This is a short report which relates to an old proposal that has been in existence for five years now to exercise control over concentrations which may affect the free working of the market. The control proposed is similar to a control which is already in existence over agreements between undertakings or abuse by large undertakings of their dominant position within the Common Market or in a substantial part of it. The proposed new Regulation, this being in draft for our consideration at this stage, would apply to concentrations where either there is an aggregate turnover of the undertakings involved exceeding 500 million units of account—which is I suppose about £275 million—and, as well, a market share of more than 20 per cent or if that turnover is not reached, the turnover is less than that, where the market share in any case exceeds 30 per cent. Apart from the control which would arise in either of these situations it is proposed in the Regulation that there would be compulsory notification in a case where the undertaking being taken over has a turnover of more than 50 million units of account. Under the proposal the Commission can commence proceedings within three months. If it does not the concentration is presumed to be compatible, that merged concentration is to be considered. However, if it is a decision of the Commission to investigate it or make inquiries then it must make a final decision within nine months on proceedings. Based on criteria specified in the Regulation the Commission may declare that the concentration is incompatible or that it is entitled to be exempted subject to conditions. If it is incompatible the Commission are entitled to get the concentration broken-up, impose fines and so on, subject to appeal to the Court of Justice.
Under the existing law of the Community if an undertaking acquires a dominant position and proceeds to abuse it the Commission have power to require the undertaking to end the abuse.
The court has held that it may do this in the case of a merger if the abuse arises through a merger and as a result of the merger the undertaking is so strengthened that a degree of dominance has been reached which substantially fetters competition, which is defined by the Court as the situation in which only undertakings whose behaviour depends on the dominant one remain in the market. Under existing law no criteria, no turnover figures or market shares, are specified; it is left at large, as I understand the position. But under the existing law, though left at large, the Commission can order decartelisation. Therefore the Commission already possess substantial power but are seeking power to prohibit proposed mergers. The Joint Committee have been affected in the drafting of this report by the view which has been expressed in one authoritative journal that the staff would require to be increased by two-thirds, that is, the staff of the Directorate General dealing with this matter, and that the machinery would become dangerously bureaucratic. In effect it was felt that the Regulation discloses an attitude which is anti-merger as distinct from merely being concerned with abusive market possession or dominance arising.
The Joint Committee question whether the proposed Regulation represents the best way of extending Community control. In doing so it has also been affected by views expressed quite strongly to it by the Confederation of Irish Industry. The Joint Committee expresses the view that the Commission's control—if the Regulation were adopted—should be through a consultation process with the Advisory Committee whose approval the Joint Committee believes should be required, the Advisory Committee consisting of an official from each Member State.
There are just two other points on it. A 12-month period was given to the Commission to reach a decision. In the Sub-Committee's view the requirement should be to commence proceedings within a month and to give a decision within two months. Finally, the Joint Committee stresses the confidentiality requirements of the proposed Regulation and the necessity for their strict observance and enforcement.
Perhaps it is relevant too to remind the Joint Committee at this stage that we have just passed through both Houses of the Oireachtas legislation which is awaiting the signature of the President which would give ministerial control of mergers which involve the merging of Irish companies or of Irish companies with foreign companies, where both the merging companies have either assets of £1¼ million or a turnover of £2½ million, irrespective of their market share. The control existing in this segment of the market is therefore very much more extensive than anything proposed in this proposal which will be the law very shortly and will also give power to the Minister after certain procedures are followed to order the decartelisation or the break up of anything which constitutes a monopoly, which is defined as being anything in excess of 50 per cent of the market or being in receipt of 50 per cent of the commodity used or the commodity supplied. Companies which export 90 per cent of their production are excluded. That summarises the situation as I find it.
