1999/574/EC: Commission Decision of 27 July 1999 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case IV/36.581 - Télécom Développement) (notified under document number C(1999) 2299) (Text with EEA relevance) (Only the French text is authentic)
Date: 1999-07-27
Institutions: European Commission
Subjects: Economic Interest Grouping, France, inter-company cooperation, railway industry, restriction on competition, telecommunications industry

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relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement

COMMISSION DECISION

of 27 July 1999

(Case IV/36.581 — Télécom Développement)

(notified under document number C(1999) 2299)

(Only the French text is authentic)

(Text with EEA relevance)

(1999/574/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

B. THE PARTIES

Having regard to the Treaty establishing the European
Community,

(3)

Having regard to the Agreement on the European Economic
Area,

Having regard to Council Regulation No 17 of 6 February
1962, First Regulation implementing Articles 85 and 86 of the
EC Treaty (1), as last amended by Regulation (EC) No 1216/
1999 (2),

Having regard to the application for negative clearance and the
notification for exemption submitted on 9 July 1997 pursuant
to Articles 2 and 4 of Regulation No 17,

Having regard to the summary of the application and noti-
fication published (3) pursuant to Article 19(3) of Regulation
No 17,

After consultation with the Advisory Committee for Restrictive
Practices and Dominant Positions,

Whereas:

I. THE FACTS

A. INTRODUCTION

(1)

(2)

On 11 April 1997 Cégétel SA (Cégétel), a new telecom-
munications operator in France, and Société nationale
des chemins de fer français (SNCF), the French national
railway company, concluded a number of agreements,
under which they will cooperate through a jointly-
to
owned subsidiary, Télécom Developpement
develop and run a national long-distance telecommuni-
cations network along the French national
railway
network.

(TD),

The notified transaction is linked to the creation of
Cégétel. By its decision of 20 May 1999 in Case IV/
36.592 (4), the Commission declared that the agreements
setting up Cégétel as a telecommunications operator in
France do not give grounds for objection under Article
81(1) of the EC Treaty.

(1) OJ 13, 21.2.1962, p. 204/62.
(2) OJ L 148, 15.6.1999, p. 5.
(3) OJ C 293, 22.9.1998, p. 4.
(4) See p. 14 of this Official Journal.

SNCF is the state-owned railways operator in France,
with both industrial and commercial activities, providing
transport services on the nationwide rail network. Its
core activities are passenger and freight transport, and
related and complementary activities. SNCF has its own
telecommunications network to satisfy its own needs.
for 1997 was
turnover of SNCF
aggregate
The
EUR 6 573 million.

Cégétel
is a telecommunications operator, created in
1996, owned by the French water utility company
Vivendi SA (5), British Telecommunications plc (BT),
Mannesmann AG and indirectly by SBC International
Inc. (6). Since 1 February 1998, Cégétel has offered a full
range of telecommunications services to all the different
segments of the French market. Cégétel also operates a
nationwide GSM network through its subsidiary Societé
française de radiotéléphonie (SFR). The aggregate turn-
over of the Cégétel group in 1997 was approximately
EUR 1 610 million.

TD is a private company with limited liability incor-
porated under French law, created in 1996 by SNCF, in
which by virtue of
the notified agreements Cégétel
becomes a shareholder.

C. TRANSACTION

The notification relates to the Framework Agreement
dated 11 April 1997, the purpose of which is to define
the principles governing the relations between SNCF and
Cégetel, both with respect to the shareholding of Cégétel
in TD and as regards the modalities of deployment of
the network and operation of
telecommunications
services.

(4)

(5)

(6)

(7)

The aim of TD is to develop and run a national, long-
distance telecommunications network based on:

(a) the surplus transmission capacity on the existing

SNCF telecommunications network;

(5) Previously known as ‘Compagnie Generale des Eaux (CGE)’.
(6) SBCI

is a wholly owned subsidiary of SBC Communications Inc.
SBC is a US company active mainly in the telecommunications
services sector.

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Official Journal of the European Communities

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(b) the optical

fibre cables made available to it by

Cégétel or its subsidiaries; and

(c) additional

investment for using its own cables as
part of an installation plan laid down in the agree-
ments for the initial period 1997-2000.

TD holds a licence to operate long-distance, public-
access networks. The notified agreements provide also
for TD to develop and deploy a long-distance telecom-
munications service in France capable of constituting an
alternative to the offer of the incumbent operator.

