96/546/EC: Commission Decision of 17 July 1996 relating to a proceeding under Article 85 of the EC Treaty and Article 53 of the EEA Agreement (Case No IV/35.337 - Atlas) (Only the English, French and German texts are authentic) (Text with EEA relevance)

• Articles: 6

Article 1

Pursuant to Article 85 (3) of the EC Treaty and Article 53 (3) of the EEA Agreement and subject to Articles 2 to 5 of this Decision, the provisions of Articles 85 (1) of the EC Treaty and Article 53 (1) of the EEA Agreement are hereby declared inapplicable, for a period of five years from the date on which two or more licences for the construction or ownership and control of alternative infrastructure for the provision of liberalized telecommunications services take effect in both Germany and France, to:

(a) the creation of the Atlas joint venture by Deutsche Telekom AG ('DT`) and France Télécom ('FT`), as notified to the Commission, including the ancillary obligations imposed on DT and on FT:

(i) to obtain from Atlas all requirements for global products under Article VII of both Distribution Agreements; and

(ii) not to compete with the joint venture for the provision of Atlas services under Article XIII of the Joint Venture Agreement and Article VII of both Distribution Agreements; and to

(b) the appointment of DT as the exclusive distributor for Atlas in Germany and of FT as the exclusive distributor for Atlas in France under Article IV of both Distribution Agreements.

Article 2

Pursuant to Article 85 (3) of the EC Treaty and Article 53 (3) of the EEA Agreement and subject to Articles 3, 4 and 5 of this Decision, the provisions of Article 85 (1) of the EC Treaty and Article 53 (1) of the EEA Agreement are hereby declared inapplicable to the integration into Atlas of the German and French public packet-switched data networks, provided that only networks providing packet-switched data communications services using the X.25, Frame Relay, SNA or Internet protocols shall be integrated, from the date on which both Germany and France have:

(a) removed all legal prohibitions on entities other than DT and FT and their subsidiaries to:

(i) build, own or control both national and international telecommunications infrastructure and use such infrastructure to provide any telecommunications service, and

(ii) provide a national and international voice telephony service; and

(b) granted and made effective at least two licences to applicants other than DT and FT for

(i) the construction or ownership, and control, of telecommunications infrastructure and either separately or in combination,

(ii) the provision of national and international voice telephony services, provided that such licences provide two suitable alternatives to DT and FT respectively to serve all or a substantial part of the territory of Germany and France,

until the expiry of the five-year period specified in Article 1.

Article 3

Until the date specified in Article 2 of this Decision, the exemption from Article 85 (1) of the EC Treaty and Article 53 (1) of the EEA Agreement set out in Article 1 of this Decision is subject to the condition that cooperation between DT and FT in developing common technical network elements comprise the following areas only:

(a) the following product management and development tasks:

(i) product definition,

(ii) product marketing,

(iii) product life-cycle management,

(iv) specification of product requirements,

(v) technical specifications and development of the products, and

(vi) technical development of the products;

(b) the following network planning functions:

(i) central network engineering and optimization of the common transmission network so as to avoid an unreasonable duplication of resources,

(ii) engineering and optimization of the networks for the various service platforms so as to ensure seamless services, and

(iii) central planning regarding the implementation of new network nodes; and

(c) the following aspects of information systems:

(i) definition of the information system architecture,

(ii) specification of information system requirements and applications,

(iii) technical development of hardware and software for information systems, and

(iv) central implementation planning of hardware and software.

Until the date specified in Article 2, all other aspects and functions of each of the French and the German public packet-switched data networks shall be controlled by two separate network management centres.

