The Gazette 1985

GAZETTE

JULY/AUGUST1985

criteria under which Member States may implement

national aid schemes for R and D; these guidelines

will complement the Community's own efforts as

part of its industrial policy to encourage and Fund

R and D

and the Commission's Regulation

exempting co-operative R and D agreements from

the prohibitions of the antitrust rules (Article 85) on

certain conditions

. This is a fine example of the

interplay between various strands of competition

policy and the meshing of that policy as a whole

with other Commission and Community policies.

- A new notification procedure to enable the

Commission to assess the cumulative effects of

sectoral, regional and other aids.

- Internal

de minimis

rules to ensure that resources

are concentrated on the most important cases.

Another area in which the Community's competition

policy has worked hand-in-hand with other policies has

been in formulating a response to the serious crisis

affecting the Community steel industry. Here a combina-

tion of rigorous control of state aids and an administered

system of production quotas has allowed the painful

process of reducing excess capacity to take place in an

environment which, recognising the particular needs of

the steel industry, does not lose sight of the overall

European Coal and Steel Community's commitment to

the common market and competition. As the

Commissioner responsible for social policy as well as

competition policy, I would also mention in passing the

considerable efforts made by the Commission to provide

an accompanying package of social measures with the

restructuring programme.

Competition in our policy has three basic functions: to

allocate

factors of production to their most productive

uses, to provide an

incentive

to firms to use their resources

in the most efficient way possible and to stimulate

innovation

by encouraging the invention and development

of new products, services and processes.

We in Europe are still at the early stages of building a

common market, whereas for the Community's major

competitors a large unified market is an everyday reality.

The principle that goods and services should move freely

between Member States is fundamental to the

Community endeavour. Competition policy has

developed a number of contributions to that endeavour,

one of the most forthright being the parallel import

doctrine. Consumers must be able to buy goods and

services on c omp a r a b le terms t h r oughout the

Community.

Horizonatl cartels

The Commission is determined to apply Article 85(1),

together with appropriate sanctions and remedies, to

arrangements between competitors to fix prices or

conditions of sale, to divide markets between them or

otherwise to restrict output by agreement, concerted

practice or decision of a trade association or other similar

grouping.

In 1984, the Commission took seven decisions in cases

involving these "classic" violations of antitrust law.

Participants in a market sharing and price Fixing cartel in

the

peroxide

industry were fined a total of 9 million

ECU.

Fines of 4 million ECU were imposed on companies

which took part in arrangements to agree prices, share

markets and exchange detailed information to facilitate

enforcement in the

flat glass

industry" in Belgium,

Luxembourg and the Netherlands.

Another decision was taken in respect of arrangements

between six

zinc

producers

whereby prices were agreed

and no sales were made on the London Metal Exchange

(LME). It was also agreed that the parties, who included

nearly all the zinc smelters and ore producers in the

western world, would support the LME price if necessary

by joint buying, restrict production to agreed levels and

limit sales through á system of export quotas and market

sharing arrangements. Fines totalling 3.5 million ECU

were imposed. The relatively low level of fines in this case

reflected the Commission's willingness to consider

mitigating circumstances, including exceptionally in this

case the severe crisis affecting the industry. This decision

also shows the limits of the Commission's tolerance of

short-term co-operation between competitors to reduce

excess structural capacity: price fixing, market sharing

and production quotas are unacceptable. It would point

out in passing that it was during the investigation of this

case that a celebrated inspection took place at the

premises of AM & S Europe Ltd. in England. That

inspection gave rise to the judgment of the Court of

Justice

holding that a doctrine of legal professional

privilege protecting certain types of correspondence

between lawyers and clients existed in Community

competition law. The Court's judgment has given rise to

international controversy because only lawyers entitled

to practise in the EEC, i.e. members of EEC bars and law

societies, are covered. The Commission has proposed to

the Council that international negotiations be authorised

with a view to concluding reciprocal treaties to resolve

this matter

In the

wood pulp

decision

, the Commission took

action against forty producers of wood pulp located in the

USA, Canada and various other non-Member countries

in respect of price fixing arrangements and re-sale and

export bans within the Community. Fines of only 4

million ECU in all were imposed as most of the firms

involved gave unilateral undertakings as to their future

conduct in the EEC. They agreed to quote, sell and

invoice at least 50% of the bleached sulphate wood pulp

sold to EEC customers in the buyer's local currency

rather than in US dollars. This will make the market more

opaque and any future concentration more difficult than

was the case previously when all producers invoiced in

dollars. This case is important because it is the first

decision on price concertation for a relatively homo-

geneous product in an oligopoly and the first time that

concertation has been proved by means of an economic

analysis showing that the similarity of prices in the

circumstances was inexplicable unless there had been

prior concertation. It is also the first case in which all the

companies and trade associations involved have their

headquarters outside the EEC, while doing business on a

regular basis in the common market.

"The effect of the

agreements and practices on prices announced and/or

charged to customers and on re-sale of pulp within the EEC

was . . . not only substantial but intended, and was the

primary ant! direct result of the agreements and practices."

(Commission decision OJ p. 15). This effect on competi-

tion within the common market and trade between the

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