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XXIXth Reporton Competition Policy

1999(Published in conjunction with the‘General Report on the Activitiesof the European Union — 1999’)

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XX

IXth R

eport on Com

petition Policy

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BELGIQUE/BELGIË

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ÖSTERREICH

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PORTUGAL

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SVERIGE

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UNITED KINGDOM

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ÍSLAND

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NORGE

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SCHWEIZ/SUISSE/SVIZZERA

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B@LGARIJA

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|ESKÁ REPUBLIKA

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CYPRUS

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EESTI

Eesti Kaubandus-Tööstuskoda(Estonian Chamber of Commerce and Industry)Toom-Kooli 17EE-0001 TallinnTel. (372) 646 02 44Fax (372) 646 02 45E-mail: [email protected]: http://www.koda.ee

HRVATSKA

Mediatrade LtdPavla Hatza 1HR-10000 ZagrebTel. (385-1) 481 94 11Fax (385-1) 481 94 11

MAGYARORSZÁG

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MALTA

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POLSKA

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ROMÂNIA

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ROSSIYA

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SLOVENIJA

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TÜRKIYE

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ARGENTINA

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AUSTRALIA

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CANADA

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EGYPT

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INDIA

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JAPAN

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MALAYSIA

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SOUTH AFRICA

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SOUTH KOREA

The European Union Chamberof Commerce in Korea5th FI, The Shilla Hotel202, Jangchung-dong 2 Ga, Chung-ku100-392 SeoulTel. (82-2) 22 53-5631/4Fax (82-2) 22 53-5635/6E-mail: [email protected]: http://www.eucck.org

SRI LANKA

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UNITED STATES OF AMERICA

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European Commission

XXIXth Reporton Competition Policy1999

(Published in conjunction with the‘General Report on the Activitiesof the European Union — 1999’)

Brussels • Luxembourg, 2000

A great deal of additional information on the European Union is available on the Internet.It can be accessed through the Europa server (http://europa.eu.int).

Cataloguing data can be found at the end of this publication.

Luxembourg: Office for Official Publications of the European Communities, 2000

ISBN 92-828-9984-5

© European Communities, 2000Reproduction is authorised provided the source is acknowledged.

Printed in Italy

PRINTED ON WHITE CHLORINE-FREE PAPER

Contents

NOTICE TO THE READER 6

FOREWORD BY PROFESSOR MARIO MONTI 7

Part One — XIXth Report on competition policy 1999 13

INTRODUCTION 19

I — Antitrust — Articles 81 and 82 State monopolies and monopoly rights —Articles 31 and 86 23

A — Modernisation of the legislative and interpretative rules 23B — Consolidating the single market 30C — Sector-based policies 37D — Statistics 57

II — Merger control 59

A — Introduction 59B — New developments 60C — Statistics 78

III — State aid 81

A — General policy 81B — Concept of aid 85C — Assessing the compatibility of aid with the common market 90D — Procedures 106E — Statistics 109

IV — International activities 111

A — Enlargement 111B — Bilateral cooperation 114C — Multilateral cooperation 118

V — Outlook for 2000 121

ANNEX — CASES DISCUSSED IN THE REPORT 125

COMPETITION REPORT 1999

4 CONTENTS


Part Two — Report on the application of the competition rules in theEuropean Union 129

I — Antitrust: Articles 81, 82 and 86 of the EC Treaty — Article 65 of the ECSCTreaty 135

A — Case summaries 135B — New legislative provisions and notices adopted or proposed by the Commission 172C — Formal decisions pursuant to Articles 81, 82 and 86 of the EC Treaty 172D — Cases closed by comfort letter in 1999 174E — Notices pursuant to Articles 81 and 82 of the EC Treaty 179F — Press releases 180G — Judgments and orders of the Community courts 182

II — Merger control: Council Regulation (EEC) No 4064/89 and Article 66 of theECSC Treaty 185

A — Summaries of decisions taken under Article 6(1)(b) of Council Regulation (EEC) No4064/89 185

B — Summaries of decisions taken under Article 8 of Council Regulation (EEC) No 4064/89 191C — Decisions pursuant to Article 2(4) of the ECMR (joint venture cases) 196D — Commission decisions 202E — Press releases 210F — Judgments of the Community courts 220


A — Case summaries 221B — New legislative provisions and notices adopted or proposed by the Commission 277C — List of state aid cases in sectors other than agriculture, fisheries, and the coal industry 278D — List of state aid cases in other sectors 292E — Judgments of the Community courts 308F — Enforcement of Commission decisions ordering the recovery of aid 310

IV — International 319

Commission report to the Council and the European Parliament on the application of theAgreement between the European Communities and the Government of the United Statesof America regarding the application of their competition laws 1 January 1999 to 31December 1999 319

Commission Report to the Council and the European Parliament on the application of theAgreement between the European Communities and the Government of Canada regardingthe application of their competition laws, 17 June 1999 to 31 December 1999 333

V — The application of competition rules in the Member States 337

A — Legislative developments 337B — Application of the Community competition rules by national authorities 343C — Application of the Community competition rules by courts in the Member States 354D — Application of the 1993 notice on cooperation between the Commission and national

courts 363E — Application of Articles 81 and 82 by national competition authorities 364

VI — Statistics 367

A — Articles 81, 82 and 86 of the EC Treaty + Article 65 of the ECSC Treaty 367B — Council Regulation (EC) No 4064/89 of 21 December 1989 on the control of

concentrations between undertakings 368C — State aid 370

VII — Studies 373

VIII — Reactions to the twenty-eighth Report 381

A — European Parliament 381B — Economic and Social Committee 386


CONTENTS 5


Notice to the reader

The Treaty of Amsterdam entered into force on 1 May 1999. This Treaty provides for the renumberingof the articles of both the Treaty on European Union and the Treaty establishing the EuropeanCommunity. This report adopts the new numbering system. Nevertheless, reference is made to the oldnumeration, when quoting from the titles of legislative acts adopted prior to the alteration in numberingor when quoting from the content of documents written prior to 1 May 1999. To draw the reader’sattention to these changes, all quotations using the old numbering appear in italics.

To assist the reader, the corresponding old and new numbers of the articles cited in this report are givenbelow:

Old number New numberArticle 37 Article 31Article 85 Article 81Article 86 Article 82Article 89 Article 85Article 90 Article 86Article 92 Article 87Article 93 Article 88Article 100a Article 95Article 169 Article 226Article 173 Article 230Article 175 Article 232Article 177 Article 234Article 190 Article 253


FOREWORD BY PROFESSOR MARIO MONTI,Member of the Commission with special responsibility for competition policy

Competition policy is relevant not only for those in business and their advisers, but also for the citizens of Eu-rope, who need to have an overall view of how competition policy is implemented and its relevance to im-proving their daily lives. One of the essential roles of competition is to promote innovation and ensure thatgoods and services are produced as efficiently as possible and that these efficiencies are benefiting con-sumers in the form of lower prices or improvements in quality, choice or services. For example, during theperiod 1997-99, residential tariffs for international calls fell, on average, by 40 % in most Member States.The introduction of competition to this sector resulted not only in a reduction in prices but also gave rise to aconsiderable increase in the supply of new and efficient services and products.

Another role is to ensure that markets are sufficiently competitive in order to keep up with globalisation,and to support employment. For example, State aid control helps to foster structural change and therebycontributes to the development of competitive and innovative industry structures, which safeguard thecreation of new jobs. Without competition the driving forces behind growth and employment would belost. It is therefore of the utmost importance that the competition rules be clear, transparent, andefficiently enforced. But competition rules must also keep up with the pace of economic andtechnological development in the 21st century.

This year, I would therefore like to put the spotlight on the need to modernise Community competitionlaw, both in the area of antitrust, where the actions of companies may distort competition, and in the areaof State aid, where the actions of Member States may produce similar effects.

Reform in the field of vertical restraints

In 1999, new competition rules in the field of vertical restraints were established. This follows a thoroughpolicy review and an extensive consultation exercise, which commenced in 1997 with the publication ofthe Commission’s Green Paper on vertical restraints. The reform of the Commission’s policy in the areaof vertical restraints represents an important pillar in the overall reform process. This review exerciseresulted in the reaching of a consensus in favour of an approach which focuses on economic analysis,with vertical restraints being assessed in terms of their impact on the market and not of their form. Sucha consensus has major implications for review of policy in other areas.

This is a policy area where the need for reform was widely acknowledged. In fact, the block exemption reg-ulations concerning certain types of distribution agreement had been criticised in recent years for being toonarrow in scope and over-formalistic in their approach and for imposing a straitjacket on industry which wasincompatible with the evolution of production and distribution methods. The Commission’s reform is aimedat simplifying the rules and reducing the regulatory burden for companies, especially companies lackingmarket power like SMEs, while ensuring a more effective control of vertical restraints implemented by com-panies holding significant market power.

The Council agreed with the Commission’s plans for reform in June 1999 when it adopted Regulation(EC) No 1215/1999 broadening the legislative powers of the Commission in the field of verticalrestraints. On the basis of these new powers, the Commission adopted, in December, a new Regulation(EC) No 2790/1999 exempting certain categories of vertical agreements and concerted practices fromthe prohibition of restrictive agreements in Article 81. This new block exemption regulation has a widescope as it covers all vertical restraints concerning final or intermediate products as well as services, withthe exception of a limited number of ‘hardcore’ restrictions and conditions. Its principal objective is toallow undertakings which have no significant market power to benefit from a safe haven within whichthey are no longer obliged to assess the validity of their agreements under the Community competitionrules. In order to link the granting of exemption to the market power of the undertakings in question, theblock exemption uses a market share threshold set at 30 %. Above this threshold, the block exemptiondoes not apply. Agreements that are not covered by the block exemption are not presumed to be illegalbut require an individual examination under Article 81. In order to assist undertakings in carrying outsuch an examination, and thus to increase the effectiveness of the competition rules, the Commissionpublished in September the draft of a set of guidelines which is currently subject to public consultationand which we hope will be adopted in the first half of 2000.

Another important element of this reform was introduced by Council Regulation (EC) No 1216/1999whereby all vertical agreements have been dispensed from the requirement of prior notification providedfor by Article 4(2) of Regulation No 17. This change makes it possible to backdate an exemption forindividual vertical agreements to the date on which they were concluded and not, as in the past, to thedate of their notification. Such a possibility for retroactive exemption is necessary to cover agreementswhich, while falling outside the new block exemption, may fulfil the conditions for individual exemptionunder Article 81(3).

By ensuring a wider coverage of such agreements in a single block exemption, the new rules will restorethe freedom to contract for most companies, while allowing the Commission to concentrate more onimportant cases which raise serious competition issues and affect the interests of consumers.

Modernisation of antitrust rules (Articles 81 and 82 of the Treaty)

1999 saw the intensification of the debate on the reform of the procedural rules in the area of antitrustwith the publication by the Commission of a White Paper on modernisation of the procedural rulesimplementing Articles 81 and 82 of the EC Treaty. This document proposes a fundamental reform ofRegulation No 17, the procedural regulation which has been in place since 1962. It is designed tostimulate discussion between the Commission and interested parties. Many contributions, mostly of avery high quality, have been received by the Commission.

The European Parliament adopted a resolution on this matter on 18 January 2000, following the reportmade by Mr Karl von Wogau. The resolution emphasises the urgent need for reform in view of theshortcomings of the existing system and the important changes that have taken place in the real economicworld. It welcomes the Commission’s proposal and supports in principle the main points in the WhitePaper, namely the abolition of the notification and authorisation system under Article 81 of the Treatyand decentralised implementation of competition rules by enhancing the role of the authorities and courtsof the Member States, as this could do much to bolster the European ‘culture of competition’.

The Economic and Social Committee adopted an opinion on 8 December 1999. This opinion alsosupports the Commission’s proposal, saying that it will benefit industry and in particular SMEs.

8 FOREWORD BY PROFESSOR MARIO MONTI


However, it sets out a number of measures that it considers should be taken prior to the implementationof the reform. These measures include direct consultation of courts, training and other forms ofassistance to national courts and measures to address the issue of forum shopping. The Committee alsostresses that harmonisation of the national procedural rules would be desirable in order to promoteconsistent application of substantive rules.

The White Paper proposes a reform based on abolition of the current system of notification andauthorisation which will in turn lead to an increase in the involvement of national competition authoritiesand courts in the application of the Community competition rules. The reforms proposed in the WhitePaper are based on two principal objectives: first, releasing the Commission from tasks which are notcontributing sufficiently to the efficient enforcement of the competition rules, and second, bringing thedecision-making process closer to citizens.

Releasing the Commission from tasks which are not contributing sufficiently to the efficient enforcementof the competition rules

The current system, put in place in the early 1960s to deal with the difficulties of that period, is a systembased on authorisation by a centralised body: agreements restrictive of competition are automaticallyvoid unless notified to the Commission, which has sole power to exempt them from the competitionrules. This system facilitated the development of a body of clear, structured rules and their coherentapplication throughout the Community. It favoured the setting-up of national competition authorities andthe adoption of national competition rules mirroring those of the Community. However, some 40 yearsafter the adoption of Regulation No 17, the environment in which competition policy finds itself hasbeen largely transformed: the Community has become a market which is strongly integrated, it has alsoincreased in size and with future enlargements will soon consist of more than 20 Member States.

In this changed environment it has to be recognised that the system put in place by Regulation No 17has reached its limits. The authorisation regime which compels undertakings to notify their agreementsto the Commission has become a bureaucratic constraint which no longer facilitates the efficientprotection of competition. Dealing with notifications prevents the Commission from focusing on themost serious restrictions. It is very rare for such notifications to give rise to a prohibition decision; inthe last five years only 0.5 % of notifications have resulted in the adoption of a prohibition decision.This shows the lack of relevance of a notification system for the efficient enforcement of the competitionrules. Management of the centralised exemption system diverts the Commission from its primary missionwhich is the detection and suppression of the most serious infringements, which are never notified. Inaddition, the notification system obstructs the full application of the Community competition rules bynational competition authorities and courts.

It is for these reasons that the White Paper proposes a fundamental reform; namely, the replacement of thecurrent system based on prior authorisation by one based on subsequent suppression of possible infringe-ments. This will allow the Commission to refocus on those infringements which are never notified and whichare the most harmful for European consumers and the European economy. Such a reform would increase theefficiency of control in at least two respects. First, by increasing the probability that those responsible for in-fringements will be identified and fined, the reform would reinforce the dissuasive effects of the competitionrules. Secondly, a growing involvement of national competition authorities and courts in the application andenforcement of Community competition rules should greatly improve the detection of the most harmful in-fringements and the overall effectiveness of competition policy. In fact, national competition authorities, be-ing closer to local markets, are generally in a better position to both detect and suppress the more serious in-fringements of the Community competition rules. Moreover, national courts can, where appropriate, awarddamages, grant interim measures or even order the performance of contracts.



Bringing the decision-making process closer to citizens

In a Community of 15 Member States with strongly integrated economies, the application of the fullrange of competition rules should no longer be confined to one body, not only for the reasons associatedwith efficiency outlined above, but also to ensure that the citizens of Europe view competition policy ina positive manner and recognise it as playing an important role in their daily lives. The protection of theinterests of consumers, and therefore of European citizens, is at the heart of Community competitionpolicy. However, this is not always the public perception. By permitting consumers to address nationalcompetition authorities and courts who have the power to apply the full range of EC competition ruleswe will go a long way towards improving the perception which European citizens have of competitionpolicy and of its benefits for them.

Follow-up to the White Paper

While the White Paper contains a reasoned choice in favour of a particular option, its primary purposeis to serve as a basis for discussion. Since it was published a number of round tables have been organisedwith associations of undertakings and lawyers, and a working group involving the representatives of theMember States has been set up. The Commission has received over 100 written observations fromMember States, associations of undertakings, lawyers and academics. The European Parliament and theEconomic and Social Committee have formulated opinions on the White Paper. It is only following afull and open dialogue with all interested parties and on the basis of observations received that thefollow-up to this White Paper will be proposed by the Commission.

Mergers

The merger regulation, itself in force for less than 10 years, has already been the subject of one majorreview, which led to modifications adopted by the Council in June 1997, and implemented in March1998. Therefore 1999 was the first full year in which jurisdictional and other modifications have beenapplied. The Commission will be reporting to the Council on the thresholds in 2000. Meanwhile, themain task of the Commission this year has been to ensure the proper application of the regulation to theever-increasing number, size and complexity of mergers notified to it.

Single market and State aid

State aid may cause distortions of trade and competition that are not acceptable in a common market.State aid control policy therefore contributes to the efficient operation of the single market. In order toallow the single market to generate sustainable growth and higher employment, State aid control policywill require continual review. I am personally convinced that there is still room to reduce current levelsof State aid in all sectors of the economy. The Commission has made clear in several decisions that it isincreasingly reviewing Member States’ financial relations with industry in whatever form and in areaswhich so far have not been tackled extensively enough. In this context I want to mention the sectors ofpublic banking and broadcasting. Furthermore, we will be putting the focus on fiscal measures. I haveinstructed my staff to step up their actions in this field, particularly in the light of the Community’s ‘codeof conduct’. At this stage, my staff are investigating whether certain tax measures constitute State aid.

The sharpening-up of State aid control, rightly called for by the European Parliament, is behind theCommission’s modernisation drive and its wish to increase the efficiency of State aid procedures. As in

10 FOREWORD BY PROFESSOR MARIO MONTI


the area of antitrust, it is important that the efficiency of State aid procedures be improved. Severalinitiatives during the year under review have contributed to this aim. The procedural regulation that wasadopted by the Council in March 1999 paves the way for this purpose. Not only does it codify theprocedures based on Commission practice and the Court of Justice’s case law, but it will also enable theCommission to intensify its monitoring of aid. The Commission may now require the immediateprovisional recovery of non-notified aid, pending its decision on the compatibility of such aid with theTreaty. It also may undertake on-site monitoring to check on compliance with its decisions. Theregulation will speed up procedures by setting time limits within which the Commission has to closeformal investigation proceedings. We are discussing with Member States, in the newly created advisorycommittee on State aid, the forthcoming block exemption regulations. Another important element to beincluded in the current review of State aid control policy is transparency. Transparency and theconcomitant availability of further, improved information on the implementation of State aid policies areessential for the Commission to base its decision-making process and future policies upon solideconomic foundations. Increased transparency is also necessary to raise awareness in Member States ofthe necessity for strict State aid control. Increased information to the public will, moreover, encouragepeer pressure on Member States to reduce State aid volumes.

My staff are therefore examining how transparency can be increased and made more effective. Thefeasibility of a State aid register and scoreboard is, for example, being considered. The register wouldcontain factual information on all State aid decisions, whilst the scoreboard would provide guidance tothe Member States on how to evaluate more accurately the cost/benefit consequences of their State aidpolicies. The annual survey on State aid in the EU will also continue to be improved and will provide amore detailed assessment of State aid expenditure.

Conclusion

From the foregoing it is apparent that the Commission is willing to adapt and improve the legalframework of European competition policy. While an important step has been taken with the adoptionof a new policy in the area of vertical restraints, we must continue to modernise our competition andState aid rules so as to ensure their effectiveness in both the current and foreseeable economic and legalenvironment, particularly in the light of pending enlargement. In doing so we will better serve theobjectives of the Treaty, which, in particular, requires the maintenance of a system ensuring thatcompetition in the internal market is not distorted.



Part One

XXIXth Reporton competition policy 1999

SEC(2000) 720 final

Contents

INTRODUCTION 19Statistics on Commission activity in applying Community competition laws in 1999 20Box 1: EU citizens and competition policy 21

I — Antitrust — Articles 81 and 82State monopolies and monopoly rights — Articles 31 and 86 23

A — Modernisation of the legislative and interpretative rules 231. New Commission competition rules in the field of vertical restraints 232. White Paper on modernisation of the rules implementing Articles 81 and 82 of the

EC Treaty 253. Review of the policy on horizontal cooperation agreements 284. Review of procedural rules 29

B — Consolidating the single market 30Box 2: Cooperation with national authorities and national courts 301. Cartels 312. Opening-up of markets 323. Undertakings in a dominant position 34Box 3: Relations with consumer organisations 35

C — Sector-based policies 371. Telecommunications 372. Postal services 393. Media 41Box 4: Convergence between telecommunications, media and the Internet 414. Transport 435. Insurance 476. Energy 497. Banking/financial services 518. Professions 53Box 5: Professions 539. Sport 5410. Motor vehicles 56

D — Statistics 57


II — Merger control 59

A — Introduction 59

B — New developments 601. Market definition 602. Dominance assessment 62Box 6: Collective dominance: Airtours/First Choice 633. Remedies 66Box 7: Assessment of potential dominance 66Box 8: Legal deadlines for submitting undertakings in Phase II cases 714. Article 2(4) 72Box 9: Fines for supplying incorrect or misleading information in the notification 735. Referrals to Member States 746. Decisions under Article 21 757. Revocation of a Commission decision 768. Guidance notices 76

C — Statistics 78


A — General policy 811. Modernising State aid control 822. State aid and tax policy 833. Transparency directive 844. Notice on State guarantees 84

B — Concept of aid 851. Origin of resources 862. Advantage to a firm or firms 863. Specificity 884. Effect on trade between Member States 89

C — Assessing the compatibility of aid with the common market 901. Horizontal aid 902. Regional aid 943. Sectoral aid 95Box 10: Public aid to Sˇkoda, an example of the application of State aid rules in

applicant countries 99Box 11: State aid to public broadcasters 104

D — Procedures 1061. Ex post authorisation of aid already paid 1062. Rights of third parties 1063. Recovery of aid 1074. Cooperation with national courts 108

E — Statistics 109

16 CONTENTS


IV — International activities 111

A — Enlargement 1111. Pre-accession 1112. Accession negotiations 113

B — Bilateral cooperation 1141. North America 1142. Other countries 116

C — Multilateral cooperation 1181. WTO: Trade and competition policy 1182. OECD 1193. Unctad 120

V —Outlook for 2000 1211. Legislative and regulatory activities 1212. International field 1223. Supervisory activities 123

Annex — Cases discussed in the report 1251. Articles 81, 82 and 86 1252. Merge control 1263. State aid 127


CONTENTS 17

INTRODUCTION

1. On 1 January, 11 Member States adopted the euro as their common currency. The changeovertook place smoothly and the new currency rapidly became established on the financial markets.Competition policy contributed to this process by continuing the drive to modernise Communitycompetition law and by pursuing the two principal objectives that underlie its approach.

2. The first objective of competition policy is the maintenance of competitive markets. Competitionpolicy serves as an instrument to encourage industrial efficiency, the optimal allocation of resources,technical progress and the flexibility to adjust to a changing environment. In order for the Communityto be competitive on worldwide markets, it needs a competitive home market. Thus, the Community’scompetition policy has always taken a very strong line against price-fixing, market-sharing cartels,abuses of dominant positions, and anticompetitive mergers. It has also prohibited unjustifiedState-granted monopoly rights and State aid measures which do not ensure the long-term viability offirms but distort competition by keeping them artificially in business.

3. The second is the single market objective. An internal market is an essential condition for thedevelopment of an efficient and competitive industry. As the Community has progressively broken downgovernment-erected trade barriers between Member States, companies operating in what they hadregarded as ‘their’ national markets were, and are for the first time, exposed to competitors able tocompete on a level playing field. There are two possible reactions to this: either to seek to compete onmerit, looking to expand into other territories and benefit from the opportunities offered by a singlemarket, or to erect private barriers to trade — to retrench and act defensively — in the hope of preventingmarket penetration. The Commission has used its competition policy as an active tool to prevent this,prohibiting, and fining heavily the parties to two main types of agreement: distribution and licensingagreements that prevent parallel trade between Member States, and agreements between competitors tokeep out of one another’s ‘territories’. Moreover, the objectives of competition policy have beenintegrated into the Commission’s new strategy for the European single market adopted on 24 November.The aim is to prevent anticompetitive practices from undermining the single market’s achievements.

4. The implementation of these two principal objectives and the drive to modernise Communitycompetition rules are described in some detail in this report.

5. In the context of enlargement of the European Union it should be noted that the HelsinkiEuropean Council decided that considerable progress had been made in the accession negotiations withCyprus, Hungary, Poland, Estonia, the Czech Republic and Slovenia. In 1999, progress has also beenmade by candidate countries in the preparation or adoption of new competition laws, or the amendmentof existing laws, in order to further align these with Community law. This progress is described in theinternational section of this report, together with developments in bilateral and multilateral cooperation.

6. The 1997 Treaty of Amsterdam came into force on 1 May 1999. This Treaty reaffirmed the Commis-sion’s role as the authority responsible for enforcing the competition rules, and the compatibility of the prin-ciples of free competition and services of general economic interest (1). It also provided, inter alia, for therenumbering of the Treaty provisions concerning competition. For the facility of readers, corresponding oldand new numbers of the relevant Treaty provisions are listed in a table at the beginning of this report.


XXIXTH REPORT ON COMPETITION POLICY 1999 — SEC(2000) 720 FINAL 19

(1) 1997 Competition Report, points 2 to 7.

7. Competition policy is well known among the business community, the Member States and publicauthorities. The maintenance of open and competitive markets is generally considered one of the mostimportant policy objectives of the EU. None the less, and in spite of its successes, competition policy isnot so well known among EU citizens and most of them are unaware of the positive impact competitionpolicy has on them as consumers of goods and users of public and private services. The Commissiontherefore wants to explain more clearly action taken in the field of competition policy to EU citizens. Asa result of these efforts, it is hoped that the Commission will gain their support. The Commission hasalready adopted a series of measures in pursuit of this objective such as the development of aninformation policy aimed at the general public (see Boxes 1 and 3 below).

Statistics on Commission activity in applying Community competition laws in 1999

As in previous years there was intense activity in all areas within the Commission’s sphere of competence.In 1999, the total number of new cases was 1 201, comprising 388 antitrust cases (under Articles 81, 82, and86), 301 merger cases (2) and 512 State aid cases. Comparable figures for 1998 were a total of 1 198 new cas-es, comprising 509 antitrust cases, 245 merger cases (3) and 444 State aid cases. While the total number ofnew cases remains stable compared with 1998 (1 201 as against 1 198), increases in the number of mergercases (301 against 245) and State aid cases (512 against 444) were offset by a reduction in the number of an-titrust cases (388 against 509). The total number of cases closed was 1 273, comprising 582 antitrust cases,279 merger cases, and 412 State aid cases. Comparable figures for 1998 were 1 289 cases closed, comprising581 antitrust cases, 248 merger cases and 460 State aid cases. A more telling indicator is the increase in thenumber of formal decisions which are particularly resource-intensive (20 Phase II merger proceedings, asopposed to 12 in 1998 and 11 in 1997; 68 antitrust decisions, as opposed to 42 in 1998 and 27 in 1997; and 66State aid decisions following the initiation of a formal investigation procedure, as opposed to 61 in 1998 and32 in 1997). This demonstrates that the work output in 1999 was at an even higher level than that of the pre-vious year.

In the antitrust sphere there were two notable features. The first was an increase in the number of casesclosed by way of formal decision (68 against 42 in 1998). Secondly, there was a drop in the number ofnew cases (388 against 509 in 1998). New cases comprise notifications (162 in 1999 against 216 in1998), complaints (149 in 1999 against 192 in 1998) and ex officio proceedings (77 in 1999 against 101in 1998).

The reduction in the number of notifications can probably be partly attributed to the 1997 notice onagreements of minor importance. This trend was first noted in last year’s annual report. It can alsoprobably be attributed to companies anticipating the Commission’s reforms in the area of verticalrestraints, with the publication in 1998 of a communication setting out the Commission’s proposals forreform in this field. The reduction in the number of complaints can probably be explained by sectoralfactors. For example, in 1999 the Commission exempted the standard pub leases of the three largestbrewers in the UK, Whitbread, Bass and S&N. This sector had heretofore given rise to numerouscomplaints on the part of tenants tied to brewers (4). This is also evidenced by the fact that over the yearsthere have been wide fluctuations in the number of complaints (177 in 1997, 159 in 1996, 114 in 1995,170 in 1994, and 110 in 1993). It is therefore too soon to draw any conclusions regarding the reduction

20 XXIXTH REPORT ON COMPETITION POLICY 1999 — SEC(2000) 720 FINAL


(2) Including nine ECSC mergers.(3) Including 10 ECSC mergers.(4) While there were no ‘beer’ complaints in 1999, 19 cases were opened for beer complaints in 1998, and 22 in

1997.

in the number of complaints for 1999. Moreover, some cases which in the past may have been dealt withby the Commission are now being handled by national authorities. More information on this issue is tobe found below in Box 2 on cooperation with national authorities. The reduction in the number of exofficio proceedings can be explained by the fact that 1997 and 1998 were record years because theCommission initiated a number of ex officio proceedings in the run-up to liberalisation in the telecomssector on 1 January 1998.

In 1999, 292 (5) cases were notified under the merger regulation compared with 235 in 1998. TheCommission took a decision in 270 cases compared with 238 in 1998. Moreover, in 1999 theCommission found it necessary to initiate the second stage of examination (‘Phase II proceedings’) inrespect of 20 planned operations, as opposed to 12 in 1998. A total of eight cases where Phase IIproceedings were initiated were authorised subject to conditions, one was formally prohibited, five werewithdrawn and nine were carried over to 2000. The main factors underlying the current merger wave arethe globalisation of markets, the introduction of the euro, the completion of the single market and theforthcoming enlargement. These factors will continue to generate high levels of merger activity inEurope for the foreseeable future.

While there was a slight drop in the number of Commission decisions in the area of State aid, there wasan increase in the number of decisions made following the initiation of a formal investigation procedure(there were 66 such decisions in 1999 compared with 61 in 1998 and 32 in 1997). Such decisions areextremely resource-intensive.



(5) Changes to the merger regulation, which came into force in 1998, brought within its scope a number of jointventure cases which would formerly have been examined under Regulation No 17. Such joint venture cases fallingwithin the scope of the new Article 2(4) of the merger regulation have also to be assessed in accordance with thecriteria of Article 81 and, therefore, are mostly dealt with by the antitrust directorates rather than the merger taskforce. In 1999 there were 15 decisions pursuant to Article 2(4) of the merger regulation (joint venture cases).

Box 1: EU citizens and competition policy

EU competition policy is widely known and appreciated in the business community and among publicauthorities, at both national and international level. In these circles competition policy is oftenperceived as one of the most important of the policies pursued by the European Commission. But itis not seen in the same way by the public at large: most people are unaware of what competitionpolicy can do for them and the benefits it can bring. Very often the Commission’s competition policyis mentioned in connection with the decision to stop a merger or to refuse State aid to a company.This sort of information can generate misunderstanding and apprehension among the public, or at besta measure of indifference. Until now, the citizens of the Union have not been clearly informed of whatthe Commission is called upon to do and what it has done in competition policy, or of the importanceof competition policy for the working of the economy as a whole.

Many citizens do not realise that competition policy is a powerful and effective tool for protectingtheir interests as consumers, users of services, workers and taxpayers. If they were conscious of thesethings, it is likely that they would provide the Commission with strong political support in this area.The Commission departments could take advantage of the day-to-day contact that consumers havewith markets. The experience of consumers and consumers’ associations could be of great assistancein identifying and evaluating possible anticompetitive practices.



The Commission must therefore set about explaining its competition policy more clearly to the manor woman in the street. There are different ways of achieving this, different channels that can be usedand different groups to aim at. One way is to involve economic, social and trade organisations andassociations.

The Commission has already adopted a series of measures in pursuit of this objective. It hasdeveloped an information policy aimed at the general public, distributing a wide variety ofdocumentation and indeed making it available on the Internet; this includes such things as theCompetition Policy Newsletter, the annual Competition Reports, and the list of prices in the motortrade. On the basis of complaints lodged by consumers the Commission has taken the step of initiatingantitrust proceedings, as it did in Volkswagen for example, a case to which it gave wide publicity.

Nevertheless, communication with the citizens of the Union can be improved further. TheCommission intends to take the following approach.

— First, for every single decision taken as part of competition policy the question should be askedwhat specific advantage there may be for the citizen, and especially the consumer. TheCommission will seek to reflect this concern in every press release, in every decision, and in theannual Competition Report.

— Secondly, the Commission intends to treat consumers not merely as people who benefit as a resultof competition policy but also as promoters of competition policy. As has already been pointedout, consumers and consumers’ organisations can be of great help in identifying anticompetitivepractices. If the Commission is able to show clearly that it can resolve competition questions thatconcern consumers more directly, it will be better understood. The Volkswagen case is still tooisolated. The Commission intends to step up relations with consumers’ organisations and moregenerally with the citizens of the Union.

— Lastly, the Commission is considering the advisability of organising meetings of various kindswith the citizens of the Union. One possibility would be an annual meeting with consumers’organisations. Here the Commission would have the opportunity of presenting and explaining itsown policy. Another possibility would be ‘competition conferences’ to be held in the MemberStates. These meetings could be held once or twice a year in the country chairing the Council atthe time. Through occasions of this kind it should be easier to reach national associations ofconsumers, trade associations, companies, national competition authorities and so on.

I — ANTITRUST — ARTICLES 81 AND 82STATE MONOPOLIES AND MONOPOLY RIGHTS — ARTICLES 31AND 86

A — Modernisation of the legislative and interpretative rules

1. New Commission competition rules in the field of vertical restraints

8. On 22 December, the Commission adopted Regulation (EC) No 2790/1999 on the application ofArticle 81(3) of the Treaty to categories of vertical agreements and concerted practices (6). Thisregulation replaces three existing regulations, one on exclusive distribution, one on exclusive purchasingand one on franchise agreements (7), whose period of validity expired on 31 December.

9. The new regulation is the result of an in-depth policy review which the Commission launched in1997 with the publication of a Green Paper on the application of Article 81 of the Treaty to verticalagreements (8). The Green Paper generated wide public debate. Comments made by Member States, theEuropean Parliament, the Economic and Social Committee, the Committee of the Regions and interestedparties were generally in favour of a reform of Community competition policy in the field of verticalrestraints. The Commission subsequently set out the framework for the proposed policy reform in itscommunication on the application of EC competition rules to vertical restraints (9) of 30 September 1998and, at the same time, it submitted two proposals for regulations to the Council for the amendment of:

— Council Regulation No 19/65/EEC of 2 March 1965 on the application of Article 85(3) of the Treatyto certain categories of agreements and concerted practices (10), in order to extend the Commission’sdelegated legislative powers, and

— Council Regulation No 17 of 6 February 1962, first regulation implementing Articles 85 and 86 ofthe Treaty (11), in order to extend to all vertical agreements the dispensation from prior notificationprovided for by Article 4(2) of that regulation.

10. On 10 June, the Council adopted the Commission’s proposals as Regulation (EC)No 1215/1999 (12) amending Regulation 19/65/EEC and Regulation (EC) No 1216/1999 (12) amendingRegulation No 17.

11. The new block exemption regulation, Regulation (EC) No 2790/1999, will effect a shift from the tra-ditional policy, which relied largely on formalistic assessment criteria, towards an approach which focusesmore on the economic effects of vertical agreements. The basic aim of this new approach is to simplify therules applicable to vertical restraints and to reduce the regulatory burden for companies, while ensuring amore effective control of agreements entered into by companies holding significant market power.



(6) OJ L 336, 29.12.1999.(7) Respectively Regulation (EEC) No 1983/83 (OJ L 173, 30.6.1983) and Regulation (EEC) No 1984/83 (OJ L 173,

30.6.1983), prolonged by Regulation (EC) No 1582/97 (OJ L 214, 6.8.1997), and Regulation (EEC) No 4087/88(OJ L 359, 28.12.1988).

(8) COM(96) 721 final.(9) COM(1998) 544 final.(10) OJ 36, 6.3.1965.(11) OJ 13, 21.2.1962.(12) OJ L 148, 15.6.1999.

12. In sum, the new policy is based on a single Commission regulation, with a wide scope, whichblock-exempts, up to a market-share threshold of 30 % and subject to a limited number of ‘hardcore’restrictions and conditions, all agreements or concerted practices between two or more undertakings,each of which operates at a different level of the production or distribution chain, where such agreementsor practices relate to the conditions under which the parties may purchase, sell or resell certain goods orservices. This includes agreements concluded by retailers’ associations, on condition that none of themembers has a turnover of more than EUR 50 million, and certain non-reciprocal vertical agreementsconcluded between competing undertakings.

13. A single market share threshold of 30 % limits the scope of the block exemption. The regulationcontains specific provisions intended to ensure flexible application of the market-share threshold in caseswhere it is temporarily exceeded. This increases legal certainty for the undertakings concerned. Abovethe 30 % threshold, agreements are not presumed to be illegal but require individual examination. Inorder to assist undertakings in carrying out such an examination, the Commission plans to adopt a set ofguidelines during the first half of 2000. A draft of these guidelines was published on 24 September andis currently subject to public consultation (13).

14. The regulation relies on a ‘blacklist’ of clauses, that is, on a list of restrictions which cannotbenefit from the block exemption. This list of ‘hardcore’ restrictions includes resale price maintenance,whether in the form of fixed or minimum prices, and certain types of territorial or customer restriction.To a large extent, it codifies current case law.

15. The application of the block exemption is also subject to a limited number of conditions, the mostimportant of which concerns non-compete obligations, i.e. arrangements preventing the buyer frommanufacturing, purchasing, selling or reselling competing goods or services. Bearing in mind thepotential risks of market foreclosure associated with this type of restraint, non-compete obligations arecovered by the new regulation in so far as their duration does not exceed five years. However, this ruleis subject to certain exceptions. For example, in the regulation it is indicated that this time limit does notapply when the products are sold from premises owned or leased by the supplier. Moreover, in theguidelines, it will be explained which other situations may justify a longer duration (e.g. transfer ofknow-how and long-term investments, especially when sunk or brand specific).

16. Under the regulation, it is also possible for the benefits of the block exemption to be withdrawn.This is a mechanism which is intended to be used in situations where, below the market share thresholdof 30 %, a vertical agreement does not have any objective advantages which compensate for its negativeeffects on competition and where, for this reason, it does not fulfil all the conditions set out in Article81(3). The withdrawal mechanism is intended, in particular, to protect competition from the negativeconsequences resulting from the cumulative effect of parallel networks of similar agreements put in placeby competing suppliers, as well as in cases of buying power.

17. Moreover, in order to ensure more effective supervision and to encourage the decentralised applica-tion of Community competition rules, the new Council enabling regulation allows national competition au-thorities to withdraw the benefit of the block exemption where a particular agreement has a negative effectwithin their national territory and where this territory constitutes a distinct geographic market.

18. The block exemption regulation also provides that the Commission may, by regulation andwithout retroactive effect, exclude specific vertical restraints from the scope of the block exemption in



(13) OJ C 270, 24.9.1999.

cases involving parallel networks of similar vertical agreements covering more than 50 % of the relevantmarket.

19. Finally, the regulation provides for a transitional period whereby the agreements currentlycovered by the existing block exemption regulations may continue to benefit from the application ofthose regulations until 31 December 2001.

2. White Paper on modernisation of the rules implementing Articles 81 and 82 of theEC Treaty

20. On 28 April, the Commission adopted a White Paper on modernisation of the rules implementingArticles 81 and 82 of the Treaty (14). This document is the starting point for a wide-ranging debate onthe reform of Regulation No 17, the cornerstone of the system for implementing Articles 81 and 82,drawn up at the beginning of the 1960s.

21. The Treaty of Rome laid down a general ban on anticompetitive agreements, tempered with theexception in Article 81(3), but left open the question of how this exception was to be applied. At thebeginning of the 1960s, European competition policy was yet to be developed: only two out of sixMember States had any competition legislation, there was only one real competition authority andEuropean law was in an embryonic state. The very general wording of Article 81(3) and the newness ofthe prohibition principle made it difficult for firms to evaluate the legality of their agreements. TheCommission, as a young institution, needed to be informed about the types of agreement which existedand to develop real knowledge of the various sectors of the economy.

22. In those circumstances, a centralised authorisation system rapidly became the obvious choice.Regulation No 17 set up a system under which anticompetitive agreements and practices affecting tradebetween Member States, in order to qualify for exemption, have to be notified to the Commission, whichhas exclusive power to apply Article 81(3). Subject to the exceptions listed exhaustively in Article 4(2)of Regulation No 17, the exemption can be applied retroactively only to the date of notification.Restrictive agreements which have not been declared exempt are automatically null and void. Thissystem enabled the development of a consistent body of law and the spread of a ‘competition culture’throughout the Community. Competition policy is today rightly perceived as a pillar of Europeanintegration, a true guardian of the single market.

A necessary reform

23. Despite successive enlargements of the Community and the establishment of credible competitionauthorities in all the Member States, the system set in place at the beginning of the 1960s has notundergone any substantial changes to date. The Regulation No 17 system today has two mainshortcomings: it no longer ensures effective surveillance and it constitutes an excessive bureaucraticconstraint for firms.

24. In a Community of 15 Member States, centralised surveillance cannot ensure that competition iseffectively safeguarded. The growing integration of Europe’s economies has considerably widened thescope of Community law and with it the Commission’s powers. The latter’s monopoly on the application



(14) COM(1999) 101 final (OJ C 132, 12.5.1999).

of Article 81(3) blocks decentralised application by both courts and competition authorities and leavesthe Commission as the sole real guarantor of compliance with the competition rules. This situation is allthe more worrying as around half of all cases handled by the Commission start as notifications. However,notifications no longer bring to the Commission’s attention the important competition cases. The figuresare telling: in 35 years, the Commission has been informed by notification of agreements justifying aprohibition decision in only nine cases. While the Commission is giving its attention to analysing thesenotified agreements, it is unable to investigate properly the complaints it receives and to conduct thenecessary own-initiative proceedings against the most serious infringements, which are never notified.

25. The second shortcoming of the current system is the bureaucracy that it generates and theinsufficient legal certainty with which it provides firms. Unlike the merger regulation, Regulation No 17does not lay down any real obligation to notify although it contains a strong incentive to firms to do so.Notifications generate major costs, whether they are made by the firms themselves or via specialisedlawyers. The procedure set out in Regulation No 17 rapidly proved too cumbersome to be followedsystematically. Under the regulation, each time a restrictive practice is notified to it, the Commissionshould examine the case, publish a notice in the Official Journal in the 11 languages to allow third partiesto submit their comments, present a draft decision to the advisory committee and lastly, adopt thedecision and publish it in all the languages. Given the large number of cases, the Commission quicklycame to reserve this complex procedure for the most important ones, adopting on average less than 10or so formal decisions each year. More than 90 % of cases are closed informally, in particular by sending‘comfort letters’. These letters merely constitute a factor which the courts may take into account and arepreceded only rarely by the publication in the Official Journal of a notice giving third parties theopportunity to submit their comments (in 1997, seven publications under Article 19(3) for 210 comfortletters, i.e. 3 % of cases): the system’s transparency is thus limited.

26. While Regulation No 17 has allowed the development of a complete corpus of coherent rules, itis no longer appropriate in Europe at the start of the 21st century. The procedures it laid down haveproved to be impracticable. Reform is needed, all the more so since competition policy will face twomajor challenges in the immediate future: enlargement to include new member countries and theincreasing globalisation of Europe’s economies.

27. Today there is broad consensus on the need to reform Regulation No 17 and on the objectives that thereform must pursue, namely the effectiveness of competition policy and the simplification of administrativesupervision. Since the 1980s, numerous proposals for reform have been made by the Member States as wellas by academics and practitioners. Some of the proposals have been confined to minor adjustments to theRegulation No 17 system, while others have entailed a thorough overhaul and a sharing of the power to grantexemptions between the Commission and the national competition authorities.

28. After conducting a thorough analysis of these various options, the Commission concluded thatminor adjustments to the current system were not sufficient to ensure effective application of thecompetition rules in an enlarged Community and that the option of decentralising notifications to thenational authorities was more risky than it was advantageous. The White Paper therefore takes a clearstance in favour of another option: the adoption of a directly applicable exception system.

29. This option consists in abolishing the authorisation arrangements and the notification systemwhich is their corollary. Under a directly applicable exception system, Article 81(3), like Articles 81(1)and 82, could be applied not only by the Commission but also by any national authority or court. Article81 would become, like Article 82, a unitary prohibition. Anticompetitive practices which affected tradebetween Member States, i.e. those caught by Article 81(1), would be lawful ab initio if they met theconditions laid down in Article 81(3). No procedure for authorisation by an administrative authority, and



hence no notification, would then be necessary. The Commission takes the view that adopting a directlyapplicable exception system would enable it to safeguard competition more effectively and to simplifyadministrative supervision, thus meeting the requirements of Article 83 of the Treaty.

More effective application of the Community competition rules

30. Adopting a directly applicable exception system would improve the protection of competition intwo ways: it would enable effective decentralisation of the application of the rules and it would make iteasier for the Commission to refocus its work on restrictions that are really detrimental to competition.

31. The reform proposed in the White Paper would improve the protection of competition by facilitatingeffective decentralised application not only by national authorities but also by national courts. In an enlargedCommunity, effective protection of competition requires the involvement of several decision-makers in theapplication of the rules. At present, national courts apply Articles 81(1), 82, and 86(1) and (2), the Court ofJustice having recognised the direct effect of these provisions at the beginning of the 1970s. However, the ef-fectiveness of the courts’intervention is largely undermined by the fact that the firms against which an actionis brought may notify their agreements to the Commission and de facto block any court proceedings. Thereare three reasons for allowing national courts to apply Article 81 in full: (i) they have powers which neitherthe national authorities nor the Commission have, such as the power to award damages to victims of illegalagreements, to order specific performance of a contract or to rule more quickly and more effectively than thecompetition authorities on urgent measures; (ii) they can simultaneously apply competition law and generalcommercial law, which simplifies proceedings in cases where Community competition law applies to one as-pect only of a dispute; (iii) lastly, giving national courts the power effectively to apply Article 81 should re-sult in a greater number of legal actions being brought in this field and thus contribute to the effective appli-cation of competition law. This is in line with the role in the effective application of Community law tradi-tionally ascribed by the Court of Justice to the national courts.

32. The adoption of a directly applicable exception system would also allow decentralised applicationby the national competition authorities. This clearly presupposes that the seven Member States that havenot yet done so empower their authorities to apply Community law. There is a clear advantage in betterexploiting the synergies which exist between the Commission and these specialised authorities, whichoften have extensive resources and a very good knowledge of their respective national markets.

33. Adopting a directly applicable exception system would allow the abolition of the notificationarrangements, which have become ineffective in safeguarding competition. This would enable theCommission to focus on the most serious restrictions. In these circumstances, complaints would take ongreater importance and the White Paper thus proposes improving the way in which they are handled, inparticular by introducing a deadline of four months within which the Commission must inform thecomplainant of the action it intends to take in response to the complaint. In addition, the reform shouldbe accompanied by a strengthening of the Commission’s powers to penalise infringements. The WhitePaper proposes a number of measures, including updating the amounts of fines and periodic penaltypayments, making it easier to have recourse to oral questions during an investigation and reforming themechanisms for obtaining authorisation from a judge to conduct an investigation.

Simplifying administrative supervision

34. Secondly, adopting a directly applicable exception system would simplify administration, thesecond requirement of Article 83(2)(b) of the Treaty. Firms would no longer be obliged to notify theirrestrictive agreements to the Commission and, if the conditions of Article 81(3) were met, they couldapply directly to the national courts in order to have its provisions enforced.



35. The White Paper sets out the arguments in support of a particular option for reform but it nonethe less offers a basis for discussion. Since its publication, numerous debates have been organised withbusiness associations and lawyers, a working group has been set up with the representatives of theMember States, and various conferences have been held. Around 100 written statements from MemberStates, firms and business associations, lawyers and academics have been received by the Commission.The European Parliament adopted a resolution on the subject on 18 January 2000 following the reportby Mr Karl von Wogau. The resolution supports the general thrust of the Commission’s proposal whilestressing the importance of consistency in the application of Community law and of legal certainty forfirms. The Economic and Social Committee also discussed the White Paper and adopted an opinion on8 December. It too came out in favour of the Commission’s proposal, considering it to be beneficial forfirms in general and SMEs in particular. However, it listed a number of flanking measures which itconsidered necessary in order to ensure the uniform application of Community law in a system of paralleljurisdictions. On the basis of all these responses to the White Paper, the Commission will draw up aproposal for a regulation which will be presented to the Council and to Parliament.

36. Other instruments will then need to be amended or produced: for example, the notices oncooperation with national authorities and courts will need to be revised and a specific notice oncomplaints will need to be drafted. Specific measures to train national judges should be taken and thenetwork made up of the Commission and the national authorities should establish rules on how it willoperate. The White Paper merely marks the start of the final stage of the thorough reform of the rulesimplementing Articles 81 and 82, which is essential to the smooth operation of a Community withenlargement on its agenda.

3. Review of the policy on horizontal cooperation agreements

37. Companies need to respond to increasing competitive pressure and changes in the market placedriven by globalisation, the speed of technological progress and the generally more dynamic nature ofmarkets. Cooperation can be a means of sharing risk, saving costs, pooling know-how and launchinginnovation faster. In particular for small and medium-sized enterprises, cooperation is an importantmeans of adapting to the changing market place. Consumers will share these gains, provided thateffective competition is maintained in the market.

38. In 1998 the Commission’s departments had intensified their thinking on the review of policy inthis area, reaching certain initial conclusions such as on the need to focus on economic analysis, in linewith the way in which the vertical restraints exercise was tackled (15). Work on the review continued in1999, with the Commission’s departments preparing drafts of revised block exemption regulations onspecialisation and on research and development, as well as draft guidelines on the applicability of Article81 to horizontal cooperation agreements. The objective is to clarify the Commission’s policy in the areaof horizontal cooperation and to make it more effective for the future economic and legal environment.The approach is likely to be similar to that recently adopted for vertical agreements. The Commissionhopes to be in a position to start public consultation on the drafts in the first half of 2000.

39. It should also be recognised that this review is an essential pillar of the Commission’s attemptsto modernise the EC competition rules. By clarifying the rules, the Commission should be freed fromexamining cases which are of no interest from a competition policy point of view and will thus be ableto concentrate on more important cases, particularly on those which harm consumers by increasing prices



(15) 1998 Competition Report, points 54 and 55.

or by reducing output, innovation or the variety or quality of goods and services. Moreover, any switchto a directly applicable exception system under Article 81 (see Section 2 above) requires both areinforcement of the legislative framework and the setting-up of mechanisms, such as guidelines, inorder to ensure the uniform application of Article 81 in a system where several bodies have enforcementpowers.

4. Review of procedural rules

As regards procedures, two changes should be noted.

40. In a number of previous reports (16), mention was made of consultation of the advisory committeein cases where the Commission envisaged sending a comfort letter to the companies concerned followingthe publication of a notice under Article 19(3) of Regulation No 17. This practice has been abandonedsince 1998 in cases where the notice does not give rise to any comments which might change the positivestance taken in it: where the comfort letter is a logical follow-up to the notice, the Committee is merelyinformed after the event. It is only when key developments which might modify the initial stance followthe publication of the notice that the Commission enters the case on the agenda of a Committee meetingprior to sending the comfort letter. A case may also be discussed at the request of a Member State. Whenit publishes its intention to take a favourable view of a request or notification, the Commission givesinterested institutions and individuals the opportunity to submit their comments. The competentauthorities in the Member States may therefore take advantage of the publication to send their commentsto the Commission and request that the case be discussed in the advisory committee.

41. The second innovation is intended to align practice in the antitrust field and the mergers andacquisitions field. So that the same letter does not have to be sent twice, once to the firm and once to itslawyer, firms may nominate a lawyer to receive their correspondence from the Commission. Suchcorrespondence would be formally addressed to the firm involved in the proceedings, but would be sentto its lawyer (using the ‘care of’ formula), who would be required to forward it to the firm. However,the Commission allows firms this possibility only if the lawyer possesses an authorisation containing thefollowing three elements: (1) the representative is authorised to receive and pass on any correspondencerelating to a case, and to reply to any correspondence; (2) he has power of attorney to act for the firm,in particular by replying on its behalf; and (3) the firm undertakes to inform the Commission should theauthorisation be withdrawn or amended.

42. This procedure applies to all correspondence sent in the course of proceedings, with the exceptionof requests for information under Article 11 of Regulations No 17 and (EEC) No 4064/89. Underparagraph 4 of this article in each case ‘the owners of the undertakings or their representatives and, inthe case of legal persons, companies or firms, or of associations having no legal personality, the personsauthorised to represent them by law or by their constitution, shall supply the information requested’. Thiswording is designed to ensure that any reply to requests for information, or indeed failure to reply,commits the firm. Requests for information should therefore always be sent directly to the firm. Thisdoes not of course prevent the persons mentioned in Article 11(4) from designating a lawyer to reply;however, in such cases, the reply is fully binding on them. It should be noted that the White Paper onmodernisation proposes amending Article 11(4) (17).



(16) 1989 Competition Report, point 4; 1990 Competition Report, point 3.(17) White Paper on modernisation, point 116.

B — Consolidating the single market (18)

43. Consolidating the single market is of prime importance in ensuring that economic and monetaryunion is a success. Of the Community policies that help to further single market consolidation,competition policy plays a key role, not just because it strengthens structures by tackling private orpublic initiatives designed to prevent or delay the opening-up of markets, but also because it stimulatesthe operation of the single market by promoting positive cooperation between companies in areas suchas R & D or environmental protection, and by punishing anticompetitive conduct. The Commissionbelieves that this action to consolidate the single market has an immediate impact on the progress ofeconomic and monetary union.



(18) Most of the cases which gave rise to a positive approach on the part of the Commission are discussed in thefollowing section (C — Sector-based policies).

Box 2: Cooperation with national authorities and national courts

In the antitrust field, the 1997 notice on cooperation between the Commission and the competitionauthorities in the Member States was applied in some 50 cases, namely:

— 13 complaints rejected or suspended by the Commission on the ground that a national authoritywas handling them;

— 4 discomfort letters sent to the national authority so that, if it wished, it could prohibit a restrictiveagreement notified to the Commission that did not meet the conditions of Article 81(3) but wasnot relatively significant enough to justify initiating the formal procedure;

— 30 cases of cooperation on cases handled simultaneously by the Commission and a nationalauthority;

— 10 cases of the Commission being consulted by a national authority on a case handled by thatauthority alone;

— 2 dilatory notifications.

In addition, pursuant to point 49 of the notice, the Italian competition authority spontaneouslyinformed the Commission of four cases in which it was applying Articles 81 and 82: Stream/Telepiù(pay television, encrypted film rights); Enel/Unapace (electrical energy supply); KM Zundholz/CIF-Conaedi (production and sale of matches); and Aeroporti di Roma (groundhandling tariffs).

As regards relations with national courts, five cases in which the relevant notice on cooperation wasapplied in 1999 should be noted. These were the reply to the question put by the Helsingborg DistrictCourt (tingsrätt) in Case IV/36.568 — Scandlines Sverige/Port of Helsingborg (port charges), andfour questions put by the Barcelona and Madrid Courts of First Instance in cases relating to thedistribution of petroleum products.

In the merger field, five cases were referred to the competent authorities in the Member States under Ar-ticle 9 of Regulation (EEC) No 4064/89. Three cases were referred in full: Rabobank/Beeck/Homann to



the German Federal Cartel Office, Heineken/Cruzcampo to the Spanish authorities, and CSME/MDP-SCPA to the French authorities. Two further cases were referred in part: Petrofina/Total and Totalfina/ElfAquitaine to the French authorities. More detailed information can be found in Chapter II of this report.

A case in which national law was applied and which is of interest for the Community was theprohibition by France of the acquisition of Orangina by Coca-Cola, despite undertakings given by thelatter. Coca-Cola proposed granting an exclusive 10-year licence to an independent third party tomarket Orangina on the ‘non-home’ market. However, the Minister for Economic Affairs, inagreement with the Competition Council, took the view that such a system would lead to coordinationof behaviour, which, while it might be necessary in order for Orangina to remain competitive on thismarket, would also be detrimental to free competition. Faced with the impossibility of resolving thiscontradictory situation, the Minister prohibited the acquisition. This case is the first in which theconcept of joint dominant position, already familiar in Community law, has been applied underFrench law.

1. Cartels

44. Of all restrictions of competition, restrictive practices in the form of secret agreements areundoubtedly the most destructive. Very often, these practices involve a substantial number of economicoperators in a given area of activity and, as such, they have a very marked impact on the relevantmarkets. Furthermore, they almost invariably concern prices and thus severely undermine competition.The Commission is committed to an extremely tough stance against cartels, particularly following theadoption of the euro as a common currency. The changeover to the euro in 11 Member States shouldincrease price transparency within the Union and, as a result, intensify competition to the benefit ofconsumers. This must not be countered by restrictive agreements designed to sidestep marketconfrontation by artificially fixing prices or other trading conditions, which in the longer term could pushup inflation and undermine the foundations of economic and monetary union.

45. As in previous years the Commission demonstrated its firm commitment by its strong actionagainst secret cartel agreements between companies. Final decisions were issued in two cases andadditional sets of proceedings have been instituted.

46. On 26 October, the Commission found that the Dutch association of electrotechnical equipmentwholesalers, the Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied(FEG), together with its largest member Technische Unie (TU), restricted competition by operating asystem of collective exclusive dealing in combination with a system of price coordination on the Dutchwholesale market for electrotechnical equipment.

47. The Commission found evidence that FEG prohibited the association of importers of such productsin the Netherlands from selling to wholesalers which were not members of FEG. The prohibition deprivedthese wholesalers of their sources of supply and complicated and delayed entry to the Dutch market by for-eign wholesalers. At the same time, the arrangement prevented suppliers from selling their products on theDutch market via wholesalers other than FEG members. As the collective exclusive dealing arrangement de-prived potential price-cutters, such as non-FEG wholesalers, of their sources of supply, the artificial pricestability created by FEG and its members could not be endangered by outsiders. The Commission imposedfines of EUR 4.4 million on FEG and EUR 2.15 million on TU (19).

(19) OJ L 39, 14.4.2000; Bull. 10-1999, point 1.3.32; Press Release IP/99/803, 26.10.1999.

48. On 8 December, the Commission adopted a decision imposing fines totalling EUR 99 million oneight producers of seamless steel tubes: British Steel Limited (United Kingdom), Dalmine SpA (Italy),Mannesmannröhren-Werke AG (Germany), Vallourec SA (France), Kawasaki Steel Corporation, NKKCorporation, Nippon Steel Corporation and Sumitomo Metal Industries Limited (Japan). These firms,which are among the largest producers of seamless tubes in the world, had colluded until 1995 (20) overkeeping to their respective domestic markets for certain seamless tubes used in oil and gas prospectingand transportation (21).

49. The products covered by the cartel were ‘standard’ steel borehole pipes (commonly known as ‘oilcountry tubular goods’, or OCTG) and ‘project’ transportation pipes (commonly known as ‘line pipe’);both varieties are used in oil and gas exploration and transport. To coordinate their behaviour on thestandard OCTG and project line pipe markets, the European and Japanese producers set up a cartel,which they called the ‘Europe Japan club’. The cartel restricted competition in the common market byrequiring that the domestic markets of the different producers (i.e. the German, French, Italian, UK andJapanese markets) be respected: the supply of seamless tubes to Member States of the Community wherea national producer was established was limited by the other producers party to the agreement refrainingfrom delivering tubes to those markets.

50. In fixing the amounts of the fines, the Commission took account of the fact that, by definition,an agreement requiring the participating firms to keep to their domestic markets constitutes a veryserious infringement of Community law, since it undermines the proper functioning of the single market.Moreover, the four Member States concerned account for most of the consumption of seamless OCTGand line pipe in the EC and hence constitute an extensive geographic market.

51. However, the Commission also took account of the fact that the standard OCTG and project linepipe sold in the Community by the firms to which the decision is addressed account for only about 19 %of Community consumption of seamless OCTG and line pipe. As attenuating circumstances, theCommission noted that the sector was in a long-term crisis and that its position had deteriorated since1991; coupled with the increasing flow of imports, these factors have resulted in capacity reductions andplant closures.

52. Pursuant to the notice on the non-imposition or reduction of fines in cartel cases (22), the finesimposed on Vallourec and Dalmine were reduced, since they had cooperated with the Commission inestablishing the facts.

2. Opening-up of markets

53. The Commission has always kept a close eye on distribution agreements. While most distributionagreements are pro-competitive and facilitate market entry, some lead to the setting-up of watertight nation-al distribution networks which partition markets, in particular where distributors are prevented from sup-plying customers based outside the contract territory. In this way, national markets are artificially isolatedfrom one another, limiting competition and price convergence. Such agreements impinge upon the right ofEuropean consumers to purchase goods in the Member State of their choice and result in their being deniedthe benefits of the internal market, particularly where there are price differences between Member States.



(20) Except in the case of British Steel, which ceased producing the pipes in 1994.(21) Bull. 12-1999; Press Release IP/99/957, 8.12.1999; not yet published in the Official Journal.(22) OJ C 207, 18.7.1996.

This is taken into account in the Commission’s new block exemption regulation in the field of vertical re-straints (23), which, inter alia, does not apply to certain types of territorial and customer protection leading toa partitioning of markets (24). Moreover, companies are advised not to use these restrictions in their agree-ments as individual exemption of such clauses will be unlikely (25).

54. In 1999 the Commission continued to demonstrate its determination to promote the opening-upof markets, a prime example of this being the case involving the creation of the joint venture BritishInteractive Broadcasting Ltd (BiB, which has since changed its name to ‘Open’) (26). Open is to providea new type of service, digital interactive television services, to consumers in the United Kingdom. Thisinvolves putting in place the necessary infrastructure and services to allow companies, such as banks,supermarkets and travel agents, to interact directly with the consumer via the TV set. In this case, themain concern raised by the Commission pursuant to Article 81 was that the creation of Open eliminatedBT and BSkyB, two of the parents of BiB, as potential competitors in the digital interactive televisionservices market. The Commission decided to clear the creation of BiB only after the parties had givensubstantial undertakings aimed at ensuring that the digital interactive television services market in theUK remained open to competition. In particular, as competition to BT and BSkyB comes from the cablenetworks, the decision should ensure that third parties will have sufficient access to BiB’s subsidisedset-top boxes, as well as to BSkyB’s films and sports channels, and that set-top boxes other that BiB’scan be developed in the market.

55. Another case where the Commission was concerned to ensure that a market remained open wasthe Microsoft Internet Explorer licensing case (27). In this case, the Commission approved Microsoft’srevised licensing agreements with Internet service providers (ISPs) by way of a comfort letter. An ISPis a company that maintains a permanent connection to the Internet and enables its subscribers to connectto the Internet via a telephone link to itself. ISPs may also provide their subscribers with worldwide web(www) pages. In 1998, Microsoft, the computer software manufacturer, formally notified to theCommission a set of revised agreements made with some European ISPs for the licensing anddistribution of its Internet Explorer products. Microsoft’s formal notification of its agreements followedan inquiry launched by the Commission’s Directorate-General for Competition into a previous versionof the agreements. During this inquiry, the Competition DG advised Microsoft to re-examine theagreements to ensure that they did not contain restrictions that might have the effect of illegallyforeclosing access to the market for Internet browser software by Microsoft’s competitors and of illegallypromoting the use of Microsoft’s proprietary technology on the Internet.

56. Microsoft subsequently amended its agreements and notified the revised agreements to theCommission. There were two major changes: the ISPs’ failure to attain minimum distribution volumesor percentages for Internet Explorer browser technology will no longer result in termination of theiragreements, and ISPs are now allowed to promote and advertise competing browser software (28). In thelight of these changes the Commission cleared the agreements by way of a comfort letter. The comfortletter covers only the agreements between Microsoft and the ISPs and does not give any ruling on theoverall behaviour of Microsoft as regards a possible abuse of a dominant position.



(23) Regulation (EC) No 2790/1999 on the application of Article 81(3) to categories of vertical agreements andconcerted practices (OJ L 336, 29.12.1999). See Chapter I.A above.

(24) Article 4 of Regulation (EC) No 2790/1999.(25) See Press Release IP/99/1045, 22.12.1999.(26) See Press Release IP/99/686, 16.9.1999.(27) See Press Release IP/99/317, 10.5.1999.(28) Further details of the notification of the Microsoft Internet Explorer licensing agreements were published in the

Official Journal of the European Communities (OJ C 175, 9.6.1998).

3. Undertakings in a dominant position

57. Article 82 prohibits undertakings in a dominant position on a given market from abusing thissituation to the detriment of third parties. Such abuse consists, inter alia, in limiting production, chargingexcessive prices, discriminatory or predatory pricing, tied sales or other commercial practices not basedon the principle of economic efficiency. The Commission takes the view that such practices, whichundermine competition, are particularly dangerous when they are carried out by undertakings with thepower to shield themselves from competitive pressure and eliminate their competitors without significantdamage to themselves or to block market access by new entrants to a significant degree. In the contextof further development of the single market, these practices are particularly damaging because they leadto market partitioning and delay the integration of the Member States’ economies. In addition, in recentlyliberalised markets there is a danger that they will wipe out the expected benefits in terms ofrestructuring, innovation or job creation. This is why the Commission is particularly alert to the effectsof dominant positions on these processes. In 1999 the Commission adopted four prohibition decisionsunder Article 82.

58. On 10 February, the Commission found that the Finnish airport operator IlmailulaitosLuftvartsferket abused its dominant position by granting a 60 % discount on landing fees at Helsinki,Vaasa, Turku, Pori and Tampere airports for domestic flights but not for intra-Community flights. Itordered Ilmailulaitos Luftvartsferket to terminate its discriminatory fees system, which had beenintroduced for no objective reason. These discriminatory fees favoured the access of domestic flightsover those originating in other Member States (29).

59. Also on 10 February, the Commission found that the operator of Portuguese airports, Aeroportose Navegação Aerea-Empresa Publica, abused its dominant position by maintaining a tariff structure witha 50 % reduction on landing fees for domestic flights but not for intra-Community flights and a volumediscount ranging from 7 to 32 % according to the number of monthly landings at Lisbon, Oporto andFaro airports. As this discriminatory rate structure, for which there was no objective justification, hadbeen introduced by a government measure, the decision was adopted under Articles 82 and 86 (formerArticles 86 and 90) of the EC Treaty. Again, these discriminatory fees favoured the access of domesticflights over those originating in other Member States (30).

60. The Commission set out its policy on commissions paid by airlines to travel agents in its decisionin the Virgin/BA case (31). Virgin’s complaint against BA was the first of a series of complaints receivedby the Commission alleging abuses of a dominant position by airlines operating loyalty rebate schemeswhich effectively tie travel agents to a dominant airline. The Commission found that the commissionsoffered by BA to UK travel agents were equivalent to a ‘loyalty discount’ i.e. a discount based not oncost savings but on loyalty. Schemes of this type have been consistently condemned as an abuse of adominant position in other industries in the past. It is well-established Community law that a dominantsupplier cannot give incentives to its customers and distributors to be loyal to it, thereby foreclosingmarket access by the dominant firm’s competitors. As a dominant firm, BA should providesupplementary commissions to travel agents only where these reflect extra services provided by the agentor efficiencies realised by BA. The Commission is taking all measures necessary to ensure that theprinciples in this decision are applied to other EC airlines in equivalent situations. The Commissionimposed a fine of EUR 6.8 million on British Airways for a serious abuse of a dominant position overa period of seven years.



(29) OJ L 69, 16.3.1999; Bull. 1/2-1999, point 1.3.79.(30) OJ L 69, 16.3.1999; Bull. 1/2-1999, point 1.3.80.(31) Decision of 14 July 1999. Not yet published in the Official Journal.

61. On 20 July, the Commission found that the local organising committee of the 1998 Football WorldCup (Comité Français d’Organisation de la Coupe du Monde de Football 1998, or ‘CFO’) had abused itsdominant position by implementing discriminatory ticket sales arrangements in the run-up to the tournamentthat favoured consumers resident in France. The decision followed an investigation by the Commission,which revealed that some 570 000 entry tickets had been sold by the CFO exclusively to consumers able toprovide an address in France. The practical effect of such a requirement was to deny the overwhelming ma-jority of consumers outside France access to a significant proportion of entry tickets for finals matches.

62. The Commission would normally impose a heavy fine where an undertaking abuses a dominantposition in this manner. Nevertheless, given that the abusive ticketing arrangements as implemented bythe CFO were similar to those adopted for previous World Cup finals tournaments, and that the CFOcould not easily have relied upon previous decisions of the Commission or case law of the Court ofJustice in order to ascertain its responsibilities under EC competition rules, the Commission decided toimpose no more than a symbolic fine of EUR 1 000 on the CFO. However, the decision sends a clearsignal that the Commission expects future tournament organisers to ensure that their ticketingarrangements comply fully with EC competition rules before putting them into effect (32).

63. On 7 October, the Court of First Instance upheld in all material respects the Commission’s decisionconcerning infringements by Irish Sugar of Article 82 (33). The Commission had imposed a EUR 8.8 millionfine on Irish Sugar and its subsidiary SDL for having abused their dominant position on the Irish markets forindustrial and retail sugar. The abuses consisted in a series of commercial practices, primarily rebate policies,aimed at tying customers to Irish Sugar and thereby foreclosing market entry (34).

64. The Court confirmed the Commission’s view that Irish Sugar and its subsidiary SDL held a(vertically) collective dominant position on the relevant markets, observing inter alia that their marketpower was not affected by any countervailing buying power on the part of their main customers. TheCourt went on to uphold the Commission’s finding that various commercial practices engaged in by IrishSugar and/or SDL had been abusive. It did, however, reduce the fine to EUR 7.88 million, on the groundsthat the Commission had not sufficiently proven one of the abuses during a two-year period. Irish Sugarhas appealed against the judgment (35).



(32) OJ L 5, 8.1.2000.(33) Decision of 14 May 1997 (OJ L 258, 22.9.1997) and Case T-228/97 Irish Sugar v Commission.(34) For more details see 1997 Competition Report, point 65.(35) Case C-497/99 P Irish Sugar v Commission.

Box 3: Relations with consumer organisations

A — Relations which are necessary and reciprocal

The goal of competition policy is to maintain a high degree of competition in the common market.For final users, this policy is reflected in lower prices, a wider choice of goods, and technologicalinnovation. Given the impact of competition policy on final consumers, it would appear legitimatefor relations to develop between the authorities responsible for competition and the organisationswhich represent consumers.

Consumer organisations have a right to expect the Commission to protect consumers as economicagents. It should preserve their capacity to act on the market as agents of competition and to reap its



rewards. Consumers make up a structural element of the market (demand) which reacts to thecommercial practices of firms (supply). Ensuring that markets operate properly therefore also meansensuring that consumers are able to make choices which influence the behaviour of suppliers.

The Commission, and its departments which deal with competition, can expect a good deal offeedback from consumers and consumer organisations. Their knowledge of the daily operation ofmarkets, especially markets for consumer goods, means that consumer organisations are in a positionto provide the Commission, by means of complaints or through informal contacts, with informationwhich may allow its departments to start own-initiative proceedings. Likewise, when they areinterested parties in the context of proceedings initiated against firms, they can contribute to theestablishment of the facts. Lastly, consumer organisations can act as an excellent information relayfor the Commission, passing on information intended for the public.

B — State of relations between the Competition DG and consumer organisations

The Commission departments responsible for competition are in fairly regular contact with consumerassociations, notably in the context of general consultation on draft legislation or of individual casesin which such associations lodge a complaint with the Commission or express concerns informally.

As regards draft legislation or rules, or monitoring reports in specific areas, consumer associationswithin the EU, together with their European federation, BEUC, have contributed to the debates. Forexample, BEUC was represented at the hearing organised by the Commission on the Green Paper onvertical restraints in competition policy and at the hearing organised by the European Parliament onthe White Paper on modernisation. Cooperation between the Commission and consumer associationshas been judged satisfactory during several such consultation exercises.

Where the Commission publicises notifications of agreements or plans for mergers or acquisitions viaa notice in the Official Journal, consumer associations sometimes contact the Commission asinterested parties in individual cases, where they consider that consumer interests may be harmed bythe effect of a restrictive agreement or a merger. The Commission may also contact them byadministrative letter to ask for information in the context of proceedings. Thus, the UK Consumers’Association played an active part in the Airtours/First Choice merger case, in particular during thehearing. It presented economic studies and a legal argument in support of its position. Likewise, in anumber of transatlantic alliance cases, the Commission had the opportunity of hearing consumerassociations (airline passengers). The same went for postal services cases, especially REIMS II, inwhich the Commission received comments from BEUC.

Consumer associations may also lodge complaints directly with the Commission in respect of a firmor a particular sector of the economy. When it receives complaints of this kind, the Commissionenjoys a certain amount of discretion, on the basis of the case law of the Court of Justice (AutomecII judgment), in deciding whether to launch own-initiative proceedings or to reject the complaint onthe ground of lack of Community interest. The Commission has already opened own-initiativeproceedings on the basis of information received from individual consumers or their representativeassociations. The most significant own-initiative proceedings of this kind were without doubt thosewhich were initiated against Volkswagen-Audi and which terminated in a decision imposing a fine ofECU 102 million. Another example is the case involving the Greek/Italian ferry cartel, in which theCommission initiated proceedings following receipt of a complaint (in the form of a letter from aconsumer).



C — Sector-based policies

1. Telecommunications

1.1. Directive under Article 86(3) on the legal separation of cable and telecommunicationsactivities (36)

65. On 23 June, the Commission adopted a directive amending for the sixth time Directive 90/388/EECof 28 June 1990 on competition in telecommunications services. Pursuant to this amendment, MemberStates must ensure that telecommunications operators which are in dominant positions and which are con-trolled by a Member State or granted special rights pursue their cable television activities in a structurallyseparate company. This is in the light of the conflict of interests that exists between the operation of the twonetworks. An operator active on both networks is much less inclined to carry out rapid upgrading of the ca-ble network and to use it to compete with its own telephone network, which also allows broadband transmis-sion thanks to new technologies available today such as xDSL.

66. The directive was adopted following wide consultation of interested parties during 1998 on thebasis of a first draft adopted on first reading by the Commission on 16 December 1997 (37). During theconsultation process, a consensus was reached on the need to deal with the conflict of interests arisingwhere the same operator owns the telephone and cable networks. Legal separation was thought to be theminimum needed to deal with this problem. This general analysis was confirmed by the EuropeanParliament in its resolution adopted on 9 February.

67. For this reason, several operators announced that they were taking the necessary preparatory stepsto comply with the legal separation obligation, or even to go one step further (divestment of the cablenetworks), even before the directive was adopted. Most considered that the approach taken met thedemands of the market in a multimedia environment and was in the interest of the firms themselves.Deutsche Telekom thus launched a call for tenders for its cable networks in August, while FranceTélécom transferred its cable networks to companies jointly owned with the operators of its networks.The Commission none the less reserves the right to go further in certain cases, as illustrated by itsdecision on the Telia/Telenor merger (38).

1.2. Fifth report on the implementation of the directives

68. On 10 November, the Commission adopted its fifth report on the implementation of thetelecommunications regulatory package (COM(1999) 537 final). This report takes stock of the results oftelecommunications liberalisation in the Member States.

69. The fifth report was prepared by the ‘joint team’ (body responsible for implementing Communitytelecommunications legislation) comprising officials drawn from the Directorates-General responsiblefor telecommunications and for competition. This team heard comments from incumbent operators, newentrants and the national regulatory authorities from each Member State during bilateral meetings heldin Brussels and collected statistics from the authorities, which are summarised in the annex to the report.

70. The report’s main conclusion is that the introduction of competition has boosted the EuropeanUnion’s telecommunications services sector, which registered an annual growth in 1999 of 10.3 %, four

(36) See IP/99/413, 23.6.1999.(37) 1997 Competition Report, point 109.(38) See Chapter II below.

times greater than the growth of GDP in the EU. In terms of value, the telecommunications services marketwas worth EUR 183 billion. The most dynamic segment of the market was mobile telephony, which grew by31.5 % in 1999 to a value of EUR 49 billion. Furthermore, thanks to competition, residential telephone tar-iffs for international calls fell by 40 % on average between 1997 and 1999 in most Member States (39); busi-ness tariffs for similar calls were also down in most Member States (on average by 25 % over the same peri-od). Tariffs for 10-minute regional and long-distance calls fell by 13 % and 30 % respectively (40). Theoverview of quality indicators annexed to the report confirms that voice telephony services offered by in-cumbent operators have improved. However, tariffs for local calls have not fallen significantly. The statisti-cal data annexed to the report also confirm the rapid growth in mobile and Internet penetration in the Euro-pean Union, which is underpinned by the keen competition on these markets.

71. However, the report identifies a number of remaining barriers to the establishment of a single Euro-pean market, arising in particular from the gaps in harmonisation of national rules and approaches. Fillingthese gaps is one of the objectives of the review of the regulatory framework also launched by the Commis-sion on 10 November with the adoption of its communication ‘Towards a new framework for electronic com-munications infrastructure and associated services: The 1999 Communications Review’(COM(1999) 539).

1.3. Monitoring the implementation of the directives

72. The Commission continued to monitor the effective implementation of the liberalisationdirectives in those Member States which had not correctly applied them, together with the introductionof the regulatory framework in Portugal, whose additional period of grace for introducing competitionexpired on 31 December.

73. During 1999 the Commission continued the infringement proceedings initiated in 1997 and 1998against those Member States which had not correctly transposed the liberalisation directives. The Commis-sion thus decided to send five reasoned opinions to Greece (41), which had neither lifted all restrictions on theoperation of DCS 1800 and DECT mobile telecommunications services, despite the availability of frequen-cies, nor liberalised satellite services and alternative infrastructures in accordance with the directive on theimplementation of full competition (Commission Directive 96/19/EC) and with Commission Decision97/607/EC. These first two objections were referred to the Court of Justice (Joined Cases C-396 andC-397/99). On 9 September, the Commission also brought an action before the Court of Justice in the con-text of proceedings initiated against Belgium on 2 December 1997 for failure to implement a Community di-rective in respect of the cost accounting method to be implemented by the incumbent operator, Belgacom.Under Directive 90/388/EEC Belgium had to ensure that a method identified the cost elements incorporatedin the interconnection charge from the first half of 1997. Since Belgium amended its legislation accordingly,the Court was able to close the case (Case C-337/99). On 28 July, the Commission decided to refer to theCourt another infringement case against Belgium, this time in respect of the method of calculating the netcost of universal service provision and the contributions of operators to its financing on the telecommunica-tions market (Case C-384/99). On 17 October, the Commission brought an action before the Court of Justiceagainst Portugal for preventing competition in ‘call-back’services on its territory (Case C-429/99). Despitesubstantial progress made by the Member States and especially by Belgium in the last few months of the year,1999 ended with 15 infringement proceedings in progress against Member States which had not correctlytransposed the competition directives. On the same date, a total of 70 infringement proceedings were also un-der way in respect of the harmonisation directives adopted by Parliament and the Council in this sector.



(39) For 10-minute calls. Source: Eurodata Foundation.(40) Fifth report on the implementation on the telecommunications regulatory package (COM(1999) 537 final, p. 2).(41) See Press Release IP/99/152, 3.3.1999.

1.4. Launching of an inquiry into the telecommunications sector (42)

74. On 27 July the Commission decided to launch an inquiry into the telecommunications sector,pursuant to Article 12 of Regulation No 17, covering three areas:

— leased lines, especially international leased lines: the Commission had received informal complaintsagainst certain incumbent operators, in which it was alleged that discrimination was being practisedas regards charges, treatment and delays in delivery or the quality of service. Furthermore, the maininternational association of telecommunications users (INTUG) had compared the charges for leasedlines applied by incumbent operators across the common market and its findings showed that thecross-border/national charge ratio exceeded 120 % in all Member States and was as high as 500 %in some cases, discrepancies which did not appear to be justified;

— mobile roaming services, including national roaming: no real competitive supply appeared to beemerging on the market for wholesale or retail roaming services. Moreover, the Commission hadreceived complaints from users who considered that roaming charges were extremely high;

— the local loop (line rental and local calls): charges appeared to remain inflexible, although the levelof monthly rental fees still differed significantly from one Member State to another. On the otherhand, complaints received by the Commission seemed to indicate that in some Member States theprice for access to unbundled local capacity seemed to be being kept artificially high. It thereforeseemed appropriate to research any evidence of anticompetitive pricing, and to determine the realstate of local-loop pricing in all Member States, on the basis of cost accounting data, where available.

75. The aim of the Commission’s inquiry is to establish whether current commercial practices andprices infringe the EU competition rules, in particular the prohibition of restrictive practices and abusesof dominant positions (Articles 81, 82, and/or 86 of the EC Treaty). This is only the third sector inquiryever launched by the Commission.

76. On 22 October, the Commission launched the first phase of this sector inquiry into leased linecharges. Detailed questionnaires were sent to national competition authorities, telecommunicationsregulators, incumbent operators throughout the EU, new entrants which provide and/or use leased linesand major business users.

2. Postal services

2.1. The stage reached in the liberalisation of postal services

77. The time limit for the implementation by Member States of the laws, regulations andadministrative provisions necessary to comply with the 1998 postal services directive (43) expired on 10February. The postal directive is a first step towards the creation of an internal market in the postal sector;it establishes common rules to ensure greater harmonisation of the conditions governing the postal sector



(42) See Press Release IP/99/786, 22.10.1999.(43) European Parliament and Council Directive 97/67/EC on common rules for the development of the internal

market in Community postal services and the improvement of quality of service (OJ L 15, 21.1.1998). See also1997 Competition Report, point 124.

in the Community. The directive has two main aims: to provide for the gradual and controlledliberalisation of the postal market, and at the same time to guarantee the provision of a universal postalservice to all users throughout the Member States. In implementing its first aim, the directive establishesmaximum limits for postal services which may be reserved. In furthering its second aim, the directivesets forth certain minimum requirements which the universal service must fulfil. At this stage, the postalservices directive allows, to the extent necessary to ensure the maintenance of a universal service, thereservation of domestic general letter mail services up to a weight of 350 grams and below five timesthe public tariff for the first class service.

78. Within this legal framework, the transposition measures notified by certain Member States raisecompetition issues which are currently being examined under Articles 86 and 82 of the EC Treaty. TheCommission has received a number of complaints that some Member States’ implementing legislationeffectively extends the scope of the existing national postal monopolies. For example, certain postalservices, which are separate and distinct from the general letter mail service and were previouslyprovided by private operators in competition with the incumbent postal operator, would be for the firsttime included within the scope of the reserved area. The Commission will investigate these complaintsand determine whether the exclusion of competition in these distinct service areas is necessary to ensurethe universal postal service.

79. Complainants have raised concerns as major players continue to expand into foreign markets bybuying up competitors and potential competitors active in markets outside the universal serviceobligation. The issue of whether the funding of some of these acquisitions by means of revenues derivedfrom the reserved area infringes the competition rules is currently being examined by the Court of FirstInstance in Case T-175/99.

80. The question of a possible cross-subsidisation of competitive activities through monopoly incomeis also of relevance under the State aid provisions of the Treaty. In that respect, the Commission decidedto open a formal investigation into State aid to Deutsche Post AG (44).

2.2. Decision exempting the Reims II Agreement

81. On 15 September, the Commission approved, under the competition rules of the EC Treaty, theReims II Agreement between 16 European postal operators on terminal dues (45). ‘Terminal dues’ is theterm used for the remuneration that a postal operator sending cross-border mail has to pay to thereceiving postal operator for delivering the mail to the addressees. The parties to the Reims II Agreementcomprise all Member States of the EU except for the Netherlands. The public postal operators of Norway,Iceland and Switzerland are also parties to the agreement (46).

82. The main aims of the Reims II Agreement are to provide the parties with cost-based compensationfor the delivery of cross-border mail which reflects more closely the real costs of delivery of each party,and to improve the quality of the cross-border mail service. In this respect, the Reims II Agreement linksterminal dues to domestic mail tariffs in the country of destination and to the quality of service providedby the postal operator that delivers the mail. The agreement also introduces a system of quality-of-servicestandards in order to improve the quality of service and a penalty system which is to be applied when



(44) Case C-61/99 (OJ C 306, 23.10.1999).(45) Commission decision of 15 September 1999 in Case No IV/36.748 — Reims II (OJ L 275, 26.10.1999).(46) The content of the amended agreement for the remuneration of mandatory deliveries of cross-border mails was

published in the Official Journal (OJ C 371, 1.12.1998).

the agreed standards are not met. Special transitional rules are set out for the public postal operators inGreece, Italy, Spain and Portugal.

83. The Commission expects the notified agreement to lead to an improvement in the distribution ofgoods and to promote technical or economic progress. Given that terminal dues previously often resultedin a remuneration for the delivery of cross-border mail which did not cover costs, a move towards a morecost-based system will allow the postal operators to maintain and improve this service. By linkingincreases in terminal dues to improvements in the quality of service, the Reims II Agreement providesa strong incentive for the parties to improve their performance. A better quality of service forcross-border mail would also be beneficial to consumers.

84. In order to ensure that the agreement is compatible with the competition rules of the EC Treaty, theCommission requires in its decision that the transitional period provided for in the agreement be postponedso as to ensure that terminal dues for the rest of 1999 are not increased beyond 55 % of domestic tariffs, andthat the maximum increase in terminal dues is to 65 % of domestic tariffs in 2000 and to 70 % of domestic tar-iffs in 2001. In addition, the parties will have to grant each other effective access to the ‘generally availabledomestic rates’ (such as bulk rates for direct mail, printed matter or periodicals) in the country of delivery(so-called ‘Level 3 access’). Furthermore, the parties will have to introduce, by the end of 1999, a transpar-ent cost accounting system ensuring that all significant cost elements can be identified, quantified, comparedand vetted. The exemption was therefore granted for the period 1 April 1999 to 31 December 2001. The Com-mission will closely monitor the development of tariffs for domestic and cross-border mail under the agree-ment and has already contacted the parties in this connection.

3. Media



Box 4: Convergence between telecommunications, media and the Internet

The development of digital technology, beginning in the field of computing, then telecommunicationsand now in television, has led to convergence between the areas through this common underlying tech-nology. Accelerating the whole process dramatically has been the explosive growth of the Internet.

Convergence can be viewed in different ways: technologically, from the consumer’s perspective andfrom the point of view of the market players. Technological convergence means that differentservices (e.g. television, telephony, Internet access) can now be provided over more or less anyinfrastructure (satellite, TV, cable, fixed telephone networks). From a consumer point of view, thesame device, whether it be a TV, a fixed or mobile telephone or a PC, is today capable of deliveringa range of different services, including moving images, telephony and Internet access. Accesstherefore becomes a key issue both in terms of access to infrastructure for operators, in particularnew market entrants, and in terms of consumer access to the full range of services and content.Finally, the market players from all three areas, telecommunications, IT and the media, arepositioning themselves to enter each other’s market as well as protect their existing market positions.They are achieving this through alliances and joint ventures, several of them already notified to theCommission.

Basically, these developments are procompetitive in that the number of communication channels isincreasing dramatically. However, the Commission has had to address these developments in anumber of cases in the past few years and to assess whether the response of the market players givesrise to competition concerns.



Since the prohibition of the MSG operation in 1994, where the joint venture between Kirch,Bertelsmann and Deutsche Telekom was found to create a dominant position on the market fortechnical services for pay-TV, a wide variety of other cases have been notified to or investigated bythe Commission. The underlying theme of these cases is that companies in different industries haveformed joint ventures or acquired other companies in order to diversify their activities and to offerservices in new and related markets.

In the area of telecommunications, media and information technology, the issue of convergence isprobably best looked at in relation to three levels. These levels are infrastructure, access and content.

An important competition concern from the point of view of infrastructure is the promotion ofcompetition in the last link between the local exchange and the consumer (the local loop). TheCommission is doing this by ensuring that incumbent telecommunications companies separate theircable-TV activities into a separate company and on a case-by-case basis by requiring divestment ofthe cable company concerned. In addition, the Commission has encouraged the unbundling of thelocal loop to enable other infrastructure providers to offer services over their own infrastructure leasedfrom the incumbent telecommunications operator. Both cable divestment and local-loop unbundlingwere undertakings given to the Commission by Telia and Telenor to secure clearance of their merger,which was subsequently abandoned.

Existing operators in the telecommunications field have sought to expand their operations into access ac-tivities, and in doing so have met companies seeking to do the same from the area of content. An exampleof this was the formation of British Interactive Broadcasting, now known as Open, to provide interactiveservices using an incoming signal via satellite and a return signal via a telecommunications line. This jointventure was set up by BT (the telecommunications provider), BSkyB (the content owner and broadcast-er), Midland Bank and Matsushita. Akey function of the joint venture was to subsidise the cost of the set-top box needed in order to have access to digital satellite TV, to the Internet (limited access) and to inter-active services, and to provide a platform for those services.

Other operations in the telecommunications sector have raised a different issue, where companies havewithdrawn from ownership of activities in a vertically related market, replacing this with an outsourcingcontract for the activities which had been sold off. In 1999 the Commission assessed and approved underthe merger regulation an operation by which AT&T and IBM acquired assets from each other in the areaof data networks and business services to large companies. In each case, the two companies replaced theiractivities with outsourcing contracts for the activities they had sold to the other. MCI WorldCom and EDSconcluded a similar arrangement, which was not, however, notified to the Commission.

Overall, in its assessment of these types of operation in vertically related markets, the Commissiontreats each case on its own merits. However, certain themes run through its approach. First, companieswhich are dominant on one market should not be permitted to extend that dominance into relatedmarkets. An example would be dominance with regard to ownership of films and sports rights beingused to achieve dominance in pay-TV and digital interactive television services. Second, theCommission cannot accept the concentration of excessive market power in the hands of one or alimited number of players which can put it or them in a gatekeeper role for existing or emergingmarkets. Finally, companies which have control of an important access device such as a set-top box,an EPG (electronic programming guide), a telecommunications local loop or an Internet browser(such as Netscape Navigator or Microsoft Internet Explorer) are likely to be required to meetdemanding conditions for the approval of any operation notified to the Commission, inter alia toensure that access to that device is not restricted.



Incompatibility with the common market, pursuant to Articles 90(3) and 52 (now Articles 86(3)and 43) of the EC Treaty, of a monopoly established by law

85. In its judgment of 8 July in Case T-266/97, the Court of First Instance (CFI) dismissed theapplication by Vlaamse Televisie Maatschappij NV (VTM) for annulment of the decision adopted on 26June 1997 by the Commission under Articles 90 and 52 (now Articles 86 and 43) of the Treaty (47)concerning the exclusive right to broadcast television advertising in Flanders.

86. The CFI first rejected two pleas claiming that the Commission had breached the right to be heardand the principle of legal certainty. With regard to the first plea, the CFI stressed that while anundertaking, that was the direct beneficiary of the State measure being challenged, had the right to beheard concerning the objections set out by the Commission in the letter of formal notice it addressed tothe Member State in question, this did not mean that the Commission was required to communicate tothat undertaking a copy of any complaint which had prompted initiation of the procedure or thecomments submitted by the Member State in reply to the Commission’s objections. The Court went onto point out that statements made in public by a Member of the Commission could not be regarded ascommitting the Commission, which operated according to the principle of collective responsibility,meaning in particular that it took its decisions as a body.

87. With regard to the second plea, the Court ruled that the Commission did not have to examine on a sin-gle occasion the compatibility of a national regulatory measure with all of the Treaty rules. It then confirmedthe Commission’s assessment of the exclusive right, pointing out that, for Article 90 (now Article 86) to ap-ply in conjunction with Article 52 (now Article 43), it was sufficient for the State measure concerned to befound to constitute a barrier to the right of establishment, there being no need to examine whether it consti-tuted a disguised form of discrimination whose effects were protectionist (48).

4. Transport

4.1. Air transport

Airports

88. On 10 February, the Commission took two decisions (49) on systems for discounting anddifferentiating landing charges at Portuguese and Finnish airports, thereby fleshing out its policy oncompetition at airports (50). After the Frankfurt airport decision, which concerned access to thegroundhandling market, and the Paris airports decision, which related to the airports’ commercial policy,the focus has now switched to the issue of charges for access to airport infrastructures, and in particularthe principle of non-discrimination in the setting of those charges. The Commission first tackled thisissue with a decision concerning Zaventem airport (51); it has now adopted a further two decisionsrelating to the differentiation of landing charges according to the origin of the flight (domestic orinternational). It found that the reductions for domestic flights of 50 % and 60 % respectively atPortuguese and Finnish airports were in flagrant breach of the single transport market.

(47) Case No IV/35.760 — VT4/Vlaamse Gemeenschap+VTM (OJ L 244, 6.9.1997).(48) 1997 Competition Report, Part Two, Chapter II.A.2.(49) OJ L 69, 16.3.1999.(50) 1998 Competition Report, Box 4.(51) 1995 Competition Report, point 120.

89. The Commission’s approach to competition in the airport sector is now clear and known to allparties. Other Community airports will have to adopt a charging policy which is in line with thatapproach if they are to avoid incurring heavy fines in the next round of cases that the Commission hasto deal with in this area. A letter setting out the Commission’s approach towards landing charges wassent to all the authorities or entities operating airports at which such discounts or differentiated chargeswere applied, calling on them to alter their system of charges.

Partial prolongation of block exemption Regulation (EEC) No 1617/93

90. On 26 May, the Commission adopted Regulation (EC) No 1083/1999 (52) partly prolongingRegulation (EEC) No 1617/93 (53), by which the Commission granted a block exemption for certaincategories of restrictive agreements in four areas, i.e. joint planning and coordination of airlineschedules, joint operation of a scheduled air service on a new or a low-density route, consultations ontariffs for the carriage of passengers, and slot allocation and airport scheduling. While Regulation (EEC)No 1617/93 has been prolonged for passenger tariff consultations and slot allocation at airports until 30June 2001, it has not been renewed for joint planning and coordination of airline schedules and jointoperations. The regulation entered into force on the date of its publication in the Official Journal.

91. The new regulation adapts the legal environment created by Regulation (EEC) No 1617/93 tomatch it to the present state of development of the air transport industry. The Commission’s owninvestigation and the extensive consultation exercise to canvas views from the industry and the MemberStates made clear that it was not appropriate to prolong the block exemption in respect of agreementson joint planning and coordination of schedules and agreements on joint operations. Joint planning andscheduling within the limited meaning of the original definition in Regulation (EEC) No 1617/93appears to be of lesser importance. Where such agreements are concluded, they are mostly part of morecomprehensive agreements, such as alliance agreements and cooperation agreements. Suchwide-ranging agreements, however, fall outside the scope of Article 2 of Regulation (EEC) No 1617/93.It also became evident that little use has been made of joint operations and that such agreements are oflittle importance to the industry. Therefore, there was no longer any need to block exempt these typesof operation.

92. The Commission did, however, feel the need to further continue and intensify its investigationinto passenger tariff consultations and slot allocation with the aim of verifying whether these twocategories should continue to be exempted in future. It was therefore decided to extend Regulation (EEC)No 1617/93 for these two issues until June 2001.

Alitalia/KLM

93. During the year the Commission also approved an alliance between Alitalia and KLM. However, thealliance was so wide-ranging that the Commission regarded the agreement as falling under the merger regu-lation, and it was examined as a merger. The alliance was only cleared subject to extensive undertakings fromthe parties designed to prevent the creation of a dominant position on the market for non-stop travel betweenAmsterdam and Milan and Amsterdam and Rome. These undertakings, which are described in Chapter II.B.4of this report, are designed to allow new entrants to compete on the Amsterdam-Milan and Amsterdam-Romeroutes. They go further than the undertakings obtained at the time of the Sabena/Swissair merger (54) or the



(52) OJ L 131, 27.5.1999.(53) OJ L 155, 26.6.1993; as last amended by Regulation (EC) No 1523/96 (OJ L 190, 31.7.1996).(54) OJ C 200, 4.8.1995.

remedies imposed on the Lufthansa/SAS alliance (55). They are similar to the ‘proposed remedies’publishedby the Commission for the BA/AAand Lufthansa/United/SAS alliances (56).

Virgin/British Airways

94. The Commission set out its policy on commissions paid by airlines to travel agents in its decisionon the Virgin/BA case (57). This case is discussed in Chapter I.B of this report.

4.2. Maritime transport

Liner conferences

95. Following the Commission’s TACA (Trans-Atlantic Conference Agreement) decision of 16September 1998 (58), several shipping lines withdrew from TACA, leaving eight members which at thebeginning of 1999 notified an amended agreement (‘revised TACA’). On 6 May, the Commissionpublished, pursuant to the competition procedures applicable in the transport sector (59), a summary ofthe revised TACA notification (60). The Commission has 90 days from the date of such publication inwhich it can raise serious doubts and so continue its investigation into the case.

96. As regards the maritime transport aspects of the revised TACA, the Commission informed theparties within the 90-day period that it had serious doubts whether their revised agreement could becleared in its current form. The Commission’s investigation centred on whether the parties’ arrangements(particularly as regards the exchange of information) could harm competition between the parties whenthey negotiate and agree individual service contracts with shippers.

97. As far as inland transport is concerned, the revised TACA no longer provides for inlandprice-fixing. The parties have instead agreed that they could adopt a ‘not-below-cost’ rule. Under sucha rule each line would agree, where they provide maritime transport services pursuant to the conferencetariff, not to charge a price less than the direct out-of-pocket cost incurred by it for inland transportservices supplied within the EEA in combination with those maritime services. The Commission did notwithin the 90-day period raise serious doubts against the not-below-cost rule, with the consequence thatthe rule is deemed exempt for three years (61). The Commission accepted, in this case, that the possibilityof implementing a not-below-cost rule was aimed at avoiding the risk that below-cost pricing on theinland leg would undermine the stability brought about by the conference maritime tariff which ispermitted under the block exemption for liner conferences (62).



(55) OJ L 54, 5.3.1996.(56) OJ C 239, 30.7.1998.(57) OJ L 30, 4.2.2000.(58) Commission decision of 16 September 1998 in Case No IV/35.134 — TACA (OJ L 95, 9.4.1999); 1998

Competition Report, points 105-109.(59) For maritime transport: Council Regulation (EEC) No 4056/86 of 22 December 1986 laying down detailed rules

for the application of Articles 85 and 86 (now Articles 81 and 82) of the EC Treaty to maritime transport (OJL 378, 31.12.1986).For inland transport: Council Regulation (EEC) No 1017/68 of 19 July 1968 applying rules of competition totransport by rail, road and inland waterway (OJ L 175, 23.7.1968).

(60) OJ C 125, 6.5.1999.(61) IP/99/620; Competition Policy Newsletter, 1999, No 3, October.(62) Article 3 of Council Regulation (EEC) No 4056/86.

98. All major conferences serving Europe have now abandoned inland price-fixing. However, appealsfrom shipping lines to the Court of First Instance against the Commission decisions prohibiting inlandprice-fixing are continuing. The Commission’s approval of the not-below-cost rule is also the subject ofan appeal from shippers to the Court of First Instance.

Capacity management agreements

99. On 30 April, the Commission adopted a decision prohibiting a capacity management programme be-tween conference and non-conference members, the Europe-Asia Trades Agreement (EATA), which oper-ated in combination with direct price-fixing agreements (63). The purpose of the EATAwas to increase pricesby establishing a capacity management programme concerning scheduled maritime transport services forthe carriage of containerised cargo from northern Europe to the Far East. Acapacity management programmeis an agreement under which the parties agree not to use a proportion of the space on their vessels for the car-riage of goods in a particular trade. The proportion set aside is part of the forecast excess of supply over de-mand. In 1994 the Commission prohibited a similar arrangement on the transatlantic trades: the Trans-At-lantic Agreement (TAA) (64). In the case of the EATAup to 17 % of the capacity of certain vessels was with-drawn from supply. On all occasions only the supply of eastbound capacity was restricted, with the result thatCommunity exporters bore the brunt of the anticompetitive effects of the EATA.

100. The EATA decision confirmed that an individual exemption for a capacity non-utilisationagreement is not possible when, as in the TAA case, it is a tool for maintaining excess capacity andartificially raising freight rates. Capacity regulation can only bring benefits if there was a real withdrawalof inefficient or outdated capacity so as to bring about a reduction of costs, leading to price reductionsfor shippers.

Consortia

101. Commission Regulation (EC) No 870/95 (65) contains a block exemption for liner shippingconsortia which expires in April 2000. As a first step in preparing for its expiry, the Directorate-Generalfor Competition prepared a ‘Report on Commission Regulation (EC) No 870/95’ (66). The report wassent for comment to industry associations. The Commission took into account the comments receivedwhen drawing up a draft new regulation. The application of Regulation (EC) No 870/95 has worked wellin practice and the reasons for its adoption are still valid. The Commission therefore published a draftnew block exemption regulation (67), largely replicating Regulation (EC) No 870/95.

102. The most important change made in the preliminary draft regulation as compared with Regulation(EC) No 870/95 is that the trade share thresholds (i.e. the share of trade held by the consortium betweenthe pairs of ports that it actually serves) are replaced by market share thresholds. Market share is theusual indication of market power used in competition legislation. The trade share criterion was adoptedin the existing regulation because shipping companies had considered that market shares would bedifficult to calculate; experience has shown that shipping companies are able to provide market shares.



(63) Commission decision of 30 April 1999 in Case No IV/34.250 — Europe-Asia Trades Agreement (OJ L 193,26.7.1999); IP/99/313.

(64) Commission decision of 19 October 1994 in Case No IV/34.446 — Trans-Atlantic Agreement (OJ L 376,31.12.1994).

(65) OJ L 89, 21.4.1995.(66) DG IV working paper, 28.1.1999

(http://europa.eu.int/comm/dg04/entente/other.htm).(67) OJ C 379, 31.12.1999.

5. Insurance

P&I insurance

103. P&I clubs are mutual non-profit-making insurers which offer shipowners insurance cover for theircontractual and third party liabilities: injury or death of crew or passengers, loss of cargo, collisiondamage to vessels, damage to third-party property (harbour equipment), damage to the environment, etc.Most of the P&I clubs are members of the International Group of P&I clubs (IG) and together they insure90 % of worldwide tonnage.

104. In 1995, the IG requested a renewal of the exemption which had initially been granted in 1985 (68)for a period of 10 years. This was granted in 1999 (69).

105. The IG members cooperate within the framework of a claims-sharing arrangement, the details ofwhich are spelled out in a century-old pooling agreement and, since the beginning of the 1980s, the Interna-tional Group agreement (IGA). Under the pooling agreement, the IG members share each other’s claims inexcess of USD 5 million. For the layer between USD 5 million and USD 30 million, each club makes a con-tribution which is roughly based on the number of claims it faces, the tonnage it covers and the total calls (i.e.premiums revenue from shipowners) it collects. Above USD 30 million, the clubs purchase together rein-surance from commercial insurers, currently up to USD 2 billion. Finally, the excess of any claim above USD2 billion up to an upper limit (the so-called overspill) is again shared by the clubs.

106. The IGA essentially lays down a number of rules concerning the procedures to be followed byclubs when a shipowner wishes to change clubs. A shipowner insured by an IG member club can onlybe offered a lower rate by another club in one or the other of two circumstances: either the new club candemonstrate to an expert committee that the old club’s rate is unreasonably high, or the old club fails todemonstrate to the expert committee that the new club’s rate is unreasonably low.

107. When the IG applied for renewal of its 1995 exemption, the Greek Shipping CooperationCommittee (GSCC), an organisation representing Greek shipowners, drew the Commission’s attentionto the clause in the pooling agreement which — at that time — forced all clubs to offer an upper levelof cover of USD 18 billion (the upper level for overspill claims). In its view, this clause severelyrestricted competition because it prevented shipowners from negotiating the level of cover which theyactually want, given the nature of the risk represented by their fleet.

108. During the course of the administrative procedure, the IG reduced the upper level of cover fromUSD 18 billion to USD 4.25 billion. The Commission considered that at this level the claims-sharingarrangement is not anticompetitive because the participating clubs could not provide the same level ofcover on their own.

109. In contrast, the provisions in the IGA concerning the procedures which clubs must follow to quoterates are anticompetitive within the meaning of Article 81(1). However, the IG has changed its rules sothat charges for the club’s administrative costs (e.g. claims handling cost, club manager fees) now falloutside the scope of the quotation procedures. Furthermore, the IG has inserted provisions in the IGA inorder to enhance transparency for shipowners with regard to these administrative costs. Accordingly,these rules qualified for exemption and benefit from an exemption pursuant to Article 81(3) for 10 years.



(68) Decision of 16 December 1985 (OJ L 376, 31.12.1985).(69) Decision of 12 April 1999 (OJ L 125, 19.5.1999).

110. As far as Article 82 is concerned, the Commission took the view that the P&I clubs which aremembers of the IG collectively hold a dominant position on the worldwide market for the provision ofP&I cover. It concluded, however, that neither the clause concerning a minimum common level of cover(objected to by the GSCC), nor the clauses concerning the conditions at which individual clubs can offerreinsurance to third parties constitute an abuse of that dominant position.

111. Finally, in its decision, the Commission states that it ‘will revoke the exemption … if the membersof the IG collectively hold a market share larger than twice the minimum scale economically requiredto provide the level of cover agreed at any moment within the IG’. This reflects the fact that the levelof cover offered by the IG requires at the present time the IG members to have a market share of morethan 50 %. If that was no longer the case, then the basis on which the decision was adopted would havechanged and the exemption would need to be considered anew.

Report on the operation of the block exemption in the field of insurance

112. On 12 May, the Commission adopted a report (70) to the Council and the European Parliament onthe operation of Council Regulation (EEC) No 1534/91 (71) and Commission Regulation (EEC)No 3932/92 (72), which applies Article 81(3) of the Treaty to certain categories of agreements in the fieldof insurance. The report chiefly describes how the Commission has applied the exemption system overthe last six years. It does not contain proposals for amendments, since the current exemption regulationwill be valid for another four years, but it does set out a number of forward-looking ideas on which theCommission wishes to receive comments from the industry, national supervisory and competitionauthorities and national courts.

113. Like any other exemption regulation, Regulation (EEC) No 3932/92 has cut down the number ofindividual cases which the Commission has had to examine. However, it has still had to assess numerousindividual cases, either where the agreements were notified by operators who were aware that they didnot meet the exemption conditions or were unsure of their scope, or in response to complaints. It hadfurthermore become clear that certain provisions of the regulation could be interpreted in different ways,that others no doubt needed to be re-examined as to their substance and that some of the aims of theinstrument had not been achieved.

114. From a practical point of view, assessing pools for the common coverage of certain types of risksin the light of the regulation (Title IV) is the most complex task (73). The report outlines thedevelopments in the approach taken by the Commission, which has had to supplement the arrangementsset in place by the regulation. As reflected in recent cases (74), the new approach essentially means thata pool which is necessary in order to attain the minimum dimension for covering the risks concerned isnow deemed to fall outside the scope of Article 81(1). At a procedural level, the Commission firstascertains whether the market shares of the pool or of its members are lower than the thresholdsstipulated in the regulation. If so and if the other requirements of the regulation are met, the pool qualifiesautomatically for exemption. If the thresholds are exceeded, the Commission checks whether the pool isindeed necessary in order to attain the minimum dimension for covering the risks in question. If so, thereis no restriction of competition and Article 81(1) consequently does not apply, irrespective of the market



(70) COM(1999) 192 final. Text available on the Internet(http://europa.eu.int/comm/dg04/entente/other.htm#dgiv_pdf_ins_rep1999).

(71) OJ L 143, 7.6.1991.(72) OJ L 398, 31.12.1992.(73) See above.(74) 1998 Competition Report, points 111-119.

share of the parties (75). Lastly, where the pool is not necessary in order to attain the minimum dimension,it can still escape the purview of Article 81(1) if its members remain genuinely free, de jure and de facto,to decide whether or not to bring the risks in question into the pool.

115. The Commission’s experience in the other areas has also shown that, while the economic andlegal principles are now fairly clear, assessment of the technical and economic parameters in specificcases is often arduous and requires expert evaluations that the Commission departments are not alwaysin a position to conduct. As far as the joint compilation of statistics with a view to calculating riskpremiums (Title II) is concerned, the problem is one of determining the extent of minimum cooperation.The Commission therefore intends to focus primarily on gauging the concrete effects of the agreementsconcerned on the individual behaviour of insurers when they calculate their own risk premiums and/orcommercial premiums.

116. For the rest, experience has revealed certain problems in interpreting the requirements for exemptingagreements on standard policy conditions (Title III) which could prompt the Commission, once it has re-ceived more comprehensive reactions from the industry, to contemplate some amendments to the existingtext. The report also raises the question of whether or not to continue allowing certain ‘black clauses’, whichare currently exemptable where the insurer expressly declares that they are not binding.

117. Agreements on security devices (Title V) have largely been concluded at national level, while Eu-rope-wide agreements, explicitly provided for by the regulation, are fairly limited and Community harmon-isation work has for the most part not yet borne fruit. This situation gives rise to a number of barriers to freemovement of the products concerned and the freedom of fitters and repairers to provide their services.

118. The report states that the Commission is not at this stage considering extending the blockexemption system to two types of agreement which are not currently covered (claims settlement andregisters of aggravated risks) although they are mentioned in the regulation, since it has not gainedsufficient experience with regard to the former (having received only one complaint, subsequentlywithdrawn, concerning an agreement of that nature) and in view of the nature of the latter (which shouldnot normally fall within the scope of Article 81).

6. Energy

119. Liberalisation of the electricity and gas industries made further progress in 1999. The electricitydirective has been implemented at national level by most Member States, while the gas directive is stillin the process of being transposed. Liberalisation will result in electricity and gas being just like anyother product for the sale of which suppliers compete. Accordingly, the general principles of competitionlaw are, subject to certain limits, now applicable to electricity in the same way as they are applied toother product markets. The same will soon be true for gas markets.

Electricity

120. Ten of the twelve Member States which were required to implement the electricity directive in 1999actually did so. Three Member States had a derogation (Belgium and Ireland until 2000, Greece until 2001).



(75) In cases where the pool is necessary for some members but not for others, the approach is pragmatic. The‘smallest’ pool necessary to enable those members who do not have the minimum individual dimension forcovering the risk concerned to do so is regarded as not restricting competition.

Two Member States (France and Luxembourg) did not fulfil their obligation; the Commission therefore de-cided to initiate proceedings under Article 226 of the EC Treaty against them.

121. Of those Member States which transposed the directive, most chose the directive’s procompetitiveoptions with regard to generation, access to the network and unbundling. All Member States but oneopted for the authorisation procedure instead of the tendering procedure for new power stations.Furthermore, 13 out of 15 Member States chose regulated third party access (TPA) instead of negotiatedTPA or the single buyer option in order to determine access to the grid. Thirdly, most Member Statesdecided to legally separate the transmission system operator(s) (TSO) from the vertically integratedelectricity supply business. They thus went further than the requirements of the directive, which requiredonly the unbundling of management and accounts of transmission grid operations as well as the creationof ‘Chinese walls’ against any information flow between the grid and supply business.

122. Many Member States opened up their markets to a greater extent than the minimum required bythe directive. Instead of the 26.5 % minimum requirement, countries like the UK, Germany, Sweden andFinland committed themselves to 100 % market opening. Other countries opened up 90 % (Denmark),33 % (Netherlands, Spain) or 30 % (Italy) of their requirements. As a result, more than 60 % of total EUelectricity demand was liberalised in 1999. This should set free a sufficient number of electricityconsumers to shop around and instigate competition among suppliers, particularly in view of the fact thatthe Union’s largest consumers of electricity are among the so-called eligible customers (76).

123. As regards competition law enforcement, in 1999 the Commission dealt mainly with networkissues, cooperation and joint ventures between suppliers, and stranded costs. The application of theantitrust rules focused on cross-border issues and cases in order to foster the emergence of trade betweenMember States. In one joint venture case (77) the Commission took the delay of one Member State inopening up its market to competitors from other Member States into account in its competitionassessment. The parties had to give an undertaking to the effect that the venture would not become activein the Member State until the latter had fulfilled its obligations under the electricity directive.

124. Since many Member States intend to grant financial aid to electricity companies to make up for in-vestments or commitments which can no longer be recovered or honoured because of the introduction ofcompetition, the Commission has decided to establish guidelines for the treatment of such stranded costs un-der the State aid rules. The Commission discussed draft guidelines with the Member States during a multi-lateral meeting in June 1999 and expects to be in a position to adopt final guidelines in the first half of 2000.

125. Most Member States opted to establish an independent electricity regulator which will have to mon-itor the electricity industry and in particular TPA. The Commission is closely collaborating with these new-ly created authorities and indeed created an EU Electricity Regulation Forum, whose inaugural meeting washeld in Florence (the so-called ‘Florence process’ (78)), in which representatives from all Member States,TSOs and electricity producers participate. The Commission endeavours to reach consensus on measures toharmonise national regulation in order to bring about the internal electricity market. In 1999 the forum dealtmainly with the issue of cross-border transmission tarification and congestion (79).



(76) For further information, see the second report from the Commission to the Council and the European Parliamenton the state of liberalisation of energy markets (COM(1999) 198 final, 4.5.1999).

(77) EdF/Louis Dreyfus, M.1557, 28.9.1999.(78) Subsequent meetings of the Electricity Regulation Forum also took place in Florence, most recently on 25 and

26 November 1999.(79) See the second report from the Commission to the Council and the European Parliament on harmonisation

requirements (COM(1999) 164 final, 16.4.1999).

126. In accordance with the case law of the Court of Justice (80), national regulators have a duty notto approve any practice or agreement contrary to Community competition law. This contributes to thecreation of the internal electricity market by providing a minimum standard for a level playing fieldthroughout the EU.

Gas

127. The gas directive was adopted in 1998. It has to be incorporated into national law by August 2000.The Commission expects that all Member States will be able to meet this deadline and that the gradualopening-up of the gas market will then begin. Derogations from the directive are limited, and can onlybe granted to Member States fulfilling certain conditions, e.g. emergent gas markets as in Greece andPortugal.

128. The fundamental principles governing the liberalisation of the electricity market also apply to thegas market, namely third party access, unbundling and eligible customers. These principles may allowthe market to be gradually opened, although nearly all Member States are expected to choose to opentheir markets faster than required. It can be expected that the gas industry will benefit from experiencegained in electricity liberalisation. In this respect, the Gas Regulatory Forum will play an important role,following the example of the Florence process for electricity liberalisation.

129. As regards competition law enforcement, the Commission mainly dealt with cases of third partyaccess (prior to liberalisation), allocation of scarce capacity in gas interconnectors and foreclosure effectscaused by long-term agreements. The proceedings are still under way.

130. Another important aspect of gas liberalisation is the link between the electricity and gas markets.Gas is currently seen as the preferred fuel for new power plants and combined heat and power plants.Consequently, access to gas is essential for newcomers in the electricity market.

7. Banking/financial services

European Court judgments on Dutch supplementary pension funds

131. On 21 September, the ECJ delivered judgment in a number of Article 234 cases involving Dutchpension funds providing supplementary pensions (81). Affiliation to such funds had been madecompulsory for the sectors at issue at the request of the relevant associations of employers andemployees. Some of the undertakings active in those sectors had, however, refused to pay theircontributions as they did not wish to be affiliated, and invoked the European competition rules. The ECJwas asked to give rulings on whether Article 81 applies to collective agreements between labour andmanagement, whether Articles 81 and 82 apply to Dutch supplementary pension funds, and on thecompatibility of the exclusive rights granted to such funds with Articles 82 and 86.



(80) Paragraph 48 of the Court’s judgment in Case 66/86 Ahmed Saeed [1989] ECR 851.(81) Case C-67/96 Albany International v Stichting Bedrijfsfonds Textielindustrie; Joined Cases C-115/97, C-116/97

and C-117/97 Brentjens’ Handelsonderneming v Stichting Bedrijfspensioenfonds voor de handel in bouwmaterialen; Case C-219/97 Maatschappij Drijvende Bokken v Stichting Pensioenfonds voor de Vervoer- enHavenbedrijven.

132. The Court ruled that agreements concluded within the framework of collective negotiationsbetween labour and management in order to improve conditions of work and employment do not, giventheir nature and purpose, fall within the scope of Article 81. It considered that, under the Treaty, theaim of the Community is not only to ensure competition but also to pursue a social policy. It took theview that the achievement of the social policy objectives of such agreements could be seriouslyhindered if the social partners had to comply with Article 81 when together trying to improve labourconditions.

133. The Court also ruled that Dutch sectoral pension funds are ‘undertakings’ within the meaning ofthe competition provisions of the Treaty. The pension fund itself determines the level of premiums andbenefits and operates in accordance with the principle of capitalisation. The level of the benefitsdepends on the return on its investments, in respect of which it is, like insurers, supervised by theinsurance supervisor. It follows that the fund carries on an economic activity and that it competes withinsurers.

134. The Court also considered that, in these circumstances, the fund’s non-profit-making characterand the fact of its having some aspects of solidarity (e.g. no medical selection and the fact thatcontributions do not reflect the risk) were insufficient bases on which to conclude that the fund is not anundertaking. The Court added that these latter aspects may well make the fund less competitive thaninsurers, but its activities nevertheless remain economic. These aspects may, however, justify the grantof exclusive rights to such a fund.

135. The Court also ruled that the Netherlands does not infringe Article 82, read in conjunction withArticle 86 of the Treaty, where it provided for compulsory affiliation to a specified sectoral pensionfund and granted the pension fund an exclusive right to administer the collected contributions. TheCourt considered that the decision by the public authorities to make affiliation compulsory necessarilyimplied that the fund should be regarded as having an exclusive right within the meaning of Article86(1). As it has a legal monopoly in a substantial part of the common market, it also occupies adominant position. In the present cases, certain firms would like to offer their employees a betterpension arrangement and, for efficiency reasons, would like to have all their pension arrangements witha single insurer. However, they are prevented from doing this as they are required to take out a pensionwith the sectoral pension fund. The resulting restriction of competition is a direct consequence of theexclusive right.

136. The Court therefore considered it necessary to examine whether that exclusive right can bejustified on the basis of Article 86(2). It ruled that the pension arrangement fulfils an essential socialfunction in the Netherlands, because of the low statutory pension. The exclusive right is necessary, i.e.without such a right the fund may well not be able to fulfil its tasks of general economic interest onacceptable economic conditions and its financial equilibrium may be endangered. The Court specificallyreferred to the dangers of the ‘good risks’ leaving and the fund being left holding the ‘bad risks’, therebyincreasing the cost of pensions for workers to whom the fund could no longer offer pensions atacceptable cost. This is a particular danger in funds such as in the present cases where there is a highlevel of solidarity.

137. The Court thus ruled that the grant of the exclusive rights is justified in such cases, because itwould not otherwise be possible for these pension funds to carry out under economically acceptableconditions a particular social task of general economic interest which is assigned to them. However, thisdoes not prevent the Commission from monitoring the behaviour of the pension funds at issue in theexercise of their exclusive rights under Articles 81 and 82.



8. Professions

138. The Commission is developing its approach towards the issues involved in applying the competitionrules to the professions. In the case of several of the professions, services are as yet still provided on a nation-al or even local level, and the condition that intra-Community trade must be appreciably affected for the ECTreaty rules on competition to apply is therefore not met in most of the cases encountered by the Commission.



Box 5: Professions

Competition policy in this area pursues two main objectives: (1) putting an end to restrictivepractices; and (2) promoting forms of cooperation that facilitate access to other geographic markets,thereby enabling members of the professions to operate at Community or international level. TheCommission’s action focuses primarily on cases which have a Community dimension in that theyconcern the rules governing the same profession in all or at least several Member States or, in thecase of the members of a profession in a single Member State, relate to a restrictive practice that hasa significant impact in several Member States.

The Commission is endeavouring gradually to draw the dividing line between purely ethical rules whichlie outside the scope of the competition provisions and rules or practices whose object or effect is contraryto Article 81 of the Treaty. The goal of promoting competition in the professions is thus, in each individ-ual case, reconciled with the objective of maintaining purely ethical rules specific to each profession.

The Commission has so far published three decisions concerning the application of Article 81 of theTreaty to the behaviour of a professional body (CNSD, COAPI and EPI) (1). In the first two decisions,the Commission found that collective price-fixing was incompatible with the common market, irre-spective of the national regulatory framework. An appeal against the first-named decision was broughtbefore the Court of First Instance (2), which has not yet ruled on the matter. The Commission alsobrought infringement proceedings against Italy with regard to the Italian legislation on customs agents,in which the Court of Justice delivered its judgment on 18 June 1998 (3). The third decision relates to thecode of conduct of the Institute of Professional Representatives before the European Patent Office (theEPI), and more particularly restrictions on advertising and unsolicited offers of services. The decisiongrants negative clearance for those rules which are necessary, in particular in order to ensure profes-sional secrecy and impartiality or to avoid conflicts of interest and misleading advertising. On the otherhand, the provisions which prohibit members from carrying out comparative advertising under the con-ditions laid down by Directive 97/55/EC (4) and from actively offering their services to former clients ofother representatives were found to be restrictions of competition in breach of Article 81(1) of the Treaty.Those restrictions were exempted for a short period. The EPI made an application to the Court of FirstInstance (5) for an annulment of the part of the decision relating to the exemption.

The above cases have already made it possible to develop the main principles governing theapplication of the competition rules to the professions.

(1) Commission decision of 30 June 1993 in Case No IV/33.407 — CNSD (OJ L 203, 13.8.1993); Commissiondecision of 30 January 1995 in Case No IV/33.686 — COAPI (OJ L 122, 2.6.1995); Commission decision of7 April 1999 in Case No IV/36.147 — EPI code of conduct (OJ L 106, 23.4.1999).

(2) Case T-513/93 CNSD v Commission.(3) Case C-35/96 Commission v Italy [1998] ECR I-3851.(4) OJ L 290, 23.10.1997.(5) Case T-144/99 EPI v Commission.



— Members of the professions are normally undertakings within the meaning of Article 81 of theTreaty where they carry on their activities as self-employed persons, and their professional bodiesor associations, to which all the members of a given profession belong, may according to thecircumstances be regarded as associations of undertakings.

— The collective fixing of prices and the prohibition of certain forms of advertising by a professionalassociation may constitute restrictions of competition within the meaning of Article 81(1) of theTreaty.

— Rules which are necessary, in the specific context of each profession, in order to ensure theimpartiality, competence, integrity and responsibility of the members of that profession or toprevent conflicts of interest and misleading advertising are not considered to be restrictions ofcompetition within the meaning of Article 81(1) of the Treaty.

— The legal framework within which agreements are made and the classification given to that frame-work under the various national laws are irrelevant as far as the applicability of the Community ruleson competition are concerned. The Court of Justice has repeatedly confirmed this principle (6).

— Even if by delegating to a professional association power to fix the prices to be charged by itsmembers a Member State may be infringing the rules of the Treaty, the association’s exercise ofthat power does not escape the application of Article 81 of the Treaty (7).

(6) Inter alia Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission [1984] ECR 19; Case 123/83 BNICv Clair [1985] ECR 391; Case C-35/96 supra.

(7) Commission decision of 30 January 1995 (OJ L 122, 2.6.1995).

9. Sport

Preliminary approach to applying the competition rules

139. The Commission’s report to the European Council on sport (82) contains a section setting out theCommission’s preliminary thinking on application of the competition rules in this area. The report beginsby stressing the social and cultural aspects of sport and its increasing economic importance. There aretwo dimensions involved: (i) the social, educational, cultural and integrational role of sport, which shouldbe preserved; and (ii) the economic dimension created by the commercial activities generated by sport.The first dimension normally lies outside the scope of the Treaty rules on competition; the second ishowever subject to those rules, which are applied with due regard to the specific characteristics of sport,namely the interdependence between clubs, the principle of equal opportunities, the uncertainty of theoutcome and the sociocultural objectives of sport.

140. The report outlines preliminary conclusions regarding the application of the competition rules inthe field of sport, giving examples of practices of sports organisations under three headings:

— Practices which do not come under the competition rules: the regulations of sporting organisationsdrawing up rules without which a sport could not exist, or which are necessary for its organisation

(82) COM(1999) 644 final.



or for the organisation of competitions. The rules intrinsic to sport are, first and foremost, the ‘rulesof the game’. The aim of these rules is not to distort competition.

