1 00:00:00,000 --> 00:00:28,920 The European Union, an open and free market. 2 00:00:28,920 --> 00:00:33,080 A market which is regulated and controlled to maintain balance. 3 00:00:33,080 --> 00:00:36,160 A role fulfilled by the European Commission. 4 00:00:36,160 --> 00:00:40,560 It monitors the development of the various sectors and analyzes the effect of commercial 5 00:00:40,560 --> 00:00:42,640 agreements on competition. 6 00:00:42,640 --> 00:00:46,360 It decides whether they should be banned or permitted. 7 00:00:46,360 --> 00:00:49,840 Most of these agreements meet with the approval of the Commission. 8 00:00:49,840 --> 00:00:55,440 However, the Commission also combats malpractice, which distorts competition. 9 00:00:55,440 --> 00:01:00,040 It implements procedures that safeguard the rights of companies to defend themselves in 10 00:01:00,040 --> 00:01:05,280 a spirit of fairness and objectivity. 11 00:01:05,280 --> 00:01:09,080 What is the purpose of the European Union's competition policy? 12 00:01:09,080 --> 00:01:29,760 In what areas does the Commission act to guarantee fair competition in Europe? 13 00:01:29,760 --> 00:01:35,120 The United Pharma Company, an American multinational, launches a revolutionary over-the-counter 14 00:01:35,120 --> 00:01:42,760 drug, a pill that allows smokers to kick the habit quickly. 15 00:01:42,760 --> 00:01:46,920 Four European companies follow suit and launch similar drugs. 16 00:01:46,920 --> 00:01:50,000 These products have only minor differences. 17 00:01:50,000 --> 00:01:58,480 They are advertised extensively for only 25 Euros. 18 00:01:58,480 --> 00:02:02,520 The management of the five companies meet secretly and decide on a price increase of 19 00:02:02,520 --> 00:02:07,640 25% per box as of the 1st of October 1998. 20 00:02:07,640 --> 00:02:14,280 This is followed by a further 25% increase at the start of the following year. 21 00:02:14,280 --> 00:02:19,400 David MacLean was present that day in his capacity as Vice President of United Pharma. 22 00:02:19,400 --> 00:02:25,000 Well, as soon as we announced the price increase, complaints started to flood in. 23 00:02:25,000 --> 00:02:29,480 We were suspected of having formed a cartel because there was no significant increase 24 00:02:29,480 --> 00:02:34,600 in the cost of raw materials or indeed any other cost that could justify such a price 25 00:02:34,600 --> 00:02:42,520 increase. 26 00:02:42,520 --> 00:02:47,960 On the basis of economic activity analyses and complaints lodged by consumer associations, 27 00:02:47,960 --> 00:02:56,280 the Commission opens an investigation and asks for information. 28 00:02:56,280 --> 00:03:00,160 Upon receiving incomplete information from the companies, the Commissioner responsible 29 00:03:00,160 --> 00:03:05,520 for competition signs in September 1999 a decision ordering the five companies to be 30 00:03:05,520 --> 00:03:12,400 submitted to an inspection of their business premises and documents. 31 00:03:12,400 --> 00:03:17,360 The inspectors of the Commission, accompanied by officials from national competition authorities, 32 00:03:17,360 --> 00:03:21,080 visit the headquarters of the five manufacturers. 33 00:03:21,080 --> 00:03:24,160 They all accept the inspection except for one. 34 00:03:24,160 --> 00:03:29,120 He is subsequently forced to accept the inspection on the basis of national legislation. 35 00:03:29,120 --> 00:03:32,880 The head of the investigation team finds evidence of the meeting of the directors of the five 36 00:03:32,880 --> 00:03:42,280 companies held on the 15th of September 1998. 37 00:03:42,280 --> 00:03:49,640 On the 1st of March 2000, the Commission sent me and all the other companies involved a 38 00:03:49,640 --> 00:03:55,480 document which described the objections expressed to our commercial behaviour. 39 00:03:55,480 --> 00:04:01,120 On the 15th of July 2000, and following access of non-confidential documents of the file, 40 00:04:01,120 --> 00:04:06,200 all the companies submitted their written reply to the objections expressed by the Commission. 41 00:04:06,200 --> 00:04:10,280 A hearing on the case is organised by the Commission on the 1st of September 2000 in 42 00:04:10,280 --> 00:04:11,520 Brussels. 43 00:04:11,520 --> 00:04:15,960 It's chaired by the hearing officer, a senior official that guarantees the rights of defence 44 00:04:15,960 --> 00:04:19,440 and independent of the team investigating the case. 45 00:04:19,440 --> 00:04:24,200 It's held in the presence of all parties involved, as well as third parties, representatives 46 00:04:24,200 --> 00:04:28,720 of the competition authorities and interested ministries of the member states, as well as 47 00:04:28,720 --> 00:04:30,560 by other Commission services concerned. 48 00:04:49,440 --> 00:05:12,680 The 49 00:05:12,680 --> 00:05:15,680 market for spring water. 