Report from the Commission to the Council and the European Parliament on the application of the Agreement between the European Communities and the Government of the United States of America regarding the application of their competition laws 1 January 1999 to 31 December 1999
Date: 2000-10-04
Institutions: European Commission
Subjects: United States, competition law, competition policy, international agreement, international competition

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 04.10.2000
COM(2000) 618 final

REPORT FROM THE COMMISSION TO THE COUNCIL AND
THE EUROPEAN PARLIAMENT

on the application of the
Agreement between
the European Communities and
the Government of the United States of America
regarding the application of their competition laws

1 January 1999 to 31 December 1999

1.

INTRODUCTION

On 23.09.1991 the Commission concluded an Agreement with the Government of the United
States of America regarding the application of
(the “1991
Agreement”),
the aim of which is to promote cooperation between the competition
authorities. By a joint decision of the Council and the Commission on 10.04.19952 the
Agreement was approved and declared applicable.

their competition laws1

On 04.06.1998 another agreement, which strengthens the positive comity provisions of the
1991 Agreement, entered into force3 (the "1998 Agreement"), after having been approved by
a joint decision of the Council and the Commission of 29.05.1998.

On 08.10.1996 the Commission adopted the first report on the application of the 1991
Agreement for the period of 10.04.1995 to 30.06.19964. The second report completes the
1996 calendar year, covering the period of 01.07.1996 to 31.12.19965. The third report covers
the whole calendar year 19976, the fourth the year 19987. The present report concerns the
calendar year from the 01.01.1999 to 31.12.1999. This report should be read in conjunction
with the first report which sets out in detail the benefits, but also the limitations of this kind
of cooperation.

In summary, the 1991 Agreement provides for:

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–

–

–

1

2

3

4

5

6

7

notification of cases being handled by the competition authorities of one Party, to the
extent that these cases concern the important interests of the other Party (Article II),
and exchange of information on general matters relating to the implementation of the
competition rules (Article III);

cooperation and coordination of the actions of both Parties' competition authorities
(Article IV);

a "traditional comity" procedure by virtue of which each Party undertakes to take
into account the important interests of the other Party when it takes measures to
enforce its competition rules (Article VI);

a "positive comity" procedure by virtue of which either Party can invite the other
Party to take, on the basis of the latter's legislation, appropriate measures regarding
implemented on its territory and which affects the
anticompetitive behaviour
important interests of the requesting Party (Article V).

Agreement between the Government of the United States of America and the Commission of the
European Communities regarding the application of their competition laws (OJ L 95, 27.4.95, pp.47
and 50)
See OJ L 95, 27.4.95, pp.45 and 46.
Agreement between the European Communities and the Government of the United States of America
on the application of positive comity principles in the enforcement of their competition laws, OJ L 173,
18/06/1998, pp. 26 – 31.
Com(1996) 479 final, see XXVIth Report on Competition Policy, pp. 299-311.
Com(1997) 346 final, see XXVIth Report on Competition Policy, pp. 312-318.
Com(1998) 510 final, see XXVIIth Report on Competition Policy, pp. 317-327.
Com(1999) 439 final, see XXVIIIth Report on Competition Policy, pp. 313-328.

2

In addition, the 1991 Agreement makes it clear that none of its provisions may be interpreted
in a manner which is inconsistent with legislation in force in the European Union and the
United States of America (Article IX). In particular, the competition authorities remain bound
by their internal rules regarding the protection of the confidentiality of information gathered
by them during their respective investigations (Article VIII).

The 1998 Agreement clarifies both the mechanics of the positive comity cooperation
instrument, and the circumstances in which it can be availed of. In particular, it describes the
conditions under which the requesting Party should normally, on making a referral, suspend
its own enforcement actions.

2.

EC/US COOPERATION IN INDIVIDUAL CASES DURING 1999

During 1999, the Commission cooperated with the Antitrust Division of the US Department
of Justice (DoJ) and the US Federal Trade Commission (FTC) in a substantial number of
cases. Beyond the specific case-related benefits arising out of this intensive cooperation for
both the competition authorities and private parties involved (in terms of a more rapid and
coherent management of cases on both sides of the Atlantic), the close daily contact between
case teams in the Commission (DG Competition) and the US DoJ and FTC is conducive to
mutual confidence building, accrued knowledge of the substantive and procedural rules in
each other's jurisdictions, substantial convergence in competition analysis, and movements
towards "best practices" in both substantive and procedural matters.