In an unpublished decision it adopted on 3 December rejecting a complaint (the Mouscron case (83)), theCommission took the view that the UEFA Cup rule requiring each club to play its home match at its ownground is a sporting rule which falls outside the scope of the competition rules laid down in the Treaty;

— Practices that are, in principle, prohibited by the competition rules: these are restrictive practices inthe economic activities generated by sport. They may concern, in particular, restrictions on parallelimports of sports products or sponsoring agreements that foreclose a market by excluding othersuppliers for no objective reason. With regard to the sale of exclusive rights to broadcast sportingevents, it is likely that any exclusivity which, by its duration and/or scope, resulted in the foreclosingof the market would be prohibited.

Lastly, it is likely that there would be a ban on the practice of a sporting organisation using its regulatorypower to exclude from the market, for no objective reason, any economic operator which, even thoughit complies with the justified quality or safety standards, has not been able to obtain a certificate fromthis organisation attesting to the quality or safety of its products.

Unjustified discrimination in the sale of entry tickets to stadiums, by organisers of sporting events enjoyinga dominant position, between users who are resident in a particular Member State and those who live outsidethat Member State is prohibited. On 20 July, the Commission found that the Comité français d’organisation(CFO) for the 1998 Football World Cup had abused its dominant position by operating a discriminatory sys-tem of ticket sales which favoured consumers resident in France (see Chapter I.B.3 above) (84);

— Practices likely to be exempted from the competition rules: the Bosman judgment (85) recognised as le-gitimate the objectives designed to maintain a balance between clubs, while preserving a degree ofequality of opportunity and the uncertainty of the result, and to encourage the recruitment and training ofyoung players. Consequently, agreements between professional clubs or decisions by their associationsthat are really designed to achieve these two objectives would be likely to be exempted, provided thatthey did not infringe other provisions of the Treaty (in particular Article 39) and the restrictions were pro-portionate to those objectives. It is also likely that short-term sponsoring agreements based on an invita-tion to tender and with clear and non-discriminatory selection criteria would be authorised.

141. Any exemptions granted in the case of the joint sale of broadcasting rights must take account ofthe benefits for consumers and of the proportional nature of the restriction on competition in relation tothe legitimate objective pursued. The impact on the structure of the broadcasters’ market must also betaken into consideration. In this context, there is also a need to examine the extent to which a link canbe established between the joint sale of rights and financial solidarity between professional and amateursport, the objectives of the training of young sportsmen and women and those of promoting sportingactivities among the population at large.

142. The examples given of the three categories of practices by sporting organisations help to createa clearer legal environment which is gradually ensuring the legal certainty which the sporting world islegitimately seeking.

(83) Complaint by the Lille municipal authorities against UEFA.(84) OJ L 5, 8.1.2000.(85) Case C-415/93 [1995] ECR I-4921.

10. Motor vehicles

Motor vehicle distribution

143. Article 81 prohibits agreements between producers and dealers who restrict inter-brandcompetition by partitioning markets. Moreover, the block exemption regulation for motor vehicledistribution (Regulation (EC) No 1475/95 (86)) contains several provisions aimed at intensifyingcompetition in the markets for new cars and spare parts and improving the position of consumers byguaranteeing them the full benefits of the internal market. In accordance with these principles, in 1999the Commission initiated two proceedings against car manufacturers and/or their importers, based onevidence found during inspections.

144. Article 11 of Regulation (EC) No 1475/95 requires the Commission to evaluate on a regular basisthe application of the regulation, particularly as regards the impact of the exempted system of distributionon price differentials of contract goods between the different Member States and on the quality of serviceto final users. The evaluation of car price differences has been ongoing since 1993, with the twice-yearlypublication by the Commission of its ‘Report on car prices within the European Union’ (87), accompaniedby a press release. This report is aimed at analysing car price differentials across the European Unionand improving price transparency for consumers. Analysis of these reports compiled as of 1 May and 1November reveals that price differentials are still too high for many models (88).

145. In addition, the Commission has to draw up a general report on the evaluation of the regulationbefore the end of 2000. The quality of service to final users is a core aspect which has to be consideredin this exercise. The principle of a single market requires in particular that consumers must be able topurchase motor vehicles wherever in the Community prices or terms are most favourable, and thateffective competition on the maintenance and repair markets is ensured. Bearing these aspects in mind,the Commission has addressed questionnaires to a number of parties directly affected by the regulation,such as car manufacturers, importers, consumer associations, independent resellers and intermediaries,producers of spare parts, independent repairers, franchised dealers, and companies active in electroniccommerce.

146. This will give the Commission a picture of what is happening in the sector as a whole and willenable it to check whether the objectives of the regulation have been attained. Many of the questions aretherefore intended to provide the Commission with an insight into the practical transposition of clausesin the regulation. Finally, the Commission would like to know whether the technical evolution of carsand the introduction of new marketing and distribution methods does not call into question the basis fora specific regulation on car distribution. All parties have therefore been invited to submit their views onfuture developments in the car distribution sector, up to the end of 2010 and beyond that date. The resultsof their evaluation will form a major basis for the report which the Commission is to adopt by the endof 2000.



(86) Commission Regulation (EC) No 1475/95 of 28 June 1995 on the application of Article 85(3) of the Treaty tocertain categories of motor vehicle distribution and servicing agreements (OJ L 145, 29.6.1995). See also 1996Competition Report, points 54-56, and IP/00/121, 7.2.2000.

(87) Available from the Commission offices in the Member States and on the home page of the Competition DG(http://europa.eu.int/comm/dg04/aid/en/car).

(88) See Press Releases IP/99/60, 1.2.1999 and IP/99/554, 22.7.1999.

D — Statistics



Figure 1New cases

600

500

400

300

200

100

01999

Cases openedon Commission’sown initiative

Complaints

Notifications

162

388

77

149

1998

509

101

192

216

1997

499

101

177

221

1996

447

82

159

206

1995

521

47

114

360

1994

42621

170

235

Figure 2Cases closed900

700

500

300

200

100

0

800

400

600

Formal decisions

Informal procedure

1993

14

792

1994

33

495

1995

14

403

1996

21

367

1997

27

490

1999

68

514

1998

42

539



Figure 3End-of-year stock of cases over time

1 400

1 200

800

600

400

200

0

1 000

Output of casesInput of cases End-of-year stock of cases

1999

388

582

19981997199619951994

426

528 521

417 447388

499 517 509

581

1 117

1 221

1 2801 262

1 204

1013

II — MERGER CONTROL

A — Introduction

147. Merger activity continued to grow unabated in 1999. In 1999, 292 cases were notified,representing an increase of 24 % from last year and an overall increase of 70 % since 1997. There hasbeen a fivefold increase in the number of cases notified under the merger regulation since 1990. TheCommission took a decision in 270 cases — 13 % more decisions than in 1998. A notable feature in1999 was that a total of five important operations were abandoned by the parties concerned after theCommission had raised serious competition concerns. Moreover, in 1999 the Commission found itnecessary to initiate the second stage of examination (‘Phase II proceedings’), lasting four months, inrespect of 20 planned operations, as opposed to 12 in 1998. A total of eight cases where Phase IIproceedings were initiated were authorised subject to conditions, one was formally prohibited, five werewithdrawn and nine were carried over to 2000. Also, more cases were cleared in the initial phase of themerger procedure (19 decisions compared to 12 last year) only after satisfactory undertakings were givento ensure that potential competition problems were resolved. The main factors underlying the currentmerger wave are the globalisation of markets, the introduction of the euro, the completion of the internalmarket and the forthcoming enlargement. These factors will continue to generate high levels of mergeractivity in Europe for the foreseeable future.

148. A distinctive feature of today’s merger control is that cases are becoming increasingly complex.The structure of a large number of the operations notified in 1999 was extremely complicated andrequired simultaneous analysis of several different markets.

149. The geographical scope of mergers is also increasing. To analyse these cases properly theCommission has to continue to liaise closely and exchange information with other antitrust authorities.The experience gained from such cooperation in 1999 shows that it can significantly improve theoutcome of investigations and the Commission attaches great importance to cooperation with otherantitrust authorities.

150. Notable examples of cases which involved international cooperation in 1999 include two cases in theoil and chemicals sector (Exxon/Mobil (89) and BPAmoco/Atlantic Richfield (90)) which the Commission ex-amined in close liaison with the US Federal Trade Commission. Cooperation with the American antitrust au-thorities also helped to identify common remedies in Imetal/China Clays (91), where many of the productmarkets affected by the operation were found to be worldwide in scope. In Honeywell/AlliedSignal (92), sev-eral of the commitments entered into were similar to the divestments ordered by the US Department of Jus-tice. The Commission also cooperated closely with the US Department of Justice in Ahlström/Kvaerner (93),which raised serious competition concerns in a number of worldwide chemical pulping markets. The in-creasing number of mergers with a global dimension and international effects means that coordination andinformation exchange is becoming increasingly important.

151. 1999 also saw significant developments in relation to oligopolistic dominance issues. Not onlydid the judgment of the Court of First Instance confirm the Commission’s decision in the Gencor/Lonrho



(89) Case No IV/M.1383.(90) Case No IV/M.1532.(91) Case No IV/M.1381.(92) Case No IV/M.1601.(93) Case No IV/M.1431.

case (94), but it also accepted the Commission’s approach in dealing with cases involving collectivedominant positions. In 1999 the Commission investigated oligopolistic dominance in several cases(notably in Airtours/First Choice (95), Exxon/Mobil and Danish Crown/Vestjyske Slagterier (96)). Whilethe analysis of each case is based on the facts of that particular case, some commonalities exist and theseare examined in more detail below. The Commission recognises the need to further clarify its approachto dealing with oligopolistic dominance in order to avoid uncertainty within the business community. Itwill continue to pursue its work in this area.

152. The third keynote of the year was that, for the first time, the Commission imposed fines on anumber of notifying parties for providing incomplete or misleading information in merger proceedings(see box below). The relatively short time periods within which the Commission has to investigatenotified operations and the fact that transactions are becoming increasingly complex make it essentialfor the achievement of a proper outcome that notifying parties provide the Commission with full andaccurate information. By imposing these fines the Commission has emphasised the importance it attachesto compliance with these requirements. It is also considering whether it may be appropriate to proposeto the Council that the maximum amounts of fines should be increased.

B — New developments

1. Market definition

Oil and chemicals

153. The wave of mergers in the oil and chemicals sector was one of the most important features of1999 and the Commission investigated a number of operations in this sector. While earlier transactionsin the oil and chemicals sector have essentially concerned the combination of businesses in limited fieldsof activities through the constitution of joint ventures, a number of the latest mergers are more global inthe sense that they combine the whole of the merging parties’ activities.

154. The Commission opened full investigations into three operations in the oil and chemicals sector(Exxon/Mobil, BP Amoco/Atlantic Richfield and Total/Elf Aquitaine (97)). The analyses covered thewhole oil and gas chain, from oil exploration to refining and retail fuel sales. Of particular interest isthat, for the first time, the Commission investigated in detail the upstream markets for the explorationand development of crude oil and natural gas. These investigations were carried out in order to establishwhether the mergers between Exxon and Mobil and that between BP Amoco and Atlantic Richfieldwould result in too small a cluster of oil companies capable of searching for and developing theunexplored reserves that will be consumed 10 to 15 years from now. They indicated that the so-called‘super majors’ (the two merging companies together with Shell) would still face competitive constraintsfrom smaller oil companies. Moreover, they revealed that the countries in whose territory oil and gas isfound have no incentives to enable oil companies to restrict production. In addition, the Commissionfound that, because of size differences, smaller explorers would not compete for the same type ofexploration rights as the larger explorers and would not be dependent on them to sell their oil. Ittherefore concluded that no dominant positions would be created or strengthened in these upstreammarkets.



(94) Case T-102/96 Gencor v Commission (25.3.1999).(95) Case No IV/M.1524.(96) Case No IV/M.1313.(97) Case No IV/M.1628.

155. In Exxon/Mobil, the Commission also concluded that there was a separate market for motor fuelretailing on toll motorways in France. It found that toll motorways in France constitute separate productmarkets by virtue of their specific characteristics. In particular, it found that demand on French tollmotorways is captive in that the opportunity to leave the motorway to buy fuel at off-motorway stationsis very limited, owing mainly to the payment of a toll. It also found that pump prices on toll motorwaysare generally higher than prices on ordinary roads. Finally, it found that a number of factors make entryto the toll motorway motor fuel retailing market more difficult than to the retail service station marketas a whole.

Transport and postal sector

156. During the year, the Commission dealt with several cases in the postal sector, a number of theminvolving large national postal companies such as Deutsche Post, La Poste and the Dutch Post (TNT).The markets for express mail services (98), parcels (99), freight forwarding (100) and logistics (101) wereall considered. The goal of the acquisitions for national postal companies is a strategic positioning in aliberalised market environment in order to diversify from their traditional monopoly activities in the faceof declining profits. A ‘one-stop shop’ with extensive product and geographic coverage seems to be ofadvantage in view of the major role delivery services will play in the growth of e-commerce.

157. In the past, the Commission has distinguished between the markets for mail, for parcels and forfreight forwarding services on the grounds that differences in size and format of the transported itemrequire different handling and sorting equipment. These markets have been further segmented accordingto the speed of delivery into the markets for express or standard mail (parcel, freight). Express servicesguarantee delivery within a certain time, whereas standard services only contain a general indication ofthe delivery time. All of the above postal and transport services are offered for domestic and cross-borderdeliveries. However, the Commission has viewed national and international postal services as separateproduct markets because there are differences in price and product, and there are frequently differentsuppliers for domestic services on the one hand and international services on the other. It has consideredthat the relevant geographic markets for all postal and transport services are national, primarily due tothe national nature of the network infrastructure.

158. There has recently been a certain shifting and blurring of the boundaries between these variousservices. Different providers are increasingly tending to design and offer special and personalisedpackages of services so as to meet the specific needs of certain types of client. These services oftencombine different delivery services with each other and with other value-added services such as ‘trackand trace’ and they can also include features like warehousing, invoicing and transport. Depending onthe centre of gravity of these activities, the Commission has classified them either as stand-alone logisticsservices (102) or as an add-on service to the delivery services in question (103). Another pattern that hasbeen observed is that cooperative ventures between mainly regional providers are being replaced byintegrated European and even wider networks both in the parcels and freight-forwarding market. The



(98) Case No IV/M.1347 — Deutsche Post/Securicor; Case No IV/M.1405 — TNT Post Group/Jet Services.(99) Case No IV/M.1371 — La Poste/Denkhaus; Case No IV/M.1447 — Deutsche Post/trans-o-flex (notification

withdrawn); Case No IV/M.1513 — Deutsche Post/Danzas/Nedlloyd.(100) Case No IV/M.1410 — Deutsche Post/Danzas; Case No IV/M.1513 — Deutsche Post/Danzas/Nedlloyd; Case

No IV/M.1549 — Deutsche Post/ASG; Case No IV/M.1585 — DFDS/FLS Industries/Dan Transport; CaseNo IV/M.1649 — Gefko/KN Elan.

(101) Case No IV/M.1500 — TPG/Tecnologistica.(102) Case No IV/M.1500 — TPG/Tecnologistica.(103) Case No IV/M.1513 — Deutsche Post/Danzas/Nedlloyd.

Commission has analysed whether this tendency leads to the foreclosure of small and medium-sizedcompetitors or to a lessening of potential competition (104).

159. The Commission has to ensure that the acquisitions of private companies by former Statemonopolies will not serve as a basis to build up dominant positions in any particular segment and/orgeographic area of this fast-developing sector. In recent cases involving national postal companies, theacquisitions mainly proved to be of a complementary nature, thus not leading to serious competitionconcerns. So far, the Commission has initiated an in-depth enquiry into just one case (DeutschePost/trans-o-flex (105)). It should, however, be noted that the main concerns raised by competitors andcustomers relate to alleged cross-subsidisation and State financing of such acquisitions. The Commissionis at present pursuing these matters under the State aid rules.

2. Dominance assessment

Collective dominance

160. Following the judgment of the European Court of Justice in the Kali und Salz (106) case in 1998,where the Court confirmed the application of the merger regulation to collectively dominant positions,the Commission’s jurisdiction to deal with oligopolies and the approach adopted was confirmed by thejudgment of the Court of First Instance in Gencor/Lonrho. The judgment, delivered in March, issignificant in a number of respects. First, the Court confirmed the Commission’s approach to tacklingcollective dominant positions. In particular, it accepted that market characteristics such as markettransparency, homogeneity of the product, market maturity, low rate of innovation, cost structures andmulti-market contacts can be used in identifying whether markets are prone to oligopolistic dominance.Second, it upheld the Commission’s analysis as to how the operation would have changed thecompetitive relations between the competitors and thereby made anti-competitive parallel behaviourmore likely. Third, it concluded that structural links are not necessary for a finding of collectivedominance. Although the Court did not provide any guidance as to which of the above factors should beconsidered particularly important in order to find collective dominance, it accepted that all these factorscan be indicators of whether markets are prone to exhibit anticompetitive parallel behaviour.

161. The Commission examined the issue of collective dominance in four Phase II cases, three of themsubsequent to the Court’s judgment. In the Airtours/First Choice case, it eventually prohibited theoperation on the grounds that it would have led to an oligopoly of three companies on an already highlyconcentrated market (see box below). In Exxon/Mobil, it found that the operation would have led to astrengthening of the existing oligopoly in the national long-distance wholesale transmission of naturalgas in Germany. It also found that, in view of the equity links between Exxon, BP/Mobil and Aral andthe other structural factors of the industry, the operation would have created or strengthened oligopolisticdominant positions in the markets for the distribution of fuels in Germany, Austria, the Netherlands,Luxembourg, the UK and on French toll motorways. A point of interest is the fact that, in motor fuelretailing, the Commission found that the merger would have created or reinforced an oligopoly in anumber of national markets which were only moderately concentrated (a minimum of three players inthe UK to a maximum of seven players in Luxembourg). Despite the relatively low levels ofconcentration in this case, the markets were found to display all the characteristics typical of markets



(104) Case No IV/M.1513 — Deutsche Post/Danzas/Nedlloyd; Case No IV/M.1549 — Deutsche Post/ASG.(105) Case No IV/M.1447 (notification withdrawn); see also box for fines proceedings.(106) Joined Cases C-68/94 and C-30/95 French Republic, SCPA and EMC v Commission [1998] ECR I-1375.

conducive to oligopoly. Finally, in Danish Crown/Vestjyske Slagterier, the Commission found that aduopoly would have supplied 70 % of the Danish market for fresh pork meat sold through supermarkets.

162. In all these cases the Commission investigated market characteristics such as market transparency,homogeneity of the product, maturity of the market, rate of innovation, similarity of cost structures,multi-market contact, links (structural or other) in order to establish whether the markets in question areconducive to oligopolistic dominance. The Commission has proceeded on a case-by-case basis in itsanalysis of these characteristics. However, the relevance of each of the market characteristics dependson the context of a specific market.



Box 6: Collective dominance: Airtours/First Choice

The Commission undertook a detailed investigation of this hostile bid in the UK package holidaysector, notified on 29 April. In the light of the results of its investigation, the Commission decided,on 22 September, to prohibit the proposed merger. The grounds for this decision were, in brief, thatit would lead to the creation of a situation of collective dominance between the merged Airtours/FirstChoice and the two other large, vertically integrated suppliers that would remain (Thomson andThomas Cook), which would substantially reduce competition in the short-haul package tour marketin the UK.

This was the first occasion on which the Commission had prohibited a merger on the grounds ofcollective dominance among more than two firms. However, the question of the applicability of themerger regulation to dominant positions among several firms rather than just one has been consideredbefore (1), and there have been a number of cases (including two which were the subject of reviewby the European Courts, see above (2)) which have dealt with the issue of dominance by two firms(duopoly) and confirmed the principle that the regulation applies to collective dominance.

The UK package holiday sector was found to exhibit a number of characteristics such as markettransparency, mature market, low rate of innovation, similarity of cost structures, commercial linksbetween the oligopolists (and so on) which made it more likely, in the Commission’s view, that themerger would lead to collective dominance with substantial adverse effects on competition.

The structure was highly concentrated even before the merger; the four largest firms, each with asubstantial market share individually, had 80 % of the market between them and the merger wouldbring together the second and third largest.

All four large companies (in contrast to the numerous, but much smaller, competitors who made upthe remaining 20 % of the market) were fully vertically integrated, both upstream into charter airlineoperation, and downstream into distribution via the chains of travel agents which they owned. Thistended to align their cost structures. It was also found that important commercial links existedbetween the four large companies — for example, significant supplies of seats on each other’s airlinesand arrangements to distribute each other’s holidays through their travel agency chains. Thisincreased the transparency of the market and reduced the likelihood of strong competition betweenthem.

(1) For example, in 1998 in the Phase II cases Price Waterhouse/Coopers & Lybrand (Case No IV/M.1016) andEnso/Stora (Case No IV/M.1225) — see the 1998 Competition Report.

(2) See also the Commission’s 1998 Competition Report.



Another key feature of the market was the relative inflexibility of supply. Sales volume, and full useof the aircraft, was widely considered to be critical to commercial success, especially for short-haulpackages (essentially those to the Mediterranean area) because unit profit margins are low. Moreover,a holiday is valueless if it is unsold by the departure date. But capacity (number of holidays for sale)has to be largely fixed well in advance of its being sold, and in particular it cannot be reduced at shortnotice without risk of substantial losses. A tour operator’s range of destinations, flight schedule andseat allocations has to be set well before its brochure is issued and selling begins. For typicalshort-haul packages in the UK, this is as much as a year before the holiday season concerned. Charterairlines cannot easily reduce their capacity at short notice; flights generally have to be made even ifbookings on them are insufficient. This inflexibility created an incentive for the larger, integrated touroperators to keep the market ‘tight’ and not to expand capacity in order to compete aggressively witheach other for market share. Oversupply by one supplier would increase the number of unsoldholidays, threatening the profitability of all, whereas constraining capacity would, other things beingequal, improve profitability for all.

The Commission also found that there were potentially significant barriers to expansion by the manysmaller tour operators to a size comparable to that of the four large firms, and at which economies ofscale and scope could be maximised so that they could compete effectively with them. In particular,it was considered necessary for a tour operator wishing to reach such a size to integrate into travelagency, given the strength of the agency chains owned by the four large operators, in order to ensureadequate and cost-effective distribution of the operator’s own holidays, and probably also into airlineoperation. Neither was likely to be easily or quickly achievable. In particular, establishing a nationaltravel agency network (whether by a series of acquisitions or by organic growth) was likely to be acostly and long-term affair, and alternatives to the traditional method of sales through travel agents’shops (e.g. via the Internet, telephone or mail order) did not seem likely to substantially displace themfor some time to come, if at all.

The Commission found that the risk of an oversupplied market, referred to above, would act as adeterrent for the oligopolists to compete for market share. It also found that there would be scope forretaliation among the oligopolists if one of them were to do so. Against this background, the removalof First Choice as a competitor in tour operation and travel agency, and its likely loss as a majorsupplier of airline seats to third parties (in which it was, unlike some of the other large tour operators,a key player) would, in the Commission’s view, lead to the creation of a collective dominant positionamong the three remaining large firms, with significant anticompetitive consequences. It wouldstrengthen their interdependency, further marginalise the ‘fringe’ of smaller players, and increasemarket transparency. That would raise the incentives for the oligopolists to restrict their capacity, andfacilitate the adoption of effective strategies for doing so.

Single dominance

163. The Commission also dealt with a number of cases involving single dominant positions. A notablefeature in 1999 was the large number of cases where the parties abandoned the merger plan before aformal prohibition decision was adopted by the Commission. Even without a decision, the effect of theCommission’s intervention in these cases was to prevent the creation or reinforcement of a dominantposition to the detriment of European consumers. Four cases, where serious competition concerns arose,were abandoned before a formal decision was taken.

164. For example, the transaction which would have combined the pulping activities of Ahlström andKvaerner was withdrawn only one day before the Commission could issue a decision prohibiting the

operation. The Commission had opened a full investigation into this merger following a number ofcomplaints and found that the operation raised serious competition concerns in a number of marketsregarding the worldwide supply of machinery, engineering and maintenance services in the chemicalpulping sector, where the parties’ overlapping activities would have created or strengthened a dominantposition. In particular, the Commission was concerned about the parties’ strong position in the supply ofchemical digesters, components of bleaching lines, washing equipment, recausticising equipment,evaporators, recovery boilers and lime kilns as well as the parties’ position as regards green fieldoperations. The operation would have raised similar concerns in relation to worldwide refurbishment andmaintenance activities of chemical digesters, washers and recovery equipment. The Commission alsosought to prohibit the operation on the grounds that the parties would have become the only viablefull-line supplier in the chemical pulping sector, providing incentives and the ability to cross-subsidisein an anticompetitive manner between products where it would have had a dominant market position andthose for which it would face more competition, and also to tie products in competitive markets to thosefor other pulp mill equipment, in which it would have had a dominant position.

165. In KLM/Martinair (107), the Commission decided to open a full investigation based oncompetition concerns regarding the supply of seats to tour operators, for incorporation into package toursfor Dutch customers, on flights from Amsterdam/Schiphol to destinations around the Mediterranean.Together, the two airlines would have become by far the largest single carrier from Amsterdam to thesedestinations.

166. KLM is the largest and Martinair the second-largest Dutch airline. Both companies are based at Am-sterdam/Schiphol airport. The operation consisted of the acquisition by KLM of the 50 % of those shares inMartinair which it did not already own. These shares are currently owned by Nedlloyd. The operation was achange from joint control of Martinair by KLM and Nedlloyd together to one of sole control by KLM. In thecircumstances of the case, this change would have materially reduced Martinair’s remaining independencefrom KLM, with serious consequences for competition. The Commission considered that the operationwould have allowed KLM to fully integrate the operations of Martinair with those of its subsidiary Transavia.KLM (principally through its subsidiary Transavia) already supplied a substantial share of the supply of ‘hol-iday’flights — whether on chartered or scheduled services — to tour operators in the Netherlands. Martinairis an equally significant competitor in this market, and together the two airlines supply around two thirds ofit. The Commission was therefore concerned that the operation would have created a dominant position, re-gardless of whether the relevant market consisted of individual routes, a bundle of routes to certain regionsor of all flights to the Mediterranean. A prohibition decision was proposed but the parties chose to abandonthe operation before a decision was taken.

167. Similarly, the proposed alliance between the Rotterdam Port Authority and the container terminaloperators Hutchison and ECT (108) would have led to a significant addition of capacity, given that thefirst, fourth and ninth largest container terminal operations in northern Europe would have been broughtunder the joint control of Hutchison. The Commission’s investigation showed that the merger wouldhave created a dominant position for ECT/Hutchison on the market for stevedoring services to deep-seacontainer ships in northern Europe. As a result of the merger, ECT/Hutchison would have had a marketshare of 36 % on this market with the nearest competitors having less than half of the joint market shareof the parties. However, ECT/Hutchison’s combined market position would have been much strongerthan reflected by their market share, given their strong joint position in transhipment, their leadingposition in Far East cargo and the fact that their terminals are particularly suited to serving largerdeep-sea vessels. The operation was abandoned before a formal decision was adopted.



(107) Case No IV/M.1328.(108) Case No IV/M.1412.

169. Rewe/Meinl (109) is a significant retail case where the focus of concern was the procurementmarket. The takeover of Meinl, the fourth largest Austrian food-retail chain, by the market leaderRewe/Billa would have created a dominant position on the Austrian food retail market and on nineregional procurement markets in Austria for daily consumer goods. The Commission considered thestrong link between the retail market and the procurement side. A competitor having a strong position inretailing and a significant purchasing volume will usually be able to achieve better purchasing prices andconditions from its suppliers, which in turn can be used to attack its rivals on the downstream side. Inthe present case, Rewe/Billa was already market leader, and the only retailer expanding at a rapid pace.As a result of the acquisition, the new entity would have achieved a market share of well over 30 %,considerably more than its nearest competitor, Spar. In order to evaluate the real strength of the newentity on the relevant markets, the Commission looked at the market shares in combination with anumber of additional advantages the parties have, such as, for example, their centralised structure, theirhigh share of favourable locations, the high combined share of profitable shops, etc. The Commissionconcluded that the operation as notified in its original form would also have increased the alreadyexisting high entry barriers to the Austrian food retail market. The parties made comprehensivecommitments removing the Commission’s concerns on both the retail and procurement side of the deal.Following the commitments, Rewe/Billa acquired only 34 % of Meinl’s food retail activities. Rewe/Billaalso undertook not to acquire any outlets to be used for food retailing in eastern Austria. Following theundertakings, Rewe/Billa will not strengthen its existing strong position and Meinl will remain active asa competitor. The reduction of market share on the retail market will also have a positive impact on theprocurement markets by reducing the dependency of suppliers operating on that market.

170. In the proposed merger between Danish Crown and Vestjyske Slagterier the operation would haveled to the creation of a duopolistically dominant position of the parties together with another large Danish

In another case, Deutsche Post/trans-o-flex, the parties also abandoned their agreement followinginformation from the Commission that a statement of objections would be sent setting out seriouscompetition concerns.

3. Remedies

Phase II

168. In 1999, nine Phase II decisions were adopted. Of these, eight resulted in conditional clearancedecisions.



(109) Case No IV/M.1221.

Box 7: Assessment of potential dominance

Recent merger cases demonstrate that market dominance may be established even at relatively lowmarket share (see, for example, Rewe/Meinl (37 %) and Hutchison/ECT/RMPM (36 %). These caseshighlight the fact that there is no formal threshold in Community merger control for potential marketdominance. However, ECT/Hutchison’s combined market position would have been much strongerthan reflected by their market share, given specific features such as their joint position intranshipment, etc. The Commission’s assessment in individual cases will be based on an assessmentof all the specific features of the market concerned.

cooperative slaughterhouse, Steff-Houlberg. The duopoly would have accounted for about 70 % of themarket for fresh pork meat sold through supermarkets. In this market, competitive actions by competitorsare very transparent due to the weekly pig price quotation. In addition, there were a number of structurallinks and other similarities between the parties and the number two competitor, Steff-Houlberg. Inparticular, Steff-Houlberg was already channelling a large volume of meat through companies controlledby the parties, and the merged entity and Steff-Houlberg would have had similar cost structures,technology and sales channels. The Commission consequently found that, owing to the market structure,neither of the duopolists would have had any incentives to compete with each other on the Danishmarket. To remedy these concerns, the parties committed themselves to abolishing the pig price quotationand the related rules concerning the basis on which farmers are paid. Furthermore, the parties undertookto sever all structural commercial links (common sales channels) with third parties, notably Steff-Houlberg. Finally, the parties undertook to sell slaughter capacity amounting to potentially more than10 % of the Danish consumption of fresh pork meat sold through supermarkets and to loosen theexclusive supply restrictions on their farmers to supply other slaughterhouses. The Commission foundthat these remedies would make the market less transparent, allow divergent cost structures, sever thelinks between the parties and their Danish competitors and provide an alternative to Danishsupermarkets. On balance, the Commission found the remedies sufficient to remedy the competitionproblem created by this merger.

171. In Exxon/Mobil, the operation as notified would have created or strengthened dominant positionsin a large number of markets. Serious competition concerns arose, amongst others, on the markets forwholesale transmission of natural gas in the Netherlands and Germany, motor fuel retailing in severalMember States, Group I base oils (an ingredient for the production of lubricants) in the EEA and aviationlubricants worldwide. In order to remedy these concerns, the parties offered what is the mostcomprehensive remedy package accepted under the merger regulation to date. Several of these remediesraised particularly difficult issues. For example, Mobil agreed to withdraw from its joint venture withBP covering motor fuel and lubricants retailing in Europe. In relation to aviation lubricants, theCommission obtained the divestiture of Exxon’s business after the parties had initially proposed to divestMobil’s aviation lubricants business. The Commission considered the sale of Mobil’s business to beinadequate because, even though it would have eliminated the overlap between the parties, theCommission found that Mobil’s business was more integrated with the Mobil group than that of Exxon.Therefore, Exxon’s aviation lubricants business was considered to be more viable as a stand-alone entity,allowing the eventual purchaser to compete independently from the parties.

172. At the same time as the Commission was investigating Exxon/Mobil, it was also investigatinganother important merger in the oil and chemicals sector: the takeover by BP Amoco of AtlanticRichfield. To illustrate the rapid pace of consolidation in this sector, the BP Amoco Group had itself onlybeen formed after the merger between The British Petroleum Company and Amoco Corporation inDecember 1998. As initially notified, the operation would have created dominant positions on the marketfor the transport of unprocessed natural gas to the UK mainland through off-shore pipelines from fieldsin the southern North Sea (‘SNS’) sector of the UK continental shelf and also on the market forprocessing natural gas in processing facilities on the UK mainland servicing the SNS area. In order toeliminate the competitive concerns, BP Amoco undertook to divest certain pipeline and processinginterests, which had the effect that the merged entity’s position remains similar to that of BP Amoco’sbeforehand.

173. The Commission carried out an in-depth investigation into the merger between the Swedish Teliaand the Norwegian Telenor (110), and concluded that the concentration as originally notified would have



(110) Case No IV/M.1439.

caused serious competition concerns in a number of telecommunications and related services markets inboth Sweden and Norway. The operation would also have led to adverse competition effects in the Irishmobile telephony market, where the merged entities would have had control over both of the only twooperators active on the Irish market. Lastly, there were serious competition concerns in a number ofNordic, Swedish and Norwegian television services markets. The operation was subject to far-reachingcommitments to open up access to the local access networks for telephony as well as to divest Telia andTelenor’s respective cable-TV businesses and other overlapping business. More particularly, Telia andTelenor committed themselves to divesting all existing overlaps in the field of telecom services. Theparties also undertook to sell either company’s stake in one of the two existing Irish mobile telephonyoperators. The parties also undertook to divest their respective interests in cable-TV networks in Swedenand Norway and to implement a set of measures to promote competition, in the last link between thelocal exchange and the consumer (the local loop), in both countries.

174. The Telia/Telenor case raises a number of interesting issues and although the merger has sincefallen through, the issues of substance in the Commission’s decision remain valid. Most importantly, thedecision sets out the Commission’s approach to operations between incumbent operators in the EU. Intelecommunication services and television distribution, the competitive analysis has to go beyond issuesof direct overlaps, and the significance of possible network effects and foreclosure must be analysed.One example of this is that the decision found Telia and Telenor to be each other’s closest actual andpotential competitor in Norway and Sweden. It was therefore found that a merger between the twocompanies, even after the proposed divestiture of the nationally overlapping activities, would havestrengthened their respective dominant positions. The finding that Telia and Telenor were each other’sclosest actual and potential competitor was based on past experience as well as on the fact that these twocompanies enjoyed a stronger degree of control over their respective network infrastructures than anycompetitor in the Nordic area. The pre-merger level of competition between Telia and Telenor was foundto be an important price constraint in the relevant markets, which also benefited other marketparticipants, owing to the non-discrimination provisions in the applicable telecommunicationregulations. Following the merger, this constraint would have been removed, and the merged entitywould have controlled a significant proportion of the transmission infrastructure, including access to allend-users in Norway and Sweden. The merged entity would also have become, to a higher degree thanTelia or Telenor alone, a necessary contracting party for its competitors. This would have enabled themto foreclose access to those competitors, thereby reducing the choice available to final users. In anyfuture notifications of operations involving incumbent operators, the Commission will look very closelyat access to local telecommunications and cable-TV networks and may require cable-TV networkdivestitures and/or local-loop unbundling (local-loop unbundling enables other infrastructure providersto offer services over their own infrastructure leased from the incumbent operator) in order to resolvecompetition issues in line with its approach in the telecommunications sector (see Chapter I.C.1. above).The decision also illustrates the Commission’s commitment to maintaining and developing a levelplaying field in the converging technology markets, telecoms, TV and the Internet. In these networkindustries it is particularly important to ascertain that mergers and other private initiatives will notforeclose the consumer’s access to the increased choice made possible by the developing technologies.From a procedural viewpoint, this merger created issues in relation to the timetable for submittingcommitments (see box below).

175. As the Commission’s decision not to accept the proposed remedies in Airtours/First Choicedemonstrates, appropriate remedies in oligopoly cases can amount, in effect, to attempting to create (orrecreate) a competing business capable of exerting sufficient competitive pressure. As such, it isparticularly important to ensure that the divested assets, together with those (if any) of their ultimateacquirer(s), will prove sufficient to maintain competition at an acceptable level, given also that themarket share and strength of the merged entity will also have increased as a result of the merger.Airtours’ principal remedy proposal consisted of an undertaking to divest certain tour operating assets,



including brand names and existing bookings, to a suitable third party. This proposal was found to beinadequate. In particular, it did not address the problem of access for the prospective buyer to a suitablechannel of distribution for its holidays. It would not, therefore, remedy one of the main competitionproblems of the merger.

176. This has a number of implications. The number of prospective purchasers is reduced by the needto exclude, as a rule, the other oligopolists, although suitable acquirers may still be found. That will also,other things being equal, increase the scale of the divestment needed to resolve the competition problem,by comparison with cases of single-firm dominance, since the buyer’s existing business is likely to bemuch smaller. Although this is not a problem confined to oligopoly cases, it may be difficult orimpossible for the merging parties to sever a proportionately sized, viable business, as opposed to adisparate collection of assets, from the whole. This is not as a rule problematic in many cases where, forexample, concerns arise in areas which are largely peripheral to the parties’‘core’ businesses. In thosecases the whole of the overlap can be divested without seriously prejudicing the commercial andeconomic rationale for the merger. But where the overlap arises in a core business, that may not bepossible. In such cases, the merger may have to be prohibited.

177. A more straightforward remedy was found in the merger between Sanitec and Sphinx (111) in theEuropean bathroom products sector. An in-depth inquiry into the transaction showed that the operationas notified would have led to adverse competition effects in ceramic sanitaryware and other bathroomproducts in the Nordic countries. The high market shares (up to 90 %), the absence of countervailingbuying power and only marginally present competitors led the Commission to conclude that theoperation would have had a particularly negative effect on Nordic customers. Sanitec subsequentlyoffered a full divestiture of Sphinx’s Gustavsberg business in the Nordic countries. A notable feature ofthese undertakings is that while the Commission did not find competition problems in taps and mixersas such, the possibility for the potential buyer to buy also this business was considered important for theviability of the divested business. The option to acquire also the taps and mixers business will ensurethat the buyer will be able to offer a full range of products and compete fully with Sanitec on the Nordicmarket.

178. In Honeywell/AlliedSignal, the Commission’s investigation focused on the markets for avionicsfor commercial applications (products generally found in aircraft cockpits, such as communication andnavigation equipment). The operation combined the first and the third largest worldwide suppliers ofcommercial avionics with major presence in all aviation segments. The combined market sharesproduced by the merger in some markets were as much as 100 % in weather radars for civil helicoptersand terrain awareness warning systems (TAWS). The combined entity would have reached market sharesof up to 74 % in airborne collision avoidance systems (ACAS) processors and modeS transponders andthere would have been only one remaining competitor in a market which exhibited high barriers to entry.Furthermore, the parties’ strong position in the market for TAWS would have had an effect on the futuremarket for integrated hazard awareness systems (IHAS), since the TAWS is a key part of this system.The new entity would have been able to technically link its engineering force and technology for thenext generation of IHAS and thereby foreclose competition.

179. In order to remedy their resulting dominant positions, the parties offered to divest Honeywell’sentire ACAS business and AlliedSignal’s weather radar business. With respect to TAWS, commitmentswere given to supply third parties open interface standards of other avionics products of the new entity,so that new suppliers can have their products installed on aircraft equipped with other avionics from the



(111) Case No IV/M.1578.

new entity. Regarding IHAS, there will be an obligation to supply third parties with TAWS technologyas well as interface data so that future product development by competing suppliers can continue to takeplace.

180. These cases and the undertakings on which their clearance was conditional demonstrate theincreasingly complex nature of transactions the Commission has to deal with. This, together with the factthat complicated undertakings need careful monitoring on the Commission’s part months, and evenyears, after the decision has been taken, means that the Commission is forced to devote more time andresources to the cases concerned. Moreover, when the nature of competition problems becomes such thatthey require elaborate undertakings and mechanisms to remove the concerns, the Commission has tocarefully consider whether accepting complex undertakings will lead to a truly satisfactory result fromthe competition point of view or whether such transactions should instead be prohibited.

Phase I

181. There was a significant upward trend in decisions where operations were cleared in Phase I onlyafter undertakings were submitted. The number of decisions where first phase remedies were acceptedclearly exceeded last year’s total of 12 decisions. In 1999, 19 cases which would previously have beensubject to second phase investigations were able to be cleared after six weeks with undertakings.

182. As in cases where the Commission opened an in-depth investigation, cases where remedies wereaccepted in Phase I typically involve substantial and complex divestments. The most comprehensiveundertakings in Phase I proceedings were accepted in the merger between Hoechst and Rhône-Poulencinto Aventis (112). Those undertakings included the divestment of the chemical businesses of Rhodia andCelanese as well as Hoechst’s veterinary division, HR Vet. In addition, the parties submittedcommitments in response to competition concerns in various pharmaceutical and agrochemical marketsas identified by the Commission during its investigation.

183. The existence of Phase I remedies facilitates the speedy clearance of operations. This can,however, be done only if the Commission is certain that all potential competition problems are resolved.Moreover, it is essential that the Commission be given sufficient time to investigate notified transactions,in particular if it is likely that they could be cleared only subject to undertakings. For instance, despitethe need for substantial undertakings, the Hoechst/Rhône-Poulenc case was able to be cleared in PhaseI because there were detailed discussions between the parties and the Commission before the operationwas formally notified. Therefore, in cases where the parties suspect that the transaction will lead tocompetition concerns, it is important that they contact the Commission at the earliest possible stage, andbefore formal notification takes place.



(112) Case No IV/M.1378.



Box 8: Legal deadlines for submitting undertakings in Phase II cases

Article 18(2) of the implementing regulation (1) provides that commitments offered to theCommission in Phase II cases must be submitted to the Commission within not more than threemonths from the date on which the Phase II proceedings are initiated. The Commission may, inexceptional circumstances, extend the three-month period. The Commission had to take a stance onthe issue of extending the legal deadline to accept remedies in Phase II proceedings twice in 1999.

In Telia/Telenor, the Commission agreed to accept commitments one week after the expiry of the legaldeadline. In reaching this decision, the Commission took into account the fact that the notifyingcompanies faced additional and exceptional constraints in submitting the proposed commitments.These additional constraints were due, not to the companies’ ownership structure as such, but to thefact that the Swedish and Norwegian Parliaments had to be consulted prior to the submission of theproposed remedies. The Commission also took account of the fact that the parties had alreadyindicated what the additional commitments would be in their request for an extension and that thisrequest was submitted within the legal deadline. The Commission further took note of the clear-cutcharacter of the proposed undertakings, which enabled it to conduct a full and proper assessment ofthe modified proposal.

In Airtours/First Choice, however, the Commission rejected the submission of undertakings outsidethe legal deadline. The Commission considered a package of possible remedies offered by Airtoursshortly before the end of the three-month period, but these undertakings were found to be inadequate.Airtours subsequently revised its proposal, but the proposal was submitted to the Commission onlyafter the legal deadline to accept remedies had expired. No exceptional circumstances were found toexist in this case. There was nothing, in the Commission’s view, in the new proposal which could nothave been included in the original one. Moreover, in order to assess the revised proposal, it wouldhave been necessary to consult third parties and liaise with Member States, and this could not havebeen completed within the short time remaining under the statutory period for a final decision.

These two cases illustrate the difficulties relating to the extension of the time limit to acceptundertakings. Article 18(2) aims to reconcile two equally important needs: first, the need properly toassess the undertakings submitted by the parties for the Commission, Member States and interestedthird parties within a reasonable time and, second, the need to take account, in line with the principleof proportionality, of specific situations justifying a shortening of the time period that is considerednecessary to carry out the assessment. The Commission also has to liaise closely with the advisorycommittee of Member States and time may also be needed to negotiate any changes that may benecessary. Moreover, the Commission needs to complete the internal procedures leading to theadoption of a final decision by the College of Commissioners within the statutory four-monthdeadline. In the absence of exceptional circumstances, the three-month deadline will therefore beconsidered the strict final deadline for submitting undertakings in Phase II proceedings in futurecases. The Commission has outlined the reasons for this time limit in its draft notice on commitments,which was released to the general public for comments before the Airtours/First Choice case.

(1) Commission Regulation (EC) No 447/98 of 1 March 1998 on the notifications, time limits and hearingsprovided for in Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings.

4. Article 2(4)

184. The amendments to the merger regulation, which came into force on 1 March 1998, extended theregulation’s scope to include full function cooperative joint ventures. According to Article 2(4) of themerger regulation, a joint venture having as its object or effect the coordination of the competitivebehaviour of its parent companies also has to be appraised in accordance with the criteria of Article 81(1)and (3) of the EC Treaty. In 1999, 19 such cases were investigated and 15 decisions taken. Fourcooperation cases were cleared only after the parties submitted undertakings.

185. In BT/AT&T (113), a Phase II case, there was a risk of parental coordination between ACC, a whollyowned subsidiary of AT&T, BT and Telewest, in which AT&T, through TCI, holds a 22 % stake regardingthe distribution of AT&T/Unisource services in the UK. The Commission raised concerns that the joint ven-ture could lead to coordination of the parties’ competitive behaviour. In order to remove these concerns,AT&T offered to divest ACC UK. AT&T also committed itself to more structural separation between AT&Tand Telewest. Furthermore, AT&T undertook to give another distributor the option to distribute AUCS ser-vices (i.e. global telecommunications services offered by the company AUCS, a joint venture betweenAT&T and Unisource) in the UK, as AT&T UK will be wound up. The Commission declared the concentra-tion compatible with the common market subject to full compliance with these undertakings.

186. In the Skandia, Storebrand and Pohjola case (114), concerning the insurance sector, theCommission also approved the joint venture with commitments. The Commission concluded that theoperation would have only minor effects on competition in the Nordic countries, with the exception ofNorway, where Skandia has a significant market presence through Vesta, a wholly owned subsidiary ofSkandia P&C Insurance Company Ltd (publ). In order to remedy the competition concerns arising fromthe combined market shares of Storebrand and Vesta in Norway, Skandia agreed to divest its VestaForsikring A/S subsidiary there, thus avoiding a further strengthening of Storebrand’s market position.

187. In Alitalia/KLM (115), the Commission authorised the concentration during the first phaseinvestigation in view of the companies’ significant undertakings to promote the entrance of newcompetitors on two hub-to-hub routes, Amsterdam-Milan and Amsterdam-Rome, where the Commissionfound that the alliance between Alitalia and KLM would have created a monopoly. To remedy theseconcerns, Alitalia and KLM proposed a set of measures to facilitate entry in line with previous decisionsin the air transport sector (see Chapter I.C.4. above). The extensive undertakings offered included: acommitment to make available slots to new entrants on the routes in question (up to 336 weekly slots);a commitment to reduce the parties’ frequencies on the Amsterdam-Milan and/or Amsterdam-Romeroutes when an entrant starts operations; a commitment to enter into interlining agreements with the newentrant and to give any new entrant the opportunity to participate in KLM’s and Alitalia’s Frequent FlyerProgramme; a commitment to refrain from tying travel agents and corporate customers in Italy and theNetherlands respectively with loyalty or other similar rebate schemes; and a commitment to ensure that,once a competing airline has entered on the route(s) in question, the first screen of the computerreservation system (CRS) is not filled with the flights of the Alliance and that consumers will beinformed about the precise code-share arrangements.

188. The cooperative joint venture between Fujitsu and Siemens (116) was cleared subject to thecompanies’ compliance with certain commitments. This operation combines the European businesses of



(113) Case No JV.15.(114) Case No JV.21.(115) Case No JV.19.(116) Case No JV.22.



Box 9: Fines for supplying incorrect or misleading information in the notification

An important development in merger control was that, for the first time, the Commission used its powersto fine companies for supplying incorrect or misleading information in their notifications or during thesubsequent investigations. The merger regulation stipulates that the Commission can impose fines of be-tween EUR 1 000 and EUR 50 000 where a company provides intentionally or negligently incorrect ormisleading information in a notification or in response to a request for information.

The Commission fined four companies for infringing the merger regulation. In February 1999,Deutsche Post AG notified its planned acquisition of sole control over the German high-speeddelivery service, trans-o-flex GmbH. According to Deutsche Post, it had acquired a minorityshareholding in trans-o-flex in 1997 but the notification contained facts that pointed to an acquisitionof sole control during that time. If that had been the case, the Commission would have had nojurisdiction to assess the transaction as notified in 1999 but, instead, the evaluation of the acquisitionof the shares in 1997 would have had to be carried out by a number of national authorities. On thebasis of these indications, the Commission requested additional information from Deutsche Post andothers concerning the 1997 transaction. In the course of this investigation, it became apparent thatDeutsche Post had deliberately supplied incorrect and misleading information to deceive theCommission. The Commission’s investigation suggested that Deutsche Post had exercised controlover trans-o-flex since 1997 through its largest shareholder, a company called Industrial Information.Deutsche Post thus committed a serious infringement of two provisions of the merger regulation. TheCommission therefore imposed two separate fines, the maximum amount of EUR 50 000 permittedunder the merger regulation for each.

The Commission also imposed a fine on KLM for supplying incorrect and misleading information.KLM notified the Commission of its planned acquisition of Martinair in September 1998. Thenotification was subsequently withdrawn. The operation was re-notified to the Commission inDecember 1998 but abandoned in May 1999 after the Commission raised objections against theoperation. The Commission started proceedings in that case because KLM supplied incorrectinformation in its first notification, the one issued on September 1998. In that notification, KLMsubmitted incorrect information on the charter destinations of its subsidiary Transavia and withheldrelevant information on scheduled flights of Transavia. In particular, KLM gave an incorrectdescription of the destinations of Transavia and failed to list 10 important Transavia destinations.KLM presented the operations of Transavia and of Martinair as ‘largely complementary’ while, inreality, both airlines operated to all Mediterranean destinations. Furthermore, KLM failed to informthe Commission about the fact that Transavia had substantial scheduled operations to Mediterraneandestinations and sold a significant number of seats on these flights to Dutch tour operators, therebygiving a misleading description of the activities of Transavia. The Commission considered thebehaviour of KLM to be grossly negligent, at the very least, and imposed a fine of EUR 40 000.

Siemens and Fujitsu for the development, manufacture and sale of computer hardware and relatedproducts, including desktop PCs, laptops, workstations, servers and storage systems. However, theCommission found that there was a risk of parental cooperation on the financial workstations market. Toaddress the Commission’s serious competitive concerns in that market, Siemens undertook to divestSiemens Nixdorf Retail and Banking Systems GmbH, a subsidiary active on that market.

189. Joint venture cases of this kind involve the application of Article 81 and, therefore, are mostlydealt with by the antitrust directorates within the Directorate-General for Competition rather than by themerger task force.

5. Referrals to Member States

190. Under Article 9 of the merger regulation, a case may be referred to a particular Member State ifthe concentration threatens to create or to strengthen a dominant position as a result of which effectivecompetition will be significantly impeded on a market within a particular Member State which presentsall the characteristics of a distinct market.

191. In 1999, three cases were referred in full and two partially to Member States. One request forreferral was refused. In Rabobank- Beeck/Homann (117), the Commission accepted a request for referralmade by the German competition authorities. The case, which concerned the German delicatessen foodsector, risked creating a dominant position in Germany or in part of it. As this threat was limited to adistinct market in Germany, the Commission referred the case to the Bundeskartellamt. The Commissiongranted a referral to Spain in the Heineken/Cruzcampo case (118), which concerned beer distribution inSpain. The grounds for referral were that competition issues were either regional or national in nature.The Commission further decided to refer to the French national authorities the proposed concentrationnotified by the two rock-salt producers in France, Compagnie des Salins du Midi et des Salines de l’Est(CSME) and MDPA/SCPA (119). The planned joint venture threatened to create or strengthen a dominantposition on the market for ice-control salt in the north-east of France. In this sector, the dimension of thegeographic markets is limited by the high proportion of transport costs in the final price of ice-controlsalt. An initial analysis of the markets showed that the north-east of France could be defined as a distinct



(117) Case No IV/M.1461.(118) Case No IV/M.1555.(119) Case No IV/M.1522.

The Commission decided to impose the maximum fine of EUR 50 000 on Sanofi and Synthélabo (1)for providing incorrect information. In this case the Commission had to revoke its original clearancedecision following the discovery that the parties had not provided information on all their overlappingactivities. The Commission found that possible competition concerns were created also in the area ofstupefying active substances, which the parties had not described in the notification. As it becameclear that the original clearance decision was based on incorrect information, it was revoked. A newdecision was subsequently issued, taking into account the divestment of Synthélabo’s activities instupefying active substances.

These decisions underline the Commission’s determination to ensure that firms comply fully withtheir legal obligations. By imposing fines in these particular cases, the Commission emphasises theimportance it attaches to the requirement under the merger regulation that complete and correctinformation be supplied. This is essential to enable the Commission to adopt its decisions within thestrict deadlines of the merger regulation and in full knowledge of the relevant facts. Incorrect ormisleading information can lead the Commission to take incorrect decisions, with potentially seriouseffects on businesses and consumers in the EU. Therefore, the Commission will continue to strictlyapply its procedural rules and to impose fines if these rules are broken. In view of the gravity of theinfringement of the procedural rules in merger cases, the Commission is also considering whether itmay be appropriate to propose to the Council that the amounts of the fines, which are currentlyrelatively low, be increased.

(1) Case No IV/M.1397.

market. The other French regions using ice-control salt were also likely to be affected by the operation.On the basis of this, the Commission decided to refer the case to the French authorities. In addition, thetakeover of Petrofina by Total was partially dealt with by the French competition authorities. The Frenchdealt with the effects of the operation on the petroleum storage infrastructure in the southern part ofFrance (i.e. Languedoc-Roussillon), where the transaction raised serious doubts. The Totalfina/ElfAquitaine case (120) was also partially investigated by the French authorities.

192. The UK competition authorities requested a referral of part of the Exxon/Mobil case, namely thatconcerning motor fuel retailing in the north-west of Scotland. However, the Commission had alreadyraised concerns in the motor fuel retailing market covering the whole of the UK. Given that the requestto deal with the effects of the merger in the north-west of Scotland fell within the scope of this enquiry,the Commission decided to deal with these concerns as part of its overall assessment of the UK motorfuel retailing market.

193. In EDF/London Electricity (121) the United Kingdom authorities requested a referral under Article9(4). The UK authorities were concerned that the Director-General of Electricity Supply, the statutoryelectricity industry regulator, should remain able to take certain measures to ensure regulatorytransparency and protect consumers. The Commission found, however, that the Article 9 request did notmeet the criteria for referral of a case to a Member State, because the operation did not strengthen adominant position on either of the distinct markets concerned (Article 9(2)(a) of the merger regulation).

6. Decisions under Article 21

194. In the BSCH/A. Champalimaud case (122), the Republic of Portugal opposed the operation eventhough it had been cleared by the Commission. By two decisions (of 20 July and 20 October), theCommission took action against the Portuguese measures. The decisions were adopted pursuant toArticle 21 of the merger regulation, which grants the Commission exclusive powers to assessconcentration operations having a Community dimension. In these decisions, and in particular the finalone adopted on 20 October, the Commission indicated that the measures of the Portuguese authoritiescould not be regarded as protecting legitimate interests within the meaning of Article 21 of the mergerregulation. In particular, these decisions indicate that, in so far as the measures of the Portugueseauthorities are based on the protection of national and strategic interests, they are contrary to Article 21of the merger regulation, both because the Portuguese authorities failed to notify them to the Commissionand because such interests could not be considered legitimate. The decision also states that the allegedprudential interests advanced by the Portuguese authorities could not be considered justified.

195. With the first Article 21 decision of 20 July 1999, the Commission requested the suspension ofthe decision by the Portuguese Minister for Finance to oppose the operation and the measures derivingtherefrom, such as the suspension of voting rights of BSCH and A. Champalimaud in MundialConfiança. The Commission subsequently decided to open an accelerated infringement procedureagainst Portugal for not suspending the measures against the BSCH/A. Champalimaud operation. Thisdecision was necessary in order to reach a prompt solution. The operation between BSCH and A.Champalimaud, although approved under the EC merger rules, could not be put in place. Moreover,Banco Comercial Português announced its intention to launch bids over the companies of the



(120) Case No IV/M.1628.(121) Case No IV/M.1346.(122) Case No IV/M.1616.

Champalimaud group, which required that the legal situation concerning the control of these companiesbe clarified quickly.

196. BSCH and Mr Antonio Champalimaud subsequently concluded a new agreement which replacedthe previous one. This operation has been notified under the merger regulation and is not expected to beopposed by the Portuguese authorities. The case is very important for Community law and the businesscommunity, as it shows that the Commission can act speedily and with determination to reaffirm itsexclusive competence in merger matters. In addition, the case underlines the importance of transnationaloperations in the financial and banking sectors.

197. In EDF/London Electricity, as well as submitting an Article 9 request, the UK authorities alsosubmitted a request for the recognition of certain ‘legitimate interests’ under Article 21(3) of the mergerregulation. Article 21(3) provides that Member States may take appropriate measures to protect‘legitimate interests’ other than those taken into consideration by the merger regulation, provided theyare compatible with the general principles and provisions of Community law. Interests relating to publicsecurity, plurality of the media and prudential rules are expressly to be regarded as ‘legitimate’ interests.Any other public interest must be communicated to the Commission by the Member State concerned,and recognised after an assessment of the interest’s compatibility with Community law, before themeasures referred to may be taken.

198. The UK authorities argued that the UK had a public interest in maintaining the integrity of theregulatory system for the electricity sector. The UK considered it to be in its public interest to be ableto make modifications to the statutory licence of a public electricity supply company (‘PES’), even incases where such a company is a party to a concentration with a Community dimension. The UKtherefore proposed modifications to the licence of London Electricity. The Commission, however,concluded that there was no need to recognise a ‘legitimate interest’ as the modification to LondonElectricity’s licence proposed by the UK electricity regulator (the Director-General of Electricity Supply— DGES) constituted the application of regulatory provisions of national law and the modifications wereaimed not at the concentration itself but at the conduct of the merged undertakings after theconcentration, to ensure that the regulator would be able to continue to carry out his duties.

7. Revocation of a Commission decision

199. In Sanofi/Synthélabo, the Commission revoked its clearance decision of 15 March 1999 pursuantto Article 6(3)(a) of the merger regulation. After receiving third parties’ observations, the Commissionhad to consider possible competition concerns being created in the area of stupefying active substanceswhich the parties had not described in their notification. Therefore, the clearance decision was consideredto be based on incorrect information and the parties were subsequently fined (see box). Following therevocation decision, the parties submitted to the Commission the relevant information relating tostupefying active substances. The parties further undertook to divest the Synthélabo activities in the areaof stupefying active substances and, consequently, the Commission adopted the final clearance decision.

8. Guidance notices

200. As part of its objective of ensuring the transparency and clarity of European merger control, theCommission has adopted a number of guidance notices in recent years relating to various aspects of themerger regulation. These guidance notices had previously been the subject of widespread consultation



with Member States, industry and the legal profession before their final adoption by the Commission.Similar consultation exercises were carried out in 1999 on three draft notices (123). The first was arevision of the current notice on restrictions directly related and necessary to the implementation of theconcentration, which has been in operation since the merger regulation first came into force. The newdraft notice takes into account the refinements made to the Commission’s practice since that time. Thesecond is an important new draft notice on remedies, which have become a vital tool in addressingcompetition problems raised in a large number of cases. The proposed notice sets out the generalprinciples applicable, summarises the main types of commitment adopted to date and sets out thesubstantive and procedural requirements for submitting commitments to the Commission and theirsubsequent implementation by the parties concerned. The third notice concerns a proposal to simplifythe handling of routine cases notified to the Commission. This is essential in order to ensure that theCommission’s resources are utilised as efficiently as possible. The proposed notice sets out and explainsthe simplified procedure, which provides for approval of routine cases without a formal decision of theCommission. At the same time a number of safeguards are introduced to ensure legal certainty andtransparency. The Commission intends to adopt the three notices during the first half of 2000.



(123) Draft Commission notices regarding the treatment of ancillary restraints, commitments and routine casesunder the merger regulation were published on the Competition DG’s website(http://europa.eu.int/comm/dg04/lawmerg/draft_notices/index.html).

C — Statistics



Final decision (R. 4064/89)

Final decisions (Art. 66 ECSC Treaty — 1992–99)

Notifications (R. 4064/89)

Figure 4Number of final decisions adopted each year since 1993 and number of notifications

200

150

100

50

0

250

19991993

6

57 58

1994

9195

12

1995

109 110

7

1996

125131

7

1997

142

10

172

1998

238

10

235

9

270292

300



Figure 5Breakdown by type of operation (1992–99)

Others6 %

Takeover bid9 %

Acquisitionof majority

39 %

Jointventure/control

46 %

III — STATE AID

A — General policy

201. 1999 saw the appointment of a new Commission determined to keep a tight control on State aidin all its forms, with the clear goal of reducing even further the amount of aid granted in the Community.Activities undertaken in previous years continued, namely work on modernising and simplifying theprocedural rules, improving transparency and concentrating resources on important cases.

202. The seventh survey on State aid in the Union (124), adopted by the Commission in March, coversthe period 1995-97. Over this period, an annual average of EUR 95 billion was granted in State aid bythe 15 Member States (EU-15) to the manufacturing, agricultural, fisheries, coal mining, transport andfinancial services sectors.

1993-95 1995-97 1995-97

Geographic area EU-12 (*) EU-12 EU-15 (**)

Overall aid (million EUR) 101 464 88 466 95 064

Aid to the manufacturing sector (million EUR) 41 809 36 365 37 680

Aid per person employed (EUR) 1 460 1 298 1 261

(*) Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal andthe United Kingdom.

(**) EU-12 + Austria, Finland and Sweden.

Overall, aid was down significantly (by 13 %) on the period 1993-95 (EU-12). In the manufacturingsector alone, EUR 38 billion, or 2.8 % of value added, was granted in aid in the Union of Fifteen. Theamount of aid per employed person fell from EUR 1 460 in 1993-95 to EUR 1 298 (EU-12) in 1995-97.

203. Over the period 1995-97, regional objectives (125) were behind 57 % of aid granted to themanufacturing sector, while horizontal objectives (126) and aid to particular industries (127) accounted for31 % and 12 % respectively. It is also noteworthy that aid granted on an ad hoc basis to individual firmsis now stabilising at around 10 % of total aid to the manufacturing sector, whereas previous reportsemphasised the increase in this type of aid.

204. However, despite the downward trend, the seventh survey stresses that, in absolute terms, thelevel of aid remains high. Moreover the survey also shows, that when expressed for example in terms ofaid per person employed or aid as a percentage of GDP, there are differences in the amounts of aid thatare granted by different Member States. These differences should be reduced further. A tough State aidpolicy, together with an appropriate monitoring mechanism, must therefore be maintained in order toreinforce the competitiveness of the Community on world markets and to reap the benefits of the singlemarket and of economic and monetary union.



(124) COM(1999) 148 final.(125) Regions assisted under Article 87(3)(a) and (c) of the EC Treaty.(126) Research and development, environment, SMEs, trade, energy saving and other objectives (principally rescuing

and restructuring firms).(127) Shipbuilding, steel and other industries.

1. Modernising State aid control

205. For around two years now, the Commission, with the support of the Council, has been takingvarious steps to modernise the conditions in which State aid is monitored. An overall system, which iscoherent and effective, provides the Commission with a body of legislation and rules that allows it tofocus on cases with a real impact on the common market and eases the administrative burden on firmswhile ensuring legal certainty and improving transparency.

206. Thus the procedural regulation (128) laying down detailed rules on the application of Article 88entered into force on 16 April. It sets out and codifies established practices and the case law of the Courtof Justice regarding, for example, deadlines within which the Commission must take decisions,definitions of existing aid, new aid, misuse of aid, individual aid and aid schemes, and the rights ofinterested parties. It will result in the State aid rules being better understood.

207. The procedural regulation also tightens aid control. It gives the Commission additional powers,in particular with regard to the recovery of unlawful and incompatible aid. Thus, whereas the recoveryof incompatible aid used often to be delayed by appeals to the national and European courts, theprocedural regulation stipulates that from now on Member States must take all measures available undertheir respective legal systems, including provisional measures, to obtain immediate and effectiveexecution of the decision ordering recovery. Firms in the Member States should thus all be dealt with ina similar way as regards the repayment of incompatible aid. Moreover, the Commission may carry outon-site monitoring visits where it has serious doubts about whether an individual decision is beingcomplied with. Lastly, where it is misused, i.e. where it is used by the recipient in a way whichcontravenes a Commission decision, the Commission is entitled to initiate the procedure laid down inArticle 88(2) of the Treaty.

208. Lastly, the procedural regulation goes some way towards speeding up procedures, for example byplacing a time limit on taking a final decision following the initiation of proceedings under Article 88(3)of the EC Treaty or by laying down strict rules on requests for additional information by the Commissionand replies sent by the Member States in the context of the investigation of a case.

209. Another aspect of the modernisation of State aid control was introduced by Regulation (EC)No 994/98 of 7 May 1998, which enables the Commission to adopt block exemption regulations forState aid. These regulations may declare certain categories of State aid compatible with the Treaty ifthey fulfil certain conditions, thus exempting them from the requirement of prior notification andCommission approval. On 28 July 1999, the Commission adopted three draft block exemptionregulations concerning respectively State aid to small and medium-sized enterprises, training aid andthe de minimis rule. The regulations set out clear rules along the lines of existing EU State aidguidelines and frameworks. The Commission’s main objective is to free resources from assessingnumerous standard cases the compatibility of which with EU rules is normally not problematic. Thiswill increase efficiency and give the Commission’s departments more room to concentrate on importantcases. Member States will take greater responsibility for applying EU State aid rules. Businesses willbenefit from administrative simplification and increased transparency. On 24 and 25 November theadvisory committee on State aid (consisting of representatives of Member States) was consulted on thedrafts.



(128) Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article93 of the EC Treaty (OJ L 83, 27.3.1999).

210. A proposal (129) for an amendment of the transparency directive (130) was agreed by theCommission on 30 March (see below). On 24 November, the Commission adopted a notice on Stateguarantees (131), which sets out its approach to State aid in the form of guarantees (see below). Inaddition, on 8 July it adopted new guidelines on State aid for rescuing and restructuring firms indifficulty (132) (see below), with a view to tightening control. The validity of the Community guidelineson State aid for the environment (133), which entered into force in 1994, expired on 31 December. InDecember the Commission adopted a decision (134) extending the validity of these guidelines until 30June 2000. Lastly, on 7 July the Commission adopted a notice on the reference and discount rates (135),which is essentially concerned with adapting the relevant rules in the light of the introduction of the euro.Thus, the reference rate for the 11 euro-zone Member States will from now on be identical, being definedas the average of the five-year interbank swap rates, plus a premium of 75 basis points.

2. State aid and tax policy

211. There is a general consensus on the need to combat harmful tax competition. In accordance with theCouncil conclusions of 1 December 1997 (136), the Code of Conduct Group identified close on 280 poten-tially harmful measures. Following a thorough examination by the group of all of these measures, 66 havebeen classed as harmful within the meaning of the code of conduct. The criteria used to assess whether mea-sures are harmful or not in the context of the code of conduct may, of course, differ from those used to makean assessment under Article 87(1) EC. The Commission has therefore undertaken to study all these measuresattentively, in keeping with its notice on the application of the State aid rules to measures relating to directbusiness taxation (137). Requests for additional information on around 50 of these measures have alreadybeen sent to the Member States. The remaining measures will be examined thoroughly in the near future.

212. Apart from this general initiative, the Commission closed its formal investigation into the schemeoffering State aid to non-residential building tenants in the customs house docks area (CHDA) inDublin (138) after the Irish authorities limited the period during which tenants may benefit from tax reliefunder the scheme, bringing the deadline forward from a potential 2010 to 2003. The decision states thattax exemptions constitute operating aid where they relieve an undertaking of the expenses it wouldnormally have to bear as part of its day-to-day running or normal activities. The continuous nature ofoperating aid, in particular, points to the conclusion that such aid should not, in principle, be authorisedfor periodic costs that continue to accrue for a significant period after the date on which a region ceasesto fall under Article 87(3)(a). Furthermore, as aid schemes, periodic tax exemptions are subject to theappropriate measures procedure laid down in Article 88(1) of the EC Treaty.

213. As regards tax aid for investment in Portugal (139), the Commission found compatible, with thecommon market, aid whose intensity was limited in relation to the costs of carrying out the assisted



(129) OJ C 377, 29.12.1999.(130) Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member

States and public undertakings (OJ L 195, 29.7.1980).(131) OJ C 71, 11.3.2000.(132) OJ C 288, 9.10.1999.(133) OJ C 72, 10.3.1994.(134) OJ C 14, 19.1.2000.(135) OJ C 241, 26.8.1999.(136) OJ C 2, 6.1.1998.(137) OJ C 384, 10.12.1998.(138) Case C-1/99 (ex NN-133/99), not yet published.(139) Case N-97/99 (OJ C 375, 24.12.1999).

projects and which was granted as an incentive to firms to undertake specific investment projects. Thescheme lays down transparent rules which make it possible to quantify the advantage conferred on eachfirm. This kind of aid is no different from a subsidy and qualifies for the regional exemptions underArticle 87(3)(a) and (c) of the Treaty, in accordance with point 31 of the Commission notice on theapplication of the State aid rules to measures relating to direct business taxation (140).

3. Transparency directive

214. On 30 March, the Commission adopted a draft amendment (141) to Directive 80/723/EEC (142)(the transparency directive). In its present form, this directive allows the Commission to investigate thefinancial relations between Member States and public undertakings. It requires the public authorities tosupply information to the Commission, on an annual basis for enterprises in the manufacturing sectorand at the Commission’s request for other enterprises.

215. The proposed amendment has become necessary in the light of progressive market liberalisationin Europe. In recent years the Commission has been confronted with a growing number of complaintsabout the behaviour of enterprises which have special or exclusive rights and/or receive compensationpayments for rendering services of general economic interest but which also operate in competition withother companies. When dealing with such complaints under the State aid rules the Commission has hadto assess whether or not aid is compatible with the common market or qualifies for the derogationprovided for in Article 86(2) of the EC Treaty.

216. The amendment aims to create transparency in the accounts of (private and public) companieswhich operate such different activities. It does not apply to sectors for which another Communityinstrument already requires separation of accounts (143), to cases where the contract to provide the serviceof general economic interest has been awarded and/or the special or exclusive right has been granted bymeans of an open and transparent procedure, or to undertakings with an annual total net turnover of lessthan EUR 40 million.

4. Notice on State guarantees

217. On 24 November, the Commission adopted a notice on the application of Articles 87 and 88 ofthe EC Treaty to State aid in the form of guarantees (144). The Commission’s intention is to make itspolicy in this area as transparent as possible, thereby ensuring that its decisions are predictable and thatequal treatment is guaranteed. The document does not lay down any new rules but sets out the existingprinciples of assessment.

218. State guarantees are usually associated with a loan or other financial obligation to be contractedby a borrower with a lender and may be granted either as individual guarantees or under guaranteeschemes. If aid is involved, the beneficiary is in most cases the borrower because he can raise funds at



(140) OJ C 384, 10.12.1998.(141) OJ C 377, 29.12.1999.(142) Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member

States and public undertakings (OJ L 195, 29.7.1980).(143) For example, in the postal, telecoms or electricity sectors, according to the relevant directives.(144) OJ C 71, 11.3.2000.

a lower cost than would be possible without the guarantee. The notice explains how the aid element ofa guarantee should be calculated and sets out several methods for making this calculation.

219. Under certain circumstances (e.g. if a guarantee is granted subsequently to cover an existing loanwithout the terms of the loan being changed), there may also be aid to the lender. This has to be examinedon a case-by-case basis.

220. The notice also lists some circumstances in which the Commission assumes a priori that no aidelement is contained in a guarantee. These are that the borrower is not in financial difficulty and couldin principle obtain a loan on market conditions from the financial markets, that the guarantee is linkedto a specific financial transaction, is for a fixed maximum amount, does not cover more than 80 % ofthe outstanding loan and that the market price is paid for the guarantee. Similar considerations apply toguarantee schemes, including that the premium paid by the recipient firms should be calculated in sucha way as to make the scheme, in all probability, self financing. However, this list does not mean thatguarantees automatically include aid if not all of the conditions are met.

221. The notice does not address the question of compatibility. In that respect the same rules apply asto State aid in other forms.

222. The principles explained in the notice apply to all forms of State guarantee, regardless of whetherthey are fixed in a contract or by law. The Commission also defines as aid in the form of a guaranteethe more favourable funding terms obtained by enterprises whose legal form provides an explicit Stateguarantee or coverage of losses by the State. The same applies to the acquisition by a State of a holdingin an enterprise if unlimited liability is accepted instead of the usual limited liability.

223. Furthermore, the notice explains the consequences of failure to notify State aid in the form ofguarantees. Guarantees differ from other State aid measures (e.g. grants) in that, in the case of aguarantee, the State enters into a legal relationship not only with the beneficiary but also with thirdparties, e.g. the provider of a loan which is guaranteed by the State. Therefore, it has to be examinedwhether the fact that State aid has been unlawfully granted has consequences for these third parties also.However, this is a matter which has to be assessed under national law.

B — Concept of aid

224. Any State measure that meets the criteria in Article 87(1) of the EC Treaty constitutes State aidand may be incompatible with the common market. More specifically, to be caught by Article 87(1), theaid must (i) be granted by the State or through State resources, (ii) confer an economic advantage on therecipient, (iii) be granted selectively to ‘certain undertakings’ or to ‘the production of certain goods’ andthus distort competition, and (iv) affect trade between Member States. The form in which the aid isprovided (grant, interest rebate, tax relief, loan guarantee, etc.) is not relevant to its assessment underArticle 87(1).

225. The qualification of a planned measure as State aid within the meaning of Article 87(1) is ofimportance to national authorities, obliged as they are under Article 88(3) EC and Article 2 of theprocedural regulation (145) to notify it to the Commission. Guidance on the definition of State aid is alsocrucial to potential aid recipients inasmuch as they are required to examine the legality of the aid they




hope to receive. Should a Member State be in any doubt as to whether a planned measure qualifies asaid, it is strongly advised to notify it to the Commission. Otherwise, the recipient runs the risk of havingto reimburse the aid received, with interest.

1. Origin of resources

226. To qualify as aid, the support measure must derive from State resources. In Kinderkanal andPhoenix (146) the Commission found that the receiver fees collected in Germany from each owner of atelevision set had to be classed as State funds. They are mandatory and have to be paid irrespective ofwhether the receiver actually watches the programmes of the public broadcasters. The funds are collectedand distributed on the basis of State regulations.

227. Similarly, the Commission considered public funds the amounts that French notaries in rural areashave to deposit at the Crédit Agricole bank (147). Under French law, these notaries are obliged to depositat the Crédit Agricole funds they receive from their clients in connection with transactions that have tobe carried out by notaries. In return, they receive a 1 % commission for the deposits. The Commissionnoted that the Member State used its discretionary power to grant the Crédit Agricole exclusive rightsto receive financial resources, and that these funds came from notaries, who, in France, are appointed bya minister and exercise a public office. The Commission therefore concluded that the amounts depositedby the notaries had to be classed as State resources.

228. In its judgment of 17 June in Industrie Aeronautiche e Meccaniche Rinaldo Piaggio and DornierLuftfahrt (148), the Court of Justice found that special insolvency proceedings may burden Stateresources. Authorisation to continue pursuing economic activity under special protection might involvean additional burden for the public authorities if the State or public bodies were among the principalcreditors of the undertaking in difficulties. The latter would enjoy advantages at the expense of the State,such as a State guarantee, a reduced rate of tax, exemption from the obligation to pay fines, or a de factowaiver of public debts.

2. Advantage to a firm or firms

229. It is the economic advantage conferred on a firm by a State aid measure that may lead to adistortion of competition within the meaning of Article 87(1) EC. This advantage may be conferredthrough a variety of means and circumstances and is not derived from the operation of the market. Wherethere is no such advantage, the measure does not constitute aid. Accordingly, in one case the Commissionfound that reducing the concession fees payable by a public broadcasting enterprise did not constituteaid (149). The reduction did not confer an advantage on the firm because in this specific case it simplyreduced the advantage of its private competitors, which paid even lower fees. In a case where a Spanishwine-growing company received aid for the restoration of historic monastery buildings in its possession,the Commission also found that no aid was involved (150). The buildings were not used for the economicactivities of the company, and the support received covered only a small part of the restoration costs.



(146) Case NN-70/98 (OJ C 238, 21.8.1999).(147) Case C-89/97.(148) Case C-295/97.(149) Case NN-140/98, RAI.(150) Case N-503/99 (OJ C 33, 5.2.2000).

The Commission concluded that the recipient did not derive any economic advantage linked to itsbusiness activities that could lead to a distortion of competition.

230. According to well-established case law, partially reducing social security charges for a particularindustrial sector constitutes aid within the meaning of Article 87(1) EC (151). On 5 October, the Court ofJustice ruled in its decision on the French textile plan (152) that there is also an advantage where the Stategrants a reduction in social security charges as compensation for additional costs which the undertakingsare incurring as a result of collective agreements with the unions. These agreements have beenvoluntarily concluded by the companies concerned on the basis of the economic evaluation of the partiesto the agreement.

231. The advantage is not always apparent where it is conferred by means other than a direct grant. Inits 24 November notice on State guarantees (153) the Commission undertook to assess to what extentState guarantees may constitute an advantage for the enterprises affected. Where the guarantee is givenon market conditions the Commission assumes a priori that no aid element is involved. In its decisionin Hoogovens-Usines Gustave Boël (154), for example, the Commission found that the intervention of theBelgian authorities in the context of the takeover of Hoogovens-Usines Gustave Boël by Dufercooccurred under market conditions and therefore did not constitute aid.

232. In the Tubacex case (155), however, the Court of Justice found that in certain circumstances marketrates for bank loans are not the appropriate criterion for establishing whether an advantage has beenconferred. The Court held that the rates a creditor asks for when rescheduling repayment of a debt aredetermined by criteria other than market rates for bank loans. In such a case the creditor is not seekingso much to make a special profit as to secure recovery of the amount due without suffering any loss, e.g.through inflation. The Court focused on the question of the background against which the Commissionhad to assess the presence of aid. Fogasa, an institution under the supervision of the Spanish Ministryof Labour and Social Security, has the task of paying the salaries of employees of companies that arenot able to pay them owing to insolvency. The Court held that this cannot be compared with the grantingof loans to undertakings in difficulties. The debts of the enterprises concerned are automatically run upjust as a result of Fogasa taking over payment of salaries. Tubacex is legally obliged to repay theseamounts. Only the repayment arrangements are subject to negotiation. In order to quantify possible aidelements, the Commission consequently has to analyse a comparable market situation in order todetermine an appropriate reference interest rate. Fogasa therefore has to be compared with a privatecreditor trying to recover a loan by means of rescheduling the debt and negotiating conditions ofrepayment. The Commission, the Court held, was wrong in comparing the interest rate of 9 %, whichwas actually paid, with normal market rates for bank loans instead of looking at the rates a privatecreditor in a comparable situation would ask for, which presumably would be lower than those marketrates.

233. The conditions under which public enterprises contract out services to dependent companiesoperating on the market may also constitute State aid. In the Sécuripost case (156), however, theCommission found that the contractual relations between the French Post Office and Sécuripostrespected market prices and therefore did not confer an economic advantage on Sécuripost.



(151) See Cases 173/73 Commission v Italy [1974] ECR 709 and C-301/87 France v Commission [1990] ECR I-307.(152) Case C-251/97 France v Commission.(153) SEC(1999) 1918, described in Chapter III.A.4 above.(154) Case N-246/99 (OJ C 245, 28.8.1999).(155) Case C-342/96 Spain v Commission; confirmed in Case C-256/97 Déménagements-Manutention Transport.(156) Case C-24/96.

234. Aspecific situation in which the State’s behaviour can be compared with market conditions is whereit injects capital into its undertakings. Here the Commission applies the private investor criterion. On the ba-sis of this criterion, the Commission assesses whether the State, when assisting public undertakings or pri-vate undertakings partially owned by it, does so on more favourable terms than would a private investor op-erating under normal market conditions. If so, the State’s action involves State aid within the meaning of Ar-ticle 87(1). This approach was confirmed by the Court of First Instance (157). The Court acknowledged, how-ever, that even in private business a parent company may, for a limited period, take over the losses of its sub-sidiary companies. This behaviour could be motivated by a desire to protect the image of the group or to redi-rect its activities. However, the Court found that there had to be a prospect of the subsidiary finding its wayback to profitability. Aprivate investor could not afford to inject further capital after years of continuous loss-es if this were more costly than winding up the company. The private investor principle also applies in caseswhere the State foregoes a return on investment that a private investor would seek. In its Westdeutsche Lan-desbank decision, the Commission concluded that the 0.6 % return required by the Land of NorthRhine-Westphalia was below the level a private investor would expect when injecting such funds into thecapital base of a bank. The surrender of appropriate income constitutes aid (158).

235. On the other hand, no discriminatory advantage within the meaning of Article 87(1) is conferred on afirm where the State simply buys a product or a service from it at the market price. Consequently, the Com-mission has found that public support for infrastructure managers enabling them to offer a certain service(e.g. the construction and operation of toll roads) does not constitute aid if the infrastructure manager is se-lected through a non-discriminatory, competitive tender procedure open to all actual and potential bidders.It has taken the view (159) that such a procedure is the best means of ensuring that the public support corre-sponds to the minimum needed to carry out the project, thereby reflecting the market price for its execution.Where there is no call for tenders, the Commission may, in exceptional circumstances, find that public-sec-tor funding represents the market price if the State support has been evaluated by an independent expert onthe basis of generally accepted market indicators and valuation standards and has been found to represent theminimum price to be paid for a service or good (160).

236. In a case where a Member State bought from a ferry line a predetermined number of travelvouchers for a predetermined price (161), the Court of First Instance considered that the price did notnecessarily reflect the market price. The number of vouchers bought was higher than the numbersactually used in previous years. In addition, the vouchers could be used only during the low season,thereby relieving the ferry line from possibly having to increase its capacity during the high season. Thetransaction was therefore considered to confer an advantage within the meaning of Article 87(1) EC.

3. Specificity

237. In order to determine whether a measure constitutes aid, a distinction has to be drawn betweenthe situation where the support is directed at certain undertakings or the production of certain goods, asspecified in Article 87(1) EC, and the situation where the measures in question have a cross-sectoralimpact, are equally applicable throughout the Member State and are intended to favour the whole of theeconomy. In the latter case, there is no State aid within the meaning of Article 87(1).



(157) Cases T-129/95, T-2/96 and T-97/96 Neue Maxhütte Stahlwerke v Commission [1999] ECR II-17.(158) Case C-64/97.(159) Most recently on 22 December 1999 in Case N-617/98 (Container Terminal Utrecht).(160) Cases N-517/98 — South Wales European Freight Terminal (OJ C 81, 24. 3. 1999) and N 121/99 — Austria

(OJ C 245, 28. 8. 1999).(161) Case T-14/96 Bretagne Angleterre Irlande (BAI) v Commission.

238. Accordingly, the Commission decided on 11 May that, as a general tax measure, a Dutch taxmeasure involving partially accelerated depreciation for R & D laboratories did not constitute Stateaid (162). Under the measure, part of the investment in an R & D laboratory is eligible for accelerateddepreciation. The Dutch authorities do not have discretionary powers in relation to the application of themeasure. The measure is not sector-specific, it will be open to all companies on an equal access basisand it is not regional or local in scope. It therefore lacks any specificity.

239. However, even if a measure is not confined to a single sector, it can be considered specific. In its judg-ment of 17 June in Industrie Aeronautiche e Meccaniche Rinaldo Piaggio v International Factors Italia andOthers (163), the Court of Justice found that the Italian special insolvency proceedings, which derogate fromthe normal insolvency proceedings, had to be considered a specific measure. The Court noted that the rele-vant law was intended to apply selectively to large industrial undertakings in difficulties which owed partic-ularly large debts to certain, mainly public, classes of creditors. It also noted that the decisions of the Minis-ter for Industry to place the undertakings in difficulties under special administration were influenced by na-tional industrial policy considerations and were therefore discretionary. In these circumstances the legisla-tion related to specific undertakings. Likewise, in its Déménagements-Manutention Transport (164) decisionof 29 June, the Court underlined that, where the body granting financial assistance enjoys a degree of latitudeenabling it to choose the beneficiaries or the conditions under which the financial assistance is provided, theassistance cannot be considered a general measure.

240. The Commission considered a Spanish tax credit scheme to be specific because it was restricted tolarge investors. The minimum investment (EUR 15 million) required under the scheme in order to qualify forthe credit was high enough to restrict its application in practice to investments involving the raising of largeamounts of capital. This was not justified by the nature or overall structure of the tax system to which an ex-ception was being made (165). The fact that only large investors could qualify for the tax credit made it a spe-cific measure, which in turn classified it as State aid within the meaning of Article 87(1) of the Treaty (166).

241. On 17 June, the Court of Justice confirmed the Commission’s decision (167) that the reduction ofsocial security charges under the Belgian Maribel bis/ter scheme was a selective measure (168).Undertakings belonging to sectors of manufacturing industry not specified in the royal decreesestablishing the scheme and undertakings in the tertiary sector and the building sector were not eligiblefor the reductions under the scheme. Neither the large number of eligible undertakings nor the diversityand importance of the industrial sectors to which those undertakings belonged warranted the conclusionthat the Maribel bis/ter scheme constituted a general economic policy measure.

4. Effect on trade between Member States

242. When the State confers even a limited advantage on an undertaking which is active in a sectorcharacterised by competition, there is a distortion or risk of distortion of competition. In order toestablish the impact of this distortion on trade between Member States, it is sufficient to conclude that



(162) Case N-18/97 (OJ C 225, 7.8.1999).(163) Case C-295/97.(164) Case C-256/97; see also the decision of 22 December in State aid Case C-22/99 (Ramondin).(165) See paragraphs 23-27 of the Commission notice of 11 November 1998 on the application of the State aid rules

to measures relating to direct business taxation (OJ C 384, 10.12.1998).(166) Case C-76/97 (Daewoo) (OJ L 292, 13.11.1999); see also Cases C-22/99 (Ramondin) and C-48/99-C-54/99.(167) Case C-14/96 (OJ L 95, 10.4.1997).(168) Case C-75/97 Belgium v Commission.

the beneficiary pursues, even partially, activities involving trade between Member States. TheCommission thus concluded in Marina di Stabia (169) that a marina on the southern Italian Tyrrheniancoastline might also attract limited demand from as far up as the southern French coast and thereby affecttrade between Member States. For purely local services this possibility may sometimes be ruled out. Inthe case of aid to public transport in the lagoon area of Venice, the Commission found that a local servicewithout potential competition, thanks to an exclusive right enjoyed by the operating enterprise, does notaffect trade between Member States (170).

243. In a Spanish scheme involving early retirement subsidies for self-employed road hauliers (171) theCommission found no potential for distortion of competition. The scheme allows self-employed roadhauliers aged over 60 to benefit from a subsidy if they definitively leave the profession. Since thebeneficiaries will terminate their business activities, the measure does not confer any advantage onundertakings operating on the market and cannot have an impact on trade between Member States.

244. In its decision on the payment of compensation to Dutch petrol stations located close to theGerman border for an alleged decline in turnover resulting from an increase in Dutch excise duties, theCommission insisted that State aid must not be used for the purpose of compensating border companiesfor differences in taxes between two countries (172). The decision concerned the stations not caught bythe de minimis rule. The Court of Justice confirmed that the fact that a Member State seeks toapproximate, by unilateral measures, the conditions of competition in a particular sector of the economyto those prevailing in other Member States cannot deprive the measures in question of their character asaid (173).

C — Assessing the compatibility of aid with the common market

1. Horizontal aid

1.1. Small and medium-sized enterprises

245. In general the Commission takes a favourable view of aid to small and medium-sized enterprises,given their structural handicaps as compared with large undertakings and their potential for innovation,job creation and growth. On 28 July, the Commission adopted a draft block exemption regulation on aidto small and medium-sized enterprises (SMEs). The draft follows the line taken in the existing guidelineson aid to SMEs. It furthermore allows investment aid to be calculated as aid for job creation linked toinvestment. This means that investment aid may be calculated as a percentage of the costs of theadditional employment created by the investment. This concept was introduced for the first time in theregional aid guidelines. The Commission has proposed applying it also to SMEs outside assisted areasbecause it favours labour-intensive industry more than it does aid measured merely as a percentage ofinvestment in fixed assets. It might notably help enterprises in the services sector.

246. In its decision on the Danish undertaking VaekstFonden (Business Development Finance) (174),the Commission approved a public fund the purpose of which is to hand out participatory loans and inject



(169) Case N-582/99.(170) Case C-81/97.(171) Case N-491/99.(172) Case C-43/98.(173) Judgment of 19 May 1999 in Case C-6/97 Italy v Commission.(174) Case N-668/98.

capital into innovation and risk capital funds. Investment in the latter is undertaken in conjunction withprivate investors. The funds’ decisions are based on commercial considerations. The Commission foundthat the scheme did not confer an advantage on the private investors participating in the funds such asmight distort competition to an extent contrary to the common interest, since it was designed to providethem with the minimum incentive necessary to persuade them to take the additional risks involved ininvesting in innovative SMEs. It concluded that any advantage to the SMEs in which the funds investedwould be within the allowable thresholds of the SME and R & D guidelines.

1.2. Research and development

247. Aid for research and development is in the Community interest and may also be approved in theform of ad hoc aid to individual undertakings. In the Dornier Luftfahrt case (175), the Commissionapproved a State guarantee for an R & D project involving the development of a new family of regionalaircraft. The measure was considered to rank as pre-competitive development and to be in line with theCommunity framework for State aid for research and development (176). Similarly, the Commissionapproved a Dutch aid measure to stimulate a long-term research programme at Shell Chemicals BV (177).The programme is a joint initiative by the Dutch Government and Shell Chemicals. It will focus on threethemes: catalysis, pervasive analytical methods and molecular toxicology. The research could result innew materials, a better understanding of the nature and/or composition of materials and product streamsand a better understanding of how certain molecular structures interact with human cells. The aid servesinter alia as a catalyst to intensify cooperation between Shell Chemicals and the academic world andconsequently has an incentive effect. The Commission concluded that the programme was a combinationof basic and industrial research and complied with the Community framework on State aid for researchand development.

1.3. Employment and training

248. One of the major challenges facing the Community is finding ways of improving the employmentsituation. The new title on employment in the EC Treaty requires Member States to develop acoordinated strategy for employment and for promoting a skilled, trained and adaptable workforce andlabour markets responsive to economic change. The important part played by training, both in enhancingthe Community’s competitiveness and in creating and maintaining jobs, has encouraged Member Statesto promote investment in training. To underline the importance of this category of aid the Commissionadopted on 28 July a draft block exemption regulation on training aid. It is intended to apply theprovisions of the Community framework on training aid (178).

249. The Union’s interest in assisting job creation relates, of course, to regular employment. The Com-mission therefore approved on 3 March an Italian proposal to grant a reduction in social security contribu-tions and a tax amnesty to employers who regularise the position of their undeclared workers (179). The Com-mission acknowledged the Community interest in fighting the underground economy.

250. Aid to maintain employment is similar to operating aid. It may therefore be approved only undercertain conditions in regions eligible for regional aid under Article 87(3)(a). In a case concerning the



(175) Case N-281/99 (OJ C 40, 12.2.2000).(176) OJ C 45, 17.2.1996.(177) Case N-335/98 (OJ C 298, 16.10.1999).(178) OJ C 343, 11.11.1998.(179) Case N-545/98 (OJ C 113, 24.4.1999).

reduction of social security contributions in the towns of Venice and Chioggia (180), the Commission tooka negative decision on aid for the maintenance of jobs in the lagoon area, while approving that part ofthe scheme which related to aid for the recruitment of disadvantaged workers and for job creation.

251. In the case of individual aid for employee training granted to Eli Lilly Ltd in the UnitedKingdom (181), the Commission approved a project to train the workforce of Eli Lilly, abio-pharmaceutical company. The Commission identified the project as a general training project withinthe meaning of the Community framework on training aid. The project provides skills that aretransferable to other firms in the same industry or to firms in related areas of work. Their transferabilityis underlined by the fact that the scheme results in nationally recognised qualifications.

1.4. Environment

252. On 22 December, the Commission decided to extend the guidelines on State aid for environmentalprotection (182) until 30 June 2000. After that date, new guidelines should become applicable. In 1999the Commission had various opportunities to clarify its interpretation of the existing guidelines.

253. On 21 April, the Commission decided not to raise any objections to several special tax provisionsin the German law of January and February 1999 introducing an ecological tax reform (183). The schemeintroduced a new tax rate for electricity and mineral oil but contains several tax exemptions, in particularreduced tax rates for manufacturing industry, the agriculture and forestry sector and rail transportservices. According to the guidelines on State aid for environmental protection, the introduction ofenvironmental taxes and charges may under certain conditions justify State aid in the form of relief fromenvironmental taxes, for example if some sectors would not be able immediately to bear the extrafinancial burden and required temporary relief. The Commission found that the conditions for such anapproval were met. It took into account the fact that at present not all Member States of the Communityor third countries impose such energy taxes and the introduction of environmental taxes therefore affectsthe competitive position of the undertakings concerned. The Commission also took into account the factthat the German Government had committed itself to renotifying the measures for approval after threeyears at the latest. Similarly, the Commission approved this aid also for the sectors falling under theECSC Treaty (184).

254. The Commission insists that aid for investment in environmental improvements may be basedonly on the additional costs necessary to meet the environmental objectives. It therefore approved onlypart of an environmental investment aid measure proposed by the Dutch Government to supportinvestment in the construction of a process-integrated gas turbine at the Nerefco refinery (185). Itfurthermore requires, in order to apply the guidelines, that the intended aid really serve the objective ofenvironmental protection. In the Ferriere Nord case, the Commission had serious doubts about whetherthe environmental protection concern was the primary goal of the alleged eligible investments andopened proceedings (186).



(180) Case C-81/97.(181) Case N-452/98.(182) OJ C 72, 10.3.1994.(183) Case NN-47/99 (OJ C 166, 12.6.1999).(184) Case NN-50/99 (ex NN-61/99) (OJ C 245, 28.8.1999).(185) Case C-44/98 (ex N-708/97) (OJ L 6, 11.1.2000).(186) Case C-35/99 (ex N-106/99) (OJ C 288, 9.10.1999).

1.5. Rescue and restructuring aid

255. On 8 July, the Commission adopted revised guidelines for State aid granted to rescue andrestructure firms in difficulty (187). In several respects the new wording represents a tightening of therules, in line with the commitment made by the Commission in the single market action plan in 1997.Aid for rescuing and restructuring firms in difficulty has been at the centre of some of the largest andmost controversial State aid cases in recent years. The Commission has repeatedly expressed concern atthe level of such aid in the European Union, which is often given on an ad hoc basis in response to asudden crisis and has a particularly distortive effect on the single market.

256. The new guidelines, which replace the previous ones adopted in 1994, strengthen the rules inseveral areas. One is that of repeated restructuring aid. The ‘one time, last time’ principle rules out asecond payment of restructuring aid to a company for 10 years after the end of its first restructuring. Thetext clarifies which firms can be considered firms in difficulty, stressing that new firms (including firmsformed out of the assets of previous ones) are excluded. It also restricts the ability of Member States togive aid approved for other purposes (such as regional aid) to companies undergoing assistedrestructuring. At the same time, it maintains the basic principles of the old guidelines: rescue aid is ashort-term holding operation while the future prospects of the enterprise are assessed, and can be grantedonly in the form of loans or guarantees. Restructuring aid can be granted only in the context of a detailedrestructuring plan which will restore the company to viability. In return, the company has to contributesome form of quid pro quo such as a capacity reduction.

257. The new rules cover the special situation of the new German Länder. In recent years theCommission has made special allowance for cases arising there in view of the particular difficultiesassociated with the region’s emergence from a non-market economy. In 1999 as well, the Commissionhad to assess numerous cases concerning companies in the new Länder. The new guidelines set cleartime limits on this special treatment, the Commission being of the view that the justification for it is nowat an end. The ‘one time, last time’ principle will, in particular, apply in full after 31 December 2000.

258. In many of the German restructuring cases the Commission raised no objections. In several cases,however, it had reason to insist on viable and realistic restructuring plans, for example in its decisionsin Spindelfabrik Hartha (188), Dieselmotorenwerk Rostock (189), Weida Leder (190) and Pittler/TornosWerkzeugmaschinen (191). In the Graphischer Maschinenbau case (192) the Commission reduced theproposed amount of aid because it exceeded the minimum needed to restructure the company.

259. Restructuring plans may be approved only where private investors contribute substantially. InVerlipack/Heye-Glas (193) the Commission had, at an earlier stage, concluded that the participation of thecompany Heye-Glas in the restructuring of Verlipack constituted the required significant privateinvestor’s contribution. It turned out subsequently, however, that Heye-Glas had itself received publicfunding precisely for the purpose of investing it in Verlipack. In this case it is questionable whether theinvestment was dependent on a private investor’s business decision. The Commission therefore reopenedthe proceedings under Article 88(2).



(187) OJ C 288, 9.10.1999.(188) Case 58/97 (ex NN-135/96) (OJ L 145, 10.6.1999).(189) Case C-6/97 (OJ L 232, 2.9.1999).(190) Case C-19/98.(191) Case C-80/97 (ex NN-53/97).(192) Case C-54/98 (ex N-101/98).(193) Case NN-178/97 (OJ C 288, 9.10.1999).

1.6. Aid to outward foreign direct investment

260. Government support measures for foreign direct investment constitute State aid. Nevertheless,they may be compatible with the common market if, apart from their effect on the competitiveness ofCommunity industry, they promote other Community objectives such as the development of SMEs.When assessing aid to outward foreign direct investment by SMEs, the Commission therefore appliesthe guidelines on aid to SMEs. The Commission approved a Portuguese tax aid scheme that providedfor aid to be granted for direct foreign investment by Portuguese companies (194). The scheme excludedany direct or indirect export aid and required individual notification of any aid to a large enterprise andany measure in favour of SMEs that provided for intensities beyond the 7.5/15 % threshold forinvestment aid. The draft block exemption regulation on aid to SMEs clarifies this approach by expresslyauthorising aid for investment ‘inside or outside the European Community’ (195).

2. Regional aid

261. The guidelines on national regional aid (196) adopted by the Commission in 1997 introduced astricter method for determining the areas eligible for regional aid and the associated aid intensities orregional ceilings. The Commission wishes in this way to demarcate assisted areas more objectively,increase geographical concentration and reduce regional aid intensities. The new regional aid maps willapply for the period from 2000 to 2006, which corresponds to the next period of Structural Fundoperations.

262. The year 1999 was devoted to implementing this reform. The Commission had requested theMember States to notify their draft regional aid maps before 31 March, but most did so late. TheCommission was nevertheless able to approve before the end of the year the regional aid maps forGermany’s five new eastern Länder (197), Finland (198), Denmark (199), Ireland, Greece and thePortuguese regions assisted under Article 87(3)(a) (200). In the case of France, Belgium and theNetherlands (201) and the Article 87(3)(c) regions of Germany (202) and Portugal (203), the Commissionfound that the draft maps did not comply fully with the guidelines, in terms of the boundaries of eligibleregions and/or the aid intensities specified, and decided to initiate the procedure under Article 88(2). Themaps for Austria, Spain, Italy, Luxembourg, the United Kingdom and Sweden were still being examinedunder the Article 88(3) procedure at the end of the year.

263. The Commission warned Member States that any aid granted under schemes that did not complywith the regional aid guidelines would be unlawful and incompatible with the common market; anyregional aid disbursed after 1 January 2000 outside regions recognised as qualifying for one of theregional exceptions in Article 87(1) would also be illegal. Early finalisation of the regional aid maps and



(194) Case N-96/99 (OJ C 375, 24.12.1999).(195) Article 3(1) of the regulation.(196) OJ C 74, 10.3.1998.(197) Case N-195/99 (OJ C 340, 27.11.1999).(198) Case N-238/99 (OJ C 33, 5.2.2000).(199) Case N-229/99 (not yet published in the Official Journal).(200) Cases N-523/99, N-469/99 and N-305/99 respectively (not yet published in the Official Journal).(201) Cases C-59/99 (ex N-352/99), C-58/99 (ex N-289/99) and C-66/99 (ex N-245/99) respectively (OJ C 332,

20.11.1999, OJ C 351, 4.12.1999 and OJ C 326, 13.11.1999).(202) Case C-47/99 (ex N-195/99) (OJ C 340, 27.11.1999).(203) Case C-78/99 (ex N-305/99), not yet published in the Official Journal.

implementation of the appropriate measures accepted by the Member States in 1998 is essential in orderto enable Structural Fund operations under the new programming period to begin.

264. The multisectoral framework on regional aid for large investment projects (204), which entered intoforce on 1 September 1998 for a period of three years, was applied for the first time: the Commission decidedon 21 April not to raise any objection to regional aid which Spain planned to grant to the firm Rockwool Pen-nisular SA(205). The multisectoral framework aims at achieving stricter control of cases with a high distortivepotential (206). It awards a ‘bonus’ to aid for investments which directly or indirectly create jobs, and reducesthe amount of aid allowed where the investment creates an increase in capacity in a declining sector or whereovercapacity exists, or in cases where the recipient firm holds, before the assisted investment is carried out, amarket share of at least 40 %. It also takes into account the capital intensity of the supported project. The Com-mission has shown that it is able to meet the very tight deadlines for vetting aid under this framework.

265. The Commission closed the formal investigation procedure concerning the scheme offering Stateaid to tenants of non-residential buildings in the customs house docks area of Dublin (207), as modifiedby the Irish authorities. The Commission was concerned about the long-lasting effect of the tax benefitinvolved, which was initially planned to extend well beyond 31 December 1999, i.e. after the expiry ofthe current more favourable map of assisted areas, and potentially until 2010. The Commission’sconcerns were heightened by the fact that the case involved both tax and operating aid, with regard towhich it is making special efforts to ensure fair conditions of competition. Since the Irish authoritiesbrought forward the expiry date of the tax reliefs granted by the scheme to tenants from the potential2010 to 2003, the Commission concluded that it was compatible with Article 87(3)(a).

3. Sectoral aid

3.1. Sectors subject to specific rules

3.1.1. Shipbuilding

266. Council Regulation (EC) No 1540/98 establishing new rules on aid to shipbuilding (208) enteredinto force on 1 January. The regulation maintains the possibility of granting operating aid forshipbuilding contracts signed before the end of 2000. The notifications received by the Commissionshow that the Member States chose to continue their existing operating aid programmes. In accordancewith Article 12 of the regulation the Commission submitted a report on the situation in worldshipbuilding (209), which was discussed by the Council on 9 November. The report focuses on the criticaldevelopments on the shipbuilding market in 1998 and early 1999. This period was marked by a reducednumber of new building orders and very low prices. The Council adopted the report’s recommendationsand invited the Commission to inform it of developments as soon as was necessary.

267. The restructuring period of the State-owned shipbuilding group AESA in Spain and of MTW-Werftand Volkswerft in eastern Germany ended on 31 December 1998. The restructuring aid granted to these yards



(204) OJ C 107, 7.4.1998.(205) Case N-94/99 (OJ C 288, 9.10.1999).(206) See the 1997 Competition Report, points 210 to 212, for further details of the multisectoral framework.(207) Case C-1/99 (ex NN-133/99), not yet published in the Official Journal.(208) OJ L 202, 18.7.1998.(209) COM(1999) 474 final, 13.10.1999.

was governed by the rules of Council Regulation (EC) No 1013/97 (210). The last tranche of aid to Volkswerftwas approved on 8 September 1999 (211). In October, the Commission submitted the last report to the Coun-cil under Article 2 of the regulation (212). It concluded that in all cases the restructuring programmes had ef-fectively been completed. The two German yards were privatised and sold in early 1998 to major shipbuild-ing groups. These yards reported positive results for the first year after privatisation. With the exception ofone yard privatised during the restructuring period, the remaining public yards in Spain made substantiallosses in 1998 and thus failed to achieve their viability target. The Commission will continue to monitor com-pliance with the capacity limitations applicable to the yards in Germany and Spain.

268. In October, the Commission took a negative final decision on State aid amounting to EUR 110.9 mil-lion in the form of tax credits to the Spanish public shipbuilding group AESA (213). The Commission foundthat this aid was not compatible with the conditions of the 1997 Commission decision on the abovementionedrestructuring aid for these yards. The aid package approved in 1997 had included a maximum amount of aidin the form of special tax credits of EUR 349 million during the period 1995-99, to compensate the yards forthe fact that they could not benefit from tax credits under Spain’s general tax consolidation system. Howev-er, the yards were subsequently integrated into the State-owned holding company Sociedad Estatal de Par-ticipaciones Industriales, which was able to obtain tax credits under the general tax consolidation system byoffsetting losses in one part of the group against profits elsewhere. These changed circumstances resulted inthe yards receiving in 1998 a general tax credit corresponding to their entitlement to such credits on the basisof their 1997 results. Nevertheless, despite this, the yards received in July 1998 a special tax credit of EUR110.9 million. The Commission concluded that this payment, although it did not result in the maximumamount of special tax credits approved in 1997 being exceeded, was not justified and was therefore incom-patible with the original decision.

269. In July, the Commission found that Kvaerner Warnow Werft in eastern Germany had exceededits authorised new building capacity (214). The Commission decided that the yard has to repay EUR 41.5million plus interest for its substantial capacity excess in 1998. During its investigations, the Commissiondiscovered that it had also breached its capacity restriction in 1997 and opened the Article 88(2)procedure on that matter in July (215).

3.1.2. Steel

270. The sixth steel aid code (216), which governs the grant of aid to the steel industry, remains in forceuntil the ECSC Treaty expires in July 2002. The code stipulates that only aid granted for research anddevelopment purposes, for environmental improvements and for social purposes in connection with thepermanent closure of plant can be compatible.

271. The Commission adopted a final decision based on Article 88 ECSC concerning Germany’sfailure to take effective action to recover incompatible aid granted to Neue Maxhütte (217). This decision,



(210) Council Regulation (EC) No 1013/97 of 2 June 1997 on aid to certain shipyards under restructuring (OJ L 148,6.6.1997).

(211) Case N-694/98 (OJ C 27, 29.1.2000).(212) COM(1999) 480 final, 13.10.1999.(213) Case C-3/99 (ex NN-145/98) (OJ C 37, 12.2.2000).(214) OJ L 274, 23.10.1999.(215) OJ C 245, 28.8.1999.(216) Commission Decision No 2496/96/ECSC of 18 December 1996 establishing Community rules for State aid to

the steel industry (OJ L 338, 28.12.1996).(217) OJ L 230, 31.8.1999.

the last stage in a procedure which started in 1998, confirmed that Germany had failed to fulfil itsobligations under the ECSC Treaty.

272. The Commission is also working closely with the candidate countries to ensure that their steelindustries’ restructuring plans are in line with the rules followed in the EU during the 1993/94restructuring process. The Commission ensures that the Council is kept informed of relevant matters asthey arise.

3.1.3. Coal

273. A number of cases concerned the European coal industry. On 22 December 1998, the Commissionauthorised Germany to grant financial assistance to its coal industry for the 1999 financial year totallingEUR 4 607.3 million (DEM 9 195.3 million) (218). Of this amount, EUR 4 226.8 million (DEM 8 436million) was linked to current production, while EUR 380.4 million (DEM 759.3 million) went to coverinherited liabilities.

274. On 20 January 1999, the Commission issued a letter of formal notice to France concerning theaid paid to Charbonnages de France (CdF) and authorised by the Commission in support of productionfor the financial years 1994 (Decision 95/465/ECSC), 1995 (Decision 95/579/ECSC) and 1996 (Decision96/458/ECSC) (219). It also addressed the years 1997 and 1998, for which State aid has not yet beenauthorised. The Commission issued the letter in response to a complaint from five French undertakingsconcerning the alleged misuse of State aid which France grants on an annual basis to the publicundertaking CdF. It claims that the CdF group sells coal at a price which is generally lower than theworld market price, a practice supported by State aid. On 9 July, the Commission issued a further letterof formal notice to France concerning the production support aid paid to CdF for the 1997, 1998 and1999 financial years and not authorised by the Commission (220). The question arises as to whether theloans issued on the financial markets by CdF, which, in the light of a financial analysis carried out bythe Commission departments, appear to be issued exclusively to cover operating losses, and the interestcharges resulting from previous loans fall within the definition of aid for the purposes of the Communityrules. Notwithstanding its critical financial condition, CdF enjoys the highest credit rating on theinternational financial markets for its short- and medium-term loans (Standard & Poor’s AAA, confirmedby Moody’s). In the absence of a formal guarantee, the Commission considers that the confidence thusshown by the international financial markets can only be explained by a tacit guarantee of the FrenchState covering loans issued by CdF, which in turn may be considered undeclared State aid.

275. On 4 May, the Commission authorised Spain to grant financial assistance for the 1999 financialyear totalling EUR 1 071.3 million (ESP 178 250 million) (221). Of this amount, EUR 727.4 million (ESP121 030 million) is linked to current production, while EUR 343.9 million (ESP 57 220 million) coversinherited liabilities.

276. On 18 January, a British coal producer (RJB Mining plc) lodged an application before the Courtof First Instance (222) for annulment of the decision concerning the grant of State aid to the German coalindustry (223) for the 1998 financial year. On 3 March, the same producer lodged an application before



(218) OJ L 117, 5.5.1999.(219) OJ C 99, 10.4.1999.(220) OJ C 280, 2.10.1999.(221) Decision 98/451/ECSC (OJ L 177, 13.7.1999).(222) Case T-12/99 (OJ C 86, 27.3.1999).(223) Decision 99/270/EC (OJ L 109, 27.4.1999).

the Court of First Instance (224) for annulment of the decision concerning the grant of State aid to theGerman coal industry (225) for the 1999 financial year.

277. Also on 3 March, the same producer lodged an application before the Court of First Instance (226)complaining that the Commission had failed to consider whether undeclared State aid had been involvedin the acquisition of Saarbergwerke GmbH and Preussag Anthrazit GmbH by Ruhrkohle AG. Alreadyon 25 January, a German power producer (VASA Energy GmbH & Co.) had lodged an application, whichhas several points in common with the one just mentioned, before the CFI (227) against the Commissionfor allegedly failing to take action following its complaint about this issue.

278. On 9 September, the Court of First Instance ruled against RJB Mining on two points of lawrelating to Case T-110/98 (228) with respect to the annulment of the Commission decision on State aidgranted to the German coal industry for the 1997 financial year (229).

3.1.4. Motor vehicle industry

279. The Commission adopted 16 decisions relating to the motor vehicle industry during the year, includ-ing 10 decisions to initiate proceedings under Article 88(2). It authorised EUR 107 million in regional aid andtraining aid, and took negative or partly negative decisions prohibiting EUR 28 million in regional aid.

280. As far as regional aid is concerned, the need for assistance is examined in particular on the basis ofproject mobility, which must be demonstrated by several factors including a location study by the investor.The proposed alternative location must be credible in the light of the firm’s commercial policy, the risks to itsimage, its industrial strategy, etc. If mobility is not proven, no aid may be allowed. The Commission alsochecks whether the investor took account of the possibility of receiving aid in the decision to locate the pro-ject in an assisted area. If that is not the case, as for example in the negative decision it adopted on 22 De-cember on the Fiat Mirafiori Meccanica project (230), the aid is deemed not to be necessary for achieving theobjectives referred to in Article 87(3) and cannot therefore be authorised.

281. The proportionality of regional aid is assessed by means of a cost-benefit analysis. This takes intoaccount all the factors determining the investor’s choice of site, giving special attention to the productioncutback or closure costs that would result from a theoretical choice not to locate the investment at theselected site. The decision taken by the Commission on 29 September on the Mercedes Vitoriaproject (231) illustrates this practice. The economic risks, for example of delay in launching commercialproduction, must also be included in the cost-benefit analysis, as can be seen from the decision taken on22 December to initiate proceedings in the Rover Longbridge case (232).

282. In its judgment of 15 December (233), the Court of First Instance dismissed the applicationslodged by the Land of Saxony and Volkswagen for annulment of the Commission decision of 26 June



(224) Case T-63/99 (OJ C 160, 5.6.1999).(225) Decision 99/299/ECSC (OJ L 117, 5.5.1999).(226) Case T-64/99 (OJ C 160, 5.6.1999).(227) Case T-29/99 (OJ C 86, 27.3.1999).(228) OJ C 314, 30.10.1999.(229) Decision 98/687/ECSC (OJ L 324, 2.12.1998).(230) Case C-9/99 (ex N-838/97), not yet published in the Official Journal.(231) Case N-697/98 (OJ C 351, 4.12.1999).(232) Case C-79/99 (ex N-481/99) (OJ C 62, 4.3.2000).(233) Joined Cases T-132/96 and T-143/96, Freistaat Sachsen, Volkswagen and Volkswagen Sachsen v Commission.

3.1.5. Synthetic fibres industry

283. In 1999 the Commission continued to be vigilant in applying the code on aid to the syntheticfibres industry (235) and in actively following up enquiries regarding possible breaches brought to itsattention. In that connection, it took a negative final decision concerning aid that the German authoritiesproposed to grant to Saxonylon Textil GmbH (236), a subsidiary of the Singaporean Tolaram Group. TheCommission took into account the fact that the project results in a significant capacity increase inpolyamide filament yarn, a product for which there is no structural shortage of supply and that theproposed aid intensity was double the maximum allowed under the code for large enterprises.

1996 (234) on aid granted for the Mosel and Chemnitz plants. In addition to its assessments of theconditions under which Article 87(2)(c) and Article 87(3)(b) apply, the Court confirmed theCommission’s classification of the investments as greenfield or extension projects, which took intoaccount the existence on the spot of adequate infrastructure, organised logistics, a suitably trainedworkforce and a well-established network of subcontractors. The Court also stressed that theCommission was entitled to refer to excess production capacities in the motor vehicle industry, andtherefore to take the Community interest into consideration, in refusing to authorise payment of part ofthe aid in question.



(234) OJ L 308, 29.11.1999.(235) OJ C 24, 29.1.1999.(236) Case C-63/98 (ex N-362/98) (OJ L 268, 16.10.1999).

Box 10: Public aid to Skoda, an example of the application of State aid rules in applicantcountries

The Europe agreement concluded with the Czech Republic provides that existing Community rulesare to apply to public aid. In the case of motor manufacturing, this means that aid to a manufacturermust comply with the Community framework for State aid to the motor vehicle industry (1).

In a spirit of transparency, the Czech authorities informed the Commission of their plan to grantregional aid to Skoda for a major investment at the Mladá Boleslav plant. The Competition DGprovided technical assistance to enable the Czech authorities to apply the motor vehicle framework,in particular by carrying out a cost-benefit analysis.

Out of the aid initially planned of around USD 130 million, the Czech authorities thus decided toaward a net grant of USD 22 million, corresponding to an aid intensity of 6.5 %.

The Commission considers that this cooperation was exemplary and should be extended to all theapplicant countries. It firmly intends to ensure that the existing Community competition rules areapplied in each of those countries.

(1) OJ C 279, 15.9.1997.

3.1.6. Transport

Road transport

284. In the road transport sector, the Commission decided to propose appropriate measures with a viewto eliminating, from the end of the year, a toll exemption system on the Tauern motorway in Austria andan Italian aid scheme for helping SMEs to purchase special transport vehicles. The latter decisionstrengthens the Commission’s policy stance that aid for the purchase of means of transport is not in theCommunity interest in markets suffering from overcapacity.

285. The Commission adopted a favourable decision on an aid scheme for restructuring road haulageand developing combined transport in Italy (237). It took the view that aid for combined transport wascompatible with the common market in so far as it was aimed at promoting operations that would proveeconomically viable in the medium term and were not liable to cause distortions of competition betweenoperators or between combined transport terminals. As far as road haulage was concerned, theCommission found that the allowances granted to self-employed hauliers voluntarily ceasing theiractivity did not constitute aid and authorised inter alia the measures designed to encourage the upgradingof the vehicle fleet in line with more stringent environmental standards.

286. The Commission approved an Italian aid scheme for groupings of businesses (237), which formspart of the above measures for restructuring the road haulage industry. In its assessment the Commissiontook note in particular of the structural weakness of the sector, which is fragmented into over 100 000mostly small and very small operators.

287. The Commission authorised Spanish individual regional aid measures enabling certain transportundertakings to obtain ISO 9000 certification (238) and found compatible with the common market aSpanish aid scheme for investments in IT equipment enabling the recipients to connect to infrastructureco-financed by the Structural Funds.

288. In the passenger transport sector, the Commission gave its approval to two schemes in theNetherlands, one concerning pilot projects for developing innovative, more efficient transport systemsand the other for restructuring public transport in large cities.

289. It is also worth mentioning that, by dismissing the application for annulment brought by Italy, theCourt of Justice upheld the Commission’s 1996 decision finding that the tax credits granted by Italy toprofessional road hauliers in 1993 and 1994 constituted State aid that was incompatible with the commonmarket and had to be recovered (239).

Rail transport

290. In the rail transport sector, the Commission authorised a Danish aid scheme for goodstransport (240) intended to compensate for the handicap suffered by the railways in relation to roadtransport and to create a more level playing field between the two modes. The aim of the measures wasto encourage the transfer of goods traffic from road to rail by neutralising the external costs and



(237) Case C-21/98 (OJ L 227, 28.8.1999).(238) Cases N-635/98, N-191/99, N-192/99 and N-196/99.(239) Judgment of 19 May 1999 in Case C-6/97 Italy v Commission, not yet reported.(240) Case N-588/98.

infrastructure costs which are not borne by road transport. The aid scheme was examined in connectionwith the introduction of infrastructure charges payable by train operators using the Danish rail network.The amount of the grant was much lower than the estimated amount of the costs not paid by the roadhaulage sector. Since the grant applied without discrimination to all goods transport operators and didnot affect the development of trade to an extent contrary to the Community interest, the Commissionfound that the aid scheme was compatible with the Treaty rules.

291. In the context of the introduction of a system of energy taxation (Ökosteuer) in Germany, theCommission authorised a partial reduction in a new electricity consumption tax for firms engaged intransport by rail or trolleybus.

Inland waterway transport

292. In this sector the Commission authorised several aid schemes designed to help carriers adjust tothe opening-up of the market.

Sea transport

293. In the maritime transport sector, the Commission continued to develop the approach set out in theCommunity guidelines on State aid to maritime transport (241). It thus authorised a number of schemesgranting aid in the form of tax relief in order in particular to reduce the wage costs of crews of vesselsoperated under the flag of a Member State. The approach is designed to reverse the trend towards there-registration of vessels outside the Community and stop the decline in employment and know-how inthe maritime transport sector.

294. The Commission also devoted increasing attention to ascertaining whether and under whatconditions compensation to offset public service obligations constitutes State aid within the meaning ofArticle 87(1) of the Treaty. In this context, the Commission opened an investigation into finance grantedto the Italian group Tirrenia.

295. In the port sector the Commission authorised tax measures intended to facilitate the replacementof obsolete facilities in French ports (242), but found incompatible with the common market othermeasures forming part of the same aid scheme which concerned the acquisition of additional newequipment by handling firms operating in the ports of Dunkirk and Le Havre.

Air transport

296. In the air transport sector, the Commission cleared an ESP 20 billion (EUR 110 million) capitalinjection into the Spanish airline Iberia on the grounds that the operation was carried out underconditions that would be acceptable to a private investor and did not therefore constitute aid within themeaning of Article 87 of the Treaty. The Commission based its assessment mainly on the principles speltout in the December 1994 guidelines (243) and took account of the improvement in the company’sperformance since 1996 and the expectation that it would return to profit in the medium term.



(241) OJ C 205, 5.7.1997.(242) Case C-42/99.(243) Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA agreement to State aids in the

aviation sector (OJ C 350, 10.12.1994).

297. On 20 July, the Commission opened proceedings in respect of a training project for staff of theBelgian airline Sabena, taking the view that the amount of funding granted far exceeded the maximumintensity that may be accepted by the Commission under the Community framework on training aid.

298. On 3 September, the Commission found that the scheme involving the award of aid of a socialcharacter for services to the smaller Sicilian islands was compatible with the common market underArticle 87(2)(a) of the Treaty. The existence of such schemes for assisting the inhabitants of remoteislands is one of the specific features of State aid in the air transport sector.

299. In the airport sector, the Commission authorised public grants for improving infrastructure at theairports of Manchester and Elba, on the grounds that the measures concerned did not constitute State aidwithin the meaning of Article 87 of the Treaty.

Nevertheless, in view of the increasingly important commercial role played by airports, the Commissionis conducting a rethink which could call into question its traditional approach whereby aid for buildingor operating airport infrastructure does not fall within the scope of the Treaty rules on State aid. Thisrethink is linked inter alia to the issues of combined transport and transport infrastructure user charges.

3.1.7. Agriculture

300. As far as policy developments during the year are concerned, following multilateral consultationswith the Member States the Commission adopted a new comprehensive set of Community guidelines forState aid in the agricultural sector (244). The need to provide a clear account of the Commission’s practicewith regard to the different types of aid that may be considered compatible with the common market,together with the entry into force of Council Regulation (EC) No 1257/1999 (245), prompted the initiativeto revise, update and consolidate the rules followed by the Commission when assessing Member States’proposals to grant State aid in the agricultural sector and applying any of the exemptions established byArticle 87(2) and (3) EC. In providing a new, clear framework for the different types of State aid allowed,the guidelines take particular account of the new developments in agricultural policy and especially theneed, on the one hand, to improve and promote the quality of agricultural products and, on the otherhand, to preserve the environment and the traditional heritage in the countryside.

301. The starting point for the new guidelines is that any State aid for the agricultural sector must be com-patible with the Community’s common agricultural and rural development policies and with its internation-al obligations, in particular the WTO Agreement on Agriculture. In particular, any State aid which would in-terfere with the mechanisms of the common market organisations is prohibited because the Member Statesdecided, when adopting the CMO regulations, to ban any unilateral aid measures which interfere with Com-munity support for product prices. Furthermore, in accordance with the principles laid down by the Court ofJustice, State aid must make a real contribution to the development of certain economic activities or certainregions. State aid which is simply intended to improve the financial situation of the recipient, without anyquid pro quo from the latter, can never be considered compatible with the EC Treaty. In the light of these gen-eral principles, the guidelines then describe the main types of aid which the Commission can accept and theconditions attaching to authorisation of the aid. These can be summarised as follows:

— aid for investment on farms can normally be permitted at up to 40 % of eligible expenses, or 50 %in the less favoured areas; higher rates of aid may sometimes be allowed for investments linked to



(244) OJ C 28, 1.2.2000.(245) OJ L 160, 17.5.1999.

the conservation of traditional landscapes, the relocation of farm buildings in the public interest, orthe improvement of the environment, animal welfare or hygiene; similarly, aid for investment in theprocessing and marketing of agricultural products can normally be permitted at rates of up to 40 %,with an extra 10 % for Objective 1 areas, provided that it can be shown that normal market outletsexist for the products concerned;

— aid granted in return for agri-environmental undertakings given by farmers and other environmentalaid;

— aid to compensate for handicaps in the less favoured areas;

— aid to help the setting-up of young farmers;

— aid for early retirement, the cessation of farming activities, or the closure of production, processingand marketing capacity;

— aid for the establishment of producer groups;

— aid to compensate for damage caused to agricultural production or the means of production bynatural disasters or exceptional occurrences, adverse weather conditions or outbreaks of animal orplant disease, and aid granted to encourage insurance against such risks;

— aid to encourage the production and marketing of quality agricultural products, the provision oftechnical support for producers and improvement of the genetic quality of livestock;

— aid to grant specific support for the outermost regions and the Aegean islands.

302. In addition to these categories of aid, which are specifically covered in the guidelines, aid mayas before also be granted, in accordance with other Community provisions, for research anddevelopment, promotion and advertising of agricultural products, short-term operating loans, rescuingand restructuring farms in difficulty, and supporting employment.

303. The guidelines will apply to all new State aid measures introduced after 1 January 2000, andMember States will be allowed one year to adjust their existing aid schemes to comply with the newrules. Individual aid already granted to farmers under existing aid schemes will not be affected by thesechanges.