On the basis of this network, owned by TD, Cégétel
intends to become the second full service telecommuni-
cations operator in France by offering a complete range
of telecommunication services including voice telephony
between fixed points and transmission capacity for other
operators.

(13)

(8)

(9)

(10)

TD will not provide a connection service for end-users,
namely businesses or individuals, except for the connec-
tions required by SNCF. Under Article 1 of the frame-
work agreement, TD will provide:

(a) a long-distance interconnection service for telecom-

munications operators;

(b) long-distance transmission capacities for Cégétel and
Cégétel subsidiaries but also for other network oper-
ators and telecommunications services providers;

(c) an end-to-end, long-distance voice telephony service,
which is to be distributed exclusively by Cégétel's
subsidiaries, ‘Cégétel Le 7’ (7) (residential market) and
‘Cégétel Entreprise’ (businesses) jointly owned with
TD.

(11) As a result of

the clauses on the acquisition of an
interest in the share capital of TD by Cégétel, the capital
share of TD will be divided up as follows:

— SNCF: between slightly more than 50 % and 60 %,

— Cégétel: between 40 % and slightly less than 50 %,

— third party (if any): 10 %.

(12)

TD is governed by a management board (the ‘Directoire’),
a supervisory board and a shareholders' committee. The
entrusted with the
management board, which is
day-to-day business of TD,
five
composed of
is
members, two appointed on a proposal from SNCF, two
on a proposal
from Cégétel, and a qualified person
unconnected with either of the Parties (the president)
appointed by the supervisory board, by joint agreement
between the Parties. The supervisory board exercises
supervision over the management board's conduct of

(7) Previously known as ‘Télécom Développement Services (TDS)’.

business and is made up of an odd number of members.
The number of members appointed by the shareholders
meeting on proposal by SNCF will always be greater by
one member than the number of members appointed by
Cégétel. The president of the supervisory board will be
one of the members chosen by the members of the
supervisory board appointed on a proposal from SNCF.
The shareholders committee, made up of 10 members,
half appointed by Cégétel and half by SNCF, is set up to
determine the joint position of the Parties on a number
of issues, including the strategic decisions and orienta-
tion of TD, the adoption and modification of the busi-
ness plan and annual budget and acquisitions of assets
or realisation of important investments.

D. RELEVANT MARKET

(a) Product market

TD acts as an operator of a telecommunications network
alternative to the network of the incumbent operator
France Télécom. It will provide; mainly for Cégétel but
also for other operators,
transmission capacity for
long-distance telecommunications traffic and,
national,
on an exclusive basis for Cégétel, long-distance, voice-
telephony services. The notified agreements will there-
fore address: (i) the market for carrier's carrier services:
long-
and (ii) the market for the provision of fixed,
two
These
distance
markets have been defined in a number of previous
Commission decisions (8). As in past decisions, more-
over, the precise product market delimitation in this case
can be left open since even on the narrowest possible
definitions the proposed transaction does not give rise to
competition problems.

telecommunications

services.

(b) Geographic market

(14)

The scope of the geographic market in telecommunica-
tions is determined (i) by the extent and the coverage of
the network and the customers that can economically be
reached and whose demand may be met; and (ii) the
legal and regulatory system in force in the territory
where the operator is active.

(15) Having regard to the licensing and regulatory framework
for the provision of fixed, long-distance telecommunica-
tions services, the geographic market for these services
must be regarded as being national in scope. Further-
more, the TD network will be limited to the territory of
France. Accordingly, the relevant geographic market for
the provision of carrier's carrier services is France.

(c) Situation of the parties on the telecommunica-

tions market

(16)

SNCF is not commercially active in the telecommunica-
tions sector. TD and Cégétel only entered the long-
distance, voice-telephony market (deregulated in France
on 1 January 1998) on 1 February 1998. In 1997, TD
had had a negligible share of the transmission capacity
supply market.

(8) See Commission Decision 96/547/EC, Case IV/35.617, Phoenix/
Global One (OJ L 239, 19.9.1996, p. 57); Commission Decision
97/780/EC, Case IV/35.830, Unisource (OJ L 318, 20.11.1997, p.
1); and Commission Decision 1999/573/EC, Case IV/36.592, Cégétel
(see p. 14 of this Official Journal).