2.1

Merger cases

Since the adoption of the Merger Regulation, there has - nearly every year - been a steep rise
in the number of operations notified to the Commission. 1999 saw a further dramatic increase
over 1998. On top of the increase in the number of transactions, it is clear that an ever-greater
number of these cases involves companies based in different parts of the world; the current
merger wave has a truly global dimension. Indeed, 1999 has seen a further rise in the number
of merger cases notified under the agreement, and a considerable intensification in co-
operation between the US and the EU in the treatment of such cases.

It has become routine for case handlers to ask the notifying parties for waivers of their right
for the confidentiality of the information which they provide to the authorities to be
protected. Such waivers enable the agencies to exchange confidential information with one
another. Frequently the main benefit of this is not so much the information which might be
exchanged, but the removal of constraints which would otherwise prevent the agencies from
having a
such exchanges prevent
misunderstandings which might otherwise arise. Such a co-ordinated approach can have the
effect of reducing the burden on the notifying parties and on third parties.

and unfettered dialogue. For

example,

free

Substantive cooperation in merger cases tends to focus on three areas:
the definition of
markets (the product and geographic scope of such), the assessment of the likely competitive
effects of the proposed operation on that/those market/s, and the appropriateness of any
remedies proposed by the parties to meet any competition concerns identified by the
authorities. EU/US cooperation has been characterised by a marked progressive convergence
in the thinking of the agencies on both sides of the Atlantic with regard to all three of these
areas. What follows are a few examples of concrete cooperation in merger cases during 1999.

3

Transatlantic (in this instance, Commission/FTC) cooperation during 1999 was particularly
intensive with regard to the big oil merger cases, most notably with regard to the
Exxon/Mobil merger. Informal contacts between the FTC and the Commission started soon
after the announcement of the Exxon/Mobil transaction (December 1998), long before the
formal notification occurred in May 1999. This allowed the EU and US authorities to discuss
the particular competition concerns for future oil and gas output which they feared might
stem from the creation of so-called “super majors”. Following notification, and having
obtained waivers from the merging parties which permitted the EU and US authorities to
exchange confidential information, assessment of much of the substance of the case was
carried out in close co-operation between the agencies. Commission staff visited their FTC
counterparts, reviewed documents at FTC premises, and there were regular telephone calls,
exchanges of documents, and other contacts between the two case teams.

Discussion between staff on both sides focused most closely on the assessment of the effects
that the proposed transaction was likely to have on competition in the upstream markets
(exploration, development, production and sale of crude oil and natural gas). The likely
impact of the merger on the market for aviation lubricants was also the subject of close
discussion. Indeed, cooperation still continues with regard to the implementation of the
remedies that were agreed in both jurisdictions.

There was also close cooperation between the Commission and FTC in relation to the BP
Amoco/ARCO merger.

The Commission cooperated closely with the DoJ in the treatment of
the Allied
Signal/Honeywell merger case. The Commission's enquiry focused on a number of markets
for avionics products (communication and navigation equipment, collision avoidance
systems, weather radar etc..), supplied to the commercial aviation industry as well as to the
space and defence industries. There were frequent (principally telephone) contacts between
the relevant staff in both agencies. Initial discussions concentrated on how to define the
product and geographic scope of the markets affected by the proposed transaction. In the later
stages, discussion focused mainly on the appropriateness of the divestitures and commitments
proposed by the parties to the two authorities; the latter discussions continued even after the
merger had been cleared by the Commission, but not yet by the DoJ. Cooperation regarding
divestitures proved particularly useful for the Commission, in view of the fact that most the
assets to be divested were located in the United States.

Cooperation in Allied Signal/Honeywell was greatly facilitated by the fact that the merging
parties had granted full waivers allowing for the exchange of market data and other
documentation submitted to the two authorities.

