CELEX: 51988PC0097
Language: en
Date: 1988-04-25
Title: Amended Proposal for a COUNCIL REGULATION (EEC) on the control of concentrations between undertakings (presented by the Commission pursuant to Article 149(3) of the EEC Treaty)

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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                     COM588 ) 97 final
                                                     Brussels , 25 April 1988
                           Amended Proposal for a
                          COUNCIL REGULATION ( EEC )
          on the control of concentrations between undertakings
         presented by the
  'K s** &                   of the EEC Treaty )
    >/. <
 ---pagebreak---                                    Summary
The annexed text contains an updated version of a proposal for a Regulation
which was first made to the Council in 1973 and which has since been
amended three times, pursuant to Article 109 of the EEC Treaty .
A further amendment of the initial proposal has been necessary in order
to take into account the actual state of discussions in the Council . These
have led to the emergence of a basically positive attitude on the
following four principles of the future Regulation !
- merger control should apply to large-scale mergers of Community-wide
   importance ;
- mandatory prior notification of planned mergers ;
- prohibition of anti-competitive mergers and authorization of
   mergers on the basis of principles analogous to those contained
   in Article 85 ( 3 );
- close and constant cooperation between the Commission and the Member
   States so as to ensure that procedures are handled rapidly .
Accordingly, the provisions concerning the field of application of the
proposed Regulation ( Article 1 ) and the criteria for the appraisal of
concentrations ( Article 2 ) as well as the procedural rules ( Articles A to 9 ,
18 , 19) have been adapted .
                                                                          1
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                          The introduction of merger control at Community level is more than
                          ever necessary :
 f
                          1.   The creation      of a  single internal market by 1992 requires a
                               strong    and   effective   competition     policy .    However ,  the
                               existing competition      rules need    to be supplemented by a set
                               of instruments enabling       the  Commission    to   control mergers
                                                                                                     i
                               that may    restrict competition .      The dismantling of internal
                               frontiers     can   be  expected   to   result   in   major corporate
                               reorganisations within the Community ; indeed , such structural
                               changes are already under       way in   many significant Community
                               markets .   This development must in principle be welcomed .        It
                               reflects the pressure on industry        to   adjust   to  changes in
                               market conditions      and is   thus in line with the requirements
                               of dynamic competition .      It can   increase the competitiveness
                               of European     industry and thus help to improve the conditions
                               for growth and the standard of living in the Community .
                          2.   However , it is also necessary to ensure that         certain mergers
                               do not    entail lasting    damage to competition .     The danger of
                               this happening      is particularly   present in     those sectors in
                               which a    small number of firms would dominate the market .        As
                               analyses of the development       of  concentration     show , it can
                               also threaten      other sectors particularly if oligopolies with
                                                                                                 e
 ---pagebreak--- feu competitors of relatively         equal size become a prominent
                                                                        I
                                                                        !
feature of markets uithin the European Community .               A further
stage , marked by the      tightening of     existing oligopolies and
the development      of individual dominant positions , could then
become discernible .      In   most   instances     of   such    cases the
reduced intensity ( or even absence ) of competition within the
Community would undermine the         efforts of     Community industry
to remain globally competitive .
The  effects     of   such    structural    changes     can   be assessed
effectively    only    at    Community    level .      Existing national
provisions    on    merger    control   are tailored to mergers with
predominantly local features within          a    single    Member State .
Such mergers     are mainly     appraised on      the basis of national
interests alone .     The    effects of    cross- frontier mergers lie
largely    outside      the     control     of     individual     national
authorities ,    which    take   into   account     only    the   domestic
implications of      a merger .     Where   a number of Member States
would seek to apply their rules to one            and the    same merger ,
this could    give rise      to mutually contradictory results with
unacceptable consequences for business            activity and economic
integration    and    with    great   legal   uncertainty       for firms .
However , as   progress is      made towards      achieving the unified
single market ,    national instruments       would not only prove to
be increasingly ineffective ; there would also be a damaging
risk   to  the    internal     market   if   they were used to favour
 ---pagebreak---  ■/
_l *
                " national   champions "      rather    than   the    interests     of   the
                Community as a whole .
           ■4 . Although it    is possible        to envisage an approach whereby the
                Community 's   existing       competition     rules    might   be   applied
                systematically to       certain mergers       that significantly affebt
                competitive    structures        within   the    common    market ,  it   is
                preferable    to   have     a    specific    merger    control instrument
                specially adopted       to deal     with Community-scale       mergers .    A
                further constraint       in applying Articles 85 and 86 to mergers
                is that the procedural rules laid            down in     Regulation No . 17
                of 1962 are not well suited to mergers .
                A   regulation    is    therefore     the    best means of treating the
                various    forms   of    concentration        in   a   non-discriminatory
                manner .     Such    a   regulation could enable the Commission to
                focus upon the     most     important     mergers     from   the Community
                point of    view and     to leave     it to the Member States to deal
                with   those   cases     of    concentrations      that    are exclusively
                national in character .