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(d) Main competitors

(17) Until 31 December 1997, France Télécom had a
monopoly on the long-distance voice-telephony market
in France, and it still has a significant market power on
that market. Similarly, France Télécom has a very strong
position on the markets for long-distance, transmission
capacity supply and for the provision of interconnection
services, with a market share exceeding 95 % in both of
them.

segments:

(18) Many companies have entered or intend to enter the
French telecommunications market, either as full service
telecommunication operators (9 Telecom) or on specific
resale of voice-telephony services
market
(Axis, Kertel, and others), telecommunications networks
(Hermes, Colt, Esprit Telecom), services for corporate
clients (WorldCom, Siris, Colt, Omnicom, and others),
or local access (Lyonnaise Cable), and so on. As of 8
April 1999, 59 licences (9) had already been delivered
for telecommunications network and/or services provi-
sion by the national
regulator.
Seven operators had been granted a ‘short prefix’ for
carrier pre-selection.

telecommunications

E. THE NOTIFIED AGREEMENTS

Agreements

(19)

The principles and detailed rules for the collaboration
between the Parties have been defined in the ‘Agreement’
between SNCF and Cégétel for their partnership within
the company Télécom Développement. This agreement
(hereinafter the ‘framework agreement’), signed on 11
April 1997,

includes:

the surplus capacity on its existing optical fibre network.
Furthermore, Cégétel transferred its own long-distance
optical fibre network and those of its subsidiaries to TD.
Cégétel Longue Distance was taken over by TD.

(b) Priority use of railway land

(21)

In an agreement concluded on 22 November 1996,
SNCF granted (10) TD a non-exclusive right to occupy
public railway land for a period of 30 years, to allow it
to deploy a telecommunications network. In order to
enable TD to complete the installation of its network in
the shortest possible time, SNCF has also granted it a
‘priority right of access’ to SNCF's land, guaranteed by a
penalty clause applicable for a period of three and a half
years, from 1997 to 2000.

(22)

The precise details regarding the scope of this priority
access and the arrangements for its application were
amended following intervention by the Commission, as
is described in recitals 28, 29 and 30.

(c) Exclusive distribution of voice-telephony services

(23) A joint company between Cégétel and TD, Cégétel Le 7,
in which Cégétel has an 80 % stake and TD a 20 %
stake, will be solely responsible for marketing TD's long-
distance telephony services for the general public. Sim-
ilarly, end-to-end, voice-telephony services for corporate
clients will be exclusively distributed by Cégétel Entre-
prise, also owned 80 %/20 % by Cégétel and TD.

(d) Exclusive supply of transmission capacity

— a deployment plan for the TD network (Annex 2 to

the framework agreement),

(24)

— an initial business plan relating to the development
of TD (Annex 9 to the framework agreement),
— a marketing agreement aimed at organising the
conditions of the distribution by Cégétel of the long-
distance telephone services of TD, the supply of an
interconnection service, and the supply of
long-
distance transmission capacity (Annex 3 to the
framework agreement),

— a contract relating to the deployment by SNCF of the
TD network (Annex 5 to the framework agreement),
— a contract relating to the maintenance by SNCF of
the TD network (Annex 6 to the framework agree-
ment).

Contractual provisions

(a) Contribution to TD of

the existing optical

fibre cable

network capacity

(20)

In an agreement concluded on 22 November 1996,
SNCF contributed to TD exclusive rights for the use of

(9) Source: Autorité de Régulation des Télécommunications, Licences
L.33-1 (licence d'opérateur de résaux) et L.34-1 (licence de fournis-
seur de service téléphonique au public).

Cégétel has signed an exclusive supply agreement with
TD, on behalf of both itself and its subsidiaries, under
the terms of which they undertake that TD is their sole
supplier for the provision of transmission capacity for
in France.
long-distance
However, Cégétel is permitted to use other suppliers if
TD's prices should at any time prove to be above the
market price. In addition, TD may buy capacity from
other operators to meet Cégétel's requirements. In addi-
tion, Cégétel is bound by its previous supply agreements.

telecommunications

traffic

(e) Non-competition

(25)

SNCF has undertaken not to engage, either directly or
indirectly via a subsidiary, in any activity in the telecom-
munications field that would be in competition with TD
or the Cégétel group.

to ‘Réseau Ferré de France’

(10) Under French Law 97-135 of 13 February 1997, SNCF transferred
the ownership of the railway infrastructures (notably tracks, plat-
the
forms and merchandise)
(RFF),
company which that Law creates. As a temporary measure,
the
Law establishes that any acts relating to the property transferred to
RFF, concluded by SNCF from 1 January 1997 and until the imple-
menting regulations were promulgated, would be deemed to have
been concluded on behalf of RFF (Article 16 of the Law). For this
reason, Article 36 of the framework agreement between SNCF and
Cégétel states that the provisions relating to the assets transferred
to RFF pursuant to the Law of 13 February 1997 are deemed to
have been concluded on behalf of RFF.

