heavy an administrative burden on Member States, 
detailed standardized reports will be required only for a very limited number 
of major aid schemes. The reports for other schemes will have to contain 
only a limited amount of information. 
<T4> Issues clarified by Commission decisions and judgments of 
the Court of Justice 
<T5> (a) Substantive questions 
<T6> State guarantees 
386. It is common for governments to support firms by guaranteeing their 
borrowing. Government loan guarantees usually involve state aid because, 
without the guarantee, the firm would be unable to raise the finance it 
requires and would have to abandon the project in question or indeed go into 
liquidation. The Commission approves many loan guarantee schemes and 
4.I.§1 .10 254 
individual guarantees to firms when they are notified to it, as they should 
be, under Article 93(3) of the EC Treaty and in accordance with the letters 
to Member States dated 1989. It always insists on it being a condition of the 
guarantee that the guarantee may be honoured only after the guaranteed 
creditor has recovered what he can of the debt through realization of the 
debtor's assets, if necessary via the winding-up of the company. 
387. Loan guarantees from the state can, however, cause major distortions of 
competition when they are given in disregard of this condition and are not 
notified. In the EFIM case,(34^ where the guarantee arose from Article 2362 
of the Italian Civil Code, banks were induced to continue to lend to 
state-owned businesses that were in serious financial difficulties in the 
expectation that the government would repay their mounting debts. Such action 
provides continued funding to a company which should properly be restructured 
or rationalized, to the detriment of its unaided competitors. Moreover, in 
the EFIM case, it was not considered to be sufficient that the companies in 
question were in liquidation for creditors to be able to claim under the 
state guarantee. In the agreement that was eventually reached between the 
Commission and the Italian authorities, payment under the guarantee contained 
in Article 2362 of the Italian Civil Code was permitted. This was made 
possible by the fact that the Italian authorities agreed to reduce the debt 
of certain wholly owned companies by 1996 to levels acceptable to a 
market-economy investor and that they undertook to dispose of shares in the 
same companies, thereby nullifying the effects of the Article in the future. 
<T6> Factors determining classification of measures as state aid 
under Article 92(1) of the EC Treaty 
<T4> Financial benefit 
388. Several cases decided by the Commission in 1993 illustrated the 
principle that, for a measure to involve state aid within the meaning of 
Article 92(1), it must confer a financial benefit on them with respect to 
normal market conditions. 
(34) See point 401 of this Report (§ 2). A full list of all decisions taken 
by the Commission over the year in state aid cases is given in 
Annexe I II.C. The list is subdivided by type of decision. References 
are given to the press release, if any, issued on the case and to the 
issues of the Official Journal in which the relevant decisions or 
notices on them were published when this is known at the time of 
wr i t ing. 
4. I .§1 .11 255 
In the Dutch gas case,(3^) the Dutch Government had, as required by the 
Commission's decision in 1992,(3^) notified the Commission of its intention 
to grant rebates to Dutch ammonia producers for certain periods of 1992 and 
1993 when the prices of ammonia were so low that producers throughout Europe 
were making losses and having to shut down plants. The Commission found that 
the price reduction was normal commercial behaviour on the part of the 50 % 
state-owned monopoly supplier Gasunie since, if it were to ignore the falls 
in product prices and the resulting financial difficulties of its customers, 
it would be jeopardizing its future markets. There was also a danger that 
customers would switch to alternative raw materials. The prices at which 
Gasunie sold gas to suppliers in other Member States afforded them scope 
similarly to reduce their prices to ammonia producers. 
The contracts which the German railway company, Deutsche Bundesbahn (DB), 
signs with firms on building or maintaining railway sidings and which offer 
them credit facilities and other help in this connection were also considered 
normal commercial conduct.(37) The Commission was satisfied that DB recouped 
its outlay on incentives in each individual case through the freight rates it 
later charged the firm and that there was no cross-subsidy to the scheme from 
other operat ions. 
389. In a number of cases involving environmental subsidies the Commission 
examined whether the subsidies confer a financial advantage on the 
recipients. This was not considered to be the case for the payments made to 
collectors of waste oils in Denmark, which were considered a straightforward 
renumeration for serv ices. (38) On the other hand, in the case of a Danish 
scheme which compensates the users of recycled raw materials for the higher 
incidence of waste involved in this process by charging them a lower rate of 
tax on waste offered at disposal facilities, the Commission considered that 
the tax treatment potentially contained a financial advantage for the 
beneficiaries with respect to the general tax system and therefore considered 
it as falling within Article 92(1).(39) 
(35) See point 533 of this Report. 
(36) Twenty-second Competition Report, points 434 to 437 
(37) See point 534 of this Report. 
(38) See point 421 of this Report. 
(39) See point 420 of this Report. 
§1-12 _ _ 256 
<T4> Select iv i ty 
390. In relation to a number of job-creation schemes in Denmark, the 
Commission had to decide whether the schemes were aid schemes falling within 
Article 92(1) or "general measures". For a scheme that subsidizes firms for 
particular activities to fall within Article 92(1), it must "favour", i.e. 
particularly benefit, certain firms or industries. In other words, there must 
be an element of selection or discrimination in relation to the 
beneficiaries. This favoured group needs not be specified in the rules of 
the scheme or be readily identifiable. It is sufficient that the scheme could 
benefit certain firms particularly, though these are not identifiable in 
advance, and this is especially so if the authorities applying it have a 
degree of discretion in selecting beneficiaries or setting the level of 
subsidy. The Commission took two decisions on variants of a scheme offering 
wage subsidies to firms taking on long-term unemployed persons.(4°) It was 
found in the first case that the Member State had little or no discretion. 
The scheme was automatically applied to any firm and unemployed person 
meeting the conditions, which were precise and well defined in the most 
important respects such as the terms of the employment contract. It was 
therefore considered to be a general measure and not an aid scheme. In the 
case of the modified scheme, however, a greater degree of discretion was 
found to have been introduced and the scheme was considered to be potentially 
selective, bringing it within Article 92(1). The authorities were now free to 
grant the subsidies for recurrent short periods of work experience without 
clear conditions as well as for periods of regular employment. 
<T4> Lev ies 
391. Levies are special taxes on the production or sale of certain goods or 
services. The proceeds of the special tax - which are to be considered as 
"state resources" within the meaning of Article 92(1) - may be used to 
finance state aid for various purposes in the industry on which the tax is 
levied. Such schemes raise a number of questions which were illustrated in 
decisions taken in 1993. First, in accordance with a long line of Court 
Judgments and Commission decisions, such levies may not be charged on imports 
or remitted on exports. Both would make the levy scheme incompatible with 
Community law. 
(40) See point 441 of this Report. 
§1.13 257 
392. A second lesson which emerges from the various levy decisions is that 
the fact that the industry is itself paying for the scheme does not make it 
lose its character of a state aid.(41) The negative attitude usually 
adopted by the Commission towards sectoral aid schemes is, however, mitigated 
when the measure does not directly benefit any individual enterprise in the 
sector but is used to promote activities benefiting the sector as a whole 
such as research, training, trade exhibitions, maintaining or improving 
quality standards, etc. Thus, the Commission was able in 1993 to grant 
exemption from Article 92(1) to levies supporting the Danish fur and the UK 
wool trade(42) and French engineering (COREM). As usual, many levy schemes 
were also approved in agr icul ture. (43) On the other hand, a much more 
sceptical attitude was taken of sectoral aid schemes offering direct 
subsidies paid for by the exchequer,(44) 
<T4> Sales of land for industrial or commercial development 
by public authorities 
393. Aid can be given to firms through the sale of sites for industrial or 
commercial development by public authorities at prices below market 
rates.(45) The Commission investigates many complaints about allegedly 
subsidized land sales. Although land normally accounts for only a small part 
of investment costs,(46) subsidized prices could upset the delicately 
balanced differentials in the level of regional incentives and so disrupt 
regional policy. The Commission is considering recommending Member States to 
follow a code of practice in this area. In the cases on which formal 
decisions were taken in 1993 it was concluded, on the basis of detailed 
valuations of the sites, that the final selling prices were within the range 
that could be considered as the market value. In the case of Sony's purchase 
of a large piece of land near the Potsdamer Platz in Berlin,(47) the price 
was found to be below an official valuation made later, but within the 
margin of error for land valuations after adjustments had been made for 
(41) See Case 78/76 Steinike und Weinlig v Germany, paragraph 22. 
(42) See point 528 of this Report. 
(43) See point 551 of this Report. 
(44) See point 453 of this Report. 
(45) Twentieth Competition Report, point 239; Twenty-second Competition 
Report, point 345. 
(46) Estimated at roughly 5% in the 1971 coordination principles for regional 
aid, OJ C 111, 4.11.1971. 
(47) Twenty-first Competition Report, point 264. 
4.I.§1 .14 
258 
the intervening rise in land prices, obligations to preserve a listed 
building and to allow part of the site to be used for cultural purposes, and 
possible further planning restrictions unknown at the time of sale. A 
decision was also taken on the sale of land at Friedberg, Hesse, to the 
pharmaceutical firm Fresenius.(48) After an official valuation, the company 
had agreed to pay ECU 280 000 more for the site than initially agreed. 
Although this still left the selling price some 10% below the valuation, the 
Commission took into account the fact that the land had been on the market 
for some time before a buyer was found. The price agreed was thus likely to 
be a market price, close to the price that would have resulted from an open 
tender. 
<T4> Breach of other provisions of Community law: a factor 
that immediately disquaiif je s aid schemes from exemption 
394. An investment aid scheme in the Basque country of Spain again showed 
that aid schemes are disqualified from exemption if they infringe other 
provisions of Community law, in particular those concerning freedom of 
establishment^49) No Member State may discriminate in the terms of an aid 
scheme against the nationals of other Member States who are resident on its 
territory. This principle has been applied many times to schemes supporting 
the film industry.(5°) In privatizations too, discriminatory terms are not 
permitted, and this was the reason why approval was initially withheld for 
the privatization programme in Portugal.^1) 
<T5> (b) Procedural Questions 
<T6> Article 93(2) proceedings and the balance between 
the rights of competitors and the prospective aid recipient 
395. In the ÇookJ52) ancj Matra(53) judgments, the Court of Justice 
confirmed the circumstances in which the Commission is obliged to open 
proceedings under Article 93(2) of the EC Treaty in order to allow interested 
third parties, generally competitors, to comment on aid proposa Is.($4) In 
(48) OJ C 21, 25.1.1994. 
(49) See point 473 of this Report. 
(50) Twenty-second Competition Report, point 442. 
(51) See point 416 of this Report. 
(52) See point 553 of this Report. 
(53) See point 553 of this Report. 
(54) See also Case 84/82 Federal Republic of Germany v Commission ("plan 
Claes"), judgment of 20 March 1984. 
4. I .§1 .15 259 
the Cook case the Court held that, wherever the market situation in the 
sector concerned was relevant to the decision, the Commission must carry out 
a market analysis before deciding to authorize aid without Article 93(2) 
proceedings. In the circumstances of the case, faced with a clear complaint 
from a competitor that the aid would worsen overcapacity and harm its 
position, the Commission should have carried out this analysis via 
Article 93(2) proceedings because it did not have the data required to reach 
a firm conclusion (on the existence of overcapacity) by itself. In the Matra 
case, on the other hand, the Court found that the Commission had been right 
not to open proceedings against the proposed aid for a new Ford/Volkswagen 
minivan plant in Portugal because it was able to make a thorough market 
analysis without this procedure. 
<T6> Charging of interest on aid that has to be recovered 
396. In its decisions ordering the recovery of illegally paid aid that is 
found to be ineligible for exemption, the Commission now normally requires 
interest to be charged on the aid from the date it was granted. This 
practice, formally announced in the letter on penalties for unnotified aid 
sent to Member States in March 1991,(55) was confirmed in the new decision 
on the recovery of aid granted to British Aerospace in connection with its 
takeover of the Rover Group.(56) However, the Commission decided that the 
policy of charging interest from the date the aid was granted should not be 
applied retrospectively in cases decided before the Commission's letter of 
March 1991. In such cases, interest would be charged only as from the date 
the principal sum became recoverable under the decision. In the BAe/Rover 
case, interest was therefore charged from the date in August 1990 when the 
original decision, which had been annulled by the Court of Justice on 
procedural grounds, became enforceable. 
<T6> Writing a reserve clause into aid legislation 
to avoid breaches of notification obligation 
397. The obligation to notify aid proposals in advance to the Commission laid 
down in Article 93(3) of the EC Treaty imposes a moratorium on "putting into 
effect" the aid plans before the Commission has given its approval. "Putting 
into effect" is taken to mean not only the actual granting of aid to 
(55) Twenty-first Competition Report, point 159 and Annex I 1.7 
(56) See point 515 of this Report. 
4. I ..§1 .16 260 
the recipient but also the conferment of powers enabling the aid to be 
granted without further formality. In 1989 the Commission wrote to 
Member States clarifying this point. Nevertheless, Member States still 
sometimes fall foul of the notification requirement by notifying aid 
legislation which confers the unreserved power to give aid, albeit not yet 
exercised, with the result that the aid case is classed as non-notified. To 
avoid such technical and often unintended breaches, the Commission recommends 
Member States' authorities to write a reserve clause into legislation whereby 
the aid-granting body can make payments only after the Commission has cleared 
the aid. 
Both central and regional government authorities are increasingly following 
this practice. For instance, in 1993 the Region of Emi I ia-Romagna in Italy 
enacted general legislation which not only established the principle that the 
grant of aid is conditional on the Commission's approval but also required 
the regulations governing all aid schemes to include a clause stating that 
the aid measures can be implemented only after publication of a notice in the 
Region's official gazette announcing the Commission's approval. 
<T6> Reference interest rates used for calculating aid values 
398. Determining the aid value of concessionary financing involves comparison 
with a reference interest rate and discounting of financial benefits 
receivable in the future at such a rate. Future tax payments must also be 
discounted when determining the net (i.e. after-tax) value of aid, including 
grants. In making these calculations, the Commission uses a standard 
reference interest rate for each Member State which is set once a year. The 
method for setting such reference rates was laid down in the annex to the 
1979 coordination principles for regional aid,(57) although they are now 
used to calculate aid values in most spheres of aid control, including aid 
for SMEs,(58) environmental protect ion,(59) and the de minimis 
faci I ity.(6°) Under the 1979 method, the reference rates were based on the 
average level of a specified base rate over the previous year and could be 
changed in the course of the current year only if the current level of the 
base rate diverged from the reference rate by more than two percentage 
(57) OJ C 31, 31.2.1979. 
(58) OJ C 217, 19.8.1992; Twenty-second Competition Report, points 78 and 
342. 
(59) See point 384 of this Report. 
(60) See point 431 of this Report. 
4.I.§1 .17 261 
points. Because of the rapid falls in interest rates in late 1992 and 1993 
the Commission found that the reference rates for 1993 in some Member States 
were considerably above market interest rates, leading to an overestimation 
of the subsidy element of financing. It therefore decided to revise all 
countries' reference rates for the second half of the year, aligning them on 
the average level of the base rate over the three months March to May 1993. 
Secondly, it decided that, so as to enable the reference rates to follow 
interest-rate movements more closely in future, the reference rates for 1994 
and later years would be based on the average of the base rate over the three 
months September to November of the previous year and would be revised in the 
course of the year whenever the current level of the base rate over a 
three-month period diverged from the reference rate by more than 15% of the 
reference rate. 
262 4.I.§2.18 
<T3> §2. Public enterprises and privatization 
<T4> Pub Iic enterpr ises 
<T7> Communication on public enterprises 
399. As expected, (61 ) the Court of Justice delivered its judgment^2) on 
France's appeal challenging the legal basis of the reporting requirement 
imposed on Member States by the Commission's 1991 communication on public 
undertakings.(63) jhe Commission based the requirement to supply annual 
reports disclosing financial transfers to major public enterprises in the 
manufacturing sector on Article 5 of Directive 80/723/EEC concerning the 
transparency of financial relations between Member States and their public 
undertak ings. 
The Court found in favour of the applicant and annulled the communication, 
holding that the general and systematic reporting obligation which the 
Commission wanted to impose went further than the obligation imposed by 
Article 5 of the 1980 Directive to supply certain financial date on 
particular public enterprises as and when necessary. The new reporting 
obligation would have constituted an amendment of the 1980 Directive and 
thus could not be imposed on the basis of a communication. 
As a result of this judgment, the Commission decided to incorporate the 
reporting requirements that were previously contained in the 1991 
communication in an amending directive.(64) The new directive imposes an 
obligation on Member States to provide the Commission with financial data in 
respect of their public undertakings operating in the manufacturing sector 
that have an annual turnover in excess of ECU 250 million. 
As the rest of the 1991 communication merely described existing law and 
practice on the criteria for judging financial flows between public 
authorities and public enterprises, the Commission sent an amended version of 
the 1991 commun i cat ion (6^) to Member States at the same time as the 
d i rect i ve. 
(61) Twenty-second Competition Report, point 529. 
(62) Case C-325/92 French Republic v Commission. See point 373 of this 
Report. 
(63) Twenty-first Competition report, point 170. 
(64) OJ L 254, 12.10.1993. 
(65) 0J C 307, 13.11 .1993. 
4. I.§2.19 263 
<T7> France 
<T8> Bull 
400. The Commission decided(66) in October to initiate the Article 93(2) 
investigative procedure in respect of Bull, the French computer manufacturer. 
This decision, under which the Commission will investigate, the French State's 
payment, without notification to the Commission, of an advance on a future 
capital injection amounting to ECU 380 million, follows the decision(67) 
taken in July 1992 which found that a previous capital injection of 
ECU 600 million into Bull represented aid.(68) 
The new case was noteworthy in that neither of Bull's minority private-sector 
shareholders (NEC and IBM) took part in the advance, whereas they had 
participated in the 1992 capital injection. This had led the French 
authorities in 1992 to argue that the 1992 recapitalization passed the test 
of the 1984 communication on public authorities' holdings in company capital 
in which the participation of private shareholders in the capital increase 
meant that no aid was present. However, this argument had not been accepted 
by the Commission as the investment decision by the French State had been 
taken before the acquisition by NEC and IBM of Bull's shares and these 
investments were not economically significant. 
Before the end of the year the Commission wrote to the French authorities 
about a further injection of ECU 1 300 million into Bull by the French State 
and France Télécom in December. 
(66) OJ C 346, 24.12.1993. 
(67) 0J C 244, 23.9.1992. 
(68) Twenty-second Competition Report, point 425. 
4.i.§2-2o 264 
<T7> Italy 
<T8> EFIM 
401. The Commission adopted two partial final dec isions(69) in connection 
with EFIM, the Italian state holding company which is in liquidation^70) 
These decisions, taken in August and September, concerned the aid 
implications of the global guarantee for EFIM's debts arising under 
Article 2362 of the Italian Civil Code. 
The Commission considered that the payment by the Italian State of the debts 
of EFIM group companies in liquidation constituted state aid because, 
following the IQR/F inalp decision,(71) a market-economy investor would not 
have accepted the greater risk associated with unlimited liability, resulting 
from Article 2362 of the Italian Civil Code in the case of full ownership, 
without a corresponding increase in the return. Furthermore, such an investor 
would have taken action to limit his financial exposure, by the sale of 
investments, restructuring, etc. once it was realized that debts were 
mounting with little likelihood of a reversal in the process. 
Since EFIM did not provide its shareholder (the Italian State) with either an 
adequate or an increased return and since its management (ultimately the 
Italian State) did not take remedial action to contain the mounting debts, 
the repayment of the group's borrowings by the State could not be considered 
to be the behaviour of a market-economy investor and, therefore, constituted 
aid. 
Although the money was to be given to companies in liquidation, it would 
still distort competition. This was because the companies in liquidation had 
borrowed from banks and had then lent these funds to the group's operating 
companies. Repayment of these external debts by the State would lead to 
cancellation of the operating companies' intra-group debts and thus to a 
benefit being granted to these companies, resulting in continued distortion 
of compet i t ion. 
(69) OJ C 267, 2.10.1993 and OJ C 349, 29.12.1993. 
(70) Twenty-second Competition Report, points 475 to 478 
(71) OJ L 183, 3.7.1992. 
§2-21 265 
The Commission decided, however, that the repayment of debt on the basis of 
Article 2362 of the Italian Civil Code was compatible with the common market 
under Article 92(3)(c) following an agreement with the Italian Government in 
which it undertook: 
to freeze the debts, at 31 December 1993, of certain holding and 
subholding companies which are wholly owned by the Italian Treasury; 
to reduce these companies' debts to levels similar to those in 
comparable private-sector companies at the latest by 1996; 
to reduce the State's shareholding in these companies, at the end of the 
debt-reduction process, to a level that will inactivate the 
unlimited-liability aspects of Article 2362 of the Italian Civil Code; 
to submit this debt-reduction programme, together with the companies' 
financial and industrial restructuring plans, to a monitoring exercise 
to be undertaken in conjunction with the Commission. 
The Commission considered that the financial and industrial restructuring 
plans would assist these Italian public undertakings in becoming competitive 
and that the eventual disposal of some of the Treasury's shareholdings in the 
companies, by cancelling the unlimited guarantee, would prevent hidden 
subsidies being provided to the companies in future via bank lending not 
warranted by their performance. The decision to authorize the repayment of 
creditors did not cover continuing aid to Alumix, whose case is still open. 
<T4> Pr ivat i zat ions 
402. The Commission continued to apply the principles it had developed over 
the yearst72) to the privatization of state-owned companies. While in some 
countries the privatization process was nearing completion, in others it was 
only beginning or being resumed after interruption. The Commission wrote to 
countries in the latter category setting out its approach in these area. Thus 
it had contacts with Belgium, Italy and France in respect of their general 
plans for privatization and requested data from the Dutch and 
(72) Twenty-first Competition Report, points 248 et seq. ; Twenty-second 
Competition Report, points 464 et sea. 
4. I. §2. 22 266 
Spanish authorities about the sale of individual companies. A final decision 
was taken on the Portuguese privatization programme. 
403. For the sake of transparency, it is worth reiterating the general 
principles which the Commission applies to privatizations and which have been 
built up over the years on the basis of scrutiny of individual cases. 
As stated in Article 222 of the EC Treaty, Community law is neutral with 
respect to the private or public ownership of undertakings. Accordingly, aid 
that facilitates privatizations may not as such benefit from a derogation 
from the basic principle of incompatibility of state aid with the common 
market laid down in Article 92(1). 
When the privatization is effected by the sale of shares on the stock 
exchange, it is generally assumed to be on market conditions and not to 
involve aid. Before flotation, debt may be written off or reduced without 
this giving rise to a presumption of aid as long as the proceeds of the 
flotation exceed the reduction in debt. 
If the company is privatized not by stock-exchange flotation but by a trade 
sale, i.e. by sale of the company as a whole or in parts to other companies, 
the following conditions must be observed if it is to be assumed, without 
further examination, that no aid is involved: 
a competitive tender must be held that is open to all comers, 
transparent and not conditional on the performance of other acts such as 
the acquisition of assets other than those bid for or the continued 
operation of certain businesses; 
the company must be sold to the highest bidder; and 
bidders must be given enough time and information to carry out a proper 
valuation of the assets as the basis for their bid. 
Privatizations by flotation or competitive tender on the above conditions 
need not be notified to the Commission in advance for examination of aid 
implications, but Member States may notify if they desire the added legal 
security of a formal clearance. In other cases, trade sales must be examined 
4.I.§2.23 267 
for possible aid implications and must therefore be notified. This is so in 
particular in the following cases: 
sales after negotiation with a single prospective purchaser or a number 
of selected bidders; 
those preceded by the writing-off of debt by the State, other public 
enterprises or any public body; 
those preceded by the conversion of debt into equity or capital 
increases; and 
sales on conditions that are not customary in comparable transactions 
between private parties. 
In all cases, there must be no discrimination based on the nationality of 
prospective buyers of the shares or assets concerned. 
Any sales on terms that cannot be considered normal commercial terms must be 
preceded by a valuation carried out by independent consultants. 
Privatizations^3) in sensitive sectors (synthetic fibres, textiles, the 
motor industry, etc.) must all be notified to the Commission beforehand. 
404. In 1993 decisions were taken on privatization programmes or individual 
cases in the following Member States. 
<T7> Germany 
405. The Commission continued its scrutiny of the operations of the 
TreuhandanstaIt in the former German Democratic Republic. Under its decision 
of November 1992,(74) several transactions of the TreuhandanstaIt were 
examined by the Commission under the accelerated procedure agreed with the 
German Government. The Commission also looked into new financing and 
privatization models developed by the Treuhand. A characteristic of the East 
German privatizations is the scale of the restructuring and the large 
(73) See points 480 et sea, of this Report. 
(74) Twenty-second Competition Report, points 19, 349 and 466. See also 
Twenty-first Competition Report, point 249. 
4.I.§2.24 268 
injections of funds necessary for this purpose. The Commission was concerned 
to prevent the operations giving the resulting businesses any artificial 
advantages over their competitors, especially when the industry was suffering 
from overcapacity. Thus, some of the financial arrangements were modified to 
accommodate initial objections raised by the Commission. In several cases 
the Commission investigated allegations that funding granted in connection 
with the privatization was being used to undercut the selling prices of 
competitors. The main cases dealt with in 1993 are described below. 
406. The Commission approved aid in connection with privatization of the 
fertilizer producer Stickstoff-Werke AG, Piesteritz (Saxony-Anha 11 ). The 
takeover of the majority of the company's assets by SKW-Stickstoffwerke 
Piesteritz GmbH, a subsidiary of the buyer (SKW-Trostberg AG), prepared the 
way for final privatization of the company. During the restructuring process, 
95% of losses up to specified ceilings will be covered by the 
TreuhandanstaIt. In total, guarantees and credits amounting to 
ECU 280 million are to be made available. Since the restructuring results in 
a reduction of the company's production capacity and involves a withdrawal 
from sectors with a general problem of overcapacity while restoring its 
profitability, the Commission decided that the aid was compatible with the 
common market. 
407. The Commission authorized two batches of aid to Buna AG (Saxony-AnhaIt). 
Buna is the second-largest chemical producer in the new Lander with factories 
located in the East German chemicals centre of Ha Ile-Merseburg. The first 
aid consisted of a guarantee for investments of ECU 228 million and liquidity 
loans of ECU 54 million. Later, the Commission approved additional loans of 
ECU 115 million. In view of the ongoing restructuring of Buna, which is 
reducing the company's production capacity in order to restore profitability 
and improve its chances of being privatized, the Commission considered the 
aid compatible with the common market. 
408. The Commission also approved aid from the Treuhandansta 11 and the Land 
of Saxony-AnhaIt for the Leuna refinery. A privatization contract concluded 
between the TreuhandanstaIt and the TED syndicate led by Elf provides for the 
combined acquisition of assets of the existing refinery of Leuna Werke AG and 
the shares of the distributing company Minol AG,(7^) the construction 
(75) Twenty-second Competition Report, point 264 
4.1.§2.25 269 
of a new refinery and the operation of the old refinery by an Elf 
subsidiary. The Commission did not object to the Treuhand's covering the 
losses of up to ECU 380 million that the old refinery will incur until the 
new refinery is operational. A monitoring system will ensure that neither Elf 
nor its affiliates will benefit from this aid. The Commission also approved 
investment aid of ECU 500 mi I I ion by the Land of Saxony-Anhalt for the 
construction of the new refinery. 
409. Aid granted by the TreuhandanstaIt to Sâchsische Olefinwerke, Bôhlen 
(Saxony), to accompany its restructuring was also authorized. The company 
produces mainly ethylene, propylene and other monomers and was to receive aid 
of ECU 115 million in guarantees and ECU 127 million in loans. In view of the 
reduction in capacity and because the restructuring will enhance the 
privatization efforts, the Commission decided that the aid was compatible 
with the common market. 
410. The Commission opened Article 93(2) proceedings against alleged misuse 
of aid from the TreuhandanstaIt to Leuna AG for its production and marketing 
of caprolactam, a raw material for nylon and other man-made fibres.(7^) 
Following complaints submitted by other manufacturers, the Commission 
investigated the prices at which Leuna sells caprolactam in the Community and 
the financing of this company by the TreuhandanstaIt. It concluded, on the 
basis of the available information, that Leuna was selling caprolactam at 
prices below its production cost and was continuing production of a product 
that had no prospects of profitability, given the situation of general 
overcapacity in the Community. 
411. The Commission closed, however, the Article 93(2) procedure it had 
opened in 1992(77) against alleged misuse of aid granted by the 
TreuhandanstaIt to Buna for its production and marketing of butyl acetate 
(butac), a product used in the paint industry. It concluded that 
TreuhandanstaIt aid should not be used to continue production of a product 
that had no reasonable prospects of profitability. With even the most 
efficient producers of butac making losses on an oversupplied market, 
continued loss-financing of Buna for this product would indeed be a misuse of 
the aid that the Treuhandansta 11 was allowed to provide to the company. 
(76) 0J C 220, 14.8.1993. 
(77) Twenty-second Competition Report, point 416. 
4.I.§2.26 270 
However, as Buna had decided in July to cease production of butac, the 
Commission closed the procedure^78) 
412. The Commission allowed a guarantee of ECU 114 million and a loan of 
ECU 46 million granted by the TreuhandanstaIt to the process plant and 
machinery builder SKET to be extended until the end of June 1993, when a 
restructuring plan detailing the required reduction in workforce and capacity 
was to be concluded. 
It subsequently allowed the guarantee and the loan to be further extended 
until the end of May 1994 and additional loans totalling ECU 72 million to 
be provided. 
The aid was to facilitate the restructuring of SKET by ending unprofitable 
activities and transferring the remaining activities to six independent 
subsidiaries. The restructuring is a prerequisite for the privatization of 
these enterpr ises. 
413. The Commission closed the Article 93(2) procedure opened in 1991(^9) 
regarding aid granted by the Treuhandansta 11 and the Land of Thuringia for 
the privatization and restructuring of Carl Zeiss Jena, Jenoptik and Jenaer 
Glaswerk. The German Government had modified the aid package to eliminate the 
possibility of open-ended aid. The Commission concluded that the remaining 
ECU 960 million aid was justified.(8°) 
414. Aid of up to ECU 794 million from the Treuhand was authorized in 
connection with the partial privatization of the former East German potash 
mining company, MitteIdeutsche Kali AG. Following an open tender, 
Mi tteIdeutsche Kali is being taken over by the West German producer Kali und 
Salz AG, a subsidiary of BASF. Kali und Saiz will own 51% of the shares of 
the merged company, Mitte Ideutsche Kali GmbH, and Treuhand the other 49%. The 
merger with Kali und Salz was investigated under the Merger Control 
Regulation and authorized.(81) The aid consisting of an ECU 539 mi I I ion 
capital injection, non-repayment of ECU 160 million of bank loans, an amount 
of up to ECU 70 million to cover future losses and an amount of 
(78) OJ C 16, 19.1.1994. 
(79) Twenty-first Competition Report, point 250 
(80) 0J C 97, 6.4.1993. 
(81) See point 297 of this Report. 
4.1.§2.27 271 
ECU 24 million for redundancy costs is being granted for restructuring that 
will reduce production capacity by two thirds and the workforce to only one 
tenth (3 000) of its size in 1989. Kali und Salz AG is likewise greatly 
reducing its production capacity so that in 1994 the combined capacity of the 
merged company wi I I be only 56% of that of its two original parents (3.1 
million tonnes in 1994 against 5.5 million tonnes in 1989). 
415. The Commission approved aid of ECU 130 million in connection with the 
privatization of Neptun Industry Rostock GmbH. The former shipyard had 
already ceased building new ships and, under the terms of the sale, was to 
discontinue its ship-repair activities and to retain only various engineering 
businesses. The aid was for restructuring and investment and included 
ECU 48 million of regional aid. 
<T7> Portugal 
416. In July the Commission decided to terminate the Article 93(2) 
proceedings(82) which it had initiated in respect of a discriminatory clause 
based on the nationality of potential acquirers of shares in enterprises 
being privatized under Law 11/90 of 5 April 1990 (which allows restrictions 
to be placed on the total number of shares in the enterprise undergoing 
privatization that can be purchased by foreign companies),(83) after 
establishing that the clause was not linked to the granting of aid. 
The Commission therefore decided to approve the privatization programme, 
under Article 92 of the Treaty, subject to the following conditions: 
prior notification, in accordance with Article 93(3) of the EC Treaty, 
of privatization cases in which the Portuguese authorities propose to 
use the restricted or direct-sale procedure; 
(82) 0J C 253, 17.9.1993. 
(83) 0J C 26, 29.1.1993; Twenty-second Competition Report, point 465 
§2.28 
272 
communication to the Commission, by 30 June of the following year, of an 
annual report on the state of progress of the privatization programme. 
The Commission accordingly pursued separately the Article 169 proceedings 
initiated against the nationality clause. 
4.I.§3.1 273 
<T3> §3. Hor i zontaI aid 
<T4> Investment aid 
<T5> Review of existing schemes under Article 93(1) of the EC Treaty 
417. In 1993 the Commission all but completed the exercise launched in 
1990(1) to eliminate general investment aid schemes, i.e. schemes offering 
aid for investment to companies of any size, including those located outside 
assisted areas. As noted in the guidelines on aid for small and 
medium-sized enterprises,(2) such schemes run counter both to economic and 
social cohesion and to SME policy. 
418. In Belgium, following the Commission's decision on the repeal of the 
1959 Economic Expansion Law, the Flemish Region adopted the necessary 
regulations to implement the decision. 
<T4> Aid for environmental protection and energy conservation 
419. The environmental aid framework was extended for a further six .months 
until the end of 1993 when the new guidelines were adopted by the 
Commission.^) In the meantime a considerable number of environmental aid 
schemes or awards were authorized, many of them for purposes not catered for 
by the previous framework, so as to encourage voluntary action to reduce 
pollution in excess of any legal requirements. 
420. In February the Commission approved, pursuant to Article 92(3)(c), tax 
relief in Denmark for companies using a minimum of 50% recycled material as 
raw material in their production. The tax on waste delivered by companies 
to a disposal facility had been increased. The relief was justified by the 
fact' that companies using recycled materials were left with considerably 
larger quantities of waste than companies using primary raw materials. The 
tax relief would thus, generally speaking, place the companies receiving it 
on an equal footing with other companies with regard to the waste tax and 
(1) Twentieth Competition Report, points 171 and 247; Twenty-first 
Competition Report, points 240 and 241; Twenty-second competition 
Report, point 454. 
(2) OJ C 213, 19.8.1992. 
(3) See points 166 and 384 of this Report. 
4-1 -§3.2 274 
would promote the use of recycled material. Most of the firms benefiting 
would be SMEs. 
421. The Commission also approved an amended scheme in Denmark to pay firms 
engaged in the collection of waste oils. However, it considered in this case 
that the payments were straightforward remuneration for services, and not 
aid. The scheme was part of the arrangements introduced to implement the 
Council Directive on the disposal of waste oils.(4) 
422. In September^) the Commission approved an aid scheme introduced in 
Belgium by the Flemish regional authorities for investment which reduced 
pollution, conserved energy or raw materials, or improved the environmental 
acceptability or safety of products. To qualify for aid, the investment had 
to take the firm beyond legal requirements for pollution control or to 
achieve an exceptional performance in the conservation of energy or raw 
materials, product safety, etc. Aid equal to 20% gross of the investment 
costs could be granted from an annual budget of around ECU 18 million. 
423. In February the Commission approved proposed aid for an 
investment programme being carried out by two Belgian companies, Solvic & Cie 
CNC and Solvay Interox S.A., with a view to restricting environmental damage 
resulting from the companies' production methods and products (PVC, hydrogen 
peroxide and sodium perborate). The new processes developed by the two 
companies are innovatory and allow existing statutory requirements to be 
exceeded. They will not affect the production capacity of the factories. 
The aid is in the form of an ECU 5 million grant for Solvic & Cie CNC and an 
ECU 3.6 million grant plus a five-year exemption from property tax for Solvay 
Interox S.A. The net grant equivalent of the aid was below 10% in both 
cases. 
424. In September the Commission approved aid for PhenoIchemie, a chemicals 
company situated at Doe I in East Flanders. 
(4) OJ L 
(5) See point 432 of this Report. 
4.I.§3.3 275 
The company was planning to install a gas turbine with a generator and a 
steam-recovery boiler, for combined heat and power generation. The project 
will substantially reduce CO2 emissions. 
Of the total cost of the investment project (ECU 31 mi I I ion), on ly the part 
directly relating to energy conservation and environmental protection 
(ECU 21 million) was taken into account by the Flemish regional authorities 
in granting the firm a subsidy of less than ECU 3 million. 
The project went beyond the statutory constraints imposed by the public 
authorities as regards elimination of pollution or nuisances and did not 
entail any increase in the recipient company's production capacity. 
425. The Commission decided to initiate Article 93(2) proceedings against two 
decrees by the Walloon Regional Executive on renewable energy sources and the 
environment. The decrees presented a number of problems relating both to 
their legal basis and to the fact that both allowed aid to be granted to 
equipment manufacturers and not just to firms installing new equipment 
designed to conserve energy or reduce pollution. 
426. The Commission opened Article 93(2) proceedings against the proposal by 
the province of Trento in Italy to grant aid to Cartiere del Garda, a 
manufacturer of coated printing paper located at Riva del Garda.(6) The aid 
of ECU 100 million would compensate the company for the additional investment 
cost it would face should it decide for environmental reasons to expand not 
at Riva, but at Mori 20km away. 
The Commission took a final decision prohibiting the authorities from 
granting the aid.(7) It considered that the aid would not respect the 
polluter-pays principle laid down in Article 130r(2) of the EC Treaty, that 
it would run counter to the objective of cohesion and that it would adversely 
affect trading conditions to an extent contrary to the common interest, given 
the existing overcapacity in this sector. 
(6) OJ C 75, 17.3T1993. 
(7) OJ L 273, 5.11.1993 
4.I.§3.4 276 
<T4> Export aid 
427. Intensive work continued throughout the year on a draft communication 
applying Articles 92 and 93 of the EC Treaty to short-term export credit 
insurance.(8) New discussions with the experts of Member States at a 
multilateral meeting in June and at several meetings of the Council Export 
Credits Group clarified the remaining issues, in particular the possibility 
of governments' providing reinsurance cover to their export-credit insurers. 
The communication would require Member States to eliminate completely any 
remaining subsidies for a limited range of business (short-term commercial, 
or "marketable", risks) which is now mostly done by private insurers or by 
official export-credit agencies acting on their own account. The Commission 
hopes to issue the communication in 1994. 
