European Commission XXVIIIth Report on Competition Policy 1998 (Published in conjunction with the `General Report on the Activities of the European Union Ð 1998') Brussels ð Luxembourg, 1999 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, 1999 ISBN 92-828-7198-3 European Communities, 1999 Reproduction is authorised provided the source is acknowledged. Printed in Belgium PRINTED ON WHITE CHLORINE-FREE PAPER Contents NOTICE TO THE READER 6 FOREWORD BY MR KAREL VAN MIERT 7 Part One Ð XXVIIIth Report on Competition Policy 1998 SEC (99) 743 final 13 INTRODUCTION 19 I Ð Antitrust Ð Articles 81 and 82 State monopolies and monopoly rights Ð Articles 31 and 86 27 A Ð Modernisation of the legislative and interpretative rules 27 B Ð Consolidating the single market 35 C Ð Sector-based policies 41 D Ð Statistics 59 II Ð Merger control 61 A Ð Introduction 61 B Ð New developments 64 C Ð Statistics 79 III Ð State aid 81 A Ð General policy 81 B Ð Concept of aid 84 C Ð Assessing the compatibility of aid with the common market 89 D Ð Procedures 104 E Ð Statistics 109 IV Ð International activities 111 A Ð Enlargement 111 B Ð Bilateral cooperation 114 C Ð Multilateral cooperation 118 V Ð Outlook for 1999 121 ANNEX Ð CASES DISCUSSED IN THE REPORT 125 COMPETITION REPORT 1998 4 CONTENTS Part Two Ð Report on the application of the competition rules in the European Union 131 I Ð Antitrust: Articles 81 and 82 of the EC Treaty Ð Articles 65 and 66 of the ECSC Treaty 137 A Ð Case summaries 137 B Ð New legislative provisions and notices adopted or proposed by the Commission 171 C Ð Formal decisions pursuant to Articles 81, 82 and 86 of the EC Treaty 172 D Ð Cases closed by comfort letter in 1998 173 E Ð Notices pursuant to Articles 81 and 82 of the EC Treaty 178 F Ð Press releases 179 G Ð Judgments and orders of the Community courts 181 II Ð Merger control: Council Regulation (EEC) No 4064/89 and Article 66 of the ECSC Treaty 185 A Ð Summaries of decisions taken under Article 6(1)(b) of Council Regulation (EEC) No 4064/89 185 B Ð Summaries of decisions taken under Article 8 of Council Regulation (EEC) No 4064/ 89 190 C Ð Decisions pursuant to Article 2(4) of the ECMR (joint venture cases) 196 D Ð Commission decisions 198 E Ð Press releases 205 F Ð Judgments of the Community courts 213 III Ð State aid 215 A Ð Overview of cases 215 B Ð New legislative provisions and notices adopted or proposed by the Commission 273 C Ð List of state aid cases in sectors other than agriculture, fisheries, transport and the coal industry 274 D Ð List of state aid cases in other sectors 294 E Ð Judgments of the Community courts 304 F Ð Enforcement of Commission decisions ordering the recovery of aid 305 IV Ð International 313 V Ð The application of competition rules in the Member States 329 A Ð Legislative developments 329 B Ð Application of the Community competition rules by national authorities 337 C Ð Application of the Community competition rules by courts in the Member States 349 D Ð Application of the 1993 notice on cooperation between the Commission and national courts 357 Annex Application of Articles 81 and 82 by national competition authorities 361 COMPETITION REPORT 1998 CONTENTS 5 VI Ð Statistics 363 A Ð Articles 81, 82 and 86 of the EC Treaty + Article 65 of the ECSC Treaty 363 B Ð Merger Regulation 364 C Ð State aid 365 VII Ð Studies 369 VIII Ð Reactions to the Twenty-seventh Report 373 A Ð European Parliament 373 B Ð Economic and Social Committee 390 COMPETITION REPORT 1998 Notice to the Reader The Treaty of Amsterdam entered into force on 1 May 1999. This Treaty provides for the renumbering of the Articles of both the Treaty on European Union and the Treaty establishing the European Community. While dealing primarily with the year 1998, this report adopts the new numbering system. Nevertheless, reference is made to the old numeration, when quoting from the titles of legislative acts adopted prior to the alteration in numbering or when quoting from the content of documents written prior to 1 May 1999. To draw the attention of readers to these changes, all quotations using the old numbering appear in italics. In order to facilitate the reading of the XXVIIIth Report, the corresponding old and new numbers of the Articles cited in this report are set out in the following table: Old number New number Article 37 Article 31 Article 85 Article 81 Article 86 Article 82 Article 89 Article 85 Article 90 Article 86 Article 92 Article 87 Article 93 Article 88 Article 100A Article 95 Article 173 Article 230 Article 175 Article 232 Article77 Article 234 Article 190 Article 253 COMPETITION REPORT 1998 FOREWORD BY MR KAREL VAN MIERT, Member of the Commission with special