EUROPEAN COAL AND STEEL COMMUNITY EUROPEAN ECONOMIC COMMUNITY EUROPEAN ATOMIC ENERGY COMMUNITY COMMISSION Seventh Report on Competition Policy (Published in conjunction with the 'Eleventh General Report on the Activities of the European Communities') BRUSSELS LUXEMBOURG April 1978 EUROPEAN COAL AND STEEL COMMUNITY EUROPEAN ECONOMIC COMMUNITY EUROPEAN ATOMIC ENERGY COMMUNITY COMMISSION Seventh Report on Competition Policy (Published in conjunction with the 'Eleventh General Report on the Activities of the European Communities') BRUSSELS LUXEMBOURG April 1978 This publication is also available in the following languages: DA ISBN 92-825-0031-4 DE ISBN 92-825-0032-2 FR ISBN 92-825-0034-9 IT ISBN 92-825-0035-7 NL ISBN 92-825-0036-5 A bibliographical slip can be found at the end of this volume © Copyright ECSC/EEC/EAEC, Brussels and Luxembourg, 1978 Printed in Belgium Reproduction authorized, in whole or in part, provided the source is acknowledged ISBN 92-825-0033-0 Catalogue No: CB-24-77-237-EN-C Contents Introduction PART ONE — COMPETITION POLICY TOWARDS ENTERPRISES 15 Chapter I: Main developments In Community policy 17 § 1 — Price disparities in the Community 17 § 2 — Information agreements 18 § 3 — Exclusive purchasing agreements 21 § 4 — Community-wide guarantee service 24 § 5 — Measures to assist small business 26 § 6 — Supply obligations of undertakings in a dominant position 30 § 7 — Horizontal groups and economic entities 31 § 8 — The Commission's policy on intra-Community dumping 34 § 9 — Findings of the inquiry into the market for naphtha for petrochemical use and into the behaviour of the oil companies 38 Chapter II: General rules applying to firms 53 § 1 — Amendment of existing regulations and notices S3 1. Extension and amendment of Regulation (EEC) No 2779/72 (specialization agreements) 53 2. Amendment of Regulation No 67/67/EEC (exclusive dealing agreements) 54 3. 'Amendment of ECSC Decision No 25-67 (exemption from the requirement of prior authorization) 55 4. Amendment of the Commission Notice of 27 May 1970 concerning agree- ments of minor importance 56 § 2 — New regulations and notices 57 1. Proposed merger control regulation 57 2. Patent licensing agreements 57 3. Subcontracting agreements 58 4. Proposed regulations applying the rules of competition to sea and air transport 58 5. Periods of limitation for ECSC fines 59 COMP. REP. EC 1977 CONTENTS Chapter 111: Cases decided by the Court of Justice 61 Van Ameyde v UCI 61 NV GB-INNO-BM v ATAB 62 SA G6nerale Sucriere and Societe Beghin-Say v Commission and Others 63 Metro v SABA 63 Concordia 65 De Bloos v Bouyer 68 Chapter IV : Restrictive practices in international trade 71 OECD 71 UNCTAD 71 Cooperation between the Commission and the competition authorities of non-member States 72 Chapter V : Main developments in national competition policies 75 Belgium 75 Denmark 76 Federal Republic of Germany 78 France 80 Ireland 83 Italy 84 Luxembourg 84 Netherlands 84 United Kingdom 86 Chapter VI : Main decisions and measures taken by the Commission 89 § 1 — Article 85(1) applied to horizontal agreements 90 Market sharing, price-fixing and information agreements 90 — Printing paper and stationery manufacturers 90 — Vegetable parchment manufacturers 90 National market protection agreements 91 — Regulation of the Dutch bicycle market 91 — Vegetable growers and dealers 92 Agreements limiting production and sales 93 — Video cassettes and video cassette recorders 93 Export cartels 94 — Necomout 94 § 2 — Encouragement of permitted forms of cooperation 95 — Sopelem/Vickers 95 — Jaz/Peter 96 — Regulations governing international motor shows 97 — EMI Electronics-Jungheinrich 98 — Specialization, joint buying and joint selling agreements in the coal and steel sector 99 COMP. REP. EC 1977 CONTENTS § 3 — Article 85 applied to distribution 101 Export bans and similar measures 101 — Distillers Company Ltd 101 — BMW Belgium 102 Supply agreements 103 — Spices (Liebig) 103 — Billiton and Metal & Thermit Chemicals 104 § 4 — Article 85 applied to industrial and commercial property rights 105 Patent and knowhow licence 105 — AGA Steel Radiators 105 Trademark licence 107 — Campari 107 Use of trademark and business name 108 — Persil washing powder 108 — 'Penneys' trademark and business name 110 § 5 — Article 86 of the EEC Treaty and Article 66(7) of the ECSC Treaty applied to abuse of dominant positions 111 — ABG 111 — Hugin/Liptons 112 — National Carbonizing Company 113 § 6 — Joint ventures 115 — De Laval/Stork 115 — The General Electric Company Ltd/The Weir Group Ltd 116 — Imperial Chemical Industries/Montedison 117 § 7 — Merger control (Article 66 of the ECSC Treaty) 120 — Belgian and French steel firms 120 — Hoesch/Herzog 121 PART TWO — COMPETITION POLICY AND GOVERNMENT ASSISTANCE