428. The Commission continued to process schemes offering guarantees or other 
incentives to reduce the risks of investment in central or eastern European 
countries. In March it approved a scheme in the Netherlands whereby the State 
will guarantee subordinated loans extended by the Nationale Investeringsbank 
to enterprises in eastern Europe in which Dutch companies have at least a 40% 
stake. The total financial commitment of the Dutch Government under the 
scheme is some ECU 68 mi I I ion. 
In June the Commission approved Italian Law No 100 of 1990 comprising 
measures to promote participation by firms in joint ventures in eastern 
Europe. Subsidized loans may be granted, through the public-sector company 
Simest, to firms acquiring holdings in such joint ventures. The budget for 
the scheme is some ECU 135 million. 
429. Aid to improve the export performance of small and medium-sized firms in 
particular may be authorized, provided that it is limited to training, 
consultancy help, attendance at trade fairs and similar activités and does 
not subsidize actual exporting activity. In such cases the support does not 
need to be limited to non-EC markets. Several aid schemes providing for such 
support were approved in 1993, including the UK wool industry levy scheme^) 
and a scheme in Northern Ireland. 
(8) Twenty-first Competition Report, point 166; Twenty-second Competition 
Report, point 339; see point 382 of this Report. 
(9) See point 528 of this Report. 
277 
<T4> Aid to small and medium-sized enterprises 
430. As expected, (1°) the issue of the guidelines for aid to SMEs and the 
associated procedural improvements eased considerably the work of approving 
aid schemes for the small-firm sector.(11) Member States generally speaking 
adapted their new or renotified schemes to the definitions and aid 
intensities of the guidelines of their own accord or after a reminder from 
the Commission. Far more schemes than before qualified for the accelerated 
clearance procedure, which was widened last year.(12) in many cases the 
Commission was also able to tell Member States which had notified a scheme 
offering aid below the de minimis limit that formal clearance was not 
required. Many of the smaller schemes of this nature supported craft 
businesses or cooperatives in ,Spain and Italy. Training and consultancy help 
("soft aid") figured prominently in the activities supported by these 
schemes, many of which are co-financed by the Community's Structural Funds. 
Some of the larger SME schemes approved in 1993 are discussed below. 
431. In March the Directorate-General for Competition sent the Member States 
a, guidance note on the use of the de minimis faci I i ty. (13) This explained 
which categories of aid could be granted up to the de minimis limit without 
notification, clarified the rules for cumulation of de minimis aid with aid 
under authorized schemes in the same three-year period, explained how aid in 
forms other than grants could be converted into cash grant equivalent, and 
suggested ways in which the Member States could monitor the proper use of the 
fac iIi ty. 
432. The Commission approved an aid scheme for SMEs in Belgium that was 
introduced under a decree of the Flemish regional authorities and will also 
offer aid for environmental protection and energy conservation^14) Aid will 
be available for investment and for consultancy and training. Both in terms 
of definition and in terms of aid intensities, the scheme conformed to the 
guidelines. The Flemish Region's guarantee can be granted in exceptional 
circumstances provided that the conditions stipulated by the Commission 
in this respect are complied with, namely payment for the guarantee and use 
(10) Twenty-second Competition Report, point 467. 
(11) See point 159 of this Report. 
(12) Twenty-second Competition Report, point 348. 
(13) See Annex I I.B of this Report. 
(14) See point 422 of this Report. 
4.I.§3.6 _ „ 278 
of it only after all other means of recovery from the recipient and the other 
guarantors have been exhausted. 
433. A scheme was approved in Denmark for developing quality management in 
SMEs in the manufacturing and service sectors through consultancy and 
training. The projects eligible under the scheme are aimed mainly at 
improving management and developing human resources in accordance with the 
so-called "total quality concept", and not at the development of specific 
products or production processes. The scheme, with a maximum aid intensity 
of 50%, has a budget for 1993-95 of ECU 32 million. 
434. The Commission authorized an extension of the special accelerated 
depreciation allowances scheme for SMEs in Germany. The existing accelerated 
depreciation allowances allow very small businesses to deduct 20% of 
investment costs more than the standard rate of depreciation from taxable 
profits in the first year. Under the extended scheme the same businesses can 
form a tax-free reserve up to two years before the investment in respect of 
up to 45% of anticipated investment costs. This two-year tax-free loan to the 
firm will be worth between 2% and 3% net of the investment and, when added to 
the ordinary accelerated depreciation, will remain within the aid limits for 
SMEs under the guidelines. The extended scheme is to be introduced in 1995. 
It will re lease an extra ECU 450 mi I I ion for investment by smaII f i rms. 
435. The Commission also approved an extension of the equity loan scheme 
which provides long-term subordinated loans to small and medium-sized firms 
in the new eastern Lander of Germany. Introduced after unification, the 
scheme was originally intended to expire at the end of 1993 but will now 
continue until the end of 1995. The new scheme now offers loans when a new 
partner puts capital into an existing business, and not only for start-ups 
and expansion. Before approving the extended scheme, the Commission satisfied 
itself that the aid was principally for investment and not for working 
capital or rescues and that the maximum aid levels for SMEs in the region 
were observed. Around ECU 520 million a year is spent on the scheme. 
436. The Commission approved a number of smaller SME schemes in the new 
eastern German Lander, including an investment aid scheme in Thuringia for 
start-ups or for SMEs faced with difficulties in adapting to new market 
conditions. Under this scheme, only firms with good prospects of viability 
evidenced by a sound business plan were eligible. The maximum aid intensity 
4. I.§3.7 
279 
allowed will be the highest regional aid authorized by the Commission for 
Thuringia, currently 35%, plus the 15% supplement for SMEs allowed by the 
SME aid guidelines in assisted areas qualifying under Article 92(3)(a) 
of the EC Treaty. The annual budget for the scheme will be ECU 7 million. 
A scheme was also approved that will help smaller manufacturing businesses 
in Thuringia through acute financial difficulties due mainly to the burden of 
debt with which they were privatized and the delayed recovery of their 
markets. The support is limited to firms with sound prospects located in the 
parts of the Land with the highest unemployment rates and is intended largely 
for rescheduling old debt with loans at slightly concessionary rates. Funds 
of ECU 17 million for 1993 and ECU 52 million for 1994-96 have been allocated 
to the scheme. 
437. The French tax credit scheme for capital increases, approved last year 
for 1992 only,(15) was again authorized for 1993. Although the tax credit 
was available to companies larger than SMEs according to the Community 
definition, the figures for 1992 showed that, in practice, the scheme had 
been used mainly by very small businesses. This, together with the low amount 
of aid per firm and the expiry of the scheme at the end of 1993, persuaded 
the Commission to overlook the failure to adapt the scheme to the SME aid 
gu i de I i nes sooner . 
438. The position was similar in the case of Italian Law 317 of 
5 October 1991. In May the Commission cleared the package of SME aid measures 
provided for by this Law, after the Italian authorities had reduced the level 
of investment aid outside assisted areas to the maximum amounts allowed by 
the SME aid guide I ines.(1^) An amending decree was issued in July containing 
the new investment aid rates and other changes and adapting the definition of 
SMEs to that used in the guidelines. The Commission did not ask for recovery 
of any of the aid which had been paid unlawfully after its original one-year 
authorization ran out at the end of April 1992, because the detailed reports 
supplied by the Italian authorities had shown that, in practice, the aid 
awards had not exceeded the guideline limits and were very low in amount, the 
aid being widely spread throughout industry. 
(15) Twenty-second Competition Report, point 469. 
(16) Twenty-second Competition Report, point 471. 
4.I.§3.8 
280 
<T4> Employment aid 
439. This year, with the economic recession creating increasingly higher 
levels of unemployment, the Commission paid particular attention to the 
financial incentives introduced by Member States to promote employment for 
the jobless, especially those who find it more difficult to enter the 
employment market, such as young people and the long-term unemployed. Where 
such incentives are general and automatic, they may fall outside the scope of 
Art icle 92(1). 
However, while its approach to such measures is generally favourable, the 
Commission seeks to ensure that, when implemented, they are genuine 
job-creating instruments and not merely a means of subsidizing labour costs. 
If the latter were the case, the aid would be operating aid, the effect of 
which might be to keep in businesss firms faced with overcapacity, with the 
result that the same unemployment problem would be passed on to other 
Member States, boosting unemployment there. 
440. The Commission authorized the implementation by the Walloon regional 
authorities in Belgium of a draft decree providing for the granting of aid to 
small and medium-sized businesses that recruit between one and five 
unemployed persons to work on "development projects", i.e. studies and 
research in certain specified areas such as the development of new products, 
environmental protection, energy conservation and the promotion of 
alternative energy sources, and compliance with stricter quality standards 
than those required by law. The aid will be made available in the form of 
degressive wage subsidies and may not exceed 50% of the cost of the project, 
unless the firm is a small enterprise as defined in the Community guidelines 
on aid for SMEs and is recruiting from among certain categories of unemployed 
persons who are particularly difficult to integrate or reintegrate into the 
labour market. 
Such aid, which is available only for study or research programmes that do 
not entail any production activity, falls within the limits specified in 
the guidelines on aid for SMEs. The exception allowed in the case of 
recruitment by small businesses of unemployed persons facing particular 
employment difficulties is justified by the serious concern to find work for 
this category of job-seekers and by the size of the recipient firms. 
4.I.§3.9 ^ ^ 28 
441. The Commission approved three major job-creation schemes in 
Denmark which are designed to take up to 100 000 persons a year off the 
unemployment register over the period 1994-96. Two of the schemes had been 
approved in February and April in a slightly different form and were 
renotified for approval in December. The schemes will cost around 
ECU 2 billion a year. Two offer wage subsidies to firms and institutions 
taking on unemployed people to work for them, the other offers subsidies to 
unemployed persons starting up their own business. 
442. Under the largest scheme, any firm taking on an unemployed person (in 
practice, those unemployed for over a year) can claim a grant of ECU 5.5 per 
hour, or around 42% of average wages in Denmark. The maximum subsidized 
period is 12 months, making the maximum grant around ECU 9 300 per person. 
There must be a net increase in employment in the company and, if the wages 
subsidies are provided for over six months, the worker must be kept on for a 
certain period after the subsidy ends or given training. The second scheme is 
similar except that it is directed at groups of unemployed experiencing 
particular difficulties in finding a permanent job such as immigrants, and 
the workers will tend to be employed by institutions providing public 
services. Under this scheme, the subsidy can rise to around 70% of average 
wages and can last for more than 12 months. The same conditions as to 
continuation of employment after the ending of the subsidy or provision of 
training apply. Finally, the third scheme offers grants of 50% of the top 
rate of unemployment benefit for a maximum period of two-and-a-half years to 
unemployed persons setting up their own business. On the basis of the current 
top rate of unemployment benefit, the maximum grant can reach some ECU 19 00O 
per person. 
The Commission considered that all the schemes fell within Article 92(1) of 
the EC Treaty because the authorities exercised some discretion, especially 
with regard to the period and the level of the subsidies granted as well as 
to the terms on which the people taken on were employed under the first two 
schemes. In February it regarded the version of the first scheme notified at 
the time as a "general measure" not falling within Article 92(1) since the 
conditions, particularly with regard to the terms of employment, left little 
or no room for discretion and hence ruled out the possibility of the schemes 
being applied selectively. In the later decisions, the schemes with their 
discretionary aid element were in any event found to be in line with 
Community policy on employment creation and hence to qualify for exemption. 
4. I.§3.10 
282 
443. In June the Commission decided to terminate the proceedings it 
had initiated in respect of the draft Italian law providing for aid of a very 
high intensity to any firm managed or controlled by a majority of women and 
to authorize its implementation.(17) The Italian authorities have limited 
the scope of the scheme in such a way that the aid will be available only to 
small enterprises as defined in the guidelines on state aid for SMEs and will 
be restricted either to the maximum intensities laid down in the guidelines 
or to amounts that may be deemed to be aid of minor importance (over a 
three-year period, per firm, ECU 50 000 for investment aid and ECU 50 000 for 
other objectives, i.e. a maximum of ECU 100 000 in total). 
The scheme as defined is thus in line with two objectives which the 
Commission generally supports, namely the promotion of employment and 
equality of opportunity for women and the development of SMEs. 
< T 4 > Aid for rescuing and restructuring firms in d i ff icu I ty 
444. The recession brought forth many new cases of government-supported 
rescues and restructuring of firms that were in financial difficulty. In 
dealing with them and in deciding cases that had arisen in previous years, 
the Commission applied the well-established principles governing such aid, 
which is designed to prevent competitors being unduly harmed by the 
operation.(18) The Commission distinguishes between rescues, which are a 
holding operation while the future of the firm in difficulty - closure or 
restructuring - is being decided, and restructuring. The means which 
governments may use for rescues are short-term bridging loans at market rates 
or loan guarantees. The bridging finance should normally not be provided for 
more than six months, although the Commission recognizes that the period may 
be extended at the Member State's request unti I an investigation under the 
Article 93(2) procedure has been completed.(19) Restructuring aid must 
restore the viability of the company through a sound restructuring plan whose 
implementation is closely monitored but, besides this sine qua non, the 
restructuring must make an additional contribution to reducing overcapacity 
in the industry if the industry is in this situation, as it typically is. 
Otherwise, competitors which are having to finance restructuring from their 
(17) Twenty-second Competition Report, point 474. 
(18) Eighth Competition Report, points 227 and 228. 
(19) See point 527 of this Report. 
4.I.§3.11 
283 
own resources will suffer harm. In cases where there is no overcapacity in 
the industry, restructuring aid should still be conditional on some 
contribution to the common interest, although this need not take the form of 
extra capacity cuts or reduction of market share. 
Many of the cases dealt with in 1993 concerned the steel and motor 
industries, other sensitive sectors and privatizations, especially in eastern 
Germany. These are reported in the relevant section. The following cases are 
some of the other cases. 
445. In western Germany, the Commission authorized aid to the machine tool 
manufacturer Berstorff Machinenbau GmbH, Hannover, in the form of a credit 
guarantee provided by the Lower Saxony authorities under an approved scheme. 
Berstorff manufactures machine tools used in the production of rubber and 
synthetic products. The guarantee covered 80% of an ECU 8 million loan 
extended to the company on market conditions. 
The firm was carrying out a restructuring plan drawn up by an independent 
consultant with a view to restoring its viability in the near future. Its 
difficulties were due to the loss of markets in eastern and central Europe. 
446. The Commission authorized the Bavarian Land Government to guarantee 
until the end of 1993 an ECU 9 million loan to a pulp mill, Bayer ische 
Zellstoff GmbH, Kelheim. The company had gone bankrupt as a result of the 
loss of production due to teething troubles with a new process which avoids 
the use of sulphur or chorine and is therefore less harmful to the 
env i ronment. 
447. The Bavarian authorities were also authorized to grant an interest 
subsidy on an ECU 15.5 million loan extended by private banks to two machine 
tool manufacturers, Maho AG and Deckel AG, which were restructuring and 
merging their activities. The interest subsidy, worth ECU 1.3 million, was 
the only public funding for the rescue and restructuring operation, which 
involved the workforces of the two companies, suppliers and private bank 
creditors. Private banks were writing off ECU 52 million of debt, while 
ECU 15.5 mi I I ion was coming from sales of land and a similar amount in new 
equity from the shareholders. 
4.I.§3.12 
284 
448. The Commission closed the Article 93(2) proceedings against aid offered 
by the Basque Government for restructuring EsmaI taciones San Ignacio S.A., a 
producer of enamelled steel cookware, gas bottles and industrial boilers, 
located at Vitoria (Alava). The Commission had initiated the procedure in 
July 1992.(2°) 
The aid consisted of a seven-year guarantee for a loan of ECU 7 million at 
market interest rates. The guaranteed credit was to be used by the company 
to finance part of a restructuring programme which involves a major reduction 
in its labour force. 
In its final decision, the Commission noted the fact that the revised 
.restructuring plan presented by the Spanish authorities appeared capable of 
restoring the company's long-term viability. The restructuring involved 
closing down loss-making lines and a reduction in its remaining capacity by 
about 13 %. The Commission also took into consideration the very low aid 
intensity of a guarantee on a loan at market interest rates when the 
loan is fully secured by assets and the beneficiary has a sound restructuring 
programme. 
449. The Commission also terminated the Article 93(2) proceedings started in 
July 1990(21) in respect of aid granted by the Spanish authorities in 
connection with the sale of certain selected assets of the engineering group 
Cenemesa to Asea Brown Boveri (ABB). 
Although not the owner, the Spanish State had been actively involved in 
seeking a purchaser for the group. In August 1989 it accepted an offer from 
ABB to acquire the group. Under the terms of the agreement, the State 
promised that the group's public-sector creditors would waive their claims 
to some ECU 230 million of debts and unilaterally relinquish the mortgages 
held on assets and also agreed to cover the costs of an early retirement 
scheme for some 1 700 employees. 
The Commission considered that, in waiving debts and agreeing to finance 
redundancies, the Spanish State had not acted like a private creditor but as 
a provider of aid. It took the view that the agreement between ABB and the 
Spanish State was not part of a normal liquidation procedure and that ABB had 
(20) Twenty-second Competition Report, point 423. 
(21) Twentieth Competition Report, point 275. 
§3.13 
285 
benefited from being able to acquire the assets of the Cenemesa group as a 
going concern without having to take over the debts normally associated with 
such a purchase. 
However, ABB had supplied information endorsed by the Spanish authorities and 
showing that the former industrial activities of the group, now run by ABB, 
would be restructured according to a plan which may be considered 
satisfactory from the Community point of view. The restructuring programme 
has reduced production capacity in all business lines by an average of more 
than 50%. This action has removed excess capacity in the Spanish market and 
was likely to make ABB's Spanish operation profitable and viable. ABB has 
contributed substantial funds and know-how to put the assets back on a viable 
foot ing. 
Lastly, the Commission took into consideration the fact that the 
restructuring plan would secure jobs in areas with specific problems of 
underdevelopment and industrial decline. 
450. The Commission closed the Article 93(2) proceedings(22) it had opened 
in July 1992(23) in respect of a proposal by the Basque authorities to 
provide aid in the form of an ECU 33 million state guarantee for the 
restructuring of La Papelera Espanola, a group of companies producing and 
processing pulp and paper. 
The Spanish Government had submitted a revised restructuring plan drawn up by 
the Basque authorities and the beneficiary group. The plan was likely to 
restore the group's profitability by 1995 by increasing productivity and 
quality and by reducing capacity. The Commission also took into account the 
very low aid intensity of the guarantee. 
451. The Commission extended the investigation begun in March 1992 and first 
extended in September 1992(24) to cover possible additional aid to the 
mechanical engineering enterprise CMF Sud SpA and its successor company CMF 
SpA. The old aid and the new are being vetted by the Commission in the light 
of the group's restructuring programme, which is under discussion with the 
I ta Iian author i t ies. 
(22) OJ C 123, 5.5.1993. 
(23) Twenty-second Competition Report, point 422 
(24) Twenty-second Competition Report, point 426 
4.I.§3.14 
286 
Following the extension of the proceedings in September 1992, the Italian 
authorities informed the Commission of a reorganization of CMF Sud SpA, 
whereby the holding company IRITECNA would set up a new company, CMF SpA, to 
which CFM Sud SpA would sell its core business for a token sum initially set 
at ECU 100 000. 
Afterwards, CMF Sud SpA would go into voluntary liquidation and IRITECNA 
would meet all its liabilities during liquidation. 
The Commission considered that the provision of capital to the new company, 
the transfer to it of the old company's core business for a token sum, and 
the guaranteeing of all the old company's debts during liquidation involved 
aid. 
452. The Commission opened Article 93(2) proceedings against the financing 
made available to Avenir Graphique, a printing house at Torcy (Marne la 
Vallée), by three state-owned banks in 1991. The banks later waived most of 
their claims when Avenir Graphique was taken over by another printing group. 
453. The Commission took a final decision(25) on a scheme introduced by the 
Lazio regional authorities in Italy to assist the ceramics sector. 
Article 93(2) proceedings had been opened in December 1992(26) against the 
ECU 3.5 million operating and investment aid to manufacturers of sanitary 
ware and crockery. 
The Commission decided that aid exceeding the limits it had set out in its 
guidelines on state aid to small and medium-sized enterprises(27) was 
incompatible with the common market and therefore could not be granted but 
that aid falling within those limits could be allowed. 
(25) OJ L 238, 23.9.1993. 
(26) Twenty-second Competition Report, point 429. 
(27) Twenty-second Competition Report, point 342. 
4.I.§4.15 
287 
<T3> §4. Aid for research and development 
<T4> General policy developments 
454. The Commission considers that the Community framework for state aid for 
research and development/28) as originally published, continues to be an 
appropriate instrument for the monitoring of R&D aid. 
455. At the multilateral meeting held in June, Commission staff discussed 
with experts from the Member States the arrangements regarding aid provided 
in the form of an advance that is repayable if the research is successful. 
Most Member States have aid schemes of this type. 
In its administrative practice, the Commission allows such advances to cover 
initially 40% of the costs of the applied research or development projects. 
Where these are successful, the aid is repaid so that the actual intensity of 
the aid does not exceed a gross grant equivalent of 25%. 
The conclusion drawn from the discussions was that there were not sufficient 
arguments for the Commission to change its policy on this type of aid for the 
t ime being. 
456. All the aid authorized in 1993 was cleared under the exemption provided 
for in Article 92(3)(c), except for two EUREKA projects (HDTV EU 95 and 
JESSI EU 127), which were cleared under Article 92(3)(b). Some of the more 
important decisions are described below. 
<T7> Belgium 
457. In connection with the federalization of Belgium, the Commission 
authorized in March the R&D aid scheme for the Walloon Region, which replaces 
two national schemes ("IRSIA industrie" and "Prototypes") already approved by 
the Commission. The budget for 1993 is ECU 73 million and will be used to 
finance all stages of research carried out by public institutions and by 
f i rms. 
(28) OJ C 83, 11 .4.1986 
4. I .§4.16 
288 
The aid for basic research takes the form of a 50% subsidy (60% in the case 
of SMEs). The aid for applied research and development is in the form of a 
40% advance (50% for SMEs) that will be repaid in the event of success so 
that the actual intensity will be 25% (35% in the case of SMEs). No 
repayment will be required if the research is not successful. 
<T7> Germany 
458. The Commission authorized state aid for research relating to the 
"VERBMOBIL" project. The aid, in the form of a grant, is intended for 
universities, research institutes and firms working on a project designed to 
allow sponanteous dialogue to be captured by machine and translated 
automat icaI I y. 
The project leader is the German centre for artificial intelligence. The aid 
will amount to ECU 30 million over four years, with a gross intensity of 47%. 
Since the project relates to basic research and since the criteria regarding 
additionaIity and the common interest are complied with, the Commission 
applied the exemption provided for in Article 92(3)(c) of the EC Treaty. 
459. The Commission also gave the go-ahead for the "Arbeit und Technik" 
research programme. This scheme, which has a budget of some ECU 163 million 
for the period 1993-96, will finance fundamental research and basic 
industrial research into the protection of health at the workplace by 
reducing and providing safeguards against dangerous loads, and into the 
adaptation of work and technology to the individual. Two thirds of the 
budget will go to scientific establishments and one third to firms, 50% of 
whose costs may be financed (60% in the new Lander). 
460. The Commission did not raise any objections to a collaborative research 
programme for SMEs. The scheme, which covers the period from 1993 to 2000, 
has a total budget of ECU 150 million. The objectives of the programme are 
to give SMEs access to research carried out at both national and 
international level and to help research workers move from industry to public 
research centres and vice versa. The level of intensity allowed is 35% (40% 
in the new Lander) of the cost of the project, with a maximum ceiling of 
ECU 155 000 (ECU 210 000) per firm for national collaboration and ECU 260 000 
(ECU 310 000) for international cooperation. As regards the transfer of 
research workers, the maximum intensity will be 40% (50%) of gross salary. 
4.I.§4.17 
289 
461. The Commission approved an extension of the major transport research 
programme "Verkehrsforschung" for 1993, which had originally been approved in 
1989 and 1990.(29) The bulk of the budget of ECU 82 million was for further 
work on the "Transrapid" magnetic lévitation train system, with smaller 
amounts for basic research on other aspects of high-speed train operation, 
urban public transport, goods transport and "transport chains". 
462. Also approved were two major research programmes in laser technology and 
in "microsystems", i.e. systems that are able to sense, process and react to 
stimuli and have potential applications in health care, environmental 
protection and transport. The laser technology programme has a budget of 
ECU 84 million until 1997 and the microsystems technology programme 
ECU 130 million for 1994-99. In line with the R&D aid framework and 
established practice, the normal aid rates can be increased by 10 percentage 
points for SMEs and for firms in the new Lander (15 percentage points for 
SMEs in the new Lander). 
<T7> France 
463. In January, February and April the Commission approved the annual 
refinancing of four French schemes covering research, development and 
innovât ion. 
The schemes are, firstly, the Atout-Puma programme, which is mainly intended 
for SMEs and, through grants and repayable advances, funds R&D projects on 
the integration of advanced materials into industrial technologies. The 
second is the Research and Technology Fund (FRT) scheme, which assists firms 
in their fundamental research or basic industrial research projects with 
grants that may cover up to 50% of project costs. 
The third scheme, "Major innovative projects", is intended for industrial 
firms working on very specific technological developments such as intelligent 
and flexible machines, clean and energy-efficient vehicles, advanced 
high-speed trains and major innovatory industrial processes. 
(29) Nineteenth Competition Report, point 145; Twentieth Competition Report, 
point 197. 
4.I.§4.18 
290 
The last programme relates to Anvar ("Agence NationaI pour la Valorisation de 
la Recherche"), which covers all stages of R&D, focusing on applied research. 
Aid to firms is provided in the form of advances which are repayable where 
the projects are successful (85% of the budget) and direct grants 
(feasibility studies). The total budget for the four schemes approved was 
ECU 536 mi I I ion in 1993. 
<T7> United Kingdom 
464. In May the Commission approved state aid for research by Shorts PLC, 
Belfast (Northern Ireland), for the design and development of a new executive 
jet known as the Learjet 45. The aid is provided in the form of an advance 
that is repayable if the project is successful, this being defined as 
the sale of 101 planes. The advance covers 25% of the costs borne by the 
f i rm. 
Although the project is not covered by the July 1992 agreement between the 
European Community and the United States on trade in large-capacity civil 
a i rcraf t, (3°) the terms of the aid are in line with the provisions of the 
agreement. 
(30) Twenty-second Competition Report, point 356. 
4.I.§5.19 
29 
<T3> §5. Regional aid 
<T4> General developments 
465. In monitoring national regional aid, the Commission continued to pursue 
the objective of increasing economic and social cohesion between the more 
developed and the less developed parts of the Union so as to reinforce the 
effect of the Structural Funds.(31) Cohesion requires the authorization of 
higher levels of national aid in the more disadvantaged regions. In other 
words, the less developed regions must be free to offer higher levels of aid 
to attract investment than the more developed ones. Furthermore, in the more 
prosperous regions, whose development problems are relatively speaking less 
severe, regional aid must be concentrated on the areas genuinely needing it, 
leading to a gradual reduction in the assisted-area coverage. Competing forms 
of aid in the non-assisted areas of developed countries must clearly also be 
strictly controlled, with investment incentives being confined to small and 
medium-sized firms or to special purposes like environmental protection^32) 
466. In presenting its proposals on amendments to the Regulations governing 
the Structural Funds,(33) the Commission committed itself to achieving 
greater coherence between structural and state aid policies. This greater 
coherence is to be assured thanks to the adoption of a timetable governing 
the eligibility of a region for aid within the framework of the two policies 
in question as well as ensuring that the regions eligible for structural fund 
aid are also eligible for national regional aid when a Member State so wishes 
it. It goes without saying that, in accordance with Art. 7 of Reg(EEC)n" 
2081/93 of the Council of 20 July 1993, support given by the Structural Funds 
must be in conformity with Community policies, including those concerning the 
rules of competition. 
(31) Twenty-first Competition Report, points 54 to 56. 
(32) See points 419 et seg. and 430 et seg. of this Report. 
(33) C0M(93)67 final, p. 15. 
4.I.§5.20 
292 
467. The Commission continued work on a policy for tackling the major 
distortions of competition that can be caused by aid for capital-intensive 
investment^34) On the basis of data supplied by the Member States, it 
explored the possibility of calculating aid in relation to value added as 
ana Iternative to the investment cost/Job criterion. However, this 
calculation does not appear feasible in the short run. The main decisions on 
national regional aid schemes are reported below. 
<T7> Belgium 
468. The Commission initiated Article 93(2) proceedings against an aid scheme 
for firms participating in European industrial programmes covered by specific 
international agreements. In addition to procedural irregularities, the 
scheme allowed operating aid to be granted in regions eligible for regional 
aid under Article 92(3)(c) of the EC Treaty, whereas such aid is acceptable, 
subject to certain conditions, only in regions eligible under 
Article 92(3)(a). 
Denmark 
469. The Commission authorized the setting-up of six enterprise zones within 
the assisted areas of Bornholm, Nordjylland and Storestrrim. The level of aid 
to be offered in the enterprise zones, mainly in the form of accelerated 
depreciation, remains within the limits the Commission has already authorized 
for the areas. In an effort to channel more investment funds to Bornholm, the 
Danish authorities decided that tax allowances offered to employers and small 
businesses for investment there would not be subject to the normal 
restriction of being an active partner in the business invested in. The 
Commission also approved this scheme. 
<T7> Germany 
470. The Commission approved the general plan of the main regional aid 
programme for 1993, i.e. the Federal Government/Lander joint programme 
("Gemeinschaftsaufgabe"), which was only slightly changed from previous 
years. Continuing the pattern since unification, one which is likely to 
(34) Twenty-first Competition Report, point 164 
4.I.§5.21 
293 
persist in the future, some 89% of the ECU 5.2 billion or so of aid to be 
paid out under the programme in 1993 was to be spent in the new Lander. 
471. The Commission agreed to a number of improvements in the range of 
regional incentives in the new Lander. The system of special accelerated 
depreciation for investment there will now be extended until the end of 
1996,(35) injecting an estimated ECU 5.4 billion more into the economy of 
the new Lander. The guarantee scheme introduced in 1991 for investment in 
the former German Democratic Republic(36) was extended to restructuring 
cases in areas suffering from especially high unemployment. Finally, the 
Commission authorized the sale of industrial land owned by the Government in 
the new Lander at half its market value and allowed the Berlin authorities 
to subsidize rents for industrial and commercial buildings in assisted parts 
of the city (in non-assisted parts, the lower rents will be available only 
to SMEs). 
472. The Commission closed the Article 93(2) proceedings against the grant 
of aid under the special ERP investment aid scheme for the new Lander, the 
"ERP-Aufbauprogramm", in the former West Berlin/37) The German authorities 
had agreed to stop giving aid under the scheme to companies in West Berlin, 
and the aid already granted had been within the limits laid down by the SME 
aid guidelines. With regard to a provision of the investment allowance 
scheme in the new Lander(38) allowing those resident there before the 
ending of the old regime to claim a higher rate than companies that had set 
up later, the Commission asked the German Government to repeal this 
discriminatory provision by 30 June 1994. 
<T7> Spain 
473. In May the Commission adopted a negative final decision on a system of 
tax aid for investment in the Basque Country/39) In its decision the 
Commission confirmed the position it had taken when proceedings were 
initiated/40) particularly as regards the discrimination in breach of 
Article 52 of the EC Treaty, which relates to freedom of establishment. 
(35) Twenty-second Competition Report, point 484. 
(36) Twenty-first Competition Report, point 285. 
(37) Twenty-second Competition Report, point 485. 
(38) Twenty-second Competition Report, points 483 and 486 
(39) OJ L 134, 3.6.1993. 
(40) Twenty-first Competition Report, point 292. 
4. I .§5.22 294 
Such discrimination is moreover one of the main reasons why the Commission 
considers that the scheme is caught by Article 92(1) of the EC Treaty and 
isnot a general measure. 
The authorities concerned were therefore asked to end the distortions in 
respect of Article 52 by 31 December 1993 at the latest. In addition, the 
Commission decided that the Spanish authorities must, within two months of 
notification of the decision and until such time as the discrimination was 
abolished, ensure that the aid granted was restricted to the areas and 
ceilings authorized for regional aid. 
<T7> France 
474. The Commission decided not to raise any objections to the credit policy 
pursued by the "Institut d'Émission des Départements d'Outre-Mer" (IEDOM). A 
particular feature of that policy is the rediscount agreements under which 
the IEDOM refinances, at a reduced rate, certain assistance provided by 
credit institutions in the overseas departments to local firms. 
The Commission took the view that such measures constituted aid for the 
credit institutions, since it reduced the cost of their resources, and for 
firms, since they obtained loans more cheaply. 
It decided not to raise any objections to the aid since it was intended for 
disadvantaged regions eligible for the exemption provided for in 
Article 92(3)(a) of the EC Treaty, in respect of which the Council, in its 
Decision of 22 December 1989 establishing the Poseidom programme/41) 
recognized the need for specific measures. 
<T7> Italy 
475. The Commission approved a number of provisions adopted by the Sicilian 
authorities that anticipate or replace national aid schemes for the 
Mezzogiorno in respect of which a considerable payments backlog has built up. 
The backlog entails substantial costs for investors, who are obliged, 
pending payment of the aid, to borrow from banks at market rates in.order to 
carry out their planned investment. 
(41) OJ L 399, 30.12.1989. 
4.I.§5.23 
295 
The scheme comprises subsidized loans for SMEs and advance payment of aid due 
to firms under Law No 64/86, within the limits allowed by the Commission for 
extraordinary aid in the Mezzogiorno. 
476. For similar reasons, i.e. in particular to mitigate the delays in the 
payment of aid under Law No 488/92 on extraordinary aid in the Mezzogiorno, 
the Commission authorized the region of Sardinia to grant subsidized loans to 
SMEs. The maximum ceilings authorized by the Commission in the region must 
be complied with where such loans are combined with aid granted under other 
regional, national or Community schemes. 
477. The Commission terminated the Article 93(2) proceedings initiated in 
September 1992(42) in respect of certain aid provided for under Law No 102 
of 2 May 1990 on the reconstruction and development of La Va I te I I i na. 
The aid consisted of grants, interest repayments, subsidized loans, 
guarantees and tax reliefs for firms in La Va I te I I i na and surrounding areas 
affected by the 1987 flooding. 
During the proceedings, the Italian authorities undertook to adjust the 
scheme so as to restrict eligibility to SMEs, to comply with the aid ceilings 
stipulated by the Commission, to turn the operating aid into investment aid 
and, in other cases, not to exceed the levels of aid of minor 
importance/43) In view of the proposed adjustments, the Commission 
declared the aid compatible with the common market. 
<T7> Portugal 
478. In July the Commission approved aid under the RETEX programme notified 
by the Portuguese authorities. The programme comprises various types of 
measures most of which involve aid within the meaning of Article 92 of the 
EC Treaty. The aim of the programme is to promote economic diversification 
in the regions affected by the restructuring of the textile and clothing 
industry. The aid is in the form of outright grants, interest-free loans 
and acquisition of public holdings financed by a risk capital fund. Most of 
(42) Twenty-second Competition Report, point 497. 
(43) Twenty-second Competition Report, point 337. See also point 431 of this 
Report. 
4. I.§5.24 
296 
the aid relates to services and to expenditure not directly linked to 
production. 
The individual measures under the programme provide for varying intensities 
of aid. The measures may be combined with one another, in respect of the 
same eligible expenditure, up to a maximum intensity of 75% (gross). They 
may also be combined with other aid in the form of tax relief. However, the 
combined total of programme aid and tax aid must likewise not exceed 75% 
(gross). 
The national budget provided for in the programme to cover financing of the 
aid in the period 1993-97 is ECU 48 million (1993 prices). The aid is part 
of the Community's RETEX programme and is thus jointly financed by the 
Structural Funds. 
<T7> United Kingdom 
479. In July the Commission decided not to raise any objections to the new 
assisted areas map in the United Kingdom. This replaces the map approved in 
December 1984 and consists of travel-to-work areas (TTWAs) and parts of such 
areas. 
The assisted areas have, as in the past, been divided into two categories: 
development areas, in which aid may amount to 30% net grant equivalent, and 
intermediate areas, in which aid is restricted to 20% net grant equivalent. 
The main scheme in force in the assisted areas in the United Kingdom is the 
regional selective assistance scheme, which was approved at the same time as 
the previous assisted areas map; the aid is provided in the form of capital 
grants, and its intensity is limited to the abovementioned ceilings. 
Some TTWAs have been divided in two, with one part having the status of 
development area and the other that of intermediate area (Birmingham, 
Blaenau, Gwent and Abergavenny, Pontypridd and Rhondda, Wirral and Chester). 
29 7 
The TTWAs of which only part is covered by the new map are the following: 
Newport, Shotton, Flint and Rhyl, Wrexham, Dorchester and Weymouth, Cardiff 
(Objective 2 part) and London (a small part representing 0.5% of the total UK 
population). The part of London was included in the assisted areas map 
because of its high level of unemployment, which is due to the steady 
deterioration of the industrial base in that part of the city. 
A significant new development is the inclusion in the assisted areas map of a 
large part of the County of Kent (the Thanet, Dover and Deal, Folkestone, 
Sittingbourne and Sheerness TTWAs) as a result of the anticipated loss of 
jobs connected with the port, the ferry link with the continent and the 
customs services once the Channel tunnel has been opened. 
The proportion of the population covered (35.15% of the total population) is 
only very slightly lower (0.15 percentage points) than previously. 
4.I.§6.p.1 
<T3> §6. Aid to sectors of industry subject to 
special Community rules on state aid 
<T4> Genera I 298 
480. In 1993 the need for strict aid control in industries with severe 
structural problems was brought home with increased force/1) It is in 
recessions that the special aid frameworks and codes in these sectors prove 
their worth. As in the mid-1980s, it fell to the Commission to initiate an 
orderly restructuring of the steel industry and prevent a subsidy race/2) 
The difference between the 1980s and 1993 was that the steel aid code no 
longer allows aid for restructuring except for plant closures, with the 
result that the assent of the Council under Article 95 of the ECSC Treaty had 
to be obtained in several cases. In the shipbuilding, synthetic fibres and 
motor vehicle industries too, the determined enforcement of the aid rules by 
the Commission maintained confidence in a level playing-field while firms 
undertook necessary restructuring. 
