Report from the Commission to the Council and the European Parliament on the application of the Agreement between the European Communities and the Government of the United States of America regarding the application of their competition laws (1 July 1996 to 31 December 1996)
Date: 1997-07-04
Institutions: European Commission
Subjects: United States, competition law, cooperation agreement (EU), economic concentration, exchange of information

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  04.07.1997 
COM(97)  346  final 

REPORT FROM THE COMMISSION  TO THE COUNCIL 
AND THE EUROPEAN  PARLIAMENT 

ON THE APPLICATION OF THE 

Agreement between 
the European Communities and 
the Government of the United States of America 
regarding the application of their competition laws 

1 July 1996 to 31 December 1996 

REPORT  ON  THE APPLICATION OF THE EC/US  AGREEMENT 

PAGE  I 

COMMISSION REPORT TO 
THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON THE APPLICATION OF THE 

Agreement between 
the European Communities and 
the Government of the United States of America 
regarding the application of their competition laws 

1 July 1996 to 31 December 1996 

1. 

INTRODUCTION 

On 23 September  1991 the Commission concluded an Agreement with the Government of 
the  United  States  of  America  regarding  the  application  of  their  competition  laws1  ("the 
Agreement").  By  a joint  decision  of  the  Council  and  the  Commission  of  10  April  19952  the 
Agreement  was  approved  and  declared  applicable  from  the  date  it  was  first  signed  by  the 
Commission. 

On  8  October  1996 the  Commission  adopted  the first report  on  the  application  of  the 
Agreement for the period  10 April  1995 to 30 June 19963.  This present report completes the 1996 
calendar  year,  covering  the  period  of  1 July  1996  to  31  December  1996  and  is  intended  to 
supplement the first report.  It was decided to report on this relatively short period of six months so 
that in subsequent years it will be possible to report on the same calendar year as the Annual Report 
on Competition Policy. 

This report  should be read in conjunction  with the first report which sets out in detail the 

main provisions of the Agreement and the advantages and limitations of cooperation. 

Agreement between the Government of the United States of America and the Commission 

1 
of  the European Communities  regarding the application  of  their competition  laws (OJ  L  95, 
27.4.95, pp.47 - 50). 
2 
3 

See OJ L 95, 27.4.95, pp.45 and 46. 
Com (96)479final. 

R E P O RT  ON  THE  APPLICATION  OF  TÎ m  EC/US  AGREEMENT 

P A GE  ?. 

2. 

COOPERATION UNDER THE AGREEMENT 

2.1 

Notifications 

2.1.1  Number of cases notified. 

Notifications  were made by the Commission  to the US  authorities  in twenty-seven  cases 
during the period between  1 July  1996 and 31 December  1996  These cases, divided into merger 
and non-merger cases, are listed in Annex 1.  Of the twenty-seven cases notified by the Commission 
eighteen were merger cases. 

During the same period, the Commission received notifications from the US authorities in 
twenty-one cases, ten from the Antitrust Division of the US Department of Justice ("the BoJ") and 
eleven from the Federal Trade Commission ("the FTC").  These cases, in so fer as they have been 
made public by the US authorities, are listed in Annex 2 and again are divided into merger and non-
merger cases.  Of the twenty-one cases notified  by the US agencies to the Commission  seventeen 
were merger cases. 

The figures given  represent  the  number  of  cases  in which  a first  notification  took  place 
during the period under review and not the total number of notifications.  Under Article II of the 
Agreement, notifications  are made at a number of specified  stages and so several notifications  may 
be made concerning the same case. 

Table  1 sets  out  in figures the  notifications  made under  the  Agreement  and  the  OECD 
Recommendation during the six month period of  1  July  1996 to 31 December  1996.  Table 2 sets 
out in figures the notifications  made under the Agreement and the OECD Recommendation  since 
23 September 1991. 