TO ENTER- PRISES 123 Chapter 1 : State aids 125 § 1 — General 125 § 2 — General regional aid schemes 125 Principles of coordination of national regional aid schemes 125 Specific statements on certain national regional aid schemes 126 — Federal Republic of Germany 127 — Belgium 127 — Denmark 128 — France 130 — Ireland 133 — Italy 133 — Netherlands 135 — United Kingdom 137 COMP. REP. EC 1977 CONTENTS § 3 — Aid schemes for specific industries 138 Shipbuilding 138 — United Kingdom 141 — Netherlands 143 — France 144 — Denmark 145 Textiles 146 Synthetic fibres 147 — Netherlands : Cotton and allied textiles 148 — Netherlands : Clothing industry 149 Electronics : United Kingdom 151 — Instrumentation and automation industry 151 — Electronic components 153 Ferrous and non-ferrous founding 155 — Netherlands and United Kingdom 155 Aids financed by quasi-fiscal charges 157 — France : Clock and watch Industry 157 §4 — General aid schemes 158 Significant cases of application of general aid schemes 159 — Italy 160 — United Kingdom : National Enterprise Board 162 § 5 — Aids to employment 165 Ireland : Aids to employment in farming and industry 166 United Kingdom : Employment subsidies for young workers 167 United Kingdom : Temporary Employment Subsidy - TES 167 § 6 — Aids to exports 170 § 7 — Aids to energy 173 Belgium : Oil refining 173 Energy-saving aids 175 — Denmark 176 — Netherlands 177 Aids to diversify sources of energy 178 — Italy : Solar energy 178 Aids to develop power production from Community coal 179 § 8 — Application of the ECSC Treaty to State aids for the steel industry 180 Belgium 181 Chapter II: Adjustment of State monopolies of a commercial character 183 Chapter III: Public undertakings 187 PART THREE — THE DEVELOPMENT OF CONCENTRATION IN THE EEC 189 Introduction 191 § 1 — National and international takeovers and mergers, share purchase and joint ventures in the Community from 1973 to 1976 191 — Comparison between national and international operations 191 COMP. RB>. EC 1W7 CONTENTS — Breakdown of international operations showing share of firms from non- member countries compared with total share of EEC firms 195 — Industrial breakdown of national and international operations 199 § 2 — The development of concentration in selected industries and sub-industries in the EEC 199 — General survey of research 199 — Concentration in selected industries 199 — Market concentration 207 — Regional and local concentration : the example of the daily press 213 § 3 — The relationship between the size of a firm and its performance 217 — Measures of efficiency 217 — The measure of efficiency applied to the food industry in the Western nations 218 — Profitability and size of firm in the United Kingdom 221 § 4 — The research programme on distribution and prices : Purpose and results 232 — Purpose 232 — Power relationships between manufacturers and consumers 232 — Trends in distribution and concentration in selected Member States 234 — France 234 — Germany 235 — United Kingdom 236 — Price differences between sales points 237 — Divergent price movements 241 — Mark-ups 243 § 5 — Summary and conclusions 250 Annex : List of individual Decisions of the Commission and rulings of the Court of Justice made in 1977 concerning the application of Articles 85 and 86 of the EEC Treaty and of Articles 65 and 66 of the ECSC Treaty 253 COMP. REP. EC 1977 Introduction The economy of Europe is undergoing a difficult period of transition. Much structural weakness has become apparent or become worse following a reduction in demand accompanied by increased pressure of imports. If structural change is essential in order to reach a new economic balance, it is as well to realize that this will be difficult to achieve in a climate of poor economic growth unless clear perspectives are maintained. The role of the Commission must therefore be to promote and establish structural change within a socially acceptable framework. The illusion must be resisted that enter- prises can protect themselves against those necessary changes by coming to terms with their competitors or by seeking excessive protection from national authorities. Competition policy plays an important role in the application of the basic rules which govern the integration of markets. The flow of trade creates the need for constant structural adaptation. The maintenance of non-competitive behaviour or anti-competitive practices, on the other hand, leads to partitioning of markets in the sectors directly involved, which then tends to spill over into related sectors in the downstream markets. It is no coincidence that these simple but basic rules should be challenged at a time when the forces of competition seem to demand excessive sacrifices in certain sectors, particularly so far as employment