50 00:05:15,680 --> 00:05:19,960 Food International, a large food group which manufactures and sells its products throughout 51 00:05:19,960 --> 00:05:21,760 the world. 52 00:05:21,760 --> 00:05:29,520 Consolidated turnover, over 28 billion euros. 53 00:05:29,520 --> 00:05:34,300 Saucier is active in the production and distribution of bottled water. 54 00:05:34,300 --> 00:05:37,520 Consolidated turnover, over 2 billion euros. 55 00:05:37,520 --> 00:05:43,400 The springs used by the two companies are mainly located in one single country. 56 00:05:43,400 --> 00:05:47,160 There's only one other major operator on the market for bottled water. 57 00:05:47,160 --> 00:05:55,280 The Entreprises Alimentaires Réunies, EAR. 58 00:05:55,280 --> 00:05:59,880 The stock exchange has had a few jolts today with the announcement by Food International 59 00:05:59,880 --> 00:06:03,080 of their takeover bid for the Saucier Group. 60 00:06:03,080 --> 00:06:07,800 Under the terms of the bid, Food International would transfer certain brands of the Saucier 61 00:06:07,800 --> 00:06:11,360 Group to another mega group, EAR. 62 00:06:11,360 --> 00:06:17,480 This operation would give these two groups a dominant position in the spring water market. 63 00:06:17,480 --> 00:06:21,820 We've learnt that Food International has informed the Commission of its intention and is waiting 64 00:06:21,820 --> 00:06:28,720 for the green light. 65 00:06:28,720 --> 00:06:33,760 In this notification, Food International shows that the operation doesn't result in the creation 66 00:06:33,760 --> 00:06:37,360 or reinforcement of a dominant position on the market. 67 00:06:37,360 --> 00:06:41,680 The Commission has a month to decide whether the operation will lead to problems. 68 00:06:41,680 --> 00:06:45,720 Within the framework of the investigation, questionnaires are sent to the parties and 69 00:06:45,720 --> 00:06:48,280 to the main competitors and customers. 70 00:06:48,280 --> 00:07:05,200 Interviews or on-site visits are organised. 71 00:07:05,440 --> 00:07:09,440 Following this one-month investigation, the Commission decides to carry out a more in-depth 72 00:07:09,440 --> 00:07:14,120 study of the market and the deal before announcing its final decision. 73 00:07:14,120 --> 00:07:18,280 The Commission expresses its objections to the operation, which are sent to the parties 74 00:07:18,280 --> 00:07:20,120 for comment. 75 00:07:20,120 --> 00:07:24,960 Following a consultation of the non-confidential part of the file and a hearing, a draft decision 76 00:07:24,960 --> 00:07:26,400 is prepared. 77 00:07:26,400 --> 00:07:31,040 It provides for a significant proportion of the springs of Food International to be sold 78 00:07:31,040 --> 00:07:33,600 off to a foreign operator. 79 00:07:33,600 --> 00:07:42,040 This will guarantee an effective competition on the market. 80 00:07:42,040 --> 00:07:46,360 The draft is examined by competition authorities of the Member States during a meeting of the 81 00:07:46,360 --> 00:07:48,040 Consultative Committee. 82 00:07:48,040 --> 00:07:50,040 The Committee adopts a favourable opinion. 83 00:08:18,040 --> 00:08:43,040 A large, state-owned chemical firm is suffering serious economic difficulties. 84 00:08:44,040 --> 00:08:50,040 The Government is about to inject a significant amount of capital, mainly to avoid bankruptcy. 85 00:08:50,040 --> 00:09:17,040 The meeting, which is taking place today between the Commissioner for Competition and the Minister 86 00:09:17,040 --> 00:09:22,040 of Industry, follows several meetings which were held in March between national authorities 87 00:09:22,040 --> 00:09:27,640 and the representatives of the Commission. 88 00:09:27,640 --> 00:09:31,880 In view of the Company's economic difficulties, the Commission considers that the injection 89 00:09:31,880 --> 00:09:36,720 of such a considerable amount of capital could not have been made by a private investor. 90 00:09:36,720 --> 00:09:41,400 Consequently, the Commission considers that the capital injection does in fact constitute 91 00:09:41,400 --> 00:09:46,720 Government aid, capable of distorting competition within the community market. 92 00:09:46,720 --> 00:09:50,520 The discussions with the national authorities reveal that some of the capital has already 93 00:09:50,520 --> 00:10:06,720 been injected into the Company without prior Commission notification or approval. 94 00:10:06,720 --> 00:10:11,120 The aid already paid will finance research and development activities. 95 00:10:11,120 --> 00:10:14,960 The Commission considers that this part of the aid may be accepted under the Community 96 00:10:14,960 --> 00:10:18,520 Framework for Aid to Research and Development. 