<T5> (a) Aid to the steel industry 
<T6> Steel covered by the ECSC Treaty 
481. At the end of the year the Commission succeeded in removing one of the 
obstacles to much-needed capacity cuts in the Community's steel industry when 
it secured the Council's agreement that special derogations under Article 95 
of the ECSC Treaty be granted to allow certain Member States to provide aid 
packages in support of the restructuring and, in some cases, privatization of 
public loss-making steel companies. These cases involved six companies in 
four Member States: I I va in Italy and CSI and Sidenor in Spain/3) EKO Stahl 
and SEW Freital in the former German Democratic Republic and the Siderurgia 
Nac ionaI in PortugaI. 
The settlement of these cases removed one of the obstacles to the private 
steel companies proceeding with a wider round of voluntary capacity 
reductions which the Council in February promised to support with additional 
(1) See points 29 and 374 of this Report. See also Twenty-second 
Competition Report, point 375. 
(2) Fifteenth Competition Report, points 177 et seg. 
(3) Twenty-second Competition Report, points 392 to 398. 
(i 
4.I.§6.p.2 
299 
Community funds to help with redundancy costs and possible ECSC loans to 
steel companies making capacity reductions under voluntary arrangements. 
In examining the six Article 95 ECSC cases, the Commission's approach was to 
ensure (where appropriate, with the assistance of outside consultants) that 
the restructuring plans were viable, that the aid would be limited to the 
amount absolutely necessary and that it would not adversely affect trading 
conditions within the Community to an extent contrary to the common interest 
by requiring counterpart measures, commensurate with the aid involved, in the 
form of capacity reductions to contribute towards the necessary structural 
adjustment of the sector. With the objective of providing equality of 
treatment as regards the latter aspect, the Commission aimed at a capacity 
reduction/aid ratio of around 750 000 tonnes/year (t/y) per ECU 1 billion in 
aid. This ratio was considered to be appropriate given the prevailing market 
situation. 
After lengthy and, in some cases, difficult negotiations with the 
Member States concerned and after repeated unsuccessful discussions in the 
Council throughout the year, an amended set of proposals was accepted on 
17 December by the Council. This cleared the way for the Commission to adopt 
decisions authorizing these aid packages early in 1994. 
482. The Council and the Commission stressed the finality and exceptional 
nature of these derogations and pledged that there would be no further aid to 
these producers that was not allowed under the steel aid code. Moreover, 
there were a number of important conditions attached to the approval of the 
aid. These included capacity reductions required as a counterpart for the 
aid amounting to a total of around 5.5 million t/y of hot-rolled products. 
In order to ensure that these reductions are definitive and irreversible, the 
installations concerned must be scrapped or sold for use outside Europe. In 
addition there must be no increase in remaining capacity, apart from 
productivity improvements, for at least five years as from the date of the 
last capacity closure or payment of aid in respect of investments under the 
plan, whichever is the later. Other conditions included requirements that 
the recipient companies should have a minimum level of financial charges of 
3.5% of turnover, should not benefit from tax relief on past losses and 
should carry out on time all the restructuring measures laid down in the 
restructur ing p lans. 
4.,.§s.p.3 30Q 
In order to ensure that all the conditions are met, the restructuring plans 
will be subject to close monitoring for the next five years, with the 
Member States required to submit six-monthly and, if necessary, quarterly 
reports to the Commission containing full information on the recipient 
company and its restructuring such as to allow the Commission to assess 
whether its conditions and requirements are fulfilled. Particular attention 
will be paid to the following: capacity and employment reductions; 
investments; compliance with the timetable for closures; production and 
effects; results in the financial markets; where appropriate, privatization 
and creation of new companies; the source and terms and conditions of any 
further financing; and progress towards viability. 
In order to verify the accuracy of the information supplied, the Commission 
may make checks in accordance with Article 47 of the ECSC Treaty and, in the 
event of a complaint in respect of underpricing by an aided company, may 
launch investigations under Article 60 of the ECSC Treaty. 
The Commission will submit six-monthly reports to the Council to keep it 
informed of developments. It may decide to mandate independent consultants, 
with the agreement of the governments concerned, to assist in its monitoring 
task. It is empowered to order the suspension or recovery of aid if the 
conditions are not fully respected. If necessary, recourse will be had to 
Article 88 of the ECSC Treaty in cases where Member States fail to comply 
with any such decisions. The Commission may also require additional measures 
to reinforce the restructuring if progress towards viability is not being 
achieved. 
The capacity cuts pledged by the countries authorized to grant aid will make 
an important contribution towards the wider restructuring effort. The total 
reductions necessary to restore viable conditions on the Community steel 
market are estimated by the Commission at a minimum of 19 million t/y of 
hot-rolled products and 30 million t/y of liquid steel production. A special 
representative of the Commission, Mr Fernand Braun, was charged with 
identifying potential cuts of this order of magnitude in cooperation with the 
industry. In November the Commission agreed to allocate ECSC funds for 
lending to companies contributing to a restructuring pool out of which some 
of the closure costs would be met. 
4.I.§6.p.4 
301 
Details of the Article 95 ECSC cases and other important cases dealt with in 
the course of the year follow. 
<7> Belgium 
483. The Commission carried out an investigation into an ECU 12.5 million 
bridging loan granted to Forges de Clabecq by Société Wallonne pour la 
Sidérugie, a public holding company wholly owned by the Walloon Regional 
Executive/4) It closed the case after the Walloon authorities had proposed 
to raise the interest rate on the loan by 0.5% to 9.3%, a level which would 
include an appropriate risk premium and therefore represented a realistic 
commercial interest rate for a steel producer under present conditions/^) 
<T7> Germany 
484. One of the two German cases approved by the Council in December under 
Article 95 of the ECSC Treaty concerned aid for restructuring at Sachsische 
EdelstahIwerke, Freital (Saxony). The aid amounted to some ECU 177 million, 
of which ECU 37 million was allowed by the Commission under Article 5 of the 
steel aid code and Article 92 of the EC Treaty/6) The Commission had 
proposed a positive decision on the remaining ECU 140 million as early as 
May, in view of the substantial capacity reduction (53%) in hot-rolled 
finished products of 160 000 t/y. 
485. The second decision approved by the Council in December concerned 
EKO Stahl, Eisenhuttenstadt (Brandenburg). It was agreed that the Treuhand 
could provide ECU 428 million in aid to the company to cover restructuring 
and part of the cost of investment in a new hot strip rolling mill, which for 
a five-year period after the last aid payment under the plan or after the 
last closure of capacities under the plan, whichever was the later, would be 
limited to a capacity of 900 000 t/y. It was decided that 60% of EKO Stahl 
would be sold to the Italian private steelmaker Riva. While EKO Stahl itself 
was creating hot-rolling capacity with the new mill, a net reduction in 
capacity in the East German steel industry of 462 000 t/y compared with 1990 
(when it entered the Community) would be achieved. This included the 
(4) 0J C 248, 11.9.1993 
(5) 0J C 71, 9.3.1994. 
(6) 0J C 302, 9.11.1993 
4. I .§6.p.5 
302 
closure, agreed in December, of a 320 000 t/y capacity medium section mill 
at a plant already owned by Riva, at Hennigsdorf. A further ECU 158 million 
in aid was to be provided for the investment at EKO Stahl under the regional 
investment aid schemes, as allowed by Article 5 of the steel aid code. 
In April the Commission had come out against an earlier restructuring plan 
for EKO Stahl which would have involved nearly ECU 1 billion in aid. This was 
based on a so-called stand-alone concept, without private capital being 
involved. 
In November, following a new proposal by the German Government, the 
Commission took the view that the relation between the state aid proposed 
(ECU 464.7 million) and the associated capacity reduction in hot-rolled 
products (142 000 t/y) was still not sufficient to Justify a proposal for the 
Council to approve the aid involved under Article 95 of the ECSC Treaty. In 
the Commission's view, the required capacity reduction for such a level of 
aid should amount to 350 000 t/y. 
486. As it had done in 1992 for the main regional aid schemes/7) the 
Commission approved under Article 5 of the steel aid code the possible 
granting, under the main ERP schemes/8) of aid to the steel industry in 
the new Lander until the end of 1994/9) Over the year it also authorized 
several awards of regional investment aid, under Article 5 of the steel aid 
code, to steel companies in the new Lander, including ECU 18 million and 
12 million to Hennigsdorfer ElektrostahIwerke and Brandenburger 
ElektrostahIwerke respectively, which were taken over by Riva last year/10) 
and to a number of scrap-treatment firms in the new Lander. 
487. The Commission initiated an investigation under Article 6(4) of the 
steel aid code into ECU 17 million in aid which the Lower Saxony Land 
Government planned to give to Georgsmarienhutte, Lower Saxony, formerly 
Klockner Edelstahl, for costs associated with the construction of a new 
electric arc furnace/11) The aid was notified for approval as aid for R&D, 
but the Commission had doubts whether it should not be considered as aid for 
investment. 
(7) Twenty-second Competition Report, points 386 and 391. 
(8) Twenty-second Competition Report, point 468. 
(9) 0J 
(10) Twenty-second Competition Report, point 388; 0J ... 
(11) 0J C 71, 9.3.1994. 
4.I.§6.p.6 
303 
<T7> Spain 
488. The aid and restructuring package approved by the Council in December 
included aid of ECU 515 million in support of a restructuring plan for the 
special steels company Sidenor. Some 379 000 t/y of hot-rolled capacity would 
be closed during the restructuring. Approval of the plan had been held up 
since November 1992, and this made certain modifications necessary/12) 
489. At the same time ECU 2 817 million in aid was authorized for 
restructuring the state-owned integrated steel company, Corporacion de la 
Sidérugia Integral (CSI). In November 1992 the Commission had come out 
against an earlier version of the restructuring plan which proposed some 
ECU 3 592 million in aid in return for a net reduction in hot-rolling 
capacity (taking into account the proposed investment in a compact strip 
production unit at Sestao) of only 1.3 million t/y which would not be 
achieved until 1997/13) The revised plan agreed by the Council reduced the 
amount of aid subject to Article 95 of the ECSC Treaty, brought forward 
closure of the hot strip mill at Ansio to the end of 1995 at the latest, and 
uncoupled the investment at Sestao from the aided restructuring plan by 
making the project dependent on genuine and long-term majority private-sector 
participation unsupported by state aid. This increased the reduction under 
the aided restructuring plan in hot-rolling capacity to 2.3 million t/y. 
<T7> Italy 
490. In July the Commission initiated proceedings under Article 6(4) of the 
steel aid code against the Italian Government's plan presented to the 
Commission in April to write.off some ECU 4 billion of the debt of the public 
steel group I I va before it was reconstituted as the new public enterprise 
Nuova Siderurgica/14) The Commission noted that the group was facing an 
extremely delicate economic and financial situation and that it had recorded 
substantial losses in 1991 and 1992 and a considerable increase in 
indebtedness. In 1993 the situation continued to deteriorate. Despite the 
gravity of the situation, the I I va group was able to continue its activities 
(12) Twenty-second Competition Report, point 393 
(13) Twenty-second Competition Report, point 394 
(14) 0J C 213, 6.8.1993. 
4.I.§6.p.7 3 Q 4 
thanks to public financial assistance, and in particular the passive 
attitude of its only shareholder, the Italian State, which enabled it to 
increase its indebtedness on the basis of the explicit guarantee that was 
provided for in Article 2362 of the Italian Civil Code and amounted to a 
credit faciIi ty. 
491. On the same occasion, the Commission adopted for the first time interim 
measures based on Article 88 of the ECSC Treaty and calling upon the Italian 
Government to waive the implementation of the plan to write off most of the 
debts of the Italian public steel industry. The decision gave the Italian 
Government formal notice to present its comments within fifteen days, failing 
which the Commission would take a reasoned decision finding that it had 
failed to fulfil an obligation under the Treaty. Before the end of July the 
Italian authorities informed the Commission that they would comply with the 
Commission's request. 
492. The final restructuring plan for I I va agreed in December involved the 
writing-off of ECU 1 579 million of debt before the assets of the company 
were split into a flat-products business and a stainless-steels business -
I Iva Laminati Piani and Acciai Special i Terni respectively - and privatized. 
The remainder of llva's debts, estimated at ECU 5.4 billion at the end of 
1993, would either be transferred to the purchasers or covered by the selling 
price'. The aid to the public steel group I I va also involved a capital 
injection of ECU 351 million and restructuring and winding-up expenditure of 
ECU 643 mill ion. To sum up, the total aid amounts to ECU 2 573 mill ion. In 
return for the aid, it was agreed that 1.2 million t/y of hot-rolling 
capacity would be cut at Taranto with the closure of two reheating furnaces, 
that the Bagnoli wide-strip mill would be completely closed and that closures 
of another 500 000 t/y of capacity would be carried out by the company 
acquiring the Taranto plant within six months of privatization/15) 
<7> Portugal 
493. Also as part of the package agreed in December, the Council gave its 
unanimous assent for ECU 306.3 million in aid for restructuring the 
publicly-owned Siderurgia Nacional. In return, the company would reduce 
(15) 0J 
4. I. §6.p.8 _ 305 
hot-rolling capacity by 140 000 t/y at its plants at Ma i a and Seixal. The 
restructuring plan also includes aid towards redundancy costs and for 
environmental protection investment that will be examined by the Commission 
separately under the steel aid code. The decision took account of Portugal's 
position as a small Member State with only one major steel company/16) 
<T6> Non-ECSC steel sectors 
<T7> Germany 
494. The Commission initiated the procedure provided for in Article 93(2) of 
the EC Treaty against a proposal to grant ECU 186 000 in regional investment 
aid to Berg-Spezial-Rohr GmbH, which makes large welded tubes at Siegen. The 
investment would increase capacity in a sector suffering from considerable 
overcapacity in the Community/17) 
495. On the other hand, the Commission authorized investment aid of 
ECU 9 mi I I ion in grants and tax al lowances plus an ECU 15.5 mi I I ion loan 
guarantee for the pipe producer Klôckner Rohrwerk Muldenstein GmbH of 
Saxony-Anha11/18) The company was reducing its capacity by 25% overall and 
by 80% in the case of smaI I-diameter pipes. 
<7> Spain 
496. Following the judgment of the Court of Justice in the Cook case/19) 
which had found that the Commission had been wrong to reject a complaint 
about aid to PYRSA, a Spanish company making steel castings, without a 
further investigation of the market situation, the Commission opened 
proceedings against the aid consisting of grants of ECU 1.4 million and a 
guarantee and interest subsidy on a loan of ECU 3.8 million/20) 
(16) 0J ... 
(17) 0J C 122, 4.5.1993. 
(18) OJ ... 
(19) See points 395 and 553 of this Report. 
(20) OJ C 281, 19.10.1993. 
4.I.§6.p.9 _ 306 
<T5> (b) Aid to shipbui I ding 
<T6> General 
497. On 16 December the Council adopted Directive 93/115/EC extending the 
period of validity of the Seventh Council Directive on aid to shipbuilding 
(90/684/EEC) for a further twelve months until 31 December 1994. In the light 
of a consultant's report, the Commission maintained the production aid 
ceiling for 1994 at 9% for large vessels and at 4.5% for vessels with a 
contract value of less than ECU 10 million and for ship conversions. 
498. Negotiations continued under the auspices of the OECD on a new 
international instrument to curb unfair trading practices in 
shipbuilding/21) The talks covered both direct and indirect aid such as 
production subsidies and home credit schemes, restrictions on traffic rights 
of foreign-built ships and export financing/22) 
499. In a judgment on two appeals brought by Belgium against decisions 
requiring it to reduce subsidies on loans to Belgian shipowners for having 
ships built in Belgian yards, the Court of Justice confirmed that aid to 
shipping companies placing orders for ships has to be counted towards aid 
ceilings for shipbuilding/23) 
<T6> Decisions on individual cases 
<T7> " Belgium 
500. In October the Commission approved a restructuring package for 
Boelwerf, the main shipyard in Flanders. The yard will undergo a 40% 
reduction in workforce and a reduction in shipbuilding capacity of more than 
50%, to be achieved in part by the irreversible closure of the site at 
Hoboken. The aid package includes ECU 53 million operating aid in conformity 
with the aid ceiling applicable under the Seventh Directive and 
ECU 26 million closure aid to defray costs related to the redundancies. 
(21) Twentieth Competition Report, point 9 
(22) See point 575 of this Report. 
(23) See point 555 of this Report. 
4...J-.P.10 307 
<T7> Germany 
501. The Commission approved operating aid totalling ECU 790 million for four 
East German shipyards - Warnow Werft, Peene Werft, Elbe Werft Bolzenburg and 
Volkswerft - all in Mecklenburg-Western Pomerania. Directive 92/68/EEC 
provides a derogation from the Seventh Directive for the East German yards 
under which they can receive production aid up to 36% of a reference annual 
turnover for a three-year period ending in 1993/24) A decision on a fifth 
yard, MTW, was postponed until i t had been settled whether a change in the 
site of this yard disqualified it from the 1992 derogation. The Commission 
also approved tranches of investment and closure aid for the first four yards 
as their investment plans were found to be in conformity with the required 
capacity reduction of 40% from 1990 levels. 
502. In April the Commission took a negative decision on aid to Bremer Vulkan 
in connection with its acquisition from Krupp of a company specializing in 
naval electronics/25) It established that ECU 65 million of unlawful state 
aid had been paid to Bremer Vulkan when it bought a majority stake in Krupp 
Atlas Elektronik via HIBEG, the investment vehicle owned by the Land of 
Bremen. The decision requires Bremer Vulkan to repay the aid to HIBEG, which 
transferred ECU 65 million more to Krupp in return for the stake than the 
stock-exchange value of the Bremer Vulkan shares it acquired. HIBEG was able 
to do so thanks to a guarantee granted by the Land of Bremen. 
<T7> Spain 
503. Under Article 9 of the Seventh Directive, Spain had been exempted until 
1 January 1992 from the operating aid rules laid down in Chapter II of the 
Seventh Directive (with the exception of Article 4(5)), provided that 
inter alia it carried out a restructuring programme in 1991/92 which would 
allow its shipbuilding industry to operate with the same aid level as the 
other Member States. As provided for under Article 9(2) of the Directive, the 
restructuring plan has been the subject of regular monitoring reports from an 
independent consultant, jointly appointed by the Spanish Government and the 
Commission. The consultant's final report for 1992 concluded that overall the 
restructuring plan had achieved its targets. However, performance at 
individual yards had been patchy, and this, together with the uncertain 
(24) Twenty-second Competition Report, point 376 
(25) 0J L 185, 28.7.1993. 
4.I.§6.p. 11 308 
prospects for new orders, raised some doubts about future levels of 
competitiveness. Article 9 provides in such circumstances for additional 
measures to be taken to reinforce the restructuring. The Commission is 
discussing the consultant's findings with the Spanish authorities. 
<7> United Kingdom 
504. The Commission authorized the United Kingdom Government to offer up to 
ECU 9 million (UKL 7 million) in production aid to the Swan Hunter yard to 
enable it to compete for two or three orders for merchant ships in 1994 and 
1995 (if aid is permitted in that year) with a view to facilitating the sale 
of the yard and avoiding its closure. Swan Hunter had never been physically 
closed to merchant shipbuilding. Only access to the national Shipbuilders' 
Intervention Fund was not allowed since 1986. The United Kingdom Government 
undertook that this was a one-off operation, that the aid would be granted in 
compliance with the rules laid down in Articles 4 and 12 of the prolonged 
Seventh Directive, and that it would not constitute a precedent for any of 
the other military yards. The Commission considered that, in the light of 
the abovementioned undertakings given by the United Kingdom Government, it 
was appropriate to authorize this small amount of aid to the Swan Hunter 
yard. 
4.I.§6.p.12 
309 
<T5> (c) Aid to the motor vehicle industry 
505. The Commission's policy of monitoring aid for investment in the motor 
industry was vindicated when the Court of Justice upheld the decision to 
authorize aid to Ford and Volkswagen for building a new mini van plant in 
Portugal Z26) 
506. In December the Council imposed countervailing duties of 4.9% on 
gearboxes imported into the EC from a new General Motors plant in Vienna for 
which the company had received an investment subsidy. Negotiations under the 
EC/Austria Free Trade Agreement had failed to find a mutually satisfactory 
solution to the problem. Another motor industry case concerning Steyr 
Nutzfahrzeuge AG was settled after the aid had been reduced to a level which 
the Commission considered reasonable for a comparable area in the Community. 
507. The Commission took the following decisions pursuant to the framework on 
state aid to the motor vehicle industry. In December 1992 it had reviewed the 
framework but decided to leave it unchanged/27) 
<T7> Belgium and the Netherlands 
508. In October the Commission initiated the procedure under Article 93(2) of 
the EC Treaty with regard to possible state aid granted by the Dutch State 
and the Region of Flanders to the truck producer DAF. DAF's financial 
situation had gradually deteriorated over recent years, during which time 
the company had asked the public authorities to postpone repayment of, or to 
reschedule, outstanding loans and to provide new loans. The Dutch and the 
Flemish authorities had not notified the transactions. Unless they are 
reversed and any aid refunded to the respective governments, they will be 
further examined under the procedure. 
After the bankruptcy of DAF in March 1993, the new company DAF Trucks N.V. 
was formed and purchased the core assets from the former DAF company. While 
the Dutch and Flemish Governments had agreed with the private shareholders 
that the public shareholding would be reduced to less than 50%, it remained 
at 61%. The Dutch State and the Flemish Region contributed ECU 72 million 
(26) See point 553 of this Report. 
(27) Twentieth Competition Report, points 250 and 251; 0J C 36, 10.2.1993 
4. I. §6.p.13 ' _ 
310 
and ECU 24 million equity capital and ECU 21 million and ECU 9 million 
risk-bearing loans respectively. In order to determine the extent to which 
these measures constitute state aid, the business plan of the new company 
will be examined in the light of the provisions of the framework on the state 
aid for the motor vehicle industry relating to rescue and restructuring aid. 
The Commission will also examine whether the sale of the assets of the former 
DAF to the new company, without being offered to other possible buyers, led 
to the price being below market value. 
If its assessment of the case should confirm that illegal state aid 
incompatible with the common market was granted, the Commission will 
determine whether any of the aid, including that awarded to but not repaid by 
the former DAF, should be reimbursed by the new company. 
<T7> Germany 
509. In June the Commission approved guarantees given by the Treuhandansta 11 
on commercial loans of up to ECU 77 million for Sachsische Automobilbau GmbH 
(SAB). SAB forms part of a large-scale Volkswagen project to establish modern 
car production in Germany's new eastern Lander. 
This project had been awarded direct and indirect aid of about 
ECU 670 million by the German authorities, including certain operating 
losses of SAB that the Treuhandansta 11 has agreed to cover. The Commission 
considered the proposed Treuhandansta 11 guarantees to contain elements of 
state aid to SAB. These guarantees constituted rescue aid but fulfilled the 
conditions set by the Commission for such aid in general and in respect of 
the motor vehicle industry in particular, as defined by the sectoral 
framework. The granting of the guarantees was also in line with the 
Commission's general position toward guarantees to TreuhandanstaIt-owned 
companies in cases where the continued financing of such companies by the 
Treuhandansta 11 is under scrutiny after initiation of the Article 93(2) 
procedure/28) The need for SAB to increase its cashflow by recourse to the 
financial markets arose de facto as a consequence of the Article 93(2) 
procedure initiated in December 1991 /29) by which all aid payments for the 
Volkswagen project were suspended until a final decision was taken. A 
decision on the whole Volkswagen project in eastern Germany is expected 
shor tI y . 
(28) See point 405 of this Report. 
(29) Twenty-first Competition Report, point 235 
§6.p.14 
31 1 
510. In October the Commission approved regional aid to Saginaw, a 
wholly-owned subsidiary of Adam Opel AG, in support of its investment plans 
in Kaiserslautern. The project involved the installation of a new production 
and testing line for diesel engines by Saginaw in the existing buildings of 
Opel's Kaiserslautern plant, replacing an existing engine line. The project 
will take place over the years 1993-96 at a total cost of ECU 260 million, 
of which ECU 220 million is eligible for regional aid. The aid is in the form 
of an ECU 33 million grant to the project that will be paid from 1994 to 
1996. This amounted to a gross grant equivalent of 14%. In approving the 
state aid, the Commission assessed the regional development benefits against 
possible adverse effects on the sector as a whole, such as the creation of 
significant overcapacity. It undertook an analysis to establish the net 
regional disadvantages that Saginaw/Opel faced by investing in the assisted 
area of Kaiserslautern. These disadvantages were found to be in proportion 
with the proposed regional aid. The project was not expected to have negative 
effects on the sector within the Community, as it will partially substitute 
extra-Community imports of engines by the company. For these reasons, the aid 
was compatible with the criteria for regional aid set out in the framework. 
511. Also in October the Commission approved regional aid to MAN 
Nutzfahrzeuge in support of its investment plans in Salzgitter. The project 
involves the extension of buildings and the installation of new machinery in 
order to expand the production of buses and bus components. The project will 
take place over the years 1991-94 at a total cost of ECU 48 million, of which 
ECU 46 million is eligible for regional aid. 
The proposed aid, in the form of a grant of ECU 1.6 million to the project, 
has a gross grant equivalent of 2.8%. 
In approving the state aid, the Commission concluded that the project 
complies with the criteria for regional aid set out in the framework for 
state aid to the motor vehicle industry. It is satisfied that the project 
will make a noticeable contribution towards overcoming the problems of high 
unemployment in the region, while it will not lead to the creation of 
significant overcapacity, particularly in view of the growing demand in 
eastern Germany, where much of the former bus capacity has been closed down. 
312 
<T7> Spain 
512. In April the Commission decided to approve state aid to Cadiz 
Electronica S.A., a wholly-owned subsidiary of the Ford Motor Company. The 
project involved installation of new, more flexible machinery in order to 
rationalize the manufacture of the current type of electronic modules and to 
create facilities for manufacturing electronic modules for advanced braking 
systems. The investment would cost ECU 46 million and create 150 jobs. The 
aid for the project consisted of a regional grant of ECU 12 million from the 
central administration. In assessing the aid, the Commission did not apply 
the same strict discipline as it does to final vehicle assembly or engine 
production projects, since this would lead to unfair treatment by comparison 
with aid to projects being undertaken by independent component producers, 
which are not notifiable under the framework. Since the increase in capacity 
was restricted to the new production of ABS electronic modules that are only 
used for ABS systems in Ford cars and since the notified aid was far below 
the ceiling for the assisted area, no significant distortions were to be 
expected. 
513. In July the Commission approved regional aid to SEAT in support of its 
investment plans in Arazuri (Pamplona). These plans stemmed from the 
Volkswagen Group's decision to centralize all production of the Polo model in 
one plant and to use the capacity released in Wolfsburg by this transfer to 
increase the production of the Golf and Vento models there. The project had a 
total cost of ECU 375 million, of which ECU 367 million was eligible for 
regional aid. The investment would increase employment by 1 425 workers to 
4 369. The company was to receive investment grants and employment aid of 
ECU 36 million, giving an aid intensity of 8% gross grant equivalent. In 
approving the state aid, the Commission concluded that the project complied 
with the criteria for regional aid set out in the framework because the aid 
only compensated for the net regional disadvantages SEAT faced in investing 
in the assisted region of Navarra. Taking into account all other capacity 
changes by the same manufacturer at group level within the relevant segment 
of the market, SEAT'S investment in Arazuri would involve a capacity 
increase. Therefore, in order not to distort competition, the Commission 
asked the Spanish authorities to ensure that the effective nominal aid 
intensity did not exceed 9.7% of the eligible costs, which was equivalent to 
the estimated level of net regional handicap. 
4.I.§6.p.16 
313 
<T7> France 
514. In June the Commission approved state aid to Renault and PSA for a joint 
R&D project on car and road safety entitled "Véhicule et Sécurité Routière". 
The project, which was concerned with passive and active safety of vehicles 
and the avoidance of accidents and was divided into four subprojects, was 
complementary to the Eureka Prometheus programme and the Community's Drive 
Research programme. The research project, which will be carried out over a 
five-year period, will cost an estimated ECU 99 million and will be 
coordinated by the joint company GIE PSA Renault, with many component 
producers participating. The aid, under two schemes administered by the 
Ministries of Research and Technology and of Industry and External Trade, 
takes the form of grants of ECU 32 million. It will cover up to 50% of the 
eligible expenditure on basic research and 25% of the expenditure on applied 
research, giving an average intensity of 32%. In approving the state aid, 
the Commission concluded that the project fulfilled the criteria of the 
Community motor vehicle and R&D frameworks. In particular, the aid limits 
laid down in the latter framework were met. 
<7> United Kingdom 
515. In March 1992 the Commission initiated Article 93(2) proceedings against 
undisclosed aid paid by the United Kingdom authorities to British Aerospace 
for its purchase of Rover Group over and above that authorized by the 
Commission in 1988/3°) It had already taken a decision on the unauthorized 
aid in July 1990, but the decision had been annulled by the Court of 
Justice on procedural grounds in February 1992 because the Commission had 
failed to give the United Kingdom authorities an opportunity to reply under 
Article 93(2) proceedings before taking the decision. In March 1993 the 
Commission took a new decision under Article 93(2) proceedings. It came to 
the conclusion that the additional financial concessions made in 1988 by the 
United Kingdom authorities to British Aerospace constituted state aid 
incompatible with the common market/31) It decided that not only the aid 
itself should be refunded, but also the interest advantage which the 
beneficiaries had enjoyed. The United Kingdom authorities later confirmed 
that British Aerospace had paid the aid plus interest, amounting to some 
ECU 73 million, to the Department of Trade and Industry. Interest was 
(30) Twenty-second Competition Report, point 413. 
(31) OJ L 143, 15.6.93. 
4. I .§6.p.17 314 
charged over the period from 18 August 1990 (the date on which the 
principal became due under the 1990 decision) to 23 May 1993. In choosing 
this starting date instead of the date on which aid was granted, the 
Commission accepted the contention of the United Kingdom authorities and the 
aid recipients that the new policy on this matter initiated in March 1991 -
whereby interest on the aid to be recovered was to run from the date of 
effective payment of the aid - should not be applied retroactively. It 
welcomed the compliance by the company and the United Kingdom authorities 
with its new decision/32) 
516. In June the Commission approved regional aid to Leyland Daf Vans (LDV) 
in support of an investment project forming part of the rescue of DAF's van 
business. The project, which will be carried out over a five-year period, has 
a total investment cost of ECU 34 million, of which an estimated 
ECU 27 million is eligible for regional aid. Grants of ECU 6.4 million will 
be available, giving an aid intensity of less than 15% net grant equiva lent, 
below the regional ceiling of 20% net. On the basis of regional aid criteria, 
the Commission concluded that LDV was suffering significant net operating 
disadvantages by investing in the old over large installations of DAF. Hence, 
the regional aid would not cause noticeable trade distortions in a market 
segment where there was no structural overcapacity at EC level. The regional 
aid would also help stem further job losses in the Birmingham area, which 
suffers from high unemployment. On the basis of restructuring criteria, the 
Commission concluded that the aid to rescue the van activities of the old 
Leyland DAF would not allow LDV to increase its small market share at the 
expense of its unaided competitors. LDV was not only diversifying its 
business but also concentrating its van sales on a niche market in the 
United Kingdom, mainly serving large fleet customers. As a result, the 
effect of the restructuring aid to LDV on other EC van producers would be 
m i nor. 
(32) See point 396 of this Report 
(2 
4. I.§6.p.18 
315 
<T5> (d) Aid to the synthetic fibres industry 
517. The new code on aid to the synthetic fibres industry came into force on 
1 January 1993. The code, which will be in force until 31 December 1994, 
requires notification of any plan to grant aid - in whatever form - to 
producers of synthetic fibres, as defined by the code. Germany initially 
accepted the code for only one year, 1993, but in December 1993 it indicated 
its acceptance also for 1994. All other Member States had already accepted 
the code for both years. 
Under the code, authorization is conditional on a significant reduction in 
the production capacity of the assisted company. In assessing the 
significance of the reduction in each case, the Commission takes into 
account, among other matters, the intensity of the aid, the location and 
size of the investment as well as the contribution, if any, the investment 
makes to the cohesion of the Community and to the trend of the average rate 
of capacity utilization of the aid recipient, any industrial group to which 
it belongs and the industry generally. 
<T7> ; Germany 
518. The Commission opened proceedings under Article 93(2) of the EC Treaty 
in four cases of aid to companies in the new Lander, namely: 
(i) Markische Faser AG, Brandenburg, in respect of matters arising out of 
the privatization of the company/33) the purchase of real estate and 
certain capital injections; 
(ii) Rhône-Poulenc Rhotex GmbH, Brandenburg (ECU 3.75 million in aid for new 
plant for the texturization of polyamide textile filament yarn); 
(iii) SST GarngeselIschaft GmbH, Thuringia (ECU 2.5 million in aid for new 
plant for the production of polyester staple fibre); and 
(iv) Texti Iwerke Deggendorf GmbH, Thuringia (ECU 22 million in aid for new 
plant for the processing of polyester and polyamide textile filament yarn). 
(33) Twenty-second Competition Report, point 402. 
4.I.§6.p.19 316 
519. Two of the cases were later closed with approval of the aid. The aid for 
Rhône-Poulenc Rhotex was allowed in view of the fact that Rhône Poulenc was 
significantly reducing its capacity for this process both in the former 
German Democratic Republic and at group level. Similarly, the Commission 
considered that, as a specific element of the strategy by which the synthetic 
fibres industry of the former German Democratic Republic was being 
restructured in order to reduce its capacity to 143 075 t/y, the aid to SST 
GarngeselIschaft was also allowed. 
<T7> France 
520. Following the judgment of the Court of Justice on 24 March which had 
annulled the Commission's original decision authorizing the aid/34) the 
Commission opened Article 93(2) proceedings in respect of some ECU 30 million 
in aid to Allied Signal Fibers Europe SA, Meurthe-et-Moselle, for 
construction of new plant for the production of polyester industrial filament 
yarn. 
<T7> Ireland 
521. The Commission authorized aid of ECU 180 000 to Wellman International 
Ltd, Cavan, a polyester and polyamide fibre producer, for the conversion of 
existing equipment and the design of new energy-efficient processes. It 
decided to approve the aid because the investment would be accompanied by a 
reduction in production capacity which was considered significant in terms of 
the code, particularly given the intensity of the aid and the location of the 
investment. 
<T7> Portugal 
522. The Commission authorized aid of about ECU 2 million to Text il Antonio 
Falcâo Lda, Braga, for a new polyamide and polyester yarn extrusion facility. 
The proposed aid was notified before the new code came into force and was 
therefore assessed under the previous code, which expired at the end of 1992. 
The Commission decided to approve the aid because of the location of the 
investment and the minimal effect on intra-Community trade. 
(34) See point 554 of this Report. 
4.I.§6.p.20 317 
<T7> United Kingdom 
523. The Commission opened Article 93(2) proceedings against the proposal to 
award around ECU 1 million of aid to Abingdon Carpets pic for facilities for 
polypropylene yarn production installed at its carpet factory in Gwent in 
1989. Although the company applied for aid for the project in 1988, the 
United Kingdom authorities did not notify the proposal to grant aid until 
September 1993. 
524. In line with the code, which requires notification of any proposal to 
award aid to a producer of synthetic fibres, the Commission was notified of a 
proposal to award ECU 1.2 million aid to Bonar Textiles Ltd, Tayside, for new 
equipment to increase production capacity for polypropylene tape. On 21 April 
it decided not to raise any objections because polypropylene tape did not 
constitute a fibre within the meaning of the code. 
4.I.§6.p.21 318 
<T5> (e) Textile and clothing industries 
525. Although the current rules governing aid to the textile and clothing 
industry, which date from 1977, do not specifically require individual awards 
of aid under authorized, e.g. regional or SME, schemes to be notified, as is 
the case with synthetic fibres, aid to this sector, which is facing 
structural adjustment problems, needs to be closely monitored and any aid 
with a capacity-increasing impact should be individually notified. In 1993 
the Commission dealt with the following cases, which were notified to it 
under other general schemes or were themselves special sectoral schemes. 
526. The Commission approved proposed aid of some ECU 4 million, with an 
intensity of 8%, for Sofisilk, Mouscron (Hainaut), Belgium. The aid consists 
of a grant and an interest subsidy. 
The proposed aid will not increase textile production on the market since 
Sofisilk has no spinning and weaving capacity but operates downstream. The 
aid therefore complies with the requirements laid down by the Commission for 
textiles and with the conditions of a regional aid scheme for the Province of 
Hainaut approved by the Commission in 1975. 
527. The Commission initiated an investigation under Article 93(2) of the 
EC Treaty into aid offered by Lower Saxony to Nino Text il AG, Nordhorn. The 
Land authorities proposed to honour a bank guarantee of ECU 13 million which 
the Commission had approved in 1990 and to waive the repayment claim against 
Nino. ' 
The Commission considered the honouring of the guarantee without attempting 
to repay the loan by realizing the firm's assets to be new aid which should 
be notified under Article 93(3) of the Treaty. 
However, during the proceedings the Commission allowed the company to receive 
a new temporary bank guarantee for a loan rimited to the minimum necessary 
to keep Nino in operation for up to six months until the Commission reached 
its final decision under the Article 93(2) proceedings. Without such rescue 
aid, the company would not survive this period/35) Should the 
Article 93(2) proceedings not be concluded within six months, the Commission 
(35) See point 444 of this Report 
§6.p.22 319 
would consider a request to extend the guarantee for the remainder of the 
period covered by the proceedings. 
528. The Commission cleared an existing scheme to raise the profile of the 
export activities of the wool textile industry in the United Kingdom. The 
scheme is run by the British National Wool Textile Export Cooperation and 
those eligible are predominantly small and medium-sized entreprises. The 
scheme is financed through a levy paid by companies carrying out specified 
activities in the woo I-processing fields and is completely self-financing, 
having a very small budget. No levies are charged on imports, and exports are 
not exempted from paying the levy. The scheme was therefore exempted. 
529. The Commission started an investigation under Article 93(2) of the 
EC Treaty into proposed aid totalling ECU 76 million for investment by the 
Hualon Corporation in Belfast. 
The investment plan (in four phases covering the period 1993-2000) involves 
the construction of buildings and the installation of the necessary plant for 
spinning, dyeing and finishing some 23 000 tonnes of polyester, polyamide and 
polycotton fabrics. 
The aid was not covered by the code on aid to the synthetic fibres industry 
since the code applies to the manufacture of synthetic fibres and Hualon's 
activities will be downstream of such production. The aid was, however, 
covered by the guidelines for textiles laid down by the Commission in 1971 
and 1977, which state that aid must not lead to increases in capacity and 
must take account of the situation of the industry in the Community as a 
whole. Although the level of the aid (38%) was below the limit for the 
region, the Commission considered that it was unable at this stage, in view 
of the fact that the investment will be completed only in 2001, to assess the 
balance between the aid's regional benefits (creation of 1 800 jobs in 
Northern Ireland) and its adverse effects on the textile sectors concerned. 
