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C 293/4 EN Official Journal of the European Communities 22.9.

98

without the prior consent of the management a marked reduction in the production of phosphoric
committee, engage or attempt to engage in the acid and fertilisers, whose manufacture requires
importation of liquid sulphur for resale to any sulphuric acid. The production of the latter in the UK
person in the UK; solicit, divert, interfere with or has declined from approximately 3,6 million tonnes
disrupt the Pool’s relationship with any supplier or when the first exemption was granted, to 2 million
customer of the Pool or otherwise compete with tonnes in 1990 and to an estimated 1,25 million
the Pool activities. tonnes in 1996.

5.ÙAs regards the sulphur market, the main evolution has III. The Commission’s intentions
been an increasing availability of indigenous refinery
sulphur on the UK market, which had an impact on 6.ÙOn the basis of the information at its disposal, the
the balance between imports and domestic Commission intends to take a favourable position on
consumption. Whereas indigenous sources of sulphur the notified arrangements. Before doing so, the
represented approximately 15Ø% of the total of Commission invites interested third parties to send
sulphur used by the industry concerned in the UK in their comments within 30 days of the publication of
1989, in 1996 it represented approximately 43Ø% of this notice, quoting reference IV/E-2/36.759/NSAA,
the UK market. However, there is a variety of factors to the following address:
limiting the availability of domestic refinery sulphur,
and thus there is a continuing requirement for
imported sulphur. European Commission,
Directorate-General for Competition (DG IV (E/2)),
Rue de la Loi/Wetstraat 200 (Office 02/40),
Though still widely used in industry, the UK B-1049 Brussels,
sulphuric acid market is in decline, principally due to Fax (32-2) 299Ø24Ø64.

Commission notice pursuant to Article 19(3) of Council Regulation No 17 (Î) concerning case
No IV/36.581 — T~l~com D~veloppement

(98/C 293/04)
(Text with EEA relevance)

A. INTRODUCTION B. THE PARTIES

On 9 July 1997 the Commission received notification, C~g~tel is a jointly-owned subsidiary of Compagnie
pursuant to Article 2 and 4 of Council Regulation No G~n~rale des Eaux (France), BT (United Kingdom),
17, of various agreements concerning T~l~com D~velop- Mannesmann (Germany) and SBCI (United States) and
pement (France) (hereinafter referred to as TD) is active in the telecommunications sector in France.
concluded on 11 April 1997 between Soci~t~ Nationale
des Chemins de Fer (France) and C~g~tel (France).

SNCF is a public undertaking with both industrial and
commercial activities, providing transport services on the
The agreements, in conjunction with the C~g~tel French national rail network. Its core activities are
Agreements (Case No IV/36.592), are part of a trans- passenger and freight transport, and related and comple-
action involving the setting-up of the second full-service mentary activities.
telecommunications operator in France. The TD joint
venture is structural in nature.

TD is a jointly-owned subsidiary of SNCF and C~g~tel,
whose field of activities is the construction, maintenance
and operation of long-distance telecommunications
(Î)ÙOJ 13, 21.2.1962, p. 204/62. networks.
22.9.98 EN Official Journal of the European Communities C 293/5

C. THE TRANSACTION 3. Exclusive use of the SNCF optical fibre cable network
capacity
The notification concerns a framework agreement signed
on 11 April 1997 between C~g~tel, SNCF and TD, and In an agreement concluded on 22 November 1996,
several related agreements: SNCF contributed to TD exclusive rights to the use
of the surplus capacity on its existing optical fibre
—Ùan agreement between SNCF and TD on the network. C~g~tel placed its own long-distance optical
contribution of certain rights, fibre network and those of its two subsidiaries at the
disposal of TD. C~g~tel Longue Distance was taken
—Ùinstallation and maintenance agreements between over by TD.
SNCF and TD,

—Ùa commercial agreement between TD and C~g~tel. 4. Priority usage of railway land

1. Activities of TD In an agreement concluded on 22 November 1996,
SNCF granted TD a non-exclusive right to occupy
TD was created to develop and run a national long- public railway land for a period of 30 years, to allow
distance telecommunications network using the it to deploy a telecommunications network. In order
surplus capacity on the SNCF optical fibre network to enable TD to complete the installation of its
and optical fibre capacity made available by C~g~tel network in the shortest possible time, SNCF has also
or its subsidiaries, in addition to installing its own accorded it a ‘priority right’ of access to SNCF’s land,
cables as part of an installation plan laid down in the guaranteed by a penalty clause applicable for a period
agreements for the period 1997 to 2000. TD holds a of three and a half years, from 1997 to 2000.
licence to operate long-distance public-access
networks.
The precise details regarding the scope of and the
arrangements for the application of this priority access
TD does not provide a connection service for were laid down following intervention by the
end-users, but rather provides: Commission, as described in Section E.