Table 1 

NOTIFICATIONS 

Year 

No. of EC 
notifications 

No. of US 
notifications 
DoJ 
FTC 

No. of Merger 
notifications 

1/7/%- 
31/12/96 

27 

11 

10 (=21) 

18(EC) + 17(US) 

A distinction has not been made between notifications  made under the 1991 

4 
Agreement and those made under the Revised OECD Recommendation of 27 & 28 July 1995 
due to the partly overlapping nature of these two instruments. 

REPORT ON THE APPLICATION OF THE EC7US AGREEMENT 

PAGE  3 

Table 2 

Year 

No. of EC 
notifications 

1991 

1992 

1993 

1994 

1995 

1996 

5 

26 

44 

29 

42 

48 

No. of US 
notifications 
FTC  DoJ 

10 

20 

22 

16 

14 

20 

2  (=12) 

20 (=40) 

18 (=40) 

19 (=35) 

21(=35) 

18 (=38) 

No. of Merger 
notifications 

3(EC) + 9(US) 

11(EC) + 31(US) 

20(EC) + 20(US) 

18(EC) + 20(US) 

31(EC)+18(US) 

35(EC) + 27(US) 

2.1.2  Notifications  to the Member  States. 

To  ensure  that  Member  States  are  kept  duly  informed  the  Commission  has  continued  to 
send  copies  of  notifications  received  from  the  US  authorities  and  notifications  sent  by  the 
Commission  to  any  Member  State  whose  interests  are  affected.  The  Commission  also  informs 
interested Member  States of any cooperation that has occurred  in an individual case and the  nature 
of that  cooperation. 

2.2 

Cooperation 

Cooperation  between  the  Commission  and  its  counterparts  in  the  United  States  has 
continued to be very positive and has contributed  greatly to the effective  resolution of a number  of 
cases. 

Due  to  the  short  period  of  time  under  review  many  of  the  cases  involving  cooperation 
under the Agreement are still ongoing and so cannot be discussed in detail or mentioned by name in 
this report. 

2.2.1 

Timing 

Contacts between the Commission and the US agencies are often  established at a very early 
stage where a common  interest has been identified.  It  is not unusual for  contacts to be  established 
even before  official  procedures have been activated  or a case opened.  Case handlers have found  it 
helpful  to be aware  of the other  authority's  intended  approach to  an individual  case right from the 
beginning.  The  authorities  have  also  continued  to  inform  each  other  on  the  timing  of  their 
respective investigations and procedures.  The advantages of this approach were outlined in the  first 
report  on cooperation  (paragraph 4.1). 

R E P O RT  ON  THE  APPLICATION  OF  THE EC/US  AGREEMENT 

P A GE  4 

2.2.2  Supply of non-confidential background information 

Non-confidential  information  supplied  by  both  parties  has  been  particularly  helpful  in 
drawing attention to possible anticompetitive behaviour.  The Commission has opened an ex-officio 
investigation under Article 85 in a high technology industry following the supply of non-confidential 
background information by the DoJ.  This information  included US media reports which were not 
readily available in Europe. 

For  the  first  time  under  the  Agreement  the  competition  authorities  have  commenced 
cooperation  in  a  cartel  investigation.  The  US  have  supplied  background  non-confidential 
information  on a cartel which they have already successfully  prosecuted.  Cooperation between the 
authorities is still ongoing.  This is an important development in particular due to the high pricrity 
given by both the Commission and the US agencies to the elimination of cartels.  However, where 
the US authorities have obtained a judgment  on the basis of a plea bargain only a severely limited 
amount of information  will have been made publicly available.  This restriction on the availability of 
information may limit the extent of cooperation. 

2.2.3  Mergers notified to both the Commission and the US authorities 

Proposed  mergers  which  were  notified  to  both  the  Commission  and  the  US  agencies 
provided  ample scope for  cooperation  and the exchange of opinions.  Two merger  investigations 
which  were  closed  in  the  period  under  review  and  which  provided  scope  for  cooperation  are 
Sandoz/Ciba-Geigy  and  Baxter/lmmuno.  Cooperation  occurred  despite  difficulties  encountered 
due to the different time scales in place in the US and in the EU and the existence, in some cases, of 
objectively  different  market  conditions  which  have  often  justified  different,  but  compatible, 
solutions. 