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(26)

(27)

Cégétel has promised to abstain from any investments in
long-distance telecommunications networks, apart from
its investment in TD.

TD has undertaken not to compete with Cégétel Le 7
and Cégétel Entreprises as regards the marketing of tele-
communications services.

F. CONTRACTUAL CHANGES

(28) On 18 March 1998,

the Commission informed the
it considered the clause governing the
parties that
priority use of railway premises by TD as falling within
the scope of Article 81 (1) of the EC Treaty and that, as
it stood,
it was not eligible for an exemption under
Article 81(3). On 20 April 1998, the parties proposed
amending the clause in question in order to clarify the
scope and practical application of the priority access
granted to TD, and thus to spell out clearly the condi-
tions under which the penalties provided for in the
agreements would be applicable. Taking into account
the Commission's observations, the parties introduced
on 31 July 1998 an amendment to the original agree-
ments under which they make provision for: (i) equal
treatment for third parties in those exceptional cases
where the railway infrastructures in question are the
only means of putting in its cables (narrow valley struc-
tures); and (ii) that SNCF (or, where appropriate, Réseau
Ferré de France: see footnote 10) remain free to give
access to the railway infrastructures to other telecommu-
this can be done
nications operators, provided that
without
interfering with the development of TD's
network.

(29)

(30)

(31)

These amendments allow SNCF to give access to its
infrastructures to other operators, provided that this can
be done without interfering with the development of
TD's own network.

is

the priority right

limited to the
Furthermore,
minimum period required to implement the network
(1997-2000), and there is an explicit undertaking that
the priority rights shall not apply in the event of other
to specific portions of
companies'
railway-owned land if the installation of cables on these
sites is the only way of creating a telecommunications
network.

seeking access

G. THIRD PARTY OBSERVATIONS

Following the publication pursuant to Article 19(3) of
Regulation 17, comments were received from four inter-
ested parties. The comments focused, in particular, on
the changes submitted by the Parties regarding the
priority use of railway land by TD,
the conditional
access to the railway premises under the agreement
during the period of deployment of TD's network and to
the alternatives to the rail network infrastructures in
France for the purposes of installation of telecommuni-
cation networks. These comments were fully assessed by
the Commission but proved not to be such as to cause

(32)

(33)

(34)

(35)

the Commission to change its favourable position in the
light of the contractual changes agreed by the Parties.

II. LEGAL ASSESSMENT

A. APPLICATION OF ARTICLE 81(1) OF THE EC TREATY TO
THE ENTRY OF CÉGÉTEL INTO THE CAPITAL SHARE OF
TD

SNCF and Cégétel are neither actual nor potential
competitors. They operate on completely different
markets. Cégétel
is present, or emerging, on most
segments of the telecommunications market in France,
whilst SNCF, which is contributing the infrastructures on
the basis of which the services will be developed and
exploited, is not commercially active in the telecommu-
nications sector. Moreover, neither SNCF nor Cégétel are
present on the market for carriers' carrier services on
which TD will mainly operate.

SNCF is the state-owned railway operator and does not
intend to become a telecommunications operator. TD
was not created by SNCF in order to act as a telecom-
munications operator, but merely to deploy a telecom-
its own
munications network previously used for
internal needs. The French authorities have confirmed
that the purpose of TD, as a subsidiary company of
SNCF, is to be limited to the activity of exploiting that
network (11). Through the notified agreement, Cégétel
will be able to have access to the French nationwide
railway infrastructures for the purpose of building up a
telecommunications network of its own. In exchange,
SNCF will receive an atypical financial return from its
assets and will obtain telecommunications capacity for
its own internal purposes.

substantial

Furthermore, the deployment of a telecommunications
network with national coverage takes a number of years
and requires
investment. TD could not
reasonably be expected to undertake such investments
without the support of a full service telecommunications
operator aiming to establish itself on the basis of infra-
structure and services alternative to those provided by
the incumbent operator in France.