—Ùa long-distance voice-telephony service, which is
marketed by the jointly-owned subsidiaries of 5. Exclusive distribution of voice telephony services
C~g~tel and C~g~tel Le 7 (residential market) and
C~g~tel Entreprises (businesses),
A joint subsidiary, named C~g~tel Le 7, in which
C~g~tel has an 80Ø% stake and TD a 20Ø% stake, will
—Ùlong-distance transmission capacity, be solely responsible for marketing TD’s long-
distance telephony services destined for the general
—Ùa long-distance interconnection service. public. A certain proportion of the C~g~tel Longue
Distance staff have been employed by C~g~tel Le 7.
2. Shareholder structure
The next step was to raise more capital for C~g~tel
SNCF initially held 100Ø% of TD. As a result of the
Entreprises, currently a wholly-owned subsidiary of
TD Agreements, C~g~tel will progressively acquire
C~g~tel; the result was that TD acquired a 20Ø%
40Ø% of TD’s capital and may apply for the
stake, with the remaining shares going to C~g~tel.
acquisition of a further 10Ø% of TD’s share capital.
C~g~tel Entreprises has exclusive responsibility for
TD’s share capital will ultimately be the following:
adding value to and marketing the corporate services
provided by TD.
—ÙSNCF: between slightly more than 50Ø% and
60Ø%
6. Exclusive supply clause
—ÙC~g~tel: between 40Ø% and slightly less than
50Ø%
C~g~tel has signed an exclusive supply agreement with
TD, on behalf of both itself and its subsidiaries, under
—Ùthird party (if any): 10Ø%.
the terms of which they undertake that TD is their
sole supplier for long-distance traffic in France.
In the event of one or other of the shareholders However, C~g~tel is permitted to use other suppliers
deciding to sell its stake, its counterpart will have if TD’s prices should at any time prove to be above
right of first refusal. TD will be jointly controlled by the market price. In addition, TD may buy in capacity
SNCF and C~g~tel. A shareholder committee will from other operators to meet C~g~tel’s requirements.
have the duty to determine the common position of Finally, C~g~tel is bound by its previous supply
the TD parties on a number of strategic issues. agreements.
C 293/6 EN Official Journal of the European Communities 22.9.98

7. Non-competition Similarly, France T~l~com has a dominant position on
the long-distance transmission capacity supply market,
SNCF has undertaken not to engage, either directly with a market share approaching 100Ø%. Some
or indirectly via a subsidiary, in any activity in the competitors have entered this market, including
telecommunications field that would be in competition Hermes, Colt, Siris, Belgacom France, Equant and
with TD or the C~g~tel group. Worldcom.

C~g~tel has promised to abstain from any investments
in long-distance telecommunications networks, apart E. AMENDMENTS MADE FOLLOWING
from its investment in TD. INTERVENTION BY THE COMMISSION

TD has undertaken not to compete with C~g~tel Le 7 On 18 March 1998, the Commission informed the
and C~g~tel Entreprises as regards the marketing of parties that it regarded the clause governing the guar-
telecommunications services. antees on access rights as falling within the scope of
Article 85(1) of the EC Treaty and that, as it stood, it
was not eligible for an exemption under Article 85(3).
D. THE RELEVANT MARKET

1. Product market On 20 April 1998, the parties proposed amending the
clause in question in order to clarify the scope and
TD acts both as network operator and as service practical application of the priority access granted to
provider, and will be present on the three following TD, and thus to spell out clearly the conditions under
markets: which the penalties provided for in the agreements
would be applicable. This leaves SNCF and RFF free to
(a)Ùthe provision of long-distance voice-telephony use any remaining capacity for access rights as they see
services; fit, in particular by making it available to other
operators, providing this does not affect TD’s installation
(b) the supply of long-distance transmission capacity; plan unduly.
(c) the provision of interconnection services,
including access to international services. Finally, there is an explicit undertaking that the priority
rights would not apply in the (hypothetical and, no
2. Geographic market doubt, exceptional) event of other companies seeking
access to railway-owned land if the installation of cables
The TD network will be limited to the territory of on the rail network was the only way of creating a tele-
France. The geographic market in this case is, communications network.
therefore, France.

3. Situation of the parties F. COMMISSION’S INTENTIONS

SNCF is not commercially active in the telecommuni- In view of the above, in particular the amendment of the
cations sector. Article governing the priority access rights, the
Commission intends to authorise the agreements under
TD and C~g~tel only entered the long-distance voice- Article 85 of the EC Treaty. Before doing so, it invites
telephony market (deregulated on 1 January 1998) on interested third parties to submit their comments, within
1 February 1998. Similarly, the parties were not active one month of the date of publication of this notice,
on the interconnection market in 1997. In 1997, TD quoting reference IV/36.581 — T~l~com D~velop-
had a negligible share of the transmission capacity pement, to the following address:
supply market.
European Commission,
4. Main competitors Directorate-General for Competition (DG IV),
Directorate C,
Until 31 December 1997, France T~l~com had a Rue de la Loi/Wetstraat 200,
monopoly on the long-distance telephony market, and B-1049 Brussels,
it still has a dominant position on this market. Fax (32-2) 296Ø70Ø81.