The Commission also cooperated with the DoJ in the treatment of the BT/AT&T case. This
operation was notified to the Commission under the new (in force since March 1998) Article
2 of the Merger Regulation, which extended the scope of the regulation to "full function"
cooperative joint ventures. Again, contacts were frequent and mainly by telephone.
Discussion focused on how to define the product/service and geographic scope of the markets
affected by the proposed transaction, and on the likelihood of the joint venture being in a
position to exercise power on those markets. The cooperation was particularly useful in
helping to assess the likely customer impact of the operation.

4

2.2

Cartel cases

Cooperation between the EU and US in cartel matters has improved markedly over the past
year. Contacts between the relevant sections of the Commission and the DoJ in particular
there has been a number of staff visits (Commission/DoJ).
have become commonplace:
Cooperation has been particularly useful with regard to investigations of cartels which have
produced effects on both sides of the Atlantic.

It has nonetheless to be acknowledged that effective cooperation in combatting cartels is
seriously hampered by the agencies' inability to exchange confidential information. A so-
called "second generation" agreement allowing such communications would greatly improve
the situation in this regard; however, domestic legal constraints on the exchange of
confidential information complicate the prospect of concluding such a further agreement. It is
particularly noteworthy that, in many cartel cases,
investigations are not conducted in
parallel, but one after the other. That is, one of the authorities "goes first", because of its
inability to inform the other of the details of its investigation; the other authority may only
learn of the investigation when it becomes public. This hampers the authorities' ability to
deal, in as efficient and timely a fashion as possible, with the threat posed by multi-national
cartels.

The DoJ hosted a highly successful Anti-Cartel workshop in Washington on Sept. 30-Oct. 1
1999, from which all participants (including officials from the Commission's Competition D-
G) seem to have benefited. The Workshop's panel system proved effective in focusing on
particular problems/issues: leniency/immunity, investigatory techniques, and so on.

3.

ADMINISTRATIVE ARRANGEMENTS ON ATTENDANCE (AAA)

The Commission adopted on March 31, 1999 a text setting forth administrative arrangements
between the competition authorities of the European Communities and of the United States
concerning mutual attendance at certain stages of the procedures in individual cases involving
the application of their respective competition rules8.

These arrangements were concluded in the framework of the agreements between the
European Communities and the government of the United States concerning enforcement of
their competition rules, and in particular
the provisions regarding coordination of
enforcement activities. The arrangements will contribute to improving mutual understanding
by the competition authorities of their respective procedures, as well as to enhancing
coordination, cooperation and avoidance of conflicts in appropriate cases of mutual interest.
Neither
the letters exchanged between the
Commission and the US competition authorities outlining and confirming a common
understanding of the said arrangements, constitute a binding international agreement.

these administrative arrangements, nor

The arrangements are bilateral and reciprocal in nature. They provide for the possibility of
the US competition authorities attending as observers, in appropriate cases of mutual concern,
at oral hearings in competition proceedings before the European Commission; they provide,
in like manner, for the possibility of the Commission attending at high level meetings (so-

8

Bulletin EU 3-1999, Competition (18/43).

5

called "pitch meetings") between the US competition authorities and the parties to
enforcement proceedings involving the application of US antitrust law.

The arrangements provide that a request for attendance at a hearing or meeting may be
to confirmation of satisfactory assurances or
granted in appropriate cases, subject
arrangements regarding confidentiality and the use of information. Attendance will be
possible only with the express consent of the persons concerned by the enforcement
proceedings in either jurisdiction, and the arrangements do not in any way limit the rights
enjoyed by those persons.

The new administrative arrangements were invoked for the first time in December 1999,
when representatives of the US FTC attended the Commission's oral hearing in the BOC/Air
Liquide merger case.

4.

EU/US MERGERS WORKING GROUP

At the annual bilateral meeting between the Commission (DG Competition), the FTC and the
DoJ, held in Brussels on October 5 1999, it was decided to create a new EU/US Working
Group whose purpose would be to enhance transatlantic cooperation in the control of "global"
mergers.

