Proposal for a Council and Commission Decision on the position to be taken by the Community within the Association Council established by the Europe Agreement between the European Communities and their Member States of the one part, and the Republic of Lithuania, of the other part, signed in [...] on [...], with regard to the adoption of the rules for the implementation of Article 64 1(i), 1(ii) and 2 of the Europe Agreement
Date: 1998-03-04
Institutions: European Commission
Subjects: Association Council (EU), Lithuania, competition law, economic concentration, free-trade agreement

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 04.03.1998 
COM(1998) 119  final 

98/ 0075 (CNS) 

Proposal for a 

COUNCIL  AND COMMISSION DECISION 

on the position to be taken by the Community within the Association Council 
established by the Europe Agreement between the European Communities and their 
Member States of the one part, and the Republic of Lithuania, of the other part, signed 
in [...]  on [...], with regard to the adoption of the rules for the implementation of 
Article 64 l(i), l(ii) and 2 of the Europe Agreement 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

Article 64 (3) of the Europe Agreement between the European Communities and their 
Member  States,  of  the  one  part,  and  the  Republic  of  Lithuania,  of  the  other  part, 
signed  in  [...]  on  [...]  provides  that  the  necessary  rules  for  the  implementation  of 
paragraphs  1  and  2  of  that  Article  (i.e.  the  competition  provisions  applicable  to 
undertakings), shall be adopted by the Association Council within the time limit of 31 
December  1997.  The ratification  of the Europe Agreement with Lithuania is close to 
full  completion and its entry into force is foreseen by early 1998. 

The Free Trade Agreement with Lithuania entered into force  on  1 January  1995. The 
Joint  Committee under the Free Trade Agreement,  on its meetings  1 April  1996 and 
16  June  1997,  agreed  that  each  Party  would  start  procedures  for  the  adoption  of 
implementing rules for undertakings as provided in Articles 64 (1) (i) and (ii). 

The  competition  provisions  are  one  of  the  basic  points  of  the  Europe  Agreement 
between  the  European  Communities  and  Lithuania.  Their  actual  implementation, 
through the adoption of the attached rules by the Association Council, is a prerequisite 
for  the smooth development of trade relations between the two parties.  The proposed 
decision  lays down  procedures  for  cooperation  between  the two parties'  competition 
authorities.  It is confirmed  that the principles embodied  in the block exemption  rules 
in  force  in  the  Community  will  apply,  and  there  is  provision  for  a  consultation 
procedure within  the Association  Council  should  disagreement  arise between  the two 
competition authorities. 

According to Article 2 (1) of the Decision of the Council and the Commission of  [...] 
on  the  conclusion  of  the  Europe  Agreement,  the  position  to  be  taken  by  the 
Community within the Association Council shall be laid down in accordance with the 
corresponding  provisions  of  the  Treaties  establishing  the  European  Communities. 
Articles 87, 235 and 228 of the EC Treaty as well as Articles 65 and 66 of the ECSC 
Treaty are the appropriate legal basis for the position to be adopted by the Community 
in  the  Association  Council  with  regard  to  rules  for  the  implementation  of  the 
competition provisions applicable  to undertakings. As a result, it is desirable that the 
Council and the Commission should adopt the attached decision. 

It is therefore  proposed that the Council approves the attached proposal for a Council 
and Commission decision. 

oL 

Proposal for a Council and Commission Decision 

on the position to be taken by the Community within the Association Council 
established by the Europe Agreement between the European Communities and  their 
Member States of the one part, and  the Republic of Lithuania, of the other part, signed 
in [...]  on [...], with regard to the adoption of the rules for the implementation of 
Article 64 l(i), l(ii) and 2 of the Europe Agreement 

THE COUNCIL OF THE EUROPEAN UNION, 

THE COMMISSION OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing  the European Community, and in particular 
Articles 87 and 235  in connection with Article 228 paragraph 2, second sentence and 
paragraph 3, first section, 

Having  regard to the  Treaty  establishing  the  European  Coal  and  Steel  Community, 
and in particular Articles 65 and 66, 

Having  regard  to  the  Decision  of,the  Council  and  the  Commission  of  [...]  on  the 
conclusion  of  the  Europe  Agreement between the  European Communities  and their 
Member States, of the one part, and  the Republic of Lithuania, of the other part, and in 
particular Article 2 (1) thereof, 

Having regard to the Opinion of the European Parliament, 

Whereas pursuant to Article 64 (3) of the  Europe Agreement the necessary  rules for 
the  implementation  of  paragraphs  1 and  2  of  that  Article  shall  be  adopted  by  31 
December  1997 by an Association Council Decision. 

