Tough performance earns praise and criticism in equal measures

Date: 21/12/1995

By Tim Jones

AS he ends his third year in the job, Competition Commissioner Karel Van Miert can look back on 1995 as the time when he won his spurs.

It was already obvious that Van Miert was not a soft touch. In 1994, he slapped record fines of 104 million ecu on 14 top European companies for price-fixing in the sale of steel beams.

But this year was different. With the 1996 Intergovernmental Conference approaching and Germany calling for an independent cartel office for Europe, it was up to Van Miert and his staff to show they could do their job. That meant policing European industry for the creation of dominant companies that could become monopolies in their sector, fighting restrictive practices and whittling down unfair state aid.

Van Miert has turned in a tough performance, so much so that critics within the Commission have accused him of being a prisoner of his competition-fanatic services.

He won equal praise and criticism for his relentless refusal to allow the creation of the 'Atlas' business communications joint venture between France Télécom and Deutsche Telekom until the two sides agreed to open up parts of their markets before the 1998 deadline.

Spain was pressed to shut down a Barcelona paint-shop in return for payment of a subsidy to car-maker SEAT, national telephone firms were cajoled into providing equal access to second mobile-phone operators and Greece was bullied into a quick-fire privatisation of the largest shipyard in the Mediterranean.

The Commission faced its biggest-ever, and arguably its trickiest, state aid case as an ill-timed expansion plan left Crédit Lyonnais on the verge of bankruptcy. The bank was allowed to shift a staggering 21 billion ecu (more than half Ireland's national debt) of problem assets into a vehicle company for disposal over a given period and the Commission allowed Paris to inject 6.9 billion ecu of state aid into the bank, but only if it was slimmed down by 35&percent; within three years.

Van Miert did his best to crack down on state aid, although a survey published in the summer showed subsidies still account for 94 billion ecu or 2&percent; of EU gross domestic product every year.

In the area of company concentrations, the Commission began to detect new patterns of corporate behaviour and became more aggressive in its use of the five-year-old merger regulation. Since its inception, it has only been used to block four mergers, mainly over the past 18 months.

For Van Miert, the reasons for this are simple. “This year, we are going to have more mergers than last year,” he said. “With more merger cases and bigger and bigger mergers, the likelihood of more negative decisions is also increasing.” Mergers in the first nine months of the year accounted for 50 billion ecu, with banking, media and utilities companies heading the field.

As in previous years, the majority of cases sailed through the Commission's monitoring procedures. This is either because they operate in markets so competitive and open that they cannot take up a monopolistic position, or because companies are canny enough to anticipate objections and do something about them in advance.

Big cases where asset sales were required included the creation of the world's largest packaging and railway systems manufacturing firms, and Europe's biggest forestry products group.

The 3-billion-ecu merger of CarnaudMetalbox and Crown, Cork & Seal was cleared in November after the companies agreed to sell five plants, representing 22&percent; of the European market for tinplate aerosol cans. The merger of Finnish pulp and paper giants Repola and Kymmene to create UPM-Kymmene was cleared after they agreed to shed their paper sack units, while ABB and Daimler-Benz were allowed to merge their railway systems units when Daimler agreed to sell a small metro and tram system equipment-maker.

Van Miert chose 1995 to keep an eagle eye on digital and satellite television and on-line services, to avoid small players in this emerging market being smothered at birth. For the Commissioner, the key element in the media sector is the fact that it is still mostly national, and thus is open more than is usual to dominance by one or more companies.

In July, he stopped the formation of Nordic Satellite Distribution - a joint venture between Scandinavian media and telephone companies - on the grounds that it would dominate the Nordic market. This autumn, the proposed creation of the Holland Media Groep between three Dutch commercial television companies was blocked on the grounds it would have dominated the Dutch market for advertising.

In the nascent on-line market, DGIV is acting very tough. At the end of the year, three different on-line investigations were under way into ventures involving Europe Online, America Online and Microsoft.