3.1.8. Fisheries

304. The Commission examined the compatibility of national aid schemes in the light of theguidelines for the examination of State aid to fisheries and aquaculture (246), which are based, to a largeextent, on Council Regulation (EC) No 2468/98 of 3 November 1998 laying down the criteria andarrangements regarding Community structural assistance in the fisheries and aquaculture sector and theprocessing and marketing of its products (247). The Commission authorised a larger number of schemesthan in 1998.



(246) OJ C 100, 27.3.1997.(247) OJ L 312, 20.11.1998.

3.2. Specific sectors not subject to special rules

3.2.1. Financial sector

305. In the course of 1999 the Commission approved two cases of restructuring aid in the bankingsector. The two ailing banks (Crédit Foncier de France (248) and Banco di Sicilia (249)) had received Stateaid in the context of a restructuring operation carried out by their governments with a view to their futureprivatisation. In both cases the Commission reaffirmed its policy of requiring, as a condition for theapproval of restructuring aid, an adequate reduction of capacity. The latter took the form of a reductionof assets for the mortgage bank Crédit Foncier and a cutback of the network for the retail bank Bancodi Sicilia.

306. The Commission also applied the ‘market economy investor principle’ in order to decide whethera capital injection into a public undertaking constitutes State aid. Finding that the return on the capitalprovided by the Land of North Rhine-Westphalia to Westdeutsche Landesbank Girozentrale (250) did notcorrespond to what a market economy investor would have demanded, the Commission decided that thetransaction involved State aid. Since this aid could not be found compatible the Commission requiredthe German Government to recover the aid from WestLB. The Commission is currently investigatingsimilar transactions by other public German Landesbanks.

3.2.2. Audiovisual sector



(248) Case C-30/96 (ex NN-44/96), not yet published in the Official Journal.(249) Case C-16/98 (ex NN-10/98), not yet published in the Official Journal.(250) Case C-64/97 (ex NN-175/95), not yet published in the Official Journal.

Box 11: State aid to public broadcasters

Since 1992 more than 10 complaints have been lodged with the Commission, alleging that thefinancing of certain public broadcasters in several Member States is incompatible with the EC Treatyrules. In November 1996, the Commission adopted its first decision in this field (RTP — Portuguesepublic television service) (1). The Commission’s task was made easier by the fact that RTP had a veryclear public service mandate and a transparent analytical accounting system. The Commissiondecision has been challenged before the Court of First Instance (2).

In September, the CFI ruled against the Commission for failing to fulfil its obligations under the ECTreaty by not taking a decision following the two complaints lodged by the applicant in a Spanish case (3).On 3 June, it ruled against the Commission for a second time in the similar case Télévision Française 1(TF1) v Commission (4). The Court held that since the Commission has exclusive jurisdiction to assess thecompatibility of State aid with the common market, it must, in the interests of sound administration andthe fundamental Treaty rules on State aid, conduct a diligent and impartial examination of any complaint

(1) Case NN-141/95 (OJ C 67, 4.3.1997).(2) Pending Case T-46/97.(3) Case T-95/96 Gestevision Telecinco v Commission.(4) Case T-17/96.



alleging that State aid is incompatible with the common market. Following this judgment for failure toact, in October 1998 the Commission departments presented a discussion paper to the Member States inan attempt to develop a common framework for dealing with State aid in broadcasting.

In this discussion paper, the Commission departments tried to address the main issues raised by thepending State aid cases involving public broadcasters, while presenting some ideas on how faircompetition between public and private broadcasters can best be ensured, with a view to stimulatingdiscussion with the Member States.

However, most Member States were opposed to the adoption of guidelines and expressed theirpreference for a case-by-case approach; the Commission therefore began to deal with the pendingcases, in order of receipt. In February, it sent three requests for information to Italy, France and Spain,requiring them to provide all the data needed to assess whether the aid was new or existing, i.e.introduced before the entry into force of the Treaty. In respect of these cases, it also opened the formalinvestigation procedure for some ad hoc measures granted to the Italian and French publicbroadcasters, as they could not be considered existing aid (having been introduced and granted in the1980s and 1990s).

In 1999, the Commission also approved the funding of two newly launched special-interest channels(Phoenix and Kinderkanal) (5) by the German public broadcasters, entirely financed with a licencefee, and of a 24-hour news service by the BBC (6), also funded solely by a licence fee. In both cases,the Commission, taking into account the specific features of the services, did not detect any abuse ofthe Member States’ powers to define the public service remit. It considered that the broadcasters wereentrusted with those tasks by an official act of the authorities, that the funding system would notdistort the development of trade to an extent contrary to the common interest and that the exemptionfor undertakings entrusted with the operation of services of general economic interest provided for inArticle 86(2) of the EC Treaty therefore applied.

In the coming months, the Commission will have to conclude its analysis of the pending cases takinginto account the relevant provisions laid down in the Treaty, and the Protocol of Amsterdam.Regardless of whether the aid is found to be existing or not, the Commission will direct its action toensuring that public service mandates as defined by Member States are transparent and that thefunding scheme, as decided by the Member States, shall respect the principle of proportionality andnot affect trading conditions and competition in the Community to an extent contrary to the commoninterest while the realisation of the remit of that public service shall be taken into account.

(5) Case NN-70/98 (OJ C 238, 21.8.1999).(6) Case NN-88/98, not yet published in the Official Journal.

D — Procedures

307. With regard to procedure, 1999 was marked by the entry into force of the procedural regulationon 16 April (251). While the regulation codifies and clarifies the rules on procedure which up to now wereenshrined only in Commission practice and decisions, the Court of Justice and the Court of First Instancehad several occasions to further elaborate on the procedural aspects of State aid control.

1. Ex post authorisation of aid already paid

308. In RJB Mining v Commission (252) the Court of First Instance (CFI) confirmed that the rulinggiven by the Court of Justice in Boussac (253), namely that the Commission may also approve illegal aidwhich has been paid prior to approval, applied to the coal sector. It stated that there is nothing in thecode on State aid for the coal industry (254) to prevent the Commission from examining the compatibilityof planned aid with the common market where the Member State which notified that planned aid hasalready paid it without waiting for prior authorisation. Although the prohibition in Article 4(c) of theECSC Treaty is more strictly worded than that in Article 87 EC, the CFI held that the substantive andprocedural provisions in the coal aid code of 1993 and the system established by Articles 87 and 88 ECdo not differ in principle. The Commission therefore has the power to give ex post facto approval to aidpaid prior to authorisation.

2. Rights of third parties

309. In several decisions (255) the Court of First Instance had to deal with the start of the time limit forlodging an application for judicial review of Commission decisions. According to the terms of Article230(5) EC the date of publication of the measure or of its notification to the complainant is relevant forthe start of the time limit. Only in the absence thereof, the Court held, may the date on which it came tothe knowledge of the applicant, for example through publication in the press, be seen as the start of thetime limit. This is notably the case where the Commission has committed itself to publishing thedecisions.

310. In an application for annulment brought by the regional authorities of Friuli-Venezia Giuliaagainst a Commission decision not to authorise aid which the region planned to grant, the Court of FirstInstance ruled on 15 June (256) that such applications may be brought by any parties that fulfil theobjective conditions laid down, i.e. any parties that have the necessary legal personality and areindividually and directly concerned by the decision being challenged, in accordance with the criteria laiddown in Article 230(4) EC. This applies also where the applicant is a regional administrative entity. Theaid measures concerned by the contested decision are measures taken by virtue of the independent




(252) Judgment of 9 September 1999 in Case T-110/98, not yet reported.(253) Case C-301/87 France v Commission [1990] ECR I-307.(254) Commission Decision No 3632/93/ECSC of 28 December 1993 establishing Community rules for State aid to

the coal industry (OJ L 329, 30.12.1993).(255) Cases T-14/96 Bretagne Angleterre Irlande (BAI) v Commission, T-110/97 Kneissl v Commission, T-123/97

Salomon v Commission and T-89/96 British Steel v Commission, not yet reported.(256) Case T-288/97 Regione autonoma Friuli Venezia Giulia v Commission, not yet reported.

legislative and financial powers directly conferred on the region by the Italian constitution. The applicantis individually and directly concerned because the decision affects the acts of the region and prevents itfrom exercising its own powers as it sees fit. The contested decision furthermore prevents the applicantfrom continuing to apply the legislation in question, cancels its effects and requires the applicant toinitiate the administrative procedure for recovering the aid from the recipients.

311. The Court of First Instance (257) confirmed, on the other hand, that an association formed tofurther the collective interests of a category of persons cannot be considered to be individually concernedwithin the meaning of Article 230(4) EC by a measure affecting the general interests of that category.The Court held that, in the absence of special circumstances such as the role which it could have playedin the procedure leading to the adoption of the measure in question, such an association is not entitledto bring an action for annulment where even its members may not do so individually. The Courtconsidered that to hold such an association’s action admissible in the circumstances of this case, in whichits members are not individually concerned and in which the applicant has no standing on its own, wouldhave the consequence of allowing natural and legal persons to circumvent Article 230(4) of the Treatyby means of a collective action.

312. As in a similar case in 1998 (258), a television broadcasting company won an action for failure toact brought before the Court of First Instance. In the judgment it delivered on 3 June (259), the CFIconfirmed that the Commission cannot prolong indefinitely its preliminary examination of governmentmeasures which have been denounced as incompatible with Article 87(1) EC, where it has agreed toinitiate such an examination. The Court has consistently held that the Article 88(2) procedure must beinitiated whenever the Commission has serious difficulties in determining whether an aid measure iscompatible with the common market. The CFI considered that the application was well founded becausewhen the Commission was given formal notice to act its preliminary examination had lasted for 31months and it was unable to demonstrate that there were exceptional circumstances explaining why ithad taken so long.

3. Recovery of aid

313. At nearly 18 % of all cases dealt with by the Commission, the number of State aid measures thathave not been notified to the Commission is still too high. It is therefore significant that the Court hasconfirmed the Commission’s policy of consistently ordering the recovery of aid that has been granted inviolation of the notification obligation and is incompatible with the common market. Article 14 of thenew procedural regulation requires Member States to execute recovery decisions immediately andeffectively (260). This policy should increasingly induce recipients of State aid to verify whether thesupport they receive is in line with Community State aid rules, this being the only way to avoid the riskof recovery. To be convincing, recovery orders need to be genuinely executed. In the Magefesa case (261)the Commission therefore decided on 13 October to refer to the Court of Justice the matter ofnon-compliance of the Spanish authorities with the recovery order.



(257) Case T-86/96 Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen v Commission [1999] ECR II-179.(258) Case T-95/96 Gestevisión Telecinco v Commission [1998] ECR II-3407.(259) Case T-17/96, Télévision française 1 (TF1) v Commission, not yet reported.(260) Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article

93 of the EC Treaty (OJ L 83, 27.3.1999).(261) Case C-44/97.

314. Furthermore, the Commission applied the principle that, in appropriate circumstances, effectiveexecution of its decisions may require the lifting of the corporate veil and recovery of aid not just fromthe original recipient, but also from other undertakings controlled by the same persons to which thebeneficiary’s assets have been transferred. This principle is based on considerations of economicattribution of the benefit.

315. In Italy v Commission (262) the Court of Justice confirmed that implementation of the recoverydecision cannot be shown to be impossible where no attempt to recover the aid has even been made.

4. Cooperation with national courts

316. In 1999, the Commission received four information requests from the Pamplona Court of FirstInstance in the context of civil proceedings. The requests concerned details of the same alleged State aidreceived by a Spanish company. They also asked for copies of any complaints and decisions taken sofar. In its joint response of 1 June to the Spanish court the Commission recalled that, on the basis of thenotice on cooperation between national courts and the Commission in the State aid field (263), nationalcourts may ask the Commission for information of a procedural nature to enable them to discoverwhether a particular case is pending before the Commission or has been the subject of a notification, orwhether the Commission has officially initiated proceedings or taken any other decision. National courtsmay also consult the Commission where the application of Article 87(1) or Article 88(3) causes particulardifficulties. In accordance with the notice the Commission will not go into the substance of the individualcase or the compatibility of the measure with the common market.

317. The Commission consequently informed the Spanish court that it had in 1996 received threecomplaints in the matter, that the case was still being examined and that, since the case was not closed,it was not possible to forward a copy of the complaints or of the other documents and information whichexisted in the file, including the amounts of aid granted, or to communicate the contents thereof, untilthe Commission had taken a decision.



(262) Case T-6/97, not yet reported.(263) OJ C 312, 23.11.1995.

E — Statistics



Figure 6Trend in the number of aid cases registered (other than in agriculture, fisheries,transport and coal) between 1994 and 1999

900

700

500

300

200

100

0

800

400

600

Existing aid

Unnotified aid

Notified aid

1668

510

10

113

680

391

550

1

140

515

597

342

197

414

1994 1995 1996 1997 1998 1999

594

803

644 656

444

512

Figure 7Trend in the number of decisions taken by the Commission (other thanin agriculture, fisheries, transport and coal) between 1994 and 1999

19991997

19961995

1994

700

500

300

200

100

0

400

600

527619

474 502460

1998

444



Figure 8Number of decision by Member State (other than in agriculture, fisheries,transport and coal)

EuropeanUnion

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

UnitedKingdom

0 100 300 400 500200

444

14

5

124

8

79

29

12

94

0

24

14

8

8

8

17

IV— INTERNATIONAL ACTIVITIES

A — Enlargement

1. Pre-accession

1.1. Implementing rules

318. With a view to further completing the legal framework for relations between the Community andthe 10 associated countries of central and eastern Europe (CEECs) in the field of competition, two setsof implementing rules have been subject to negotiations with the CEECs. The first concerns theimplementation of the competition provisions of the Europe agreements applicable to undertakings. Thesecond relates to the rules concerning State aid.

319. Implementing rules for the competition provisions applicable to undertakings have already beenadopted for seven CEECs, namely Bulgaria, the Czech Republic, Estonia, Hungary, Poland, Romania andthe Slovak Republic (264). The European Commission has presented its proposal to the Council for imple-menting rules with Latvia, Lithuania and Slovenia (265). These are expected to be adopted in early 2000. Thewording of the implementing rules is basically the same for all of the associated countries. They containmainly procedural-type rules, i.e. rules regarding competence to deal with cases, procedures for notificationof cases to the other party, consultation, comity and the exchange of information.

320. The Czech Republic is the only associated country where the implementing rules for State aid arecurrently in force (266). The implementing rules constitute a two-pillar system of State aid control. Onthe Community side, the European Commission assesses the compatibility of State aid granted by EUMember States on the basis of the Community State aid rules. On the side of the Czech Republic, theCzech national monitoring authority is to monitor and review existing and new public aid granted bythat country, on the basis of the criteria arising from the application of the Community State aid rules.The implementing rules include procedures for consultation and problem solving, rules on transparency(i.e. the Czech Republic is to draw up and thereafter update an inventory of its aid programmes andindividual aid awards), and rules on mutual exchange of information. During 1999, the EuropeanCommission presented proposals for State aid implementing rules (267) with regard to seven CEECs:Bulgaria, Estonia, Latvia, Lithuania, Poland, Romania, and Slovenia (268).

321. Generally, the adoption and proper application of implementing rules for State aid is, apart fromwider policy considerations, also seen as an important step towards reducing any possible trade frictionbetween the Community and the third country in question, because it may, if properly implemented,



(264) Decision No 2/97 of the association council of 7 October 1997 (OJ L 15, 21.1.1998). Decision No 1/96 of theassociation council of 30 January 1996 (OJ L 31, 9.2.1996).Decision No 1/99 of the association council of 28 April 1999 (OJ L 144, 9.6.1999).Decision No 2/96 of the association council of 6 November 1996 (OJ L 295, 20.11.1996).Decision No 1/96 of the association council of 16 July 1996 (OJ L 208, 17.8.1996).Decision No 1/99 of the association council of 16 March 1999 (OJ L 96, 10.4.1999).Decision No 1/96 of the association council of 15 August 1996 (OJ L 295, 20.11.1996).

(265) COM(1998) 68 final, 4.3.1998; COM(1998) 119 final, 4.3.1998; COM(1999) 353 final, 14.7.1999.(266) Decision No 1/98 of the association council of 24 June 1998 (OJ L 195, 11.7.1998).(267) Bull. 7-8/1999.(268) COM(1999) 354 final, 14.7.1999-COM(1999) 357 final, 14.7.1999; COM(1999) 359 final, 14.7.1999;

COM(1999) 360 final, 14.7.1999; COM(1999) 362 final, 14.7.1999.

eliminate the need for either party to have recourse to action under the WTO Agreement on Subsidiesand Countervailing Measures (ASCM).

1.2. Enhanced pre-accession strategy

322. A major element of the enlargement process is the so-called enhanced pre-accession strategy,which centres on accession partnerships and increased pre-accession aid. The accession partnerships,which are revised regularly, bring together in one document the priority areas in which each candidatecountry needs to make progress in order to prepare itself for membership in the EU. They also defineways in which EU financial assistance of various types and through different programmes, in particularthe Phare programme, will support their efforts to do so. On 6 December, the Council adopted theprinciples and priorities of the new accession partnerships for the 10 central and east European candidatecountries (269). On 22 December, the European Commission adopted accession partnerships for each ofthese 10 candidate countries. Legislative alignment, enforcement, institution building and transparencyin the fields of antitrust and State aid are among the most important priorities identified by the EuropeanCommission in the different accession partnerships.

323. The accession partnerships are complemented by the national programmes for the adoption of theacquis (NPAA), drawn up by each of the 10 candidate countries. The NPAAs give details of thesecountries’ commitments with regard to making progress in accordance with the priorities laid down inthe accession partnerships.

1.3. Progress in alignment of competition rules

324. The European Commission reports regularly to the European Council on progress made by each ofthe candidate countries towards accession. The second regular reports for the 10 CEECs, Cyprus andTurkey (270), adopted by the European Commission in October, assess progress made since the previous re-ports delivered by the European Commission in 1998. In 1999, the European Commission adopted a regularreport also for Malta (271) alongside its updated opinion on Malta’s application for membership (272).

325. In the past year, most of the candidate countries have taken decisive steps in preparing or passing newcompetition legislation, or have amended existing laws, in order to further align these with Community law.The competition authorities in these countries have also gained further experience in the enforcement of theircompetition legislation. However, on several occasions the European Commission has emphasised the needfor the competition authorities of the candidate countries to further strengthen their independence, inves-tigative powers, powers to impose fines, and the need for them to increase their resources.

326. In contrast with the progress made in the field of competition, the introduction of proper State aidcontrol in the candidate countries has been slow or inadequate. While a number of countries haveintroduced or are now in the process of adopting rules on the control of State aid, a lot of work remainsto be done. As a matter of priority, many candidate countries still need to establish comprehensiveinventories on existing aid in order to ensure transparency in this field. Despite the fact that the CEECs



(269) COM(1999) 521 final-COM(1999) 532 final, 13.10.1999.(270) COM(1999) 500 final-COM(1999) 507 final, 13.10.1999; COM(1999) 509 final-COM (1999) 513 final,

13.10.1999. See also (http://www.europa.eu.int/comm/enlargement/report_10_99/intro/index.htm).

(271) COM(1999) 508 final, 13.10.1999.(272) COM(1999) 69 final, 17.2.1999.

have submitted annual reports to the European Commission on the volume of aid granted in thesecountries, as is required under the Europe agreements, the European Commission still remains concernedabout the lack of a comprehensive picture of the State aid situation in most CEECs.

327. A second priority for the candidate countries is to set up or strengthen their State aid monitoringauthorities, and to ensure an effective monitoring of State aid. This is of the utmost importance in orderto establish a sound and systematic State aid control in these countries. Most of the candidate countrieshave already clearly designated a monitoring authority. However, legal procedures and the necessarypowers, and/or resources to ensure genuine control of new and existing State aid in these countries, arestill lacking in many respects.

328. Finally, with regard to approximation of legislation, while certain countries have adopted or are cur-rently preparing substantive and procedural rules in this field, the European Commission notes that most can-didate countries are generally lagging behind the level that is required at this stage in the run-up to accession.

1.4. Technical assistance

329. In view of these remaining shortcomings, technical assistance in the field of competition remainsan essential tool to prepare the candidate countries for accession. Specific actions are being undertakenin the framework of the Phare programmes. Under the institution building (‘twinning’) arrangement, EUMember State experts are now also providing advice on a long-term basis to the competition and Stateaid authorities in the CEECs.

330. The European Commission has pursued a proactive policy of further intensifying its contacts with thecompetition authorities of the CEECs and between those authorities. On 28 and 29 June, the fifth competi-tion conference of the CEECs and the European Commission took place in Krakow, Poland. The delegationsincluded high-level officials from the competition and State aid authorities of the CEECs and the Commis-sion. The annual conference serves as a forum for the exchange of views and experience in the field of ap-proximation of legislation and enforcement. It also serves to establish and strengthen professional contactsbetween officials responsible for competition in the European Commission and in the CEECs.

331. The Competition DG continued to contribute to workshops and study visits organised by theEuropean Commission’s Technical Assistance and Information Exchange Office (TAIEX) in the field ofcompetition. The annual joint training sessions on competition were organised by the Competition DG,in cooperation with TAIEX, for officials from the candidate countries in November and December.

332. The Competition DG continued to hold various bilateral meetings with the competition and Stateaid authorities of the candidate countries. Technical discussions at expert level were held on competitionlaw approximation, institution building and enforcement. Discussions on specific State aid issues, suchas the set up of a State aid inventory, regional aid maps, assessment of individual cases in sensitivesectors, were also held during ad hoc meetings with the candidate countries.

2. Accession negotiations

333. In order to identify potential problems with the candidate countries in view of their capability toimplement Community law upon accession, a number of screening meetings on the competition acquiswere organised with the applicant countries in 1998. The multilateral screening meeting took place withall candidate countries in May 1998. In autumn 1998, the competition acquis was screened bilaterally



with the six countries, with which negotiations had started in March 1998 (Cyprus, the Czech Republic,Estonia, Hungary, Poland and Slovenia). With the former ‘pre-in’ applicant countries (Bulgaria, Latvia,Lithuania, Romania, the Slovak Republic) the bilateral screening exercise was carried out in March andApril 1999. The first round of multilateral and bilateral screening of the competition acquis was heldwith Malta in November 1999.

334. In the context of the enlargement negotiations on the competition chapter, the EuropeanCommission assessed the negotiating positions submitted by Cyprus, the Czech Republic, Estonia,Hungary, Poland and Slovenia. The European Commission’s evaluation of these applicants’ capability tomeet the accession criteria in the field of competition was reflected in the common positions adopted bythe EU in May. The common positions identified a number of issues that warranted further informationand/or clarification from the applicants. Cyprus, the Czech Republic, Estonia, Hungary and Sloveniasubmitted to the accession conference modifications and/or supplementary information to their initialnegotiating positions in summer 1999. On the basis of these, the EU adopted revised common positionson the competition chapter in November. Poland submitted an addendum to its negotiating position inOctober and a revised common position still needs to be adopted by the EU. For all six countries, thecompetition chapter remains open, mainly due to insufficient progress made in the field of State aid.

B — Bilateral cooperation

1. North America

1.1. United States

1.1.1. Implementation of the 1991 cooperation agreement (273) and of the 1998 positive comityagreement (274)

335. Every year, the Commission reports to the Council and the European Parliament on itscooperation activities with the US under the 1991 agreement. The last report covered the period from 1January 1998 to 31 December 1998 (275).

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

337. Bilateral cooperation was particularly intensive with regard to the large oil merger cases, mostnotably with regard to the Exxon/Mobil merger. Informal contacts between the FTC and the Commissionstarted soon after the announcement of the Exxon/Mobil transaction (December 1998), long before the



(273) Agreement between the European Communities and the Government of the United States of America regardingthe application of their competition laws (OJ L 95, 27.4.1995, as corrected by OJ L 131, 15.6.1995).

(274) Agreement between the European Communities and the Government of the United States of America on theapplication of positive comity principles in the enforcement of their competition laws (OJ L 173, 18.6.1998).

(275) Adopted on 13 September 1999, COM(1999) 439 final; see 1998 Competition Report, pp. 313-328.

formal notification occurred in May 1999. This allowed the EU and US authorities to discuss theparticular competition concerns for future oil and gas output which they feared might stem from thecreation of so-called ‘super majors’. Following notification, and having obtained waivers from themerging 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 cooperation between theagencies. Commission staff visited their FTC counterparts, reviewed documents at FTC premises, andthere were regular telephone calls, exchanges of documents, and other contacts between the two caseteams. Discussion between staff on both sides focused most closely on the assessment of the effects thatthe 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 themarket for aviation lubricants was also the subject of close discussion. Indeed, cooperation still continueswith regard to the implementation of the remedies that were agreed in both jurisdictions.

338. Other cases which involved close transatlantic cooperation included inter alia the AlliedSignal/Honeywell, Hoechst/RPR, Astra/Zeneca, and Air Liquide/BOC merger cases. Case-related EC-UScooperation is discussed in further detail in the fifth report to the Council and the European Parliamentfor the year 1999, which will be published during 2000.

1.1.2. Administrative arrangements on attendance at hearings in individual cases (276)

339. The Commission adopted on March 31 a text setting forth administrative arrangements betweenthe competition authorities of the European Communities and of the United States concerning mutualattendance at certain stages of proceedings in individual cases involving the application of theirrespective competition rules. The arrangements are bilateral and reciprocal in nature. They provide thata request for attendance at a hearing or meeting may be granted in appropriate cases, subject toconfirmation of satisfactory assurances or arrangements regarding confidentiality and the use ofinformation. Attendance will be possible only with the express consent of the persons concerned by theenforcement proceedings in either jurisdiction, and the arrangements do not in any way limit the rightsenjoyed by those persons.

340. The arrangements will contribute to improving mutual understanding by the competitionauthorities of their respective procedures, as well as to enhancing coordination, cooperation andavoidance of conflicts in appropriate cases of mutual interest. Neither these administrative arrangements,nor the letters exchanged between the Commission and the US competition authorities, constitute abinding international agreement.

1.1.3. EU-US working group on cooperation in global merger cases

341. At a bilateral meeting held on 5 October between the Commission’s Competition DG, the US DoJand the US FTC, it was agreed to set up a working group designed to intensify transatlantic cooperationin the field of merger control. This working group has been mandated to focus on: (i) the scope forfurther convergence of analysis/methodology in merger cases being treated in both jurisdictions,particularly regarding the respective EU and US approaches towards oligopoly/collective dominance;and (ii) an in-depth study of the respective EU and US approaches to the identification andimplementation of remedies (in particular, divestitures), and to post-merger compliance-monitoring. Theworking group is expected to conclude its deliberations during 2000.



(276) Bulletin of the European Union (March 1999).

1.2. Canada

342. On 17 June, a competition cooperation agreement was signed between the European Communitiesand the Canadian Government. It entered into force immediately. The draft agreement had been approvedby the European Parliament in February, and by the Council of Ministers in May.

343. The agreement will facilitate increased cooperation between the European Communities andCanada with respect to the enforcement of their respective competition rules. An increasing number ofcases are being examined by both competition authorities, and there is consequently a growingrecognition of the importance, on the one hand, of avoiding conflicting decisions and, on the other, ofcoordinating enforcement activities to the extent that this is considered mutually beneficial by bothparties.

344. In substance, the agreement is very similar to the one entered into between the EU and the US in1991. Essentially, it provides for (i) the reciprocal notification of cases under investigation by eitherauthority, where they may affect the important interests of the other party; (ii) the possibility ofcoordination by the two authorities of their enforcement activities, and of rendering assistance to eachother; (iii) the possibility for one party to request the other to take enforcement action (positive comity),and for one party to take into account the important interests of the other party in the course of itsenforcement activities (traditional comity); and (iv) the exchange of information between the parties,while not affecting either party’s confidentiality obligations with respect to such information.

345. There has already been active cooperation in a number of merger cases since the entry into forceof the agreement. The first post-agreement bilateral meeting between the Commission’s Competition DGand the Canadian Competition Bureau was held in Ottawa in September. As with the EU-US agreement,the Commission will report annually to the Council and Parliament detailing cooperation under theagreement with Canada.

2. Other countries

2.1. Japan

346. The Commission finalised a new list of proposals for further deregulation in Japan. The listincluded a series of proposals in the area of competition. The new EU proposals focused on 3 points:

(i) more effective enforcement of the Anti-monopoly Act (AMA);

(ii) further suppression of exemptions and exceptions under specific laws and the AMA, andclarification regarding exceptions and exemptions that will remain in force; and

(iii) examination by the Japanese Fair Trade Commission (JFTC) of all administrative guidance —written and oral — to check for conformity with anti-monopoly guidelines coupled with publicationof the results. The new package was officially given to Japan during an EU-Japan high-levelmeeting on 3-5 November in Tokyo.

347. The annual bilateral meeting between the Commission and the JFTC took place in Tokyo on 28and 29 October. Commission officials stressed that progress has been made towards deregulation of



competition in Japan, adding, however, that a great deal of regulatory reform is still needed to create anopen, transparent and fully functioning competitive market economy, fully accessible to domestic andforeign business. Particularly, in the field of competition policy, Japan needs to enforce existinganti-monopoly rules more vigorously, eliminate exemptions, challenge cartels notably in the wholesaledistribution system and subject ‘administrative guidance’ to rigorous scrutiny for compatibility withcompetition law. The tolerance of anticompetitive practices cannot be in the long-term interest ofpromoting efficiency in and helping restructuring of the Japanese economy. It will also be important toensure and perhaps strengthen the independence of the JFTC when it is placed under the Ministry ofGeneral Affairs (MGA) in 2001, as part of the central government reorganisation, and to maintain theintegrity of its personnel system and budget.

348. Further, the Commission delegation stated its interest in reinforcing bilateral relations with Japanin the area of competition. The two sides envisaged exploring the possibilities for a cooperationagreement similar to the EU agreements with the US (1991) and Canada (1999), as well as to the recentUS-Japan agreement (1999). Besides talks on the possibilities for closer cooperation, the two sidesdiscussed recent developments in the area of competition policy in the EU and Japan, and exchangedviews on selected cartel and merger cases. They also discussed the progress of preparations for the WTOministerial conference in Seattle, where they will both push for negotiations to be launched towards amultilateral framework for competition rules.

2.2. Turkey

349. Decision 1/95 of the EC-Turkey association council, implementing the final phase of the customsunion being created between the Community and Turkey, and Article 7 of the Turkey-ECSC free tradeagreement require the adoption of rules for the implementation of the competition provisions. Theseimplementing rules should establish a framework for the application of the antitrust and State aid rulesby inter alia specifying the respective functions of the Community’s and Turkey’s competitionauthorities, and by putting in place a structure for consultation and cooperation between those authorities.It is expected that substantive discussions between the Commission and the Turkish authorities will belaunched in the near future, aimed at the adoption of such rules.

2.3. Russia, Ukraine and the other NIS

350. The partnership and cooperation agreements (PCAs) which the EU has concluded with Russia,Ukraine, Moldova and most of the other former Soviet Republics contain — to a greater or lesser extent— a commitment by these countries to move towards an approximation of their competition and Stateaid legislation with that of the Community. Although progress is slow, the EU-Russia, EU-Ukraine andEU-Moldova PCA joint committees have now established subcommittees, with the task of overseeinginter alia the fulfilment of the commitments in the field of competition and State aid; thesesubcommittees met on several occasions during 1999. A number of Tacis projects, with the task ofproviding relevant expertise, are also being undertaken.

2.4. Mediterranean countries

351. An association agreement was concluded between the EU and Egypt during the course of 1999.Agreements have already been concluded with Tunisia, Israel, Jordan and the Palestinian Authority.Others are being negotiated with Algeria, Lebanon, and Syria. The provisions on competition containclear commitments aimed at bringing the competition policies of the countries concerned into line withthe Community arrangements. Proposed implementing rules for the competition provisions in theassociation agreements are being prepared, and it is expected that these will be forwarded to the



Community’s Mediterranean partners during the course of 2000. Likewise, in the context of ‘theEuro-Mediterranean partnership and the single market’, seminars aimed at furthering cooperation withthe MED countries are planned for next year.

2.5. South Africa

352. The European Union and South Africa concluded a free trade agreement in 1999. The agreementcontains provisions concerning competition and State aid, including provisions on cooperation betweenthe EU and South African competition agencies, and provides in particular for positive and traditionalcomity. This means that the EU and South Africa have the possibility of requesting each other to takeenforcement action, and that they must take into account each other’s important interests in the courseof their enforcement activities.

353. New South African competition legislation came into force during 1999. The legislation includesprovisions relating to merger control, as well as prohibitions on anticompetitive restrictive arrangementsand on the abuse of a dominant position. A new independent enforcement agency, the CompetitionCommission, has been established, as well as a specialised Competition Tribunal and CompetitionAppeal Court.

2.6. Latin America

354. A free trade agreement between the EU and Mexico was concluded during 1999. The agreementprovides for a mechanism of cooperation between the competition authorities of both parties. Thismechanism provides for: coordination of certain enforcement activities; the exchange of information; theinvestigation of allegedly anticompetitive behaviour in one party’s territory when it prejudices theinterests of the other party; and technical cooperation. This cooperation mechanism will ensure moretransparency in competition enforcement, and should improve the effectiveness of that enforcement.

355. During 1999, the Commission received a mandate from the Council of Ministers to opennegotiations with Mercosur and Chile aimed at the conclusion of a free trade agreement. It is envisagedthat this agreement should contain provisions on competition, and on cooperation and coordinationbetween competition authorities. Negotiations commenced in November, and will continue for sometime. Moreover, proposals for technical assistance to Mercosur and the Communidad Andina will bemade during the course of next year, on the basis of a report compiled during 1999. It should also beadded that, thanks to the intervention of the Commission, a first meeting was held during 1999 betweenthe member countries of Caricom, to examine draft competition rules for the Caribbean common market.

C — Multilateral cooperation

1. WTO: Trade and competition policy

356. The WTO working group on the interaction between trade and competition policy held threeformal meetings in 1999 (19-20 April, 10-11 June and 14 September). At the meetings in April and June,consideration was given to the full range of topics called for in the decision of the WTO General Council:

(i) the relevance of fundamental WTO principles of national treatment, transparency, andmost-favoured-nation treatment to competition policy and vice versa;



(ii) approaches to promoting cooperation and communication among Members, including in the fieldof technical cooperation; and

(iii) the contribution of competition policy to achieving the objectives of the WTO, including thepromotion of international trade.

357. The principal purpose of the meeting held on 14 September was to review and adopt the workinggroup’s report (1999) to the General Council.

358. In preparation for the third WTO ministerial conference in Seattle (3.12.1999) the EU tabledproposals for the launching of negotiations towards a multilateral framework of competition rules.Negotiations should focus on three main elements:

— first, all WTO members should introduce basic competition rules and enforce them;

— second, core common principles should guarantee a degree of coherence and commonality betweenWTO members, and

— third, cooperation between competition agencies in member countries should be possible through amultilateral instrument.

359. The Council conclusions on October 26 1999, regarding the ministerial conference in Seattleincluded the following passage on competition: ‘The WTO should begin negotiations on a basicframework of binding core principles and rules on domestic competition law and policy and itsenforcement. The WTO principles of transparency and non-discrimination would provide keyfoundations for the development of such core principles and rules. The WTO should also aim atdeveloping common approaches on anticompetitive practices with a significant impact on internationaltrade and investment as well as on the promotion of international cooperation. The developmentdimension should also be at the centre of the considerations of such a multilateral framework bycombining possible transitional periods together with technical assistance and flexibility in the rules.’

360. No agreement was reached between the WTO members at the ministerial conference in Seattleregarding the launch of a new round of multilateral trade negotiations. Consequently, no actualnegotiations are taking place at this point in time regarding trade and competition.

However, the WTO working group on trade and competition is expected to continue its meeting activitiesduring the year 2000 and the Community and its Member States will continue to further clarify itsposition on the need for multilateral competition rules.

2. OECD

361. The Commission played an active part in the work of the Committee on Competition Law andPolicy of the OECD, especially in the round tables and working party meetings organised in 1999(promoting competition in postal services, oligopoly, professional services, guidelines for multinationalenterprises, enforcement priorities of competition authorities, airline mergers and alliances). TheCommission took part also as examiner (together with Greece) in the review of the Hungarian regulatoryreform in the area of competition policy which took place on October 21.



3. Unctad

362. The Commission issued on 15 September a working document (COM(1999) 451 final) withguidelines for participation in the 10th United Nations Conference on Trade and Development (UnctadX).

363. The purpose of the working document was to help prepare the position of the European Union atthe conference to be held in Bangkok, Thailand, from 12 to 19 February 2000. As regards competition,the working document stresses in point 23 that development requires above all the smooth functioningof fair and competitive markets for products, services and other resources including credit, land andgenetic resources. In this respect, it is essential to contain arbitrary action of governments againstbusiness, to combat corruption and to prevent the collusion between public authorities and rent-seekingoligopolists or monopolists by rigorous competition policies. Further, the development dimension willalso have to be addressed in negotiating multilateral rules on competition (point 35). Finally, Unctadshould continue to conduct analyses and to provide a forum for debate at intergovernmental and at expertlevel on competition policies and rules, in order to raise developing countries’ awareness and to allowthem to share their experience. Unctad could in particular analyse the importance of State-owned andprivate monopolies in emerging markets, the relations between investment and competition, the types ofregulation adapted to different levels of market development. Unctad could also undertake analysis insupport of the negotiations of multilateral rules on competition, giving particular attention to the specificneeds and conditions of developing countries in this context. Unctad could carry on technical cooperationactivities aimed at assisting developing countries in the definition and implementation of competitionrules and policies (point 54).



V — OUTLOOK FOR 2000

1. Legislative and regulatory activities

364. The Commission will pursue the process ensuring that the Community’s competition policy isapplied taking full account of the rapidly evolving nature of the market place. As markets integrate, bothin the EU and globally, it is vital that this evolution is reflected in the procedural and substantive rulesof the Community. The Commission will therefore continue the revision of its procedural and substantiverules for the enforcement of Articles 81 and 82.

365. In the area of procedural rules for antitrust, the objective of 2000 is to have the Commission adopta proposal for a new draft regulation containing rules on the implementation of Articles 81 and 82 of theEC Treaty for transmission to the Council, which could start discussions of that draft regulation towardsthe end of 2000.

366. In the field of vertical restraints, the objective of 2000 is to have the Commission adopt a set ofguidelines complementing the new block exemption regulation adopted in 1999 and which enters intoforce on 1 June 2000. The guidelines will assist companies in the assessment of their distributionagreements when these are not covered by the new block exemption regulation.

367. Revision of policy towards horizontal cooperation agreements continues to be another priority forthe Commission. Moreover, the exercise is an important complement to the reform of vertical restraintsand to the modernisation of antitrust procedures.

368. In 1999, the Competition DG drafted revisions of the current block exemption regulations onresearch and development and specialisation. In parallel, a set of draft guidelines setting out the principalpolicy lines for the application of Article 81 to horizontal agreements has been drafted. In 2000, it is theCommission’s objective to conduct extensive consultations with the experts of the Member States,industry, consumer organisations and other interested parties.

369. The 1997 de minimis notice, which gives guidance on the concept of agreements of minorimportance not falling under Article 81, will have to be revised to take account of the abovementionedchanges in policy for vertical restraints and horizontal cooperation. Work is scheduled to commence onthis review in 2000.

370. In the motor vehicle sector the Commission has to draw up an evaluation report regarding blockexemption Regulation (EC) No 1475/95 on car distribution. The evaluation report will be an essentialdocument for deciding on future competition policy for motor vehicle distribution.

371. As a complement to the above reform projects, impact assessment studies will be launched, the gen-eral aim being to improve the effectiveness of competition policy by measuring the impact of interventionsby the Commission on markets and by identifying sectors where competition needs to be spurred.

372. In the field of mergers the year 2000 will be a particularly active year. The merger regulationrequires the Commission to report to the Council before 1 July 2000 on the operation of the thresholdsand criteria set out in the merger regulation, which determine the jurisdictional scope of Communitymerger control. The Commission may also take the opportunity to examine other aspects of theregulation including, in particular, the referral processes between Member States and the Commission(Articles 9 and 22).



373. The Commission also plans to adopt three guidance notices which have already been the subjectof widespread public consultation in 1999, namely a new (replacement) notice on ancillary restraints, anotice on the simplified treatment of routine cases under the merger regulation, and a notice oncommitments submitted under the merger regulation. The subject of remedies will also be the focus ofa joint EU-US working group established between the Commission and US regulatory authorities at theend of 1999. In addition the Commission intends to develop formal guidance on oligopolistic dominance,an issue of growing importance in the context of increasing European, and even global consolidation ofcertain industries.

374. In the field of State aid policy the Commission intends to revise the guidelines on State aid forenvironmental protection, the guidelines on aid to employment and the framework for State aid in themotor vehicle sector. Furthermore, it intends to adopt three block exemption regulations concerning Stateaid to SMEs, for training and the de minimis rule.

2. International field

375. The ever-increasing integration of the world economy is creating an unprecedentedinterdependence between countries. In many industries, companies are competing in worldwide markets,and are becoming larger and multinational as a result. The past year has seen a series of so-called ‘mega-mergers’ between companies based in different parts of the world, creating new corporations of trulyglobal dimensions. In these circumstances, competition problems are also taking on global dimensionswhich necessitates ever-closer international cooperation between competition authorities in differentcountries.

376. In view of the above and actuated by its communication to the Council of 28 June 1996 (‘Versl’établissement d’un cadre international de règles de concurrence’), the Commission will pursue a dualpolicy of continued bilateral cooperation with the Community’s main partners and examining ways toexpand multilateral cooperation in the field of competition. Modalities for such multilateral cooperationin the area of competition law could usefully be adopted within the framework of the WTO as part ofan agreement which would also set out certain core principles to be contained in the domesticcompetition laws of the individual WTO members.

377. In addition to these two basic objectives, it is clear that the preparation for enlargement will havea significant impact on the Commission’s priorities for 2000 in the international field. The Commissionwill continue its technical assistance to the countries of central and eastern Europe, Cyprus and Malta.The objective being to ensure, prior to enlargement, the setting-up and the implementation of viablecompetition law systems based on the principles and main criteria of EC competition law and theestablishment of well-functioning and credible competition authorities. Special attention shall be paid tothe adoption of State aid rules and effective enforcement of the rules by the State aid monitoringauthorities in these countries.

378. In respect of bilateral cooperation (other than in the context of enlargement) the main prioritieswill be to ensure that the 1991 cooperation agreement with the US, the 1998 ‘positive comity agreement’concluded with the US and the new administrative arrangements on attendance are fully functional.

379. The Commission will also implement the new cooperation agreement with Canada which enteredinto force on 17 June 1999. Concerning Japan, it will explore possibilities of strengthening cooperation.The Commission also intends to fully implement the PCA with Russia which entered into force in



December 1997 and where, with regard to competition policy, it is envisaged to cooperate in thedevelopment and implementation of competition rules, in particular in the area of State aid.

3. Supervisory activities

380. In the context of enforcing the competition rules in the antitrust area, the main part of theCommission’s work consists in dealing with concrete cases, be it notifications, complaints or ex officioinvestigations. The Commission will continue its efforts to focus its resources on the most importantcases giving rise to major legal, economic or political interest for the EU. This implies a sustained effortto strengthen and improve cooperation with national competition authorities and national regulatoryauthorities.

381. The identification, prohibition and, where appropriate, fining of hard-core cartels will continue tobe given the highest priority in the antitrust field. In a number of important cases, proceedings havealready reached an advanced stage and it is therefore the objective to adopt several importantcartel prohibition decisions with fines in 2000.

382. The Commission is also determined to continue, as a top priority, with its work of eliminatingabuses of dominant positions. Such abuses have the effect of limiting, or even destroying, the ability ofcompetitors to affect the dynamics of the market or for potential competitors even to enter the market.Such practices are particularly damaging, since they lead to market partitioning and delays in marketintegration. It will therefore continue to be particularly alert to abusive behaviour by dominant firms andformal decisions with fines for infringement of Article 82 are likely to be adopted in 2000 in a numberof cases, where the investigation is already quite advanced.

383. Success in the area of liberalisation policy continues to depend on a strict application ofCommunity competition law and monitoring of the liberalisation directives. With respect to liberalisationin the telecommunications area, the main task will continue to be monitoring the effectiveimplementation of Community legislation in the Member States. In the postal sector, efforts will befocused on the follow-up of the implementation by Member States of the Commission’s liberalisationdirective adopted in December 1997. The next step in the liberalisation process is a revision of thedirective, for which the Commission intends to submit a proposal before the end of the year. Year 2000will be Year 2 for the liberalisation of the European electricity market, as monopoly rights weresuccessfully abolished in 11 Member States in February 1999. The remaining four Member States areexpected to do the same in 2000 (France, Belgium and Ireland) and 2001 (Greece). The objective of theCommission is to make liberalisation on electricity markets a reality throughout the Community. Thetransposition of the gas directive will take place in 2000. The Commission will concentrate on networkissues and on the contractual arrangements concluded between producers and importers, with a view toachieving effective liberalisation.

384. Since many Member States intend to grant financial aid to electricity companies to make up forinvestments or commitments which cannot be honoured in a liberalised system, the Commission hasdecided to establish a guideline for the treatment of such stranded costs under the State aid rules.

385. In the area of merger control, the main task of the Commission is to continue ensuring theeffective regulation of mergers notified under the merger regulation by preventing the creation orreinforcement of dominant positions as a result of which effective competition would be significantlyimpeded in the common market or a significant part of it. Given current economic indicators this



casework is likely to continue to increase in the same proportion as in previous years, with even greateremphasis on the international character of mergers.

386. In the field of State aid, priority will be given to measures increasing the transparency of theCommission’s State aid monitoring and Member States’ State aid practice. The Commission will start toset up a State aid register. In the interest of increasing efficiency of State aid control, it will follow upmore systematically its recovery orders concerning illegal aid.



ANNEX — CASES DISCUSSED IN THE REPORT

1. Articles 81, 82 and 86



Case Publication Point

Aeroportos e Navegação Aerea-Empresa OJ L 69, 16.3.1999 59, 88Publica (Portuguese airports)

Airtours/First Choice IP/99/695 Box 3

Alitalia/KLM IP/99/628 93, 187

AT&T/IBM IP/99/259 Box 4

Bosman

British Interactive Broadcasting Ltd IP/99/686 54, Box 4

CNSD OJ L 203, 13.8.1993 Box 5

COAPI OJ L 122, 2.6.1995 Box 5

Coca-Cola/Orangina Box 2

Deutsche Telekom 67

Dutch pension funds 131–137

EPI OJ L 106, 23.4.1999 Box 5

Europe–Asia Trades Agreement (EATA) OJ L 193, 26.7.1999 99, 100

France Télécom 67

Ilmailulaitos/Luftfartsverket (Finnish airports) OJ L 69, 16.3.1999 58, 88

Irish Sugar OJ L 258, 22.9.1997 63, 64

Microsoft Internet Explorer IP/99/317 55, Box 4

Mouscron IP/99/965 140

MSG Box 4

Nederlandse Federatieve Vereniging voor de OJ L 39, 14.4.2000 46, 47Groothandel op Elektrotechnisch Gebied (FEG)

P&I clubs OJ L 125, 19.5.1999 103, 111

REIMS II OJ L 275, 26.10.1999 Box 3, 81– 83

Revised TACA (Trans-Atlantic Conference OJ C 125, 6.5.1999 95 –98Agreement)

Seamless steel tubes IP/99/957 48, 49

Telia/Telenor IP/99/746 Box 4, 67,

The 1998 Football World Cup OJ L 5, 8.1.2000 61–62, 140

Trans-Atlantic Agreement (TAA) OJ L 376, 31.12.1994 99, 100

Virgin/British Airways OJ L 30, 4.2.2000 60, 94

Vlaamse Televisie Maatschappij OJ L 244, 6.9.1997 85, 87




Ahlström/Kvaerner IP/99/665 150, 164

Airtours/First Choice IP/99/695 151, 161, 175, Box 6 and 8

Alitalia/KLM IP/99/628 187

BP Amoco/Atlantic Richfield IP/99/712 150, 154, 172

BSCH/A. Champalimaud IP/00/296 194–196

BT/AT&T IP/99/209 185

Compagnie des Salins du Midi et des Salines IP/99/391 191de l’Est (CSME)/MDPA/SCPA

Danish Crown/Vestjyske Slagterier IP/99/165 152, 161, 170

Deutsche Post/ASG IP/99/485 156

Deutsche Post/Danzas/Nedlloyd IP/99/456 158

Deutsche Post/trans-o-flex IP/99/318 156, 159, 167, Box 9

EdF/London Electricity IP/99/49 193, 197

Exxon/Mobil IP/99/708 150–151, 154–155, 161, 171–172,192

Fujitsu/Siemens IP/99/719 188

Gencor/Lonrho IP/97/338 151, 160

Heineken//Cruzcampo IP/99/632 191

Hoechst/Rhône-Poulenc IP/99/626 182–183, 338

Honeywell/AlliedSignal IP/99/921 150, 178–179, 338

Hutchison/RMPM/ECT IP/99/618 167, Box 7

Imetal/China Clays IP/99/263 150

Kali und Salz IP/98/655 160

KLM/Martinair IP/99/421 165–166, Box 9

Rabobank-Beeck/Homann IP/99/220 Box 2, 191

Rewe/Meinl IP/99/83 Box 7, 169

Sanofi/Synthélabo IP/99/591 Box 9, 199

Skandia/Storebrand/Pohjola IP/99/635 186

Telia/Telenor IP/99/746 67, Box 4, 173, 174, Box 8

Total/Elf Aquitaine Box 2, 154, 192

Total/Petrofina IP/99/197 191

TPG/Tecnologistica IP/99/320 156, 157

2. Merger control




Exemption from tolls on the Tauern 284motorway in Austria

AESA/MTW-Werft/Volkswerft OJ L 148, 6.6.1997 267

Charbonnages de France OJ C 280, 2.10.1999 274

Crédit Agricole 227

Customs house docks area (CHDA) IP/99/1042 212, 265

Danish VaekstFonden OJ C 245, 28.8.1999 246

Dieselmotorenwerk Rostock OJ L 232, 2.9.1999 258

Dornier Luftfahrt GmbH OJ C 40, 12.2.2000 247

Dutch petrol stations 244

Early retirement subsidies for road hauliers 243

Eli Lilly 251

Ferriere Nord 254

Fiat Mirafiori Meccanica IP/99/1037 280

German ecological tax reform OJ C 245, 28.8.1999 253

Graphischer Maschinenbau GmbH IP/99/73 258

Hoogovens-Usines Gustave Boël OJ C 245, 28.8.1999 231

Italian fiscal amnesty OJ C 113, 24.4.1999 249

Kinderkanal/Phoenix OJ C 238, 21.8.1999 226, Box 11

Kvaerner Warnow Werft OJ L 274, 23.10.1999 269

Investment in Portugal OJ C 375, 24.12.1999 213

Marina di Stabia 242

Mercedes Vitoria OJ C 351, 4.12.1999 281

Nerefco OJ L 6, 11.1.2000 254

Neue Maxhütte OJ L 230, 31.8.1999 271

Pittler/Tornos Werkzeugmaschinen GmbH 258

RJB mining plc PB C 86, 27.3.1999 276–278, 308

Rover Longbridge OJ C 62, 4.3.2000 281

Saxonylon Textil GmbH OJ L 268, 16.10.1999 283

Sécuripost 233

Shell Chemicals BV OJ C 298, 16.10.1999 247

Spindelfabrik Hartha OJ L 145, 10.6.1999 258

Towns of Venice and Chioggia IP/99/887 250

Verlipack/Heye-Glas OJ C 288, 9.10.1999 259

Weida Leder GmbH IP/99/502 258

Purchase of special vehicles 284

Restructuring of the road haulage sector in Italy IP/99/307 285

Spanish regional measures IP/99/1041 287

Danish scheme to subsidise the transport of goods IP/99/238 290

Tirrenia 294

French ports 295

Iberia 296

3. State aid



Sabena 93, 297

Manchester Airport 299

Elba Airport 299

Crédit Foncier de France IP/99/416 305

Banco di Sicilia IP/99/833 305

Westdeutsche Landesbank Girozentrale IP/99/471 234, 306

BBC Box 11

Part Two

Report on the applicationof the competition rulesin the European Union

[Report prepared under the sole responsibilityof Competition Directorate-general inconjunction with the Twenty-ninth Reporton Competition Policy 1999 —SEC(2000) 720 final]


Contents

I — Antitrust: Articles 81, 82 and 86of the EC Treaty — Article 65 of the ECSC Treaty 135

A — Case summaries 1351. Prohibitions 1352. Authorisations 1413. Rejections of complaints 1664. Settlement 1705. Inquiry into sectors of the economy 1706. Failure to comply with procedural rules 171

B — New legislative provisions and notices adopted or proposed by the Commission 172

C — Formal decisions pursuant to Articles 81, 82 and 86 of the EC Treaty 1721. Published decisions 1722. Other formal decisions 173

D — Cases closed by comfort letter in 1999 174

E — Notices pursuant to Articles 81 and 82 of the EC Treaty 1791. Publication pursuant to Article 19(3) of Council Regulation No 17 1792. Notices inviting interested third parties to submit observations on proposed

transactions 1793. “Carlsberg” notices (concerning structural cooperative joint ventures) 179

F — Press releases 180

G — Judgments and orders of the Community courts 1821. Court of First Instance 1822. Court of Justice 183

II — Merger control: Council Regulation (EEC) No 4064/89 and Article66 of the ECSC Treaty 185

A — Summaries of decisions taken under Article 6(1)(b) of Council Regulation (EEC) No4064/89 1851. Merger proposals where undertakings have been given by the firms involved 185

B — Summaries of decisions taken under Article 8 of Council Regulation (EEC) No 4064/89 1911. Merger proposals where undertakings pursuant to Article 8(2) of the ECMR have

been given by the firms involved 1912. Merger proposals declared incompatible with the common market under Article 8(3)

of the ECMR 195

C — Decisions pursuant to Article 2(4) of the ECMR (joint venture cases) 196

D — Commission decisions 2021. Decisions under Article 6 and 8 of Council Regulation (EEC) No 4064/89 2022. Decisions pursuant to Article 66 of the ECSC Treaty 210

E — Press releases 2101. Decisions under Articles 6 and 8 of Council Regulation (EEC) No 4064/89 210

F — Judgments of the Community courts 220


A — Case summaries 2211. Regional aid 2212. Aid to specific industries 2283. Cross-industry schemes 260

B — New legislative provisions and notices adopted or proposed by the Commission 277

C — List of state aid cases in sectors other than agriculture, fisheries, and the coal industry 2781. Cases in which the Commission found, without opening a formal investigation, that

there was no aid element within the meaning of Article 87(1) (former Article 92(1))of the EC Treaty or Article 1(2) of Decision 2496/96/ECSC 278

2. Measures which the Commission considered compatible with the common marketwithout opening a formal investigation under Article 88(2) (former Article 93(2))of the EC Treaty or Article 6(5) of Decision 2496/96/ECSC 278

3. Interim decisions requiring the Member State to supply the information needed bythe Commission 285

4. Aid cases in which the Commission initiated proceedings under Article 88(2)(former Article 93(2)) of the EC Treaty in respect of all or part of the measure 285

5. Aid cases in which the Commission initiated proceedings under Article 6(5) ofDecision 2496/96/ECSC in respect of all or part of the measure 287

6. Aid cases in which the Commission extended proceedings under Article 88(2)(former Article 93(2)) of the EC Treaty in respect of all or part of the measure 288

7. Cases in which the Commission terminated proceedings under Article 88(2) (formerArticle 93(2)) of the EC Treaty having found that there was no aid element withinthe meaning of Article 87(1) (former Article 92(1)) of the EC Treaty 288

8. Cases in which the Commission considered that the aid was compatible with thecommon market and terminated proceedings under Article 88(2) (former Article93(2)) of the EC Treaty by way of a positive final decision 288

9. Cases in which the Commission considered, subject to certain reservations, that theaid was compatible with the common market and terminated proceedings underArticle 88(2) (former Article 93(2)) of the EC Treaty by way of a conditional finaldecision 289

10. Cases in which the Commission considered that the aid was incompatible with thecommon market and terminated proceedings under Article 88(2) (former Article93(2)) of the EC Treaty by way of a negative or partly negative decision 290

11. Cases in which the Commission considered that the aid was incompatible with thecommon market and terminated, by way of a negative or partly negative decision,proceedings under Article 88 of the ECSC Treaty for failure by a Member State tofulfil its obligations 291

132 CONTENTS


12. Aid cases in which the Commission terminated proceedings under Article 88(2)(former Article 93(2)) of the EC Treaty after the Member State withdrew theproposed measure 291

13. Aid cases in which the Commission proposed appropriate measures under Article88(1) (former Article 93(1)) of the EC Treaty 291

14. Aid cases which the Commission decided to refer to the Court of Justice under thesecond subparagraph of Article 88(2) (former Article 93(2)) of the EC Treaty 291

15. Other Commission decisions 292

D — List of state aid cases in other sectors 2921. In the agricultural sector 2922. In the fisheries sector 3053. In the transport sector 307

E — Judgments of the Community courts 3081. Court of First Instance 3082. Court of Justice 309

F — Enforcement of Commission decisions ordering the recovery of aid 3101. Commission decisions (Competition DG) ordering the recovery of aid (1983-98)

not yet implemented 3102. Commission decisions (Competition DG) taken in 1999 ordering reimbursement 315

IV — International 319

Commission report to the Council and the European Parliament on the application of theAgreement between the European Communities and the Government of the United Statesof America regarding the application of their competition laws 1 January 1999 to 31December 1999 319

1. Introduction 3192. EC/US Cooperation in individual cases during 1999 3203. Administrative Arrangements on Attendance (AAA) 3224. EU/US Mergers Working Group 3235. Positive Comity 3236. Statistical information 3237. Conclusions 325

Commission Report to the Council and the European Parliament on the application of theAgreement between the European Communities and the Government of Canadaregarding the application of their competition laws, 17 June 1999 to 31 December 1999 333

1. Introduction 3332. The Agreement 3333. Notifications 3344. Cooperation 3355. Some Cases 3356. Conclusion 335


CONTENTS 133

V — The application of competition rules in the Member States 337

A — Legislative developments 337

B — Application of the Community competition rules by national authorities 343

C — Application of the Community competition rules by courts in the Member States 354

D — Application of the 1993 notice on cooperation between the Commission and nationalcourts 363

E — Application of Articles 81 and 82 by national competition authorities 364

VI — Statistics 367

A — Articles 81, 82 and 86 of the EC Treaty + Article 65 of the ECSC Treaty 3671. Activities in 1999 3672. Four-year overview 367

B — Council Regulation (EC) No 4064/89 of 21 December 1989 on the control ofconcentrations between undertakings 3681. Notifications received 1994-99 3682. Article 6 decisions 1996-99 3693. Article 8 decisions 1996-99 3694. Referral decisions 1996-99 3695. Article 7 decisions (suspension of concentrations) 1996-99 369

C — State aid 3701. New cases registered in 1999 3702. Cases being examined as at 31 December 1999 3703. Cases dealt with in 1999 according to the register in which they were recorded 3704. Decisions taken by the Commission in 1999 3715. Evolution over the period 1989-99 3716. Decisions broken down by Member State 371

VII — Studies 373

VIII — Reactions to the twenty-eighth Report 381

A — European Parliament 381Resolution of the European Parliament on the Commission’s XXVIIIth Report onCompetition Policy (1998) (SEC(1999) 743 – C5-0121/1999 – 1999/2124(COS))and reply by the Commission 381

B — Economic and Social Committee 386Opinion of the Economic and Social Committee on the XXVIIIth Report onCompetition Policy (1998) (SEC(1999) 743 final) and the Commission’s response 386

134 CONTENTS


I — ANTITRUST: ARTICLES 81, 82 AND 86 OF THE EC TREATY —ARTICLE 65 OF THE ECSC TREATY

A — Case summaries

1. Prohibitions

1.1. Horizontal agreements

FEG+TU (Case IV/F1/33.884)

On 26 October the Commission adopted a decision under Article 81(1) of the EC Treaty prohibiting acollective exclusive dealing arrangement and a system of price coordination on the Dutch wholesalemarket for electrotechnical equipment. (1) The decision confirms well-established Commission policyand the case-law of the EC Court of Justice and Court of First Instance. (2)

The case started in 1991 as a result of a complaint by the UK-based wholesaler in electrotechnicalequipment City Electrical Factors and its Dutch subsidiary (“CEF”). It essentially covers the period1986-1994.

The first infringement the Commission established concerns the application of a collective exclusivedealing arrangement involving the Dutch association of wholesalers of electrotechnical equipment(“FEG”), the association of importers of such products in the Netherlands (“NAVEG“) and a largenumber of individual suppliers of such products.

The Commission found evidence that on the basis of the aforementioned arrangement FEG hadprohibited members of NAVEG and individual suppliers from selling to wholesalers that were notmembers of FEG. The prohibition deprived these wholesalers of their sources of supply and complicatedand delayed the entry to the Dutch market of foreign wholesalers, like the complainant. At the same time,the arrangement prevented suppliers from selling their products on the Dutch market via wholesalersother than FEG members. As the turnover achieved by suppliers, and especially NAVEG members,depended for a large part on sales to FEG members it was difficult for them to ignore FEG’s wishes.

The basis for the collective exclusive dealing arrangement was a gentleman’s agreement between FEGand NAVEG. The scope of the arrangement was extended by the participation of numerous individualsuppliers. It appeared that until the late 1950s the collective exclusive dealing arrangement had beenbased on a formal written agreement. After its prohibition by the Dutch competition authorities theparties had decided to convert the formal written agreement into a more covert gentleman’s agreement.


ANTITRUST 135

(1) Commission Decision 2000/117/EC (OJ L 39, 14.2.2000). See also press release IP/99/803, 26.10.1999.(2) With respect to exclusive collective dealing, see the Commission’s First Competition Report, covering 1971,

pp. 35-36, point 19; Third Competition Report, covering 1973, p. 48, point 53; Commission Decision 72/390/EECCentrale Verwarming, OJ L 264, 23.11.1972; Commission Decision 78/59/EEC Centraal Bureau voor deRijwielhandel, OJ L 20, 25.1.1978; and Commission Decision 82/123/EEC VBBB/VBVB, OJ L 54, 25.2.1982;with respect to price coordination, see the judgments of the Court of Justice in Case 48/69 ICI v Commission[1972] ECR 619, paragraphs 115-116; Case 123/83 BNIC v Clair [1985] ECR 391, paragraph 29; and Case 243/83Binon v Agence et messageries de la presse [1985] ECR 2015, paragraph 44; and the judgment of the Court ofFirst Instance in Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission [1997] ECR II-1739,paragraphs 158-164.

The second infringement of Article 81(1) the Commission established in this case concerns theinterference by FEG in the pricing policy of its members. The Commission found evidence that FEGand its members had pursued a policy aimed at lessening price competition among FEG members andcreating artificial price stability with healthy margins for FEG members. In order to achieve these goalsFEG and its members had recourse to the following instruments:

— a binding FEG decision prohibiting its members from advertising using specially reduced prices;

— a binding FEG decision requiring FEG members to pass on to their customers price increasesimplemented by the supplier after they had ordered the products;

— discussions among FEG members on prices and discounts during FEG meetings;

— the issue of price recommendations by FEG to its members.

The effects of the price arrangements were enhanced by the collective exclusive dealing arrangement.As the exclusive collective dealing arrangement deprived potential price-cutters such as non-FEGwholesalers of their sources of supply, the artificial price stability created by FEG and its members couldnot be endangered by outsiders.

Considering that FEG members accounted for 96% of the Dutch wholesale market for electrotechnicalequipment the violations had appreciably restricted competition. As 30-50% of all electrotechnicalproducts sold on the Dutch market were imported, the Commission also considered that trade betweenMember States had been affected to an appreciable extent.

In view of their respective role in the above infringements fines were imposed on both FEG(EUR 4.4 million) and Technische Unie (TU) (EUR 2.15 million). FEG could be identified as theinstigator and controller of both the collective exclusive dealing arrangement and the pricingarrangements. A fine was, however, also imposed on FEG’s biggest and most important member, TU,for two reasons: Firstly, TU could be distinguished from other FEG members by its active and long-termparticipation in the board of FEG and its committees. Secondly, it was clear that TU had also undertakenrestrictive practices on its own account in its trading relations with individual companies.

The calculation of the fines was based on the Commission’s published guidelines on the imposition offines. (3) The Commission considered that the infringements were serious and of medium to longduration and that neither aggravating nor mitigating circumstances were present in this case.

The Commission decided, however, that the fines thus set needed to be reduced to take into account theduration of the Commission’s proceedings. In arriving at this conclusion, it based itself on the relevantcase-law of the EC Court of First Instance and Court of Justice. (4)

Both FEG (T-05/00) and TU (T-06/00) have lodged appeals with the Court of First Instance against theCommission decision.

136 APPLICATION OF THE COMPETITION RULES IN THE EUROPEAN UNION


(3) OJ C 9, 14.1.1998.(4) See the judgments of the Court of Justice in Case C-185/95 P Baustahlgewebe [1998] ECR I-8485 and the Court

of First Instance in Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission [1997] ECR II-1739.

Market-sharing cartel between seamless steel tube producers(Case IV/E1/35.860 B)

On 8 December the Commission decided, pursuant to Article 81 of the EC Treaty, to impose finestotalling EUR 99 million on eight seamless steel tube producers: British Steel Limited (UnitedKingdom), Dalmine SpA (Italy), Mannesmannröhren Werke AG (Germany), Vallourec SA (France), andKawasaki Steel Corporation, NKK Corporation, Nippon Steel Corporation and Sumitomo MetalIndustries Limited (Japan). (5) The products concerned were “standard” steel borehole pipes (commonlyknown as “oil country tubular goods”, or OCTG) and “project” transportation pipes (commonly knownas “line pipe”); both varieties are used in oil and gas exploration and transport.

To coordinate their behaviour on the standard OCTG and project line pipe markets, the producers set upa cartel, which they called the “Europe-Japan Club”. The cartel restricted competition in the commonmarket by requiring that the domestic markets of the different producers (i.e. the German, French, Italian,UK and Japanese markets) should be respected: the supply of seamless tubes to CommunityMember States where a national producer was established was limited by the other producers party tothe agreement refraining from delivering tubes to those markets. Other parts of the cartel agreement,which related to certain third markets, were not covered by the decision, since the Commission couldnot provide evidence of a restrictive effect within the EU.

As regards duration, the Commission decided that the infringement lasted from 1990 to 1995 (except inthe case of British Steel, which ceased producing the pipes in 1994).

In fixing the amounts of the fines, the Commission took account of the fact that, by definition, anagreement aimed at the observance of the domestic markets of the participating firms constitutes a veryserious infringement of Community law, since it undermines the proper functioning of the single market.Moreover, the four Member States in question accounted for most of the consumption of seamless OCTGand line pipe in the EC and hence constituted an extensive geographic market.

However, the Commission also considered that the standard OCTG and project line pipe sold in the Com-munity by the firms to which the decision was addressed accounted for only about 19% of Community con-sumption of seamless OCTG and line pipe. Some of the demand for seamless OCTG and line pipe could fur-thermore be met by smaller-diameter welded tubes. Lastly, the sales of these products in the four MemberStates in question by the firms to which the decision was addressed were only about EUR 73 million a yearduring the period 1990-95. As a result, in practice, the infringement had only a limited impact on the market.

As attenuating circumstances, the Commission noted that the sector was in a long-term crisis and thatits position had deteriorated since 1991; coupled with the increasing flow of imports, these factors hadresulted in capacity reductions and plant closures.

Pursuant to the notice on the waiving or reduction of fines in cartel cases (“leniency notice”), (6) the fineson Vallourec and Dalmine were reduced, since the firms had cooperated with the Commission in theestablishment of the facts.

All the companies concerned except Vallourec lodged appeals with the Court of First Instance.


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(5) Press release IP/99/957, 8.12.1999.(6) OJ C 207, 18.7.1996.

1.2. Vertical agreements

Lee Cooper (Case IV/F3/36.015)

The Commission stopped the UK jean manufacturer Lee Cooper from cutting the Belgian market offfrom cheaper UK imports; Lee Cooper was trying to maintain Belgium as a market with a premium pricelevel for its product.

The Commission opened proceedings after receiving information that Lee Cooper was forcing its UKwholesale customers to refrain from parallel exports to Belgium where Lee Cooper jeans were selling at ahigher price. The Commission’s investigation established that Lee Cooper had taken this action on the basisof an understanding with its Belgian customers. Lee Cooper offered to settle the case and the Commissionnegotiated a settlement which put an end to Lee Cooper’s action against parallel trade. At the Commission’srequest, Lee Cooper also informed all its customers that they were now free to engage in parallel trading.

1.3. Abuse of dominant positions

Portuguese airports (Case IV/D-2/35.703)

This case follows on from a general investigation of the various methods used for discounting anddifferentiating landing charges at Community airports which the Commission launched in the wake ofits decision of 28 June 1995 on the discounts in use at Brussels National Airport. (7) It relates to thesystem for granting discounts on landing charges and differentiating these charges according to the originof the flight introduced by the Portuguese authorities at the mainland airports administered by Aeroportose Navegação Aerea — Empresa Publica (ANA).

Landing charges are payable by airlines as consideration for services provided by ANA, such as themaintenance and operation of runways and approach control. A government measure had introduced 50%reductions on landing charges for domestic flights and a volume discount ranging from 7% to 32%according to the number of monthly landings.

Article 82 of the EC Treaty prohibits undertakings that hold a dominant position in a substantial part ofthe common market from applying dissimilar conditions to equivalent transactions with other tradingparties, thereby placing them at a competitive disadvantage. In providing the same service, ANA couldnot therefore discriminate between different airlines for no objective reason: the handling of an aircraftby ANA was the same, whether it was the first or the hundredth landing by a given airline or whether itcame from another Portuguese airport or another Member State. Since the system of discounts inquestion was introduced by government measure, the Commission found that it infringed Article 86, readin conjunction with Article 82, of the Treaty.

The decision of 10 February (8) called on Portugal to bring an end to the system of discounts on landingcharges, differentiated according to the origin of the flight, applied at the airports of Lisbon, Oporto andFaro. On 4 May Portugal filed an application for annulment of the decision with the Court of Justice,registered as Case C-163/99. On 14 July the Commission sent the Portuguese authorities a letter offormal notice under Article 226 of the EC Treaty for failure to comply with a Commission decision.



(7) OJ L 216, 12.9.1995.(8) OJ L 69, 16.3.1999. See also press release IP/99/101, 10.2.1999.

Finnish airports (Case IV/D-2/35.767)

On 10 February the Commission adopted a decision (9) calling on Ilmailulaitos/Luftfartsverket, the Finnishairport operator, to put an end to its system for differentiating landing charges according to the origin of theflight at the airports of Helsinki, Vaasa, Turku, Pori and Tampere. Domestic flights were granted a 60% dis-count for no objective reason: the handling of domestic flights and intra-EEA flights by Ilmailulaitos/Luft-fartsverket was equivalent. The differentiation of charges decided independently by the Finnish airport oper-ator was investigated under Article 82 of the EC Treaty alone. Since this was the first decision relating to air-port infrastructure access costs under Article 82 and in view of the fact that Ilmailulaitos/Luftfartsverket hadwithdrawn part of the discount system and reduced the difference between charges for domestic flights andintra-Community flights since the investigation had begun, the Commission decided not to impose a fine.

Virgin/BA (Case IV/D2/34.780)

On 14 July, acting on a complaint from Virgin Atlantic, the Commission imposed a fine of EUR 6.8 millionon British Airways for abusing its dominant position as a buyer of air travel agency services from UnitedKingdom travel agents. (10) For at least the past seven years BA had been offering travel agents extra com-mission payments in return for their meeting or exceeding their previous year’s sales of BA tickets. Thismade the travel agents loyal to BA, discouraging them from selling travel agency services to other airlines,and created a barrier to airlines that wished to compete against BA on the UK markets for air transport. Forthe future, the Commission and BAhave identified a set of principles, which are the result of fruitful cooper-ation between the airline and the Commission. Applying these principles will prevent BA from engaging inthe type of behaviour criticised in the decision. The principles will also provide clear guidance for any otherairline in a similar situation; the Commission will take all measures necessary to ensure that the principles inthis decision are applied to other EC airlines in equivalent situations.

The commissions offered by BA were equivalent to a “loyalty discount”, i.e. a discount based not oncost savings but on loyalty, of the type consistently condemned in the past as an exclusionary abuse ofa dominant position. It is well-established principle of Community law that a dominant supplier cannotgive incentives to its customers and distributors to be loyal to it, thereby foreclosing the market to itscompetitors. The effect of this abuse is to try and counteract the effect of market liberalisation bymaintaining the dominant airline’s market share at its old levels and by penalising travel agents whodivert some of their customers to relatively new competitors.

A dominant firm should provide supplementary commissions to travel agents only where these reflectextra services provided by the agent or efficiencies achieved. The existence of these practices preventedUK consumers from fully benefiting from the effects of deregulation and liberalisation of air transport.

The principles, which are designed to provide guidance to any airline which is a dominant purchaser ofair travel agency services and wishes to avoid infringing Article 82 of the EC Treaty, are as follows:

1. Commissions offered to different travel agents are differentiated to the extent that the differencesreflect:

1.1. Variations in the cost of distribution through different travel agents; or


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(9) OJ L 69, 16.3.1999. See also press release IP/99/101, 10.2.1999.(10) OJ L 30, 4.2.2000. See also press release IP/99/504, 14.7.1999.

1.2. Variations in the value of the services provided to British Airways by different travel agents inthe distribution of its tickets.

2. Commissions increase at a rate which reflects:

2.1. Savings in British Airways’ distribution costs; or

2.2. An increase in the value of services provided by the travel agent to British Airways in thedistribution of its tickets.

3. Commissions relate to sales made by the travel agent in a period not exceeding six months.

4. Commissions do not have targets that are expressed by reference to the sales made by the travel agentin a preceding period.

5. Commissions increase on a straight line basis above any base line stated in the agreement.

6. The commission paid on any ticket does not include any increase in the commissions paid on allother British Airways tickets issued by the travel agent.

7. Travel agents are free to sell the tickets of any other airline and the goods or services supplied byany third party.

British Airways has lodged an appeal against this decision with the Court of First Instance.

Football World Cup (Case IV/D3/36.888)

On 20 July the Commission found against the local organising committee of the 1998 Football WorldCup (Comité français d’organisation de la Coupe du monde de football 1998, or “CFO”), following thelatter’s implementation of discriminatory ticket sales arrangements in the run-up to the tournament whichfavoured consumers resident in France. (11)

In 1996 and 1997 the CFO sold over 570 000 entry tickets exclusively to consumers who could providean address in France. Of those tickets, some 393 200 related to matches (other than the opening match)taking place either during the first phase of the competition or in the first knock-out round of the secondphase. A further 181 000 entry tickets relating to the opening match, quarter final and semi-final matches,the third and fourth place play-off and the final itself were sold by the CFO following the outcome of aspecial draw which took place in Paris in December 1997. The practical effect of the requirement toprovide an address in France was to deprive the overwhelming majority of consumers outside France ofthe possibility of purchasing tickets in 1996 and 1997 direct from the CFO.

In the absence of any justification on security or other grounds, the Commission concluded that theimplementation by the CFO of discriminatory sales arrangements amounted to an abuse of its dominantposition in the market for the sale of entry tickets in 1996 and 1997 contrary to Article 82 of theEC Treaty. The Commission also concluded that, by advising the non-French public that tickets could



(11) OJ L 5, 8.1.2000. See also press release IP/99/541, 20.7.1999.

be obtained only from national football federations and tour operators, the CFO reinforced thediscrimination against non-French residents wishing to purchase entry tickets for the finals competition.

The Commission would normally impose a heavy fine where an undertaking abuses a dominant positionin this manner. Nevertheless, given that the abusive ticketing arrangements as implemented by the CFOwere similar to those adopted for previous World Cup finals tournaments, and that the CFO could nothave easily relied upon previous Commission decisions or Court of Justice case-law in order to ascertainits responsibilities under EC competition rules, the Commission decided to impose only a token fine ofEUR 1 000. The decision gives a clear signal, however, that the Commission expects tournamentorganisers in the future to ensure that their ticketing arrangements comply fully with EC competitionrules before putting them into effect.

2. Authorisations

2.1. Horizontal agreements

a) Joint ventures and other forms of cooperation

Telecommunications

Esat Telecom — Irish Rail (Case IV/C-1/37.183)

On 5 August 1998 Esat Telecommunications Limited, Coras Iompair Eireann (CIE) and the latter’ssubsidiary, Irish Rail, notified to the Commission a set of agreements relating to the creation of analternative, nationwide telecommunications network in Ireland. In the course of the notificationprocedure, the Commission, in close cooperation with the Irish Competition Authority, examined inparticular the conditions of access to railway lines for the purpose of installing telecommunicationsnetworks. A notice pursuant to Article 19(3) of Council Regulation No 17 was published in the OfficialJournal asking interested third parties to send their comments to the Commission.

Pursuant to the agreements as amended, CIE may install or permit the installation of other telecommunica-tions cable for third parties provided that for a short, limited period Esat Telecom is granted priority access toCIE infrastructures for the purposes of deploying and putting into service its network as fast as possible. InOctober the Commission sent the parties a comfort letter stating that no further action now needed to be tak-en under Article 81(1) of the EC Treaty in respect of the notified agreements.

GlobalOne II (Case IV/C-1/37.459)

On 3 August the Commission indicated that it intended to allow GlobalOne, the joint venture created in1996 by Deutsche Telekom, France Télécom and Sprint, to provide all telecommunications services,including voice telephony, in all the EU Member States. Before adopting a formal decision to that end,the Commission published a notice in the Official Journal inviting all interested parties to comment. TheCommission’s position is based on market developments since it approved the creation of GlobalOne in1996, including the entry into the market of other substantial competitors such as the BT/AT&T venture.

In July 1996, the Commission exempted, for a period of seven years, the creation of the GlobalOne jointventure by Deutsche Telekom AG (DT), France Télécom (FT) and Sprint Corporation for the provision


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of corporate telecommunications services, traveller services and carrier services. The purpose of thereview of the 1996 GlobalOne decision is to enable GlobalOne to be free to provide alltelecommunications services (in addition to those covered by the 1996 decision), to provide, on an agentor reseller basis, services of FT and DT available to third parties and to enable FT and DT to sellGlobalOne services. The Commission is not at present reviewing conditions relating to the behaviour ofthe parent companies (e.g. requirements not to cross-subsidise or discriminate in favour of GlobalOne).

Farland Network (Case IV/C-1/37.130)

In June the Commission cleared a set of agreements between British Telecom and its partners in Europe —Viag Interkom in Germany, Albacom in Italy, Telfort in the Netherlands and Sunrise in Switzerland — bywhich those companies will link their in-country networks into a pan-European fibre optic network. The net-work, to be run by a company called Farland, is primarily intended and designed for international traffic. Theagreements were notified on 2 July 1998. The Commission published a notice in the Official Journal on20 March indicating its intention to grant negative clearance for the operation and inviting third parties tocomment.

Farland Network is primarily intended and designed for international traffic; it will interlink switchedlocations between European cities. Given the expected substantial increase in capacity offered in thismarket segment and in the availability of alternative sources of substitute supply, it is unlikely that theintended cooperation could restrict competition in the market for the provision of telecommunicationstransmission capacity at European Union level. The Commission also investigated the extent to whichthe notified agreements allow scope for alignment of competitive strategies or increased transparencybetween BT and its partners or between the partners themselves. In June, the Commission informed theparties, by way of a comfort letter, that the agreements do not fall within the scope of Article 81(1) ofthe EC Treaty.

Cégétel + 4 (Case IV/C-1/36.592)

On 20 May the Commission adopted a decision approving the creation of a joint venture betweenCompagnie générale des eaux SA — now named Vivendi — (France), British Telecommunications plc(UK), Mannesmann AG (Germany) and SBC International Inc (USA). (12) In the approved agreements,the parties agreed on their respective contributions and commercial relationships in connection with therestructuring of Cégétel. The purpose of the operation was to enable Cégétel to become the second full-service telecommunications operator in France, offering a full range of telecommunications servicesincluding fixed voice telephony.

Initially, Compagnie générale des eaux (CGE) held 100% of the shares in Cégétel. As a result of thenotified agreements, CGE (now Vivendi) holds 44%, BT holds 26%, Mannesmann holds 15% and SBCIholds 15% of the shares. The agreements provide that Cégétel will be active in France only and willaddress all segments of the French telecommunications market. In addition, Cégétel is appointed asexclusive distributor in France of British Telecommunications’ value added and enhanced internationalservices traded under the brand name Concert.

The Commission found that, except for mobile telecommunications services, the parties’ market shareson the relevant segments were negligible. At the time of the decision SFR, a subsidiary of Cégétel, had



(12) OJ L 218, 18.8.1999.

a market share of 38% on the French mobile telephony market, whereas France Télécom had a 51%market share. In almost all segments of the fixed telephony market, France Télécom continues to hold adominant position due to its former legal monopoly. Many companies, however, have recently enteredor intend to enter the French telecommunications market, either globally or on specific segments.

The Commission granted negative clearance regarding the restructuring of Cégétel. Even if BT and SBCare incumbent operators on their home markets, they have to be considered new entrants in France andin any other national telecommunications market in fixed voice telephony, which is by far the mostimportant one. The restructuring creates a more effective competitor to the incumbent operator in Francethan the parent companies would have been capable of doing separately. Therefore, Cégétel’srestructuring was found to fall outside the scope of Article 81(1).

The Commission held that the general restriction of competition on the parent companies, by virtue ofthe non-competition clause contained in the notified agreements, was the expression of the shareholders’commitment towards Cégétel to guarantee that each one would focus its efforts on the French marketthrough Cégétel. Therefore, the non-competition clause was regarded as ancillary to the operation, aslong as the parties keep their current influence over Cégétel. In order to meet the Commission’s concernsregarding a possible restriction of competition in the mobile market, the parties agreed to suppressrestrictions on the sale of mobile telephony services by SFR (SIM cards) outside France and byMannesmann and BT of their respective national mobile services (D2 and Cellnet) in France.

As regards the Concert exclusive distribution agreement, the Commission granted an exemption for aten-year period ending on 17 July 2007. The exclusivity given to Cégétel will facilitate the promotionof Concert services in France and will lead to intensive marketing. This will stimulate competitionbetween the different providers of global services in France and can be considered the most effectiveway of ensuring competition with France Télécom’s GlobalOne subsidiary in the market for globalservices.

Télécom Développement (Case IV/C-1/36.581)

On 20 May the Commission adopted a decision (13) authorising the cooperation agreements concluded be-tween Cégétel, a new telecommunications operator in France, and Société nationale des chemins de ferfrançais (SNCF), the French national railway company, with a view to setting up a joint subsidiary, Télé-com Développement (“TD”). TD is to set up and run a nation-wide, long-distance telecommunications net-work along the French national railway network. The notified operation is linked to the creation of Cégétel,which the Commission also authorised in 1999.

TD will not itself provide services for end-users, namely businesses or individuals. On the other hand,it will provide: a long-distance interconnection service for telecommunications operators; long-distancetransmission capacities mainly for Cégétel but also for other network operators and telecommunicationsservices providers; and an end-to-end, long-distance voice telephony service, to be distributedexclusively by Cégétel’s subsidiaries.

The Commission found that the agreements setting up Cégétel did not fall within the scope ofArticle 81(1) of the EC Treaty in so far as they granted TD a non-exclusive right to use public railwayland.


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(13) OJ L 218, 18.8.1999.

MetroHoldings (Case IV/C-1/37.123)

On 29 June 1998 the Commission received notification of a cooperation agreement between DTFT Ltd— a venture between Deutsche Telekom and France Télécom — and Energis, the UK carrier formerlyowned by the National Grid. Under the agreement, the parties are to create a 50:50 joint venture“MetroHoldings Limited” to build metropolitan area telecommunication networks in the UK.

MetroHoldings will provide its entire transmission capacity to Energis and DTFT for sale to end users.The parties will compete with each other for the provision of telecommunications services to end usersand seek to brand and differentiate their products. The Commission’s investigation, which invited thirdparties to comment by publishing a notice pursuant to Article 19(3) of Council Regulation No 17,revealed no grounds under Article 81(1) of the EC Treaty for further action in respect of the notifiedagreement. A comfort letter was sent to the parties on 31 March.

Symbian II (Case IV/C-1/37.367)

On 2 February the Commission cleared a partnership agreement between Motorola, Ericsson, Nokia andPsion. By means of the agreement, Motorola became a shareholder of Symbian, a joint venture createdin August 1998 by the mobile phone manufacturers Ericsson and Nokia and the handheld computer andoperating system manufacturer Psion. The aim of the partnership is to promote an operating system forthe new generation of mobile telecommunications handsets and to stimulate the development of a massmarket for such products.

The Commission cleared the original Symbian joint venture under the Merger Regulation on13 August 1998. In December 1998, the Commission established that the entry into that venture of USmobile phone manufacturer Motorola did not constitute a new concentration within the meaning of theMerger Regulation. Following that conclusion, the Commission further examined whether the intendedtransaction could restrict competition within the meaning of Article 81 of the EC Treaty.

Media

Télévision Par Satellite (Cases IV/C-2/36.237 and 36.237A)

TPS is a company set up by several French free-to-air broadcasters (TF1, France 2, France 3 and M6),France Télécom and Suez-Lyonnaise des eaux in order to launch a digital satellite television platform inFrance to compete with CanalSatellite/Canal+, the only pay-TV operator on the French market until1996.

The creation of TPS is therefore procompetitive in that it enables a new operator to enter the pay-TVmarket and compete with the monopoly held by Canal+/CanalSatellite. Its market entry furthermorerapidly prompted CanalSatellite to lower its subscription charges.

Nevertheless, there were three clauses in the agreements which gave rise to objections, in particular fromTPS’s competitors:

The first of these clauses gave TPS an exclusive right to broadcast in digital mode the four general-interest channels (TF1, France 2, France 3 and M6).



The Commission decided to exempt this clause for three years starting from the market launch of the TPSbouquet. The parties originally intended the clause to apply for ten years, which was deemed excessive.However, given the situation of the pay-TV market in France, dominated by Canal+/CanalSatellite, and thedifficulty of acquiring attractive programmes, particularly recent films and sports events, to which theCanal+ group held exclusive rights, the Commission took the view that the exclusive presence of the gener-al-interest channels on TPS was essential to its market penetration during the launch period since it made theTPS package attractive to consumers and differentiated it from other services.

In the second clause, the two cable operators involved in TPS undertook to distribute as a matter ofpriority on their cable networks the channels broadcast on TPS and to coordinate their services with thoseoffered by TPS. The parties decided to delete this clause, which had attracted much criticism, althoughit had never really been applied by France Télécom and Lyonnaise des eaux.

A third clause was regarded as restricting competition by limiting the supply of programme contentavailable to TPS’s competitors: this granted TPS preferential access to the special-interest channels andservices controlled by its members. This clause was also exempted for three years starting from themarket launch of TPS.

Lastly, the agreements included a non-competition clause, which was regarded as ancillary to thecreation of TPS and not falling within the scope of Article 81(1) of the EC Treaty during the platform’sthree-year launch phase.

The Commission therefore decided on 3 March (14) to exempt the TPS agreements for a three-year periodexpiring on 15 December 1999. The parties requested a renewal of the exemption, and after examiningtheir request the Commission decided not to object to an extension as regards the non-competition clauseand the clause providing for exclusive digital transmission of the general-interest channels on TPS. Onthe other hand, in view of the evolution in the supply of special-interest channels, the clause giving TPSpreferential access to the special-interest channels of its members was deleted at the Commission’srequest. A comfort letter was sent to the parties on 20 December, stating that the Commission would re-examine TPS’s position after two years had elapsed, i.e. before 15 December 2001.

British Interactive Broadcasting (now Open) (Case IV/C2/36.539)

On 15 September the Commission exempted pursuant to Article 81(3) of the EC Treaty the creation ofa joint venture company, British Interactive Broadcasting Ltd (BiB, now named Open). (15) Open’sparent companies are BSkyB Ltd, BT Holdings Limited, Midland Bank plc and Matsushita ElectricEurope Ltd. Open is to provide a new type of service, digital interactive television services, to consumersin the United Kingdom. This involves putting in place the necessary infrastructure and services to allowcompanies, such as banks, supermarkets and travel agents, to interact direct with the consumer. Thefollowing will form part of the Open digital interactive television service: home banking, homeshopping, holiday and travel services, downloading of games, learning on-line, entertainment and leisure,sports, motor world, a limited collection of “walled garden” (16) Internet sites provided by a third party,together with e-mail and public services. An important element of this infrastructure is a digital set-topbox. Open will subsidise the retail selling price of these digital satellite set-top boxes.


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(14) OJ L 90, 2.4.1999. Some of the notifying parties brought an action for annulment before the Court of FirstInstance on 10 May 1999 (Case T-112/99).

(15) Press release IP/99/686, 16.9.1999.(16) “Walled garden”: access to a limited amount of Internet content.

The Commission took its decision (17) (hereinafter the BiB decision) after the parties had given theCommission substantial undertakings aimed at ensuring that the digital interactive television servicesmarket in the UK remains open to competition.

The decision found that the combination of the very significant market power of BT and, in particular,of BSkyB in markets related to that in which BiB will be active (such as the customer accessinfrastructure market, technical services for pay-TV and digital interactive services, the pay-TV marketand the market for the wholesale supply of film and sport channels for pay-TV), risked eliminating asubstantial part of competition on the markets for digital interactive TV services.

The main element of concern raised by the Commission pursuant to Article 81 was that the operationeliminated BT and BSkyB as potential competitors in the digital interactive television services market.Both had sufficient skills and resources to launch such services and both would be able to bear thetechnical and financial risks of doing so alone. Given the market positions of BT and BSkyB in marketsrelated to the one in which Open will be active, the restriction of competition between them wasappreciable. The conditions imposed by, and described in, the decision should ensure that this problemdoes not materialise. In particular, as competition with BT comes from the cable networks, the decisionshould ensure that third parties will have sufficient access to BiB’s subsidised set-top boxes, as well asto BSkyB’s films and sport channels, and that set-top boxes other than BiB’s set-top box can bedeveloped in the market, so that the digital interactive television services market remains open tocompetition.

The provisions of Article 81(1) of the EC Treaty were consequently declared inapplicable for a periodof seven years.

New market definitions in the BiB decision

In the fields of telecommunications and the media, the decision established the following new marketdefinitions:

The digital interactive television services market

The Commission concluded that demand substitutability by the end-user for a package of interactiveservices is distinguishable from demand substitutability of the individual services which form part of thepackage, or from close alternative sources of supply for the customers of BiB’s services, such as high-street retailing or interactive services via personal computers. The Commission also concluded thatdigital interactive television services and pay-television services are different markets.

Customer access infrastructure market for telecommunications and related services

In the decision, the Commission defined for the first time a customer access infrastructure market fortelecommunications and related services.

The decision explains the transition in the market from the past, when consumer demand fortelecommunications services almost exclusively consisted of voice telephony services, to the presentsituation, in which demand for data services — such as Internet access — has grown significantly, and



(17) OJ L 312, 6.12.1999.

even overtaken telephony in volume. To provide these services, companies need infrastructure capableof bringing them into the home. The decision examined the infrastructures capable of meeting thedemand for the new telecommunication and related services that are emerging in the market, in terms oftwo-way communication capability, transmission capacity and price. After discarding the inclusion in themarket definition of wireless fixed networks and digital mobile networks based on the GSM standard oron the DCS 1800 standard, (18) the Commission concluded that the relevant infrastructure marketincluded only BT’s traditional copper network and the cable operators’ cable networks. (19)

Markets for the wholesale supply of films and sports channels for pay-television

The Commission also decided for the first time that there is a separate market for the wholesale supplyof film and sports channels, after a detailed analysis of the wholesale price of acquiring such channels.The Commission found that the price of film and sports channels was far higher than that of other basicchannels and that small permanent increases in relative prices have been profitable. The Commission didnot consider it necessary for the purposes of the case to decide whether there are separate wholesalemarkets in respect of film and sports channels.

Pay-television

There is no change in the classic distinction made in the Commission’s decision-making practicebetween pay-television and free-to-air television. The Commission’s view that there is no reason todistinguish between markets for analogue and digital pay television was also reinforced.

Technical services for digital interactive television services and pay-television

The Commission has defined a product market for the wholesale provision of the technical servicesnecessary for pay-television in a number of decisions. (20)

The Commission found in the BiB decision that there is a very large area of overlap between thetechnical services necessary for pay-television and the services necessary for digital interactive televisionsuch as the supply of set-top boxes or the electronic programme guide. The Commission decided, onbalance, that the relevant product market is that for technical services necessary for digital interactivetelevision services and for pay television. (21)

Finally, the Commission recognised that the skills and technologies underlying each of the individualtechnical services necessary for pay-television and/or digital interactive television services are differentin some respects, and that therefore narrower product markets may exist. However, the Commission leftthis point open in the BiB decision, as it was not necessary for the purposes of the case.


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(18) See, however, the impact of the introduction of the next generation mobile standard, the universal mobiletelecommunications system (UMTS).

(19) Cable TV networks are capable of providing a range of services from basic telephony through on-demand servicesto full broadcast services.

(20) See for example, Commission Decision 1999/153/EC of 27 May 1998 in Case IV/M.993 -Bertelsmann/Kirch/Premiere (OJ L 53, 27.2.1999).

(21) See Commission Decision 94/922/EC of 9 November 1994 in Case IV/M.469 MSG - Media Service (OJ L 364,31.12.1994), where the same conclusion was reached.

Interrelation between regulatory and competition remedies

In the BiB decision the Commission regarded the implementation of Directive 95/47 (22) in the UK andthe commitments given by BSkyB in relation to the UK regulatory regime “as a fact basic to the makingof the decision”. If the relevant UK authorities were to bring an action against BSkyB for infringementof these obligations, the Commission would consider this situation under Article 8(3)(a) of RegulationNo 17. (23) A number of elements in the conditions relating to the availability of a clean feed, theoperation of Symulcript arrangements (24) and a subsidy recovery mechanism follow the same approach.

United International Pictures BV (UIP) (Case IV/C-2/30.566A)

On 9 September the Commission confirmed, by means of a comfort letter, (25) the favourable positiontaken in its 1989 decision (26) exempting the agreements establishing UIP. UIP is a joint venture filmdistribution company established by Paramount Pictures Corporation, Universal Studios Inc and Metro-Goldwyn-Mayer Inc (“the partners”). (27) It distributes mainly the partners’ films not just within the EU,but worldwide, except for the United States, Puerto Rico and Canada. Originally, the partners eachdistributed their own films through their own separate organisations, but they pooled their distributionactivities in UIP with the aim of obtaining efficiency gains and avoiding administrative duplication.

The exemption of UIP in 1989

The Commission first exempted UIP in 1989 after a lengthy investigation of the UIP arrangements. TheCommission considered that restrictions of competition resulted both from the creation of the jointventure itself and from certain provisions in the UIP agreements, in particular some exclusivity clauses.However, it was able to exempt UIP because the partners agreed to revise the UIP agreements and toprovide a number of undertakings to minimise the restrictive effects of UIP. The modifications weredesigned to ensure the highest possible degree of autonomy for the partners in the conduct of theirbusiness, whilst taking into account the specific characteristics of the film industry.

Period after 1993

Following UIP’s application for a renewal of the exemption, which expired on 26 July 1993, theCommission received a number of informal complaints regarding UIP’s commercial behaviour. Ittherefore launched a thorough investigation including an investigation at the premises of UIP inJune 1996. However, neither the informal complainants nor the investigation produced substantiveevidence of any anticompetitive behaviour.

The Commission’s investigation revealed that UIP does not seem to provide the partners with a tool forcoordinating their commercial behaviour in an anticompetitive manner. The film distribution market is



(22) European Parliament and Council Directive 95/47/EC of 24 October 1995 on the use of standards for thetransmission of television signals (OJ L 281, 23.11.1995).

(23) Article 8(3)(a) of Regulation No 17 empowers the Commission to revoke or amend its decision where there hasbeen a change in any of the facts which were basic to the making of the decision.

(24) As defined in Annex II to the decision.(25) Press release IP/99/681, 14.9.1999.(26) Commission Decision of 12 July 1989 (OJ L 226, 3.8.1989). See also press release IP/89/559, 13.7.1989, and

1989 Competition Report, point 51.(27) MGM will leave UIP as of November 2000.

generally characterised by transparency with regard to the fixing of release dates for films. Film is aheterogeneous product, which reduces the risk of an anticompetitive coordination of release dates.Furthermore, throughout the investigation and at the oral hearing in September 1998, UIP was supportedby a considerable number of players in the European market (independent producers, distributors andexhibitors), who all adduced evidence of UIP’s efficient performance and good commercial behaviour.

The Commission’s investigation also showed that the European film market has developed from a stateof deterioration into a sound, even growing market. Despite this, UIP does not seem to have had anyparticular impact on the market. There is no indication that UIP has sufficient market power in anyMember State to render it immune to competition, thus permitting the partners to reap the rationalisationbenefits derived through UIP without passing any of those benefits on to the market. In addition, UIPseems to be facing competition from a number of distributors and exhibitors that have countervailingpowers. The Commission found that UIP has performed only moderately well over the years, with anaverage EU market share oscillating around 20%.

The Commission departments therefore considered that a renewal of the exemption would be possible, par-ticularly since the parties amended the UIPagreements to extend the partners’autonomy further and gave un-dertakings regarding UIP’s commercial behaviour. The Commission therefore published a summary (28) ofthe revised UIP agreements and undertakings, indicating that they appeared to meet the criteria for exemp-tion pursuant to Article 81(3) of the EC Treaty. None of the third-party comments submitted in reply to thenotice provided any new or substantive elements that could change the legal assessment of the case. The casewas closed by way of a comfort letter on 9 September. However, the Commission will re-examine the case ifit learns of any new facts affecting the assessment of the case, particularly those arising from complaints, and,in any event, it may do so five years after issuing the comfort letter.

The new additional changes made to the UIP agreements

The amendments to the UIP agreements concern the following two areas:

First, UIP’s right of first refusal to distribute the partners’ films in the EU is now applied on a Member State(29) basis, rather than for the whole EU as one territory. The agreement is therefore less restrictive of compe-tition as, in countries where UIP chooses not to distribute a partner’s film, the partners may use alternativedistributors. This should contribute to diversifying the supply of films in the Member States.

Secondly, UIP is no longer required to make a best effort to maximise each partner’s profits for eachfilm distributed by UIP. Originally exempted, this requirement is now seen as an incentive for UIP tocoordinate film releases across the EU. However, the Commission has accepted the retention of such a“best efforts” provision in the individual franchise agreements concluded between UIP and the individualpartners. Such individual clauses are not an incentive for UIP, or the partners, to coordinate film releasesacross the EU.

The undertakings given by UIP

The partners have given a number of undertakings. They include not only those given in 1989, but alsocertain revisions and additions. The undertakings essentially aim at ensuring that the partners maintainthe highest possible degree of autonomy in the conduct of their business and that UIP will deal with


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(28) Publication in accordance with Article 19(3) of Regulation No 17 (OJ C 205, 20.7.1999).(29) Except for Belgium/Luxembourg and the UK/Republic of Ireland, which would be treated as one territory.

cinemas on a fair and equitable basis, and they set out the efforts which the parties will undertake inrespect of local film industries. A non-confidential version of the undertakings is published on theInternet on the Commission’s homepage. (30)

Transport

Revised TACA (Case IV/D-2/37.396)

The Commission’s TACA (Trans-Atlantic Conference Agreement) decision of 16 September 1998 foundthat certain agreements between the liner shipping companies party to TACArestricted competition and nei-ther fell within the scope of the block exemption for liner conferences nor qualified for individual exemption.Under those agreements, the TACA parties fixed prices for inland transport, restricted the availability of in-dividual service contracts between shipping lines and their customers, and fixed freight forwarder commis-sions. The decision also found that the TACAparties had abused their joint dominant position. (31)

After the Commission’s September 1998 decision several shipping lines withdrew from TACA, leavingeight members, and on 29 January 1999 the remaining eight TACA members notified an amendedagreement (“Revised TACA”).

On 17 February the eight TACA members together with twelve other lines notified the “North AtlanticAgreement”, which would have replaced the Revised TACA with a new conference with a market shareof over 70%. The North Atlantic Agreement was subsequently abandoned after the Commission and theUS Federal Maritime Commission (FMC) had begun enquiries.

On 6 May the Commission published a summary of the Revised TACA agreement. (32) Under the competi-tion procedures applicable in the transport sector, (33) the Commission has 90 days from the date of such pub-lication in which it can raise serious doubts and so continue its investigation into the case. If the Commissiontakes no action in the 90-day period, an agreement is automatically exempted for six years in the case of mar-itime transport and three years in the case of inland transport. Following publication of the summary theCommission received critical comments on the agreement from shippers’associations.

Maritime transport aspects

As regards the maritime transport aspects of the Revised TACA, the Commission informed the partieswithin the 90-day period that it had serious doubts as to whether their revised agreement could be clearedin its current form. The Commission’s investigation is continuing, and centres on whether the parties’arrangements (particularly as concerns the exchange of information) could harm competition betweenthe parties when they negotiate and agree individual service contracts with shippers.



(30) http://europa.eu.int/comm/dg04/entente/undertakings/30566.pdf.(31) Case IV/35.134 – TACA (OJ L 95, 9.4.1999); press release IP/98/811, 16.9.1998. See also Competition Policy

Newsletter, 1999 Number 1, February, p. 17.(32) OJ C 125, 6.5.1999.(33) For maritime transport: Council Regulation (EEC) No 4056/86 of 22 December 1986 laying down detailed rules

for the application of Articles 85 and 86 (now Articles 81 and 82) of the EC Treaty to maritime transport (OJ L378, 31.12.1986).For inland transport: Council Regulation (EEC) No 1017/68 of 19 July 1968 applying rules of competition totransport by rail, road and inland waterway (OJ L 175, 23.7.1968) (Special Edition 1968 I, p. 302). Internet:http://europa.eu.int/comm/dg04/lawenten/en/101768.htm

Inland transport aspects

As regards inland transport, the Revised TACA no longer contains an inland tariff. The parties haveinstead agreed that that they could adopt a “not-below-cost” rule. Under such a rule each line wouldagree, where they provide maritime transport services pursuant to the conference tariff, not to charge aprice less than the direct out-of-pocket cost incurred by it for inland transport services supplied withinthe EEA in combination with those maritime services. The Commission did not within the 90-day periodraise serious doubts against the not-below-cost rule, with the consequence that it is deemed exempt forthree years.

The Commission accepts that a not-below-cost rule would avoid the risk that below-cost pricing on theinland leg would undermine the stability brought about by the conference maritime tariff. In the FEFCdecision (34) (paragraphs 135-139) the Commission recognised that, in the absence of collective pricefixing for carrier haulage services, the members of the FEFC might charge shippers rates which arebelow their costs of buying in such services, the effect of which would be similar to offering a discountoff the conference tariff for the maritime transport. The Commission did not, however, accept that thethen arrangements of the FEFC to fix the price for carrier haulage were indispensable to achieve theobjective of stability. The FEFC decision expressly left open to what extent other kinds of agreementmight fulfil the conditions of Article 81(3), and referred to the Commission’s 1994 Maritime TransportReport to the Council, (35) in which the Commission stated that, if appropriate, it would be prepared toconsider granting individual exemption to a not-below-cost provision.

The particular type of not-below-cost rule adopted by the parties is that no line would charge a price less thanits direct out-of-pocket costs for inland transport services. Overhead and administration costs, and costs ofrepositioning empty containers, would be excluded. The rule would mean that each line’s price would be setby reference to its own costs, and not some industry average, and is similar to the “first option” identified inthe Carsberg Report, which considered the issue of inland price fixing by liner conferences. (36)

Price competition would not be eliminated. In addition to competition from outside the conferencealtogether and from merchant haulage on the inland leg, the not-below-cost rule would only apply tosituations where the parties were providing maritime transport services pursuant to the tariff. Thus, therule would not be applicable to carriage under an individual service contract.

VSA2/CSAV consortium (Case IV/D-2/37.304)

On 6 November 1998 five shipping companies notified agreements under which they operate a joint linerservice across the Atlantic between northern Europe and the East Coast of South America. The partiesare Blue Star Line, Contship Containerlines, Montemar and P&O Nedlloyd (the “VSA2 Lines”) andCompañía Sud Americana de Vapores SA (“CSAV”). The consortium operates within a conference, theEurope East Coast of South America Conference (“EECSAC”).

Their cooperation provides for joint fixing of sailings and ports of call, cross space charter,administrative and marketing cooperation, cooperation on supply of equipment and vessels, and joint useof terminals and restrictions on participation in competing service with, or chartering space to, thirdparties.


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(34) Commission decision of 21 December 1994 Far Eastern Freight Conference (OJ L 378, 31.12.1994).(35) SEC(94) 933 final, 8.6.1994.(36) Final report of the multimodal group (chaired by Sir Bryan Carsberg), November 1997, paragraphs 90 and 91.

For the purpose of assessing the consortium and its market share, the Commission considered a slotcharter to DSR Senator to be part of the overall consortium arrangements in view of the followingfactors: the long duration of the slot charter (four years, with a six-month notice period after an initialperiod of 18 months); agreement by DSR Senator not to charter space on competing carriers, other thanin exceptional circumstances; and attendance (albeit without voting rights) by DSR Senator at meetingsof the VSA2 Lines.

According to the parties, the consortium members had a market share of 31.5%. The consortium servicewas faced by competing services including services operated by major east/west carriers who hadrecently, as in other north/south trades, been entering the trade either by way of direct services or by wayof transhipment. On 25 March the Commission decided not to oppose the cooperation and to allow it tobenefit from the consortium block exemption in Regulation 870/95 until the latter expired on21 April 2000.

P&O Stena Line (Case 36.253)

On 26 January the Commission approved the joint venture between P&O and Stena operating cross-Channel ferry services. (37) P&O and Stena have combined their respective ferry operations on the shortChannel crossing and to and from Ostend to form a joint venture company, P&O Stena Line. TheCommission’s decision exempts the joint venture pursuant to Article 81(3) until 9 March 2001.

On 31 October 1996 P&O and Stena notified their proposal to the Commission for exemption underArticle 81 of the EC Treaty. Following the publication of a summary of the proposal on 13 March 1997in the Official Journal, on 10 June 1997 the Commission sent the parties a letter of serious doubts settingout the reasons why it was continuing its investigation into the proposal. On 6 February 1998 theCommission published a notice in the Official Journal indicating its intention to exempt the jointventure. The joint venture started operations on 10 March 1998.

In its letter of serious doubts the Commission set out its concern that the creation of the joint venturecould lead to a duopolistic market structure conducive to parallel behaviour on the part of the jointventure and Eurotunnel on the short Channel crossing tourist market. After further investigation, theCommission concluded that the characteristics of the market were such that the joint venture andEurotunnel could be expected to compete with each other rather than act in parallel to raise prices.

The case also posed difficulties because of uncertainties over future developments in the market forcross-Channel ferry services, including the impact of the ending of duty-free concessions in mid-1999.It was in view of these uncertainties that the Commission decided to limit the duration of the exemptionto three years from the date of implementation of the agreement, i.e. until 9 March 2001. This will enablethe Commission to re-examine the impact of the joint venture on the cross-Channel ferry market afterthe summer season in the year 2000.

The joint venture was also approved under national merger control rules in France and in the UnitedKingdom.



(37) OJ L 163, 29.6.1999; press release IP/99/56, 28.1.1999.

Communauté d’intérêts automobiles (CIA) (Case IV/D-2/36.535)

Communauté d’intérêts automobiles (CIA) is a cooperation agreement between nearly all the EC railwaycompanies relating to the international carriage by rail of new motor vehicles. CIA was requesting arenewal of the exemption granted in 1994. (38)

After publishing a summary (39) of the request for an exemption declaration under Article 5 of CouncilRegulation (EEC) No 1017/68, the Commission set out in a letter dated 3 August serious doubts as towhether the agreement could be exempted. In the Commission’s view, the tariff applied under theagreement for each set of links was liable to restrict competition between the railway companies. A setof links here means the set of all rail links between two economic areas, i.e. usually two Member States.Where a set of links comprises alternative routes enabling railway companies or international groupingsto compete, the application of a single tariff for each set of links prevents those companies or groupingsfrom competing on price.

CIA having done away with the disputed tariff and amended the agreement accordingly, the Commissionfound that it no longer had any grounds for taking action under Article 81(1) of the EC Treaty. (40)

Other sectors

Ecomet (Case IV/D-1/34.563)

Set up in December 1995 for the joint sale of meteorological products, and now made up of almosttwenty European national meteorological institutes, the Ecomet economic-interest grouping notified itsstatutes and all its operating rules to the Commission. Ecomet’s main purpose is to part-finance the costof the European infrastructure needed to gather meteorological data through commercial activities. Anoverall initial target of 3% is fixed at present. The commercial activities of the national meteorologicalinstitutes are focused on final users of meteorological services, intermediaries such as independentservice providers who need the meteorological data gathered by the national meteorological institutes tocreate their own meteorological products, and the media.

Discussions with the Commission departments were complicated by the fact that Ecomet was set up ina field characterised by institutionalised relations between the public meteorological services, inparticular under the auspices of the World Meteorological Organisation, the purpose of which is tomaintain very close cooperation between those services so that they are able to perform theirgovernmental duties. The Commission already announced in 1995 that it intended to adopt a favourableattitude towards the draft agreements to set up Ecomet, but invited interested third parties to submit theircomments. (41) Some independent service providers expressed fears that they might not have easy accessto all of the meteorological data they required or might not have access to that data at reasonable prices.They also feared that they might be confronted with discriminatory practices in relation to thecommercial divisions of the national institutes. In the light of the Commission’s comments, the Ecometmembers amended several points of their agreements, and the Commission was able to close the case bymeans of a comfort letter on 20 October.


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(38) 1994 Competition Report, point 191.(39) OJ C 146, 27.5.1999.(40) Comfort letter of 22 December 1999.(41) OJ C 223, 29.8.1995.

The main factors on which the Commission based its decision are as follows:

The Ecomet rules ensure equal treatment of independent service providers and the commercial divisionsof the national meteorological institutes with regard to access to meteorological data and the invoicingof that data. Some Ecomet members have also taken steps to facilitate effective access to these data bysetting up electronic access points to all Ecomet products.

The Ecomet invoicing rules essentially set out to establish principles which are themselves legitimate(e.g. the charges for making data available must cover the corresponding costs). They do not go as faras harmonising charges for the meteorological products which the members market via Ecomet. Eachmember retains individual freedom as regards charges for its own products in the context of the overallaim of financing part of the costs of the infrastructure necessary to gather meteorological data throughcommercial activities. The only exception, i.e. zero invoicing except for the cost of making the dataavailable, for certain types of data, is clearly in the interests of users, in particular independent serviceproviders. In order to guarantee fair competition with independent service providers, the Ecomet rulesrequire the national meteorological institutes to keep analytical accounts in which their commercialactivities are entered separately and which thus ensure that there is no cross-subsidisation. There is nowan arbitration procedure for settling disputes between independent service providers and Ecometmembers on any matter falling within the scope of the notified rules.

Neither has the Commission objected to the reciprocal exchange of data free of charge between nationalmeteorological institutes, irrespective of the use to which they are put, which is a consequence of therequirements of international cooperation in this field.

General Electric + Pratt & Whitney (Case IV/F-2/36.213)

On 14 September the Commission adopted a formal decision under Article 81(3) of the EC Treatyapproving the creation of the Engine Alliance, a joint venture between General Electric Aircraft Engines(GE) and Pratt & Whitney (P&W). (42) The exemption is granted for a period of 15 years.

The joint venture is aimed at developing and selling a new jet engine which is intended to equip Airbus’sfuture very large aircraft, known as the A3XX aircraft. The new engine may also equip possible futureextended versions of the Boeing B747-400 aircraft. GE and P&W are two of the world’s threemanufacturers of large jet engines. The third manufacturer, Rolls-Royce, does not have to develop acompletely new engine for the A3XX aircraft, but will be able to offer a derivative of its existing Trentengine.

The Engine Alliance will be owned and run by GE and P&W, which have allocated responsibility forthe different engine parts between them. The Engine Alliance will be in charge of the final assembly andthe sale and marketing of the new engine.

In its decision, the Commission came to the conclusion that, although it may be economically moreefficient for the parties to develop the new engine jointly, it would be technologically and economicallyfeasible for both parties to develop it individually. The creation of the joint venture appreciably restrictscompetition for the new engine, since it reduces the number of engine suppliers from three potentialsuppliers to two. It therefore falls within the scope of Article 81(1) of the EC Treaty.



(42) Press release IP/99/684, 15.9.1999.

However, the Commission considered that the joint venture fulfilled the conditions for an individualexemption under Article 81(3) of the EC Treaty. The Engine Alliance enables GE and P&W to eachconcentrate on the specific aspects in which they have a technological advantage. It will thus enable themto develop a new engine fulfilling stricter performance targets than any existing engine within a shortertime frame and at a lower cost than would otherwise have been possible. Competition will not beeliminated, since Rolls-Royce will be able to offer a new version of its Trent engine in competition withthe new engine.

The market for large jet engines is highly concentrated, with only three operators. It is furthercharacterised by very high barriers to entry. To safeguard competition on this market, it is important toensure that the cooperation between the two manufacturers is limited in scope and does not extend intoother market segments where GE and P&W currently compete. In its decision, the Commissionconsidered that there was a risk that the joint venture might provide an incentive for the parties to adaptthe jointly produced engine for use on aircraft for which it was not originally intended instead ofindividually developing new engines. The exemption was therefore granted on condition that thecooperation remains limited to a specific engine that is exclusively intended for the A3XX aircraft andto any future Boeing four-engine aircraft designed for more than 450 passengers.

In addition to the condition regarding the scope of the joint venture, the decision is also subject to anumber of obligations. The parties are thus required to notify any proposed change in the scope of theEngine Alliance to the Commission. Moreover, the joint venture must be a separate legal entity withseparate accounting records from its parent companies. The Engine Alliance is also required to submitits auditing records to the Commission. GE and P&W personnel must not market or sell the new engine,but only act as client contacts. If a customer requests a bid for several engines, including the new engineand the parties’ own engines, the terms of sale of the new engine must be stated separately. GE and P&Wmust not disclose to each other or to the Engine Alliance the terms of their separate offers. Finally, theEngine Alliance and the parties must establish safeguards to prevent the exchange of competitivelysensitive information regarding GE’s and P&W’s separate engine offerings.

In addition to the conditions and obligations, GE and P&W gave a number of undertakings. Accordingto these undertakings, the Engine Alliance will not seek, solicit or impose conditions of exclusivity inits bids or contracts for the development or supply of the new engine to airframe manufacturers, exceptfor campaigns in which another engine manufacturer has offered to enter into an exclusive agreement.Moreover, the Engine Alliance will make available engine manuals and technical information to enablethird parties to perform basic service and maintenance on the new engine. Finally, GE will report to theCommission any purchase orders placed by its leasing subsidiary General Electric Capital Services(GECAS) for any new aircraft powered by the new engine.

Subject to the above conditions and obligations, the Commission approved the joint venture for a periodof 15 years. The relatively long period is justified by the fact that the decision concerns a sector withlong development periods in which investments typically take at least 15 years to be recovered.

Yoplait/Valio (Case IV/F-3/36.836)

On 16 June the Commission approved by way of a comfort letter the creation of two joint venturecompanies for fresh dairy products in Finland and Sweden between the French dairy cooperative Sodiaal(through its subsidiaries Yoplait SA and Sodima International SA) and the Finnish dairy cooperativeValio. However, approval was only obtained after the parties had agreed to make important structuralchanges to the Finnish joint venture.


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The two joint venture companies are Yoplait Valio Nord OY, based in Finland, and Yoplait Valio NordAB, based in Sweden. Both will distribute and sell fresh dairy products (principally yoghurt, fromagefrais and desserts) under the Yoplait brand name in Finland, Sweden, the Baltic countries and certainwestern parts of Russia.

Valio is the leading operator in Finland for fresh dairy products and Yoplait is a major international dairycompany. Originally, the two companies were supposed each to have a 50% shareholding in the jointventures. The Commission, however, informed the parties that, on the Finnish market, the cooperationraised serious doubts as to its compatibility with Community competition rules, since Yoplait wouldeffectively have been eliminated as an independent competitive force. Through the 50/50 nature of theFinnish joint venture, Valio would have been in a position to exert a decisive influence over the jointventure’s business policies and marketing strategies.

The parties thereafter agreed to substantial changes to the structure of the Finnish joint venture. Inparticular, the joint venture is to be owned 51% by Yoplait and 49% by Valio and the shareholders’agreement will be amended to reflect the new structural balance. Moreover, different general managerswill be employed by the Finnish and the Swedish companies respectively.

The Swedish joint venture required no structural amendments. The former licensee of Yoplait productsin Sweden was Arla, which is the leading Swedish dairy cooperative. Valio, on the other hand, is arelatively small player on the Swedish market.

Following the above-mentioned changes, the Commission considered that the two joint ventures couldbecome competitive forces on the Swedish and Finnish markets respectively and serve as vehicles forthe introduction of new products.

b) Other horizontal agreements

Exchange of information between tractor and agricultural machinerymanufacturers (43)

At the Commission’s instigation, tractor and agricultural machinery manufacturers and their associationsagreed to alter their information exchange methods in the European Union. The new methods bring theexchanges into line with the EU competition rules and relate to both exchanges of data on individualcompetitors and exchanges of aggregate data. As a result of the agreement, the Commission closed theproceedings opened in respect of the tractor and agricultural machinery manufacturers and theirassociations. (44)

Background

In 1989 the Commission discovered that tractor and agricultural machinery manufacturers,manufacturers’ associations and importers’ associations were organising a number of informationexchanges at national and international level. The information exchanged related to individual andaggregate registrations, deliveries and sales in monthly, quarterly and yearly time periods and was broken



(43) Cases 32955, 32956, 32957, 33107, 33108, 33109, 33110, 33113, 33114, 33116, 33117, 34548, 34568, 35863,35864, 35865, 35866, 36528 and 37762.

(44) Press release IP/99/690, 20.9.1999.

down by country and into smaller geographical units such as provinces and counties and in some caseseven by postcode. The information exchanges at national level were organised by the manufacturers’ orimporters’ associations; the international exchanges were organised by the manufacturers themselves.

In 1992 the Commission already decided that the information exchange organised in the United Kingdom,where the market was highly concentrated with the four largest manufacturers together accounting for 80%of tractor sales, was anticompetitive since it substantially reduced competition between the limited numberof significant players and increased the barriers to market entry for non-members. (45) That decision was up-held in all respects by the Court of First Instance (46) and the Court of Justice. (47)

Similar national information exchange systems having been set up in all the Member States byassociations of manufacturers and importers, the Commission decided to bring all these systems into line,as the concentration level in the sector is high in all the Member States. It took the same approachtowards international information exchanges set up by the manufacturers themselves.

New situation

The Commission has laid down a number of principles for the future:

1. Individual data may not be exchanged until a period of twelve months has elapsed between thedate of the event constituting the subject of the exchange and the date of the exchange.

2. Aggregate market data, which may be less than twelve months old, may be exchanged if the dataare supplied by at least three dealers belonging to different industrial or financial groups. If there arefewer than three dealers, data may be exchanged only if the figure being exchanged concerns at least 10tractor units. (48)

Application of these principles will prevent the exchange of information on tractors and agriculturalmachinery from having in the EU the anticompetitive effects established in UK Agricultural TractorRegistration Exchange.

The European Committee of Associations of Agricultural Machinery Manufacturers (CEMA) hasundertaken, on its own behalf and on that of its members, to comply with those principles. The fourlargest manufacturers worldwide, i.e. John Deere, New Holland, (49) Case and AGCO, have undertakento exchange information within the European Union only if the exchanges comply with those principles.These undertakings have been given irrespective of the source and retail level at which the informationoriginates.

The same principles are applicable to associations of importers of tractors and agricultural machinery inthe EU.


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(45) Commission decision of 17 February 1992 UK Agricultural Tractor Registration Exchange (OJ L 68, 13.3.1992);see also press release IP/92/146, 4.3.1992.

(46) Judgments of 27 October 1994 in Case T-35/92 John Deere v Commission [1994] II-0957 and Case T-34/92 NewHolland v Commission [1994] II-0905.

(47) Judgments of 28 May 1998 in Case C-7/95 John Deere v Commission [1998] I-3111 and Case C-8/95 NewHolland v Commission [1998] I-3175.

(48) Application of the “10 units” rule is specific to tractors and agricultural machinery.(49) New Holland and Case merged in 1999.

Conclusion

The principles set out clear guidelines for any similar exchanges of information in other economicsectors as highly concentrated as the market for tractors and agricultural machinery.

The Commission closed the proceedings it had initiated by sending comfort letters to the associationsconcerned. It will take all the necessary steps to ensure that the principles are applied in similarsituations.

Dutch banks (acceptance giro system) (Case IV/D-1/34.010)

On 8 September the Commission adopted a decision (50) finding that the agreement concluded by about60 banks in the Netherlands on the joint processing of acceptance giro forms did not fall within the scopeof Article 81 of the Treaty because it did not affect trade between Member States. The Commission alsoexplained in its decision why agreement on a multilateral interbank fee for processing acceptance giroforms restricted competition, stating, however, that it viewed such a fee favourably.

An acceptance giro is a pre-printed credit transfer order intended for domestic payments of a recurringand obligatory nature where payment is made at a distance, i.e. where debtor and creditor do not meetface to face. Examples are subscriptions, energy and telephone bills, and insurance premiums.Acceptance forms are widely used as a payment instrument in the Netherlands.

In 1991 the Dutch banking association NVB (Nederlandse Vereniging van Banken) notified to theCommission, on behalf of its members, an agreement on a joint payment and acceptance giro formprocedure. The notification concerned, in particular, the introduction of a multilaterally set interbank feeof NLG 0.30 (EUR 0.14), which had to be paid by the creditor bank to the debtor bank for every paymentusing an acceptance giro form. The payment is made for the service by the debtor bank of processingthe acceptance giro form, in particular converting the information on it into electronic form.

The multilateral interbank fee is a maximum fee. The introduction of this fee resulted in an increase incharges to creditors as all credit banks decided to pass on the fee to their clients. This triggered a numberof formal complaints against the fee by some creditors.

In the light of the judgment of the Court of Justice of 21 January 1999 in Joined Cases C-215/96 and C-216/96Bagnasco v Banca popolare di Novara, which also concerned a domestic banking product, the Commissionfurthermore concluded that the Dutch acceptance giro form agreement lacked an appreciable effect on intra-Community trade. This was primarily for two reasons. Firstly, because the acceptance giro product is clear-ly a domestic payment product relating to domestic economic activities. Secondly, the share of foreign banksin the Dutch acceptance giro system, although not insignificant in terms of numbers, is very limited in termsof volume. This prompted the Commission to adopt a negative clearance decision.

The Commission also explained in its decision that a clause contained in the notified agreement, namelythe remuneration fee for processing activities by the debtor bank of not more than NLG 0.30 (EUR 0.14),which the banks had multilaterally agreed upon, was anticompetitive within the meaning of the EUcompetition rules. This was because the banks participating in the acceptance giro system had limitedthe possibility of negotiating independently such a fee with the other banks at a level which they saw



(50) OJ L 271, 21.10.1999.

fit. Moreover, the Commission found that the multilaterally agreed interbank fee was liable to producerestrictive effects on the relationship between banks and their clients since the banks which had to paythe fee tended to pass it on to their clients.

The Commission indicated in its decision that it intended to take a favourable stance on this restrictiveinterbank fee, referring to a communication which it had earlier published in the Official Journal. (51)Although the Commission initially had objections to the multilateral fee, it became convinced in thecourse of the proceedings that it was in fact more efficient than bilaterally setting interbank fees; ittherefore intended to take a favourable view of the fee. In this context the Commission took into accountin particular the fact that the amount of the multilateral interbank fee was related to the costs of the debtorbank with the most efficient processing method and that the Dutch banks agreed to a periodic review ofthe amount of the fee by an independent expert.

