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GAZETTE
FEBRUARY
1989
Ireland is a member). Member
States will no longer be allowed to
favour suppliers in IT (or other)
public procurement programmes.
Testing and certification of equip-
ment will follow common pro-
cedures.
The removal of fiscal barriers
The Commission regards the
harmonisation of indirect taxation
as an essential and integral part of
achieving the Internal Market. The
first step to achieving such
harmonisation will be the approxi-
mation throughout the EEC of
turnover tax (VAT) rates. Contrary
to reports in the press, the
Commission's aim is not to impose
uniform rates throughout the EEC,
but rather to restrict variations
between rates for particular classes
of goods. This is analogous to the
American practice which suggests
that variations of indirect tax rates
of more than 5% lead to distortions
of trade. The Commission is there-
fore proposing to set standard rates
for indirect taxes on classes of
goods which Member States will
be permitted to exceed or undercut
by margins of 2.5%. For example,
if the standard rate for particular
goods were to be set at 16.5%
actual rates adopted by Member
States could be in the range of 14%
to 19%.
Merger Control
At present the Commission can
control mergers only through the
application of the competition rules
contained in the Treaty (Articles 85
and 86). The completion of the
internal market necessitates a
specific merger control instrument
especially adapted to deal with an
increasing number of cross-frontier
mergers. The proposed merger
regulation is based on the following
principles:
- The Regulation will apply only to
mergers "having a Community
dimension", related to geogra-
phical scope and turnover.
- Qualifying mergers must be
notified in advance and not
implemented until the Com-
mission has considered them.
- Mergers which create or
strengthen a dominant position
in the Community, will not be
compatible with the single
market. Where the combined
market share of the companies
concerned does not exceed
20%, it is presumed that a
dominant position does not
exist. Above this threshold, a
merger will only be permitted if
it would contribute to improving
the production or distribution of
goods or would promote tech-
nical or economic progress.
- The Commission will have only
two months following notifi-
cation to initiate proceedings
and a final decision would
normally have to be taken within
the following four months.
Conclusion
By the end of 1988 the Com-
mission had tabled 243 of the
approximately 300 directives
covering the proposals contained in
the 1985 White Paper for the
completion of the Internal Market.
The adoption in the Single
European Act of Article 100A per-
mits the Council to adopt legis-
lation relating to the completion of
the Internal Market on the basis of
a "qualified majority" rather than
an absolute majority. Although
inevitable political objections
persist in many fields, this pro-
cedure will ensure that measures
cannot be blocked by one or two
recalcitrant Member States. Despite
widely held views that 1992 is still
a pipe dream, the momentum is
inevitable: the goal of a single Euro-
pean market is going to be achieved.
The DTI campaign to promote
1992, spearheaded by Sir John
Harvey-Jones and Sir John Egan, is
designed to remedy the level of
ignorance as to the implications of
1992 for British business. Solicitors
have an important role to play; they
should inform themselves of the
issues and be prepared to advise on
the implications for their clients of
a range of new laws and business
opportunities.
MICHAEL HUTCHINGS
Love1 White Durrant
London
Michael Hutchings practises in the
field of EEC law, and spent four
years in his firm's office in Brussels.
He is currently Vice-Chairman of
the English Law Society's Solicitors
European Group, and wrote this
article for publication in its Journal.
It is reprinted here with permission
of the author and some minor
changes have been made to suit
the Irish context.
•
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