     II . Background
          1 .   The   Commission       made    a   proposal    to    the   Council   for   a
                Regulation    on     the      control     of     concentrations     between
                undertakings as      long ago at 1973(1 ).        The proposal , based on
          1,    OJ No C 92 , 31.10.1973 . p. 1 .
                                                                                          7
 ---pagebreak---   'VI       1У
■ .V V"
     ΐ· :·ψ
                   Articles 87 and 235       of the EEC Treaty ,* despite having been
                   amended three      times was not unfortunately acted upon by the
                   Council ( 2 ).  In its    resolution on     the Fifteenth Competition
                   Policy    Report ,   the   European    Parliament    stated   " that the
                   Commission should end the 13 year-old deadlock in the Council
                   ... by withdrawing [ its proposals ] forthwith , in order that a
                   fresh start can be made on filling this important gap             in the
                   Community’s     competition    policy"(1 ).       In this context , the
                   possibility     of   applying    the    existing    competition    rules
                   systematically      to   mergers   is   relevant particularly in the
                   light of the case      law of    the Court    of Justice ( Continental
                   Can - Philip Morris ).
               2.  Following intensive bilateral discussions with all the Member
                   States ,    the  Commission    once    again   raised    the  political
                   aspects    of   European    merger    control   in   the   Council on 5
                   October 1987 and 30       November 1987 .     The   discussions in the
                   Council led to the emergence of a basically positive attitude
                   on a draft Regulation based on the following principles :               |
                        merger control should apply         to   large-scale    mergers of
                        Community-wide importance ;
                        mandatory prior notification of planned mergers ;
               2.  0J No C 36 , 12.2.1982 , p . 3 : 0J No C 51 , 23.2.1984 , p . 2 : and
                   0J No C 324 , 17.12.1986 , p . 5 .
               1 . Annex to the Sixteenth Competition Report , p. 245 , point 29 .
 ---pagebreak--- ; i-“S jlf-
                              prohibition     of       anti-competitive        mergers     and
                              authorisation   of   mergers     on   the   basis of principles
                              analagous to those contained in Article 85(3 );
                              close and constant    cooperation      between   the Commission
                              and the  Member States     so as     to ensure that procedures
                              are handled rapidly .
            III . The amended proposal for a Regulation
                  The Commission has therefore decided ,          under Article    149(3 ), to
                  amend   its   previous   proposal    for   a    Council   Regulation on the
                  control of concentrations between undertakings .                 ’         j
                  The main amendments may be summarized as follows :
                  i .   Scope of application
                        The Regulation    applies only     to mergers     "having a Community
                        dimension" ( Article   1(1 )).     This concept     is defined by re ¬
                        ference to two criteria , one involving the " geographical field of
                        activity " of the companies involved and the other related to their
                        turnover ( Articles 1 paragraphs 2 and 3 ).
                        For reasons of practicability and legal security , the amended
                        proposal provides for    the    same    overall    turnover criterion
                        both for   the scope   of application ( Article 1 ) and the prior
                        notification requirement ( Article 4 ).
                                                                                          6
                                                                                               ML.
 ---pagebreak--- ΐψψ
    2. Appraisal criteria
       All mergers within the scope of the Regulation are subject to
       prior control (Article 2(1 ). Mergers which give rise to or!
                                                                                i
       strengthen a dominant position in the            common market   or in a
       substantial     part    of   it   are not compatible with the common
       market ( Article 2(2 )).        Where the    combined market    share of
       the firms     concerned does not exceed 20% , it is presumed that
       a dominant position does not exist ( Article 2(3 )).
       The Regulation provides for         the   possibility    of authorizing
       mergers    as   being    compatible     with   the common market .   The
       authorization criteria have been          modelled on    the principles
       laid down     in Article     85(3 ); this allows account to be taken
       of international competition ( Article 2(4 )).
    3. Procedura 1 ru 1 e s
       The   periods      for     proceedings     have     been  substantially
       shortened ;    they    amount    to  two   months for the preliminary
       appraisal before       the   commencement     of   proceedings ( Article
       6(3 )) and    to four months for the further' examination leading
       to a final decision ( Article 19(1 )).
       In order    to ensure      close and    permanent cooperation between
       the   Commission     and    the   national    authorities ,  it   is now
       provided that      the Member     States directly     concerned must be
       consulted     before    the   commencement     of proceedings ( Article
                                                                             4
 ---pagebreak---             18(2 ),
                                                                         i
            The role of the Advisory Committee during the last stage of
            the decision-making process has been formulated in accordance
            with the Council Decision of 13 July 1987 laying down detailed
            rules for the exercise of the executive powers vested in the
            Commission ( Article 18(4 ) to  ( 8 )).
