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29.7.

98 EN Official Journal of the European Communities C 238/3

Notice pursuant to Article 19(3) of Council Regulation No 17 concerning a request for negative
clearance or exemption pursuant to Article 85(3) of the EC Treaty
(Case No IV/36.592 — CegetelØ+Ø4)

(98/C 238/03)

(Text with EEA relevance)

A. Introduction 5.ÙBT is the historical telecommunications operator in
the United Kingdom and is now active worldwide.
1.ÙOn 18 July 1997 the Commission received notifi- BT’s worldwide turnover for the year ending 31
cation pursuant to Article 4 of Council Regulation March 1997 was GBP 14Ø935 million (ECU 18Ø352
No 17 concerning a set of agreements, by which million). BT is the majority owner of Concert
Compagnie G~n~rale des Eaux (‘CGE’), British Communications which provides value-added and
Telecommunications plc (‘BT’), Mannesmann AG enhanced services to multinational companies.
and SBC International Inc. (‘SBCI’) have agreed on
the respective contribution, interests and commercial
relationships in connection with Cegetel.

6.ÙMannesmann AG is the ultimate parent of a diver-
sified industrial group, with a worldwide turnover
2.ÙThis notification concerns the restructuring of of DEM 34Ø683 million (ECU 18Ø163 million).
Cegetel which was created at the end of 1995 by Mannesmann AG intends to become the second tele-
CGE and was already active on previously liberalised communications operator in Germany, through its
segments of the telecommunications market, joint venture with Deutsche Bahn. Mannesmann AG
particularly in mobile telephony (SFR) and in paging operates the second GSM mobile network in
(TDR). Germany.

It is related to the notification of the agreements
7.ÙSBCI is a wholly owned subsidiary of SBC
between the SNCF and Cegetel concerning T~l~com
Communications Inc. SBC is one of the seven
D~veloppement (‘TD’) (Case No IV/36.581), a
regional telecommunications operators in the United
jointly controlled subsidiary to which SNCF has
States. It is one of the world’s leading diversified
contributed its existing telecommunications network
telecommunications companies, with nearly 114Ø000
(9Ø000 km of optical fibre cables), now being
employees and a net income of more than USD
developed into an alternative longdistance infra-
3Ø000 million.
structure network, by the additional roll-out of
6Ø000 km of optical fibre cables.

3.ÙCegetel’s goal is to become the second full-service C. The notified operation
telecommunications operator in France, by offering a
full range of telecommunications services. Cegetel 1. Shareholding
launched its long-distance operation in February 8.ÙCGE initially held 100Ø% of Cegetel. As a result of
1998. In the short term, it will not be active on the the agreements, the parties hold, directly or
local telecommunications market. indirectly, the following participations in Cegetel:
CGE (44Ø%), BT (26Ø%), Mannesmann (15Ø%) and
SBCI (15Ø%).

B. The Parties

4.ÙCGE is a diversified company, providing a full range 2. Management
of services: water supply, waste management,
building and public works, real estate, communi- 9.ÙCegetel is managed by a board of directors, which is
cation (multimedia, cable television, telecommuni- assisted by an Executive Committee and other
cations). CGE’s worldwide turnover in the financial committees. The board comprises nine directors (five
year 1996 was ECU 25Ø552 million (FRF 165Ø914 from CGE, two from BT, one from Mannesmann
million), 3,6Ø% of which was in the telecommuni- and one from SBCI), among whom a chairman is
cations sector. appointed.
C 238/4 EN Official Journal of the European Communities 29.7.98