responsibility for competition policy Last year's Report ushered in a new form of introduction which afforded me the opportunity of raising issues that transcended present-day concerns and turned competition policy towards broader horizons. This innovation was, I know, well received and I have decided to continue in the same vein. Heeding the oft-repeated call of the European Parliament and the Economic and Social Committee, I propose this year to turn the spotlight on to our international activities because of the increasing importance of the international dimension to the competition rules that the Commission is enforcing. I would like, in particular, to highlight the desirability of enhanced international cooperation between competition law enforcement authorities. To date, such cooperation has been largely confined to bilateral arrangements, many of which are proving very effective. In the long run, however, I believe that the desirability, even the necessity, of also putting in place a multilateral framework ensuring the observance of certain basic competition principles will be widely recognised. This would guarantee that the impressive progress which has been made in trade liberalisation over the past few decades is not undermined by a failure to deal effectively with anticompetitive behaviour by firms competing in the global economy. Globalisation and the threat posed by anticompetitive practices The ever-increasing integration of the world economy is creating an unprecedented inter-dependence between countries. Over the past decade, with the successful conclusion of the Uruguay Round, we have seen an acceleration in the progressive dismantling of trade barriers. Business is taking advantage of this openness, and there has been a huge growth in the volume of trade. 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 ªmega-mergersº between companies based in different parts of the world, creating new corporations of truly global dimensions. Where companies are not already present in several countries, they are often forming strategic alliances which enable them to penetrate foreign markets together with international partners. This is particularly true in high- technology sectors such as the telecommunications, information technology, entertainment, air transport and pharmaceutical industries. The Commission has had to keep pace with the increasing globalisation of markets and its analyses of competition problems are, to an increasing extent, taking into account market data from outside the European Union. It is not surprising to find that, in these circumstances, competition problems are also taking on global dimensions. Anticompetitive behaviour, including restrictive arrangements between companies and abuses of market dominance, does not respect borders. The emergence of ever-larger multinational companies, with the technological means and resources to do business on a global level, brings with it the danger that they may be tempted to take measures Ð either unilaterally or in collusion with other firms Ð which restrict competition or abuse their market power on these global markets. If such anticompetitive behaviour is allowed to go unchecked, it is no exaggeration to say that many of the COMPETITION REPORT 1998 8 FOREWORD BY MR KAREL VAN MIERT benefits that have been achieved in terms of opening markets across the globe could be negated. The enhanced opportunities which trade liberalisation has provided for the interpenetration of markets around the world could very well be seriously undermined by restrictive commercial behaviour. Such practices may be resorted to by companies seeking to protect their traditional Ð often national Ð markets from foreign competitors. The need for cooperation in enforcement The removal of barriers to market integration resulting from anticompetitive commercial practices is nothing new for the European Union. Since 1958, the Community's competition rules have served as an indispensable tool in carrying out the task of creating a single European market, and in helping to ensure that it becomes and remains a reality. In the absence of such control over restrictive and abusive behaviour by companies, or without merger control, national markets would remain much more difficult for newcomers from both inside and outside the Community to penetrate. Where such practices are carried on outside the Community, however, combating them is much more complicated. National or regional competition authorities are ill-equipped to grapple with the problems posed by commercial behaviour occurring beyond their borders. Information may be difficult to obtain, and decisions Ð once taken Ð may be impossible to enforce.