                                        *                               vv     •      ]
                                            *
       The Council presidency has put the work on establishing Community-
       level merger control high on its list of priorities with a view
       to adoption of a merger control regulation during 1988 . It intends
       to report to the Council on 22 June 1988 of the results of the
       discussions to be held in its relevant working party on the
       attached amended proposal for a Regulation
                                                                                         i
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 ---pagebreak---                           Amended Proposal for a
                         COUNCIL REGULATION ( EEC )
          on the control of concentrations between undertakings
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,                               ■>
Having regard to the Treaty establishing the European Economic Community
and in particular Articles 87 and 235 thereof ,
Having regard to the prcpcsal from the Commission,
Having regard to the Opinion of the European Parliament,
Having regard to the Opinion of the Economic and Social Committee ,
 ( 1 ) Whereas , for the achievement of the aims         of the Treaty
        establishing the European Economic Community , Article 3 ( f )
        requires the Community to institute “a system ensuring that
        competition in the common market is not distorted ";
   ( 2 ) Whereas this    system  is essential for the achievement of the
          internal market by 1992 ;
   (3)    Whereas the dismantling of internal frontiers can be expected to
          result in major corporate reorganisations in the Community ,
          particularly in the form of concentrations ;
   (4)    Whereas such a development must be welcomed as being in line
          with the requirements of dynamic competition and liable to
          strengthen the competitiveness of European industry , to improve
          the conditions of growth and to raise the standard of living in the
          Community ;
   (5)    Whereas it must be ensured that the process of reorganisation does
          not give rise to lasting damage to competition ; the system
          of undistorted competition must therefore include provisions
          governing those concentrations which may hinder effective competition
          in the common market ;
                                                                           S
 ---pagebreak---   ( 6) Whereas pursuant to Articles 85 and 86 , anticompetitive agreements ,
        decisions and practices , which may affect trade between Member States ,
        are prohibited as incompatible with the common market , provided that
        their impact on competition and trade is appreciable ;
  ( 7) Whereas the principles laid down in Articles 85 and 86 apply also to
        arrangements which alter the competitive structure of the market ^
        and provisions for the implementation of these principles must takfe
        due account of the specific context of market structure ;
  ( 8) Whereas these provisions should apply to structural alterations , the
        effects of which are substantial and go beyond national borders of
        one Member State ;
 ( 9 ) Whereas the scope of application of this Regulation       should therefore
       be defined according to the territory of operations       of the undertakings
       concerned and be limited by quantitative thresholds       in order to include
       only those operations of concentration which have a       Community dimension ;
  (10) Whereas this is the case where the aggregate turnover of all the under¬
       takings concerned exceeds a given level and where each of the undertakings
        effecting the concentration has its sole or. principal field of activities in a
       different Member State or where , although the undertakings in
        question act mainly in one and the same Member State , at least one
        of them has substantial operations in other Member States through
        subsidiaries or direct sales ;
 ( 11) Whereas the existing competition rules and in particular Article 87
        provide a legal basis for the control of certain forms and types of
        concentration ;
( 12) Whereas it is necessary , however , to create a legal framework which makes it
        possible to treat in a comprehensive way ail consent rat ions having the same
        impact on the competitive structure of the common market ;
( 13) Whereas under Article 235 of the Treaty the Community may , by way of
        Regulation , give itself     the additional powers of action necessary
        for the attainment of this objective , with regard to concentrations on the
       markets for products listed in Annex II to the Treaty ;
 ( 1.4) Whereas such Regulation should establish the principle that
         concentrations which create or enhance a dominant position are not
         compatible with the common market ;
 ---pagebreak---                                      - 3 -
(15 ) Whereas concentrations which , by reas.on of the limited market share
       of the undertakings concerned, are not likely to impede the
       preservation of effective competition may be presumed to be
       compatible with the common market ;
(16) Whereas concentrations which , although they give rise to a
       substantial alteration of the competitive structure within the ■>
       Community, contribute to the attainment of the basic objectives of
       the Treaty in such a way that on balance their economic benefits
       prevail over the risks for compel i tion, should be subject to possible
       authorization as a positive measure of Community policy;
 ( 171 Whereas the Regulation should provide that authorizations may also be
        granted under conditions and obligations to be determined case
        by case in order to prevent in particular a substantial deterioration
        -in the competitive structure of the Community national market concerned ;
 ( 18) Whereas the Commission should be entitled to take decisions in respect of
        concentrations which are incompatible with the common market and decisions
        designed to re-establish conditions of effective competition ;
 ( 19) Whereas , to ensure effective supervision , prior notification and the
        suspension of concentrations pending a Commission decision should be
         made obligatory ;
 ( 20) Whereas a time limit within which the Commission must commence
         proceedings in respect of a concentration notified to it and a
         time-limit within which it must give a final decision on the
         incompatibility of a concentration with the common market should
         be laid down ;
  ( 21) Whereas, before opening proceedings , the Commission should consult
         the Member States directly concerned by the concentration ;
          4
  ( 22) Whereas undertakings concerned must be accorded the right to be