It was felt that, while EU/US cooperation in merger cases is very successful, there is still
scope for improvement, particularly in view of the current merger wave and the exponential
increase in large-scale cross-border transactions. In the longer term, the Working Group
could be further mandated to study other competition issues of common concern. For the time
being, the working group has been mandated to focus on:

(a)

(b)

an in-depth study of the respective EU and US approaches to the identification and
implementation of remedies (in particular divestitures), and to post-merger remedy
compliance monitoring.

the scope for further convergence of analysis/methodology in merger cases being
treated in both jurisdictions, particularly regarding the respective EU and US
approaches towards oligopoly/collective dominance/coordinated interaction.

The working group is focusing, during a first phase, on the first topic (remedies in merger
cases) and its deliberations will continue during 2000.

5.

POSITIVE COMITY

The positive comity instrument provided for in Article V of the 1991 Agreement was
invoked, for the first (and so far only) time by the US DoJ in 1997. The DoJ requested that
the Commission investigate the Computer Reservation System (CRS) Amadeus, owned by
Air France, SAS, Iberia, Lufthansa and Continental. Sabre, a CRS at the time owned by
American Airlines, had complained to the US DoJ about
the allegedly exclusionary
behaviour of Amadeus.

In February 1999, the Commission issued a statement of objections against Air France, on the
basis of a small number of the original allegations. The case is still ongoing.

6

6.

a)

STATISTICAL INFORMATION

Number of cases notified by the Commission and by the US authorities

There was a total of 70 notifications made by the Commission during the period between
1 January 1999 and 31 December 1999. The cases are divided into merger and non-merger
cases and are listed in Annex 1.

The Commission received a total of 49 notifications from the US authorities during the same
period. 23 were received from the DoJ and 26 from the FTC. A list of these cases is found in
Annex 2, again broken down into merger and non-merger cases.

Merger cases made up the majority of all notifications in both directions. There were 59
merger notifications made by the Commission and 39 by the US authorities.

The figures given represent the number of cases in which one (or more) notifications took
place and not the total number of individual notifications. Under Article II of the Agreement,
notifications may be made at various stages of the procedure and so more than one
notification may be made concerning the same case.

Table 1 sets out in figures the number of cases notified under the 1991 EC/US Agreement
during the period from 1 January 1999 to 31 December 1999. Table 2 sets out in figures the
number of cases notified since 23 September 1991.

Table 1

CASES NOTIFIED

Year

No. of EC
notifications

No. of US
notifications

No. of merger
notifications

1999

70

FTC

26

DoJ

23

59 (EC)

39 (US)

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Table 2

CASES NOTIFIED

Year

1992

1993

1994

1995

1996

1997

1998

1999

No. of EC
Notifications

No. of US
notifications
FTC
DoJ

No. of merger
notifications

26

44

29

42

48

42

52

70

20

22

16

14

20

12

22

26

20 (=40)

11 (EC) +31(US

18 (=40)

20 (EC)+20(US)

19 (=35)

18 (EC)+20(US)

21 (=35)

31 (EC)+18(US)

18 (=38)

35 (EC)+27(US)

24 (=36)

30 (EC)+20(US)

24 (=46)

43 (EC)+39(US)

23 (=49)

59 (EC)+39 (US)

b)

Notifications by the Commission to Member States

The text of the interpretative letter sent by the European Communities to the US as well as
the Statement on Transparency made by the Commission to the Council on 10 April 1995,
provides that the Commission, after notice to the US Competition authorities, will inform the
Member State or Member States, whose interests are affected, of the notifications sent to it by
the US antitrust authorities. Thus, when notifications are received from the US authorities,
they are forwarded immediately to the relevant sections in D-G Competition and at the same
time copies are sent to the Member States, if any, whose interests are affected. Equally, at the
same time that D-G Competition makes notifications to the US authorities, copies are sent to
the Member State(s) whose interests are affected.

In most instances, the US authorities also notify the Member States directly, under the OECD
Recommendation9. During the period under review 29 cases were notified to the United
Kingdom, 19 to France, 13 to Germany, 11 to the Netherlands, 7 to Sweden, 6 to Italy, 4 to
Belgium, 2 each to Denmark and Finland, and 1 each to Greece, Austria and Luxembourg.