HAVE DECIDED AS FOLLOWS : 

The position to be adopted by the Community in the Association Council set up  under 
the Europe Agreement between the European Communities and their Member States, 
of  the one  part, and the Republic  of Lithuania, of the other part, with regard to the 
rules for the implementation of Article 64 l(i), l(ii) and 2 of the said Agreement shall 
be based on the draft Decision of the Association Council annexed to this Decision. 

Done at Brussels on, 

For the Council 

For the Commission 

Draft Decision N° 

/98 

of the Association Council between the European Communities and their Member 
States, of the one part, and the Republic of Lithuania, of the other part, of... 

adopting the necessary rules for the implementation of Article 64  l(i),  l(ii)  and 2 of 
the Europe Agreement between the European Communities and their Member States, 
of the one part, and the Republic of Lithuania, of the other part, 

THE ASSOCIATION COUNCIL, 

Having regard to the Europe Agreement between the European Communities and their 
Member States, of the one part, and the Republic of Lithuania, of the other part, and in 
particular Article 64 (3) thereof, 

Whereas pursuant to Article 64 (3) of the Europe Agreement the necessary rules for 
the  implementation  of  Article  64  (1)  and  (2)  thereof  should  be  adopted  by  the 
Association Council; 

HAS DECIDED AS FOLLOWS : 

Article  1 

The  necessary  rules  implementing  Article  64  l(i),  l(ii)  and  2  of  the  Europe 
Agreement between the European Communities and their Member States, of the one 
part, and the Republic of Lithuania, of the other part, as set out in the Annex to this 
Decision, are hereby adopted. 

Article 2 

The Decision shall be published in the Official  Journal of the European Communities 
and Valstybes Zynios (Lithuanian Official Journal). 

This Decision shall enter into force on the day of its adoption. 

Article 3 

Done at Brussels on, 

For the Association Council 

The President (s) 

4 

IMPLEMENTING  RULES FOR COMPETITION  PROVISIONS 
APPLICABLE TO  UNDERTAKINGS 

ANNEX 

Implementing  Rules  for  the  application  of  the  competition  provisions  applicable  to 
undertakings provided for  in Article 64 para,  li),  lii) and 2 of the Europe Agreement 
between the European Communities and their Member States, of the one part, and the 
Republic of Lithuania, of the other part : 

ARTICLE  1 : GENERAL PRINCIPLE 

Cases  relating  to  agreements  between  undertakings,  decisions  by  associations  of 
undertakings and concerted practices between undertakings which have as their object 
or effect  the prevention, restriction or distortion of competition as well as to abuses of 
a dominant position  in the territories of the  Community or of Lithuania as a whole or 
in  a  substantial  part  thereof,  which  may  affect  trade  between  the  Community  and 
Lithuania  shall  be  settled  according  to the principles  contained  in Article  64 para. 1 
and 2 of the Europe Agreement. 

For  this  purpose,  these  cases  are  dealt  with  by  the  Commission  of  the  European 
Communities  (DG  IV)  on  the  Community  side  and  the  State  Competition  and 
Consumer Protection Office  (SCO) on the Lithuanian side. 

The  competences  of the  EC  Commission  and  the  Lithuanian  State  Competition  and 
Consumer Protection Office  to deal with these cases shall flow from the existing rules 
of the respective  legislation  of the Community  and  Lithuania,  including  where these 
rules are applied to undertakings located outside the respective territory. 

Both  authorities  shall  settle the cases in accordance with their own substantive  rules, 
and having regard to the provisions  set out below.  The relevant  substantive  rules  of 
the  authorities  are  the  competition  rules  of  the  Treaty  establishing  the  European 
Community  as well  as the ECSC Treaty  including the competition-related  secondary 
legislation, for the EC Commission and the Law on Competition and relevant by laws, 
for the Lithuanian State Competition and Consumer Protection  Office. 

ECONOMIC ACTIVITIES UNDER THE EC TREATY 

ARTICLE 2 : COMPETENCE OF BOTH COMPETITION  AUTHORITIES 

Cases  under  Article  64  of  the  Europe  Agreement  which  may  affect  both  the 
Community  and the Lithuanian  market  and which may fall  under the competence  of 
both competition authorities shall be dealt with by the EC Commission and the  State 
Competition  and  Consumer  Protection  Office,  according  to  the  rules  under  this 
Article. 

r 

2.1 

Notification 

2.1.1  The  competition  authorities  shall  notify  to  each  other  those  cases  they  are 
dealing with, which, according to the general principle laid out in Article  1, appear to 
fall as well under the competence of the other authority. 