Cooperation in the Sandoz/Ciba-Geigy merger involved detailed discussions on the various 
product  markets in the areas of pharmaceuticals, animai health, crop protection and seeds, as well 
as on how  each  party  defined  the  geographical  markets.  Discussions  also  concerned  to  a large 
extent  the  terms  on which the  merger  could  be  approved.  The parties  granted  a waiver  for  the 
exchange of confidential  information  in certain sectors.  Contacts were regular and the discussions 
on settlement were of great importance in attempting to ensure that both the Commission and the 
FTC  sought  undertakings from the  parties  that  were  compatible.  Difficulties  arose  due  to  the 
different  time  scales  applicable  in the EC  and  the US.  The  Commission  was  obliged  under  the 
Merger  Regulation  to  come  to  a  decision  in  July  1996  while  the  FTC  did  not  conclude  its 
investigation until  3 January  1997 when it entered  into a consent  decree with the parties.  In the 
circumstances the agencies cooperated as best they could and in the final analysis the undertakings 
sought separately by both the Commission and the FTC are not contradictory. 

2.2.4  Allowing one authority to take the lead 

The investigation into the practices of AC Nielsen Company ("Nielsen"), a provider of retail 
tracking services, provides a clear example of successful  cooperation between the Commission and 
the US Department of Justice and anticipates a new pattern of cooperation.  Both the Commission 

REPORT  ON  TI IE  APIM.H 'ATION  OK THE  KCA is  AGREEMENT 

I'AHI; ;> 

and  the  DoJ  received  a  complaint  from  IRI  that  Nielsen  was  abusing  its  dominant  position  in 
Europe  and  thus  prevented  IRI  from  establishing  a  competitive  presence  there.  During  the 
investigation the case handlers from both authorities were in close contact, exchanging documents 
as well as points of view on different  aspects of the case.  The ability of the authorities to cooperate 
was greatly enhanced by the waivers which were obtained from both IRI and Nielsen permitting the 
exchange of confidential  information. 

As the complaint was primarily addressed to contractual practices implemented in Europe 
and had its greatest  impact within Europe, the DoJ let the Commission take the lead once it was 
confident  that it had a firm intention to act.  The Commission conducted negotiations with Nielsen 
to  arrive  at  an  acceptable  solution  ensuring that  competition was not  distorted.  At  every  stage 
during negotiations the DoJ was informed of progress and given an opportunity to comment on the 
undertakings  it  was  proposed  to  seek  from  Nielsen.  Once  the  Commission  had  secured  the 
necessary undertakings from Nielsen, the DoJ was able to conclude that the practices it had been 
investigating would not continue, and thus it closed its investigation. 

Although the US did not request the Commission to take action in the IRI/Nielsen case, the 
approach  taken  by  the  US  of  standing  back  and  awaiting  the  results  of  the  Commission's 
investigation may provide an example of how positive comity may operate in the future. 

3. 

NEW DEVELOPMENTS 

In light of the 1996 communication from the Commission to the Council entitled "Towards 
an  International  Framework  of  Competition  Rules"5  the  Commission  has  continued  to  seek  to 
strengthen  cooperation  between  competition  authorities  around  the  world  by  both  building  a 
network  of bilateral agreements and promoting common competition rules at the multilateral level 
in the WTO and OECD. 

On the 25th of October  1996 the Commission was granted  a mandate by the Council  to 
enter  into  negotiations  with  the  United  States  in  order  to  reach  an  agreement  which  would 
strengthen  the  positive comity  provisions of the  1991 bilateral  Agreement  on  cooperation  in the 
application of competition laws. 

