2000/45/EC: Commission Decision of 29 September 1999 declaring a concentration to be compatible with the common market and the EEA Agreement (Case IV/M.1532 — BP Amoco/Arco) (Text with EEA relevance.) (notified under document number C(1999) 3059)
Date: 1999-09-29
Institutions: European Commission
Subjects: economic concentration, gas pipeline, holding company, merger control, oil industry, petrochemicals

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Official Journal of the European Communities

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 29 September 1999

declaring a concentration to be compatible with the common market and the EEA Agreement

(Case IV/M.1532 (cid:151) BP Amoco/Arco)

(notified under document number C(1999) 3059)

(Only the English text is authentic)

(Text with EEA relevance)

(2001/45/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

which the undertaking BP Amoco plc (BPA) acquires
control within the meaning of Article 3(1)(b) of the
Merger Regulation of Atlantic Richfield Company
(Arco).

Having regard to the Agreement on the European Economic
Area, and in particular Article 57(2)(a) thereof,

(2)

Having regard to Council Regulation (EEC) No 4064/89 of
21 December 1989 on the control of concentrations between
undertakings (1), as
last amended by Regulation (EC) No
1310/97 (2), and in particular Article 8(2) and Article 10(2)
thereof,

Having regard to the Commission decision of 10 June 1999 to
initiate proceedings in this case,

(3)

Having regard to the opinion of the Advisory Committee on
Concentrations (3),

Whereas:

(1) On 4 May 1999, the Commission received notification
pursuant to Article 4 of Regulation (EEC) No 4064/89
(the Merger Regulation) of a proposed concentration by

(1) OJ L 395, 30.12.1989, p. 1; corrected version in OJ L 257,

21.9.1990, p. 13.

(2) OJ L 180, 9.7.1997, p. 1.
(3) OJ C (cid:133), (cid:133), p. (cid:133).

By decision of 10 June 1999, the Commission found
that the notified operation raised serious doubts as to its
compatibility with the common market and initiated
proceedings pursuant to Article 6(1)(c) of the Merger
Regulation.

I. THE PARTIES AND THE OPERATION

petrochemical

petroleum and

(refining, marketing,
Amoco
and

BPA is the holding company of a multinational oil
group
exploration,
comprising three core businesses, that is, BP Amoco
Exploration (oil and gas exploration and production);
and
BP Amoco Oil
transportation);
Chemicals
BP
(manufacturing and marketing of petrochemicals and
related products). The BP Amoco Group was formed as
a result of the merger between the British Petroleum
It has
Company plc
well-established operations in Europe, the United States
of America, Australasia and parts of Africa, and is
expanding its presence in Asia and South America.

and Amoco Corporation (4).

supply

(4) See Commission Decision of 11 December 1998 in Case

IV/M.1293 (cid:151) British Petroleum/Amoco Corporation.

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(4) Arco is involved in the exploration for, production,
transportation and sale of crude oil and natural gas and
in the refining of crude oil and the transportation and
marketing of petroleum products. Although it has
operations in a number of countries such as Venezuela,
Algeria, Tunisia, the United Kingdom and Indonesia, the
bulk of
take place in the USA (i.e.,
approximately 86 % of its total turnover in 1998).

its activities

decision-initiating proceedings
the Commission had
expressed serious doubts on these markets. However,
there
indicated below, no
reasons
the
competition concerns on these markets.

are,

for

(5)

(6)

II. CONCENTRATION

Exploration, development and production process

The concentration being notified is an acquisition of
sole control within the meaning of Article 3(1)(b) of the
Merger Regulation. It will result in BPA acquiring sole
control of Arco. The concentration will be effected by
means of share sale. This will be achieved by Arco
being merged into a newly established company
incorporated in accordance with the laws of the State of
Delaware, USA (Newco), which will
itself be wholly
owned by BPA. Following the merger of Arco with
Newco, Arco will be the surviving legal entity and will,
at that point, have become a wholly owned subsidiary
company of BPA. Thus, as a result of these operations,
BPA will have acquired ownership of the entire issued
share capital of Arco.

(8) Upstream activities comprise three types of commercial
activity: the finding of new reserves, the development
and the commercial exploitation of those reserves. The
finding of new reserves
is generally described as
(cid:145)exploration(cid:146). Development concerns the setting up of
adequate
future production (oil
for
platforms, pipelines, terminals, etc.). The exploitation of
called (cid:145)production and sales(cid:146). Previous
reserves
Commission decisions (6)
focused primarily on the
impact of
then notified transactions on the
the
production and sales segment.

infrastructure

is

III. COMMUNITY DIMENSION

(9)

the parties’

Since
combined aggregate worldwide
turnover (5) exceeds EUR 5 billion, they each have a
Community-wide turnover of more than EUR 250
million, and they do not each achieve more than two
their aggregate Community-wide turnover
thirds of
within
the
same Member
concentration has a Community dimension pursuant to
Article 1(2) of the Merger Regulation.

State,

one

and

the

a

is

and

time-

Exploration
and
development
capital-intensive activity, which includes a number of
successive steps. Firstly, countries which believe that
hydrocarbon reserves could be discovered on their
territory (such a country is called the (cid:145)host country(cid:146))
organise bids to grant exploration licences. The bidding
processes vary from public auctions in the USA to
situations where bidders are preselected by the host
country. This preselection can be based to varying
extents on technical capability,
financial strength or
other considerations (lobbying, cultural affinities, etc.).

IV. ASSESSMENT UNDER ARTICLE 2
OF THE MERGER REGULATION

A. EXPLORATION, DEVELOPMENT, PRODUCTION AND

SALE OF CRUDE OIL AND NATURAL GAS

(7)

Both parties are active in the exploration, development
and production of crude oil and natural gas and in the

(5) Turnover calculated in accordance with Article 5(1) of the Merger
Regulation and the Commission Notice on the calculation of
turnover (OJ C 66, 2.3.1998, p. 25). To the extent that figures
include turnover for the period before 1 January 1999, they are
calculated on the basis of average ECU exchange rates and
translated into EUR on a one-for-one basis.

In

to

bring

skills.

complementary

(10) Often, companies bid together in order to spread risks
or
some
circumstances, host countries may require that some
bidders join together in order to get the licence for
exploration. Host countries may also require that their
national oil companies be granted a share in any
discovery made in the block under licence. In all cases
when the licence is granted jointly to a number of
companies, an operator for the block is named. The role
of the operator is to manage technically and financially
the exploration and possibly the development and
production phases of the project. Most of the important
decisions require unanimity from all the partners in the
project.

(6) See Commission Decision in Case IV/M.1200 (cid:151) Arco/Union
Texas, OJ C 16, 21.1.1999, p. 8; Commission Decision in Case
IV/M.88 (cid:151) Elf Enterprise, OJ C 203, 2.8.1991; and Commission
Decision in Case IV/M.85 (cid:151) Elf Occidental, OJ C 160, 20.6.1991.