         heard by the Commission as soon as proceedings have commenced ,
         and third parties showing a sufficient interest must be given
         the opportunity to submit their comments ;
                                                                         /)/)
 ---pagebreak---                                            4
  ( 23) Whereas the Commission should act in close and constant liaison
         with the competent authorities of the Member States in order
         to avoid concurrent proceedings ;
  ( 24) Whereas the Commission must be afforded the assistance of the Member States
         and must also be empowered to require information to be given and
         to carry out the necessary investigations in order to examine v
         concentrations in the Light of the provisions of this Regulation ;
  ( 25) Whereas compliance with this Regulation must be enforceable by means
         of fines and periodic penalty payments ; whereas it is desirable to confer
         upon the Court of Justice , pursuant to Article 172, unlimited juris-
         di ction to that end ;
  ( 26.) Whereas it is appropriate to define the concept of concentration
         in such a manner as to cover operations bringing about a SLbstahtial change in
         the competitive structure of a market and to exclude from the scope
         of application of this Regulation those operations which have as
         their principal object or effect the coordination of conduct of
         independent undertakings , the latter operations having to be examined
         under the provisions of other Regulations implementing
         Articles 85 and 86 ;
   ( 27) Whereas the Commission should be given exclusive competence to
          apply this Regulation , subject to review by the Court of Justice ;
          whereas it should also be stipulated that the provisions of this
          Regulation alone apply to concentrations of Community dimension,
          HAS ADOPTED THIS REGULATION :
                                                    »
                                                                              1e
i
 ---pagebreak---                                      - 5 -
                                      Artide 1
                                  Scope of application
C1 ) This Regulation shall apply to all concentrations having a Community dimension
      including those falling within the scope of Articles 85 (D or 86 of the
      Treaty .
( 2 ) A concentration has a Community dimension
      a ) where at least two of the undertakings effecting the concentration have
           their principal field of Community activities in a different Member State or
      b ) where the undertakings effecting the concentration have their principal
           field of 'Community activities in one and the same Member State, but where
           at least one of them has substantial operations in other Member States
           in particular through subsidaries or direct sales .
 (3)    A concentration does not have a Community dimension
      a ) where the aggregate worldwide turnover of all the undertakings
           concerned is less than one thousand million ECU or
      b ) where the aggregate worldwide turnover of all the undertakings
           concerned exceeds one thousand million ECU , but where the aggregate
           worldwide turnover of the undertaking to be acquired is less than
           fifty million ECU or
       c ) where all the undertakings effecting the concentration achieve more than
            three quarters of their aggregate Community-wide turnover within
           one and the same Member State .
                                                                        -7 2
 ---pagebreak---                                          6
                                    A'ticle 2
                          Appraisal of cone snt rat ions
   (1 ) Concentrations within the scope of this Regulation shall be subject to
          prior control in order to determine whether they are compatible with
          the common market .                                                11
  ( 2 ) Concentrations shall not be compatible with the common market where they
         give rise to or strengthen a dominant position in the common market or
         in a substantial part thereof . This shall be appraised by reference in
         particular to the possibilities of choice of suppliers and consumers ,
         to the market position and the economic and financial power of the
         undertakings concerned , to their access to supplies or markets , to the
         structure of the markets affected , to international competition , to
         legal and factual barriers to entry , and to supply and demand trends
         for the relevant goods or Services .
  ( 3 ) Concentrations shall be presumed to be compatible with the common
         market where the market share of the undertakings concerned in the
         common market or in a substantial part thereof is less than 20          This
         presumption can be rebutted if it is established that the concentration
         nevertheless fulfils the coildftlons of paragraph 2 .
   ( 4 ) The Commission shall authorize concentrations as compatible with the common
         market where they contribute to the attainment of the basic objectives
         of the Treaty , in particular to improving production and
         distribution , to promoting technical or economic progress or to improving
         the competitive structure within the common market , taking due account
          of the competitiveness of the undertakings concerned with regard to inter¬
          national competition and of the interests of consumers , provided that they do not
          ( a ) impose on the undertakings concerned restrictions which are not
                indispensable to the achievement of the concentration ,
          ( b ) do not afford the undertakings concerned the possibility of
                eliminating competition in respect of a substantial part of the
                goods or services concerned .
                                                                                 s7ÿ>
I
 ---pagebreak---                                     - 7 -
                                     Article 3
                            Definition of concentration
( 1 ) A concentration shall be deemed to take place
        a ) where two or more undertakings merge
        b ) or where
            - one or several persons already controlling at least one
               undertaking or
            - one or several undertakings
            acquire , whether by purchase of shares or assets , by contract
            or by any other means , direct or indirect control of the whole
            or parts of one or more undertakings .
 ( 2 ) Operations which have as their principal object or effect
        the coordination of conduct of independent undertakings shall be
        deemed not to give rise to a concentration within the meaning of
        paragraph 1 ( b ) .
