Time-limits for ventures close

Date: 12/06/1997

By Tim Jones

PLANS to impose strict deadlines on the investigation of massive joint ventures between European companies are attracting widespread support among member states.

Reform of the EU's anti-trust rules would put inquiries into 'cooperative' joint ventures on to an equal footing with those into straightforward 'concentrative' mergers.

This would mean that an initial decision as to whether the concentration had anti-competitive effects would have to be taken by the European Commission within a month, and a further in-depth investigation would have to be completed within four months.

Soundings among the Union's national competition authorities over the past month have produced a consensus that these reforms are both necessary and acceptable, and member states' government negotiators are also falling into line.

Although some of the measures proposed by Competition Commissioner Karel van Miert in a consultative Green Paper on the merger regulation in January 1996 ran into fierce opposition from governments, this proposal is likely to be adopted.

This will come as welcome news to telecommunications operators, almost all of which are regrouping into global alliances so as to win international business in the run-up to full voice-telephony liberalisation in January next year.

Since these are not full 'concentrative' mergers, but are based instead on cooperation between operators in specific areas such as business communications, they are investigated under Article 85 of the Treaty of Rome rather than the seven-year-old merger regulation.

This article of the treaty bans agreements among undertakings which both affect trade between member states and distort competition, but it sets no time-limits for completion of the Commission inquiry.

This can lead to significant hold-ups in establishing new ventures.

When, for example, Deutsche Telekom, France Telecom and Sprint announced their intention to form their 'Global One' joint venture to develop the market in business communications back in July 1994, they had to wait until December 1995 for the Commission to give its provisional go-ahead and a definitive decision was not taken until last summer.

Similarly, Van Miert did not give his blessing to the creation of the 'Unisource' global alliance between the Spanish, Swiss, Dutch and Swedish telecommunications operators along with US giant AT&T until after more than a year of inquiries.

And while British Telecom's cooperative alliance with US carrier MCI took two years to win Commission clearance, the complete merger of the companies to create 'Concert' was approved within five months.

The need to speed up these procedures is becoming ever more pressing as the number of joint ventures increases in all utilities sectors.

Eight concentrations notified to the Commission at the end of January have been cleared, while a proposed aircraft engine joint venture between France's Societe Nationale d'Etude et de Construction de Moteurs d'Aviation (Snecma) and Canada's Pratt & Whitney announced in the same week under Article 85 still awaits a verdict.

Van Miert is optimistic that agreement can be reached both on this aspect of the reforms and on how to deal with multiple notifications of mergers to national authorities in time for the new rules to come into force from the beginning of next year.

“I hope we will be able to come to conclusions before the end of the year, but it would not be a drama if we needed a few months more,” he insisted.