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(11)

(12)

(13)

(14)

The total time between the granting of a licence and
actual production typically range from five years to 15
years. Costs of exploration and development projects
can reach in the region of EUR 7 billion for projects in
the (cid:145)frontier areas(cid:146). The split of expenditures between
the exploration stage and the development stage is
typically respectively 15 % and 85 %.

the relevant product markets according to the various
stages of the exploration, development, production and
sales of respectively crude oil and natural gas.

Relevant geographic markets

infrastructure needs

It must also be mentioned that when production is
started in a new area,
to be
developed. This includes notably oil platforms, pipelines
and terminals. Smaller
fields, which would not be
economical
to develop on their own, can then be
exploited through using the infrastructure already put in
place for
fields are
sometimes called (cid:145)satellite fields(cid:146). Exploration in the
North Sea has typically followed that process.

field. Such smaller

the bigger

Relevant product markets

is often argued that exploration, development and
It
production and sale are too closely interlinked for more
than one distinct product market to be defined. It may,
however, be argued that exploration constitutes a
separate product market. Indeed, it could be argued that
a firm engaged in exploration has two categories of
clients:
the host country to which it has generally
undertaken to provide a future flow of resources in case
oil or gas is found; and the subsequent producers and
sellers of oil and gas that may buy it out or join in the
development and production. The transfer of rights over
blocks is a widespread practice in the industry.

the time of exploration,

Since the possible contents of the underground are not
known at
the Commission
considers that it is not justified to make a distinction
between exploration for oil and exploration for natural
gas. As regards the development, production and sales
product markets, since gas and crude oil have differing
applications
to varying pricing
subject
behaviour as well as cost constraints, the Commission
considered
the
decision-initiating proceedings to define one relevant
product market for the development, production and
sales of crude oil and another relevant product market
for the development, production and sales of natural
gas.

appropriate

stage

and

the

are

of

at

it

(16)

(17)

(18)

The Commission considers that the exploration market
is worldwide in scope and agrees with the parties that
relevant
from a European-demand perspective
geographic markets
for
development, production and sales of crude oil and
probably include the EEA, Algeria and Russia for gas.

are worldwide

in scope

the

could

(Russia

constitute

relevant markets.

The Commission examined whether smaller geographic
areas
Some
purchasers of gas make, for security of supply reasons, a
distinction in their purchasing policy as to the origin of
the gas on the basis of the perceived political risks and
their influence on the security of supply with regard to
Russian and Algerian gas
accounted for
approximately 17 % of total western European supply
and Algeria for 12 %). The most explicit example of this
is the Spanish legislation ordering that not more than
60 % of the natural gas demand can come from the
same country.
is, however, unlikely that a price
increase of gas produced in the EEA would not be
increase in the proportion of gas
defeated by a small
purchased from Russia and Algeria.
In any case, the
precise definition of the relevant geographic market can
be left open, as this does not alter the conclusion of the
competitive assessment.

It

Market players

and

future

objectives

Traditionally, companies involved in the exploration,
development and production and sales business were
grouped in three categories with different profiles,
and
strategic
development capabilities. The categories are:
the
State-owned (mainly OPEC and some OECD-based
companies such as Statoil) producers; (ii) the (cid:145)majors(cid:146),
companies with
integrated oil
is,
that
international
of
a multitude
(iii)
and
substantially smaller oil companies, most of which are
non-integrated upstream explorers and/or producers.

exploration

activities;

vertically

(i)

(15)

existence of

The parties have
an
contested the
exploration market arguing that it is too closely linked
to the subsequent steps of the production process to
make it a possible product market. As will be explained
in the section on effects of the merger on competition,
it is not necessary for the appraisal of the effects on
competition of the notified operation to define precisely

(19)

The competition concerns identified by the Commission
were raised mainly by the fact that as a result of the
notified transaction, as well as of that notified by Exxon
tier of players might
(fourth)
and Mobil, a distinct

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prevail on the exploration and development activities.
(cid:145)super majors(cid:146) would be composed of
This group of
Exxon-Mobil, BP Amoco-Arco and Shell.

Production and sales

Position of the parties in the market

Exploration

(20)

There is no widely available or accepted indicator on
the basis of which market shares can be calculated as a
proxy to assess market power in the exploration market.
Measurement of market shares could be carried out on
the basis of the number of blocks where licences have
the number of blocks where a given
been granted,
total acreage
company is the operator, net acreage,
under operatorship, capital expenditure in exploration,
etc. There is wide agreement
that proxies based on
number of blocks or acreage would not be reliable as
they cover widely varying situations.

(21) On the basis of capital expenditures, Exxon-Mobil, BP
Amoco-Arco and Shell would represent together, with
roughly equivalent shares, between 30 % and 40 % of
the
exploration,
development and production scheduled for 1999. The
next largest player would represent one third of the
average size of the three main players.

expenditures

capital

total

in

(22)

The parties have contested the adequacy of this measure
of market power for the following reasons. First, capital
expenditures vary according to the sites explored. This
biases downwards the market share of national oil
companies in low cost OPEC areas. Secondly, capital
expenditures often do not reflect the correct share of
ownership of
the output. This is
because State companies often pay a share which is
disproportionately lower than their licence interest or
take of crude oil output. Thirdly, capital expenditures
often include expenditure on investments such as gas
liquefaction and infrastructure rather than sums invested
purely in exploration.

the licence or of

(23) Another possible way to measure market power would
be to calculate the share of expected production of these
companies (since current exploration and purchase of
third-party rights will translate into future production).
On the basis of the market investigation, the combined
market share of the three super majors of the non-OPEC
production, in some 10 years from now, would again
be in the 30 % to 40 % range.

