Rules Of Competition In The Association And Cooperation Agreements

Author:Damien Geradin
Profession:Professor of Law at the University of Liège and Director of the Global Competion Centre
Pages:33-42
SUMMARY

Competition Rules in the Agreements Concluded with the Mediterranean Partners. The Competition Rules in the New Euromed Agreements. The Effectiveness of the Competition Rules of the Association Agreements. The Implementation by the Council of Association. The Degree of Protection Enjoyed by Individuals. The Way Ahead.

 
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Competition Rules in the Agreements Concluded with the Mediterranean Partners

The first bilateral36 agreements between the EC and the Mediterranean Partners (MPs) essentially focused on the removal of some tariff and nontariff barriers and did not provide for any competition rules. 37 The insertion of such rules within the Association Agreements took a long time. It was initiated, on the one hand, with the launching of the accession process with the candidates of the Euro-Mediterranean area (Cyprus, Malta, and Turkey) and, on the other hand, with the opening of negotiations on a new generation of agreements (the "Euromed Agreements") with the other countries engaged in the Barcelona Process. This new generation of agreements now provides for competition rules. 38 Three main reasons explain this evolution.

A first reason is related to the impact of the discussions engaged in the WTO framework, as well as in other multilateral forums. As we have seen above, the link between free trade and competition policy is a very hot issue and is increasingly being discussed at the international level. 39 Not Page 34 surprisingly, this issue has also penetrated the negotiation of regional trade agreements (Idot 2002). Competition rules are now an essential component of such agreements, including those involving developing countries.

A second reason lies in the accession process and the Association Agreements previously concluded with the CEECs. These agreements (the "Europe Agreements") already provided for com-

BOX 5.1: EXAMPLES OF REGIONAL TRADE AGREEMENTS COMPRISING COMPETITION RULES
Central Africa Competition law and policy is addressed quite extensively in African sub-regional agreements, which include competition rules often based on the Treaty of Rome. The 1964 Brazzaville Treaty, which established the Central African Customs and Economic Union (UDEAC), had stated that restrictive business practices (RBPs) in trade between the member states should be abolished. Two regulations are currently being drafted within the framework of the Treaty Establishing the Economic and Monetary Community of Central Africa (CEMAC), which lay down principles for common competition provisions to keep both RBPs and Government activities under control. This Treaty will replace the UDEAC Treaty. It is also proposed, in pursuance of the Treaty on the Harmonisation of Business law in Africa, that a uniform act covering competition law should be adopted. This act would have direct legal effect in its 16 Member States which stretch from West to Central Africa. Pursuant to the Treaty establishing the Common Market for Eastern and Southern Africa (COMESA), member states agree that RBPs, which have as their object or effect the prevention, restriction or distortion of competition within the common market, should be prohibited. The COMESA Council will have the task of elaborating competition law regulations. Subsidies that distort competition and affect trade between Member States will also infringe the law, with some exceptions to this rule. In order to harmonize national competition policy, a regional competition policy will be put into force. Changes are also on the horizon in Southern Africa. The Southern African Development Community (SADC) has stated that measures shall be taken that render unfair business practices unlawful and at the same time enhance competition. Latin America and the Caribbean In Latin America and the Caribbean, Protocol VIII of the 1973 Treaty Establishing the Caribbean Community (CARICOM) states that the Community is to establish appropriate norms and institutional arrangements to prohibit and sanction anticompetitive behavior, and that Member States should adopt a competition law, create institutions and procedures for the enforcement of the law and make sure that access to enforcement authorities by nationals of other member states is catered for. Regarding anticompetitive cross-border business conduct, a Competition Commission is established at the regional level to enforce the competition rules. The Commission is also mandated to promote competition within the Community. In coordinating the implementation of Community competition policy, the Commission will work alongside national competition authorities in the enforcement of the law. Recently, MERCOSUR has adopted a protocol covering individual conduct or concerted agreements impeding, restricting, or distorting competition or free access to markets, or abusing a dominant position in a relevant regional market within MERCOSUR and affecting trade between its Member States. The enforcement of these norms can be ordered by the MERCOSUR Technical Committee on Competition Policy and Commerce Commission. National agencies of the Member States would then implement them. Common norms controlling anticompetitive behavior are on the horizon and national competition agencies are urged to promote cooperation in areas such as information exchange. Anti-dumping is also to be reviewed by MERCOSUR. The control of RBPs is also provided for by Decision 285 of the Commission of the Cartagena Agreement (established under the Andean Pact). Andean Pact institutions, unlike MERCOSUR, have supranational powers. Companies with a legitimate interest or Member States can request the Board of the Cartagena Agreement to apply measures which prevent or correct injury to production or exports which are the consequences of RBPs. The regulation of antidumping action or countervailing duties is also covered.
Source: UNCTAD, "Experiences gained so far on international cooperation on competition policy issues and the mechanisms used,- 25 April 2003.