( 3 ) Control is constituted by rights or contracts which , either
       separately or jointly , and having regard to the considerations
       of fact or law involved , make it possible to determine how an
      undertaking: shall operate , and particularly by :
       1 ) Ownership or the right to use all or part of the assets
            of an undertaking ;
       2 ) Rights or contracts which confer power to influence the
             composition , voting or decisions of the organs of an
            undertaking }
 ---pagebreak---                                                - 8 -
       3 ) Rights or contracts which make it possible to manage the
            business oF an undertaking ;
      i1 ) Cont rncto made with r.n undertaking; concerning the computation
            or appropriation of it's profits ;
      5 ) Contracts wade with an undertaking concerning the whole or
            a substantial part of supplies or outlets , where the duration of
            these contracts or the- quantities to which they relate exceed
            what is usual in commercial contracts dealing with those matters .
( 4 ) Control, is acquired by persons , undertakings or groups of persons
      or undertakings which :
       l ) are holders of the rights or entitled to rights under the
            contracts conco nied ;
      £ ) while not being holders of such rights or entitled to rights
            under such contracts , have power to exorcise the rights deriving
            therefrom ;
       3 ) in a fiduciary capacity own assets of an undertaking or shares
            in an undertaking , and have power to exorcise the rights
            attaching thereto ,
( 5 ) Control of an undertaking is not constituted whore , upon formation
      of an undertaking or increase of its capital , banks or financial
       i nstitutions acquire shares in that undertaxing with a view to
       selling them on the market , provided that they do not exorcise voting
       rights in respect of ' those shares .
                                                                            Ή
 ---pagebreak---                                Article 4
                  Prior notification of concentrations
Concentrations within the scope of this Regulation , whether agreed or not ,
shall be notified to the Commission before they are put into effect .
 ---pagebreak---                                           - 10 -
                                     Article 5
                    Calculation o.f turnover and market shares
  (1 )          Aggregate turnover within the meaning of Article 1 shall be
                calculated by adding together the pre-tax turnover of the
                undertakings concerned for all goods and services in the last
                financial year . Turnover deriving from internal operations
                within a group shall not be included in this calculation .
   (2)          The market share within the meaning of Article 2 ( 3 ) shall be
                calculated by adding together the market shares held by the
                undertakings concerned in the area of the common market
                affected by the concentration . Market share shall be defined
                as the percentage share which the goods or services supplied
                by an undertaking concerned represent in the total supplies
                made in identical goods or services and those which , by reason
                of their characteristics , their price and their use are regarded
                as equivalent by the consumer .
  ( 3)          Where the concentration consists in the acquisition of a part of
                 the assets of an undertaking only the turnover relating to that
                 part shall be taken into account on behalf of the seller .
   ( 4) In place of turnover the following shall be used :
       ( a ) for banking and financial institutions : within the meaning of
              Article 1 paragraph 3 ( a> and ( b ), one tenth of their assets ; within the
              meaning of Article 1 paragraph 3 ( c ), the operat-idns with national and
              foreign clients ;
       ( b ) for insurance companies : the value of the premiums received by them .
( 5) For the purposes of this Regulation , the undertakings concerned are :
        ( a ) those which’ take part directly in the concentration ;
        (b) those in which a party to the concentration, directly or indirectly,
               - owns more than half the capital or business assets or
               - has the 'power to exercise more than half the voting rights , or
                                                                                  18
 ---pagebreak---                                    - 11
      - has the power to appoint more than half the members of the supervisory
        board , board of management or bodies legally representing
        the undertakings , or
      - has the right to manage the undertaking 's affairs ;
( c ) those which directly or indirectly have in or over a party to the
      concentration the rights or powers listed in ( b );
( d ) those in or over which an undertaking referred to in Cc ) directly or
      indirectly has the rights or powers listed in < b ).
Undertakings in which several undertakings as referred to in ( a ) to ( d )
jointly have , directly or indirectly , the rights or powers set out in ( b )
shall also be considered to be undertakings concerned .
                                                                      7jp
 ---pagebreak---                                           12 -
                                    Article 6
                                  Proceedings
  ( 1 ) Where the Commission considers that a concentration does not give rise
         to a substantial change of the fompetitive structure within the          ( .
         Community , it shall' immediately' inform the undertakings concerned and
         the competent authorities of the Member States that there a(e no grounds
         for action on its part under this Regulation .
  ( 2 ) Where the Commission considers that a concentration gives rise to a
         substantial change of the competitive structure within the Community,
         it shall immediately commence proceedings with a view to establishing
         whether or not that concentration may be authorized and so inform the
         undertakings concerned and the competent authorities of the Member State .
( 3 ) As regards concentrations notified to it , the Commission shall commence
        proceedings within a period . n<#t exceeding two months unless the underta ¬
        kings concerned agree to extend that period . The period of two months shall
        commence on the day following receipt of the notification , or if the
        information to be supplied with the notification is incomplete , on the
        day following the receipt of the complete information .
( 4 ) The Commission may commence proceedings after the expiry of the two months
        period where the information supplied by the undertakings in the notifi ¬
        cation is false ©r misleading .
