- Article 85 EC provides as follows: The following shall be prohibited as incompatible with the common market; all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which:
- (a)directly or indirectly fix purchase or selling prices or any other trading conditions;
- (b)limit or control production, markets, technical development, or investment;
- (c)share markets or sources of supply;
- (d)apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
- 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.
- 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
- —any agreement or category of agreements between undertakings;
- —any decision or category of decisions by associations of undertakings;
- —any concerted practice or category of concerted practices; which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
- (a)impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
- (b)afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
- 3 IP/96/1214.
- The full text of the press release reads as follows: ‘The Commission has cleared an Agreement notified by the companies participating in the development of the Britannia gas field in the United Kingdom. The notified oral agreement concerned the decision by the participating companies to appoint one of their number as the single sales negotiator on behalf of them all. The Commission has concluded that this Agreement did not affect trade between Member States and was therefore outside the scope of the European Community's competition rules. This was a factual determination relating solely to the notified oral agreement which was in force between February 1992 and the end of 1994.
- The Britannia gas condensate field is a relatively large gas field in the central area of the UK Continental Shelf (UKCS). Reserves are estimated at 2.3 trillion cubic feet, which in the plateau period (1998–2004) will result in 740 million cubic feet per day (mcfd) or annual 7.4 billion cubic metres (bcm) production. Presently, it is the largest undeveloped UK gas field. Condensate (a form of light crude oil) evacuation is projected to account for a significant part of initial revenues.
- The field ownership was, at Notification, divided between the following companies: Conoco (UK) Ltd, Conoco Petroleum Ltd, Chevron UK Ltd, Union Texas Britannia Ltd, Santa Fe Exploration (UK) Ltd, Texaco North Sea UK Company, Phillips Petroleum Co UK Ltd, and Amerada Hess Ltd. In addition, there have been a number of previous owners, who have sold out, but whose share was minor, including British Gas and Oryx. Amerada Hess left the consortium in January 1996’.
- OJ 1996 C291/10
- Article 19(3) notice, para 6.
- The ‘Chapter 1 prohibition’ reads in relevant part as follows:
- 2.-(1)Agreements between undertakings, decisions by associations of undertakings or concerted practices which—
- (a)may affect trade within the United Kingdom, and
- (b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom, are prohibited unless they are exempt in accordance with the provisions of this Part.
- (2)Subsection (1) applies, in particular, to agreements, decisions or practices which_
- (a)directly or indirectly fix purchase or selling prices or any other trading conditions;
- (b)limit or control production, markets, technical development or investment;
- (c)share markets or sources of supply;
- (d)apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- (e)make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
- (3)Subsection (1)applies only if the agreement, decision or practice is, or is intended to be, implemented in the United Kingdom.
- (4)Any provision of an agreement or decision which causes the agreement or decision to infringe the prohibition imposed by subsection (1) is void.
- (5)For the purposes of this Part “agreement” includes any agreement which, even though it is not enforceable, would be an agreement for the purposes of Article 85.
- (6)A provision of this Part which is expressed to apply to, or in relation to, an agreement is to be read as applying equally to, or in relation to, a decision by an association of undertakings or a concerted practice (but with any necessary modifications).
- (7)Subsection (6)does not apply where the context otherwise requires.
- (8)In this section “the United Kingdom” means, in relation to an agreement which operates or is intended to operate only in part of the United Kingdom, that part.
- (9)The prohibition imposed by subsection (1)is referred to in this Act as “the Chapter I prohibition”.’
- Restrictive Trade Practices (Gas supply and connected Activities) Order 1986, SI 1986 No 1810, as amended.
- Article 90 provides:
- ‘1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular to those rules provided for in Article 6 and Articles 85 to 94.
- 2. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community.
- 3. The Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States.’
- Today, this problem is increasingly being solved by building portfolios of gas for shorter term and spot sales.
- See Hart's Daily Petroleum Monitor, 11 November 1997, where it was reported that Ruhrgas’ attempt to block the jurisdiction of the US Courts was rejected by the US Supreme Court.
- Council Directive 91/296 of 31 May 1991, OJ 1991 L147.
- IP/96/139 (13 February 1996).
- CONF/4001/97, p 81.
- Commission Communication on ‘Services of general interest in Europe’, OJ 1996 C281 and 1996 EC Competition Report at pp 23 and 53.
- UK/Continental Sub-sea Gas Interconnector—OJ 1995 C73.
- OJ 1993 C43/2.
- Point 18.
- Point 20.
- OJ 1997 L180/1.
- Case 23/67 11967] ECR 407, [1968] CMLR26.
- Optical Fibres OJ 1986 L236/30.