(24)

(25)

(26)

BPA and Arco would have together around [less than
15 %] (*) of respectively the worldwide production of
crude oil and the European production of natural gas in
1998. These numbers would be [less than 25 %] for a
combined Exxon-Mobil and less than 20 % for Shell.
These numbers have not materially changed over the
years. Of the total natural gas production in the EEA,
the three super majors account
for almost 40 %.
However, of the natural gas consumed in the EEA, the
three super majors account for less than 30 %.

relevant

indicator of

The industry often refers to proven reserves as a proxy
for market power. On this basis, the parties would hold
approximately [less than 3 %] and [less than 5 %] of
respectively the worldwide proven reserves of crude oil
and European-wide proven reserves of natural gas.
However the parties argue that proven reserves are not
a
future production. Proven
reserves as stated by the oil companies have just a stock
function and, as any other private company, private oil
companies need to limit as much as possible their
stocks. By means of their proven reserves, the company
indicates that
is not) able to replace the
foreseeable depletion of existing oil fields and thereby to
remain a viable player on the market. However, national
oil companies do not need to justify further exploration
and development investments to their shareholders since
they benefit from the national reserves which usually
largely exceed their needs. Therefore, such an indicator
in favour of national
involves
companies.

an upward bias

is (or

it

the foreseeable future,

Currently and for
the OPEC
producers collectively enjoy substantial market power in
crude oil production. They control a substantial amount
of production and proven reserves (approximately 40 %
and 75 %, respectively, whereas Saudi reserves account
for more than one third of OPEC reserves). OPEC has
been able in a number of
to
influence (7) crude oil prices up to a certain level.

instances in the past

(27) Gazprom (17 %) and Sonatrach (11 %),

the national
for
Russian
account
approximately 30 % of EEA sales of natural gas and
their reserves account for 88 % (Gazprom 81,5 %) of the
combined proven reserves that can be sold in the EEA.

suppliers,

Algerian

and

(*) Parts of

this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets.

(7) Prices

in the crude oil

trade markets may be significantly

influenced by mere announcements following an OPEC meeting.

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Effects of the merger on competition

strategies. OPEC would then be in a position to raise
and sustain prices at the highest price threshold above
which new exploration would be triggered.

(28)

(29)

(30)

(31)

The Commission raised the following serious doubts as
to the effect on competition in the markets
for
exploration, development, production and sales of crude
oil and natural gas. The notified acquisition together
with the Exxon-Mobil merger could lead to the creation
of a fourth tier of competitor in the industry composed
of BP Amoco-Arco, Exxon-Mobil and Shell. Whatever
the parameter retained (market capitalisation, oil and
gas production, proven reserves etc.), there is now a
material gap between these three super majors and the
remaining majors.

It was considered whether it would be possible that the
three super majors would in the future be in a
privileged position to find and develop new important
reserves compared to the other players in the market.
This could come from their increased financial strength
that would now enable them to hold a portfolio of risks
of increased size. On the contrary the other competitors
would have to pick and choose the areas where they
intend to become active. Because of their less favourable
access to capital and capacity to spread risks, smaller
if
companies would,
continue
fields, have to become smaller
developing important
partners to the super majors to benefit
from their
combination of resources. Their only other alternative
would be
focused on
to become niche players
exploration. This may result
in the super majors
controlling the access by other explorers to the new
frontier areas, first at the time of the granting of the
first licences and then for further surrounding blocks
since the super majors will have built
the necessary
infrastructure.

they wanted

to

Since the typical time lapse between the first stages of
exploration and the start of production varies between
five and 15 years, under this scenario there would be a
possibility that within some ten years, new non-OPEC
reserves and production would be influenced to a
significant extent by the super majors.

This could affect the production and sales markets in
the following way. The competitive constraints limiting
OPEC’s ability to function as a cartel would be lessened.
These three companies would have the same interests as
OPEC and would be likely to align themselves on the
OPEC decisions by limiting output to a certain level
fearing that others would take advantage of
without
this. This would translate into the strengthening of
OPEC’s dominant position in the crude oil market
through the
structure
combining both OPEC and the three super majors, thus
creating incentives for alignment on OPEC’s commercial

creation of an oligopolistic

(32) On the basis of

the

foregoing,

the Commission
concluded that the operation raised serious doubts as to
its compatibility with the common market and the
the EEA agreement, which should be
functioning of
further explored in an in-depth investigation.

(33)

(34)

(35)

The parties contested the Commission’s serious doubts
on mainly two grounds. First, the super majors would
still be facing competitive constraints from smaller oil
companies. Secondly, host countries control oil and gas
production and in any case would have no incentives to
let oil companies restrict production.

The market investigation confirmed that small explorers
do not seem to believe that the emergence of a new
class of super majors would threaten their position.
Because of size differences they would not compete for
the same type of exploration rights and they would not
be dependent on the bigger explorers to sell their oil. In
addition, majors such as Chevron, Texaco, Elf or Total
would all seem to have unchanged capacity to explore
and develop fields anywhere in the world. The parties
have provided numerous examples of the involvement
of majors in current projects all over the world.

contracts

Second, the market investigation confirmed that typical
concession
and
from limiting
explorers-producers prohibit
their output (and leave such a decision to the discretion
of the government).

governments

the latter

between

(36) As to natural gas, it is unlikely that the parties, together
with the other super majors, could control
the EEA
production and therefore that competition would be
affected. Even if such a market did exist (in view of the
perceived political risk attached to the gas production in
Russia and Algeria), no collective dominance between
the super majors can be argued in view of the strong
position of Norwegian gas delivered by competitors. In
addition,
very
gas
concentrated demand in the hands of
the national
wholesale gas transmission companies such as Gaz de
France or Distrigaz.

producers

natural

face

of

(37)

Therefore,
concentration will not

Commission
lead

the

concludes
to the

that

the
creation or

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strengthening of a dominant position on the markets
for the exploration, development, production and sale of
crude oil and natural gas.

B. NATURAL GAS TRANSPORTATION AND PROCESSING

infrastructure located in only one Member State (the
United Kingdom). These items of infrastructure are of
two types: sub-sea gas pipelines and an interest in a
gas-processing facility. All of these assets are located on
the part of the UK continental shelf lying to the east of
the UK mainland and on the eastern UK mainland itself.

(38)

for:

(i) natural gas

The concentration raises competition concerns in the
markets
transportation through
pipelines in the southern North Sea (SNS); and (ii)
natural gas processing services
in the SNS. These
markets and the market for natural gas transportation
through pipelines in the northern North Sea (NNS) will
be dealt with further below.

Relevant product market

the
the

liquids.

hydrocarbon

facility,
and

gaseous
gaseous

stream contains

gas often requires

(39) When natural gas emerges from the well-head of a
gaseous
the
production
This
hydrocarbons
transportation by
unprocessed
is processed by
pipeline to a facility at which it
constituents.
separating
further
Thereafter,
to produce gaseous
processing/purification in order
specification
the
hydrocarbons meeting
necessary for carriage in the transmission system into
which it will be introduced (pipeline quality gas).
Producers of natural gas carry out this transportation
and processing either through use of their own assets
and
by
or,
offshore/onshore gas processing facilities owned by
other undertakings.

and
liquid
stream undergoes

technical

pipelines

utilising

cases,

some

in

(40)

the view that gas transportation and gas
BPA is of
processing each fall in a separate product market. In the
case of gas transportation, the relevant product market
would be the market for the transportation by sub-sea
pipeline of natural gas (8). In the case of gas processing,
BPA would regard the relevant product market as the
market for processing natural gas.