9

Revised recommendation of the OECD Council concerning cooperation between Member countries on
anti-competitive practices affecting international trade, adopted 27/28 July 1995.

8

7.

CONCLUSIONS

1999 witnessed a further intensification of EU/US cooperation in competition matters. In
relation to the treatment of cross-border merger cases in particular, this cooperation has been
very close and fruitful; it has facilitated a growing convergence in the respective EU and US
approaches toward the assessment of the likely anticompetitive effects engendered by such
operations. The authorities on the two sides of the Atlantic are also taking increasingly
convergent approaches to the identification and implementation of remedies, and to post-
merger remedy compliance monitoring.

The EU and US authorities have moreover further strengthened their contacts with respect to
combatting global cartels during 1999, and have concluded administrative arrangements
allowing for the possibility of attending key meetings with the parties in individual cases of
mutual concern. The Commission, DoJ and FTC also continue to maintain an ongoing
dialogue on general competition policy/enforcement issues of common concern.

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ANNEX 1

NOTIFICATIONS BY THE EUROPEAN COMMISSION TO THE US AUTHORITIES
01.01.1999 - 31.12.1999

Merger cases:

01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

38
39
40
41
42

Case n° IV/M.1339 - ABB/Elsag Bailey
Case n° IV/M.1388 - Total/Petrofina
Case n° IV/M.1462 - TWR/LUCASVARITY
Case n° IV/M.1381 - Imetal/English China Clays
Case n° IV/M.1376 - Cargill/Continental Grain
Case n° IV/M.1363 - DuPont/Hoechst/Herberts
Case n° IV/M.1358 - Philips/Lucent Technologies
Case n° IV/M.1391 - International Paper/Union Camp
Case n° IV/M.1466 - Eaton Corporation/Aeroquip-Vickers
Case n° IV/M.1452 - Ford/Volvo
Case n° IV/M.1403 - Astra/Zeneca
Case n° IV/M.1440 - Lucent Technologies/Ascend Communications
Case n° IV/M.1433 - Carrier Corporation/Toshiba
Case n° IV/M.1456 - Dura /Adwest
Case n° IV/M.1415 - BAT/Rothmans
Case n° IV/M.1467 - Rohm and Haas/Morton
Case n° IV/M.1493 - UTC/Sundstrand
Case n° IV/M.1518 - Lear/United Technologies
Case n° IV/M.1532 - BP Amoco/Atlantic Richfield
Case n° IV/M.1383 - Exxon/Mobil
Case n° IV/M.1512 - DuPont/Pioneer Hi-Bred International
Case n° IV/M.1560 - TI Group/Walbro
Case n° IV/M.1561 - Getronics/Wang
Case n° IV/M.1580 - CAI/Platinum
Case n° IV/M.1551 - AT&T/MediaOne
Case n° IV/M.1404 - General Electric/ALSTOM
Case n° IV/M.1612 - Walmart/ASDA
Case n° IV/M.1470 - Goodyear/Sumitomo
Case n° IV/M.1623 - Allied Signal/MTU
Case n° IV/M.1643 - IBM/Sequent
Case n° IV/M.1682 - Ashland/Superfos
Case n°IV/M.1630 - Air Liquide/BOC
Case n° IV/M.1601 - Allied Signal/Honeywell
Case n°IV/M.1618 - Bank of New York/Royal Bank of Scotland Trust Bank
Case n° IV/M.1603 - General Motors Acceptance Corporation/AAS
Case n° IV/M.1589 - Meritor/ZF Friedrichshafen
Case n° IV/M.1598 - Hicks, Muse, Tate & Furst Investment Partners/Hillsdown

Holdings

Case n° IV/M.1631 - Suez Lyonnaise/Nalco
Case n° IV/M.1588 - Tyco/Raychem
Case n° IV/M.1699 - TPG Baccus/Bally
Case n° IV/M.1694 - EMC/Data General
Case n° IV/M.1653 - Buhrmann/Corporate Express

