WRITTEN QUESTION E-1628/98

by Amedeo Amadeo (NI) to the Commission

(27 May 1998)

Subject: Twenty-sixth report on competition policy

With regard to the Twenty-sixth report on competition policy (1996) (SEC(97) 628 final, CES 1381/97), can the Commission take appropriate measures with regard to the CEEC countries and Cyprus to ensure that before accession all the candidate countries are implementing the policies of the Union with regard to competition and State aids?

Answer given by Mr Van Miert on behalf of the Commission

(15 July 1998)

The Europe agreements with nine of the ten Central and Eastern European countries (CEEC) (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic) and the interim agreement with Slovenia contain competition rules that apply where trade between the Community and a CEEC is affected. In particular, the following are deemed to be incompatible with the proper functioning of the agreement: (i) agreements between undertakings which have as their object or effect the restriction of competition; (ii) abuses by undertakings which have a dominant position on the market; (iii) any public aid which distorts or threatens to distort competition. These competition rules are to be interpreted in accordance with the criteria arising from the application of Articles 85, 86 and 92 of the EC Treaty.

The association council has adopted the necessary rules for the implementation of the above competition rules applicable to undertakings for Bulgaria, the Czech Republic, Hungary, Poland and the Slovak Republic. Identical rules in relation to the other CEECs are currently passing through the legislative process. According to these implementing rules, cases are dealt with by the Commission on the Community side, and by the national competition authorities of each CEEC in accordance with the respective legislation of the Community and each CEEC.

However, the national competition legislation of the CEECs must be made compatible with Community competition law. The Europe agreements provide that a major pre-condition for the CEECs' economic integration into the Community is the approximation of their existing and future legislation to that of the Community. The rules on competition are expressly mentioned as a particular area for approximation. The Commission is closely following and supporting, in particular through various technical assistance and training actions, the process of approximation of legislation.

In the field of state aid, the process for the final adoption of implementing rules by the association council is underway. According to these rules, the Commission checks the compatibility of state aid granted by the Member States on the basis of the existing Community rules on state aid. For each CEEC, a national monitoring authority has to monitor and review any public aid granted by the same CEEC, on the basis of the same substantive rules.

The Community or a CEEC may take appropriate measures after consultation within the association council, if it considers that a particular practice is incompatible with the competition rules of the Europe agreement, and is not adequately dealt with under the implementing rules, or in the absence of such rules, and if such practice causes or threatens to cause serious prejudice to the interest of the other party or material injury to its domestic industry. In the field of state aid, such measures must be adopted in accordance with the procedures and under the conditions laid down by the General agreement on tariffs and trade (GATT).

The Protocol laying down the conditions and procedures for the implementation of the second stage of the agreement establishing an association between the Community and Cyprus and adapting certain provisions of the Agreement(1) contains the main substantive competition rules that apply concerning trade between the Community and Cyprus. They cover agreements between undertakings which restrict competition; abuses by undertakings having a dominant position on the market and any state aid which distorts competition. These provisions are to be interpreted in accordance with the principles set out in Articles 85, 86 and 92 EC Treaty. No detailed rules have yet been adopted for the application of the competition principles in relation to Cyprus. In case of anti-competitive behaviour or practices applied in Cyprus, the Community may take appropriate measures after consultation within the association council.

The Protocol does not provide as clear a legal base for the requirement of approximation as that found in the Europe agreements. However, it is clear from the conclusions of the Luxembourg European Council of 12 and 13 December 1997 that the requirement that Cyprus approximate its competition law to Community competition law is a major precondition for Cyprus' integration into the Community.

(1) OJ L 393, 31.12.1987.