2.1.2.  This situation may arise in particular in cases concerning activities that : 

Involve anticompetitive activities carried out in the other authority's 
territory, 
Are relevant to enforcement activities of the other competition 
authority, 
Involve  remedies  that would  require or prohibit conduct  in the other 
authority's territory. 

2.1.3.  Notification under this article shall include sufficient  information to permit an 
initial  evaluation by the recipient party of any effects  on its interests.  Copies of the 
notifications shall be submitted on a regular basis to the Association Council. 

2.1.4.  Notification  shall be made in advance, as soon as possible and at the latest at 
the stage of an investigation still far enough in advance of the adoption of a settlement 
or decision, so as to facilitate comments or consultations and to enable the proceeding 
authority  to  take  into  account  the  other  authority's  views,  as  well  as  to  take  such 
remedial actions it may find feasible under its own laws, in order to deal with the case 
in question. 

2.2 

Consultation and Comity 

Whenever  the  EC  Commission  or the  State  Competition  and  Consumer  Protection 
Office  consider that anticompetitive activities carried out on the territory of the other 
authority are substantially affecting  important interests of the respective Party, it may 
request consultation with the other authority, or it may request that the other Party's 
competition authority initiate any appropriate procedures with a view to take remedial 
action under its legislation on anticompetitive activities.  This is without prejudice to 
any action under the requesting Party's competition law and does not hamper the full 
freedom of ultimate decision of the authority so addressed. 

2.3 

Finding of an Understanding 

The competition authority so addressed shall give full and sympathetic consideration 
to  such  views  and factual  materials as may be provided  by the requesting  authority 
and,  in  particular,  to  the  nature  of  the  anticompetitive  activities  in  question,  the 
enterprises involved and the alleged harmful  effects  on the important interests of the 
requesting Party. 

Without  prejudice  to  any  of  their  rights  or obligations,  the  competition  authorities 
involved  in  consultations  under  this  Article  shall  endeavour  to  find  a  mutually 
acceptable solution in the light of the respective important interests involved. 

G 

ARTICLE 3 :  COMPETENCE OF ONE COMPETITION AUTHORITY ONLY 

Cases falling under the exclusive competence of one competition authority, in 
3.1 
accordance with the principle laid down in Article  1, and which may affect important 
interests of the other Party, shall be handled having regard to the provisions set out in 
Article 2, and taking account of the principles set out below. 

3.2 
In  particular,  whenever  one  of  the  competition  authorities  undertakes  an 
investigation or proceeding in a case which is found to affect important interests of the 
other  Party,  the  proceeding  authority  shall  notify  this  case  to  the  other  authority, 
without formal request by the latter. 

ARTICLE 4 :  REQUEST FOR INFORMATION 

Whenever the competition authority of a Party becomes aware of the fact that a case, 
falling  also  or only  under  the  competence  of  the  other  authority,  appears  to  affect 
important interests of the first Party, it may request information about this case  from 
the proceeding authority. 

The proceeding authority shall give sufficient  information to the extent possible and at 
a  stage  of  its  proceedings  far  enough  in  advance  of  the  adoption  of  a  decision  or 
settlement to enable the requesting authority's views to be taken into account. 

ARTICLE 5 :SECRECY AND CONFIDENTIALITY OF INFORMATION 

Having  regard  to  Article  64  para.  7  of  the  Europe  Agreement,  neither 
5.1 
competition  authority  is  required  to  provide  information  to  the  other  authority  if 
disclosure  of that information to the requesting authority is prohibited by the law of 
the  authority  possessing  the  information,  or would  be  incompatible  with  important 
interests of the Party whose authority is in possession of the information. 

5.2.  Each  authority  agrees  ^o  maintain,  to  the  fullest  extent  possible,  the 
confidentiality  of any information provided to it in confidence by the other authority. 

ARTICLE 6 :  BLOCK EXEMPTIONS 

In the application of Article 64 of the Europe Agreement as provided for in Articles 2 
and 3 above, the competition authorities shall ensure that the principles contained in 
the block  exemption regulations  in force  in the Community  shall be applied  in  full. 
The  State  Competition  and  Consumer  Protection  Office  shall  be  informed  of  any 
procedure related to the adoption, abolition or modification  of block  exemptions by 
the Community. 