The decision does not, however, elaborate on this aspect as the Commission concluded that, in theabsence of an appreciable effect on intra-Community trade, the EU competition rules did not apply.

EPI code of conduct (Case IV/D-3/36.147)

This is the first case in which the Commission has applied the competition rules to restrictions onadvertising in a Europe-wide profession.

The Commission’s decision of 7 April (52) assessed the compatibility with Article 81 of the EC Treatyand Article 53 of the EEA Agreement of the code of conduct adopted by the Institute of ProfessionalRepresentatives (EPI), a European professional body grouping together all the professionalrepresentatives before the European Patent Office (EPO). The relevant market was defined as the marketin services associated with European patent applications, which is separate from the market in servicesassociated with national patent applications.

The decision demonstrates that the aim of promoting competition in the professions is not incompatiblewith the aim of maintaining rules on professional conduct.

The Commission drew a distinction, in the context of the profession concerned, between rules genuinelydealing with professional conduct and those that can distort competition. It took the view that the rulesnecessary in order for example to ensure impartiality, competence, integrity and responsibility on the partof representatives, to prevent conflicts of interest and misleading advertising and to guarantee the properfunctioning of the EPO did not restrict competition in the specific context of this profession. They weretherefore granted negative clearance. On the other hand, rules prohibiting EPI members from carryingout comparative advertising under the conditions specified in Directive 97/55/EC (53) and from activelyoffering services to users that have already been clients of other representatives were deemed toconstitute restrictions of competition within the meaning of Article 81(1) of the EC Treaty.

The Commission nevertheless considered that those restrictions could be exempted until the deadline bywhich Member States must adopt the provisions necessary to comply with Directive 97/55: it grantedsuch exemption for a very short period in order to avoid a sudden changeover from a situation in which


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(51) OJ C 273, 9.9.1997.(52) OJ L 106, 23.4.1999.(53) European Parliament and Council Directive amending Directive 84/450/EEC concerning misleading advertising

so as to include comparative advertising (OJ L 290, 23.10.1997).

nearly all advertising and the supply of unsolicited services by EPI members was prohibited to one inwhich all forms of advertising and supply of services are permitted; a transitional period for adjustingto the new situation offers advantages both for users and for representatives.

The Commission takes the view that truthful advertising informs users of the services available, howmuch they cost and which professional representative is best qualified to deal with a particular case. Itthus makes the services linked to European patent applications more accessible to users, particularlysmall and medium-sized enterprises, and encourages the development of greater efficiency within theprofession of professional representative.

The EPI appealed against this decision before the Court of First Instance (Case T-144/99): it is seekingan annulment on grounds relating to the exemption.

The Internal Market DG and the Health and Consumer Protection DG cooperated on several occasionsin the preparatory work relating to this decision.

JAMA (Case IV/F-2/37.634) and KAMA (Case IV/F-2/37.611) (CO2 reductions)

The Association of Japanese Automobile Manufacturers (JAMA) and the Association of Korean Automo-bile Manufacturers (KAMA) notified in the year under review voluntary commitments on reducing carbondioxide (CO2) emissions from new passenger cars sold in the EU. (54) The members of JAMA and KAMAcommit themselves to achieving an average target of 140g CO2/km for their fleet of new passenger cars soldin the EU by the year 2009. The commitments correspond to the voluntary commitment entered into in 1998by the Association of European Automobile Manufacturers (ACEA). (55)

The commitments do not impose a target on individual manufacturers, but only an average target for all JA-MAand KAMAmembers. The car manufacturers are free to develop and introduce new CO2-efficient tech-nologies independently and in competition with each other. The monitoring reports will not refer to the indi-vidual companies’achievements in order not to distort competition between the members. The Commissionaccordingly took the view that they do not restrict competition within the meaning of Article 81(1).

2.2. Vertical agreements

Internationale Dentalschau (IDS) (Case IV/F-1/36.160)

By comfort letter dated 6 September (56) the Commission informed Gesellschaft zur Förderung der Den-talindustrie mbH (GFDI) that it had no objections to the conditions for participation at the International Den-tal Exhibition (IDS) which will apply after the expiry of the exemption granted in 1987. (57) The IDS is heldby GFDI in collaboration with the local trade fair association every two years in Cologne.

The conditions include a closed period during which participants may not take part in any otherexhibition of this kind in Germany. As in the past, the Commission considered that this restriction ofcompetition is justified by its rationalisation effect and the objective of exhibiting as complete as possible



(54) Press release IP/99/922, 1.12.1999.(55) Press release IP/98/865, 6.10.1998.(56) Press release IP/99/672, 10.9.1999.(57) Decision of 18 September 1987 (OJ L 293, 16.10.1987); 1987 Competition Report, point 78.

a range of products for dentists and dental technicians. It is not excessive, taking account of its limitedduration and the exceptions it provides for events such as “open days” organised by individual exhibitorsand exhibitions in the context of congresses or symposia.

Compared to the conditions exempted in 1987, the closed period has been reduced from five monthsevery three years to twelve weeks every two years. In the course of the new notification the GFDIextended the exception for exhibitions held in conjunction with congresses or symposia to include allcongresses or symposia for dentists or dental technicians as long as the products presented are related tothe subject of the congress or are used for demonstration purposes.

A summary of the conditions was published (58) in accordance with Article 19(3) of Regulation No 17.Several professional organisations of dentists in Germany (Zahnärztekammern) initially submittedobjections, but later agreed with GFDI on a circular in which the arrangement for exhibitionsaccompanying congresses is explained.

Newspaper distribution contracts in Belgium — AMP (Cases IV/C-2/31.609and 37.306)

Agences et Messageries de la Presse (AMP) having notified its selective distribution contracts with itsauthorised retailers, the Commission had to examine the newspaper distribution system in Belgium.

Newspaper and magazine distribution raises the issue of price setting, as the products involved have adistinctive legal status. Traditionally, a retailer sells on to consumers goods that he owns and shouldersthe business risks associated with ownership of his stock. In newspaper distribution, the retailer does notown the newspapers and periodicals he sells and does not run the risk of being left with unsold copies.That risk is assumed by the publisher alone, who has to take back unsold copies. In return, the publisheralone sets the price at which the goods are sold to the consumer and the retailer has to apply that price.

The proportion of unsold copies is far higher for foreign newspapers than for the domestic press: it canbe as much as 50-70% as against only 10-30% in the case of the latter. Cross-border newspapercirculation is marginal chiefly as a result of the low profitability of cross-border sales for publishers.

The Commission took the view that the fixed selling price clause was caught by Article 81(1) of theEC Treaty and had to be examined in the light of Article 81(3).

It carried out a two-stage analysis, first examining whether distribution at news-stands could beorganised differently and then considering whether the clause imposing the price set by the publisherwas indispensable in a sale-or-return system.

The Commission noted that this method of organising distribution at news-stands was applied throughout theworld; the widespread use of the system was in itself already an initial sign of a lack of alternative solutions.

It then looked into the specific nature of newspapers and periodicals. The products have an extremelyshort lifespan: one day in the case of daily publications, a few days in the case of weeklies. Thisparticular characteristic explains why the sale-or-return system is generalised.


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(58) OJ C 6, 9.1.1999.

If unsold copies were not returned, the financial burden would be borne by the retailer or the distributor,and this would have two consequences for their marketing policy: they would limit to the strict minimumnecessary the number of copies offered to the public, even if that might result in a shortage, and theywould refrain from distributing certain papers that were considered risky. Another possibility might beto increase the price of the service rendered by the distributor, with the effect of reducing the publisher’smargin or, more likely, increasing the price to the consumer.

The sale-or-return clause is therefore necessary in order to reap the benefits expected from this methodof distribution, namely to offer consumers a wide range of newspapers and periodicals.

The Commission went on to consider whether a publisher could accept a sale-or-return system withoutcontrolling the price to the consumer. The retailer would in that case not run any business risk with regardto unsold copies. If the retailer made a commercial misjudgment, something which could well happenin the absence of an overview of the newspaper’s position in the market, there would be more unsoldcopies and the publisher would bear the financial burden of the retailer’s pricing error. It is thereforeeconomically acceptable in the distribution system concerned that the operator who incurs the maineconomic risk should control the selling price.

There were consequently grounds for exempting this clause under Article 81(3) of the EC Treaty and on3 June the Commission sent AMP a comfort letter to that effect.

Microsoft Internet Explorer Licensing (Case IV/C3/36.945)

On 27 February 1998 Microsoft, the computer software manufacturer, formally notified to theCommission a set of agreements concluded with some European Internet Service Providers (ISPs) forthe licensing and distribution of its Internet Explorer products. An ISP is a company that maintains apermanent connection to the Internet and enables its subscribers to connect to it via a telephone link withthe ISP. ISPs may also provide their subscribers with World Wide Web (WWW) pages.

Microsoft’s formal notification of its agreements followed an inquiry launched by the Commission’sCompetition Directorate-General. During that inquiry, the Commission advised Microsoft to re-examineits agreements in the light of the Community competition rules to ensure that they did not containrestrictions that might have the effect of illegally foreclosing the market for Internet browser softwareto Microsoft’s competitors and of illegally promoting the use of Microsoft’s proprietary technology onthe Internet.

Microsoft subsequently amended its agreements and notified the revised agreements to the Commission.The two main changes are the following: failure by the ISPs to attain minimum distribution volumes orpercentages for Internet Explorer browser technology will no longer result in termination of theiragreements; and ISPs are now allowed to promote and advertise competing browser software.

Once the disputed clauses had been removed, the Commission decided to clear the agreements by wayof a comfort letter pursuant to Article 81(1) of the EC Treaty. (59) The comfort letter covers only theagreements between Microsoft and the ISPs; the Commission has not given any ruling on Microsoft’soverall behaviour and its possible abuse of a dominant position.



(59) Press release IP/99/317, 10.5.1999.

Trans-European transport networks

The Commission examined two major land transport infrastructure operations in the light of itscommunication on the application of the competition rules to new transport infrastructure projects. (60)

CTRL (Case IV/D-2/37.289)

The track access agreements for the Channel Tunnel Rail Link (CTRL), a high-speed link between theChannel Tunnel and London due to be completed in 2007, were notified to the Commission. Theagreements were concluded inter alia between the railway company Eurostar (UK) Ltd, the UK partnerin the Eurostar international service, and the infrastructure manager Railtrack plc. The Commissionindicated in a notice (61) that it intended to take a favourable view of the agreements. It did not discussthe parties’ opinion that there would be spare capacity for new entrants once the track was brought intoservice; it merely pointed out there was no actual competitor to Eurostar (UK) for access to the CTRLand that any potential competitor was still, at that stage, hypothetical. In a comfort letter dated 12 Marchthe Competition Directorate-General therefore confirmed to the parties that there were in its view nogrounds for applying Article 81(1) of the EC Treaty to the agreements in question.

Eurotunnel (Case IV/D-2/32.490)

On 22 October 1996 the Court of First Instance annulled (62) the Commission’s decision of13 December 1994 (63) exempting for 30 years the usage contract between Eurotunnel, British Rail andSociété nationale des chemins de fer français (SNCF). In addition to bearing in mind the fact, noted bythe CFI in its judgment, that certain clauses in the contract allowed Eurotunnel to cede some of its owncapacity to new entrants, the Commission conducted a fresh analysis of the usage contract in the lightof the regulatory developments that had taken place in the meantime and the evolution of the cross-Channel transport market since the tunnel opened in 1994. The parties had furthermore waived one ofthe clauses in the usage contract that had prompted the Commission’s 1994 decision.

The Commission noted first of all that the tunnel was not saturated. In so far as there were availablehourly paths and the agreement between Eurotunnel and the railway companies was not exclusive, theCommission took the view that the usage contract had neither the purpose nor the effect of restrictingcompetition in the market for the provision of hourly paths.

Neither was the usage contract a market-sharing agreement, and neither was it intended to restrictcompetition in so far as the railway companies and Eurotunnel were operating on different transportservices markets. Nor did the Commission find that the usage contract had restrictive effects on therelevant transport services markets in which the railway companies and Eurotunnel were active.

In a comfort letter dated 21 May the Competition Directorate-General therefore confirmed to the partiesthat there were in its view no longer any grounds for applying Article 81(1) of the EC Treaty to the usagecontract.


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(60) OJ C 298, 30.9.1997.(61) OJ C 6, 9.1.1999.(62) Joined Cases T-79/95 and T-80/95 [1996] ECR II-1491.(63) 1994 Competition Report, points 184 and 185.

UK beer cases (64)

The Commission exempted the standard leases of the three largest brewers in the UK. This followed anexhaustive examination by the Commission departments of the way in which the national brewers Bass,Scottish and Newcastle (“S&N”) and Whitbread had operated contractual agreements with their lessees.

The national brewers’ standard leases are typical UK property tie agreements. In such arrangements, acompany (in this case a national brewer) owns a retail outlet which it does not operate itself, but insteadrents out to an independent entrepreneur in exchange for a contractual rent and the obligation to buy allhis beer (of certain specified types) from the landlord-brewer.

Article 81(1)

The leases fall within the scope of Article 81(1) if they meet two conditions set down in Delimitis: (65)(i) if the national on-trade beer market is foreclosed and (ii) if the agreements of the brewer in questioncontribute significantly to that foreclosure.

The Commission considered that the UK on-trade beer market was foreclosed in view of the totality ofon-trade beer throughput covered by the property-tied, managed houses and loan-tied outlets of all thebrewers operating in the UK and the beer which non-brewing pub companies were obliged to buy fromlocal brewers, and also other factors relating to the opportunities for access to, and the competitive forceson, the market.

The Commission also considered that the tied networks of Bass, S&N and Whitbread (66) contributedsignificantly to that foreclosure.

Article 81(3)

The Commission found that, on average, the lessees which are tied to Bass, S&N and Whitbread had topay more for their beer purchases than individual operators who bought the same beer from the samebrewer (so-called free traders). However, the Commission considered that an exemption was warrantedbecause Bass, S&N and Whitbread tied lessees were, on average, on a level playing field with their othercompetitors.

The Commission therefore decided to grant a temporary individual exemption to these brewers’ standardleases. As Whitbread still owned a large leased estate and was still entering into 20-year leases withtenants, it was considered that a long exemption period was required and the Commission consequentlyconcluded that the exemption should extend until 31 December 2008. For Bass and S&N, where theleased estate had either been sold off or was in the process of being converted to managed houses, theCommission decided on a shorter exemption end-date, namely 31 December 2002, which was consideredto enable both Bass and S&N to base their commercial decisions with the remaining tenanted houses ona reasonable level of legal certainty.



(64) Cases 35079, 35999 and 36081 (notifications) and 36302, 36349, 36356, 36717, 36719, 36745, 36746, 36953,36954, 36956, 36971, 36987, 36991, 37007, 37011, 37019 and 37054 (complaints).

(65) Court of Justice, Case C-234/89 Stergios Delimitis v Henninger Bräu [1991] ECR I-935.(66) Consisting of the brewer’s property-tied, managed houses and loan-tied outlets, plus, in principle, the beer which

its “wholesale partners” are under an obligation to buy.

Following the adoption by the Commission of these three Article 81(3) decisions concerning Whitbread,(67) Bass (68) and S&N, (69) a number of complainants were sent a copy, signifying formal rejection oftheir complaints.

2.3. Dominant positions

Electricity transmission tariffs in the Netherlands (Case IV/E3/37.770)

In the Netherlands the total cost of transmitting electricity through the grid is shared on a 75:25 basis betweenconsumers and producers. The dominant Dutch transmission system operator (TSO) intended to charge sup-pliers for imports into the Netherlands and for transit transmissions of electricity through the Netherlands thesame fee as domestic suppliers, i.e. 25%. The Dutch electricity regulator, who has to approve such fees, con-sulted the Commission on the compatibility of the TSO’s planned pricing policy with the Community com-petition rules. The regulator was acting in accordance with Community case-law, under which national au-thorities must not approve any practice or agreement contrary to Community competition law. (70)

In their reply to the Dutch electricity regulator, the Commission departments regarded the import andtransit charges as compatible with Article 82 of the EC Treaty, provided that two conditions were met.

A dominant TSO’s charges for electricity transmissions must always be linked to the actual cost in orderto avoid abuse within the meaning of Article 82. According to the information currently available to theCommission, such costs normally arise only if there is a physical flow of electrons across borders. TheDutch TSO may therefore, under the supervision of the regulator, charge for import and transittransmissions only to the extent that these give rise to extra costs on the lines interconnecting the Dutchgrid with other grids in neighbouring Member States.

Within the new framework of the internal market for energy it is quite possible for electricity to be tradedseveral times across national boundaries. This is particularly the case in Member States with a powerexchange such as exists in the Netherlands. In order to avoid double payments to the dominant TSO,care must be taken that foreign traders only pay import charges for electricity which is actually importedfrom another Member State. It is, however, for importers to prove the origin of the electricity.

Irish Interconnector (Case IV/E-3/37.589)

In 1999 the Irish Department of Public Enterprise consulted the Commission on the question of howscarce capacity in the UK-Ireland gas interconnector could be allocated. The question arose as a numberof undertakings or JVs were planning to build new gas-fired plants generating electricity for the Irishmarket; however, the capacity in the UK-Ireland gas interconnector was considered insufficient to meetthe increased demand for power generation between 2001 and 2004.

In their analysis, the Commission departments took the view that the principle of non-discriminationwould not be violated if power plants were favoured over other gas users in the allocation process,provided that the increased electricity demand could not be met through other means. They also pointed


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(67) OJ L 88, 31.3.1999.(68) OJ L 186, 19.7.1999.(69) OJ L 186, 19.7.1999.(70) Case 66/86 Ahmed Saeed [1989] ECR 803.

out that no additional capacity should be allocated to the ESB, the incumbent Irish electricity monopolist.It was apparent that the allocation of additional capacity to the ESB would render it difficult, if notimpossible, for potential competitors to enter the Irish electricity market, as access to gas was needed tobuild a state-of-the-art power generation plant. Thus, it appeared that the allocation of gas capacity tothe ESB would reinforce its dominant position on the Irish electricity market.

The Irish Department of Public Enterprise also consulted the Commission on the appropriate allocationmethod: auction, lottery, first come first served, etc. Although no final position was taken on this issue, theCommission departments made it clear that it was normally for the Department to choose the appropriatemethod provided certain conditions such as transparency and the principle of non-discrimination were ful-filled. In the case in question allocation by means of an auction appeared to be acceptable.

3. Rejections of complaints

Lille/UEFA (the “Mouscron case”) (Case COMP/E3/36.851)

On 3 December the Commission adopted a decision rejecting a complaint lodged by the Communautéurbaine de Lille against the Union of European Football Associations (UEFA) in what has come to beknown as the “Mouscron case”. (71)

The decision helps to determine the limits to the application of the EC Treaty competition rules to sportand thus to improve legal certainty for the different organisations involved. It highlights three key aspectsof the Commission’s policy in this sector: (i) the Commission recognises the regulatory powers of sportsorganisations as regards non-economic aspects linked to the specific nature of sport; (ii) the rules ofsports organisations that are necessary to ensure equality between clubs and uncertainty as to results arenot, in principle, caught by the Treaty competition rules; and (iii) the Commission investigates only casesthat have a Community dimension and significantly affect trade between Member States.

The Commission considered that the UEFA Cup “at home and away from home” rule and the exceptionsto that rule (which do not prevent the host club from playing its home match in its opponent’s country)were needed to ensure equality between clubs. The rule therefore fell outside the scope of Article 81 ofthe Treaty. It followed that, by adopting this rule and the exceptions to it, UEFA had exercised itslegitimate right of self-regulation as a sports organisation in a manner which could not be challenged bythe Treaty competition rules.

The Commission also took the view that there was no Community interest that would justify looking moreclosely into whether UEFA had abused any dominant position it might hold by applying exceptions to thatrule without taking account of the integration that existed between certain frontier regions and, in particular,in the case in point. The complaint, lodged on 31 December 1997, challenged UEFA’s decision not to allowthe UEFACup game between Excelsior Mouscron and FC Metz to be held at the ground of Lille-Métropole.As a result, the Communauté urbaine de Lille was unable to hire out the stadium to Excelsior Mouscron.

The lack of any Community interest was demonstrated among other things by the fact that there waslittle probability of establishing an infringement of Article 82 of the Treaty, for two reasons: (i) the casehad to be assessed within the context of the national geographical organisation of football in Europe,



(71) IP/99/965, 9.12.1999.

which was not called into question by Community law; and (ii) the case was the only one that had beenbrought to the Commission’s notice and was an isolated case that had given rise to a dispute in the past.The investigatory measures needed would therefore be disproportionate to the probability of establishingthat an infringement had taken place.

TF1/France 2 and France 3 (Case IV/C-2/34.711)

TF1 lodged this complaint on 10 March 1993. Referring to Article 81 of the EC Treaty, it claimed thatthe cooperation established between France 2 and France 3 created distortions of competition which wereharming its interests. It argued that the purpose of this cooperation was to restrict competition becauseit formed part of a purely commercial strategy of gaining shares of the advertising market. TF1 pointedto two allegedly anticompetitive effects: the elimination of all competition between France 2 andFrance 3 and the fact that the operations of third parties such as TF1 were made more costly.

In deciding on 3 February to reject the complaint the Commission applied the “intra-enterprise doctrine”,whereby Article 81(1) of the EC Treaty does not apply to agreements or concerted practices betweencompanies belonging to the same group if the companies concerned form a business unit.

The Commission considered that France 2 and France 3 did form a business unit, for several reasons:

— the very purpose of the Act of 2 August 1989 was to create a single group by introducing a jointchairmanship. The preamble to the bill and the minutes of the parliamentary debates were quite clearon this point;

— the role of the joint chairman showed that he framed the strategy of the two channels and coordinatedtheir activities;

— the programming of the two channels was harmonised, complementary and coordinated under theauthority of the joint chairman;

— their advertising management departments had been merged.

Pursuant to Article 82 of the EC Treaty, the Commission also rejected the complaint on the ground thatthe two publicly owned channels could not be deemed to hold a dominant position in any of the relevantmarkets. In terms of audience shares, the relative positions of the two groups were broadly similar, bothat the time when the complaint was lodged in 1992 (41% for TF1 as against 38% for the two publicchannels) and in 1997 (35% for TF1 as against 40.1% for France 2 and France 3). In terms of advertisingrevenues, TF1 was by far the dominant player with a 55% share in 1992 and 50% in 1997.

The Commission found, furthermore, that the practices which the complainant had alleged to be unfairin fact constituted normal commercial behaviour in a competitive environment; the strategy of counter-programming challenged by TF1 was normal, lawful behaviour.

M6/European Broadcasting Union (EBU) (Case IV/C2/36.826)

The EBU is a professional association of national broadcasters. One of its tasks is to negotiate, with the sportsfederations or organisers of competitions, exclusive broadcasting rights to sports events for its members.Members also provide each other with technical assistance for the retransmission of sports events.


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M6 lodged a complaint against the EBU on 5 December 1997. Since 1987 it had on six occasions appliedto join the EBU and had each time been refused.

The Commission had exempted the EBU system on 11 June 1993. (72) The Court of First Instanceannulled that decision in a judgement it handed down on 11 July 1996. (73) The CFI found fault inparticular with the criteria for joining the organisation, which it found too imprecise, subjective andliable to be applied in a discriminatory manner. The EBU brought an appeal before the Court of Justice,supported by the Commission.

These developments form the background to the complaint lodged by M6, which considered that, byagain refusing its application for membership, the EBU had failed to take account of the CFI’s judgementand was continuing to apply membership criteria that the CFI had found unlawful. M6 also claimed thatthe Commission should have ordered the EBU to grant it direct access to the sporting rights it acquiredon behalf of its members.

The Commission rejected the complaint by decision dated 29 June. It found first of all that it did nothave the necessary legal powers to order the EBU to grant M6 direct access to sports broadcasting rights.It rejected the complaint on the grounds that the membership criteria did not fall within the scope ofArticle 81(1) of the EC Treaty and that, even if they did restrict competition, the EBU had not appliedthem but had, following the CFI’s ruling, assessed and rejected M6’s application in the light of newcriteria. Those new criteria were objective, quantifiable and capable of being applied in a non-discriminatory manner and as such complied with the CFI’s requirements.

CanalSatellite/TPS (Case IV/C-2/36.605)

On 7 April the Commission dismissed a complaint brought by CanalSatellite against TPS and its foundercompanies (TF1, France Télévision, M6, France Télécom and Suez-Lyonnaise des eaux). CanalSatellitechallenged the agreement granting TPS the exclusive right to retransmit the general-interest channels indigital mode.

Arguing that the relevant market was the market in both pay-TV and free-to-air television services, thecomplainant claimed that the exclusive retransmission right conferred a disproportionate advantage onTPS. CanalSatellite also took the view that, even if a specific market in pay-TV was identified, adistinction had to be drawn according to the type of subscription offered, and the market for digital pay-TV bouquets therefore had to be regarded as separate from the market for a single pay-TV channel suchas Canal+; this meant that a dominant position could no longer be deemed to exist in the market in whichTPS was operating.

The Commission did not accept that market definition. It considered that pay-TV constituted a separatemarket from free-to-air television, but that the pay-TV market should not be further segmented accordingto the technology used (analogue or digital) or according to the method of transmission (cable, satelliteor terrestrial). It thus confirmed the analysis it made of the broadcasting sector inBertelsmann/Kirch/Premiere. (74)



(72) OJ L 179, 22.7.1993.(73) Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Métropole Télévision SA, Reti Televisive Italiane SpA,

Gestevisión Telecinco SA, Antena 3 de Televisión v Commission [1996] ECR II–649.(74) OJ L 53, 27.2.1999.

In view of the dominant position held by the Canal+ group on the pay-TV market, the Commission tookthe view that TPS suffered from a definite handicap in securing programme content and, in order tolaunch its services, needed a feature distinguishing it from Canal+ and CanalSatellite. The complainttherefore could not be upheld.

Info-Lab/Ricoh (Case IV/E-2/36.431)

On 7 January the Commission adopted a decision rejecting a complaint by Info-Lab, a manufacturer oftoner for photocopiers, against Ricoh, a photocopier manufacturer. Info-Lab alleged that Ricoh wasabusing its dominant position on the market for toner cartridges compatible with certain Ricohphotocopiers and protected by Ricoh intellectual property rights by refusing to supply Info-Lab withempty toner cartridges, which would enable Info-Lab to compete with Ricoh in the sale of filled tonercartridges.

Info-Lab claimed that it was not possible to design a toner cartridge which would fit into the Ricohmachines without infringing Ricoh’s intellectual property rights. It therefore wished to purchase emptytoner cartridges from Ricoh, fill them with toner which it already manufactured and then sell the filledtoner cartridges in competition with Ricoh. Ricoh, however, which had not so far licensed its designrights or sold empty cartridges to anyone, refused to do this.

According to Info-Lab the relevant product market was the market for empty toner cartridges compatiblewith Ricoh copiers which were intended to be filled with toner powder and sold to end users. Such a marketdid not exist, however. No producer or dealer sold empty toner cartridges compatible with Ricoh copiers.Apart from Ricoh, no company could produce these toner cartridges, since they were protected by intellec-tual property rights held by Ricoh, which had not so far licensed its design rights. Nor did Ricoh sell emptytoner cartridges to other companies or end users. At the retail level there was no demand for empty cartridgeseither. Cartridge and powder were sold together as a single product. Other copier manufacturers and inde-pendent toner cartridge manufacturers, such as Info-Lab itself, sold filled cartridges to end users. This satis-fied a recognised consumer need, reduced costs, and meant that the components had to be used together.Powder and cartridge therefore had to be considered a single product.

Since a market for empty toner cartridges compatible with Ricoh copiers did not exist, the question waswhether Ricoh, which had neither licensed its design rights nor sold empty cartridges, could be forcedto start selling them so as to allow Info-Lab to enter the market. Since there was no consumer demandfor empty toner cartridges, because cartridge and powder were used together by end customers, the solepurpose of selling empty cartridges would be to enable Info-Lab to compete with Ricoh in the marketfor filled toner cartridges. The Commission was of the opinion that a company cannot be obliged to enterinto such forced cooperation with prospective market players or that such forced cooperation could onlybe envisaged under exceptional circumstances in line with the case-law of the Community courtsconcerning the concept of “essential facilities”. (75)

The application of Article 82 in a case like this could at most be envisaged if Ricoh had a dominant positionon the consumables market allowing it to act independently of possible competitors and especially to be freein setting prices. Ricoh was the only undertaking which sold filled toner cartridges compatible with Ricohphotocopiers. According to the Commission’s investigation, however, Ricoh did not have a dominant posi-tion in the photocopiers market. This raised the issue whether a company could be considered dominant on


ANTITRUST 169

(75) See the judgment of Court of Justice of 26 November 1998 in Case C-7/97 Oscar Bronner GmbH & Co. KG vMediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG and Others [1998] ECR I-7791.

the consumables market where there was no dominance in the upstream market, i.e. the photocopier market.Central to this issue was the existence of a close link between these two markets.

Applying the criteria outlined in Pelikan/Kyocera, (76) the Commission came to the conclusion that thephotocopier market and the consumables market were interrelated in such a way that competition on thephotocopier market also constituted an effective competitive constraint on the consumables market.Under the approach adopted by the Commission in Pelikan/Kyocera, Ricoh could therefore beconsidered not to hold a dominant position.

4. Settlement

Lif (Case IV/F3/37.411)

In early 1998 the Danish Ministry for Health and Lif, the Danish Association of Pharmaceutical Producers,concluded an agreement aimed at controlling public spending on price subsidies for pharmaceuticals. Theagreement froze prices for prescription drugs and placed a cap on total public spending on price subsidies.

It also established a quota arrangement whereby each supplier was allocated a quota of the overall spendingcap based on that supplier’s share of public price subsidies during the previous year. The quota was operatedon a monthly basis. If the overall spending cap was exceeded, those Lif members who exceeded their quotaswere obliged to eliminate the excess by reducing their drug prices during the following quarter.

The Commission found that the quota arrangement infringed Article 81 of the EC Treaty because itreduced the incentive for operators to expand sales and because less restrictive means of reducing publicspending were available. The Commission had in the past accepted as compatible with Article 81 certainagreements aimed at limiting expenditure within the public health sector. These agreements contained aprice freeze or a commitment by industry to reduce prices by a certain percentage.

Following the Commission’s intervention the parties to the agreement accepted a common interpretationaccording to which the quota scheme would not force any Lif member to reduce prices below acalculated European average price for each individual product. Furthermore, the parties agreed not torenew the quota scheme when the agreement expired on 1 March 2000. (77)

5. Inquiry into sectors of the economy

Telecommunications

On 27 July the Commission decided, pursuant to Article 12 of Regulation No 17, (78) to open a generalinquiry into three areas of the telecommunications industry where it had observed price rigidity, whichsuggested that competition in the common market was being restricted or distorted. (79) The areas were:the supply of leased lines, roaming services for mobile telephony and local loop services.



(76) 1995 Competition Report, p. 140.(77) Press release IP/99/633, 17.8.1999.(78) OJ 13, 21.2.1962; Fifth General Report, point 47.(79) Bull. 7/8-1999, point 1.3.29.

The inquiries would involve requesting information from incumbent fixed network operators, mobilenetwork operators, a number of newly authorised fixed telecommunications network operators, largebusiness users and national authorities.

For practical reasons, the Commission was to assess these three areas in three phases, starting with theinquiry into leased lines. The other two inquiries were to follow before the end of the year. Pursuant tothe July decision, on 22 October the Commission started the investigation regarding the conditions ofprovision and pricing of leased lines. Questionnaires were sent to national competition authorities,telecommunications regulators, incumbent operators, new entrants who provide or use leased lines andbig business users. Recipients were given a six-week deadline within which to reply.

The Commission was aware that leased line charges remained high despite the creation of competinginfrastructure by new entrants. The aim of the Commission’s inquiry was to establish whether currentcommercial practices and prices infringed the EU competition rules, in particular the ban on restrictivepractices and abuses of dominant positions (Articles 81, 82 and/or 86 of the EC Treaty). This was onlythe third sector inquiry ever launched by the Commission.

6. Failure to comply with procedural rules

Anheuser-Busch — Scottish & Newcastle (Case IV/F3/34.237)

On 14 December the Commission adopted a formal decision finding that the brewers Anheuser-Buschand Scottish & Newcastle had infringed the procedural rules for competition cases laid down inRegulation No 17 by negligently supplying the Commission with incorrect information in response to aformal request for information. (80) The Commission therefore imposed fines of EUR 3 000 on bothAnheuser-Busch and Scottish & Newcastle. Anheuser-Busch (USA) is the world’s largest brewingorganisation and holder of the Budweiser brand. Scottish & Newcastle is the largest UK brewer.

The companies are party to agreements concerning the brewing, distributing and marketing of Budweiserbeer in the UK. Scottish & Newcastle became party to the agreement after it had bought the brewingbusiness of another UK brewer and was thus originally not a party to the notification of the agreementsto the Commission.

In the course of the Commission investigation, a formal request for information was sent to the notifyingparties in order to see whether there had been any changes to the agreements after Scottish & Newcastlebecame party to them.

In their joint response to the Commission’s request for information, the parties omitted the so-calledBudweiser marketing guidelines, which were agreed and accepted by Scottish & Newcastle. Thenegligence of the parties seriously hindered the proper investigation of the case. The Commissiontherefore considered it appropriate to impose fines on both parties for the negligent supply of incorrectinformation.


ANTITRUST 171

(80) OJ L 49, 22.2.2000.

B — New legislative provisions and notices adopted or proposed bythe Commission



Title Date Publication

Report to the European Parliament and to the Council 12.5.1999 Http://www.europa.eu.int/on the operation of Commission Regulation No 3932/92 comm/dg04/entente/concerning the application of Article 81, paragraph 3, of other.htm#dgiv_pdf_ins_rep1999the Treaty to certain categories of agreements, decisionsand concerted practices in the field of insurance

White paper on modernisation of the rules implementing 12.5.1999 OJ C 132, 12.5.1999, p. 1Articles 85 and 86 of the EC Treaty

Commission Regulation (EC) No 1083/99 amending 26.5.1999 OJ L 131, 27.5.1999, p. 27Regulation (EEC) No 1617/93 on the application of Article 85(3) of the Treaty to certain categories of agreements and concerted practices concerning joint planning and coordination of schedules, joint operations, consultations on passenger and cargo tariffs on scheduled air services and slot allocation at airports

Notice pursuant to Article 4 of Council Regulation (EEC) 31.12.1999 OJ C 379, 31.12.1999, p. 13No 479/92 of 25 February 1992 on the application ofArticle 81(3) of the EC Treaty to certain categories ofagreements, decisions and concerted practices betweenliner shipping companies (consortia)

Commission Regulation (EC) No 2790/1999 on the 22.12.1999 OJ L 336, 29.12.1999, p. 21application of Article 81(3) of the Treaty to categoriesof vertical agreements and concerted practices

Published decisions Date of decision Publication

P&O Stena Line 26.1.1999 OJ L 163, 29.6.1999, p. 61

Portuguese airports 10.2.1999 OJ L 69, 16.3.1999, p. 31

Finnish airports 10.2.1999 OJ L 69, 16.3.1999, p. 24

TPS (Télévision Par Satellite) 3.3.1999 OJ L 90, 2.4.1999, p. 6

Whitbread 24.2.1999 OJ L 88, 31.3.1999, p. 26

IMA 7.4.1999 OJ L 106, 23.4.1999, p. 14

P&I Clubs 12.4.1999 OJ L 125, 19.5.1999, p. 12

EATA (Europe Asia Trades Agreement) 30.4.1999 OJ L 193, 26.7.1999, p. 23

Cégétel +4 20.5.1999 OJ L 218, 18.8.1999, p. 14

Virgin/British Airways 14.7.1999 OJ L 30, 4.2.2000, p. 1

Bass 16.6.1999 OJ L 186, 19.7.1999, p. 1

Scottish & Newcastle 16.6.1999 OJ L 186, 19.7.1999, p. 28

1998 Football World Cup 20.7.1999 OJ L 5, 8.1.2000, p. 55

SNCF/Cégétel 23.7.1999 IP/99/558

Nederlandse Vereniging van Banken 8.9.1999 OJ L 271, 21.10.1999, p. 28

C — Formal decisions pursuant to Articles 81, 82 and 86 of theEC Treaty

1. Published decisions

2. Other formal decisions (81)

2.1. Rejections of complaints by decision


ANTITRUST 173

Pratt & Whitney/General Electric 14.9.1999 OJ L 58, 3.3.2000, p. 16

Reims 15.9.1999 OJ L 275, 26.10.1999, p. 17

British Interactive Broadcasting 15.9.1999 OJ L 312, 6.12.1999, p. 1

FEG + TU 26.10.1999 OJ L 39, 4.2.2000, p. 1

Seamless steel tubes 8.12.1999 Not yet published

Anheuser-Busch/Scottish & Newcastle 14.12.1999 OJ L 49, 22.2.2000, p. 37

Case No IV/ Name Date of decision

36.431 Info-Lab/Ricoh 7.1.1999

36.561 VIKH/Mazda 21.1.1999

36.320 Sea France/P&O Stena 26.1.1999

34.711 TF1/France 2+France 3 3.2.1999

36.522 VPRT/ARD+ZDF+Germany 8.3.1999

36.395 SEP/Renault 8.3.1999

36.717 Whitbread Lessees/Whitbread 11.3.1999

36.719 Falla/Whitbread 11.3.1999

36.745 Maitland Walker/Whitbread 11.3.1999

36.746 Whitbread Lessees/Whitbread 11.3.1999

36.577 RAU/Westfa + Toyota 17.3.1999

36.605 CanalSatellite/TPS+TF1+M6+France 2+ France 3 7.4.1999

36.930 Isibars+Viraj/European producers of stainless steel bright bars 21.4.1999

36.826 M6/EBU 29.6.1999

37.129 UPS/DP & DHL 30.6.1999

36.953 Anderson/Scottish & Newcastle 5.7.1999

36.954 AAP/Scottish & Newcastle 5.7.1999

36.956 Egan/Scottish & Newcastle 5.7.1999

36.971 O’Leary/Bass 5.7.1999

36.987 Andreucci/Bass 5.7.1999

36.991 Hand/Scottish & Newcastle 5.7.1999

37.007 McDonald/Scottish & Newcastle 5.7.1999

37.011 Wilson/Bass 5.7.1999

37.019 Duguid/Bass 5.7.1999

37.054 Meek & Meek/Bass 5.7.1999

36.302 Padden/Scottish & Newcastle 5.7.1999

36.349 Adams/Bass 5.7.1999

36.356 Hand/Scottish & Newcastle 5.7.1999

36.834 Fenin/SNS + Spain 26.8.1999

(81) Not published in the Official Journal.



(82) 1 = Negative clearance 81(1) or 822 = Individual exemption 81(3)3 = Conformity with notice/block exemption.


36.174 Telecinco/EBU 1.3.1999

2.2. Refusal to grant interim measures


37.522 Sector inquiry in the field of telecommunications services 27.7.1999

2.3. Sector inquiries pursuant to Article 12 of Council Regulation No 17

36.359 Hamilton/Carlsberg Tetley (Allied Domecq) 7.9.1999

36.654 Röwe/VAG 22.11.1999

36.655 Röwe/BMW 22.11.1999

36.656 Röwe/General Motors & Opel 22.11.1999

36.657 Röwe/Mercedes-Benz 22.11.1999

36.851 Lille/UEFA (Mouscron) 3.12.1999

Case Name Date of closure Type of comfort No IV/ letter (82)

00.427 Handelsreglement 9.9.1999 1

35.490 WorldPartners+5 11.1.1999 1

36.849 MPEG+9 12.1.1999 2

37.316 Vectair Systems + Technical Concepts 12.1.1999 1

33.433 Serac+Stork 13.1.1999 2

37.222 Hoogovens + Sidmar 13.1.1999 1

35.413 Skafor 15.1.1999 1

37.097 Linde+Mider 19.1.1999 1

37.220 Ffestiniog Investments+Robin Anthony Kyffin+AnturDwyryd-Llyn Cyfyngedig+Ffestiniog ExpandedSlate Co 19.1.1999 1

37.327 Pub Estate 21.1.1999 1

36.832 Energis+NGC+2 22.1.1999 1

36.893 Scottish Nuclear+British Nuclear 22.1.1999 1

37.172 PASS 1.2.1999 2

37.357 Bass/Miller 2.2.1999 1

37.367 Ericsson+Nokia+Motorola+Psion+1 2.2.1999 1

D — Cases closed by comfort letter in 1999


ANTITRUST 175

36.881 Ugine Savoie+EWK 4.2.1999 1

33.131 Eurogroup SA (GB-Inno-BM+Rewe+Vendex) 5.2.1999 1

33.360 Ahold+Argyll+Casino and others 5.2.1999 1

33.389 GB Inno+ Rewe+ Vendex (Eurogroup) 5.2.1999 1

33.394 Socadip+Markant+EMD 5.2.1999 1

37.293 Kuoni + Larsen + 2 9.2.1999 3

37.303 NSAB and SES 10.2.1999 1

34.991 PRS 17.2.1999 1

35.576 Sanyo UK+1 26.2.1999 1

36.861 Inlingua 4.3.1999 3

37.358 Föreningssparbanken+SpareBank 1+5 4.3.1999 1

35.900 SAP Aktiengesellschaft 8.3.1999 2

36.271 Emera 11.3.1999 1

37.018 Tamrock+Caterpillar+1 15.3.1999 2

36.019 SES 17.3.1999 1

37.160 Revipap 18.3.1999 1

37.305 Compass Energy (ex M1315) 26.3.1999 1

34.747 IAE + 12 30.3.1999 1

37.123 Metro Holdings+5 6.4.1999 1

37.157 FTMI+Mobilix+2 6.4.1999 1

36.630 Bayer + Rohm and Haas Company 7.4.1999 1

37.317 OCIMF (P&T Programme) 8.4.1999 1

36.940 Yule Catto+Synthomer+3 15.4.1999 2

34.585 UCI Multiplex + 3 19.4.1999 2

35.685 Nordisk Flyforsikringsgruppe 19.4.1999 1

36.028 GEMA+MCPS+SDRM+BEL+1 19.4.1999 1

37.449 Girobank+A & L+1 19.4.1999 1

32.871 Nederlandse Luchtvaartpool 21.4.1999 1

37.347 DEO 30.4.1999 1

37.156 Pfizer+Draxis+1 3.5.1999 1

37.036 Elf+Cepsa+1 12.5.1999 1

37.289 Channel Tunnel Rail Link 12.5.1999 1

35.394 Hoffmann-La Roche+Abbott 18.5.1999 1

37.359 Degussa+Norddeutsche Affinerie 20.5.1999 1

37.181 Inforstrada & Ferrovie dello Stato 21.5.1999 1

36.945 Microsoft 27.5.1999 1

37.186 Energizer UK Company+Cert Group of Companies 31.5.1999 2

37.035 BP+Sterling 3.6.1999 1

37.463 DNES+Petri+1 4.6.1999 3

34.640 ABI standard contracts 7.6.1999 1

37.306 AMP 7.6.1999 2

37.471 Olivetti+Canon+1 7.6.1999 2

37.365 Sears Clothing + Selfridges Retail 9.6.1999 1

37.381 SweDane Crop Protection 9.6.1999 1

37.164 Anheuser-Busch+Guinness N.I. 10.6.1999 1



37.301 NVPI (Achtergrondmuziek) 10.6.1999 1

37.302 NVPI (Muziekvideogrammen) 10.6.1999 1

37.494 Archbishop’s Council + Church House Publishing 10.6.1999 1

36.938 Carlsberg-Tetley+Ind Coope+2 21.6.1999 2

37.053 FIT 21.6.1999 1

37.130 Farland Network+10 21.6.1999 1

36.836 Yoplait+Valio+4 25.6.1999 2

37.091 Carlsberg+Sol-Viking 29.6.1999 2

37.447 IVO/Elsam+2 29.6.1999 1

37.173 Tuborg+Egill 30.6.1999 2

36.546 Fiat+ABN AMRO 1.7.1999 1

36.858 ACMA 5.7.1999 1

36.438 Audiovisual Sport 6.7.1999 1

37.441 Solutia+Dow Chemical 6.7.1999 3

37.496 KPN Orange Belgium+5 6.7.1999 1

37.474 NIE/Scottish Power 7.7.1999 1

37.318 IBP+Thermconcept+1 8.7.1999 1

35.385 Smithkline Beecham 9.7.1999 1

37.165 Anheuser-Busch+Peroni 9.7.1999 2

36.497 Rhône-Poulenc Rorer + Novo Nordisk 14.7.1999 2

36.267 Nestlé + CarnaudMetalbox 16.7.1999 1

35.650 NSAB + Kinnevik + TeleDanmark 20.7.1999 1

36.517 MTG, NSAB and Viacom 20.7.1999 2

37.251 Telia+Riksmedia 20.7.1999 1

36.783 Endesa+Stet 22.7.1999 1

37.349 Bayer+Fournier 27.7.1999 1

37.475 UBON+Norwaco 29.7.1999 1

37.476 UBON 29.7.1999 1

36.670 Stinnes+Haniel Reederei+3 (ex IV/M897) 11.8.1999 1

32.490 Eurotunnel 12.8.1999 1

34.303 Danish Bankers Association + 2 12.8.1999 1

37.127 DITH+BDI+3 12.8.1999 1

37.558 Pioneer+Eurodis 16.8.1999 1

36.105 InfoScan+IRI+1 18.8.1999 2

37.482 BASF+Svalöf+1 18.8.1999 1

36.759 NSAA 23.8.1999 1

36.122 NLA+6 24.8.1999 1

33.139 London Platinum & Palladium Market 25.8.1999 1

37.086 Bedrijfschap Frisdranken en Waters 31.8.1999 1

37.429 MSSA+Octel 31.8.1999 1

37.500 DeTeMobil Deutsche Telekom Mobilnet + Viag Interkom 31.8.1999 1

37.587 SFA 2.9.1999 1

36.843 Heggenstaller+Presswood+1 8.9.1999 2

37.427 Tuborg+Feldschlösschen 8.9.1999 1


ANTITRUST 177

37.486 ZSW+Würth Solar 14.9.1999 1

35.416 Skafor: security against burglary 15.9.1999 1

37.137 Shell + BP Oil 15.9.1999 1

37.554 Siemens +GEC+2 19.9.1999 1

36.942 Mayfair+S&N 20.9.1999 2

37.585 Trumpf+Mecos 20.9.1999 1

35.977 Hoechst+BP 21.9.1999 2

36.092 Music Choice Europe+Interpark House+Sony DigitalRadio Europe 21.9.1999 1

37.615 MCE+Music Choice Europe+Time WarnerMCE+Sony Digital Radio Europe+British Sky Broadcasting+Sky Ventures 21.9.1999 1

30.566A UIP Cinema 21.9.1999 2

37.478 CAT+Medical Research+1 27.9.1999 1

37.412 Dana 28.9.1999 1

36.274 Egana+Esprit 29.9.1999 1

33.601 Suzuki 30.9.1999 2

36.980 Lucas+ATT+7 30.9.1999 1

37.540 Ericsson Austria + 3 30.9.1999 2

37.104 Fercher+Steidl 1.10.1999 1

37.351 Fercher+Gailer 1.10.1999 1

37.469 ALK+TVW Institute+1 5.10.1999 1

37.443 Compo+KD 6.10.1999 2

32.955 International Tractor Shipment Exchange 7.10.1999 1

32.956 International Harvester Exchange 7.10.1999 1

32.957 International Rear Digger Exchange 7.10.1999 1

33.107 Chambre Syndicale 7.10.1999 1

34.548 LAV + 2 8.10.1999 1

34.568 AEA 8.10.1999 1

33.114 Agricultural Machinery Luxembourg 11.10.1999 1

34.762 LAV + 2 (Erntemaschinen) 11.10.1999 1

35.544 JCB Landpower+participants in 32955 11.10.1999 1

35.863 Unacoma (Movimento Terra) 11.10.1999 1

35.864 Unacoma (Maos/Motori) 11.10.1999 1

35.865 Unacoma (Trattrici) 11.10.1999 1

35.866 Unacoma (Immatricolazioni) 11.10.1999 1

36.528 Unacoma 11.10.1999 1

37.516 Claas 11.10.1999 1

37.564 National Discography+3 11.10.1999 1

33.039 NVVA (Aansprakelikheidsverzekeraar) 12.10.1999 3

37.182 Esat Telecom + Coras Iompair Eireann + Irish Rail 12.10.1999 1

34.239 Bankgirocentrale + 9 (SOGA) 13.10.1999 1

34.393 Bankgirocentrale + 5 13.10.1999 1

37.406 NSAB - Teracom - Swedish Space Corporation - Tele Danmark 13.10.1999 1

37.207 Searle + Pfizer 18.10.1999 1



37.535 Garching MPG+Lundbeck 18.10.1999 1

36.448 GSIT 21.10.1999 1

37.648 Scottish Power+Scottish Telecom 26.10.1999 1

37.481 Enator+NetStore 28.10.1999 1

36.160 Internationale Dentalschau 9.11.1999 2

37.016 Neopost 15.11.1999 1

34.563 Ecomet+16 16.11.1999 1

36.059 Isabel+10 16.11.1999 1

36.268 Accountancy Firms’ Memorandum 16.11.1999 1

37.502 Ragolds Süsswaren + Eckes-Granini 16.11.1999 1

34.998 TMC 18.11.1999 2

36.907 Transco+BG 18.11.1999 1

37.517 NSAB+SVT 19.11.1999 1

36476A Racecourse Owners + Channel Four 19.11.1999 1

37.364 Nestlé Italiana + Kungsörnen 23.11.1999 1

36.640 Yuasa Batteries + 4 24.11.1999 2

35.882 Geest+2+Wibdeco+1 26.11.1999 1

36.197 Wibdeco + Fyffes 26.11.1999 1

37.179 BBCW + Flextech 26.11.1999 1

37.034 GSM MoU Association 30.11.1999 2

37.456 Sanseverino+Enel 2.12.1999 2

37.466 Global Telematics+2 3.12.1999 1

37.611 KAMA+Hyundai Motor Cy+Daewoo Motor Cy+KiaMotors Corporation 3.12.1999 1

37.634 JAMA 3.12.1999 1

37.691 VIS Farmaceutici+Lundbeck 7.12.1999 1

33.817 Eurelectric 8.12.1999 1

37.559 ANT 8.12.1999 1

36.646 NEL + BNFL 13.12.1999 1

37.277 NESA+Vattenfall 13.12.1999 1

37.395 Sydkraft+KB+3 13.12.1999 1

37.448 Elsam+Öresundskraft 13.12.1999 1

37.421 ABIM Card+6 14.12.1999 1

37.669 MECMA 2+27 20.12.1999 1

36237A TPS + 7 21.12.1999 2

37.544 BIAC+BSS 22.12.1999 2


ANTITRUST 179

Case No IV/ Name Publication

36.160 Internationale Dentalschau OJ C 6, 9.1.1999, p. 2

37.289 CTRL’s track access agreements OJ C 6, 9.1.1999, p. 7

37.123 Metro Holdings Ltd. OJ C 19, 23.1.1999, p. 18

36.448 Groupement pour un Système Interbancaire deTélécompensation (GSIT) OJ C 64, 6.3.1999, p. 5

37.130 Farland Network OJ C 77, 20.3.1999, p. 2

35.449 Allied Domecq OJ C 82, 25.3.1999, p. 5

37.182 Esat/Coras Iompair Eireann (CIE) OJ C 181, 26.6.1999, p. 19

30.566 A UIP Cinema OJ C 205, 20.7.1999, p. 6

37.459 Global One II OJ C 220, 31.7.1999, p. 23

32.150 EBU (Eurovision) OJ C 248, 1.9.1999, p. 4

36.732 Solvay + Sisecam OJ C 272, 25.9.1999, p. 14

37.632 UEFA rule on the integrity of UEFA club competitions: OJ C 363, 17.12.1999, p. 2independence of clubs

E — Notices pursuant to Articles 81 and 82 of the EC Treaty

1. Publication pursuant to Article 19(3) of Council Regulation No 17


37.272 Coredeal OJ C 56, 26.2.1999, p. 6

37.396 Revised TACA OJ C 125, 6.5.1999, p. 6

37.506 DVD OJ C 242, 27.8.1999, p. 4

2. Notices inviting interested third parties to submit observations on proposedtransactions


37.214 DFB OJ C 6, 9.1.1999, p. 10

37.145 MTU/Volvo Aero OJ C 23, 28.1.1999, p. 7

37.359 Degussa-Norddeutsche Affinerie OJ C 29, 4.2.1999, p. 21

36.932 Eisai/Pfizer OJ C 36, 10.2.1999, p.13

37.179 BBCW+Flextech OJ C 38, 12.2.1999, p. 3

37.400 Project Gandalf OJ C 70, 13.3.1999, p. 5

37.398 UEFA OJ C 99, 10.4.1999, p. 23

37.450 Ecotop + 4 OJ C 102, 13.4.1999, p. 6

37.428 Ladbroke+PMU+2 OJ C 112, 23.4.1999, p. 34

37.462 GTO +8 OJ C 119, 30.4.1999, p. 14

37.500 Viag/T. Mobile OJ C 144, 22.5.1999, p. 9

3. “Carlsberg” notices (concerning structural cooperative joint ventures)



Reference Date Subject

IP/99/56 28.1.1999 Commission approves P&O Stena Line joint venture

IP/99/60 1.2.1999 Car prices in the European Union on 1 November 1998

IP/99/65 2.2.1999 Commission authorises Motorola’s participation in Symbian, a joint venturecompany producing operating systems for wireless information devices

IP/99/101 10.2.1999 Commission adopts two decisions on landing charges at Portugueseand Finnish airports

IP/99/104 11.2.1999 The Commission clears Whitbread’s standard pub leases

IP/99/133 24.2.1999 Commission debates application of its competition rules to sports

IP/99/152 3.3.1999 Commission takes further action against Greece regardingtelecommunication services

IP/99/161 8.3.1999 Commission clears the creation of the digital satellite television platformTPS (France)

IP/99/193 23.3.1999 Commission: POLFIN may sail forth

IP/99/211 31.3.1999 Commission authorises UK telecommunications joint venture betweenEnergis, Deutsche Telekom and France Télécom

IP/99/228 14.4.1999 Commission approves EPI code of conduct

IP/99/230 16.4.1999 Commission decision clearing agreements of the International Group ofP&I Clubs

IP/99/279 29.4.1999 Commission sees substantial progress in its investigation into internationaltelephone prices

IP/99/291 3.5.1999 Gas distribution in France

IP/99/298 4.5.1999 Commission successfully closes investigation into mobile and fixedtelephony prices following significant reductions throughout the EU

IP/99/304 5.5.1999 Commission examines ticketing arrangements for next year’s EuropeanFootball Championships

IP/99/308 6.5.1999 Commission clears joint venture providing a paid-for Game Channel(Germany) on Internet

IP/99/313 10.5.1999 EATA: Commission adopts another major decision in the liner-shippingsector

F — Press releases

37.406 NSAB – Teracom – Swedish Space Corporation - TeleDanmark OJ C 168, 16.6.1999, p. 9

37.536 Mobility Leaders OJ C 193, 9.7.1999, p. 5

37.590 Pfizer + HMR + Inhale OJ C 237, 20.8.1999, p. 2

37.532 Alstom + Fiat OJ C 259, 11.9.1999, p. 11

37.612 Techjet Aerofoils Ltd OJ C 269, 23.9.1999, p. 6

37.648 Scottish Telecom OJ C 287, 8.10.1999, p. 5

37.562 Eutelsat OJ C 292, 13.10.1999, p. 5

37.644 Recitel + Woodbridge OJ C 298, 16.10.1999, p. 11

37.650 Solvay – Elf Atochem OJ C 308, 27.10.1999, p. 6

37.669 Mecma OJ C 311, 29.10.1999, p. 4

37.652 Telefónica/Sogecable/AVS II OJ C 330, 18.11.1999, p. 7

37.659 Koninklijke Philips Electronics NV (Philips) and LG OJ C 331, 19.11.1999, p. 3Electronics Inc. (LGE)


ANTITRUST 181

IP/99/317 10.5.1999 Commission clears Microsoft’s agreements with European Internet ServiceProviders

IP/99/357 26.5.1999 Commission approves the restructuring of Cégétel, a new fully fledgedtelecommunications operator in France

IP/99/360 27.5.1999 Commission sends its report on the application of the rules of competitionin the field of insurance to the Parliament and the Council

IP/99/362 31.5.1999 Commission partially extends group exemption in the air transport sector

IP/99/413 23.6.1999 Commission adopts Cable Directive: a major step towards competitionin the local loop

IP/99/420 23.6.1999 The Commission approves joint venture between Yoplait and Valio for diaryproducts in Finland and Sweden

IP/99/434 30.6.1999 Commission opens formal proceedings into Formula One and otherinternational motor racing series

IP/99/448 2.7.1999 Commission takes a favourable view on Esat Telecom - Irish Rail agreements

IP/99/457 5.7.1999 The Commission clears Bass and Scottish & Newcastle’s standard pub leases

IP/99/494 13.7.1999 Commission takes issue with the methods of calculation and financing ofthe net charges for universal service provision in telecommunications fixedby the French government

IP/99/504 14.7.1999 Virgin/BA case: Commission sets out its policy on commissions paid byairlines to travel agents

IP/99/541 20.7.1999 Commission takes action against the local organisers of the 98 FootballWorld Cup finals competition in France

IP/99/554 22.7.1999 Car prices in the European Union on 1 May 1999 in new presentation

IP/99/558 23.7.1999 Commission authorises SNCF-Cégétel agreements (Télécom Developpement)

IP/99/596 29.7.1999 Commission investigates Internet agreements under EU competition rules

IP/99/609 3.8.1999 Commission intends to allow GlobalOne to provide full telecommunicationservices within the EU

IP/99/620 5.8.1999 Commission approves the inland aspects of the Revised TACA butcontinues its investigation into the maritime aspects

IP/99/633 17.8.1999 The Commission intervenes against a quota scheme to control publicexpenditure on pharmaceuticals

IP/99/668 9.9.1999 Commission closes file on Dutch fixed book price system

IP/99/672 10.9.1999 The Commission has no objection to the conditions for participation at theInternational Dentalschau Exhibition in Cologne, Germany

IP/99/681 14.9.1999 Commission renews UIP authorisation for five years

IP/99/683 15.9.1999 Commission finds that Dutch banks’ acceptance giro system does not affectEU competition rules

IP/99/684 15.9.1999 The Commission approves joint venture between Pratt & Whitney andGeneral Electric Aircraft Engines

IP/99/685 16.9.1999 Commission approves agreement between postal operators on internationalmail subject to conditions (Reims II)

IP/99/686 16.9.1999 Commission exempts for seven years the creation of British InteractiveBroadcasting (now Open)

IP/99/687 16.9.1999 Commission takes Belgium to Court over telecommunications legislation

IP/99/690 20.9.1999 The Commission approves new system for exchange of information betweentractor and agricultural machinery manufacturers following changes

IP/99/691 20.9.1999 The Commission assesses motor vehicle distribution within the EU

IP/99/781 21.10.1999 The Commission authorises joint sale of meteorological products by Ecomet

IP/99/782 21.10.1999 Commission launches formal proceedings on FIFA rules governingplayers’ agents



IP/99/786 22.10.1999 Commission launches first phase of sectoral inquiry into telecommunications:leased line tariffs

IP/99/805 26.10.1999 The Commission fines FEG, the Dutch association of electrotechnicalequipment wholesalers

IP/99/922 1.12.1999 Commitments by Japanese and Korean car manufacturers to reduce CO2emissions comply with EC competition rules

IP/99/957 8.12.1999 Commission fines cartel of seamless steel tube producers for market sharing

IP/99/965 9.12.1999 Limits to application of Treaty competition rules to sport: Commissiongives clear signal

IP/99/985 14.12.1999 Commission fines Deutsche Post, KLM, Anheuser-Busch and Scottish &Newcastle for supplying incorrect or misleading information in competitionprocedures

Case Parties Date Publication

T-185/96, Riviera Auto Service Etablissements Dalmasso SA, 21.1.1999 [1999] ECR II-0093T-189/96 and Garage des quatre vallées SA, Pierre Joseph Tosi, T-190/96 Palma SA (CIA- Groupe Palma), Christophe and

Gérard Palma v Commission

T-134/94 NMH Stahlwerke GmbH v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 12

T-136/94 Eurofer v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 12

T-137/94 Arbed SA v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 13

T-138/94 Cockerill-Sambre SA v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 13

T-141/94 Thyssen Stahl AG v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 14

T-145/94 Unimetal v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 14

T -147/94 Krupp Hoesch Stahl AG v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 15

T-148/94 Preussag Stahl AG v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 15

T-151/94 British Steel plc v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 16

T-156/94 Siderúrgica Aristrain Madrid SL v Commission 11.3.1999 OJ C 160, 5.6.1999, p. 16

T-157/94 Empresa Nacional Siderúrgica SA (Ensidesa) 11.3.1999 OJ C 160, 5.6.1999, p. 17v Commission

T-305/94, Limburgse Vinyl Maatschappij NV, Elf Atochem 20.4.1999 OJ C 160, 5.6.1999, p. 17T-306/94, SA, BASF AG, Shell International Chemical T-307/94, Company Ltd, DSM NV and DSM Kunststoffen T-313/94, BV, Wacker-Chemie GmbH, Hoechst AG, Société T-315/94, artésienne de Vinyle, Montedison SpA, Imperial T-316/94, Chemical Industries plc, Hüls AG and Enichem T-318/94, v CommissionT-325/94,T-328/94,T-329/94 andT-335/94

T-175/95 BASF Coatings AG v Commission 19.5.1999 OJ C 246, 28.8.1999, p. 23

T-176/95 Accinauto SA v Commission 19.5.1999 OJ C 246, 28.8.1999, p. 23

T-17/96 Télévision française 1 SA (TF1) 3.6.1999 OJ C 265, 18.9.1999, p. 6

T-266/97 Vlaamse Televisie Maatschapij NV v Commission 8.7.1999 OJ C 281, 2.10.1999, p. 13

G — Judgments and orders of the Community courts

1. Court of First Instance


ANTITRUST 183

T-127/98 UPS Europe SA v Commission 9.9.1999 OJ C 314, 30.10.1999, p. 8

T-228/97 Irish Sugar plc v Commission 7.10.1999 OJ C 366, 18.12.1999, p. 26

T-9/96 andT-211/96 Européenne automobile SARL v Commission 13.12.1999

T-190/95 and Société de distribution de mécaniques et T-45/96 d’automobiles (Sodima) v Commission 13.12.1999

T-189/95, Service pour le groupement d’acquisition (SGA) 13.12.1999T-39/96 and v CommissionT-123/96

T-198/98 Micro Leader Business v Commission 16.12.1999


C-215/96 andC-216/96 Carlo Bagnasco and Others v Banca Popolare di 21.1.1999 [1999] ECR I-0135

Novara Soc. Coop. arl. (BPN) (C-215/96) and Cassa di Risparmio di Genova e Imperia SpA(Carige) (C-216/96)

C-119/97 P Union française de l’express (Ufex), formerly 4.3.1999 [1999] ECR I-1341Syndicat français de l’express international (SFEI), DHL International and Service CRIE v Commissionand May Courier

C-436/97 P Deutsche Bahn AG v Commission 27.4.1999 [1999] ECR I-2387

C-126/97 Eco Swiss China Time Ltd v Benetton 1.6.1999 OJ C 204, 17.7.1999, p. 17International NV

C-49/92 P Commission v Anic Partecipazioni SpA 8.7.1999 OJ C 333, 20.11.1999, p. 3

C-51/92 P Hercules Chemical NV v Commission 8.7.1999 OJ C 333, 20.11.1999, p. 4

C-199/92 P Hüls AG v Commission 8.7.1999 OJ C 333, 20.11.1999, p. 4

C-200/92 P Imperial Chemical Industries plc (ICI) v Commission 8.7.1999 OJ C 333, 20.11.1999, p. 5

C-227/92 P Hoechst AG v Commission 8.7.1999 OJ C 333, 20.11.1999, p. 5

C-234/92 P Shell International Chemical Company Ltd 8.7.1999 OJ C 333, 20.11.1999, p. 6v Commission

C-235/92 Montecatini SpA v Commission 8.7.1999 OJ C 333, 4.12.1999, p. 1

C-245/92 Chemie Linz GmbH v Commission 8.7.1999 OJ C 333, 20. 11.1999, p. 6

C-5/93 DSM NV v Commission 8.7.1999 OJ C 333, 20.11.1999, p. 7

C-310/97 P Commission v AssiDomän Kraft Products AB 14.9.1999 OJ C 366, 18.12.1999, p. 2and Others

C-22/98 Criminal proceedings against Jean Claude Becu and 16.9.1999 OJ C 6, 8.1.2000, p. 1Others (reference for a preliminary ruling)

C-115/97, Brentjens’ Handelsonderneming BV v Stichting 21.9.1999 OJ C 6, 8.1.2000, p. 2C-116/97 and Bedrijfspensioenfonds voor de Handel in C-117/97 Bowmaterialen (references for a preliminary ruling)

C-67/96 Albany International BV v Stichting 21.9.1999 OJ C 6, 8.1.2000, p. 1Bedrijfspensioenfonds Textielindustrie (reference for a preliminary ruling)

2. Court of Justice

II — MERGER CONTROL: COUNCIL REGULATION (EEC) NO 4064/89AND ARTICLE 66 OF THE ECSC TREATY

A — Summaries of decisions taken under Article 6(1)(b) of CouncilRegulation (EEC) No 4064/89

1. Merger proposals where undertakings have been given by the firms involved

Usinor/Cockerill

The French firm Usinor and the Belgian firm Cockerill Sambre are each active mainly in the areas ofproduction, processing and distribution of steel in both ECSC and EEC markets, which were examinedunder Article 66 of the Treaty of Paris and the Merger Regulation respectively.

As regards the EEC markets, the operation as initially notified would have led to a strengthening of thedominant position on the French market for cold-rolled steel profiles for the building industry, giving amarket share of over 60% in a market with competitors holding market shares of less than 10%. In orderto remove these competition concerns the parties undertook to divest to an independent third party anumber of production and sales operations representing a volume of 70 000 tonnes. This remedy wouldcompletely cancel out the increase in market share and allow a new player to enter the market.

As for the market for the distribution of flat carbon products in France, covered by the ECSC Treaty, the newgroup’s market share of over 50% would have given it a clearly dominant position on the market. To remove thisconcern Usinor proposed to divest a part of the business accounting for over 333 000 tonnes of flat steel prod-ucts delivered through stockholders and steel service centres on the French market. The divestments proposedby Usinor included all the assets, personnel and contracts necessary for the operation of the activities concerned.

In all the other markets concerned by the operation the parties faced competition from major steelcompanies. Consequently, and subject to the complete implementation of the commitments referred toabove, the Commission decided to authorise the operation under Article 66 of the ECSC Treaty and todeclare it compatible with the common market under the Merger Regulation.

Astra/Zeneca

The operation concerned the acquisition of all the shares in the Swedish company Astra AB (“Astra”)by the Zeneca Group Plc (UK). Both companies are active in the pharmaceutical sector and severalaffected markets were identified.

The parties’ activities overlapped mainly in anti-hypertension drugs, anaesthetics and anti-asthmatics. TheCommission found that the operation raised serious doubts with regard to plain and combined betablockers(anti-hypertension drugs) and local anaesthetics, where the parties would attain market shares of over 50%.In order to remove these serious doubts the parties gave commitments to grant a viable independent third par-ty both the exclusive distribution rights for Zeneca’s plain betablocker in Sweden and Norway and Astra’sentire interests in dual combined betablockers throughout the EEA. The parties also undertook to divestZeneca’s local anaesthetics by terminating an existing licence agreement with a third party.

Concerning anti-asthma products, Zeneca had no such activities until the recent development of aleukotriene receptor antagonist (LTRA), a new class of products which is now being introduced in


MERGER CONTROL 185

Europe. The fact that market shares were not especially significant and the existence of other strongcompetitors in this market led the Commission to conclude that there were no competition concerns.

FCC/Vivendi

Through the proposed operation Vivendi, the French multinational group, acquired joint control of theSpanish group Fomento de Construcciones y Contratas («FCC»). Vivendi is active in construction,energy, water management, waste management, transport, telecommunications and the media, whileFCC is mainly active in construction, cement production, real estate business, water supply and watertreatment, waste treatment and waste management.

The operation as initially notified raised competition problems leading to the creation or strengtheningof a dominant position in the Spanish markets for urban waste collection, landfill disposal and streetcleaning. To address the Commission’s concerns Vivendi submitted undertakings concerning thedivestiture of its activities in these markets to a viable competitor.

Total/Petrofina

The merger between the French oil company Total and the Belgian oil and petrochemical companyPetrofina was cleared by the Commission, subject to undertakings, while part of the operation wasreferred to the French competition authorities.

The economic sectors concerned by the operation are those of oil and gas, including the upstream market,that is the exploration, production, refining, logistics and distribution of refined products to end usersand resellers, where both parties are active. The operation raised competition concerns in the markets for“non-forecourt sales” (i.e. sales made to either resellers or large end users ) of refined petroleum products(i.e. petrol, diesel, heating oil) in five areas of northern France (i.e. Pas-de-Calais, Nord, Aisne, Ardennesand Somme). In order to remedy this situation, the notifying party undertook to divest part of its holdingsin certain petroleum storage depots in the area. The effect of the undertakings was to enhance thepossibilities of alternative supplies in this area.

AXA/GRE

The transaction concerned the acquisition by the French AXA group, one of the leading insurance groupsin Europe, of control of the British insurer Guardian Royal Exchange («GRE»).

The merger concerned life and non-life insurance, where the parties are both active. The Commission’sconcerns focused on the Luxembourg market, where the merger would result in a significant structurallink between the largest and third-largest companies in non-life insurance. Taken together, the marketshares of the two players attained a critical level on several markets in the non-life insurance sector,which is characterised by the small number of competitors, each with a significant market share(essentially Le Foyer, La Luxembourgeoise and AXA). On the basis originally notified, it could not beruled out that the operation would not create or strengthen a dominant position in Luxembourg.

In order to remove this risk, the parties undertook to modify the structural links between AXA andLe Foyer or take suitable disinvestment measures so that there would remain the same number of majorfirms offering effective competition as independent suppliers on the non-life insurance markets.



In the light of these commitments from the parties, the Commission authorised the operation at the endof the first phase of the investigation.

Rohm & Haas/Morton

Rohm & Haas (“Rohm”) notified an operation whereby Rohm acquired sole control of US-based Morton In-ternational Inc. (“Morton”). The business activities of Rohm are performance polymers, speciality chemicalsand electronic materials. Morton is active in the manufacture and marketing of speciality chemicals and salt.

The relevant markets in this case concerned the manufacture and sale of dry film photo resists, whichare used in the production of printed wiring boards (PWBs, PCBs) for primary imaging purposes.

Rohm is active on this market through a joint venture (Elga Ronal) with a significant interest in TOKItalia (under the Japan-based company TOK), exclusive distributor for Europe of TOK Italia products.This market is highly concentrated with only two competitors with similar market shares to those of theparties (over 30%), the remaining competitors being considerably smaller. In addition, the parties holdlarge market shares (over 35%) in several Member States. The situation raised serious doubts as to itscompatibility with the common market.

In response, Rohm & Haas gave an undertaking in phase I either to withdraw from Elga Ronal or towind the company up. It also undertook not to distribute within the European Community any dry filmphoto resists by other manufacturers on an exclusive basis for a certain period of time. Through theseundertakings Rohm’s interest in the exclusive distribution of TOK’s dry film photo resists waseliminated, together with its indirect shareholding in TOK Italia.

Imetal/English China Clays

Imetal SA (“Imetal”) made a public offer for the entire issued capital of English China Clays plc(“ECC”). Imetal’s operations include building materials, industrial minerals and metal processing. TheECC group is mainly focused on mineral products, primary kaolin (china clay) and calcium carbonates.

The market investigation revealed a number of horizontally affected markets, including fused silica,kaolin for paper applications (specifically coated kaolin), kaolin for ceramics, and high value refractoryclays. Significant overlaps were found in all these markets, for which the parties submitted divestitureundertakings: Imetal proposed to divest ECC’s activities in fused silica and a kaolin plant in the US(kaolin being a worldwide market).

In particular in the refractory clays market, the concentration would have had a clear negative impact inone segment of high value refractory clays which are used in two value-added applications (investmentcastings and kiln furniture), where Imetal has a strong worldwide position in the production of theseclays. Vertical concerns would also have arisen from the acquisition. The Commission noted that as aresult of the acquisition Imetal would have had a monopoly in the supply of a critical raw material forall kiln furniture manufacturers, while simultaneously being active as a competitor in this same industry.Structural remedies were proposed and accepted to resolve this concern.

As many of the affected markets have a worldwide scope and Imetal has worldwide production facilities,the Commission’s examination involved close liaison with the US Department of Justice, which helpedin the identification of an agreement on common remedies with Imetal.


MERGER CONTROL 187

Vodafone/Airtouch

The British company Vodafone Group plc (“Vodafone”) and the Californian company Air TouchCommunications, Inc. (“Air Touch”) notified their intention to merge. Both parties are active worldwidein the operation of mobile telecommunication networks, the provision of global satellite communication,paging and personal communications services and other related telecommunication services.

The Commission had to decide whether the main activity of both parties, the operation of mobiletelecommunication networks, was national in scope. The Commission’s investigation concluded that thiswas the case since the additional costs for customers to roam permanently, i.e. subscribe to an operatorof another country, currently rendered this option unattractive. Based on national markets the merger wasfound to be largely complementary. There were only two Member States where the parties had anoverlap, namely Germany and Sweden. While in Sweden the parties had stakes in the same operator,they would have had joint control of two of the four operators in the German market, D-2 and E-plus,which together command a significant share of the market.

Vodafone accordingly submitted a divestment undertaking to the Commission whereby Vodafone agreedto sell its stake in E-plus. With the sale of this stake any overlap in the German market for mobiletelecommunications between Vodafone and Air Touch was eliminated.

Rhodia/Donau Chemie/Albright & Wilson

The French company Rhodia SA (“Rhodia”), a subsidiary of Rhône-Poulenc, acquired the Britishcompany Albright & Wilson plc (“A &W”). Both parties are active in the chemical business.

The Commission concluded that the relevant geographic market for phosphate grades and surfactantswas essentially Europe-wide. Based on European markets the merger created competitive concerns inthe markets for ingredients (ammonium and calcium phosphates) of fire extinguisher powders,fermentation product agents, oral care abrasives, and leavening agents. Rhodia agreed to eliminate theoverlap through a combination of a toll manufacturing agreement with a third party, trade mark licensing,provision of customer lists and non-compete clauses. As a result the Commission was able to approvethe operation.

AT&T/MediaOne

The operation concerned the acquisition of MediaOne Group, Inc. (“MediaOne”) by AT&T Corp.(“AT&T”). AT&Tis a US-based telecommunications carrier providing domestic and international voice anddata communications services. It also has interests in a number of European companies offering telecom-munications, cable and Internet services. MediaOne is a US-based broadband communications companywith interests in the European Union in companies active in cable services and mobile telephony.

The merger was focused almost entirely in the US with marginal effects on competition in the EU. It will giverise to limited overlaps and vertical integration in fixed telephony services in the UK and in Internet servicesin Belgium. However, both companies had joint control over Telewest Communications plc (“Telewest”),active in cable television and telecommunication services in the UK, which raised concerns about a possiblecoordination between Telewest and BT (already identified in the BT/AT&T decision). These concerns wereremoved after AT&T gave a commitment intended to create greater structural separation between AT&T andTelewest. AT&T also undertook to dispose of MediaOne’s interest in Telewest.



Hoechst/Rhône-Poulenc

Hoechst AG and Rhône-Poulenc SA together with their subsidiaries, are active in pharmaceuticals, plantprotection and production, chemicals and animal health. The two parties agreed to merge into a new entity,Aventis, which would rank second in terms of worldwide turnover. The Commission’s investigation showedcertain competition concerns, notably in specific pharmaceutical and plant protection areas.

As regards pharmaceuticals, the operation raised concerns with respect to certain active substances usedto make pharmaceutical products, namely the market for macrolides in France; the market for twoadvanced anti-thrombotics, and the market for “cobalamines” active substance area. For macrolides andanti-thrombotics the parties undertook to surrender the licence for each product respectively to thelicensor or to find an independent and viable competitor able to develop and market the product. In the“cobalamines” active substance area, the parties proposed to grant a licence for one of the companies’main products to a third party. In plant protection the companies offered to divest the IPU business andto grant an exclusive licence for one of their cockroach insecticides to a third party.

In addition, in order to remove any anticompetitive concerns in the chemical and animal health areas,the companies agreed to divest most of their respective activities in chemicals ( Rhodia, Celanese andothers) and in animal health (Hoechst Roussel Veterinär GmbH)

Pakhoed/Van Ommeren

Koninklijke Pakhoed NV (“Pakhoed”) and Koninklijke Van Ommeren NV (“Van Ommeren”) areinternational companies based in the Netherlands which had already notified the proposed merger to theCommission in 1998, but at that time the divestment proposals were not sufficient to remove thecompetition problems identified and the merger was called off. The notified transaction was a full mergergiving rise to a new company called Vopak.

The companies’ business interests include tank storage for crude oil, petroleum products, chemicals andvegetable oils, tanker shipping (inland, short sea and deep sea) and other transport-related services(agencies, forwarding, stevedoring, dry cargo shipping).

The Commission analysed four markets, namely the market for the storage of edible oils and fats, themarket for the storage of chemicals, the market for the storage of petroleum products and the market forthe barging of chemicals in north-western Europe (Rhine delta, Germany and Switzerland). Although thecombination of the merging firms’ fleets of chemical barges did not raise competition concerns, thecombination of their respective storage activities would have led to the creation of the strongest playerin the storage of petroleum, chemicals and veg oils in the ARA area (Antwerp-Rotterdam-Amsterdam).

To remove these concerns the merging companies offered to divest the Panktank Pernis and Botlekterminals in Rotterdam and all of Van Ommeren’shares in Gamatex in Antwerp. The Commission clearedthe merger on the basis that with these divestments the competitive situation prevailing in the storagemarket in ARA prior to the merger was restored.

EDF/Louis Dreyfus

The operation related to the creation of a joint venture company between Électricité de France (“EDF”),a French company active in the production, transport, distribution and supply of electricity, and LouisDreyfus, mainly active in energy and in raw materials trading.


MERGER CONTROL 189

The joint venture company, EDF Trading, will be involved in the purchase, marketing and sale of energyrelated products, i.e. electricity, natural gas, coal and oil, outside France. It will also assist EDF in theformulation of structured offers to eligible electricity customers in France. The Commission found thatthere was a serious risk that the proposed operation would reinforce the dominant position of Électricitéde France in France and enable it to delay or restrict the entry of competitors on to the French market.

As the draft French law transposing the Electricity Directive into national legislation had not been enacted,competitors were severely disadvantaged because neither the precise terms and conditions of access to theelectricity transport system nor the identity of eligible customers were known. In that context, during the pe-riod between the creation of EDF Trading and the opening of the French market, EDF, using EDF Trading ex-pertise and to cover the risks, would be the only supplier able to make complex structured contracts with el-igible French customers, and therefore delay or restrict the entry of competing suppliers.

To eliminate the Commission’s concerns, the parties undertook to implement measures to prevent thejoint venture from helping EDF in relation to eligible customers in France. The parties also undertookto ensure that there would be no transfer of know-how or relevant information from EDF Training toEDF during the same period.

When the parties consider that the conditions have been met, they will make a detailed proposal allowing theCommission to decide whether eligible customers in France can legally and effectively choose suppliers oth-er than EDF, and whether electricity suppliers can legally and effectively supply those customers.

New Holland/Case

The operation concerned the acquisition of the US-based Case Corporation (“Case”) by New Holland, aFiat subsidiary. Both companies are active in the agricultural machinery and construction equipmentsectors. Different affected markets were found in those sectors.

In the agricultural machinery sector, several affected markets were involved in different Member States,namely the markets for standard tractors, large square balers and combine harvesters. The high marketshares, the substantial brand and dealer loyalty plus the entry barriers caused by the dense distributionand aftersales network would have led to a strengthening of a dominant position. In the constructionequipment sector the operation would have led to a collective dominant position on the market forbackhoe loaders at EEA level.

In order to address the competition concerns raised by the operation, the parties undertook to divestvarious ranges and brands in all the affected product markets and to open up Case’s or New Holland’sdistribution networks to the purchasers of the divested businesses.

Akzo Nobel/Hoechst Roussel Vet

The acquisition of Hoechst Roussel Vet by Akzo Nobel’s subsidiaries Intervet International BV andIntervet GmbH concerned the production, distribution and sale of animal healthcare products. In thisfield the parties had overlapping activities only in the sectors for veterinary pharmaceuticals andbiologicals.

In the pharmaceutical sector both parties are active in antimicrobials and endocrine treatment. Theconcentration had created serious concerns in the markets for mastitis treatments as regards certain dry



cow products. In addition, in the market for endocrine treatments, the operation raised concerns ofcollective dominance in the market for synthetic prostaglandins in Portugal and single dominance in themarket for gonadotrophins in Spain. The parties also held strong positions in France and Germany inparticular for different endocrine treatments. In the biological sector, both parties were active in animalvaccines, where the operation threatened to create or strengthen dominant positions in different marketswithin the sectors of pig vaccines, horse vaccines and dog vaccines in different Member States.

In order to address the serious competition doubts, the parties undertook to divest products in all theaffected markets with significant concerns. They agreed to license and transfer to a viable independentthird party the product concerned in a given national market. This commitment covered all know-howreceived and generated by Intervet, the product’s marketing trademark and access to registration andsupply agreements entered into with the licensee.

B — Summaries of decisions taken under Article 8 of Council Regulation(EEC) No 4064/89

1. Merger proposals where undertakings pursuant to Article 8(2) of the ECMR havebeen given by the firms involved

Rewe/Meinl

Rewe AG is the leading food retailer in Germany and also operates in Austria through its affiliate BML(“Billa”). Julius Meinl AG («Meinl») is the fourth largest Austrian food retail chain. The operationconcerned the food retail market and several procurement markets for daily consumer goods in Austria.

Rewe/Billa was already the leading operator in Austria. Furthermore, Rewe/Billa already has specificstrengths compared with its competitors, for instance its leading market position in the key region of EastAustria, the best chain of highly productive large outlets, a strong position in urban centres plus theadvantage of a centralised organisation. The Commission came to the conclusion that the operation ledto a dominant position on the Austrian food retail market. The investigation undertaken by theCommission also showed that suppliers would on average have depended for 29% of their turnover onsales to Rewe/Billa/Meinl, with some product groups showing a higher degree of dependency. Theproposed concentration would also have led to dominant positions on several procurement markets.

The parties offered commitments removing the Commission’s concerns on both the retail and theprocurement side of the deal. Following the commitments, Rewe/Billa acquired only 34% of Meinl’sfood retail activities and also undertook not to acquire any outlets to be used for food retailing in EastAustria. As a result of the commitments, Rewe/Meinl will not strengthen its present strong positionand Meinl will remain active as a competitor. In addition, the reduction of market share on the retailmarket will also reduce to a large extent the increase in dependency of suppliers on the procurementmarkets.

The Commission came to the conclusion that the commitment will prevent the creation of a dominantposition on the Austrian retail market as well as the creation or strengthening of dominant positions onnine Austrian procurement markets for daily consumer goods, and therefore approved theconcentration.


MERGER CONTROL 191

Danish Crown/Vestjyske Slagterier

Danish Crown is the largest and Vestjyske Slagterier the second largest Danish cooperativeslaughterhouse. The merger will create the largest European pig slaughterhouse. The merged entitywould control four other Danish cooperatives within the meat industries. The Commission investigationconcluded that the operation would have led to the creation of a dominant position in the market for thepurchase of live pigs for slaughter and, with another large Danish cooperative slaughterhouse, to aduopolistic dominant position on the market for the sale of fresh pork meat in supermarkets, and thecreation of a dominant position on the market for abattoir by-products.

The parties gave six undertakings which, viewed as a “whole package”, removed all competition problems.First, the farmer members of Danish Crown/Vestjyske Slagterier will in future be able, after giving appro-priate notice, to supply 15% of their weekly production to slaughterhouses other than the merged entity (atpresent, members have an exclusive supply obligation). Second, the weekly pig quotation in the publicationof the Danish cooperative slaughterhouse’s trade association would be discontinued. Third, the partiesagreed to dissolve the co-ownership of the export company ESS-Food in which the two other remaining Dan-ish cooperative slaughterhouses had minority shareholdings. Fourth, the parties ensured that the two otherremaining Danish cooperative slaughterhouses would receive the full value of their stake in the co-ownedmeat trading and sausage casings company, should they decide to withdraw from it. Finally, the parties un-dertook to sell a slaughterhouse to a third party and to sell a sufficient ownership stake in the abattoir by-prod-ucts company, thereby ensuring that they do not acquire control of it.

Exxon/Mobil

Both parties are active in the whole oil and gas chain, from exploration to motor fuel retailing. Asinitially notified the operation would have created or strengthened dominant positions on eight marketsconcerning natural gas, motor fuel and aviation oil in several countries. In order to address the seriouscompetition concerns in all the affected markets the parties offered commitments which were acceptedby the Commission.

In the market for the exploration, development and production of crude oil and natural gas, the marketinvestigation dispelled the initial doubts expressed by the Commission as the so-called “supermajors”would still be facing competitive constraints from smaller oil companies and local authorities, in whoseterritory gas and oil are found, and therefore had no incentive to let oil companies restrict production.Also in the market for gas-to-liquid technology the Commission found that, in spite of Exxon andMobil’s strong patent positions in alternative GTL technologies, the operation would not give rise to adominant position. As regards the market for the wholesale transmission of natural gas in theNetherlands, the fact that Exxon had a 25% stake in Gasunie, the Dutch dominant wholesale company,would have stopped Mobil from competing with Gasunie after the merger. To remedy this concern theparties undertook to divest Mobil’s Dutch trading entity together with its supply and transport contracts.In relation to the long-distance wholesale transmission of natural gas in Germany, the operation wouldhave strengthened the existing oligopoly or single dominant positions as Exxon already controlled BEBand Thyssengas and both Exxon and Mobil are shareholders of Ruhrgas. The parties therefore agreed todivest Exxon’s share in Thyssengas and to give up majority voting rights in Erdgas Münster, the onlypotential competitor. As regards the storage of natural gas in southern Germany, Ruhgas has a dominantposition on that market which would be strengthened as Mobil had concession rights which could beconverted into storage facilities. The parties offered to sell Mobil’s interest up to a certain volume at themarket price. For the Group I base oils in the EEA, where the new entity would become dominant, theparties offered to divest certain businesses or to hand over control through long-term leases. In themarkets for fuel distribution in Germany, Austria, the Netherlands, Luxembourg, the UK and the French



toll motorways, the operation would also have created or strengthened a dominant position given theequity and structural links between the parties in Aral. The parties undertook to dissolve the fuels partof the BP/Mobil JV and to withdraw from Aral. In worldwide aviation lubricants, the parties offered todivest Exxon’s business in this field as both parties separately had a market share of in excess 40%.Finally, as regards the market for aviation fuels at Gatwick airport, the new entity would have had adominant position in the supply market and would have controlled part of the essential infrastructure.The parties offered to divest their interest in some of the pipelines concerned.

BP Amoco/Atlantic Richfield

As initially notified the operation would have created dominant positions on two markets: first, the marketfor the transport of unprocessed natural gas by means of offshore pipelines from fields in the southern NorthSea “SNS”) sector of the UK continental shelf to the UK mainland and second, the market for processing nat-ural gas in processing facilities on the UK mainland servicing the SNS area. In both markets the new entitywould have controlled the access to the necessary infrastructure, to the detriment of owners of new gas fields,and would thereby control the conditions on which this new gas would be marketed. In order to remedy theseconcerns BPAmoco agreed to divest its equity interests in certain pipelines and processing facilities. As a re-sult, BPAmoco’s position would be similar to its position prior to the concentration.

Telia/Telenor

Telia and Telenor are the former national telephone operators in Sweden and Norway respectively, bothof which provide the full range of telecommunications services in their countries and elsewhere,especially in the Nordic area. Both are active across the full range of telephony and related services, andin retail distribution of TV services and related markets. All business activities of both parties would bebrought under the control of a new company in which the Swedish and Norwegian Governments wouldhave a shareholding of 60% and 40% respectively.

The Commission found that the merger as originally notified would have strengthened dominantpositions in:

— A number of telecommunications and related services markets in Sweden and Norway, in particular themarkets for fixed switch telephony services (local, long-distance and international); mobile telephony;business data communications; Internet access; PABX distribution and local telephone directories.

— The Irish mobile telephony market, where the merged entities would have control over the only twooperators active on the Irish market.

— A number of Nordic, Swedish and Norwegian television services markets, in particular in the marketsfor retail distribution of TV services; content buying; wholesaling of rights to content; satellitetransponder capacity and technology for scrambling and unscrambling TV signals.

In order to address these concerns, the parties agreed to a number of divestitures. Firstly, they offered todivest all existing overlaps in the field of telecom services (i.e. the sale of Swedish businesses owned byTelenor and Norwegian businesses owned by Telia). The new entity would thus not have a moreextensive customer base than Telenor previously had alone and the new owners would acquire a strongerfoothold on the Swedish and Norwegian markets. Secondly, one of the parties would sell its stake in oneof the existing Irish mobile telephony operators. Thirdly, they undertook to divest their respectiveinterests in cable-TV networks in Sweden and Norway and to implement a set of measures to introduce


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local loop unbundling (LLU) in both countries, thereby ensuring that the merged entity would not be theonly company having access to final users of telecommunication services in the Nordic region. Finally,the future buyer of Telia’s and Telenor’s cable-TV networks would be well placed to offer traditional andvalue-added services through those cable-TV networks.

From a procedural view point, the Commission accepted that the notifying companies faced additionaland exceptional constraints in submitting the proposed commitments due to the fact that, inter alia, theiroriginal merger plan had been approved by the Swedish and Norwegian Parliaments. The Commissiontherefore exceptionally agreed to take the proposed commitments into account, even though they weresubmitted one week after the legal deadline.

Sanitec/Sphinx

Sanitec Ltd Oyj Abp (“Sanitec”) is a Finnish company active in the design, production marketing ofbathroom products and bathroom ceramics worldwide. The target company, the Dutch undertaking NVKoninklijke Sphinx Gustavsberg (“Sphinx”), is also active in the bathroom business.

The markets where a serious impact on effective competition was identified were ceramic sanitary wareproducts, bathtubs and shower screens in the Nordic countries, namely Sweden, Finland, Norway, Denmarkand Iceland. Other Member States were also affected, such as the Benelux countries, Germany and France.

The Commission found that the notified transaction would strengthen the dominant position of the parties inthe ceramic sanitary ware market, or alternatively, in the markets for WCs, WC cisterns and washbasins.Moreover, it would create a dominant position on the markets for bathtubs in the Nordic countries at both na-tional and regional levels. With regard to shower screens, the Commission found that the operation wouldhave led to the strengthening of a dominant position in Norway, or alternatively, to the creation of a dominantposition in the Nordic countries. The combined entity would account for up to 90% of market share. Fur-thermore, there was no effective countervailing buying power, other competitors being only marginally pre-sent in the Nordic countries, and a strong brand loyalty was also detected.

Following the serious competition concerns raised by the Commission in its investigations, Sanitecoffered a full divestiture of the entire Gustavsberg business and the brand name to remedy thecompetitive situation in the Nordic countries. An important feature of its undertaking was that, while theCommission did not find competition problems in taps and mixers as such, the possibility for a potentialbuyer to buy this business as well was considered important for the viability of the divested business.The ability to acquire the taps and mixers business ensured that the buyer would be able to offer a fullrange of products and compete fully with Sanitec on the Nordic market.

Allied Signal/Honeywell

The merger between the two large US-based firms would have led to the creation or strengthening of adominant position in different markets within the avionics products area (i.e. products that can generallybe found in the cockpit, such as the communication and navigation equipment of an aircraft). TheCommission focused its investigation on the worldwide market of avionics for commercial applications,since avionics products supplied for the space and defence industries, in contrast to the situation in theUS, would not have a significant impact in the EEA.

The companies’ overlapping activities would have entailed a risk of creating a dominant position in theEEA for so-called “airborne collision avoidance systems” (ACAS) and for radar systems for civil



helicopters. In addition, the new entity would be able to strengthen its present dominant position on themarket for “terrain awareness warning systems” (TAWS). Furthermore, for the next generation of“integrated hazard surveillance systems”(IHAS) it was found that, where Honeywell’s engineering forcewas combined with Allied Signal’s TAWS technology, the new entity would have been able to foreclosecompetition on the IHAS market if the TAWS technology were no longer available to third parties. Afurther issue looked into by the Commission concerned the possible range of effects created by theoperation, in particular the potential to combine offers of avionics and non-avionics products.

The commitments offered consisted in selling the parties’ overlapping ACAS business of Honeywell andthe civil helicopter radar business of Allied Signal. For TAWS, the parties agreed to supply third partieswith open interface standards of other avionics products, so that new TAWS suppliers could have theirproducts installed on aeroplanes equipped with other avionics from the parties. Regarding IHAS, therewas an obligation to supply third parties with the related technology and with interface data, so that theycould continue to carry out product development with crucial Allied Signal technology. The parties alsoagreed that they would not pursue an active policy of selling avionics and non-avionics jointly.

The Commission carried out its investigation in close cooperation with the US Department of Justice(DOJ). Further divestments were ordered by the US DOJ for certain avionics products with military andspace applications which were not a focus of the Commission’s investigation.

2. Merger proposals declared incompatible with the common market under Article 8(3)of the ECMR

Airtours/First Choice (83)

The proposal concerned a hostile bid by Airtours plc for First Choice plc. Both are UK companies activeprincipally in tour operating — notably, the supply of foreign package holidays — charter airlines andtravel agencies. After a preliminary examination, the Commission concluded that the proposed operationwould lead to the creation of a collective dominant position between the merged company and the twoother large, vertically integrated tour operators that would remain (Thomson and Thomas Cook). Themarket concerned was the supply of short-haul package holidays — essentially, those involving amaximum flight time of about four hours from the UK— to UK consumers.

Airtours and First Choice are, respectively the second- and fourth-largest suppliers of such holidays toUK consumers. The Commission found that this market was already highly concentrated, with the fourlarge players between them supplying some 80% of all such holidays, and also having importantinterests in distribution (all owned travel agency networks) and in charter airlines. Moreover, suppliershad to set their capacity (number of flights, hotel rooms, etc.) a long time (up to a year) before theywere sold, and later adjustments in the light of demand were costly. The market was also transparent,with information about suppliers’ capacity decisions, prices, etc. being readily available to competitors— who sold each others’ holidays and to some extent shared their airline capacity. As a result,competition was already muted, and the many smaller players could not compete effectively with themajor suppliers, since they faced substantial barriers to expansion, especially the need for a touroperator above a certain size, to integrate into travel agency and/or airline operation. The reduction inthe number of large players from four to three as a result of the merger would lead, in the Commission’s


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(83) 22.9.1999. The decision is subject to appeal by Airtours before the Court of First Instance.

view, to increased scope for the large players to coordinate their activities, especially as regardscapacity, so as to avoid overcapacity in the market and the consequent need for all of them to cut pricesseverely in order to avoid losses.

Towards the end of the three-month period provided for in the regulations, Airtours proposed solutionsto the Commission’s concerns, based on the divestment of certain tour operating businesses. These wereexamined and tested with third parties, but were found to be insufficient to remove the dominantposition. In particular, they did not address the need, in order to maintain competition, for a third partyacquiring these assets to have an adequate distribution channel for its holidays that was not dependenton the parties. Later, and outside the permitted period, Airtours submitted a revised package ofundertakings. However, the Commission found no exceptional circumstances that might justify acceptingthem out of time. Moreover, it was not clear that they would fully address all the Commission’s concerns,in particular as regards distribution. Accordingly, the Commission decided that the merger should beprohibited.

C — Decisions pursuant to Article 2(4) of the ECMR (joint venturecases) (84)

BT/AT&T (Case No JV 15)

On 30 March the Commission conditionally approved an operation consisting in the creation of a 50-50joint venture by BT (the fifth biggest telecommunications operator worldwide by turnover) and AT&T(the second). (85) The joint venture would provide a broad range of advanced global telecommunicationsservices to multinational corporate customers and international carrier services to other carriers.

The Commission investigated the operation on four different markets: global telecommunicationsservices, international carrier services, international voice telephony services on the UK-US route, andcertain UK services.

— Global telecommunications services

The Commission investigated whether there were any bottlenecks that would constitute barriers to entryfor new entrants or whether the joint venture would benefit from unmatchable advantages. It investigatedin particular whether the current strong position on the local loop (the last link between the localexchange and the consumer) that BT has in the UK and/or the possibility of the joint venture locking incustomers by means of Application Programming Interface (API) facilities could create or strengthen adominant position as the result of which effective competition would be significantly impeded in thecommon market. It appeared that the joint venture would not be able to act independently from itscompetitors and customers. This is in particular because it will operate in a competitive and fast-movingmarket, with sophisticated and powerful multinational corporate customers: both competitors andcustomers would react to price increases so that such increases would not be profitable for the jointventure.



(84) Joint venture cases covered by Article 2(4) of the ECMR must also involve the application of Article 81 and aretherefore generally dealt with by the operational units of the Competition DG rather than by the Merger TaskForce.

(85) Press release IP/99/209, 30.3.1999.

— International carrier services

Following its investigation, the Commission concluded that the present operation would not lead to the cre-ation or strengthening of a dominant position in the area of international carrier services. This is because ofthe entry of numerous new competitors, because of comparable volumes of international traffic carried byboth parties and the joint venture’s main competitors, and because there is no lack of capacity either in the EUor on transatlantic routes, due to the existence of alternative pan-European networks and new and plannedhigh-capacity submarine transatlantic cables. No significant overlap in capacity ownership except on thetransatlantic routes could be found. Moreover, the cost of capacity is decreasing fast.

— International voice telephony services on the UK-US route

Though the capacity owned by the joint venture on all transatlantic cables would be less than 20% in2000, it appeared that the joint venture would, however, account for approximately half of the two-waytraffic between the US and the UK. The Commission therefore further investigated the UK-US route.

Following its investigation, the Commission concluded, in respect of this route, that the joint venturewould not be able either to raise its competitors’ costs or to act independently from its competitors andcustomers. This is because numerous facilities-based operators are authorised to operate on this route,several operators have already started to own end-to-end capacity, and because of the availability ofexcess capacity at rapidly decreasing costs.

— Certain UK services

The Commission investigated the possibility that the creation of the joint venture would strengthen BT’sdominant position on certain UK markets for telecommunications services. The Commission found thatthe current and future regulatory regime to be applied by the UK telecommunications regulator Oftelwould prevent BT from adopting such behaviour.

For the first time ever in a second phase enquiry, the Commission identified areas of concern which ledto serious doubts under Article 2(4) of the Merger Regulation. This is because there was a risk of parentalcoordination between ACC (a wholly-owned subsidiary of AT&T), BT and Telewest, in which AT&Tthrough TCI holds a 22% stake, and regarding the distribution of AT&T/Unisource services in the UK.The Commission was concerned that the joint venture could lead to the coordination of the parties’competitive behaviour. In order to remove these concerns, AT&T offered to divest ACC UK. AT&T alsocommitted itself to more structural separation between AT&T and Telewest. Furthermore, AT&Tundertook to give another distributor the option to distribute AUCS services (i.e. globaltelecommunications services offered by the company AUCS, a joint venture between AT&T andUnisource) in the UK, as AT&T UK will be wound up. The Commission declared the concentrationcompatible with the common market subject to full compliance with these undertakings.

Mannesmann/Bell Atlantic/Omnitel (Case No JV 17)

On 21 May the Commission authorised Mannesmann and Bell Atlantic to acquire joint control ofOmnitel Pronto Italia (OPI). (86) The transaction is subject to the withdrawal of Olivetti as an Omnitel


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(86) OJ C 11, 14.1.2000; press release IP/99/341, 25.5.1999.

shareholder if the former’s bid for Telecom Italia is successful. After examining the notification, theCommission concluded that the operation did not give rise to serious doubts as to its compatibility withthe functioning of the common market and the EEA Agreement.

Mannesmann AG is active in several industrial sectors and in all telecommunications areas in general.Bell Atlantic is present in the telecommunications and information industry in the United States andcertain regions of Europe. OPI is one of the three operators currently holding a licence to supply mobiletelephony services in Italy. Its network covers 96% of Italy and has 6.5 million subscribers.

The transaction would not lead to market shares of more than 15% in any of the markets concerned. Atnational level, as only OPI is active in Italy with a market share of some 30%, the transaction will notlead to overlapping between the parties. The Commission therefore considers that any coordinationbetween the firms involved resulting from the operation would be insignificant.

Chronopost/Correos (Case No JV 18)

On 1 June the Commission authorised the Spanish public postal operator Correos y Telégrafos (Correos)to acquire a 50% holding in Jet Worldwide España, a subsidiary of the French postal company La Poste,thus concluding proceedings initiated under Article 2(4) of the Merger Control Regulation. (87)

The joint venture, Chronopost España SA, will engage in the express delivery of documents and parcelsin Spain. The notified transaction consists in an agreement under which the parent companies willacquire joint control of the joint venture. The Commission decided not to object to the operation and todeclare it compatible with the common market as it does not create or strengthen a dominant position orset up anticompetitive cooperation between the parent companies.

Alitalia KLM joint venture (Case no JV 19)

On 11 August the Commission decided not to raise serious doubts with regard to the proposed concentrationbetween Alitalia and KLM. (88) The two airlines planned progressively to integrate their scheduled passen-ger air transport activities and their cargo air transport activities. Under the terms of their Alliance Settlementagreement, Alitalia and KLM will act as a single economic entity from 1 November.

In authorising this concentration, the Commission took the view that the activities of Alitalia and KLMare complementary to a very large extent and therefore do not raise major competition issues. However,the alliance between Alitalia and KLM raised concerns on the two routes that link the hubs of the twocompanies: Amsterdam-Milan and Amsterdam-Rome.

Alitalia and KLM are currently the only airlines that operate on these two routes. The merger wouldtherefore have created a monopoly on the routes. To overcome this anticompetitive situation, Alitalia andKLM proposed to take a set of measures that will facilitate the entrance of potential competitors. Alitaliaand KLM have undertaken to:

— make slots available to new entrants applying to operate on any of the two routes in question. Alitaliaand KLM will make available up to 224 slots a week. This will allow competing airlines to operate



(87) OJ C 302, 19.10.1999; press release IP/99/365, 2.6.1999.(88) OJ C 96, 5.4.2000; press release IP/99/628, 11.8.1999.

up to four frequencies (i.e. four return flights a day) on each route, including two frequencies at peaktimes;

— make extra slots available so as to allow airlines which do not currently operate at Amsterdam, Milanor Rome, to stop over at one of these airports and fly on to one of the two others. This willsignificantly increase the number of airlines that can take advantage of these undertakings to enterthe Amsterdam-Milan and Amsterdam-Rome routes by connecting them to their existing network.Alitalia and KLM will make available up to 112 slots a week to this end;

— reduce their frequencies on the Amsterdam-Milan and/or Amsterdam-Rome routes when a newentrant airline starts operations. This reduction will be equal to the new entrant airline’s frequenciesup to a maximum of 40% of the frequencies operated by Alitalia and KLM;

— enter into interline agreements with the new entrant airline;

— give the new entrant the opportunity to participate in their Frequent Flyer Programme;

— refrain from tying travel agents and corporate customers in Italy and the Netherlands, respectively,with loyalty or other similar rebate schemes;

— ensure that, once a competing airline has entered on the route(s) in question, the first screen of thecomputer reservation system is not filled with the flights of the Alliance (e.g. by displaying theAlliance flights in one line only). Consumers will be informed about the precise code-sharearrangements.

Skandia/Storebrand and Pohjola (Case No JV 21)

On 17 August the Commission approved the creation of a joint venture between the Swedish insurancegroup Skandia, the Norvegian insurance group Storebrand and the Finnish insurance group Pohjola forthe establishment of a new pan-Nordic provider of non-life insurance services.

Skandia, Storebrand and Pohjola each transferred their respective non-life insurance business andportfolios to the joint venture, which is established in Sweden and operates in Norway and Finlandthrough branch offices.

The operation has effects mainly in the various markets for the provision of non-life insurance productsin Sweden, Norway and Finland. However, with one exception, in each market the increase in marketshare was limited and there are other major competitors present to ensure effective competition. Theexception was Norway where Skandia had a significant market presence through its wholly ownedsubsidiary Vesta.

The combined market shares of Storebrand and Vesta in Norway were such as to give rise to serious concernson the part of the Commission. However, undertakings were given to the Commission regarding the divest-ment of Vesta which the Commission regarded as satisfactorily resolving these concerns.

The Commission also examined whether there was an appreciable risk that the establishment of the jointventure would lead to coordination between the parents as regards their life insurance activities inSweden, Norway and Finland. The Commission concluded that this was not likely.


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The Commission therefore concluded that the operation did not give rise to competition concerns in thecommon market or the EEA and consequently decided not to oppose the operation and to declare itcompatible with the common market and with the functioning of the EEA.

Fujitsu/Siemens (Case No JV 22)

On 30 September the Commission decided to authorise the setting-up of a joint venture between Fujitsuand Siemens. (89) The aim of the operation was to combine the two companies’ European businesses forthe development, production and sale of computer hardware and related products, including desktop PCs,laptops, workstations, servers and storage systems. The Commission examined the transaction underArticle 2(4) of the Merger Control Regulation, (90) which provides that a joint venture which has as itsobject or effect the coordination of the competitive behaviour of its parent companies should also beappraised in accordance with the criteria of Article 81 of the EC Treaty.

The Commission’s task was to assess the risk that the operation might create or strengthen a dominantposition on the markets in which the new venture will operate. It concluded that, in view of the marketshares held by the parent companies and the presence of powerful competitors on all the marketsconcerned, there was no such risk. In addition, the Commission identified coordination between the twoparent companies only on the market for financial workstations. These are used in banking and consistof automatic teller machines and cash dispensers, connected to a central computer. In order to resolvethe serious doubts concerning competition on this particular market, Siemens undertook to divest itselfof Siemens Nixdorf Retail and Banking Systems GmbH, a subsidiary active in this sector, in accordancewith the terms negotiated with the Commission. This is the first merger case in which one of thenotifying parties agreed to transfer a subsidiary on a market liable to coordination in the first phase ofan enquiry. (91)

The commitment given is evidence of the importance attached by the Commission to analysis of newjoint ventures under Article 2(4) of the Merger Control Regulation. Its analysis of the coordination ofthe competitive behaviour of the parent companies on the markets liable to coordination as defined inArticle 2(4) was conducted on the basis of the criteria of Article 2(1), while taking account of thestructure of the relevant markets and the position of the parties on those markets. The Commissiontherefore authorised the merger, provided that the firm concerned honoured its commitment in full.

Telefonica/Portugal Telecom/Medi Telecom (Case No JV 23)

On 17 December the Commission authorised Telefónica InterContinental and Portugal TelecomInternational to acquire joint control of Médi Télécom, the second licensed GSM operator in theKingdom of Morocco. (92) Under the transaction, Telefónica Intercontinental and Portugal TelecomInternational acquire 69% of the shares of Médi Télécom. The remaining shareholders are localinvestment and industrial groups.

Telefónica and Portugal Telecom are the incumbent operators in Spain and Portugal respectively. Theyprovide a full range of telephony services to business and residential customers. Médi Télécom has been



(89) OJ C 318, 5.11.1999; press release IP/99/719, 1.10.1999.(90) Council Regulation (EEC) No 4064/89, as last amended by Regulation (EC) No 1310/97.(91) The commitment in Phase 1 in Case IV/M.1327 NC/Canal+/CDPQ/Bank America did not involve a transfer of

activity.(92) OJ C 22, 26.1.2000.

formed to build and operate a GSM cellular mobile telecommunications business in Morocco. It will bethe second operator in the provision of those services in direct competition with the incumbent operator,which is so far the only player authorised in that market. The provision of Médi Télécom mobiletelecommunication services is to be restricted to the territory of Morocco. The Commission found thatthe operation will not create or strengthen a dominant position on the Moroccan market (where theCommission is not competent to make an assessment under the EU competition rules) or on any widermarket definition. Nor would it lead to anticompetitive cooperation between the parent companiesbeyond the scope of an existing general cooperation agreement notified to the Commission in 1997.

Bertelsmann/Planeta/Bol Spain (Case No JV 24)

On 3 December the Commission cleared a merger between Bertelsmann AG and Planeta CorporaciónSRL. (93) Through this operation the parties obtained joint control over Books On-Line Ibérica, SA (BOLSpain). The operation did not lead to the creation or strengthening of a dominant position.

The parties will merge their on-line sale activities of books in Spanish and the other officially recognisedlanguages in Spain in BOL Spain. For this purpose, Planeta acquired a 50% stake in BOL Spain which,prior to the operation was a wholly owned subsidiary of Bertelsmann.

Although the parties are active in the markets for distance sales of books and for Internet sales of booksin Spain, they are not dominant in these markets. There was no indication of coordination on these orother markets.

The Commission’s investigation has revealed that, taking into account the parties’ market position, noincentive for coordination in the market for book publishing in Spain is to be expected. Bertelsmann’spresence in this market is insignificant and Planeta is not dominant. Moreover, the markets for distanceor Internet sales of books are emerging and still account for only a very small part of the overall marketfor book sales in Spain. BOL Spain is of very minor commercial significance to its parents in relationto their activities upstream. Finally, there is no arrangement that prevents BOL Spain from marketingand selling other publishers’ books. Consequently, no incentive for coordination between the parentcompanies is created as a result of the merger.

Sony/Time Warner/CDNow (Case no JV 25)

On 21 December the Commission cleared the takeover of CDNow, an on-line retailer of music, homevideo and other entertainment-related products, by Time Warner and Sony. CDNow became a subsidiaryof a new corporation Holdco, which is jointly controlled by Time Warner and Sony. (94) CDNow’s shareof the market in which it operates is low, as are those of Time Warner and Sony. At the horizontal level,therefore, the operation will not lead to the creation or strengthening of a dominant position. It will alsonot alter the competitive situation from a vertical standpoint as Time Warner and Sony will need tocontinue to sell music and home video products through other third party distributors and retailers in theEEA and worldwide. Nor will the operation lead to the coordination of the competitive behaviour ofSony and Time Warner.


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(93) OJ C 323, 11.11.1999; press release IP/99/948, 7.12.1999.(94) OJ C 339, 26.11.1999; press release IP/99/1022, 22.12.1999.

Freecom/Dangaard Holding (Case no JV 26)

The Commission approved the creation of a joint venture between the German companies BHS HoldingGmbH & CoKG/debitel AG and the Danish companies Fleggaard Holding AS/Fleggaard Partner AS. (95)The parent companies transferred to the joint venture their respective wholesale businesses (FreeComGmbH and Dangaard Holding AS) in mobile telecommunications devices, in particular mobile phones,and related value-added services (e.g. hot-line and repair services, implementation of promotionprogrammes for retailers, packaging for retailers). The operation allowed the joint venture to offer itscustomers a pan-European company structure and to better face increasing competition from networkoperators and service providers in bringing mobile phones to the market.

The Commission, while considering it not strictly necessary to define the relevant product market indetail, took the view that wholesaling and the provision of related value-added services were two distinctmarkets. The question whether the geographic market was EU-wide or national could be left open.FreeCom had a well-established position on the German market while Dangaard had a strong positionin the Scandinavian markets and in Switzerland. The activities of the two companies were thus to a largedegree geographically complementary. In Germany, where the parties’ activities overlapped, the resultingmarket share of the joint venture in the wholesale market did not exceed 15 per cent.

The Commission concluded that the operation would not lead to the creation of a dominant position orto anticompetitive cooperation between the parents to the joint venture.

D — Commission decisions

1. Decisions under Article 6 and 8 of Council Regulation (EEC) No 4064/89

1.1. Decisions under Article 6(1) of Council Regulation (EEC) No. 4064/89



Case Title Date of O.J. Date ofDecision Publication

IV/M.1358 PHILIPS/LUCENT TECHNOLOGIES 6.1.1999 C 39/13 13.2.1999(DECONCENTRATION)

IV/M.1387 LUFTHANSA/MENZIES/SIGMA AT MANCHESTER 13.1.1999 C 25/18 30.1.1999

IV/M.1380 SIEBE/BTR 13.1.1999 C 68/10 11.3.1999

IV/M.1360 AKZO NOBEL/GLAVERFIN/EIJKELKAMP 13.1.1999 C 73/9 17.3.1999

IV/M.1355 NEWELL/RUBBERMAID 13.1.1999 C 109/3 20.4.1999

IV/M.1402 GAZ DE FRANCE/BEWAG/GASAG 20.1.1999 C 32/6 6.2.1999

IV/M.1388 TOTAL/PETROFINA 22.1.1999

IV/M.1394 ALBA/OTTO 26.1.1999 C 41/4 16.2.1999

IV/M.1330 PECHINEY/SAMANCOR 26.1.1999 C 41/4 16.2.1999

IV/M.1346 EDF/LONDON ELECTRICITY 27.1.1999 C 92/10 1.4.1999

IV/M.1328 KLM/MARTINAIR (II) 1.2.1999 C 42/9 17.2.1999

IV/M.1401 RECOLETOS/UNEDISA 1.2.1999 C 73/8 17.3.1999

IV/M.1400 REXAM/PLM 1.2.1999 C 69/15 12.3.1999

(95) OJ C 365, 18.12.1999; press release IP/99/931, 2.12.1999.


