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 Latvia, 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), Latvia, agreement (EU), competition law, economic concentration

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 04.03.1998 
COM(1998) 68  final 

98/0076 (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 Latvia, of the other part, signed in 
[...] on [...], with regard to the adoption of the rules for the  implementaion 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 Latvia, 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 Latvia is close to full  completion and 
its entry into force is foreseen by early 1998. 

The  Free  Trade  Agreement  with  Latvia  entered  into  force  on  1 January  1995.  The 
Joint  Committee  under the  Free Trade Agreement, on its meetings 2 April  1996 and 
18  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  Latvia.  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. 

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 Latvia, of the other part, signed in 
|...| on |...|,  with regard to the adoption of the rules for the implementaion of Article 
64  1 (i),  1 (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  Latvia,  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  Latvia,  of  the  other  part,  with  regard  to  the 
necessary  rules  for  the  implementation  of  Article  64  l(i),  1 (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 Latvia, 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 Latvia, 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 Latvia, 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  Latvia,  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 Latvijas Vestnesis (Latvian 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) 

V 

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 Latvia, 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 Latvia as a whole or in a 
substantial  part  thereof,  which  may  affect  trade between  the  Community  and  Latvia 
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  Anti-Monopoly  Committee1 
on the Latvian side. 

The competences  of the EC Commission  and the Anti-Monopoly  Committee to deal 
with these cases shall flow from the existing rules of the respective legislation  of the 
Community  and  Latvia,  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 Latvian Competition law and the relevant 
by-laws. 

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 Latvian market and which may fall under the competence of both 
competition  authorities  shall  be  dealt  with  by  the  EC  Commission  and  the  Anti-
Monopoly Committee, according to the rules under this Article. 

1 From  1 January  1998, the Competition Authority. 

J 

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  Anti-Monopoly  Committee  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. 

6 

ARTICLE 3 : COMPETENCE OF ONE COMPETITION  AUTHORITY  ONLY 

3.1 
Cases falling  under the exclusive  competence  of one  competition authority,  in 
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, 

In  particular,  whenever  one  of  the  competition  authorities  undertakes  an 
3.2 
investigation  or proceeding  in  a case  which  is  found  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 

5.1 
Having  regard  to  Article  64  para.  7  of  the  Europe  Agreement,  neither 
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. 

Each  authority  agrees  to  maintain,  to  the  fullest  extent  possible,  the 

5.2. 
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  Anti-Monopoly  Committee  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  Latvian 
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 Latvian 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  undertakings2  and  which  have  a  significant 
impact on the Latvian economy,  the Anti-Monopoly  Committee  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 

Anticompetitive  activities  whose  effects  on trade  between  the  Parties  or on 
8.1 
competition  are  negligible,  do  not  fall  under  Article  64  para  1  of  the  Europe 
Agreement, and therefore, are not to be treated under the 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  Latvian  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, and 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  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 
In  these  recommendations,  the  Association  Council  may  take  into 
Agreement. 

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

09.07.1997). 

ff 

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. 

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  Anti-Monopoly  Committee  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 Latvia  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  Anti-Monopoly  Committee  will  provide  for  practical 
arrangements  for  mutual  assistance  or  any  other  appropriate  solution  concerning  in 
particular the question of translations. 

3 

ISSN 0254-1475 

COM(98) 68 final 

DOCUMENTS 

EN 

11  06  01 

Catalogue number  :  CB-CO-98-120-EN-C 

ISBN 92-78-31651-2 

Office  for Official  Publications of the European Communities 

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