WRITTEN QUESTION E-3087/03 by Bruno Gollnisch (NI) to the Commission. Commission criteria on concentrations.
Date: 2003-10-20
Institutions: European Parliament, Provisional data
Subjects: European undertaking, business policy, competition policy, dominant position, economic concentration, economic policy, merger, merger control

C 78 E/462

Official Journal of the European Union

EN

27.3.2004

Through the Working Party on customs cooperation set up under the Treaty establishing the Europe
Union (Third pillar (cid:1) Justice and Home Affairs) the Member States implement an annual programme of
common customs surveillance operations to combat
trafficking in illegal goods. These operations
frequently target cigarettes, tobacco and alcohol in the European Union. They are co-financed by the
Commission under the AGIS programme.

External border controls have always been a priority for the Commission.
It recently adopted a
Communication on the role of customs in the integrated management of external frontiers (1) which sets
out its strategy in this area. Its objective is to ensure greater protection for goods crossing the EU’s external
borders against environmental, health and public safety risks. The Communication proposes a common
risk strategy for all Member States under which controls at the external borders can be prioritised to make
them more effective.

The Commission would inform the Honourable Member that the new Customs 2007 programme, like its
predecessor Customs 2002,
is designed to ensure that all Member States apply customs controls,
particularly at the external borders, in the same and most efficient way. One of the principal objectives is
to strengthen cooperation between customs authorities in order to more effectively combat fraud. This
programme is open to both current and future Member States.

The Commission would also point out that one of the fundamental freedoms of European citizens under
the principles governing the Internal Market is to be able to purchase excisable products in one Member
State and take them for their personal consumption to the Member State where they reside without having
to pay excise duty there.

As things stand at present, Community legislation lays down only minimum rates of excise duty beyond
which Member States are allowed to set their own. Under the Directive a proposal by the Commission on
these minimum rates of excise duties for manufactured tobacco were recently raised (2) and a minimum
level of excise duty expressed in euros was introduced to ensure that a minimum level of excise duty on
cigarettes is applied in all Member States.

The Commission is, nevertheless, aware that, if the Member States fail to agree on greater harmonisation of
excise duty rates, differences in these rates will create distortions of competition between traders in the
Member States, particularly in border areas. The Commission has always taken the view that greater
harmonisation of excise duty rates, in particular for manufactured tobaccos, will overcome this problem.
The Commission continues to recommend such an approach to improve the functioning of the Internal
Market.

(1) COM(2003) 452 final.
(2) Council Directive 2002/10/EC of 12 February 2002 amending Directives 92/79/EEC, 92/80/EEC and 95/59/EC as

regards the structure and rates of excise duties applying to manufactured tobaccos, OJ L 46, 16.2.2002.

(2004/C 78 E/0488)

WRITTEN QUESTION E-3087/03

by Bruno Gollnisch (NI) to the Commission

(20 October 2003)

Subject: Commission criteria on concentrations

In its assessment of the legality of business mergers and concentrations, the Commission seems opposed to
the actual establishment of any European dominant position, and not just abuses of dominant position.

What is more worrying, the Commission has on several occasions in the past (ATR-De Havilland, Legrand-
Schneider, …) and event recently (Alcan-Pechiney) given the impression that its decisions systematically
sought to penalise mergers in which the dominant company on the world market was European, but were
very lenient in the opposite situation.

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Will the Commission outline the underlying principles of its policy on concentrations?

Is it clearly opposed to attempts by European companies to become world leaders in their field?

Is it opposed, as a matter of principle, to world-scale industrial poles being run by Europeans?

Will it state whether or not its position is based on a criterion of ‘net benefit’ to the EU or its industrial
sectors?

Does its analysis take account of the employment situation in Europe?

Answer given by Mr Monti on behalf of the Commission

(9 December 2003)

In the Commission’s view, concentrations (or mergers) are a normal part of business life and, in principle,
have a beneficial effect on the economy. Mergers generate economies of scale and increase the
competitiveness (cid:1) and hence performance (cid:1) of the companies concerned. By virtue of the impact they
can have on the competitiveness of industry in the broad sense of the term and on economic growth,
mergers are also generally conducive to long-term employment because sustained economic growth
provides the best guarantee of high employment. Mergers are, therefore, an essential factor in wealth
generation and job creation, contributing to the economic and social dimensions of sustainable
development.

However, this virtuous circle presupposes that the productivity gains made by companies as a result of
mergers are, at least in part, redistributed to their customers (final or intermediate consumers, the latter
being other companies that are often small and medium-sized companies) in the form of lower prices or
innovative or better-quality goods or services. In other words, it is most important to ensure that the gains
stemming from mergers are not wholly (or largely) retained by the company resulting from the merger for
its own benefit.

Only sufficient competitive pressure is capable of ensuring that the company resulting from a merger has
the necessary incentives to allow its customers, and consumers in general, to benefit from the productivity
and efficiency gains generated by the merger, with the result that these gains are spread throughout the
economy.