Cégétel is a new entrant in the French telecommunica-
tions markets facing strong competition from France
Télécom. It does not have its own backbone network
and has been, until now, dependent on the incumbent
operator for the infrastructure by means of which it
offers its services. By means of TD, Cégétel will be able
to have access to the French nationwide railway infra-
structures for the purpose of building up a telecommu-
nications network of its own. This network will be the
first nationwide
alternative network (to the one
controlled by the incumbent operator) to be put into
service in France. Although for the purposes of creating
telecommunications networks there are a number of
alternative infrastructures to that of the railways, which
Cégétel could in fact have studied before deciding to
acquire an interest in TD, it is unlikely that without TD's
existing network and the priority usage of the railway
premises of SNCF, Cégétel could have been present on
(including
the long-distance, voice-telephony market
switched transit or dedicated transit services) as early as
1 February 1998.

(11) As confirmed by a letter of the French Secretary of State for Trans-

port to the President of SNCF dated 17 July 1996.

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(36)

(37)

(38)

(39)

The notified agreements provide for an allocation of
tasks between, on the one hand, TD, which will be in
charge of the technical aspects of the establishment,
maintenance and operation of the telecommunications
network, and, on the other hand, Cégétel, which through
Cégétel Le 7 et Cégétel Entreprises will provide commer-
cial telecommunication services to end-users.

which constitutes the basis of the operation of Cégétel,
itself a new entrant into the French telecommunications
market, those provisions ensure TD the conditions of
operation required to secure its entry into the market
within a short period of time.

are

alternative

The French telecommunications market has only relat-
ively recently been fully liberalised (1 January 1998) and
new entrants are exposed to strong pressure from the
incumbent operator which has traditionally represented
the sole source of domestic transmission lines in that
country. Liberalisation of
infrastructures
occurred in France on 1 July 1996. A number of tele-
communications operators
building or have
announced plans to build national fibre optic networks
in France, including Hermes (12), COLT, Worldcom/MCI
and Cable & Wireless. Against that background, it does
not appear that the notified agreement has the effect of
preventing, restricting or distorting competition within
the relevant market referred to above. By enabling
Cégétel to build up its own network and offer long-
distance services over the transmission capacity de-
veloped by TD, the agreements will allow that company
to compete more effectively on the market by ending its
dependency on the incumbent operator for its backbone
network.

(42)

(a) Exclusive use by TD of the SNCF optical fibres

its
By means of
this provision, SNCF ensures that
venture TD will have the necessary resources
for
carrying on its main business. This is an exclusive right
which concerns the very nature of
the contribution
agreement. This provision also arises from the SNCF's
decision not to act as a telecommunications operator
and to transfer to its subsidiary TD all the activities
relating to the operation of the network built up on the
railway facilities. Furthermore, the task of TD involves
the configuration and maintenance of a nationwide tele-
communications network starting from the optical fibres
already deployed by SNCF. Those fibres require an
upgrading in order to increase their capacity and ensure
their integration into the network. The management,
integration and upgrading of such network would be
extremely difficult unless the exclusive use of all the
fibres which constitute the network has been secured.

The agreements are not likely to affect the competitive
position of third parties, in so far as SNCF is not unduly
precluded from granting access to its infrastructures to
other operators. Furthermore,
third-party operators
would benefit from the existence of the additional trans-
mission capacity for telecommunications services that
TD will create.

(43)

The Commission has itself recognised that new licensed
operators such as TD required access to pathways across
public and private property to enable them to roll out
their networks, as well as acknowledging the merits of
facility sharing in terms of town planning, and for envir-
onmental and economic reasons, albeit in an intercon-
nection context (13).

(40)

In conclusion, on the basis of the arguments set out
above, the acquisition of a shareholding by Cégétel in
the share capital of TD falls outside the scope of Article
81(1) of the EC Treaty.

(b) Priority use of railway land

The purpose of this provision is to secure for TD its
means of operation by ensuring that the deployment of
the telecommunications network will take place within
the schedule contained in its business plan. Cégétel is
relying solely on the long-distance network of TD for
the transport of the long-distance telecommunications
traffic. The priority use of railway land is justified in
view of the conditions of deployment of the network
imposed by the law and of
the requirements of
continuity of railroad transport operation and security of
circulation of trains. The wording of the agreements, as
amended by the Parties (see recitals 28, 29 and 30), does
not imply that any exclusivity is given to TD and does
not prevent
third parties from having access to the
railway land (14) for the purposes of laying cables, and
thus does not hinder the construction of networks by
competing operators.