Negotiations  have  been  extremely  productive  and  a  draft  Agreement,  provisionally 
approved by the US authorities, has been submitted to the EC Member States, industry and other 
interested parties to obtain their views.  It is expected that the Council, having received the opinion 
of the European Parliament, will approve the Agreement in the course of 1997. 

The draft  Agreement provides that a competition authority will normally defer  or suspend 
its  own  enforcement  activities  in  respect  of  certain  anti-competitive  activities  which  occur 
principally in and are directed principally towards the other Party's territory, where that other Party 
is prepared to deal with the matter. 

Com(96) 284  final 

REPORT ON THE APPLICATION OK THE KC/US AGREEMENT 

PAGE  6 

4. 

BILATERAL MEETING 

There  was  a  high  level  meeting  in  Washington  on  the  16th  of  October  1996  between 

officials from the Commission, the FTC and the DoJ. 

A number of wide ranging issues were dealt with during the bilateral  meeting, including, 
cooperation and notification issues, the draft Positive Comity Agreement, proposed amendments to 
policy and legislation, cartels, air transport, télécoms and media, the EU proposal in the WTO on 
competition  policy  and  the  New  Transatlantic  Agenda  and  Transatlantic  Business  Dialogue 
proposals on competition. 

5. 

CONCLUSIONS 

The Agreement  continues to provide a framework for  meaningful  and useful  cooperation 
between the Commission  and the United  States.  The cooperation  that was described  in the first 
report to the Council and the European Parliament has continued to bring benefits on both sides of 
the Atlantic.  Benefits, not only to the competition authorities but also to the companies involved. 
It  is everyone's  interest  that  compatible  solutions  be  found.  This  has been  particularly  true  in 
merger  cases,  where  parties  have  been  willing  to  grant  waivers  allowing  the  exchange  of 
confidential  information. 

In the IRI/Nielsen case it was clearly in the complainant's interest to facilitate  cooperation 
between  the  Commission  and the DoJ  to  ensure that  a remedy  was put  in place  as quickly and 
effectively  as possible.  It is interesting to note that it was also in the defendant  company's interest 
to avoid  lengthy  investigations  and the risk of incompatible  remedies being imposed  by both the 
In  this  instance  both  the  complainant  and  the  company  under 
Commission  and  the  DoJ. 
investigation granted waivers permitting the exchange of confidential  information. 

However,  while  a  good  deal  of  cooperation  can  take  place  without  the  exchange  of 
confidential  information,  in  cases  where  a  waiver  cannot  be  obtained,  the  effectiveness  of 
cooperation may be curtailed.  For example, difficulties  may arise in explaining the suitability of a 
particular remedy  if the confidential  information justifying  that  decision  cannot  be discussed.  At 
present  it  is  not  possible  for  the  Commission  and  the  US  authorities  to  exchange  confidential 
information  due to the existence of confidentiality  rules in domestic legislation.  Before  measures 
can be taken  to  remove these  legal  obstacles  to  the  exchange  of information,  it  is  necessary  to 
address  the  real  concerns  expressed  by  Member  States  and  the  business  community  on  the 
safeguards  which  could  be  provided  to  information  exchanged  under  a  future  cooperation 
agreement.  The Commission is at present studying the safeguards which can be provided under US 
law  and  the  possibility  of  overcoming  the  existing  obstacles  to  the  exchange  of  confidential 
information.  The  exchange  of  confidential  information  would  be  particularly  useful  in  the 
investigation of international cartels, where the companies involved are unlikely to grant waivers for 
the  exchange  of  confidential  information  and  problems  may be  encountered  in  the  collection  of 
incriminating evidence. 

REPORT ON THE APPLICATION OF THE EC/US AGREEMENT 

PAGE  7 

ANNEX 1 

NOTIFICATIONS BY THE EUROPEAN COMMISSION TO THE US  AUTHORITIES 
01.07.96 - 31.12.966 

Merger Cases: 

1. 