4.I.§6.p.23 320 
<T5> (f) Aid to the coal industry 
530. Pursuant to Decision No 2064/86/ECSC establishing Community rules for 
state aid to the coal industry/36) the Commission ensured in 1993 that 
financial measures planned for the coal industry complied strictly with the 
Decision. 
Financial measures were authorized only where they were in line with the 
objectives and application criteria of the Decision and with the specific 
objectives laid down in Articles 2 and 3 of the ECSC Treaty. 
The Commission approved, by decision, the 1993 aid proposals for the Federal 
Republic of Germany on 24 December i992/37)(38) for Belgium on 
24 February 1993,(39) for France on 18 May 1993(4°) and for Portugal on 
7 December 1993.(41) 
By decisions of 23 December 1992(42)(43) addressed to the 
Spanish Government, the Commission authorized financial measures for the 
Spanish coal industry for 1993. In those decisions the Commission also ruled 
on the various other financial assistance measures for 1991 and 1992 which 
the Spanish Government proposed to implement following the measures for 
restructuring, rationalizing and modernizing the coal industry, and on the 
financial assistance represented by the compensatory amounts to be paid to 
electricity generators under the Ofico aid scheme for 1992. 
The United Kingdom did not notify any aid for current production for the coal 
industry in the financial year 1993/94. This reflects the United Kingdom 
(36) OJ L 177, 1.7.1986. 
(37) OJ L 58, 11.3.1993. 
(38) OJ L 59, 12.3.1993. 
(39) OJ L 85, 6.4.1993. 
(40) OJ L 198, 7.8.1993. 
(41) OJ L 23, 28.1.1994. 
(42) OJ L 57, 10.3.1993. 
(43) OJ L 57, 10.3.1993. 
4...J..P.24 32 
Government's policy of restricting the granting of aid to redundancy costs 
and other social costs connected with the restructuring, rationalization and 
modernization of the coal industry. 
In accordance with Article 16 of Decision No 2064/86/ECSC, the Commission 
presented to the Council the annual report on the application of the Decision 
in 1992/44) 
Since the Community's current rules on financial assistance provided by 
Member States to the coal industry (Decision No 2064/86/ECSC) were to expire 
on 31 December, the Commission adopted on 28 December Decision 
No 3632/93/ECSC establishing new rules for state aid to the Community coal 
industry, to enter into force on 1 January 1994/45) 
On 25 March the Commission adopted the report on the market for solid fuels 
in the Community in 1992 and the outlook for 1993/46) A revised version of 
the report was approved by i t on 23 September/47) 
(44) C0M(93)589 final, 26.11.1993. 
(45) OJ L 329, 30.12.1993. 
(46) SEC(93) 441 final, 25.3.1993. 
(47) SEC(93) 1399 final, 23.9.1993 
S.p.25 
Stote aid to the coal industry 
Aid for current production in 1992 and 1993 
(mi I I ion ECU) 
1 1 I I 1 1 1 1 
| Belgium | Germany | Spain | France | Portugal | United Kingdom | Community | 
i | ! J , 1 , j , j , j , ( , 1 
| 1993 | 1992 | 1993 | 1992 | 1993 | 1992 | 1993 | 1992 | 1993 | 1992 | 1993 | 1992 | 1993 | 1992 | 
; Aid under Decision No | | | | | | | | | | | II I I 
| 2064/86/CECA I I I I I I I I I I I II I I 
1, Di rect aid I I I I I I I I I I I I I I I 
-Article 3 j - j 33.5 j 139.4 | 177.7 j 355.4 j 379.7 j 191.3 | 186.9 j 6.1 j 5.0 | - | - j 692.2 j 782.8 j 
-Article 4 j - j - j 1513.3 j 1787.7 j- j -j -j - | -j - | - I - I 1513.3 | 1787.7 j 
Î -Article 5 j - j - j - | - | 24.9 j -j -j -j -j - I - I - I 24.9 j - j 
| - Article 6 | - j - j 61.6 j 65.6 j - j - j - j - j - j j j - j 61.6 j 65.6 j 
J -Other j - j - j - j - | - | 66.3 j - j - j 0.6 j 0.8 j - j - j 0.6 j 67.1 j 
i i i i i i i t i i i i i i i i 
TOTAL | - j 33.5 j 1714.3 | 2031.0 j 380.3 j 446.0 | 191.3 j 186.9 j 6.7 j 5.8 j — j - j 2292.6 | 2703.2 j 
ECU per tonne j - j 153.67 j 26.66| 28.15 j 20.56 j 23.94 j 21.33j 19.72j 27.73 | 26.36 j - j - j 14.33| 14.64 | 
2. Indirect aid j - j 7.4 j 2566.7 j 2466.7 j 15.5 j 17.3 j -j -j -j - I - I ~ I 2582.2 j 2491.4 j 
i ' I I I I I I I I I I I I I I I 
TOTAL | - | 40.9 | 4281.0 | 4497.7 | 395.8 | 463.3 | 191.3 | 186.9 | 6.7 | 5.8 | - | - | 4874.8 | 5194.6 | 
I I I I I I I I I ' I I I I I I I 
; ECU per tonne | - | 187.61 | 66.58] 62.34| 21.39 | 24.87| 21.331 19.721 27.73 | 26.36 | - | - | 30.47| 28.14 | 
CM 
NO 
4.I.§7.p.26 323 
<T3> §7. Aid to other industries 
531. The bulk of the aid cases dealt with in 1993 in industries other than 
those subject to aid codes or frameworks involved rescues and restructuring 
of firms in difficulty and are reported above/48) A number of schemes 
supporting particular industries through levies were also considered. The 
problems arising from levy schemes are described in the introductory section 
of this chapter/49) The remaining cases, in the energy sector, are reported 
below. 
<T4> Energy 
532. In July the Commission authorized the United Kingdom Government to 
continue to charge a levy on electricity bills in order to support the 
development of renewable energy in England and Wales. The Fossil Fuel Levy 
was introduced in 1990 at the time of the privatization of most of the 
electricity supply industry in Britain, and the bulk of it is used to help 
finance the decommissioning and waste management costs of nuclear power 
stations. Although the levy also supports some renewable-generated 
electricity, the Commission, in authorizing it in 1990/5°) limited it to 
the period up to 1998 because of the nuclear component. 
For renewables, which require longer-term support, the time limit was acting 
as an obstacle to development. The Commission therefore lifted the limit as 
far as renewable energy was concerned, allowing the United Kingdom to 
continue the levy into the next century to finance a further 900 MW of 
renewable capacity in England and Wales. At its peak, the levy will yield 
around ECU 240 million a year for renewables support. In July and August the 
Commission also authorized schemes . to subsidize renewable-generated 
electricity in Northern Ireland and Scotland. The latter two sclernes 
represent a total of 300 MW. 
Aid arrangements for renewable-generated electricity are not counted towards 
the limit of 20% of electricity demand which the Commission applies to 
subsidies or other protective arrangements for indigenous fuels.(51) 
(48) See point AAA of this Report. 
(49) See point 391 of this Report. 
(50) Twentieth Competition Report, point 293. 
(51) Twenty-second Co^r'? f ; t : -r r--'-.-..-'- • • :n! :• 1/-': ar-o -153 
4.I.§7.p.27 324 
533. In 1992 the Commission had decided that a new tariff for supplies of 
natural gas by Gasunie to nitrate fertilizer producers in the Netherlands did 
not involve aid, but it asked the Dutch Government to notify to it any 
applications of a revision clause whereby the producer could be given rebates 
off the tariff prices/52^ These rebates should, however, not take the 
prices below those charged for gas exported from the Netherlands for use as 
a raw material. In 1993 the Dutch authorities notified the Commission that 
Gasunie wished to grant Dutch ammonia producers a rebate of 0.88 cts/m^ for 
the period March to October 1992 and 0.58 cts/m3 for the period May to 
July 1993. Both periods had seen sharp falls of up to 20% in the prices of 
ammonia, the main raw material for nitrate fertilizer production. The rebates 
amounted to around 6% and 3.8% respectively of the tariff price and still 
left the prices well above those at which Gasunie was supplying distributors 
in Belgium, Germany and France. The Commission judged that the rebates were 
normal commercial behaviour for Gasunie. Owing to the falls in prices due in 
part to low-priced imports from eastern Europe, Gasunie's customers were 
having to close ammonia plants to stem heavy losses. The rebates did not give 
Dutch producers a competitive advantage over foreign ammonia producers as the 
export prices for Dutch gas were still below those charged to Dutch 
producers. 
(52) Twenty-second Competition Report, points 434 to 437 
4.I.58.P.1 325 
<T3> §8. Aid in the transport sector 
<T5> (a) Land transport 
534. State aid for the maintenance of essential public services is a vital 
element in the common transport policy. Article 77 of the Treaty allows aid 
to be granted to compensate for the discharge of public service obligations. 
As regards rail transport, Regulation (EEC) No 1893/91d) has, since 
1 July 1992, allowed the competent authorities to conclude contracts to 
ensure the provision of services. The Commission intends to examine the way 
in which this new facility is utilized so as to ensure that it is fully 
effective. 
In the light of the provisions of Directive 91/440/EEC(2) as they relate to 
the separation of infrastructure costs and operations, the whole question of 
the payment of infrastructure charges, particularly for freight, has come 
into sharper focus. Pursuant to Article 93(3) of the Treaty, the 
United Kingdom notified the Commission of its intention to institute a 
freight facilities grant and a track charging scheme. Following examination, 
the Commission decided not to raise any objection to the schemes, which 
should facilitate the Commission's objective of making better use of the rail 
system for freight movements. 
The Commission decided that certain financial facilities provided by the 
German railways (DB) to firms to encourage them to have sidings built or to 
maintain existing sidings did not involve state aid. It considered the 
arrangements - loans and the provision of materials and staff - were 
completely financed out of the freight charges later paid to DB by the 
company and were thus in line with the commercial investor principle. 
In the inland waterways sector, Commission Regulation (EEC) No 3690/92(3) 
introduced changes to the financial arrangements for scrapping so as to 
permit further vessels to be removed from the fleet and thus reduce the 
overcapacity in this sector. These measures came into force on 
1 January 1993. 
(1) OJ L 169, 29.6.1991. 
(2) OJ L 237, 24. 8. 1991 
(3) OJ L 374, 22.12.1992. 
4.i.§8.p.2 326 
Having initiated proceedings under Article 93 (2), the Commission took a 
negative decision with regard to an Italian decree of 28 January 1992 which 
introduced a tax credit for Italian road haulers. The Commission decided 
that such aid was incompatible with the Treaty as it did not meet any of the 
conditions for the derogation laid down in Article 92(2) and (3) of the 
Treaty or in Council Regulation (EEC) No 1107/70. 
In 1991 the Commission also initiated Article 93(2) proceedings with regard 
to a draft Law of the Italian Government which contained state aid for the 
restructuring of the Italian road transport sector. In March 1993 it decided 
to extend the proceedings to include another Italian Law adopted in 
February 1992 and containing identical state aid to that in respect of which 
the proceedings had been initiated in 1991. 
Finally, in May 1993 the Commission authorized a Spanish programme of aid 
amounting to a maximum of ECU 81 million for the improvement of the road 
transport sector for the years 1993-95. The authorization was based 
i nter alia on the fact that the programme wi I I reduce overcapacity in the 
sector by at least 8%. 
<T5> (b) Maritime transport 
535. The Commission is currently examining a number of cases involving state 
aid and is continuing its work in reviewing its Guidelines for the 
examination of state aids to Community shipping companies, adopted in 1989, 
in the light of developments since then. 
It has also undertaken a study on the question of the transparency of 
financial relations between public authorities and ports which will be 
finalized by the end of the year. 
The Commission took decisions on a number of state aid cases concerning 
maritime transport and ports during the year. A new interim state aid to 
stimulate shipping in the Netherlands was approved by it in July. The budget 
envisaged for the calendar year 1993 is ECU 27 million and the measure will 
apply for one year only. 
The Commission authorized two state aid schemes for maritime transport in 
Germany. One allows financial contributions to be made to shipowners using 
4. I. §8.p.3 
327 
modern ships flying the German flag. The scheme, approved in December, has 
been put in place for 1993 and 1994 only, and the total budget for the two 
years amounts to some ECU 110 million. 
In October aid to assist with the privatization of Deutsche Seereederei 
Rostock was approved by the Commission. This amounted to ECU 170 million and 
will help maintain levels of employment in Mecklenburg-Western Pomerania. 
The Commission initiated Article 93(2) proceedings against aid proposed by 
the Basque authorities for a new shipping I ine between Bilbao and Portsmouth. 
The proceedings should allow the Commission to determine whether the aid, 
amounting to ECU 8.5 million, is compatible with the common market. 
In respect of ports, the Commission authorized in July the payment of certain 
aid to support the restructuring of the Italian port sector (ECU 70 million). 
However, it initiated Article 93(2) proceedings in respect of aid of 
ECU 34 million to reduce the commercial deficits of port companies. 
Financial support worth ECU 3 million granted by the Spanish authorities to 
the leisure ports of Catalonia was considered by the Commission to be 
compatible with the common market under Article 92. 
<T5> (c) Air transport 
536. Since the entry into force on 1 January 1993 of Regulations (EEC) 
Nos 2407/92, 2408/92 and 2409/92/4) representing the third and final stage 
of the Community air transport liberalization measures, a more rigorous 
approach has become necessary in assessing aid for Community air carriers. 
The Commission decided to consider as compatible with the common market under 
Article 92(3)(a) aid notified by the Portuguese Government aimed at 
compensating for the accrued deficit of TAP incurred during the period 
1978-91 in carrying out public service obligations on the routes to the 
autonomous regions of the Azores and Madeira/5) The aid amounted to some 
ECU 178 million (ECU 163 million debt write-off and ECU 5 million capital 
injection). In the same decision the Commission initiated Article 93(2) 
(4) 0J L 240, 24.8.1992. 
(5) OJ C 178, 30.6.1993. 
<.,».p.4 328 
proceedings with regard to the new method adopted by the Portuguese 
authorities to compensate for the losses incurred by TAP in fulfilling public 
service obligations on the same routes. According to this method, 
compensation is calculated on the basis of the difference between the tariffs 
imposed on TAP and those which TAP would apply taking into consideration its 
commercial interest. The proceedings were initiated because this method 
involves a, risk of overcompensation of the deficit and is not transparent. 
Article 93(2) proceedings were also initiated with regard to non-notified aid 
involved in the privatization and sale of the Dutch pilot school RLS to 
KLM. (6) The Dutch Government sold the pilot school RLS to KLS (wholly owned 
by KLM) for the token sum of HFL 1 and committed itself to covering the 
operating deficit made by the school in the five years following 
privatization. The Commission initiated proceedings because it doubted that 
HFL I reflected the real market price of the school and had serious doubts 
as to the compatibility of the covering of operating deficits with the 
common market. 
537. In November the Commission initiated Article 93(2) proceedings with 
respect to the subscription, through a subsidiary of the Caisse de Dépôts et 
Consignations - Participations, of the bonds issued by Air France last 
March. The ECU 224 million issue consists of two types of bonds: bonds 
repayable in shares (ECU 112 million) and subordinated progressive-interest 
securities carrying share subscription vouchers. 
The Commission's decision to initiate proceedings reflects doubts about the 
commercial character of the operation, which, in the light of Air France's 
financial position, appears to constitute state aid within the meaning of 
the Treaty. 
The Commission will therefore investigate whether the financial operation is 
linked to a restructuring plan presented by the French carrier at the end of 
1992 to restore the company's viability. It will verify the impact of the 
aid on competition within the common market, in the light of Air France's 
competitive position in the air transport sector, and in particular in its 
domest ic market. 
(6) OJ C 293, 29.10.1993 
§8-P.5 _ ^ ^ 329 
538. The Commission decided in December to authorize the Irish Government to 
inject ECU 216 million equity into Aer Lingus. This equity injection, to be 
carried out in three tranches, will enable Aer Lingus to implement a 
comprehensive restructuring plan which the Commission considers will restore 
the airline's commercial viability over two years. 
The Commission's approach in the context of increased competition in the air 
transport sector, following the entry into force of Regulations (EEC) 
Nos 2407/92, 2408/92 and 2409/92 (the "third package") on 1 January 1993, is 
that there must be a strict policy of control of state aid so as to avoid any 
effects which would be contrary to the common interest. 
In general, airlines which receive state aid must compete fairly and freely 
in the single market, taking account of existing demand and future market 
growth. However, it would be unfair if they were allowed to obtain increased 
capacity to compete with other EC carriers. 
The Commission therefore required specific undertakings that the state aid 
will not be used to allow Aer Lingus to compete unfairly within the common 
market. 
The Irish Government's commitments, which have been given for the duration of 
the restructuring programme, relate mainly to the following points: 
the cost-reduction programme will be carried out as envisaged; 
the Irish Government will periodically report to the Commission on the 
financial and economic development of Aer Lingus and the development of 
the programme; 
Aer Lingus will not expand its operating fleet; 
the Irish Government will not grant any further aid to Aer Lingus; 
if created before the end of the restructuring period, the low-cost 
subsidiary Aer Lingus Express will operate within Aer Lingus's operating 
fleet; 
the European operations, the Transatlanic operations and, if and when 
created, Aer Lingus Express will become and operate as separate legal 
entities with separate accounts to allow transparency of operations; 
§8.p.6 
330 
Aer Lingus will not increase seats offered for sale to the public on 
scheduled flights on the Ireland/UK market as well as on the 
Dublin-London (Heathrow) route beyond clearly specified ceilings based 
on the traffic level achieved in the twelve months before notification; 
Aer Lingus will use the money for restructuring purposes only and will 
not acquire shareholdings in any Community carrier. 
539. The Commission addressed two recommendations under Article 93(1) of the 
Treaty to the German and Portuguese governments^) with a view to abolishing 
the general tax exemption for TAP and the accelerated depreciation system for 
airlines established in Germany. As a consequence of the German Government's 
refusal to abolish the accelerated depreciation system, the Commission 
initiated Article 93(2) proceedings with regard to this tax privilege/8) 
The Commission is at present updating its guidelines for the assessment of 
aid schemes for Community carriers. It will take into account the conclusions 
reached by the "Committee of Wise Men". For this purpose, the new guidelines 
will be published after the Committee has completed its work on the future of 
Community civil aviation. 
(7) OJ C 163, 15.6.1993 
(8) OJ C 16, 19.1.1993. 
4.I.§9.1 
OÙ 1 
<T3> §9. Aid to other service sectors 
<T4> Financial services 
540. The liberalization of financial and postal services continued to 
generate complaints from private competitors of state-owned banks and postal 
administrations. The complaints concerned special privileges enjoyed by the 
public-sector operators, injections of public funds when businesses are 
privatized, and extensions of activities into markets previously served only 
by the private sector. 
541. In implementing the guidelines set out in the Green Paper on postal 
services/1) the Commission examined the measures taken by the Belgian 
authorities with respect to the OCP (Office des Chèques Postaux) and the OCCH 
(Office Central de Crédit Hypothécaire) as well as measures adopted in France 
in 1990 regarding the taxation of financial services provided by the post 
off ice. 
(1) C0M(91)476 final, 11.6.1992. 
332 
<T4> Horse-race betting 
542. In December 1990 the Commission initiated Article 93(2) proceedings in 
respect of certain financial assistance granted to Pari Mutuel Urbain (PMU). 
Since three of the aid measures had not been suspended following the 
initiation of proceedings, the Commission adopted a provisional decision in 
June 1991 calling on the French authorities to suspend such measures within 
f i fteen days. 
A feature of horse-race betting is that competition and trade between 
Member States have developed only in the last few years. There are few 
competing companies, and trade involves bets taken in one Member State on 
horse-races run in other Member States and the exchange of televised pictures 
of such races. For these reasons, the Commission had some difficulty in 
reaching a well-founded assessment of any state aid that might arise from the 
measures taken by the French Government in support of PMU/2) 
In September the Commission terminated the Article 93(2) proceedings; the 
main points of its decision are as follows. 
Of the three measures in respect of which the Commission had taken an interim 
decision, two were deemed to be aid incompatible with the common marke. In 
particular, the amounts received by PMU as a result of exemption from the 
employer's contribution to the building of subsidized housing must be repaid 
by it. The other measure, involving exemption from the one-month delay rule 
for VAT payments, although amounting to aid that was incompatible with the 
common market, was offset by a permanent deposit of funds lodged with the 
Treasury, so that its effect on competition and trade was nullified. The 
other measures must be deemed to form part of the normal funding arrangements 
of the PMU and do not therefore call for any objections under Article 92(1) 
of the EC Treaty. 
(2) See Annex I I I.A.1(c) to this Report 
4. I .§9.3 333 
<T4> Pub I ish ing 
543. In May the Commission authorized four aid schemes operated by the 
Coopérative d'exportation du livre français (CELF) in support of the sale of 
French-language books in non-French-speaking countries. Although the schemes 
subsidized exports of books, albeit in small quantities, they were justified 
on cultural grounds in view of the fact that all French-language book 
publishers in the Community could benefit. The decision was subsequently 
challenged by the Société internationale de diffusion et d'édition (SIDE) 
before the Court of First Instance/3) 
<T4> Film and broadcasting 
544. In June the Commission cleared a proposal by the French Government to 
extend the .system of levies on cinema admissions and television station 
revenue, the proceeds from which are used to finance film productions and 
high-quality television programmes, to include sales of prerecorded 
vidéocassettes/4) With video sales accounting for an ever-increasing 
proportion of film revenues, the French Government wanted this distribution 
mode to contribute to its film industry support system. In 1992 the 
Commission had approved the German film aid scheme, which contains a levy on 
prerecorded vidéocassettes/5) 
545. In October the Commission approved an ECU 6 million grant by the 
Brandenburg Land Government for Studio Babelsberg. The old "Ufa/Defa" 
studios, where many of the most famous pre-war German films were made, has 
been purchased from the Treuhand by an international consortium which plans 
to make it into a modern European film production centre. The grant by the 
Land Government was for investment in the sound studios. 
546. Four private television stations in Spain, France and Portugal have 
complained to the Commission about alleged unfair competition through 
subsidies and anti-competitive practices by public broadcasters. The subsidy 
complaints are that the public funding of state broadcasters, through 
television licence fees, capital injections and other payments, 
overcompensates public broadcasters for any public service obligations they 
(3) Case T-49/93, OJ C 272, 8.10.1993. 
(4) Twenty-second Competition Report, point 444. 
(5) Twenty-second Competition Report, point 442. 
.§9.4 334 
may have to perform and for any advertising restrictions they may face and 
therefore represents distortive state aid. To assist it in assessing the 
complaints, the Commission is having a study made by outside consultants into 
the balance between the respective rights and obligations and financial 
resources of public and private television in the European Community. The 
results of the study will be ready by mid-1994. 
4. I.§10.p.1 
3Ô5 
<T3> §10. State aid in the agricultural sector 
547. In the agricultural sector, Commission activity is largely determined by 
the provisions of the common agricultural policy, the principles of which are 
laid down in numerous Council regulations. This applies above all to the 
common market organizations, which are in principle exhaustive regulations 
for the products concerned and exclude additional national market support 
measures via state aid. In the field of agricultural structural and 
environmental measures, Commission policy concerning the assessment of state 
aid under Articles 92 and 93 of the EC Treaty is similarly largely determined 
by Council regulations. In this context the introduction of Council 
Regulation (EEC) No 2078/92 on agricultural production methods compatible 
with the requirements of the protection of the environment and the 
maintenance of the countrysided) is of particular importance. This 
Regulation constitutes one of the accompanying measures of the 1992 CAP 
reform. Regulation (EEC) No 2078/92 provides that Member States can introduce 
additional state aid measures with different conditions and higher amounts of 
aid than those set in this legislation. For the assessment of these state aid 
schemes, the Commission has to take into account the basic criteria of this 
Regulation. In comparison to the criteria which were applied before under 
Council Regulation (EEC) No 2328/91, which previously set the parameters for 
environmental measures, the following changes are important : 
aid can also be given for the maintainance of certain farming practices 
including those not under any immediate threat; 
the aid programmes can cover whole regions and are not restricted only 
to environmentally sensitive areas; 
"the aid rate (e.g. premium per ha) can provide an incentive and thus be 
higher than any income losses or possible additional costs associated 
with the requirements of environmental protection. 
The full extent of the new parameters set by this legislation remain to be 
defined. However, it is already evident that a very wide spectrum of 
conditions may now be considered as conferring environmental benefits. 
(1) OJ No L 215, 30.7.1992, p. 85. See also point 384 of this Report. 
4.I.§10.p.2 336 
Consequently state aid related to the environment can now be the source of 
additional income to the agricultural sector in those Member States able and 
willing to avail their farmers of the new possibilities opened up by 
Regulation (EEC) No 2078/92, over and above that flowing from Community 
co-financed actions. 
548. As mentioned above, the Commission as a general rule raises objections 
to aid which concerns national market support measures for products subject 
to the various common market organizations. This is done because normally 
such national aid per unit of output or input is liable to disturb Community 
market mechanisms and, as operating aid, has no lasting effect on the 
development of the sector concerned. In this context the Commission took 
final negative decisions against two Italian aid schemes, one of them 
concerning aid to olive oil producers which went beyond the total amount of 
aid permitted by the market organization for oils and fats, the other 
concerning aid for the private storage of nuts. 
The Commission initiated Article 93(2) proceedings with regard to the 
apparent misuse of a scheme approved in 1992(2) for the export of mushrooms 
from Ireland. It regarded this aid as an infringement of the market 
organization for fruit and vegetables and as operating aid with no lasting 
effect on the development of the sector. According to the information 
available to the Commission, the aid was based on the quantity of mushrooms 
exported and reduced the exporters' costs. Thus this aid is regarded as not 
being in conformity with an approved aid scheme of which it is part, which 
was intended to avoid massive lay-offs in small and medium-sized enterprises 
whose earnings had dropped sharply due to the depreciation of the pound 
sterling. The Commission had raised no objections to this aid scheme in 1992 
on the understanding that products such as mushrooms for which common market 
organizations exist were excluded from direct support to avoid an 
infringement of the market organizations. 
Another reason for initiating proceedings in this case was that a condition 
for the grant of the aid constituted a measure having equivalent effect to a 
quantitative trade restriction in contravention of Articles 30 et seg. of 
the Treaty. According to the information available to the Commission, the aid 
(2) Twenty-second Competition Report, point 470. 
4.I.§10.p.3 337 
was granted only to producers, buying compost from one or more of the five 
Irish composting companies. This case illustrates that in assessing state 
aid the Commission has to take account of other Treaty provisions. It deems 
any aid incompatible with Article 92 if the conditions for its grant are in 
contravention of another provision of Community law. 
Another case in the context of a common market organization where the 
Commission decided to initiate proceedings under Article 93(2) of the 
EC Treaty was in regard to aid taking the form of the transfer of assets of 
the Milk Marketing Board for England and Wales, which currently constitutes a 
virtual monopoly for the collection and marketing of milk, to a new 
cooperative to be called Milk Marque. 
On the basis of this transfer, Milk Marque will issue certificates of 
entitlement to milk producers. These will not be transferable and can be 
cashed in by producers not Joining the new cooperative on the fifth 
anniversary of the day on which it is set up. Milk Marque is to pay interest 
of 7% per annum on them after a one-year moratorium. 
The Commission considered that these arrangements, which may also involve an 
underestimation of the value of the assets due to be transferred to Milk 
Marque, do not reflect normal market conditions but violate the open market 
principle as established by the Court of Justice in its judgment in 
Case 177/78 (Pigs and Bacon Commission v McCarren and Company Ltd). Milk 
producers who do not wish to become members of Milk Marque would be forced 
investors in the new cooperative, which would accordingly not be established 
on a genuinely voluntary basis. Consequently the Commission also had to 
consider the measure as an infringement of the market organization for milk 
and milk products. 
549. "In the wine sector, the Commission initiated Article 93(2) proceedings 
in December 1992 with regard to German aid for supplementary distillation of 
wine in Rhine land-Palatinate going beyond the quantities provided for in the 
provisions of the common market organization. The Council subsequently 
decided in February 1993 to allow this aid under the terms of the third 
subparagraph of Article 93(2) of the EC Treaty, on the grounds that 
exceptional conditions were present - a criterion which the Commission is not 
permitted to invoke in its assessment of state aid. 
4.I.§10.p.4 
3Ô8 
However, it has to be mentioned that it is not the only case in recent times 
where the Council has made use of this Treaty provision to allow aid in the 
wine sector against which the Commission had decided to initiate 
proceedings/3) During 1992 and 1993 the Council took a total of four 
decisions invoking "exceptional" circumstances for aid in the wine sector. 
550. Concerning aid to investments for improving processing and marketing 
conditions of agricultural products, Community policy is laid down in 
Council Regulation (EEC) No 866/90 and further defined in the Commission 
decision of 7 June 1990 on the selection criteria to be adopted for these 
investments, otherwise referred to as "sector limits". Although Council 
Regulation (EEC) No 866/90 allows Member States to introduce aid under 
different conditions through Articles 92 and 93 of the EC Treaty, this 
freedom is confined by the selection criteria under Regulation (EEC) 
No 866/90 applied by analogy for the assessment of state aid. 
This is Commission practice because these "sector limits" were established 
to take account of the Community market situation for the products concerned 
and not to reflect relative priority for use of Community funds. Thus, for 
reasons of consistency of Community policy, it would be inappropriate to 
encourage investments in sectors which are excluded from aid as a 
consequence of Community market and structural policy by allowing state aid 
in these restricted sectors. 
The Commission had to deal with several cases which concerned aid for the 
modernization of undertakings in excluded sectors (grainmills, oil seeds 
processing) in the new Lander of Germany. The Commission decided to initiate 
the proceedings under Article 93(2) of the EC Treaty because it saw no 
reason to allow derogations from the abovementioned limits if motivated 
solely by the general argument of the special situation in the new Lander. 
Derogations from the "sector limits" might in general, however, be warranted 
for a given case provided there is a solid justification based on an 
economic analysis which included the Community interest. 
(3) See, e.g., Twenty-second Competition Report, point 503. 
4.I.§10.p.5 
339 
Such a derogation was made when the Commission raised no objections to an 
investment aid for an animal feed production plant, which is normally an 
excluded sector (except units of small size); this derogation was allowed 
because the Danish authorities could provide assurances that the measure, 
located on the island of Bornholm had no impact on trade between Member 
States. 
These assurances were based on the particular circumstances of the case, 
especially the geographical location of the investment and its isolation from 
the relevant markets elsewhere in the Community. 
551. In the case of aid financed by parafiscal charges (compulsory levies), 
the Commission has to examine the financing of the aid as well as the aid 
itself. The case of a German aid scheme for publicity financed by parafiscal 
charges (Absatzfondsgesetz) highlighted new aspects of the examination 
of these kinds of aid. The Commission raised no objections against this aid 
scheme although for some products (e.g. oilseeds) only that part of 
production was taxed (in this case oil production) which benefited from the 
aid. In this case the aid was used exclusively for publicity for oils on the 
domestic market. Thus the exclusion from the tax of production either for 
export or for uses other than oil production was not considered as indirect 
operating aid for these exempted products. 
With regard to aid financed by parafiscal charges on products imported from 
other Member States, the Commission's policy, based on the case-law of the 
Court of Justice, is to consider such aid to be normally incompatible with 
the common market because of the way in which it is financed. Only in cases 
where there is substantial processing of such products after importation, 
having the effect of changing the origin.of the processed products, and where 
the charge is levied only on the products thus processed, can the 
aid-financing aspect be deemed compatible with the common market. 
The Commission was thus able to terminate Article 93(2) proceedings in 
respect of aid for research financed by a parafiscal charge levied on 
processed fruit and vegetables, the proceedings having been initiated because 
of the taxation of fresh products imported from other Member States. After 
the Dutch authorities had altered the regulations governing the levying of 
the parafiscal charge, the situation was such that the charge was levied only 
4. I.§10.p.6 
340 
on fruit and vegetables that had undergone substantial processing, so that 
the products obtained were of Dutch origin. 
Acting under Article 93(1) of the Treaty, the Commission recommended that the 
French Government halt the granting of aid by the French national association 
of table wines and regional wines. The aid was incompatible with the common 
market because it was financed by a contribution levied when the products 
were released to the home market and also on export, with products imported 
from the other Member States also being taxed at those two stages. 
The Commission did not consider that the blending of French table wines and 
wines imported from other Member States amounted to substantial processing 
that could alter the origin of the wines from the other Member States. 
Furthermore, the Commission noted that the table wines supplied for 
processing in France are not subject to the charge, whereas table wines are 
always liable to the contribution on export, whether or not they are intended 
for processing. The contribution was therefore regarded as a tax having an 
equivalent effect to an export duty. 
4.I.§11.p.1 341 
<T3> §11. Aid in the fisheries sector 
552. In 1993 the Commission registered 23 new aid schemes and two aid schemes 
notified after their adoption by the Member State in question. 
The Commission decided not to oppose the implementation of 21 aid schemes. 
During 1993 the Commission initiated Article 93(2) proceedings in relation to 
one Danish aid measure and one Italian aid measure. During the same period, 
the Commission decided to terminate Article 93(2) proceedings with regard to 
three aid measures introduced by France and Italy. 
The table below gives an indication of the evolution of the number of aid 
schemes adopted in the fisheries and aquaculture sector which have been 
examined by the Commission and the number of decisions taken by the 
Commission concerning the compatibl itiy of these aid measures with the 
competition rules and Community fisheries legislation. The data are based on 
the date of the decision and do not necessarily reflect the number of aid 
measures registered or examined. 
Year 
1990 
1991 
1992 
1993 Total 
23 
45(D 
33(2) 
25(3) Decision by the Commission 
No 
object ion 
12 
18 
28 
21 Ini t iat ion of 
Article 93(2) 
proceedings 
2 
7 
10 
2 Termination of 
proceedings 
2 
4 
9 
3 Negat ive 
dec i s i on 
1 
(1) Seven registered aid measures were subsequently withdrawn from the 
register of aid before the examination process commenced. 
(2) One registered aid measure was subsequently withdrawn from the register 
of aid before the examination process commenced. 
(3) Five registered aid measures were withdrawn from the register of aid 
before the examination process commenced. 
4. I I .p.1 
342 
<T4> Chapter I I 
<T2> Main decisions of the Court of Justice 
<T3> §1• Weighing of rights of third parties and prospective aid 
recipients in decisions whether or not to initiate proceedings 
under Article 93(2) of the EEC Treaty 
553. Third parties may be hurt by failure to initiate proceedings under 
Article 93(2) because their rights to have their views heard is infringed. 
As far as prospective aid recipients are concerned, the initiation of 
Article 93(2) proceedings has important legal effect because of the 
suspensive effect of those proceedings/1 ) In two judgments^) the Court 
confirmed the extent of the Commission's obligations towards third parties 
and prospective aid recipients when deciding whether or not to open 
investigation proceedings under Article 93(2). 
In the Cook judgment, the Court annulled the decision of the Commission to 
raise no objections to several sets of aid granted to PYRSA, a Spanish 
manufacturer of foundry products, which would increase the production 
capacity of the company. 
The Court considered that the Commission had based its decision not to raise 
objections on the absence of overcapacity in the sub-sector in question. At 
the same time, the Commission did not have at its disposal all the necessary 
figures or statistics showing with any degree of certainty that its 
assessment of the capacity situation was correct. 
Consequently, the Commission was facing serious difficulties in determining 
whether the aid could be considered compatible with the common market, and 
therefore should have initiated the procedure under Article 93(2) of the 
Treaty in order to verify its assessment. 
(1) See [1992] ECR 1-4117; Twenty-second Competition Report, point 532 and 
Case C-47/91 , Italian Republic v Commission ("I taIgrani"), judgment of 
30 June 1992. 
(2) Cook v Commission. Case C-198/91 , judgment of 19 May 1993; Matra v 
Commiss ion. Case C-225/91, judgment of 15 June 1993. 
p.2 343 
In the Matra case, however, the Court upheld the Commission's decision to 
allow regional aid granted by the Portuguese Government to Volkswagen and 
Ford for building a new multi-purpose van plant at Setubal. The Commission 
had not opened proceedings; it had been satisfied as to the absence of 
overcapacity from a consultant's report. In these circumstances, not having 
serious doubts about the compatibility of the aid with the common market, it 
had not been obliged to open proceedings. If the Commission was sure without 
opening proceedings that the aid was permissible under the exceptions to 
Article 92(3), it should not do so. 
<T3> §2. Legal status of aid frameworks and their interpretation 
554. In the CIRFS v Commission judgment^) of 24 March 1993, the Court 
reaffirmed the binding nature of rules setting out the Commission's practice 
in controlling aid where the rules have been recommended to the Member States 
and accepted by them under Article 93(1) of the Treaty. 
The Court found that the Commission had made a mistake in interpreting the 
scope of the synthetic fibres aid framework when i-t had held that aid for an 
investment project by Allied Signal did not need to be notified because it 
concerned man-made fibres for industrial uses. The Commission had based its 
interpretation on that given in a previous decision under which it had 
approved aid to a German man-made fibres producer. However, the Court held 
that an act of general scope could not be altered implicitly by an individual 
decision. It therefore annulled the Commission's decision not to initiate 
Article 93(2) proceedings in respect of the aid granted by France to Allied 
S i gna I . 
The Commission has since initiated Article 93(2) proceedings against the 
aid/4) 
(3) CIRFS v Commission ("Allied Signal"), Case No C 373/89, judgment of 
24 March 1993. 
(4) See point 520 of this Report. 
4.I I.p.3 
344 
<T3> §3. Aid to shipping companies placing orders for ships 
' to be counted towards aid ceilings for shipbuilding 
555. The Court dismissed two applications by the Belgian Government seeking 
the annulment of Commission decisions concerning aid in the form of 
subsidized loans granted to shipowners for the building of ships in Belgian 
shipyards.(5) The grant equivalent of the loans exceeded the maximum aid 
ceiling laid down by the Commission pursuant to Article 4(1) of the sixth 
Council Directive on aid to shipbuilding/6) In its decisions, the 
Commission required the Belgian Government to review the terms of the loans 
in such a way as to bring their grant equivalent within the limits set for 
1989. 
The Belgian Government argued that part of the aid thus granted did not 
constitute support for shipyards, but was merely aid for the operation of sea 
transport under the Belgian flag, and that the compatibility of the aid 
should therefore be examined in the light of the exemptions provided for in 
Article 92(3)(a), (b) and (c) of the Treaty. 