MERGER CONTROL 203

IV/M.1375 VOLKSWAGEN/FORD/AUTOEUROPA 2.2.1999 C 67/5 10.3.1999

IV/M.1382 TYCO/AMP 3.2.1999 C 60/10 2.3.1999

IV/M.1411 DEUTSCHE BANK/CORAL 3.2.1999 C 60/10 2.3.1999

IV/M.1398 DEUTSCHE BANK/CREDIT LYONNAIS BELGIUM 3.2.1999 C 90/5 31.3.1999

IV/M.1376 CARGILL/CONTINENTAL GRAIN 3.2.1999 C 52/8 23.2.1999

IV/M.1329 USINOR/COCKERILL 4.2.1999 C 69/17 12.3.1999

IV/M.1357 NORDIC CAPITAL/HILDING ANDERS 4.2.1999 C 62/8 4.3.1999

IV/M.1363 DUPONT/HOECHST/HERBERTS 5.2.1999 C 64/2 6.3.1999

IV/M.1391 INTERNATIONAL PAPER/UNION CAMP 5.2.1999 C 63/4 5.3.1999

IV/M.1379 VALMET/RAUMA 8.2.1999 C 56/15 26.2.1999

IV/M.1418 SCA PACKAGING/REXAM 11.2.1999

IV/M.1367 INCHCAPE HOLDINGS HELLAS/EFG EUROBANK 11.2.1999

IV/M.1377 BERTELSMANN/WISSENSCHAFTSVERLAGSPRINGER 15.2.1999 C 122/19 4.5.1999

IV/M.1405 TNT POST GROUP/JET SERVICES 15.2.1999 C 67/5 10.3.1999

IV/M.1410 DEUTSCHE POST/DANZAS 17.2.1999 C 102/9 13.4.1999

IV/M.1419 GROUPE COFINOGA/BNP 19.2.1999 C 80/7 23.3.1999

IV/M.1347 DEUTSCHE POST/SECURICOR 23.2.1999 C 72/6 16.3.1999

IV/M.1435 FORD/JARDINE 23.2.1999 C 73/9 17.3.1999

IV/M.1408 HALIFAX/CETELEM 26.2.1999 C 69/15 12.3.1999

IV/M.1437 CVC/WMO — WAVIN 26.2.1999 C 109/5 20.4.1999

IV/M.1403 ASTRA/ZENECA 26.2.1999 C 335/3 23.11.1999

IV/M.1371 LA POSTE/DENKHAUS 26.2.1999 C 208/4 22.7.1999

IV/M.1423 CRH/IBSTOCK 1.3.1999 C 107/4 16.4.1999

IV/M.1442 MMP/AFP 3.3.1999 C 76/13 19.3.1999

IV/M.1420 BASF/SVALÖF WEIBULL 3.3.1999 C 74/6 18.3.1999

IV/M.1460 LAFARGE/TITAN 3.3.1999

IV/M.1447 DEUTSCHE POST/TRANS-O-FLEX 4.3.1999 C 69/16 12.3.1999

IV/M.1365 FCC/VIVENDI 4.3.1999 C 120/20 1.5.1999

IV/M.1349 CVC CAPITAL PARTNERS/DYNOPLAST 8.3.1999 C 94/16 7.4.1999

IV/M.1341 WESTDEUTSCHE LANDESBANK/CARLSON/THOMAS COOK 8.3.1999 C 102/9 13.4.1999

IV/M.1456 DURA/ADWEST 11.3.1999 C 130/7 11.5.1999

IV/M.1462 TRW/LUCAS VARITY 11.3.1999 C 88/8 30.3.1999

IV/M.1413 THOMSON-CSF/RACAL ELECTRONICS 15.3.1999 C 94/16 7.4.1999

IV/M.1446 DAIMLER CHRYSLER/ADTRANZ-ABB DAIMLER BENZ TRANSPORTATION 15.3.1999 C 97/7 9.4.1999

IV/M.1397 SANOFI/SYNTHELABO 15.3.1999 C 117/4 29.4.1999

IV/M.1338 TEKSID/RENAULT 15.3.1999 C 139/3 19.5.1999

IV/M.1406 HYUNDAI/KIA 17.3.1999

IV/M.1415 BAT/ROTHMANS 17.3.1999 C 120/21 1.5.1999

IV/M.1475 DEXIA/CREDIOP 24.3.1999

IV/M.1433 CARRIER CORPORATION/TOSHIBA 25.3.1999 C 109/2 20.4.1999

IV/M.1488 WILLIAM HILL/CINVEN/CVC 26.3.1999 C 109/5 20.4.1999

IV/M.1464 TOTAL/PETROFINA (II) 26.3.1999

IV/M.1452 FORD/VOLVO 26.3.1999 C 304/4 21.10.1999



IV/M.1476 ADECCO/DELPHI 26.3.1999 C 176/9 22.6.1999

IV/M.1386 VIAG/ALGROUP 30.3.1999

IV/M.1466 EATON CORPORATION/AEROQUIP-VICKERS 31.3.1999 C 130/8 11.5.1999

IV/M.1461 RABOBANK - BEECK/HOMANN 6.4.1999

IV/M.1440 LUCENT TECHNOLOGIES/ASCEND COMMUNICATIONS 6.4.1999 C 139/4 19.5.1999

IV/M.1477 METALLGESELLSCHAFT/GEA 7.4.1999 C 139/5 19.5.1999

IV/M.1369 THYSSEN HANDEL/MANNESMANN HANDEL 7.4.1999 C 208/3 22.7.1999(see ECSC.1292)

IV/M.1450 SMS/MANNESMANN DEMAG 8.4.1999 C 176/10 22.6.1999

IV/M.1453 AXA/GRE 8.4.1999

IV/M.1482 KINGFISHER/GROSSLABOR 12.4.1999 C 176/12 22.6.1999

IV/M.1412 HUTCHISON WHAMPOA/RMPM/ECT 14.4.1999 C 127/3 7.5.1999

IV/M.1432 AGFA-GEVAERT/STERLING 15.4.1999 C 228/11 11.8.1999

IV/M.1467 ROHM AND HAAS/MORTON 19.4.1999 C 157/7 4.6.1999

IV/M.1455 GRUNER + JAHR/FINANCIAL TIMES/JV 20.4.1999

IV/M.1499 SWISS LIFE/LLOYD CONTINENTAL 20.4.1999 C 137/7 18.5.1999

IV/M.1396 AT&T/IBM GLOBAL NETWORK 22.4.1999 C 287/4 8.10.1999

IV/M.1465 DEUTSCHE TELEKOM/MAX MOBIL 22.4.1999 C 143/6 21.5.1999

IV/M.1496 OLIVETTI/TELECOM ITALIA 22.4.1999 C 216/9 29.7.1999

IV/M.1407 BERTELSMANN/MONDADORI 22.4.1999 C 145/4 26.5.1999

IV/M.1384 DEUTSCHE BANK/BANKERS TRUST 22.4.1999 C 143/7 21.5.1999

IV/M.1481 DENSO/MAGNETI MARELLI 26.4.1999 C 139/5 19.5.1999

IV/M.1381 IMETAL/ENGLISH CHINA CLAYS 26.4.1999

IV/M.1409 FYFFES/CAPESPAN 27.4.1999 C 193/6 9.7.1999

IV/M.1485 CARLYLE/HONSEL 28.4.1999 C 203/10 17.7.1999

IV/M.1309 MATRA/AEROSPATIALE 28.4.1999 C 133/5 13.5.1999

IV/M.1518 LEAR/UNITED TECHNOLOGIES 29.4.1999 C 181/18 26.6.1999

IV/M.1449 SABENA/SNECMA 29.4.1999 C 216/9 29.7.1999

IV/M.1514 VIVENDI/US FILTERS 29.4.1999 C 152/3 1.6.1999

IV/M.1431 AHLSTROM/KVAERNER 3.5.1999

IV/M.1448 MAN ROLAND/OMNIGRAPH (II) 5.5.1999 C 178/14 23.6.1999

IV/M.1447 DEUTSCHE POST/TRANS-O-FLEX 5.5.1999 C 130/9 11.5.1999

IV/M.1479 THOMSON/BANCO ZARAGOZANO/CAJAMADRID/INDRA 5.5.1999 C 148/4 28.5.1999

IV/M.1487 JOHNSON & SON/MELITTA/COFRESCO 6.5.1999 C 157/7 4.6.1999

IV/M.1459 BERTELSMANN/HAVAS/BOL 6.5.1999

IV/M.1502 KUONI/FIRST CHOICE 6.5.1999 C 139/3 19.5.1999

IV/M.1489 YIT/VALMET/RAUMA 6.5.1999 C 263/6 17.9.1999

IV/M.1474 MAERSK/SAFMARINE 7.5.1999 C 176/9 22.6.1999

IV/M.1506 SINGAPORE AIRLINES/ROLLS-ROYCE 10.5.1999 C 176/11 22.6.1999

IV/M.1500 TPG/TECHNOLOGISTICA 11.5.1999 C 176/10 22.6.1999

IV/M.1519 RENAULT/NISSAN 12.5.1999 C 178/14 23.6.1999

IV/M.1521 UBS/GROUPE VALFOND 19.5.1999 C 155/6 2.6.1999

IV/M.1430 VODAFONE/AIRTOUCH 21.5.1999 C 295/2 15.10.1999

IV/M.1255 FLUGHAFEN BERLIN 21.5.1999 C 186/8 2.7.1999


MERGER CONTROL 205

IV/M.1491 ROBERT BOSCH/MAGNETI MARELLI 25.5.1999 C 183/3 29.6.1999

IV/M.1493 UNITED TECHNOLOGIES/SUNDSTRAND 25.5.1999 C 206/19 21.7.1999

IV/M.1328 KLM/MARTINAIR (II) 25.5.1999 C 162/7 9.6.1999

IV/M.1526 FORD/KWIK-FIT 31.5.1999 C 298/10 16.10.1999

IV/M.1404 GENERAL ELECTRIC/ALSTOM 1.6.1999 C 205/3 20.7.1999

IV/M.1469 SOLVAY/BASF 2.6.1999 C 197/2 14.7.1999

IV/M.1484 ALSTOM/ABB 2.6.1999

IV/M.1434 SCHNEIDER/LEXEL 3.6.1999 C 176/12 22.6.1999

IV/M.1362 BAY WA AG/RWA 3.6.1999 C 191/7 8.7.1999

IV/M.1498 AEGON/TRANSAMERICA 7.6.1999 C 237/4 20.8.1999

IV/M.1516 THOMSON-CSF/EUROCOPTER 10.6.1999 C 216/10 29.7.1999

IV/M.1529 HAVAS ADVERTISING/MEDIA PLANNING 10.6.1999 C 190/5 7.7.1999

IV/M.1560 TI GROUP/WALBRO 11.6.1999 C 189/6 6.7.1999

IV/M.1522 CSME/MSCA/ROCK 11.6.1999

IV/M.1561 GETRONICS/WANG 15.6.1999 C 189/6 6.7.1999

IV/M.1541 KINGFISHER/ASDA 15.6.1999 C 137/4 18.5.1999

IV/M.1527 OTTO VERSAND/FREEMANS 16.6.1999 C 211/15 23.7.1999

IV/M.1512 DUPONT/PIONEER HI-BRED INTERNATIONAL 21.6.1999 C 208/3 22.7.1999

IV/M.1567 LUCCHINI/ASCOMETAL (See also ECSC.1309) 21.6.1999 C 236/5 19.8.1999

IV/M.1533 ARTEMIS/SANOFI BEAUTE 21.6.1999

IV/M.1509 ISPAT/UNIMETAL 22.6.1999 C 193/6 9.7.1999

IV/M.1492 HYUNDAI ELECTRONICS/LG SEMICON 23.6.1999

IV/M.1438 BRITISH AEROSPACE/GEC MARCONI 25.6.1999 C 241/8 26.8.1999

IV/M.1564 ASTROLINK 25.6.1999

IV/M.1609 ELF/SAGA 25.6.1999 C 197/2 14.7.1999

IV/M.1558 CINVEN/INVESTCORP/ZENECA CHEMICALS 25.6.1999 C 228/12 11.8.1999

IV/M.1580 CAI/PLATINUM 28.6.1999 C 227/19 10.8.1999

IV/M.1563 FORD/PLASTIC OMNIUM 28.6.1999

IV/M.1536 WIND/ENEL STC 29.6.1999

IV/M.1497 NOVARTIS/MAÏSADOUR 30.6.1999 C 208/4 22.7.1999

IV/M.1552 BABCOCK BORSIG/AE ENERGIETECHNIK 30.6.1999

IV/M.1590 HSBC/RNYC/SAFRA 30.6.1999

IV/M.1513 DEUTSCHE POST/DANZAS/NEDLLOYD 1.7.1999

IV/M.1569 GRÄNGES/NORSK HYDRO 5.7.1999 C 216/10 29.7.1999

IV/M.1573 NORSK HYDRO/SAGA 5.7.1999 C 162/5 9.6.1999

IV/M.1572 ISS/ABILIS 5.7.1999 C 248/10 1.9.1999

IV/M.1539 CVC/DANONE/GERRESHEIMER 5.7.1999 C 214/7 27.7.1999

IV/M.1549 DEUTSCHE POST/ASG 8.7.1999 C 227/18 10.8.1999

IV/M.1581 AT&T/UNISOURCE/AUCS 8.7.1999 C 328/7 17.11.1999

IV/M.1562 HEIDELBERGER ZEMENT/SCANCEM 12.7.1999

IV/M.1517 RHODIA/DONAU CHEMIE/ALBRIGHT & WILSON 13.7.1999 C 248/10 1.9.1999

IV/M.1471 STATOIL/ICA 14.7.1999

IV/M.1585 DFDS/FLS INDUSTRIES/DAN TRANSPORT 14.7.1999 C 228/11 11.8.1999

IV/M.1595 BRITISH STEEL/HOOGOVENS (see IV/ECSC.1310) 15.7.1999 C 277/5 30.9.1999

IV/M.1606 EDF/SOUTH WESTERN ELECTRICITY 19.7.1999 C 248/9 1.9.1999



IV/M.1510 BT/AT&T/JAPAN TELECOM 19.7.1999

IV/M.1588 TYCO/RAYCHEM 20.7.1999 C 342/12 30.11.1999

IV/M.1603 GENERAL MOTORS ACCEPTANCECORPORATION/AAS 22.7.1999 C 228/12 11.8.1999

IV/M.1534 PINAULT-PRINTEMPS-REDOUTE/GUCCI 22.7.1999 C 290/2 12.10.1999

IV/M.1592 TOYOTA MOTOR/TOYOTA DENMARK 23.7.1999 C 248/9 1.9.1999

IV/M.1470 GOODYEAR/SUMITOMO 23.7.1999 C 227/19 10.8.1999

IV/M.1551 AT&T/MEDIAONE 23.7.1999 C 277/5 30.9.1999

IV/M.1612 WAL-MART/ASDA 23.7.1999 C 225/12 7.8.1999

IV/M.1556 MO OCH DOMSJÖ/SCA 23.7.1999 C 264/18 18.9.1999

IV/M.1598 HICKS, MUSE, TATE & FURST INVESTMENTPARTNERS/HILLSDOWN HOLDINGS 30.7.1999 C 278/4 1.10.1999

IV/M.1553 FRANCE TELECOM/EDITEL/LINCE 30.7.1999 C 11/5 14.1.2000

IV/M.1589 MERITOR/ZF FRIEDRICHSHAFEN 2.8.1999 C 262/6 16.9.1999

IV/M.1504 NSR/VSN/CMI/IGO PLUS 2.8.1999 C 287/3 8.10.1999

IV/M.1412 HUTCHISON WHAMPOA/RMPM/ECT 2.8.1999 C 256/5 9.9.1999

IV/M.1547 LUFTHANSA/AMADEUS/START 2.8.1999 C 241/8 26.8.1999

IV/M.1616 ANTONIO DE SOMMER CHAMPALIMAUD/BANCOSANTANDER CENTRAL HISPANOAMERICANO 3.8.1999 C 306/37 23.10.1999

IV/M.1574 KIRCH/MEDIASET 3.8.1999 C 255/3 8.9.1999

IV/M.1494 SAIR GROUP/AOM 3.8.1999 C 245/29 28.8.1999

IV/M.1593 STS/TEERBAU 9.8.1999 C 275/7 29.9.1999

IV/M.1615 HSBC/LINDENGRUPPEN/CIH 9.8.1999

IV/M.1378 HOECHST/RHÔNE - POULENC 9.8.1999 C 254/5 7.9.1999

IV/M.1637 DB INVESTMENTS/SPP/ÖHMAN 11.8.1999 C 11/3 14.1.2000

IV/M.1555 HEINEKEN/CRUZCAMPO 17.8.1999

IV/M.1594 PREUSSAG/BABCOCK BORSIG 17.8.1999 C 292/3 13.10.1999

IV/M.1631 SUEZ LYONNAISE/NALCO 20.8.1999 C 287/4 8.10.1999

IV/M.1629 KNORR BREMSE/MANNESMANN 20.8.1999

IV/M.1618 BANK OF NEW YORK/ROYAL BANK OFSCOTLAND TRUST BANK 25.8.1999

IV/M.1661 CREDIT LYONNAIS/ALLIANZ-EULER/JV 26.8.1999 C 285/6 7.10.1999

IV/M.1617 ROYAL & SUN ALLIANCE/TRYGG-HANSA 26.8.1999

IV/M.1640 ACERALIA/UCIN (See also IV/ECSC.1313) 26.8.1999 C 5/9 8.1.2000

IV/M.1660 BANK OF NEW YORK/ROYAL BANK OFSCOTLAND/RBSI SECURITY SERVICES 26.8.1999

IV/M.1632 RECKITT + COLMAN/BENCKISER 3.9.1999 C 332/14 20.11.1999

IV/M.1431 AHLSTROM/KVAERNER 7.9.1999 C 263/3 17.9.1999

IV/M.1559 STN ATLAS MARINE ELECTRONICS/SAIT RADIOHOLLAND 8.9.1999 C 278/5 1.10.1999

IV/M.1596 ACCOR/BLACKSTONE/COLONY/VIVENDI 8.9.1999 C 347/7 3.12.1999

IV/M.1653 BUHRMANN/CORPORATE EXPRESS 8.9.1999 C 278/4 1.10.1999

IV/M.1670 GERIL/FCC CONSTRUCCION/ENGIL 10.9.1999 C 278/6 1.10.1999

IV/M.1621 PAKHOED/VAN OMMEREN (II) 10.9.1999 C 282/3 5.10.1999

IV/M.1627 CU ITALIA/BANCA DELLE MARCHE/JV 13.9.1999 C 278/5 1.10.1999

IV/M.1633 RWE UMWELT/VIVENDI/BERLINERWASSERBETRIEBE 13.9.1999


MERGER CONTROL 207

IV/M.1630 AIR LIQUIDE/BOC 16.9.1999 C 266/4 21.9.1999

IV/M.1642 ELF AQUITAINE/TOTALFINA 17.9.1999

IV/M.1644 WIENERBERGER/DSCB/STEINZEUG 17.9.1999 C 4/9 7.1.2000

IV/M.1623 ALLIED SIGNAL/MTU 20.9.1999 C 11/3 14.1.2000

IV/M.1524 AIRTOURS/FIRST CHOICE 22.9.1999

IV/M.1656 HUHTAMÄKI OYJ/PACKAGING INDUSTRIESVAN LEER 23.9.1999 C 287/3 8.10.1999

IV/M.1643 IBM/SEQUENT 23.9.1999 C 342/12 30.11.1999

IV/M.1682 ASHLAND/SUPERFOS 23.9.1999 C 309/3 28.10.1999

IV/M.1669 DEUTSCHE TELEKOM/ONE2ONE 27.9.1999 C 309/3 28.10.1999

IV/M.1674 MAERSK/ECT 27.9.1999

IV/M.1557 EDF/LOUIS DREYFUS 28.9.1999 C 323/11 11.11.1999

IV/M.1691 AEGON/GUARDIAN LIFE 28.9.1999 C 313/7 30.10.1999

IV/M.1532 BP AMOCO/ATLANTIC RICHFIELD 29.9.1999

IV/M.1383 EXXON/MOBIL 29.9.1999

IV/M.1649 GEFCO/KN ELAN 30.9.1999 C 319/6 6.11.1999

IV/M.1659 PREUSSEN ELEKTRA/EZH 30.9.1999

IV/M.1654 TELEXIS/EDS 30.9.1999 C 313/6 30.10.1999

IV/M.1699 TPG BACCHUS/BALLY 30.9.1999 C 295/2 15.10.1999

IV/M.1641 LINDE/AGA 1.10.1999 C 285/4 7.10.1999

IV/M.1628 TOTALFINA/ELF AQUITAINE 5.10.1999 C 322/5 10.11.1999

IV/M.1651 MAERSK/SEA-LAND 6.10.1999 C 313/6 30.10.1999

IV/M.1689 NESTLÉ/PILLSBURY/HÄAGEN-DAZS US 6.10.1999 C 316/9 4.11.1999

IV/M.1694 EMC/DATA GENERAL 6.10.1999 C 347/6 3.12.1999

IV/M.1439 TELIA/TELENOR 13.10.1999

IV/M.1597 CASTROL/CARLESS/JV 14.10.1999 C 16/5 20.1.2000

IV/M.1696 ONEX/AIR CANADA/CANADIAN AIRLINES 15.10.1999

IV/M.1686 DAIMLERCHRYSLER SERVICES/MB-AUTOMOBILVERTRIEBSGESELLSCHAFT 15.10.1999

IV/M.1702 VEDIOR/SELECT APPOINTMENTS 18.10.1999 C 357/5 9.12.1999

IV/M.1698 RWA/NORDSEE/CERNY 20.10.1999

IV/M.1707 GILDE BUY-OUT FUND/SYNBRA 20.10.1999 C 351/37 4.12.1999

IV/M.1679 FRANCE TELECOM/STI/SRD 21.10.1999 C 335/3 23.11.1999

IV/M.1708 TAPIS SAINT-MACLOU/ALLIED CARPETS GROUP 21.10.1999 C 326/11 13.11.1999

IV/M.1714 FÖRENINGSSPARBANKEN/FI-HOLDING/FIH 21.10.1999 C 353/5 7.12.1999

IV/M.1575 THYSSEN KRUPP/VDM EVIDAL/KME SCHMÖLE 22.10.1999

IV/M.1672 VOLVO/SCANIA 25.10.1999 C 324/10 12.11.1999

IV/M.1697 TPG PARTNERS II/PIAGGIO 25.10.1999

IV/M.1703 PHELPS DODGE/ASARCO 27.10.1999 C 313/7 30.10.1999

IV/M.1571 NEW HOLLAND/CASE 28.10.1999 C 9/12 13.1.2000

IV/M.1687 ADECCO/OLSTEN 29.10.1999

IV/M.1587 DANA/GKN 4.11.1999 C 9/10 13.1.2000

IV/M.1732 SYDKRAFT/HEW/HANSA ENERGY TRADING 4.11.1999

IV/M.1677 BT/LGT TELECOM 8.11.1999 C 4/9 7.1.2000

IV/M.1348 ARCHER DANIELS MIDLAND/ALFRED C.TOEPFER INTERNATIONAL/INTRADE 9.11.1999 C 5/7 8.1.2000



IV/M.1663 ALCAN/ALUSUISSE 10.11.1999 C 5/8 8.1.2000

IV/M.1719 DELTA LLOYD VERZEKERINGSGROEP/NUTS OHRA 10.11.1999 C 357/5 9.12.1999

IV/M.1715 ALCAN/PECHINEY 10.11.1999 C 5/8 8.1.2000

IV/M.1626 SAIR GROUP/SAA 15.11.1999

IV/M.1711 TYCO/SIEMENS 16.11.1999 C 11/4 14.1.2000

IV/M.1652 D’IETEREN/PGSI 17.11.1999 C 357/4 9.12.1999

IV/M.1723 ILLINOIS TOOL WORKS/PREMARK 17.11.1999

IV/M.1667 BBL/BT/ISP-BELGIUM 17.11.1999

IV/M.1736 UIAG/CARLYLE/ANDRITZ 17.11.1999 C 14/7 19.1.2000

IV/M.1696 ONEX/AIR CANADA/CANADIAN AIRLINES 18.11.1999

IV/M.1681 AKZO NOBEL/HOECHST ROUSSEL VET 22.11.1999 C 11/5 14.1.2000

IV/M.1599 DUPONT/TEIJIN 24.11.1999 C 4/10 7.1.2000

IV/M.1538 DUPONT/SABANCI 24.11.1999 C 16/4 20.1.2000

IV/M.1701 GRUNER + JAHR/DEKRA/FAIRCAR 24.11.1999 C 9/8 13.1.2000

IV/M.1748 INDUSTRI KAPITAL LIMITED/SUPERFOS 24.11.1999 C 357/4 9.12.1999

IV/M.1710 INDUSTRI KAPITAL 1997 LTD (MARMORANDUM)/NESTE CHEMICALS 29.11.1999 C 7/2 11.2.2000

IV/M.1761 TOYOTA MOTOR/TOYOTA FRANCE 30.11.1999 C 358/7 10.12.1999

IV/M.1650 ACEA/TELEFONICA 1.12.1999

IV/M.1754 MORGAN GRENFELL/PIAGGIO 1.12.1999

IV/M.1601 ALLIED SIGNAL/HONEYWELL 1.12.1999

IV/M.1578 SANITEC/SPHINX 1.12.1999

IV/M.1700 AVNET/EUROTRONICS 3.12.1999

IV/M.1739 IVECO/FRAIKIN 3.12.1999

IV/M.1735 SEITA/TABACALERA 3.12.1999

IV/M.1636 MMS/DASA/ASTRIUM 3.12.1999 C 358/7 10.12.1999

IV/M.1728 CVC/TORRASPAPEL 3.12.1999 C 7/2 11.2.2000

IV/M.1744 UPM-KYMMENE/STORA ENSO/METSÄLIITTO/JV 3.12.1999

IV/M.1740 HEINZ/UNITED BISCUITS FROZEN AND CHILLED FOODS 6.12.1999 C 4/10 7.1.2000

IV/M.1764 SKANDINAVISKA ENSKILDA BANKEN/BFG BANK 10.12.1999

IV/M.1768 SCHOYEN/GOLDMAN SACHS/SWEBUS 10.12.1999 C 11/6 14.1.2000

IV/M.1675 DUCROS/HERO FRANCE 13.12.1999

IV/M.1759 RMC/RUGBY 15.12.1999

IV/M.1717 SIEMENS/ITALTEL 15.12.1999 C 21/26 25.1.2000

IV/M.1763 SOLUTIA/VIKING RESINS 17.12.1999

IV/M.1787 DEUTSCHE BAHN/NS GROEP/JV SERVICE STORES 17.12.1999 C 13/4 18.1.2000

IV/M.1771 SEDGWICK NOBLE LOWNDES/WOOLWICH 17.12.1999 C 16/4 20.1.2000

IV/M.1765 KKR ASSOCIATES/SIEMENS NIXDORF RETAILAND BANKING SYSTEMS 17.12.1999 C 21/26 25.1.2000

IV/M.1755 CVC/ACORDIS 20.12.1999

IV/M.1790 DEUTSCHE BANK/BHS/PAGO 20.12.1999 C 16/5 20.1.2000

IV/M.1760 MANNESMANN/ORANGE 20.12.1999

IV/M.1767 AT&T/IBM/INTESA 20.12.1999

IV/M.1773 NORDIC CAPITAL/TRELLEBORG 20.12.1999

IV/M.1781 ELECTROLUX/ERICSSON 20.12.1999


MERGER CONTROL 209

Case Title Date of O.J. Date of Decision Publication

JV 16 Bertelsmann/VIAG Game Channel 5.5.1999 C 186 2.7.1999

JV 17 Mannesmann/Bell Atlantic/Omintel 21.5.1999 C 11 14.1.2000

JV 18 Chronopost/Correos 1.6.1999 C 302 19.10.1999

JV 19 KLM/Alitalia 11.8.1999 C 92 5.4.00*

JV 21 Skandia/Storebrand/Pohjola 17.8.1999 9.12.99*

JV 22 Fujitsu/Siemens 30.9.1999 C 318 5.11.1999

JV 28 Sydkraft/HEW/Hansa Energy Trading 30.11.1999

JV 26 FreeCom./Dangaard Holding 1.12.1999 C 365 18.12.1999

JV 24 Bertelsmann/Planeta/BOL Spain 3.12.1999 C 67 9.3.2000

JV 31 HMI International Holdings/Arnoldo Mondadori Editore 15.12.1999

JV 33 Hearst/VNU 15.12.1999

JV 23 Telefonica/Port. Telecom/Medi Telecom 17.12.1999 C 22 26.1.2000

JV 25 Sony/Time Warner/CDNow 21.12.1999 C 116 26.4.2000

JV 29 Lafarge/Readymix 20.12.1999 C 21 25.1.2000

* Notice saying that decision has been adopted

Case Title Date of O.J. Date ofDecision Publication

IV/M.1221 REWE/MEINL 3.2.1999

IV/M.1313 DANISH CROWN/VESTJYSKE SLAGTERIER 9.3.1999 L 20 25.1.2000

IV/M.1524 AIRTOURS/FIRST CHOICE 3.6.1999 C 162/7 9.6.1999

IV/M.1383 EXXON/MOBIL 9.6.1999 C 170/4 17.6.1999

IV/M.1532 BP AMOCO/ATLANTIC RICHFIELD 10.6.1999 C 167/5 15.6.1999

IV/M.1439 TELIA/TELENOR 15.6.1999 C 181/18 26.6.1999

IV/M.1578 SANITEC/SPHINX 3.8.1999 C 227/22 10.8.1999

IV/M.1601 ALLIED SIGNAL/HONEYWELL 30.8.1999 C 259/9 11.9.1999

JV 15 BT/AT&T 30.3.1999 Not yet published

1.2. Decisions under Article 8 of Council Regulation (EEC) No. 4064/89

IV/M.1693 ALCOA/REYNOLDS 20.12.1999

IV/M.1791 UBS CAPITAL/VENCAP/STIGA 20.12.1999 C 14/7 19.1.2000

IV/M.1775 INGERSOLL-RAND/DRESSER-RAND/INGERSOLL-DRESSER PUMP 22.12.1999

IV/M.1789 INA/LUK 22.12.1999

IV/M.1742 SUN CHEMICAL/TOTALFINA/COATES 22.12.1999

IV/M.1671 DOW CHEMICAL/UNION CARBIDE 22.12.1999 C 5/7 8.1.2000

E — Press releases

1. Decisions under Articles 6 and 8 of Council Regulation (EEC) No 4064/89

1.1. Decisions under Article 6(1) of Council Regulation (EEC) No 4064/89



Case Title Date of Decision

ECSC.1268 Usinor/Cockerill — 4.2.1999 4.2.1999

ECSC 1293 Thyssen Handel/Mannesmann Handel 7.4.1999

ECSC 1309 Lucchini/Ascometal 21.6.1999

ECSC 1310 British Steel/Hoogovens 15.7.1999

ECSC 1311 British Steel/Sogerail 2.8.1999

ECSC 1306 Shell/Carbones del Zulia/Ruhrkohle 16.8.1999

ECSC 1313 Aceralia/Ucin 26.8.1999

ECSC 1295 Thyssen/Usinor Grain Orientes 8.10.1999

ECSC 1316 RAG/Burton 17.11.1999

2. Decisions pursuant to Article 66 of the ECSC Treaty


IP/99/8 7.1.1999 Commission authorises the re-acquisition by Philips of its share from PhilipsConsumer Communications - a former joint venture between Philips andLucent Technologies

IP/99/19 13.1.1999 Commission gives green light to Siebe and BTR merger

IP/99/20 13.1.1999 Commission approves Menzies and Lufthansa’s joint venture at Manchesterairport

IP/99/21 14.1.1999 Commission approves Newelll/Rubbermaid merger

IP/99/22 13.1.1999 Commission authorises Akzo Nobel and Glaverbel to take over Eijkelkamp

IP/99/42 21.1.1999 Commission approves acquisition of joint control of GasAG by Gaz deFrance Deutschland and Bewag

IP/99/49 27.1.1999 Commission clears the acquisition of London Electricity by Electricitéde France

IP/99/50 27.1.1999 Commission doesn’t have objections to the acquisition of shares from ElsaElbe-Saale Recycling GmbH, a wholly owned subsidiary of Otto, by AlbaAG & Co. KG

IP/99/51 27.1.1999 Commission clears the joint venture between Pechiney and Samancor in thesilicon metal sector

IP/99/62 2.2.1999 Commission opens full investigation into KLM/Martinair merger

IP/99/63 2.2.1999 Commission approves the take-over of PLM by Rexam

IP/99/64 2.2.1999 Commission clears the acquisition by Recoletos of joint controlin “El Mundo” publisher

IP/99/86 4.2.1999 Commission approves takeover of Autoeuropa by Volkswagen AG

IP/99/87 4.2.1999 Commission clears acquisition of AMP by Tyco InternationalIP/99/88 4.2.1999 Commission clears the acquisition of the Coral group (UK) by Deutsche

Bank AG (Germany).

IP/99/89 4.2.1999 Commission authorises Cargill to acquire Continental Grain’s CommodityMarketing Group division


MERGER CONTROL 211

IP/99/92 4.2.1999 Commission gives conditional approval to acquisition of Cockerill Sambre(Belgium) by Usinor (France)

IP/99/93 5.2.1999 Commission clears Nordic Capital’s acquisition of joint control of Swedishfurniture company Hilding Anders

IP/99/96 8.2.1999 Commission clears acquisition of Herberts AG (Germany) by DuPont (US)

IP/99/97 8.2.1999 Commission clears the acquisition of Union Camp Corporation by InternationalPaper Company (both USA)

IP/99/99 9.2.1999 Commission clears merger between two Finnish companies, Valmet and Rauma

IP/99/100 10.2.1999 Commission fines A.P. Møller for late notification and unlawful implementationof three concentrations

IP/99/106 12.2.1999 Commission approves the creation of Autofin, a banking joint venturein Greece

IP/99/107 12.2.1999 Commission approves the acquisition of Rexam’s industrial packaging businessby Svenska Cellulosa Aktiebolaget SCA

IP/99/115 16.2.1999 Commission authorises the acquisition of the Springer-Verlagsgruppe (Austria/Germany) by Bertelsmann (Germany)

IP/99/116 16.2.1999 Commission authorises the acquisition of Jet Services by TPG

IP/99/124 17.2.1999 Commission approves take-over of Danzas (Switzerland) by Deutsche Post

IP/99/129 23.2.1999 Commission authorises storecard’s joint venture

IP/99/134 25.2.1999 Commission clears joint venture between Deutsche Post and Securicor

IP/99/135 25.2.1999 Commission clears acquisition of Dagenham Motors Group PLC by PolarMotors Group Ltd.

IP/99/138 1.3.1999 Commission authorises Halifax Plc (UK) and Cetelem SA (France) to takecontrol of Harry Dawn Ltd (UK)

IP/99/139 1.3.1999 Commission clears an acquisition of joint control by CVC over Wavin

IP/99/140 1.3.1999 Commission authorises the acquisition of Denkhaus (Germany) by La Poste(France)

IP/99/151 3.3.1999 Commission authorises CRH (Ireland) acquisition of sole control overIbstock (UK)

IP/99/153 4.3.1999 Commission approves acquisition of AFP (Europe) Limited corrugatedpackaging business by Mondi Minorco Paper

IP/99/154 5.3.1999 Commission approves the acquisition of control in FCC by Vivendi

IP/99/155 4.3.1999 Commission approves the acquisition of joint control of Svalöf Weibull ABby BASF and Svenska Lantmännen Riksförbund ek för

IP/99/156 4.3.1999 Commission clears Lafarge SA (France) and Titan Cement Company SA(Greece) acquisition of joint control of Beni Suef Cement Co. (Egypt)

IP/99/157 5.3.1999 Commission will examine more closely the Deutsche Post/trans-o-flexmerger case

IP/99/162 9.3.1999 Commission clears joint venture combining Thomas Cook and Carlson inU.K. leisure travel

IP/99/163 9.3.1999 Commission clears CVC Capital Partners’ acquisition of joint control inDynoplast Group of Companies

IP/99/167 12.3.1999 Commission approves the acquisition of LucasVarity by TRW

IP/99/175 16.3.1999 Commission authorises merger Sanofi-Synthélabo (France)

IP/99/176 16.3.1999 Commission approves the acquisition of the foundry business of Renaultby Teksid

IP/99/177 16.3.1999 Commission clears joint venture between Thomson-CSF and Racal Electronics

IP/99/178 16.3.1999 Commission approves acquisition of sole control of ABB Daimler BenzTransportation (Adtranz) by Daimler Chrysler AG

IP/99/188 18.3.1999 Commission clears acquisition of Kia by Hyundai



IP/99/189 18.3.1999 Commission approves BAT/Rothmans merger in the manufactured tobaccosector

IP/99/196 26.3.1999 Commission clears Carrier/Toshiba joint venture

IP/99/197 29.3.1999 Commission approves merger between Total and PetroFina subject to undertak-ings, while part of the operation is referred to the French competition authorities

IP/99/199 29.3.1999 Commission approves acquisition by Cinven and CVC of UK bookmakerWilliam Hill

IP/99/201 29.3.1999 Commission clears acquisition by Ford (USA) of Volvo Cars (Sweden)

IP/99/214 7.4.1999 Commission clears the acquisition by Eaton Corporation of Aeroquip-Vickers,Incorporated

IP/99/215 7.4.1999 Commission approves takeover of GEA by Metallgesellschaft

IP/99/218 9.4.1999 Commission clears take over of Guardian Royal Exchange by AXA, subjectto undertakings

IP/99/219 9.4.1999 Commission authorises acquisition of Mannesmann Handel AG by ThyssenHandelsunion AG

IP/99/220 9.4.1999 Commission refers Rabobank-Beeck/Homann merger to the GermanBundeskartellamt

IP/99/221 9.4.1999 Commission authorises the acquisition of Ascend Communications by LucentTechnologies

IP/99/222 9.4.1999 Commission approves the concentration Sms/Mannesmann Demag

IP/99/226 13.4.1999 Commission approves Kingfisher’s acquisition of the German photographiclaboratory Wegert-Großlabor

IP/99/229 15.4.1999 Commission opens in-depth inquiry into acquisition of ECT by Hutchisonand the Rotterdam port authority

IP/99/231 16.4.1999 Commission clears acquisition by Agfa-Gevaert (Belgium) of certain assetsof Sterling (US)

IP/99/233 20.4.1999 Commission approves subject to conditions the acquisition of MortonInternational by Rohm and Haas (both USA)

IP/99/249 22.4.1999 Commission approves the joint venture between Financial Times (UK) andGruner+Jahr (Germany)

IP/99/251 22.4.1999 Commission clears acquisition of Lloyd Continental (France) by Swiss Life(Switzerland)

IP/99/252 23.4.1999 Commission approves takeover of Max Mobil (Austria) by Deutsche Telekom

IP/99/253 22.4.1999 Commission approves the acquisition by Olivetti of Telecom Italia (both Italy)

IP/99/255 22.4.1999 Commission revokes original decision authorising Sanofi-Synthélabo merger,but says timetable still valid

IP/99/256 23.4.1999 Commission approves Deutsche Bank takeover of Bankers Trust

IP/99/259 23.4.1999 Commission clears AT&T Corp. acquisition of the IBM Global Networkbusiness

IP/99/260 26.4.1999 Commission authorises the merger of the Italian book-clubs of Mondadoriand Bertelsmann

IP/99/262 27.4.1999 Commission clears takeover of Magneti Marelli Manufacturing (Italy) byDenso Corporation (Japan)

IP/99/263 27.4.1999 Commission approves Imetal’s acquisition of English China Clays subjectto conditions

IP/99/276 28.4.1999 Commission authorises Fyffes and Capespan Group to acquire joint controlof Capespan International

IP/99/278 29.4.1999 Commission approves the non-military aspects of the merger betweenLagardère and Aérospatiale

IP/99/283 30.4.1999 Commission clears acquisition by Vivendi (France) of US Filter (US)


MERGER CONTROL 213

IP/99/284 30.4.1999 Commission clears joint venture between Snecma and Sabena

IP/99/285 30.4.1999 Commission approves acquisition of Honsel by Carlyle

IP/99/289 3.5.1999 Commission clears the acquisition by Lear Corporation of United TechnologiesAutomotive Inc.

IP/99/297 6.5.1999 Commission clears the acquisition of Omnigraph (Germany) by MAN Roland(Germany)

IP/99/301 4.5.1999 Commission raises no objections to the acquisition by Finmeccanica of theassets of Breda Fucine Meridionale in liquidation

IP/99/306 5.5.1999 Commission opens in-depth investigation into the joint venture betweenKvaerner and Ahlström in the chemical pulping sector

IP/99/309 7.5.1999 Commission clears joint venture between Bertelsmann (Germany) and Havas(France) for the sale of French books via Internet

IP/99/310 7.5.1999 Commission approves the acquisition by Johnson & Son (USA) of a 35%share in the Cofresco joint venture from Dow Chemicals (USA)

IP/99/311 7.5.1999 Commission clears merger between Kuoni (Switzerland) and First Choice(UK) in the travel sector

IP/99/312 7.5.1999 Commission clears acquisition of joint control by Thomson-CSF (France),Caja Madrid and Banco Zaragozano (Spain) of Indra (Spain)

IP/99/315 10.5.1999 Commission clears the acquisition of Safmarine Container Lines N.V. (SouthAfrica) by Maersk A/S (Denmark) in the liner shipping sector

IP/99/316 10.5.1999 Commission clears the Scandinavian Mill Service joint venture in generalmaintenance services to the pulp and paper industry

IP/99/318 11.5.1999 Deutsche Post has withdrawn the notification of its planned concentrationwith trans-o-flex

IP/99/320 17.5.1999 Commission clears the acquisition of Tecnologistica (Italy) by TNT PostGroup (Netherlands)

IP/99/325 11.5.1999 Commission clears joint venture between Rolls-Royce, SIA and HAESL

IP/99/331 17.5.1999 Commission clears the operation Renault/Nissan (France/Japan)

IP/99/335 19.5.1999 Commission authorises Sanofi-Synthélabo merger (France) subject to acondition

IP/99/336 19.5.1999 Commission gives green light to acquisition of Groupe Valfond (France) byUBS (Switzerland).

IP/99/342 25.5.1999 Commission authorises Vodafone and AirTouch to merge

IP/99/343 25.5.1999 Commission approves the acquisition of the Berlin Brandenburg AirportHolding by a consortium of Hochtief and Frankfurt Airport

IP/99/344 25.5.1999 Commissioner Van Miert welcomes Coca-Cola’s decision to drop itsacquisition of Schweppes in continental Europe

IP/99/355 26.5.1999 Commission authorises Bosch (Germany) and Magneti Marelli (Italy) jointventure

IP/99/356 26.5.1999 Commission clears take-over of Sundstrand by United Technologies (both USA)

IP/99/363 1.6.1999 Commission clears the acquisition by Ford of the UK based company Kwik-Fit plc

IP/99/367 3.6.1999 Commission authorises ABB and Alstom to enter into a joint venture on power generation equipment

IP/99/369 3.6.1999 Commission authorises General Electric (USA) to acquire Alstom’s (France) large heavy duty gas turbines business

IP/99/370 3.6.1999 Commission clears the acquisition by Solvay (Belgium) of the PVC andPVDC businesses of BASF (Germany)

IP/99/374 4.6.1999 Commission authorises the acquisition of Lexel (Denmark) by Schneider(France)



IP/99/375 4.6.1999 Commission authorises acquisition of joint control by BayWa (Germany)and RWA Genossenschaft (Austria) of RWA AG (Austria)

IP/99/384 9.6.1999 Commission clears acquisition of control of Transamerica Corporation (USA)by Aegon N.V. (Netherlands)

IP/99/388 11.6.1999 The European Commission opens detailed investigation into the BP Amoco/Arco concentration

IP/99/390 11.6.1999 Commission clears the concentration between Media Planning and HavasAdvertising

IP/99/391 14.6.1999 Commission refers the planned joint venture CSME/MSCA/ROCK to thecompetent French authorities

IP/99/392 14.6.1999 Commission clears joint venture between Thomson-CSF and Eurocopter

IP/99/393 14.6.1999 Commission authorises the acquisition of Walbro Corporation by the TIGroup plc

IP/99/397 16.6.1999 Commission clears the merger between Kingfisher and ASDA

IP/99/402 17.6.1999 Commission clears the acquisition of Freemans (UK) by Otto Versand(Germany)

IP/99/403 18.6.1999 Commission authorises the acquisition of Wang (USA) by Getronics(Netherlands)

IP/99/408 22.6.1999 Commission approves Artémis SA (France) acquisition of Sanofi Beauté(France)

IP/99/409 22.6.1999 Commission approves acquisition of Pioneer Hi-Bred International Inc. byDuPont de Nemours & Co. (both USA)

P/99/410 22.6.1999 Commission approves the acquisition of Ascométal (France) by the LucchiniGroup (Italy)

IP/99/421 24.6.1999 KLM has withdrawn the notification of its planned merger with Martinair

IP/99/422 24.6.1999 The Commission approves the acquisition of Unimetal (France) by Ipstat(Netherlands)

IP/99/424 25.6.1999 Commission clears acquisition of LG Semicon by Hyundai ElectronicsIndustries (both South Korea)

IP/99/426 28.6.1999 Commission approves non-military aspects of British Aerospace/Marconimerger (UK)

IP/99/427 28.6.1999 Commission approves joint acquisition by Cinven and Investcorp of Zeneca’sspecialty chemicals division (all UK)

IP/99/428 28.6.1999 Commission approves Astrolink joint venture between Lockheed Martin,TRW (both USA) and Telespazio (Italy)

IP/99/430 29.6.1999 Commission authorises the acquisition by Computer Associates of Platinum(both USA)

IP/99/431 29.6.1999 Commission approves acquisition by Ford of the automotive interior plasticcomponents business of Compagnie Plastic Omnium

IP/99/445 6.7.1999 Commission clears the creation of a joint venture company by the Swedishcompany Gränges and the Norwegian company Hydro Aluminium, asubsidiary of Norsk Hydro

IP/99/451 2.7.1999 Commission approves Wind’s acquisition of Enel’s internal telecoms network,Enel STC (both Italy)

IP/99/452 2.7.1999 Commission authorises the acquisition by Babcock Borsig of AEEnergietechnik

IP/99/453 2.7.1999 Commission approves joint venture for maize and sunflower seeds

IP/99/454 2.7.1999 Commission clears two acquisitions by HSBC in the financial sector

IP/99/456 5.7.1999 Commission does not oppose Deutsche Post’s acquisition of Nedlloyd’s landtransport activities - other competition aspects to be further examined

IP/99/458 6.7.1999 Commission clears the acquisition of Saga Petroleum by Norsk Hydro


MERGER CONTROL 215

IP/99/459 6.7.1999 Commission approves acquisition of Abilis by ISS

IP/99/460 6.7.1999 Commission clears CVC’s acquisition of the food and beverage glasspackaging activities of Danone and Gerresheimer

IP/99/481 9.7.1999 Commission approves Unisource’s acquisition of sole control over AUCS

IP/99/485 9.7.1999 Commission does not oppose Deutsche Post’s acquisition of ASG

IP/99/524 19.7.1999 Commission approves merger between British Steel (UK) and Hoogovens(Netherlands)

IP/99/533 20.7.1999 Commission suspends Portuguese measures against the acquisition of jointcontrol by BSCH over the group of Mr Champalimaud

IP/99/544 20.7.1999 Commission clears acquisition of SWEB (United Kingdom) by EdF (France)

IP/99/552 22.7.1999 Commission approves the acquisition by BT (UK) and AT&T (USA) of JapanTelecom (Japan)

IP/99/553 22.7.1999 Commission clears acquisition of Arriva Automotive Solutions (UnitedKingdom) by General Motors (USA)

IP/99/557 23.7.1999 Commission approves the acquisition of Gucci (Italy) by PPR (France)

IP/99/561 26.7.1999 Commission clears the merger between Wal-Mart (USA) and ASDA (UK)

IP/99/563 26.7.1999 Commission authorises Tyco (Bermuda) to acquire Raychem (USA)

IP/99/567 27.7.1999 Commission clears merger in the tyre sector

IP/99/568 27.7.1999 Commission clears merger between AT&T and MediaOne (both US)

IP/99/590 28.7.1999 Commission clears the acquisition by Toyota of its Danish motor vehicledistributor

IP/99/591 28.7.1999 Commission fines Sanofi and Synthélabo (France) for supplying incorrectinformation on their merger

IP/99/605 30.7.1999 Commission approves the creation of a joint venture by Swedish Mo ochDomsjö and Svenska Cellulosa Aktiebolaget SCA in the fine paper sector

IP/99/606 2.8.1999 Commission authorises joint venture between France Telecom and Editel

IP/99/607 2.8.1999 Commission clears take-over of Hillsdown (UK) by Hicks, Muse (USA)

IP/99/608 3.8.1999 Commission clears Amadeus’ acquisition of joint control in Start

IP/99/610 3.8.1999 Commission approves the acquisition of joint control by BSCH (Spain) overthe Champalimaud group (Portugal)

IP/99/611 3.8.1999 Commission clears a joint venture between Kirch (Germany) and Mediaset(Italy) in the TV sector

IP/99/615 4.8.1999 Commission approves a joint venture between Meritor (USA) and ZFFriedrichshafen (Germany)

IP/99/616 4.8.1999 Commission approves creation of IGO Plus joint venture in the Dutchregional public transport sector

IP/99/617 4.8.1999 Commission clears SAirGroup and Marine-Wendel’s acquisition of the AOMMinerve airline (France)

IP/99/618 5.8.1999 Hutchison and Rotterdam Municipal Port Management abandon their jointacquisition of European Combined Terminals

IP/99/625 10.8.1999 Commission authorises the acquisition of Teerbau (Germany) by Vivendi(France)

IP/99/626 10.8.1999 Commission clears the merger between Hoechst (Germany) and Rhône-Poulenc(France) into Aventis subject to conditions

IP/99/627 10.8.1999 Commission clears joint venture in the artists’ materials sector

IP/99/628 11.8.1999 Commission clears the alliance between Alitalia (Italy) and KLM (Netherlands)subject to conditions.

IP/99/629 13.8.1999 Commission clears real estate joint venture of DB Investments (UK), SPPand Öhman (both Sweden)



IP/99/632 18.8.1999 Commission refers to the Spanish authorities the proposed acquisition ofCruzcampo (Spain) by Heineken (Netherlands)

IP/99/635 18.8.1999 Commission approves insurance joint venture between Skandia (Sweden),Storebrand (Norway) and Pohjola (Finland) with conditions.

IP/99/636 20.8.1999 Commission approves acquisition of Babcock Borsig (Germany) by Preussag(Germany)

IP/99/637 23.8.1999 Commission approves joint venture of Knorr-Bremse and Rexroth (bothGermany)

IP/99/638 23.8.1999 Commission gives its green light to the acquisition by Suez-Lyonnaise desEaux (France) of Nalco (USA)

IP/99/642 27.8.1999 Commission approves the acquisition of the steel activities of Ucín (Spain)by the Arbed group (Luxembourg)

IP/99/644 30.8.1999 Commission clears acquisition of Trygg Hansa (Sweden) by Royal & SunAlliance (UK)

IP/99/649 31.8.1999 Commission clears the acquisition by Bank of New York (USA) of RBSTrust Bank (UK)

IP/99/650 31.8.1999 Commission clears acquisition by the Bank of New York (USA) of a jointlycontrolling stake in RBSI Security Services (Holdings) Limited (UK)

IP/99/651 31.8.1999 Commission approves factoring joint venture between Crédit Lyonnais(France) and Allianz (Germany)

IP/99/655 6.9.1999 Commission clears Reckitt Benckiser merger (UK/Netherlands)

IP/99/665 8.9.1999 Commissioner Van Miert welcomes withdrawal of joint venture betweenKvaerner (UK/Norway) and Ahlström (Finland)

IP/99/669 9.9.1999 Commission opens infringement procedure against Portugal for not respectingits suspension decision in the BSCH/Champalimaud case

IP/99/670 9.9.1999 Commission clears hotel groups merger

IP/99/673 13.9.1999 Commission clears Pakhoed/Van Ommeren merger following spin-off ofstorage terminals

IP/99/674 13.9.1999 Commission authorises joint venture between STN Atlas (Germany) andSAIT Radio Holland (Belgium)

IP/99/677 14.9.1999 Commission authorises take-over of CorpExpress (USA) by Buhrmann(Netherlands)

IP/99/678 14.9.1999 Commission authorises RWE (Germany) and Vivendi’s (France) investmentinto Berlin waterworks

IP/99/679 14.9.1999 Commission approves the acquisition of joint control by FCC (Spain) overEngil (Portugal)

IP/99/680 14.9.1999 Commission approves the joint ventures between CU Italia and BDM (bothItaly)

IP/99/688 17.9.1999 Commission opens full investigation into acquisition of parts of BOC (UK)by L’Air Liquide (France)

IP/99/689 20.9.1999 Commission clears the acquisition of joint control over Steinzeug GmbH byWienerberger and Cremer & Breuer

IP/99/693 21.9.1999 Commission clears AlliedSignal (USA) and MTU (Germany) joint venturefor small aeroderivative gas turbines

IP/99/696 24.9.1999 Commission clears public bid by Ashland (USA) on Superfos (Denmark)

IP/99/697 24.9.1999 Commission authorizes the acquisition of Sequent by IBM (both USA)

IP/99/698 24.9.1999 Commission clears the acquisition of Van Leer (Netherlands) by Huhtamäki(Finland) in the packaging sector

IP/99/701 27.9.1999 European Commission authorises a joint-venture between Maersk (Denmark)and ECT (Netherlands) for the operation of a container terminal

IP/99/702 28.9.1999 Commission authorises the acquisition by Deutsche Telekom (Germany) ofOne2One (UK)


MERGER CONTROL 217

IP/99/707 29.9.1999 Commission clears acquisition by Aegon UK Plc (Netherlands) of GuardianLife Business (UK)

IP/99/711 29.9.1999 Commission clears merger between Exxon and Mobil (both USA) subject toconditions

IP/99/715 1.10.1999 Commission approves joint venture between Telexis and EDS in call centreservices sector

IP/99/716 1.10.1999 Commission clears take-over of EZH (Netherlands) by PreussenElektra(Germany)

IP/99/717 1.10.1999 Commission authorises Gefco to acquire control of KN ELAN (Germany)

IP/99/719 1.10.1999 Commission gives conditional green light to joint venture between Siemens(Germany) and Fujitsu (Japan) to produce computer hardware

IP/99/720 1.10.1999 Commission opens full investigation into the acquisition of AGA (Sweden)by Linde (Germany) in the industrial gases industry

IP/99/723 4.10.1999 Commission clears TPG’s (USA) take-over of Bally (Switzerland)

IP/99/730 7.10.1999 Commission initiates detailed investigation into proposed merger betweenTotalFina and Elf Aquitaine (France)

IP/99/732 7.10.1999 Commission clears US joint venture between Nestlé USA and Pillsbury

IP/99/733 7.10.1999 Commission authorises acquisition by Maersk (Denmark) of the containerisedliner shipping activities of Sea-Land (USA)

IP/99/734 7.10.1999 Commission clears acquisition by EMC of Data General (both US)

IP/99/749 13.10.1999 Commission moves on with infringement procedure against Portugal forignoring its suspension decision in the BSCH/Champalimaud case

IP/99/757 15.10.1999 Commission clears joint venture between Castrol and Carless Refining andMarketing Ltd.

IP/99/762 18.10.1999 Commission approves automobile-leasing joint venture in Austria betweenDaimlerChrysler and the Pappas Group

IP/99763 18.10.1999 Commission opens full investigation into Canadian airlines merger

IP/99/770 19.10.1999 Commission approves merger in temporary employment services sector

IP/99/773 20.10.1999 Financial services: Commission to send reasoned opinion to Portugal overveto against BSCH participation in Champalimaud group

IP/99/774 20.10.1999 EU competition law: Commission overrules Portuguese measures againstBSCH/Champalimaud operation

IP/99/779 21.10.1999 Commission approves acquisition by Gilde Buy-Out Fund of Shell’sshareholding in Synbra B.V.

IP/99/780 21.10.1999 Commission approves joint venture between RWA Raiffaisen Ware Austria AGand Nordsee GmbH, Austria

IP/99/785 22.10.1999 Commission authorises joint venture in Portugal between France Telecom andSonae group

IP/99/791 25.10.1999 Commission approves acquisition of Allied Carpets by Tapis Saint-Maclou

IP/99/792 25.10.1999 Commission approves joint venture between Thyssen Krupp (Germany) andSMI (Italy)

IP/99/793 26.10.1999 Commission opens in-depth inquiry into Volvo/Scania merger

IP/99/797 26.10.1999 Commission clears acquisition of FIH by Föreningssparbanken

IP/99/811 28.10.1999 Commission clears acquisition of Case Corporation (US) by New Holland(the Netherlands) with substantial conditions

IP/99/815 29.10.1999 Commission approves acquisition of US based Olsten employment servicesby Swiss based Adecco

IP/99/818 3.11.1999 Commission refers BSCH/Champalimaud case to the Court of Justice

IP/99/820 5.11.1999 Commission clears joint venture between Dana Corporation (UK) and GKNplc (UK) for light propeller shafts business



IP/99/835 11.11.1999 European Commission opens detailed inquiry into the mergers betweenaluminium producers Alcan, Alusuisse and Pechiney

IP/99/839 10.11.1999 Commission authorises acquisition by British Telecom of shares in LGTTelecom (Korea)

IP/99/840 10.11.1999 Commission authorises Archer Daniels Midland Company to acquire jointcontrol of Alfred C. Toepfer International and InTrade

IP/99/842 11.11.1999 Commission approves insurance sector merger in Holland and Belgium

IP/99/845 16.11.1999 Commission authorises acquisition of a stake in South African Airways bySairGroup

IP/99/852 17.11.1999 Commission clears acquisition by Tyco of Siemens’ electromechanicalcomponents business

IP/99/855 18.11.1999 The European Commission clears Belgian joint venture between BT and BBL

IP/99/857 18.11.1999 Commission approves acquisition by Illinois Tool Works of PremarkInternational

IP/99/858 18.11.1999 Commission clears the acquisition of sole control by d’Ieteren of Plate Glass& Shatterprufe Industrie

IP/99/859 18.11.1999 Commission approves acquisition of Andritz by Carlyle and UIAG

IP/99/869 23.11.1999 Commission clears Akzo Nobel’s acquisition of Hoechst Roussel Vet GmbH,subject to conditions

IP/99/891 25.11.1999 Commission approves joint venture between Gruner+Jahr and DEKRA

IP/99/892 25.11.1999 Commission authorises aquisition by Industri Kapital of Superfos A/S

IP/99/893 25.11.1999 European Commission clears the polyester product joint venture betweenDupot and Sabanci

IP/99/894 25.11.1999 European Commission clears Polyester Film joint venture between Dupontand Teijin

IP/99/912 30.11.1999 The Commission authorises the acquisition by Industri Kapital (Marmorandum)of Neste Chemicals

IP/99/932 Commission approves joint venture between Acea and Telefonica

IP/99/933 2.12.1999 Commission clears acquisition of Piaggio & C.S.p.A by Morgan GrenfellDevelopment Capital Syndications Ltd.

IP/99/934 2.12.1999 Commission clears the acquisition by Toyota Motor Corporation of its Frenchdistributor Toyota France SA

IP/99/942 6.12.1999 Commission approves the acquisition of the Fraikin Group by the Iveco Group

IP/99/943 6.12.1999 Commission opens full investigation into the creation of Astrium, a jointventure of Matra Marconi Space and DASA, in the space industry

IP/99/945 6.12.1999 Commission has approved the merger in the tobacco sector between Seita(France) and Tabacalera (Spain) creating Altadis

IP/99/946 7.12.1999 Commission clears acquisition of sole control by Avnet Inc. over the SEIbrand activities of Sonepar Electronique International SA (“Sonepar”) in theelectronic components wholesale distribution sector.

IP/99/947 7.12.1999 Commission clears a joint venture between UPM-Kymmene, Stora Enso andMetsäliitto

IP/99/949 7.12.1999 Commission clears acquisition by Heinz Company (USA) of United Biscuits(UK) frozen and chilled food business

IP/99/969 10.12.1999 Commission approves the acquisition of sole control by CVC Group ofTorraspapel Group

IP/99/971 13.12.1999 European Commission clears acquisition of BfG Bank by SkandinaviskaEnskilda Banken

IP/99/972 13.12.1999 Commission authorises acquisition by Schoyen and Goldman Sachs of Swebus

IP/99/983 14.12.1999 Commission authorises joint venture between Ducros and Hero France

IP/99/991 16.12.1999 Commission clears acquisition of Rugby Group by RMC Group


MERGER CONTROL 219

IP/99/992 16.12.1999 Comission clears splitting of Italtel by Siemens and Telecom Italia

IP/99/1001 20.12.1999 Commission approves joint venture between Sedgwick Noble Lowndes (UK)and Woolwich (UK)

IP/99/1003 20.12.1999 Commission clears acquisition by KKR Associates of Siemens Nixdorf Retailand Banking Systems

IP/99/1004 20.12.1999 Commission approves acquisition of Viking Resins Group by Solutia

IP/99/1006 20.12.1999 Commission clears joint venture of Deutsche Bahn and NS Groep

IP/99/1010 20.12.1999 Commission opens detailed inquiry into merger between aluminium producersAlcoa and Reynolds

IP/99/1012 21.12.1999 Commission clears a joint venture between Deutsche Bank and BHS Holding,a member of the group Metro

IP/99/1013 21.12.1999 Commission authorises acquisition by Nordic Capital and Trelleborg of NTHolding

IP/99/1014 21.12.1999 Commission clears acquisition by AT&T of the Intesa network connectivitybusiness

IP/99/1017 21.12.1999 Commission approves acquisition by investment company CVC Group ofAcordis fibres business from Akzo Nobel

IP/99/1018 21.12.1999 Commission authorises Mannesmann acquisition of Orange

IP/99/1019 21.12.1999 Commission clears joint venture between Electrolux and Ericsson

IP/99/1023 22.12.1999 Commission clears joint acquisition Of Stiga by UBS Capital (NL) andVencap (S)

IP/99/1046 22.12.1999 Commission clears Sun Chemical’s acquisition of the Coates printing inksbusinesses.

IP/99/1047 22.12.1999 Commission clears acquisition by Ingersoll-Rand of Dresser-Rand andIngersoll-Dresser Pump

IP/99/1048 22.12.1999 Commission approves acquisition of German car part supplier LuK by INA

IP/99/1049 22.12.1999 Commission opens full investigation into Dow Chemical/Union Carbidechemicals

IP/99/209 30.3.1999 JV. BT/AT & T

IP/99/628 11.8.1999 Commission clears the alliance between Alitalia (Italy) and KLM (Netherlands)subject to conditions

IP/99/635 18.8.1999 Commission approves insurance JV between Skandia (S),Storebrand (N) andPohjola (SU),with conditions.

IP/99/719 1.10.1999 Commission gives conditional green light to joint venture between Siemens(Germany) and Fujitsu (Japan) to produce computer hardware

IP/99/931 2.12.1999 Commission clears joint venture between BHS/Debitel and FleggaardHolding/ Fleggaard Partner

IP/99/948 7.12.1999 Commission authorises creation of joint venture BOL Spain by BertelsmannAG and Planeta Corporación S.R.L.

IP/99/989 16.12.1999 Commission authorises setting-up of the joint venture Hearst MondadoriEditoriale SRL

IP/99/990 16.12.1999 Commission authorises setting-up of the joint venture VNU Hearst RomaniaSRL

IP/99/1005 20.12.1999 Commission clears acquisition of joint control by Telefonica Spain andPortugal Telecom of Moroccan mobile telephony operator

IP/99/1020 21.12.1999 Commission gives go-ahead to planned joint-venture between Larfarge andReadymix

IP/99/1022 22.12.1999 Commission authorises takeover of CDNow by Time Warner and Sony



Case Date Parties Field

T-102/96 Judgement 25.3.1999 Gencor v Commission Competition

F — Judgments of the Community courts

Court of First Instance


IP/99/83 3.2.1999 Commission approves Rewe/Meinl merger (Austria)

IP/99/165 10.3.1999 Commission clears the merger between Danish Crown and VestjyskeSlagterier subject to conditions

IP/99/373 4.6.1999 Commission opens full investigation into Airtours/First Choice (both UK)travel trade merger

IP/99/387 10.6.1999 The European Commission opens full investigation into Exxon/Mobil merger

IP/99/396 16.6.1999 The Commission decides to make an in-depth investigation of the proposedTelia (Sweden) and Telenor (Norway) venture

IP/99/613 4.8.1999 Commission opens an in-depth investigation into the acquisition of Sphinx(Netherlands) by Sanitec (Finland)

IP/99/645 30.8.1999 Commission opens in-depth inquiry into AlliedSignal/Honeywell merger

IP/99/695 22.9.1999 Commission prohibits Airtours’ takeover of First Choice in UK leisure travelsector

IP/99/708 29.9.1999 Commission clears merger between Exxon and Mobil (both USA) subject toconditions

IP/99/712 29.9.1999 Commission clears take-over of Arco (USA) by BP Amoco (UK) subject toconditions

IP/99/746 13.10.1999 Commission clears merger between Telia (Sweden) and Telenor (Norway)with substantial conditions

IP/99/921 1.12.1999 Commission authorises AlliedSignal/Honeywell merger, subject to substantialconditions

IP/99/923 1.12.1999 Commission approves Sanitec’s acquisition of Sphinx subject to substantialdivestiture in the bathroom products sector

1.2. Decisions under Article 8 of Council Regulation (EEC) No 4064/89

III— STATE AID

A — Case summaries

1. Regional aid

Belgium

Regional aid map 2000 to 2006 (96)

The Commission examined the regional aid map proposed by Belgium for the period 2000 to 2006 inthe light of Article 87(3)(c) of the EC Treaty and the guidelines on national regional aid, (97) and decidedon 20 July to initiate the Article 88(2) procedure.

The Commission had doubts about the methodology applied by Belgium to select the areas for inclusionin the regional aid map (choice of basic geographical units, the indicators used to measure regionaldisparities and the way in which disparities were measured). Furthermore, the proposed regional aid mapcovered 35.2% of the Belgian population, which was higher than the population ceiling of 30.9% laiddown in the Commission decision regarding the national ceilings for regional aid coverage under Article87(3)(a) and (c) of the EC Treaty for the period 2000 to 2006. (98) Lastly, the proposal notified byBelgium was not complete (list of areas proposed and aid intensity ceilings applicable in each area).

Denmark


The Commission examined the regional aid map proposed by Denmark for the period 2000 to 2006 inthe light of Article 87(3)(c) of the EC Treaty and the guidelines on national regional aid, and decided on26 October to approve it.

The map covers 17.1% of the Danish population, which is in line with the population ceiling forDenmark, as established by Commission decision. (100) The basic geographical unit used by Denmark todetermine Article 87(3)(c) regions is the kommunegruppe (groups of municipalities forming travel-to-work areas). Each of the ‘kommunegrupper’ included in the map was selected on the basis of amethodology that is entirely in line with the guidelines. Furthermore, 14 small islands are included inthe map on the basis of paragraph 3.10.5 of the guidelines, (101) which provides that regions eligible foraid under the Structural Funds may be included in the regional aid map. Each of these islands is includedin the Danish Objective 2 map for 2000 to 2006.

The aid intensity ceiling that will apply in most of the Danish Article 87(3)(c) regions is limited to 10%net grant equivalent (NGE). A higher regional aid intensity ceiling of 20% NGE is proposed for two


STATE AID 221

(96) Case C 58/99 (ex N 289/99) (OJ C 351, 4.12.1999).(97) OJ C 74, 10.3.1998.(98) OJ C 16, 21.1.1999.(99) Case N 229/99.(100) OJ C 16, 21.1.1999.(101) OJ C 74, 10.3.1998.

counties only. The application of the maximum aid ceiling in these cases is justified because, firstly, thetwo counties consist of several islands, which by definition face particularly difficult developmentchallenges owing to accessibility problems, and secondly, the two counties concerned have a combinedpopulation of only 3.2% of the national total.

Germany


The Commission examined the regional aid map proposed by Germany for the period 2000 to 2006 in thelight of Article 87(3)(a) and (c) of the EC Treaty and the guidelines on national regional aid, and decidedon 7 July not to raise any objections to the part of the map concerning the Article 87(3)(a) regions but toinitiate the Article 88(2) procedure in respect of the regions proposed for inclusion under Article 87(3)(c)of the EC Treaty.

The Commission considered the notified regions and the associated aid intensities to be compatible withthe common market as regards the five new Länder of Brandenburg, Saxony, Saxony-Anhalt, Thuringiaand Mecklenburg-Western Pomerania. The Commission expressed doubts about the regions in westernGermany and the city of Berlin proposed for assistance under Article 87(3)(c) of the EC Treaty. Its doubtsrelated to the methodology used by Germany to select the regions and to the municipalities which werenot part of labour market regions (these being the geographical areas chosen by Germany to define theassisted areas), but which were nevertheless proposed to the Commission. Furthermore, the proposedpopulation ceiling of 23.4% was higher than the ceiling of 17.6% fixed by the Commission in its decisionregarding the national ceilings for regional aid coverage under Article 87(3)(a) and (c) of the EC Treatyfor the period 2000 to 2006. (103) Some regional aid intensities and the modulation principle did notrespect the principles set out in the guidelines. Lastly, the transparency of the cumulation rules neededto be improved.

Greece


The Commission examined the regional aid map proposed by Greece for the period 2000 to 2006 in thelight of Article 87(3)(a) and (c) of the EC Treaty and the guidelines on national regional aid, and decidedon 22 December to approve it. All NUTS level II regions of Greece have a per capita gross domesticproduct (measured in purchasing power standards) of less than 75% of the Community average. Theentire territory of Greece therefore meets the criteria for eligibility under Article 87(3)(a) of the ECTreaty. Greece is divided into four categories of assisted area with a view to varying aid intensity ceilingsbetween the different regions. The aid intensity ceilings comply with the maximum ceilings specified inthe regional guidelines in all cases.



(102) Case C 47/99 (ex N 195/99) (OJ C 340, 27.11.1999).(103) OJ C 16, 21.1.1999.(104) Case N 469/99.

Spain

a) Regional aid to Rockwool Peninsular SA (105)

On 21 April the Commission took its first decision (not to raise objections) under the multisectoralframework on regional aid for large investment projects. (106) Under this framework, a “bonus” may beapplied in order to assist the financing of investments which create direct and indirect jobs. Theframework also stipulates that the amount of aid should be reduced where the investment creates anincrease in capacity in a sector in decline or overcapacity, or in cases where, before the assistedinvestment is carried out, the recipient firm holds a market share of at least 40%. The framework requiresthe Commission either to approve the aid within two months of notification or, where doubts exist, toopen an investigation and take a final decision after a maximum of four months.

This case concerned investment of EUR 64.7 million by Rockwool Peninsular SA in a new facility for theproduction of mineral wool in Caparosso (Navarre), an area assisted under Article 87(3)(c) of the EC Treaty.Regional aid was planned to reach an intensity of 13.2% NGE (EUR 15.3 million), the applicable regionalceiling being 15%. The number of direct and indirect jobs to be created were respectively 107 and 76 (in anassisted area), with the aid per job created or safeguarded standing at EUR 143 000; the ratio of new capitalto jobs was EUR 605 000. The three cumulative notification conditions were thus met, namely:

— the total project cost was above EUR 50 million;

— the aid intensity was above 50% of the regional ceiling;

— the aid per job created or safeguarded was above EUR 40 000.

The Commission concluded after examining the project that the capital-labour factor (I) was 0.8 and theregional impact indicator (M) was 1.1. The recipient’s market share was below 40%, so this factor hadno influence. As regards the competition factor (T), in the absence of sufficient data on capacityutilisation, the Commission has to consider whether the investment takes place in a declining market.For this purpose, it has to compare the trend in apparent consumption of the product in question withthe growth rate of the EEA manufacturing industry as a whole. If this trend is significantly (more than10%) below the annual average of EEA manufacturing industry as a whole, the market is deemed to bein decline. The annual growth rate for mineral wool was 3.475% over the period 1992-97, whereas theannual growth rate for the whole of the manufacturing industry over the same period was 3.235%. Themineral wool market could not therefore be deemed to be in decline; thus the competition factor (T) tobe applied was 1. The authorised maximum intensity (R x T x I x M) (107) had to be calculated as follows:15% x 1 x 0.8 x 1.1 = 13.2% NGE. Consequently the Commission decided not to raise any objections.

b) Daewoo Electronics Manufacturing España SA (Demesa) (108)

On 24 February the Commission decided to close with a partly negative final decision proceedingsinitiated under Article 88(2) of the EC Treaty in respect of regional aid to Demesa in the form ofinvestment grants and tax-relief measures exceeding the ceiling allowed for regional aid in the Basque


STATE AID 223

(105) Case N 94/99 (OJ C 288, 9.10.1999).(106) OJ C 107, 7.4.1998.(107) R = regional ceiling; T = competition factor; I = capital-labour factor; M = regional impact factor.(108) Case C 76/97 (ex NN 115/97) (OJ L 292, 13.11.1999).

Country. The tax concessions granted to Demesa rank as state aid in view of their selective nature, suchselectivity being due to the discretionary powers enjoyed by the Provincial Government in granting taxcredits.

Given the difficult situation on the refrigerators market on which Demesa operates, the Commissioncame to the conclusion that only the investment aid corresponding to 20% of the eligible costs andgranted under the Ekimen regional aid scheme was compatible with the common market. The other aidmeasures, i.e. the amount corresponding to the 5 percentage points by which the maximum permissiblegrant under the Ekimen aid scheme of 20% of eligible costs was exceeded, the grant to Demesa by theÁlava Provincial Government of a tax credit corresponding to 45% of the cost of the investment, andthe substantial reduction in the tax base normally applicable in Álava for four years following that inwhich Demesa began to make a profit, were incompatible.

c) Ramondín Cápsulas SA et Ramondín SA (109)

In concluding proceedings initiated in March, the Commission decided on 22 December that thereduction in the tax base together with that part of the tax credit made available in 1997 which exceededthe regional aid ceiling approved for the Basque Country constituted state aid incompatible with thecommon market. However, it approved the aid which came within the applicable regional aid ceiling.

Ramondín SA, which operates on the world market for wine bottle capsules, relocated from Logroño(Rioja) to Laguardia (in the Basque province of Álava), a distance of 5 km. The firm’s decision wasthought to have been motivated by the tax concessions and investment aid available in Álava. It receiveda tax credit of unlimited duration, equivalent to 45% of a EUR 23.2 million investment in Álava.Furthermore, a new subsidiary, Ramondín Cápsulas SA, was set up. It was intended that this companyshould benefit from reductions in its tax base of 99%, 75%, 50% and 25% respectively for fourconsecutive years running from the first year in which the basis of assessment was positive.

For the same reasons as in the Demesa case (point b), the Commission found in particular that the taxcredit and the reduction in the tax base had to be classed as state aid in view of their selective nature.

As regards the tax credit granted to Ramondín SA, the Commission found that it could be likened toinvestment aid. It therefore concluded that the part of the tax credit which, while complying with therules on the combination of aid, did not exceed the applicable regional aid ceiling of 25% NGE couldbe considered compatible with the common market.

d) Tax aid in the Provinces of Álava, Guipúzcoa and Vizcaya (Basque Country) and the AutonomousCommunity of Navarre (110)

On 14 July the Commission decided to initiate proceedings under Article 88(2) of the EC Treaty inrespect of several tax aid schemes, which took the form in the Basque Provinces of Álava, Guipúzcoaand Vizcaya of a 45% tax credit and, for newly established companies, a reduction in the taxable amount,and in the Autonomous Community of Navarre of tax relief of 50%. The aid appeared to be operatingaid not eligible for exemption under Article 87(2) or (3) of the EC Treaty.



(109) Case C 22/99 (ex NN 117/98) (not yet published in the Official Journal).(110) Cases C 48 to 54/99 (ex NN 129/98, NN 29 to 33/99 and NN 60/99) (published in part in OJ C 340, 27.11.1999

and OJ C 351, 4.12.1999).

Ireland

a) Regional aid map 2000 to 2006 (111)

The Commission examined the regional aid map proposed by Ireland for the period 2000 to 2006 in thelight of Article 87(3)(a) and (c) of the EC Treaty and the guidelines on national regional aid, and decidedon 26 October to approve it. Until 31 December, the whole of Ireland qualified for regional aid underArticle 87(3)(a). As a result of the economic growth enjoyed by Ireland in recent years, this picture haschanged for the better. While all of Ireland remains eligible for assistance under either Article 87(3)(a)or (c), the aid intensities should be significantly reduced.

The NUTS II region “Border, Midlands, West” has a GDP/capita of 72 and thus qualifies for assistanceunder Article 87(3)(a). The aid intensity allowed in this region is 40% NGE. This is the maximum aidintensity allowed for this type of region. The Commission considered the aid level to be justified as thisregion borders on Northern Ireland, which has a considerably higher GDP but enjoys special status underthe guidelines and is allowed an aid intensity of 40% NGE. The remaining parts of Ireland qualify underthe Article 87(3)(c) exemption. The aid intensities for these areas are to be reduced in stages over thenext few years to 18% net or 20% net as from 1 January 2000.

b) Tax incentives for owners of buildings in the Customs House Docks Area (CHDA) (112)

On 20 January the Commission decided not to raise any objection to tax relief in the form of accelerated de-preciation for owners of new and newly refurbished buildings in the Customs House Docks Area in Dublin.This aid was approved as regional investment aid in view of the 87(3)(a) status of the region, the fact that theaid financed initial investment and also that market forces alone did not suffice for the development of thisderelict area. The long-term nature of the leasing contracts accepted by incoming companies allowed theCommission to conclude that the regional development achieved through this measure was sustainable.

Furthermore, on 22 December the Commission closed the formal investigation procedure initiated inrespect of the scheme offering state aid to non-residential building tenants in the CHDA. (113) Theprocedure had been initiated in respect of tax incentives from which tenants of buildings in the CustomsHouse Docks Area had been benefiting since 1993. The Commission was concerned about the lastingeffect of the ensuing tax advantage, which was planned to extend far beyond 31 December 1999, i.e.beyond the expiry of the current, more favourable map of assisted areas, and potentially up to 2010. TheCommission’s concern was all the greater as the case involved both tax and operating aid. Since the Irishauthorities subsequently decided that the tax relief measures under the scheme would not be grantedbeyond 2003, the Commission concluded that it was compatible with Article 87(3)(a) of the EC Treaty.

Italy

Aid for a marina development project (114)

On 8 December the Commission approved aid to Marina di Stabia SpAfor an investment project in the neigh-bourhood of Castellammare di Stabia (Gulf of Naples). The investment project consisted in building a sea


STATE AID 225

(111) Case N 523/99 (not yet published).(112) OJ C 99, 10.4.1999.(113) Case C 1/99 (ex NN 133/99) (not yet published).(114) Case N 582/99 (not yet published).

marina, a hotel, a dry dock and an area intended for service, commercial and leisure activities. The proposedaid consisted of investment aid with an intensity of 47.36% NGE, compared with an applicable regional ceil-ing of 49.94% NGE. The Commission applied the multisectoral framework on regional aid for large invest-ment projects, (115) with the result that the calculation basis was the regional maximum intensity authorisedfor SMEs under the regional aid scheme approved on the date of notification. SMEs with large projects suchas a marina development should fall under its provisions, given the potential impact of the proposed invest-ment. The Commission considered that the planned 47.36% NGE intensity was within the maximum allow-able aid intensity calculated on the basis of the multisectoral framework (49.94% NGE, equivalent to the re-gional ceiling for SMEs, which may not be exceeded under any circumstances).

Netherlands


The Commission examined the regional aid map proposed by the Netherlands for the period 2000 to2006 in the light of Article 87(3)(c) of the EC Treaty and the guidelines on national regional aid, anddecided on 28 July to initiate proceedings under Article 88(2).

The Dutch authorities proposed to use NUTS V areas (municipalities) as the homogeneous geographicalunit for drawing up the map, without specific justification. This was not in conformity with the above-mentioned guidelines. Moreover, the Commission doubted whether three of the four groups ofcontiguous NUTS level V areas included in the Dutch proposal for the list of (c) regions formed compactzones as required by the guidelines. The Dutch authorities proposed to include 71 municipalities in thelist of (c) regions. For one of the notified NUTS V areas, there appeared to be no objective reason whyit should be selected as an assisted area. Furthermore, the regional aid map submitted did not contain aprecise proposal regarding the aid intensity ceilings applicable in each of the (c) regions. Lastly, theDutch authorities proposed to apply a maximum aid intensity ceiling higher than 10% NGE in an areawhich did not fulfil the criteria which had to be met in order to benefit from such a high aid intensity.

Portugal

a) Regional aid map for the period 2000 to 2006 (117)

Having examined the draft regional aid map produced by the Portuguese authorities for the period 2000 to2006 in the light of Article 87(3)(a) and (c) of the EC Treaty and the guidelines on national regional aid, theCommission decided on 8 December not to raise any objections to the part relating to the regions eligible forassistance under Article 87(3)(a) of the EC Treaty. However, it initiated proceedings under Article 88(2) ofthe EC Treaty in respect of the part of the map relating to regions eligible under Article 87(3)(c).

All of Portugal will remain eligible under the regional exemptions until 2006. However, some regionspreviously assisted under Article 87(3)(a) will in the period 2000 to 2006 be eligible underArticle 87(3)(c) only. As regards the regions eligible under Article 87(3)(a), the Commission found thatthe Portuguese notification was in line with the guidelines, given in particular that the proposedmaximum intensities would vary within certain NUTS II regions according to the socio-economicsituation in the various NUTS III regions of which they consisted.



(115) OJ C 107, 7.4.1998.(116) Case C 66/99 (ex N 245/99) (OJ C 326, 13.11.1999).(117) Case C 78/99 (ex N 305/99) (OJ C 62, 4.3.2000).

However, the part of the proposal relating to the NUTS II region «Lisboa e Vale do Tejo», eligible underArticle 87(3)(c) as a former (a) region, could not, at that stage, be considered compatible with theguidelines. Portugal intended the entire region, which held 33.4% of the Portuguese population, tobenefit from the four-year transition period allowed under the guidelines for the progressive reductionof the aid intensities then applicable. However, under the transitional arrangements set out in theguidelines, the coverage was limited to only 10.2% of the Portuguese population.

b) Tax aid for investment (118)

On 8 September the Commission approved a tax aid scheme for investment. The scheme is to run untilthe end of 2010 and aid will be provided in the form of tax exemptions (income tax credit) granted fora period of no longer than ten years to investment projects of at least EUR 5 million. The aid willessentially be for productive investment and is subject to the continuation of the investment and, whereappropriate, the jobs created for as long as the tax exemption agreement applies and in any event for atleast five years.

The Commission considered that the aid was granted as an incentive to firms to undertake specificinvestment projects, that the aid intensity was limited compared with the cost of carrying out the projectsand that the aid scheme concerned had transparent rules enabling the advantage conferred on each firmto be quantified. The aid was therefore no different from a subsidy and qualified for application of theregional exemptions in Article 87(3)(a) and (c) of the EC Treaty in accordance with paragraph 31 of theCommission notice on the application of the state aid rules to measures relating to direct businesstaxation. (119)

Finland


Having examined the draft regional aid map submitted by the Finnish authorities for the period 2000 to2006 in the light of Article 87(3)(c) of the EC Treaty and the guidelines on regional aid, the Commissiondecided on 26 October not to raise any objections. The proportion of the Finnish population living inassisted regions would rise slightly, from its previous level of 41.7% to 42.2% on 1 January 2000. Aidintensities were falling considerably. The region of East Finland would benefit from the highestmaximum intensities (24%). With a GDP per capita below 75% of the Community average, this regioncontinues to rank as one of the least developed regions of the Union. For the other regions, Finland wouldlimit aid to large firms to 8%, 10% or 12% depending on the circumstances.

United Kingdom

English Partnerships/Partnership Investment Programme (EP/PIP) (121)

On 22 December the Commission decided to close the Article 88(2) proceedings which it had initiatedwith regard to English Partnership’s financing of site and building development projects by adopting apartly positive decision. In 1995 the UK authorities had notified to the Commission the programme of


STATE AID 227

(118) Case N 97/99 (OJ C 375, 24.12.1999).(119) OJ C 384, 10.12.1998.(120) Case N 238/99 (OJ C 33, 5.2.2000).(121) Case C 39/99 (ex E 2/97) (not yet published).

assistance offered under the Single Regeneration Budget (SRB). (122) This notification had covered anumber of schemes, including the EP/PIP regional development scheme, relating to the public financingof regeneration projects in England. The Commission approved the SRB on the basis of Article 87(3)(c)of the EC Treaty. In its decision the Commission stated that a number of measures included in the SRBwere not caught by Article 87(1) of the EC Treaty. Urban regeneration (EP activities) was mentioned asone of those measures. Following the approval of the SRB, the Commission’s attention was drawn tocertain cases where the beneficiaries of EP’s assistance were also enterprises competing in intra-Community trade. In July 1998 the Commission proposed appropriate measures (123) to align any stateaid involved in the operation of the scheme with the state aid rules.

The Article 88(2) proceedings were initiated in May, (124) following the failure by the UK authorities toaccept the proposed appropriate measures in full. In its final decision, the Commission noted as regardsbespoke development (the end user is known) that the UK authorities had agreed to subject the schemeto the regional and other relevant state aid rules. The Commission thus concluded that aid for bespokedevelopment under the EP/PIP scheme was compatible with the common market. As regards speculativedevelopment (end user not known) the Commission decided that the scheme, as modified by the partialacceptance only of the appropriate measures, was compatible with the common market provided that itwas also brought under the relevant state aid rules. Furthermore, the UK authorities had to notify on thebasis of Article 88(3) all cases where one of the actors involved (end user, land owner, developer) wasactive in a sector subject to the special state aid rules. The decision terminated the implementation of theEP/PIP scheme as originally approved in case N 31/95 (Single Regeneration Budget).

2. Aid to specific industries

2.1. Steel

Germany

a) Neue Maxhütte Stahlwerke GmbH (125)

On 21 April the Commission closed with a negative decision the proceedings it had initiated against theGerman Government under Article 88 of the ECSC Treaty for its failure to fulfil its obligations. In breachof Article 86 of the ECSC Treaty, the German Government failed to fulfil its obligation to take allnecessary measures to ensure the recovery of EUR 37.8 million in aid unlawfully received by the steelundertaking Neue Maxhütte Stahlwerke GmbH, as it had been ordered to do by the Commission’s earliernegative decisions. The firm was subsequently declared insolvent on 31 December 1998, makingrecovery of the sums due more uncertain. None the less, the Commission decided to take a final decisionestablishing formally that the German Government had failed to fulfil its obligations in this regard. TheCommission considered that this decision was necessary to guarantee the legal basis of any claims fordamage suffered by the other Member States, the Community or other interested parties.



(122) Case N 31/95.(123) Case E 2/97.(124) OJ C 245, 28.8.1999.(125) Case C 78/98 (ex C 55/94 and C 41/95) (OJ L 230, 31.8.1999).

b) Gröditzer Stahlwerke (126)

On 8 July the Commission decided to close with a negative decision the Article 88(2) proceedingsinitiated in respect of aid granted over the period 1992-99. Before taking its final decision, theCommission learnt that Gröditzer Stahlwerke assets had been transferred to other undertakingscontrolled by the Bundesanstalt für vereinigungsbedingte Songeraufgaben (BvS). The object or effect ofthis may have been to remove these assets from the reach of the Commission decision and to continuethe non-viable parts of the business. This would be in breach of the duty of Member States to ensure thatthe obligations imposed by a Commission decision are complied with. The Commission thereforeordered that, instead of being confined to the initial aid recipient, the recovery procedure be extended toinclude any undertaking continuing the business of the initial undertaking using the transferredproduction plant, in so far as there were aspects of the transfer on either side (what was transferred, price,date, identity of the various shareholders, profitability of the transfer) which indicated that the businesswas in fact being continued.

2.2. Shipbuilding

Germany

a) German development aid to Indonesia (127)

On 3 March the Commission took a negative final decision against development aid to Indonesia. In1994 the Commission had approved development aid under Article 4(7) of Directive 90/684/EEC on aidto shipbuilding (128) in connection with sales to an Indonesian company of dredgers built by VolkswerftStralsund. The Commission’s letter of approval to Germany stated that the vessels were to be used inIndonesia only. Following a complaint, Germany confirmed that two dredgers had been used in Malaysiaand Taiwan. Germany argued that their use outside Indonesia was due to delays in the implementationof the projects for which the vessels were initially required. However, the Commission decided that itwould not have approved the aid if it had known, at the time of its initial decision, that the vessels werenot for use exclusively in Indonesia and that they were to be used to a significant extent on a commercialbasis in Malaysia and Taiwan. In particular, the Commission considered that the development content ofthe project could no longer be verified. Consequently, the Commission required Germany to recover theaid.

b) Bremer Vulkan Marineschiffbau GmbH (129)

On 17 March the Commission decided to close with a positive decision the Article 88(2) proceedingsinitiated in respect of investment aid related to the upgrading of a dock purchased from the formerBremer Vulkan yard. Additional financial measures taken by the Land of Bremen in connection with thetakeover of Bremer Vulkan Marineschiffbau GmbH by Lürssen Maritime Beteiligung GmbH & Co. KGwere considered to be for naval shipbuilding and thereby to form part of the protection of essentialGerman security interests within the meaning of Article 296 of the EC Treaty.


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(126) Case C 43/97 (ex NN 46/94 and N 361/97) (OJ L 292, 13.11.1999).(127) Case C 22/97 (OJ L 46/99, 3.5.1999).(128) OJ L 380, 31.12.1999.(129) Case C 9/98 (ex NN 176/97) (OJ L 301, 24.11.1999).

c) Kvaerner Warnow Werft GmbH (KWW) (130)

On 8 July the Commission took a negative final decision as regards KWW, a shipyard situated inMecklenburg-Western Pomerania, because it exceeded its capacity ceiling in 1998.

Between 1993 and 1995 the Commission had approved aid totalling EUR 638 million (DEM 1 247 million)for the restructuring of KWW. The aid was approved in accordance with Directives 90/684/EEC and92/68/EEC on aid to shipbuilding, which required the genuine and irreversible reduction of shipbuilding ca-pacity in eastern Germany. The maximum capacity for KWW was set at 85 000 cgt over a period of 10 years,that is until the end of 2005, to offset the distortive effect of the aid on competition in the sector. While mon-itoring the decisions the Commission found that the yard had exceeded its production in 1998 and possiblyalso in 1999.

The Commission decided that KWW had to pay back DEM 83 million of the restructuring aid on accountof its having exceeded the annual capacity limitation in 1998. The Commission also decided to initiateArticle 88(2) proceedings with respect to the exceeding of the annual capacity limitation in 1997.

Spain

State aid to publicly owned merchant shipyards (131)

On 26 October the Commission decided that state aid of EUR 110.9 million paid in 1998 to the publiclyowned merchant shipyards in Spain was not compatible with the conditions laid down in a 1997 Commissiondecision approving a package of restructuring aid to the yards and should be recovered with interest.

The package had included aid in the form of special tax credits up to a maximum amount ofEUR 349 million during the period 1995 to 1999 to compensate the yards for not being able to benefitfrom tax credits under Spain’s general tax consolidation system. However, the yards were subsequentlyintegrated into the state-owned holding company Sociedad Estatal de Participaciones, which was able toobtain tax credits under the general tax consolidation system by offsetting losses in one part of the groupagainst profits elsewhere. These changed circumstances resulted in the yards receiving in 1998 a generaltax credit corresponding to their entitlement to such credits on the basis of their 1997 results.Nevertheless, despite this, the yards also received in July 1998 a special tax credit of EUR 110.9 million.The Commission concluded that this payment, although it did not result in the maximum amount ofspecial tax credits approved in 1997 being exceeded, was not justified and was therefore incompatiblewith the common market.

France

a) Development aid for French Polynesia (132)

On 30 March the Commission decided to close with a positive decision the Article 88(2) proceedings ithad opened in July 1998 in respect of development aid in the form of tax relief to investors in two cruisevessels constructed by Chantiers de l’Atlantique and intended for use in French Polynesia.



(130) Case C 66/98 (ex NN 113/98) (OJ L 274, 23.10.1999).(131) Case C 3/99 (ex NN 145/98) (OJ L 37, 12.2.2000).(132) Case C 37/98 (ex N 124/98) (OJ L 29, 13.11.1999).

The Commission had had doubts because it could not verify to what extent the aid would facilitateeconomic development in French Polynesia and whether it was necessary. Furthermore, the companywhich was to operate the vessels was not registered in French Polynesia. This was in contradiction ofArticle 4(7) of the Shipbuilding Directive, in which reference is made to certain OECD criteria requiringthat the owner of the vessels be resident in the beneficiary country. In closing the proceedings, theCommission decided that its initial doubts could be allayed on condition that the operating company beregistered in French Polynesia and the vessels be deployed exclusively in French Polynesia for at least5 years.

b) Stardust Marine (France) (133)

On 8 September the Commission declared incompatible aid of a nominal value of some EUR 76 millionto Stardust Marine.

In 1997 the Commission had initiated proceedings under Article 88(2) of the EC Treaty in respect ofpublic financial assistance measures to the pleasureboat firm Stardust Marine and the circumstances ofits privatisation, which resulted in its transfer to the buyer FG Marine. The assistance, in the form ofloans and bank guarantees granted by the Crédit Lyonnais group between 1992 and 1995, was followedby non-repayable financing in the form of a recapitalisation by the Crédit Lyonnais group at the end of1994 and subsequently in the form of an advance on current account and recapitalisations by way of adebt write-off by the shareholder which succeeded the group, Consortium de Réalisations, following thetransfer of Stardust Marine to the hive-off vehicle of Crédit Lyonnais in 1995. The unlawful aidamounted to FRF 496 million.

This was not restructuring aid but aid which, in the context in which it was originally granted, wasdesigned to permit and support the rapid growth of the firm. Since, in addition, Stardust became one ofEurope’s leading pleasureboat businesses thanks to the aid and since a significant proportion of itscustomers are located in Europe but outside France, the aid affects intra-Community trade. TheCommission concluded that the aid had a distortive effect which was not compatible with the EU rulesand that it should be repaid by Stardust Marine.

2.3. Motor vehicles

Spain

Mercedes Vitoria (134)

On 29 September the Commission authorised regional aid which Spain was planning to grant for investmentin producing a new commercial vehicle at the Daimler-Chrysler plant in Vitoria (Basque Country). On thebasis of a very thorough location study completed by the investor, the Commission first established that theformer had evaluated several locations and had in the end faced a choice between two real alternatives for theproject, Vitoria and the existing plant at Jelcz (Poland). The Commission then did a cost/benefit analysis inorder to establish the level of regional aid that could be authorised. It looked at the costs of carrying out theproject at Vitoria by comparison with a similar project at Jelcz which Daimler-Chrysler had studied. The ef-fects of a slow-down in activity or the closure of the plant at Vitoria as a result of the project’s being locatedat Jelcz were included in the analysis, in particular the costs of laying off staff at Vitoria, calculated accord-


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(133) Case C 73/97 (ex NN 146/97), not yet published.(134) Case N 697/98 (OJ C 351, 4.12.1999).

ing to both the Spanish labour law rules in force and usual practice as regards negotiations with trade unionorganisations. The proceeds from selling off the plant were also included in the cost/benefit analysis. Lastly,the Commission established that the planned regional aid, with an intensity of 6.7%, was in line with theframework for state aid in the motor vehicle sector. (135)

Italy

Fiat Mirafiori Meccanica (136)

On 22 December the Commission prohibited regional aid with an intensity of 4.6% for an investmentproject by Fiat. It found that the aid was not necessary to the implementation of the project at MirafioriMeccanica.

At the end of 1997 Italy had notified six cases of regional aid under Law 488/92 for Fiat Auto, including Mi-rafiori Meccanica. After an initial analysis of the cases, the information provided by Italy was not sufficientto demonstrate that the planned regional aid was in line with the principles of the motor vehicle framework.On 3 February the Commission therefore initiated proceedings under Article 88(2) of the EC Treaty (137) inrespect of the six aid projects. On 26 May the Commission decided to extend proceedings in three cases (in-cluding Mirafiori Meccanica), (138) mainly in connection with the necessity of the planned aid.

The motor vehicle framework lays down that, to be compatible with the common market, regional aidmust be necessary to the investment project being carried out in the assisted area concerned. However,the location study which led Fiat to choose Mirafiori as the site for its investment project was conductedin 1993-94. Mirafiori did not belong to an assisted area until March 1995, when it was classed as beingpart of an area eligible for assistance under Article 87(3)(c) of the EC Treaty. As a result, Fiat could nothave included receipt of regional aid in the financing of its project at Mirafiori. Furthermore, the mobilityof the project was not sufficiently demonstrated by the Italian authorities. Mirafiori was the only site atwhich Fiat planned to locate its project.

The aid for Fiat Mirafiori Meccanica notified by Italy was therefore not necessary to achieve theobjectives set out in Article 87(3)(c) of the EC Treaty, in this case, to facilitate the development of certaineconomic areas. The Commission accordingly decided that the aid was incompatible with the commonmarket and could not be granted.

United Kingdom

Rover Longbridge (139)

On 22 December the Commission decided to initiate proceedings under Article 88(2) of the EC Treaty in re-spect of regional aid the United Kingdom authorities were planning to grant to BMW group’s investment inRover’s Longbridge plant in Birmingham. The total cost of the proposed investment was UKL702 million, ofwhich UKL 141 million would be financed by regional aid. The decision was based on doubts about the mo-bility of the project and about some elements of the cost/benefit analysis required for the evaluation of the aid.



(135) OJ C 279, 15.9.1997.(136) Case C 9/99, not yet published.(137) Case C 9/99 (ex N 838/ 97) (OJ C 120, 1.5.1999).(138) OJ C 288, 9.10.1999.(139) Case C 79/99 (ex N 481/99).

The United Kingdom also notified a UKL 38 million training package, of which UKL 11 million wouldbe covered by aid. This aid was approved by the Commission since it complied with the Communityframework on training aid.

2.4. Synthetic fibres

Germany

Saxonylon Textil GmbH (140)

On 20 July the Commission decided to take a negative final decision concerning aid that the German author-ities were proposing to grant to Saxonylon Textil GmbH, a subsidiary of the Singaporean Tolaram Group.The proposed aid comprised DEM 42.3 million to support investment in Meerane, Saxony (Germany). Theproject would have resulted in a significant capacity increase in polyamide filament yarn, a product for whichthere is no structural shortage of supply. Moreover, the Commission noted that the proposed aid intensity was35% (gross), which is the applicable regional aid ceiling for larger firms in the Land of Saxony and equal todouble the maximum allowed under the code on aid to the synthetic fibres industry (141) for larger firms. Forthese reasons, the Commission found that the proposed aid could not be approved as it did not meet the re-quirements of the code and was therefore incompatible with the common market.

Portugal

Cerfil SA (142)

On 4 May the Commission decided to raise no objections to the non-notified aid granted by thePortuguese authorities to the synthetic fibres producer Cerfil SA, located in an Article 87(3)(a) region.The aid was awarded largely in support of the production of synthetic fibres falling within the scope ofthe code. The intensity of the proposed aid and other aspects conformed with the IMIT (143) specificprogramme authorised by the Commission in 1995 within the framework of the PEDIP II (144)programme. The Commission considered that the reduction of 16.8% in the real production capacityresulting from the investment project was significant within the meaning of the code and consequentlydecided not to raise any objections.

2.5. Financial sector

Germany

Westdeutsche Landesbank Girozentrale (145)

On 8 July the Commission decided to close with a negative decision the Article 88(2) proceedings it hadinitiated in respect of aid granted to Westdeutsche Landesbank Girozentrale («WestLB») by way of acapital injection by the Land of North Rhine-Westphalia.


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(140) Case C 63/98 (ex N 362/98) (OJ L 268, 16.10.1999).(141) OJ C 94, 30.3.1996.(142) Case NN 34/99 (ex N 658/98) (OJ C 298, 16.10.1999).(143) Iniciativa para a Modernizaçao da Indústria Têxtil.(144) Programa Específico de Desenvolvimento da Indústria em Portugal.(145) Case C 64/97 (not yet published).

In 1994 a complaint had been lodged with the Commission about this capital injection. After preliminaryenquiries it initiated formal investigation proceedings in October 1997. In the course of theseproceedings the Commission established that capital injected by the Land of North Rhine-Westphaliahad been provided on favourable terms. The Wohnungsbauförderungsanstalt («Wfa»), which was theproperty of the Land and devoted itself exclusively to housing promotion, was transferred to WestLB atthe end of 1991 in order to allow the bank to comply with the stricter solvency criteria entering into forcein 1993. While Wfa continued to be devoted to the promotion of housing, the transaction allowedWestLB to use, for banking supervision purposes, part of Wfa’s capital as backing for its own business.The consideration to be paid was decided nearly two years after the transfer and amounted to only 0.6%annually of the usable portion of the capital.

The Commission came to the conclusion that the consideration of 0.6% was not what a provider ofcapital operating under market conditions would have sought for such capital. The Land chose to foregothe appropriate consideration. This constituted state aid within the meaning of the Treaty. The aidelement involved amounted to EUR 808 million for the period 1992 to 1998. Since this aid wasincompatible with the common market it had to be recovered from WestLB, with interest running fromthe time of the transfer.

France

Crédit Foncier de France (146)

On 23 June the Commission decided not to raise any objections to restructuring aid granted in 1996 toCrédit Foncier de France (CFF) and totalling some FRF 16 billion. State intervention became necessarywhen legislative and economic changes occurred on the market for loans for building low-cost housing,causing at the beginning of the 1990s a major deterioration in this specialised bank’s liquidity.

The restructuring aid granted to CFF comprised (i) a government guarantee that all debt represented bysecurities would be honoured over the whole maturity range, and (ii) the Government’s undertaking thatevery necessary step would be taken to ensure that CFF could continue to carry on its activities inaccordance with the prudential rules in force; this took the form of an FRF 1.85 billion increase in thebank’s capital. The Commission declared this aid to be compatible with the common market given thatthe bank’s balance-sheet total had been reduced very significantly (by 25%) since the State’s interventionand on condition that CFF continue to restructure in accordance with the notified business plan. Itsviability having been restored, it was possible to privatise CFF in July.

2.6. Transport

Air transport

Aerelba — airport of the island of Elba

On 30 March the Commission decided that the grant awarded by the Tuscany region to Aerelba for the pur-pose of financing the modernisation of the airport of the island of Elba (Marina di Campo) did not constitutestate aid to the extent that it was intended for the carrying-out of an infrastructure project in the collective in-terest and that the infrastructure in question was open without discrimination to all Community carriers.



(146) Case C 30/96 (ex NN 44/96) (not yet published).

Alitalia

As part of the verification provided for in point 10 of Article 1 of its decision of 15 July 1997 on therecapitalisation of Alitalia, (147) the Commission found on 20 July that the conditions laid down by thatdecision could be deemed to be met. In its analysis the Commission took particular account of the freshcommitments entered into by the Italian authorities on 13 and 16 July concerning firstly the lack of anydiscrimination in favour of Alitalia, which entailed amending the terms of the agreement between Alitaliaand the Italian authorities, and secondly further restrictions on the capacity offered by the carrier on thedomestic Italian market in 1999 and 2000.

Iberia

Following notification by Spain of a proposal to increase Iberia’s capital by ESP 20 billion (EUR 120 mil-lion), the Commission examined Iberia’s results in detail in the light inter alia of the profitability criteriamentioned in the decision of 31 January 1996 (148) and of the airline’s future prospects. The operation is thefinal stage of the financial restructuring provided for in the recovery plan. It enables the public holding com-pany SEPI to place the airline in the best possible position with a view to its forthcoming privatisation. SEPIought, moreover, to recover the funds invested and earn a worthwhile return on them in the short term as partof the privatisation process. This being so, the Commission concluded, by decision of 26August, that the cap-ital increase amounted to the behaviour of a rational investor and accordingly did not constitute aid withinthe meaning of Article 87 of the EC Treaty.

Social aid to the inhabitants of Sicily

The Commission examined the system of air transport compensatory payments to inhabitants of thesmall islands off the coast of Sicily and to professional people having occasion to practise there. In thelight of the sectoral guidelines applicable, it decided on 3 September that the system constituted aidhaving a social character granted without discrimination and as such was compatible with the commonmarket within the meaning of Article 87(2)(a) of the EC Treaty.

Sea transport

“Taxe professionnelle” in ports — France

On 22 December the Commission decided to close the Article 88(2) proceedings initiated earlier in theyear with respect to a notified aid scheme concerning the French «taxe professionnelle». In order tofacilitate a transfer of ownership and management of existing cargo-handling equipment from the publicsector to private cargo-handling companies in 23 French ports, a reduction in the «taxe professionnelle»was envisaged. Further, a similar tax reduction was proposed for the acquisition of new, additionalequipment in the ports of Le Havre and Dunkirk to increase their capacity. In the decision, theCommission authorised aid to the private cargo-handling companies for the transfer and replacement ofexisting equipment, whereas the aid for the purchase of new, additional equipment in the ports of LeHavre and Dunkirk was not considered compatible with the common market.


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(147) OJ L 322, 25.11.1997.

Funiviaria Alto Tirreno SpA — Italy

In its decision of 22 December the Commission considered that aid granted to a company, FuniviariaAlto Tirreno SpA in the port of Savona, in its current form and extent was incompatible with the commonmarket, and proposed appropriate measures to Italy. The Italian Government had been granting aid underItalian Law No 1221 of 1952 to Funiviaria Alto Tirreno inter alia to cover operating losses deriving fromits cargo-handling activities in the port.

Rail transport

Environmental aid for the transport of goods by rail (Denmark)

On 21 April the Commission decided that the scheme of aid to offset the uncovered marginal externalcosts of road transport was compatible with the provisions of the Treaty. The maximum amount of theaid was 50% of the turnover generated by each rail transport operation. The aid scheme was envisagedin the context of the introduction of infrastructure charges payable by railway companies for using theDanish rail network. The Commission took a favourable decision on the basis of Article 77, which wasapplied directly: (i) the amount of the subsidy was well below the estimated amount of the costs not paidby road transport; (ii) the scheme applied without discrimination to any goods transport operator; and(iii) it did not affect the development of trade to an extent contrary to the common interest (exclusion oftransit with a view to ruling out any negative effects on sea transport).

Road transport

Transitional tax exemption for local transport (Netherlands)

The Commission decided on 10 November not to raise any objections to a transitional tax exemptionfrom corporation tax for transport undertakings for municipal companies operating public transport ineight Dutch cities. In view of the envisaged liberalisation of the Dutch local transport market and as atransitional measure to induce necessary restructuring measures within those companies the Commissionregarded the aid as compatible with Article 87(3)(c) of the EC Treaty.

Road aid scheme (Italy)

By two decisions adopted in May and December the Commission stated its position on Italian measuresto restructure the road sector and develop intermodality provided for by Law No 454/97 and itsimplementing measures. As regards combined transport, the Commission considered that the aid plannedby Italy was compatible with the common market inasmuch as it sought to promote operations whichwere economically viable in the medium term and which were unlikely to distort competition betweendifferent operators or terminals. In addition, the Commission confirmed its practice in this area byregarding investment aid up to 30% of eligible costs for the purchase of loading and reloading equipmentand of electronic and telematic programmes and equipment as likely to facilitate the development of thesector in accordance with Article 87(3)(c) of the EC Treaty. As regards road transport, the Commissionconsidered that allowances granted to owner-operators voluntarily ceasing their activity did notconstitute aid and authorised the measures aimed at encouraging the upgrading of the vehicle fleet inline with more stringent environmental standards together with the measures to support the training ofoperators. The Commission likewise authorised the measures designed to promote groupings of roadhaulage companies in view of the structural weakness of the sector, fragmented as it is into over 100 000mostly small and very small operators.



Combined transport

Combined transport (Austria)

The Commission decided on 8 July not to raise any objections to an Austrian state aid scheme whichallows investment aid for the construction of combined transport terminal infrastructure. TheCommission argued that such state aid has to be regarded as aid under Article 87(1) of the EC Treaty incases where operation of the terminal has not been awarded by public tender and constitutes an economicactivity. It decided that such aid can be allowed under Article 73 of the Treaty if the granting of the aid(1) is necessary for the construction of the terminal; (2) does not distort competition in the market forterminals in a way contrary to the common interest, and (3) access to the aid scheme is provided in atransparent and non-discriminatory manner.

Combined transport (Belgium)

In its decision of 26 October the Commission held that the granting of aid for terminal construction doesnot in every case affect trade between Member States within the meaning of Article 87(1) of theEC Treaty. An effect on trade is present if the aid would distort competition between the subsidisedterminal and a terminal in another Member State. But even if there is no distortion of competitionbetween terminals, there may be an effect on trade between Member States if the terminal operator isactive in this sector in several Member States or such activity is reasonably foreseeable.

2.7. Agriculture

Belgium

a) Aid for operators hit by the dioxin crisis

Concerning state aid for “exceptional occurrences” under Article 87(2)(b) of the EC Treaty, theCommission authorised the Belgian Government to implement a number of aid measures to assistproducers and firms hit by the crisis sparked by the dioxin contamination of animal feeds. TheCommission took the view that, while chemical contamination of foodstuffs could not be regarded as anexceptional occurrence within the meaning of Article 87(2)(b), the Belgian authorities’ disclosure of suchcontamination and the emergency measures subsequently adopted prevented operators from placing theirproducts on the market and suddenly faced them with a crisis the nature and effects of which were quiteunusual and did not bear any relation to normal market conditions. The Commission neverthelessconsidered that the concept of exceptional occurrences could apply only to producers adversely affectedby a situation for which they could in no way be held responsible.

The national aid to farmers initially took the form of compensation payments and recoverable advances,granted to poultry producers and to pigmeat, beef and egg producers respectively.(149) The Commission sub-sequently allowed the recoverable advances to be converted into definitive compensation payments, fixed ateither 80% of the production cost of the livestock or the market price, whichever was lower. (150) The aim of


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(148) OJ L 104, 27.4.1996.(149) Cases NN 87/99, NN 88/99, NN 89/99, N 380/99 and N 386/99, Commission decision of 20 July 1999 (OJ C

253, 4.9.1999).(150) Cases N 510/99, N 511/99, N 512/99 and N 513/99, Commission decision of 29 September 1999 (OJ C 326,

13.11.1999).

the measures taken by the Belgian Government was to provide compensation or relief for producers follow-ing the slaughter and destruction of livestock and eggs either because they were contaminated with dioxin orbecause their optimum marketing period had been exceeded and they had to be destroyed on animal welfareand public health grounds. The latter measures related in particular to holdings whose production had beenseized as a precautionary measure and could not therefore be placed on the market.

The aid to firms owning products of animal origin also took the form of recoverable advances and wasaimed at preventing bankruptcy among operators affected by the destruction of contaminated productsor products whose expiry date had passed following the precautionary measures taken by the BelgianGovernment. (151) In the same context, the Commission authorised another measure designed tocompensate owners for the compulsory destruction of fresh pigmeat, beef and poultrymeat and pigmeat,beef and poultrymeat products possibly contaminated with dioxin. (152) These products had been seizedas a precautionary measure and in some cases destroyed because they could not be released forconsumption and all possible risks of contamination could not be ruled out. In this case the measure,which was intended to protect the health of consumers, was deemed compatible with the common marketunder Article 87(3)(c) as aid to facilitate the development of the sectors concerned. The Commissionalso allowed the Belgian State to bear the costs of testing and destroying the livestock and productsconcerned by all the preceding measures. (153) In accordance with its standard practice, the Commissionallowed all those costs to be defrayed on the grounds that the quality controls on and destruction of theproducts in question were compulsory under Community and/or national provisions.

The Belgian dioxin crisis also involved the approval as state aid of the measures provided for by an agree-ment concluded between the Belgian State and the Belgian Banking Association. (154) The agreement con-cerned a loan scheme to prevent the failure of basically sound agricultural businesses owing to loss of incomeas a result of market destabilisation caused by the contamination of certain animal feeds by dioxin and themeasures taken to deal with this. The scheme was based on equal efforts from the public and private sectorswhereby the public sector would guarantee 50% of the amount lent and the banking sector would assume therisk of the remaining 50% and forgo its normal margin on the interest rate, which would be at most the Bel-gian prime rate less 30 basis points (cost price to the banks). Eligibility was restricted to businesses that werebasically sound and viable but had seen large turnover falls in the period between June and September 1999(25% over a two-month period or 40% in a single month). The notification contained two aid elements with-in the meaning of Article 87(1) of the EC Treaty. First, the principal aid element was the provision of a stateguarantee. Second, the fees of the accountants certifying losses were to be met by the State. The state guar-antee element was considered compatible under Article 87(2)(b) of the EC Treaty as the Commission hadconcluded in previous cases that the nature and extent of the restrictions needed to protect public health inconnection with the dioxin crisis affecting foodstuffs and animal feed produced in Belgium amounted to anexceptional occurrence within the meaning of Article 87(2)(b). The state guarantee amounted to a subsidy ofless than 6.05% of the total loan. Moreover the Belgian authorities undertook to ensure that there would beno overcompensation to individual recipients for their losses. Payment by the State of the accountants’ feeswas considered soft aid, for which the Commission’s standard practice is to accept aid rates of up to 100%.

Asecond agreement, concluded between the Regions and the Belgian Banking Association,(155) was also au-thorised. Unlike the preceding scheme, this aid was intended for businesses involved in the production, pro-



(151) Cases NN 95/99 and N 384/99, Commission decision of 20 July 1999 (OJ C 253, 4.9.1999).(152) Cases N 434/99, N 435/99 and N 447/99, Commission decision of 16 August 1999 (OJ C 264, 18.9.1999).(153) Case NN 90/99, Commission decision of 20 July 1999 (OJ C 253, 4.9.1999), and Cases N 514/99 and N 509/99,

Commission decision of 29 September 1999 (OJ C 326, 13.11.1999).(154) Case N 499/99, Commission decision of 7 September 1999 (OJ C 288, 9.10.1999).(155) Case N 614/99, Commission decision of 8 December 1999 (not yet published).

cessing, transport and distribution of food products or animal feeds. Under the agreement, the banking sec-tor could grant loans to sound businesses facing cash flow problems as a result of the crisis. The loan termswere identical to those of the preceding scheme, but eligibility was limited to businesses operating in the Re-gion in which the request for a guaranteed loan was made. As in the preceding case, and on the same grounds,the provision of state guarantees was deemed compatible with Article 87(2)(b) of the Treaty. The grant equiv-alent of the state guarantee was less than 4% of the total amount loaned. The Belgian authorities likewise un-dertook to ensure that individual recipients would not be overcompensated for their losses.

The Commission had to examine a federal bill establishing the horizontal legislative frameworkconferring the necessary powers for adopting all the specific aid measures for agricultural businessesaffected by the crisis. (156) Although the bill did not provide for aid in the strict sense, it authorised thegrant of federal aid to agricultural businesses to cover all or part of any losses sustained that had notalready been compensated for by other federal and/or regional aid schemes. A compensation funddesigned to finance some of the expenditure incurred by the State in the form of aid to the affectedbusinesses was also set up. The bill also introduced a number of checks to ensure that the combinationof federal and regional aid did not lead to overcompensation for losses sustained and that any excess waspaid back to the fund.

b) Aid for environmental protection and possible infringement of the nitrates directive

The Commission decided to initiate proceedings under Article 88(2) in respect of a measure notified bythe Belgian authorities (157) granting aid to farmers as compensation for no longer being allowed tospread more than a certain amount of manure (the maximum amounts change each year). This measurecould be covered by point 3.4 of the Community guidelines on state aid for environmental protection,(158) whereby operating aid may, in exceptional cases, be allowed if: (i) the aid compensates only forextra costs in comparison with traditional costs; (ii) the aid is temporary and in principle degressive; and(iii) the aid is necessary to offset losses in competitiveness, particularly at international level.Furthermore, the Commission normally takes account of what the firms concerned have to do in returnto reduce their pollution. In this case the Commission initiated Article 88(2) proceedings since it haddoubts as to whether these conditions were met. The aid did not appear to be temporary or degressiveor to be necessary to offset losses in competitiveness, and the farmers did not appear to have to take anyaction to reduce their pollution. Furthermore, the amount of manure that could be spread per hectareunder the measure appeared to infringe the nitrates directive (Council Directive 91/676/EEC of12 December 1991 concerning the protection of waters against pollution caused by nitrates fromagricultural sources). There did not therefore appear to be any reason for granting aid.

Denmark

a) Land tax on agricultural land

In a Danish case, (159) the Commission applied for the first time in the agricultural sector its notice onthe application of the state aid rules to measures relating to direct business taxation. (160) The caseinvolved reintroduction of a ceiling on the Danish local land tax levied by municipalities on land used


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(156) Case N 680/99.(157) Case C 12/99 (ex N 380/98), Commission decision of 17 February 1999 (OJ C 129, 8.5.1999).(158) OJ C 72, 10.3.1994.(159) Case N 53/99, Commission decision of 9 June 1999 (OJ C 213, 24.7.1999).(160) OJ C 384, 10.12.1998.

for primary production purposes. The measure, which took the form of an amendment to the 1990 localland tax law, was intended to apply to the 1999 and 2000 tax years. The ceiling proposed (0.008%) byDenmark was lower than the ceiling (0.015%) approved by the Commission in its previous two decisionson the land tax for the 1994-96 and 1997 tax years. These decisions covered land used for agriculture,horticulture and seed nurseries. The new measure also involved the extension of the tax ceiling toforestry. The rationale of the ceiling was primarily to counteract increases in land prices andconsequently land taxes which were caused by factors not attributable to primary production. Aconsiderable reduction in variations in the tax rate (from 0.006-0.024% to 0.006-0.008%) was also to beachieved. In its previous decisions on the land tax the Commission considered that the land tax ceilingdid not constitute aid. The Danish authorities gave assurances that the factors on which the Commissionbased its previous decisions had not changed. In its decision the Commission reiterated the position ithad taken in the previous two cases, i.e. that the measure, though selective, did not constitute state aidwithin the meaning of Article 87(1) of the EC Treaty. As additional arguments to back up this conclusionthe decision took account of the fact that the measure applied to the entire primary production sector andof the specific nature of land in connection with primary production.

b) Aid for animal diseases

The Commission decided to initiate proceedings under Article 88(2) against an aid measure notified byDenmark involving modification of the Danish Poultry Levy Fund, a parafiscal aid scheme. (161) Thespecific purpose of the measure notified was to allow the Poultry Levy Fund to finance part of the costsfor preventive vaccination in broiler flocks against Gumboro, a poultry disease which causes increasedmortality rates among slaughter poultry flocks. The aid was to be paid retroactively to owners whosenon-infected flocks were vaccinated as part of a vaccination campaign. As the disease was not coveredby Danish or Community legislation on animal diseases the aid did not meet all of the cumulativeconditions which, according the Commission’s standard practice, have to be fulfilled if state aid forcombating epizootic or plant diseases is to be declared compatible with the common market underArticle 87(3)(c) of the EC Treaty (compulsory Community or national provisions, infections of publicconcern, preventive and/or compensatory nature of the aid, no overcompensation of individualundertakings, compliance with Community veterinary legislation). In addition, the Commission haddoubts as regards fulfilment of the requirement that the aid must only concern infections of publicconcern and must not be granted to cover costs related to normal entrepreneurial risks, in particularconsidering a previous Gumboro outbreak during the 1990s and the existence of a voluntary industryGumboro fund. Following the opening of the proceedings, the Danish authorities withdrew theirnotification.

Germany

a) Aid for land purchase

The Commission adopted a negative final decision on the aid granted by the German Government underthe Entschädigings- und Ausgleichsleistungsgesetz (EALG). (162) The law set up a scheme for thepurchase of land at reduced prices in the former German Democratic Republic which amounted to stateaid to some beneficiaries. The Commission argued that, while for the category Wiedereinrichter(resettled farmers) and juristische Personen (legal entities) comprising at least one of the former thebenefit of a reduced-price purchase could constitute compensation for a loss suffered (the expropriation



(161) Case C 15/99 (ex N 489/98), Commission decision of 23 June 1999.(162) Case C 17/98, Commission decision of 20 January 1999 (OJ L 107, 24.4.1999).

of land and/or the possible deterioration of the farm’s inventory), this was not true for Neueinrichter(newly settled farmers), other legal entities and any other beneficiaries not mentioned in the law inquestion. For the latter category the aid would constitute state aid under Article 87(1) of the EC Treaty,given that they had not suffered expropriation or similar damage. The aid rate appeared too high incomparison with the rates which the Commission could normally accept for the purchase of farm landin normal areas (i.e. those not classified as less favoured). In addition, the aid in question appeared tobe discriminatory and thus to infringe Articles 12, 34(3) and 43 of the EC Treaty given the condition thatcertain beneficiaries had to have been resident in the former GDR on 3 October 1990, a condition thatin practice could be fulfilled only by (East) German nationals.

In the course of the year an amended version of the land purchase scheme was notified to and approvedby the Commission. (163) The problems which had led to the partly negative decision were resolved:

— The Commission’s partly negative final decision of 20 January regarding the old EALG consideredthat the requirement of residence on a given date for eligibility under the scheme was discriminatory:in practice this requirement could be met by (East) Germans only. All such dates were deleted fromthe new scheme.

— The Commission also objected to the aid intensity for the purchase of agricultural land outside LFAs.The aid rate was brought fully into line with the rates the Commission usually accepts. Any aidgranted in excess under the old EALG would be recovered with interest as required by theCommission decision of 20 January.

In the light of the assurances provided by the German authorities, the Commission clearly established thatthere was sufficient land to eliminate any potential discrimination without rescinding the contracts conclud-ed under the old EALG. In so far as residual elements in the new scheme would give priority to East Germanswhere the other criteria were equal, such preference fell within the objective of restructuring agriculture inthe new Länder, while at the same time ensuring that potential purchasers who or whose families had livedand worked in the GDR for several decades could participate, an objective which was accepted as legitimatein the Commission decision of 20 January and had not been challenged.

The Commission consequently took the view that the new scheme proposed by the German Governmentwould facilitate the development of economic activities in the sector. The measure therefore qualifiedfor exemption under Article 87(3)(c) of the Treaty.

b) Aid for promotion of agricultural products

The Commission decided to initiate proceedings under Article 88(2) of the EC Treaty in respect of aid grant-ed by the Land of Mecklenburg-Western Pomerania for promoting agricultural products. The aid consistedof several measures that could be divided into “soft aid” and promotional aid. It is standing Commissionpractice to allow soft aid with an intensity of up to 100% for participation in trade fairs and seminars, marketresearch, etc. Promotional aid has to comply with the Commission communication concerning State in-volvement in the promotion of agricultural and fisheries products (164) and, if the promotion is in the form ofadvertising, the framework for national aid for the advertising of agricultural products and certain productsnot listed in Annex II to the EEC Treaty, excluding fishery products. (165) One of the main conditions for pro-


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(163) Case N 506/99, Commission decision of 22 December 1999 (not yet published).(164) OJ C 272, 28.10.1986.(165) OJ C 302, 12.11.1987.

motional aid is compliance with Article 28 of the Treaty. In an earlier decision the Commission consideredthis condition to be fulfilled. (166) However, before taking the current decision the Commission re-examinedmaterial that the German authorities sent as an example. At first sight this promotional material did not con-tain any message other than that the products were from Mecklenburg-Western Pomerania. Therefore, boththe existence of a reasonable balance between references to the qualities and varieties of the product and itsnational origin (a condition of the above-mentioned communication) and compliance of the measure withArticle 28 of the Treaty seemed doubtful. Furthermore, the measure provided for aid only to undertakings es-tablished in Mecklenburg-Western Pomerania, which appeared to infringe Article 43 of the EC Treaty. In re-ply to the initiation of proceedings the German authorities indicated that they would amend the measure: thematerial shown as an example of the promotion would not be used; they furthermore gave assurances that fu-ture promotional material would comply with Article 28 of the EC Treaty and undertook to send the Com-mission an annual report with examples of the promotional material used. Finally, the condition of estab-lishment in Mecklenburg-Western Pomerania in order to be eligible for aid would be eliminated. Followingthese amendments the Commission decided to close the proceedings by adopting a positive decision. (167)

c) Exemption from tax on electricity and oil

The Commission considered that an exemption from tax on electricity and oil which was partly applicable alsoto the agricultural sector (168) complied with point 3.4 of the environmental guidelines. (169) The German au-thorities had notified an exemption for three years. The aid was therefore temporary but not degressive. How-ever, having regard to its existing practice in the interpretation of the guidelines, in this case the Commissionwaived the degressivity requirement. Although in the agricultural sector the simple fact that most other coun-tries do not yet have energy taxes is not an acceptable justification for the payment of the aid, in this case theCommission accepted that the limited temporary relief provided by the aid measure was necessary to enablefarms to adapt to new competitive conditions. Furthermore, although the Commission noted that there was nolegal obligation for any quid pro quo from the agricultural sector, it was finally accepted that farmers would in-vest to reduce their energy consumption. Given the limited nature of the tax exemption in the agricultural sec-tor (producers still have to pay 20% of the tax) and the large net additional tax burden which resulted from themeasure, it appeared that primary agricultural production had a substantial incentive to make energy savings.

d) Aid for rescuing and restructuring firms in difficulty

The Commission also opened proceedings in respect of three plans to grant aid for rescuing orrestructuring companies in the new German Länder. (170) Following the opening of the proceedings, oneof these notifications was withdrawn. The examination of the other notifications is still under way.

Greece

The Greek Cotton Board: aid financed via parafiscal charges

The Commission adopted a negative final decision concerning the operation of the Greek Cotton Board(GCB), in so far as this body was financed through a parafiscal charge of 1% of the overall value of import-



(166) Case NN 27/97, Commission decision of 18 June 1997 (OJ C 334, 5.11.1997).(167) Case C 23/99, Commission decision of 25 November 1999 (OJ L 37, 12.2.2000).(168) Case NN 47/99, Commission decision of 21 April 1999 (OJ C 166, 12.6.1999).(169) OJ C 72, 10.3.1994.(170) Cases C 71/99 (ex N 258/98), Commission decision of 13 October 1999 (OJ C 359, 11.12.1999), C 73/99 (ex

NN 90/97), Commission decision of 26 October 1999 (not yet published), and C 16/99 (ex NN 108/98),Commission decision of 3 March 1999 (OJ C 120, 1.5.1999).

ed cotton. (171) The GCB is a public body carrying out institutional tasks in the cotton sector as well as grant-ing state aid to the sector (technical assistance, quality controls, research). The Commission considered theaid itself to be compatible with the common market; however, it was financed through the collection of aparafiscal charge levied not only on domestic products, but also on imported cotton. Besides being incom-patible with Commission policy on parafiscal charges, these measures appeared to contravene the Treaty ofAccession of Greece. As a consequence of the decision Greece is required to modify the scheme, to notify theCommission of the amendments and to recover the amounts unduly paid.

Spain

Aid for the agricultural and agri-food sector

The Commission adopted two negative decisions on aid schemes introduced by the region of Extremadura,in which it required the Spanish authorities to recover aid already disbursed. The first decision(172) relates toDecree 35/1993, which established financing mechanisms to cover the capital requirements of a campaignfor developing agriculture and agri-food activities. The recipients were farmers, farm cooperatives and oth-er producer groupings and agri-food industries based in Extremadura which entered into contracts for thepurchase of raw materials for industrial processing with farmers and livestock farmers in Extremadura. Theaid took the form of interest-rate subsidies for loans covering the marketing year. The second decision (173)relates to the Order of 8 July 1998 laying down aid for agricultural production intended for industrial pro-cessing in the 1997/98 marketing year. The recipients were producers of horticultural products based in Ex-tremadura who entered into contracts for supplying industrial processors in that region during the 1997/98marketing year. The aid amounted to between ESP 1.5 and ESP 5 per kilogram of green or red peppers,gherkins, cabbages, onions, broccoli, cauliflower, spinach, broad beans and potatoes. As the two aid schemeswere limited to producers or industrial processors in Extremadura who concluded contracts for the purchaseof raw materials for industrial processing with primary producers in Extremadura, they restricted the freemovement of goods between the Member States and consequently infringed Articles 28 and 29 of the Treaty.The aid was furthermore granted with a view to promoting the production of products subject to a commonmarket organisation (Council Regulation (EC) No 2200/99 of 28 October 1996 on the common organisationof the market in fruit and vegetables), which is to be regarded as a comprehensive and exhaustive set of ruleswhich precludes any national measures that might undermine that organisation or create exceptions to it. Asfar as case C 38/99 is concerned, any aid the amount of which depends on the quantities produced has to beregarded as operating aid that is incompatible with the common market. Furthermore, the scheme inCase C 37/99 did not comply with the criteria set out in the Commission communication on subsidised short-term loans in agriculture. (174)

France

Aid for the wine sector

The Commission decided to initiate an investigation under Article 88(2) of the Treaty into a measurenotified by France aimed at promoting the production of wines meeting consumer demand in theCharentes region. (175) The purpose of the aid was to improve the quality of the vineyards while


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(171) Case C 60/94, Commission decision of 20 July 1999 (not yet published).(172) Case C 37/99 (ex NN 25/99), Commission decision of 22 December 1999 (not yet published).(173) Case C 38/99 (ex NN 26/99), Commission decision of 22 December 1999 (not yet published).(174) OJ C 44, 16.12.1996.(175) Case C 70/99 (ex N 79/99), Commission decision of 29 September 1999 (OJ C 359, 11.12.1999).

encouraging cognac producers to switch to “local wine” production by promoting the use of certain winevarieties. The Commission took account of the fact that the new Council Regulation (EC) No 1493/1999of 17 May 1999 on the common organisation of the market in wine (OJ L 179, 14.7.1999), which enteredinto force on 21 July 1999 and was to apply from 1 August 2000, contained provisions on theabandonment of wine-growing areas and the restructuring and conversion of vineyards. It consideredthat, since the programme presented by the French authorities sought a long-term solution to the problemof wine production in the Charentes region, the measures envisaged had to take account of the newguidelines set out in that common market organisation. The Regulation established a system for therestructuring and conversion of vineyards, the objective of which was to adapt production to marketdemand. Article 15(c) provided inter alia for the introduction, in the implementing rules to be adoptedby the Commission, of provisions aimed at preventing an increase in production potential arising out ofthe application of the conversion measures. The information transmitted indicated that the plannedconversion measures involved the production of new “local wines” and, therefore, an overall increase inthe production of such wines. In addition, Article 2(1) of the Regulation lays down that planting withvines classified as wine-grape varieties is prohibited until 31 July 2010. The Commission concluded thatone of the aims of the new organisation of the market in wine was to prevent an increase in wineproduction. While agreeing that the varietal conversion of the vineyards in the Charentes had theadvantage of reducing the production of wines for which there was no market, the Commissionconsidered that the resulting increase in “local wine” production in France was incompatible with theprinciples contained in the new organisation of the market in wine and was likely to distort competitionon a wine market that was showing no signs of growth. It had to be borne in mind that the wines resultingfrom the conversion of these vineyards would enter the ordinary wine market, while current productionby definition went to other destinations outside that market. Consequently, there was a strong risk thatthe general conversion of the vineyards concerned would shift the problem on to other markets since itwould lead to an overall net increase in the quantity of wine placed on the market, which wasincompatible with the objectives of the new common organisation of the market.

Ireland

Aid to sheep producers and assistance for winter fodder losses

The Commission opened proceedings under Article 88(2) of the EC Treaty to investigate two aidmeasures notified by Ireland. (176) The first measure (177) was a submeasure (Ewe Premium) of the EweSupplementary Measure, which consisted in providing slaughter facilities to remove about 100 000 cullmountain ewes in six western counties of Ireland which were affected by weather conditions and difficultsoil types. The Commission considered that this measure appeared to constitute aid to the sheep producerand expressed doubts that Article 87(2)(b) could be applied. Indeed the measure appeared to tackleproblems due to an economic downturn in the sector and could not therefore be considered to constitutecompensation for damage due to an exceptional occurrence. Furthermore, by permitting the meatobtained from “boner ewes” to be sold on for human consumption, and thus compete in the marketplacewith other meat, whose slaughter costs had not been subsidised, it appeared that the Irish authorities hadfailed to take the steps necessary to minimise the effects of the measure on competition.

The second measure against which proceedings were opened is the Scheme of Assistance for WinterFodder Losses. (178) The scheme contained three submeasures aimed at providing relief to farmers whohad suffered winter fodder losses. With special reference to the measure concerning the compensation



(176) Case C 44/99 (ex NN 23/99 and ex NN 79/99), Commission decision of 8 July 1999 (OJ C 280, 2.10.1999).(177) Case C 44/99 (ex NN 23/99, ex N 678/98).(178) Case C 44/99 (ex NN 79/99, ex N 90/99).

granted by the Special Fodder Hardship fund (SFHF) to farmers who did not qualify for aid under theother measure, the Commission raised doubts that this compensation might not be conditional on, andproportional to, losses of winter fodder due to wet weather. In fact the assistance appeared to be providedto any farmer who could prove that his cattle was suffering or was likely to suffer malnutrition due to ashortage of fodder for whatever reason. The Commission accordingly considered that the measure couldconstitute pure operating aid.

