WRITTEN QUESTION E-2383/99 by Bart Staes (Verts/ALE) to the Commission. Regulation on exclusive purchasing obligations.
Date: 1999-12-16
Institutions: European Parliament, Provisional data
Subjects: Member States' contribution, competition policy, derogation from EU law, exclusive distribution agreement, exclusive purchasing agreement, exemption from restrictive-practice authorisation, franchising, non-competition clause, regulation (EU), vertical agreement

8.8.2000

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Official Journal of the European Communities

C 225 E/119

in order to improve the private sector competitiveness in developing countries, the
More generally,
Commission has introduced a new strategy of support to private sector development in 1998. This
strategy is based on the comprehensive approach aiming to improve the business environment, the local,
financial and private sector, institutions and the capacities of individual companies (1).

For the implementation of its strategy the Commission provides a number of supporting facilities to ACP
countries. For the analysis of the business climate in the ACP countries the programme Diagnos is
introduced to help design a country or region-level strategy with emphasis on the determination of reform
policies, but also including support at intermediary and micro levels. A demand-driven, cost-sharing
facility, the Community- ACP business assistance scheme (EBAS) aims at increasing competitiveness of ACP
enterprises and strengthening the capacity of private sector and non-financial intermediaries. To foster
inward investment and economic co-operation, the programme Proinvest (under preparation), will aim at
encouraging continuity and sustainability in investment and partnership promotion as a catalyst for
business-to-business co-operation. Moreover, each country or region may in addition have included
allocations for private sector development in the national or regional indicative programmes.

to the private sector runs in collaboration and co-ordination with the
The Commission(cid:146)s support
instruments provided by the European Investment Bank (EIB) and the ACP-EC Centre for the development
of industry (CDI). Both institutions will have an enlarged mandate under the post LOME convention that is
currently under negotiation. Co-ordination is sought with other donors, in particular with Member States,
in implementing the strategy.

Finally, it should be kept in mind, that the difference between Member States aid and the Commission(cid:146)s aid
on this point is, that Community aid is tendered in all 15 Member States (in addition to what is mentioned
above).

(1) COM(98) 667 final.

(2000/C 225 E/127)

WRITTEN QUESTION E-2383/99

by Bart Staes (Verts/ALE) to the Commission

(16 December 1999)

Subject: Regulation on exclusive purchasing obligations

A new European regulation seeks to make exclusive purchasing obligations impossible for products and
services if the suppliers in question have a market share greater than 30 %. However, the proposed
regulation threatens to make exclusivity contracts the norm. Very few suppliers have a market share in
excess of 30 %. For example, owners of cafØs and public houses would be tied to one supplier not only for
drinks but also for all other goods and services which they need.

1. What were the economic arguments for the abovementioned draft regulation? What persuaded the
Commission to draft this regulation?

2.
Does the Commission have a (detailed) breakdown of exclusive purchasing obligations in the fifteen
Member States? If so, what contracts and what (percentage) shares of the market are involved? If not, does
not the regulation risk producing the opposite effect in view of the 30 % threshold that is applied?

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Official Journal of the European Communities

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8.8.2000

Answer given by Mr Monti on behalf of the Commission

(6 January 2000)

The Honourable Member(cid:146)s question refers to the draft block exemption regulation the Commission has
published, together with draft guidelines (1). These draft texts are the final step in the review and reform of
Community competition policy towards vertical agreements.

The first step was the publication of a green paper (2), followed by a consultation of all interested parties,
and the publication of a communication by the Commission (3). In these documents the reasons for the
review and reform are amply described.

In short, the future policy that is proposed signifies a shift to a more economic approach. This is widely
supported and is made necessary by a number of structural weaknesses in the current block exemption
including that covering certain of the beer delivery contracts. The three existing block
regulations,
exemption regulations concerning exclusive distribution, exclusive purchasing and franchising agreements
have been widely criticised in recent years for being too narrow in scope, over formalistic in their
approach and for imposing on industry a strait-jacket incompatible with the evolution of production and
distribution methods. In addition, in cases where companies have market power, vertical restraints can be
used for pro-competitive purposes as well as anti-competitive purposes, for example to foreclose the
market.

