WRITTEN QUESTION E-2092/00 by Reino Paasilinna (PSE) and Ulpu Iivari (PSE) to the Commission. Definition of a geographical market.
Date: 2000-06-28
Institutions: European Parliament, Provisional data
Subjects: competition law, dominant position, economic concentration, market, single market

C 81 E/140

Official Journal of the European Communities

EN

13.3.2001

Answer given by Mrs Diamantopoulou on behalf of the Commission

(7 September 2000)

Article 18(6) of Directive 93/104/EC of 23 November 1993 concerning certain aspects of the organisation
of working time provides that, every five years, the Commission shall submit to the Parliament, the
Council and the Economic and Social Committee a report on the application of the Directive in all
Member States.

The Commission is in the final stages of preparing this implementation report. Once the Commission has
adopted the report, it will transmit it to the Parliament.

(2001/C 81 E/172)

WRITTEN QUESTION E-2090/00

by Carlos Bautista Ojeda (Verts/ALE) to the Commission

(28 June 2000)

Subject: Euromed

Is the Commission aware of the project for a high-speed train link (Euromed) to Almer(cid:237)a (Spain)?

Will this project be funded partly or wholly by the EU?

If there is to be EU funding, to which of the Community funds will it be charged and what sum will be
involved?

Answer given by Mr Barnier on behalf of the Commission

(28 July 2000)

The extension of the so-called Euromed railway line to the city of Almer(cid:237)a through the region of Murcia is
mentioned in the Spanish regional development plan for objective 1 regions and is one of the most
important projects for the period 2000-2006 in the region of Andalusia. The project is also scheduled in
the Spanish infrastructure plan for the period 2000-2007. However, as negotiations on the Community
support framework for objective 1 structural fund support to Spain are still under way, it is not possible to
state yet whether the project will be supported in this context.

On the other hand, this line is not defined as Trans-European rail network (TEN) and is therefore not
eligible for funding under the Cohesion fund or the TEN-transport budget line.

(2001/C 81 E/173)

WRITTEN QUESTION E-2092/00

by Reino Paasilinna (PSE) and Ulpu Iivari (PSE) to the Commission

Subject: Definition of a geographical market

(28 June 2000)

The Commission has taken a hard line in defining the concept of (cid:145)relevant markets(cid:146) when intervening in
the purchase of undertakings, mergers and certain types of agreement. The Commission has prohibited the
above-mentioned activities and has imposed conditions on them if they have had an influence on a
relevant product market or geographical market in such a way that a commanding market position is
created or strengthened. However, the Commission(cid:146)s interpretation of a (cid:145)relevant geographical market(cid:146)
diverges from the concept of a market as seen by business. Businesses understand a market area to mean
the sales area or area of
industry in which they operate. On what exactly is the Commission(cid:146)s
interpretation of a commanding market position based? How does it justify the fact that its definition
differs so radically from the concept of a market as seen by business?

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In practice the Commission(cid:146)s interpretation hitherto in the light of the above-mentioned principles has led
firms, particularly those from economically small areas to regard the Commission(cid:146)s intervention in their
mutual cooperation arrangements as illegal. The present application of the competition rules places
business cooperation systems in large and thinly populated border areas on an unequal footing with
those in the centre of
the EU. The Commission has been much keener to intervene in business
consortiums in border areas, even though their market share is relatively small, than in cases where the
market share is perceptibly larger. No intervention takes place in comparable consortiums in the centre of
the EU. How does the Commission propose to take account of this state of affairs and ensure that its
interpretation of a market area does not harm the development of competitive units in small market areas?

Answer given by Mr Monti on behalf of the Commission

(1 August 2000)

It is certainly true, as the Honourable Members indicate, that the concept of the (cid:145)relevant market(cid:146) for a
merger or anti-trust assessment can be different from other definitions, including those used by companies.
Companies may use the term (cid:145)market(cid:146) simply as a reference to the area where they sell their products or to
refer broadly to the industry or sector to which they belong. This is in contrast to the term (cid:145)relevant
market(cid:146), as used in the competition rules, which has a legal and economic meaning, based on the
interpretation given by the Court of justice.

In the latter sense, market definition is a tool to identify and define the boundaries of competition between
firms. It serves to establish the framework within which the Commission applies competition policy.
The main purpose of market definition is to identify in a systematic way the competitive constraints that
the firms face. The objective of defining a market in both its product and geographic dimension is to
identify those competitors of the firms involved that are capable of constraining the latter(cid:146)s behaviour and
of preventing them from behaving independently of effective competitive pressure.
is from this
perspective that the market definition makes it possible to calculate market shares that convey meaningful
information regarding the market power of the involved firms.