Italy

a) Acquisition of capital holdings

Some sophisticated types of assistance in providing financing to undertakings were notified by Italy in1998 and 1999. In particular, in 1999, the Commission informed Italy that it had approved an aid schemeaimed at supporting investments in the agri-food sector through the State-owned holding company RIBS.(179) The scheme envisaged the acquisition by RIBS of capital holdings in the beneficiary undertakingsand the provision of subsidised loans, for a maximum of 15 years. Approval of this aid scheme has madeunnecessary the individual notification to the Commission of investment projects below a certainthreshold, thus speeding up their approval, which is carried out only at national level. The nationalauthorities undertook to submit to the Commission an annual report on the implementation of thescheme. On the basis of this report, the Commission will where appropriate be able to proposemodifications to the aid scheme. Investment projects in the sugar sector and projects involving an overallparticipation by RIBS exceeding about EUR 25 million (ITL 50 billion), however, were expresslyexcluded from the aid scheme and are to be notified individually to the Commission. In the past year,the Italian Government also notified, as a precautionary measure, a series of interventions by State-owned holding companies which were deemed to take place “at market conditions”. Due to a long-standing tradition of support for the food sector, the Commission, in particular in relation to RIBS’operations, required Italy to notify pursuant to Article 88(3) any such intervention with the exception ofsome very obvious cases. These interventions, which normally take the form of acquisitions of holdingsin the capital of other undertakings, are often linked to development projects including investments,promotion, marketing, organisational changes, etc. In these cases the State-owned holding company isexpected not only to recover its capital, but also to obtain an acceptable return on the capital invested.So far, the Commission has cleared one of these types of intervention. (180) Other cases were notified in1999 and are currently under examination.

b) Aid to the sugar industries

The Commission adopted a negative final decision on several Italian state aid measures in the sugarsector granted through the State holding company RIBS between 1988 and 1992. (181) This aid, whichwas linked to the operation of two sugar plants in central Italy (Abruzzi and Tuscany), varied in natureand amount. The aid included commercial guarantees, capital holdings to cover losses, capital holdingsfor investments, extension of capital holdings, waiver of preferential claims, favourable conditions onsale of public property and loans at subsidised rates. The Commission declared most of the above aidincompatible with the Treaty, required Italy to recover the amounts unduly granted within two monthsof notification of the decision and to inform the Commission within the same deadline of the measurestaken to comply with the decision. Italy decided to challenge the Commission’s negative final decisionbefore the European Court of Justice. Following this decision, the Commission was notified of five other


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(179) Case N 619/98, Commission decision of 22 December 1998.(180) Case N 191/98, Commission decision of 22 December 1998.(181) Case C 56/96, Commission decision of 11 May 1999 (OJ L 236, 7.9.1999).

cases where aid was granted through the State-owned holding company RIBS to undertakings operatingin the sugar sector between 1989 and 1992.

c) Aid for small and medium-sized enterprises in the form of guarantees and subsidised loans

The Commission adopted a negative final decision (182) on aid which Italy intended to grant to small andmedium-sized enterprises in the south in the form of guarantees and subsidised loans for the consolidation ofdebts under Article 2 of Law 341 of 8 August 1995. Since these loans and guarantees were not linked to in-vestment, and since they were not granted for the rescue or restructuring of firms in difficulty, the Commis-sion concluded that they had to be regarded as operating aid which is prohibited in the agricultural sector.

d) Aid for rescuing and restructuring firms in difficulty

Concerning aid for restructuring, the Commission informed Italy that it had decided to initiateproceedings under Article 88(2) of the EC Treaty in respect of a notified plan to grant aid forrestructuring undertakings operating in the sector of protected agricultural products (flowers andhorticultural products) in Sardinia. (183) The Commission took this decision because the notified scheme,which envisaged financial measures (repayment and renegotiation of debts), structural measures(investments) and technical assistance, did not appear to satisfy the conditions under which an aidscheme for restructuring ailing firms can be approved under the Community guidelines on state aid forrescuing and restructuring firms in difficulty. (184) Aid for restructuring raises particular competitionconcerns with regard to other producers who are managing without aid and with regard to otherMember States. Restructuring aid can therefore be allowed only in circumstances in which it can bedemonstrated that its approval is in the Community interest. This will only be possible when strict criteriaare fulfilled and full account is taken of the possible distortive effects of the aid. In the present case theCommission had doubts concerning, in particular, the following aspects: (i) the state of financialdifficulty of the potential recipients; (ii) the restoration of viability of the holdings concerned throughthe measures envisaged by the notified scheme; (iii) the avoidance of undue distortions of competition;(iv) the proportionality of the aid to the restructuring costs and benefits; and (v) the fact that not all thebeneficiaries might satisfy all the conditions for qualifying as SMEs as provided in point 3.2.4 of theguidelines. A further reason for initiating proceedings was that the national authorities did not dispel thedoubts concerning possible duplication of aid for repayment of debts in favour of the same beneficiarieswho might not yet have repaid the aid which the Commission, in a previous decision, had declaredincompatible with the common market and had ordered to be recovered. According to the Court ofJustice, in these circumstances, the failure to repay the illegal aid constitutes an essential factor whichis lawfully taken into account when the compatibility of the new aid is examined (Case C-355/95 PTextilwerke Deggendorf GmbH (TWD) v Commission and Federal Republic of Germany [1997] ECR I-2549). The planned budget for the aid measure amounted to ITL 60 billion (± EUR 30 million).

e) Aid for the maintenance of female breeding animals of the Chianina breed

The Commission took a negative final decision on aid which Italy intended to grant for the maintenanceof female breeding animals of the Chianina breed (185). The aid formed part of a package of threemeasures which, according to the Italian authorities, was designed to counter the decline which this local



(182) Case C 36/98, Commission decision of 10 November 1999 (not yet published).(183) Case C 83/98 (ex N 40/98), Commission decision of 22 December 1998 (OJ C 187, 3.7.1999).(184) OJ C 283, 19.9.1997.(185) Case C 57/98, Commission decision of 10 November 1999 (not yet published).

Tuscan breed had been experiencing over the last ten years. Of the three measures forming part of thescheme only this aid measure was regarded by the Commission as incompatible with the commonmarket. The aid was granted in the form of a premium for the maintenance until first calving of adultfemale animals of the Chianina breed meeting specific requirements and was aimed to encouragestockfarmers to use females as breeding animals rather than selling them or fattening them for slaughter,operations which are considered more profitable and less risky. The Commission has generallyconsidered aid granted for the maintenance of male breeding animals to be compatible with the commonmarket on account of the role played by these animals in the process of genetic and qualitativeimprovement of the livestock sector and of the high costs involved in keeping them, which are generallynot recovered by stockfarmers. This is not the case with female animals, which can at the same timeprofitably be used by stockfarmers for calving, milk production and the improvement of beef meatproduction without any of these operations resulting in a reduction of their market value. In this respect,the Commission considers that any aid granted for the maintenance of female animals would be nothingmore than an operating aid intended to relieve farmers of the costs normally incurred in the course oftheir activity. The only case where the Commission has consistently authorised aid for the maintenanceof both female and male animals is when the breeds concerned are in danger of extinction according toCommunity criteria. In this case the aid is in fact considered to favour genetic diversity within theframework of Regulation 2078/92. The data submitted by the Italian authorities, however, clearly showedthat the Chianina is far from being a breed in danger of extinction and no exception to Article 87(1) ofthe EC Treaty could therefore be granted for the aid concerned.

Netherlands

a) Aid for natural disasters

Concerning aid granted pursuant to Article 87(2)(b) of the EC Treaty in order to make good damagecaused by natural disasters, the Dutch authorities notified an aid scheme for damage compensation inthe affected areas to all the sectors concerned, although most of the potential beneficiaries wereagricultural undertakings. (186) In agriculture, the Commission has customarily held that weatherconditions such as frost, hail, ice, rain or drought cannot be regarded as a natural disaster within themeaning of the Treaty unless the damage caused to the individual recipient of the aid reaches a certainminimum threshold, normally 30% or more (20% or more in less favoured areas) of production inrelation to a normal period. Because of the seasonal variability of agricultural production, it is necessaryto ensure that such a threshold is applied in order to prevent claims of adverse climatic conditions beingused as a pretext for the payment of operating aid. In this specific case, the Dutch authorities indicatedthat heavy rain had caused floods in certain regions. Since flooding is regarded as a natural disasterwithin the meaning of Article 87(2)(b) of the EC Treaty, compensation of damage to agriculturalproduction in these regions was in line with Commission policy. As regards the remainder of thedamaged areas, only limited floods in the traditional sense (i.e. bursting of riverbanks) had occurred.Nevertheless, in this particular case, the Commission considered that a very unusual combination ofgeographical and climatic circumstances took place which could be considered a natural disaster withinthe meaning of Article 87(2)(b) of the EC Treaty, so that there was no need to require the usual 30%production loss for damage compensation. The weather conditions in the damage areas concerned hadbeen exceptionally harsh: at least 100 mm of rain had fallen in two days, an event which according tothe Dutch Royal Meteorological Institute occurs only once every 125 years. According to the informationprovided by the Dutch authorities, the problems arose in a “polder” area, situated below sea level andwith a heavy clay ground rendering natural draining of the water more difficult. A strong wind coming


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(186) Case NN 136/98 (ex N 561/98), Commission decision of 9 December 1998 (OJ C 72, 16.3.1999). See also CaseN 19/99, Commission decision of 12 March 1999 (OJ C 92, 1.4.1999).

from the sea made it impossible to drain the water to the sea — on the contrary, water was pushedinwards towards the land. A breakdown in the water management systems in the region took place, withthe result that the level of the water table rose and the land became saturated from below. Theconsequences of this chain of events were therefore very similar to those which would have occurredhad the land been flooded in the traditional sense. In reaching this conclusion, the Commission also tookaccount of the fact that the Dutch compensation scheme was general in scope. It was open to privateindividuals, public-law entities and non-commercial bodies (schools, municipalities, religious entities,etc.), commercial businesses operating in all sectors and agricultural producers. The Dutch authoritieshad confirmed that the calculation of the losses would be undertaken individually for each beneficiary,who would be expected to bear a proportion of the losses themselves. In the agricultural sector, thecalculation of losses would be based on the losses incurred in comparison with the average yields overthe previous three years, which corresponds to normal Commission practice for the calculation of losses.There was therefore no risk of overcompensation arising from the scheme. In these circumstances, anyrisk of abuse of the scheme for payment of operating aid, which normally warrants the use of the 30%threshold in case of adverse weather conditions, appeared to be ruled out.

b) Aid for promotion financed via parafiscal charges

The Commission adopted a negative final decision on a proposed amendment to an existing aid schemeconcerning flower bulbs in the Netherlands. (187) The existing aid scheme for promoting ornamentalplants and flowers, financed by parafiscal charges, was compatible with Community rules both asregards the promotion activities and as regards the current system of financing, which explicitly excludedlevying charges on products imported from other Member States. The Dutch authorities, however,notified an amendment to the scheme whereby products imported from other Member States would alsobe subject to the levy. The yield of the levy would be repaid to a representative organisation establishedin each Member State of origin, for use on promotional activities in that country. A negative finaldecision on the proposed amendment was adopted by the Commission for the following reasons: evenin the case of generic promotion activities, which do not refer to the origin of the product and thereforeguarantee formal equality of treatment, it appeared that at the practical level such promotion andadvertising activities would favour national specialisations, needs and shortcomings. In particular, it waslikely that the timing of promotional activities and the choice of varieties to be emphasised duringpromotion campaigns would be based on national characteristics to the detriment of imported products.Furthermore, the Dutch proposal to transfer the yield of taxes on products imported from otherMember States to representative organisations in those Member States, for use on promotional activitiesin the Member States concerned, did not appear to modify this assessment. First, the Dutch authoritieswere unable to answer the concerns expressed by other Member States about the representativeness ofthe organisations to which the money would be transferred. Second, in some cases it may be thatproducers in other Member States are paying compulsory levies to finance promotional activities in theirown country. This would raise the problem of possible double taxation in the country of production andthe Netherlands. The Dutch authorities offered to reimburse their tax where the importer could show thatit had paid an equivalent tax in the Member State of production. However, the introduction of sucharrangements would require the establishment of additional administrative formalities solely for goodsmoving in intra-Community trade, which was contrary to Article 28 of the EC Treaty. Third, the Dutchauthorities provided no convincing explanation of how the administrative costs of such a system wouldbe covered, and how it would avoid further administrative formalities on products moving in intra-Community trade, which could be contrary to the Treaty. In view of the foregoing, the Commissiondecided that the system proposed by the Dutch authorities had an adverse effect on trading conditionswhich was contrary to the common interest. Therefore, the general principle, based on the Court



(187) Case C 34/97, Commission decision of 20.7.1999 (not yet published).

judgment in Case 47/69, was applied: in principle, aid financed by parafiscal charges which are alsolevied on products imported from other Member States is incompatible with the common market.

c) Aid for flower bulbs and possible infringements of the common market organisation

In another case the Dutch authorities notified a modification to the parafiscal charge financing existingstate aid for market intervention in the flower bulbs sector in the Netherlands. (188) The existing aidscheme provided that in situations of surplus supply the Product Board for Horticulture (ProductschapTuinbouw) could decide to make use of its intervention system and determine intervention (minimum)prices. In this case the intervention body Stichting Bloembollensurplusfonds bought flower bulbs forwhich the minimum price was not achieved by paying the intervention price to the producers concerned.When the amendment was notified, the Commission took the opportunity to re-examine the whole aidregime. Since the aid concerns a national market intervention system for agricultural products (flowerbulbs) which are subject to a common market organisation, according to the well-established case-lawof the Court of Justice the existence of a common organisation of the market precludes national measuresin the areas covered unless the Community legislation provides otherwise, and therefore Member Statesmust refrain from taking any measures which might undermine that organisation or create exceptions toit (see, for example, Case 111/76 Officier van Justitie v Van den Hazel [1977] ECR 901, Case 177/78Pigs and Bacon Commission v Mc Carren [1979] ECR 2161 and Case 190-73 Van Haaster [1974]ECR 1123). The basic criterion for assessing the lawfulness of national measures is thus whether theexercise of the residual power resting with the Member States affects or may affect the properfunctioning of the common market organisation. Not only can the rationing of production be consideredto be a measure having an effect equivalent to quantitative restrictions, but also an intervention systemcould qualify as such as it is capable of affecting trade between Member States. Such quantitativerestrictions or measures having equivalent effect in intra-Community trade are explicitly prohibited byArticle 10 of the CMO. The nature of the national intervention system is such that products are takenout of the market; obviously, this has an effect on prices and on the flow of trade (products taken out ofthe market cannot be sold; the intervention price will effectively become the minimum price). In theabsence of the intervention system, the normal freedom of commercial transactions under conditions ofgenuine competition would prevail. The Court has accepted that an open market and effectivecompetition underlie the market for flower bulbs (see Case 94/79 Vriend [1980] ECR 327). Similarly,the national intervention system eliminates from the market products which are of a satisfactory quality.Apart from this question of principle the Dutch national market support scheme might not be compatiblewith the common market since only Dutch products and not those from other Member States couldbenefit from it. The argument that imported products benefited indirectly through the reduction of outputon the market appeared difficult to accept. After the Commission departments had communicated to theDutch authorities their preliminary view that the scheme was incompatible with the common market forthe reasons explained above, the Dutch authorities indicated that the scheme would be withdrawn.

d) Aid for the rationalisation of the cattle slaughter sector

The Commission also decided to initiate Article 88(2) proceedings in respect of a Dutch measureregarding the rationalisation of the cattle slaughter sector. (189) The original measure was aimed atreducing the existing cattle slaughter overcapacity. To that end, the Cattle SlaughterhousesReorganisation Fund (Stichting Sanering Runderslachterijen), set up by the Product Board for Cattle andMeat (Productschap voor Vee en Vlees), bought up slaughter capacity. New excess capacity had beencreated. The Fund therefore wished to buy up additional capacity which came on the market following


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(188) Case N 212/97.(189) Case C 55/99 (ex N 534/97), Commission decision of 20 July 1999 (OJ C 280, 2.10.1999).

bankruptcy or closure of cattle slaughterhouses. The Dutch authorities notified an increase in a parafiscalcharge the proceeds of which were to be used to buy up a capacity of 120 000 slaughters per year (i.e.the capacity of a company which had become bankrupt), thus reducing capacity to 1.26 million animals.The Dutch authorities took the view that the measure could be approved on the basis of Commissionpolicy on abandoning of production. However, the Commission expressed doubts as to the justificationprovided by the Dutch authorities, mainly for the following reasons: the amount paid for a promise notto use the facilities for slaughtering seemed high in view of prevailing market conditions, as theabandoned capacity might possibly have no value whatsoever and the risk of overcompensation couldnot be ruled out. Furthermore, no evidence had been submitted demonstrating a possible interest in theacquisition of the bankrupt company. Such interest would have proved the need for the aid and provideda yardstick for determining the aid amount for the buy-out of capacity.

e) CO2 tax exemption for the glasshouse horticulture sector

The Commission approved partial relief from a CO2 tax granted to the glasshouse horticulture sector. (190)The original version of the Law on environmental taxes (Wet belastingen op milieugrondslag) was approvedby the Commission on 3 December 1992. Various amendments were made to this Law, inter alia the intro-duction of a regulatory energy tax. The purpose of the regulatory energy tax was to contribute to reducingCO2 emissions and to promote energy conservation. The Dutch Government amended the energy tax ratesapplicable with effect from 1 January 1999: the rates were increased and the tax brackets adjusted. The rev-enues accruing from this increase were to be clawed back to households and businesses in the form of a re-duction in wage and income tax. The Dutch Government expected this heavier taxation of energy consump-tion to have a positive effect on CO2 emissions.

The regulatory energy tax was also levied at a zero rate on natural gas used in glasshouse cultivation.The Dutch authorities requested an extension of the zero rate on such natural gas for the glasshousehorticulture sector for at least another year. If there was no natural gas connection, a zero rate applied tomedium oil, gas oil and liquefied petroleum gas.

Following contacts with the Commission departments, the Dutch authorities amended the measure: thezero rate would apply only in 1999. In 2000 and 2001 the sector would be taxed on a (graduallyincreasing) basis similar to other energy-intensive sectors. The Dutch authorities undertook to renotifythe scheme in 2002.

The measure fell within the scope of the Community guidelines on state aid for environmental protectionbecause the objective of the law was environmental protection. It was intended to reduce energyconsumption through an increase in energy taxation. The tax exemption would appear to be operatingaid. The Community guidelines apply strict conditions on operating aid granted in connection withenvironmental problems:

— The aid should be temporary and in principle degressive: the Dutch authorities provided a cleardeadline by which the zero rate was to end and the scheme was to be brought gradually within thegeneral framework. The measure was degressive since a zero rate continued to apply in 1999,whereafter a gradually increasing rate of taxation was to be introduced.

— The aid should be necessary to offset a competitive disadvantage: the Commission took account ofthe fact that since the glasshouse horticulture sector had below average relative labour costs, the



(190) Case N 589/B/98, Commission decision of 8 December 1999 (not yet published).

undertakings concerned would derive only very limited benefits from the offsetting reductions inlabour taxes. The previously existing preferential pricing system for natural gas to the glasshousehorticulture sector had ceased to exist at the end of 1998.

— A quid pro quo must be provided by the beneficiaries: a covenant had been concluded with the sectorwhich also set targets for renewable energy use: 4% of the energy used in 2010 had to consist ofrenewable energy; and energy efficiency had to improve by 65% compared with 1980. A further quidpro quo could be found in the increasing total tax burden: the new measure providing for graduallyincreasing taxation of gas (and full taxation of electricity use) gave a clear incentive for theglasshouse horticulture sector to use energy rationally and reduce CO2 emissions.

The Commission therefore concluded that the measure met the requirements laid down by theenvironmental guidelines.

Austria

Aid to keep she-goats

The Commission initiated proceedings under Article 88(2) of the EC Treaty with regard to an aid schemenotified by the Austrian authorities for granting operating aid to encourage farmers in Lower Austria tokeep she-goats. The Austrian authorities had stated that the aid would help to develop goat rearingpractices and thereby the sector concerned, and that goats in Austria were in danger of extinction, makingthem eligible for support under Article 2(1) of Regulation (EEC) No 2078/92. However, the Commissiondecided to adopt a negative final decision on the measure as its effect and purpose was merely to cut theproduction costs of the aid recipients for the duration of the scheme, without any lasting benefit to thesector concerned and, furthermore, there was no indication that goats were in danger of extinction inLower Austria. (191)

Portugal

a) Aid for pig producers facing market difficulties

The Commission decided to initiate proceedings under Article 88(2) of the EC Treaty against Portugalin relation to an aid scheme to provide relief for pig producers facing market difficulties at the end of1998. (192) The scheme consisted of two measures: the first one was a one-year moratorium on existingshort-term loans, as well as a reduction in interest rates on these loans (up to 100%); the second measurewas a subsidised short-term loan (one year) for which the subsidy rate could be as high as 100%. TheCommission considered that the aid appeared to constitute operating aid to pig farmers going beyond themaximum amount allowed by Commission policy on subsidised short-term loans in the agriculturalsector. The measure could also be an infringement of the common market organisation for pigmeat.

b) EPAC and Silopor: restructuring and privatisation

In 1998 the Commission initiated proceedings under Article 88(2) of the EC Treaty in relation to therestructuring and privatisation plans of the cereal trading company Epac and the port handling company


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(191) Case C 82/98, Commission decision of 8 December 1999 (not yet published).(192) Case C 31/99 (ex N 704/98), Commission decision of 4 May 1999 (OJ C 220, 31.7.1999).

Silopor, both publicly owned. (193) Although Portugal showed interest in exploring with the Commissiondepartments the possibility of bringing the restructuring plans into line with the Community rules onrescuing and restructuring companies in difficulty, no result has yet been achieved. Meanwhile, theEPAC cases, concerning Portugal’s failure to comply with the Commission’s 1997 decision declaringthat the state guarantee granted to Epac was illegal and incompatible state aid, were heard before theEuropean Court of Justice. The Court is expected to hand down its decisions on these cases at thebeginning of 2000.

Sweden

Preferential rates of rent for business premises and of leasing payments in connection with the saleand leaseback of assets

In pursuance of the general principle that Member States must not grant pure operating aid, the Commissiondecided to initiate proceedings under Article 88(2) of the EC Treaty in respect of unnotified aid granted bySweden to a meat processing company. (194) On the basis of a complaint, certain newspaper articles and in-formation provided by the Swedish authorities, the Commission concluded in its decision to initiate pro-ceedings that the following measures granted between 1995 and 1997 by a municipal property company inSkellefteå in Sweden possibly involved state aid to Nya Holmlunds Livs AB (“Holmlunds”), a meat pro-cessing company in Skellefteå: (i) rental payments under an agreement between a municipal property com-pany and Holmlunds in respect of the meat processing factories where Holmlunds operated; (ii) a sale andleaseback operation involving two sets of agreements whereby the property company bought Holmlunds’tangible and intangible assets and leased them back to Holmlunds; and (iii) Holmlunds’ repurchase of theassets from the property company under an agreement in 1997 in connection with the transfer of Holmlunds’shares to a new owner. The Commission’s suspicion that state aid had been involved was based on an eval-uation of the property company’s behaviour from the point of view of the market economy investor princi-ple. The possible aid linked to the situations listed above appeared to the Commission to have been in the na-ture of operating aid: preferential rates of rent in respect of the old and the new factories owned by the prop-erty company as well as preferential rates of leasing payments in connection with the sale and leaseback ofthe assets. During the period when the measures were taken by the municipal property company (1995-97)Holmlunds was apparently an undertaking in difficulty. However, it was clear to the Commission that themeasures did not fulfil any of the relevant rules as regards agricultural undertakings in financial difficulty.To the extent that the measures possibly constituted operating aid, they appeared to be incompatible with thecommon market and to constitute an infringement of the common market organisations concerned (pig-meat, beef and veal).

United Kingdom

Pig Welfare Slaughter Compensation Scheme

After initiating Article 88(2) proceedings, the Commission adopted a favourable decision on the PigWelfare Slaughter Compensation Scheme, which applied in Northern Ireland in September 1998. (195)Following an accidental fire on 20 June 1998, a major pig slaughtering plant in Ballymoney, NorthernIreland, was destroyed, leading to the loss of an estimated 40% of the slaughtering and butcheringcapacity for pigs in the region. Many producers were left with nowhere to take their animals for slaughter



(193) Case C 51/98 (ex N 852/97 and N 6/98), Commission decision of 29 July 1998 (OJ C 363, 25.11.1998).(194) Case C 72/99 (ex NN 149/98), Commission decision of 13 October 1999 (OJ C 359, 11.12.1999).(195) Case C 76/98, Commission decision of 9 June 1999 (OJ L 227, 28.8.1999).

and butchering, so that by the middle of August 1998 20 000 — 30 000 pigs were awaiting slaughterand the situation was deteriorating by the day. Consideration was given to the possibility of transportingthese animals to slaughterhouses in Great Britain or the Republic of Ireland, but the overall depressedmarket situation and disease control restrictions militated against this. Thus producers were left with anincreasing number of animals which were basically unsaleable. Furthermore, as a result of the increasingbacklog of pigs on the farms, serious animal welfare problems had arisen due to overcrowding andfeeding difficulties. The animals were faced with overcrowding, heat stress and tail-biting, causing themunnecessary suffering. The Pig Welfare Slaughter Compensation Scheme, which provided aid paymentsfor slaughter and rendering costs and compensation payments for producers of overweight clean pigs(that is to say, pigs of a minimum live weight of 110 kg excluding in-pig gilts and breeding sows andboars) of up to GBP 30 per head.

In its final decision, the Commission did not accept the United Kingdom’s argument that the fire shouldbe regarded as constituting an exceptional occurrence within the meaning of Article 87(2)(b) of theEC Treaty. As a derogation from the general ban on state aid enshrined in Article 87(1), the provisionsof Article 87(2)(b) have to be interpreted restrictively. In this case, the Commission noted that as regardsmaterial loss, the main victims of the fire, the owners of the Ballymoney facility, were not receiving aidand indeed appeared to be covered by normal commercial fire insurance. From the point of view of thepig producers, in economic terms the effects of the fire were the same as if the plant had closed for otherreasons, for example because it was not profitable, or as a result of the insolvency of the owners. Sincein normal commercial transactions there is always a degree of risk, albeit small, that one of the partiesmay cease trading for reasons which are beyond the control of the other parties, such events do notconstitute exceptional occurrences within the meaning of Article 87(2)(b) of the EC Treaty.

Nevertheless, in view of the very specific situation of the Northern Ireland pig market at the relevanttime, and in view of the various steps taken by the United Kingdom authorities to try to resolve theproblem, the Commission concluded that the measure could be deemed to facilitate certain activities orcertain economic areas within the meaning of Article 87(3)(c) of the EC Treaty.

Agrimonetary aid

Concerning agrimonetary aid, 1999 was marked by the changeover to the euro and the dismantling of thefrozen green rates. Only one case concerned the revaluation of the Swedish krona for arable crops, whichtook place on 1 July 1998. (196) The overall aid granted to this sector was EUR 2.215 million at the rate ofEUR 1.4 per hectare, taking account of the Swedish base rate area. All other aid cases concerned the applica-tion of Council Regulation (EC) No 2799/98 establishing agrimonetary arrangements for the euro (OJ L349,24.12.1998) and Council Regulation (EC) No 2800/98 on transitional measures to be applied under the com-mon agricultural policy with a view to the introduction of the euro (OJ L 349, 24.12.1998). Pursuant to Arti-cle 3 of the latter Regulation, where the conversion rate or the exchange rate for the euro applicable on theday of the operative event in 1999 to flat-rate aid per hectare or livestock unit (including compensatory pre-miums for ewes) and amounts of a structural/environmental nature is lower than the rate applied previously,compensatory aid shall be granted. To this end, it should also be noted that the rules on the grant of transitionalagrimonetary aid diverge from past rules. Indeed, the granting of the Community part of transitional agri-monetary aid is not just a possibility for the Member State as in the past; it is an obligation. Member States re-tain, however, the right to decide whether they wish to grant the national funding required for the second andthird tranches. For the CAP measures having an operative event on 1 or 3 January 1999 or 1 July 1999, theMember States concerned are: Belgium, Denmark, France, Ireland, Italy, Luxembourg, Finland, Sweden


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(196) Case C 76/98, Commission decision of 9 June 1999 (OJ L 227, 28.8.1999).

(only for 1 July 1999), Spain (for 1August 1999 and 1 September 1999) and the United Kingdom. All Mem-ber States submitted their proposals in time. For most of the direct CAPaid, the transitional agrimonetary aidwas granted via top-ups of the relative market premiums. However, some practical difficulties surfaced in thecase of the structural measures (Regulation (EC) No 950/97) and the measures accompanying the reform ofthe CAP(Regulation (EEC) No 2078/92 — agri-environmental measures; Regulation (EEC) No 2079/92 —early retirement from farming and Regulation (EEC) No 2080/92 — forestry measures). The difficultieswere mainly due to the fact that these measures are implemented through multiannual programmes approvedby the Commission; these programmes contain a significant number of measures whose implementing con-ditions differ appreciably. So far the Commission has approved five schemes in the United Kingdom (sheeppremiums, (197) beef premiums, (198) agri-environment and afforestation, (199) arable areas/hops premiums(200) and flax/hemp scheme (201)), two schemes in Denmark (one relating to measures having an operativeevent on 1 and 4 January (202) and the other relating to those having an operative event on 1 July (203)), onescheme for France (204) and Luxembourg (205) covering all sectors affected, two schemes in Belgium (onecovering only the animal products having an operative event on 1 or 4 January 1999(206) and the other relat-ing to those having an operative event on 1 July(207)), three schemes for Finland (animal products,(208) arablecrops (209) and flax and hemp (210)) and three schemes for Ireland (animal premiums, (211) agri-environmentand early retirement (212) and arable crops (213)). Concerning Italy, (214) the Commission requested more de-tailed information on how the available funds would be used, and therefore examination of the notified planis still pending.

2.8. Fisheries

Spain

The Commission authorised a Spanish scheme providing aid to finance experimental fishing projectsaimed at assessing the viability of introducing such fishing methods on a regular, long-term basis.Projects were to be selected on the basis of the following criteria: innovative nature of the pilot project,use of new or selective fishing gear, value of the species caught, fishing in zones other than those wherethe Community fleet operates, and scientific value as attested by the Spanish Oceanographic Institute oranother scientific institution.

The scheme was considered to be in line with the guidelines for the examination of state aid to fisheriesand aquaculture, which state that schemes of this type are compatible with the common market if they



(197) Case N 156/99, Commission decision of 21 April 1999 (OJ C 159, 5.6.1999).(198) Case N 239/99, Commission decision of 23 June 1999 (OJ C 233, 14.8.1999).(199) Case N 241/99, Commission decision of 8 December 1999 (not yet published).(200) Case N 487/99, Commission decision of 26 October 1999 (OJ C 359, 11.12.1999).(201) Case N 483/99, Commission decision of 26 October 1999 (OJ C 359, 11.12.1999).(202) Case N 258/99, Commission decision of 15 January 2000 (OJ C 12, 15.1.2000).(203) Case N 576/99, Commission decision of 26 October 1999 (OJ C 12, 15.1.2000).(204) Case N 395/99, Commission decision of 13 October 1999 (OJ C 340, 27.11.1999).(205) Case N 295/99, Commission decision of 10 November 1999 (not yet published).(206) Case N 296/99, Commission decision, 26 October 1999 (not yet published).(207) Case N 730/99, Commission decision of 22 December 1999 (not yet published).(208) Case N 256/99, Commission decision of 10 November 1999 (not yet published).(209) Case N 620/99, Commission decision of 25 November 1999 (not yet published).(210) Case N 741/99 Commission decision of 18 January 2000 (not yet published).(211) Case N 251/B/99, Commission decision of 10 November 1999 (not yet published).(212) Case N 251/A/99, Commission decision of 8 December 1999 (not yet published).(213) Case N 650/99, Commission decision of 22 December 1999 (not yet published).(214) Case N 257/99.

comply with the Community framework for state aid for research and development. The R&Dframework provides that research aid is compatible with the EC Treaty if it is intended to facilitate thedevelopment of certain economic activities within the meaning of the Treaty and ensures among otherthings that the results are accessible. The latter condition was met given that the final reports on all theprojects were to be published by the Spanish Oceanographic Institute.

France

In the context of implementation of the Community’s Pesca programme, the Commission authorised ameasure setting up a national guarantee fund with the aim of rationalising the organisation and boostingthe efficiency of the marketing of fishery products and, in particular, supporting the different operatorsinvolved in the distribution chain (fishermen, wholesalers, retailers and the corresponding associations).The aid took the form of a public guarantee granted by the fund to the credit institution financing theauctioneer. The guarantee provided by the fund would be called upon only in the event of failure ofwholesalers, after the compulsory security lodged by buyers at auctions had been used up.

The measure was intended to make the market work more efficiently by reducing the inflexibilities and struc-tural shortcomings that tended to handicap the distribution of fishery products. The operation of the fundwould enable products to be marketed more successfully, remove bottlenecks and make financial transac-tions more secure. It would allow new activities to develop by facilitating wholesalers’access to products atdifferent ports and stabilising the distribution chain both upstream and downstream of wholesalers. The mea-sure was in line with the programming instruments adopted under the Community rules: the Community ini-tiative for restructuring the fisheries sector contributed, as far as France was concerned, towards efforts tostrengthen marketing channels and, in particular, measures in favour of the first link in the chain, whole-salers. Adoption of measures of this nature was envisaged in order to cope with changes in retail distribution(consumers’tastes and the demands of buyers, processors and distributors) and the financial vulnerability ofwholesaling firms. The measure furthermore qualified for exemption under Article 87(3)(c) of the ECTreatysince it facilitated the development of certain economic activities without adversely affecting trading condi-tions to an extent contrary to the common interest.

Italy

The Commission authorised a scheme for improving the quality of and promoting fisheries and aquacultureproducts obtained by organic production methods in Liguria. The project was intended to promote produc-tion methods compatible with protection of the environment and the health of producers and consumers. Thescheme was available only to producers complying with the Community rules on organic production meth-ods. It complied with the rules laying down the criteria and conditions for Community structural operationsin the fisheries and aquaculture sector, which allow Member States to take action to encourage the develop-ment and implementation of systems for improving quality and environmental impact.

It also cleared a scheme for supporting trap net tuna fishing by aiding investments in the purchase andmaintenance of vessels and the maintenance of fishing gear and nets. The measure formed part of theeffort to maintain fishing using this particular method and was aimed at safeguarding a historical andcultural asset for the development of tourism and cultural activities in the region.

Portugal

The Portuguese Government notified an aid scheme setting up a fund to provide financial support forprofessional fishermen temporarily laid off as a result of disasters resulting in lengthy port closures or


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prevented from fishing by an exceptional and non-recurring event. The fund was financed by the revenuefrom fines imposed for breaches of the general fishing regulations. The aim was to support fishermenwho were prevented from working for lengthy periods on account of natural disasters or an exceptionalneed to conserve resources, on grounds of public health or protection of the environment, since therewas no insurance in the industry covering situations of this type. Fishing depended to a large extent onclimatic conditions and the state of stocks. The fund would pay allowances to crew members who, as aresult of the suspension of fishing, would otherwise not receive a minimum income, thereby operatingas the equivalent of a social security scheme.

2.9. Television

Germany

Kinderkanal and Phoenix (215)

On 24 February the Commission decided that two measures concerning specialised TV channels did notconstitute state aid or were compatible with the Treaty. In 1997 a complaint was filed against the creationof two public special-interest television channels in Germany: Kinderkanal and Ereignis- undDokumentationskanal Phoenix. The complainants alleged that financing these two new channels bylicence fees and giving both preferential access to the cable network constituted state aid.

The Commission decided that the licence fees constituted state aid under Article 87(1) of the EC Treaty,which could be compatible pursuant to Article 86(2) of the Treaty if it was granted as compensation forthe provision of “services of general economic interest”. It concluded that Germany legitimately definedas part of the public service broadcasting remit (i) a children’s channel, free of advertising and violenceand with a high share of information suitable for children, and (ii) an event and documentary channelwhich served political discussion by delivering background information about politics and society, fromGermany and abroad, focusing on event transmissions (e.g. parliamentary sessions), documentary reportsand discussion programmes and broadcast free of advertising. It found that the financial resourcesgranted to both channels did not exceed their actual costs and were therefore proportionate to the publicservice remit. Finally, the creation and financing of these two special interest channels did not appear toaffect trade within the EU to an extent contrary to the Community interest. The Commission thereforedecided that the funds from the licence fees dedicated to Kinderkanal and Phoenix were compatible withthe Treaty rules.

Furthermore, the Commission concluded that the rules governing access to the cable network inGermany did not constitute state aid because no state resources were involved.

France, Italy and Spain

Orders requiring France, Italy and Spain to provide information on their public service broadcasters (216)

On 3 February the Commission adopted orders requiring three Member States to provide it withsufficient information to enable it to assess whether their system for financing public broadcasters hadto be considered as predating the signature of the EC Treaty (in the case of France and Italy), or predating



(215) Case NN 70/98 (OJ C 238, 21.8.1999).(216) Cases NN 167/95, NN 166/95 and NN 140/98.

accession to the Community (in the case of Spain). Although the basic rules of the schemes wereintroduced before the entry into force of the state aid rules for the three Member States, the assessmentof whether the aid schemes were «existing» schemes required a complex analysis of the legal andeconomic conditions under which the aid was granted. The Member States were given one month fromthe day of receipt of the official letter from the Commission to submit their views on the nature of theaid and to provide the information necessary for performing the assessment.

France

France 2 — France 3 (217)

On the basis of the French authorities’ reply to the information order of 3 February, the Commissiondecided on 20 July to initiate proceedings under Article 88(2) of the EC Treaty in respect of aid grantedby France to the two public broadcasters France 2 and France 3 in the form of capital increases and cashsubsidies granted between 1988 and 1994. The Commission considered that these measures were notexisting aid and expressed doubts about the compatibility of the aid with the common market.

Italy

RAI (218)

On 20 July, having analysed the Italian Government’s reply to the information order of 3 February, theCommission decided to initiate proceedings under Article 88(2) of the EC Treaty regarding aid grantedby Italy to RAI in the form of a capital increase subscribed by IRI in 1992, a tax exemption and apreferential loan granted by a public body.

The Commission started its investigation, in the context of the assessment of the whole system offinancing for RAI, on the basis of a complaint lodged in 1996 by RAI’s main competitor. TheCommission considered that these measures were not existing aid and expressed doubts about thecompatibility of the aid with the common market.

The Commission also decided that the reduction of the concession fee and two loans granted by a publicbody did not constitute state aid as they did not confer any economic advantage on RAI.

United Kingdom

BBC News 24 (219)

On 28 September the Commission decided not to raise any objections to the state financing of BBC News 24,a special-interest channel dedicated to news coverage. BBC News 24 is a channel delivered free of advertis-ing and free of charge to carriers (cable or satellite operators). The service was originally developed for thedigital satellite platform but is available also on the free-to-air network during night hours and on analoguecable. The Commission considered that the funds stemming from licence fees constituted state aid, but foundsuch aid compatible under Article 86(2) of the EC Treaty as it compensated for the provision of a public ser-


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(217) Case C 60/99 (OJ C 340, 27.11.1999).(218) Case C 62/99 (OJ C 351, 4.12.1999).(219) Case NN 88/98 (not yet published).

vice, as defined and entrusted by the UK Government. Finally, the Commission found that the measure, al-though having an effect on trade between Member States, did not affect the development of such trade to anextent contrary to the common interest.

2.10. Other industries

Postal services

Germany

Deutsche Post (220)

On 20 July the Commission decided to start formal proceedings regarding state aid possibly granted toDeutsche Post AG. The public company Deutsche Post is required by law to provide a universal mailservice throughout Germany and has been granted a monopoly for certain letter services. It also offersother services, especially for the business community, on a purely commercial basis and under noobligation to the State. Private competitors complained to the Commission that Deutsche Post had usedprofits from its mail monopoly to subsidise its competitive services and to finance a number of takeoversin recent years. Under Community rules, revenue from a reserved field of activity must balance thespecific costs of the public service obligation in order to be justified under Article 86(2) of the EC Treaty.If revenue from this reserved field is greater than costs, this may constitute state aid if a market economyinvestor would not have left the surplus funds in the undertaking.

France

Sécuripost (221)

The Commission decided on 20 July to close by means of a positive decision the proceedings it hadinitiated under Article 88(2) of the Treaty in respect of a number of measures taken between 1988 and1993 by the French post office in favour of Sécuripost, which was at the time its subsidiary specialisedin the transport of valuables. The Commission had initially examined these measures to determinewhether they constituted state aid within the meaning of Article 87(1) of the Treaty and had found on31 December 1993 that no state aid was involved. However, on 28 September 1995 the Court of FirstInstance annulled that decision, finding that the Commission had not given proper or sufficient groundsfor certain aspects of its decision; the substance of the CFI’s judgment was subsequently confirmed bythe Court of Justice on 2 April 1998.

Accordingly, in 1996 the Commission opened a formal investigation into the measures concerned by theCourt judgment, namely the secondment of post office officials to Sécuripost, the fact that Sécuriposthad not contributed to unemployment insurance funds, the placing of post office premises at Sécuripost’sdisposal, the maintenance of Sécuripost vehicles by SNAG (the post office’s workshop and garageservice), the grant of an FRF 15 million advance by Sofipost (a post office holding company) toSécuripost for 1989, and the rates charged by Sécuripost to the post office. After analysing thesemeasures in detail and comparing them with market prices and conditions, the Commission concludedthat they did not in fact involve any state aid.



(220) Case C 61/99 (OJ C 306, 23.10.1999).(221) Case C 24/96 (OJ L 274, 23.10.1999).

Cement

Greece

Heracles General Cement Company (222)

On 17 March the Commission took a partly negative final decision on state aid to Heracles GeneralCement Company, the largest manufacturer of cement in Greece. In 1986 Greece converted Heracles’sdebts into new shares held by the State. The Commission opened proceedings in 1988 because it doubtedwhether the aid to the company fulfilled all the conditions the Commission had set in 1987 when itapproved Law 1386/83, intended to remedy a serious disturbance in the Greek economy. In 1991 theCommission concluded that the aid did meet the conditions of its 1987 decision and therefore closed theproceedings. This decision was challenged by competitors before the Court of First Instance. InJuly 1995 the CFI held that the Commission had failed to assess fully the effects of the aid on trade andcompetition, and annulled the Commission’s decision. The Commission decided in November 1995 toextend the Article 88(2) proceedings opened in 1988.

In its final decision the Commission concluded that the conversion of Heracles’s debt into capital was aid andthat it distorted competition and affected trade between Member States. Part of the aid was considered com-patible with the common market under Article 87(3)(b) of the EC Treaty as it was intended to remedy a seri-ous disturbance in the Greek economy. The remaining part of the aid was not limited to the minimum neces-sary and unduly placed the company in a more favourable position vis-à-vis its competitors. It therefore hadto be recovered in order to re-establish the status quo. The sum to be recovered was to bear interest from thedate on which it was made available to Heracles until its actual recovery.

Miscellaneous

Netherlands

a) Philips/Rabobank Technolease (223)

On 21 April the Commission decided to close the investigation into the tax treatment of the Technoleaseagreement between Philips and Rabobank, finding that it did not involve any state aid. The Commissionhad initiated Article 88(2) proceedings in 1997 after press articles suggested that the Dutch taxauthorities had granted an unspecified amount of aid to Philips and/or Rabobank in the form of a taxadvantage within the framework of Technolease. The latter consisted of a two-way transaction in whichPhilips sold know-how to Rabobank and Rabobank leased it back to Philips.

In its decision, the Commission stated that the exploitation of intangible assets did not in principle differfrom the use of other assets. Since Dutch tax legislation did not contain any specific provision regardingsale and leaseback or leasing contracts in general, the treatment of Technolease by the tax authorities hadto be assessed on the basis of the general principle of sound business practice. A thorough investigationof Dutch legislation and case-law led the Commission to the conclusion that the Dutch tax authoritieshad not exercised any discretionary power in the application of their general tax law to the Technoleaseagreement. Hence no aid was involved in the operation.


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(222) Case C 2/88 (ex NN 126/87) (not yet published).(223) Case C 28/97 (ex NN 38/97) (not yet published).

b) Dutch service stations (224)

On 20 July the Commission decided to close by means of a negative decision the Article 88(2)proceedings it had opened with respect to a Dutch aid scheme designed to compensate service stationsfor higher taxes than those levied on competitors on the German side of the border. The Commissionfound that aid to 450 service stations located near the border with Germany out of a total of 633 stationswhich benefited from the scheme was incompatible with the common market. Subsidies exceeding thede minimis threshold of EUR 100 000 per recipient, which Member States may grant over a three-yearperiod without infringing Article 87(1) of the EC Treaty, had to be recovered.

3. Cross-industry schemes

3.1. Environmental protection

Germany

a) Environmental tax reform law (Gesetz zum Einstieg in die ökologische Steuerreform) (225)

On 21April the Commission decided not to raise any objections to several special tax provisions in the law in-troducing an environmental tax reform. The scheme contained several tax exemptions, in particular reducedtax rates for the manufacturing industry, the agriculture and forestry sector and rail transport services. The spe-cial provisions reduced the full tax rate on electricity and mineral oil in some cases to as little as 20%, therebyrelieving the recipient companies from part of the tax, while all other companies had to pay higher taxes thanbefore. The Commission considered that the exemptions from such a general tax in the form of reduced taxrates or refunds had to be classed as state aid since they favoured certain undertakings or sectors of industry.

The Commission found, however, that the notified measures could be exempted for a period of three yearsunder Article 87(3)(c) of the ECTreaty. The Community guidelines on state aid for environmental protection(226) recognise that the introduction of environmental taxes and charges may under certain conditions justi-fy state aid in the form of relief from environmental taxes. This could be the case if some sectors were not ableimmediately to carry the extra financial burden and required temporary relief. The Commission took accountof the fact that not all Member States or third countries currently levied such energy taxes and that the intro-duction of environmental taxes therefore affected the competitive position of the undertakings concerned. Italso bore in mind that the German Government had undertaken to renotify the measures for approval afterthree years at the latest, and took note of the German Government’s confidence that German industry wouldcontinue to respect the voluntary agreements entered into previously and would keep up its efforts to reduceenergy consumption and increase energy efficiency.

b) Special environmental tax measures (227)

On 26 May the Commission decided to authorise the application of special tax arrangements, in the formof reduced environmental taxes on electricity and mineral oils, also to the economic sectors referred to



(224) Case C 43/98 (ex 558/97) (OJ L 280, 30.10.1999).(225) Case NN 47/99 (OJ C 166, 12.6.1999).(226) OJ C 72, 10.3.1994.(227) Case NN 50/99 (ex NN 61/99) (OJ C 245, 28.8.1999).

in the environmental tax reform law and covered by the ECSC Treaty. The Commission took the viewthat the aid could be exempted under Article 3 of the Steel Aid Code (228) and point 3.4 of the guidelineson state aid for environmental protection.

Italy

a) Environmental aid to several steel plants (229)

On 30 March the Commission decided not to raise any objection to environmental aid for several steelundertakings. The project provided for EUR 7 million in aid for environmental protection to be grantedto the following steel companies: ILVA Laminati Piani, Acciaierie di Cornigliano, ICMI and AcciaiSpeciali Terni. The aid was all related to the adaptation of existing environmental equipment and metthe conditions set out in the Steel Aid Code. (230) In some cases the initiatives resulted in savings in termsof production costs, namely those connected with the recycling of some acids. This benefit was thereforededucted from the original figure for eligible investments.

b) Ferriere Nord SpA (231)

The Commission decided on 11 June to open proceedings pursuant to Article 6(5) of the Steel Aid Code(232)against environmental aid to the steel undertaking Ferriere Nord SpAThe Italian authorities intended to grantaid amounting to 15% of an investment of EUR 7.33 million (ITL14.2 billion) for environmental protection.The planned investments were aimed at reducing noise and dust in connection with the setting-up of a newrolling mill and at reducing both noise and vibrations at the continuous steel casting plant. The investmentsappeared to have minimal impact on environmental protection. There was reason to doubt that environmen-tal protection was the primary purpose of the allegedly eligible investments. Furthermore, the claimed envi-ronmental benefit linked to the health and safety of workers did not appear to fall within the scope of Article 3of the Steel Aid Code or the Community guidelines on state aid for environmental protection.

Netherlands

Nerefco refinery (233)

On 30 March the Commission decided to close the investigation it had initiated under Article 88(2) of theEC Treaty in respect of aid amounting to EUR 6.7 million (NLG 15 million) which the Netherlands plannedto grant Nerefco for the purchase of an integrated gas turbine. The Commission authorised aid amounting toEUR 5.1 million (NLG 11.3 million) after finding that the project would help to achieve a considerable re-duction in the firm’s CO2 emissions and that the amount authorised, representing 30% of the eligible costs,complied with the guidelines on state aid for environmental protection. The Commission concluded that theremainder of the planned aid was incompatible with the common market and could not be granted.


STATE AID 261

(228) Commission Decision 2496/96/ECSC of 18 December 1996 establishing Community rules for state aid to thesteel industry (OJ L 338, 28.12.1996).

(229) Cases N 792/97 and 154, 155 and 156/98.(230) Commission Decision 2496/96/ECSC of 18 December 1996 establishing Community rules for state aid to the

steel industry (OJ L 338, 28.12.1996).(231) Case C 35/99 (ex N 106/99) (OJ C 288, 9.10.1999).(232) Commission Decision 2496/96/ECSC of 18 December 1996 establishing Community rules for state aid to the

steel industry (OJ L 338, 28.12.1996).(233) Case C 44/98 (ex N 708/97) (OJ L 6, 11.1.2000).

Finland

Energy production from renewable sources (234)

On 9 and 23 June the Commission decided not to object to the implementation of an aid scheme grantingtax deductions to promote energy production from renewable sources. It found that the aid complied withthe guidelines on state aid for environmental protection and with Article 3 of the Steel Aid Code and wastherefore compatible with the common market under both the EC Treaty and the ECSC Treaty.

Sweden

a) Extension of the district heating network (235)

On 3 February, having found that it complied with the guidelines on state aid for environmentalprotection, the Commission decided not to object to the grant of investment aid to encourage extensionof the district heating network, a heating system that generates less pollution and allows considerableenergy savings. The aid was to be granted over a five-year period and the total budget for the schemewas EUR 56 million (SEK 515 million).

b) Exemption of certain specific waste categories from the tax on waste disposal (236)

On 3 March the Commission decided not to raise any objections to an exemption from the new generaltax on the disposal of waste, levied at the rate of SEK 250 (EUR 27) per tonne. The scheme exemptedfrom payment of the tax certain specific categories of waste which could not at present be effectively re-used or recycled, the only option and the best solution from the standpoint of the environment beingdisposal at specific facilities in order to avoid the pollution that would result from uncontrolled storage.The number of beneficiaries was estimated at around 300 and the cost of total exemption from the taxat SEK 318.8-328.55 million, while the revenue from the tax, without counting the exemption, wasexpected to be SEK 1 305 million (EUR 145 million). For the waste categories concerned, the approachtaken was the best way of achieving the environmental protection objective pursued.

On 21 April the Commission decided to approve the application of this exemption also to ECSCundertakings. (237)

3.2. Research and development

Germany

Development of a regional jet by Dornier Luftfahrt GmbH (238)

On 8 December the Commission decided not to object to the grant of aid to Dornier Luftfahrt GmbH inthe form of a state guarantee covering 80% of a loan of around EUR 348 million to cover pre-



(234) Cases N 515/98 (OJ C 225, 7.8.1999) and N 292/99 (OJ C 326, 13.11.1999).(235) Case N 769/97 (OJ C 88, 30.3.1999).(236) Case N 284/98 (OJ C 113, 24.4.1999).(237) Case N 15/99 (OJ C 340, 27.11.1999).(238) Case N 281/99 (OJ C 40, 12.2.2000).

development costs under a plan to build a range of regional jet aircraft. The overall development costswere to be far in excess of those of the R&D project in question. The Commission found that the aidcomplied with the Community framework for state aid for research and development. (239)

Spain

a) Technological Plan II for the Aerospace Industry (240)

On 21April the Commission decided not to raise any objections to the implementation of Technological PlanII for the Aerospace Industry, which followed on from an aid scheme approved by the Commission in 1994.The scheme provided interest-free loans whose aid element was compatible with the R&D aid framework; itwas to last for five years and had a total budget of EUR 180.305 million (ESP 30 000 million) for the period1999-2003. It was intended to assist firms, research centres and universities carrying out R&D work in thefield of aerospace technology. The aid intensity was 75% for technical feasibility studies upstream of indus-trial research, 50% for technical feasibility studies upstream of pre-competitive activities, 50% for industri-al research projects and 25% for pre-competitive development activities, with a bonus of 10% for SMEs,10% in areas assisted under Article 87(3)(a) and 5% in areas assisted under Article 87(3)(c).

b) Environmental R&D (241)

On 20 July the Commission decided not to raise any objections to an aid scheme for promoting environmen-tal R&D. Atotal of EUR 240.4 million (ESP 40 000 million) was to be granted over the period 1999-2002 tofirms engaged in industrial production and public or private bodies, non-profit-making institutions and as-sociations of firms providing businesses with technical services linked to industrial activity. The aid took theform of interest-free loans and its intensity was in line with the R&D aid framework, with a bonus of 10% forSMEs, 10% in areas assisted under Article 87(3)(a) and 5% in areas assisted under Article 87(3)(c).

France

PIDEA-Eureka 1888 research programme (242)

On 11 May the Commission decided not to object to aid totalling EUR 50 million being granted to firmsand research centres taking part in PIDEA, a Eureka research programme bringing together ten Europeancountries, including eight EU Member States, and composed of individual R&D projects on theinterconnection and assembly of electronic components. The Commission found that the projects assistedand the conditions for granting aid were in line with the R&D aid framework.

Netherlands

a) Partly accelerated depreciation for R&D laboratories (243)

On 11 May the Commission decided not to object to a partly accelerated depreciation scheme aimed atstimulating investments in the construction or extension of R&D laboratories. After examining the


STATE AID 263

(239) OJ C 45, 17.2.1996.(240) Case N 135/99 (OJ C 166, 12.6.1999).(241) Case N 299/99 (OJ C 298, 16.10.1999).(242) Case N 67/99 (OJ C 203, 17.7.1999).(243) Case N 18/97 (OJ C 225, 7.8.1999).

scheme in the light of its notice on the application of the state aid rules to measures relating to directbusiness taxation, (244) the Commission found that it did not involve any state aid falling within the scopeof Article 87 of the EC Treaty, among other things because the advantage was granted automatically onthe basis of objective criteria to all firms, irrespective of the region or sector in which they operated.

b) Shell Chemicals BV (245)

On 20 July the Commission decided not to raise any objections to aid of up to EUR 11.34 million(NLG 25 million) to support a long-term research programme at Shell Chemicals BV. The research costsof the programme were expected to total up to EUR 30.13 million (NLG 66.4 million) and the aidintensity was 37.6%. The programme was a joint initiative of the Dutch Government and ShellChemicals, focusing on three topics: catalysis, pervasive analytical methods and molecular toxicology.The research on catalysis was aimed at investigating the catalytic activity of new homogeneous organo-metal complexes and other heterogeneous or homogeneous catalytic materials; the research could leadto the development of new materials. The work on pervasive analytical methods focused on techniqueswhich allowed a better understanding of the nature and/or composition of materials and product streams.The main goal of the research in the field of molecular toxicology was to gain a better understanding ofhow certain molecular structures interact with human cells in order to develop methods of assessing risksto human health caused by chemical exposures. The programme was a combination of fundamental andindustrial research. The aid served among other things as a catalyst to intensify the cooperation betweenShell Chemicals and the academic world and consequently had an incentive effect. It therefore compliedwith the Community framework for state aid for R&D.

Sweden

Energy sector in southern Sweden (246)

On 3 February the Commission decided not to raise any objections to an aid scheme to promote thedevelopment of energy technology and more environmentally friendly electricity production in southernSweden. The scheme, which had a budget of EUR 43.5 million (SEK 400 million) for a period of twoyears, provided aid for fundamental research, industrial research and pre-competitive developmentactivities, and for environmental improvement measures and investments in the district heating andnatural gas distribution network. It complied with both the R&D and environmental aid frameworks.

3.3. Internationalisation

Portugal

Tax aid scheme for internationalisation projects (247)

On 8 September the Commission decided not to raise any objections to a tax aid scheme forinternationalisation projects in Portugal. Under the scheme, which was to last until the end of 2010, taxexemptions were to be granted for periods of not more than five years in respect of investment andinternationalisation projects costing at least EUR 250 000. The aid was chiefly intended for direct foreign



(244) OJ C 384, 10.12.1998.(245) Case N 335/98 (OJ C 298, 16.10.1999).(246) Case N 384/98 (OJ C 92, 1.4.1999).(247) Case N 96/99 (OJ C 375, 24.12.1999).

investment projects aimed at establishing production facilities and subsidiaries and the creation oracquisition of production companies. Initial investment expenditure on the acquisition of stakes in orpayment of the registered capital of foreign companies and on the acquisition of buildings and plantdirectly linked to the implementation of projects was eligible; on the other hand, any expenditure on thecreation or acquisition of marketing companies, the promotion of exports or the creation and operationof distribution networks abroad was excluded from the scheme.

As far as the aid for direct foreign investment by SMEs was concerned, the Commission found that itcould be compatible with the common market according to the criteria laid down in the Communityguidelines on state aid for small and medium-sized enterprises. (248) On the other hand, it decided thataid for direct foreign investment by large firms had to be notified in advance for examination on a case-by-case basis. The Portuguese authorities undertook to notify individually all plans to grant aid to largefirms and all planned aid to small or medium-sized enterprises with an intensity of more than 15% and7.5% respectively of eligible expenditure. The Commission took account of the fact that the aid wasintended to promote the internationalisation of SMEs and could contribute to the long-term economicand social development of developing countries and the gradual, harmonious integration of the centraland east European applicant countries.

3.4. Rescue and restructuring aid

Belgium

Verlipack (249)

On 19 May the Commission decided to initiate proceedings under Article 88(2) of the EC Treaty inrespect of aid granted in 1997 to Verlipack by the Walloon Region. Verlipack, declared insolvent inJanuary, had operated on the market for container glass. The investigation was to focus first on a newcapital injection worth BEF 350 million made in 1997 on the occasion of a capital increase, which theCommission had approved in its decision of 16 September 1998. (250) This decision had been based onthe fact that the Walloon Region had complied with the principle of the private investor operating undernormal market economy conditions. The Commission had been informed that the Walloon Region’scontribution to Verlipack’s capital was accompanied by a sizeable injection by a private investor, Heye-Glas. However, Heye-Glas’s share had come from public resources, a fact which called into question thebasis of the Commission’s decision. The fact that this information had not been available at the time ofthe Commission’s decision meant that proceedings had to be initiated with a view to revoking it.

Second, the Commission was to examine additional aid, not notified to it at the time of its decision,which had been granted by the Walloon authorities, also in 1997, in the form of two loans totallingEUR 12 394 676 (BEF 500 million) to the Heye-Glas group with a view to financing its contribution toVerlipack’s capital. The loans constituted unlawful aid. On the basis of the information in theCommission’s possession, this aid could not be classed as rescue and restructuring aid.


STATE AID 265

(248) OJ C 213, 23.7.1996.(249) Case C 40/99 (ex NN 178/97) (OJ C 288, 9.10.1999).(250) Case NN 178/97 (OJ C 29, 4.2.1999).

Germany

a) Graphischer Maschinenbau GmbH (251)

On 3 February the Commission closed Article 88(2) proceedings initiated in respect of aid for therestructuring of Graphischer Maschinenbau GmbH, deciding to authorise part of the aid measure. Itapproved the provision of a grant of EUR 2.268 million (DEM 4.435 million). It did not approve afurther amount of EUR 2.493 million (DEM 4.875 million). The proposed restructuring plan wasfeasible, coherent and far-reaching. Germany had demonstrated that Graphischer Maschinenbau GmbHhad viable long-term prospects and was able to operate on the strength of its own resources withoutrequiring further state assistance. Production capacity was to be redistributed within the Koenig & Bauer-Albert AG group in so far as the segment of loss-making products manufactured in the past byGraphischer Maschinenbau GmbH was to be abandoned. The company would concentrate on newcompetitive machinery parts, which would, in return, be abandoned at other Koenig & Bauer-Albertproduction sites. As a result and in the absence of excess capacity in the market segment, theCommission found that the state aid would not lead to distortion in the market. However, it concludedthat the proposed state aid amount of EUR 4.76 million (DEM 9.310 million) was not in proportion tothe eligible restructuring costs of EUR 9.231 million (DEM 18.055 million) and exceeded the minimumneeded to restructure the company. It therefore decided to deduct from the amount proposed the partrelating to non-eligible costs which arose primarily for the benefit of the Koenig & Bauer-Albert AGgroup.

b) Spindelfabrik Hartha GmbH, Saxony (252)

On 3 February the Commission closed with a negative decision the proceedings it had initiated on 30 Ju-ly 1998 under Article 88(2) of the EC Treaty in respect of restructuring aid granted to Spindelfabrik HarthaGmbH by the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (BvS) and the Land of Saxony. Fol-lowing economic difficulties in 1995, a restructuring plan had been drawn up by the BvS in January 1996. Itincluded financial measures worth EUR 4.7 million (DEM 9.3 million). The total amount in aid connectedwith the restructuring was EUR 3.6 million (DEM 7.03 million). The aid did not meet one of the conditionscontained in the Community guidelines on state aid for rescuing and restructuring firms in difficulty. (253)The restructuring plan designed to restore the long-term viability of the firm was not based on realistic as-sumptions and it overestimated turnover prospects. This was confirmed by the actual results of the firm,against which insolvency proceedings were initiated in June 1997. The amount of the aid would, the Com-mission concluded, have to be recovered by the German authorities.

c) Dessauer Geräteindustrie GmbH (254)

On 21 April the Commission decided to initiate proceedings under Article 88(2) of the EC Treaty inrespect of restructuring aid totalling EUR 6.19938 million (DEM 13.571 million) granted to DessauerGeräteindustrie GmbH in Saxony-Anhalt. The firm produces and distributes domestic heating appliancesand installations. The Commission entertained serious doubts about the compatibility of the aid with thecommon market, given that the restructuring plan did not appear sufficient to restore the firm’scompetitiveness and that the market suffered from overcapacity.



(251) Case C 54/98 (ex N 101/98) (not yet published).(252) Case C 58/97 (ex NN 135/96) (OJ L 145,10.6.1999).(253) OJ C 368, 23.12.1994.(254) Case NN 63/98 (OJ C 213, 24.7.1999).

d) Increase in working capital for firms in the Land of Thuringia (255)

On 21 April the Commission decided to initiate proceedings under Article 88(2) in order to investigatehow the de minimis rules had been applied in connection with the implementation of the Land ofThuringia’s working capital programme of 20 July 1993. The Commission found that the programmeapplied to all firms without distinction, that is, it also applied to firms in sensitive sectors, although thesesectors are explicitly excluded from the de minimis provisions. Furthermore, in some cases involvingfirms in difficulty, aid granted in the form of a guarantee might have exceeded the de minimis threshold.The advantages conferred on the firms concerned in both these cases thus constituted state aid which hadto be assessed in the light of Article 87 of the EC Treaty.

e) Dieselmotorenwerk Rostock (256)

On 21 April the Commission closed with a negative decision the Article 88(2) proceedings it had openedin respect of restructuring aid to Dieselmotorenwerk Rostock (DMR), formerly DieselmotorenwerkVulkan. DMR had run into severe financial difficulties when its parent company Bremer Vulkan VerbundAG collapsed in early 1996. The federal agency BvS and the Land of Mecklenburg-Western Pomeraniahad provided rescue aid to the company from 1996 and bought the shares of DMR from the insolventVulkan Industrie Holding GmbH in 1997. In order to prevent the loss-making DMR from goingbankrupt, the new state owners had to provide subordinate loans and various state guarantees. Attemptsto re-privatise the company had failed thus far. Owing to a sharp decline in new orders in 1998 it wasexpected that the company would face new losses and depend on continued state support for theforeseeable future. The Commission found that the rescue measures granted up until May 1997 could beregarded as compatible with the common market. The subsequent restructuring aid did not fulfil thecriteria of the Community guidelines on state aid for rescuing and restructuring firms in difficulty. Inspite of the large amount of restructuring aid (EUR 60.5 million (DEM 118 million)) the company wouldnot become financially viable. It would remain dependent on state aid, and it could be expected that thecontinuous subsidies would distort competition on the market for ship engines in the Community. Therestructuring aid was therefore found to be incompatible with the common market and had to berecovered.

f) Korn Fahrzeuge und Technik GmbH, Thuringia (257)

On 11 May the Commission decided to initiate Article 88(2) proceedings in respect of aid amounting toat least EUR 5.325 million (DEM 10.416 million) granted by the Land of Thuringia to Korn Fahrzeugeund Technik GmbH. The company was benefiting from two sets of aid measures purportedly awardedon the basis of approved schemes for restructuring purposes. The Commission doubted whether the aidmeasures complied with the terms of these schemes and whether they satisfied the criteria laid down inthe guidelines on state aid for rescuing and restructuring firms in difficulty.

g) Aid for Dow/Buna SOW Leuna Olefinverbund GmbH (BSL) (258)

On 26 May the Commission decided to close with a positive decision the Article 88(2) proceedings reopenedon 10 December 1997 in respect of changes in aid totalling EUR 4.8 billion (DEM 9.5 billion), approved in


STATE AID 267

(255) Case NN 18/99 (OJ C 203, 17.7.1999).(256) Case C 6/97 (OJ L 232, 2.9.1999).(257) Case 29/98 (OJ C 233, 14.8.1999).(258) Case C 83/97 (not yet published).

1996 (259) in the context of the privatisation of Buna SOW Leuna Olefinverbund GmbH (BSL), a chemicalcompany located in Saxony-Anhalt and Saxony. The Commission’s approval of the aid in 1996 was condi-tional on the German authorities notifying any deviation from the privatisation contract. In September 1997the German authorities submitted to the Commission two new contractual agreements between Dow andBvS, by which the privatisation contract was amended. In its 1997 decision to reopen the case, the Commis-sion took account of the fact that the overall aid amount of EUR 4.8 billion was not changed by the amend-ment agreements. Nevertheless, it had serious doubts about the alterations within BSL’s restructuring con-tained in these agreements. It could not rule out the possibility that increases in capacity could have a nega-tive impact on competition and trade between Member States. In addition, the Commission strongly sus-pected that a new energy supply contract provided aid to cover electricity costs.

In the course of the proceedings the German authorities agreed to exclude the capacity increases fromthe aided investment. In addition, a study produced for the Commission by an independent consultantcame to the conclusion that the energy supply contract could be explained by factors other than the aidpackage the Commission had approved in May 1996. The Commission therefore concluded that theamendments were within the scope of its 1996 decision.

h) Weida Leder and Abwasserreinigungsanlage Schloßmühlenweg Weida (260)

On 14 July the Commission decided to close the Article 88(2) proceedings it had initiated and to adopt a neg-ative final decision with respect to aid for Weida Leder GmbH and its subsidiary, AbwasserreinigungsanlageSchloßmühlenweg Weida GmbH, in Thuringia. The Land of Thuringia and the BvS had together grantedstate aid of some EUR 19.5 million (DEM 38 million) with a view to stabilising the company and improvingits business structure in the context of negotiations with potential investors. EUR 15.4 million (DEM 30 mil-lion) of this amount was not covered by an approved aid scheme. The search for investors had not been suc-cessful. Despite the public financial assistance the firm filed for bankruptcy on 28 May 1998. In the absenceof an investor willing to take over the company and of a realistic restructuring plan leading to the restorationof the long-term profitability of the company, these aid measures worth EUR 15.4 million could not be ap-proved under the relevant guidelines.

i) Lautex GmbH Weberei und Veredelung (261)

On 20 July the Commission closed with a negative decision the proceedings it had initiated underArticle 88(2) of the EC Treaty in respect of restructuring aid to the textiles manufacturer Lautex GmbHWeberei und Veredelung. It concluded that the conditions set out in the guidelines for firms in difficultyhad not been met. The restoration of the company’s long-term viability on the basis of a soundrestructuring plan seemed unlikely, and the contribution by private investors was insufficient and not ofsubstance. Lastly, the Commission had doubts as to whether the restructuring plan would be fullyimplemented. It formally requested the German Government to recover the aid disbursed.

j) SKET Maschinen- und Anlagenbau (262)

On 20 July the Commission decided to close with a positive decision the Article 88(2) proceedings ithad initiated in respect of EUR 29.5 million (DEM 57.8 million) in aid to SKET Maschinen- und



(259) Cases C 4, 61 and 62/94 (OJ L 239, 19.9.1996).(260) Case C 19/98 (not yet published).(261) Case C 23/97 (OJ L 42, 15.2.2000).(262) Case C 69/97 (ex NN 122/97).

Anlagenbau GmbH (MAB), Saxony-Anhalt. The aid measures were to fund a restructuring plan designedto return the company to long-term viability and complete its integration into the operations of its twoprivate investors, the Enercon Group and LMB Group. The Enercon Group is active in the development,design and erection of wind turbines worldwide. As a result of the privatisation, SKET MAB would havecloser connections to that submarket. The LMB Group is active in a similar market to that of SKETMAB. The aid was restricted to the minimum required to implement the aid programme. The aidmeasures complied with the Community guidelines on state aid for rescuing and restructuring firms indifficulty.

k) Brockhausen Holze (263)

On 28 July the Commission closed with a negative decision the proceedings it had initiated underArticle 88(2) of the EC Treaty in respect of aid granted to Brockhausen Holze. It found first that the aidgranted under previously approved schemes had not been granted in accordance with the conditions forapplying these schemes, and second, that the provisions of the guidelines on aid for firms in difficultyhad not been complied with. It therefore concluded that the aid was incompatible with the commonmarket and ordered its recovery.

l) Pittler/Tornos Werkzeugmaschinen (264)

On 28 July the Commission closed with a negative decision the proceedings it had initiated underArticle 88(2) of the EC Treaty in respect of restructuring aid worth EUR 15.75 million(DEM 30.8 million) for the firm Pittler/Tornos Werkzeugmaschinen GmbH. It found that no coherentrestructuring plan had been drawn up and that the long-term viability of the firm was not ensured. Itordered the recovery of the aid paid out.

m) Kranbau Eberswalde (265)

On 28 July the Commission decided to terminate with a positive decision Article 88(2) proceedingsinitiated in respect of aid amounting to EUR 28.9 million (DEM 56.5 million) for Kranbau EberswaldeGmbH, Brandenburg. The aid measures were to fund a restructuring plan designed to return the companyto long-term profitability and complete its integration into the operations of its private investor, theKirow Group. A key element of the restructuring was the completion of the merger with Kocks KraneInternational GmbH, also a subsidiary of the Kirow Group. The aid measures complied with the relevantCommunity guidelines.

n) Everts Erfurt (266)

On 28 July the Commission decided to terminate with a positive decision Article 88(2) proceedingsinitiated in respect of aid amounting to EUR 4.65 million (DEM 9.1 million) for Everts Erfurt GmbH.Everts Erfurt produces and sells products made of rubber and latex, 95% of its turnover being achievedby the sale of condoms. The restructuring plan made the firm viable. A new private investor contributedsignificantly to the restructuring. The aid could therefore be considered compatible with the commonmarket.


STATE AID 269

(263) Case C 5/98 (ex NN 54/97) (OJ L 7, 12.1.2000).(264) Case C 80/97 (ex NN 53/97) (not yet published).(265) Case C 22/98 (ex NN 9/98) (OJ L 326, 18.12.1999).(266) Case C 42/97 (ex NN 121/96) (OJ L 310, 4.12.1999).

o) Entstaubungstechnik Magdeburg GmbH (267)

On 22 December the Commission decided to close with a positive decision the proceedings it hadinitiated under Article 88(2) of the EC Treaty in respect of aid totalling EUR 11.6 million(DEM 22.8 million) which had been granted between 1993 and 1997 to Entstaubungstechnik MagdeburgGmbH (ETM), a manufacturer of advanced air and smoke filtering systems, in the context of itsprivatisation. This was a growth market worldwide, given the increasing importance of environmentalprotection. The Commission concluded that the aid met the requirements of the guidelines on aid forrescuing and restructuring firms in difficulty.

Spain

a) Babcock Wilcox España SA (268)

On 8 July the Commission decided to extend the Article 88(2) proceedings it had initiated in April 1998(269) to cover a new capital contribution of EUR 246.4 million (ESP 41 000 million) to Babcock WilcoxEspaña SA («BWE») by the Spanish public holding company SEPI. The Commission had initiated theproceedings with respect to two capital contributions to BWE made by SEPI in 1994 and 1997 andtotalling EUR 120 million (ESP 20 000 million). The new capital contribution, notified by the Spanishauthorities in June, was intended to increase BWE’s capital, eroded by losses, up to the minimum legallyrequired under Spanish company law, and to finance a further labour-force reduction of about 500people. The Commission took the view that this new capital contribution constituted aid since it was notlikely to provide an adequate rate of return to its investor, and that it appeared incompatible with thecommon market. The compatibility of the new capital contribution, as well as of the aid investigated sofar, would be assessed in the light of the characteristics of the restructuring programme that the purchaserof BWE would implement.

b) Ercros (270)

On 20 July the Commission decided not to raise any objections to aid amounting to EUR 51.086 million(ESP 8 500 million) to Ercros, a manufacturer of chemicals. In May 1994 Ercros had prepared arestructuring plan entailing, on the one hand, divestment of its petrochemicals, explosives and miningactivities and the restructuring of its fertilisers activities for possible sale to an investor, and, on the otherhand, the restructuring of its chemicals activities, on which it was to concentrate. The companyimplemented a restructuring plan which led to the restoration of its long-term viability. The divestmentand the substantial capacity reduction offset as far as possible adverse effects on competitors.

France

Gooding Consumer Electronics (formerly Grundig) (271)

On 16 November the Commission decided to close with a negative decision the proceedings it hadinitiated under Article 88(2) of the EC Treaty in respect of a total of EUR 5.5 million (FRF 36 million)



(267) Case C 16/B/95.(268) Case C 33/98 and N 332/99 (OJ C 280, 2.10.1999).(269) OJ C 249, 8.8.1998.(270) Case NN 62/99.(271) Case C 14/98 (ex NN 19/95) (not yet published).

granted in aid to Gooding Consumer Electronics (GESA) (formerly Grundig), in insolvency since 1997.The Commission found that the firm’s restructuring plan had not been implemented in full, although thisis a prerequisite for the authorisation of aid to firms in difficulty. Even though certain external factorsplayed a part, the causes of GESA’s insolvency and winding-up were principally to be found in the non-compliance by the purchaser with undertakings he had given as regards financing and the diversificationof production operations in the context of the restructuring plan. It followed that the requirements forcompatibility with the common market were not met. The Commission therefore concluded that the aidwas incompatible and required the French Government to recover the amount with interest running fromthe date on which the aid was granted.

Italy

a) SIRAP SpA (272)

On 3 March the Commission decided to close with a negative decision the proceedings it had initiated underArticle 88(2) of the EC Treaty in respect of an aid scheme set up for firms affected by the bankruptcy of SIR-AP SpA: suppliers, creditors and firms having carried out work on its behalf. The aid, which had been grant-ed in the form of state guarantees and interest subsidies to the tune of EUR 1.03 million (ITL 2 000 million),constituted operating aid incompatible with the common market. The Commission therefore decided that theportion of this aid not covered by the de minimis rule should not be granted. As regards aid already granted,it ordered that the state guarantees be discontinued and the aid recovered.

b) Enterprise SpA (273)

On 17 March the Commission decided not to object to the granting of aid to the construction firmEnterprise SpA in the form of a guarantee at the market rate of EUR 16.7 million (ITL 32 335 million)for a period of six months. The aid was to enable the company to obtain a bridging loan pending recoveryof the amounts owed to it by its defaulting Libyan debtors. The Commission concluded that the aidcomplied with the guidelines on state aid for rescuing companies in difficulty.

c) Siciliana Acque Minerali Srl (274)

On 11 May the Commission decided to initiate proceedings under Article 88(2) of the EC Treaty inrespect of the decision by the Italian authorities to recapitalise to the tune of up to EUR 1.5 million(ITL 3 000 million) Siciliana Acque Minerali Srl (SAM), a firm which specialises in managing industrialplants for bottling and distributing mineral water and beverages. The measure was intended to cover thecompany’s losses and reconstitute its capital with a view to privatisation. In the absence of any indicationthat the company would return to viability, the Commission seriously doubted whether the aid wascompatible with the common market.

d) Seleco SpA and Multimedia (275)

On 2 June the Commission decided to close with a negative decision the proceedings it had initiated in1994 under Article 88(2) of the EC Treaty and extended in 1998 in respect of aid granted to Seleco, a


STATE AID 271

(272) Case C 27/96 (ex NN 196/95) (not yet published).(273) Case N 648/98 (OJ C 288, 9.10.1999).(274) Case N 576/97 (not yet published).(275) Case C 46/94 (ex NN 60/94 et NN 92/94) (not yet published).

consumer electronics firm declared bankrupt in April 1997. The measures implemented in various formsby the public body Ristrutturazione Elettronica (Rel) and the public company Friulia were judged by theCommission to constitute state aid which was incompatible with the common market and should berecovered.

Thirteen months before its bankruptcy, Seleco had regrouped its most profitable activities in Multimedia,a company set up in 1995 the capital of which had been divided since July 1996 between Friulia, Italteland Finanziaria Elettronica, the latter a subsidiary of Seleco. The Commission required the incompatibleaid to be recovered from Seleco and also from any other company to which assets had been transferredin such a way as to thwart implementation of the decision requiring recovery of the aid. The Commissiondecided that there was continuity between the firms concerned so that the incompatible aid couldeffectively be recovered even where the initial recipient, which had subsequently gone into bankruptcy,acted in reality as no more than the intermediary of the final recipient.

e) Law on the extraordinary administration of large firms in difficulty (276)

On 28 July the Commission decided to initiate Article 88(2) proceedings in respect of Italian LawNo 95/1979 on the extraordinary administration of large firms in difficulty. In this connection theCommission had already proposed appropriate measures under Article 88(1) of the EC Treaty to theItalian Government in 1994. Since the Italian Government did not accept the Commission’s proposal,the latter had opened Article 88(2) proceedings in 1997. (277) The investigation was close to a conclusionwhen on 17 June in Rinaldo Piaggio SpA and Dornier Luftfahrt GmbH (278) the Court of Justice declaredincorrect the Commission’s 1997 decision to class Law No 95/1979 as existing aid. The Commissionwas therefore compelled to open a new investigation as the above scheme had in principle to beconsidered non-notified aid.

Italian Law No 95/1979 introduced a scheme that derogates from the normal insolvency proceedings.The beneficiaries are large firms in difficulty as defined by both the number of employees (300) andtheir outstanding liabilities vis-à-vis (mainly) public creditors. The law authorises the firms in difficultyto pursue their activity in circumstances where this would be denied them in the context of normalinsolvency proceedings. It furthermore provides for the firms to benefit from a state guarantee, a reducedtax rate on the purchase of the firm, an exemption from the obligation to pay fines and the forgoing ofits public liabilities. The Commission had reasons to believe that the scheme was not compatible withthe common market as it was aimed at large enterprises, whereas the Community guidelines on state aidfor rescuing and restructuring firms in difficulty accept schemes for SMEs only.

f) Banco di Sicilia and Sicilcassa (279)

On 10 November the Commission decided to close with a conditional positive decision the proceedingsit had initiated under Article 88(2) of the EC Treaty in respect of aid to Banco di Sicilia and Sicilcassa.It approved aid of EUR 2.4 billion on condition that the restructuring of Banco di Sicilia, which hadtaken over most of Sicilcassa’s activities, continued and that considerable compensatory measures wereoffered. Thus, 55 branches would have to be closed in Sicily by the end of 2000 and no new branchcould be opened there for a period of three years. Furthermore, the Commission noted the undertaking



(276) Case C 68/99 (ex NN 96/99, ex C 7/97, ex E 13/92) (OJ C 245, 28.8.1999).(277) OJ C 192, 24.6.1997.(278) Case C-295/97.(279) Case C 16/98 (ex NN 10/98) (not yet published).

given by the Italian Government to privatise the Mediocredito Centrale group, the parent company ofBanco di Sicilia, by June 2000.

3.5. Employment and training aid

Spain

a) Promotion of the cooperative/non-profit sector in Andalusia (280)

On 20 January the Commission decided not to raise any objections to aid for the creation andsafeguarding of employment which the regional government of Andalusia was providing under a plan topromote the cooperative/non-profit sector. The plan was designed in particular to encourage specific,disadvantaged categories of job-seeker (young people and women without work and the long-termunemployed) to create their own jobs through the setting-up and development of cooperatives andworker-owned firms (sociedades laborales). The recipients were small and medium-sized enterprises(SMEs) situated in a less-favoured area in which the standard of living was particularly low. TheCommission considered that the aid was compatible under the terms either of Article 87(3)(a) or ofArticle 87(3)(c) of the EC Treaty, according to the circumstances, since it was granted either to promotethe regional development of regions where the standard of living was abnormally low or to facilitate thedevelopment of certain economic activities of cooperatives and worker-owned firms without affectingtrading conditions to an extent contrary to the common interest.

b) Job creation following reorganisation and reduction of working time in Catalonia (281)

On 21 April the Commission decided not to raise any objections to a job creation incentive schemefollowing the reorganisation and reduction of working time, proposed by the Region of Catalonia. Underthe scheme, firms based in Catalonia were to be granted reductions in the social security contributionsthey paid as employers when they took on unemployed persons registered with employment agencies asa result of the reduction or reorganisation of working time. Firms’ contributions could be reduced by asmuch as 40%. The aid was to be granted for two years as from the signature of the agreement with eachfirm during the period 1999-2000. The scheme involves net job creation since firms which have laid offworkers in the twelve months preceding their application to participate in the scheme would not beeligible for the incentives. In addition, to benefit from the scheme, the posts had to be created for anindeterminate period.

Italy

a) Aid scheme to realign wages (282)

On 3 March the Commission decided not to object to implementation of a scheme for aid in the form ofsocial security reductions and a tax amnesty for managers of firms that regularised the position of theirundeclared workers and gradually realigned their wages on the collective agreements in force. Thescheme, which was designed to combat the underground economy, was restricted to companies based inthe regions of Sicily, Sardinia, Calabria, Basilicata, Apulia and Campania, regions in which theunderground economy was particularly widespread and which were likely to qualify for aid pursuant to


STATE AID 273

(280) Case N 546/98 (OJ C 66, 9.3.1999).(281) Case N 520/99 (OJ C 298, 16.10.1999).(282) Case N 545/98 (OJ C 113, 24.4.1999).

the exception in Article 87(3)(a) of the EC Treaty. In the light of the guidelines on employment aid (283)and regional aid, and given the purpose of these measures, the Commission took the view that they werecompatible with the common market.

b) Employment aid schemes (284)

On 11 May the Commission decided to close the proceedings it had initiated under Article 88(2) of theEC Treaty in respect of aid for recruitment granted in the form of reductions in social securitycontributions for training/work experience contracts and their conversion into open-ended contracts. Itconcluded that the aid was compatible with the common market where it either related to the recruitmentof certain groups of workers experiencing particular difficulties entering or re-entering the labour market,or involved net job creation as defined in the guidelines on aid to employment. It therefore authorisedthe aid in these specific cases. However, the aid which did not comply with one or other of the aboveconditions was incompatible with the common market and was prohibited. The Commission thereforeordered the recovery of the aid which had already been granted.

c) Reduction in social security contributions for firms in Venice and Chioggia (285)

On 24 November the Commission decided to close proceedings initiated under Article 88(2) of theEC Treaty in respect of measures exempting firms located in Venice and Chioggia from social securitycontributions during the period 1995-97. The Commission found that the measures granting aid in theform of exemption from social security contributions for job creation in SMEs were compatible with thecommon market. They were also compatible when granted to large firms operating in an area eligiblefor regional aid, and when granted to any type of firm recruiting groups of workers experiencingparticular difficulties entering or re-entering the labour market. However, the other aid granted to largefirms outside areas eligible for regional aid, together with the aid granted for safeguarding jobs, wasdeclared incompatible with the common market.

United Kingdom

Employee training (286)

On 20 January the Commission decided not to raise any objections to aid for employee training for EliLilly Ltd, a bio-pharmaceutical company. The Commission identified the project as a general trainingproject within the meaning of the Community framework on training aid. (287) It provided skills that weretransferable to other firms in the same industry or to firms in related areas of work. Its transferablecharacter was underlined by the fact that it resulted in nationally recognised qualifications. Furthermoreemployees were to be trained to carry out a broad range of tasks covering several skill areas thattraditionally would be carried out by several people with skills specific to one skill area only. Forexample, administrative staff were trained to carry out customer service, production planning anddocumentation control activities.



(283) OJ C 334, 12.12.1995.(284) Case C 49/98 (OJ L 42, 15.2.2000).(285) Case C 81/97 (not yet published).(286) Case N 452/98 (not yet published).(287) OJ C 343, 11.11.1998.

3.6. Aid for small and medium-sized enterprises

Denmark

VaekstFonden (288)

On 4 May the Commission decided not to raise any objections to the Danish Business DevelopmentFinance (VaekstFonden) scheme. The approved scheme allowed Business Development Finance, a publicbody answerable to the Danish Government, to provide financial assistance to innovative small-businessstart-ups. Four types of assistance were possible: participatory loans, injections of capital into innovationfunds, injections of capital into venture capital funds and guarantees to cover losses incurred by venturecapital funds investing in small businesses in the development phase. These investments were made inconjunction with private investors, selected by tender procedure. The innovation and venture capitalfunds took shares in new, innovative and independent small businesses in order to finance research anddevelopment costs or capital investment linked to the creation or expansion of the small businessesconcerned. Likewise, Business Development Finance could guarantee investments by venture capitalfunds in new and innovative small businesses. Investment decisions by the innovation and venture capitalfunds were taken solely on the basis of commercial considerations by their private managers orshareholders.

The Commission took the view that the various types of assistance provided by Business DevelopmentFinance did not confer any advantage capable of distorting competition in favour of private firms thatresponded to its calls for tender, since the latter, being widely publicised and based on transparent andnon-discriminatory criteria, ensured that assistance by Business Development Finance, by increasing theexpected profitability of the investments, compensated these investors precisely for the additional riskthey were taking by investing in innovative small businesses. The Commission moreover considered thatthe assistance provided by Business Development Finance in the form of shareholdings in or guaranteesfor the innovation and venture capital funds did not favour the small businesses in which these fundswere invested. If, however, the intervention by Business Development Finance were to contain any stateaid element for the small businesses, it would be minimal and below the maximum intensities laid downin the Community framework for state aid for research and development, and, where applicable theCommunity guidelines on state aid for SMEs. (289)

Netherlands

Job creation aid scheme (290)

On 28 July the Commission decided not to raise any objections to a job creation aid scheme for Arnhem-Nijmegen. The scheme provided aid for net job creation linked to initial investment projects carried outby SMEs. The aid per job created amounted to EUR 4 538 if the person recruited had previously beenunemployed, or EUR 3 403 if the person recruited was in employment. In addition, the Dutch authoritieshad undertaken to ensure that the total aid granted to any individual project would not exceed 15% forsmall enterprises and 7.5% for medium-sized firms. The aid granted under the proposed aid measure wasrestricted to SMEs. The aid for job creation linked to initial investment was in this decision approvedoutside national regional aid areas, in application of the thresholds of the Community guidelines on state


STATE AID 275

(288) Case N 668/98 (OJ C 245, 28.08.99).(289) OJ C 213, 23.7.1996(290) Case N 60/99 (OJ C 5, 8.1.2000).

aid for small and medium-sized enterprises. By analogy with the provisions on aid for job creationcontained in the guidelines on national regional aid, (291) the aid was calculated on the basis of thenumber of jobs created linked to an initial investment, rather than on the basis of the value of thatinvestment.

Finland

Aid scheme in the form of accelerated depreciation (292)

On 17 March the Commission closed the proceedings it had initiated under Article 88(2) of the EC Treatyin respect of the application in sensitive sectors of an aid scheme set up in 1998 in the form of accelerateddepreciation for SMEs in development areas. It decided not to object to the scheme given that itsapplication to sensitive sectors was ruled out retrospectively by a change in the law at the end of 1998.Since aid in that form was not to appear until the year after the investment, no aid had been granted insensitive sectors prior to the amendment, with the result that the scheme no longer posed any problemin terms of its compatibility with the common market.

3.7. Other non-sector-specific aid

Spain

Restoration of the Santa María de Retuerta monastery, Valladolid (293)

On 13 October the Commission decided not to raise any objections to an ad hoc grant of EUR 120 202(ESP 20 million), representing 11% of the investment, to Explotación Agrícola Vitivinícola FincaRetuerta SA for the restoration of the Santa María de Retuerta monastery, Valladolid. The Commissionconcluded that the grant did not constitute state aid within the meaning of Article 87(1) of the EC Treaty,having found that intra-Community tourism would not be affected in view of the modest nature of theproject and the fact that it would be used only marginally for tourist purposes. It also noted that it didnot seem likely that the measure would have any impact on the recipient’s agricultural and winegrowingactivities.

Italy

Aid to local public service companies (294)

On 21 April, following a complaint from the Association of Private Water Companies, the Commissionopened Article 88(2) proceedings in respect of tax exemptions and preferential loans granted by Italy tomajority publicly owned local public service companies. The measures under investigation allowedpublic undertakings in the local public services sector (gas, water, waste disposal and electricity) tobenefit from various aid measures when they were transformed into joint-stock companies. The measurescomprised exemption from all “transfer” taxes at the time of creation of the company, three-yearexemption from corporation tax for the new joint-stock company until the tax year ending on 31



(291) OJ C 74, 10.3.1998.(292) Case C 55/98 (not yet published).(293) Case N 503/99 (OJ C 33, 5.2.2000).(294) Case C 27/99 (ex NN 69/98) (OJ C 213, 24.7.1999).

December 1999, and access to preferential loans from the public entity Cassa Depositi e Prestiti. Themeasures were available only if the undertaking, previously part of the public sector, was transformedinto a joint-stock company and if the municipality retained the majority of the share capital. Theseincentives were not available to fully private companies operating on the same markets or toundertakings in which the municipality sold more than 50% of the capital to private investors. TheCommission had doubts as to the compatibility of the measures, as they discriminated betweenundertakings operating in the relevant sectors.

B — New legislative provisions and notices adopted or proposed bythe Commission


STATE AID 277

1 Commission communication concerning the extension of the guidelines OJ C 67, 10.3.1999, p. 11on state aid for rescuing and restructuring firms in difficulty

2 Proposal for a Council Regulation (EC) on the common organisation of OJ C 78, 20.3.1999, p. 1the markets in fishery and aquaculture products

3 Council Regulation (EC) No 659/1999 of 22 March 1999 laying down OJ L 83, 27.3.1999, p. 1detailed rules for the application of Article 93 of the EC Treaty

4 Commission Regulation (EC) No 812/1999 of 19 April 1999 amending OJ L 103, 20.4.1999, p. 5Regulation (EEC) No 1102/89 laying down certain measures for imple-menting Council Regulation (EEC) No 1101/89 on structural improvements in inland waterway transport

5 Commission notice on technical adaptations to the method for setting the OJ C 241, 26.8.1999, p. 9reference and discount rates

6 Draft Commission Regulation on the application of Articles 87 and 88 of OJ C 89, 28.3.2000, p. 6the EC Treaty to de minimis aid

7 Draft Commission Regulation on the application of Articles 87 and 88 of OJ C 89, 28.3.2000, p. 8the EC Treaty to training aid

8 Draft Commission Regulation on the application of Articles 87 and 88 of OJ C 89, 28.3.2000, p. 15the EC Treaty to state aid to small and medium-sized enterprises

9 Draft Commission Directive amending Directive 80/723/EEC on the OJ C 377, 29.12.1999, p. 2transparency of financial relations between Member States and public undertakings

10 Community guidelines on state aid for rescuing and restructuring firms in OJ C 288, 9.10.1999, p. 2difficulty

11 Commission notice on the application of Articles 87 and 88 of the EC OJ C 71, 11.3.2000, p. 14Treaty to state aid in the form of guarantees

12 Extension of the validity of the Community guidelines on state aid for OJ C 14, 19.1.2000, p. 8environmental protection

C — List of state aid cases in sectors other than agriculture, fisheries,and the coal industry

1. Cases in which the Commission found, without opening a formal investigation, thatthere was no aid element within the meaning of Article 87(1) (former Article 92(1)) ofthe EC Treaty or Article 1(2) of Decision 2496/96/ECSC

GermanyN 325/99 20.7.1999 Transfer of the shipbuilding capacity of the former Elbewerft

BelgiumN 246/99 26.5.1999 Financial assistance from the Belgian authorities for HUGB OJ C 245, 28.8.1999

(ECSC steel)

SpainNN 28/97 20.1.1999 Measures to assist Setra SA OJ C 066, 9.3.1999

ItalyN 127/99 4.5.1999 Aid to Acciaierie di Sicilia OJ C 046, 19.2.2000

NN 10/99 4.5.1999 Acquisition of the assets of Breda Fucine Meridionali (BFM) OJ C 375, 24.12.1999by Finmeccanica

NetherlandsN 18/97 11.5.1999 Partially accelerated depreciation for R&D laboratories OJ C 225, 7.8.1999

N 600/98 20.7.1999 Sustainable energy R&D programme OJ C 288, 9.10.1999

2. Measures which the Commission considered compatible with the common marketwithout opening a formal investigation under Article 88(2) (former Article 93(2)) ofthe EC Treaty or Article 6(5) of Decision 2496/96/ECSC

GermanyN 674/98 11.1.1999 Bavarian loan programmes for SMEs OJ C 084, 26.3.1999

N 657/98 15.1.1999 Measures in favour of the Bonn region OJ C 069, 12.3.1999

N 445/98 20.1.1999 Scheme of aid under the programme on processing and OJ C 108, 17.4.1999marketing conditions for forestry products in North Rhine-Westphalia

N 463/98, N 464/98 26.1.1999 Equity loan scheme (eastern Germany including east Berlin) OJ C 069, 12.3.1999

N 301/98 28.1.1999 Scheme of Land of Thuringia to reduce emission of air OJ C 113, 24.4.1999pollutants

N 581/98 28.1.1999 New telematics-aided mobility services in transport OJ C 069, 12.3.1999

N 649/98 2.2.1999 Extension of the scheme of the Land of Saxony-Anhalt to OJ C 084, 26.3.1999promote the attendance of SMEs at fairs and exhibitions

N 237/98, NN 57/98 3.2.1999 Aid to Palla Creativ Textiltechnik GmbH OJ C 151, 29.5.1999

N 13/99 15.2.1999 Guarantee scheme of the Land of Saxony-Anhalt for the OJ C 113, 24.4.1999acquisition of shareholdings abroad



NN 70/98 24.2.1999 Aid to broadcasting channels «Kinderkanal» and «Phoenix» under Art. 86(2) of theEC Treaty,OJ C 238, 21.8.1999

NN 68/98 3.3.1999 Aid to Schiess Wema GmbH OJ C 187, 3.7.1999

NN 85/98 3.3.1999 Financial measures by the BvS to assist BZW (Bleschzentrum OJ C 187, 3.7.1999GmbH)

N 100/99 31.3.1999 Extension of the Land of Brandenburg scheme to assist SMEs OJ C 144, 22.5.1999in recruiting innovation assistants and to promote know-how ransfers

N 507/98 12.4.1999 Use of worldwide available knowledge for training and OJ C 166, 12.6.1999innovation

N 4/98 21.4.1999 Amendments to the film production aid scheme

NN 47/99 21.4.1999 Ecological tax reform OJ C 166, 12.6.1999

NN 125/97 4.5.1999 Aid to Cimbria SKET GmbH OJ C 194, 10.7.1999

NN 86/98 4.5.1999 Aid to Gematex Textilmaschinenbau Aue GmbH OJ C 213, 24.7.1999

N 66/99 4.5.1999 Consolidation and Growth Fund of the German Equalisation OJ C 203, 17.7.1999 Bank (for eastern Germany and east Berlin) OJ C 213, 24.7.1999

N 651/98 11.5.1999 Center for operation and use for the international space station - OJ C 225, 7.8.1999«Beos» project

NN 46/98 26.5.1999 Aid to Auerbach Maschinenfabrik GmbH (Land of Saxony) OJ C 213, 24.7.1999

NN 50/99 26.5.1999 Ecological tax reform (ECSC steel) OJ C 245, 28.8.1999

N 202/99 1.6.1999 Aid for renewable energies OJ C 194, 10.7.1999

NN 152/98 9.6.1999 Rescue, privatisation and restructuring of WPM: Wismarer Art. 87(1) partly notPropeller-und Maschinenfabrik GmbH applicable

N 51/99 18.6.1999 Hundred thousands roofs solar electricity programme

N 125/99 23.6.1999 Counter-guarantee of Saxony-Anhalt for guaranteeingemployee partnerships

N 126/99 23.6.1999 Support for emissions protection measures (Saxony-Anhalt)

NN 100/97 20.7.1999 Aid to KAB «Kraftwerks- und Anlagenbau GmbH» Berlin OJ C 359, 11.12.1999

N 23/99 27.7.1999 Extension of and amendment to programme for promoting the sale of eastern German products abroad

N 640/98 28.7.1999 Aid to Geomin Erzgebirgische Kalkwerke GmbH

NN 61/98 28.7.1999 Aid to Stahl-und Maschinenbau GmbH, Rostock OJ C 365, 18.12.1999

N 541/98 30.7.1999 Technology Foundation Innovation Centre Berlin

N 590/98 30.7.1999 Aid in the field of telematics (Land of Saxony)

N 182/99 25.8.1999 Tourism promotion OJ C 027, 29.1.2000

N 343/99 25.8.1999 Bavarian SME Credit programme OJ C 288, 9.10.1999

N 640/98 8.9.1999 Aid to Geomin Erzgebirgische Kalkwerke GmbH OJ C 365, 18.12.1999

N 694/98 8.9.1999 Aid for restructuring Volkswerft OJ C 27, 29.1.2000

N 140/99 8.9.1999 Investment aid to Sosta Edelstahlwerke GmbH OJ C 365, 18.12.1999

N 449/99 13.9.1999 Renewable energy sources OJ C 27, 29.1.2000

N 446/99 14.9.1999 Capital for R&D by SMEs OJ C 306, 23.10.1999

N 314/99 24.9.1999 Aid for job creation OJ C 313, 30.10.1999

N 316/99 28.9.1999 Environmental technology OJ C 365, 18.12.1999

N 353/99 28.9.1999 Production research OJ C 326, 13.11.1999

NN 4/99 29.9.1999 Esda Feinstrumpffabrik OJ C 27, 29.1.2000

N 482/99 1.10.99 Eastern German products abroad OJ C 27, 29.1.2000

N 213/99 22.10.99 Technology Management Programme Support for Inventors - OJ C 27, 29.1.2000Tempo 3 (Saxony-Anhalt)

N 216/99 22.10.99 Technology Management Programme Technology Transfer -Tempo 5 (Saxony-Anhalt)

N 218/99 22.10.99 Technology Management Programme Design -Tempo 7 OJ C 27, 29.1.2000(Saxony-Anhalt)


STATE AID 279

N 219/99 22.10.99 Technology Management Programme Information -TEMPO 8 (Saxony-Anhalt)

N 349/99 22.10.99 Microsystems OJ C 359, 11.12.1999

N 372/99 22.10.99 R&D genetic biotechnology OJ C 340, 27.11.1999

NN 48/98 26.10.99 Aid to Hydraulik Makranstadt GmbH

N 240/99 26.10.99 Aid to Silesia Gerhard Hanke GmbH & Co KG

NN 49/98 10.11.1999 Aid to Hydraulik Seehausen GmbH OJ C 46, 19.2.2000

NN 46/99 10.11.1999 Restructuring and privatisation of Mecklenburger Metallguss OJ C 375, 24.12.1999GmbH (MMG)

N 428/99 2.12.1999 Scheme of support for information and communication OJ C 5, 8.1.2000technologies

N 272/99 9.12.1999 Aid for shipbuilding for 1999

N 281/99 9.12.1999 Development of a range of regional transport aircraft by OJ C 40, 12.2.2000Dornier Luftfahrt GmbH

N 459/99 13.12.1999 Man-technology interaction in the knowledge society OJ C 33, 5.2.2000

N 660/99 22.12.1999 Investment aid to Mannesman Präzisrohr GmbH (non-ECSC steel)

NN 129/99 22.12.1999 Aid to Spremberger Tuche GmbH (Land of Brandenburg)

N 448/99 27.12.1999 Measures in the area of information and communication in OJ C 33, 5.2.2000Lower Saxony

AustriaN 136/98 3.2.1999 Aid for hotel project in Loipersdorf OJ C 238, 21.8.1999

N 29/99 26.2.1999 Technology impulse programme OJ C 113, 24.4.1999

N 30/99 26.2.1999 Process innovation programme OJ C 108, 17.4.1999

N 73/99 12.4.1999 «Kplus competence centres program» - main phase OJ C 151, 29.5.1999

N 696/98 29.4.1999 Aid to industrial competence centres and networks OJ C 159, 5.6.1999

N 37/99 26.5.1999 Impulse package (Tyrol) OJ C 213, 24.7.1999

N 26/99 22.7.1999 Guarantees for tourism enterprises

N 367/99 25.8.1999 ERP tourism programme OJ C 288, 9.10.1999

N 249/99 1.9.1999 Economic Development Fund OJ C 288, 9.10.1999

N 253/99 13.10.1999 Environmental aid to MKE Heidenreichstein (Lower Austria) OJ C 351, 4.12.1999

N 306/99 1.10.99 Aid from the province of Lower Austria to promote the OJ C 27, 29.1.2000economy 2000-2006: R&D

BelgiumN 16/99 17.2.1999 Environmental aid to NV ALZ, ECSC steel OJ C 113, 24.4.1999

N 28/99 6.5.1999 Investment premiums for firms affected by flooding OJ C 166, 12.6.1999

N 644/98 20.7.1999 Training aid (Vlamivorm) OJ C 288, 9.10.1999

N 118/99 28.7.1999 Investment aid to Sioen Fibres SA OJ C 340, 27.11.1999

NN 77/95 26.10.99 Measures to promote foreign trade (Walloon Region) OJ C 5, 8.1.2000

N 636/98 26.10.99 Amendment to an export promotion scheme OJ C 33, 5.2.2000

N 612/99 25.11.1999 R&D aid to Sidmar - ECSC steel

DenmarkN 3/99 3.2.1999 Contract-related operating aid to shipbuiding OJ C 072, 16.3.1999

N 142/99 22.4.1999 Jobtraining and individual jobtraining in private enterprises OJ C 151, 29.5.1999

N 668/98 4.5.1999 «VaekstFonden» growth fund OJ C 187, 3.7.1999

N 229/99 26.10.99 Regional aid map (2000-2006)

N 501/99 22.11.1999 Jobtraining and individual jobtraining in private enterprises OJ C 375, 24.12.1999



SpainN 534/98 11.1.1999 Employment aid scheme (Castile-Leon) OJ C 066, 9.3.1999

N 839/97 15.1.1999 Vocational training plan (Aragon) OJ C 069, 12.3.1999

N 308/98 19.1.1999 Measures to promote tourism (Aragon) OJ C 069, 12.3.1999

N 610/98 19.1.1999 Shipbuilding aid scheme 1998

N 535/98 20.1.1999 Development aid to Algeria under Art. 4(7) of the 7th Directive OJ C 069, 12.3.1999on aid to shipbuilding

N 546/98 20.1.1999 Aid to promote cooperative working - investment aid and OJ C 066, 9.3.1999employment aid linked to investment

N 659/98 20.1.1999 Grant to Sevillana de Electricidad for a programme of work to OJ C 088, 30.3.1999 improve the electricity infrastructure in Andalusia

N 491/98 26.1.1999 Aid scheme for cooperative, mutual and non-profit enterprises OJ C 081, 24.3.1999(Castile-La Mancha)

N 483/98 28.1.1999 Aid to the Gas Natural group for the promotion of gas OJ C 081, 24.3.1999distribution in the province of Malaga (Andalusia)

N 17/99 4.2.1999 Aid scheme to promote recruitment in place of overtime OJ C 092, 1.4.1999working (Canary Islands)

N 665/98 8.2.1999 R&D aid scheme in the energy sector OJ C 056, 26.2.1999

N 685/98 16.2.1999 SME aid scheme to limit industrial imbalance (Catalonia) OJ C 081, 24.3.1999

N 664/98 17.3.1999 Shipbuilding aid scheme 1999-2003 OJ C 151, 29.5.1999

N 667/97 16.3.1999 Measures to assist SMEs (Comunidad Foral de Navarra) OJ C 129, 8.5.1999

N 257/98 25.3.1999 Programme for dangerous waste (Aragon) OJ C 144, 22.5.1999

N 12/99 26.3.1999 Aid to firms in the Madrid area undertaking research and OJ C 113, 24.4.1999technological development projects

N 133/99 30.3.1999 Shipbuilding - fiscal investment aid for shipowners OJ C 151, 29.5.1999

N 35/99 8.4.1999 Conversion of declining industrial areas in assisted regions OJ C 166, 12.6.1999

N 11/99 12.4.1999 Regional aid scheme to protect the environment OJ C 166, 12.6.1999

N 46/99 20.4.1999 Training and employment-promotion aid (Rioja) OJ C 166, 12.6.1999

N 520/98 21.4.1999 Job-creation incentives following reorganisation and reduction OJ C 298, 16.10.1999of working time in Catalonia

N 94/99 21.4.1999 Aid to Rockwool Peninsular SA OJ C 288, 9.10.1999

N 135/99 21.4.1999 Technological plan for the aerospace industry II OJ C 166, 12.6.1999

N 85/99 29.4.1999 Aragon training and vocational reintegration programme (1999) OJ C 166, 12.6.1999

N 174/99 18.5.1999 Extension of a scheme to assist business development and OJ C 213, 24.7.1999promotion (Andalusia)

N 670/98 20.5.1999 Extension of scheme N 953/95 (grants for removing waste OJ C 181, 26.6.1999from residual water)

N 555/98, N 565/98 26.5.1999 Amendment to a scheme (N 403/95) of regional aid linked to investment and employment (Valencia)

N 155/99 31.5.1999 Job-sharing aid scheme (Galicia)

N 661/98 11.6.1999 Employment aid for those at risk of social exclusion (Rioja) OJ C 203, 17.7.1999

N 278/99 29.6.1999 Change to regional investment aid scheme (N 298/98) (Basque OJ C 225, 7.8.1999Country)

N 154/99 6.7.1999 Measures to promote treatment of industrial waste - Catalonia OJ C 288, 9.10.1999

NN 12/99 8.7.1999 Extension of regional fiscal aid scheme (N 643/92) for investment and research «Cartuja 93»

N 291/99 8.7.1999 R&D aid - information society industries (Atyca)

NN 62/99 20.7.1999 Aid to Ercros SA

N 299/99 20.7.1999 Environmental R&D aid for industry OJ C 298, 16.10.1999

N 340/99 22.7.1999 Aid for job creation by reorganising working time (Aragon) OJ C 288, 9.10.1999

N 268/99 28.7.1999 Aid scheme for initial processing of forestry products (Galicia) OJ C 46, 19.2.2000

N 341/99 28.7.1999 Aid for piping gas to towns in Andalusia from LPG plants

N 393/99 1.9.1999 «Machine tool» technology plan


STATE AID 281

N 358/99 14.9.1999 Stable employment - Rioja OJ C 306, 23.10.1999

N 697/98 29.9.1999 Aid to Mercedes Benz España - Vitoria plant OJ C 351, 4.12.1999

N 433/99 13.10.99 Air/sea transport

N 503/99 13.10.99 Santa Maria Retuerta monastery OJ C 33, 5.2.2000

N 265/99 22.10.99 Plan to grant guarantees to SMEs (Aragon) OJ C 340, 27.11.1999

NN 45/99 25.11.1999 Regional aid scheme to protect the environment (Basque Country)

NN 70/99 25.11.1999 Aid to Alfacel SA

N 602/99 30.11.1999 Grants for co-generation plants and electricity distribution OJ C 5, 8.1.2000in rural areas

N 606/99 9.12.1999 Scheme of aid for investment and research «Cartuja 93» (Andalusia)

N 502/99 13.12.1999 Job support measures

FinlandN 50/99 26.5.1999 Contract-related operating aid to shipbuilding OJ C 313, 30.10.1999

N 515/98 9.6.1999 Aid measures connected with energy taxation OJ C 225, 7.8.1999

N 292/99 23.6.1999 Aid measures connected with energy taxation - ECSC OJ C 326, 13.11.1999steel industry

N 103/99 8.7.1999 Aid in favour of biofuels

N 582/98 8.9.1999 Tax concession for vessels with ice-breaking facilities OJ C 340, 27.11.1999

N 238/99 26.10.99 Regional aid map (2000-2006) OJ C 33, 5.2.2000

N 304/99 13.10.99 Financing of sustainable forestry OJ C 365, 18.12.1999

FranceN 171/98 8.2.1999 SODIV aid scheme for SMEs OJ C 129, 8.5.1999

N 475/98 15.2.1999 Extension of the SODIE assistance areas OJ C 066, 9.3.1999

N 67/99 11.5.1999 PIDEA programme - Eureka 1888 OJ C 203, 17.7.1999

N 315/99 8.7.1999 Shipbuilding aid scheme 1999-2003

N 276/99 25.8.1999 Eurimus programme OJ C 288, 9.10.1999

N 485/99 26.10.99 Parafiscal charge on entertainment OJ C 40, 12.2.2000

N 363/99 25.11.1999 Overseas departments guarantee fund

N 198/99 22.12.1999 Scheme of financial support from local administrative units for SMEs

GreeceN 239/98 15.1.1999 Improvement of health and safety conditions in industrial OJ C 039, 13.2.1999

working environment

N 663/98 3.3.1999 Aid for health and safety conditions in favour of Corinthia OJ C 113, 24.4.1999Pipeworks (non-ECSC steel)

N 143/99 11.5.1999 Aid to Halyvourgia Thessalias OJ C 359, 11.12.1999

NN 138/97 26.5.1999 Aid to the Sovel rolling mill (ECSC steel) OJ C 46, 19.2.2000

N 469/99 22.12.1999 Regional aid map 2000-2006

IrelandN 353/98 15.1.1999 Tax relief for corporate investment in renewable energy projects OJ C 151, 29.5.1999

N 267/98 20.1.1999 Tax incentives for building owners in the Customs House Docks Area (CHDA) under the 1998 Finance Act

N 563/98 23.6.1999 Urban renewal scheme

N 564/98 23.6.1999 Pilot rural renewal scheme

N 204/99 23.6.1999 Cork regional airport OJ C 375, 24.12.1999



N 357/99, NN 49/97 20.7.1999 Tax-based incentive scheme for investment in film production OJ C 375, 24.12.1999for the period 1999-2000 «Section 35/481»

N 455/99 26.10.99 Knock regional airport OJ C 5, 8.1.2000

N 523/99 26.10.99 Regional aid map 2000-2006

ItalyN 334b/96 15.1.1999 Grant for the redevelopment of Ortigia (Sicily) OJ C 039, 13.2.1999

N 426/98 15.1.1999 Territorial employment pacts OJ C 039, 13.2.1999

N 747/97 19.1.1999 Reform of guarantee funds OJ C 069, 12.3.1999

N 25/98 3.2.1999 Emergency aid for municipalities in Marche and Umbria OJ C 072, 16.3.1999affected by the earthquake

N 593/98 15.2.1999 Amendment to aid scheme for investment in tourism (Basilicata) OJ C 092, 1.4.1999

N 545/98 3.3.1999 Provisions on the realignment of contributions and benefits OJ C 113, 24.4.1999

N 22/99, N 24/99 16.3.1999 DOCUP Objectives 2 and 5b (Marche) OJ C 144, 22.5.1999

N 648/98 17.3.1999 Rescue aid to Enterprise SpA OJ C 288, 9.10.1999

N 792/97, N 154/98, 30.3.1999 Aid to Acciai Speciali Terni (Ilva SpA) OJ C 187, 3.7.1999N 155/98, N 156/98

N 423/98 12.4.1999 Refinancing of certain measures under Law 221/90 to promote OJ C 166, 12.6.1999conversion in the mining industry

N 629/98 12.4.1999 PCI Interreg II Italy-Slovenia: Measure 3.1 «Business OJ C 166, 12.6.1999investment aid»

N 455/98 23.4.1999 Measures in support of industrial activities (Sardinia) OJ C 306, 23.10.1999

N 790/97 11.5.1999 Aid to Sicilian publishing houses OJ C 194, 10.7.1999

N 180/99 26.5.1999 Scheme of aid for shipbuilding for 1999-2003 OJ C 288, 9.10.1999

N 127/98, N 336/98 9.6.1999 Environmental aid to the Ilva steel group OJ C 326, 13.11.1999

N 52a/99 9.6.1999 Recovery of economic activities affected by the earthquake OJ C 225, 7.8.1999in Marche

N 468/98 23.6.1999 Measures to support the economy (Trento) OJ C 238, 21.8.1999

NN 143+A242/98 8.7.1999 Employment aid (Sicily) OJ C 359, 11.12.1999(NN 69/99)

N 701/98 20.7.1999 Abolition of social security contributions to promote job OJ C 359, 11.12.1999creation in the Mezzogiorno

NN 144/98 28.7.1999 Aid to firms affected by the exceptionally bad weather in Sicily

N 178/99 28.7.1999 Regional aid for investments at the De Poli shipyard OJ C 340, 27.11.1999

NN 39/99 28.7.1999 Refinancing of Law 215/97 to assist female entrepreneurs OJ C 359, 11.12.1999(ex N 611/98)

N 248/99 28.9.1999 Piedmont tourism and commerce OJ C 313, 30.10.1999

N 269/99 28.9.1999 Subcontracting OJ C 313, 30.10.1999

N 84/A/99 10.11.1999 Rules on aid for employment and the development of the OJ C 40, 12.2.2000regional productive apparatus

N 364/99 10.11.1999 Meraklon SpA OJ C 27, 29.1.2000

N 86/99 25.11.1999 Regional Law 36/98 - employment aid (Sardinia) OJ C 12, 15.1.1999

N 323/99 2.12.1999 Preparation of multiannual and annual balance sheet for OJ C 5, 8.1.2000the region

N 582/99 9.12.1999 Aid to Marina di Stabia SpA OJ C 40, 12.2.2000

N 432/99 22.12.1999 Itainvest - Restructuring of Rambaudi Industriale

N 583/99 22.12.1999 Aid to Benfil srl

N 584/99 22.12.1999 Aid to Tessival Sud srl

NetherlandsN 185/98 26.1.1999 The Province of Limburg bottlenecks Fund Regulation OJ C 056, 26.2.1999

N 6/99 17.3.1999 Job creation aid scheme (South Limburg) OJ C 113, 24.4.1999


STATE AID 283

N 54/99 4.5.1999 Compensation for the damage caused by extremely heavy OJ C 203, 17.7.1999rain in October 1998

N 456/98 6.5.1999 Stimulating enterprises in North Netherlands OJ C 181, 26.6.1999

N 114/99 11.6.1999 Grants for technological collaboration projects in OJ C 225, 7.8.1999the Arnhem-Nijmegen area 1998-2001

N 335/98 20.7.1999 Aid to Shell Chemicals NV OJ C 298, 16.10.1999

N 60/99 28.7.1999 Job creation aid scheme (Arnhem-Nijmegen) OJ C 5, 8.1.2000

N 412/99 29.9.1999 Shipbuilding OJ C 332, 20.11.1999

NN 124/98 13.10.99 Waiver of taxes on pollution in favour of Kemira Agro Pernis BV (KAP) and Hydro Agri Rotterdam BV (HAR)

N 414/99 27.12.1999 R&D programme for civil aircraft development OJ C 33, 5.2.2000

PortugalNN 112/98 20.1.1999 Aid to Manuel Rodrigues d’Oliveira e Sà & Filhos, SA OJ C 066, 9.3.1999

NN 34/99 4.5.1999 Aid to Cerfil SA OJ C 298, 16.10.1999

N 397/99 1.9.1999 SAJE OJ C 375, 24.12.1999

N 96/99 8.9.1999 Tax assistance to internationalisation projects OJ C 375, 24.12.1999

N 97/99 8.9.1999 Tax assistance for investment OJ C 375, 24.12.1999

United KingdomN 452/98 20.1.1999 Aid for employee training to Eli Lilly Ltd

N 609/98 4.2.1999 Biotechnology in industry programme OJ C 088, 30.3.1999

N 325/98 30.3.1999 Aid in favour of Northern Ireland Events Company OJ C 151, 29.5.1999

NN 106a/95 30.3.1999 Business advisory services (Development Board for OJ C 181, 26.6.1999Rural Wales)

N 585/98 1.6.1999 Technical textiles technology programme OJ C 225, 7.8.1999

N 698/98 11.6.1999 Cleaner coal R&D programme OJ C 213, 24.7.1999

N 579/98 24.6.1999 First year capital allowances for small and medium-sized businesses

N 280/99 30.7.1999 Aid to SMART

NN 88/98 12.9.1999 Financing by the BBC, through a licence fee, of a round-the-clock, advertising-free news channel

N 422/99 13.10.99 Shipbuilding OJ C 359, 11.12.1999

N 355/99 22.10.99 Britech OJ C 340, 27.11.1999

NN 101/99 25.11.1999 Competitiveness in the oil and gas supplies sector aid scheme OJ C 46, 19.2.2000

SwedenN 769/97 3.2.1999 Measures in favour of the extension of the district heating OJ C 088, 30.3.1999

network

N 782/97 3.2.1999 Measures in favour of efficient energy technology OJ C 092, 1.4.1999

N 384/98 3.2.1999 Aid to the energy sector in southern Sweden OJ C 092, 1.4.1999

N 284/98 3.3.1999 Measures in favour of some specific waste facilities OJ C 113, 24.4.1999

N 15/99 21.4.1999 Measures in favour of some specific waste facilities - ECSC OJ C 340, 27.11.1999steel sector

N 224/99 8.7.1999 Modification of the scheme «Local investment project aiming at increasing the ecological sustainability of society»

NN 143/96 26.10.99 State aid for windpower plants OJ C 5, 8.1.2000

N 146/99 26.10.99 Modified regional policy transport aid scheme



3. Interim decisions requiring the Member State to supply the information needed bythe Commission

GermanyC 47/97 17.2.1999 Aid for Leuna 2000/Elf/Mider investment project

C 64/97 3.3.1999 Aid in the banking sector to Westdeutsche Landesbank - Girozentrale

SpainNN 166/95 3.2.1999 Aid to RTVE and publicly owned regional television stations followed by a corrigendum

on 10.2.1999

C 32/97 20.7.1999 Aid to «Porcelanas del Norte SAL (Ponsal)/Comercial Europa de Porcelanas SAL (Comepor) (Navarra)

FranceNN 167/95 3.2.1999 Aid to publicly owned television stations followed by a corrigendum

on 10.2.1999

C 38/98 8.7.1999 Aid to the Kimberly Clark Scott group

NN 63/99 8.7.1999 Grigny-Vitry-Chatillon free urban zone

ItalyNN 140/98 3.2.1999 Aid to publicly owned television stations followed by a corrigendum

on 10.2.1999

C 81/97 23.6.1999 Reduction in social security contributions payable by firms in Venice and Chioggia

NetherlandsC 43/98 20.1.1999 Aid to 624 Dutch petrol stations located near the German border followed by a corrigendum

on 17.2.1999

NN 53/99 23.6.1999 Aid to ten manure processing projects allegedly not covered by the approved BPM aid scheme

4. Aid cases in which the Commission initiated proceedings under Article 88(2) (formerArticle 93(2)) of the EC Treaty in respect of all or part of the measure

GermanyNN 78/98 (C 13/99) 17.2.1999 Activities of Landesentwicklungsgesellschaft Thüringen mbH OJ C 280, 2.10.1999

(LEG)

N 804/97, NN 120/98 3.3.1999 Amendment, extension and abuse of the Thüringer + request for informationIndustriebeteiligungsfonds scheme (C 17/99)

NN 16/99 (C 18/99) 3.3.1999 Aid awarded by BvS to UCB Chemie GmbH, Linde AG + request for information(Saxony-Anhalt) OJ C 194, 10.7.1999

NN 27/99, C 74/97 17.3.1999 Aid to Kali und Salz GmbH + request for information(C 21/99) OJ C 272, 25.9.1999

N 702/98 (C 25/99) 21.4.1999 Common guidelines of the Land of Berlin for the use of the OJ C 340, 27.11/99economic development fund

NN 63/98 (C 26/99) 21.4.1999 Aid to Dessauer Geräteindustrie GmbH (Saxony-Anhalt) + request for informationOJ C 213, 24.7.1999

NN 18/99 (C 28/99) 21.4.1999 Incorrect application of the de minimis rules under the OJ C 203, 17.7.1999Thuringia working capital programme of 20 July 1993

NN 29/98 (C 36/99) 11.5.1999 Aid to Korn Fahrzeuge und Technik GmbH + request for informationOJ C 233, 14.8.1999


STATE AID 285

N 49/95 (C 41/99) 26.5.1999 Aid to EFBE Verwaltungs GmbH & Co Management KG + request for informationOJ C 238, 21.8.1999

N 195/99 (C 47/99) 8.7.1999 New delimitation of assisted areas under the «Joint Federal OJ C 340, 27.11.99Government/Länder programme for improving regional economic structures» 2000-2006

NN 59/99 (C 66/98) 8.7.1999 Kvaerner Warnow Werft - exceeding of capacity limitation OJ L 274, 23.10.1999in 1997

NN 153/96 (C 61/99) 20.7.1999 Parcel service of Deutsche Post AG (DP AG) OJ C 306, 23.10.1999

NN 84/99 (C 63/99) 20.7.1999 Impact of new electricity tax on feed-in price under OJ C 306, 23.10.1999Stromeinspeisungsgesetz

NN 148/98 (C 67/99) 28.7.1999 Aid to Dampfkessel Hohenthurn GmbH

NN 97/99 25.11.1999 Aid to Volkswagen AG (Dresden)

BelgiumNN 178/97 (C 40/99) 19.5.1999 Aid to Verlipack Revocation of the decision,

16.9.1998 OJ C 288,9.10.1999

N 289/99 (C 58/99) 20.7.1999 Regional aid map 2000-2006 OJ C 351, 4.12.1999

SpainNN 145/98 (C 3/99) 20.1.1999 Publicly owned shipyards : exceeding of approved volume OJ C 113, 24.4.1999

of aid

NN 117/98 (C 22/99) 30.3.1999 Investment aid to Ramondin SA + order to suspend the aidOJ C 194, 10.7.1999

NN 129/98 (C 48/99) 14.7.1999 Scheme of tax aid in the form of a 45% tax credit

NN 29/99 (C 49/99) 14.7.1999 Tax aid in the form of a reduction in the tax base for certain new businesses (Alava)

NN 30/99 (C 50/99) 14.7.1999 Tax aid in the form of a reduction in the tax base for certain new businesses (Guipuzcoa)

NN 31/99 (C 51/99) 14.7.1999 Tax aid in the form of 50% tax relief on corporation tax OJ C 340, 27.11.99(Navarre)

NN 32/99 (C 52/99) 14.7.1999 Tax aid in the form of a reduction in the tax base for certain OJ C 351, 4.12.1999new businesses (Vizcaya)

NN 33/99 (C 53/99) 14.7.1999 Tax aid in the form of a 45% tax credit in the province of OJ C 351, 4.12.1999Guipuzcoa

NN 60/99 (C 54/99) 14.7.1999 Tax aid in the form of a 45 % tax credit in the province OJ C 351, 4.12.1999of Vizcaya

FranceNN 134/98 (C 2/99) 20.1.1999 Shipbuilding aid to ACHCN OJ C 113, 24.4.1999

NN 1/99 (C 14/99) 17.2.1999 Recapitalisation of TASQ SA OJ C 194, 10.7.1999

NN 20/99 (C 29/99) 21.4.1999 Presumed aid to Manufacture Corrézienne de Vêtements + request for information(MCV) and planned aid to the new company MCV OJ C 298, 16.10.1999

NN 167/95 (C 60/99) 20.7.1999 Capital increase and other ad hoc subsidies to France TV OJ C 340, 27.11.99


NN 65/99 (C 74/99) 10.11.1999 Development aid to Saint-Pierre-et-Miquelon OJ C 33, 5.2.2000

