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PAGE 58 EC COMPETITION POLICY NEWSLETTER Vol. 1, N° 2, Summer 1994

and reasonably efficient enforcement procedures. It is in this

context that DG IV and the competent authorities of the

relevant countries began drawing up such rules within the

Joint Committees set up under each of the Interim

Agreements. The first draft has been drawn up jointly by DG

IV and the Polish Antimonopoly Office. The draft was

submitted to the Joint Committee under the Community-

Poland Interim Agreement and approved in January 1994. It

is currently in the process of being reconfirmed in the

framework of the Europe Agreement. Further drafts have

recently been agreed upon by DG IV and the responsible

Bulgarian, Hungarian and Slovak authorities and are being

submitted to the relevant organs of the Interim Europe

Agreements for approval. Negotiations with the other

countries are far advanced and it is hoped that finalization of

the texts will take place before the end of this year.

The main instrument for dealing with cases that fall foul of

the competition provisions are the Community competition

rules on the one hand, and the national competition laws of

the respective countries on the other hand. Both authorities

apply their own laws but they are linked through a

cooperation procedure. For DG IV this will mean that it will

have to take account of those Agreements in the definition

of its priorities of action. On the other hand such tools as

Regulation 17 do not obtain wider applicability than before.

The implementing rules deal with three situations:

- Situations may arise in which each authority (DG IV and

the authority of the respective associated country) may

have jurisdiction in one and the same case.

- In other cases where only one authority is competent, the

measures taken by it may affect major interests of the

party whose national authority is not competent.

- Finally, a case might fall outside the competence of the

authorities of both parties.

In cases falling under the competence of both competition

authorities, starting point has been to ensure close

cooperation between those authorities. A one-stop-shop

principle (as for instance in the EEA Agreement between the

Commission and the EFTA Surveillance Authority) was not

considered workable in this particular context, because of the

lacking element of a "supranational" second pillar and an

independent Court to ensure its control, which is foreseen in

the EEA Agreement. Rather, the approach chosen is similar

to that under the 1991 EC-US Agreement and also contains

some elements borrowed from the 1986 OECD

recommendation. Notifications of cases, requests for

information and consultations are foreseen between the

authorities, as well as a recourse to the principles of negative

and positive comity. This means that the authority of the

other party can be requested to exercise restraint in the

application of its laws, or even to take positive action with

respect to certain practices affecting the requesting party's

important interests. Possible conflicts should only be brought

to the Joint Committee as a last resort.

Similar proceedings are foreseen in cases where only one

authority is competent. It is here that one can imagine that

positive comity will have a large role to play, if interests of

the party whose competition authority is not competent for

a given case are at stake.

Cases of so-called negative conflict of competence, i.e.

falling outside the competence of the authorities of both

parties, are difficult to imagine, given that it is sufficient for

an agreement to produce effects or to be implemented in the

Community for the Community to have jurisdiction, and

since most of the laws of the associated countries have also

embraced the effects doctrine. Nevertheless it is provided

that such cases can be discussed in the Joint Committee,

without prejudice to the rights of EC Member States.

Some further points of interest in the implementing rules

concern a "de minimis" rule, consultations in merger control

matters and confidentiality. The rules also provide that the

principles of EC block exemptions shall be taken over by

the associated countries.

b) Rules related to state aids

The definition of implementing rules relating to state aids

and their control in a transparent way is an area which will

be requiring immediate attention in the near future. While

none of the associated countries have the budgetary means

to pay large subsidies, there are a variety of support

mechanisms such as tax reliefs, non pursuit of debts owed to

the state etc. which are classified as state aids in the

Community. Work has already begun in that the associated

countries have agreed that as a first step towards

transparency an inventory of existing aids needs to be drawn

up. For this task they benefit from technical assistance

provided by PHARE.

The implementing rules will need to define methods of

mutual cooperation, taking into account the particular

situation of the associated countries as economies in

transition. It is to be noted that the Agreement already

provides for the application of the article 92(3,a) derogation

from the basic interdiction to give aid.

It is generally felt that state aid control is an area which will

require a special effort in training and technical assistance.

For an effective enforcement, achieving a conversion of

mentality and creating an awareness of the problem will

probably be as important as putting in place the formal rules.

2) Relations with the Newly Independent States

a) Baltic States

In relation with the three Baltic States (Estonia, Latvia,

Lithuania), negotiations of Free Trade Agreements have

recently been concluded. They contain competition rules

similar to those in the Europe Agreements concluded with

the CEEC.

b) Russia

In the Partnership and Cooperation Agreement (PCA) signed

with Russia

in June, competition provisions are likewise

included. Given that the links established between the

Community and Russia are different in nature and not as far-

reaching as with the CEEC and the Baltic States, the

competition rules agreed upon in this context are less

stringent.

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