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petition rules similar to those of the EC Treaty. 40 The replication of such rules in the Euromed Agreements shows a form of spill over effect of the Europe Agreements (Idot 2002). This effect is particularly significant, as the first new generation Euromed Agreements were concluded just after the adoption of the latest Europe Agreements. It thus seems that the EC institutions sought to achieve a certain degree of standardization of the competition law provisions inserted in their external Association Agreements. 41

Finally, this evolution takes place within a process of increasing economic integration between the EC and the MPs. The first generation agreements have contributed to dismantle tariff and nontariff barriers (although many such barriers remain) and have increased market access to foreign operators. As a result, the MPs have become important trading partners of the EC. 42 Market access could, however, still be impeded by anticompetitive behaviors from private operators. 43 In order to prevent that trade between the EC and its Euromed partners be restricted by such practices, competition rules were enacted so as to complement the classic trade provisions (Lahouel 2000).

The Competition Rules in the New Euromed Agreements

The competition provisions of the Euromed Agreements can be found in the title related to "payments, capital, competition and other provisions." 44 It can be reasonably inferred from this that the competition rules of these agreements have to be considered as rules designed to complement the main trade provisions (such as provisions on tariffs, customs).

As far as competition rules are concerned, the MPs are subject to a differentiated treatment. A first group of countries are bound by a complete set of competition rules equivalent to articles 81, 82, 86, and 87 of the EC Treaty. This is, for instance, the case of the agreements concluded with Morocco and Tunisia. It must also be noted that these agreements contain a provision on State commercial monopolies, similar to Article 31 of the EC Treaty. A second group of countries, whose agreements with the EC are more recent, are bound by a more limited set of competition rules since these agreements do not include provisions on State aids. This is the case for Algeria and Lebanon. Moreover, the wording of the competition rules of these agreements is slightly different. Notwithstanding this distinction, the competition provisions of the Association Agreements will be analyzed altogether. 45First, it is important to note that the competition rules contained in these agreements will only be applicable to situations where trade between the EC and the associate countries is hampered. 46

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This measure is comparable to the criterion that triggers the application of EC competition rules inside the EC legal order, which requires that trade between Member States be affected. As in the EC, it is also not exclusive of the application of national laws. 47

The competition rules declare incompatible all (i) restrictive agreements between undertakings, (ii) abuses of a dominant position by one or more undertakings, and (iii) State aids that distort, restrict, or prevent competition. 48 The first agreements of the new generation also provide for rules with regard to State monopolies having a commercial character, as well as public undertakings and undertakings enjoying special or exclusive rights. These provisions must be applied according to the criteria of interpretation flowing from the provisions of the EC Treaty. In other words, the competition rules found in the Euromed Agreements have to be interpreted in conformity with the EC secondary legislation, the decision-making practice of the European Commission and the case law of the European Court of Justice (ECJ) and of the Court of First Instance (CFI). 49 It is expected that each agreement will be progressively implemented...

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