IrelandNN 133/98 (C 1/99) 20.1.1999 Aid to non-residential building tenants in the Customs House OJ C 099, 10.4.1999,

Docks Area (CHDA) in Dublin partial initiation

ItalyN 727/97 (C 4/99) 3.2.1999 Aid to Fiat Auto SpA - Pomigliano d’Arco plant OJ C 113, 24.4.1999

+ request for information



N 728/97 (C 5/99) 3.2.1999 Aid to Fiat Auto SpA - Mirafiori Carrozzeria plant OJ C 120, 1.5.1999+ request for information

N 729/97 (C 6/99) 3.2.1999 Aid to Fiat Auto SpA - Piedimonte San Germano plant OJ C 113, 24.4.1999+ request for information

N 730/97 (C 7/99) 3.2.1999 Aid to Fiat Auto SpA - Termoli plant OJ C 113, 24.4.1999+ request for information

N 834/97 (C 8/99) 3.2.1999 Aid to Fiat Auto SpA - Rivalta plant OJ C 120, 1.5.1999+ request for information

N 838/97 (C 9/99) 3.2.1999 Aid to Fiat Auto SpA - Mirafiori Meccanica plant OJ C 120, 1.5.1999+ request for information

NN 11/99 (C 20/99) 17.3.1999 Constitution of a public undertaking for the distribution of + request for informationelectricity (Provincia autonoma di Bolzano) OJ C 245, 28.8.1999

NN 69/98 (C 27/99) 21.4.1999 Tax exemption and preferential loans for utilities with majority OJ C 213, 24.7.1999public shareholding

N 576/97 (C 34/99) 11.5.1999 Recapitalisation of Siciliana Acque Minerali Srl OJ C 365, 18.12.1999+ request for information

NN 11/94, ex C 12/94 23.6.1999 Capital contribution to Enichem SpA OJ C 245, 28.8.1999(C 43/99)

N 668/97 (C 56/99) 20.7.1999 Employment aid (Sicily), Regional Law 16, 27.5.1997, Art. 11(1)

NN 140/98 (C 62/99) 20.7.1999 Capital increase and other measures in favour of RAI OJ C 351, 4.12.1999

NN 96/99 (C 68/99) 28.7.1999 Law No 95/79 on the extraordinary administration of large OJ C 245, 28.8.1999firms in crisis

N 167/99 25.11.1999 Aid to Fiat Melfi SATA

NetherlandsNN 3/99 (C 11/99) 3.2.1999 Investment aid in favour of Hewlett Packard - SCI Systems OJ C 144, 22.5.1999

+ request for information

NN 36/99 (C 33/99) 4.5.1999 Alleged aid in favour of the American group Reebok in OJ C 233, 14.8.1999connection with its establishment in Rotterdam


PortugalN 305/99 9.12.1999 Regional aid map 2000-2006

United KingdomE 2/97 (C 39/99) 11.5.1999 Proposal for appropriate measures in respect of the «Single OJ C 245, 28.8.1999

regeneration budget» (N 31/95) - «English partnerships»

N 481/99 22.12.1999 Aid to Rover Longbridge

5. Aid cases in which the Commission initiated proceedings under Article 6(5) ofDecision 2496/96/ECSC in respect of all or part of the measure

GermanyNN 55/98 (C 10/99) 3.2.1999 Aid to Salzgitter AG, Preussag Stahl AG and iron and steel OJ C 113, 24.4.1999

subsidiaries of the SAG group

BelgiumN 601/98 (C 57/99) 20.7.1999 Environmental aid to Sidmar OJ C 280, 2.10.1999

NN 153/98 25.11.1999 Employment aid to Cockerill Sambre SA


STATE AID 287

FranceNN 43/99 (C 45/99) 8.7.1999 Investment aid to Myriad (Fafer de Maubeuge) OJ C 259, 11.9.1999

ItalyN 125/98, N 126/98, 17.3.1999 Aid to Ilva Lamiere e tubi SpA and Siderumbra OJ C 332, 20.11.1999N 341/98 (C 19/99)

N 106/99 (C 35/99) 11.5.1999 Environmental aid to Ferriere Nord SpA OJ C 288, 9.10.1999

6. Aid cases in which the Commission extended proceedings under Article 88(2) (formerArticle 93(2)) of the EC Treaty in respect of all or part of the measure

AustriaC 61/98 23.6.1999 Aid to Lenzing Lyocell GmbH & Co KG (Burgenland) + request for information

SpainC 33/98 8.7.1999 Injection of fresh capital into Babcock Wilcox España SA OJ C 288, 9.10.1999

(«BWE»)

ItalyC 5/99, C 8/99, 26.5.1999 Aid to Fiat Auto SpA - Mirafiori Carrozzeria, Rivalta and + request for informationC 9/99 Mirafiiori Meccanica plants

7. Cases in which the Commission terminated proceedings under Article 88(2) (formerArticle 93(2)) of the EC Treaty having found that there was no aid element within themeaning of Article 87(1) (former Article 92(1)) of the EC Treaty

GermanyC 73/98 8.7.1999 Neue Maxhütte Stahlwerke GmbH - Environmental protection

measures

FranceC 24/96 20.7.1999 Presumed aid to Sécuripost, a Post Office subsidiary operating

in the market for the secure transportation of money

NetherlandsC 28/97 21.4.1999 Tax treatment of the «technolease» agreement between Philips

and Rabobank

8. Cases in which the Commission considered that the aid was compatible with thecommon market and terminated proceedings under Article 88(2) (former Article93(2)) of the EC Treaty by way of a positive final decision

GermanyC 54/98 3.2.1999 Restructuring aid to Graphischer Maschinenbau GmbH (Berlin)

C 9/98 17.3.1999 Financial measures in connection with the takeover of Bremer OJ L 301, 24.11.1999Vulkan Marineschiffbau GmbH by Lürssen Maritime Beteiligung GmbH & Co. KG



C 83/97 26.5.1999 Aid to Buna SOW Leuna Olefinverbund GmbH (BSL)

C 69/97 20.7.1999 Aid to SKET Maschinen und Anlagenbau GmbH

C 42/97 28.7.1999 Aid to Everts Erfurt GmbH (Thuringia) OJ L 310, 4.12.1999

C 22/98 28.7.1999 Aid to Kranbau Eberswalde GmbH OJ L 326, 18.12.1999

C 16/B/95 22.12.1999 Aid to Entstaubungstechnik Magdeburg GmbH (Saxony-Anhalt)

FinlandC 55/98 17.3.1999 Accelerated depreciation scheme

FranceC 12/98 16.11.1999 Aid to Cofidur

IrelandC 1/99 22.12.1999 Rental of non-residential buildings in the Customs House

Docks Area (CHDA) in Dublin

ItalyC 6/99 8.7.1999 Aid to Fiat - Piedimonte San Germano

C 7/99 29.9.1999 Aid to Fiat Auto SpA - Termoli plant OJ L 6, 11.1.2000

PortugalC 60/98 4.5.1999 Aid to COTESI: Companhia de Têxteis Sintéticos SA OJ L 230, 31.8.1999

9. Cases in which the Commission considered, subject to certain reservations, that theaid was compatible with the common market and terminated proceedings underArticle 88(2) (former Article 93(2)) of the EC Treaty by way of a conditional finaldecision

FranceC 37/98 30.3.1999 Development aid to French Polynesia under Art. 4(7) of OJ L 292, 13.11.1999

the 7th Directive on aid to shipbuilding

C 30/96 23.6.1999 Aid to Crédit Foncier de France

ItalyC 16/98 10.11.1999 Restructuring aid to Sicilian banks Banco di Sicilia and

Sicilcassa

C 35/98 16.11.1999 Aid for the setting-up of new shipyards in Oristano and Belvedere Marittimo (Sardinia)

United KingdomC 39/99 22.12.1999 English Partnerships (EP) included in the Partnerships

Investment Programme (PIP), or EP/PIP scheme


STATE AID 289

10. Cases in which the Commission considered that the aid was incompatible with thecommon market and terminated proceedings under Article 88(2) (former Article93(2)) of the EC Treaty by way of a negative or partly negative decision

GermanyC 58/97 3.2.1999 Aid to Spindelfabrik Hartha GmbH OJ L 145, 10.6.1999

C 22/97 3.3.1999 Development aid to Indonesia under Art. 4(7) of the 7th OJ L 259, 6.10.1999Directive on aid to shipbuilding

C 6/97 21.4.1999 Restructuring and rescue aid to Dieselmotorenwerk Rostock OJ L 232, 2.9.1999

C 64/97 8.7.1999 Aid to Westdeutsche Landesbank/Girozentrale (WestLB/WFA)

C 66/98 8.7.1999 Kvaerner Warnow Werft GmbH - exceeding of capacity OJ L 274 (23.10.1999)limitation

C 43/97 8.7.1999 Gröditzer Stahlwerke OJ L 292, 13.11.1999

C 19/98 14.7.1999 Aid to Weida Leder GmbH

C 23/97 20.7.1999 Aid to Lautex GmbH OJ L 42, 15.2.2000

C 53/97 20.7.1999 Privatisation and restructuring of CBW «Chemie GmbH Bitterfeld-Wolfen»

C 63/98 20.7.1999 Aid to Saxonylon Textil GmbH

C 77/98 20.7.1999 Covering of losses of INMA shipyard by the public holding company Itainvest

C 80/97 28.7.1999 Aid to Pittler/Tornos Werkzeugmaschinen GmbH

C 5/98 28.7.1999 Measures in favour of Brockhausen Holze GmbH (Chemnitz, OJ L 7, 12.1.2000Saxony)

SpainC 76/97 24.2.1999 Aid to Daewoo Electronics Manufacturing España SA OJ L 292, 13.11.1999

(DEMESA)

C 3/99 26.10.99 Exceeding of approved volume of aid to publicly owned OJ L 37, 12.2.2000shipyards

C 22/99 22.12.1999 Aid to Ramondin SA and Ramondin Capsulas SA - Basque Country

FranceC 73/97 8.9.1999 Aid to Stardust Marine

C 14/98 16.11.1999 Aid to Gooding Consumer Electronics

GreeceC 2/88 17.3.1999 Conversion of a debt of Heracles General Cement Company

into capital

C 48/96 21.4.1999 Aid to two fertiliser producers: Protypos Ktimaki-Touristiki SAand Nitrogen Fertilizers Industry

ItalyC 27/96 3.3.1999 Measures in favour of firms affected by the insolvency of Sirap

SpA (Sicily)

C 49/98 11.5.1999 Employment aid schemes OJ L 37(15.2.2000)

C 46/94 2.6.1999 Aid to Seleco SpA, Pordenone + recovery of the aid fromthe new Seleco

C 86/98 20.7.1999 Aid to Sangalli Vetro SpA (Manfredonia, Apulia)

C 4/99 28.7.1999 Aid to Fiat Pomigliano

C 81/97 25.11.1999 Reduction of social security contributions in favour of Venice and Chioggia

C 9/99 22.12.1999 Aid to Fiat Mirafiori Meccanica



NetherlandsC 44/98 30.3.1999 Process integrated gas turbine at the Nerefco refinery OJ L 6, 11.1.2000

C 43/98 20.7.1999 Aid to 624 Dutch petrol stations located near the German border OJ L 280, 30.10.1999

11. Cases in which the Commission considered that the aid was incompatible with thecommon market and terminated, by way of a negative or partly negative decision,proceedings under Article 88 of the ECSC Treaty for failure by a Member State tofulfil its obligations

GermanyC 78/98 21.4.1999 Aid to Neue Maxhütte Stahlwerke GmbH: recovery of OJ L 230, 31.8.1999

unlawful aid

12. Aid cases in which the Commission terminated proceedings under Article 88(2)(former Article 93(2)) of the EC Treaty after the Member State withdrew theproposed measure

GermanyC 24/95 21.4.1999 Guarantee scheme in Saarland OJ C 173, 19.6.1999

C 84/98 21.4.1999 27th outline plan for the joint Federal Government/Länder programme for improving regional economic structures, «sell-and-rent back» component

BelgiumC 67/98 30.3.1999 Aid to Decochim SA

GreeceC 50/98 29.9.1999 SME aid scheme

13. Aid cases in which the Commission proposed appropriate measures under Article88(1) (former Article 93(1)) of the EC Treaty

BelgiumE 3/98 3.2.1999 Aid to SMEs in the Walloon region OJ C 187, 3.7.1999

14. Aid cases which the Commission decided to refer to the Court of Justice under thesecond subparagraph of Article 88(2) (former Article 93(2)) of the EC Treaty

SpainC 44/97 (C 38/88) 13.10.1999 Aid to firms belonging to the Magefesa group and its successors

FranceC 50/97 23.6.1999 Investment and restructuring aid to Nouvelle Filature Lainière

de Roubaix


STATE AID 291

15. Other Commission decisions

GermanyN 237/98, NN 57/98 24.2.1999 Aid to Palla Creativ Textiltechnik GmbH OJ C 151, 29.5.1999

corrigendum to the decisionof 3.2.1999

C 78/98 28.4.1999 Aid to Neue Maxhütte Stahlwerke GmbH: recovery of corrigendum to the decisionunlawful aid of 21.4.1999

NN 63/98 (C 26/99) 11.5.1999 Aid to Dessauer Geräteindustrie GmbH (Saxony-Anhalt) corrigendum to the decisionof 21.4.1999

AustriaC 3/98 26.5.1999 Guidelines relating to the acquisition of shareholdings in termination, as the measure

undertakings by WIBAG was an existing aid measure

SpainNN 166/95 10.2.1999 Aid to RTVE and publicly owned regional television stations corrigendum to the decision

of 3.2.1999

N 94/99 11.5.1999 Aid to Rockwool Iberia SA corrigendum to the decisionof 21.4.1999

FranceNN 167/95 10.2.1999 Aid to public television stations corrigendum to the decision

of 3.2.1999

C 47/96 8.9.1999 Aid to Crédit Lyonnais extension of time limit

ItalyNN 140/98 10.2.1999 Aid to public television stations corrigendum to the decision

of 3.2.1999

N 792/97, N 154/98, 21.4.1999 Aid to Acciai Speciali Terni (Ilva SpA) corrigendum to the decisionN 155/98, N 156/98 of 30.3.1999 OJ C 187,

3.7.1999

NetherlandsC 43/98 17.2.1999 Aid to 624 Dutch petrol stations located near the German corrigendum to the decision

border of 20.1.1999

D — List of state aid cases in other sectors

1. In the agricultural sector

1.1. Cases in which the Commission found, without opening a formal investigation, that there wasno aid element within the meaning of Article 87(1) of the EC Treaty

DenmarkN 53 /1999 9.6.1999 LOCAL LAND TAX OJ C 213, 24.7.1999

NetherlandsN 173 /1999 4.5.1999 CLEAN-UP SCHEME FOR ASBESTOS OJ C 187, 24.7.1999

ROADS



1.2. Measures which the Commission considered compatible with the common market withoutopening a formal investigation under Article 88(2) of the EC Treaty or Article 6(5) of Decision2496/96/ECSC

AustriaN 242 /1998 18.1.1999 PROGRAMME FOR SAFEGUARDING GRASS- OJ C 42, 17.2.1999

LAND

TYROL N 447 /1998 19.2.1999 SCHEME TO ENCOURAGE FARMERS TO OJ C 69, 12.3.1999GIVE UP BATTERY FARMING

LOWER N 654 /1998 28.4.1999 ENVIRONMENTAL MEASURES (ÖPUL) OJ C 159, 5.6.1999AUSTRIA

VORARLBERG N 673 /1998 11.5.1999 ENVIRONMENTAL PROTECTION FUND OJ C 166, 12.6.1999

N 59 /1999 8.6.1999 PROMOTION OF FORESTRY MEASURES OJ C 194, 10.7.1999

STYRIA N 77 /1999 18.6.1999 AID IN THE MILK AND DAIRY PRODUCTS OJ C 213, 24.7.1999SECTOR

CARINTHIA N 56 /1999 18.6.1999 IMPROVEMENT OF THE QUALITY OF MILK OJ C 213, 24.7.1999AND DAIRY PRODUCTS

SALZBURG N 111 /1999 18.6.1999 AID IN THE MILK AND DAIRY PRODUCTS OJ C 213, 24.7.1999SECTOR

LOWER N 682 /1998 24.6.1999 ELIMINATION OF BVD-INFECTED CATTLE OJ C 213, 24.7.1999AUSTRIA

N 273 /1999 25.8.1999 MEASURES TO IMPROVE THE QUALITY OF OJ C 280, 2.10.1999MILK AND MILK PRODUCTS

N 436 /1999 22.10.1999 COUNTRYSIDE PLANNING OJ C 340, 27.11.1999

BelgiumN 397 /1998 20.1.1999 DROUGHT IN FAGNE AND FAMENNE OJ C 42, 17.2.1999

N 355 /1998 22.1.1999 QUALITY OF AGRICULTURAL PRODUCTS OJ C 42, 17.2.1999

N 164 /1999 22.4.1999 CONTRIBUTIONS AND PAYMENTS TO THE OJ C 151, 29.5.1999BUDGET FUND FOR RAW MATERIALS

N 55 /1999 22.4.1999 MEASURES TO ASSIST HORTICULTURE OJ C 151, 29.5.1999

N 162 /1999 11.5.1999 INSPECTION OF CERTAIN SPECIES OF FRUIT OJ C 166, 12.6.1999AND VEGETABLE BEFORE HARVESTING

N 159 /1999 18.5.1999 CONTRIBUTIONS TO THE FUND FOR OJ C 173, 19.6.1999ANIMAL AND ANIMAL PRODUCT HEALTH AND QUALITY

N 172 /1999 18.5.1999 CONTRIBUTIONS TO BE PAID FOR CHECKS OJ C 173, 19.6.1999ON SEEDS AND PROPAGATING MATERIALFOR AGRICULTURE AND BY CERTAIN BRANCHES OF AGRICULTURE, HORTICUL-TURE AND FORESTRY

N 117 /1999 18.5.1999 COMPULSORY CONTRIBUTIONS TO THE OJ C 173, 19.6.1999FUND FOR ANIMAL AND ANIMAL PRODU-CT HEALTH AND QUALITY

N 58 /1999 23.6.1999 RESTRUCTURING AID FOR THE PIG SECTOR OJ C 233, 14.8.1999

N 228 /1999 20.7.1999 MEASURES TO ASSIST ORGANIC MARKET OJ C 245, 28.8.1999GARDENERS

N 380 /1999 20.7.1999 RECOVERABLE ADVANCE TO BEEF PRO- OJ C 253, 4.9.1999DUCERS WHOSE ANIMALS ARE SUBJECTTO A DESTRUCTION ORDER

N 384 /1999 20.7.1999 ADVANCE TO ENTERPRISES AFFECTED BY OJ C 253, 4.9.1999THE DIOXIN CRISIS

NN 90 /1999 20.7.1999 DIOXIN CRISIS: DESTRUCTION OF ANIMALS OJ C 253, 4.9.1999TO PREVENT THE SPREAD OF CONTAMINATION BY DIOXINS

NN 89 /1999 20.7.1999 SPECIAL MEASURES FOR POULTRY OJ C 253, 4.9.1999PRODUCERS (DIOXIN CRISIS)


STATE AID 293

NN 87 /1999 20.7.1999 PRECAUTIONARY SEIZURE OF PIGS OJ C 253, 4.9.1999(DIOXIN CRISIS)

NN 88 /1999 20.7.1999 DESTRUCTION OF PIGS (DIOXIN CRISIS) OJ C 253, 4.9.1999

NN 95 /1999 20.7.1999 COMPENSATION FOR CERTAIN PRODUCTS OJ C 253, 4.9.1999OF ANIMAL ORIGIN (DIOXIN CRISIS)

N 386 /1999 20.7.1999 DIOXIN - RECOVERABLE ADVANCE TO OJ C 253, 4.9.1999FARMERS WHOSE EGGS ARE THE SUBJECTOF PRECAUTIONARY SEIZURE

N 434 /1999 16.8.1999 AID TO THE PIGMEAT SECTOR OJ C 264, 18.9.1999

N 435 /1999 16.8.1999 AID TO THE BEEF SECTOR OJ C 264, 18.9.1999

N 447 /1999 16.8.1999 SEIZURE OF FRESH MEAT AND CERTAIN OJ C 264, 18.9.1999PRODUCTS OF ANIMAL ORIGIN FROM POULTRYMEAT

N 261 /1999 25.8.1999 OJ C 280, 2.10.1999

N 499 /1999 7.9.1999 DIOXIN CRISIS OJ C 288, 9.10.1999

N 514 /1999 29.9.1999 SPECIAL MEASURES FOLLOWING DIOXIN OJ C 326, 13.11.1999CONTAMINATION




N 512 /1999 29.9.1999 DIOXIN CRISIS - SLAUGHTER OF CATTLE - OJ C 326, 13.11.1999COMPENSATION TO PRODUCERS


N 296 /1999 26.10.1999 TRANSITIONAL AGRIMONETARY AID

N 598 /1999 17.12.1999 MEASURES TO ASSIST BUSINESSES AFFECTED BY THE DIOXIN CRISIS

N 593/1999 10.11.1999 MEASURES TO ASSIST CERTAIN BUSINESSES AFFECTED BY THE DIOXIN CRISIS

N 614/1999 8.12.1999 REGIONAL GUARANTEE FOR LOANS GRANTED TO BUSINESSES FOLLOWING DIOXIN CONTAMINATION

N 730/1999 22.12.1999 AGRIMONETARY COMPENSATION - CHANGEOVER TO THE EURO (REGULATIONS(EC) 2800/98 AND 2808/99)

DenmarkN 587 /1998 18.1.1999 MEASURES TO ASSIST ORGANIC OJ C 42, 17.2.1999

PRODUCTION

N 532 /1998 11.2.1999 AMENDMENT TO THE PARAFISCAL PIG OJ C 69, 12.3.1999PRODUCTION LEVY FUND SCHEME - TREATMENT OF 15 PIG HERDS INFECTED BY SALMONELLA

N 503 /1998 24.2.1999 PIG PRODUCTION LEVY FUND SCHEME OJ C 72, 16.3.1999

N 681 /1998 31.3.1999 THE PRO MILLE AND PROFESSIONAL FUNDS

N 53 /1999 9.6.1999 LOCAL LAND TAX OJ C 213, 24.7.1999

N 152 /1999 24.6.1999 MEASURES TO COMBAT SALMONELLA OJ C 213, 24.7.1999

N 576 /1999 26.10.1999 AGRIMONETARY AID - ARABLE AREAS OJ C 12/00, 15.1.2000

FinlandN 158 /1999 3.6.1999 FODDER AID FOR REINDEER OJ C 194, 10.7.1999

N 256 /1999 10.11.1999 EURO AGRIMONETARY SCHEME



N 620/1999 25.11.1999 EURO AGRIMONETARY SCHEME

N 659/1999 22.12.1999 NATIONAL AID PROGRAMME (ART. 141 ACT OF ACCESSION)

N 314/1998 3.2.1999 AID FOR FORESTRY MEASURES (ALAND ISLANDS)

FranceN 655 /1998 22.4.1999 AID FOR MILK PRODUCERS OJ C 151, 29.5.1999

NN 2 /1999 26.5.1999 AID FOR FRUIT AND VEGETABLES OJ C 213, 24.7.1999

N 95 /1999 11.6.1999 LANGUEDOC-ROUSSILLON - AID TO OJ C 203, 17.7.1999WINEGROWERS AFFECTED BY FROST

N 79/1999 29.9.1999 AID FOR VINEYARDS IN CHARENTES OJ C 359, 11.12.1999

N 405 /1999 13.10.1999 AID FOR PIG FARMING - CESSATION OF OJ C 340, 27.11.1999ACTIVITIES

N 395 /1999 13.10.1999 TRANSITIONAL AGRIMONETARY AID OJ C 340, 27.11.1999

N 604 /1999 8.11.1999 PARAFISCAL CHARGE FOR CENTRE OJ C 359, 11.12.1999TECHNIQUE DE LA CONSERVATION DES PRODUITS AGRICOLES

N 244/1999 8.7.1999 PARAFISCAL CHARGE FOR CENTRE DE COOPERATION INTERNATIONALE EN RECHERCHE AGRONOMIQUE POUR LE DEVELOPPEMENT

GermanyHAMBURG N 471 /1998 28.1.1999 AID IN THE AGRO-ENVIRONMENTAL OJ C 47, 20.2.1999

SECTOR

SCHLESWIG- 531 /1998 2.2.1999 AID TO ENCOURAGE ENVIRONMENTALLY OJ C 69, 12.3.1999NHOLSTEIN FRIENDLY FARMING

LOWER N 635 /1997 11.2.1999 MEASURES TO ASSIST NATURE RESERVES OJ C 69, 12.3.1999SAXONY

RHEINLAND- N 498 /1998 3.3.1999 ENVIRONMENTAL MEASURES FOR OJ C 81, 24.3.1999PFALZ MANURE PRODUCTION

BADEN- N 626 /1998 9.3.1999 MODERNISATION OF AN ABATTOIR IN OJ C 81, 24.3.1999WÜRTTEMBERG BRETTEN

BAVARIA N 549 /1998 11.3.1999 IMPROVEMENT OF THE QUALITY OF OJ C 84, 26.3.1999PRODUCTION

MECKLENBURG- N 454 /1998 11.3.1999 INVESTMENT IN THE AGRICULTURAL OJ C 84, 26.3.1999WESTERN SECTORPOMERANIA

SAXONY N 479 /1998 11.5.1999 PROMOTION OF STRUCTURAL OJ C 166, 12.6.1999IMPROVEMENTS IN THE MILK SECTOR

BAVARIA N 481 /1998 26.5.1999 AGRO-ENVIRONMENTAL MEASURES CONCERNING THE KULAP VINEYARDS

BAVARIA NN 82b/1998 26.5.1999 PROMOTION OF ENVIRONMENTALLY OJ C 203, 17.7.1999FRIENDLY PRODUCTION PROCESSES

N 70 /1999 2.7.1999 STRUCTURAL IMPROVEMENTS IN OJ C 225, 7.8.1999AGRICULTURE AND IN COASTAL DEFENCES

BAVARIA NN 182 /1997 23.6.1999 AID FOR THE CONSTRUCTION OF AN OJ C 233, 14.8.1999ABATTOIR

LOWER N 5 /1999 8.7.1999 VOLUNTARY NATURE-PROTECTION OJ C 233, 14.8.1999SAXONY CONTRACTS IN PARKS AND NATURE

PROTECTION AREAS

HESSEN N 607 /1998 8.7.1999 AID FOR FARMING METHODS COMPATIBLE OJ C 233, 14.8.1999WITH THE REQUIREMENTS OF ENVIRONMENTAL PROTECTION AND NATURE MANAGEMENT


STATE AID 295

BADEN- NN 125 /1998 23.6.1999 AGRO-ENVIRONMENTAL PROGRAMME OJ C 233, 14.8.1999WÜRTTEMBERG

BAVARIA N 667 /1998 8.7.1999 AID TOWARDS INVESTMENT IN A MILK OJ C 238, 21.8.1999PROCESSING PLANT

BADEN- N 477 /1998 23.6.1999 LIQUIDITY FOR FARMS IN DIFFICULTIES OJ C 233, 14.8.1999WÜRTTEMBERG

BAVARIA N 641 /1997 24.6.1999 PROMOTION OF BREEDING ACTIVITIES OJ C 213, 24.7.1999

SAXONY N 493 /1998 20.7.1999 FINANCIAL SUPPORT FOR UNDERTAKINGS OJ C 253, 4.9.1999IN DIFFICULTIES

LOWER N 189 /1999 30.7.1999 AID FOR AN AGRICULTURAL INFORMATION OJ C 259, 11.9.1999SAXONY SYSTEM

LOWER N 274 /1999 3.8.1999 AID TO THE POTATO SECTOR OJ C 259, 11.9.1999SAXONY

BAVARIA N 362 /1999 19.8.1999 HORTICULTURAL PRODUCTION - RAIN OJ C 272, 25.9.199AM LECH 9

LOWER N 252 /1999 19.8.1999 AID TO THE POULTRY SECTOR OJ C 272, 25.9.1999SAXONY

BAVARIA N 411 /1999 10.9.1999 MEASURES FOLLOWING THE DAMAGE OJ C 298, 16.10.1999CAUSED BY FLOODING - 1999

BAVARIA N 547 /1998 10.9.1999 AID TO FARMS OJ C 298, 16.10.1999

MECKLENBURG- N 371 /1999 18.10.1999 POTATO PRODUCTION OJ C 332, 20.11.1999WESTERN POMERANIA

LOWER N 288 /1999 13.10.1999 TREATMENT OF WASTE WATER FOR OJ C 340, 27.11.1999SAXONY IRRIGATION PURPOSES

NORTH RHINE- N 643 /1998 29.10.1999 PROMOTION OF ENVIRONMENTALLY OJ C 351, 4.12.1999WESTPHALIA FRIENDLY AGRICULTURE

N 605 /1999 13.12.1999 PROMOTION OF QUALITATIVE OJ C 12, 15.1.2000IMPROVEMENTS

NORTH RHINE- N 72/1999 8.12.1999 PROMOTION OF ORGANIC MILKWESTPHALIA

N 506/1999 22.12.1999 LAND PURCHASE PROGRAMME

GreeceN 556 /1998 7.1.1999 AID FOR THE PURCHASE OF ANIMAL FEED OJ C 42, 17.2.1999

IN CONNECTION WITH FIRES IN 1998

N 525 /1998 7.1.1999 AID TO FARMERS OJ C 42, 17.2.1999

N 538 /1998 4.2.1999 MEASURES TO ASSIST FARMS WHOSE OJ C 47, 20.2.1999PRODUCTION WAS DAMAGED BY BAD WEATHER IN MARCH 1998

N 557 /1998 18.2.1999 MEASURES TO ASSIST FARMERS WHOSE OJ C 69, 12.3.1999HOLDINGS WERE DAMAGED BY FIRE

N 210 /1999 11.6.1999 AID FOR THE LOSSES INCURRED AS ARESULT OF BAD WEATHER DURING THE PERIOD JULY-DECEMBER 1998

N 318 /1999 29.10.1999 COMPENSATION FOR LOSSES CAUSED BY OJ C 351, 4.12.1999BAD WEATHER

IrelandN 112 /1999 12.5.1999 MILK PRODUCTION - HEALTH MEASURES OJ C 173, 19.6.1999

N 113 /1999 23.6.1999 CONTROL OF FARM POLLUTION OJ C 233, 14.8.1999

N 251b/1999 10.11.1999 TRANSITIONAL AGRIMONETARY AID: AID IN RESPONSE TO AN EVENT OCCURRING ON 1 AND 3 JANUARY

N 251a/1999 8.12.1999 TRANSITIONAL AGRIMONETARY AID: AGRO-ENVIRONMENTAL AND EARLYRETIREMENT SCHEMES



ItalyN 650/1999 22.12.1999 COMPENSATORY AID

TUSCANY N 653 /1998 18.1.1999 CONTROL AND CERTIFICATION, ORGANIC OJ C 42, 17.2.1999FARMING

N 198 /1998 28.1.1999 PROMOTIONAL MEASURES FOR OJ C 47, 20.2.1999«PROSCIUTTO DI PARMA»

LOMBARDY N 641 /1998 28.1.1999 PLAN FOR THE REGENERATION OF LA OJ C 47, 20.2.1999VALTELLINA - STRUCTURAL ASSISTANCE FOR FORESTRY

N 310 /1998 28.1.1999 PROMOTIONAL MEASURES FOR OJ C 47, 20.2.1999«PROSCIUTTO DI SAN DANIELE»

N 427 /1998 4.2.1999 RIBS - GIAS PROJECT OJ C 69, 12.3.1999

SARDINIA N 443 /1998 3.2.1999 MEASURES FOR FARM AND RURAL OJ C 69, 12.3.1999TOURISM

TUSCANY N 672 /1998 16.2.1999 AID FOR YOUNG FARMERS OJ C 081, 24.3.1999

FRIULI- N 537 /1998 16.2.1999 AID SCHEMES PROVIDED FOR UNDER OJ C 69, 12.3.1999VENEZIA LEADER IIGIULIA

EMILIA- N 62 /1998 18.2.1999 PROMOTION OF DEVELOPMENT SERVICES OJ C 69, 12.3.1999ROMAGNA IN THE FOOD INDUSTRY

BOLZANO- N 251 /1998 19.2.1999 PROVINCIAL LAW ON AGRICULTURE OJ C 81, 24.3.1999BOZEN

N 4 /1999 25.2.1999 DESIGNATIONS OF ORIGIN OF PRODUCTS OJ C 81, 24.3.1999

N 282 /1998 26.2.1999 PROMOTION AND PUBLICITY MEASURES OJ C 81, 24.3.1999FOR WINE AND OTHER FOODSTUFFS

UMBRIA N 630 /1998 12.3.1999 AID FOR THE RESTRUCTURING OF WINE- OJ C 92, 1.4.1999GROWING AREAS

VENETO N 695 /1996 18.3.1999 DEVELOPMENT OF THE AGRICULTURAL OJ C 92, 1.4.1999SECTOR

UMBRIA N 568 /1998 23.3.1999 DEVELOPMENT OF COOPERATIVES IN THE OJ C 99, 10.4.1999FOOD INDUSTRY

MARCHE N 573 /1998 15.4.1999 IMPROVEMENT OF THE QUALITATIVE OJ C 129, 8.5.1999LEVEL OF ASS- AND HORSE-BREEDING

SARDINIA N 182 /1998 21.4.1999 REGIONAL LAW OF 4 FEBRUARY 1998: OJ C 220, 31.7.1999EAGGF GUIDANCE EXPENDITURE

N 136 /1999 11.5.1999 MEASURES FOR THE STORAGE OF OJ C 166, 12.6.1999POTATOES PRODUCED IN 1998

N 120 /1999 26.5.1999 1998 INTER-BRANCH AGREEMENT ON OJ C 187, 3.7.1999POTATO PROCESSING

TUSCANY N 31 /1999 28.5.1999 PROMOTION OF AGRICULTURAL OJ C 187, 3.7.1999RESOURCES FOR 1999

N 151 /1999 3.6.1999 PROJECT «CONSORZIO CADALASCO DEL OJ C 194, 10.7.1999POMODORO» - RIBS SPA

TUSCANY N 222 /1999 9.6.1999 LEADER II PROGRAMME (TUSCANY) - OJ C 194, 10.7.1999«MAREMMA» BREED THREATENED WITH EXTINCTION

FRIULI- NN 150 /1998 26.5.1999 AID TO MOUNTAIN FARMING OJ C 203, 17.7.1999VENEZIAGIULIA

LIGURIA N 372a/1998 21.6.1999 AID TO ORGANIC FARMING

TUSCANY N 42 /1999 2.7.1999 AID TO DAIRY FARMING OJ C 225, 7.8.1999

VENETO N 474 /1998 27.7.1999 AID IN THE FRUIT AND VEGETABLE SECTOR OJ C 253, 4.9.1999

ABRUZZI N 645 /1998 2.7.1999 REGIONAL GUARANTEE FUNDS OJ C 225, 7.8.1999

TUSCANY N 496 /1998 2.7.1999 VALUE ENHANCEMENT OF CERTAINAGRICULTURAL PRODUCTS


STATE AID 297

N 27 /1999 8.7.1999 PARTICIPATION OF RIBS IN FINANCINGTHE ORTO DEL LEVANTE PROJECT

NN 113 /1997 20.7.1999 INTERREGIONAL PROGRAMME OJ C 253, 4.9.1999«AGRICULTURE AND QUALITY»

MARCHE N 183 /1998 20.7.1999 AID MEASURES IN THE WINEGROWING OJ C 253, 4.9.1999SECTOR

APULIA N 736 /1997 20.7.1999 RIBS - MEASURES IN THE MILK SECTOR OJ C 253, 4.9.1999

BOLZANO- N 252 /1998 30.7.1999 AID FOR STOCKFARMING OJ C 259, 11.9.1999BOZEN

NN 112 /1997 20.7.1999 INTERREGIONAL PROGRAMME OJ C 259, 11.9.1999«TECHNICAL ASSISTANCE TO STOCKFARMING»

TUSCANY N 620 /1998 11.8.1999 FORESTRY LEGISLATION OJ C 264, 18.9.1999

N 45 /1999 12.8.1999 LOCAL DEVELOPMENT (SANGRO OJ C 264, 18.9.1999AVENTINO)

N 129 /1999 19.8.1999 ADVERTISING MEASURES OJ C 272, 25.9.1999

PIEDMONT N 376 /1999 3.9.1999 DEVELOPMENT OF ORGANIC FARMING OJ C 288, 9.10.1999

N 128 /1999 3.9.1999 EXTENSION OF CIPE INSTRUMENTS OJ C 288, 9.10.1999

N 119 /1999 3.9.1999 AID FOR THE MILK SECTOR OJ C 288, 9.10.1999

N 149 /1999 29.9.1999 VERONESI PROJECT - RIBS SPA OJ C 326, 13.11.1999

N 259 /1999 7.10.1999 STANDARDS FOR SERVICES FOCUSING ON OJ C 326, 13.11.1999THE DEVELOPMENT OF THE FOOD INDUSTRY IN MARCHE

LIGURIA N 223 /1999 7.10.1999 STANDARDS IN FORESTRY AND OJ C 326, 13.11.1999HYDROGEOLOGICAL RESOURCES

TUSCANY N 261 /1997 13.10.1999 START-UP AID TO PRODUCER GROUPS C 332, 20.11.1999

N 453 /1999 22.10.1999 TERRITORIAL EMPLOYMENT PACT OJ C 340, 27.11.1999(APPENNINO CENTRALE)

MARCHE N 52b/1999 22.10.1999 RELAUNCH OF ECONOMIC ACTIVITY OJ C 340, 27.11.1999AFFECTED BY THE EARTHQUAKE OF 26 SEPTEMBER 1997

ABRUZZI N 377 /1999 26.10.1999 REGIONAL PROGRAMME ON POTATO OJ C 351, 4.12.1999GROWING

MARCHE N 575 /1998 26.10.1999 LEADER II PROGRAMME OJ C 351, 4.12.1999

N 307b/1998 8.11.1999 LEGISLATIVE DECREE NO 173 OF 30 APRIL OJ C 359, 11.12.19991998 (ARTICLE 1(3) AND ARTICLE 13(1))

TUSCANY N 408 /1999 9.12.1999 ECONOMIC PROMOTION ACTIVITIES - OJ C 12.00, 15.1.2000AGRICULTURAL SECTOR

N 266 /1999 9.12.1999 LUCERNE CULTIVATION OJ C 12.00, 15.1.2000

PIEDMONT N 622 /1999 13.12.1999 MODERNISATION OF THE AGRO- OJ C 12.00, 15.1.2000INDUSTRIAL SECTOR

ABRUZZI N 88 /1999 13.12.1999 MEASURES IN FAVOUR OF PRODUCER OJ C 12.00, 15.1.2000ORGANISATIONS

MOLISE N 311 /1998 13.12.1999 MEASURES TO ASSIST HOLDINGS OJ C 12.00, 15.1.2000DAMAGED BY ENZOOTIC BOVINE LEUKOSIS

VENETO N 360/1998 15.11.1999 AID FOR AGRICULTURAL PRODUCTS

APULIA N 80/1998 22.12.1999 FINANCIAL DISCIPLINE IN AGRICULTURE

MARCHE N 671/1997 8.11.1999 MEASURES IN THE ANIMAL OJ C 359, 11.12.1999REPRODUCTION SECTOR

PIEDMONT N 632/1998 22.12.1999 SUBSIDISED LOANS IN AGRICULTURE FROM 1 JULY 1998

SICILY N 346/1999 22.12.1999 RESTRUCTURING OF THE CORLEONE CHEESE FACTORY

EMILIA- N 610/1999 16.12.1999 AID TO FIRMS PROCESSING AND ROMAGNA MARKETING AGRICULTURAL PRODUCTS

NN 114/1999 25.11.1999 LEADER II OJ C 12.00, 15.1.2000



LuxembourgN 109 /1999 22.4.1999 AID FOR THE POTATO SECTOR OJ C 151, 29.5.1999

N 250 /1999 3.6.1999 AID TO THE CEREAL SECTOR OJ C 194, 10.7.1999

N 83 /1998 28.7.1999 WINEGROWING SECTOR - COMPENSATION OJ C 264, 18.9.1999FOR PRODUCTION LOSSES DUE TO BAD WEATHER IN 1997

N 295/1999 10.11.1999 TRANSITIONAL AGRIMONETARY AID

NetherlandsN 510 /1998 28.1.1999 PROMOTION OF ORGANIC FARMING - OJ C 47, 20.2.1999

AMENDMENT OF THE RSBP

N 591 /1998 16.2.1999 TEMPORARY RULES ON AGRICULTURAL OJ C 81, 24.3.1999NATURE MANAGEMENT

N 19 /1999 12.3.1999 COMPENSATION FOR DAMAGE INFLICTED OJ C 92, 1.4.1999BY HARSH WEATHER CONDITIONS IN AUTUMN 1998

NN 8 /1999 3.3.1999 TEMPORARY RULES ON PRIVATE NATURE OJ C 92, 1.4.1999CONSERVATION

N 466 /1998 15.4.1999 EXEMPTION FROM INCOME TAX FOR OJ C 129, 8.5.1999SUBSIDIES OBTAINED FOR PRIVATE NATURE CONSERVATION

N 424 /1998 21.6.1999 AID FOR GLASSHOUSE GROWING - NORTH HOLLAND

N 671 /1998 18.5.1999 AID TO QUALITY CONTROL MILK OJ C 173, 19.6.1999FOUNDATION

N 451 /1998 23.6.1999 AID AND PARAFISCAL CHARGES IN THE OJ C 233, 14.8.1999POULTRY AND EGG SECTOR

N 173 /1999 4.5.1999 CLEAN-UP SCHEME FOR ASBESTOS ROADS OJ C 187, 3.7.1999

N 92 /1999 8.6.1999 EXEMPTION FROM INCOME TAX FOR OJ C 194, 10.7.1999SUBSIDIES OBTAINED FOR INDIVIDUALPROJECTS OF AN EXPERIMENTAL NATURE

N 10 /1999 8.7.1999 INVESTMENT FOR PROCESSING OF FLAX OJ C 233, 14.8.1999FIBRES

N 350 /1999 20.7.1999 MODIFICATION OF PARAFISCAL CHARGES OJ C 259, 11.9.1999IN THE FORESTRY SECTOR

N 334 /1999 20.7.1999 AID AND PARAFISCAL CHARGE IN THE OJ C 259, 11.9.1999POULTRY AND EGG SECTOR

N 20 /1999 28.7.1999 ADDITIONAL MEASURES ACCOMPANYING OJ C 306, 23.10.1999THE REFORM OF THE PIG SECTOR

N 339 /1999 31.8.1999 RENOVATION OF RURAL AREA OJ C 280, 2.10.1999

NN 115 /1999 29.9.1999 AID AND PARAFISCAL CHARGE IN THE OJ C 332, 20.11.1999WINE SECTOR

N 526 /1999 13.10.1999 PARAFISCAL CHARGES FINANCING OJ C 340, 27.11.1999MEASURES FOR STARCH POTATOES

NN 117 /1999 26.10.1999 PARAFISCAL CHARGE FINANCING AID IN OJ C 359, 11.12.1999THE PIG SLAUGHTERING SECTOR

NN 93 /1998 23.6.1999 FLAX FUND TO STIMULATE RESEARCH OJ C 359, 11.12.1999AND SALES PROMOTION

NN 131/1999 8.12.1999 AID IN THE FRUIT AND VEGETABLE SECTOR

N 589b/1998 8.12.1999 EXTENSION OF REGULATORY CO2/ENERGYTAX, ZERO-TARIFF NATURAL GAS FOR THE GLASSHOUSE-CULTIVATION SECTOR

N 636/1999 24.11.1999 ENVIRONMENTAL AID (SPOM)


STATE AID 299

PortugalN 615 /1998 11.2.1999 MEASURES TO ASSIST COOPERATIVES OJ C 69, 12.3.1999

AND PRODUCER GROUPS FOLLOWING FREAK WEATHER CONDITIONS

N 612 /1998 11.2.1999 COLLECTION OF DATA ON THE FORESTRY OJ C 69, 12.3.1999SECTOR

N 578 /1998 19.2.1999 MEASURES TO ASSIST FARMS AFFECTED OJ C 81, 24.3.1999BY FLOODING IN OCTOBER AND NOVEMBER 1997

N 190 /1999 8.7.1999 MEASURES TO ASSIST PRODUCERS OJ C 233, 14.8.1999AFFECTED BY FREAK BAD WEATHER

NN 42 /1999 28.7.1999 MODERNISATION AND DEVELOPMENT OF OJ C 272, 25.9.1999AGRICULTURE AND FORESTRY

N 160 /1999 19.8.1999 AMENDMENT OF THE SIPAC - INTEGRATED OJ C 272, 25.9.1999SYSTEM FOR PROTECTION AGAINSTCLIMATIC DISTURBANCES

N 424 /1999 3.9.1999 STORAGE AID FOR POTATOES AND CREDIT OJ C 288, 9.10.1999FOR THE PURCHASE OF WARE POTATOES

N 267 /1999 21.10.1999 AID FOR THE LABELLING OF BEEF AND OJ C 340, 27.11.1999VEAL, PIGMEAT AND POULTRYMEAT

N 320 /1999 9.12.1999 MEASURES TO ASSIST PRODUCERS OJ C 12.00, 15.1.2000AFFECTED BY CYCLONES IN DECEMBER 1998

SpainBASQUE N 499 /1998 21.1.1999 AID TO CATTLE FARMING - ALAVA OJ C 42, 17.2.1999COUNTRY

ARAGON N 559 /1998 28.1.1999 AID TO IMPROVE PROCESSING AND OJ C 47, 20.2.1999MARKETING OF AGRICULTURALPRODUCTS

GALICIA N 32 /1999 11.2.1999 AID FOR BEEKEEPING OJ C 69, 12.3.1999

CANARY N 707 /1998 19.2.1999 MEASURES FOR REPRODUCTIVE MATERIALISLANDS IN NURSERIES OJ C 81, 24.3.1999

MADRID N 677 /1998 26.3.1999 AID TO IMPROVE PROCESSING AND OJ C 99, 10.4.1999MARKETING CONDITIONS FOR AGRICULTURAL PRODUCTS

MURCIA N 76 /1999 31.3.1999 AIDE TO AGRICULTURAL ASSOCIATIONS FOR THE MARKETING AND PROCESSING OF AGRICULTURAL PRODUCTS

N 175 /1999 3.5.1999 AID TO CERTAIN AGRI-FOOD ENTERPRISES OJ C 159, 5.6.1999

CASTILE-LEON N 514 /1998 18.5.1999 MEASURES TO COMPENSATE FOR OJ C 173, 19.6.1999ADVERSE WEATHER CONDITIONS IN SUMMER 1997

ASTURIAS N 74a/1999 26.5.1999 COLLABORATION BETWEEN ASTURIAS OJ C 187, 3.7.1999AND THE AGRICULTURAL CREDIT BANK

ASTURIAS N 207 /1999 28.5.1999 MEASURES TO ASSIST BEE FARMS OJ C 187, 3.7.1999

N 705 /1998 28.5.1999 MEASURES TO ASSIST SPANISH BREEDS IN OJ C 187, 3.7.1999DANGER OF EXTINCTION

NN 25 /1999 11.5.1999 DECREE 35/1993 OF 13 APRIL 1993 ON THE OJ C 225, 7.8.1999FINANCING OF OPERATING CAPITAL IN THE AGRICULTURAL SECTOR

CASTILE-LEON N 168 /1999 11.5.1999 AID FOR FARMERS’AND BREEDERS’ OJ C 194, 10.7.1999PENSIONS

MADRID N 188 /1999 8.6.1999 PLANTING OF VINEYARDS - DESIGNATION OJ C 194, 10.7.1999OF ORIGIN «VINOS DE MADRID»

CATALONIA N 87 /1999 11.6.1999 AID TO SMEs OJ C 203, 17.7.1999

CANTABRIA N 297 /1999 18.6.1999 PURCHASE OF MALE BREEDING ANIMALS OJ C 213, 24.7.1999



CASTILE-LEON N 279 /1999 18.6.1999 AID FOR BEE FARMS OJ C 213, 24.7.1999

N 254 /1999 18.6.1999 CLEANING AND DISINFECTION OF OJ C 213, 24.7.1999LIVESTOCK TRANSPORT VEHICLES

CATALONIA N 263a/1999 26.7.1999 AID TO OBTAIN ISO 9000 CERTIFICATION OJ C 253, 4.9.1999

CATALONIA N 262a/1999 26.7.1999 AID TO PROMOTE QUALITY AND OJ C 253, 4.9.1999PRODUCTIVITY IN FIRMS

N 255 /1999 28.7.1999 AID TO STOCK BREEDERS’ASSOCIATIONS OJ C 253, 4.9.1999

CANTABRIA N 285 /1999 27.9.1999 MEASURES TO IMPROVE DAIRY FARMS OJ C 313, 30.10.1999

VALENCIA N 544 /1999 21.10.1999 ACCESS TO OWNERSHIP OJ C 340, 27.11.1999

CASTILE-LEON N 493 /1999 21.10.1999 AID FOR THE LIVESTOCK SECTOR OJ C 340, 27.11.1999

CANTABRIA N 603 /1999 8.11.1999 CHEESE MANUFACTURING (PYME OJ C 359, 11.12.1999INITIATIVE)

VALENCIA N 400 /1999 8.11.1999 QUALITY PROGRAMME FOR OLIVE OIL OJ C 359, 11.12.1999

N 571 /1999 9.11.1999 AID TO THE POTATO SECTOR OJ C 359, 11.12.1999

SwedenN 544 /1998 28.1.1999 AID FOR THE PRESERVATION OF THE OJ C 47, 20.2.1999

NATURAL AND CULTURAL ENVIRONMENTSIN THE REINDEER HUSBANDRY AREA

N 83 /1999 8.9.1999 AGRIMONETARY AID OJ C 359, 11.12.1999

N 185/1999 22.12.1999 AID TO CEREALIA AB - ENVIRONMENTALMEASURES

United KingdomN 616 /1998 29.1.1999 COUNTRYSIDE STEWARDSHIP SCHEME OJ C 47, 20.2.1999

N 25 /1999 17.2.1999 AMENDMENT TO COUNTRYSIDE OJ C 81, 24.3.1999STEWARDSHIP SCHEME

N 156 /1999 21.4.1999 AID TO THE SHEEP SECTOR OJ C 159, 5.6.1999

WALES N 662 /1998 29.4.1999 WELSH FOOD STRATEGY OJ C 159, 5.6.1999

N 239 /1999 23.6.1999 AGRIMONETARY AID - BEEF SCHEME OJ C 233, 14.8.1999

N 337 /1999 11.8.1999 SMALL FARM WOODLANDS OJ C 264, 18.9.1999

N 338 /1999 12.8.1999 ENVIRONMENTALLY SENSITIVE AREAS OJ C 264, 18.9.1999

NORTHERN N 467 /1999 18.10.1999 FIRST YEAR CAPITAL ALLOWANCES OJ C 332, 20.11.1999IRELAND

SCOTLAND N 547 /1999 22.10.1999 ORKNEY ISLANDS COUNCIL OJ C 340, 27.11.1999

WALES N 330 /1999 22.10.1999 AGRO-ENVIRONMENTAL AID (TIR GOFAL) OJ C 340, 27.11.1999

N 487 /1999 26.10.1999 AGRIMONETARY AID - ARABLE AREA AND OJ C 359, 11.12.1999HOPS SCHEMES

N 483 /1999 26.10.1999 AGRIMONETARY AID - ARABLE AREA AND OJ C 359, 11.12.1999HOPS SCHEMES

N 599 /1999 13.12.1999 PREPARATION OF RECORD BOOKS FOR OJ C 12.00, 15.1.2000STOCK BREEDERS

N 241/1999 8.12.1999 TRANSITIONAL AGRIMONETARY SCHEME

N 537/1999 15.11.1999 AID TO THE CHEESEMAKERS ASSOCIATION

N 621/1999 25.11.1999 TRANSITIONAL AGRIMONETARYCOMPENSATION - FLAX & HEMP SCHEME


STATE AID 301

1.3. Aid cases in which the Commission initiated proceedings under Article 88(2) of the EC Treatyin respect of all or part of the measure

BelgiumN 380 /1998 17.2.1999 PROTECTION OF THE ENVIRONMENT OJ C 129, 8.5.1999

AGAINST POLLUTION BY FERTILISERS

DenmarkN 489 /1998 3.3.1999 AMENDMENT TO A PARAFISCAL SCHEME

IN THE POULTRY-BREEDING SECTOR. MEASURES TO COMBAT AND PREVENTGUMBORO DISEASE

FranceN 79 /1999 29.9.1999 AID FOR VINEYARDS IN CHARENTES JO/C 359, 11.12.1999

GermanyTHURINGIA NN 108 /1998 3.3.1999 AID FOR FRUIT AND VEGETABLE OJ C 120, 1.5.1999

PRODUCTION

MECKLENBURG- N 22a/1998 21.4.1999 PROMOTION OF AGRICULTURALWESTERN PRODUCTS OJ C 213, 24.7.1999POMERANIA

THURINGIA NN 28 /1999 4.5.1999 LOAN GUARANTEE FOR A MEAT OJ C 238, 21.8.1999PROCESSING COMPANY, GREUSSENER SALAMIFABRIK GMBH

N 258 /1998 13.10.1999 AID IN THE SUGAR SECTOR JO/C 359, 11.12.1999

THURINGIA NN 90 /1997 26.10.1999 RHONGOLD MOLKEREI FRICKE GMBH & CO, KALTENSUNDHEIM

IrelandNN 23 /1999 8.7.1999 ASSISTANCE FOR WINTER FODDER OJ C 280, 2.10.1999

LOSSES (1999)

ItalySARDINIA N 182 /1998 21.4.1999 REGIONAL LAW OF 4 FEBRUARY 1998: OJ C 220, 31.7.1999

EAGGF GUIDANCE EXPENDITURE

NetherlandsN 534 /1997 20.7.1999 PARAFISCAL CHARGES INTENDED FOR OJ C 280, 2.10.1999

FINANCING PURPOSES

N 20 /1999 28.7.1999 ADDITIONAL MEASURES ACCOMPANYING OJ C 306, 23.10.1999THE REFORM OF THE PIG SECTOR

PortugalN 704 /1998 4.5.1999 MEASURES IN FAVOUR OF THE PIG SECTOR OJ C 220, 31.7.1999

SpainEXTREMADURA NN 25 /1999 11.5.1999 DECREE 35/1993 OF 13 APRIL 1993 ON THE OJ C 225, 7.8.1999

FINANCING OF OPERATING CAPITAL IN THE AGRICULTURAL SECTOR

NN 26 /1999 11.5.1999 DECREE OF 8 JULY 1998 FIXING AID FOR OJ C 233, 14.8.1999AGRICULTURAL PRODUCERS FOR PRODUCTION FOR INDUSTRIALPROCESSING FOR THE 1997/98 MARKETING YEAR

SwedenNN 149 /1998 13.10.1999 AID TO NYA HOLMLUNDS LIVS AB OJ C 359, 11.12.1999



1.4. Cases in which the Commission considered that the aid was compatible with the commonmarket and terminated proceedings under Article 88(2) of the EC Treaty by way of a positivefinal decision

GermanyTHURINGIA C 16 /1999 13.10.1999 AID FOR FRUIT AND VEGETABLE OJ C 120

PRODUCTION

MECKLENBURG- C 23 /1999 25.11.1999 PROMOTION OF AGRICULTURAL PRODUCTSWESTERN POMERANIA

GreeceC 68 /1998 26.10.1999 AID FOR NEW FARMERS

ItalyC 56 /1996 11.5.1999 AID TO THE SUGAR SECTOR OJ L/236, 7.9.1999

CAMPANIA C 29 /1996 23.6.1999 CAMPANIA - REGIONAL LAW 31/90

TUSCANY C 57 /1998 10.11.1999 AID FOR THE «CHIANINA» CATTLE BREED (1997-99)

NetherlandsC 80 /1998 8.12.1999 AID FOR PIG ASSEMBLY CENTRES

United KingdomNORTHERN C 76 /1998 9.6.1999 PIG WELFARE SLAUGHTER COMPENSATION OJ L/227, 28.8.1999IRELAND SCHEME

1.5. Cases in which the Commission considered that the aid was incompatible with the commonmarket and terminated proceedings under Article 88(2) of the EC Treaty by way of a negativeor partly negative decision

AustriaC 57 /1996 3.2.1999 EXEMPTION FROM BEVERAGE TAX ON OJ L/305, 30.11.1999

WINE AND OTHER FERMENTEDBEVERAGES

LOWER C 82/1998 8.12.1999 DIRECTIVES PROMOTING THE BREEDINGAUSTRIA OF NANNY GOATS

GreeceC 60 /1994 20.7.1999 GREEK COTTON BOARD

ItalySARDINIA C 51 /1996 30.3.1999 DECISION OF 24 DECEMBER 1995 (ART.16

OF REGIONAL LAW 9/62) CONCERNING THE GRANT OF SHORT-TERM LOANS IN THE MILK SECTOR

C 56 /1996 11.5.1999 AID TO THE SUGAR SECTOR OJ L/236, 7.9.1999

CAMPANIA C 29 /1996 23.6.1999 CAMPANIA - REGIONAL LAW 31/90

SICILY C 1 /1998 22.12.1999 GUARANTEE FUND FOR THE FRUIT AND VEGETABLE SECTOR

TUSCANY C 57 /1998 10.11.1999 AID FOR THE «CHIANINA» CATTLE BREED (1997-99)


STATE AID 303

C 36 /1998 10.11.1999 AMENDMENTS TO THE GUARANTEE FUND FOR DEBT CONSOLIDATION OPERATIONS INVOLVING SMEs IN OBJECTIVE 1 AREAS, AGRICULTURAL SECTOR

NetherlandsC 34 /1997 20.7.1999 AID AND PARAFISCAL CHARGES FOR

ADVERTISING ORNAMENTAL PLANTS

PortugalC 65 /1997 25.11.1999 CREDIT LINE FOR THE DEBT RELIEF OF

INTENSIVE BREEDING FARMS AND THE REVIVAL OF PIG BREEDING

SpainEXTREMADURA C 37 /1999 22.12.1999 DECREE 35/1993 OF 13 APRIL 1993 ON

FINANCING THE REVOLVING FUND IN THE AGRICULTURAL SECTOR

C 38 /1999 22.12.1999 ORDER OF 8 JULY 1998 SETTING THE LEVELOF AID FOR HORTICULTURAL PRODUCTION INTENDED FOR INDUSTRIAL PROCESSING, 1997/98

1.6. Aid cases in which the Commission terminated proceedings after the Member State withdrewthe proposed measure

DenmarkC 15/1999 23.6.1999 AMENDMENT TO A PARAFISCAL SCHEME

IN THE POULTRY-BREEDING SECTOR. MEASURES TO COMBAT AND PREVENTGUMBORO DISEASE

ItalyVENETO C 53 /1998 17.2.1999 SUBSIDISED SHORT-TERM LOANS IN OJ C 99, 10.4.1999

AGRICULTURE

EMILIA- C 4/1996 20.7.1999 MEASURES IN FAVOUR OF COLLECTIVE OJ C 313, 30.10.1999ROMAGNA FORMS OF GUARANTEE IN THE

AGRICULTURAL AND AGRO-INDUSTRIALSECTORS

1.7. Aid cases in which the Commission proposed appropriate measures under Article 88(1) of theEC Treaty

ItalyMARCHE C 6/1994 20.7.1999 ORGANIC FARMING - REGIONAL LAW 44/92 OJ C 313, 30.10.1999

PortugalNN 42 /1999 28.7.1999 MODERNISATION AND DEVELOPMENT OF OJ C 272, 25.9.1999

AGRICULTURE AND FORESTRY



1.8. Other Commission decisions

FinlandN 314 /1998 3.2.1999 AID FOR FORESTRY MEASURES (ALAND OJ C 21, 26.1.1999

ISLANDS)

GermanyC 17 /1998 20.1.1999 LAW ON EXPROPRIATION AND

COMPENSATING PAYMENTS

GreeceC 32/1998 17.3.1999 AID FOR DEBT SETTLEMENT OJ C 120, 1.5.1999

AND CONSOLIDATION OF AGRICULTURAL COOPERATIVES AND OTHER ENTREPRISES

SpainANDALUCIA C 26 /1997 3.2.1999 AID TO HIJOS DE ANDRES MOLINA SA OJ L/193, 26.7.1999

(HAMSA)

2. In the fisheries sector

2.1. Measures which the Commission considered compatible with the common market withoutopening an investigation under Article 88(2) of the EC Treaty

NetherlandsN 405/98 16.7.1998 FUND FOR RESEARCH ON MUSSELS OJ C 072, 16.3.1999

N 406/98 16.7.1998 FUND FOR THE PROMOTION OF MUSSELS OJ C 072, 16.3.1999

N 502/98 4.9.1998 REDUCTION IN FISHING CAPACITY OJ C 032, 6.2.1999

N 679/98 10.12.1998 FISHING PORT FACILITIES OJ C 088, 30.3.1999

N 683/98 14.12.1998 AQUACULTURE: PROMOTION OF PRODUCTS AND OJ C 264, 18.9.1999RESEARCH

N 684/98 15.12.1998 AID TO THE SHRIMP SECTOR OJ C 166, 12.6.1999

N 99/99 25.2.1999 PROMOTION OF FISH PRODUCTS OJ C 213, 24.7.1999

N 294/99 19.5.1999 PROMOTION OF AQUACULTURE OJ C 253, 4.9.1999

N 440/99 2.8.1999 AMENDMENT TO EXISTING SCHEME OF ASSISTANCE OJ C 332, 20.11.1999FOR SHRIMP MARKETING CAMPAIGNS

N 454/99 9.8.1999 AID FOR FISHING PORT INFRASTRUCTURE OJ C 332, 20.11.1999

N 527/99 31.8.1999 FISH AUCTIONS: SUBSIDY FOR EXTERNAL OJ C 359, 11.12.1999CONSULTANCY FEES

SpainN 401/B/98 17.7.1998 PROCESSING AND MARKETING OF FISHERIES OJ C 011, 15.1.1999

PRODUCTS

N 560/98 8.10.1998 AID TO PRODUCER ASSOCIATIONS OJ C 011, 15.1.1999

N 639/98 24.11.1998 AMENDMENT OF ORDER 228/96 (BASQUE COUNTRY) OJ C 144, 22.5.1999

N 74/B/99 8.2.1999 AID IN THE FORM OF A REDUCED RATE OF INTEREST OJ C 225, 7.8.1999(ASTURIAS)

N 81/99 12.2.1999 TEMPORARY LAYING-UP OF THE SARDINE SEINER OJ C 213, 24.7.1999FLEET (ANDALUSIA)

N 123/99 8.3.1999 TEMPORARY LAYING-UP UNDER THE AGREEMENT OJ C 298, 16.10.1999WITH MOROCCO


STATE AID 305

N 181/99 29.3.1999 EXPERIMENTAL FISHING PILOT PROJECTS OJ C 272, 24.9.1999

N 206/99 15.4.1999 PESCA INITIATIVE OJ C 213, 24.7.1999

N 263/B/99 5.5.1999 AID TO OBTAIN QUALITY CERTIFICATION OJ C 288, 9.10.1999(CATALONIA)

N 387/99 21.6.1999 AID FOR AQUACULTURE (SHELLFISH CULTURE) OJ C 298, 16.10.1999

N 388/99 21.6.1999 AID FOR AQUACULTURE (SHELLFISH CULTURE) OJ C 272, 24.9.1999

NN 37/99 26.2.1999 TEMPORARY LAYING-UP OF THE SARDINE SEINER OJ C 213, 24.7.1999FLEET (GALICIA)

GermanyN 124/99 4.3.1999 PESCA INITIATIVE (MECKLENBURG-WESTERN OJ C 166, 12.6.1999

POMERANIA)

N 559/99 13.9.1999 PROMOTION OF STRUCTURAL MEASURES IN THE OJ C 365, 18.12.1999FISHERIES SECTOR

NN 172/97 12.11.1997 AID FOR FIRMS IN DIFFICULTY (MECKLENBURG-WESTERN POMERANIA)

DenmarkN 527/98 22.9.1998 EXPERIMENTAL FISHERIES AND DEVELOPMENT OF OJ C 011, 15.1.1999

PRODUCTS

N 666/98 1.12.1998 AID FOR SCRAPPING FISHING VESSELS OJ C 072, 16.3.1999

N 47/99 13.1.1999 AID FOR THE FISHERIES SECTOR (CONSOLIDATION) OJ C 113, 24.4.1999

N 64/99 19.1.1999 AID FOR AGRICULTURE AND EXPERIMENTAL FISHING OJ C 166, 12.6.1999

N 89/99 15.1.1999 ROYAL FISHERIES BANK OJ C 151, 29.5.1999

N 147/99 17.3.1999 AID FOR THE CONSTRUCTION OF FISHING VESSELS OJ C 259, 11.9.1999

N 331/99 16.6.1999 AID TO AQUACULTURE TO COMPENSATE FOR LOSSES OJ C 288, 9.10.1999DUE TO DISEASE CONTROL MEASURES

PortugalN 347/99 23.6.1999 WAGES COMPENSATION FUND OJ C 326, 13.11.1999

N 365/99 31.12.1999 PROMOTION OF FISHERY PRODUCTS OJ C 379, 31.12.1999

NN 129/97 12.8.1997 AZORES: AID FOR DAMAGE OJ C 129, 8.5.1999

FranceN 551/98 1.10.1998 AID FOR FISHERY ENTERPRISES OJ C 340, 27.11.1999

N 183/99 6.4.1999 GUARANTEE FUND OJ C 181, 26.6.1999

N 500/99 31.8.1999 PARAFISCAL CHARGES (OFIMER) OJ C 340, 27.11.1999

NN 4/98 9.12.1997 AID FOR MARICULTURE OJ C 213, 24.7.1999

ItalyN 364/98 30.6.1998 AID UNDER THE PESCA COMMUNITY INITIATIVE OJ C 084, 26.3.1999

N 372/C/98 6.7.1998 FISHERIES AND ORGANIC AQUACULTURE (LIGURIA) OJ C 144, 22.5.1999

N 21/99 21.12.1998 STEWARDSHIP AND DEVELOPMENT OF FISHERIES OJ C 306, 23.10.1999HERITAGE (SARDINIA)

N 116/99 24.2.1999 CESSATION OF FISHING (SARDINIA) OJ C 203, 17.7.1999

N 419/99 21.7.1999 TECHNICAL MEASURES SUSPENDING FISHERIES AND OJ C 306, 23.10.1999SOCIAL MEASURES

NN 179/97 3.12.1997 AID TO COOPERATIVES FOR THE RUNNING OF FISH OJ C 084, 26.3.1999MARKETS (ABRUZZI)

NN 183/97 11.12.1997 AID TO SUPPORT THE CONSERVATION AND OJ C 203, 17.7.1999MANAGEMENT OF STOCKS

NN 24/98 20.2.1998 AID FOR RESTRUCTURING FISHING COOPERATIVES OJ C 084, 26.3.1999



NN 39/98 31.3.1998 MEASURES TO PROMOTE FISHERIES OJ C 011, 15.1.1999

NN 101/98 22.9.1998 LAW N°164, 21.5.98 (FISHERIES AND AQUACULTURE) OJ C……..

NN 119/98 29.10.1998 REGIONAL LAW N°25, 1.12.1998 (SICILY) OJ C 203, 17.7.1999

FinlandNN 71/97 22.1.1997 AID FOR TEMPORARY CESSATION OF SALMON OJ C 081, 24.3.1999

FISHING

United kingdomN 507/99 24.8.1999 ANGUS COUNCIL PROJECT PESCA OJ C 340, 27.11.1999

3. In the transport sector

3.1. Inapplicability of Article 87

NN 109/1998 UK MANCHESTER AIRPORT 26.5.1999

3.2. Decisions to raise no objection

N 404/1998 NL AID FOR PASSENGER TRANSPORT 3.3.1999

N 635/1998 E AID TO RALUY 3.3.1999

N 638/1998 I ELBA AIRPORT 30.3.1999

N 102/1999 IRL MARITIME TRANSPORT - TAX MEASURES 21.4.1999

N 588/1998 DK GOODS TRANSPORT - AID TO OFFSET EXTERNAL COSTS 21.4.1999

N 191/1999 E GIROMAN 4.5.1999

N 192/1999 E AUTOTRASPORTESARAGONES 4.5.1999

NN 35/1999 B DREDGING AND MERCHANT MARINE 4.5.1999

N 200/1999 E MARITIME TRANSPORT - BALEARIC ISLANDS 26.5.1999

N 231/1999 IRL PROGRAMME FOR SEAFARERS 9.6.1999

N 521/1998 E ROAD HAULAGE (EUROGATE PROJECT) 23.6.1999

N 121/1999 A AID FOR COMBINED TRANSPORT 8.7.1999

N 302/1999 E MARI RENOM 19.7.1999

N 404/1999 E STATE GUARANTEES FOR PURCHASING VESSELS 20.7.1999

N 396/1999 I EXEMPTION FROM SOCIAL SECURITY CONTRIBUTIONS 28.7.1999FOR MARITIME CABOTAGE

N 196/1999 E INBERCONDOR BARCELONA 30.7.1999

N 399/1999 I SOCIAL TARIFFS SICILY 3.9.1999

N 368/1999 E IBERIA 3.9.1999

N 713/1997 EL RION ANTIRION PROJECT 29.9.1999

N 462/1999 EL ROAD TRANSPORT INFRASTRUCTURES 29.9.1999

N 491/1999 E EARLY RETIREMENT PREMIUMS FOR SELF-EMPLOYED 21.10.1999ROAD HAULIERS

N 293/1999 B AID FOR COMBINED TRANSPORT (FLEMISH REGION) 26.10.1999

N 199/1999 NL PUBLIC PASSENGER TRANSPORT 2000 10.11.1999

N 568/1999 F INLAND WATERWAY NAVIGATION 10.11.1999

N 569/1999 D INLAND WATERWAY NAVIGATION - TRAINING AID 10.11.1999

N 412/1998 I ROAD AND COMBINED TRANSPORT IN THE REGION OF 8.12.1999MARCHE

N 389/1999 I GROUPINGS OF ROAD HAULAGE FIRMS 22.12.1999

N 237/1999 I AID TO SERVICES COMPLEMENTARY TO LOCAL 15.10.1999PASSENGER SERVICES IN THE REGION OF PIEDMONT


STATE AID 307


T129/95, Neue Maxhütte Stahlwerke and Others v Commission 21.1.1999 [1999] ECR II-7T-2/96, («Neue Maxhütte I - CFI»)T-97/96

T-230/95 Société Bretagne Angleterre Irlande (BAI) v Commission 28.1.1999 [1999] ECR II-123

T-14/96 Société Bretagne Angleterre Irlande (BAI) v Commission 28.1.1999 [1999] ECR II-139

T-86/96R Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen & 11.2.1999 [1999] ECR II-179Hapag-Lloyd v Commission

T-58/98 Sardegna Lines - Servizi Maritimi della Sardegna SpA v 16.3.1999Commission

T-37/97 Forges de Clabecq SA v Commission 25.3.1999

T-164/96 Moccia Irme SpA, Prolafer Srl, Ferriera Acciaieria Casilina 12.5.1999T-165/96 SpA, Dora Ferriera Acciaieria Srl, Ferriera Lamifer SpA,T-166/96 Nuova Sidercamuna SpA (in liquidation) v CommissionT-167/96 T-122/97 T-130/97

T-17/96 TF1 v Commission 3.6.1999

T-288/97 Regione Friuli-Venezia Giulia v Commission 15.6.1999

3.3. Initiation of Article 88(2) proceedings

NN 68/1999 I TIRRENIA GROUP 8.7.1999

NN 83/1999 B TRAINING AID FOR SABENA 20.7.1999

NN 51/1999 NL COMBINED TRANSPORT AT ROTTERDAM 21.4.1999

C 32/1993 E AID TO THE FERRY OPERATOR GOLFO DE VIZCAYA SA 26.5.1999

N 351/1998 F EXEMPTION OF HANDLING FIRMS’ PORT EQUIPMENT 26.5.1999FROM BUSINESS TAX

3.4. Negative final decisions

C 42/1999 F EXEMPTION OF HANDLING FIRMS’ PORT EQUIPMENT 22.12.1999FROM BUSINESS TAX

3.5. Positive final decisions

C 2/1997 NL PREPARATION COSTS IN INTERMODAL TRANSPORT 21.4.1999

C 21/1998 I RESTRUCTURING OF THE ROAD HAULAGE MARKET 4.5.1999

C 59/1998 NL BARGE CONTROL 10.11.1999

C 42/1999 F EXEMPTION OF HANDLING FIRMS’ PORT EQUIPMENT 22.12.1999FROM BUSINESS TAX

3.6. Proposals for appropriate measures

E 4/1999 A TYROL MOTORWAY 3.3.1999

E 6/1999 I DPR 902 OF 9.11.1976 8.7.1999

E 7/1999 I FUNIVARIA 22.12.1999

Corrigendum in 2000

E — Judgments of the Community courts

1. Court of First Instance




STATE AID 309


C-342/96 Spain v Commission 29.4.1999 [1999] ECR I-2459

C-6/97 Italy v Commission 19.5.1999

C-75/97 Belgium (Maribel bis/ter) v Commission 17.6.1999

C-295/97 Industrie Aeronautiche e Meccaniche Rinaldo Piaggio 17.6.1999v IFITALIA, Dornier, Min. della Difesa

C-256/97 Procureur du Roi v D.M. Transport 29.6.1999

C 254/97 Société Baxter and Others v France 8.7.1999

C-251/97 France v Commission 5.10.1999

2. Court of Justice

T-82/96 ARAP (Ass. does Refinadores de A. Portugueses) and 17.6.1999Others v Commission («ARAP II»)

T-89/96 British Steel v Commission 7.7.1999

T-106/96 Wirtschaftsvereinigung Stahlv Commission 7.7.1999

T-110/98 RJB Mining plcv Commission 9.9.1999

T-110/97 Kneissl Dachstein Sportartikel AG v Commission 6.10.1999

T-123/97 Salomon SA v Commission 6.10.1999

T-132/96, Freistaat Sachsen, Volkswagen AG & Volkswagen Sachsen 15.12.1999T-143/96 GmbH v Commission

T-158/96 Acciaierie di Bolzano SpA (SCB) v Commission 16.12.1999



MS

Nam

eD

ecis

ion

No

Dat

e of

dec

isio

nO

ffic

ial

Jour

nal

For

m t

aken

A

mou

nt t

o R

emar

ksby

the

aid

be r

epai

d(E

CU

mill

ion)

BB

eaul

ieu

I 30

.11.

1983

L62

(19

84)

Cap

ital

inje

ctio

n13

.27

Act

ion

brou

ght

agai

nst

MS

for

failu

re t

o (F

abel

ta)

fulf

il ob

ligat

ions

. CJ

judg

men

t fi

ndin

g th

atde

cisi

on h

ad n

ot b

een

impl

emen

ted

(21.

2.19

90, C

ase

C-7

4/89

). L

ates

t na

tiona

lco

urt

judg

men

t in

199

4. A

ppea

l pe

ndin

gbe

fore

Cou

rt o

f A

ppea

l. Pl

eadi

ngs:

21.1

.200

0. A

mou

nt t

o be

rep

aid

is i

nbl

ocke

d ac

coun

t.

BB

eaul

ieu

II27

.6.1

984

L28

3 (1

984)

Cap

ital

inje

ctio

n5.

41A

ctio

n br

ough

t ag

ains

t M

S fo

r fa

ilure

to

(Ide

alsp

un)

fulf

il ob

ligat

ions

. CJ

judg

men

t fi

ndin

g th

atde

cisi

on h

ad n

ot b

een

impl

emen

ted

(9.4

.198

7, C

ase

5/86

) an

d th

at i

tsju

dgm

ent

in C

ase

5/86

had

not

bee

nco

mpl

ied

with

(19

.2.1

991,

Cas

e C

-37

5/89

). A

ppea

l pe

ndin

g be

fore

Cou

rt o

fA

ppea

l. Pl

eadi

ngs:

20.

9.20

00. A

mou

nt t

obe

rep

aid

is i

n bl

ocke

d ac

coun

t.

UK

Dea

n 23

.7.1

984

L23

8 (1

984)

Gra

nt1.

5C

ompa

ny s

topp

ed t

radi

ng i

n 19

89 a

nd w

asD

ove

wou

nd u

p in

199

4.A

ctio

ns b

efor

e na

tiona

l co

urts

aga

inst

com

pany

’s d

irec

tors

.

DD

eufi

l10

.7.1

985

L27

8 (1

985)

Gra

nts

1.53

Judg

men

t of

Cou

rt o

f Ju

stic

e up

hold

ing

deci

sion

(24

.2.1

987,

Cas

e 31

0/85

);na

tiona

l co

urt

upho

lds

deci

sion

. Tax

auth

oriti

es r

ecov

er i

nves

tmen

t gr

ant.

As

rega

rds

aid

from

Lan

d: a

ctio

n be

fore

natio

nal

cour

ts.

F —

Enf

orc

emen

t o

f C

om

mis

sio

n d

ecis

ions

ord

erin

g t

he r

eco

very

of

aid

1.C

omm

issi

on d

ecis

ions

(C

ompe

titi

on D

G)

orde

ring

the

rec

over

y of

aid

(19

83-9

8) n

ot y

et im

plem

ente

d


STATE AID 311

MS

Nam

eD

ecis

ion

No

Dat

e of

dec

isio

nO

ffic

ial

Jour

nal

For

m t

aken

A

mou

nt t

o R

emar

ksby

the

aid

be r

epai

d(E

CU

mill

ion)

DA

lcan

14

.12.

1985

L72

(19

86)

Gra

nts

4.18

Act

ion

agai

nst

MS

for

failu

re t

o fu

lfil

oblig

atio

ns. J

udgm

ent

of C

ourt

of

Just

ice

find

ing

that

dec

isio

n ha

d no

t be

enim

plem

ente

d (2

.2.1

989,

Cas

e C

-94/

87).

Cas

e pe

ndin

g be

fore

nat

iona

l co

urts

. See

al

so j

udgm

ent

of 2

0.3.

1997

in

Cas

e C

-24/

95.

EL

Exe

mpt

ion

3.5.

1989

L39

4 (1

989)

Tax

exem

ptio

n N

ot s

peci

fied

Act

ion

brou

ght

agai

nst

MS

for

failu

re t

o fr

om t

axes

on

ear

ning

s fu

lfil

oblig

atio

ns. J

udgm

ent

of C

ourt

of

on e

xpor

tsfr

om e

xpor

tsJu

stic

e fi

ndin

g th

at d

ecis

ion

had

not

been

impl

emen

ted

(10.

6.19

93, C

ase

C-1

83/9

1).

Dou

bts

rem

ain

as t

o w

heth

er G

reek

auth

oriti

es h

ave

impl

emen

ted

repa

ymen

tde

cisi

on.

EM

agef

esa

IC

44/

97I.

20.

12.1

989

I. L

5 (1

991)

I.

Loa

n I.

7.2

II.

N

egat

ive

deci

sion

fin

ds t

hat

inco

mpa

tible

&II

II. 1

4.10

.199

8II

. L19

8 gu

aran

tees

, N

ot s

peci

fied

aid

gran

ted

in 1

989

has

not

been

rep

aid.

(30.

7.19

99)

soft

loa

ns,

An

actio

n w

as b

roug

ht b

efor

e C

ourt

of

gran

ts I

I. N

on-

Just

ice

for

non-

repa

ymen

t in

Dec

embe

rpa

ymen

t of

19

99.

taxe

s an

d so

cial

se

curi

ty

cont

ribu

tions

EH

ytas

a C

22/

9025

.3.1

992

L17

1 (1

992)

Cap

ital

inje

ctio

n26

Dec

isio

n pa

rtly

ann

ulle

d by

Cou

rt o

f (n

ow

18.9

.199

6L

96 (

1997

)Ju

stic

e (1

4.9.

1994

, Cas

e C

-278

/92)

. New

M

edite

r-C

omm

issi

on d

ecis

ion

of 1

8.9.

1996

bef

ore

rane

o C

ourt

(C

ase

C-4

15/9

6).

Tecn

ica

Text

il SA

)

EPi

ezas

yC

25/

9314

.3.1

995

L25

7G

rant

; lo

an

Not

spe

cifi

edJu

dgm

ent

of C

ourt

of

Just

ice

upho

ldin

g R

odaj

es

(27.

10.1

995)

guar

ante

e;

Com

mis

sion

dec

isio

n (1

4.1.

1997

, Cas

e C

-(P

yrsa

)in

tere

st s

ubsi

dy;

169/

95).

Com

pany

has

sus

pend

ed

gift

of

land

paym

ents

. App

eal

by c

ompa

ny a

gain

stad

min

istr

ativ

e de

cisi

on o

rder

ing

reim

burs

emen

t.



MS

Nam

eD

ecis

ion

No

Dat

e of

dec

isio

nO

ffic

ial

Jour

nal

For

m t

aken

A

mou

nt t

o R

emar

ksby

the

aid

be r

epai

d(E

CU

mill

ion)

DN

eue

C 4

1/95

18.1

0.19

95L

53 (

2.3.

1996

)L

oans

25.6

431

.12.

1998

: N

MH

ins

olve

nt. A

mou

nt t

oM

axhü

tte

13.3

.199

6L

198

(8.8

.199

6)L

oans

12.3

9be

rec

over

ed h

as b

een

notif

ied

as p

art

ofSt

ahlw

erke

inso

lven

cy p

roce

edin

gs. A

ppea

l by

Gm

bH

Ger

man

y ag

ains

t Art

icle

88

EC

SC(d

ecis

ions

de

cisi

on (

Cas

e C

-276

/99,

16.

7.19

99).

II a

nd I

II)

DH

ambu

rger

C 2

8/94

31.1

0.19

95L

78 (

28.3

.199

6)So

ft l

oans

App

rox.

82

Pend

ing

befo

re C

FI (

Cas

e T-

234/

95)

and

Stah

lwer

keC

ourt

of

Just

ice

(Cas

e C

-404

/95)

. App

eal

Gm

bHby

Gov

ernm

ent

to n

atio

nal

cour

ts. A

id h

asbe

en p

artly

rep

aid.

DW

alzw

erk

C 1

1/95

29.5

.199

6L

233

(14.

9.19

96)

Gra

nt3.

5A

ppea

l to

CFI

dis

mis

sed

(31.

3.19

98, C

ase

Ilse

nbur

gT-

129/

96).

App

eal

by P

reus

sag

to C

ourt

of

Just

ice

(Cas

e C

-210

/98P

).

ET

ubac

exC

9/9

530

.7.1

996

L8

(11.

1.19

97)

Soft

loa

ns;

Not

spe

cifi

edA

id t

o Fo

gasa

par

tly r

epai

d. A

ppea

l by

repa

ymen

t co

mpa

ny t

o Sp

anis

h co

urts

aga

inst

holid

ayre

imbu

rsem

ent

of a

id l

inke

d to

soc

ial

secu

rity

. Jud

gmen

t of

Cou

rt o

f Ju

stic

e of

29.4

.199

9 (C

ase

C-3

42/9

6) a

nnul

ling

deci

sion

. Act

ion

with

draw

n.

BM

arib

elC

14/

964.

12.1

996

L95

(10

.4.1

997)

Red

uctio

n of

N

ot s

peci

fied

App

eal

by M

S to

Cou

rt o

f Ju

stic

e ag

ains

tbi

s/te

rso

cial

sec

urity

de

cisi

on o

f 4.

12.1

996

(Cas

e C

-75/

97).

cont

ribu

tions

Act

ion

by C

omm

issi

on f

or f

ailu

re t

oim

plem

ent

deci

sion

of

21.1

0.19

98 (

Cas

eC

-378

/98)

. Agr

eem

ent

with

Gov

ernm

ent

on p

rinc

iple

s go

vern

ing

reco

very

.

FB

orot

ra

C 1

8/96

9.4.

1997

L33

4 (5

.12.

1997

)R

educ

tion

of

Not

spe

cifi

edU

nder

taki

ng b

y Fr

ench

aut

hori

ties

to

plan

soci

al s

ecur

ity

impl

emen

t re

imbu

rsem

ent

mea

sure

s by

co

ntri

butio

nsea

rly

2000

.

DTa

x C

28/

961.

10.1

997

L73

(12

.3.1

998)

Tax

prem

ium

sN

ot s

peci

fied

Tax

prem

ium

gra

nted

to

Elf

Aqu

itain

eco

nces

sion

s(D

EM

120

mill

ion)

has

bee

n pa

id i

nto

afo

rmer

bl

ocke

d ac

coun

t. A

mou

nt w

ill b

e pa

id

GD

R (

8%)

back

to

Elf

Aqu

itain

e as

aid

fro

m L

and

ofSa

xony

-Anh

alt

for

Leu

na p

roje

ct (

cf.

Dec

isio

n N

94/

98 -

Leu

na 2

000

Settl

emen

t agr

eem

ent)

as

soon

as

a de

cisi

onis

tak

en o

n ca

se C

47/

97(L

euna

200

0 R

efin

ery

cost

).


STATE AID 313

MS

Nam

eD

ecis

ion

No

Dat

e of

dec

isio

nO

ffic

ial

Jour

nal

For

m t

aken

A

mou

nt t

o R

emar

ksby

the

aid

be r

epai

d(E

CU

mill

ion)

DL

and

of

C 5

3/96

18.1

1.19

97L

126

(28.

4.19

98)

Gua

rant

ees

Not

spe

cifi

edD

iscu

ssio

ns o

n ar

rang

emen

ts f

or r

epay

men

t Sa

xony

-of

aid

in

form

of

a gu

aran

tee

for

firm

s in

Anh

alt

diff

icul

ty. T

o be

res

umed

in

the

light

of

Not

ice

on a

id i

n th

e fo

rm o

f gu

aran

tees

.

DB

rem

er

C 1

4/92

(see

abo

ve 1

993)

L31

6 L

oan

and

gran

tD

EM

126

mill

ion

Bei

ng i

nsol

vent

, gro

up c

ease

d tr

adin

g in

Vul

kan,

25

.2.1

998

(25.

11.1

998)

(EC

U 6

3 m

illio

n)19

97. S

tate

sou

ght

reim

burs

emen

t.K

rupp

&

Ger

man

aut

hori

ties

conf

irm

tha

t ai

dH

ibeg

cann

ot b

e re

cove

red.

DB

rem

er

C 7

/96

see

C 1

4/92

L10

8 (2

7.4.

1999

)se

e C

14/

92se

e C

14/

92se

e C

14/

92V

ulka

n (M

TW

, V

olks

wer

ft)

DD

evel

op-

C 2

2/97

25.2

.199

8L

46 (

20.2

.199

9)L

oan

and

gran

t5.

7m

ent

assi

s-ta

nce

to

Indo

nesi

a

IE

mpl

oy-

C 2

1/97

3.6.

1998

L32

(5.

2.19

99)

Loa

nN

ot s

peci

fied

Num

ber

of r

ecip

ient

s fr

om w

hom

aid

will

men

t in

ha

ve t

o be

rec

over

ed m

ay b

e ve

ry l

arge

.Si

cily

AA

ctua

l C

62/

971.

7.19

98L

316

Soft

loa

n fo

r 1.

1C

ompa

ny h

as b

ecom

e in

solv

ent.

Aus

tria

n M

asch

inen

-(2

5.11

.199

8)re

scue

&

auth

oriti

es h

ave

aske

d fo

r am

ount

plu

s ba

ure

stru

ctur

ing

inte

rest

in

inso

lven

cy p

roce

edin

gs.

Com

mis

sion

is

keep

ing

a cl

ose

wat

ch o

nde

velo

pmen

ts.

IK

elle

r &

C

14/

971.

7.19

98L

63 (

12.3

.199

9)L

oans

at

2.62

Publ

icly

ow

ned

bank

s ha

ve g

iven

for

mal

K

elle

r pr

efer

entia

l no

tice

to r

ecip

ient

s to

rei

mbu

rse

aid.

Mec

cani

cara

tes

EPo

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d.

IV— INTERNATIONAL

Commission report to the Council and the European Parliament on the application of the Agreementbetween the European Communities and the Government of the United States of America regardingthe application of their competition laws 1 January 1999 to 31 December 1999

1. Introduction

On 23.9.1991 the Commission concluded an Agreement with the Government of the United States ofAmerica regarding the application of their competition laws (295) (the “1991 Agreement”), the aim ofwhich is to promote cooperation between the competition authorities. By a joint decision of the Counciland the Commission on 10.4.1995 (296) the Agreement was approved and declared applicable.

On 4.6.1998 another agreement, which strengthens the positive comity provisions of the 1991Agreement, entered into force (297) (the «1998 Agreement»), after having been approved by a jointdecision of the Council and the Commission of 29.5.1998.

On 8.10.1996 the Commission adopted the first report on the application of the 1991 Agreement for theperiod of 10.4.1995 to 30.6.1996 (298). The second report completes the 1996 calendar year, covering theperiod of 1.7.1996 to 31.12.1996 (299). The third report covers the whole calendar year 1997 (300), thefourth the year 1998 (301). The present report concerns the calendar year from the 1.1.1999 to 31.12.1999.This report should be read in conjunction with the first report which sets out in detail the benefits, butalso the limitations of this kind of cooperation.

In summary, the 1991 Agreement provides for:

— notification of cases being handled by the competition authorities of one Party, to the extent thatthese cases concern the important interests of the other Party (Article II), and exchange ofinformation 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 im-portant 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 ba-sis of the latter’s legislation, appropriate measures regarding anticompetitive behaviour implemented onits territory and which affects the important interests of the requesting Party (Article V).


INTERNATIONAL 319

(295) Agreement between the Government of the United States of America and the Commission of the EuropeanCommunities regarding the application of their competition laws (OJ L 95, 27.4.95, pp.47 and 50)

(296) See OJ L 95, 27.4.95, pp.45 and 46.(297) 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.

(298) Com(96) 479 final, see XXVIth Report on Competition Policy, pp. 299-311.(299) Com(97) 346 final, see XXVIth Report on Competition Policy, pp. 312-318.(300) Com(98) 510 final, see XXVIIth Report on Competition Policy, pp. 317-327.(301) Com(99) 439 final

In addition, the 1991 Agreement makes it clear that none of its provisions may be interpreted in a mannerwhich 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 theprotection 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 thecircumstances in which it can be availed of. In particular, it describes the conditions under which therequesting 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 specificcase-related benefits arising out of this intensive cooperation for both the competition authorities andprivate parties involved (in terms of a more rapid and coherent management of cases on both sides ofthe Atlantic), the close daily contact between case teams in the Commission (DG Competition) and theUS DoJ and FTC is conducive to mutual confidence building, accrued knowledge of the substantive andprocedural rules in each other’s jurisdictions, substantial convergence in competition analysis, andmovements 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 thenumber of operations notified to the Commission. 1999 saw a further dramatic increase over 1998. Ontop of the increase in the number of transactions, it is clear that an ever-greater number of these casesinvolves companies based in different parts of the world; the current merger wave has a truly globaldimension. Indeed, 1999 has seen a further rise in the number of merger cases notified under theagreement, and a considerable intensification in co-operation between the US and the EU in the treatmentof such cases.

It has become routine for case handlers to ask the notifying parties for waivers of their right for theconfidentiality of the information which they provide to the authorities to be protected. Such waiversenable the agencies to exchange confidential information with one another. Frequently the main benefitof this is not so much the information which might be exchanged, but the removal of constraints whichwould otherwise prevent the agencies from having a free and unfettered dialogue. For example, suchexchanges prevent misunderstandings which might otherwise arise. Such a co-ordinated approach canhave the effect of reducing the burden on the notifying parties and on third parties.

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

Transatlantic (in this instance, Commission/FTC) cooperation during 1999 was particularly intensivewith 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/Mobiltransaction (December 1998), long before the formal notification occurred in May 1999. This allowedthe EU and US authorities to discuss the particular competition concerns for future oil and gas outputwhich they feared might stem from the creation of so-called “super majors”. Following notification, andhaving obtained waivers from the merging parties which permitted the EU and US authorities toexchange confidential information, assessment of much of the substance of the case was carried out inclose co-operation between the agencies. Commission staff visited their FTC counterparts, revieweddocuments at FTC premises, and there were regular telephone calls, exchanges of documents, and othercontacts between the two case teams.

Discussion between staff on both sides focused most closely on the assessment of the effects that theproposed 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 themarket for aviation lubricants was also the subject of close discussion. Indeed, cooperation still continueswith 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/ARCOmerger.

The Commission cooperated closely with the DoJ in the treatment of the Allied Signal/Honeywell mergercase. The Commission’s enquiry focused on a number of markets for avionics products (communicationand navigation equipment, collision avoidance systems, weather radar etc..), supplied to the commercialaviation industry as well as to the space and defence industries. There were frequent (principallytelephone) contacts between the relevant staff in both agencies. Initial discussions concentrated on howto define the product and geographic scope of the markets affected by the proposed transaction. In thelater stages, discussion focused mainly on the appropriateness of the divestitures and commitmentsproposed by the parties to the two authorities; the latter discussions continued even after the merger hadbeen cleared by the Commission, but not yet by the DoJ. Cooperation regarding divestitures provedparticularly useful for the Commission, in view of the fact that most the assets to be divested werelocated in the United States.

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

The Commission also cooperated with the DoJ in the treatment of the BT/AT&T case. This operation wasnotified to the Commission under the new (in force since March 1998) Article 2of the MergerRegulation, 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 theproduct/service and geographic scope of the markets affected by the proposed transaction, and on thelikelihood of the joint venture being in a position to exercise power on those markets. The cooperationwas particularly useful in helping to assess the likely customer impact of the operation.

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 have becomecommonplace: there has been a number of staff visits (Commission/DoJ). Cooperation has beenparticularly useful with regard to investigations of cartels which have produced effects on both sides ofthe Atlantic.


INTERNATIONAL 321

It has nonetheless to be acknowledged that effective cooperation in combatting cartels is seriouslyhampered by the agencies’ inability to exchange confidential information. A so-called «secondgeneration» agreement allowing such communications would greatly improve the situation in this regard;however, domestic legal constraints on the exchange of confidential information complicate the prospectof 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 «goesfirst», because of its inability to inform the other of the details of its investigation; the other authoritymay 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, fromwhich all participants (including officials from the Commission’s Competition D-G) seem to havebenefited. 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 betweenthe competition authorities of the European Communities and of the United States concerning mutualattendance at certain stages of the procedures in individual cases involving the application of theirrespective competition rules (302).

These arrangements were concluded in the framework of the agreements between the EuropeanCommunities and the government of the United States concerning enforcement of their competitionrules, and in particular the provisions regarding coordination of enforcement activities. The arrangementswill contribute to improving mutual understanding by the competition authorities of their respectiveprocedures, as well as to enhancing coordination, cooperation and avoidance of conflicts in appropriatecases of mutual interest. Neither these administrative arrangements, nor the letters exchanged betweenthe Commission and the US competition authorities outlining and confirming a common understandingof the said arrangements, constitute a binding international agreement.

The arrangements are bilateral and reciprocal in nature. They provide for the possibility of the US competi-tion authorities attending as observers, in appropriate cases of mutual concern, at oral hearings in competi-tion proceedings before the European Commission; they provide, in like manner, for the possibility of theCommission attending at high level meetings (so-called «pitch meetings») between the US competition au-thorities 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 granted inappropriate cases, subject to confirmation of satisfactory assurances or arrangements regardingconfidentiality and the use of information. Attendance will be possible only with the express consent ofthe persons concerned by the enforcement proceedings in either jurisdiction, and the arrangements donot in any way limit the rights enjoyed by those persons.

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



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

4. EU/US Mergers Working Group

At the annual bilateral meeting between the Commission (DG Competition), the FTC and the DoJ, heldin Brussels on October 5 1999, it was decided to create a new EU/US Working Group whose purposewould 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 improve-ment, particularly in view of the current merger wave and the exponential increase in large-scale cross-bor-der transactions. In the longer term, the Working Group could be further mandated to study other competi-tion issues of common concern. For the time being, the working group has been mandated to focus on:

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

b) the scope for further convergence of analysis/methodology in merger cases being treated in both juris-dictions, particularly regarding the respective EU and US approaches towards oligopoly/collectivedominance/coordinated interaction.

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

5. Positive Comity

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

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

6. Statistical information

a) 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 and31 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. 23were received from the DoJ and 26 from the FTC. A list of these cases is found in Annex 2, again brokendown into merger and non-merger cases.

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


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The figures given represent the number of cases in which one (or more) notifications took place and notthe total number of individual notifications. Under Article II of the Agreement, notifications may bemade at various stages of the procedure and so more than one notification may be made concerning thesame case.

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

Table 1



Year No. of EC notifications No. of US notifications No. of mergernotifications

FTC DoJ

1999 70 26 23 59 (EC) 39 (US)

CASES NOTIFIED

Year No. of EC notifications No. of US notifications No. of mergernotifications

FTC DoJ

1992 26 20 20 (=40) 11 (EC) +31(US

1993 44 22 18 (=40) 20 (EC)+20(US)

1994 29 16 19 (=35) 18 (EC)+20(US)

1995 42 14 21 (=35) 31 (EC)+18(US)

1996 48 20 18 (=38) 35 (EC)+27(US)

1997 42 12 24 (=36) 30 (EC)+20(US)

1998 52 22 24 (=46) 43 (EC)+39(US)

1999 70 26 23 (=49) 59 (EC)+39 (US)

Table 2

CASES NOTIFIED

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 Statementon Transparency made by the Commission to the Council on 10 April 1995, provides that theCommission, after notice to the US Competition authorities, will inform the Member State or MemberStates, 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 relevantsections in D-G Competition and at the same time copies are sent to the Member States, if any, whoseinterests are affected. Equally, at the same time that D-G Competition makes notifications to the USauthorities, 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 OECDRecommendation (303). 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 toDenmark and Finland, and 1 each to Greece, Austria and Luxembourg.

7. Conclusions

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

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


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

ANNEX 1NOTIFICATIONS BY THE EUROPEAN COMMISSION

TO THE US AUTHORITIES — 1.1.1999 — 31.12.1999

Merger cases

01 Case n° IV/M.1339 — ABB/Elsag Bailey

02 Case n° IV/M.1388 — Total/Petrofina

03 Case n° IV/M.1462 — TWR/LucasVarity

04 Case n° IV/M.1381 — Imetal/English China Clays

05 Case n° IV/M.1376 — Cargill/Continental Grain

06 Case n° IV/M.1363 — DuPont/Hoechst/Herberts

07 Case n° IV/M.1358 — Philips/Lucent Technologies

08 Case n° IV/M.1391 — International Paper/Union Camp

09 Case n° IV/M.1466 — Eaton Corporation/Aeroquip-Vickers

10 Case n° IV/M.1452 — Ford/Volvo

11 Case n° IV/M.1403 — Astra/Zeneca

12 Case n° IV/M.1440 — Lucent Technologies/Ascend Communications

13 Case n° IV/M.1433 — Carrier Corporation/Toshiba

14 Case n° IV/M.1456 — Dura /Adwest

15 Case n° IV/M.1415 — BAT/Rothmans

16 Case n° IV/M.1467 — Rohm and Haas/Morton

17 Case n° IV/M.1493 — UTC/Sundstrand

18 Case n° IV/M.1518 — Lear/United Technologies

19 Case n° IV/M.1532 — BP Amoco/Atlantic Richfield

20 Case n° IV/M.1383 — Exxon/Mobil

21 Case n° IV/M.1512 — DuPont/Pioneer Hi-Bred International



22 Case n° IV/M.1560 — TI Group/Walbro

23 Case n° IV/M.1561 — Getronics/Wang

24 Case n° IV/M.1580 — CAI/Platinum

25 Case n° IV/M.1551 — AT&T/MediaOne

26 Case n° IV/M.1404 — General Electric/Alstom

27 Case n° IV/M.1612 — Walmart/ASDA

28 Case n° IV/M.1470 — Goodyear/Sumitomo

29 Case n° IV/M.1623 — Allied Signal/MTU

30 Case n° IV/M.1643 — IBM/Sequent

31 Case n° IV/M.1682 — Ashland/Superfos

32 Case n°IV/M.1630 — Air Liquide/BOC

33 Case n° IV/M.1601 — Allied Signal/Honeywell

34 Case n°IV/M.1618 — Bank of New York/Royal Bank of Scotland Trust Bank

35 Case n° IV/M.1603 — General Motors Acceptance Corporation/AAS

36 Case n° IV/M.1589 — Meritor/ZF Friedrichshafen

37 Case n° IV/M.1598 — Hicks, Muse, Tate & Furst Investment Partners/Hillsdown Holdings

38 Case n° IV/M.1631— Suez Lyonnaise/Nalco

39 Case n° IV/M.1588 — Tyco/Raychem

40 Case n° IV/M.1699 — TPG Baccus/Bally

41 Case n° IV/M.1694 — EMC/Data General

42 Case n° IV/M.1653 — Buhrmann/Corporate Express

43 Case n° IV/M.1711 — Tyco/Siemens

44 Case n° IV/M.1689 — Nestlé/Pillsbury/Haägen Dazs US

45 Case n° IV/M.1711 — Tyco/Siemens


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46 Case n° IV/M.1723 — Illinois Tool Works/Premark

47 Case n° IV/M.1538 — Dupont/Sabanci

48 Case n° IV/M.1768 — Schoyen/Goldman Sachs/Swebus

49 Case n° COMP/M.1765 — KKR Associates/Siemens Nixdorf Retail and Banking Systems

50 Case n° COMP/JV.27 — Microsoft/Liberty Media/Telewest

51 Case n° COMP /M.1775 — Ingersoll-Rand/Dresser-Rand/Ingersoll-Dresser Pump

52 Case n° COMP /M.1693 — Alcoa/Reynolds

53 Case n° COMP /M.1763 — Solutia/Viking Resins

54 Case n° COMP /M.1671 — Dow Chemical/Union Carbide

55 Case n° COMP /M.1784 — Delphi Automotive Systems/Lucas Diesel

56 Case n° COMP /M.1767 — AT&T/IBM/Intesa

57 Case n° COMP /M.1683 — The Coca-Cola Company/Kar-Tess Group (Hellenic Bottling)

58 Case n° COMP /M.1636 — MMS/DASA/Astrium

59 Case n° COMP /M.1817 — Bellsouth/Vodafone (E-Plus)

Non-merger cases (304)

01 See footnote

02 Case n° IV/36488 — Sabre/Amadeus

03 See footnote

04 Case n° IV/37506 — DVD

05 See footnote

06 See footnote



(304) Due to confidentiality requirements or to protect the secrecy of ongoing invetigations, this list names only thoseinvestigations or cases which have been made public.

07 See footnote

08 Case n° IV/36880 — BT/VeriSign

09 Case n° IV/37612 — Techjet Aerofoils Limited

10 See footnote

11 See footnote


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ANNEX 2NOTIFICATIONS BY US AUTHORITIES TO THE EUROPEAN

COMMISSION — 1.1.1999 — 31.12.1999

Merger cases (305)

01 Exxon/Mobil

02 GNK/Interlake

03 Barnes & Noble/Bertelsmann (JV)

04 T&N PLC/Federal/Mogul Corp

05 Cobe/Sorin

06 Signature/AMR Combs

07 Imetal/English China Clays PLC

08 Micrion/FEI

09 BOC Group/Air Products & Chemicals

10 Hoechst/Rhone Poulenc/Aventis

11 Astra/Zeneca

12 Steag/AGA

13 Lockheed Martin/Comsat

14 British Aerospace/GEC-Marconi

15 Tomkins/ACD Tridon

16 Intergraph/Carl Zeiss (JV)

17 Kvaerner Pulping/Ahlstrom

18 Albright & Wilson/Rhodia

19 Alstom/ABB HV (JV)




20 Precision Castparts Corp./Wyman-Gordon

21 See footnote

22 Global Industrial Technologies/RHI

23 Irving Materials/Lehigh Portland Cement

24 Fiat/Case

25 Alcan Aluminium Pechiney/Alusuisse Lonza Group

26 Allied Waste Industries/Vivendi/Superior Services

27 Signal/Vertex

28 VNU/Nielsen Media Research

29 Union Carbide/Dow Chemical

30 Nalco Chemical Company/Suez Lyonnaise des Eaux

31 See footnote

32 Reckitt & Coleman, plc/Benckiser/NRV

33 Hannaford Bros Co/Delhaize Freres

34 See footnote

35 BP Amoco/ARCO

36 See footnote

37 VEBA/Lyondell

38 See footnote

39 Rohm and Haas/Morton


INTERNATIONAL 331

Non-merger cases (306)

01 Gyma/Cambrex/Profarmaco/Mylan

02 See footnote

03 Criminal investigation: Public Real Estate Foreclosure Auctions in Brooklyn

04 See footnote

05 See footnote

06 See footnote

07 See footnote

08 Criminal investigation: Graphite Electrodes

09 Criminal investigation: Sorbates

10 Criminal investigation: Vitamins




Commission Report to the Council and the European Parliament on the application of the Agreementbetween the European Communities and the Government of Canada regarding the application of theircompetition laws, 17 June 1999 to 31 December 1999

1. Introduction

On 17 June 1999 the European Commission concluded an Agreement with the Government of Canadaregarding the application of their competition laws (307) («the Agreement»), the aim of which is topromote cooperation between the competition authorities. By a joint decision of the Council and theCommission of 29 April 1999 (308) the Agreement was approved. The Agreement was applicable fromthe date it was signed. The exchange of letters referred to in the Agreement was deemed to have takenplace implicitly with the act of signature since they form an integral part of the Agreement.

The period covered by this first report is relatively short and therefore in many instances it has not beenpossible to identify significant trends or to draw definite conclusions.

Many of the cases notified during the period under review are still open, particularly matters falling under Ar-ticles 81 and 82 of the EC Treaty and, therefore, it is not possible to discuss them in detail or to mention themby name, save where they have already been the subject of a Commission statement or notice.

At the same time, merger cases, which gave rise to notifications and cooperation under the Agreement,are now mostly closed because of the strict deadlines applied under the Merger Regulation (309) and thesecan therefore be discussed in this report.

In addition, the confidentiality surrounding Canadian procedures, and the obligation of confidentiality towhich the European Communities are subject by virtue of Article X of the Agreement, has meant thateven where the European Commission has completed its investigation and closed cases, references tospecific cases which are still being pursued by the Canadian authorities, or are otherwise covered byconfidentiality requirements, have had to be limited.

Despite these limitations, it is intended that this report will give some sense of the nature and degree ofcooperation between the Commission and the Canadian Competition Bureau.

2. The Agreement

As a brief reminder, the main provisions of the Agreement include:

— notification of cases handled by the competition authorities of one Party, when these cases concernthe important interests of the other Party (Article II), and exchange of information on general mattersrelating to the implementation of the competition rules (Article III);


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(307) Agreement between the European Communities and the Government of Canada regarding the application oftheir competition laws, OJ L 175 of 10.07.1999, pp. 50-60.

(308) Council and Commission Decision of 29 April 1999, OJ L 175 of 10.07.1999, p.49(309) Council Regulation (EEC) No.4064/89 of 21 December 1989 on the control of concentrations between

undertakings, OJ L 395, 30.12.1989, p.1; as corrected in OJ L 257, 21.9.1990, p.13 and as amended by CouncilRegulation (EC) No 1310/97 of June 1997.

— 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 im-portant 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 ba-sis of the latter’s legislation, appropriate measures regarding anticompetitive behaviour implemented onits territory and which affects the important interests of the requesting Party (Article V).

In addition, the Agreement makes clear that none of its provisions may be interpreted in a manner whichis inconsistent with the legislation in force in the European Communities and Canada (Article XI). Inparticular, the competition authorities remain bound by their internal rules regarding the protection ofthe confidentiality of information gathered by them during their respective investigations (Article X).

3. Notifications

3.1. Number of cases notified (310): 4 (EU); 3 (Canada)

Notifications were made by the Commission in four cases during the period between 17 June 1999 and31 December 1999. During the same period, the Commission received notifications from the CanadianCompetition Bureau in three cases. Even though the number of notifications might not appear very high,considering the short time of existence of the Agreement and the quality of issues, the notifications havelaid an important basis for cooperation. In tendency, notifications by the Commission concerning mergercases are increasing more rapidly than for other non-merger antitrust cases.

3.2. Practical steps

During the period under review, the Commission took some practical steps to ensure that it fulfills itsobligations under the newly-concluded agreement, and in particular to ensure that cases meeting thecriteria for notification are duly notified.

To keep trace of notifications under the Agreement, the database of notifications was modified to recordthe details, in line with DG Competition’s policy of computerising its work, wherever this bringsefficiencies. This allows case handlers in the operational units to feed into the database the informationnecessary to make a notification. The notifications database does not, however, contain any of theconfidential information collected by DG Competition during the investigation of the case, as this iscontained in a file to which access is restricted.

3.3. Notifications to the Member States

All notifications received by the Canadian Competition Bureau are copied to the Member State orMember States whose interests might be affected, at the same time as they are forwarded to the relevant



(310) The figures given represent the number of cases in which notifications were made under Article II of theAgreement. Notifications are made at a number of specified stages of the investigations and formal procedurein a case. Therefore, the number of notifications can be higher.

units of DG Competition. Equally, at the same time that DG Competition makes notifications to theCanadian Competition Bureau, copies are sent to the Member State(s) whose interests are affected.

4. Cooperation

The Commission’s experience of cooperation with its Canadian counterparts in individual cases sinceJune 17 1999 has been very positive. However, as stated above, many of the cases where there have beencontacts are still under investigation, on one side or the other, and so cannot be discussed.

The nature of cooperation depends on the individual case, and can relate to such matters as simpleenquiries regarding the timing of procedures or to coordination of the proposed remedy in a case.

Moreover, the Canadian Competition Bureau and DG Competition of the Commission held the firstbilateral meeting under the Agreement on September 30, 1999. These bilateral meetings are an importantimplementing activity pursuant to Article VIII of the Agreement. The meeting took place in a friendlyatmosphere and has confirmed the good basis for developing further mutual cooperation. Its agendaincluded the implementation activities undertaken by each Party after entry into force of the Agreement.The first notifications and the ensuing cooperation were also the subject of a short appraisal. There werealso detailed discussions on important competition policy issues of common concern. With respect tofurthering cooperation activities, some ideas were presented by each side and it was agreed that thesewould be developed pragmatically on the basis of the experience with the Agreement.

5. Some Cases

The first notification received from Canada on June 30, 1999 concerned an investigation on the marketfor vitamins and related products. By the time of the first bilateral meeting, the Canadian CompetitionBureau had announced that the former Vice President — Sales of the Chinook Group Ltd. of Torontowas sentenced to nine months imprisonment for his participation in an extended international conspiracyto fix prices and allocate or share markets for choline chloride.

An issue which had received considerable attention in Canada was the announced merger of Onex/Canada Airlines/ Air Canada that had also been notified to the Commission under the merger regulation.The Commission itself notified the case to the Canadian Competition Bureau on September 23, 1999.Pursuant to this the Canadian Competition Authority has lodged a request for cooperation. At the timeof the request, the Canadian Competition Bureau had no jurisdiction over the case since the applicationof its competition law had been suspended. Apart from that, discussions took place with a view toproviding competition policy advice on how to best promote competition in Canada’s airline industry.The notification of the merger to the Commission was ultimately withdrawn, at the moment it becameclear that the transaction would not go ahead.

6. Conclusion

The Agreement has had a successful start. It was up and running only a fortnight after its signature andentry into force. Each of the cases on which cooperation has taken place have proven to be of importantinterest to at least one of the Parties.


INTERNATIONAL 335

V — THE APPLICATION OF COMPETITION RULES IN THE MEMBERSTATES

This chapter is based on contributions from Member States’ competition authorities. Fuller details oftheir activities may be found in the national reports which most of them draw up.

A — Legislative developments

There was no amendment to competition law in 1999 in nine Member States (Denmark, Finland, France,Germany, Greece, Ireland, the Netherlands, Portugal and the United Kingdom).

However, substantial changes were made to competition law in Austria, Belgium and Spain. Legislationin Belgium (full-function joint ventures), Spain (mergers) and Sweden (agreements of minor importance)was aligned on Community law.

In the United Kingdom, preparations continued for the entry into force of the new Competition Act on1 March 2000 and amendments to merger control legislation are planned. Legislative changes wereannounced in Denmark, France, Ireland, Luxembourg and Sweden.

Austria

In July Parliament adopted an amendment to the Restrictive Practices Act, which improves on theRestrictive Practices Act (Kartellgesetz) 1988; it entered into force on 1 January 2000.

The principal innovations were, in summary:

— the Restrictive Practices Court (Kartellgericht) may now act on its own initiative: for certain typesof case, it could not previously intervene unless requested to do so by an administrative authority;

— the prohibition principle was extended to include concerted practices;

— the assumption was introduced that firms with market shares of at least 30% are in a dominantposition;

— a sales price below cost price was explicitly classed as an abuse of a dominant position;

— the application of inappropriate time limits for payment and interest on arrears was explicitly classedas an abuse of a dominant position;

— the obligation to notify was withdrawn in respect of mergers and acquisitions of minor importance;

— the thresholds for intervention in respect of mergers/acquisitions subject to the notification obligationwere increased slightly (from ATS 3.5 billion to ATS 4.2 billion for total turnover worldwide,ATS 210 million for total turnover in Austria and an increase from ATS 5 million to ATS 28 millionfor turnover generated by at least two firms worldwide);


THE APPLICATION OF COMPETITION RULES IN THE MEMBER STATES 337

— account will now be taken of turnover generated abroad in the calculation of thresholds for mergercontrol intervention.

— Comments on the amended Restrictive Practices Act indicate that the debate should continue.

Belgium

Since 1991 Belgium has applied a Competition Act comprising three elements: the first is equivalent toArticle 81 of the EC Treaty, the second, to Article 82 and the third, to the European merger regulation.Two laws adopted on 26 April amend the Act of 5 August 1991 in a number of respects. The coordinatedversion of the Act was established by Royal Decree of 1 July 1999 and published in the official gazette(Moniteur belge) on 1 September.

a) Merger control

The two laws of 26 April 1999 amend the merger control rules in particular.

— The principal threshold determining whether mergers have to be notified is now set as follows:turnover generated individually in Belgium by at least two of the firms concerned must beEUR 15 million or above (about BEF 605 million); the second threshold is reached when totalturnover generated in Belgium by the firms concerned exceeds EUR 40 million (aboutBEF 1.6 billion). The two thresholds are cumulative.

— All full-function joint ventures (whether cooperative or concentrative) have to be notified as mergers ifthe notification thresholds are exceeded. This new rule is based on the provisions of Regulation (EC) No1310/97. Belgium has thus brought its competition policy into line with this Regulation. Cooperativejoint ventures of Belgian dimension will therefore be assessed both in the light of the procedural rules onmerger control and in accordance with the criteria of Article 2 of the Belgian Competition Act.

— Where the parties together control less than 25% of the relevant market in Belgium, the merger isapproved.

— Parties now have one month instead of seven days from the signature of an agreement within whichto notify it.

— The initial stage of an investigation is increased to 45 days. The second stage is reduced from amaximum 75 to a maximum 60 days.

— Parties to a merger may now also notify a draft agreement.

— The parties may adapt the agreement at any time during the initial stage of the investigation, forexample, by proposing commitments.

— If the Competition Council decides not to authorise a merger, the parties may appeal to the Councilof Ministers.

b) Procedure applicable to restrictive practices and abuses of dominant positions

— Complaints and agreements must now be lodged with the Competition Council, which refers themfor investigation to the Corps des rapporteurs (Reporting Panel, a new body instituted by the Act).



— Agreements between small businesses only are exempt from the notification obligation. They aretherefore granted an exemption without it being necessary for them to notify their agreements.

— The Competition Council must rule on a case within six months of receiving the panel’s report.

As regards proceedings for a preliminary ruling, a court called upon to rule on a case, the settlement ofwhich depends on the lawful nature of a competitive practice, must now refer the matter to the BrusselsCourt of Appeal. Transparency is improved still further by the obligation on all courts and tribunals tonotify the Competition Department within eight days of any ruling or judgment on the lawfulness of alawful practice.

Denmark

The Danish Competition Act, which entered into force on 1 January 1998, was not amended in 1999.However, a proposal for an amendment was drawn up in order to bring the Act up to the same level asin the other Member States of the European Union and the Union itself. The amended Act should alsoenable Denmark, like the other countries of the Union, to apply the principle of decentralisingcompetition cases that the Commission plans to implement.

Consequently, the amended Act would enable the Danish competition authorities to apply the EC Treatycompetition rules directly and to impose fines where a dominant position was abused for the first time.It would also contain provisions instituting merger control.

The draft is expected to be submitted to Parliament in the spring of 2000.

France

The Government announced that a draft law will be drawn up on economic regulation, which will containprovisions designed to tighten up the application of competition law.

Ireland

The Authority’s Category Certificate/Licence (in respect of agreements between suppliers and resellers),Decision No 528 of 4 December 1998, came into effect on 1 January. This Decision, which is theequivalent in Irish law of a block exemption regulation in Community law, will apply from1 January 1999 to 31 December 2003.

The government-appointed Competition & Mergers Review Group published a range of discussionpapers in 1999 on the future of Irish competition policy. They can be obtained from the Secretariat ofthe Competition Authority, Kildare Street, Dublin 1.

Luxembourg

Work was completed in 1999 on the research project carried out by the Ministry in cooperation with thePublic Research Centre’s economic law think tank at the Luxembourg University Centre with a view toupdating the Act of 17 June 1970 on restrictive trade practices. The reform project is a policy priorityfor the Ministry of Economic Affairs, and will progress through the legislative bodies in 2000.



Netherlands

There was no change as regards the Competition Act (MW), which entered into force on 1 January 1998,and the general administrative regulations relating primarily to block exemptions adopted under it. TheNetherlands Competition Authority (Nederlandse Mededingingsautoriteit or NMa) applied the Act,which is largely based on Community legislation.

One of the areas which received attention in 1999 was competition monitoring. The NMa has general re-sponsibility in this respect. The Council of Ministers had decided to limit as far as possible the number of sec-tor-specific rules and supervisory bodies; the following provisions were therefore inserted into the new Act,designed in particular to apply the new Community regulations containing liberalisation measures.

The NMa is the supervisory authority for the Gas Act; in this respect, it is given certain specific powers,such as the power to monitor planned negotiations on access to the gas transport network. Under theElectricity Act, on the other hand, a separate regulator was set up: the DTE (Dienst Uitvoering enToezicht Elektriciteitswet), which constitutes a division of the NMa. In the telecommunications field, thelegislator decided to use a provisional independent regulator, OPTA (Onafhankelijke Post enTelecommunicatie Autoriteit). The NMa and OPTA have signed an agreement setting out how they willcooperate on telecommunications matters. OPTA has also been named as the supervisory authority in aproposal for a new Postal Services Act. The NMa naturally retains its responsibility for the enforcementof the Competition Act, including both the electricity and telecommunications sectors.

Spain

Law No 16/1989 on the protection of competition was amended as regards economic concentrations byRoyal Decree No 6/1999 on urgent measures for liberalisation and increased competition, which enteredinto force on 19 April. This Decree aligns Spanish law on Community legislation in a number ofimportant respects.

1. It introduces compulsory notification for economic concentrations which are not subject toCommunity control and which meet either of the following two criteria: (a) market share of 25% ormore of the national market or a defined geographical market within it, or (b) combined turnoverwithin Spain of more than ESP 40 billion in the last financial year, as soon as at least two of theparticipating companies achieve individual turnovers within Spain of more than ESP 10 billion.Under the law, companies may consult the Competition Service in advance on whether or not theyare subject to the notification obligation.

2. It defines the concept of economic concentration as a lasting change in the control structure of thecompanies concerned. In the case of a joint venture, there is deemed to be a concentration where thejoint venture carries out on a permanent basis the tasks of an independent economic entity and doesnot have as its object or basic effect the coordination of the competitive behaviour of the companies,which remain independent.

3. Non-compliance with the obligation to notify a concentration or a planned concentration is madepunishable by a fine, which may be as high as ESP 5 million plus ESP 2 million per day for latenotifications following a request by the Competition Service that the transaction be notified.

4. The Decree allows firms to submit commitments or to amend the transaction within one month incases where it would cause distortions of competition that are easy to remedy. In the light of the



commitments given and after consulting the Competition Service, the Minister for Economic andFinancial Affairs may authorise the transaction if the commitments are considered to be sufficientor, if they are not, refer the case to the Competition Tribunal.

Law No 16/1989 was further amended by Law No 52/99 of 28 December 1999 (official gazette- BOE -of 29 December 1999). There were a number of new elements.

1. As regards the classification of behaviour, Article 6 (abuse of a dominant position) was amended toinclude cases of abuse of economic dependence, a term which should be taken to mean the situationin which customers or suppliers find themselves when they can turn to no equivalent alternative inorder to carry out their activities. This will be presumed to be the case where a supplier has to grantadvantages beyond the usual discounts granted to equivalent purchasers. Furthermore, the followingwill constitute abuses of such a position: (a) unjustified rupture of relations and (b) the threat ofrupture in order to obtain commercial advantages.

Exceptions may be made to the prohibition in Article 1 (restrictive agreements) only in cases wherea rule with the status of a law explicitly authorises or provides for the restriction.

2. A new situation was added in which restrictive practices and agreements may be authorised, namelythat of agreements and practices which, given their minor importance, are not capable of affectingcompetition to a significant extent.

New arrangements for closer coordination with the ordinary courts were set in place, allowing theCompetition Tribunal, on request, to issue an opinion on the source and extent of the harmful andother effects of behaviour on which it has given a ruling.

3. The Competition Tribunal will be able to launch own-initiative investigations into state aid.

4. Regarding procedure: (a) possibilities for investigation and inspection during visits to firms’premises were clarified and extended, (b) provision was made for cases to be closed in return forundertakings given by the parties and duly examined by the authorities, this option being termed“closure by agreement”, (c) changes were introduced in order to make the bodies responsible forsafeguarding competition more effective and (d) their roles were more precisely defined, each beingassigned a specific role by comparison with that of the other institutions.

5. The new Law gives a mandate to the Government to draw up plans before October 2000 for a newreform defining the powers of the Autonomous Communities as regards competition matters, whichwere recently recognised by the Constitutional Court.

6. Lastly, the Law saw its horizontal coverage extended across all the sectors of the economy, it beingmade clear that the bodies in charge of protecting competition were alone responsible for applyingthe Law, with the role of the industry regulators being specified.

Sweden

The Government has decided to extend the block exemption regulation applicable to retail chains until30 June 2001.



In its draft rules on company mergers (draft 1998/99:144), the Government proposes to amend the ruleson acquisitions contained in the Competition Act. The proposal marks a new effort to align Swedish lawon the relevant Community rules. The concept of acquisition will be replaced from now on by that ofmerger on the Community model. Joint ventures and ancillary restraints will have to be assessed inaccordance with the merger rules, in the same way as under the Community rules. The possibilities forinformal confidential prior notification are improved. It is proposed that the Act enter into force on1 April 2000.

The general guidelines produced by the Competition Authority (Konkurrensverket) on agreements ofminor importance were revised, notably on the basis of amendments made in 1997 to the correspondingCommission notice. In its new general guidelines (KKVFS 1999:1), the Competition Authority explainshow it interprets the words “to a significant extent” in Article 6 of the Competition Act. The formerSEK 200 million general limit on turnover has been withdrawn and, as regards the limit on market share,a distinction has been drawn between horizontal and vertical agreements. Concerning horizontalagreements, the Competition Authority considers that cooperation does not affect competition to asignificant extent if the firms’ combined market share does not exceed 10% of the relevant market. Forvertical agreements, on the other hand, the limit is set at 15%. Small businesses with an annual turnoverof less than SEK 30 million may conclude restrictive agreements provided their combined market sharedoes not exceed 15%, without their cooperation falling within the scope of the prohibition in Article 6of the Competition Act. However, following the example of the Commission notice, certain types ofagreement, such as horizontal price agreements and vertical territorial protection agreements, are stillconsidered to restrict competition to a significant extent.