556. In its judgment, the Court confirmed that the aid to shipowners that was 
granted for the purchase of ships was aid to shipyards and should be fully 
subject to the common ceiling rules, and that the Council directives based on 
Article 92(3)(d) had already taken account of the aspects contained in 
Article 92(3)(a), (b) and (c). 
(5) Belgium v Commission, Joined Cases C-356/90 and C-180/91, judgment of 18 
May 1993. 
(6) Council Directive 87/167/EEC of 26 January 1987. 
5.§1.p.1 
345 
<T5> Part V 
<T1> International dimension 
<T3> §1. EFTA countr ies 
557. In the referendum of 6 December 1992 the Swiss people decided that 
Switzerland would not become part of the European Economic Area. 
Consequently, the Agreement had to be amended and an additional protocol was 
concluded. That protocol did not change any of the competition provisions. 
Liechtenstein has also decided not to join the EEA for the time being but 
could still do so at a later stage. 
All the other countries involved were able to conclude their ratification 
procedures during the period under review so that the EEA could enter into 
force on 1 January 1994. 
The EFTA Surveillance Authority (ESA) will be responsible for enforcing the 
competition rules on the EFTA side. During the review period the Commission 
cooperated closely with EFTA's Preparatory Committee for the Surveillance 
Authority in order to help it prepare in the best possible way for the tasks 
awaiting it upon the entry into force of the EEA. 
On 15 December the Commission adopted new notification forms on which 
companies will notify their agreements or a proposed merger to the Commission 
so that account can be taken of the EEA dimension/1) 
<T4> The Free Trade Agreements of 1972 
558. The Commission continued to apply the competition rules of the 1972 Free 
Trade Agreements, particularly in the state aid sector/2) 
As the EEA Agreement covers only state aid granted and anti-competitive 
practices taking place after 1 January 1994, the Commission intends to 
continue to monitor state aid as well as anti-competitive practices in EFTA 
countries which date back to before the entry into force of the EEA and to 
propose to the Council that remedial action is taken where needed. 
(1) OJ L 336, 31.12.1993. 
(2) See points 98 and 101 to 104 of this Report 
5.§1.p.2 346 
<T4> Sectoral agreements in the aviation sector 
559. The Agreement between the Community and the Kingdoms of Norway and 
Sweden which entered into' force on 6 July 1992 was amended on 
10 September 1993 in order to extend the application of the so-called "third 
package" in the area of civil aviation to these two countries. Although the 
Agreement was originally set to expire on the date that the EEA entered into 
force, the three Parties realised that this would lead to a particular 
problem. The EEA does not as yet include the third package in the 
"acquis communautaire" as defined in its Annex 13. This incorporation will 
take place at a later stage. It has therefore been decided to maintain in 
force the Agreement with Norway and Sweden as regards the third package, in 
principle until the incorporation of the latter has taken place. 
560. After Switzerland decided not to become part of the EEA Agreement, the 
Swiss Government expressed an interest in concluding an agreement similar to 
the one with Norway and Sweden on civil aviation. In addition, it asked for 
an agreement covering road transport. In September the Commission recommended 
that the Council instruct the Commission, to open negotiations on such 
agreements. These negotiations should follow a two-track approach, i.e. cover 
both the transport policy aspects and the competition aspects. The main 
problem will be the enforcement of those rules. Unlike the Agreement with 
Norway and Sweden, which was always intended to apply for a limited period 
only, an agreement with Switzerland could remain in force indefinitely. For 
this reason, the enforcement issue presents itself with more urgency. 
<T4> Accession talks 
561. The ongoing talks on enlargement with Austria, Finland, Norway and 
Sweden have been greatly helped by the work already done on competition for 
the European Economic Area. 
Acceptance of the "acquis communautaire" is thus not presenting any major 
difficulties, although the negotiations have highlighted two particularly 
sensitive issues as far as the applicant countries are concerned, one 
concerning the adjustment of state monopolies of a commercial nature and 
5.§1.p.3 ' 347 
the other regional aid schemes. The applicant countries stated among other 
things that account should be taken of essential public health requirements 
in connection with the alcohol and alcoholic drinks' monopoly and of the 
characteristics of sparsely populated areas in the northern regions. 
It was agreed in an exchange of letters between the Commission and the 
Swedish authorities, on the one hand, and the Finnish authorities, on the 
other, that the exclusive rights for the wholesale importation, production 
and marketing of alcohol monopolies in those countries would be abolished. 
As regards exclusive rights in the retail trade, existing Community 
legislation does not require the abolition of existing state monopolies but 
imposes the elimination of any discrimination in their operation. The 
Commission also considered that the foregoing arrangements should be applied 
as soon as the EEA Agreement entered into force. 
562. In accordance with the conclusions of the Copenhagen summit, the 
Commission opinion on accession applications from Cyprus and Malta analysed 
the competition situation in these countries. 
5.§2.P.4 34Q 
<T3> §2. Central and Eastern Europe 
563. During the period under review, the Community and its Member States 
concluded a Europe Agreement with Romania, while an Interim Agreement between 
that country and the Community was also concluded. In addition, the 
Commission continued its technical assistance programmes with the countries 
of central and eastern Europe with a view to helping them meet the obligation 
under the Interim as well as the Europe Agreements to harmonize their 
competition rules with those of the Community and acquire the necessary 
experience in applying their competition laws. 
564. Negotiations continued on partnership and cooperation agreements with 
Russia and several other former republics of the Soviet Union. The Commission 
has proposed that a competition article be included in the draft agreement 
with Russia, which is at a more advanced stage than the other agreements. 
Because the draft agreement does not aim to create a free trade area with the 
Russian Federation, it was not felt appropriate to propose a competition 
article which was as ambitious as those included in the Europe Agreements. 
<T4> Other countries 
565. Discussions about possible trade agreements are also taking place with 
the Baltic States and with Slovenia. The intention is that the agreements 
should include provisions on competition similar to those contained in the 
) 
Association Agreements with the central and eastern European countries, since 
it may be in the interests of economic operators that as many Community 
partners as possible form a coherent whole from the standpoint of competition 
rules and their implementation. 
566. As regards relations with Israel, the competition rules contained in the 
1975 Agreement were to be strengthened and extended to cover service 
activities in particular, while the arrangements for implementing the agreed 
principles were to be set out more clearly. 
5.§2.p.5 349 
567. As regards the Euro-Maghreb agreements to be negotiated with 
Morocco and Tunisia, the same approach to competition rules could be taken as 
for the central and eastern European countries. A major argument for 
including such rules is the mutual advantage to the contracting parties in 
applying harmonized competition rules instead of adopting defensive trade 
measures. 
568. A 1964 agreement between the Community and Turkey, which was 
supplemented by a protocol in 1973, provided that, when a transitional period 
of 22 years from that date had expired, a customs union would be set up. 
Discussions have therefore started with a view to preparing for the change, 
which should take place in 1995. It is clear that the competition rules are 
an important aspect of the negotiations as they ensure that distortions of 
trade will not result from the conduct of undertakings, an essential feature 
of any treaty that provides for the abolition of all customs restrictions. 
5.§3.p.6 ^ _ 
350 
<T3> §3. North Amer ica 
569. The Agreement which the Commission concluded with the Government of the 
United States on 23 September 1991(3) continued to be applied both by the 
Commission and the US competition authorities. 
Thirty-six notifications were received and thirty-three sent. Those 
notifications concerned mainly mergers and acquisitions while others dealt 
with price fixing or licences. 
Although the operation of the agreement should have been reviewed at the 
latest 24 months after the entry into force of the Agreement, i.e. before 
23 September 1993, it was decided to defer such a review until the Court of 
Justice had taken a decision in Case 327/91 (France v Commission).(4) The 
Advocate-General dealing with the case delivered his opinion at the end of 
1993, suggesting that the Agreement be annulled. No date has yet been set 
for the Court judgment. 
Bilateral meetings between DG IV and the US authorities were held in Brussels 
on 20 September and in Paris on 9 December. At those meetings, the parties 
discussed enforcement priorities, with particular emphasis on those of the 
new US Administration, exchanged views on certain international aspects of 
competition policy and explored ways of cooperating more closely on certain 
specific cases. 
A number of other contacts took place, inter 'alia in the margins of 
international meetings at the OECD and in relation to specific enforcement 
cases. 
570. During the year under review no formal bilateral meeting took place 
between DG IV and the Canadian Bureau of Competition, mainly because of 
personnel changes in Canada. A number of informal contacts did take place, 
however, in the day-to-day application of the' competition rules. 
(3) Twenty-first Competition Report, points 64 and 362 
(4) Twenty-first Competition Report, point 64. 
5.§4.p.7 
35 1 
<T3> §4. Japan and Korea 
571. Relations with the Japanese Fair Trade Commission (JFTC) entered a new 
phase when the Commission and the JFTC organized a Joint seminar on 
competition policy in the EC and Japan on 4 November in Tokyo. The success of 
the seminar led to a decision in principle to organize a follow-up seminar in 
Brussels during the course of 1994.(5) At an informal meeting in Paris on 
9 December, it was decided that this seminar should focus on enforcement 
issues in the EC and Japan. 
The seminar was preceded by the eighth bilateral meeting between the 
Commission and the JFTC on 2 November, also in Tokyo. A number of issues of 
mutual interest were discussed, including exchanges on sectoral studies 
undertaken by the JFTC into four sectors (automobiles, car parts, paper and 
flat glass). One of the purposes of those sectoral studies is to examine 
whether anti-competitive practices in those countries may give rise to market 
access problems in Japan. The Commission is currently examining those studies 
and may ask the JFTC to deal with certain problems highlighted in the 
studies. 
572. On 13 December a delegation from the Korean Fair Trade Commission 
visited Brussels for their first bilateral meeting with DG IV. The meeting 
was given over mostly to an exchange of views on recent enforcement 
activities in the EC, in order to identify areas where the Community's 
experience could provide the Korean authorities with useful guidance as 
regards enforcement policies in their country. 
(5) See point 110 of this Report 
5.§5.p.8 352 
<T3> §5. Multilateral organizations 
<T4> OECD 
573. During the period under review the OECD Committee on Competition Law and 
Policy (CLP) held a number of meetings. Some joint meetings also took place 
between CLP Working Parties and the Trade Committee on the relationship 
between trade and competition policies. The Commission took an active part 
in these discussions since they.may form a preparatory stage for the possible 
discussions within the GATT on international competition rules. Other topics 
discussed in the CLP were vertical and horizontal restraints. 
574. The Commission took part in the work of the Industry Committee on 
subsidies and structural adjustment. This involved drafting and finalizing 
common concepts and methodologies for assessing state aid to industry with a 
view to producing a detailed questionnaire for OECD members. 
The questionnaire is an important stage in the project aimed at quantifying 
the net cost to OECD public authorities of subsidies to industry. 
575. The Commission continued to be involved in the ongoing talks in the OECD 
about fair trading rules in the shipbuilding sector/6) 
<T4> Unctad 
576. The Unctad Intergovernmental Group of Experts on Restrictive Business 
Practices (IGE) held its 12th meeting in Geneva on 18-22 October 1993. 
(6) See point 498 of this Report 
6.§1.p.1 
353 
<T5> Part Six 
<T1> Contacts with Community institutions and 
external organizations 
<T3> §1. European Parliament 
577. In the course of 1993 Parliament paid a great deal of attention to 
competition matters. Its constructive contributions are greatly appreciated 
by the Commission. It is the Commission's aim to maintain the regular 
dialogue with Parliament on issues of competition policy. 
On 8 February Parliament adopted its resolution on the Twenty-second 
Competition Report. The resolution and the Commission's response are annexed 
to this Report /1 ) 
Two other resolutions were adopted which have a bearing on competition. They 
concerned: 
- shipbuilding (adopted on 16 November) and 
- the situation of Daf/Leyland (adopted on 11 February). 
578. During the year Members of Parliament submitted 159 written questions on 
competition (141 in 1992); a further 29 questions were submitted for oral 
reply (66 in 1992). 
(1) Annex I.A, 
6.§2.p.2 354 
<T3> §2. Economic and Social Committee 
579. On 24 November the Economic and Social Committee delivered its opinion 
on the Twenty-second Competition Report. The opinion and the Commission's 
response are reproduced in Annex I.B. 
On 30 June the Committee delivered an opinion on state aid to shipbuilding. 
580. The Commission appreciates the constructive observations made by the 
Economic and Social Committee and hopes for a continuation of the good 
working relationship with it. 
6.§3.p.3 
355 
<T3> §3. Advisory Committee on Restrictive Practices 
and Dominant Positions 
581. The Advisory Committee met six times to examine preliminary draft 
Commission decisions pursuant to Articles 85 and 86 of the EC Treaty. Two of 
the decisions involved interim measures. 
The Committee delivered a total of seven opinions. It was also consulted in 
13 cases where the Commission was considering sending comfort letters to 
firms following publication of a notice pursuant to Article 19(3) of 
Regulation No 17. It was also kept informed of progress in several major 
cases. 
In its various compositions, the Committee held four meetings on matters 
concerning legislation. Three of them dealt with a number of preliminary 
draft regulations amending the block exemption regulations covering air 
transport. One meeting was given over to discussion of a new block exemption 
regulation relating to shipping consortia. 
6.§4.p.4 -7 r ' 
35b 
<T3> §4. Advisory Committee on Concentrations 
582. The Advisory Committee on Concentrations met five times. It delivered 
opinions on the draft decisions in KNP/BUhrmann Tetterode/VRG. 
Pi Ikington-Techint/SIV. KaIi +SaIz/MDK/Treuhand and Mannesmann/VaIlourec/ILVA. 
The review of Regulation (EEC) No 4064/89 was discussed at two meetings with 
government experts from the Member States. The Commission drew very widely 
on the results of the discussions in drafting its report to the Council/2) 
The meeting of Directors-General for Competition that was held on 15 October 
was given over entirely to problems of cooperation between the Commission and 
the competent authorities in the Member States. Discussions of this question 
will be pursued within a working party of experts. 
2) See points 43 et seg. of this Report. 
6.§5.p.5 357 
<T3> §5. Conference of national government experts 
583. At their 44th conference, held in Brussels on 7 December, the government 
experts on restrictions of competition examined the preliminary draft of a 
new Commission regulation on the form, content and other details of 
applications and notifications pursuant to Regulation No 17 and the 
preliminary draft of a new Form A/B. It was agreed to carry out a second 
reading of the two preliminary drafts once the Commission had finished 
consulting the relevant representatives of business and industry. 
6. §6.a.p.6 358 
<T3> §6. Contacts with the competition authorities in the Member States 
<T5> (a) Restrictive agreements, dominant positions and mergers 
584. In accordance with a general principle of law enshrined in all the 
regulations implementing Articles 85 and 86, the Commission carries out its 
proceedings in close and constant liaison with the competent authorities of 
the Member States. Such contacts, which were once again very numerous in 
1993, not only involve an exchange of views on the individual cases being 
dealt with by the Commission. They also allow assessment of the scope for 
cooperation at the investigation stage and, where appropriate, for the 
sharing of tasks, in accordance with the principles of subsidiarity and 
decentralization/3) 
585. It was in this spirit that the Commission decided to share with the 
Member States a number of investigations to be carried out into firms in the 
spectacle industry. The investigations were conducted partly by the national 
authorities acting under Article 13 of Regulation No 17 and partly by 
Commission officials acting under Article 14. In one case concerning the 
distribution of office requisites, the Commission asked the authorities in 
three Member States to carry out on its behalf investigations on their 
respective territories into alleged restrictive practices. In two cases 
which resulted in proceedings for infringement of Articles 85 and 86 and 
related respectively to the foodstuffs and building materials industries, the 
Commission decided to separate out from the facts resulting from its 
investigation those which were more national in character and to refer them 
to the competent authorities in the Member States concerned. 
(3) See Part One, Chapter V, §2 of this Report. 
6.§6.b.p.7 
359 
<T5> (b) Aid 
586. The Commission held two multilateral meetings with officials from 
national ministries responsible for aid matters to discuss issues of state 
aid policy. These meetings are dealt with elsewhere in this Report/4) 
(4) See points 382 and 383 of this Report 
6.§7.p.8 35,3 
<T3> §7. Competition law in the Member States 
587. The year saw a continuation of the tendency for competition law in the 
Member States to move into line with the Community competition rules. 
Measures were taken in several Member States to replace, amend or supplement 
the existing legislation with this objective in view. Similar legislation 
was being drafted in other Member States. 
588. In Belgium the Act of 5 August 1991 on the protection of economic 
competition entered into force on 1 April 1993, along with the necessary 
implementing orders. It is closely based on Articles 85 and 86 of the 
EC Treaty and introduces a ban on restrictive practices, with scope for 
exemption, a ban on the abuse of dominant positions, and a system of merger 
control. A number of bodies are involved in its application. Cases are to 
be investigated by a Competition Office in the Ministry of Economic Affairs. 
Decisions on these cases are to be taken by a Competition Council made up of 
six professional judges and six specialists in competition matters. The 
Council's decisions can be challenged before the Brussels Appeal Court, which 
also has power to deliver preliminary rulings on the interpretation of the 
Act at the request of other courts. The Minister for Economic Affairs is 
empowered to declare block exemptions. There is also a joint Competition 
Commission which is to play an advisory role. 
589. In Portugal the decree-laws on competition and merger control were 
incorporated into a single text. Important changes were made at the same 
time. The new legislation resembles the EC competition rules in that it no 
longer seeks to cover the case of an ordinary firm engaging in restrictive 
practices individually. The previous rules on unfair and discriminatory 
practices and on refusal to supply have been dropped. The ban on the abuse 
of a dominant position has been supplemented by a ban on the abuse of 
another's position of dependence. The merger control rules have been 
reformulated so as to align them on the principles and concepts laid down in 
the EC Merger Control Regulation. The new legislation also prohibits any 
6.§7.p.9 36 1 
state aid which might significantly restrict or otherwise affect 
competition. At the request of an interested firm, the Minister for Trade is 
to investigate cases of state aid. If necessary, he will recommend to the 
minister responsible the measures needed to restore competition. 
590. The Dutch authorities are preparing a thoroughgoing reform of the 1956 
Economic Competition Act. The system of supervision based on the concept of 
abuse is to be replaced by new legislation prohibiting restrictive practices 
and the abuse of dominant positions which would correspond closely to 
Articles 85 and 86. The possibility of merger control legislation is also 
under consideration. Plans have now been submitted to the appropriate 
advisory bodies. In advance of the forthcoming reform, the Government 
tightened up the supervision of certain horizontal agreements. Orders were 
made banning price agreements, market-sharing agreements and restrictive 
agreements in respect of tenders. Exemptions can be granted only in 
individual cases. To qualify for exemption, an agreement must be shown to be 
in the general interest. 
591. In Ireland a bill was drafted which would amend the Competition Act 1991 
in order to make the application of the law more efficient. The Minister for 
Enterprise and Employment doubled the thresholds at which mergers must be 
notified. The Competition Authority declared exemptions for exclusive 
distribution and exclusive purchasing agreements for motor fuels which 
correspond closely to those provided for in the Community block exemption 
regulations, viz. Regulations (EEC) Nos 1983/83 and 1984/83. 
592. In Denmark a committee was set up to draft a prohibition-based 
competition bill and to examine the advantages and disadvantages of a reform 
of the existing law. It is also to consider the introduction of merger 
control. 
593. The Government of the United Kingdom pressed ahead with its plans to 
reform the rules on the abuse of economic power. A document setting out 
various legislative options has been the subject of extensive consultations 
e.§7.p.io 352 
with all interested parties. The new rules are to be enacted together with 
rules banning restrictive practices as soon as parliamentary time can be 
found. 
594. The Commission welcomes these moves, which in some cases go hand in hand 
with a liberalization of markets and an ending of privileged treatment for 
particular sectors, since they represent a decisive step towards the 
harmonization of the competition policies of the Community and the 
Member States and improve the scope for closer cooperation between 
competition authorities and for decentralized law enforcement. This is an 
objective to which the Commission has attached considerable importance and 
which is being taken up more and more widely. In two other Member States, 
France and Portugal, legal provision has now been made for the application of 
Articles 85 and 86 by the domestic competition authorities. As yet there is 
no such legislation in Denmark, Ireland, Italy, the Netherlands or the 
United Kingdom. The Commission will continue its efforts to secure the 
introduction of similar provisions in these countries too. 
595. Those national authorities which do possess the necessary powers have 
been applying Articles 85 and 86 more extensively. Eighteen new cases of 
this kind were brought to the Commission's attention in 1993 (two in Germany, 
six in Spain, eight in France and two in Portugal). In the large majority of 
cases the Community prohibitions were applied in conjunction with the 
corresponding prohibitions under domestic competition law. In the two German 
cases, only the ban in Article 85(1) was applied because in the industry 
concerned, the energy sector, domestic law gave the competition authorities 
only very limited powers to supervise abuse. 
596. The number of court cases in which the Community competition rules are 
applied has also been increasingly rapidly. Member States' reports to the 
Commission for 1993 list about 60 such decisions, with special mention being 
made of 37 of them which are deemed to be of particular importance. Most of 
the national competition authorities do not possess complete statistics on 
(2 
6.§7.p.11 7 
such cases and so the total number of such judgments may well be a great 
deal higher. The Commission considers that this development too provides 
support for its policy of decentralized application. 
597. Details of developments in Community law in the Member States are given 
in the country-by-country reports in the annex. 
6. §8. p. 12 3^4 
<T3> §8. Other contacts 
598. In addition to the contacts mentioned in this Report, the Commission, in 
the course of preparation of its legislative work and general policy 
documents, continues to receive submissions from, and have contacts with, 
organizations representing consumers, employers and other relevant groups. 
The Commission is in regular contact in particular with the European Bureau 
of Consumers' Unions (BEUC), the European Round Table and the Union of 
Industrial and Employers' Confederations of Europe (UNICE). It also 
maintains contacts with chambers of commerce representing not only the 
Member States but also our main trading partners, notably the United States. 
Commission officials also spoke in a personal capacity at several conferences 
relating to competition matters; this is a valuable means of increasing the 
transparency of Community policy and of obtaining feedback from business and 
other circles on the impact of competition policy in the market place. The 
Commission welcomes these contacts with consumers, employers and other 
relevant groups in monitoring the impact of competition policy. 
599. The Commission replied to the questionnaire sent to it by Mr Charié, 
Chairman of the French National Assembly's working party on disfunctions of 
competition, and reported on progress in the work being carried out on the 
issues dealt with in the questionnaire, including abuse of economic 
dependence, dominant positions, price transparency and refusal to sell. The 
Charié report draws widely on the Commission's comments. 
<T4> National representative organizations 
600. During the year Commission officials also met with the national 
employers' organizations in Germany, Spain, France, Ireland and the 
United Kingdom. The Commission invites employers' organizations or other 
interested groups to make contact with its relevant departments if they would 
like a similar opportunity to explain their points of view on general 
questions and policy. 
601. Finally, submissions were made to the UK House of Lords for its enquiry 
into competition law/with regard in particular to procedures in individual 
cases under Articles 85 and 86. 
ANNEXES 
Annex I I I.A.1. p.1 3 6 J D 
<T4> Annex 
<T2> Decisions, notices and judgments relating to individual cases 
<T9> A. Competition policy towards enterprises 
<T3> 1• Case summar ies 
<T4> (a) Restrictive agreements 
<T5> * Horizontal agreements 
<T6> International Securities Market Association (ISMA) (formerly AIBD) 
1. This case concerns a notification made by ISMA of its Rulebook. ISMA is an 
association of traders or "bond dealers" in international securities, for the 
most part "Eurobonds". It has some 900 member banks. Most of the not i fed 
rules relate to arrangements devised by ISMA for maintaining the orderly 
functioning of the market (such as harmonization of settlement and matching 
procedures, and procedures for making good a failure to deliver etc.). Most 
of the notifed rules did not pose any problem from a competition point of 
view although some minor amendments were requested to be made in the rules 
and procedures governing membership. 
Within ISMA there exists a sub-group known as the Council of Reporting 
Dealers (CRD), which has approximately 100 members. A market maker is a 
trader who undertakes to "make a market" in a specified category of security, 
i.e. to quote a buying and selling price in that security during a specified 
period and for a minimum quantity to other market makers. A reporting dealer 
is the term usually used to denote a market maker who is also a member of the 
CRD. Brokers can also be members of the CRD. A broker's role is to introduce 
a buyer to a seller and arrange the deal for them. There are basically two 
types of broker - first the agency broker who merely introduces the parties 
and acts for their account; and secondly the "matched principal" broker who 
acts as principal entering into "back-to-back" transactions with the buyer 
and the seller. He does not disclose the name of the parties and does not 
hold securities on his books. The notified rules were concerned exclusively 
with this latter kind of broker. 
Annex I I I.A.1. p.2 366 
An Article 19(3) notice was published on 14 December 1991 declaring that the 
Commission intended to take a favourable view of ISMA's rules. Subsequently, 
the Commission received two complaints alleging that Rules 931 and 932 
infringed Article 85 of the EC Treaty. Rule 931 stated that brokers "shall 
exclusively effect business between reporting dealers and shall give an 
undertaking ... not to effect business with or between other parties." Under 
Rule 932, reporting dealers were obliged to deal only with brokers who had 
agreed to abide by Rule 931. As a result of these complaints, new facts came 
to light which led the Commission to review its assessment of Rules 931/2 and 
to conclude that : 
(a) Rule 931 constituted an appreciable restriction of competition within 
the meaning of Article 85(1) in that it prohibited brokers from dealing with 
traders who were not CRD market makers and prevented them from dealing with 
their existing clients (many of whom are not CRD market makers). One of the 
objects and the effect of this prohibition is to facilitate the maintenance 
of artificially high prices and to increase the prices available to dealers 
who are not CRD market makers and to the "end investor". An exemption could 
not be justified since the restriction did not produce any benefits other 
than for the CRD market makers while at the same time producing harmful 
effects on other market participants. 
(b) Rule 932 also constituted an appreciable restriction of competition 
since it is designed to reinforce the restrictive effect of Rule 931 by 
preventing CRD market makers from dealing with brokers who are not willing to 
restrict their dealing to CRD market makers. An exemption could not be 
granted since this restriction produces benefits only for CRD market makers. 
Following an informal letter stating the objections to Rules 931/2, ISMA 
agreed to abandon these rules. The Commission was then able to issue an 
administrative letter confirming that the Rulebook was in conformity with 
Article 85 (1). This comfort letter was without prejudice to the question of 
the CRD sub-committees, their rules and structure, and was subject to the 
usual caveat regarding a change in circumstances. 
Ill A.1 . p.3 _, , 367 
<T6> ACRISS 
2. On 29 May the Commission published a notice pursuant to Article 19(3) of 
Council Regulation No 17 regarding a notification of ACRISS (The Association 
of Car Rental Industry Systems Standards). The notification concerned the 
ACRISS constitution, and also a code of conduct, car classification system, 
special equipment code and standard rental voucher scheme relating to the 
procurement of car rental in the Community through the use of Computerized 
Reservation Systems (CRSs). 
ACRISS is at present composed of the five leading car rental firms operating 
in the EC, Avis, Budget, Hertz, Europcar Interrent and EuroDollar. However, 
the system is open to all car rental firms. 
CRSs, which have been used in the airline sector for some time/1) are now 
also being used by the car rental industry in the EC. ACRISS has formulated a 
code of conduct for the companies seeking to sell car rental through CRSs. 
This code is largely based on the code of conduct drawn up by the Commission 
for application in the distribution and sale of air tickets through CRSs. The 
object of the code is said to be to ensure that Computer Reservation Systems 
are used in a fair, non-discriminatory and transparent way. 
The Commission has concluded that the arrangements fall within Article 85(1) 
of the EC Treaty because the availability of market information through a CRS 
enables car rental firms to be informed, on a continuous basis, of their 
competitors' prices and conditions of supply. 
Nevertheless, the Commission considers that, overall, the arrangements 
contribute to the enhancement of competition in this sector and has decided 
to issue the parties with a comfort letter. 
In its assessment, the Commission has particularly taken into account the 
fact that all car rental firms are allowed to participate, for a reasonable 
fee, and that the EC consumer is provided with easily accessible, 
comprehensive and accurate information on a competitively priced car reniai 
service. 
(1) Exempted from Article 85(1) by Commission block exemption Regulation 
(EEC) No 83/91, OJ L 10, 15.1.1991. 
Ill A.1. p.4 
368 
However, given that this is a new departure in the EC car rental market, the 
Commission is particularly keen that the present arrangements do not preclude 
the right of all interested parties to pursue any grievances which they may 
have through recourse to independent arbitration/appeal. Furthermore, the 
Commission will intervene immediately if there is any evidence of price 
coordination between participating companies or any indication that a 
concerted effort is being made to restrict competition in any way. It is also 
to be expected that there would be no constraints on the variety of 
information which can be offered and, as far as technically possible, 
included in the CRS. Finally, if the participating companies wish to make 
additional concessions available to their clients, e.g. discounts and special 
offers, without displaying such concessions on the CRS, they should clearly 
be free to do so. 
I I I .A.1. p.5 
369 
<T6> UTC (Pratt & Whitney) / MTU(2) 
3. The Commission authorized, by the dispatch of a comfort letter, a 
cooperation agreement concluded in the commercial aero-engine sector between 
the American company United Technologies Corporation (Pratt & Whitney 
division) and the German company MTU Motoren- und Turbinen-Union. 
Under the agreement, MTU's involvement in existing programmes is to increase, 
and the two companies are to divide between them the work on future engine 
programmes. MTU will thus play a more prominent part in the supply of 
components and in the overhaul and repair of engines, and it will share with 
P&W the risks associated with, and revenues earned from, such programmes. 
The draft originally notified to the Commission provided for "strategic" 
collaboration of a general nature going beyond collaboration on specific 
industrial projects. However, following publication of a summary of the 
notified agreement and in the light of comments submitted by third parties, 
the parties undertook, at the Commission's request, to limit their 
cooperation in the large-engine sector to particular projects. Such 
cooperation will henceforth concern specific families of commercial 
aero-engines. 
The Commission accordingly considers that the cooperation will help to 
promote competition because it involves a significant transfer of technology. 
However, whenever it is faced with such framework agreements, it is the 
Commission's policy to exempt only specific cooperation projects, especially 
where the relevant markets are oligopolistic. 
This was the first time the Commission had to assess a cooperation agreement 
in this sector. A review of the situation will therefore be carried out in 
ten years' time to see what impact the agreement has had on the market. 
(2) Twenty-second Competition Report, Annex I I I.A.1 
III.A.1. p.6 5/0 
<T6> Datacentra len - Maersk Data 
4. Datacentraien A/S ("Datacentralen"), a company owned by the Danish 
State, and Maersk Data A/S ("Maersk"), a company belonging to the Danish A.P. 
McJI1er Group, which have world-wide activities in shipping, manufacturing, 
aviation, oil production and trade, notified a set of agreements for the 
establishment of two joint venture companies on a fifty-fifty basis, Dan 
Computer Management A/S ("DCM"), and Dan Software International A/S ("DSI"). 
Further information was requested on several points and, having received the 
information, the Commission was able to close the file by sending a negative 
clearance comfort letter within the two months provided for in the 
accelerated procedure. 
Datacentraien and Maersk are both computer service companies, dealing with 
"systems development" (analysis, design, programming, testing) and "operative 
performance" (production) or "facilities management" ("FM") of computer 
assignments. Datacentraien has mainly supplied FM to undertakings in the 
public sector. Its activities abroad consist essentially in systems 
development outside the Community. Maersk provides in particular computer 
services to the A.P. Mailer Group. Like DC, it has no FM activities in the 
Community apart from Denmark. 
The main object of the agreements is to implement a decision of the Danish 
Government for the privatization of Datacentraien. Accordingly, DCM takes 
over the FM activities of Datacentraien and Maersk, but reserves services for 
the A.P. Miller Group. DSI is intended to work as a joint systems-export 
undertak ing. 
The parties have negligible market shares in the Community as a whole and the 
Commission considered that the putting together of Maersk's and 
Datacentralen's goodwill and know-how in respect of FM is not likely to have 
any appreciable impact on the scope for undertakings established outside 
Denmark to win contracts in that country. 
I I I .A.1. p.7 
37! 
<T6> * BP/Montedipe agreements 
5. An agreement was reached by which Montedipe (MD) agreed to sell and BP 
agreed to purchase MD's business of the sale and distribution of the acetyls 
products manufactured by MD at Porto Marghera and Priolo. MD will continue 
to produce, but entirely for BP. 
The agreement provided for the transfer of all the goodwill and other assets 
and relevant sales/commercial personnel, as well as all the liabilities, 
pertaining to MD's going concern. MD also covenanted not to compete either 
directly or through its affiliates with BP in the business for a period of 
f ive years. 
The sale and purchase agreement envisaged the execution by MD and BP of 
certain ancillary agreements relating, inter alia, to the toll-manufacture of 
the above acetyls products by MD for sale by BP ; a proportion of the vinyl 
acetate monomer will be sold to MD associates. 
The ancillary agreements provided, inter alia, as follows : 
MD is to convert raw materials supplied by BP for an initial period of 
10 years with a right to extend such period for up to five further 
periods of one year each. It is envisaged that the plants will by then 
have exhausted their useful economic life. MD has the obligation to 
allocate its entire production capacity to BP and to operate the plants 
to the i r fulI capac i ty. 
BP has the right to require MD temporarily to shut down the plants, 
further to permanently close them and, if necessary, demolish them. 
It was further provided that the responsibility for the operation of the 
plants remains with MD, who must indemnify BP against any and all 
environmental risks and hazards caused by the operation of the plants 
and the handling, distribution and storage of raw materials and finished 
products. 
The cost of the conversion by MD will be equal to MD's fixed and 
variable costs together with the reimbursement of agreed capital costs 
and an element of profit or service chargé (or toll-fee). 
I I I .A.1 . p.8 372 
It was also agreed that such quantities of ethylene as are required for 
conversion by MD to acetaldehyde would be supplied by MD from its Priolo 
ethylene plant. Such arrangement, based on an arm's length 
relationship, is to continue for the duration of the acetyls 
toi I-agreement. 
The Commission stated that the agreements in question between some companies 
of the BP Group and some companies of the EN I Group were agreements between 
competitors restricting competition between them because they gave rise to 
coordination of competitive behaviour between the parties with respect to the 
supply and production of the products in question. They therefore fell under 
Article 85 (1) of the EC Treaty. 
This restriction of competition was appreciable, particularly in the case of 
ethyl acetate, because BP had a fairly high share within the EC market in 
1991. 
However, the Directorate-General for Competition took the view that the 
parties had provided sufficient (prima facie) justification for an exemption 
to be granted by the Commission. It appeared in particular that the 
agreements had certain advantages, notably environmental ones, because the 
know-how acquired by Montedipe on the legal and technical requirements of 
Italian law for environmental protection would allow environmental issues to 
be handled efficiently. The question was not one of determining whether MD's 
know-how was preferable to that of BP : since MD had been the previous 
operator of the site, the sharing of environmental responsibilities no longer 
posed any problems, and since MD was operating other production units on the 
same site, the sharing of environmental responsibilities between the various 
plants was avoided. 
It was considered that the notification of the case could be dealt with by 
means of a comfort letter closing the file. 
Il I .A.1. p.9 373 
<T6> Bio-ethanol 
6. The Directorate-General for Competition examined the conditions under 
which fuel additives are marketed. It carried out inspections of oil 
companies so as to see why they refused to purchase a new product on the 
market, bio-ethanol. The oil companies adduced technical and commercial 
arguments in support of their refusal to purchase the product. The 
Commission's investigation did not identify any factors indicating that any 
illegal concerted practices were involved. It therefore decided to 
discontinue the investigation. 
<T6> International Energy Agency 
7. On 12 December 1983 the Commission adopted a decision granting a ten-year 
exemption, under Article 85(3) of the EC Treaty, for the concerted practices 
between oil companies that were necessary to allow application of the 
emergency oil allocation system provided for under the International Energy 
Agency. 
The undertakings concerned asked for the exemption, which expired on 
31 December 1993, to be renewed for a period of ten years. The Commission 
accordingly initiated the procedure and, before taking a decision under 
Article 85(3) of the Treaty, published a notice pursuant to Article 19(3) of 
Regulation No 17 in the Official Journal. 
I I I .A.1. p.10 374 
<T6> Solvay-Asahi joint venture 
8. A comfort letter closing the file was issued in the case of a joint 
venture between Solvay and Asahi Glass in respect of a trona mine and natural 
soda ash plant in the United States formerly owned by Tennelo. Solvay, the 
largest European producer of synthetic soda ash, acquired the capital stock 
of a United States company in May 1992, which gave it an 80 % share in the 
trona and soda ash operation. The other 20 % was held by Asahi Glass. The 
output of the mine is allocated between Solvay and Asahi in proportion to 
their interests. 
The ancillary selling arrangements expressly stipulated that they did not 
apply to Europe. Asahi Glass is however the owner of one of Solvay's major 
customers for natural soda ash in the Benelux. The 20% shareholding gives it 
direct access to natural soda ash from the United States". Having obtained 
assurances from Solvay that there was no agreement or understanding relating 
to the sharing of customers in the EC, the Commission was able to close the 
f i Ie. 
I I I . A. 1 . p . 11 
375 
<T6> Enimont-Orkem 
9. In 1989 Enimont (now Enichem) and Orkem (now Elf Atochem) reached 
agreement on the bases for a reciprocal transfer of activities between the 
two groups. Under the agreement, Orkem transferred to Enimont its radical 
low-density polyethylene production (Dunkirk and Carling Saint-Avoid plants) 
and its standard linear low-density polyethylene production (Dunkirk plant). 
Enimont transferred to Orkem the company VedriI (Rho, Italy), which produces 
methyl methacrylate and polymethyl methacrylate, and Vedri I Deutschland GmbH, 
which operates a polymethyl methacrylate plant at Stockstadt, Germany. 
Enimont also transferred to Orkem its polymethyl methacrylate production 
plant at Porto Marghera, Italy. In addition, Enimont and Orkem had planned 
to operate under a joint stucture the Dunkirk cracking plant and to share 
ownership of Stocknord, which operates the necessary storage facilities at 
that site, and the associated services. 
