Lawyers seek clarification of collective-dominance rules

Date: 17/02/2000

By Peter Chapman

EU LEGAL experts are calling on the European Commission to clarify its approach towards deals which result in 'collective' market dominance by a handful of companies.

The demand comes in the wake of Competition Commissioner Mario Monti's surprise decision last year to block UK tour operator Airtours' planned take-over of rival FirstChoice on the grounds that the move would have left control of the British market in the hands of a few top firms.

Monti insisted he had no choice but to block the take-over after Airtours failed to offer enough concessions to offset the deal's negative impact on competition.

Experts believe that the ruling signalled that the Commission's competition directorate-general intends to take a tougher line in future on deals which could lead to collective dominance of a market - even when there is no evidence that the firms involved would actually collude with each other to carve up the market between themselves.

But lawyers say the situation remains unclear and insist that Monti should set out the Commission's approach soon by publishing a formal explanatory 'notice'. Otherwise, they complain, companies will not know whether such deals are likely to be blocked until there is a substantial body of case law to guide them.

Gerwin van Gerven, a lawyer with firm Linklatters and Alliance and co-chairman of the American Chamber of Commerce's competition committee, said it was still "unclear" how the Commission would approach cases involving collective dominance. "It is in its formative stage. It is unclear what the Commission means. I think they should issue a notice as soon as possible," he said.

Other Union lawyers agree that clarification is needed, although some concede that the Competition Commissioner may need more time to come up with definitive guidelines. "The Airtours' decision was not just confirming previous case law. It went a step further. I think there is a clear need for the Commission to give some guidance, although I think Monti would be right to get one or two more cases under his belt first," said Fiona Carlin, of law firm Oppenheimer, Wolff and Donnelly.

Carlin said the next key test of the Commission's approach to this issue was likely to be a planned merger between some of the world's biggest aluminium companies. The Commission is due to rule by 22 March on the three-way deal between Alcan, Pechiney and Alusuisse which would create the world's second largest aluminium firm.

A spokesman for Monti said this week that officials were considering the requests for publication of a notice outlining their approach, but added that this was unlikely to emerge until the Commissioner has completed work on a raft of other planned changes to the EU's competition rules and procedures.

EU legal experts are calling on the European Commission to clarify its approach towards deals which result in 'collective' market dominance by a handful of companies.