10.ÙThe four shareholders have a balanced influence on 4. Non-compete clauses
the Executive Committee which is designed to play a
key role in determining the common position of the
shareholders regarding major strategic decisions. 16.ÙAll parties agree that Cegetel and its subsidiaries
The Executive Committee is chaired by either shall be the sole entities through which they will set
Cegetel’s Directeur G~n~ral or the CGE represen- up and carry out any telecommunications activity in
tative at the Executive Committee. France, subject to any applicable competition rule
relating to passive sales. Some very specific activities
are excluded from this non-compete clause.
11.ÙThe Executive Committee is designed to operate by
unanimous consent, but a dispute resolution
mechanism is provided for. In the event that no
agreement is reached on a matter, this matter is 5. Preferred supplier and preferred customer clauses
finally decided by the board of directors (at a ‘final
board’) by simple majority, subject to veto rights and
specific consent rights. 17.ÙCommercial contracts between Cegetel and any of
the four shareholders will be concluded on a
preferred supplier basis. This means that when
Cegetel is the purchasing party, it will select one of
the shareholders as the supplier in priority to third
3. Scope of business activities parties, where the terms offered by this shareholder
match or are more favourable than any agreement
that could reasonably be reached with a third party,
considering all relevant factors (price, volume,
12.ÙCegetel is active in France only, including overseas quality of service, etc). Conversely, a shareholder
departments and territories, and will address all will select Cegetel as its supplier where the terms
segments of the French telecommunications market. offered by Cegetel are at least as favourable as any
Under the provisions of the shareholders’ agreement, offer that could be made by a third party.
it is prohibited from investing in infrastructure
outside France.
The same mechanism prevails in the commercial
relationship between Cegetel and its subsidiaries.
13.ÙCegetel and the companies controlled by it offer a
full range of domestic and international telecom-
munications products and services (notably various
18.ÙCegetel will cooperate with BT for the development
voice and data services to end-users both residential
of Cegetel’s international traffic, on a ‘preferred
and corporate, the distribution of Concert services,
supplier’ (as explained in the previous paragraph)
delivery of these services through the construction
and a ‘preferred customer’ basis. BT will be the
and operation of a domestic network and/or inter-
preferred supplier of Cegetel for the outgoing inter-
connection with other operators, international
national traffic products and services, except in
services, infrastructure services, outsourcing and
comparison to the other shareholders. Cegetel will
facilities management, Internet access provision).
be the preferred supplier of BT for termination of
incoming international wholesale voice traffic in
France.
Cegetel will further develop its mobile telecommuni-
cations activities in France, which are currently
carried out by its subsidiary SFR.
Cegetel will be BT’s favoured customer for outgoing
international wholesale voice traffic: BT will offer to
Cegetel terms and conditions that are at least as
14.ÙAt the end of 1996, Cegetel withdrew from SIRIS, a favourable to Cegetel as those conditions that BT
venture set up in 1995 with Unisource and which is offers to other licensed operators in France. BT will
active on the corporate telecommunications market be Cegetel’s favoured customer for termination of
in France. Cegetel has acquired the existing incoming international voice traffic in France:
corporate telecommunications business (only to the Cegetel will offer to BT terms and conditions that
extent of supplying global products) of BT’s affiliate are at least as favourable to BT as those conditions
in France (BT France). that Cegetel offers to any other operator in the
United Kingdom.

15.ÙTelephony over cable-TV networks is not included
in Cegetel’s scope of business at this stage, unless the The other shareholders have the possibility to enter
parties unanimously agree otherwise. into similar arrangements.
29.7.98 EN Official Journal of the European Communities C 238/5

6. The Concert distribution agreement 4. The main competitors on these markets

19.ÙCegetel is appointed as exclusive distributor of 25.ÙIn France, as well as in most European countries, the
Concert services in France and agrees to appoint BT incumbent telecommunications operator, France
as its exclusive supplier for all global products. In the T~l~com, holds a dominant position in nearly all
event that Cegetel is expressly required by a segments of the telecommunications market, due to
customer in France to provide a global product other its former legal monopoly on infrastructure and
than a Concert service, the case would be reported services.
to the Executive Committee.
26.ÙOnly one other firm has publicly announced its
intent to become a fully-fledged telecommunications
D. The relevant market operator in France: Bouygues, which has entered
into an alliance with Telecom Italia.
1. Product market
Several other operators are progressively entering
20.ÙCegetel will address all segments of the French tele- the French market for corporate telecommunications
communications market, which can be further services (AT@T/Unisource, Colt, WorldCom, etc.)
divided into specific segments (for example: voice or the market for leased lines (Hermes,
telephony services, both long-distance and local; MFS-WorldCom, etc.).
mobile telephony; data services; Internet service and
access provisions; outsourcing of telecommunications
services; managed network services and leased lines;
E. Changes made following the Commission’s
directories, etc.).
intervention

2. Geographical market 27.ÙIn a letter dated 22 December 1997, the Commission
informed the parties that the application of the
21.ÙFor most of the relevant segments, the market is non-compete clause to the marketing and sales of
national. GSM services (sale of SIM cards) appeared to be
incompatible with Community competition rules.
Consequently the parties have agreed to amend the
22.ÙAs described in the Atlas and Phoenix/Global One original agreements to exclude from the
decisions, demand for customised packages of non-compete clause the provision, by Cegetel’s
corporate telecommunications services exists in at shareholders, other than CGE, of SIM cards to
least three distinct geographic markets, namely at end-users located in France, and to allow Cegetel
global, cross-border regional and national levels. and the companies controlled by it to sell its GSM
Cegetel intends to address this market at a national services (SIM cards) outside France.
level, through the distribution of Concert services.

23.ÙAs regards the market for GSM service provision, F. The Commission’s intentions
the Commission has held in the past that there is an
increasing trend towards a European market, due to 28.ÙOn the basis of the foregoing, the Commission
a certain degree of substitutability throughout intends to take a favourable view pursuant to Article
Europe between the various subscriptions allowed by 85 of the EC Treaty. Before doing so, it invites third
‘roaming’ agreements. parties to send their observations within one month
of the publication of this notice, to the following
3. Market shares of the parties address, quoting the reference IV/36.592 —
CegetelØ+Ø4:
24.ÙExcept concerning the mobile telecommunications European Commission
services, the parties’ market shares on the described Directorate-General for Competition (DG IV)
segments are currently negligible (below 1Ø% in Directorate C
1997). SFR, a subsidiary of Cegetel, holds a market Rue de la Loi/Wetstraat 200
share of approximately 38Ø% in mobile telephony in B-1049 Brussels
France. Fax (32-2) 296Ø70Ø81.