(41) Although the owners of a gas

transport

field require both
transport and processing to be able to market their gas
and will look for the cheapest overall combination, the
Commission considers that it is appropriate to separate
the
the
competitive conditions differ between transport and
processing. For instance, it is apparent from the market
investigation, that all combinations are possible between
own (newly constructed) pipelines and/or processing
facilities
to existing
pipelines and/or processing facilities.

and third-party access

processing market

(TPA)

since

and

Relevant geographic market

(42) Arco’s interests in the Community in gas transportation
in relation to

and processing infrastructure

arise

(8) Arco has no interests in on-shore production fields.

(43)

(44)

consists,

relevant geographic market

from a
The
demand perspective, i.e. owners of gas fields requiring
transport and/or processing, of the (existing or newly
constructed) infrastructure that forms a viable economic
alternative. In this respect, the eastern part of the UK
the
continental shelf can be divided into two areas:
NNS, which is the area of the North Sea lying to the
north of latitude 55(cid:176) N, and the SNS, the area of the
North Sea lying to the south of latitude 55(cid:176) N.

BPA considers that, although gas fields in the NNS
could, in theory, look to processing facilities in the SNS,
in most instances a gas field located in the NNS is likely
to seek transportation to and processing of its output at
NNS processing facilities.
there is only one
pipeline under construction linking an NNS gas field
with a SNS processing facility.

In fact,

(45) Gas fields in the SNS have looked in the past, and will
continue to look in the future, to the terminal areas on
the coastline adjacent to the SNS for the processing of
their output (although to a minor extent, SNS gas fields
have invited bids for transportation via pipelines landing
from the market
in the Netherlands).
investigation that,
the
construction of new infrastructure is not a realistic
alternative to the use of existing facilities since the SNS
is a (cid:145)mature gas province(cid:146) where the new fields that
might be discovered will be too small to support the
construction of new infrastructure.

for the SNS, unlike the NNS,

is apparent

It

(46)

For these reasons, BPA considers that, as regards the
market for the processing of gas and the market for
sub-sea pipeline transportation of gas, the NNS and the
SNS are separate geographic markets. Since Arco has no
equity interests in the NNS gas processing market, this
market is not further considered.

(47) However, the geographic market is not smaller than that
of the regions as defined above. There is ample evidence
that the options for a new field are not limited to the
different facilities at a single location (for example three
gas processing facilities at Bacton) and/or a single
location served with different pipelines (for example the
three pipelines servicing the Bacton-Amoco processing
plant).

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(48)

For these reasons, the Commission considers that, for
both gas transportation and gas processing, the SNS and
the NNS constitute distinct geographic markets.

Position of the parties in the market (9)

(a) NNS pipelines

the eight different
Table 1 gives an overview of
pipelines
to the NNS gas
processing plants, together with the parties’ respective

linking NNS gas

fields

currently

equity ownership and the name of the operator. The
transports only minimal
Miller pipeline
quantities of gas and will be expanded (see recital 59).
In addition, there is one pipeline (SEAL) currently under
construction that will
link NNS gas fields with a SNS
processing facility. Arco has a [(cid:133)] % interest in this
pipeline.

Overall, BPA has an equity ownership in three pipelines
and Acro has an equity ownership in two pipelines.
There is no overlap in the parties’ ownership interests
and in four of the nine pipelines, the parties have no
interest.

Table 1: NNS pipelines

Gas processing facility

Pipelines

BPA/Arco equity
ownership in pipeline

Operator

St Fergus (Shell/Esso)

FLAGS

Fulmar

St Fergus (Total)

Frigg (two pipelines)

0

0

0

Shell

Shell

Total

Miller

BPA [(cid:133)] %

BPA

St Fergus (Mobil)

Britannia

Arco [(cid:133)] %

Conoco/Chevron

SAGE (Beryl)

0

Mobil

SAGE (Brae)

BPA [(cid:133)] %

Mobil

CATS

SEAL

BPA [(cid:133)] %

Arco [(cid:133)] %

BPA

Shell

Teesside (BPA)

Bacton (Shell)

Source: Parties’ data.

(49)

(50)

These ownership interests give the parties an equity
interest of around [15 % to 25 %] of the total nominal
the nine gas pipelines
gas transportation capacity of
the Miller pipeline)
expansion of
(assuming
gas
expected
mentioned
total
the
transportation
5 058
of
mmscfd (10), the parties’ equity interests in each pipeline
multiplied by the expected actual throughput in each

above. Of

throughput

1999

the

for

(9)

In this section the references to capacity are based on actual
capacity as indicated by the market players. Those references
therefore constitute business secrets of the respective players that
cannot be meaningfully summarised in a non-confidential manner.
Although the nameplate capacity of the infrastructure is publicly
available,
to be a reliable indicator in all
markets.

this has proven not

(10) Million metric standard cubic foot per day.

pipeline, gives them a market share of around [10 % to
20 %].

(b) SNS pipelines

(51)

Table 2 gives an overview of
the different pipelines
linking the SNS gas fields to the SNS gas processing
plants
in Dimlington, Easington, Theddlethorpe and
Bacton. It also sets out the equity ownership of each of
the
the undertakings concerned and the name of
operator.
It can be seen that BPA has an equity
ownership in 10 pipelines and Arco has an equity
ownership in seven pipelines. The parties’ ownership
overlaps in four of them. In four of the 17 pipelines,
the parties have no interest.

L 18/8

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Table 2: SNS pipelines

Gas processing facility

Pipelines

BPA/Arco equity
ownership in pipeline

Operator

Dimlington (BPA)

Cleeton

BPA 100 %

BPA

Easington (BPA and British Gas each
have a processing facility)

West Sole (two lines)

BPA 100 %

BPA

Rough (two lines)

0

BG

Amethyst

BPA [(cid:133)] %
Arco [(cid:133)] %

BPA

Theddlethorpe (Conoco)

Viking

BPA 50 %

Conoco

LOGGS

BPA 50 %

Conoco

Caister-Murdoch

Arco [(cid:133)] %

Conoco

Pickerill

Sean

Bacton (Shell)

Leman (two pipelines)

Bacton (BPA)

Sole Pit

EAGLES

Leman

Inde

Arco [(cid:133)] %
BPA [(cid:133)] %

Conoco

BPA [(cid:133)] %
Arco [(cid:133)] %

0

0

Arco [(cid:133)] %
BPA [(cid:133)] %

Shell

Shell

Shell

Arco

BPA [(cid:133)] %

BP Amoco

BPA [(cid:133)] %

Bacton (Phillips)

Thames

Arco [(cid:133)] %

Arco

Hewett (two pipelines)

Arco [(cid:133)] %

Phillips

Lancelot

0

Phillips

Source: Parties’ data.