Where  such  block  exemption  regulations  encounter  serious  objections  on  the 
Lithuanian side, and having regard to the approximation of legislation as foreseen in 
the  Europe Agreement,  consultations  shall  take place  in the Association  Council,  in 
accordance with the provisions contained in Article 9. 

The same principles shall apply regarding other significant changes in the Community 
or Lithuanian competition policies. 

% 

ARTICLE 7 : MERGER CONTROL 

With  regard to mergers which  fall  within  Council  Regulation  (EEC)  n° 4064/89  on 
the  control  of  concentrations  between  undertakings1 and  which  have  a  significant 
impact on the  Lithuanian economy,  the State Competition  and Consumer  Protection 
Office  shall be entitled to express its view in the course of the procedure, taking into 
account  the time  limits  as provided  for  in the aforementioned  Regulation.  The EC 
Commission shall give due consideration to that view, without prejudice to any action 
under the Parties' respective competition laws.. 

ARTICLE 8 : ACTIVITIES OF MINOR IMPORTANCE 

8.1 
Anticompetitive  activities  whose  effects  on  trade  between  the  Parties  or  on 
competition  are  negligible,  do  not  fall  under  Article  64  para  1  of  the  Europe 
Agreement,  and therefore,  are not to be treated under Articles  2 to  6 of  the present 
implementing rules. 

Negligible  effects  in the sense of Article  8.1  are generally presumed to exist 

8.2 
when 

the  aggregate  annual  turnover  of  the  participating  undertakings  does 
not exceed ECU 200 millions, and 

the goods or services which are the subject of the agreement together 
with the participating undertakings' other goods or services which are 
considered  by  users to  be  equivalent  in view  of  their characteristics, 
price  and  intended  use,  do  not  represent  more  than  5% of  the  total 
market for  such goods or services  in the area of the common market 
affected  by the agreement,  and the Lithuanian market affected  by the 
agreement. 

ARTICLE 9 : ASSOCIATION COUNCIL 

9.1  Whenever the procedures provided for in Articles 2 an 3 above do not lead to a 
mutually  acceptable  solution,  as  well  as  in  other  cases  explicitly  mentioned  in the 
present implementing rules, an exchange of views shall take place in the Association 
Council at the request of one Party within three months following the request. 

9.2 
Following this exchange of views, or after expiry of the period referred to in 
para.  9.1., the  Association  Council  may make appropriate recommendations  for the 
settlement  of  these  cases,  without  prejudice  to  Article  64  para  6  of  the  Europe 
Agreement. In these recommendations, the Association Council may take into account 
any  failure  of  the  requested  authority  to  give  its  point  of  view  to  the  requesting 
authority within the period referred to in para. 9.1. 

1  OJ  n°  L  395  of  30.12.89,  as  last  modified  by  Regulation  (EC)  n°  1310/97  (OJ  n°  L  180  of 
09.07.1997). 

r 

These  procedures  in  the  Association  Council  are  without  prejudice  to  any 

9.3 
action under the respective competition laws in force in the territory of the Parties. 

ARTICLE 10 : NEGATIVE CONFLICT OF COMPETENCE 

When both the EC Commission and the State Competition and Consumer Protection 
Office consider that neither of them is competent to handle a case on the basis of their 
respective  legislation  an  exchange  of  views  shall  take  place  on  request  in  the 
Association  Council.  The  Community  and  Lithuania  shall  endeavour  to  find  a 
mutually acceptable solution in the light of the respective important interests involved 
with  the  support  of  the  Association  Council,  which  may  make  appropriate 
recommendations, without prejudice of Article 64 para. 6 of the Europe Agreement, 
and the rights of individual EU Member States on the basis of their competition rules. 

ECONOMIC ACTIVITIES UNDER THE ECSC TREATY 

ARTICLE  11 : TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL 
COMMUNITY (ECSC) 

The provisions contained in Articles  1 to 6 and 8 to  10 above  shall also apply with 
respect to the coal and steel sector. 

ARTICLE 12 : ADMINISTRATIVE ASSISTANCE (LANGUAGES) 

The EC Commission and the State Competition and Consumer Protection Office  will 
provide  for  practical  arrangements  for  mutual  assistance  or  any  other  appropriate 
solution concerning in particular the question of translations. 

ISSN 0254-1475 

COM(98)  119 final 

DOCUMENTS 

EN 

11  ©6  01 

Catalogue  number  :  CB-CO-98-119-EN-C 

ISBN  92-78-31640-7 

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