Move to harmonise scrutiny procedures

Date: 01/05/1997

By Chris Johnstone

THE EU and US could in future work to the same deadlines in scrutinising transatlantic business deals in order to reduce possible conflicts between authorities, Competition Commissioner Karel van Miert has suggested.

The issue of harmonising procedures was raised for the first time during recent meetings between Van Miert and his US counterparts, but is unlikely to produce a swift agreement.

“That debate on rules and procedures will take a lot of time. US cases usually last longer and sometimes we cannot wait to give our decision - which annoys them,” explained the Commissioner.

Faced with an existing ruling on a key case by its counterpart on the other side of the Atlantic, the laggard authority has the stark choice of falling into line with it or causing confusion by taking a different view.

It is not always the Americans who are in the slow lane. The European Commission found itself in that position over the merger between Kimberly-Clark Corporation and Scott Paper Company to create the world's largest producer of tissue paper.

The 7.1-billion-ecu deal was cleared first by the US justice department in late 1995, leaving the Commission with no option but to allow the merger to go ahead everywhere but in the European Economic Area while it made up its mind what to do next.

Harmonising competition procedures would be a big step forward from current moves by Commission officials to seal a closer working relationship with US authorities through a new cooperation agreement which, says Van Miert, should be tied up within a few months.

The new accord between the EU and US would enable each side to let the other take the lead in key competition cases which affected both of them.

National governments have already said they are in favour of a fresh deal, but European businesses have given a mixed response after being canvassed for their views.

The 'step-aside' provision would not affect merger cases (such as the ongoing case load of BT/MCI and Boeing/ McDonnell Douglas) where the final decision to clear, ban or demand changes will remain with individual competition authorities.

Brussels officials have also built in a demand that Washington renounces laws giving it the power to deal unilaterally with competition cases in Europe which have an impact on US companies.

The US has seldom exercised its extra-territorial muscle against European companies in competition cases, but the fact that such powers are held in reserve and have occasionally been used rankles with the EU.

American competition officials have collared such big-name companies as UK glass producer Pilkington using these provisions. Pilkington was found guilty in 1994 of attempting to prevent US glass producers from exporting to key markets by promising to sell them state of the art technology if they kept away.

Insurance market Lloyds of London has also been caught in the extra-territorial net.

The Union has no power to take similar action against US firms on their home ground. “We are trying to redress the imbalance with this proposal,” said one EU official.

Union and US representatives have informally put some of the new agreement's provisions into effect already by conceding case leadership to the other. In the case of US retail market researcher AC Nielsen, American officials allowed their Union counterparts to pursue the probe into a suspected abuse of dominant position because most of the market effects were in Europe.

The two sides had already demonstrated that a high degree of cooperation could be achieved in the Microsoft case, where close liaison in the investigation of the software giant allowed the Commission and US department of justice to agree on similar remedies to settle the case.

By the end of June last year, 15 months after the first EU-US competition agreement had come into force, the Americans had notified Brussels of 44 cases where they believed they could cooperate and the Europeans had in turn signalled 54 cases to Washington.