97 00:10:18,520 --> 00:10:23,080 For the remaining aid, the Commission expresses serious doubts about its compatibility with 98 00:10:23,080 --> 00:10:24,480 the single market. 99 00:10:24,480 --> 00:10:29,600 In fact, this aid is simply aimed at keeping the Company artificially alive, to the detriment 100 00:10:29,600 --> 00:10:48,800 of its competitors. 101 00:10:48,800 --> 00:10:52,960 The Commissioner for Competition proposes to the Commission to approve the part relating 102 00:10:52,960 --> 00:10:57,360 to research and development, on the grounds of its beneficial action on the competitiveness 103 00:10:57,360 --> 00:11:03,600 of the Company vis-à-vis its non-European competitors, and because it stimulates innovation. 104 00:11:03,600 --> 00:11:07,680 On the other hand, the Commission decides to examine the other part of the aid, while 105 00:11:07,680 --> 00:11:20,280 urging the Government to suspend payments until the examination is over. 106 00:11:27,360 --> 00:11:32,720 The Commission explains publicly the reasons for the approval of a part of the aid and 107 00:11:32,720 --> 00:11:42,840 the opening of the procedure concerning the remainder. 108 00:11:42,840 --> 00:11:47,480 The decision is published in the official journal in the 11 community languages. 109 00:11:47,480 --> 00:11:51,780 Interested parties are invited, within a period of one month, to transmit their comments and 110 00:11:51,780 --> 00:12:18,380 remarks on this case to the Commission. 111 00:12:21,780 --> 00:12:33,580 In the course of the procedure, the Government submits to the Commission a restructuring 112 00:12:33,580 --> 00:12:35,540 plan for Global Chimie. 113 00:12:35,540 --> 00:12:39,980 The plan will enable the Company to solve its economic problems and restore its long-term 114 00:12:39,980 --> 00:12:40,980 viability. 115 00:12:40,980 --> 00:12:47,500 In fact, the aid will be granted as part of the implementation of this restructuring plan. 116 00:12:47,500 --> 00:12:51,940 The Commission verifies that the restructuring plan has a good chance of success and that 117 00:12:51,940 --> 00:12:56,140 the Company will not need further aid in the future, then approves the aid. 118 00:13:17,500 --> 00:13:34,900 The Commission, as the guardian of the treaties, has an obligation to ensure that public companies 119 00:13:34,900 --> 00:13:39,620 or state monopolies are also subject to the general competition rules that apply to the 120 00:13:39,620 --> 00:13:43,620 private sector. 121 00:13:43,620 --> 00:13:48,220 In order to offer a better service to the consumer and in close cooperation with the 122 00:13:48,220 --> 00:13:52,860 Member States, the Commission has adopted, during the last few years, several directives 123 00:13:52,860 --> 00:13:57,500 aimed at liberalising the telecommunications sector. 124 00:13:57,500 --> 00:14:02,580 This action was vital to prepare Europe for the Information Society. 125 00:14:02,580 --> 00:14:07,540 All Member States have been obliged to grant a second licence for GSM mobile telephony 126 00:14:07,540 --> 00:14:12,660 to private companies under the same conditions that apply to the publicly owned telecommunications 127 00:14:12,660 --> 00:14:13,660 operator. 128 00:14:13,660 --> 00:14:19,940 They are also obliged to liberalise satellite services, cable networks, internet access 129 00:14:19,940 --> 00:14:22,900 and mobile communications. 130 00:14:22,900 --> 00:14:26,980 Public voice telephony is also liberalised. 131 00:14:26,980 --> 00:14:31,500 Telecommunications costs have dropped dramatically and the choice of services on offer has greatly 132 00:14:31,500 --> 00:15:01,460 increased. 133 00:15:01,460 --> 00:15:05,820 The competitive structures of the market are maintained today thanks to the Commission's 134 00:15:05,820 --> 00:15:12,860 ongoing contacts with the OECD, the United States, Japan, Canada and many other countries 135 00:15:12,860 --> 00:15:16,660 in order to harmonise decisions. 136 00:15:16,660 --> 00:15:26,180 In the countries of Eastern Europe, the technical assistance provided by the European Union 137 00:15:26,180 --> 00:15:36,100 helps in the development of competition policy where a new market economy is being set up. 138 00:15:36,100 --> 00:15:40,860 Community competition policy is based on an accurate economic analysis of the market backed 139 00:15:40,860 --> 00:15:45,860 up by the Commission's ongoing dialogue with industry and the Member States. 140 00:15:45,860 --> 00:15:51,020 It safeguards the rights of companies to defend themselves in competition procedures implemented 141 00:15:51,020 --> 00:15:55,700 in a spirit of fairness and objectivity. 142 00:15:55,700 --> 00:16:02,020 It is designed to protect the consumer, employment, competitiveness and innovation within companies 143 00:16:02,020 --> 00:16:05,460 by constantly guaranteeing an economically sound environment.