That is why Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations
between undertakings (1) (‘the Merger Regulation’) seeks to prevent mergers from resulting in the creation
of dominant companies, i.e. companies with such economic strength that they can impose unreasonably
high prices on customers, erode their purchasing power and, ultimately, deprive the economy of the
efficiency and productivity gains associated with mergers.

In short, the fundamental principle underlying the Merger Regulation is that preserving competitive market
structures is the best way of maintaining and improving the competitiveness of industry and of the
European economy in general and of ensuring solid, lasting growth and, accordingly, a high level of
employment in the European Union.

The state of the labour market in Europe is not, therefore, one of the Commission’s immediate concerns
when vetting a merger, but this aspect is a consideration in terms of competition policy broadly speaking.
Under Article 18 of the Merger Regulation, workers’ representatives from notifying companies can make
their views known in the course of the merger vetting procedure. The Commission is also planning to
include in the notification form a reminder to notifying companies that they must meet their obligations
under the Community and national social provisions applicable to merger transactions.

Against that background, it should also be noted that other EU policies, in particular employment policy
and enterprise policy, also make a major contribution to maintaining high employment and developing the
competitiveness of the European economy in accordance with the objectives laid down in the EC Treaty.
These various policies are therefore broadly and naturally complementary.

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Accordingly, when exercising its powers to scrutinise mergers, the Commission must consider whether the
transactions notified to it create or strengthen a dominant position as a result of which effective
competition would be significantly impeded in the common market or in a substantial part of it. When
carrying out this analysis, the Commission is required under Article 2(1)(b) of the Merger Regulation to
take account of technical and economic progress, i.e. efficiency gains which are the direct result of the
merger, provided that they are to the consumers’ advantage and do not form an obstacle to competition.
In practice, taking these efficiency gains into account may produce similar results to applying a ‘net benefit’
criterion, albeit on the understanding that the existence and scope of those efficiency gains are assessed by
the Commission as part of a competition analysis and can therefore be taken into account only in so far as
they ultimately have a beneficial effect on competition.

It is true that the Merger Regulation is designed to prohibit the creation or strengthening of dominant
positions as a result of which effective competition would be significantly impeded in the common market,
and this as opposed to Article 82 of the EC Treaty, which refers only to abuse by companies already in a
dominant position. This reflects the different, complementary natures of these two legal
instruments:
whereas the former introduces a priori checks which are preventive in nature, the latter consists of ex-post
checks which are punitive in nature. The attraction of a priori merger supervision lies in the fact that it is
more efficient to maintain a situation of effective competitive situation on the markets concerned than to
take steps subsequently against anti-competitive abuse by companies which have acquired or strengthened
a dominant position as the result of a merger.

transactions only 18 of which were prohibited. Many of

In thirteen years of implementing the Merger Regulation, the Commission has examined more than 2 300
the mergers authorised by the
merger
Commission have allowed powerful European groups to emerge which are themselves world leaders or
able to challenge world leaders on their respective markets. Examples include the groups which resulted
from the decisions concerning Carrefour/Promodes, TotalFina/Elf, Volvo/Renault, Framatome/Siemens,
Usinor/Arbed/Aceralia (merged as Arcelor) and Aérospatiale/DaimlerChrysler Aerospace/Centre for
Advanced Spatial Analysis (CASA) (merged as the European Aeronautic, Defense and Space Company
(EADS)). The Air Liquide/Brin’s Oxygen Company (BOC) merger would be another example if that
particular transaction had not been abandoned after the US authorities had indicated that it would very
probably be banned. Prohibited mergers (or mergers abandoned in the course of in-depth investigations by
the Commission) include those designed to establish both European (e.g. Volvo/Scania) and non-European
(e.g. General Electric (GE)/Honeywell) groups.

It is thus clear that the Commission exercises its merger supervision powers in a perfectly neutral fashion
as regards the identity and nationality of the companies involved or their shareholders and that this is not
incompatible with the objectives of making European industry and the European economy in general more
competitive, maintaining high employment and guaranteeing solid, lasting growth in the European Union.

(1) OJ L 395, 30.12.1989; corrected version: OJ L 257, 21.9.1990.

(2004/C 78 E/0489)

WRITTEN QUESTION E-3099/03

by Jonas Sjöstedt (GUE/NGL) to the Commission

(20 October 2003)

Subject: Aid for the farming of mussels

The eutrophication of our coastal seas continues to be a major environmental problem even though
certain measures have been taken on land to reduce the leakage of nutrients into the sea. Eco-systems
adjust to some extent to the growing quantity of vegetable plankton caused by eutrophication through a
sharp increase in the number of mussels and other organisms that act as filters. These filters are of crucial
importance in reducing plankton biomass in coastal seas. The risk of harmful plankton efflorescence is
reduced in areas with many filters. In some areas there are good opportunities for biological manipulation
of fjord systems as it were by increasing the number of filters with the aid of mussel farming.