  ( 5 ) Without prejudice to paragraph 4 a concentration notified to the Commission
         shall be considered not to have given grounds for action if the Commission
         has not commenced proceedings within the period specified in paragraph 3 .
                                                                             «o
 ---pagebreak---                                  - 13 -
                                Artide 7
                     Suspension of the concentration
( 1 ) Undertakings shall not put into effect a concentration notified to
      the Commission before the end of the time limit provided for in
      Article 6 ( 3 ) unless the Commission informs them pursuant to Article
      6 ( 1 ) that there are grounds for action on its part under this
      Regulation .
( 2 ) Paragraph 1 shall not prevent or impede the implementation of a public
      takeover bid which has been notified to the Commission at the date of
      its inscription , provided that the acquirer does not exercise the
      voting rights attached to the shares in question .
( 3 ) Where the Commission commences proceedings the undertakings concerned
      shall not put into effect the concentration until the Commission has
      authorized it as compatible with the common market or has closed the
      proceedings .
( 4 ) The Commission may at any time waive paragraphs 1 and 3 in order to
      prevent serious and irreparable damage to one or more undertakings
      concerned by the concentration .
                                                                             2/
 ---pagebreak---                                           i !
                                        11 ■ 14
                                             i
                                                -
                                         il ;
                                    Article 8
                      Pouers of décision of the Commission
 ( 1 ) The Commission may by decision state whether a concentration is or is not
        compatible with the Cpmmdn Market .
 ( 2 ) Where the Commission finds that a concentration is caught by Article 2 ( 2 )
       and that the conditions laid down in Article 2 ( 4 ) are not satisfied ,
        it shall issue a decision refusing the authorization and declaring the
       concentration to be incompatible with the common market .
( 3 ) Where a concentration has already been put into effect , the
       Commission may require , by decision taken under paragraph 1 or by
       a separate decision , the undertakings     or assets acquired or
       concentrated to be separated or the cessation of common control or
       any other action that may be appropriate in order to restore
       conditions of effective competition .
( 4 ) where the Commission finds that a concentration satisfies the conditions
       laid down in Article 2 ( 4 ), it shall issue a decision authorizing the
       the concentration as compatible with the common market ; conditions
       and obligations may be attached thereto .
 ---pagebreak---                                - 15 -
                             Artide 9
                     CLosure of proceedings
If , after having commenced proceedings in respect of a concentration ,
the Commission finds that there ere no grounds for action on its part under
this Regulation , it shall dose the proceedings and so immediately inform
the undertakings concerned and the competent authorities of the Member
State .
 ---pagebreak---                                               16 -
                                     Art ici u 10
                              Requests for Information
1 . In carrying out the dut :1 os assigned to it by this Regulation , tho
     Commission may obtain all necessary information from tho governments
   . and compotent authorities of the Member States and from undertakings
     and associations of undertakings .
2 . Wien sending a roquest for information to an undertaking or association
     of undertakings , the Commission shall at tho same time forward a copy
     of the request to the compotent authority of the Member State in whoso
     territory the seat of tho undertaking or association of undertakings is
     situated .
3 . In its request tho Commission shci.ll state the legal basis and the purpose
     of the request and also tho penalties provided for in Article 13(l)(b )
     for supplying incorrect information .
4 . Tho owners of tho undertakings or their representatives and , in tho case
     of legal persons , companies      firms , or of associations having no legal
     personality , the persons authorised to represent them by law or by their
     memorandum , shall supply the information requested .
5 . Where an undertaking or association of undertakings dues not supply the
     information requested within the- fme limit fixed by the Commission , or
     supplies incomplete information , tho Commission shall by decision require
     the information to be supplied . The decis' on shall specify what infor¬
     mation is required , fix an appropriate time limit within which it is to
     be supplied and mention the penalties provided for in Article 13(l ) (b )
     and Article. 14(l ) (a ) and the right to have the decision reviewed
     by the Court of Justice .
6 . The Commission shall at the same time forward a copy of its decision to
     the competent authority of tho Member dtato in whoso territory the seat
     of the undertaking or association of undertakings is situated .
                                                                            2
                                                                               7
 ---pagebreak---               M                    Article 11
             Investigations "by the Authorities of the Member States
1 . At the request of the Commission , the compotcnt authorities of the Member
     States shall undertake the investigations which the Commission considers
    to be necessary under Article 12(l ), or which it ha3 ordered by decision
    pursuant to Article 12(3 ). The officials of the competent auth9riti.es
    of the Member States responsible for conducting these investigations shall
     exercise their powers upon production of an authorization in writing
     issued by the competent authority of the Member State in whose territory
     the investigation is to be made . Such authorization shall specify the
     subject matter and purpose of the investigation .
2 . .If so requested by the Commission or by the competent authority of the
     Member State in whosdj territory the investigation is tc be made ,
     officials of the Commission may assist the officials of such authority in
     carrying out their duties .
 ---pagebreak---                                            - 18 -
                                       Article 12
                      Invest igat.ing Powers of the Commission
1 . In carrying out the duties assigned to it by this Regulation , the
      Commission may undortak all necessary investigations into undertakings
      and associations of undertakings .