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Official Journal of the European Communities

L 18/9

(52)

These ownership interests give the parties an equity
interest of around [between 30 % and 50 %] of the total
nominal gas transportation capacity of the gas pipelines
in operation. Of the total expected gas transportation
throughput
the parties’
for 1999 of 4 225 mmscfd,
in each pipeline multiplied by the
equity interests
expected actual throughput in each pipeline, gives them
a market share of [between 30 % and 40 %].

(53)

British Gas has a market share of around 15 %, and
Conoco has around 10 %.

required amongst all the owners of the infrastructure
with regard to major decisions, including the conditions
of third party access to the infrastructure. As the main
competition concern arising from an interest in such
infrastructure is the possibility for the infrastructure
owners to constrain the development of new, competing
gas fields, the position of an individual company will
depend not so much on its equity capacity share, but on
the total capacity, and especially spare capacity (11), of
the infrastructure in which it has an interest.

(c) SNS gas processing

(54)

Table 3 lists the seven SNS gas processing facilities with
the parties’ respective ownership interests and the name
of the operator. It can be seen that the parties have an
interest in five of these facilities (BPA 4 + Arco 1) and
that there is no overlap. These ownership interests give
the parties an equity interest of [between 40 % and
50 %] of the total nominal SNS gas processing capacity
the total expected gas
(Arco less
processing throughput
the parties’ equity
interests in each processing facility multiplied by the
expected actual throughput in each facility gives them a
market share of [between 30 % and 40 %].

than [(cid:133)] %). Of

for 1999,

Table 3: SNS gas processing

Gas processing
facility

BPA/Arco
equity ownership

Operator

Dimlington

BPA 100 %

Easington (BPA)

BPA 100 %

Easington (BG)

0

BPA

BPA

BG

Theddlethorpe

BPA 50 %

Conoco

Bacton (Shell)

0

Shell

Bacton (BPA)

BPA [(cid:133)] %

BPA

Bacton (Phillips)

Arco [(cid:133)] %

Phillips

Source: Parties’ data.

(55)

Conoco and Exxon/Shell each have around 15 %.

Competitive assessment

(56) A key element in the operation of UK pipelines and
is

processing facilities is that unanimous agreement

(57) An

in
in

from the
increase
infrastructure will,
particular
concentration
therefore, not endow BPA with any greater influence
over this pipeline than exists prior to the concentration.

ownership
a

resulting

(a) NNS pipelines

(58) Of

in

the

seven

pipelines

currently

operation
and the SEAL pipeline under
(disregarding Miller
construction), BPA has an interest in two and Arco has
an interest in one. These pipelines account for only half
of the total capacity. Since there is currently, and for the
coming two to three years, no spare capacity in the
the
NNS pipelines,
owners of new gas fields do not depend on the equity
interests of the owners of NNS pipelines and thus, in
the context of this procedure, on the equity interests of
BPA and Arco. There is therefore no dominant position
on this market.

the competitive constraints

for

(59)

in which the owners

fundamentally
These competitive constraints are not
changed by the fact that in 2002, at least two other
pipelines will become operational. They are the SEAL
pipeline, where Arco has a [(cid:133)] % interest, and the
(BPA [(cid:133)] %,
Miller pipeline,
Conoco [(cid:133)] % and Enterprise [(cid:133)] %) plan to reach a
capacity level of 1 200 mmcfd by 2002, accounting for
less than [between 10 % and 25 %] of total capacity. The
SEAL pipeline will accommodate transport of gas from
own resources (newly developed gas fields), whereas the
Miller capacity is targeted to accommodate transport of
third party gas. Therefore,
the transaction does not
result in a change of market power of the merged entity
vis-(cid:224)-vis the owners of new gas fields since the SEAL
pipeline in which Arco has an interest does not
accommodate transport of gas from the owners of new
gas fields. In other words, the notified operation does
not
lead to the creation or a strengthening of a
dominant position.

(11) Defined as the unused capacity available in the infrastructure
regardless of the origin of the actual gas throughput (equity gas of
the owners of the infrastructure + gas for which a TPA agreement
is concluded).

L 18/10

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19.1.2001

(b) SNS pipelines

as the expected cashflow of satellite fields is too small to
recover the investment needed for constructing a new,
dedicated pipeline. In fact, such fields cannot, in general,
be developed without guaranteed TPA to pipelines and
processing facilities.

(60) As a result of

it

is

and

the transaction, BPA will achieve an
equity interest in 13 of the 17 existing pipelines. The
total capacity of the pipelines in which the parties have
an interest accounts for [greater than 60 %] of
total
capacity
from the market
apparent
investigation that the four pipelines in which the parties
do not have an equity interest have limited spare
capacity. Therefore, BPA would be in a position to
control the access to pipeline transport for new fields in
the area since it controls the pipelines with free capacity
in the area. Since the SNS is a (cid:145)mature gas province(cid:146), it
is not likely that further large fields will be discovered. It
is,
therefore, unlikely that new infrastructure will be
built.

(61)

(62)

(63)

(64)

the

the
concludes
Commission
Therefore,
concentration will
lead to the creation of a dominant
position in the SNS pipeline transport market. BPA can
use this position to the detriment of the owners of new
(small) gas fields by asking high transport
tariffs or
offering a limited transport service.

that

BPA has argued that it would not have any market
power in the SNS pipelines market as a consequence of
the concentration because: (i) the SNS is a mature gas
province with plenty of available capacity in the existing
pipelines; (ii) new infrastructure can be built; and (iii) an
industry custom exists that does not allow BPA to
exercise its equity rights in more than one piece of
competing pipeline infrastructure. The Commission does
not accept these arguments for the following reasons.

The Commission recognises that there is overall capacity
underutilisation in the SNS pipelines and,
therefore,
severe competition could be expected between the
different pipelines whenever a new field (generally much
smaller than the original fields) wants to negotiate third
party access in order to attract the additional transport
tariff income. However, it is apparent from the market
investigation that the pipelines in which the parties do
not have an interest have only limited spare capacity.

is not

surprising since the fields

Second, even BPA recognises that no new major gas
pipelines have been constructed in the SNS since 1992.
This
that have
developed recently in the SNS area are satellite fields of
previously developed larger fields. Furthermore, it is not
expected that new large fields will be discovered. No
new pipelines are therefore expected to be constructed

(65)

(66)

(67)