At the Government’s request, the Competition Authority described and analysed the competitionsituation in Sweden during the 1990s and made proposals for measures to strengthen competition. In itsreport, the Authority proposes a number of specific measures in important economic sectors, togetherwith some amendments, to the Competition Act in particular. The main proposals are intended to providethe Competition Authority with more effective means of combating restrictive agreements. For example,it is proposed that serious breaches of the prohibition on anticompetitive cooperation be made a criminaloffence and that strict confidentiality and explicit provision under the law for a reduction in fines beintroduced for firms which help to reveal cartels. The Competition Authority also proposes that it beempowered to exchange information with its counterparts in the other Member States and to providethem with assistance.

United Kingdom

The United Kingdom Government continued to prepare the ground for full implementation of theCompetition Act 1998, which will occur on 1 March 2000. The purpose of the Act is to strengthen UKcompetition law by replacing much of the current system with two prohibitions, closely based on Articles81 and 82 of the EC Treaty.

When the prohibitions in the Act come into force on 1 March 2000, they will replace the RestrictiveTrade Practices Act 1976, the Resale Prices Act 1976 and the greater part of the Competition Act 1980.The new Act will give the Director General of Fair Trading improved powers of investigation andenforcement, including the power to levy financial penalties and impose interim measures. It will beapplied and enforced by the Director General of Fair Trading and, in relation to the regulated utilitysectors, concurrently by the regulators for telecommunications, gas and electricity, water services andrailway services. The Office of Fair Trading has launched an extensive programme to educate businessabout the implications of the new Act, including publishing a series of guidelines. All of the guidelinespublished to date are available from the Office of Fair Trading, or its website at www.oft.gov.uk.



The current UK competition legislation will continue to apply until 1 March 2000. However, theRestrictive Trade Practices Act will apply in a modified form alone, requiring notification only of price-fixing agreements and variations to existing registered agreements to the Director General, who retainshis powers to call in other forms of agreement considered to be anticompetitive. The monopolyprovisions of the Fair Trading Act 1973, which allow the Director General to refer cases to theCompetition Commission, will continue to apply after March 2000, and since 1 April the DirectorGeneral has had greater investigative powers in relation to monopolies.

1999 also saw the establishment of the Competition Commission, which replaces the former Monopoliesand Mergers Commission. The Competition Commission will continue to examine monopoly and mergerreferences under the Fair Trading Act. However, once the prohibitions under the Competition Act 1998have entered into force, the Competition Commission will also act as an appeal tribunal for decisions ofthe Director General (and the sectoral regulators with concurrent powers under the Act).

The president of the Competition Commission’s Appeal Tribunal will be Sir Christopher Bellamy QC,previously of the Court of First Instance of the European Communities.

One of the aims of the new legislation is to align national rules as far as possible with Community rules.Section 60 of the Act provides that the UK authorities must deal with questions of competition, as far aspossible and having regard to any relevant differences, consistently with Treaty principles andCommunity case-law.

The new Act will have no direct effect on the UK rules on mergers, which will continue to be assessedunder the relevant provisions of the Fair Trading Act 1973. Agreements giving rise to mergers within themeaning of the 1973 Act will generally be excluded from the provisions of the 1998 Act, as willrestrictions considered ancillary to such agreements. The Government has announced its intention toreview the effectiveness of the UK’s current merger rules, particularly the extent of ministerialinvolvement in the process and the timetable for investigations, and the Department of Trade andIndustry issued a consultation paper on this in August.

B — Application of the Community competition rules by nationalauthorities

Currently, in seven Member States (Austria, Denmark, Finland, Ireland, Luxembourg, Sweden and theUnited Kingdom), the competition authorities do not have the power to apply Articles 81(1) and 82directly. In Denmark, however, a bill should enable the competition authorities to apply the ECcompetition rules directly.

Articles 81(1) and 82 were applied in 1999 by the competition authorities in France, Germany, and Spain.Cases involving the application of Article 9 of the Merger Regulation have been mentioned by the Frenchand Dutch authorities. The Dutch authority has mentioned the application of the notice on cooperationbetween the Commission and national competition authorities in respect of the application of Articles 81and 82; other authorities, such as the Finnish and Luxembourg authorities, have mentioned cooperationwith the Commission without specifically referring to the notice.

This chapter also contains a summary of decisions based on domestic law reported by the national competi-tion authorities of Austria, Denmark, Italy, Portugal and Sweden, owing mainly to their significance from aCommunity point of view.



Austria

a) Restrictive practices, abuse of a dominant position

Verein für sauberen Wettbewerb (Association for fair competition)/«Ja!Natürlich». Spar, the second-largest chain of food shops, accused its main competitor, Billa, a subsidiary of the German Rewe group,of abusing its dominant position on the Austrian organic milk market. Billa had attempted to tie the maindairies, which had limited-access collection points for unpasteurised organic milk, to it by means ofexclusive supply agreements. It was established in proceedings before the Restrictive Practices Courtthat, even if Billa was in a dominant position and had concluded corresponding supply agreements, thishad not given rise to bottlenecks in supplies of organic milk to other food retail chains, since there wereseveral dairies operating with sufficient quantities of organic milk.

Antenne Wien and others/ORF and others. Certain regional radio stations, which had come on air follow-ing liberalisation of the broadcasting market, had started to cooperate with ORF, the public broadcasterwhich enjoyed a monopoly until a few years ago, on advertising. Competing regional broadcasters com-plained that this disrupted access to the national advertising market. The Restrictive Practices Court ruledthat the restrictions enshrined in the cooperation contract constituted a deliberate restrictive agreement. Theadvertising agencies announced that the main competition restrictions would be deleted from the contracts.

M-Preis/Coca-Cola. The plaintiff is a food retail chain which is mainly active in the province of Tyrol.It claims that the defendant, Coca-Cola, has a dominant position on the market for cola drinks and/orsoft drinks. It regards itself as bound to buy the defendant’s products because they are notinterchangeable in the food trade sector. Coca-Cola is alleged to have abused its position by grantingillegal and arbitrary reductions and by requiring shops to launch promotion or sales campaigns forspecific products. The Restrictive Practices Court’s judgment is still awaited.

b) Mergers

Kika-Leiner/Michelfeit group: Kika-Leiner wanted to acquire a holding of 26% and, ultimately, 100%in Michelfeit, a furniture store. The relevant market is the furniture retail market (including smallretailers and specialist shops). As regards the geographic market, it has been observed that 90% ofcustomers travel within a radius of 35 km maximum to buy furniture, which means that the relevantmarket covers the Vienna conurbation, because Michelfeit was active only in that region. Kika-Leiner,the market leader, and Michelfeit, its closest competitor, held 23% and 13% respectively of the relevantmarket. The Restrictive Practices Court found that the merger would result in the creation of a dominantposition on the market, but gave it the go-ahead on condition that the post-merger market share did notexceed 30% of the relevant market, which meant that the new company had to sell off several sites.

Vonwiller/Farina/MPG and Vonwiller/Rauch/Fritsch & Rauch are two joint ventures operating on theAustrian grain mill market. The Restrictive Practices Court essentially investigated the flour market, whichcan be subdivided into three sectors: flour in silos, in bags and packaged flour for the retail trade. The marketshare of the joint ventures is said to be between 35% and 58%, depending on the sector. The Restrictive Prac-tices Court found that one was a concentrative joint venture but that the other constituted a deliberate re-strictive practice. The Restrictive Practices Court recently confirmed that the restrictive practice is lawful.

Belgium

The Competition Council did not take any decisions pursuant to Articles 81 and 82 in 1999. However,a decision taken in application of Belgian competition law, but which has implications for Communitycompetition policy, is worth noting.



Competition Council decision of 21 January 1999 concerning the practices of official motorcycleimporters

A number of independent motorcycle importers and distributors lodged a complaint against five officialimporters and their professional association. The plaintiffs claimed that, by virtue of the fact that thoseofficial importers had laid down the procedure for obtaining a certificate of conformity for parallelimports into Belgium of motorcycles and had carried out roadworthiness tests, they were abusing adominant position and that, via their professional association, they had concluded agreements on theprice and other conditions of issue of certificates of conformity for motorcycles so as to undermine thecompetitive position of independent importers.

The Council took the view that any official importer of a particular brand of motorcycles as a privatecompany with exclusive rights to carry out conformity tests on motorcycles of a given brand, had adominant position on the market for issuing certificates of conformity. The official importers had abusedtheir dominant position inter alia as indicated below:

— they had required an official distributor to process homologation applications and to follow up theprocedure until the certificate of conformity was issued;

— they had required an official distributor to supply and fit spare parts;

— they had required new motorcycles in kit form to be presented assembled and ready to ride forhomologation purposes. They had also required certain superfluous acoustic tests to be carried outon them.

The Competition Council ordered that these practices be brought to an end and imposed fines totallingBEF 45.8 million on the guilty parties.

Denmark

Given that the Competition Act does not contain provisions on merger control, mergers do not have tobe notified to the Danish competition authorities.

In the case of the planned merger between two Danish dairies, MD Foods and Kløver Mælk, the Minister forTrade and Industry requested the Competition Department in March to investigate the merger’s potential im-pact on the Danish dairy market. The purpose of the investigation was to enable the minister to decide whetherthe Danish authorities should refer the case to the Commission, given that the merger did not have a Commu-nity dimension and notification was therefore not mandatory. The Competition Department’s investigationsalso showed that the merger might distort competition from the perspective of consumers as well as that ofcompetitors and the retail trade. Accordingly, MD Foods entered into a number of undertakings which, in theview of the Competition Department, were in line with Community practice. In these circumstances, the Com-petition Department recommended that the minister authorise the merger between MD Foods andKløver Mælk on condition that MD accepted the proposed measures on behaviour and structure. (311)

The Competition Council also authorised an accord between the Ministry of Health and thepharmaceutical industry association (Lif) on the price of medicinal products, with a view to restricting



(311) Press release from the Competition Authority dated 21 April 1999.

state aid in the sector. The accord was due to expire on 1 March 2000. The parties notified theCommission of the accord in 1998, and when it carried out investigations, they stated that the accordshould be interpreted as meaning that no company was obliged to set its prices below a fixed Europeanaverage. The Commission then decided not to intervene. The Competition Council, like the Commission,took the view that certain aspects of the accord posed problems from a competition perspective. Theaction taken by the Competition Council is determined by the Commission’s position and, accordingly,it decided not to intervene either in view of the fact that the accord was due to expire shortly. (312)

Finland

The Competition Council (Kilpailuneuvosto) took a decision finding that Ajasto (313) had been guilty ofabusing a dominant position on the market for calendars and almanacs published in Finland because itapplied discriminatory and restrictive criteria to its customers in connection with the granting of basicreductions, annual bonuses and marketing aid. It ordered Ajasto to pay a fine of FIM 2 million to thestate. Ajasto appealed against the Competition Council’s decision to the Supreme Administrative Court(Korkein hallinto-oikeus).

On 6 August the Competition Authority (Kilpailuvirasto) rejected the new application for exemptionsubmitted by the Central Union of Agriculture and Forestry Producers (Maa- ja metsätaloustuottajienKeskusliitto ry — MTK) with a view to promoting cooperation between forest owners in the roundwoodtrade on the grounds that such cooperation did not appear to improve efficiency or benefit customers. Itconsisted of a consultation system whereby forest owners attempted to reach agreement with loggingenterprises on prices prior to negotiations. The exemption granted by the Competition Authority in 1997remained in force until 30 April. (314) The Competition Authority worked together with the EuropeanCommission to examine this exemption application. The Commission had authorised the parties toimplement a five-year plan for the timber trade by administrative letter dated 16 December 1996. MTKlodged an appeal against the Competition Authority’s decision with the Competition Council.

In its statement of 16 September concerning national roaming on mobile phone networks, theCompetition Authority took the view that Sonera and Radiolinja had undermined competition in nationalmobile telephone services by setting a price for national roaming which was so high that it preventedanother competitor, Telia, from taking part in activities which were vital if it was to provide such serviceson a national level. The Competition Authority wound up investigations after Telia and Radiolinjaconcluded an agreement enabling Telia to offer a national mobile phone service.

The Competition Authority took the view that Helsingin Puhelin Oyj (HPY) and Päijät-HämeenPuhelinyhdistys (PHP) had abused a dominant position by pricing certain customer services in adiscriminatory, restrictive fashion, thus excluding competing telephone companies. In the case of HPY,the abuse concerned charges for local loops and fixed links together with the link between the rentingof local loops and fixed links and the acquisition of other telecommunications services. PHP, for its part,had abused its position by granting reductions to owners. The Competition Authority proposed that theCompetition Council prohibit the abusive practices in question and impose fines.



(312) Press release from the Competition Authority dated 15 December 1999.(313) 1998 Competition Report, p. 339. The Competition Council states in its decision of 17 December 1998 that

Community competition rules and national competition law are applicable in parallel, and that the fact offulfilling the conditions for the application of Article 82 does not preclude the application of national law onrestrictions of competition.

(314) The 1997 Competition Report describes the background to this case, p. 339.

In the media sphere, the Competition Authority called on the Competition Council to prohibit MTVEurope from applying, in Finland, the broadcasting policy of the satellite television channel whichoperated under the MTV name: Music Television, including the related conditions and licence fees, onthe grounds that the policy in question placed satellite television networks using collective aerials at adisadvantage in relation to cable networks.

The Competition Authority proposed that the Ministry of Finance amend Finnish motor vehicle taxarrangements by establishing a transparent system. This initiative was inspired by complaints concerningmotor vehicle taxation received by the Competition Authority. The roots of the problem lie in the lackof transparency in motor vehicle taxation in Finland and the discriminatory tax treatment of differenttypes of company which results. In addition, the current system prevents parallel imports of new cars.The Competition Authority also disseminated information on the entitlement of owners of vehiclesimported by the parallel route to benefit from guaranteed services in the country of origin.

Merger control was exercised for a full year in Finland for the first time in 1999. During that period, theCompetition Authority intervened in five cases and laid down conditions which had to be met. One suchcase is the merger in the sugar industry between the Danish company Danisco and the Finnish companyCultor. Intervention was justified by the potential disappearance of a competitor on the Finnish market;the Community sugar regime did not constitute an obstacle to the measures decided by the CompetitionAuthority, even though the sugar trade is tightly regulated.

France

a) Restrictive practices, abuse of a dominant position

With regard to restrictive practices, the Competition Council applied Community law in one case only,in which it had to examine the pricing policy of Laboratoires 3 M Santé group. Referring to the Courtof Justice’s Viho judgment, the Council concluded that no infringement had occurred, given that thepractices identified had involved subsidiaries of the same group. (315)

With regard to abuses of a dominant position, the Council issued several decisions of relevance to theopening-up to competition of network industries.

The Council imposed a fine of FRF 30 million on Electricité de France (EdF) for offering financial ormaterial aid in return for exclusive supply agreements within the framework of contracts awarded forthe heating work on several large real-estate developments in Paris. It took the view that these practiceswere abuses of a dominant position under national law and stated that they were likely to underminemoves to open up the economy to competition as provided for in the law of 9 December 1998. (316)

When an application for interim measures was made by a cable television company (NC Numéricâble),the Council applied the concept of essential infrastructure to the cable networks owned and operated byFrance Télécom, taking the view that it was irrelevant whether France Télécom was a competitor ofNuméricâble on the market for operating these networks on the sites concerned. It therefore called onFrance Télécom to suspend the fee increase imposed on Numéricâble, taking the view that, given thesize (70%) and sudden nature of the increase, it might be considered, after the substance of the case had



(315) Decision No 99-D-18 of 2 March 1999.(316) Decision No 99-D-51 of 20 July 1999.

been investigated, as falling within the scope of Article 8 of the Order of 1 December and Article 82 ofthe EC Treaty. (317)

In connection with another application for interim measures submitted by telecommunications operators,the Council took the view that France Télécom’s policy of offering a rate reduction on fixed-linktelephone services to all mobile telephone subscribers was likely to constitute a tied reduction caught byArticle 8 of the Order of 1 December 1986 and by Article 82 of the EC Treaty in view of the potentialcompetition from operators based in other Member States. (318)

Two judgments handed down by the Paris Court of Appeal, which is competent to hear appeals againstdecisions of the Competition Council, are also relevant.

In the Filetech case, (319) the Court annulled the Council’s decision on procedural grounds. Ruling onthe substance, however, it endorsed the Council’s analysis and confirmed the penalty imposed on FranceTélécom pursuant to Article 82 for making access to the list of subscribers, regarded as an essentialresource, subject to discriminatory pricing conditions with a view to covering its operating costs.

The Paris Court of Appeal also endorsed the decision of the Competition Council in the Télévision parSatellite (TPS) case, taking the view that Canal Plus had abused its dominant position by tying the priorpurchase of exclusive rights to broadcast recent French films on television by subscription to thecondition that the producer waive his entitlement to sell to any other operator the television broadcastingrights in respect of these films for broadcasting by a pay-per-view service. In so doing, the Courtconcurred with the analysis of the Competition Council, which had defined the relevant markets as thatfor pay-TV, irrespective of the mode of transmission (terrestrial, cable or satellite) or manner ofmarketing (subscription or pay-per-view), and that for the rights to broadcast recent French films on pay-TV. (320)

As regards cases initiated in 1999, the most interesting are those lodged by the Minister for EconomicAffairs requesting the Competition Council to look into agreements for the creation of central purchasingconsortia for certain large distributors.

b) Mergers

Article 9 of the Community regulation was implemented in the following cases: Total/Fina,EMC/CSME/Rock and TotalFina/Elf (still pending at the end of 1999).

The EMC/CSME/Rock merger concerned the creation of a joint venture operating in France on localroad salt markets by Compagnie des Salins du Midi et des Salines de l’Est (CSME) and EntrepriseMinière et Chimique (EMC) designed to offset the reduction in capacity at EMC which had resulted fromthe planned closure of its potassium mines. The merger was given the go-ahead by the Minister forEconomic Affairs, Finance and Industry on 1 September after the parties had made a number ofsignificant commitments: to sell a substantial number of storage facilities, to stop marketing a particularbrand on one of the market segments and, with a view to facilitating access to markets, to release securityreserves, thus enabling third parties to reduce their costs when replying to calls for tender.



(317) Decision No 99-MC-01 of 12 January 1999, confirmed by the Paris Court of Appeal on 15 March 1999.(318) Decision No 99-MC-04 of 10 March 1999.(319) Judgment of 29 June 1999 on Council Decision No 98-D-60 of 29 September 1998.(320) Judgment of 15 June 1999 on Council Decision No 98-D-70 of 24 November 1998.

In the case of Total/Fina, the local market for storage of oil products in the Port-la-Nouvelle region hadbeen referred to the French authorities. The minister authorised the merger in the light of thecommitments suggested by the parties: sale of a storage facility, proposed contractual arrangements forspot customers and partial opening of the closed storage facility at Sète.

With regard to mergers investigated in France, 1999 was marked by the decision prohibiting the takeoverof Orangina by Coca-Cola, which had submitted a new proposal featuring commitments designed to dealwith the competition concerns aired when the original proposal was rejected in 1998. Essentially, Coca-Cola proposed granting an exclusive 10-year licence to an independent third party to market Oranginaon the “non-home” market. However, the Minister for Economic Affairs, in agreement with theCompetition Council, took the view that such a system would lead to coordination of behaviour which,while it might be necessary in order for Orangina to develop and thus remain competitive on this market,would also be detrimental to free competition. Faced with the impossibility of resolving thiscontradictory situation, the Minister prohibited the acquisition. This case illustrates the difficulty ofdividing ownership or operations for a given brand in the same territory and is the first occasion on whichthe concept of joint dominant position has been applied under French law.

Germany

During the period under review the Federal Cartel Office applied the Community competition rules inthe following cases:

a) The prices recommended by the Federal Transport and Storage Association (BundesverbandSpedition und Lagerei eV) for collective goods transport carried out by forwarding agents, inconnection with which proceedings were instituted pursuant to Article 81(1) of the EC Treaty,expired at the end of 1998 and were not renewed. The Federal Cartel Office had first announced thatit had prohibited these recommended prices and then stated that it would tolerate them until the sixthamendment to the Competition Act came into force on 1 January.

b) The proceedings instituted against Deutsche Telekom AG (DTAG) pursuant to Article 82 of the ECTreaty and Articles 22(5) and 26(2) of the former Competition Act for refusing to provide directoriesor for levying excessive charges for this service were suspended when DTAG gave the Federal CartelOffice an undertaking that it would bring this abusive practice to an end.

c) In the proceedings concerning the shared use of the port facilities at Puttgarden by competing ferrycompanies, the Federal Cartel Office, by decision 21 December 1999, condemned ScandlinesDeutschland GmbH pursuant to Article 82 of the EC Treaty and Article 19(4)(4) of the CompetitionAct, for refusing to grant access to these facilities to Eidsiva Rederi ASA and a Dano-Swedish groupof which Stena Rederi AB formed part. The decision is not yet enforceable.

d) The Federal Cartel Office prohibited cooperation between Nordzucker AG and Union Zucker Südhan-nover GmbH for the joint marketing of beet sugar produced by the partners. Its decision was taken pur-suant to Article 81(1) of the EC Treaty and Article 1, the first sentence of Article 28(1) and Article 28(4),read in conjunction with Article 12(1), of the Competition Act on the grounds of the dominant positionof the joint venture Nordzucker GmbH and Co. KG, which excluded implementation of the derogationin Article 28 of the Competition Act. The parties have appealed against the decision.

e) Atlantik Hafenbetriebe Geuther & Schnitger GmbH & Co. KG and Friedrich Tiemann GmbH & Cocomplained to the Commission that they had been refused access to port facilities and terminals



controlled by Bremer Lagerhaus-Gesellschaft AG & Co (BLG). The Commission took the view thatthis was a matter for the national authorities and requested the Federal Cartel Office to deal with thecomplaint. The complainants, who had initially regarded the case as one with a Communitydimension which should be investigated by the Commission, subsequently contacted the FederalCartel Office, which invited the respondent firm to submit its comments.

Neither the Berlin Court of Appeal (Kammergericht) nor the Federal Supreme Court (Bundesgerichtshof)took any decisions in application of the Community competition rules during the period under review.

Italy

As regards application of the Community competition rules by the Competition Authority in 1999, theauthority terminated proceedings (Unapace/ENEL) which had been instituted pursuant to Article 82; asecond set of proceedings, instituted in November 1998 on the grounds of presumed infringements ofArticles 81 and 82, is still pending (Consorzio industrie fiammiferi). Two other sets of proceedings wereinstituted in 1999 (Stream/Telepiù, Aeroporti di Roma — Tariffs for groundhandling services), pursuantto the Community competition rules.

With regard to the terminated proceedings, the authority took the view that Enel had infringed Article 82by engaging in conduct likely to limit access by competitors from Italy and from other Communitycountries to the electricity supply market. In the course of the investigations the authority established theexistence of two clauses restricting competition in the electricity supply contracts spanning several yearsconcluded in 1998 between Enel and customers with a high annual energy consumption who are likely,under Directive 96/92/EC, to purchase electrical energy freely from producers other than Enel (referredto as «eligible customers»). More specifically, the first clause provided for Enel’s exclusive right tosupply electrical energy to be extended, whereas the second clause granted Enel a right of first refusalin cases where the customer received more attractive offers from a competitor (known as an «Englishclause»). The extension of the exclusive supply right, which was increased from one year to three yearsminimum, would have enabled Enel to tie eligible customers to it, even after the new regulations hadcome into force. This restriction took on particular importance in view of the consequences of the rightof first refusal granted to Enel which, because it made it pointless to submit more attractive offers, waslikely to hinder and restrict access by new competitors to the Italian electricity supply market. In thecourse of the proceedings, Enel amended the conditions whereby each customer could terminate itssupply contract by eliminating the English clause and enabling eligible customers (a) to terminate thesupply contract unilaterally during the first twelve months after the date on which they were recognisedas eligible customers, in accordance with the decision of the electricity and gas authorities and (b) to askfor the contract to be renegotiated, on expiry of the twelve-month period referred to above, in the eventof changes to tariffs or legislation. The Competition Authority took the view that the amendments madeby Enel to the contractual conditions governing the supply of electricity were sufficient to eliminate thedistortions of competition resulting from the previous arrangements.

With regard to the three sets of proceedings still pending, the Consorzio industrie fiammiferi caseconcerns possible infringements of Article 81(1) and Article 82 in the market for the production andwholesale distribution of matches in Italy. The case involves the presumed coordination of thecommercial policies of Italian match manufacturers and conduct likely to have the effect of limitingaccess to the market by competing producers, whether from Italy or from other Community countries.In March the Competition Authority decided to carry out further investigations into the business linksbetween Consorzio industrie fiammiferi and Swedish Match SA, the largest European match producer,with a view to ascertaining whether an agreement fixing market shares in advance for match sales inItaly had been put into practice.



The set of proceedings concerning Stream and Telepiù, which was initiated in March, concerns possibleinfringements of Community competition rules on the Italian markets for pay television, encrypted rightsfor sports broadcasts and encrypted film rights. These alleged infringements were linked to long-termexclusivity contracts for the acquisition of rights for football matches and encrypted films concluded byTelepiù with the main football teams and the leading Italian and US film producers, and to the exclusivedistribution contract concluded between Telepiù and Stream for the purpose of sharing cable and satellitebroadcasts. Lastly, the third set of proceedings, Aeroporti di Roma — Tariffs for groundhandlingservices, which was initiated in November, concerns a presumed infringement of Article 82 by Aeroportidi Roma, which holds the management franchise for Rome’s airports, on the markets for infrastructuremanagement and groundhandling services at Rome’s main airport (Rome Fiumicino). More specifically,the behaviour under scrutiny is said to consist of an amendment to charges for groundhandling servicesin the form of a new system of quantity-based «loyalty» discounts and of the creation of obstacles to in-house production and activities by actual or potential competitors.

With regard to the application of national competition rules where a Community interest exists, it shouldbe noted that in July the Competition Authority terminated proceedings to establish potentialinfringements of the ban on anticompetitive restrictive practices by the Lega Nazionale Professionisti(LNP), a private association to which the 38 football clubs taking part in the first and second divisionchampionships are affiliated. The football league regulations provided for the LNP to be given exclusiverights by clubs to free-to-air and encrypted television coverage for championship matches and the ItaliaCup. Until the 1998-99 season, the LNP had sold free-to-air and encrypted television broadcasting rightsfor first and second division championship matches and the Italia Cup on a collective basis. With a viewto assessing whether the collective sale of rights by the LNP constituted a restrictive practice, it wasdeemed necessary to distinguish between the three products sold: free-to-air broadcasting rights for thehighlights of first and second division championship matches; rights for first and second divisionchampionship matches; and rights for Italia Cup matches. According to the Competition Authority, theeconomic justification for the centralised sale of highlights was the high costs associated with theindividual sale of those rights. Their collective sale was therefore not deemed to be restrictive within themeaning of Law No 287/90 given that it appeared to be the only possible way of marketing the product.In contrast, encrypted broadcasting rights for first and second division championship matches areproducts which can be sold individually by football clubs and acquired separately by broadcastingcompanies since there is no reason to assume that, in the event of no collective sale taking place, thebroadcasting companies would not be interested in acquiring those rights. The centralised sale of thoseproducts was therefore deemed to constitute a restrictive practice which limited competition. Lastly, thecentralised sale of rights for the Italia Cup was also deemed to be such as to affect the operation of themarket. However, account was taken of the high cost of the transactions and of the uncertainty involvedfor broadcasting companies purchasing rights whose owners are known only shortly before the event(once it is clear which teams have qualified for the next round). In view of these considerations and thefact that the Italian league made a number of changes to its regulations immediately after proceedingswere instituted, the centralised sale of rights for the Italia Cup, only for the knockout stages, was deemedto qualify for exemption under Article 4 of Law No 287/90.

Also likely to be significant from a Community point of view are the proceedings terminated by theCompetition Authority in December concerning companies controlled by Coca-Cola operating in Italyas well as certain independent bottling plants based in southern Italy and the islands. The proceedingsdemonstrated various forms of abusive behaviour designed to hinder access by competing soft drinkproducers to wholesale distribution, modern retail distribution and the catering industry. In particular, theauthority took the view that the application of discounts and other benefits to wholesalers, the existenceof exclusivity clauses and the setting of individual sales targets for wholesalers constituted abusivebehaviour. A ITL 30.6 billion fine was imposed on Coca Cola; the two bottling companies each receiveda fine of approximately ITL 400 million.



Luxembourg

With a view to preparing the Restrictive Trade Practices Commission (CPCR) for the new functions itmay be required to fulfil after the entry into force of the planned reform of the Competition Act, theMinister for Economic Affairs referred a number of cases to it. The two most interesting cases submittedto the CPCR concerned telecommunications and payment services (luncheon vouchers) in the cateringindustry.

The first case had to do with accounting rates, which are arrangements freely negotiated betweentelecommunications operators whereby they are paid for transferring international telephone calls to theirdestination. Accounting rates formed the subject-matter of a preliminary inquiry by the EuropeanCommission, which suspended the proceedings in order that the national authorities might, as part of thedecentralisation process, handle the case with a view to taking a decision under their domestic law. TheMinister for Economic Affairs concluded that the investigation carried out did not show that a dominantposition had been established in the industry. The other case was based on a complaint concerningpayment methods in restaurants, which was concluded in May.

Netherlands

Regular consultations took place between the Dutch Competition Authority (NMa) and the Commissionwithin the framework of cooperation arrangements between the Commission and the Member States onimplementation of the competition rules. The purpose of these consultations is to ensure uniformapplication of the competition rules and to prevent parties from shopping around for the authority, be itEuropean or domestic, perceived as the most sympathetic.

The consultations essentially concerned cases in which the Commission had sent a comfort letter to theparties. They also took place in cases in which complaints and/or exemption applications had been sentsimultaneously to the NMa and the Commission. In this way a decision can be taken as to which bodyis primarily responsible for investigating the matter; the other body stays proceedings and the parties areinformed. Lastly, under the new Community policy on vertical agreements, the NMa adjourned a certainnumber of proceedings so as to avoid a decision having to be annulled when the new provisions enteredinto force.

Portugal

Acting under domestic law, the Competition Council handed down decisions in two infringementproceedings in 1999 concerning, respectively, an abuse of a dominant position on the part ofTabaqueira with regard to the contractual conditions imposed on stockists and wholesalers, and variousrestrictive practices linked to a distribution system for soft drinks. Neither set of proceedings led to anyfines being imposed.

The Council also issued a declaration of non-applicability with regard to Article 2 of Decree-lawNo 371/93 as part of a prior assessment procedure for an agreement signed by pharmaceuticalscompanies with a view to setting up a joint venture.

During the period under review, the Directorate-General for Trade and Competition instituted three setsof proceedings for infringement of Portugal’s competition rules. They concerned the following markets:telecommunications (two of the sets of proceedings referred to above) and credit cards (distance sales).



During the same period, the Directorate-General for Trade and Competition wound up investigations ofthe following cases by issuing the corresponding final report — Unicer — União Cervejeira, SA, inconnection with which it looked into the beer distribution system practised by this company; —Associação da Bolsa de Valores de Lisboa (ABVL), which concerned a discriminatory practice and anabuse of a dominant position in connection with the provision of information during stock markettrading, and Lusomundo — Audiovisuais, in which Lusomundo’s film distribution system came underscrutiny.

In the merger control field, the Directorate-General received 67 notifications concerning the followingsectors: industry (43), commerce (7) and services (17). Of these operations, 57 were authorisedunconditionally and two were authorised on a conditional basis. One notification was withdrawn by thecompanies concerned and the others are still being investigated.

Spain

a) Mergers

On 23 July — in connection with case IV/M.1555 Heineken/Cruzcampt — the Spanish authoritiessubmitted their first request for Article 9 of the Regulation to be implemented. By decision of 17 August,the Commission transmitted this case to the Spanish authorities.

b) Restrictive conduct

— Case 412/97 BT/Telefónica. The Competition Tribunal ruled that two forms of conduct prohibitedunder Article 6(d) and (e) of the Competition Act and under Article 82(c) and (d) of the EC Treatyhad taken place, fining Telefónica de España SA ESP 580 million (EUR 3.5 million). The abusesconsisted of Telefónica’s use of discriminatory and selective discounts to potential BT customers andin tying liberalised services (international calls) to other services (domestic calls) which weredifficult to access.

— Case 408/97 Panasonic. The Competition Tribunal ruled that the Spanish company Panasonic SalesSpain (a subsidiary of Japanese company Matsushita) and Sonicel (the exclusive Matsushitadistributor in Portugal) had infringed Article 81(1) by engaging in a concerted practice to preventparallel exports to Portugal from Spain, even though the domestic market had not been affected. Thisconduct took the form of a refusal on the part of Panasonic to sell to a parallel competitor,Climaxpania. The Tribunal ordered Panasonic, its parent company Matsushita and Sonicel to end theprohibited practice forthwith and fined Panasonic and Sonicel EUR 150 000 and EUR60 000 respectively.

— Case MC 30/99 Glaxo 2. In October 1998 the Competition Tribunal adopted the interim measureproposed by the Competition Service (SDC) consisting in suspending, for six months, application ofthe fourth general condition of sale of Glaxo Wellcome SA and its subsidiaries, which preventedparallel exports of medicines from Spain to the rest of Europe. The interim measure was notimplemented until December 1998. Glaxo notified its conditions of sale to the Commission with arequest for negative clearance or, alternatively, exemption under Article 81(3), but the Commissionsent it a statement of objections on 14 July 1999. Prior to that, on 1 July, the SDC had proposed, atthe request of the complainants Aseprrofar and Spain Farma, that the Tribunal adopt new interimmeasures when the previous provisional measures expired. The Tribunal decided to take the interimmeasures in question on 19 July.



Sweden

The Competition Authority took the view that Scandinavian Airlines System (SAS) had abused itsdominant position on the domestic airline market in Sweden on two occasions. In the first instance, theMarket Tribunal (Marknadsdomstolen) fined SAS SEK 1 million for infringing the competition rules onthe grounds that it had refused to sign an interlining agreement with a competitor.

In the other instance, the Competition Authority took the view that SAS’s application of the EuroBonusloyalty scheme (SAS Frequent Flyer Programme) on domestic lines contravened competition rulesbecause it represented an obstacle for other airlines wishing to set up or maintain competing domesticservices. The Authority therefore called on SAS to make changes to the way it applied EuroBonus fordomestic flights. At the request of SAS, the Market Tribunal issued a stay of execution pending its finalruling.

In a case concerning a restrictive practice, the Competition Authority held that Uponor AB, AB SvenskaWavin and KWH Pipe Sverige AB, which operate in the plastic pipes sector, had committed a numberof infringements of the competition rules, particularly by engaging in restrictive practices concerningmarket shares, price-fixing and exchanges of information on sales volumes, and by dividing up majortenders by municipal authorities in the water pipe sector. Their aim was to prevent, restrict or distortcompetition on the plastic pipes market, and they achieved these ends. The conduct of the threecompanies represented a serious distortion of competition because it effectively restricted the plastic pipemarket and a substantial part of the polyethylene pressure pipe market or placed those markets undertheir control for a long period of time. Accordingly, the Competition Authority requested the StockholmMarket Tribunal to impose fines on Uponor, Wavin and KWH Pipe of SEK 13 million, SEK 3 millionand SEK 1.5 million respectively.

In December the Competition Authority surveyed the five largest oil companies with a view to collatingdata for a report examining whether they had coordinated petrol price adjustments and discounts incontravention of the Swedish competition rules.

C — Application of the Community competition rules by courts in theMember States

The competition authorities of seven Member States only (Belgium, Finland, France, Germany, Italy, theNetherlands and the United Kingdom) have reported decisions by a national court applying theCommunity competition rules or referring a question to the European Court of Justice for a preliminaryruling.

This section does not include judgments delivered by courts with jurisdiction over decisions of nationalcompetition authorities. These judgments were mentioned in the previous section (Application of theCommunity competition rules by national authorities).

Belgium

On 7 May the Court of Cassation delivered an important judgment concerning the professions, especiallypharmacists. The Court held that, even if they are not traders within the meaning of Article 1 of theCommercial Code and perform a social function, pharmacists practise an occupation whose purpose isto trade in goods and services. They pursue an economic aim on a long-term basis and are as a generalrule undertakings within the meaning of Article 1 of the Belgian Competition Act.



Finland

There are no statistics on the application of the Community competition rules in Finland by the nationalcourts and, as far as can be established, there were no important judgments.

The käräjäoikeus (alioikeus) (court of first instance) in Tampere referred a question for a preliminary rulingto the European Court of Justice concerning the applicability of Article 81(1) to a marketing and collabora-tion contract concluded by a supplier and relating to the operation of a service station. Under the contract, theservice station is obliged to sell only certain oil and specialised products on its premises. (321)

France

The Council of State confirmed its line of decisions placing the competition rules within the body of lawsupervised by the administrative courts. Required to give a decision on public sector employmentcontracts concluded by Aéroports de Paris (a public corporation), the Council, before pronouncingjudgment, consulted the Competition Council in order to gather «all the information» enabling it todetermine whether the acts in question constituted an abuse of a dominant position within the meaningof Article 8 of the Order of 1 December 1986. (322)

In its judgment of 9 April 1999 confirming the prohibition of the Coca-Cola/Orangina merger of17 September 1998, the Council of State based itself to a considerable extent on Community decisions,in particular in its assessment of the relevant markets and the portfolio effect.

In a judgment of 6 April 1999, the Court of Cassation confirmed the validity, in the light of Article 81of the EC Treaty and exemption Regulation (EEC) No 4087/88, of a restraint-of-trade obligation imposedby a franchisor. The latter, a company named Phildar, had forbidden its franchisees to sell products of acompeting brand. The obligation was considered essential to the preservation of the network’s identityand to the homogeneity of the brand image «having regard to the field of activity and the nature of theproducts sold» (wools and textile goods).

Germany

The judgments of the German civil courts applying Community competition law and notified to theFederal Cartel Office are indicated below :

Judgments delivered in 1998 and received in 1999

1 Hamburg Regional Court, judgment of 13 November 1998 416 O 85/98 P-74/99

Esso AG, Hamburg

Tankstelle Koch GmbH, Dobra

Petrol distribution contract with a 20-year exclusive dealing clause held to be contrary to Article 85EC: not covered by Regulation (EEC) No 1984/83 nor, given the distribution of risks, by the noticeon commercial agents.



(321) Case C-214/99 Neste Markkinointi Oy v Yötuuli Ky, Eija Ritamäki, Anna-Kaisa Jukkola et Jari Jukkola.(322) Section judgment - EDA- -26 March 1999


Esso AG, Hamburg

Beyer + Schulz oHG, Magdeburg


3 Hamburg Regional Court, judgment of 13.11.1998 416 O 90/98 P-76/99

Esso AG, Hamburg

Bettina und Rüdiger Melswich oHG, Güsten

Petrol distribution contract with a 20-year exclusive dealing clause held to be contrary to Article 85EC: not covered by Regulation (EEC) No 1984/83 nor, given the distribution of the risks, by thenotice on commercial agents.


Esso AG, Hamburg

Manuela und Frank Linke oHG, Friedersdorf



Esso AG, Hamburg

Lutz John, Calbe



Esso AG, Hamburg

Annette und Jens Gottschalk oHG, Rochlitz


7 Cologne Regional Court , judgment of 18 November 1998 28 O 252/98 P-175/98

Sauer Anhydrit GmbH, Lauf a.d. Pegnitz

MIROS Mineralische Rohstoffe GmbH, Bergheim

The court finds that the damages agreement in question is not anticompetitive; in particular, neitherde facto nor de jure, is it an exclusive dealing agreement within the meaning of Article 85(1), nor isit void on account of a procedural defect for the purposes of Section 34 of the Law prohibitingrestraints of competition (GWB).



8 Frankfurt am Main Higher Regional Court, judgment of 15 December 1998 11 U(Kart)16/98 P-090/98

AE TV Cooperation GmbH, Heidelberg

Fédération Internationale de l’Automobile, Paris/F.

The rights of a TV production company (the applicant) are not infringed by the centralised marketingof television rights to motor racing events by the Fédération internationale de l’automobile (thedefendant) (Article 823(2) of the German Civil Code (BGB); Articles 85 and 86 of the EC Treaty;Article 826 of the Civil Code; Sections 1 and 3 of the Unfair Competition Act (UWG))

9 Frankfurt am Main Higher Regional Court, judgment of 22 December 1998 11 U (Kart) 32/94 P-140/91

Beck-Bau GmbH, Eschwege

Wilfried Rappe, Breuna-Wettesingen

There is no all-wheel surcharge within the meaning of Article 13 of the Short Haul Freight Tariff(GNT) where the parties have agreed flat-rate compensation below the rate for the journey; as theEuropean Court of Justice has held, the provisions of the Carriage of Goods Act (GüKG) are notcontrary to Article 85 EC.

Judgments delivered and transmitted to the Federal Cartel Office in 1999

1 Frankfurt am Main Regional Court, judgment of 6 January 1999 3/8 O 109/97 P-71/98

Churchill Trading System Textilhandels GmbH, Frankfurt/M.

Artesanos Camiseros SA, Madrid/E.

The franchising agreement between the parties is void on account of a procedural defect; non-applicability of the Regulation on franchise agreements (Section 34 of the GWB (old version);Regulation (EEC) No 4087/88)

2 Düsseldorf Regional Court, judgment of 6 January 1999 34 O 182/98 P-260/98

Mundipharma GmbH, Limburg/Lahn

AOK Bundesverband, Bonn

The joint setting of fixed amounts for morphine-based preparations by federations of statutory healthinsurance funds within the meaning of Article 35(3) of the Social Security Code (SGB) read inconjunction with Section 213 of the Social Security Code Regulation (SGB V) is contrary toArticle 85 of the EC Treaty (interim measures).

3 Düsseldorf Higher Regional Court, judgment of 19 January 1999 U (Kart) 17/98 P-136/98

Klaus Kohlgrüber, Bergisch-Gladbach

DOM Brauerei GmbH, Cologne

A beer supply contract containing an exclusive dealing and minimum purchase agreement is valid inprinciple, but the no-fault obligation to pay a lump sum compensatory amount contravenes publicpolicy (Section 34 GWB (old version); Article 85 of the EC Treaty; Article 138 of the Civil Code).



4 Düsseldorf Regional Court, judgment of 19 January 1999 4 O 114/98 P-140/98

New York Blood Center, Inc.; New York/USA

1. Octapharma AG, CH-Ziegelbrück; 2. Octapharma, A-Vienna and others.

The patent licensing contract is not covered by the Technology Transfer Regulation; the possibleinvalidity of the maturity clause does not mean that the whole contract is void; the written form isrespected (Sections 34, 20 of the GWB (old version); Regulation (EC) No 240/96; Article 85 of theEC Treaty; Article 20 of the Swiss Code of Obligations (OR)).

5 Mainz Regional Court, judgment of 22 January 1999 11 HKO 62/98 P-140/98

Deutsche Post AG, Bonn

Landal Green Parks GmbH

A reference to the European Court of Justice concerning the compatibility with Community law ofthe charging by Deutsche Post (the applicant) of a domestic rate in a borderline case of non-physicalremail (Article 25 of the Universal Postal Convention (UPC); Articles 59 et seq., 30 et seq., 90 and86 of the EC Treaty).

6 Celle Higher Regional Court, judgment of 24 February 1999 13 U (Kart) 162/98 P-175/96

Autohof Bismark GmbH, Münster

HDI Haftpflichtverband der Deutschen Industrie mutual insurance society (VVaG), Hannover

No right to demand that an insurance company waive settlement on the basis of its own rates forreplacement vehicles (Sections 1 and 3 of the UWG; Sections 25(1), 26(2) and 35(1) of theGWB (old version); Article 85 of the EC Treaty; Article 823 of the Civil Code; Article 240 of theCriminal Code (StGB)).

7 Hamburg Higher Regional Court, judgment of 31 March 1999 3 U 76/97 P-88/99

Sony Deutschland GmbH, Cologne

Stefan Bahrami, Cologne

The defendant’s vertical distribution system was effective, unexceptional and actually implemented(Section 1 of the UWG; Section 34 of the GWB (old version); Article 85(1) of the EC Treaty;Section 20(1) of the GWB; decision on costs in accordance with Article 91 a of the Code of CivilProcedure (ZPO)).

8 Traunstein Regional Court, judgment of 31 March 1999 1 HK O 1395/98 P-111/99

A + S Unipeg Pharma-Vertriebs GmbH, Weißenhorn

Herlmut Leipold, Bayerisch Gmain

The non-compete clause covering a period of three years after the departure of the applicant, a memberof the defendant company, is not contrary to Section 1 of the GWB or the former Article 85 of the ECTreaty, since it is not shown to have an appreciable effect («Urkundsprozeß» interim measures).

9 Düsseldorf Regional Court, judgment of 28 April 1999 34 O (Kart) 23/99 P-36/99

Süd-Apotheke, Inh. Dr. Wolfgang Reipen, Düsseldorf

AOK-BV, Bonn and other federations of statutory health insurance funds

The agreement between federations of statutory health insurance funds and pharmacists on the purchaseprices of formulations for cytostatic medicines does not restrict competition (Articles 823(2) and 1004of the Civil Code; former Article 85(1) of the EC Treaty; Section 1 of the UWG).



10 Frankfurt Higher Regional Court, judgment of 18 May 1999 11 U (Kart) 54/98 P-129/99

Klaus Zimber Inh. D. Parfümerie und Mode Zimber, Lahr

Eurocos Cosmetic GmbH, Groß-Gerau

No right to damages for non-delivery (inter alia), because the applicant, by selling products tounauthorised dealers, breached its obligations under the franchise agreement (Section 26(2) of theGWB (old version); former Article 85 of the EC Treaty).

11 Munich Higher Regional Court, judgment of 20 May 1999 U (K) 3915/98 P-119/97

Agip Dt AG and other oil companies in the Tankdienst-Gesellschaft Civil Code partnership (GbR),Munich

Flughafen München GmbH, Munich

The applicant may not claim the right to provide aviation fuel supply services to Munich airport ordamages for the wrong choice of authorised service providers (Article 86 of the EC Treaty;Directive 96/97/EC; Sections 20 and 33 of theGWB).

12 Düsseldorf Regional Court, judgment of 26 May 1999 34 O (kart) 219/98 P-11/99


Allkauf Reisen GmbH, Düsseldorf

Deutsche Post AG is entitled to charge the domestic rate for the distribution of mail from thedefendant’s German establishment posted in Denmark; Article 25 of the UPC does not infringeCommunity law.

13 Düsseldorf Regional Court, judgment of 26 June 1999 34 O 220/98 P-10/99


Comfort Card Services GmbH, Ratingen

The applicant may require the defendant to pay the domestic rate for its consignments of mailgenerated and posted in the Netherlands and addressed to German recipients (Article 25 of theUPC 1989; former Articles 59 and 86 of the EC Treaty).

14 Munich I Regional Court, judgment of 30 June 1999 21 O 5205/99 P-174/99

Hennig Arzneimittel GmbH, Flörsheim

Bundesausschuß der Ärzte und Krankenkassen, Cologne and others

No right to prevent the publication of directives of the Federal Committee of Doctors and HealthInsurance Funds precluding the right to prescribe certain categories of medicines (Section 1 ofthe UWG; Articles 81 and 82 of the EC Treaty; interim measures).

15 Düsseldorf Higher Regional Court, judgment of 27 July 1999 U (Kart) 33/98 P-97/97

Gödecke AG, Berlin

AOK Bundesverband, Bonn and federations of other health insurance funds

The adjustment of fixed amounts for medicines by federations of statutory health insurance fundsinfringes Community competition law (Articles 81(1) and 86(2) of the EC Treaty; Articles 823(2)and 1004 of the Civil Code).



16 Düsseldorf Higher Regional Court, judgment of 27 July 1999 U (Kart) 36/98 P-108/97

Intersan, Institut f. pharm. u. klin. Forschung GmbH, Ettlingen

AOK Bundesverband, Bonn and federations of other health insurance funds

The adjustment of fixed amounts for medicines by federations of statutory health insurance fundsinfringes Community competition law (Articles 81(1) and 86(2) of the EC Treaty; Articles 823(2)and 1004 of the Civil Code).

17 Düsseldorf Regional Court, judgment of 28 July 1999 34 O (Kart) 72/99 P-97/99

Byk Gulden Lomberg Chemische Fabrik GmbH, Konstanz

Bundesausschuß der Ärzte und Krankenkassen, Cologne

If there is no urgency, interim measures preventing the publication of the defendant’s directivesprohibiting the prescription of certain of the applicant’s products may not be applied for after thedefendant has discontinued publication (Section 1 of the UWG; former Articles 85 and 86 of the ECTreaty; Sections 1, 19, 20(1), 21(1) to (3) and 33 of the GWB).

18 Düsseldorf Regional Court, judgment of 28 July 1999 34 O (Kart) 71/99 P-91/99

Goedecke Aktiengesellschaft, Berlin



19 Düsseldorf Regional Court, judgment of 28 July 1999 34 O (Kart) 77/99 Q P-107/99

Chephasaar GmbH, ST. Inghert



20 Cologne Higher Regional Court, judgment of 3 August 1999 4 U 60/98 P-196/99

Auto Valen GmbH, Gütersloh

Chrysler Import Deutschland GmbH, Kerpen

An exclusive distribution contract is void because it infringes Regulation No 1495/95; the claim thatit is void after effective (renewed) termination by the defendant does not constitute a breach of trust.

21 Düsseldorf Regional Court, judgment of 4 August 1999 34 O (Kart) 111/99 P-145/99

Mannesmann Mobilfunk GmbH, Düsseldorf

DeTeMobil Deutsche Telekom MobilNet GmbH, Bonn

No obligation on the defendant to offer its C network customers free call diversion when they changenot only to its DI network but also to the applicant’s D2 network (former Article 86 of the EC Treaty;Sections 19(4)(4), 20 and 33 of the GWB; interim measures).



22 Düsseldorf Higher Regional Court, 26.8.1999 U (Kart) 3/99 P-260/98

Mundipharma GmbH, Limburg/Lahn

AOK Bundesverband, Bonn

The joint setting of fixed amounts for morphine-based preparations by federations of statutory healthinsurance funds within the meaning of Article 35(3) of the Social Security Code (SGB) read inconjunction with Section 213 of the Social Security Code Regulation (SGB V) is contrary toArticle 81 of the EC Treaty (interim measures).

23 Düsseldorf Regional Court, judgment of 31 August 1999 34 O 194/98 P-280/98

Procter & Gamble GmbH, Schwalbach a.R.

AOK Rheinland, Düsseldorf and nine other health insurance funds

A dispute about the setting of fixed amounts for incontinency products within the meaning ofArticle 35(3) of the Social Code (SGB), in breach of former Articles 85 and 86 of the EC Treaty, isa matter for a civil court (Section 17a of the Judicature Act (GVG); Section 51(2) of the SocialSecurity Court Act (SGG); Section 87(1) of the GWB).

24 Düsseldorf Higher Regional Court, judgment of 28 September 1999 U (Kart) 16/99 P-36/99

Süd-Apotheke, Inh. Dr. Wolfgang Reipen, Düsseldorf

AOK-BV, Bonn and other federations of statutory health insurance funds

The agreement between federations of statutory health insurance funds and pharmacists on the purchaseprices of formulations for cytostatic medicines does not restrict competition (Articles 823(2) and 1004of the Civil Code; former Article 85(1) of the EC Treaty; Section 1 of the UWG).

25 Munich Higher Regional Court, judgment of 21 October 1999 U (Kart) 3153/99 P-111/99

A + S Unipeg Pharma-Vertriebs GmbH, Weißenhorn

Herlmut Leipold, Bayerisch Gmain

The non-compete clause covering a period of three years after the departure of the applicant, amember of the defendant company, is not contrary to Section 1 of the GWB or former Article 85 ofthe EC Treaty, since it is not shown to have an appreciable effect («Urkundsprozeß» interimmeasures).

26 Düsseldorf Regional Court, judgment of 27 October 1999 34 O (Kart) 221/98 P-21/99


Der Schlanke Schnitt Versand GmbH, Langenfeld

The applicant is entitled to payment of the domestic rate for the defendant’s consignments posted abroadfor non-physical remail (Article 25 of the UPC, 1989; former Articles 59 and 86 of the EC Treaty).

Italy

a) Decisions of national courts

Monza Court, judgment of 23 February 1999: the Court held that the calculation of the interest due fromcustomers to banks under the quarterly capitalisation clause was illegal on the grounds, among others,that the Italian Banking Association’s uniform rules imposing quarterly capitalisation on banks werecontrary to Article 81.



b) References for a preliminary ruling

References to the Court of Justice under Article 234 included the request by the Court of First Instanceat Pinerolo for a preliminary ruling on the applicability of Article 81(1) and (3) to the setting of minimumand maximum lawyers’ fees by the National Bar Council.

Netherlands

The Dutch courts applied Community competition law in the following decisions. It should be noted that,even where they apply the Dutch Competition Act, the Dutch courts are in fact interpreting Articles 81and 82, since the Act is modelled on the Community competition rules.

— Order of the President of the Groningen District Court (Rechtbank Groningen), 28 January 1999,Volvo Nederland/Autobedrijf W.F. Nijburg

Interim measures, Regulation (EEC) No 1475/95; a new distribution agreement lasting two years wasregarded as contrary to Article 5(2)(2) of the Regulation; the provision concerning duration did not,however, mean in this particular case that the agreement was void, since the intention was to applyto the distributor (already in possession of a contract for a longer period), the same terms as agreedwith other distributors when the Regulation had come into force. The protection given to distributorsby the Regulation against (unduly) short-term contracts was not compromised therefore.

— Supreme Court (Hoge Raad), 29 January 1999, Zuivelcoöperatie Campina Melkunie/De Bie andothers

The Supreme Court rejected a final appeal against the ‘s-Hertogenbosch Appeal Court’s judgmentdeclaring void a cooperative’s disaffiliation scheme which, in conjunction with an exclusive supplyobligation, had not only the effect but also the purpose of restricting competition for purchasers andwhich, in addition, if it had been notified to the Commission, would very probably not have beenexempted under Article 81(3).

— ’s-Hertogenbosch Court of Appeal (Gerechtshof ’s-Hertogenbosch), 15 February1999, Thijm/DieselBenelux

Application for interim measures; clothing sector; the Court held that Article 81(1) was not infringed,given that the existence of a retailing ban was not proven; it considered that there was no reason toprohibit a supplier from applying a distribution system which had quantitative features as well asqualitative ones; the Court also considered that the system was not contrary to Article 82, becausethere was no need to consider that Diesel Benelux had a dominant position on any large segment ofthe market (luxury and designer jeans/leisurewear or jeans and leisurewear ensembles).

— Amsterdam Court of Appeal (Gerechtshof Amsterdam), 15 April 1999, Heineken/P.S.E. Belgium

Application for interim measures; non-compete clause; no significant influence (likely to restrictcompetition) on the conference-organising market; only a very small number of conferences in theNetherlands and the European Union is involved; the restraint of trade is also of a limited durationand applies to a limited region.

— Rotterdam District Court (Rechtbank Rotterdam), 9 September 1999, Koninklijke NederlandseVoetbalbond (KNVB)/Feyenoord

Dispute over the ownership of various rights relating to football matches; KNVB should be regardedas an association of undertakings within the meaning of Article 81(1) of the EC Treaty; the KNVB



rules in question have an adverse effect on competition on the Dutch market, and on trade betweenMember States, since KNVB is the only football federation of which all the clubs in the premierdivision are members.

— The Hague Court of Appeal (Gerechtshof ‘s-Gravenhage), 30 September 1999, OnderlingeWaarborgmaatschappij Zorg en Zekerheid/Theo de Graaf Brillen en Contactlenzen

Application for interim measures; a health insurance body may be regarded, in the case in point, asan undertaking within the meaning of Article 81(1), since, when offering the supplementaryinsurances in question, it is not acting in performance of its statutory task.

— Supreme Court (Hoge Raad), 15 October 1999, Driessen/Benegas

Final appeal, exclusive purchasing contract; former Article 85(1) is applicable to agreementsbetween undertakings; the fact that the buyer of the gas does not resell it but consumes it itself byno means precludes the buyer from being an undertaking within the meaning of Article 85(1).

United Kingdom

Anumber of cases concern beer ties. In Passmore v Moreland plc, the Court of Appeal held that the purchas-ing contract in question no longer infringed Article 81(1) after the transfer of the ownership of Inntrepreneurto Moreland plc, a smaller company. In other cases — Trent Taverns Ltd v Sykes, Walker Cain Ltd and IndCoope Ltd v McCaughey, Inntrepreneur v Langton and Inntrepreneur v Birch and others —, the publicans,who maintained that the agreements in question were covered by Article 81(1) and therefore void, were notsuccessful. While, in Trent Taverns, the Court of Appeal decided that there was no need to grant the appli-cant’s request to refer the case to the Court of Justice under Article 234, it did so in Courage Ltd v Crehan; thelatter case concerns the question whether a party to a prohibited agreement has a right to damages.

D — Application of the 1993 notice on cooperation between theCommission and national courts

In 1999 the Commission’s Competition Directorate-General replied to five requests from courts in theMember States pursuant to the 1993 notice.

Four of these requests came from Spanish courts and related to service-station contracts. Only one —the first mentioned — concerned a point of law.

On 18 March the competent Director replied to a request from the President of the Administrative DisputesChamber of the National High Court (Sixth Division) dated 4 November 1998. The request was for an analy-sis, in the light of Community competition law and in particular of Regulation (EEC) No 1984/83, of a long-term contract for the exclusive supply of fuel between an oil company and a service station owner. It con-cerned the appeal by the service station owner against a decision of the Competition Court confirming a res-olution of the Directorate-General for Competition in the Spanish Ministry of Economic Affairs declaringthe disputed contract to be consistent with Community law and Spanish competition law. In his reply, the Di-rector made some general comments on the aspects of Community competition law raised by the request:these were, first, the distinction between a commercial agent and a reseller, taking account in particular of theCommission notice of 1962 on exclusive dealing contracts with commercial agents, and, second, the inter-pretation of Article 12 of Regulation (EEC) No 1984/83 as regards the maximum duration of exclusive pur-chasing obligations if they were to qualify for a block exemption.

On 21 June Court of First Instance No 39 in Madrid asked the Competition Directorate-General for acertified copy of the letter of 18 March referred to in the previous paragraph. The dispute in question



concerned the oil company and the service station owner who were the parties to the contract which gaverise to the above proceedings. The competent Director replied to the court on 15 July, sending a copy ofthe document requested.

Another Spanish civil court, Court of First Instance No 38 in Barcelona, asked the CompetitionDirectorate-General on 31 May to certify the authenticity of a comfort letter it had sent in the past to anoil company in Case IV/33.503 (see point 226 of the Twenty-third Report on Competition Policy (1993),page 361 of the Twenty-fourth Report on Competition Policy (1994) and Commission press releaseIP/94/596 of 30 June 1994). The competent Director confirmed the authenticity of the letter on 23 June.

Likewise on 23 June, another Spanish civil court, Court of First Instance No 50 in Barcelona, also askedfor confirmation of the authenticity of the comfort letter referred to in the previous paragraph. Thecompetent Director replied on 26 July.

On 18 May the competent Director replied to the Helsingborg District Court, which had asked when theCommission thought it could take a decision in Case IV/36.568 Scandlines Sverige/Port of Helsingborg.The Director stated that the Commission had completed the preliminary stage of its investigation. If astatement of objections were sent in this case, he explained, allowance would have to be made both forthe time given to the parties to submit their observations and for the holding of a hearing. It was unlikely,therefore, that a decision could be taken before the fourth quarter. If, however, the Commissionconcluded that the complaint was not justified, it would have to give the plaintiff time to present itsobservations; therefore, a decision rejecting the complaint could be taken in the autumn.

E — Application of Articles 81 and 82 by national competitionauthorities

Opening remarks

1. The present summary relates only to the enforcement of Articles 81 and 82 of the EC Treaty bythe administrative authorities of the Member States, not by the judiciary, as those articles are directlyapplicable and are therefore enforceable by the courts of each Member State without exception.

2. Their application by the administrative authorities is subject to the limitations provided for, infavour of the Commission, by Article 84 of the Treaty and Article 9(3) of Regulation No 17.



Application Source of law/Additional details

Yes/No

Austria No

Belgium Yes Law of 5.8.1991, Art. 53, effective from 1.4.1993: when the Belgian authori-ties have to decide, under Art. 84 of the EC Treaty, on the admissibility ofagreements and on abuse of a dominant position in the common market, thedecision is taken by the authorities stipulated in that Law pursuant toArticles 81(1) and 82 of the Treaty, according to the procedure and the penal-ties provided for in that Law.

Denmark No

Finland No The working group established by the Ministry of Commerce and Industryopted out of this possibility (report of January 1997)

Conclusions

1. In comparison with 1998, the situation has not changed in 1999.

2. In eight of the 15 Member States, the administrative authorities can directly apply Articles 81 and82, whereas in the other seven they cannot.

3. The eight are Belgium, France, Germany, Greece, Italy, the Netherlands, Portugal and Spain. Theother seven are Austria, Denmark, Finland, Ireland, Luxembourg, Sweden and the United Kingdom.



France Yes Order 1.12.1986, Art. 56bis (inserted by the Act of 2.12.1992).Under the Order, the Minister for Economic Affairs and Ministry officials onthe one hand and the «Conseil de la Concurrence» (Competition Council) onthe other, have the powers to apply Articles 81 and 82 that they normally have to apply French competition law.

Germany Yes GWB (Gesetz gegen Wettbewerbsbeschränkungen), Article 47In order to exercise the powers conferred on the authorities of the MemberStates by Articles 84 and 85 of the EC Treaty, and by the regulations based onArticle 83 of the Treaty, the «Bundeskartellamt» is competent as regards the application of the GWB.

Greece Yes Nomos (Act) 703/1977 peri prostassias tou elephterou antagonismou (on the protection of free competition), as amended by Article 13b(3) of Nomos (Act) 2296/1995: the Competition Commission and its Secretariat perform the tasks which have been assigned to the national authorities of the Member States by Articles 84 and 85 of the Treaty establishing of the European Eco-nomic Community, and by regulations adopted pursuant to Article 83 of the Treaty in conjunction with other enabling provisions thereof. To perform these tasks the Competition Commission and its Secretariat have the powers granted to them under the present Act.

Ireland No

Italy Yes Legge comunitaria 1994, Article 54(5) : The «Autorità garante della concor-renza» applies Articles 81(1) and 82, using the powers conferred upon it by the national law on competition (Act No 287 of 10 October 1990).

Luxembourg No

Netherlands Yes Competition law («Mededingingswet») of 22 May 1997, Article 84: the Di-rector General of the Competition Authority («Mededingingsautoriteit») is empowered under the regulations based on Article 83 of the EC Treaty to ap-ply Articles 81(1) and 82 of the Treaty.

Portugal Yes Decreto-lei 371/93, de 29 de Outubro, Article 12(2): the Directorate General for Competition and Prices is empowered to carry out the tasks for which the authorities of the Member States are responsible under the regulations based on Article 83 of the EC Treaty.

Spain Yes «Real Decreto 295/1998, de 27 de febrero» regarding the application in Spain of the European competition laws:Art. 1: «El Tribunal de Defensa de la Competencia» is the competent authori-ty for the application in Spain of Articles 81(1) and 82 of the EC Treaty.

Art. 3: «El Servicio de Defensa de la Competencia» is the body entrusted with carrying out the procedures for implementing Articles 81(1) and 82 of the EC Treaty.

Sweden No

United NoKingdom

VI— STATISTICS

A — Articles 81, 82 and 86 of the EC Treaty + Article 65 of the ECSCTreaty

1. Activities in 1999

1.1. New cases opened in 1999


STATISTICS 367

(323) An ex-officio case is one opened on the Commission’s own initiative.

Type Number %

Notifications 162 42

Complaints 149 38

Ex officio (323) 77 20

Total 388 100

By formal decisions By informal procedure

Infringement of Article 82 with fine 10 Comfort letter 81/1 146

Exemption 18 Comfort letter 81/3 36

Rejection of complaint 34 Rejection of complaint 64

Non-opposition 3 Administrative closure 255

Infringement of Article 65 ECSC 0 Discomfort letter 13

Article 86 decision 3

Total 68 TOTAL 514

1.2. Cases closed during 1999

Cases open at the end of the calendar year

1996 1997 1998 1999

Notifications 726 589 538 425

Complaints 368 450 441 402

Ex officio 127 223 225 186

Total 1 221 1 262 1 204 1 013

2. Four-year overview

2.1. Evolution of stock of cases



(324) As amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ L 180, 9.7.1997).

New cases registered during the year

1996 1997 1998 1999

Notifications 206 221 216 162

Complaints 159 177 192 149

Ex officio 82 101 101 77

Total 447 499 509 388

2.2. Evolution of input

Cases closed during the year

1996 1997 1998 1999

Formal decisions 21 27 42 68

Informal procedures 367 490 539 514

Total 388 517 581 582

2.3. Evolution of output

1994 1995 1996 1997 1998 1999

Cases notified 95 110 131 172 235 272

Notifications withdrawn 6 4 5 9 5 7in phase I

Notifications withdrawn 0 0 1 0 4 5in phase II

Total cases closed by final 91 109 125 142 238 270decision

1. Notifications received 1994-99

B — Council Regulation (EC) No 4064/89 of 21 December 1989 on thecontrol of concentrations between undertakings (324)


STATISTICS 369

1996 1997 1998 1999

Article 6(1)(a) 6 4.5% 4 2.5% 6 2.5% 1 1%

Article 6(1)(b) without undertakings 109 91% 118 87.5% 207 87.5% 236 86%

Article 6(1)(c) 6 4.5% 11 8.5% 12 5% 20 7.2%

Cases in which undertakings were 0 0% 2 1.5% 12 5% 16 5.8%accepted during phase I

Total 121 100% 135 100% 237 100% 273 100%

2. Article 6 decisions 1996-99

1996 1997 1998 1999

Article 8(2) with conditions and 3 42% 7 70% 5 55.% 8 89%obligations

Article 8(2) without conditions and 1 16% 1 0% 2 22.5% 0 0%obligations

Article 8(3) prohibition 3 42% 1 10% 2 22.5% 1 11%

Article 8(4) divestiture orders 0 0% 2 20% 0 0% 0 0%

Total 7 100% 10 100% 9 100% 9 100%

3. Article 8 decisions 1996-99

1996 1997 1998 1999

Article 9 (request by a Member State) 4 11 4 10

Article 9 (total or partial referral to a 3 7 4 5Member State)

Article 22(3) 1 1 0 0

Total 8 19 8 15

4. Referral decisions 1996-99

1996 1997 1998 1999

Article 7(2) (continuing suspensive effect) 17 36 10 0

Article 7(4) derogation from suspension 3 5 13 7

Total 20 41 23 7

5. Article 7 decisions (suspension of concentrations) 1996-99



Agriculture Transport Fisheries Coal Other Total

Notified aid N 159 17 11 5 242 434 47.69%

Non-notified aid NN 133 12 16 0 108 269 29.56%

Existing aid E 23 2 1 0 9 35 3.85%

Initiation procedures C 47 17 4 0 104 172 18.90%

Total 362 48 32 5 463 910

39.78% 5.27% 3.52% 0.55% 50.88%

2. Cases being examined as at 31 December 1999


Notified aid N 236 30 42 1 234 543 71.07%


Existing aid E 0 2 0 0 2 4 0.52%


Total 286 42 52 1 383 764

37.43% 5.50% 6.81% 0.13% 50.13%

3. Cases dealt with in 1999 according to the register in which they were recorded

3.1. Cases forming the subject-matter of a decision in 1999

Agriculture Transport Fisheries Coal Other TOTAL

Notified aid N 236 29 40 0 213 518 72.75%


Existing aid E 0 0 0 0 0 0 0.00%


Withdrawal by MS 33 0 0 0 0 33 4.63%

Total 321 35 52 0 304 712

45.08% 4.92% 7.30% 0.00% 42.70%

3.2. Cases closed in 1999


Notified aid N 292 32 43 3 460 830 83.75%


Existing aid E 0 3 0 0 2 5 0.50%

Total 331 43 55 3 559 991

33.40% 4.34% 5.55% 0.30% 56.41%

C — State aid

1. New cases registered in 1999


STATISTICS 371

Agriculture Transport Fisheries Coal Other TOTAL

No objection 245 32 52 1 258 588 71.01%

Decisions as Initiation 12 5 0 0 62 79 9.54%part of theformal scrutinyprocedure

Positive 13 2 0 0 28 43 5.19%

Negative 12 1 0 0 30 43 5.19%

Conditional 0 0 0 0 3 3 0.36%

Appropriate measures 0 2 0 0 0 2 0.24%

Other decisions 4 0 3 0 63 70 8.45%

Total 286 42 55 1 444 828

34.54% 5.07% 6.64% 0.12% 53.62%

4. Decisions taken by the Commission in 1999

Decisions taken 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

No objection 259 415 493 473 399 440 504 373 385 308 258

Decisions as Initiation 36 34 54 30 32 40 57 43 68 66 62part of the formal scrutinyprocedure

Positive 21 20 28 25 19 15 22 14 18 16 28

Negative 16 14 7 8 6 3 9 23 9 31 30

Conditional 0 0 2 7 1 2 5 3 5 8 3

Appropriate measures/ 11 9 13 9 10 27 22 18 17 31 63other decisions

Total 343 492 597 552 467 527 619 474 502 460 444

5. Evolution over the period 1989-99

D A B DK E FIN F EL IRL I L NL P UK S EU

No objection 61 13 9 5 54 7 12 3 9 43 0 14 7 13 8 258

Decisions as Initiation 16 1 4 0 11 0 6 0 1 18 0 3 1 1 0 62part of theformal scruti-ny procedure

Positive 13 0 1 0 2 1 1 1 1 6 0 1 0 1 0 28

Negative 14 0 0 0 3 0 2 2 0 8 0 0 0 1 0 30

Condi- 1 0 0 0 0 0 0 0 0 1 0 1 0 0 0 3tional

Appropriate measures 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other decisions 19 0 0 0 9 0 8 2 1 18 0 5 0 1 0 63

Total 124 14 14 5 79 8 29 8 12 94 0 24 8 17 8 444

6. Decisions broken down by Member State

VII — STUDIES

The Directorate-General for Competition commissioned 15 studies in 1999. Ten of them will becompleted in 2000. Of the five studies completed this year, three must remain strictly confidential andwill not be covered in this report. Two other confidential studies were completed; only their titles aregiven below:

Study concerning Belgacom’s fixed-mobile convergent Duet serviceMarket definition in European sports broadcasting

Nine studies commissioned the previous year were also completed in 1999. Four of them concernindividual competition cases and must remain confidential; they are therefore not covered here. Twoother confidential studies were completed; only their titles are given below:

Co-reinsurance poolsThe effects of air fare consultations on the level of fares

The three other studies completed in 1999 are summarised below:

Buyer power and its impact on competition in the food retail distributionsector of the EU

The last couple of decades have seen considerable changes in retailing across most developed countries,with the emergence of new store formats, the increased prevalence of retail chains, the development ofout-of-town and edge-of-town retail parks, and significant investment in new technology and improvedlogistics. At the same time, the sector has seen the rise of giant corporations controlling significantproportions of overall domestic retail sales, and the emergence of internationally operating retail groups.The size of these retailers now ranks them amongst the largest companies in their countries of origin.

While increased concentration of retailing has brought clear associated benefits from improvedefficiency and service, there may be cause for concern that it may facilitate the ability of retailers toexercise market power, as both buyers and sellers. However, it may be argued that buyer power can besocially beneficial where it can be used to counter the market power of manufacturers. Here, the exerciseof this power prevents manufacturers from exploiting their position as fully as they could if they werefaced with a less concentrated retail sector. The buyer power of retailers could thus result in lowerwholesale prices which, assuming effective retailer competition, would be passed on to consumers inlower final prices. Lower final prices would mean higher output and higher welfare.

The contrary view is that buyer power may ultimately damage economic welfare. Although it may lead tolower prices in the short run, there may be longer-term detrimental effects resulting from buyer power. In thecontext of retail grocery markets it may have the effect of forcing manufacturers to reduce investment in newproducts or product improvements, and to eliminate secondary brands and weaken primary brands, causingwholesale prices to small retailers to rise, further weakening them as competitors. In other words, buyer pow-er may have the effect of considerably distorting both retail and producer competition.

There is considerable uncertainty over the net effects of increased buyer power, and this has led to adebate over the appropriate policy to adopt towards it. This study is specifically concerned with the buyer


STUDIES 373

power of retailers. It seeks to draw on new economic insights to develop a framework for examiningbuyer power, and to determine the net economic effects in particular instances and with regard to specificmanifestations of buyer power. It also presents an empirical study of the food-retailing sector in the EU.

Part I of the report examines the theoretical and policy underpinnings. It contains four chapters.Following the introduction in Chapter 1, Chapter 2 reviews and analyses the economic theory of buyerpower. From this analysis, Chapter 3 puts forward a set of buyer power propositions and a structuredframework for considering the net welfare effects of buyer power. Then, the definition of the term “buyerpower” is considered in Chapter 4, along with its economic measurement and the definition of therelevant market. This is followed in Chapter 5 by a brief commentary on present competition policy andlaw in respect of buyer power. Separate appendices at the end of the report supplement this analysis withdetailed consideration of three key aspects: policy towards retail mergers, the competition effects ofcross-border retailer alliances, and the competition and welfare effects of Efficient Consumer Response(ECR) and other partnership activities between major retailers and key suppliers.

Part II moves on from the theoretical and policy analysis to consider the actual structure and nature offood retail distribution in Europe. It presents a formal statistical analysis of retailing across the EuropeanUnion, providing a bridge between the theoretical discussion of Part I and the case studies of Part III.Part II contains two chapters. The first, Chapter 6, draws on existing statistical sources to build up apicture of the key structural dimensions of the sector. Chapter 7 takes the statistical analysis further byconstructing an entirely new database — the EU Retail Food Market Share Matrix — which is designedto yield an integrated and internally consistent statistical mapping of the structure of the sector at boththe aggregate EU and national levels, and for the leading firms therein.

Part III provides case analysis from four representative countries — France, Germany, Spain and the UK— which considers for each country the characteristics and evolution of market structure, competitionin food retailing, retailer and buying power, own-label development and any other special marketfeatures. Each of the country reports also contains specific information on the production and distributionof three representative product groups — washing detergents, coffee (instant and roast/ground), butterand non-butter spreads (margarine) as illustrations of the nature of supply and buyer activity in the sector.The four case studies are set out in successive chapters (8-11) and conclusions from them, both in termsof cross-country comparisons and product comparisons, are contained in a summary chapter (12).

Chapter 13 concludes the report, summarising a number of “headline facts” and drawing some generalconclusions about the state of competition and the extent and effects of buyer power in the food retaildistribution sector of the European Union. The authors do not see that at present there is a pressing needfor new policies (i.e. beyond existing ones) to be developed for Europe to cater for the specific problemof high buyer power. Second, by implication, whilst the Economic Dependency laws developed in someEuropean states have attractive features, they also can easily create perverse incentives and could ossifycompetition. Therefore, so far as the Community is concerned, the authors consider that the case forintroducing them has not been proven, though they accept that the economic, social and political contextmay make such policy measures attractive to particular Member States but not to others.

The study can be accessed at http/europa.eu.int/comm/dg04/publications/studies/bpifrs/. The paperversion was recently published under the number ISBN 92-828-7938-0.



Economic viability of digital audio-visual platforms

This study establishes the main components of a digital audio-visual service’s profit and loss accountand financing plan, whatever broadcasting medium it uses, and produces a model for simulating aplatform’s profit and loss trend over a five-year period with reference to key variables.

The report begins by outlining some concepts and principles that explain the choices made in the courseof the study and gives a definition of digital platforms together with a description of their industrialorganisation.

It goes on to describe the typical structure of the profit and loss account and the financing plan; this isfollowed by a discussion of the key variables, i.e. each of the income and expenditure items.

Lastly, the study presents the evaluation tool, giving explanations of the calculations used and someexamples of simulation.

Conclusions of the study

In comparable conditions of development, a marked inequality between broadcasting methods wasfound: satellite broadcasting becomes profitable in the third year, terrestrial at the end of the fourth yearand cable does not break even until after more than five years of operation.

As regards both the operating result and financing requirements, the size of the market does not changethe number of years needed to break even; it affects the levels of profit and loss and the amount offinancing needed, but does not change the length of time required.

A satellite operator has relatively low financing requirements, and a terrestrial operator slightly higher.The financing requirements of a cable operator are enormous in the first year, after which they soon tailoff to nothing.

Follow-up to the fixed/mobile inquiry started in 1998 (325)

The Commission was able to close the investigation into mobile and fixed telephony prices followingsignificant reductions throughout the EU.

The Commission decided to close the EU-wide investigation into fixed and mobile operators’interconnection rates, after finding that prices had fallen significantly (by more than 80% in some cases)in response to its investigation. In conducting the inquiry, launched in February 1998, the Commissioncooperated closely with national competition authorities and national regulatory authorities (NRAs) inthe Member States. Following the inquiry’s successful conclusion as regards fixed and mobile telephonyrates, the Commission intends to continue scrutinising competitive conditions in the context of an inquiryinto the telecommunications sector, which will address the main telecommunications issues, includingcurrent roaming conditions between mobile operators.


STUDIES 375

(325) See press release IP/99/298, 4.5.1999.

After initially investigating 45 companies in the 15 Member States of the EU, the Commission decidedin July 1998 to conduct a more in-depth inquiry into 14 cases where it suspected a possible distortion ofcompetition. (326) These cases fall into three categories:

i) Mobile-to-fixed termination rates:

Cases involving possible discrimination by incumbent telecommunications operators against mobileoperators as regards charges for the termination of mobile calls in the public telephony network. TheCommission opened investigations into four cases involving incumbent operators in Germany, Spain, theNetherlands and Italy respectively;

ii) Income retained by fixed operators on fixed-to-mobile calls:

Cases involving income retained by telecommunications operators on calls from their public switchedtelecommunications networks (PSTN) to mobile networks. The Commission opened eight investigationsinto cases involving telecommunications operators in Belgium, Ireland, the United Kingdom (BT),Austria, Spain, the Netherlands, Italy and Germany.

iii) Mobile termination rates:

Cases involving the termination rates charged by mobile operators for terminating calls in their networks.The Commission opened five investigations in total, one for each mobile operator; two of the companiesconcerned are based in Italy and three in Germany.

As regards the rates charged by fixed operators to mobile operators for terminating mobile calls in thePSTN, prices have fallen significantly (by up to 82%) in four of the six cases investigated. All theoperators are now applying rates below or close to the best practice reference rates set by the EU.

As regards the income retained by fixed operators on the charge for fixed-to-mobile calls, marginsrecorded in 1999 are lower than 1998 margins by between 31% and 80% in the cases investigated.

The Commission will be able to close the remaining cases (Deutsche Telekom and Telekom Austria)once these operators have made the necessary reductions.

The Commission also closed its investigations into rates charged by the German and Italian mobileoperators for terminating calls in their respective networks as the national authorities concerned wereconducting their own inquiries.

Background

A) Mobile-to-fixed call termination

Germany

In July 1998 the Commission found that Deutsche Telekom was overcharging for the termination ofmobile calls in its fixed network. In February of this year, the German NRA, RegTP, informed the



(326) See press releases IP/98/141, 9.2.1998; IP/98/707, 27.7.1998; and IP/98/1036, 26.11.1998.

Commission that, once its inquiry was completed, it would take a formal decision within a few weeks.As it generally does when action is being taken at national level, the Commission suspended its owninvestigation into this case. The file will be closed following implementation of the measures plannedby RegTP.

Italy

In July 1998 the Commission found that Telecom Italia’s termination charges for mobile calls to itsnetwork were higher than the termination charges for calls from the fixed network. Telecom Italiasubsequently informed the Commission that it was now charging mobile and fixed operators the sameprice for terminating calls in its PSTN. This new system of charges also resulted in a significantreduction in costs for mobile operators. The Commission was satisfied that the discrimination to whichit had objected had ceased and it therefore closed this investigation.

Spain

According to the Commission, the Spanish incumbent operator, Telefónica, was charging mobileoperators excessively for call termination in its network. Subsequent to the Commission’s opening itsinvestigation into the case, the Spanish NRA, CMT, imposed changes on Telefónica’s call terminationpolicy. The Spanish Government approved Telefónica’s reference interconnection offer after the operatorhad complied with CMT’s requirements. The Commission was satisfied with the result and closed theinvestigation.

Netherlands

In December 1998 the Dutch NRA, OPTA, informed the Commission that its own investigation showedthat there may have been a difference in prices charged by KPN to mobile and fixed operators for calltermination in its network, but that this difference had meanwhile been abolished by KPN, which wasnow applying a single charge for call termination. This charge applied to fixed and mobile operators anddid not make any distinction on the ground of the call’s origin. This situation was confirmed by otherDutch operators questioned by OPTA. The Commission therefore closed the case-file.

B) Income retained on calls

Netherlands

OPTA informed the Commission in November 1998 that it had concluded its investigation into the newretail charges proposed by KPN. As part of its investigation, OPTA checked whether the fixed part offixed-to-mobile calls was actually calculated on the basis of cost and indicated to the Commission thatit was satisfied with the results. The Commission therefore closed the case.

Belgium

The Belgian incumbent operator, Belgacom, informed the Commission of its new call terminationcharges for the two mobile operators. The prices were backdated to September 1998, which means thatBelgacom’s retention rate fell to just below the level at which the Commission initiates a formalinvestigation. The Commission considers the case closed.


STUDIES 377

Ireland

The Commission stated in July 1998 that the Irish incumbent operator, Telecom Éireann, was possiblyoffsetting reductions in its mobile services’ call termination charges by retaining a greater margin onfixed-to-mobile calls. However, Telecom Éireann subsequently announced new retail charges for suchcalls, significantly reducing the margin it retained on them. The Commission was satisfied with the newcharges and closed its investigation.

United Kingdom

In the United Kingdom, the Monopolies and Mergers Commission (MMC) concluded that BT’s marginswere excessive and recommended that the British NRA, Oftel, see that the margins were reduced andsubjected to price control for the following two years. Oftel informed the Commission that it intendedto implement all the changes indicated and was in the process of finalising the necessary regulatorymeasures. The Commission therefore closed the case.

Italy

The incumbent Italian operator, Telecom Italia, informed the Commission that new rules applied to fixedoperator retentions as of January. The Italian NRA modified fixed-to-mobile retail charges and thissignificantly reduced Telecom Italia’s margin. On 17 March the Italian authority informed theCommission of the new retail pricing structure for fixed-to-mobile calls, to become effective from17 April. It presented its decision as an interim stage prior to the adoption of a new pricing structure forfixed-to-mobile calls. The Commission was satisfied with the rate decrease and closed its investigation.

Spain

Telefónica provided the Commission with new figures for its retention rates in November 1998. It alsoprovided a copy of the interconnection agreements it had concluded with the two mobile operators, Airteland Telefónica Móviles. The agreements show in detail how the reduction is distributed between theoperators. The data clearly show a considerable reduction in the revenue for the fixed network, thusdispelling the Commission’s concerns. The latter therefore considered the problem resolved and closedthe case.

C) Call termination in mobile networks

Germany

Since November 1998 RegTP has been cooperating with the Federal Cartel Office in Germany, asprovided for by law, in an investigation into a case of alleged collusion between T-Mobil, Mannesmannand E-Plus over call termination charges in their respective networks. The Commission thereforesuspended its own investigation pending the results of the domestic inquiry.

Italy

The Commission monitored progress in the proceedings initiated in January by the NRA after TelecomItalia Mobile (TIM) and Omnitel simultaneously decided to cut peak rates while increasing business andoff-peak family rates. As in the German case (above), the Commission suspended its own investigation



pending the outcome of the domestic inquiry. The Commission remained in close contact with the NRA,which was to have taken a final decision on these rates by July.

D) Quantitative assessment

In order to quantify changes in the income retained and in the mobile-to-fixed termination charges underinvestigation, the Commission asked independent consultants to conduct a new market survey. To ensurea fair and consistent comparison between the 1998 figures, on the basis of which it had been decided toopen the inquiry, and the figures for March 1999, the consultants were asked to repeat two of the testscarried out in the original study. The results were as follows:

a) Discrimination in mobile-to-fixed termination charge cases

Mobile-to-fixed termination charges were compared with fixed-to-fixed call termination charges andwith the EU “best practice” reference rate. This reference rate was calculated on the basis of anassessment carried out in 1998 by KPMG. For the updated report, the consultants compared the chargesgiven in the previous report with the current rates in four countries: Germany, the Netherlands, Spainand Italy. They found that, in all cases, changes to the structure of fixed operators’ call terminationcharges meant that there was no longer any discrimination against mobile operators. All operators werenow either below or close to the Union’s best practice rates.

Germany

Deutsche Telekom informed RegTP of its new rates for the termination of calls from mobile telephones.These were considerably lower than the previous rates. City rates had been reduced by 80%, local ratesby 78% and national rates by 81%. These rates were still slightly higher than the EU reference rates, butmuch closer to the latter than they had been.

Spain

Telefónica cut its fixed-to-fixed call termination rates by 66% for calls within the same province and by25% for inter-provincial calls. The reduction was even greater for mobile-to-fixed calls, namely 82% forintra- and 77% for inter-provincial calls. Telefónica’s rates were now below the EU reference rates forcalls made within the same province. Inter-provincial calls were still higher than the best practice rates,but only marginally.

Netherlands

KPN’s termination charges for mobile to fixed calls fell by 52% for local and around 73% for nationalcalls. For calls from fixed telephones, the rates fell by 15% for local and 20% for national calls.Termination charges for both local and national calls were below the EU best practice rates.

Italy

Telecom Italia’s termination rates for calls from the mobile networks had fallen by 77% for local and55% for single tandem calls. Rates for calls from fixed networks had fallen by around 35% for local and25% for single tandem calls. In both cases, the rates were below the EU reference rates.


STUDIES 379

b) Income retained by the fixed operators

A comparison was made between the net revenue retained by seven fixed operators on a fixed-to-mobilecall. The purpose of this test in the previous report had been to see which fixed operators were collectingexcessive income on fixed-to-mobile calls by comparing the net revenue retained in the various EUMember States.

The 1998 report identified eight fixed operators which were retaining 100% or more above EU bestpractice. These operators were: Belgacom, Telecom Éireann, BT, P&T-Austria, Telefónica, KPN,Telecom Italia and Deutsche Telekom (on calls to T-Mobil). The study carried out this year by theconsultants covers the retention rates of 12 operators in six countries. The data obtained show thatretention rates have fallen by between 31% and 80% owing to the combination of changes in terminationcharges and cuts in retail rates. The Dutch and British operators were slightly above the EU best practicerate; all the others were below it.

The following list shows the percentage drop between 1998 and 1999 in income retained by theoperators.



Proximus - 31

Mobistar - 32

KPN mobile - 55

Libertel - 55

TIM - 80

Omnitel - 8

Eircell - 66

Esat Digifone - 66

Vodafone - 58

Cellnet - 58

Telefónica Móviles - 64

Airtel - 64

(%)

VIII — REACTIONS TO THE TWENTY-EIGHTH REPORT

A — European Parliament

Resolution of the European Parliament on the Commission’s XXVIIIth Report on CompetitionPolicy (1998) (SEC(1999) 743 — C5-0121/1999 — 1999/2124(COS)) and reply by the Commission.

1. Rapporteur : Bernhard Rapkay

2. EP No : A5-0078/99

3. Date of adoption of the report : 18 January 2000

4. Subject:

5. Competent parliamentary committee: Committee on Economic and Monetary Affairs

6. Analysis of the text and Parliament’s requests,

7. reply to these requests and outlook regarding the action that the Commission has taken orintends to take:


REACTIONS TO THE TWENTY-EIGHTH REPORT 381

— having regard to the Commission’s XXVIIIth Report onCompetition Policy — (1998) (SEC(1999) 743 – C5-0121/1999),

— having regard to the Commission’s Seventh Survey onState Aid in the European Union in the manufacturing andcertain other sectors (COM(1999) 148),

— having regard to its legislative resolution of 1 April 1998on the proposal for a Council Regulation on theapplication of Articles 92 and 93 of the EC Treaty tocertain categories of horizontal State aid (COM(1997)396),

— having regard to its resolution of 14 January 1999 on theproposal for a Council Regulation laying down detailedrules for the application of Article 93 of the EC Treaty(COM(1998) 073),

— having regard to its legislative resolution of 15 April 1999on the proposal for a Council Regulation amendingRegulation No. 19/65/EEC on the application of Article85(3) of the Treaty to certain categories of agreements andconcerted practices (COM(1998) 546),

— having regard to its legislative resolution of 15 April 1999on the proposal for a Council Regulation amendingRegulation Nos. 17: First Regulation implementingArticles 85 and 86 of the Treaty (COM(1998) 546)

— having regard to the Commission’s written answers toParliament’s resolution on the XXVIIth report oncompetition policy (1997),

— having regard to the report of the Committee on Economicand Monetary Affairs and the opinion of the Committeeon Legal Affairs and the Internal Market (A5-0078/1999),

The European Parliament The Commission



A. whereas European competition policy cannot beconsidered separately from the European Union’s otherpolicy areas, for example social policy or environmentalpolicy,

The Commission shares Parliament’s view that competitionpolicy is not separate from the Commission’s other policies.

B. whereas competition policy must contribute to theachievement of the EU’s aims, such as economic growth,competitiveness, sufficient employment, environmentalprotection, consumer protection and economic and socialcohesion,

The Commission too believes that competition policy is one thebest means of helping to achieve Community of aims as regardscompetitiveness and growth and thus also in relation toemployment promotion and economic and social cohesion. Asfar as consumer protection is concerned, the Commissionbelieves that dynamic competition is the best way of ensuring awide range of goods and services at lower prices. Finally,competition policy may contribute to environmental protection.

C. whereas European competition policy must be adaptedand modernised to keep pace with economicdevelopments, such as the increasingly unified internalmarket, globalisation and rapid technological progress,

The markets must indeed face up to a number of challenges:strengthening of the internal market, globalisation,technological innovation, enlargement etc. The Commissionmust therefore adapt its competition policy in line with theserapid developments.

D. whereas a higher degree of control over competition isneeded in the Economic and Monetary Union in order tomaintain an operational internal market,

The Commission is convinced that the means of control at itsdisposal in relation to competition should be used to full effectand applied rigorously in order to stimulate the internal market,which recently completed a crucial phase with Economic andMonetary Union.

E. whereas efficient control of competition in the euro areacalls for close collaboration between the EuropeanCommission and the competition authorities of theMember States,

Cooperation with the national authorities responsible forcompetition is a precondition for more effective control,although the Commission believes that this should take placethroughout the EU and not just in the euro area.

F. whereas the modernisation and stricter application ofcompetition rules, in particular control over aid, make itmore important than ever before to clarify the reasons forcompetition policy and communicate them to the generalpublic, the relevant sectors and economic operators in theregions,

The Commission shares Parliament’s view that steps should betaken to explain competition policy to the citizens of the EU. Itbelieves that the public should be persuaded of the benefits ofcompetition policy and thus give their support to it.

G. whereas the workload of the European Commission’s Di-rectorate-General for competition policy has grown enor-mously over the last few years, with the addition of newtasks such as liberalisation in the telecommunications andenergy sector or increased international cooperation,

Parliament is right to stress the very considerable increase inworkload in the Commission’s departments dealing withcompetition policy.

H. aware that an efficient competition policy promotes thecompetitiveness of European businesses,

The Commission too considers that competition policy helps tomake the European economy more competitive.

1. Welcomes the XXVIIIth report on competition policy andconsiders it to be an important document, in which theCommission fulfils its duty to be accountable, assanctioned in the Treaty;

The Commission thanks Parliament for its favourableassessment of the XXVIIIth report on competition policy.

2. Welcomes the innovations in the layout which make the re-port on competition policy easier to understand and hencepromote the transparency of competition policy; takes theview that it is extremely important to communicate the mo-tivation behind and content of competition policy to as manypeople as possible, since the implementation of measures al-so depends on the understanding of the sections of the popu-lation concerned;

The Commission appreciates Parliament’s favourable view of itsinnovations in the layout of the Report. It intends to continue inits efforts to make this document both clear and of interest forall groups of European citizens.



3. Expresses once again its appreciation of the excellentquality of the dialogue with the Commission, in particularthe previous Commissioner; advocates furtherdevelopment in the democratic control of the EuropeanUnion’s competition policy; calls on the newCommissioner for competition policy to attend regularinformation meetings with the relevant committee, atwhich in particular important current competition casesshould be debated;

The new Member of the Commission responsible forcompetition policy has already accepted this invitation toengage in a dialogue, and has given an undertaking to appearbefore Parliament’s Committee on Economic and MonetaryAffairs around six times a year in order to explain competitionpolicy to those representing the citizens of the EU.

4. Refers to the importance of the Commission’s writtenanswers to Parliament’s resolution on the XXVIIth reporton competition policy and urges its own departments touse this document as an important element of the dialogueon competition policy;

The Commission can assure Parliament that its resolutions, andthe Commission’s views on these, are a very important basis fordeliberations and action by the Commission’s departments.

5. Calls on the Member States and the Commission to ensurethe uniform application of the law in the Member Stateswhich is necessary for Community control of competition;

Like Parliament, the Commission considers it essential thatCommunity law be applied consistently throughout the EU. Inthe context of the updating of rules implementing Articles 81and 82, it is in particular endeavouring to devise suitablearrangements to ensure consistency in the law. It would stress,however, that the Court of Justice is ultimately responsible forguaranteeing the coherence of Community law through thepreliminary ruling procedure.

6. Calls on the Commission to undertake to involveParliament as far as is possible in the further developmentand implementation of competition policy;

The Commission is in favour of a regular dialogue withParliament, and can give an undertaking to involve Parliamentvery closely in competition policy provided that this does notinterfere with cases currently under investigation. TheCommission is already working towards this. It involvesParliament in its deliberations on the modernisation ofCommunity competition law, replies to MEPs’ questions on theimplementation of competition policy submitted in writing or atmeetings attended by the Member of the Commissionresponsible for competition. Finally, the Commission publishesnumerous information documents, particularly the AnnualReport on competition policy, with regard to which it isanswerable to Parliament.

7. Takes the view that the further development ofcompetition policy must be accompanied simultaneouslyby a comprehensive consumer protection policy and betterinvolvement of consumer organisations;

To promote competition on the market is also to defendconsumer interests. The Commission is convinced of this, andshares Parliament’s view as regards greater involvement ofconsumer organisations in competition policy. In thisconnection, the Commission has launched a number ofinitiatives aimed at consumers and the organisationsrepresenting them.

8. Considers that competition rules must not unduly hinderMember States wishing to adopt pioneeringenvironmental legislation in pursuit of the aims set out inArticle 6 of the Treaty;

In any event, under Article 86 of the Treaty, the Commission canonly focus on legislation concerning economic activities orcompanies which, by virtue of special rights, have assumedresponsibility for operating services of general economicinterest, provided that the enforcement of competition rules doesnot prevent these companies from carrying out the tasksassigned to them.

9. Welcomes the fact that the Commission took, in four casesduring 1998, a positive approach to environmental issuesin its competition analysis in the framework of Article85(3); notes with satisfaction that the Commissionreaffirmed in its recent competition report its positiontaken already in the 1995 report that improving theenvironment is to be regarded as a factor promotingeconomic or technical progress;

The Commission may only grant an exemption for a restrictiveagreement under Article 81(3) for environmental reasons, andthen only if the four criteria for exemption are met —particularly the requirement that competition in respect of a

substantial part of the products in question may not beeliminated. As Parliament has noted, the Commission may onlyconsider environmental aspects which contribute to promotingtechnical and economic progress — which is one of the fourassessment criteria.



10. Calls on the Commission to take care to ensure that noagreements detrimental to competition are drawn upbetween banks as regards the various methods ofpayment, especially in the euro area;

The Commission is actively investigating any agreementsbetween banks that may be detrimental to competition andconsumers. For example, the Commission began a cartelinvestigation in February 1999 to look for any evidence thatprior to the introduction of the euro, banks colluded to fix thestructure and amount of tariffs to be applied after 1 January1999 for all types of foreign exchange transactions within theEuropean Union.

11. Calls for the need for more staff in the Directorate-General for Competition to be met by additional posts, sothat the Commission may completely fulfil its obligationsunder the Treaty;

The Commission acknowledges the considerable increase in theworkload of the Competition DG and will take all necessarymeasures to enhance the resources available to it.

12. Welcomes the efforts made by the Commission tomodernise competition law; requests, however, at thesame time that the intended reforms should not lead to arenationalisation or weakening of European competitionpolicy; considers, however, that the regions should, on theprinciple of subsidiarity, be allowed a degree ofdiscretion;

The Commission thanks Parliament for supporting its draftreforms. It fully shares Parliament’s concern to strengthencompetition policy and ensure that it is put into practice as closeto the citizen as possible without, however, thereby jeopardisingthe coherence of Community law.

13. Takes the view that a consistent application of competitionpolicy can support the aims of the guidelines foremployment; in this context calls on the Commission toimplement as soon as possible the regulation authorisingblock exemptions, which will introduce positive anddynamic developments in particular for small- andmedium-sized enterprises (SMEs) and in the field oftraining;

In order to ensure that compliance with EU State aid control law,under the terms of Article 88(3) EC Treaty Member States arerequired to notify national State aid measures to theCommission prior to their implementation. The only exceptionconcerns aid granted according to the conditions laid out ingroup exemption regulations. The Commission has alreadyadopted in July draft group exemptions which are beingdiscussed with Member states and interested parties. Apart fromthat, the notification procedure will continue as well as theprocess of developing stricter State aid control measures.

14. Requests, in view of the continuing overall high level ofState aids and their incompatibility with the smoothfunctioning of the internal market, that Europeancompetition policy be given priority over nationalregulations on aid, subject to the principle of subsidiarity;

The Commission shares Parliament’s view that there is stillroom for tightening State aid control. The principle ofsubsidiarity is not applicable in the area of State aid control,where the Treaty has invested the Commission with theexclusive right to review national aid schemes under Article 87of the Treaty.

15. Confirms that public monopolies must continue to bereplaced by competitive structures in order to moderniseEurope and foster a more competitive environment forconsumers and companies;

The Commission shares Parliament’s view, as was set out in itscommunication on services of general interest in Europe.

16. Calls on the Commission to take effective action with aview to harmonising the rules governing the repayment ofillegal State aid;

Effective execution of decisions to reimburse aid is indeedcrucial for the credibility of State aid control. The Commissionis therefore ready to improve its system to follow up thesedecisions.

17. Emphasises, however, that State aid measures remainnecessary in order to correct certain market failures and tosupport the wider aims of the EC Treaty;

State aid is not entirely forbidden. It may be authorised if itsupports aims of the Treaty, such as employment, research anddevelopment, the environment and notably regional aid. TheCommission has issued guidelines which describe its respectiveapproach.

18. Takes the view that what has now become an annualsurvey on State aid in the European Union in themanufacturing and certain other sectors may serve as agood basis for achieving more transparency in the field ofState aid; urges that the report should deal in greater depthwith the quality of aids;

The Commission will continue, in keeping with previouseditions, to extend the coverage of the State aid survey and todeepen the analysis of State aid.

19. Calls on the Commission to put forward proposals for apublic and regularly up-dated register of State aids takinginto account the qualitative differences in the aids grantedand to include aid in respect of which procedures havebeen initiated;

The Commission welcomes the support for a State aid register,the establishment of which is in its preparatory stage.



20. Calls on the Commission to introduce a league tablesimilar to that for the internal market, to pinpoint theMember States with the highest and the lowest levels ofState aid;

The Commission is currently studying the necessary elements ofa league table (scoreboard). Such an instrument needs thoroughand careful preparation in order to present pertinent indicators.The use of mere aid levels to compare Member States is notsuitable.

21. Urges that the Commission should publish an annualdocument analysing the impact of State aid oncompetitiveness, price levels and the mobility of thefactors of production;

The Commission is currently studying whether the mentionedissues can be appropriately treated in the context of a possibleleague table (scoreboard).

22. Reiterates its approval of State aids which are consideredas being in the common interest, for example in the areasof R&D, SMEs, education, energy saving andenvironmental protection, but believes it to be importantfor the Commission to produce uniform criteria andconditions for this type of State aid;

The Commission has already developed in guidelines andframeworks criteria concerning the categories of aid mentioned.These rules are from time to time adapted in order to includefurther experience and to increase their mutual coherence. TheCommission intends to revise this year the guidelines on Stateaid for environmental protection.

23. Calls on the Member States to grant more aid in the fieldsof energy saving and environmental protection in order toachieve the objectives of the Kyoto Protocol, since theseareas account for only 3% of all aid granted;

The Commission is of the opinion that State aid is only oneamongst many instruments that can encourage energy saving,improve the protection of our environment and achieve theobjectives of the Kyoto Protocol. A judgement on the pertinenceof aid amounts has to take account of all instruments and inparticular with the guidelines on State aid for environmentalprotection. In 1999 the Commission approved several aidschemes aiming at the reduction of CO2 emissions.

24. Calls on the Commission to place greater emphasis thanin the past on examining fiscal measures as well as Stateaid for their effect in distorting competition;

In 1999 the Commission started to examine over 50 fiscalmeasures. All Member States have been asked to provide thenecessary information.

25. Calls on the Commission to report to Parliament regularlyon the progress made in introducing competition policy inthe countries which have applied for accession to the EU;

The Commission will report regularly to Parliament on progressmade in enforcing competition policy in the applicant countries.

26. Takes the view that the current legal framework for EUcompetition law must be taken over completely by theapplicant States; however, the rules on competition inindividual cases should be applied flexibly during atransitional phase; urges the Commission to offer theapplicant countries adequate assistance in adapting theirrules on competition;

Under the Europe Agreements, the provision on theapproximation of laws provides that CEEC shall use their bestendeavours to ensure that their legislation is compatible withCommunity legislation. The Commission agrees that this shouldreceive an extensive interpretation and that the legislative set upin the CEEC should be as close as possible to that of the EU.In individual cases, the Commission tries to strike a balancebetween the necessary compliance by the CEEC with their legalobligations and the need to take their particular problems oftransition economies into account.The Commission, within the limits of its staff resources, makesimportant efforts to give assistance and advice whenever theapplicant countries need it.

27. Calls on the Commission to submit to Parliament a reportoutlining its ideas on the future shape of the internationaldimension of competition policy;

The Commission will report to Parliament with respect to the

international dimension of competition policy.

28. Advocates a larger role for the World Trade Organisation(WTO) in international competition policy; therefore callson the Council to instruct the Commission to conductnegotiations aimed at concluding multilateral agreementson international competition law in the context of theWTO; at the same time, urges the Commission toincorporate uniform minimum competition standards andthe establishment of independent competition authoritiesin all WTO member countries in the guidelines forcombating practices detrimental to competition, whichinterfere with trade and investment;

The European Commission is also of the opinion that amultilateral framework for competition rules is a necessarycomplement to the WTO regulatory system for trade and willpursue its efforts to put the issues highlighted in this Resolutionon the negotiating table. We firmly believe that such aframework will be beneficial for both developed and developingcountries.

29. Instructs its President to forward this resolution to theCommission and the Council.

B — Economic and Social Committee

Opinion of the Economic and Social Committee on the XXVIIIth Report on Competition Policy(1998) (SEC(1999) 743 final) and the Commission’s response

On 31 May 1999 the Commission decided to consult the Economic and Social Committee, under Article262 of the Treaty establishing the European Community, on the XXVIIIth Report on Competition Policy(1998) (SEC(1999) 743 final).

The Section for the Single Market, Production and Consumption, which was responsible for preparingthe Committee’s work, adopted its opinion on 25 November 1999. The rapporteur was Mr Bagliano.

At its 368th plenary session (meeting of 8 December 1999), the Economic and Social Committee adoptedthe following opinion by 97 votes to one, with two abstentions.



1. The XXVIIIth Report on Competition Policy is ofparticular importance, not only because it documents theCommission’s outstanding administrative and legislativework, but first and foremost because it provides an earlyinterpretation, in terms of action and initiatives, of themarked changes characterising the Community’s newcompetition policy. There are two keys to understandingthe 1998 report: the first is modernisation and the secondis cooperation. These are the keys to the Commission’sfuture scenario for competition policy.

The Commission shares the Economic and Social Committee’sview of the XXVIIIth annual report.

1.1. In 1998, the Commission’s supervisory activities as wellas its initiatives and proposals already reflected themodernising approach made necessary by globalisation:in other words, the need to take account of an outsideworld which is changing much faster than in the past. TheCommission fully expressed its awareness of this in thenew regulatory and legislative approach to verticalagreements and in the subsequent highly innovative WhitePaper which was formally adopted in early 1999.

The Commission welcomes the fact that its message concerningthe modernisation of law and practice in the competition fieldhas been so well received by the Economic and SocialCommittee.

1.2. Such modernisation is also necessary and urgent at thiskey stage in the completion of the single market onaccount of the powerful influence on competition policyof the widespread restructuring under way on theEuropean market, which is partly a result of increasingcompany merger initiatives. This is combined with thebeneficial and invigorating effects on the Communityeconomy of the introduction of the single currency and therapid public sector liberalisation processes.

The Commission agrees with the Economic and SocialCommittee about the impact of market integration, theintroduction of the euro and the liberalisation process, makingas it does modernisation necessary and urgent.

1.3. The road ahead is therefore clearly mapped out. It is consis-tent with past action, but is mainly geared to ensuring rapidand constant adjustment to current and future changes: mosturgently, the numerous problems arising from EU enlarge-ment. To meet these new commitments and increased re-sponsibilities, a new way of shaping and implementing co-operation must be found — not only with but also betweenMember State authorities and judiciaries. All parties in anyway involved must be in a position to cooperate with eachother in the interests of the fair competition between compa-nies which it is competition policy’s tasks to guarantee. Allfuture plans and action must, however, be placed in an inter-national context..

The Commission agrees with the Economic and SocialCommittee about the need to cooperate both externally and atMember State level.



2. The XXVIIIth Report on Competition Policy is precededby an introduction which briefly outlines the content ofthe report itself. The question of international cooperation,however, is dealt with separately in a foreword byCommissioner Van Miert. The Committee sees this asintended to place particularly strong emphasis on theinternational aspect of competition policy, and hopes thatit will form an integral part of the report rather than anaddition — however prestigious may be, bearingCommissioner Van Miert’s signature.

The Commissioner’s foreword is written under his ownresponsibility. Substantively, however, the text does not departfrom the Commission’s positions, as set out in the part dealingwith the international dimension of competition policy. Theforeword can therefore be considered an integral part of theReport.

2.1. The Committee welcomes the decision to give this year’spreface over to the Commission’s work at internationallevel, in view of the growing importance of theinternational dimension. As the Commissioneracknowledges, his proposal for competition policy to beseen in a broader perspective echoes the Committee’s oft-repeated call.

The Economic and Social Committee’s views on theinternational dimension of competition policy coincide withthose of the Commission.

2.2. The comment that the ever-increasing integration of theworld economy is creating an unprecedented inter-dependency between countries is perfectly accurate. Inter-dependency has not only now become one of the definingfeatures of the current economic situation, but is set togrow still further in tandem with the irreversibleglobalisation process. Against this backdrop, competitionissues also take on a necessarily global dimension;International cooperation is therefore essential.

The Commission agrees with the Economic and SocialCommittee’s assessment. It is busy expanding its internationalactivities in the competition sphere.

2.3. Cooperation with the United States, under an agreementdating back to 1991 (but, as the Commissioner points out,coming into force in 1995), confirms that bilateralagreements can be highly effective. The results of actionon bilateral cooperation with a view to enlargement alsoconfirm that the Commission is moving in the rightdirection. The Committee, however, agrees with theCommissioner that steps need to be made towardsmultilateral agreements as a matter of urgency. Progresshere is much more difficult, but it is the only possiblepath: efforts must be stepped up.

The Commission agrees with the Economic and Social Commit-tee. In this connection, it regrets the failure of the Seattle Confer-ence, preventing as it did the question of the multilateral frame-work of competition rules from being tackled.

2.4. Under these circumstances, the aim of establishing «acomprehensive worldwide multilateral framework,providing for the application of a basic set of commoncompetition rules’ comes to the fore; The WTO workinggroup is examining proposals on the best approach toadopt, and should be encouraged and supported in everyway possible. In its opinion on the XIXth annual report,the Committee concluded that:«although the final goal may seem distant, work shouldcontinue on the internationalisation of antitrust rules, andharmonisation (even partial and gradual) of the rules ofinternational trade». Almost a decade has passed: the«one-step-at-a-time» policy needs to speed up or it will beleft trailing by events.

A stronger political will is now needed. This is a furtherchallenge, which needs to be faced gradually butdeterminedly.

Idem.



2.5. In the meantime, «turmoil and uncertainty» are increasing«the threat posed by anticompetitive practices». Furtheron in his introduction, the Commissioner makes thefollowing comment, as courageous as it is important: «so-called ‘crony capitalism’ meant that competition betweenfirms was very often foregone in favour of opaquearrangements which have very little to do with marketforces. I am convinced that the pursuit of a robustcompetition policy, at both the national and theinternational level, would provide an important antidote tosuch tendencies by promoting the competitiveness ofindustry, decentralising commercial decision-making,fostering innovation and maximising consumer welfare».The WTO’s role will be crucial in this respect. TheCommittee hopes that this acknowledgement on the partof the outgoing commissioner will be fully matched byboth his successor and the Commission as a whole in theexercise of its full powers. To cite the most notorious caseonly (which has had a major impact on the Community’seconomy, and is also damaging to the majority ofdeveloping countries), the fixing of oil prices byinternational cartels must no longer be tolerated.

The Commission shares the Economic and Social Committee’sviews on the need for a common framework of competitionrules at the international level.

3. The Commission was highly active in 1998 at both thelegislative and administrative levels under it programmeof modernisation of Community competition law. Thisrepresents yet another challenge, going beyond the simplereplacement of one law with another; The Commissionalso imposed severe penalties in cases of marketpartitioning, price cartels and abuses of dominant marketposition. In practice, modernisation — synonymous with«refocusing» — has meant concentrating «on those caseswhere the Community interest is manifest». The policy isundergoing consolidation and is giving rise to ambitiousprojects for change. The Committee supports theCommission’s interesting in initiatives and action in thisdirection.

The Commission welcomes the warm reception given by theEconomic and Social Committee to the modernisation process.

4. The notice on cooperation between Community andnational competition authorities seems to be producing itsfirst results, as reflected in effective collaboration(exchange of information on notifications, joint handling).The anomaly whereby seven national authorities are stillnot authorised to apply Articles 81 and 82, however,remains unresolved . In this connection, the Committeewould repeat its insistence on the urgent need forharmonisation of national legislation on competitionthrough the application of Articles 81 and 82, as aprerequisite for any improvement in cooperation and,above all, for effective decentralisation. It also hopes thatthis «harmonisation» will encompass the principlesunderpinning national legislation on competition.

The Commission also considers that all the national competitionauthorities of the Member States should be able to apply Articles81 and 82 of the Treaty. It should be remembered, however, that,subject to Article 81(3), these articles are directly applicable byMember States’ national courts.



4.1. The Commission should devote a chapter (includingcomparative tables) of its annual report to the state ofapplication of Community (as well as national)competition law in each Member State. This would alsoserve to assess the degree of transposition, as well asdecentralisation, actually achieve. Here, the Committeewonders which of the effects of insufficient harmonisationin the different Member States are most damaging. Itshould be borne in mind that markets are still segmentedand national diversities still strong, and that a number ofdominant national positions remain in existence and havemajor, serious distorting effects on competition. Acarefully planned information campaign will be needed ifgreater transparency is to be achieved. Harmonisationtakes time. Pending more substantial results, it might benecessary to look into at least specific supervisoryinstruments, with the same aim of preventing distortion ofor unduly advantageous positions.

The Commission has already done so. The results are to befound in Part Two of the Report.On the second point, the Committee’s concerns are misplaced.There is no legal vacuum in the Member States in thecompetition sphere. Articles 81 and 82 are directly applicable bynational courts in all Member States. In more than half of them,the competition authorities are empowered to apply Articles 81and 82. All Member States (apart from Luxembourg) havenational machinery for controlling anticompetitive practices.They are thus able to combat restrictions of competition atnational level.

Harmonisation, for its part, is achieved through frequentcontacts between the Commission and national authorities orcourts, governed as they are by two Commission notices oncooperation between these various bodies.

5. Liberalisation has proceeded apace in telecommunications,but has been slower in the energy sector; The commissionviews these sectors as providing a considerable spur forcompetitiveness and for consolidating and invigorating thesingle market.

The Commission shares the views of the Economic and SocialCommittee.

5.1. In this context, the Commission should also examine theoverall effects of liberalisation processes, and of theending of certain monopolies; The purposes would not, ofcourse, be to try to turn the clock back, but to fine-tunesupervision and identify new trends or signs of change atan early stage. A further aim would be to keep a close eyeon the possibly significant repercussions for employment;The Committee suggests that following an in-depth ad hocinvestigation, the Commission should public periodicalinformation reports and updates. These would be of greatvalue to economic operators as well as to nationalinstitutions and authorities.

The Commission (former DG XIII) had a study carried out backin 1996 into the impact of liberalisation in thetelecommunications sector. Employment issues are dealt withthere.

In its work on the post-liberalisation situation in the variousliberalised sectors, the Commission will be able to take accountof the impact of liberalisation on employment.

6. Legislative activity in the field of vertical agreements andstate aid has been particularly intense. Real reform, as partof the broader reform contained in the White Paper onmodernisation, adopted in early 1999, (327) has been set intrain. It provides the legislative groundwork for the newcriterion for interpreting competition rules, which shouldhenceforth place the emphasis on economic rather thanlegal or formalistic aspects. The Committee, which hasalready voiced its approval of the relevant opinions set outin the Green Paper, is drawing up an opinion on thismatter, but wishes at this stage to acknowledge theCommission’s consistency and clear, responsible vision ofthe problems.

The Commission welcomes the Economic and SocialCommittee’s favourable stance regarding the new policy onvertical agreements. Its comments on the Economic and SocialCommittee’s definitive opinion on this matter are to be found ina separate document.

7. The Commission has taken landmark decisions and im-posed fines in application of the Merger Regulation. Thesedecisions have always provided thorough documentation,in-depth analysis and solid economic and legal reasoning toback the conclusions reached.

The Commission welcomes the Committee’s favourable attitudetowards its merger control activity.

(327) COM(1999) 101 final du 12 mai 1999. Avis du CES, CES 1130/99.



7.1. Here again, however, the Committee believes that the timehas come for the effects of this action to be verified,including at international level, as them may generate newform of oligopoly or even monopoly, with repercussionson the Community market. The Committee calls upon theCommission to add to its annual report by including theresults of its checks on the effects of formal commitmentsentered into by companies in the first and second phasesof conditionally authorised merger operations. It must beborne in mind, particularly with regard to the employmentmarket — to which the Committee is always highlyattentive — that jobs in traditional sectors are contracting,having been decimated over recent years by automationand, more recently, by the unstoppable processes ofrelocation. Factories are switched, in part or in whole, tocountries with lower labour costs, as a result of non-compliance with the ILO’s minimum key standards.Competition policy cannot afford to overlook theseaspects: it must be fleshed out and integrated — hereagain, by means of cooperation, first and foremost withinthe Commission itself — if application of competitionrules is to be the result of a real Community policy.

When scrutinising mergers, the Commission takes theinternational dimension into account where necessary.

The Commission takes the question of commitments veryseriously. First of all, when accepting the remedy to thecompetition problem proposed by the parties, it makes sure thatthe remedy precisely matches the problem identified and thatany transfer of assets, say, works to the advantage of viablecompeting firms. It keeps a close watch on compliance by thenotifying parties with their commitments and verifies that theremedy has actually been applied. The Committee asks theCommission to monitor the effects of such remedies. TheCommission has already carried out studies which have revealedthe effectiveness of its policy regarding remedies. In future, itmight consider making public through the annual Report thefindings of any studies it has made. This would probably involveonly a limited number of cases in so far as the remedies are veryoften tailored to the problem posed.

As to taking account of the impact of competition policy onemployment, the Commission has already stressed the policy’spositive effects in that it helps to strengthen the competitivenessof our economy and hence to safeguard and create stable, lastingjobs, thereby contributing effectively to the attainment of theUnion’s objectives in relation to employment.

7.2. Individual Member States markets must also besupervised for this purpose, so that concern for the globaldimension does not have the effect of downgrading theimportance — which is clearly primordial — of anefficient, competitive and expanding internal market.Many further mergers and concentrations may beexpected to take place in the future, and at a faster pace.The speed of change in market and production structuresinside and outside the single market must be matched byswift adjustment of rules and controls.

In the merger sphere, control is exercised by the Commissionwhere the operation has a Community dimension within themeaning of the Merger Regulation. Below the Communitycompatibility thresholds, monitoring merger operations is amatter for the Member States. Most Member States now havemachinery for controlling mergers, hence national markets canbe considered to be «supervised», to borrow the term used in theEconomic and Social Committee’s opinion.

8. In the area of state aid the Commission defined its aim asbeing «to improve transparency and legal certainty, tomake the state aid monitoring system more efficient, toreinforce vetting, in particular in cases involving largevolumes of ad hoc aid, and to simplify the monitoringsystem for more minor cases». The Committee supportthis objective as a matter of course.

8.1. The Commission’s regulatory activity has also beenintense in t his area. A regulation aimed at codifying thevarious aspects of the monitoring system whilestrengthening its powers was proposed, and has now comeinto force. It will clearly be a valuable instrument inmanaging competition policy in the highly sensitive areaof state aid. The Commission has in any case always actedwith dispassionate objectivity and down-to-earth realism.The innovative proposal for a regulation enabling theCommission to exempt certain categories of horizontal aidfrom the notification requirement also appears to reflect ahealthily pragmatic approach, and naturally meets withthe Committee’s support.

8.2. The Committee also welcomes the new framework ontraining aid. Facilitating training initiatives is a securemedium-term investment which will help to boost socialand economic stability within the Member States. More,however, needs to be done. A competition policy that is inline with current circumstances and with the needs ofEuropean integration must facilitate all initiativesdesigned to encourage and stimulate employment.

The enabling regulation also provides for an exemptionregulation on employment aid. Already now, however, the 1995guidelines on aid to employment provide for this category of aidto encourage the creation of employment.



8.3. Aid should in principle be progressively reduced, as theCommittee ha always recommended. The Treaty,however, makes provision for such aid within acompetition policy which is simultaneously designed tohelp secure the cohesion targets also pursued by otherCommunity policies.

The Commission shares this observation.

8.4. With regard to regional policy, in March 1998 theCommission adopted an important document: theguidelines on national regional aid, which simplifies andupdates the criteria for applying Treaty rules. TheCommittee agrees with the principles ad with theevaluation and monitoring mechanisms set out in thedocument.

8.5. The Committee must, however, once again point to thevery different situations in the various Member States,which continue to counteract all cohesion policies withclear implications for competition.

8.6. In this regard, the annual report on competition shouldalso assess the effects of Community «aid», which hasmushroomed over recent years, now accounting for aconsiderable portion of public aid within the EU. A newconcept of «public aid’ needs to be adopted, including notonly state aid — at national and regional level — but alsoCommunity aid.

Community support is, by definition, not state aid within themeaning of Article 87(1) of the EC Treaty. The Commission’scompetition policy therefore has to confine itself to distortion ofcompetition by state aid, be it on a national, regional or locallevel. Community aid is taken into consideration, however,when it is combined with state aid. The compatibility of state aidis in this case assessed in the light of the overall intensity of thepublic assistance.

8.7. The CEEC are quite another matter. In paragraph 300 ofthe XXVIIIth Report on Competition Policy, theCommission acknowledges that «In contrast to antitrustpolicy, the introduction of state aid control in the CEEChas proven to be much more controversial and difficult tobring about ... a lot of work remains to be done. The mosturgent priority is to create transparency...». The situationis also extremely diverse: an extreme example might beheavy industry, which is in state hands to the tune of 80%.The adjustment process will be lengthy. The Committee isaware of these circumstances and difficulties, but for thisvery reason would again urge the Commission this year toexercise careful supervision of these problems and play anactive part in any contract or negotiations.

The Commission shares the view of the Committee. Through thepre-accession process, the Commission is monitoring veryclosely compliance with the commitments entered into by theapplicant countries with respect to state aid.

9. The outlook for competition policy, confronted with thedual challenge of enlargement and globalisation, can be rea-sonably bright provided simplification and modernisationare pursued more vigorouslwy.

The drive to modernise and reform brings a need for an over-all review which should also serve to trigger new measuresto encourage training, foster initiatives in the most innova-tive and hi-tech sectors, and map out new jobs.

The Commission intends to continue its modernisation drive. Itconsiders that the implementation of the new system it isproposing will favour competitiveness and hence have a positiveimpact on innovation and the hi-tech sectors.



9.1. The quickening pace of market globalisation has accentuat-ed the role of innovation as the trump card for the more ad-vanced economies, which must counter the aggressivelycosts-based policies of the recently industrialised countries.In this setting, only strong investment in innovation canshield, the developed countries from the competition, basedon price and rising product quality, offered by their newcompetitors. In spite of this awareness of the strategic valueof innovation and of the new technologies, the Committeenotes some hesitation in seizing the related opportunities formodernisation and growth. Community competition policymust seek out appropriate areas in which to act as a drivingand sustaining force, and to create the most advantageousreference framework for businesses, within which they mustmake choices, take decisions, place in vestments and takerisks. This is where competition policy links in with otherCommunity policies.

The Commission is absolutely convinced that innovation has adecisive role to play, being a key factor in the competitivenessof the European economy. Several Commission exercises in thecompetition sphere accordingly take this dimension intoaccount, e.g. those involving the liberalisation of networkindustries such as telecommunications, the specific favourableprovisions concerning technology transfers or R&D aid, or thefactoring of innovation into the analysis of certain agreementsor certain merger operations which might give rise to entrybarriers for innovative goods or services. The Commissiontherefore considers that it is meeting the Economic and SocialCommittee’s concerns.

10. Competition policy is not simply a matter of legalprocesses, penalties and controls. Nor is it divorced fromother Community policies. It should not be isolated fromthem, not should it seek to distance itself from them.Consultation and cooperation must be stepped up withinthe Commission. New trends must be detected andinterpreted. The Commission possesses a tried and testedmachine in its Competition Directorate-General: it can useit to learn about and understand change and to «refocus»all its own policies promptly and consistently. Thechallenges of enlargement, globalisation and the singlecurrency demand a more rigorous, and at the same timemore far-sighted competition policy, backed up by astronger and more active Commission presence at allinternational levels.

The Commission shares the view of the Economic and SocialCommittee that competition policy is not divorced from theUnion’s other policies. It applies this principle, having dueregard to the provisions of the Treaty, both duringinterdepartmental consultations and when taking decisions as acollege.

The Report on Competition Policy is published annually by the European Commission in response to the request ofthe European Parliament made by a resolution of 7 June 1971. This report, which is published in conjunction withthe General Report on the Activities of the European Union, is designed to give a general view of the competitionpolicy followed during the past year.

European Commission

XXIXth Report on Competition Policy — 1999

Luxembourg: Office for Official Publications of the European Communities

2000 — 392 pp. — 16.2 x 22.9 cm

ISBN 92-828-9984-5


European Commission

XXIXth Reporton Competition Policy

1999(Published in conjunction with the‘General Report on the Activitiesof the European Union — 1999’)

OFFICE FOR OFFICIAL PUBLICATIONSOF THE EUROPEAN COMMUNITIES

L-2985 Luxembourg�


16

8K

D-28-00-018-E

N-C

1999

EN

XX

IXth R

eport on Com

petition Policy

ISBN 92-828-9984-5

9 789282 899847

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XXIXth Report on Competition Policy - 1999ec.europa.eu/competition/publications/annual_report/1999/en.pdf · BELGIQUE/BELGIË Jean De Lannoy Avenue du Roi 202/Koningslaan 202 B-1190