      To this ond the officials authorized by the Commission are empowered :
      (a ) to examine the books and other business records 5
      (b) to take or demand copies of or extracts from the books and business
            records }
      ( c ) to ask for oral explanations on the spot ;
      ( d ) to enter any promises , land and means of transport of undertakings .
2 . The officials of the Commission authorize ! to carry out these
      investigations shall exercise their powers upon production of an author¬
      ization in writing specifying the subject matter and p xrposc of the
      investigation and the penalties provided for in Article 13(1 ) ( c ) in
      cases where production of the required books or other business records
      is incomplete . In good time before the investigation , the Commission
      shall inform the competent authority of 'cne Member State in who f o
      territory the investigation is to be made of the investigation and of
      the identity of the authorized officials .
3 . Undertakings and associations of undertakings shall submit to invest i­
    , gat ions ordered by decision of the Commission . The decision shall specify
      the subject matter and purpose of the investigation , appoint the date on
      which it is to begin and indicate the penalties provided for in Article 13(l )
      ( c ) and Article 14(l ) (b ) and the right to have the decision reviewed
      by the Court of Justice .        '                       '
4 . The Commission shall take decisions referred to in paragraph 3 after
       consultation with the competent authority of tire Member State in whose
       territory the investigation i3 to be made .
 ---pagebreak---                                        19
  5 > Officials of the competent authority of the Member State in whose
      territory the investigation iai to he made may , at the request of such
      authority or of the Commission , assist the officials of the Commission
      in carrying out their duties .
  6 . Where an undertaking opposes an investigation ordered pursuant to this
      Article , the Member State concerned shall afford the necessary assistance
      to the officials authorized by the Commission to enable them to make their
      investigation . Member States shall , after consultation with the Commission ,
      take the necessary measures to this end before .
»
 ---pagebreak---                                            20 -
                                     Article 13
                                       Fines
1 . The Commission may by decision impose on undertakings and associations
    or unaertakingc fines of from 1000 to      100.000 ECU where
    intentionally or negligently :
    ( a ) they supply incorrect or misleading info rotation in a notification
          pursuant to Article 4 ;
    (b ) they supply incorrect information in response to a request made
          pursuant to Article 10 or fail to supply information within the
          time-limit fixed by a decision taken pursuant to Article 10 f
    ( c ) they produce the required books or other business records in
          incomplete form during investigations under Article 11 or 12 ,
          or refuse to submit to an investigation ordered by decision
          taken pursuant to Article 12 .
2 . The Commission may by decision impose on natural or legal persons
    fines 'of from 1000 to    2.000.000 ECU where , either
    intentionally or negligently , they commit a breach of the obligation
    to notify under Article 4 .
3 . The Commission may by decision impose fines not exceeding 10 % of the
    value of the reorganized assets where the undertakings concerned either
    iptentionally or negligently put into effect a concentration in breach of
    their obligations under Article 7 or in spite of a decision under
    Article 8 ( 2).
 ---pagebreak---                                       - 21 -
                                    Article' 14
                              Periodic Penalty Payments
1 . The Commission may by decision impose on undertakings or associations of
    undertakings periodic penalty payments up to 50.000 ECU
    for each day of the delay calculated from the date appointed by
    the decision , in order to compel them :
    (a ) to supply complete and correct information which it has
         rccpiested by decision taken pursuant to Article 10 ;
    (b ) to submit to an investigation which it has ordered -by decision
         taken pursuant to Article 12 .
2 , Tho Commission may by decision impose on such undertakings periodic
    penalty payments up to 100.000 ECU for each
    day of the delay , calculated from the day appointed by the decision ,
    in order to compel them to apply the measures resulting from a decision
    taken pursuant to Article 8 ( 2 ).
 ---pagebreak---                                    Article 15
                         Review by the Court of Justice
The Court of Justice shall have unlimited jurisdiction within the meaning
of Article 172 of the Treaty to review decisions whereby the Commission has
fixed a fine or periodic penalty payment ; it may cancel , reduce or increase
the fine or periodic penalty payment imposed .
 ---pagebreak---                                   аз-
                              ArticU 16
                          Professional secrecy
                                   »
1 . Information aquired as a rebuilt df the application of Articles 10 , 11
    and 12 shall be used ohly for* the purpose of the relevant readiest or
    investigation .
2 . Without prejudice to the provisions of Article 20, the Commission and the
    competent authorities of the Wembtr States , their officials ahd other
    servants shall not disclose information acquired by them as a result of
    the application of this Regulation and of the kind covered by the
    obligation of professional secrecy .
3 . The provisions of paragraphs 1 and 2 shall not prevent publication of
    general information or surveys which do not contain information relating to
    particular undertakings or associations of undertakings .