Thirdly, the parties refer to the (cid:145)step-out(cid:146) custom in the
UK oil and gas industry, under which, if two or more of
the pipelines in which a company has an interest
compete,
that company abstains from exercising its
right to vote in more than one of the pipeline consortia.
BPA argues that it is thereby prevented from being able
to exercise its right of veto so as to divert gas for
example from the Bacton-Amoco line (where it has
[(cid:133)] % )to the Bacton-Leman line (where it has [(cid:133)] %).
The step-out custom is a general recognition of the fact
in a
find themselves
times
that companies can at
interests when they hold
conflicting
position of
ownership
in
infrastructure
in
competition to submit an offer for transportation and/or
processing services to a potential user. Although it is
rare for step-out obligations to be contained in the
contract documentation relating to ownership of
the
various pieces of
the custom is well
infrastructure,
established in the UK oil and gas industry. BPA believes
the step-out custom is an
that due observance of
factor in complying with the principle of
important
non-discrimination (as
contained in the Offshore
Infrastructure Code of Practice) and hence avoiding
sanctions under UK domestic law (i.e., Section 17 of the
Petroleum Act 1998 and Section 12 of the Gas Act
1995).

interests

that

is

The Offshore Infrastructure Code of Practice (issued by
the UK Government’s Department of Trade
and
Industry) is a code adopted by all owners of offshore oil
and gas transportation infrastructure and aims to ensure
objectivity and transparency in the processes of making
infrastructure available to third-party users. Section 17
of
the Petroleum Act 1998 provides the legal basis
upon which the UK authorities can require the granting
to third parties of access to oil and gas pipelines on
reasonable terms following an initial refusal by the
infrastructure owners to do so. Section 12 of the Gas
Act 1995 provides the legal basis upon which the UK
authorities can require the granting to third parties of
access to gas processing facilities on reasonable terms
following an initial refusal by the facility owners to do
so.

The market investigation has confirmed the existence of
such a step-out custom as described by the parties.
However, the step-out custom is as such not a part of
the voluntary Code of Practice. The respect of
the
custom,
solely on the unilateral
behaviour of all the companies concerned. The future

therefore,

relies

19.1.2001

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Official Journal of the European Communities

L 18/11

behaviour of BPA would therefore only be constrained
by its voluntary commitment to a custom which is not
necessarily enforceable.

(72)

The concentration will
position on the SNS gas processing market as well.

therefore create a dominant

(68)

(69)

(70)

Even if it were accepted that the step-out custom is a
reflection of the Code of Practice which in turn might
be enforceable by the UK authorities, that would not be
assessing
sufficient. The Commission
concentrations pursuant
to the stringent criteria of
Article 2(3) of the Merger Regulation, accept that the
presence of a regulator whose function is to monitor
and sanction the behaviour of
in
the conclusion that no dominant
question justifies
position is created.

the companies

cannot,

in

Commission

The
the
concentration would create a dominant position on the
SNS gas pipelines market.

considers

therefore

that

(c) SNS gas processing

a

as

the

SNS

facilities

in five of

consequence of

sole ownership of

the
The parties will have,
the seven gas
concentration, an interest
processing
In
sector.
servicing
addition, their share of the existing capacity and of the
actual throughput is in excess of 40 %. Furthermore, the
two facilities in which the parties do not have an
interest have a limited spare capacity at peak times. On
the other hand, the facilities in which the parties have
an interest have spare capacity in excess of 50 % even at
peak times. The merged entity might therefore be in a
position to control the access for new fields in view of
its
shared
ownership of three facilities where its control results
these
from the unanimity requirements
facilities. The available free capacity at peak times in the
third
the
(Bacton-BPA), where
participants is free to offer its spare capacity to third
parties, accounts for less than [between 10 % and 20 %]
of the total capacity. However, BPA owns [more than
25 %] of the total capacity in the terminal. The free
capacity in this terminal available for the other owners
only amounts to around 5 % of the total capacity. In
addition, it cannot be excluded that BPA could, in view
of
further reduce the
the terminal,
availability of this free capacity.

two facilities and its

its operation of

in two of

each of

terminal

V. COMMITMENTS PROPOSED BY THE PARTIES

A. COMMITMENTS

(73)

BPA has given a commitment to the Commission to
divest the equity interests that Arco currently holds in
[certain pieces of SNS gas transportation and processing
infrastructure]. These equity interests will be divested to
one or more purchasers approved by the Commission.
In addition, BPA has given a commitment not
to
reacquire any of those assets without the Commission’s
prior approval.

(74)

The full text of the undertakings is in the Annex.

B. ASSESSMENT

(75)

The divestiture by BPA of the interests held by Arco in
those pipelines and processing facilities where BPA
currently has no interest means that the competitive
situation of BPA will be the same before and after the
concentration. That is because, as indicated above,
in
the SNS pipelines and processing facilities TPA is
accorded on the basis of unanimous agreement between
the owners. The competitive situation therefore depends
on the number of pipelines in which a company has an
interest and the total spare capacity of those pipelines.
The divestiture of the equity interests in the (cid:145)additional(cid:146)
infrastructure therefore eliminates the overlap on the
relevant markets
between BPA and Arco. The
Commission therefore concludes that, as a consequence
of the commitments,
there will be no creation of a
dominant position on the relevant markets.

VI. CONCLUSION

(71)

The arguments made by BPA as described above with
regard to SNS pipelines have also been made for the
SNS processing market. For
the same reasons as
expressed above, they cannot be accepted.

(76) Having regard to Article 10(2) of the Merger Regulation,
the Commission concludes that the commitments given
by BPA are sufficient
to remove its serious doubts,
identified in its decision-initiating proceedings and in its
subsequent investigation of the operation, in relation to
Article 2(2) of the Merger Regulation.

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Official Journal of the European Communities

19.1.2001

(77)

The operation is, therefore, subject to the condition of
full compliance with the commitments in the Annex,
compatible with the common market and with the EEA
Agreement,

Article 2

This Decision is addressed to:

HAS ADOPTED THIS DECISION:

Article 1

full

to the

condition of

Subject
compliance with the
commitments with regard to the divestiture of [certain pieces
of SNS gas transportation and processing infrastructure] which
are set out in the Annex, the concentration notified by BP
Amoco plc on 4 May 1999 relating to the acquisition of
control of Atlantic Richfield Company is declared compatible
with the common market and with the EEA Agreement.

BP Amoco plc
Britannic House
1, Finsbury Circus
London EC2M 7BA
United Kingdom

Done at Brussels, 29 September 1999.

For the Commission

Mario MONTI

Member of the Commission

19.1.2001

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Official Journal of the European Communities

L 18/13

Undertakings presented by BP Amoco plc pursuant to Article 8(2) of Regulation (EEC) No 4064/89 with a view to
eliminating competition concerns

ANNEX

1.

Definitions

1.1.