It

These principles are applied to all merger cases (as well as in the context of Articles 81 and 82 (ex Articles
85 and 86) of the EC Treaty). The Commission does not share the Honourable Members(cid:146) view that its
competition policy has led to discriminatory treatment of operations between companies from smaller
market areas. As no particular case is mentioned where,
in the Honourable Members(cid:146) view, such
discrimination would have occurred, the Commission will use the recent example of the Volvo/Scania
case to illustrate its statement above.

As the Honourable Members may be aware, the Commission decided, on 14 March 2000, to declare the
proposed merger between the two Swedish heavy vehicle manufacturers incompatible with the common
market. The reason for this decision was that the two merged companies would have achieved a dominant
position on 15 relevant markets for heavy trucks, buses and coaches in Denmark, Finland,
Ireland,
Norway, Sweden and the United Kingdom. Indeed, following that decision some commentators raised
similar questions as the Honourable Members(cid:146), i.e. whether the Merger Regulation (Council Regulation
(EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (1))
sufficiently takes into consideration the situation of smaller Member States, with an important industrial
sector.

it must be stressed that the purpose of merger control is to ascertain that dominant
In this context,
positions are not created or reinforced on any relevant market (regardless of whether the market in
question is small or large). Looking at many of the markets affected by the proposed Volvo/Scania merger,
the effect would have been to eliminate almost entirely the existing competition. For a merger to be
acceptable, it must not create such problems. Unfortunately, even after due consideration of the commit-
ments proposed by Volvo, these concerns remained.

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Official Journal of the European Communities

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13.3.2001

Second, it should be remembered that the success of companies such as Volvo and Scania has been due
largely to the competition between them. This explains, to a large degree, why they have become
successful international companies with more than 80 % of their sales outside the Nordic region. Even
from an industrial point of view it is therefore not clear why it would be in anyone(cid:146)s interest to have
competition between such companies eliminated through a merger.

Third, to allow mergers leading to dominant positions in even small home markets would, in addition to
being unlawful under the Merger Regulation, lead to discrimination against customers and consumers in
smaller Member States. These customers would become exposed to the dominance and would not be
protected in the same way as if they had lived in a large Member State. It would also lead to discrimination
against companies from larger Member States, which would be barred from entering the markets of the
dominant firm, whereas the merged entity would be able to enter the more open (and possibly larger)
Member States. Companies from larger Member States would also be discriminated by not being able to
claim this peculiar (cid:145)small market defence(cid:146).

Finally, firms based in smaller countries and which have high market shares in their home markets, such as
Volvo and Scania, are certainly not precluded from expanding through mergers. In fact they have many
options for cross-border mergers, a fact which is amply shown by the involvement of both firms in new
transactions (with Volkswagen and Renault respectively), within a very short period after the Commission(cid:146)s
decision.

In conclusion, the Commission strongly believes that there are no grounds for the allegation that the
application of the competition rules discriminates against firms from smaller Member States. The process
of market definition treats all companies in a uniform way. It does not focus on whether the relevant
geographic area is large or small, neither whether this area constitutes a border area or central region.
Instead, the focus is, and must be, on the competitive constraints faced by the companies operating in the
economically relevant area.

(1) OJ L 395, 30.12.1989.

(2001/C 81 E/174)

WRITTEN QUESTION E-2093/00

by Gianfranco Dell(cid:146)Alba (TDI) to the Commission

(28 June 2000)

Subject: Alleged fraud at the Stockholm Information Office involving € 648

Now that it is aware of just how serious are the accusations made against officials of the Commission(cid:146)s
representation in Stockholm and of
just how huge was the amount allegedly embezzled, can the
Commission indicate the cost of the inquiry conducted by OLAF (broken down by type of expenditure)
and the procedures in accordance with which the officials were suspended, together with the cost relating
thereto during the period concerned?

Answer given by Ms Schreyer on behalf of the Commission

(18 September 2000)

The Commission would point out that it is obliged to examine (via OLAF) any allegations of irregularities
committed by its officials and other servants which are liable to damage the Communities(cid:146) financial
interests. As last pointed out in its communication of 28 June 2000 The protection of the Communities(cid:146)
financial interests (cid:129) The fight against fraud (cid:129) For an overall strategic approach (1), the Commission must
pursue a policy of zero tolerance in this field if it is to maintain its credibility.

It therefore considers the cost of the Stockholm inquiry to be fully justified (expenses for the two missions
carried out from 22 to 25 November 1999 and from 11 to 14 January 2000: € 8 777; working hours
spent on the inquiry: approximately 180 man/days). The damage caused to the Community (cid:129) including