The agreements, and in particular the reciprocal transfer of activities, are 
intended to enable each of the parties to specialize in its strongest areas, 
namely polyethylene in the case of Enimont and methyl methacrylate in the 
case of Orkem. Following the exchange, the two parties ceased being 
competitors on the relevant markets, since polyethylene and methyl 
methacrylates are completely different products. When the French public 
sector chemical industry was reorganized in 1990, Orkem's activities were 
redeployed between the chemicals subsidiaries (Atochem and Total-Chimie 
respectively) of the EIf-Aquitaine and Total-CFP groups. Orkem's chemical 
activities were thus regouped with those of Atochem. However, whereas Orkem 
had decided to withdraw completely from the sector of activity transferred to 
Enimont (polyethylene), Atochem was at that time already active in that 
sector . 
After Atochem had intervened in the negotiations, the agreements concerning 
the Dunkirk steam cracker (under which Enimont had the option of increasing 
its share in ownership and operation from 50% to 100%) were amended in such a 
way as to guarantee Atochem a 30% right of ownership and operation of the 
steam cracker . 
I I I .A.1. p.12 
376 
In 1991 Enichem succeeded Enimont and has for some time been planning to 
carry out a programme to rationalize its own activities. In accordance with 
the programme and with Elf Atochem's desire to consolidate its presence in 
the polyethylene sector, it was decided in 1993 to terminate part of the 
agreements previously signed between Orkem and Enimont. In particular, the 
Car ling linear low-density polyethylene production plants (which had 
previously been transferred by Orkem to Enimont) are retransferred to Elf 
Atochem. 
The Commission took the view that the agreements as a whole represented 
cooperation that was caught by Article 85(1) of the EC Treaty. 
However, the agreements made it possible to rationalize production in the 
sectors concerned and to organize more efficient distribution on larger 
geographical markets than those previously operated on by each party. The 
parties are thus able to offer consumers a wider range of complementary 
products and to concentrate their efforts on those activities in which they 
are more efficient, and consequently to improve their products. The 
Commission accordingly closed the case by sending a comfort letter. 
I I I .A.1. p. 13 _ 
377 
<T6> Abim Card 
10. On 6 August 1992 a notification was made concerning an arrangement 
between four oil companies, Aral AG, BP Oil International Ltd, Italiana 
Petrol i S.p.A. and Mobil Petroleum Company, Inc. (the "participants") to 
enter into an arrangement under which each participant will individually 
issue its own international commercial cards for the cashless purchase of 
fuel and related products and services ("commercial cards") by haulage and 
fleet operators ("commercial customers") in all suitable service stations 
throughout Europe designated by each participant. The venture will 
facilitate the mutual acceptance of commercial cards issued by each 
participant throughout the venture network, called the "ROUTEX" network. 
Technical aspects of the venture are contained in additional agreements, 
including a purchase and sales agreement and a trade mark management 
agreement. 
The venture was designed to respond to the growth in cross-border road 
transport in Europe, as truck and fleet operators extend their pan-European 
activities, and to meet the increasing demand from commercial customers for 
an easy and convenient means of obtaining fuel without cash wherever in 
Europe they may be. Since none of the participants was in a position to 
offer the density and spread of service stations throughout Europe that 
commercial customers demand, each participant agreed to accept each other's 
commercial cards on a reciprocal basis. Participants envisaged that this 
international card acceptance arrangement would enable them to develop a 
viable network of sufficient size to meet commercial customers' expectations 
by providing them with service opportunities and network coverage on a 
European-wide basis. 
The cooperation provides that each participant accept certain obligations, 
namely (i) to implement the venture in each European country in which a 
participant maintains authorized outlets; (ii) to use its best efforts to 
promote commercial cards; (iii) to issue a commercial card marked by a common 
trade mark and (iv) to recogize commercial cards issued by the other 
part ic ipants. 
I I I .A.1. p. 14 
373 
By participating in the venture each participant also agreed to further 
acceptance of the UTA (Union Tank Eckstein GmbH) truck card at its designated 
service stations and to grant UTA market-related terms for diesel fuel. 
Except for a few transitional arrangements limited in time, a number of 
restrictions of competition were deleted at the Commission's request. The 
Commission was particularly concerned that no commonly agreed discounts among 
participants and between participants and UTA or commonly agreed rebates 
given to commercial customers or a commonly authorized product range were 
part of the arrangements, and that dealers would not be prevented from freely 
determining whether the additional cost relating to a card payment should be 
charged to customers. 
The final agreements, as amended, were submitted in October 1993 and the case 
was closed by the issuance of a comfort letter. 
I I I.A.1. p.15 
379 
<T6> MPEAA/NOS and NOS Programme Coordination Rules 
11. This case concerns a number of rules coordinating the purchase and 
production of television programmes by the Dutch public broadcasting 
organizations. The latter cooperate within the central broadcasting 
organization "NOS", which operates the aforementioned system of programme 
coordinat ion. 
The main suppliers of television programmes to the Dutch public broadcasting 
organizations are the large American producers. Motion Picture Export 
Association of America (MPEAA), an association of film producers and 
distributors, and its member companies filed a complaint with the Commission 
against the above rules on 5 April 1989. The Programme Coordination Rules 
were notified to the Commission by the NOS on 20 September 1990. 
After a notice pursuant to Article 19(3) of Regulation No 17 concerning these 
rules was published, the system was exempted by comfort letter of 
1 March 1993. The exemption was based upon the fact that the system presents 
advantages in terms of organization and cost efficiency for the operation of 
the Dutch public broadcasting system. The complainants did not raise any 
objection to the case being closed by means of a comfort letter. 
III.A.1. p.16 
380 
<T6> BSB/Football Association 
12. Following publication of a notice pursuant to Article 19(3) of Council 
Regulation No 17, the Commission closed the file concerning agreements 
between the English Football Association (FA), the BBC and BSkyB (formerly 
BSB). Under their agreements with the FA, the BBC and BSkyB were granted 
exclusive television coverage for the 1988/89-1992/93 football seasons. The 
agreements related to ail national and international matches of which the FA 
is the owner of the television rights, i.e. matches of the national cups 
organized by the FA (FA Cup and Charity Shield) and international matches 
involving the English national team. The BBC and BSB, which had bid jointly 
for the rights, shared the rights between them by alternating transmission. 
The Commission took the view that the exclusivity granted to the BBC and 
BSkyB was caught by Article 85(1). In order to allow all channels a fair 
chance to obtain access to major football matches, the duration of contracts 
should as a general rule be limited to one football season. However, in this 
particular case, an exemption was justified since BSB (now BSkyB), which came 
into operation only in 1990, needed a longer-term contract in order to 
facilitate its entry into the new developing market for. direct-to-home 
satellite broadcasting. This assessment is without prejudice to the view the 
Commission may take on any future contracts to be concluded by the parties. 
Originally, the BBC and BSB (now BSkyB) were also granted exclusive 
permission to televise football matches from abroad, which under Article 14 
of the UEFA Statutes was subject to the prior permission of the FA. At the 
Commission's request, this clause, which was the main subject of the 
complaint by the Independent Television Association, was removed from the 
agreements in 1992. Pending the Commission decision on Article 14 of the 
UEFA Statutes, the FA undertook not to discriminate between, on the one hand, 
the BBC and BSkyB and, on the other, third-party broadcasters, such as the 
ITV companies, which want to show football matches from abroad. 
I I I .A.1. p.17 
381 
<T6> BBC Enterpr ises 
13. In December 1991 BBC Enterprises Limited, a subsidiary of the British 
Broadcasting Corporation ("BBC"), submitted a request for negative clearance 
or exemption to the Commission under EC competition rules in respect of a 
standard copyright licensing agreement for the purpose of facilitating 
retransmission of United Kingdom television programmes to subscribers in 
Ireland to diffusion services (i.e. cable networks and multipoint microwave 
distribution systems, "MMDS"). 
The licensors participating in the agreement with BBC Enterprises Limited are 
other United Kingdom terrestrial broadcasters and organizations which 
represent the owners of copyright and related rights in television programme 
services broadcast in the United Kingdom, including the Independent 
Television Association, Channel 4 and the Association de Gestion 
Internationale Collective des Oeuvres Audiovisuelles "AGICOA" of Switzerland. 
The licensees with whom agreements have been concluded to date are various 
cable television undertakings and undertakings proposing to operate MMDS 
services in Ireland, including Cablelink Limited in Dublin and Cork 
Communications Limited. 
The Commission considered that the agreement contained restrictions which 
came within Article 85(1). In the context of its assessement of the request 
for exemption under Article 85(3), it accepted the view of the notifying 
parties that collective licensing was the most effective means by which an 
operator of cable or MMDS systems could be sure of not infringing copyright 
or neighbouring rights in retransmitting television broadcasts to its 
subscr ibers. 
Notwithstanding this, and in view of the fact that in certain Member States 
broadcasters had in the past been excluded from similar agreements, the 
Commission had to ensure that such risks were minimized here in the interest 
of fair competition. The agreement was thus modified by the parties, at the 
Commission's request, to ensure adequate access by broadcasters not at 
present party to the agreement. 
I I I .A.1. p.18 382 
Following the publication of a notice^) pursuant to Article 19(3) of 
Council Regulation 17/4) in response to which no observations were 
received, the Commission advised the notifying parties on 8 July by comfort 
letter that the criteria for an exemption had been fulfilled. 
(3) OJ C 105, 16.4.1993. 
(4) OJ 13, 21.2.1962. 
I I I .A.1 . p.19 _, 
7 0 7! 
JUJ 
<T6> Philips/Matsushita - DCC 
14. In November 1991 Philips International BV ("Philips") notified to the 
Commission for exemption or negative clearance a series of agreements 
relating to patent licensing in connection with the development and 
exploitation of the Digital Compact Cassette ("DCC") and the DCC player. DCC 
is a new type of magnetic tape cassette recording and reproduction system 
producing digital sound as opposed to the present analogue sound of 
traditional cassettes. The other principal undertakings party to the 
agreements are Matsushita Electric Industrial Company Ltd and Sony 
Corporation, both of Japan, together with Thomson Consumer Electronics SA, a 
company within the French Thomson group. In addition, a memorandum of 
understanding relating to the prevention of copyright piracy in this context 
between Philips and the International Federation of the Phonographic Industry 
("IFPI"), representing the international music industry, was also notified. 
Notwithstanding the fact that the agreements contained restrictions of 
competition falling within Article 85(1) of the Treaty, namely pooling of 
patents and know-how together with standardization of specifications, the 
Commission took the view that there were sufficient grounds for an exemption 
under Art icle 85(3). 
Following the publication of a notice pursuant to Article 19(3) of Council 
Regulation No 17, in response to which no observations were received, the 
Commission advised Philips on 29 April by comfort letter that the criteria 
for an exemption had been fulfilled. 
I I I .A.1. p.20 
384 
<T4> (b) Abuse of a dominant position 
<T6> IBM undertaking 
15. The Commission continues to monitor the undertaking given by IBM on 
1 August 1984. The undertaking provides for the disclosure of interface 
information for attachment of competitors' products to IBM System/370 
products and SNA (System Network Architecture). 
Since its inception, there has been a total of 189 requests from 23 
competitors containing 1 487 individual questions. Seven of these companies 
have signed and received information under technical information disclosure 
agreements. 
I I I .A.1. p.21 
385 
<T4> (c) Decisions to reject complaints 
<T6> Exelvision - France Télécom 
16. The Commission formally rejected by decision a complaint lodged in 1987 
by the French company Exelvision against France Télécom for abuse of a 
dominant position consisting in the offering free of charge by the latter of 
Minitel terminal equipment to be used for the provision of videotex 
value-added services to end-users. 
The complainant was a manufacturer of terminals with similar features to 
those offered by France Télécom. 
The assessment of the case was made complicated by the change in the 
regulatory framework, in France and in the entire EC, as regards the 
provision of. value-added services that has taken place since the complaint 
was lodged. Whereas in 1987 the provision of value-added services was still 
under monopoly in France, it was liberalized in 1988. 
In its reasoning, the Commission considered that, for a limited period of 
time, the offering by France Télécom of the basic Minitel terminals free of 
charge to end-users was a promotion action intended, like many others, to 
ensure a quick starting up of the videotex service so as to make it 
attractive for potential providers of services and end-users. That was what 
happened in fact, and now over 90% of the videotex terminals in the EC are 
installed in France. In addition, many countries are following, to a greater 
or lesser extent, the French strategy. 
In respect of the period after the liberalization of the videotex service, 
the Commission assessed whether the behaviour of France Télécom could amount 
to an abuse of a dominant position by trying to eliminate a competitor by 
predatory action. In so doing, the Commission took into consideration the 
facts that France Télécom was not actually manufacturing the terminals but 
buying them in large series following public tendering procedures, in which 
the complainant never took part, and that from 1989 onwards France Télécom 
introduced a monthly rental fee for the new Minitel terminals and stopped the 
acquisition of the older models. 
386 
The result of the assessment showed that no abuse of a dominant position 
could be deemed to exist because no intention to eliminate Exelvision was 
proven and because no indication of pricing below average variable costs was 
found either as regards the entire videotex service or the new Minitel 
termina Is. 
.A.1. p.23 
387 
<T6> Tiercé Ladbroke (B)/PMU-DSV-French "sociétés de courses" 
17. In 1990, Tiercé Ladbroke, the Belgian subsidiary of Ladbroke Group, the 
largest bookmaker in the United Kingdom, lodged a complaint with the 
Commission alleging that Articles 85 and 86 of the EC Treaty had been 
infr inged by: 
GIE Pari Mutuel Urbain ("PMU"), a body running a totalizator betting 
system which was set up under French law by the ten racecourse 
organizers in France, the "sociétés de courses"; 
the ten "sociétés de courses" themselves; 
Pari Mutuel International SA ("PMI"), a subsidiary of PMU set up to 
manage its rights abroad; 
Deutscher Sport ver lag Kurt Stoof GmbH & Co. ("DSV"), Cologne, which is 
PMU's sublicensee in Germany. 
The object of the complaint was twofold: 
1. The ten "sociétés de courses" hold the intellectual property rights to 
the races they organize; Ladbroke claimed that they had infringed 
Article 86 of the EC Treaty by refusing to supply Tiercé Ladbroke in 
Belgium with television coverage of French races comprising sound, 
pictures and commentary. French racing provides the basis for a large 
proportion of the odds betting service offered by Ladbroke in Belgium. 
The French "sociétés de courses" supply sound, pictures and commentary 
to PMU's own betting shops in France, and through PMI to DSV, which 
transmits this coverage to German bookmakers. 
The Commission decided that the relevant market here was not the Belgian 
market in horse-race betting but the market in the televised 
distribution of sound, pictures and commentary covering horse-races in 
general. It had not been demonstrated that PMU, PMI, DSV or any 
I I I .A.1. p.24 388 
individual race organizer held a dominant position on this market. 
Ladbroke had not shown that the ten "sociétés de courses" together held 
a collective dominant position. 
Even supposing that they did hold such a position, however, the 
Commission concluded that they remained free to choose, market by 
market, whether or not to grant licences in respect of their rights. So 
far they themselves did not transmit sound, pictures and commentary 
covering their races to the Belgian market. The position would be 
different if the "sociétés de courses" were to decide to grant licences 
to certain bookmakers and not to others. Conduct of that kind might 
constitute discrimination caught by Article 86. 
2. Ladbroke also challenged, under Article 85 of the EC Treaty, the 
validity of conditions in contracts which prevented PMU and DSV from 
transmitting to other countries the sound, pictures and commentary they 
received from the French "sociétés de courses". 
The Commission concluded that, as Community law stood at present, these 
were restrictions which a licensor was entitled to impose and were not 
caught by Article 85(1) of the EC Treaty. 
The Commission accordingly decided to reject the complaint. 
I I I.A.1. p.25 38 9 
<T6> Ladbroke Racing Ltd (UK)/PMU-French "sociétés de courses" 
18. In 1989 Ladbroke Racing Ltd, the main UK bookmaker, lodged a complaint 
against ten of the associations known as "sociétés de courses", which 
organize horse races in France. The ten associations (five in the Paris 
region and five in the provinces) were authorized to take off-course 
totalizator bets by a decree of ,11 July 1930, and the complaint alleged that 
they had infringed Articles 85 and 86 of the EC Treaty by entrusting the 
organization of off-course betting to a single body, GIE Pari Mutuel Urbain 
(PMU). 
A law of 16 April 1930, and the implementing decree of 11 July 1930, 
authorized five Paris "sociétés de courses" and five provincial ones jointly 
to take bets away from their own racecourses. The ten authorized 
associations entrusted the organization of their off-course betting business 
to the company Société du PMU s.a.r.l.. A law of 23 December 1964 gave the 
same associations the exclusive right to take bets on foreign races. A 
decree of 14 November 1974 required "sociétés de courses" wishing to take 
off-course bets to do so through the PMU. A decree of 13 September 1985 
stipulated that a "société de courses" could take off-course bets on races 
run in France only at its own racecourse or through the PMU. 
The Commission rejected Ladbroke's claim that the associations acted 
unlawfully in choosing a single organization, the PMU, to organize their 
off-course betting between 1962 and 1974. It found that the designation of a 
single organization to be responsible for computing the total stakes and 
calculating and paying out winnings was a legal obligation imposed on the 
associations by the 1930 decree authorizing off-course betting. Before the 
1974 decree made the PMU's involvement compulsory, Ladbroke never asked the 
associations to designate it in the PMU's place. Contrary to the claims put 
forward by Ladbroke, the 1930 decree prevented the associations from 
designating an individual operator. 
The Commission also found that there had not been any ex post legalization of 
restrictive agreements or practices prohibited by Article 85 of the 
EC Treaty, as the EC Treaty did not exist when the 1930 decree was issued. 
III.A.1. p. 26 390 
It took the view that the agreements entered into by the associations for the 
organization of betting, such as arranging the racing calendar, were a 
logical consequence of the 1930 decree. The other issues raised by Ladbroke 
were considered in the course of separate proceedings. 
I I I.A.1. p.27 
39 1 
<T6> Tiercé Ladbroke (B)/French PMU and PMU Belge 
19. In 1991 Tiercé Ladbroke, the Belgian subsidiary of the largest British 
group of bookmakers, lodged a complaint with the Commission against the 
French PMU (GIE Pari Mutuel Urbain) and the PMU Beige, which comprises 
Pari Mutuel Unifié Belge asbl and the Société coopérative auxiliaire PMU 
Belge, which was set up by the PMU Beige for the taking of totalizator bets 
in Belgium. The complainant charged that the parties against which it was 
complaining had, on 25 May 1990 and 18 March 1991, concluded agreements 
which, as from 20 March 1991, allowed bettors in 17 departments in Northern 
France to place totalizator bets four times a month, in the outlets of the 
French PMU, on races organized in Belgium by the Belgian "sociétés de 
courses". 
The system is as follows: the bets are taken in France by the French PMU in 
its outlets and totalized by it. The bets are subsequently transferred to 
the Belgian totalizator system, at which point a 35% levy is deducted in 
accordance with Belgian law. Of this 35% levy, 26% are kept by the PMU Beige 
and the remaining 9% are returned to the French PMÙ, which, together with the 
"sociétés de courses", keeps 5%, the remaining 4% going to the French 
Government, whereas on French races, the percentage retained by the PMU and 
the "sociétés de courses" is 10% and the State's levy 18%. 
In France and in Belgium, the PMUs are the joint organ of the "sociétés de 
courses" and are authorized by law to take bets on domestic races in 
accordance with the totalizator principle. Whereas in France only the 
totalizator is authorized and consequently the PMU enjoys a monopoly 
position, in Belgium bookmakers are also authorized to take not only 
odds-type bets, but also on-course totalizator bets, under the control of the 
"sociétés de courses", to which they pay a fee. They are also authorized, 
and are the only ones to have such authorization, to take odds-type bets on 
foreign races. 
The Commission considers that the relevant geographic markets are France on 
the one hand and Belgium on the other, since national legislation on the 
taking of bets in the two countries has the effect not only of making the 
conditions of competition uniform within each country, but also of making 
them different from those in all the other Member States. 
I I .A.1 392 
In view of the legislative provisions currently in force on the French 
market, where bets can be placed only with the French PMU, there can be 
neither any abuse of a dominant position within the meaning of Article 86 nor 
any restriction of competition within the meaning of Article 85(1) of the 
EC Treaty for the simple reason that no competition may be exercised. 
As far as the Belgian market is concerned, since the PMU Beige does not hold 
a dominant position, it cannot have committed any infringement of Article 86 
of the Treaty. Furthermore, the marketing abroad of the betting medium 
constituted by the races which its members, i.e. the "sociétés de courses", 
organize must be seen as merely a sale of services from one Member State to 
another which, though it may affect trade between Member States, has neither 
the object nor the effect of preventing, restricting or distorting 
competition within the common market; this means that the PMU Beige has not 
committed any infringement of Article 85(1) either. 
(2 
I I I .A.1. p.29 393 
<T6> Tiercé Ladbroke (B)/PMU Beige 
20. In 1992, Tiercé Ladbroke (the Belgian subsidiary of the leading British 
group of bookmakers) lodged a complaint with the Commission against the 
PMU Beige. The PMU Beige comprises Pari Mutuel Unifié Belge asbl and the 
Société Coopérative Auxiliaire PMU Belge, to which the "sociétés de courses" 
entrust the taking of off-course totalizator bets on the races which they 
organize. 
The complainant charged that the PMU Beige, which had accredited it as its 
agent for the taking of totalizator bets on Belgian horseraces from 1982 to 
1988, had refused to renew its accreditation for the taking of such bets. 
In the meantime, (in December 1991), the PMU Beige and four chairmen or 
members of Belgian "sociétés de courses" had taken control of one of 
Tiercé Ladbroke's competitors, Tiercé Franco-Belge, which the PMU Beige 
continued to accredit as its agent for the taking of this type of bets. 
Tiercé Ladbroke claimed that the PMU Beige had as a result excluded it from 
the market for the taking of bets on Belgian races, which meant that, under 
Belgian law, it could take bets only on foreign races. 
It concluded that the PMU Beige, which, in its view, had a monopoly for the 
taking of off-course bets on Belgian races, was abusing its dominant position 
in breach of Article 86 of the EC Treaty. 
The Commission took the view that no such monopoly existed any longer since 
the Brussels Court of Appeal (in a judgment delivered on 11 May 1993) 
recognized the Ostend racecourse's right to entrust the taking of bets on its 
races to an agent other than the PMU Beige. Furthermore, the Ostend 
racecourse immediately availed itself of this right for the 1993 summer 
season and entrusted the taking of bets on its races to Tiercé Ladbroke. 
The Commission also took the view that the PMU Beige (and its subsidiary, 
Tiercé Franco-Belge) was not in a dominant position on the relevant market, 
which is that for the taking of bets in Belgium on horseraces, irrespective 
III.A.1. p.30 7 n 694 
of where they are run and the type of betting involved. It is in fact 
Tiercé Ladbroke which has the largest share of that market. 
Lastly, it took the view that, even supposing that the PMU Beige and Tiercé 
Franco-Belge were in a dominant position, the refusal to accredit Ladbroke 
would not have affected trade between Member States, since the taking of bets 
at the Franco-Belgian frontier is of only marginal significance and since the 
bets to which the complaint relates are taken in Belgian outlets on Belgian 
races and do not involve any financial transfer between Belgium and another 
Member State. 
It consequently rejected Tiercé Ladbroke's complaint. 
III.A.1. p.31 __ 
395 
<T6> MTVE/VPL-IFPI 
21. In June 1992 the Commission received a complaint from MTV Europe 
("MTVE"), a pan-European satellite television station, which broadcasts pop 
music videos, against Video Performance Limited ("VPL"), the International 
Federation of the Phonographic Industry ("IFPI") and the five major worldwide 
record companies, Sony, Polygram, Warner, BMG, and Thorn/EMI ("the majors"). 
VPL licenses and administers broadcast and other performance rights in 
relation to music videos under UK law for its members, including the five 
majors. IFPI is an international association of record and video-producers 
which coordinates the activities of its members, including the majors, in the 
various national collecting societies to which they belong. 
MTVE complained (a) that the existence of VPL and its operations in the 
licensing of copyright in the music videos of its members within the EC and 
its joint activities with IFPI, which enable record companies to operate 
pan-European licensing through joint selling agreements (80 % of which is on 
behalf of the five majors), was contrary to Article 85(1) and (b) that VPL 
and IFPI jointly occupy a dominant position in the Community within the 
meaning of Article 86 as they are able to exercise absolute control over the 
licensing of their members' music videos. According to MTVE, they have abused 
this dominant position in the relevant market by imposing unfair prices on 
MTVE for the licensing of pan-European transmission of music videos. 
MTVE had first concluded an agreement with VPL/IFPI in 1987 for the rights 
described above. This had been renewed in 1990 but was due to expire on 
31 July 1992, and MTVE was concerned that VPL and IFPI would not be prepared 
to renew it. Therefore, in conjunction with the complaint, it requested the 
Commission to adopt interim measures, requiring VPL and IFPI to enter into a 
new agreement with it. However, following intervention by the Commission, 
VPL and IFPI agreed to extend the agreement with MTVE to 31 July 1993. (It 
was subsequestly extended to 31 July 1994). 
On 11 May 1993 the Commission rejected MTVE's request for interim measures, 
on the sole ground that, in view of the extension of the agreement, no risk 
I I I .A.1. p.32 396 
of serious and irreparable damage to MTVE which would justify the adoption of 
interim measures existed. 
In view of this, it was not necessary for the Commission to make any finding 
in that context in relation to the existence, or otherwise, of a prima facie 
case of infringement of the Community's competition rules. 
The substantive examination of MTVE's complaint by the Commission is 
proceeding. 
I I I .A.1 . p. 33 39 7 
<T6> Pentos 
22. The Commission refused to grant interim measures following a complaint by 
Pentos Retailing Group, a UK retail bookseller, concerning the Net Book 
Agreements (NBA). 
The NBA provides for uniform standard conditions of sale to be imposed by 
British publishers on retailers for the resale of "net" books. Following the 
Commission's Decision of 12 December 1988 not to exempt the NBA(5) and the 
judgment of the Court of First instance of 9 July 1992 upholding the 
Decision/6) Pentos filed a complaint with the Commission contending that 
the continued operation of the NBA, and in particular the application of the 
clause concerning the reimportation from other Member States of books printed 
in the United Kingdom (the circumvention clause), prevented it from adopting 
price promotion measures, thus adversely affecting its sales. 
The Commission took the view that, in relation to the circumvention clause, a 
prima facie case of infringement of Article 85 could not be excluded. 
However, the Commission considered that the condition of serious and 
irreparable harm was not fulfilled because of lack of sufficient evidence put 
forward by Pentos. 
(5) Eighteenth Competition Report, point 52. 
(6) Twenty-second Competition Report, point 318 
I I-A.1. p.34 
398 
<T6> ECSC inspection 
As in the past, the ECSC inspection department carried out a number of checks 
on coal and steel production subject to the levy (Articles 49 and 50 of the 
ECSC Treaty). 
In all, 103 checks of declared production were carried out at the head 
offices and works of coal and steel undertakings. 
Annex I I I.B p.1 39 9 
<T9> B. Public enterprises and national monopolies 
<T4> Decisions pursuant to Article 90 of the Treaty 
<T6> Port of Rddbyd) 
On 21 December the Commission adopted a decision under Article 90(3) of the 
EC Treaty requiring the Kingdom of Denmark to bring to an end an infringement 
of Article 90(1), read in conjunction with Article 86 of the EC Treaty, in 
relation to a refusal to grant access to port facilities at Rtfdby (Denmark). 
The Danish authorities had refused to allow Euro-Port A/S, a subsidiary of 
STENA Rederi AB, access to existing port facilities at Rddby or, 
alternatively, to construct new facilities on land adjacent to the existing 
port. Euro-Port A/S wished to enter the market for ferry services on the 
Rtfdby/Puttgarden (Germany) route. The port of Rtfdby is owned and managed by 
DSB, the state-owned railway company, which holds the exclusive right for the 
organization of rail traffic in Denmark. DSB also operates ferry services 
from the port in conjunction with Deutsche Bundesbahn, a German public 
undertaking. 
The Commission found that an undertaking which owns and manages an essential 
facility, i.e. a facility or infrastructure without which its competitors are 
unable to offer their services to customers, and refuses to grant them access 
to such a facility is abusing its dominant position. Specifically, an 
undertaking which owns and manages essential port facilities from which it 
provides a maritime transport service may not, without objective 
justification, refuse to grant a shipowner wishing to operate on the same 
maritime route access to that facility without infringing Article 86. 
Moreover, Article 90(1) prohibits a Member State placing an undertaking in a 
position in which it could not have placed itself by its own conduct without 
infringing Article 86. Therefore, where a Member State refuses to grant 
access to essential port facilities and has strengthened the effects of the 
refusal by also refusing to authorize the construction of a new port, it 
constitutes a breach of Article 90(1), read in conjunction with Article 86. 
(1) Commission Decision 94/119/EC, 0J L 55, 26.2.1994 
Annex I I I.B p.2 400 
Having examined the argument of the parties, the Commission found that there 
was no objective justification for the double refusal of the Danish 
authorities and that it effectively prevented competitors to DSB entering the 
market for ferry services between Denmark and Germany, thus strengthening the 
joint dominant position of DSB and Deutsche Bundesbahn on the 
Rddby/Puttgarden route, contrary to Article 90(1), read in conjunction with 
Art icle 86. 
Annex IV.A. p.1 
401 
<T5> Annex IV 
<T1> The evolution of concentration and competition 
<T4> Introduct ion 
23. As announced in the XXII Annual Report, the collection of data directly 
by the Commission (DOME), which was the source for the preparation of the 
statistical information contained in this annex, was interrupted in 1992. 
From this year, the inforamtion presented in this section of our Annual 
Report will come from outside databases. Most of the information presented 
here comes from the AMDATA database, a product of Acquisitions Monthly and 
Computasoft Ltd. to which the Commission services are subscribed. AMDATA 
figures have been completed with information on joint ventures provided by 
KPMGd). This has been necessary to improve our coverage of these types of 
operations, which are not the specifically addressed by AMDATA. 
The characteristics of the AMDATA and DOME databases have been the subject of 
a comparative study carried out by the Directorate General for Economic and 
Financial Affairs, which has been published in European Economy. For our own 
purposes, it is important to point out the following features of AMDATA as 
compared to DOME. 
a) AMDATA has a much broader coverage than DOME. This is reflected in the 
large number of operations that it captures as compared to DOME (see 
figure 1). Furthermore, AMDATA registers not just the operation in 
itself but a greater number of variables and characteristics of the 
operation, including its value (although not always). 
b) As figure 1 shows despite the differences in coverage between the two 
databases, the comparison of the time series of mergers and majority 
acquisitions provided by DOME has a time profile similar to the series 
on number and value of these types of operations provided by AMDATA(2). 
(1) We would like to thank KPMG for kindly providing this information. 
(2) The comparison of figures on minority acquisitions and joint ventures is 
not possible given the relatively recent coverage of these types of past 
operations by AMDATA and KPMG. 
Annex IV.A. p.2 402 
c) AMDATA provides detailed information about the nationality of the bidder 
and target companies. This allows us to improve our knowledge about the 
cross-border flows of takeover activity. 
d) AMDATA also provides detailed information about the Standard Industry 
Classification of the operation which allows us to improve the sectorial 
analysis of the deals. 
In order to maintain some continuity in our publication, we have tried to 
maintain a format of presentation as similar to the old one as the 
differences in our statistical sources allow us. We have also kept the 
annual period unchanged and data presented below cover years running from 
1st June to 31st May. The date of each operation corresponds to the date of 
announcement of the deal as reported by AMDATA. 
Finally, it is worth recalling that the objective of this annex has always 
been and will be in the near future to provide a description of the main 
patterns of evolution of merger and concentration activity in the EC. We do 
not enter here into any in-depth analysis of the causes behind this 
evolution. Our main purpose is a descriptive one. 
<T9>A. Takeovers (including mergers and majority acquisitions), 
minority acquisitions and joint ventures in 1992/1993 
<T4> A genera I overv iew 
24. Table 1 shows the evolution between 1987/1988 and 1992/1993 of mergers 
and majority acquisitions, minority acquisitions and joint ventures. The 
first part of the table includes data on agriculture, mining, utilities, 
construction and manufacturing and the second one gives information on 
services. Sectors of activity are defined at one digit level according to 
the British Standard Industrial Classification as given by AMDATA. At the two 
digit level, this classification is practically equivalent to the NACE code. 
Entries in blank correspond to information not available in the two sources. 
Operations are classified according to their geographical dimension. We have 
defined five categories. National deals are operations between firms of the 
same country. Community deals include operations involving firms from at 
least two different Member States. For majority and minority acquisitions, 
DOME: No. of cases 
1000 
800 h 
600 
400 
200 h Mergers and majority 
acquisitions as measured 
by DOME and AMDATA Graphic 1 
No.of cases(x1000) Vol. in 10BECU : AMDATA 
20 > 
CD 
87/88 88/89 89/90 90/91 91/92 92/93 
AMDATA:N.Oper. 
Sources: AMDATA and DOME databases DOME:N.Oper. -*- AMDATA:Vol.in ECU 
4^ 
CD 
Osl 
Annex IV.A P.4 404 
we have distinguished extra-EC operations depending on the nationality of the 
bidder and the targetted firm. 'EC-internationaI' designates operations in 
which EC companies acquire firms of non-EC origin. International-EC deals 
are operations in which the bidder is a firm from outside the Community and 
it acquires one or several EC firms. The last category (outside EC) includes 
deals in which there was not any involvement of EC firms. 
25. As graphic 1 and Table 1 show, concentrâtive activity has maintained 
during the last year the declining trend started in 1990/1991. Both the 
number of operations and the total value of deals has declined even more 
sharply than last year. The decrease in the number of deals is general 
affecting almost all sectors. In manufacturing, there is a fall of 
approximately 12% in the number of mergers and majority takeovers. The 
subsector with the largest contraction in concentrâtive activities was metal, 
engineering and cars with a 15% decrease in 1992/1993. However, this sector 
had maintained its 1990/1991 levels in 1991/1992. All manufacturing 
susbsectors showed in 1992/1993 frequencies of operations similar to those 
achieved in 1988/1989, just before the 1989/1990 peak. In agriculture, 
mining and utilities, the rate of decrease of concentration activity was 
higher than in the manufacturing sectors. 
26. In the service sector, the evolution has not been so uniform. For 
instance, the distribution and tourist sector attained a high level of 
concentration activities in 1991/1992, though inferior to 1989/1990 figures. 
However, in 1992/1993, mergers and acquisitions of majority stakes fell a 
considerable 22% with respect to 1991/1992 figures. The banking and 
financial sector also experienced a reduction in the number of deals, 
although this was of lesser magnitude (6%). 'Other services' was the only 
subsector that had an increase in concentrâtive activity, reaching a number 
of deals similar to the 1990/1991 figure (even higher if we add minority 
acquisitions). This subsector includes health and sanitary services, 
education, research and development and recreational, cultural and personal 
serv ices. 
This contraction in concentration activity shows very different patterns 
depending on the geographic nature of the operations. In manufacturing, 
cross-border operations involving EC firms (i.e. intra-EC operations or deals 
between European and a non-European firms) have fallen by less than national 
operations (10% and 18% respectively). However, the evolution of cross-
border operations has not been uniform. Intra-Community operations have in 
Tabla 1 
Mergers end majority acquisitions i 
SIC code 
(1 digit) Nation. ! Caimn. I EC/ ! Intern./ i Cutside INaticn. ICarmn. 
opérât. Î cperat. ! intern. ! EC ! EC ! cperat. ! cperat 
vears ŒXENTRMIVE CFERM1CNS Br SECKR AN) GEDTi^miC TtfE 1987/1968 - 1992/1993 
Minority acquisitions ! Joint ventures 
EC/ ! Intem./iOutside itotien. iCaimn. ! EC/ I Intern./ iOutside INaticn. 
intern. ! EC 'EC ! cperat. ! cperat. I intern. ! EC ! EC I cperat. 
/Vjriculture 
1967/1968 6 
1968/1969 
1969/1990 
1990/1991 
1991/1992 
1992/1993 
Ehergy/Nbte r 
1967/1968 26 
1968/1969 
1989/1990 
1990/1991 
1991/1992 
1992/1993 
Winer./Chan. 
1967/1968 84 
1968/1969 195 
1989/1990 247 
1990/1991 271 
1991/1932 23CT 
1992/1993 194 
Mst./Eng/Cars 
1967/1968 399 
1968/1969 568 
1989/1990 715 
1990/1991 647 
1991/1992 687 
1992/1993 564 
Mnufactur. 
1967/1968 385 
1968/1989 675 
1969/1990 777 
1990/1991 846 
1991/1992 851 
1992/1993 701 
Construction 
1967/1968 59 
1968/1969 80 
1989/1990 107 
1990/1991 92 
1991/1992 127 
1992/1993 106 6 
21 
10 
18 
11 
5 
37 
105 
151 
134 
92 
94 
50 
160 
178 
182 
169 
123 
50 
180 
249 
209 
164 
122 
4 
12 
35 
25 
16 
15 20 
16 
16 
12 
17 
18 
72 
94 
117 
77 
88 
73 
102 
143 
130 
130 
122 
118 
85 
131 
114 
104 
98 
118 1 
4 
5 
10 
9 
16 
22 
58 
79 
107 
79 
91 
37 
102 
203 
178 
176 
136 
40 
104 
167 
147 
117 
120 
0 
5 
16 
9 
12 
12 3 
12 
7 
6 
11 
11 
17 
32 
47 
62 
61 
63 
36 
80 
107 
88 
69 
102 
21 
63 
62 
79 
43 
69 0 
0 
9 
9 
14 
0 
0 
8 
9 
18 
1 
0 
12 
25 
29 2 
0 
7 
15 
11 0 
0 
2 
10 
11 5 
7 
12 0 
2 
14 
10 12 
22 
17 
34 
30 
46 
28 
34 
3 
19 
13 
14 40 
90 
65 
75 
129 
176 
138 
77 
21 
60 
54 
51 
8 
19 
13 
9 26 
87 
84 
68 
65 
15 
166 
131 
21 
60 
81 
60 
3 
10 
9 
8 6 
11 
35 
33 
30 
16 
26 
33 
44 
49 
71 
51 
! 84 
i 195 
I 247 
I 280 
i 239 
i 203 
399 
568 
715 
655 
696 
582 
335 
676 
777 
858 
876 
730 
! 59 
! 81 
I 107 
I 97 
! 133 
! 110 !Comn. 
I cperat. 