In these undertakings:

(cid:145)ABL(cid:146)

means Arco British Limited (a wholly owned subsidiary of Arco);

(cid:145)approval date(cid:146)

means the date of the Decision issued by the Commission pursuant to Article
8(2) of Regulation (EC) 4064/89 declaring the concentration between BPA and
Arco compatible with the common market subject to BPA complying with the
undertakings set out herein or, in the absence of any such Decision, the date
upon which, pursuant
said
concentration is deemed to have been declared compatible with the common
market;

to Article 10(6) of

that Regulation,

the

(cid:145)Arco(cid:146)

(cid:145)BPA(cid:146)

(cid:145)BP Amoco affiliate(cid:146)

means Atlantic Richfield Company;

means BP Amoco plc;
means any company over which, or the purposes of Article 3(3) of Council
Regulation (EC) 4064/89, BPA has
the possibility of exercising decisive
influence;

(cid:145)Commission(cid:146)

means the Commission of the European Communities;

[(cid:133)]

(cid:145)Merger Agreement(cid:146)

means the Agreement and Plan of Merger dated as of 31 March 1999, and
made among BPA, Arco and Prairie Holdings, Inc.;

(cid:145)nominee(cid:146)

means the person appointed by BPA pursuant to paragraph 2.5, 2.6 or 2.7 (as
the case may be);

(cid:145)relevant assets(cid:146)

means the following: [(cid:133)]

[(cid:133)]

2.

Divestment of relevant assets and related matters

2.1. BPA hereby undertakes to the Commission:

2.1.1.

to procure that ABL shall, no later than by [a specified time], have transferred legal title to the relevant
assets to one or more purchasers approved by the Commission; and

2.1.2. not without the Commission’s prior approval to reacquire, and to procure that the BP Amoco affiliates
shall not without the Commission’s prior approval reacquire, any of the relevant assets, provided that if by
the 14th day after the date upon which BPA sends a written request to the Commission seeking such
approval, the Commission has not given written notice to BPA denying such approval, the Commission
shall be deemed to have given such approval.

2.2.

If at any time after the concentration completion date the Commission has reasonable grounds to suspect that
BPA is failing to comply diligently with the undertaking given in paragraph 2.1.1 above, the Commission shall
have the power to appoint a trustee.

2.3.

If by [a specified date], ABL has not transferred legal title to the relevant assets to one of more purchasers
approved by the Commission, BPA shall appoint a trustee.

2.4. The appointment of a trustee pursuant to paragraphs 2.2 and 2.3 shall be effected, and the mandate of any

trustee so appointed, shall be as described in the Appendix hereto.

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Official Journal of the European Communities

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2.5. By [a specified date] after the approval date, BPA shall submit to the Commission the name of a person,
independent of BPA, who BPA considers appropriate (in view of that person’s knowledge and experience) to act
as BPA’s nominee (the nominee) for the purposes of participating after the concentration completion date in any
discussions with the owners of equity interests in the relevant assets and exercising ABL’s right to vote at
meetings of the Operating Committees of the relevant assets in regard (in either case) to the transportation and/or
processing in any of the relevant assets of gas owned by any party which does not own an equity interest in the
relevant asset in question.

2.6.

If the Commission rejects the name submitted to it by BPA pursuant to paragraph 2.5 above, BPA shall, within
seven days of receiving written notice of such rejection, submit the name of an alternative person to act as
nominee, provided that if by the 14th day after that date upon which BPA submits the name of a person to act as
nominee (whether pursuant to paragraph 2.5 or pursuant to this paragraph 2.6), the Commission has failed to
give BPA written notice of rejection of the person so named, that person shall be deemed to have been approved
by the Commission to act as nominee.

2.7.

In the event that the Commission, upon reasonable grounds, rejects two individuals proposed consecutively by
BPA to act as nominee, the Commission shall name an alternative individual having the requisite degree of
knowledge and experience to act as nominee, and within seven days of the Commission having done so, BPA
shall appoint that person as nominee.

2.8.

If upon reasonable grounds the Commission considers that the nominee is failing to carry out diligently his/her
mandate, the Commission shall be entitled to give written notice thereof to BPA, in which event a new person
shall be appointed (in accordance with the procedure described in paragraphs 2.5 to 2.7 above, mutatis mutandis)
to act as nominee.

2.9. The nominee’s mandate shall be to ensure that during the period commencing on the concentration completion
date and ending on the date upon which legal title to a relevant asset is transferred to a purchaser approved by
the Commission, ABL’s rights under the Operating Agreement (or similar) in relation to the transportation and/or
processing in that relevant asset of gas owned by parties who have no equity interest in that relevant asset, are
exercised in the best interests of the relevant asset in question. In addition to the foregoing, the nominee shall
from time to time (and no less frequently than every two months) provide a written report to the Commission on
progress in the discharge of the nominee’s mandate.

3.

Notices and other communications

3.1. All notices and other written communications between the Commission and BPA required by or relating to the
undertakings contained herein (including the Appendix hereto) shall be sent by facsimile or by overnight courier
to the following number/address:

If to the Commission:

(cid:151) if by facsimile: (32(cid:151)2) 296 43 01,

(cid:151) if by courier:

Commission of the European Communities (DGIV B)
150 Avenue de Cortenbergh/Kortenberglaan 150
Brussels
Belgium

marked for the attention of the Director in charge of merger control;

If to BPA:

(cid:151) if by facsimile: (44(cid:151)207) 496 45 71,

(cid:151) if by courier:

BP Amoco Legal
BP Amoco plc
Britannic House
1 Finsbury Circus
London EC2M 7BA
United Kingdom

marked for the attention of Juan A. Rodriguez, solicitor.

19.1.2001

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Official Journal of the European Communities

L 18/15

3.2. Each notice and other communication sent by facsimile shall be deemed to have been received on the day and at
the time indicated in the transmission report issued by the facsimile unit from which the said notice or other
communication was sent unless such time is after 5 p.m. in the country of receipt or such day is not a working
day in the country of receipt, in which event the said notice or other communication shall be deemed to have
been received at 10 a.m. on the next working day in the country of receipt. Each notice and other
communication sent by overnight courier shall be deemed to have been received on the day and at the time
indicated in the acknowledgment of receipt given to the individual who effects such delivery unless such time is
after 5 p.m. in the country of receipt or such day is not a working day in the country of receipt, in which event
the said notice or other communication shall be deemed to have been received at 10 a.m. on the next working
day in the country of receipt.

4.

Reports and approval of purchaser(s) of relevant assets

4.1. BPA shall:

4.1.1. promptly inform the Commission of all material developments (including but without limitation the
identity of any proposed purchaser of the relevant assets) that relate to the compliance by BPA with the
undertakings set out herein; and

4.1.2. every two months during the period commencing on the approval date and ending at such time as legal
title to the relevant assets has been transferred to one or more purchasers approved by the Commission,
send to the Commission a written report describing the current status of the divestment process being
followed in relation to the relevant assets.

4.2. At such time as BPA gives notice to the Commission of the identity of any proposed purchaser of any of the
relevant assets, BPA shall include in such notice such information as BPA possesses in regard to the matters
indicated in points (i) to (iv) of paragraph 4.3.