B. APPLICATION OF ARTICLE 81(1) OF THE EC TREATY TO

(c) Exclusive distribution of TD's voice-telephony

THE CONTRACTUAL PROVISIONS

services by Cégétel

(41) On the basis of arguments developed below,

the
contractual provisions identified in recitals 28, 29 and
30 are ancillary to the activity of TD in as much as they
are directly linked to, and necessary for, such activity.
investment required to deploy an
Given the financial
telecommunications network
alternative nationwide

(12) SNCF is an indirect shareholder of Hermes through a 9 % sharehol-

ding in HitTail BV.

(13) See Commission Directive 90/388/EEC of 28 June 1990 on
competition in the markets for telecommunications services (OJ L
192, 24.7.1990, p. 10), as last amended by Directive 96/16/EC (OJ
L 74, 22.3.1996, p. 13).

(44)

The commercialisation agreement provides that TD will
not, by itself, market voice-telephony services to end-
users, and will instead provide those services to Cégétel
(See Article 2(1) of the commercialisation agreement).
The strategy agreed between the two parent companies
results in TD being in charge of the technical aspects of
the setting up and operation of the network and Cégétel,
through Cégétel Le 7 and Cégétel Entreprises, assumes

(14) The arrangements for implementation of works on railways have to
comply with the provisions of French Law 97-135 of 13 February
1997 (Journal officiel de la République Française, 15.2.1997, Annex 5).

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Official Journal of the European Communities

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the commercial operation of client services. This provi-
sion reflects SNCF's intention to limit the activity of TD
to the operation and exploitation of the telecommunica-
tions network. As a result of
the
commercialisation agreement ensures that TD will find a
demand for its long-distance voice-telephony services
which will be marketed by Cégétel. The agreement
ensures therefore that TD will have sufficient demand
for its services to sustain its entry into the market and
contributes to its long-term viability as operator.

limitation,

that

(45)

(d) Exclusive supply clause

an effective

company has

Similarly, the obligation contained in Articles 4(4) and
(5) of the framework agreement, by requiring Cégétel to
establish its operation on TD's network, ensures that the
venture
and profitable
minimum volume of activities, as well as regular profits.
It should be recalled, however, that this undertaking is
considerably reduced on the one hand by Cégétel's
option of being supplied by a third party if the TD
prices are less favourable than those on the market, and
on the other hand by Cégétel's adherence to previous
supply undertakings.

(46) On the basis of the particular circumstances of this case,
it can be concluded that the exclusive use of the SNCF
optical fibre cable network capacity, the priority use of
railway land resulting from the amendments introduced
by the parties on 31 July 1998, the exclusive distribu-
tion of voice-telephony services and the exclusive supply
clause are directly related and necessary to the successful
implementation of the network and operation of TD.
Hence, they have to be regarded as ancillary restraints to
the
the project
competition rules of the EC Treaty.

Parties under

intended by

the

(47) Ancillary restraints are to be assessed together with the
creation of the company. In this respect, as the agree-
ments between SNCF and Cégétel concerning TD have
been found not to fall within the scope of Article 81(1)
of the EC Treaty, it follows that the provisions detailed
above do not do so either.

will concentrate their efforts on TD. Furthermore, given
that the telecommunications network operated by TD,
which is built upon the premises of French railway
infrastructures, is essential for Cégétel's operation as a
full telecommunications operator, those terms are neces-
sary in order to ensure that TD becomes stable on the
market. The non-compete obligation binding on TD
ensures that TD will concentrate its efforts on the
exploitation of the telecommunications network,

HAS ADOPTED THIS DECISION:

Article 1

On the basis of the facts in its possession, the Commission has
no grounds for action under Article 81(1) of the EC Treaty and
Article 53(1) of the EEA Agreement in respect of the notified
agreements relating to the cooperation between Société natio-
nale des chemins de fer français and Cégétel SA through their
joint subsidiary Télécom Développement.

Article 2

This Decision is addressed to:

1. Société nationale des chemins de fer français

88, rue St. Lazare
F-75 009 Paris

2. Cégétel SA

52, rue d'Anjou
F-75 008 Paris

3. Télécom Développement

88, rue St. Lazare
F-75 009 Paris.

(e) Non-competition

Done at Brussels, 27 July 1999.

(48)

The non-compete terms applicable to SNCF (Articles 3
and 36 of the framework agreement) and to Cégétel
(Article 4(8) of the framework agreement) guarantee that
Cégétel and SNCF,
two non-competitors who have
entered a product market which is new to both of them,

For the Commission

Karel VAN MIERT

Member of the Commission