The proposed new policy will considerably simplify the rules applicable to vertical restraints and reduce
the regulatory burden, as it will enable companies which lack significant market power (and most
companies lack significant market power) to benefit from a safe harbour within which it will be no longer
necessary for them to assess the validity of their agreements under the Community competition rules. In
accordance with this new approach, the proposed block exemption regulation covers, up to a market share
threshold proposed to be set at 30 %, all vertical restraints concerning both intermediate and final goods,
as well as services, except for a limited number of hardcore restraints and conditions. For example, in
relation to the beer delivery contracts the Honourable Member mentions,
it is in general not to be
expected that a brewer with a market share below 30 % will be able, on its own, to foreclose the market to
its competitors by imposing a non-compete obligation on the pubs it is supplying.

Companies with market shares above the 30 % threshold will not benefit from the safe harbour. However,
their vertical agreements will not be presumed illegal but may require an individual examination under
Article 81 (ex Article 85) EC Treaty. The accompanying guidelines are designed to assist undertakings in
carrying out such an examination and thus to increase the effectiveness of the competition rules.

As regards non-compete obligations, it is not feasible to have an overview of all such obligations in the
Community as this would concern thousands of agreements in many sectors. However, the Commission
does not fear nor expect that non-compete obligations will become the norm for a number of reasons.

Firstly, the new block exemption provides for a reduction of the exempted duration of non-compete
obligations to 5 years, while under the current regime, in certain sectors like the beer sector, distributors
can be tied up to 10 years or even indefinitely. This will give distributors the power to put pressure on
their suppliers by threatening to change supplier, which is more efficient than regulating in detail the
rights and obligations of the contracting parties.

Secondly, as said above, unlike the current regulations,
undertakings with market shares exceeding 30 %.

the future block exemption will not cover

the proposed regulation covers for the first

Thirdly,
time associations of small and medium-sized
enterprises (SME) retailers, which should enable such SMEs to strengthen their position vis-(cid:224)-vis their
suppliers and better compete with large integrated distribution groups.

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the new legal

framework also provides for a withdrawal mechanism that will enable the
Fourthly,
competition authorities to intervene even below the 30 % market share threshold, if vertical restraints
lead to an anti-competitive outcome.

The Commission(cid:146)s aim is to establish a competition policy genuinely based on economic criteria and
focused on the analysis of the effects of vertical agreements on the market. The Commission does not want
to regulate, through the Community competition rules, the contractual relations between the parties for
the purposes of re-equilibrating their respective bargaining positions. The antitrust rules are there to
protect competition and to ensure that vertical restraints do not lead to an anti-competitive outcome in the
markets, in particular where suppliers have significant market power. The new policy will also benefit
SMEs.

(1) OJ C 270, 24.9.1999.
(2) Green paper on vertical restraints in EC competition policy, COM(96) 721 final.
(3) Communication on the application of the EC competition rules to vertical restraints, (COM(98) 544).

(2000/C 225 E/128)

WRITTEN QUESTION P-2388/99

by SØrgio Marques (PPE-DE) to the Commission

(1 December 1999)

Subject: Banana import arrangements

The proposal adopted by the Commission at its meeting of 10 November 1999 on the new import
arrangements for bananas poses a substantial threat to the continued production of bananas in the EU,
owing in particular to the probable substantial change in marketing channels. This change may seriously
hinder the marketing of Community bananas and the risk is that no aid system may be able to compensate
producers.

Because of this and the fact that a senior Commission official stated that the new arrangements would not
adversely affect Community bananas, can the Commission say how it intends to safeguard the interests of
banana producers in Madeira under the new arrangements?

Furthermore, assuming that the marketing of Community bananas is guaranteed and bearing in mind the
budgetary commitments made in Agenda 2000, how will the additional cost of the system of aid to
Community producers ((cid:145)deficiency payments(cid:146)) be funded following the increased supply of bananas and the
consequent fall in prices?

Answer given by Mr Fischler on behalf of the Commission

(20 December 1999)

The proposal adopted by the Commission on 10 November 1999 (1) aims to meet the Community(cid:146)s
obligations to the World Trade Organisation (WTO), while taking into account the essential concerns of
the Community and the banana producers in the African, Caribbean and Pacific (ACP) States and the need
to comply with the strict limits of the Community budget.

It is based on a tariff-only system which would enter into force not later than 1 January 2006 following a
transitional period during which a system of tariff quotas would apply, together with a tariff preference
which would be sufficient to maintain access for ACP produce.

The Commission considers that support for Community producers is guaranteed by the present system of
compensatory aid calculated on the basis of the difference between the flat-rate reference income (cid:129) which
was increased by 5 % in 1998 and by 3 % in 1999 (cid:129) and the average prices obtained during the banana
marketing year. This system ensures that Community production is marketed, by providing full compensa-
tion no matter how prices move on the Community market during this period.