4.3. The Commission shall use its best endeavours to inform BPA within 14 days after receiving any notice sent
pursuant to paragraph 4.2 above of the suitability of any proposed purchaser(s) of the relevant assets. The
Commission, in determining whether any proposed purchaser is suitable, will take into account whether the
prospective purchaser concerned: (i) appears to possess the status and resources necessary to own the relevant
asset in question as a viable competitor to BPA; (ii) is independent of BPA; (iii) can be shown not to have
significant and relevant commercial connections with BPA which may call into question its independence from
BPA; and (iv) has, or reasonably can obtain, all necessary approvals from the relevant competition authorities and
other regulatory authorities in the European Community and elsewhere (if necessary). If by the end of the 14th
day after receiving any notice sent pursuant to paragraph 5.2 above, the Commission has not given BPA written
notice of rejection of any proposed purchaser (specifying in reasonable detail the reasons for such rejection), the
proposed purchaser(s) named in that notice shall be deemed to have been approved by the Commission as
suitable to purchase the relevant asset in question.

5.

Duration of undertakings

The undertakings given by BPA herein shall automatically lapse if and at such time as the Merger agreement is
terminated pursuant to Article V thereof, or, if for any other reason, the proposed concentration between BPA
and Arco does not proceed or is abandoned.

L 18/16

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Official Journal of the European Communities

19.1.2001

Appendix

1.

(a)

If the Commission decides to exercise the powers referred to in paragraph 2.2, it shall request BPA to propose
to the Commission, within seven days of BPA receiving notification of such request, the names of at least two
experienced investment banks or similar such institutions,
independent from BPA, whom BPA considers
appropriate to be appointed as trustee.

(b)

If by the later of the relevant date and the concentration completion date, ABL has not transferred legal title to
the relevant assets to one or more purchasers approved by the Commission, BPA shall, by the seventh day
after the later of the relevant date and the concentration completion date, propose to the Commission the
names of at least two experienced investment banks or similar such institutions, independent from BPA, whom
BPA considers appropriate to be appointed as trustee.

(c) The Commission shall have the discretion to approve or reject one or both of the names submitted by BPA
pursuant to paragraphs 1(a) and/or 1(b) of this Appendix, save that if by the 14th day after the date upon
which BPA submits such names, the Commission has not given BPA written notice that the Commission
rejects the institutions so named by BPA, such institutions shall be deemed to have been approved by the
Commission. If, pursuant to the foregoing, only one name is approved, BPA shall appoint the institution
concerned as trustee. If more than one name is approved, BPA shall be free to choose the trustee to be
appointed from among the names approved.

(d)

If all the names submitted pursuant to paragraph 1(c) of this Appendix are rejected, BPA will submit the
names of at least two further such institutions ((cid:145)the further names(cid:146)) within seven days of being informed of the
rejection. If only one further name is approved by the Commission (or deemed to have been so approved
because the Commission has failed within 14 days of receiving the further names to have given BPA written
notice that the Commission rejects such further name), BPA shall appoint the institution concerned as trustee.
If more than one further name is approved, BPA shall be free to choose the trustee to be appointed from
among the names approved.

(e)

If all further names are rejected by the Commission, the Commission shall nominate a trustee to be appointed
by BPA.

2. As soon as the Commission has given approval to one or more names submitted, or nominated a trustee, BPA

shall appoint the trustee concerned within seven days thereafter.

3. The trustee’s mandate shall comprise the following functions:

(a)

to monitor BPA’s maintenance of the viability and market value of the relevant assets, and that each of the
relevant assets is being operated in the normal course of business and consistent with its status;

(b)

to monitor the satisfactory discharge by BPA of its obligations under the undertaking given in paragraph 2.1.1
(save that any trustee appointed pursuant to paragraph 2.3 shall, in addition to the other duties forming part
of his/her mandate, be required by [(cid:133)] after his/her appointment to transfer legal title to the relevant assets to
one or more purchasers approved by the Commission [(cid:133)]). In particular, the trustee shall:

(i) monitor and advise the Commission as to the adequacy of the procedure for selecting purchasers to

purchase the relevant assets and as to the conduct of the negotiations with each such purchaser;

(ii) monitor and advise the Commission as to whether the agreements to be entered into with each purchaser
of one or more of the relevant assets will properly provide for the divestiture of the relevant asset(s), as
provided for in the undertaking given in paragraph 2.1.1; and

(c)

to provide written reports ((cid:145)the trustee’s reports(cid:146)) to the Commission on progress in the discharge of the
trustee’s mandate, identifying any respects in which he/she has been unable to discharge his/her mandate. Such
reports shall be provided at regular monthly intervals commencing one month after the date of his or her
appointment, or at such other time(s) or time periods as the Commission may specify.

19.1.2001

EN

Official Journal of the European Communities

L 18/17

4. At any time during the term of the trustee’s appointment, the Commission may, if on reasonable grounds, it
believes that the undertaking given in paragraph 2.1.1 is not being properly complied with, request the trustee to
carry out the following additional functions ((cid:145)the request(cid:146)), and the trustee’s mandate shall be deemed to be
extended accordingly (save that in the event of conflict with the initial functions (as specified in paragraph 3 of this
Appendix), the trustee shall give priority to the discharge of these additional functions):

(a)

to ensure that the relevant assets are not being operated other than in the normal course of business consistent
with their status;

(b)

to ensure the proper divestment of the relevant assets;

(c)

(d)

(e)

(f)

in the trustee’s reports, or in any event within no later than one month of being notified of the request, to
submit to the Commission a proposal for the method and timescale proposed by the trustee for the divestiture
in accordance with the undertaking given in paragraph 2.1.1 of the relevant assets (in which event the
Commission will, as soon as reasonably practicable, approve the proposal or indicate any changes that it may
require);

in the trustee’s reports, or as soon as negotiations are entered into with prospective purchasers, to provide to
the Commission sufficient
the
purchaser(s) in question;

information to enable the Commission to decide on the suitability of

to break off negotiations with any prospective purchasers, or to instruct BPA to break off such negotiations, if
it appears to the Commission that
the negotiations concerned are being conducted with an unsuitable
purchaser; and

to submit to the Commission for approval an agreement for sale and purchase of the relevant assets (or any of
them); such agreement to be unconditional on both purchaser and seller and irrevocable except for the
approval(s) required from the Commission, and any approvals required from any other authority or person.

5. BPA undertakes to provide the trustee with all such assistance and information, including copies of all relevant
documents, as he or she may reasonably require in carrying out his or her mandate, and to pay reasonable
remuneration for his/her services.

6.

If BPA should announce that the proposed concentration between BPA and Arco has been irrevocably abandoned,
the trustee’s mandate(s) shall be deemed to be discharged, and his/her appointment shall forthwith be terminated.