- OJ 1968 C75/3.
- See, most recently T-19/92 Groupement d'Achat Edouard Leclerc v EC Commission [1997] 4CMLR 995.
- Points 65–69.
- Supra, note 5, Para 3.
- Commission Press release IP/97/227 (17 March 1997).
- Commission Press release IP/96/1183 (17 December 1996).
- In the UK, the Offshore Infrastructure Code of Practice (January 1996) also must be taken into account.
- Supra, note 16.
- OJ 1997 C372/13 (9 December 1997).
- OJ 1986 C231/2.
- 15 October 1997.
- Notification of a merger to the Commission is effected by way of Form CO. Notification of an agreement which may fall within the prohibition of Article 85(1) is effected by way of Form A/B.
- This conclusion has been adopted by the Commission in the past. See Elf/Occidental (Case IV M085, 13 June 1991) Kelt/American Express (Case IV/M672, 12 February 1996).
- Supra, note 23.
- Supra note 31.
- Supra note 17.
- The following guidelines for regulating the functions of the joint gas negotiating committee were set out in Chapter 11 of the Report to the Storting No 46(1986–87):
- ‘1. The committee is to act as a permanent advisory body for the Ministry of Petroleum and Energy in questions associated with the disposal of natural gas reserves and evaluations of which fields and transmission systems can most expediently be developed or exploited to deliver natural gas under new contracts. Close contact should be maintained between the committee and the authorities in these matters.
- 2. The committee is also to be in charge of necessary investigation and an analysis in connection with natural gas sales. Preparation and implementation of gas sales negotiations are to take place under the direction of the committee under Statoil's supervision. Necessary clarification in the licence groups is to take place in accordance with established decision-making procedures.
- 3. It is the authorities’ task to decide which fields are to be developed. Clarification with potential buyers concerning which fields are to be included in a gas sales agreement can therefore take place only after the authorities have decided on this.’
- It was further stated that ‘In consultation with Ministry, Statoil, Norsk Hydro and Saga Petroleum are expected to draft a cooperation agreement for the committee.’
- STATEMENT OF THE EEA JOINT COMMITTEE:
- ‘THE CONTRACTING PARTIES TO THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC AREA: RECOGNISING the major impact of the petroleum sector on the Norwegian economy and the development of its society.
- HAVE AGREED as follows:
- THEY TAKE NOTE that the Agreement on the European Economic Area in no way prejudices the rules in Contracting Parties governing the system of property ownership;
- THEY RECOGNISE that the Contracting Parties have sovereignty and sovereign rights over petroleum resources; THEY RECOGNISE to this effect that the Contracting Parties have:
- (a)the right to State participation in petroleum activities, including the national competence to determine the share of that participation, and to appoint a legal entity to manage that participation;
- (b)exclusive rights to resource management, inter alia, exploration and exploitation policies, the optimalisation of development and production and the rate at which petroleum resources may be depleted or otherwise exploited;
- (c)exclusive rights to specify and levy taxes, royalties and other financial payments payable by virtue of such exploration and exploitation.
- and REAFFIRM that the exercise of such rights by the Contracting parties must be in accordance with the Agreement on the European Economic Area and the other European Economic Area provisions.’
- [1993] I ECR 5801, [1995] 5 CMLR 145.
- See Note 36 above.
- See, eg, Case 13/77 GB—Inno v ATAB [1977] ECR 2115, [1978], CMLR 283 Case 267/86 Van Eycke v ASPA NV [1988] ECR 4769 [1990] 4 CMLR 330. See also Case 66/86 Ahmed Saeed Flugreisen v Zentrale zur Bekaempfung Unlauteren Wettbewerbs [1989] ECR 803, [1990] 4 CMLR 102 and Case 30/87 Bodson v Pompes Funèbres des Regions Libérées [1988] ECR 2479, [1989] 4 CMLR 984.
- See by analogy Case 231/83 Cullet v Leclerc [1985] ECR 305, [1985] 2CMLR 524—public authorities may fix prices.
- COM(95) 682 final (1995).
- See, eg, The Society of Lloyd's v Clementson, [1995] CLC 117.
- See, eg, Floral OJ 1980 L39/51, [1980] 2CMLR 285.
- OJ 1962 2921.
- OJ 1983 L173/1.
- Article 3(b). If one of the parties has annual turnover of less than Ecu 100 million, the exemption is available.
- Cooper Basin Natural Gas Supply Arrangements determination, where an adverse decision of the Australian Competition and Consumer Commission (27 March 1996) was reversed by the Australian Competition Tribunal, VG 1 of 1996, 14 October 1997.
Journal of Energy & Natural Resources Law
Volume 16, 1998 - Issue 3