10

43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59

Case n° IV/M.1711 - Tyco/Siemens
Case n° IV/M.1689 - Nestlé/Pillsbury/Haägen Dazs US
Case n° IV/M.1711 - Tyco/Siemens
Case n° IV/M.1723 - Illinois Tool Works/Premark
Case n° IV/M.1538 - Dupont/Sabanci
Case n° IV/M.1768 - Schoyen/Goldman Sachs/Swebus
Case n° COMP/M.1765 - KKR Associates/Siemens Nixdorf Retail and Banking Systems
Case n° COMP/JV.27 - Microsoft/Liberty Media/Telewest
Case n° COMP /M.1775 - Ingersoll-Rand/Dresser-Rand/Ingersoll-Dresser Pump
Case n° COMP /M.1693 - Alcoa/Reynolds
Case n° COMP /M.1763 - Solutia/Viking Resins
Case n° COMP /M.1671 - Dow Chemical/Union Carbide
Case n° COMP /M.1784 - Delphi Automotive Systems/Lucas Diesel
Case n° COMP /M.1767 - AT&T/IBM/INTESA
Case n° COMP /M.1683 - The Coca-Cola Company/Kar-Tess Group (Hellenic Bottling)
Case n° COMP /M.1636 - MMS/DASA/ASTRIUM
Case n° COMP /M.1817 - Bellsouth/Vodafone (E-Plus)

Non-merger cases10:

01
02
03
04
05
06
07
08
09
10
11

See footnote
Case n° IV/36488 – Sabre/Amadeus
See footnote
Case n° IV/37506 – DVD
See footnote
See footnote
See footnote
Case n° IV/36880 - BT/VeriSign
Case n° IV/37612 - Techjet Aerofoils Limited
See footnote
See footnote

10

Due to confidentiality requirements or to protect the secrecy of ongoing invetigations, this list names
only those investigations or cases which have been made public.

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ANNEX 2

NOTIFICATIONS BY US AUTHORITIES TO THE EUROPEAN COMMISSION
01.01.1999 - 31.12.1999

Merger cases11

01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39

11

Exxon/Mobil
GNK/Interlake
Barnes & Noble/Bertelsmann (JV)
T&N PLC/Federal/Mogul Corp
Cobe/Sorin
Signature/AMR Combs
Imetal/English China Clays PLC
Micrion/FEI
BOC Group/Air Products & Chemicals
Hoechst/Rhone Poulenc/Aventis
Astra/Zeneca
Steag/AGA
Lockheed Martin/Comsat
British Aerospace/GEC-Marconi
Tomkins/ACD Tridon
Intergraph/Carl Zeiss (JV)
KvaernerPulping/Ahlstrom
Albright&Wilson/Rhodia
Alstom/ABB HV (JV)
PrecisionCastpartsCorp./Wyman-Gordon
See footnote
Global IndustrialTechnologies/RHI
IrvingMaterials/Lehigh Portland Cement
Fiat/Case
Alcan Aluminium Pechiney/Alusuisse Lonza Group
Allied Waste Industries/Vivendi/Superior Services
Signal/Vertex
VNU/Nielsen Media Research
Union Carbide/Dow Chemical
Nalco Chemical Company/Suez Lyonnaise des Eaux
See footnote
Reckitt & Coleman, plc/Benckiser/NRV
Hannaford Bros Co/Delhaize Freres
See footnote
BP Amoco/ARCO
See footnote
VEBA/Lyondell
See footnote
Rohm and Haas/Morton

Due to confidentiality requirements or to protect the secrecy of ongoing invetigations, this list names
only those investigations or cases which have been made public.

12

Non-merger cases12

01
02
03
04
05
06
07
08
09
10

Gyma/Cambrex/Profarmaco/Mylan
See footnote
Criminal investigation: Public Real Estate Foreclosure Auctions in Brooklyn
See footnote
See footnote
See footnote
See footnote
Criminal investigation: Graphite Electrodes
Criminal investigation: Sorbates
Criminal investigation: Vitamins

12

Due to confidentiality requirements or to protect the secrecy of ongoing invetigations, this list names
only those investigations or cases which have been made public.

13