IV/M.747 - Chevron Corp/British  Gas/NOVA Corp./NGC Corp. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

IV/M.734 - Melitta /Dow - Newco 

IV/M.727 - BP/Mobil 

IV/M.774 - Saint Gobain / Wacker Chemie / NOM 

IV/M.800 - Siemens/Sommer Allibert Industrie 

IV/M.706 - GEC Alsthom/AEG 

IV/M.823 - John Deere Capital Corp/Lombard North Central pic 

IV/M. 829 - Thyssen / Bôhler Uddeholm 

IV/M. 821 - Baxter / Immuno 

10. 

IV/M.779 - Bertelsmann / CLT 

11. 

IV/M.836 - Gillette / Duracell 

12. 

IV/M. 826 - ESPN/STAR 

13. 

IV/M. 794 - Coca-Cola/Amalgamated Beverages 

14. 

IV/M. 841 - Lagardere / Thomson-CSF 

15. 

IV/M.865 - Cable & Wireless/Nynex/Bell Canada 

16. 

IV/36.213 - GEAE / Pratt & Whitney 

17. 

IV/M.773 - Westinghouse / Equipos Nucleares 

18. 

IV/M.862 - Textron / Kautex 

6 
which have been made public. 

Due to confidentiality  requirements, this list includes only those investigations or cases 

UI-PORTONTin-APPLICATION  oi'Tiiii  I'.C/US AtiRHHMHNT 

PAOH  H 

ANNEX  1 (continued) 

NOTIFICATIONS BY THE EUROPEAN COMMISSION TO THE US  AUTHORITIES 

01.07.96 - 31.12.96 

Non-merger cases: 

1. 

Air Transport  agreements 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

IV/35.134 - trans-Atlantic Conference  Agreement 

IV/35.962 - De Agostini - Rand McNally 

IV/4722, 33690 - Caterpillar 

IV/36.183/F-3 - Coca-Cola Enterprises Inc/Amalgamated Beverages Great Britain Ltd 

IV/D-5/35.935 - Murex/Chiron + 4 

IV/36.194 - Digital Video Discs 

IV/36.089 - British Airways / American Airlines 

IV730.373R-P&I Clubs 

RliPORT ON THK APPLICATION OF TMi KC/US AGIUiliMENT 

PAUK 9 

ANNEX 2 

NOTIFICATIONS BY US  AUTHORITIES TO THE EUROPEAN  COMMISSION 
01.07.96 - 31.12.967 

Merger  cases: 

1. 

Lucas Industries pic / Variety Corp. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Tilcon  Inc. / Oldcastle Northeast Inc. 

National  Medical Care Inc / Fresenius AG 

Metal Levé S.A. / Mahle GmbH 

KoJbenschmidt AG / T&N pic 

Soivay SA / American Home Products Corp. 

Immuno International AG / Baxter International Inc. 

General Electric Company / Pratt & Whitney / United Technologies Corp. 

Sandoz / Ciba-Geigy 

7 
cases which have been made public by the US authorities. 

Due to confidentiality  requirements, this list includes only those US investigations or 

RKPORT ON THE APPLICATION OF THIi KCAJS AGREEMENT 

PAGE  10 

ANNEX 2 (continued) 

NOTIFICATIONS BY US  AUTHORITIES TO THE EUROPEAN  COMMISSION 

01.07.96 - 31.12.968 

Non-merger cases: 

1. 

2. 

3. 

International Association of Conference  Interpreters 

Lykes Bros. Steamship Co Inc / Universal Shippers Association 

A&L Mayer Associates Inc 

B 
cases which have been made public by the US authorities 

Due to confidentiality  requirements, this list includes only those US investigations or 

ISSN 0254-1475 

COM(97) 346 final 

DOCUMENTS 

EN 

11  08  10 

Catalogue  number  :  CB-CO-97-339-EN-C 

ISBN  92-78-21982-7 

Office  for Official  Publications of the European Communities 

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