6 
21 
10 
20 
16 
6 
37 
1C5 
163 
157 
113 
132 
50 
160 
203 
231 
204 
163 
50 
182 
252 
235 
192 
147 
4 
12 
36 
35 
27 
24 TOTAL 
EC/ ! Intern./ IOutside 
intern, i EC i EC 
21 
20 
21 
24 
30 
33 
94 
152 
236 
278 
243 
245 
139 
250 
467 
491 
453 
354 
125 
235 
302 
315 
280 
299 
6 
12 
30 
37 
32 
26 3 
12 
7 
7 
14 
14 
17 
32 
73 
150 
154 
140 
36 
80 
172 
105 
249 
243 
21 
63 
84 
144 
133 
133 
1 
3 
9 
19 
13 
12 4^ 
O 
en 
Tabla 1 continued 
COCENIWnVE ŒERMIOS Bf SECTCR AK) ŒTJGR»flHIC TrFE 1967/1968 - 1992/1993 
Minority acquisitions ! Joint ventures Mergers and majority acquisitions ! 
3IC code 
(1 digit) Nation, i Caimn. i EC/ ! Intern./ ! Outside ! Nation. ! Conrui. i EC/ i Intern./ i Outside ! Nation, i Carmn. I EC/ i Intern./ i Outside I Nation, 
cperat. I cperat. î intern. ! EC I EC I cperat. ! cperat. ! intern, i EC ! EC î cperat. I cperat. ! intern, i EC i EC ! cperat. 
''ears 
Oistr./fbtels 
1967/1968 399 
1988/1969 602 
1969/1990 744 
1990/1991 570 
1991/1992 763 
1992/1993 508 
Trortsp.^3cjnri. 
1967/1968 78 
1963/1969 113 
1939/1990 152 
1990/1991 164 
1991/1992 159 
1992/1993 133 
BonK^ in/Ins. 
1937/1968 540 
1988/1969 704 
1969/1990 859 
1990/1991 800 
1991/1992 683 
1992/1993 606 
Other services 
1967/1933 134 
1968/1969 203 
1969/1990 173 
1990/1991 167 
1991/1992 123 
1992/1993 132 
Totals 
1937/1988 2110 
1983/1969 3167 
1989/1990 3353 
1990/1991 3633 
1991/1992 3720 
1992/1993 3004 48 
121 
214 
157 
121 
104 
9 
24 
53 
33 
23 
33 
41 
123 
206 
168 
136 
122 
5 
12 
20 
15 
22 
15 
252 
761 
1122 
947 
760 
634 79 
85 
110 
70 
53 
82 
6 
15 
10 
23 
23 
20 
121 
139 
122 
106 
76 
82 
19 
28 
17 
13 
20 
499 
659 
655 
550 
497 
537 12 
57 
109 
108 
87 
103 
2 
26 
33 
37 
33 
33 
45 
80 
122 
122 
73 
108 
8 
22 
10 
16 
30 
160 
447 
768 
729 
605 
656 16 
41 
33 
36 
44 
44 
3 
19 
12 
22 
14 
17 
17 
53 
64 
69 
63 
51 
3 
8 
4 
13 
19 
114 
310 
356 
376 
326 
381 0 
1 
14 
12 
15 
1 
0 
5 
12 
6 
4 
4 
33 
73 
80 
0 
0 
6 
8 
18 
0 
9 
5 
93 
163 
196 0 
0 
4 
10 
8 
2 
2 
21 
27 
17 
0 
4 
2 
44 
82 
58 1 
2 
4 
13 
10 
0 
2 
3 
17 
47 
49 8 
12 
12 
0 
0 
0 
25 
45 
42 0 
6 
16 
2 
0 
0 
1 
18 
67 
54 8 
29 
16 
15 
6 
10 
19 
13 
41 
125 
47 
18 
9 
9 
4 
15 
0 
0 
110 
266 
151 
149 39 
75 
30 
30 
19 
49 
67 
30 
58 
130 
87 
67 
8 
13 
16 
24 
0 
0 
322 
612 
470 
363 13 
73 
74 
41 
19 
43 
60 
54 
32 
108 
77 
82 
1 
18 
17 
22 
0 
0 
65 
247 
228 
199 I 399 
I 602 
I 745 
i 534 
I 780 
I 523 
78 
114 
152 
169 
171 
144 
540 
703 
863 
833 
756 
636 
I 134 
I 203 
I 173 
I 173 
i 131 
I 150 
1151 
1627 
1933 
1759 
1833 
1503 CaTTTLTI. 
cperat. 
43 
121 
222 
190 
147 
127 
9 
24 
59 
43 
43 
50 
41 
125 
249 
312 
210 
157 
5 
12 
29 
25 
30 
34 
103 
282 
559 
570 
435 
363 TOT/>l 
EC/ 
intern. Intern./ I Outside 
EC ! EC 
91 
142 
258 
258 
177 
219 
8 
41 
67 
111 
125 
86 
167 
219 
302 
366 
243 
269 
0 
27 
58 
40 
45 
77 
266 
429 
635 
775 
595 
651 16 
41 
51 
109 
123 
92 
3 
19 
31 
72 
80 
79 
17 
53 
96 
183 
156 
135 
0 
3 
9 
23 
33 
45 
36 
116 
187 
387 
392 
351 
Source: AOMTA (acquisitions) end WMS (joint ventures). 
Note: Joint ventures values for 1990/1991 go fran January 1991 to May 1991 only. O 
a* 
Annex IV.A. p.7 
407 
fact declined by more than national deals, with a 20% decrease with respect 
to last year figures. On the contrary, the number of deals involving 
European and non-European firms shows a certain resistence to fall with 
decreases in the range of 3% to 4%. 
This trend appears even more clearly in the service sector. Here, domestic 
operations fell by 20% last year while cross-border operations increased by 
9%. Once more, this is due to the increase in the number of operations 
between EC and non-EC firms that increased considerably while intra-Community 
deals decreased by 9%. 
The figures of operations between firms from outside the EC showed 
remarkable increases in manufacturing during the last two years. The metal, 
engineering and cars sector explains this upsurge in extra-EC merger 
activity. Although the coverage by the database of this type of operation is 
not comparable to its EC coverage, the evidence provided by Table 1 seems to 
suggest that the contraction in concentration activities has been more 
important in Europe than in the rest of the world during the last years. 
<T4> Distribution by sector of mergers and majority acquisitions 
27. Table 2 gives a detailed account of the distribution by sector of the 
mergers and majority acquisitions involving EC firms that took place during 
1992/1993. The first three columns give us the information concerning the 
geographic dimension of those operations and column four and the rest of 
columns give us the aggregate figures for the period 1987/1988 to 1992/1993. 
This table includes only mergers and majority acquisitions which result from 
the addition of the following categories supplied by AMDATA: public bids, 
private bids, management buy-outs, divestments, reverse takeovers^). 
The first part of the table shows the number of operations of these types 
that took place in agriculture, mining and utilities, construction and 
manufacturing. This latter category has been subdivided in three groups: 
minerals and chemicals, metal, engineering and motor industries and general 
manufacturing. The second part of the table includes all the service sectors 
divided in four subgroups: distribution and hotels, transport and 
communication, banking, financial sector and insurance and other services. 
(3) For a definition of three categories, see the section on distribution 
by size and bid type below. 
408 
Table 2 
M3RGERS HO MVJCRITY ACQUISITIONS Bf S.W-CICK 
Geo. dimensicn and yr 
Target SIC (2 digits) 1992/1993 
National Cananity ET^hon-EC Total TOTALS 
1967/1963 1968/1969 1969/1990 1990/1991 1991/1992 
Agriculture &KbrticuIture 11 1 5 17 
Forestry 10 0 1 
Fishing 10 3 4 
AGRICULTURE 13 1 8 22 
Coal mining & solid fuels 2 0 5 7 
Mineral oil k natural gas 7 2 13 22 
Mineral oil processing 5 11 7 
Nuclear fuel production 2 0 3 5 
Electricity/Gas Mother energy 24 1 11 36 
Water supply industry 2 11 4 
EhETCf&WTER 42 5 34 81 
Metalliferous ores 116 8 
Metal manufacturing 37 9 17 63 
Other mineral extraction 15 3 12 30 
Ncn-metal mineral products 76 35 30 141 
Chemical industry 64 45 97 206 
Product ion of man-trade fibres 112 4 
MJ^ER^/CHM04LS 194 94 164 452 
Other metal goods manufacture 87 15 23 125 
Mschanical engineering 225 47 95 367 
Office machinery/data prcc. equipment 18 2 15 35 
Electrical k electronic eng. 127 34 77 233 
Motor vehicles k parts 38 14 12 64 
Other transport equipment 33 3 11 52 
Instrument engineering 31 8 21 60 
MTTAL/EN3Ir£ERIr£/t>RS 564 123 254 941 
Food industry 114 29 35 178 
Sugar 4: sugar by-products 104 15 54 173 
Textile industry 44 16 11 71 
Leather k leather goods 4 0 4 8 
Footwear k clothing industries 69 9 14 92 
Timber k wooden furniture 52 6 14 72 
Paper manufacture k products 239 29 55 324 
Rjbber k plastics processing 52 15 37 104 
Other manufacturing industries 23 3 13 39 
k^NLFACTURING 701 122 233 1061 
Construction/civil engineering 106 15 17 138 
aO^TRCTIOl 106 15 17 133 
Total 1620 360 715 2695 14 
1 
2 
16 
10 
42 
6 
0 
2 
2 
53 
6 
23 
9 
69 
107 
2 
215 
85 
184 
35 
187 
26 
30 
41 
538 
76 
71 
46 
2 
40 
54 
170 
71 
30 
560 
69 
69 
1501 21 
0 
1 
22 
9 
24 
17 
1 
8 
18 
77 
7 
65 
30 
141 
204 
5 
452 
131 
302 
53 
306 
67 
49 
60 
975 
140 
146 
78 
9 
97 
117 
304 
157 
42 
1090 
104 
104 
2720 39 
1 
5 
45 
9 
30 
14 
1 
12 
9 
75 
9 
96 
35 
166 
283 
5 
594 
146 
445 
50 
353 
87 
65 
83 
1229 
195 
184 
94 
13 
101 
110 
336 
174 
50 
1307 
164 
164 
3414 38 
2 
5 
45 
7 
20 
15 
2 
30 
14 
10 
108 
23 
192 
252 
4 
589 
154 
332 
36 
320 
80 
64 
91 
1137 
235 
215 
74 
15 
96 
91 
381 
148 
49 
1306 
134 
134 
3299 36 
0 
1 
37 
5 
35 
16 
3 
39 
4 
102 
17 
58 
36 
145 
226 
7 
439 
156 
415 
34 
321 
80 
73 
75 
1154 
217 
203 
111 
7 
76 
101 
337 
136 
42 
1230 
161 
161 
3173 
(2. 
409 
Table 2 continued 
MEFCERS AND MUCRITY ACOlISmOS IN ACfUCLLTLFE, MINING UTILITIES, MâNLFACÎLRIN3 AND ODNSTRJCTIGM Bf SiftH-'ILK 
Geo. dimension and yr 
Target SIC (2 digits) 1992/1993 
National Catrrtnity B^ncn-EC Total TOTALS 
1967/1988 1983/1969 1969/1990 1990/1991 1991/1992 
Distribution-wholesale 262 73 125 460 
Scrap deal ing/Wiste materials 10 0 1 11 
Distribution-retail (dcmestic) 95 10 10 115 
Distribution- retail (other) 78 6 17 101 
Hotels and catering 55 14 31 101 
Repair of goods & vehicles 7 11 9 
DISTRIEt^ON/FDTELS 506 104 185 797 
Gen. traisp./Carnririication 9 0 1 10 
Railways 3 0 1 4 
Other inland transport 36 6 7 49 
Sea transport 113 5 19 
Air transport 12 3 4 19 
Transport support services 17 3 6 26 
Other trans?, serv./storage 49 18 26 93 
Postal serv./teleçons 10 3 4 
TRVvEPCrVlHIDO^NICATIONB 133 33 53 224 
Banking & finance 123 28 43 194 
Insur. (ex social security) 43 15 21 84 
Business services 333 66 110 509 
Renting of movables 29 7 8 44 
Owning/dealing in real estate 73 6 8 87 
B*NK^IrWŒ/IN3UWCE 606 122 190 918 
Sanitary services 33 5 16 54 
Education 10 0 6 16 
Research k Development 8 3 5 16 
MadicaI/Health serv.; vets 13 1 3 17 
Other public services 0 0 2 2 
Recréâtiandl/cultural serv. 63 5 15 83 
Personal services 5 13 9 
OTr£RSER/IŒS 132 15 50 197 288 
8 
89 
77 
70 
15 
547 
0 
0 
39 
6 
7 
13 
36 
0 
95 
78 
44 
498 
62 
66 
743 
20 
12 
8 
12 
2 
46 
66 
159 430 
6 
114 
135 
116 
12 
863 
3 
3 
55 
21 
17 
11 
67 
0 
178 
195 
81 
608 
92 
70 
1045 
48 
10 
12 
32 
0 
74 
66 
242 614 
11 
141 
227 
155 
25 
1173 
15 
2 
47 
33 
25 
18 
110 
3 
253 
242 
94 
773 
104 
96 
1309 
23 
38 
31 
13 
25 
96 
17 
243 455 
3 
140 
185 
103 
13 
899 
15 
0 
62 
21 
23 
15 
103 
13 
257 
280 
96 
635 
53 
78 
1194 
57 
16 
16 
15 
8 
87 
10 
209 526 
18 
256 
135 
75 
14 
1025 
4 
2 
68 
29 
21 
30 
72 
12 
233 
243 
73 
535 
39 
78 
968 
49 
11 
19 
5 
1 
75 
14 
174 
TOTALS 1334 274 478 2136 1549 2329 2978 2559 2405 
Source: >*>M3ATA 
Annex IV.A.p.10 41 D 
As Table 1 already showed, the general manufacturing group and metal, 
engineering and motor industries are the two subgroups with the greatest 
number of mergers and majority acquisitions in 1992/1993. This has been a 
constant since 1987/1988. The geographic distribution of these operations 
presents significant differences though. While cross-border operations have 
more or less the same number of cases in these two subsectors, the number of 
national operations in general manufacturing is much higher than in 
meta I/engineering/cars. 
General manufacturing, paper and paper products, food and sugar were the 
subsectors with the highest frequency of operations during last year. 
Despite the general decline in the number o.f deals, the paper subsector 
maintained a high level of concentration activity in 1992/1993. As a result, 
it has increased its relative share within the manufacturing group, 
accounting for more than 30% of all deals in this group. The shares of the 
food and sugar subsectors experienced a substantial reduction in the number 
of deals but still maintained their relative importance, which is greater 
than in 1987/1988. 
In the metal, engineering and automobile sector, we have to note that the two 
main subsectors - mechanical engineering and electrical and electronic 
engineering - have behaved differently over time. Both subsectors had 
approximately the same number of deals in 1987/1988. Since then, 
concentrâtive activity in mechanical engineering has grown far more rapidly 
than in electrical and electronic engineering. It is also worthwhile 
noticing that national deals are more frequent in mechanical than in 
electrical engineering. / 
Despite its small number, the progression in the number of deals in the 
'electricity, gas and other energy' subsector is quite remarkable. 
In services, there is a high concentration of deals in two subsectors that 
account for approximately 50% of the total number of mergers and majority 
takeovers. These are distribution at the' wholesale level and business 
services in the financial group. 
Almost all subsectors have followed the general trend in concentration 
activity over time, with a peak around 1989/1990 and 1990/1991 followed by 
Annex IV.A. p.11 - . . 
41 1 
the present decline. This gives a very stable distribution of operations by 
sector over time with just a few noteworthy events: 
a) first, the relative decline of business services versus wholesale 
distribution, although the former still maintains its leadership in 
terms of deals registered; 
b) the banking subsector has increased its relative importance steadily 
over the years but suffered a drastic reduction in the number of deals 
in 1992/1993; 
c) all the other financial services (i.e. insurance, renting of movables 
and real estate) have had more deals in 1992/1993 than in 1991/1992, 
although the increase was relatively small; 
d) non-domestic retail distribution had an unusually low level of 
concentrâtive activity in 1991/1992 and the important increase of last 
year must be considered as the re-establishment of a normal level of 
concentrâtive activity; 
e) domestic retail distribution had an unusually high number of deals in 
1991/1992, but in 1992/1993 concentrâtive activity in this subsector has 
diminished to the level of previous years. 
To conclude this section, Table 3 shows the distribution by country of all 
the intra-Community operations - i.e.. national plus Community-wide 
registered in 1992/1993. 
The United Kingdom has the highest number of deals in six out of the ten 
economic sectors included in the table (agriculture, metal and engineering, 
general manufacturing, distribution and hotels, banking and insurance and 
other services). Germany has the greater number of deals in four sectors 
(energy and utilities, minerals and chemicals, construction and transport and 
communications). This high level of concentrâtive activity in Germany seems 
to reflect the influence of German re-unification given the nature of the 
sectors in which Germany occupies the first place. The third country with 
respect to the total number of operations of intra-Community dimension was 
France. 
412 
Table 3 
fcETCERS HO MUCRITY ymJISITIGNS CF INTRMDOMMTY DMNSIGN BT SECTCR AN) TARGET NAJIGMftLITY - 1992/1993 
Nbticrol/Camuiity 92/S3 
Target nationality B CK Irl F D Gr I Lux N_ FT S? IX Total 
Target SIC 
Agriculture 2111100 0 2 0 3 3 14 
Energy &Wdter 20042202 0 4 0 2 11 47 
Mins^hamicals 13 11 3 31 67 1 31 2 11 1 29 68 288 
Mstal/thg./Cars 13 41 2 131 185 1 64 1 45 0 13 191 687 
Manufacturing 2732 13 153 184 3 93 1 60 440 203 823 
Construction 64111470 2 0 6 0 1 43 121 
Distrib./Hotels 20 19 4 82 199 1 13 0 40 4 24 206 612 
Transporty€arm. 9 12 1 28 45 1 17 0 25 0 6 27 171 
Bank^in./Insur. 43 33 7 125 114 2 70 3 74 4 45 203 728 
Other services 5 3 1 20 39 0 10 0 6 1 3 59 147 
TOTALS 140 161 33 591 923 9 302 7 273 14 166 1019 3533 
Source: /M>ATA 
Annex IV.A. p.13 
413 
<T4> Geographic distribution of concentrâtive operations 
28. The AMDATA database allows us to give a detailed breakdown of the 
geographic distribution of concentrations. In this section, intra-Community 
operations are presented separately from those involving Community and non-EC 
companies in the same operation. 
<T5> Intra-Community operations 
29. Table 4 presents the distribution of mergers and majority acquisitions 
involving firms from the Member States only. The diagonal of this table 
shows operations of purely national dimension while the remaining entries are 
Community-wide operations, i.e. operations between firms of at least two 
different Member States. This table includes all the operations that 
occurred during 1992/1993 in all sectors (agriculture, mining and utilities, 
manufacturing and services). 
Table 4 shows that the three countries which are targetted more often for 
mergers and majority acquisitions of national and Community dimension (UK, 
Germany and France) have also been the countries of origin of the greater 
number of bids to acquire companies within the Community. The UK is the 
first country in both cases. In 1992/1993 there were more operations of this 
kind within the UK than anywhere else within the Community. Just the number 
of national operations in the United Kingdom is greater than the total number 
of operations anywhere else in the EC: there were 929 purely national 
operations in the UK while the total of national plus Community operations 
targetting Germany (which occupies the second place) was just 923. France 
had the third highest levels of concentrâtive activity in 1992/1993, both in 
terms of nationality of the bidding and targetted firms. 
However, the table shows some important differences between these three 
countries. The number of cases with the UK appearing as bidder nationality 
is slightly greater than the number of cases of that country appearing as 
target nationality (1,101 and 1,019 respectively). Therefore, we could say 
that the UK is a 'purchasing country' in the EC context as the net balance in 
terms of number of operations is negative, i.e. with more purchases of 
414 
Table 4 
OOLNIRT DISTRIBUTION CF MERGERS AND MUCRITY AfJQJISITIGNB CF MRMD3MMTY DIMENSION (national and Carrrunity) (al I sectors) 
1992/1993 
Target nationality B DX Irl F D Gr I Lux KL FT S? IK Total 
Bidder nationality 
Belgiun 7810830 03 40 3 3 103 
Derrrark 1 134 0 3 3 1 10 11 2 16 163 
Ireland 1025020 00 40 1 19 52 
France 19 30477342 251 11 2 2B 23625 
Germany 5 13 0268010 82 14 0 8 16 893 
Greece 000104 00 0 0 0 0 5 
Italy 110 18 612491 11 8 2289 
Luxembourg 101100 00 00 2 1 6 
The Netherlands 22417290 30 215 1 7 9296 
Portugal 000000 00 0 4 1 05 
Spain 000220 00 04 89 1 98 
United Kingdom 12 5 6 48 43 1 16 0 23 1 17 929 1101 
TOTALS 140 161 33 591 923 9 302 7 273 14 165 1019 3633 
Source: /fcOATA 
Annex IV.A. p.15 415 
foreign companies by UK firms than of British firms by foreign companies^4). 
Nevertheless, the UK is a country where the proportion of domestic operations 
with respect to Community operations is relatively high: for each bid for a 
foreign firm of a different Member State made by a UK firm, there are 5,4 
operations involving British-only companies. 
In 1992/1993 at least, France showed a different profile. As in the UK, 
French firms appear more often as buyers of foreign firms from other EC 
countries than as targets for intra-EC operations^). But domestic 
operations are relatively less important in France (in comparison with 
Community operations) than in Britain: for every cross-border operation there 
were 3.2 national majority acquisitions of national firms by French 
companies. 
Germany has a differnt profile too. Firms of German nationality have been 
targetted more often than German firms have targetted companies in another 
Member State. In this sense the situation in Germany is different from that 
of the UK and France. However, as in the UK, national operations (801) were 
relatively much more important than acquisitions of foreign firms by German 
companies (92) or than acquisitions of German firms by foreign companies 
(122). 
The rest of the Member States follow more or less closely these three 
patterns. Belgium, Greece and the Iberian countries are targetted more often 
than they appear as bidders abroad but within the Community. In this sense, 
they look like Germany. Belgium shows a great degree of 'openness' in 
concentrâtive operations within the Community. As in France, the ratio of 
national to Community deals is proportionately smaller compared with other 
countries. The opposite seems to apply to Italy for instance where 82% of 
all intra-Community deals were strictly national. 
(4) Of course, the real net balance should be given in terms of the value of 
the operations, but given the high number of cases with missing data of 
bid value, it is considered here that the number of operations is a 
better indicator. in the case of the UK and operations of Community 
dimension, the balance in value terms is also highly negative: the value 
of bids by British firms was 7,7 bil. ECU while the value of bids of 
targetted British firms was just 2,6 bil. ECU. 
(5) However, the balance in terms of aggregated bid values is more or less 
balanced in the French case. 
Annex IV.A. p.16 A *. •' 
4 I b 
<T5> EC/non-EC operations 
30. Tables 5 and 6 complement the picture of transnational concentrâtive 
activities. Table 5 shows the distribution of majority acquisitions by 
European firms in non-EC countries according to the nationality of the 
targetted firms. Table 6 shows the nationality of origin of companies from 
outside the Community merging or acquiring majority participations in EC 
firms. 
As table 5 shows, North America was the preferred target nationality for EC 
firms acquiring or merging with a non-EC firm. On the buyers' side, the UK 
was again the most active EC nationality followed by Germany and France. But 
again, these countries show different patterns. About' 50% of UK firms 
acquiring companies outside the EC chose the USA or Canada as the target 
nationality. On the other hand, Germany and France distributed their target 
nationalities more evenly among North America and Western (non-EC) and 
Eastern Europe. It is remarkable that the fifth largest EC acquiring country 
according to table 5 was Denmark where over half the operations were in 
Scandinavia^6^. The relatively high activity of Italian firms in Latin 
America is also noteworthy. 
Table 6 shows that Germany was in 1992/1993 the favourite country of 
destination of foreign funds from outside the Community to acquire EC 
companies. In 88 cases, North America companies acquired majority 
participations in German companies. Western Europe ranked second with 62 
cases, which is a significant figure. Those two worId regions, followed by 
Scandinavia, accounted for most of the operations as expected. The Far East 
was the fourth largest investor, but considering the size of these Asian 
economies like Japan, they show a relatively low level of concentrât i ve 
activity with EC firms. This becomes apparent if we compare the figure for 
Scandinavia (91 operations) with the figure for Far East Asia (62 
operations). 
The sectorial breakdown of mergers and majority acquisitions by EC firms of 
companies outside the Community shows that they tend to concentrate their 
acquisitions in the metal, engineering and cars and in the manufacturing 
(6) In fact Denmark accounts one third of all EC acquisitions in 
Scandinav ia. 
Table 5 
DISTRIBUTION Bf WCFLD REGION CF MERŒR3 MO MUCRITT A03JISITICN5 BY EC FIRvB CF OCMWIES CF hCN-£D N\TICNW-ITY (al I sectors) 
1992/1993 
Target nationality 
Bidder nationality USV^an Scandinavia Rest of West. 
Europe Far East Latin America Middle East East Europe Australia Asia Africa International TOTAL 
Belgiun 
Derrrork 
Ireland 
France 
Germany 
Greece 
Italy 
Luxembourg 
The Netherlands 
Portugal 
Spain 
United Kingdom 4 
7 
6 
24 
25 
1 
10 
0 
14 
0 
2 
102 0 
21 
1 
4 
12 
0 
2 
0 
8 
0 
0 
15 0 
1 
0 
19 
27 
0 
2 
1 
5 
0 
0 
25 1 
2 
0 
6 
3 
0 
1 
0 
6 
0 
0 
15 1 
0 
0 
5 
0 
0 
10 
1 
1 
0 
2 
5 4 
4 
1 
19 
25 
1 
7 
0 
9 
0 
0 
9 0 
1 
0 
1 
2 
0 
0 
0 
3 
0 
0 
14 10 
37 
8 
85 
96 
2 
33 
2 
53 
0 
5 
201 
TOTALS 195 63 80 34 25 79 21 15 12 534 
Source: ACATA 
4^ 
3k 
Table 6 
DISTRIBUTION BY BEDZR NATICNALITY CF MERGERS AND MUCRTTY CF 
AOQUISmCNS CF EC FD*6 BY CCMWŒS FROM CUTSIDZ Tr£ EC (al I sectors) - 1992/1993 418 
Target nationality 
Bidder nationality DX Irl F Gr Lux NL FT SP IK Total 
UBA&Canada 
Scandinavia 
Western Europe 
Caribbean 
Far East 
Latin America 
Middle East 
Eastern Europe 
Australasia 
Asia 
Africa 
International 6 
16 
3 
0 
1 
0 
0 
1 
0 
0 
0 
0 35 
5 
21 
0 
11 
0 
2 
1 
1 
0 
2 
3 88 2 
26 0 
62 1 
0 0 
15 0 
2 0 
4 0 
2 0 
4 0 
5 0 
3 0 
3 1 19 
7 
13 
1 
4 
0 
0 
1 
0 
0 
0 
2 19 
11 
16 
1 
1 
0 
0 
0 
4 
0 
1 
3 20 
12 
10 
0 
3 
5 
1 
0 
0 
0 
2 
5 75 
12 
11 
2 
26 
0 
1 
0 
5 
0 
5 
9 273 
91 
145 
4 
62 
7 
8 
5 
15 
5 
14 
27 
TOTALS 12 27 5 81 214 4 47 56 58 146 656 
Source: /MDATA 
Annex IV.A. p. 19 A <\ r\ 
sector (with 118 operations each) followed by the distribution and hotels and 
the banking, insurance and finance sectors (with 82 operations each). This 
follows the general pattern of the sectorial distribution of operations seen 
in Table 2. However, the distribution by world regions shows some 
differences. In concentrations between North America and EC firms, there is 
a substantial difference in the number of cases registered in the metal, 
engineering and car sector (50 cases) and the number of cases in general 
manufacturing (33 cases, which is similar to the number of cases in 
chemicals, 31, distribution and hotels, 30 and banking, 30). When EC firms 
acquire or merge with companies in Eastern Europe, the general manufacturing 
sector is the one with the highest frequency of operations (31 deals) 
followed by metal and engineering and distribution and hotels (with 18 and 10 
operations respectively). The number of operations affecting Eastern Europe 
in the banking, insurance and finance is limited to 5 only. By contrast, the 
financial sector has the highest number of concentrâtive operations 
targetting firms from Australasia. For Western Europe, manufacturing, metal 
and engineering and chemicals (with 18, 17 and 13 deals respectively) were 
more often targetted than the service sectors (12 cases in distribution and 
10 in the financial sector). Finally, 19 Scandinavian companies were 
targetted in the metal and engineering sector and 15 in the distribution and 
hotels sector. 
The sectorial distribution of concentrâtive operations in which a non-EC 
company targetted an EC company shows some differences with respect to the 
sectorial distribution of intra-EC deals that we examined in Table 3 above. 
First of all, there were more concentrât ive operations in the metal and 
engineering sector in 1992/1993 than in the general manufacturing sector (136 
and 120 operations respectively). This is the opposite to the situation 
found for intra-Community deals, where general manufacturing occupies the top 
position among targetted sectors. The number of operations that targetted 
the financial sector was also relatively higher when the bidding firm was of 
non-EC origin, compared with the number of cases in which all the firms 
involved were European (17% compared with 20%). The same applies to 
chemicals, mining and utilities and agriculture. The high concentration 
activity involving foreign companies that acquired EC firms in the metal and 
engineering sector was due in part to the large number of deals of these 
types in which German firms were targetted (56 cases which account for 41.2% 
of the deals in that sector). The huge weight of Germany in the geographic 
distribution of deals determines to a large extent the sectorial distribution 
Annex IV.A. P.20 420 
(Germany attracted 32.6% of the operations of this kind). Very important too 
was the activity in the German distribution sector with 48 cases of non-EC 
firms targetting German firms in that sector. The UK shows once more its 
speciIisation in the financial sector with 42 cases of British firms being 
the target of non-EC firms in 1992/1993. In France, the distribution was 
relatively even among the main five sectors. The case of Belgium is 
remarkable as the number of operations targetting Belgian firms with a non-EC 
bidder was significantly low compared with the number of deals registered 
wi th an EC bidder . 
<T4> Flows of concentration activity 
31. The identification of the nationality of the bidder and target company in 
each operation permits a detailed description of the flows of concentrâtive 
activities between countries. The combination of this information and the 
geographical dimension of operations can help to identify patterns or 
characteristics of each Member State as regards to its position in the 
international flow of concentrâtive operations. In this section, we will 
define three indicators to help determine the pattern for each country. 
The first one refers to the role of each Member State as bidder or 
targetted country in operations of intra and extra-EC dimension. This 
classification is based on the propensity of each country to target (or 
to be targetted by) firms (from) inside or outside the EC. 
The second indicator, the net-balance index is a sort of external 
balance for each country measuring the difference between the number of 
cross-border deals in which that country appears as bidder and target 
nat ionaI i ty . 
Finally, the 'openness index' gives us an idea about the ratio between 
national and cross-border deals involving companies from a certain 
Member State. Graphics 2 and 3 summarize the characteristics of the 
Member States based on these indexes. 
32. In order to identify the role as internally or externally targetted 
country for each Member State, we divide the corresponding entries of the 
last two rows of Tables 3 and 6. It can be seen that the number of 
operations with EC bidders is much larger than the number of cases with a 
Annex IV.A. p.21 42 1 
non-EC company as bidder. For instance, there were 3,638 operations of 
intra-EC nature and only 656 cases of non-EC firms acquiring EC companies. 
This means that for each time that a non-EC firm took over an EC company, 
there were 5.55 deals of EC firms acquiring majority holdings in other EC 
firms. This can help us to characterise Member States according to their 
propensity to be targetted from inside or outside the EC. Countries with a 
ratio lower than 5.55 would then be countries which have a propensity to be 
targetted by firms from outside the EC higher than the Community average. On 
the other hand, if the ratio is higher than 5.55 we can say that firms of 
that nationality are more often targetted, in relative terms, by firms from 
inside the EC than the EC average. Following to this method, we find that 
Greece, Portugal, Spain, Germany and The Netherlands are Member States 
relatively more open to concentrâtive activity from outside than from inside 
the Community. The opposite happens in the other Member States, with Belgium 
at the top with 11.7 intra-EC operations for each operation with a non-EC 
f i rm as bidder. 
A similar analysis can be made with Tables 4 and 5 to measure the relative 
propensity of EC firms from each Member State to bid in concentrâtive 
operations within the Community or target firms outside the Community. For 
that purpose we can divide term by term the entries of the last columns of 
these two tables. On average, each time an EC firm takes over a firm from 
outside the Community, 6.81 EC firms are taken over by an EC company. 
Countries with a ratio below 6.81 indicate a propensity to take over firms 
from outside the Community higher than the Community average. If the ratio 
is greater than 6.81 it can be said that a country has a relatively greater 
tendency to be a bidder in intra-EC deals than in EC/non-EC deals than the 
Community average. This classification gives Portugal, Spain, Germany, 
Italy, France and Belgium as having a relatively higher propensity for intra-
EC bidding, Greece, The Netherlands, Denmark, Luxembourg, Eire and the UK as 
countries with a propensity to bid more outside the EC than within the EC. 
These criteria give a picture of EC Member States according to their intra or 
extra-EC concentration activities as presented in graphic 2. Of course, the 
smaller the absolute concentrâtive activity is for any country, the more 
volatile is the position of one country in the graphic. Thus, the picture 
for countries such as Greece, Portugal or Luxembourg should be considered as 
Internal 
Bidder 
6.81 
External 
Bidder EC Member Stales as bidder or target 
countries from inside and outside the EC 
Portugal « 
Spain 
Germany» 
EC Av 
Netherlands 
Greece 
Externally targetted I laly 
France 
EI re 
« UK 
Denmark 
l.u xem. 
l._ 
5.55 Graphic 2 
B e I g l u m 
nternally targetted 
Source: Tables 3, 4, 5 and 6 > 
CD 
< 
> 
4^ 
Annex IV.A. p.23 423 
highly unstable as the small numbers of operations in those countries can 
make their position fluctuate a great deal from one year to another. 
Graphic 3 provides some further information about the characteristics of 
Member States as far as international concentration activities are concerned. 
The net balance index has been calculated for each Member State as the 
difference between the number of cross-border deals^7) in which firms of 
that country appear as targetted from abroad and as bidders in extra-EC 
operations, divided by the total number of international deals for that 
country. Only five countries appear with a negative balance, i.e. as 
countries whose firms are more often bidders acquiring firms in other EC or 
non-EC countries than targetted by foreign firms. Ireland and the UK have 
the most negative balance followed by Denmark, France and The Netherlands. 
On the other hand, Portugal, Spain, Greece, Belgium and Germany, followed by 
Italy have a positive net balance in the number of operations involving firms 
from outside their national borders. 
Graphic 3 also includes an openness index. This index measures the relative 
importance of cross-border concentrâtive activity in one country compared 
with the number of national deals. It is calculated as the difference 
between all international deals and national operations, divided by the sum 
of both. Small countries such as Luxembourg, Portugal, Greece and Ireland 
tend to be very open as one would have expected, while large countries such 
as Germany tend to be less open. However, it is interesting to notice some 
exceptions. In particular, Denmark has a negative index which shows that 
internal concentrâtive activity is very important relative to international 
operations. It is also interesting to note that France has a negative index 
but very small in absolute terms (as compared with Italy for instance), which 
shows a certain balance between the number of cross-border and national deals 
involving French firms. Among the countries with positive net balances and 
openness indexes, there are some important differences. For instance, the 
net balance is approximately the same in Spain and Portugal. However, the 
openness index in Spain is less than half of the Portuguese index, which 
shows a much more important concentrâtive activity of domestic nature in 
Spain than in Portugal. 
(7) Both of EC and non-EC nature, but excluding national operations 
Net balance and openness index of EC 
countries in terms of M&Maj.acquisitions 
Belgium -
Denmark -
Eire -
France -
Germany -
Greece -
Italy -
Luxem. -
Netherlands -
Portugal -
Spain -
U.K. -Graphic 3 > 
CD 
< 
> 
-0,6 -0,4 -0,2 1,2 
Source: AMDATA Net balance Openness index 
4^ 
Annex IV.A. p.25 . _ 
425 
<T4> Distribution of concentrâtive operations 
by bid-value intervals and bid type 
33. The AMDATA database does not provide information on the turnover of the 
companies involved in concentrations as the DOME database did. Therefore, it 
is not possible to give an account of the size of the companies involved in 
the operations. Nonetheless, AMDATA provides certain information which can 
give us an idea about the size distribution of the operations themselves 
instead of the size of the firms involved. AMDATA gives information of the 
value of the bid in each deal. However, as Table 7 shows, there is a large 
percentage of operations for which the bid value remains unknown. The bid 
value is given for only one third of the total number of operations involving 
European firms (i.e. national and Community deals plus operations involving a 
European and a non-EC firm). The percentage of missing bid values is not the 
same for all the sectors. This problem is worse in intra-EC operations in 
the construction sector, where the bid value is known in approximately only 
one out of six operations. On the other hand, the problem is a minor one in 
EC/non-EC deals in the energy and water sector where the bid value is not 
known for only 13 of a total of 34 operations. 
Intra-EC operations are usually of smaller dimension than those involving EC 
firms and firms from third countries. For instance, in general manufacturing 
65% of intra-EC deals had bid values below 10M ECU while that percentage was 
43% in the case of EC/non-EC operations. However, 56% of EC/non-EC deals in 
that sector had bid values between 10 and 500M ECU, and 34% of intra-EC 
operations were included in the same bid value interval. Nonetheless, there 
were 2 intra-EC operations with bid values of over 200M ECU. 
The distribution of the size of the deals by sector of activity and by bid 
value intervals shows some interesting facts. The energy and water sector 
has a high average size of operations. In the case of intra-EC deals, 31% of 
all operations for which figures are available had bid values above 200M ECU. 
In the EC/non-EC case, that percentage goes up to 38% with 3 deals having bid 
values of over 900M ECU. The chemicals and extractive sectors also had bid 
values greater than the average ones. 47 operations of extra-EC dimension 
had bid values above 50M ECU and 7 deals exceeded the 500M barrier. The 
financial sector, metal and engineering and general manufacturing are next 
more important in terms of in average size of deals. 
Table 7 
DISTRIBUTION BT BID-VALLE MERv5»LS HO SECTCR CF /CTNITC CF COŒNTRATICNS - 1992/1993 426 
Bid value bends in MEU5 
Target SIC hb value < 1CM < 5CM < 1CCM < 20CM < 50CM < 90CM Cver Totals 
Agriculture 
Energy k Water 
Mins/]h8T)icals 
Mstal^hg./Cars 
Mnufacturing 
Const ruction 
Distrib./fbtels 
Trcnsport/jatm. 