                                     I
                                     I
                                                                            $1
 ---pagebreak---                              Article 17
              Hearing of the parties and third parties
(1)  Before taking decisions provided for in Articles 8 , 13 and 14 , the
     Commission shall give the parties the opportunity of being heard
     on the matters to which the Commission has taken objection .
( 2) If the Commission or the competent authorities of the Member States
     consider it necessary , the Commission may also hear other natural
     or legal persons . Applications to be heard on the part of such
     persons shall , where they show a sufficient interest , be granted .
 ---pagebreak---                                       - 25 -
                                    Artide 18
                Liaison with the authorities of the Member States
C1 ) The Commission shall forthwith transmit to the competent authorities of
      Member States a copy of the notifications together with the Most important
      documents lodged with or issued by the Commission pursuant to this
      Regulation .
( 2 ) Before commencing proceedings pursuant to Article 6 , the Commission
      shall seek the views of the competent authorities of the Member States
      directly concerned by the concentration .
( 3 ) The Commission shall carry out the procedure set out in this Regulation
      in close and constant cooperation with the competent authorities of the
      Member States ; such authorities shall have the right to express their
      views upon that procedure , and in particular to request the Commission
      to commence proceedings under Article 6 .
( 4 ) The Advisory Committee on Restrictive Practices and Dominant Positions
      shall be consulted prior to the taking of any decision pursuant to
      Articles 8 , 13 and 14 .
( 5 ) The Advisory Committee shall consist of officials having responsibility
      for restrictive practices and dominant positions . Each Member State shall
      appoint an official to represent it ; he may be replaced by another
      official where he is unable to act .
( 6 ) Consultation shall take place at a meeting convened at the invitation of
      the Commission . A summary of the facts , together with the most important
      documents and a preliminary draft of the decision to be taken , shall be
      sent with the invitation . The Committee shall deliver its opinion on the
      draft , within a time limit which the Chairman may lay down according to
      the urgency of the matter , if necessary by taking a vote .
 ---pagebreak---                                       - 26 -
( 7) The opinion shall be recorded in the minutes ; in addition , each Member State
      shall have the right to ask to have its position recorded in the minutes .
( 8 ) The Commission shall take the utmost account of the opinion delivered by
      the Committee . It shall inform the Committee of the manner in which its
      opinion has been taken into account .
 ---pagebreak---                                        27 -
                                     Article 19
                               Time limits for decision
( 1 ) Decisions under Article 8 ( 2 ) or ( 4 ) shall be taken within four months
       following the date of - commencement of proceedings , save where there is
       agreement with the undertakings concerned to extend that period .
( 2 ) The period of four months shall be suspended where the Commission, owing
       to circumstances for which one of the undertakings concerned by the
       concentration is responsable , has to request information by decision
       taken pursuant to Article 10 or to order an investigation by decision
       taken pursuant to Article 12 .
 ( 3 ) Without prejudice to paragraph 2 a concentration shall be considered to
        have been authorized as . compatible with the common market if the
       Commission has not taken a decision under Article 8 ( 2 ) or ( 4 ) before
       expiry of the period specified in paragraph ^}
 ---pagebreak---                                    - 28 -
                               Article 20
                       Publication df decisions
( 1 ) The Commission shall publish in the Official Journal of the European
      Communities the decisions which it takes pursuant to Article 8 .
( 2 ) The publication shall stats the names of the parties and the main
      content of the decision ; it shall have regard to the legitimate^
      interest of undertakings in the protection of their business secrets .
 ---pagebreak---                                - 29 -
                            Article 21
                          Juri sdi etion
Subject to review by the Court of Justice , the Commission shall have sole
competence   to take the decisions provided for in this Regulation .
 ---pagebreak---                                        - 30 -
                                 Article 22
              Exclusive application of this Regulation
Regulations ( EEC ) No 17 , No 1017 / 68 , No 4056 /86 and No 3975 / 87 shall not apply
to concentrations falling within the scope of this Regulation .
 ---pagebreak---                              - 31 -
                         Article 23
                Implementing previsions
The Commission shall have ponper to adopt implementing provisions concerning
the form, content and other details of notifications pursuant to
Article 4 and hearings pursuant to Article 17 .
                                                                   ■r-i
                                                                    T
                                                                    V
 ---pagebreak---                                52 _
                           Article 24
                         Entry into force
This Regulation shall enter into force ....
This Regulation shall be binding in its entirety and directly
applicable in all Member States .
Done at                                         For the Council
 ---pagebreak--- |1                               FINANCIAL STAT
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                                                                                                                                                                                                 TES / NO
          OBSERVATIONS :
 ---pagebreak---                Impact of small and medium- sized undertakings
The proposed Regulation establishes a control        of large-scale mergers
having  a    Community  dimension .     It  therefore applies only to large
undertakings    which  are   obliged   to  notify  planned  mergers  to the
Commission .     Small  and   medium-sized   undertakings  are not directly
concerned .   Indirectly , however , the Regulation favours them by placing
no legal obligations or impediments in the way of mergers between thenij
thus enabling them to grow and to improve their competitiveness .