The Gazette 1989

FEBRUARY

1989

GAZETTE

internal market necessitates a specific merger control instrument especially adapted to deal with an increasing number of cross-frontier mergers. The proposed merger regulation is based on the following principles: - The Regulation will apply only to mergers "having a Community dimension", related to geogra- phical scope and turnover. - Qualifying mergers must be notified in advance and not implemented until the Com- mission has considered them. - Mergers which create or strengthen a dominant position in the Community, will not be compatible with the single market. Where the combined market share of the companies concerned does not exceed 20%, it is presumed that a dominant position does not exist. Above this threshold, a merger will only be permitted if it would contribute to improving the production or distribution of goods or would promote tech- nical or economic progress. - The Commission will have only two months following notifi- cation to initiate proceedings and a final decision would normally have to be taken within the following four months. Conclusion By the end of 1988 the Com- mission had tabled 243 of the approximately 300 directives covering the proposals contained in the 1985 White Paper for the completion of the Internal Market.

The adoption in the Single European Act of Article 100A per- mits the Council to adopt legis- lation relating to the completion of the Internal Market on the basis of a "qualified majority" rather than an absolute majority. Although inevitable political objections persist in many fields, this pro- cedure will ensure that measures cannot be blocked by one or two recalcitrant Member States. Despite widely held views that 1992 is still a pipe dream, the momentum is inevitable: the goal of a single Euro- pean market is going to be achieved. The DTI campaign to promote 1992, spearheaded by Sir John Harvey-Jones and Sir John Egan, is designed to remedy the level of ignorance as to the implications of 1992 for British business. Solicitors have an important role to play; they should inform themselves of the issues and be prepared to advise on the implications for their clients of a range of new laws and business opportunities. MICHAEL HUTCHINGS Love1 White Durrant London Michael Hutchings practises in the field of EEC law, and spent four years in his firm's office in Brussels. He is currently Vice-Chairman of the English Law Society's Solicitors European Group, and wrote this article for publication in its Journal. It is reprinted here with permission of the author and some minor changes have been made to suit the Irish context. •

Ireland is a member). Member States will no longer be allowed to favour suppliers in IT (or other) public procurement programmes. Testing and certification of equip- ment will follow common pro- cedures. The removal of fiscal barriers The Commission regards the harmonisation of indirect taxation as an essential and integral part of achieving the Internal Market. The first step to achieving such harmonisation will be the approxi- mation throughout the EEC of turnover tax (VAT) rates. Contrary to reports in the press, the Commission's aim is not to impose uniform rates throughout the EEC, but rather to restrict variations between rates for particular classes of goods. This is analogous to the American practice which suggests that variations of indirect tax rates of more than 5% lead to distortions of trade. The Commission is there- fore proposing to set standard rates for indirect taxes on classes of goods which Member States will be permitted to exceed or undercut by margins of 2.5%. For example, if the standard rate for particular goods were to be set at 16.5% actual rates adopted by Member States could be in the range of 14% to 19%. Merger Control At present the Commission can control mergers only through the application of the competition rules contained in the Treaty (Articles 85 and 86). The completion of the

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