Banlyfin./Insur. 
Other services intro-EC 
EQfocn-EC 
intra-EC 
EC/ncn-EC 
intra-EC 
EC/hcn-EC 
intra-EC 
EC/hcn-EC 
intra-EC 
EC/ncn-EC 
intro-EC 
EC/ncn-EC 
intro-EC 
EC/ncn-€C 
intro-EC 
EC/ncn-EC 
intro-EC 
EC/ncn-EC 
intra-EC 
EC/ncn-EC 7 
6 
31 
13 
187 
102 
466 
171 
600 
156 
96 
10 
396 
130 
129 
35 
469 
126 
97 
28 6 
1 
8 
5 
55 
15 
151 
36 
144 
29 
16 
4 
138 
27 
24 
9 
143 
28 
32 
8 1 
1 
3 
5 
30 
25 
52 
31 
59 
24 
5 
1 
54 
18 
13 
5 
59 
21 
15 
7 0 
0 
0 
3 
9 
10 
12 
10 
9 
11 
2 
2 
9 
8 
3 
3 
24 
8 
2 
3 0 
0 
4 
4 
5 
5 
3 
4 
5 
8 
0 
0 
6 
2 
1 
0 
25 
4 
1 
1 14 
8 
47 
34 
164 
637 
254 
823 
233 
121 
17 
612 
185 
171 
52 
728 
191 
147 
47 
TOTALS 3259 879 429 128 78 41 4828 
Source: AVCATA 
Annex IV.A. p.27 
427 
Table 8 gives the distribution of concentrâtive operations (excluding joint 
ventures and minority participations as in the previous tables) by type of 
operation. Public bids identify deals in which any acquiree is quoted on a 
stock exchange anywhere in the world. The private acquisitions category 
includes any transaction where the acquiree is not quoted on a stock exchange 
and the transaction does not fall into any other category. Management buy­
outs are those operations in which the acquiror is identified as being owned, 
partly or in total, by members of the management of the company being 
acquired. Divestments are defined by AMDATA as acquisitions with a divesting 
company registered in the United Kingdom. Finally, reverse takeovers account 
for operations in which a stock exchange quoted company buys a non-quoted 
company and the issue of shares as consideration results in the non quoted 
company taking control of the quoted company(Q). 
Table 8 shows that private acquisitions are, by far, the most frequent type 
of operation with 3,821 deals out of 4,828 intra-EC and EC/non-EC operations. 
They are particularly frequent in EC/non-EC operations as only 184 deals of 
extra EC concentration activities belong to other categories. On the other 
hand, reverse takeovers are very seldom found with only 3 cases registered in 
1992/1993. Management buy-outs were relatively frequent in the intra-EC 
group with more than 12% of the total number of deals. Most of the 184 cases 
of the extra-Community deals were concentrated in the divestments category. 
Those deals were relatively frequent in the distribution and financial 
sectors. Public bids of intra-EC dimension were particularly important in 
the banking, finance and insurance sector with 60 operations. 
As can be seen, AMDATA allows for a much more detailed bid type 
classification than DOME, which had mergers and majority acquisitions, 
minority acquisitions and joint venturs as the only three types of 
operations. It is worthwhile noticing that AMDATA does not include a 
separate category for mergers. Even in the case of two companies that merge 
into a new one, disappearing as the entities originally in existence, AMDATA 
does not include a separate category for mergers. If two companies that 
merge into a new one, disappearing as the entities originally in existence, 
(8) AMDATA includes 'strategic alliances' (minority) stakes and 'demergers' 
as additional categories which do not fall under the majority 
acquisition general heading. Minority stakes are presented in the next 
sect ion. 
Table 8 
DISTRIBUTION CF CFERMICNS BT BID TrFE AVD SECTCR CF ACTIVITY - 1992/1993 
Bid type 
Target SIC Publ ic bids Private acq. Mm. buy-outs Divestments Rev. takeovers Totals 
intro-EC EC/ncn-EC intro-EC EC/ncn-EC intro-EC EC/non-EC intro-EC EC/xn-EC intro-EC EC/ncn-EC intro-EC EC/hcn-EC 
Agriculture 10 9 6 1 1 3 10 
Energy k Water 5338240 0 4 70 
Minerals/Chemicals 12 12 209 133 30 3 37 16 0 
Ktetal/Engineering/Cars 17 5 492 230 117 3 61 16 0 
Manufacturing 29 3 617 214 97 2 80 19 0 
Construction 1 1 94 15 19 1 7 0 0 
DistributiayHotels 17 8 467 156 650 63 200 
Trcnsport/CaWnication 23 140 4520 1 9 30 
BcnJyfirxrce/Tnsurcnce 609532 156 80 2 55 231 
Other services 3 4 107 37 16 0 21 6 0 14 
47 
283 
637 
823 
121 
612 
171 
728 
147 8 
34 
164 
254 
238 
17 
185 
52 
191 
47 
TOTALS 147 48 2705 1016 445 13 340 111 3638 1190 
Source: /fcCATA 
4^. 
NO 
OO 
Annex IV.A. p.29 
429 
AMDATA identifies at least one of the companies as having some control or 
priority over one or the others, just as in a takeover or in a majority 
acquisition. In terms of this database, there is always (at least) one 
bidder and one target company^9). Besides, it is this accounting method, 
which allowed us to make the geographic analysis of flows of concentrâtive 
activities based on the nationality of the bidder and target companies. 
<T4> Minority acquisitions and joint ventures 
34. Tables 1 and 9 give information on the evolution of minority 
acquisitions^10) during last year in comparison with the 1987/1988 to 
1991/1992 period. Contrary to what happened with mergers and majority 
acquisitions, the purchase of minority stakes has not fallen very 
drastically with respect to 1991/1992 figures. National operations and EC 
international operations grew relative to the 1991/1992 figures. The 
evolution was relatively similar in manufacturing and services. The number 
of operations of this type experienced some increase in metal, engineering 
and cars and in the financial sectors and other services. The highest 
concentration of minority acquisitions took place in the banking, insurance 
and financial sector with 80 national operations and 39 cross-border deals 
involving EC companies. This high level of activity was already present in 
the previous years, although the incomplete time coverage of these types of 
deals by AMDATA before 1990/1991 does not allow us to make long term 
comparisons. 
Table 9 gives a summary of international activity of minority acquisitions 
involving EC firms. Intra-EC deals were much more abundant than deals 
involving firms from outside the EC. France was the country with the 
highest number of national operations in 1992/1993 followed by Italy. In 
the United Kingdom and Germany, two countries with very high levels of 
concentration activities in terms of majority acquisitions, the number of 
minority acquisitions was quite small. 
(9) Although this may be difficult at times, and therefore questionable, it 
is also true that the number of 'pure' mergers is proportionately very 
smaII. 
(10) AMDATA defines minority acquisitions or stakes as operations in which 
the acquiror does not own more than fifty per cent of the acquiree. The 
thresholds for inclusion are either that the size of the stake being 
acquired is greater than thirty per cent or if less, the transaction 
value is greater than £ 10M. 
Table 9 
BITXER AN) TARGET NMIOW.ITIES CF MMRITY AaUISITIOS - 1992/1993 
Source: AKCATA Target naticnality B EX Irl F D Gr I Lux N_ FT FJS IK Total 
Bidder naticnality 
Belgian 800 110 00 10 00 11 
Denmark 0 140 000 00 00 10 15 
Ireland 111 000 00 00 00 3 
Frcnce 1107730 51 01 31 93 
Gemtny 000 0 110 20 10 23 19 
Italy 000 2 00 41 0 00 30 46 
Luxembourg 100 000 00 00 00 1 
Spain 000 010 00 01 15 0 17 
thitedKingdon 000 500 30 30 3 14 28 
The Netherlands 300 100 10 15 1 00 21 
Total intro-€C 14 16 1 86 16 0 52 1 20 3 27 18 254 
U^&Ccnada 100 520 20 11 02 14 
Scandinavia 010 000 10 10 11 5 
Western Eurcpe 110 310 10 10 11 10 
For East 000 100 00 10 23 7 
Middle East 000 010 00 00 00 1 
Eastern Eurcpe 000 100 00 10 00 2 
International 000 000 10 00 11 3 
Total Rest of World 220 10 40 50 51 58 42 
TOTAL EC + Rest of World 16 18 1 96200 571 254 3226 296 [BMCan Sccnd. West Eur. Far East Latin Am. East Eur. Other Total I 
0 ! 
0 2 0 0 0 1 0 3 I 
10 10 0 0 0 2 1 
4 0 3 2 3 1 1 14 i 
12 5 3 0 1 0 12 J 
0 0 10 0 1 13 1 
10 0 0 0 0 0 1! 
3 10 3 1 0 4 12 I 
0 0 0 0 1 1 0 2 I 
10 5 10 8 5 5 6 49 I TOTAL 
11 
18 
5 
107 
3) 
49 
1 
18 
41 
23 
304 
Annex IV.A. p. 31 A -, , 
431 
France was also the main bidder nationality in cross-border operations of 
this kind, with 16 intra-European operations and 14 deals with firms from 
non-EC countries. France was also targetted very often for this type of 
operations by other firms from both inside and outside the EC (19 cases). It 
is also worthwhile noticing that Spain, with 17 international operations, was 
another frequent target nationality. Italy was third with 16 operations. 
The data for joint ventures are limited to those contained in Table 1. These 
data have been kindly offered by KPMG. These time series include figures of 
three types of agreements: 
a) Agreements between two or more companies, not being daughter companies 
of the same parent company, to set up something new. This could be a 
new company, the development of an oilfield or whatever as long as they 
start something new and independent. 
b) Agreements creating a consortium which will make acquisitions or develop 
goods or services on a permanent or long term basis. 
c) Agreements by which two separate companies merge some of their 
subsidiar ies. 
This implies that the categories included in Table 1 under different headings 
are not completely mutually exclusive. Furthermore, it must be borne in mind 
that joint ventures are counted every time one company goes across the 
border. This means that if a joint venture is being formed by three 
companies of which two companies are going cross-border, the operation is 
counted twice. 
The KPMG database does not include information concerning national joint 
ventures as we indicated before. Moreover, the EC/non-EC deals are counted 
without making reference to bidder or target nationality of the firms, given 
that this is more difficult or even sometimes impossible to establish in this 
k ind of operat ion. 
Table 1 shows that the number of intra-EC joint ventures in manufacturing 
increased considerably during last year but it was still below the 1991/1992 
figure. However, EC/non-EC deals in manufacturing continued their decreasing 
Annex IV.A. p.32 A -, ~ 
432 
tendency started in 1991/1992. It is worthwhile noticing that joint ventures 
in manufacturing between EC and non-EC firms are much more frequent that 
intra-EC operations. The metal, engineering and car sector contained most of 
the intra and extra Community joint ventures in manufacturing, followed by 
minerals and chemicals and general manufacturing. 
The evolution in the service sector was more uniform with decreases in all 
types of deals. The number of joint ventures of an intra-Community nature 
has been reduced to one third of the 1991/1992 figure in the service sector. 
The decrease has been also constant although less dramatic in the EC/non-EC 
area. 
Most of the operations of this kind .are found in banking, insurance and 
financial services with 85 joint ventures involving EC firms created in 
1992/1993. It is also important to take note of the high level of activity 
in the creation of joint ventures registered by KPMG outside the EC. 
V.B. p.1 433 
<T9> B. The 1993 studies programme 
35. During 1993 eight studies were commissioned by DG IV. One of these 
studies entitled "Analysis of technical and economic problems concerning the 
application of competition rules to the electricity sector" is intended for 
publication. Two studies will not be published. The first one of them deals 
with price differentials for consumer electronics goods. The second one 
examines the issue of cross-subsidies. Five confidential studies were 
commissioned last year. These studies have been instrumental for the 
internal work of DG IV. Given the confidential nature of these studies, we 
cannot present an abstract of their findings in this section. 
<T4> Summary of studies intended for publication 
<T5> Analysis of technical and economic problems concerning the 
application of competition rules to the electricity sector 
36. The study, comprising four chapters, looks at the problem of price 
discrimination in the electricity sector. The first chapter analyses the 
problem on the basis of a methodological approach which determines the 
structure of the rest of the report. The second chapter looks at the various 
types of goods and services in respect of which price.discrimination may be 
practised; it also sets out the cost concepts that may be applied in 
analysing discrimination. The third chapter looks at price discrimination 
from the cost angle. The fourth chapter examines how price discrimination 
can be explained in terms of normal economic behaviour or may be justified in 
regulated behaviour. 
The first chapter analyses the problem of price discrimination in the 
electricity sector. The three types of discrimination usually identified in 
economic theory are presented. It is concluded that all three are relevant 
to an analysis of the electricity sector. The chapter also draws a 
distinction between the regulated and non-regulated markets-, it argues that, 
while the regulated market is at present the natural framework for examining 
discrimination issues in the electricity sector, there is also a need to look 
at any discriminatory practices resulting from normal economic behaviour. 
Such practices are a function of the type of competition prevailing on the 
IV.B. p.2 
434 
market. The electricity sector is, from this point of view and in present 
circumstances, relatively simple to deal with since the typical situation is 
that of a monopoly. There are various possible reasons for the 
discriminatory practices obtaining on the regulated markets. Among such 
practices, it is necessary to draw a distinction, as explicitly recognized in 
US regulatory practice, between justified and unjustified discrimination. 
Justification is based on an improvement in economic efficiency, and any 
discrimination that does not bring about any such improvement is regarded as 
unjustified. Applying those concepts, the study of discrimination can thus 
be broken down into five topics, each involving a particular characterization 
of discriminatory practices. The first topic relates to the legal 
characterization of discrimination, which might be different from the 
characterization usually applied in economics. This law-related topic is not 
dealt with in the report. The second topic is the economic characterization 
of discriminatory practice in the electricity sector. Such characterization 
calls for a definition of the goods and their variants and of the cost 
concepts applied. The third and fourth topics relate to the characterization 
of discrimination resulting from normal economic behaviour and from regulated 
behaviour respectively. As far as the fourth topic is concerned, the 
question of the level of discrimination that can be justified by an 
improvement in economic efficiency is of particular importance. The fifth 
and final topic is the numerical characterization of the impact of 
discrimination in terms of economic efficiency (measured by a welfare 
function). By definition, this question involves case-by-case studies and 
cannot be dealt with here. It is concluded, however, that it should be 
possible for such studies to be carried out successfully in the electricity 
sector as long as one remains within the framework of normal economic 
behaviour under a monopoly and within the framework of regulated behaviour. 
The second chapter defines the market within which questions of 
discrimination and the cost concepts applicable for the purposes of the 
analysis are to be studied. So as to avoid any technical or mathematical 
discussion, the analysis is based exclusively on examples. It is important 
to note that, in most cases (interruptibiI ity defined in terms of power and 
energy being an exception), this does not restrict the general validity of 
IV.B. p.3 j -. -
4ôb 
the concepts. The concepts presented here on the basis of examples may be 
extended to actual cases applying appropriate calculation tools. The 
relevant market is defined as that for the supply of electricity and for 
electricity transmission services. Such supply and services are marketed in 
different variants. They may vary in terms of geographical location, volume, 
regularity and interruptibi Iity. They may be combined (supply including 
generation and transmission) or separate (transmission service separate from 
generation). Various cost concepts may be applied in attempting to justify 
price differences. The concepts of allocated, incremental and marginal costs 
are presented. 
The third chapter deals with the economic characterization of discrimination. 
While the concept does not pose too many difficulties for the stylized models 
that are usual in economic theory, application difficulties emerge once 
reference has to be made to real costs. The analysis is presented in terms 
of the different variants of supply and services established in Chapter 2. 
It makes use of the cost concepts introduced in that chapter. It is evident 
that conclusions as to the existence of discrimination may differ widely 
depending on the context within which the transactions have been concluded 
and depending on the cost concepts applied. Marginal costs lend themselves 
least well to the practice of discrimination. However, they raise questions 
of practical implementation, are sometimes difficult to interpret and are, in 
any event, difficult to verify. Incremental costs avoid some of these 
difficulties but introduce degrees of freedom that may be exploited for the 
purposes of discrimination. The characterization of discrimination thus 
poses questions as to the application of uniform cost-assessment methods. A 
minimum requirement is that any undertaking justifying price differentiation 
through incremental cost differences should be asked to demonstrate that it 
is applying a cost-calculation approach that is properly formalized and 
applied in a non-discriminatory manner to its various transactions. A better 
solution is to standardize the calculation of incremental cost at national or 
Community level. These remarks apply to an even greater extent to allocated 
costs. By definition, allocated costs lend themselves more easily to 
discriminatory practices. Unless it can be validated on the basis of other 
approaches (marginal or incrementaI cost), justification of price differences 
by differences in allocated costs is not economically sound. However, 
allocated costs do have a major advantage in that they are the most 
IV.B. p.4 436 
easily verifiable on the basis of accounting information. Here too, a 
minimum requirement seems to be that any justification of price differences 
based on differences in allocated costs should derive from a formalized 
procedure applied in a non-discriminatory manner. The ideal situation would 
be for cost-allocation procedures to be standardized to some extent as 
between undertakings in the member countries. 
The fourth chapter looks at the characterization of discrimination resulting 
from normal economic behaviour, and regulated behaviour. Normal economic 
behaviour covers a vast range of potential discrimination. In practice, if 
recourse to normal economic behaviour is not to be used to explain 
practically any type of discrimination, it is important to characterize, both 
legally and through statistical assessments of welfare, discrimination which, 
although compatible with normal economic behaviour, constitutes an abuse of a 
dominant position. The concept of excessive prices could considerably 
facilitate such characterization. 
Similarly, regulated behaviour may cover a vast range of discriminatory 
practices. Here again, it seems essential to be able to characterize either 
legally or through statistical assessments of welfare regulatory requirements 
that may be acceptable. Within such acceptable regulatory requirements, 
discriminatory practices must be justifiable in terms of economic efficiency. 
This may be partially achieved on the basis of non-statistical analyses. 
<T4> Summary of studies not intended for publication 
<T5> Study on consumer electronics prices 
37. This study was carried out by the International Economics Research 
Centre of the University of Sussex (United Kingdom). The study was a 
combination of data sources to compare EC prices of several consumer 
electronics products: CD players, colour TV sets, video cameras and video 
cassette recorders. The main conclusion of the study is that there are 
significant price differences for some individual products from market to 
market and that certain EC markets seem to have markedly higher prices than 
IV.B. p.5 
437 
other markets. On the other hand, prices seemed to display considerable 
convergence on average if one considers only France, Germany and the United 
Kingdom. Although the study is not a complete survey, it presents an 
illustration of price differences and the problems of measuring them. 
The study covers the United Kingdom, France and Germany quite extensively and 
it also includes information on certain European countries: the Netherlands, 
Denmark, Belgium, Spain, Greece and Italy as well as Japan. 
In the United Kingdom, France and Germany, it was not easy to find evidence 
of significant price variations (VAT included) for those products for which 
identical models were on sale in several countries. However, for some 
models, prices differed significantly across these three countries. Some of 
the evidence suggests that for radio cassette players, prices were higher in 
France than in the other two countries. Exchange rates in Autumn 1992 raised 
French prices to above 20% above UK prices. 
The relative similarity in prices among these three Member States did not 
extend to the whole Community. 
In Italy, Greece, Denmark and (to a lesser extent) Spain prices were often 
significantly higher than in France, Germany and the United Kingdom. Denmark 
for instance shows prices 50% higher for VCRs, radio cassette players and TV 
sets, although Danish VAT rates are not so much higher. 
Within this pattern, at the level of average prices, there were a number of 
individual differences for some models. Price differentials emerged at the 
brand level. For instance, some brands appeared to be relatively more 
expensive in certain markets even where the general level of prices in those 
markets might not have been exceptional. 
Very crude sampling of prices in the Japanese market did not appear at first 
sight to indicate that many EC items were dearer in Japan than in the EC. 
The study has also pointed out some technical problems establishing price 
comparisons. For instance, technical differences were rife in all products 
except pure audio, and since identical models were not always available, the 
exact price equivalencies were not easy to establish. Moreover, differences 
IV.B. p.6 438 
on guarantee terms added further complications. Also, figures for average 
differences between markets will be very sensitive to the sampling approach 
and the method of averaging. 
<T5> Cost allocation and cross-subsidies 
38. The study examines the issue of cross subsidies between different 
activities within one enterprise and which have consequences for competition 
policy. 
Cross subsidies, within an enterprise, can arise where costs are common to 
two or more activities. The allocation of such costs between these activities 
can have an influence on the process of competition. Similarly, cross 
subsidies can arise in the context of monopoly power. In such circumstances a 
monopolist who also operates in a competitive market may be able to absorb 
some of the costs of the latter in the monopoly sector and so distort 
competition in the competitive sector. A monopolist can also be in a position 
where there are substantial common costs. 
These matters are of particular interest to competition authorities 
especially where exclusive rights are being withdrawn from monopolists, 
allowing for competitive entry to previously closed markets. 
When a monopolist cross subsidises competitive activities from monopoly 
activities there is a clear problem for competition policy. However, the 
existence of common costs resulting from shared assets can give rise to 
productivity gains. Nevertheless, competition issues can ensue where there is 
an inappropriate allocation of costs. 
39. The study examines three methods for the allocation of costs in these 
circumstances. These three methods are: Fully Distributed Cost, Incremental 
Cost, and Stand Alone Cost allocation, each of which can be used to identify 
cross subsidies. Each of these methods is sensitive to bases on which they 
are made. Typically enterprises make choices between these three methods and 
much depends upon the information they wish to generate, the market context 
of enterprise concerned and the regulatory environment. 
IV.B. p.7 
439 
40. State-owned network frequently have weak cost accounting systems. This 
situation will change as markets are liberalised. When such a state 
enterprise is privatised the accounting for cross subsidy issue becomes more 
important as the enterprise seeks to eliminate any redistributional cross 
subsidy or uses cross subsidies as a barrier to entry. In some instances this 
type of enterprise has accounting systems imposed upon them by a national 
regulatory authority. 
41. The study emphasises the link between pricing principles and accounting 
systems for common costs and cross subsidies in networks. This is especially 
the case where constraints have been imposed on pricing e.g. 'universality', 
'affordable prices' or 'geographic averaging'. The study recognises, in these 
circumstances, the possibility of contradictions where such networks face 
competitive new entrants. 
42. The study demonstrates the importance of the cross subsidy and cost 
allocation issue to the Single Market. Economic integration could be 
influenced by the response to these issues in sectors such as energy and 
telecommunications. Consequently, tackling these issues is deemed to be an 
important policy issue. 
43. Some possible policy solutions to the accounting and cross subsidy 
problems are suggested and examined. Structural separation of the relevant 
activities would provide a solution but at the cost of lost economies of 
scope. Equally, the detailed regulation of accounting systems would offer a 
solution but again this would impose costs on the economy. 
44. The results of the study suggest that the best policy would be to resort 
to broad statements of principle and to place upon the enterprises concerned 
the obligation to maintain management accounting records of a nature 
sufficient to enable it to demonstrate that its conduct does not infringe 
these principles. The study argues that once these broad principles have been 
established, they should be supported by a survey of allocation methodologies 
in place, by the further development of the 'market economy investor 
principle' and by the application of the competition rules. 
IV . B . p . 8 
440 
<T4> Confidential studies 
Study of the restructuring plan for the Spanish integrated steel company 
CSI . 
Study of the restructuring plan for the Spanish special steels company 
Sidenor. 
Study of the shipbuilding market 1993. 
Planned capacity reductions in former GDR shipyard. 
Examen des pratiques de la gestion collective des droits afférents à la 
cablodistribution en Belgique. 
IV.C. p.1 
441 
<T9> C. Statistical note on concentration operations notified under 
Council Regulation (EC) No 4064/89 
<T3> §1. Introduct ion 
45. Council Regulation (EEC) No 4064/89 on the control of concentrations 
entered into force in September 1990. In line with the practice established 
by the two previous competition reports the Commission has prepared a 
detailed statistical analysis of the cases dealt with in the appl ication of 
the Regulation to September 1993. For the purposes of consistency the same 
methodology as used last year has been followed. 
46. The tables presented below give a statistical description of the cases 
classified according to the type of concentration, the geographic dimension, 
the economic sectors involved and the nationality of the firms concerned. 
47. Cases officially notified to the Commission but not falling within the 
scope of the Regulation have been excluded. Cancelled or withdrawn 
notifications have also been omitted. 
48. The cases have been grouped into three periods of time (1990/91, 1991/92 
and 1992/93). Each group covers notifications (or decisions) made in the 
period from 21 September to 20 September of the following year. This 
grouping, which is determined by the date of entry into force of the 
Regulation, does not coincide exactly with the periods used in part A of this 
annex. 
<T3> §2. Type of operation and geographic dimension 
of the concentrations (Table 1) 
49. Table 1 shows the breakdown of the operations that took place in 1990/91, 
1991/92 and 1992/93 by type of operation and by geographic dimension. 
50. There are six different types of concentration. 'Majority acquisitions' 
represents cases where one or more undertakings purchase securities or assets 
by contract or by other means, thereby acquiring direct or indirect control 
iv.c. p.2 442 
of the whole or parts of one or more undertakings. However, those cases where 
the acquisition takes place under the form of a public offer for the 
securities of the acquired company have been excluded from the 'majority 
acquisitions' heading. Public-bid cases have been further divided into those 
in which the bid has been contested by the acquired firm and those in which 
the bid was commonly agreed. The group 'Others' includes a cross-shareholding 
deal in both 1990/91 and 1992/93 and one demerger case in 1991/92. 
51. With respect to geographic dimension, the same four groupings as last 
year have been used : national deals, which are those involving two or more 
companies from the same country (not necessarily a Member State), operations 
of Community dimension which are those involving companies of at least two 
different Member States, the third category which includes deals between at 
least one Community company and at least one company from a non-Member State 
and lastly, extra Community deals which involve only companies from at least 
two different non-EC countries without the participation of any company from 
any Member State. 
52. In 1992/93 the total number of cases falling under the Regulation was 
somewhat down on the total in the previous year (52 compared 57 cases). This 
is perhaps not surprising in the less positive economic climate, currently 
preva iIing. 
53. Joint ventures and the acquisition of a majority holding were again by 
far the most common type of concentrations and represented respectively 51 % 
f 
and 35 % of total cases notified in 1992/93. It would appear that the marked 
increase in the percentage of joint venture cases that occurred in 1991/92 
compared to 1990/91 (49 % compared 32 %) has now stabilised at a level of 
around 50 % of all cases, since the 1992/93 figure shows only a marginal 
increase (ie. 51 %). For the other types of concentration, namely agreed and 
contested public bids, mergers and other, the number of cases remains small 
and is comparable to the position in previous years. 
54. With regard to the geographic dimension of the operations, the most 
remarkable feature of this year's statistics would seem to be the substantial 
increase in operations of a pure Community dimension not involving non-EC 
companies. In 1991/92, these operations represented 33 % of the total but in 
1992/93 this rose to over half of the total (51 %). This is an indicator of 
increasing cross-border integration within the Community. The counterpart to 
«v.c. p.3 44 3 
the increase in purely Community operations was a strong decrease in the 
number of deals concerning Community and non-EC companies. The total number 
of such operations fell from 20 in 1991/92 to only 10 in 1992/93. 
<T3> §3. Economic sectors of the operations (Table 2) 
55. Notified cases are classified by NACE code of the main economic activity 
of the concentration resulting from the operation. This sectorial breakdown 
is further analysed by the geographic dimension of the concentration. 
56. In 1992/93 there was a larger number of cases in the service sector 
compared to manufacturing as a whole. This reverses the position observed in 
the two previous years. Whilst manufacturing activities, namely the broad 
categories 1, 2 and 3 of the NACE classification, accounted for 62 % and 58 % 
of total operations in 1990/91 and 1991/92 respectively, these 
classifications accounted for less than half of all operations notified (23 
deals corresponding to 44 %) in 1992/93. The increase in activities in the 
service sector is largely explained by the sharp rise in the number of 
operations in real estate, computer and professional services, as well as the 
maintained high number of concentrations in transport, community and 
financial services. In 1992/93 there were 9 cases in the former sector 
compared to only 3 in the previous year, whereas the latter was the sector 
with the highest number of operations in 1992/93 and experienced a total of 
13 cases. 
<T3> §4. Operations by nationality of the companies involved (Table 3) 
57. Table 3 includes information regarding the nationality of the firms 
involved in the operations. Given that two or more companies of the same or 
different national origin can be involved in the same deal, this information 
can be presented in different ways. To simplify the analysis and facilitate a 
comparison over the last three years, a breakdown by nationality of the 
companies involved in the operations falling under the Regulation is 
IV.C. p.4 444 
presented in Table 3. Countries are ranked according to the frequency of 
companies with the corresponding nationality and are divided in two groups : 
Member States and non-Member States. 
58. As can be expected on general grounds, there is a relatively strong 
correlation between frequency of company nationality and the economic size of 
the corresponding country. The five larger Member States head the list for EC 
countries and the United States has the greatest number of mentions for non-
EC countr ies. 
59. In 1992/93, as was the case in 1990/91 and 1991/92, France, Germany and 
the United Kingdom had the largest number of cases. French companies were 
again particularly active in mergers and acquisitions in 1992/93 and over the 
three years they have the largest number of mentions (80 mentions) compared 
to United Kingdom (64 mentions) and Germany (59 mentions). Italian and 
Spanish companies figure less strongly in the list in 1992/93 compared to 
1991/92 (8 and 5 mentions respectively compared to 16 and 11 for the previous 
year). Companies from the Netherlands were relatively more active in 1992/93 
with 8 mentions compared to only 3 in 1990/91 and 1991/92. 
<T3> §5. Analysis of cases leading to a decision under Article 8(2) 
or Art icle 8(3) (Table 4) 
60. Table 4 provides detailed information on the individual decisions taken 
under Article 8(2) and 8(3) of the Regulation. Although most of the notified 
cases falling under the scope of the Regulation are cleared with the usual 
one month deadline by means of an Article 6(1)(b) decision, where the 
proposed operation raises serious doubts with regard to its compatibility 
with the common market, the Commission will open a more exhaustive second 
stage of analysis by means of an Article 6(1)(c) decision. This procedure is 
normally^1) terminated by means of an Article 8(2) or Article 8(3) decision. 
61. The number of cases leading to an Article 8 decision are relatively few 
in number to allow a large number of general conclusions to be drawn. 
Nevertheless, the number of cases leading to second stage proceedings appears 
(1) This was in fact the rule for all but one operation. This operation 
concerned case No IV/M.238 - Siemens/Philips, where the parties withdrew 
their notification after the Commission had decided to initiate second 
stage proceedings. 
IV.C. p.5 445 
to be relatively stable at about 4 cases a year (4 in 90/91, 3 in 91/92 and 4 
in 92/93). This corresponds to somewhat less than 10 per cent of all cases 
falling under the Regulation. However, it should be noted that these 
statistics only take account of cases closed within the year under review and 
that towards the end of the year 1992/93, the Commission opened second stage 
proceedings in three other cases which will appear in the statistics for 
1993/94. 
62. Examination of the individual decisions in Table 4 show that relatively 
few cases involve joint ventures (only 2 out of 11 cases) and that with one 
exception all cases involved the manufacturing sector. 
IV.C. p.6 446 
Table 1 Operations by type of concentration and geographic dimension 
Type of concentration 
Acquisition of majority 
ho Id i ng 
Agreed pub Iic bid 
Contested public bid 
Joint venture/Control 
Merger 
Other 
Total 1990/91 
A B C D Total 
5 11 8 2 26 
1 1 
0 1 
7 5 0 
0 
2 
0 
0 0 10 1 
7 18 16 6 47 2 
1 2 
1 15 
1 1 
Type of concentration A 
Acquisition of majority 
holding 3 1992/93 
BCD Tota 
Agreed pub Iic bid 1 
Contested public bid 0 
Joint venture/Control 5 
Merger 1 
Cross shareholding 0 
Acquisition of minority 1 
Total 11 26 11 9 
1 
0 
15 
1 
0 
0 0 19 
1 3 
0 0 
2 26 
0 2 
1 1 
0 1 
4 52 1991/92 
A B C D Total 
6 6 
0 2 
0 0 
3 10 
1 0 
0 1 0 
10 19 20 1 22 
0 3 
0 1 
6 28 
1 2 
0 1 
8 57 
A= national, B= Community, C= Community plus non-EC, D= extra-Community 
Source: MTF Database. 
IV.C. p.7 447 
Table 2 Operations by economic sector and geographic dimension 
NACE code 1990/91 
A B C D Total 
1. Food, textiles and 2 12 0 5 
clothing 
2. Wood, paper, refining 3 6 1 1 11 
chemicals, metal k 
machinery 
3. Elect, and transport 2 3 6 2 13 
equipment k furniture 
4. Public utilities and 0 10 0 1 
construct ion 
5. Wholesale, trade 0 4 10 5 
hotels & restaurants 
6. Transport, commun. 0 3 0 2 5 
k financial services 
7. Real estate, computer 0 0 5 0 5 
services and prof. 
services 
8. Education and public 0 0 0 0 0 
health 
9. Community, social 
and personal serv. 
Total 0 0 112 
7 18 16 6 47 1991/92 
A B C D Total 
0 2 114 
3 5 7 3 18 
2 2 5 2 11 
10 0 0 1 
2 5 10 8 
1 4 5 2 12 
1 1 1 0 3 
0 0 0 0 0 
0 0 0 0 0 
10 19 20 8 57 1992/93 
A B C 0 Total 
0 13 15 
4 3 5 0 12 
0 5 10 6 
0 10 0 1 
0 5 10 6 
3 8 0 2 13 
4 3 119 
0 0 0 0 0 
0 0 0 0 0 
11 26 11 4 52 
A= national, B= Community, C= Community plus non-EC, D= extra-Community 
Source: MTF Database. 
IV.C. p.8 
448 
Table 3 
France 
United Kingdom 
Germany 
Italy 
Spain 
Netherlands 
Be I g i urn 
Portugal 
Denmark 
Ireland 
Luxemburg 
Greece 
USA 
Sweden 
Switzerland 
Japan 
Canada 
South Afr ica 
Kuwa i t 
Australia 
Austr ia 
Finland 
Hong Kong 
New Zealand 
Virgin Island Operations by nationality of the companies involved 
1990/91 
27 
16 
14 
6 
5 
3 
1 
14 
3 
5 
5 
1 1991/92 
23 
31 
25 
16 
11 
3 
5 
1 
2 
13 
12 
6 
2 
2 
2 
1 
1 1992/93 
30 
17 
20 
8 
5 
8 
4 
3 
2 
1 
1 
Total companies 101 
Total operations 47 TOTAL 
80 
64 
59 
30 
21 
14 
10 
4 
4 
1 
1 
0 
34 
17 
17 
8 
5 
4 
2 
159 
57 119 
52 
Table 4 Breakdown of final decisions resulting from proceedings Initiated under Article 6(l)(c) of Council Regulation 4064/89 
No of cases 
Type of 
operation 
Geographical 
Dimension 
NACE code 
Nationality 
of firms Involved 1990/91 
Article 8(2) decisions 
With condition 
3 
Acquisition of 
majority (2) 
Joint venture/ 
control (1) 
Nat. (1) 
Comm. (2) 
31 (2) 
32 (1) 
French/ltalIan 
(2) 
German/German Without conditions 
1 
Acquisition of 
majority 
Extra-EC 
29 
Swedish/Swiss Article 8(3) decisions 
0 1991/92 
Article 8(2) decisions 
With conditions 
2 
Agreed bid 
Contested bid 
Community (1) 
Community/ 
non EC (1) 
159 
55 
Belgian/French 
French/Swiss Without conditions 
0 Article 8(3) decisions 
1 
Acquisition of 
majority 
Community/non-EC (1) 
35 
Canadian/French/ 
Ital ian < 
b 
CO 
4^ 
No of cases 
Type of 
operation 
Geographlca 
Dimension 
NACE code 
Nationality 
of firms Involved ' 1992/93 
Article 8(2) decisions Article 8(3) decisions 
With condition Without conditions 
2 1 0 
Acquisition of Joint venture/ 
majority (1) control 
Merger (1) 
National National 
Comm./non-EC 
211-247 272 
Dutch/Dutch/ German/German 
Dutch 
EnglIsh/American < 
o 
o 
NACE codes 
159 Mineral water 
29 Manufacturing of machinery and equipment N.E.C. 
31 Manufacturing of electrical machinery and apparatus N.E.C. 
32 Manufacturing of radio, television and communications equipment 
35 Manufacturing of other transport equipment 
55 Hotels and Restaurants 
211 Paper 
247 Manufacturing of nylon fibres 
272 Steel tubes 
Source: MTF Database. 4^ 
o 
V.C. p.11 45 1 
Table 5: Initiation of proceedings under Article 6(1)(c) 
1990/91 1991/92 1992/93 
No of cases 
Type of operation 
Geographical 
dimension 
NACE codes 
Nationality Acquisition of 
majority (4) 
Joint venture/ 
Control (1) 
National (1) 
Community (2) 
Commun i ty/non— 
Community (1) 
non-Commun i ty/ 
non-Community (1) 
314 (2) 
32 
295 
353 
Ge rman/Ge rman 
French/ltalian (2) 
F rench/CanadI an/ 
I ta M an 
Swiss/Swedi sh Aquisition of 
majority (1) 
Joint venture/ 
Control (1) 
Agreed Bid (1) 
Contested Bid (1) 
National (1) 
Community (1) 
Commun i ty/non— 
Community (2) 
55 
159 
247 
272 
Ge rman/Ge rman 
French/Belgian 
Swiss/French 
Ame r i can/EngIi sh 
159 Mineral water 
211 Paper 
241 Potash products 
247 Manufacturing of nylon fibres 
261 Flat glass 
272 Steel tubes 
295 Packaging machines and foodstuffs 
314 Manufacturing of accumulators, cells and primary batteries 
353 Manufacturing of aircraft and spacecraft 
55 Hotels and restaurants Acquisition of 
majority (1) 
Joint venture/ 
Control (2) 
Merger (1) 
National (2) 
Community (2) 
211 
241 
261 
272 
Ge rman/Ge rman 
Dutch/Dutch/Dutch 
Ge rman/F rench/ 
I ta Iian 
English/Italian 
ISSN 0254-1475 
OM(94) 161 final 
DOCUMENTS 
EN 08 
Catalogue number : CB-CO-94-174-EN-C 
ISBN 92-77-67851-8 
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