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European Union

Draft Notice on competition

The Commission published a preliminary draft Notice on September 10 on cooperation between national competition authorities and the Commission in cases falling within Articles 85 and 86 of the EU Treaty.

Through this Notice, the Commission aims to enhance the role of the national competition authorities and is encouraging these authorities to apply Community law themselves directly instead of making firms refer the Community law aspects of their cases to the Commission. The Commission argues that national authorities are closer to the activities that require monitoring and are often in a better position than the Commission to perform the role of watchdog. The new system should eliminate duplication of checks on compliance with the competition rules, as well as the risk of divergent decisions and the possibility of firms shopping around for authorities they believe may be favourable to their case.

It is proposed that national competition authorities should now be able to deal with matters relating to conduct that has an appreciable effect on trade between member states, either at their own initiative or at the Commission's request. However, the draft Notice makes it clear that the Commission should remain the only body with the power to authorize exemptions, in individual cases, to the ban on restrictive practices under Article 85(3) of the Treaty, or to deal with matters arising from an exemption, such as a complaint against a decision to withdraw it. Furthermore, the Commission suggests in its Notice that where a case involves businesses located in several member states, the Commission should deal with it, since it would be difficult for a national authority to conduct investigations beyond its borders.

Interested parties now have until October 25 to submit their comments on the preliminary draft notice, following which the Commission will publish it in its final form.


German state aid to Volkswagen disputed by Commission

The EU and Germany are continuing their discussions over aid granted by the state of Saxony to Volkswagen. In June, the Commission took a final decision to disallow Dm240.7 million (US$159 million) of aid which was part of a restructuring package for former East German state-owned plants at Chemnitz and Mosel. The Commission has decided to delay applying for a referral to the European Court of Justice which would enable it to obtain immediate emergency interim cancellation of the payment of the unauthorized part of the aid. It has not ruled out the possibility of such a referral completely. The delay was granted in return for the German government's undertaking to freeze state aid to Saxony to offset Dm91 million in illegal subsidies already paid to Volkswagen. Meanwhile, on September 16, the German government commenced proceedings at the European Court of Justice to annul the Commission's June decision.

The German Economy, Günther Rexrodt, has called for the wider application of Article 92/2/c of the EU Treaty, which allows for the provision of aid to certain regions of Germany to compensate for the cost of German reunification, and is insisting that the aid granted to Volkswagen falls within this article. The Commission has hitherto only allowed aid under Article 92/2/c in two cases, that of Daimler Benz, where Dm53 million was granted for the purchase of land at Potzdamer Platz in Berlin, and that of the Bavarian firm Tettauer Winkel, where aid was granted as compensation for the closure of a railway line. The Commissioner for Competition Policy, Karel van Miert, has re-emphasized that although the EU is not opposed to aid to the new German Länder, it must be achieved within a Community framework, and allowing Germany freedom to grant state aid would be extremely dangerous for the single market.

Michael Reynolds
Allen & Overy
Brussels

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