Article 4

The exemption from the application of Article 85 (1) of the EC Treaty and Article 53 (1) of the EEA Agreement set out in Articles 1 and 2 of this Decision is subject to the following conditions:

(a) Divestiture of Info AG

(1) FT shall:

(i) sell Transpac's shares in Info AG before [. . .] (33). The Commission may extend the period granted to FT for divestiture of Info AG by an additional six months after that date; FT shall be deemed to have complied with this condition by [. . .] (34) if it has entered into a binding letter of intent or a binding contract for the sale of Info AG to a purchaser agreed by the Commission, provided that such sale is completed within a reasonable time limit, after the signing of such binding letter of intent or binding contract, agreed by the Commission;

(ii) appoint a trustee subject to approval by the Commission to advise on the management and to sell Info AG, provided that, subject to approval by the Commission, FT may

- terminate the trustee agreement should FT decide at any time after the appointment that the trustee is not performing its duties properly, and

- replace the previously appointed trustee by another trustee also approved by the Commission;

(iii) give the trustee an irrevocable mandate to sell Info AG, on best possible terms and conditions, to any available purchaser making an offer before [. . .] (35);

(iv) remunerate the trustee providing incentives for a prompt divestiture;

(v) give all reasonable assistance requested by the trustee to sell Info AG by the target date;

(vi) establish and facilitate the management structure agreed with the trustee in the framework of the divestiture negotiations;

(vii) provide the purchaser of Info AG with any licences and know-how relating to the provision of Info AG's services to the extent possible under existing contractual obligations, if any. FT may charge the purchaser a market-based fee for any such licence and know-how;

(viii) keep all administrative and management functions relating to Info AG which have been carried out at all levels within FT and/or Transpac, so as to maintain the viability, marketability and competitiveness of Info AG until divestiture is completed or until the trustee advises FT that such functions are no longer necessary, whichever occurs earlier.

(2) FT shall at all times use its best efforts to maintain the value of Info AG and of its business in every respect and, when the trustee is appointed to sell Info AG, shall consider the advice of the trustee to maintain this value. FT shall in particular ensure that all services provided by FT or any of FT's subsidiaries to Info AG continue to be provided efficiently and satisfactorily and that no increase is made in the charge (if any) made to Info AG for any such service. FT shall not, except with the consent of the trustee, employ or offer employment to any employee or officer of Info AG until after the sale of Info AG.

(3) The trustee appointed by FT shall:

(i) advise FT and Transpac on the best management structure to ensure the continued viability, marketability and competitiveness of Info AG's business, also in the event of a restructuring of Info AG;

(ii) advise FT and Transpac with regard to the satisfactory operation and management of Info AG, so as to ensure the continued viability, marketability and competitiveness of Info AG's business, and shall supervise, monitor and control the implementation of the advice by Info AG; for these purposes the trustee shall have complete access to Info AG's personnel and facilities as well as to documents, books and records of both FT and Transpac, including such personnel, facilities, books and records which, even if not directly related to Info AG, may have an impact on the conduct of Info AG's operations;

(iii) act as FT's investment banker in conducting bona fide negotiations with interested third parties with a view to selling Info AG. In the event that the trustee at any time prior to the target date determines together with the Commission that it is not possible to identify an acceptable purchaser for the business of Info AG other than the customers whose headquarters are located outside Germany, the trustee, FT and the Commission shall discuss appropriate alternatives to the proposed divestiture of Info AG, notably an extended divestiture;

(iv) provide the Commission with a written report before a binding contract is signed and in any event every month on all developments in its negotiations with third parties interested in purchasing Info AG;

(v) provide the Commission with a written report every two months concerning the monitoring of the operations and management of Info AG;

(vi) at any other time upon the Commission's request, provide the Commission with a written or oral report on any aspect of the duties and activities of the trustee in relation to Info AG and its possible purchasers, indicating whether a proposed purchaser would be able to ensure that Info AG remains a competitive participant in the German telecommunications market and whether negotiations with such proposed purchaser should continue; and

(vii) cease to perform its duties as trustee for the purpose of this condition when the sale of Info AG or any alternative remedy within the meaning of point (iii) becomes effective.

(4) Multinational clients to whom Info AG has so far provided network services as part of the Transpac network and whose headquarters are located outside Germany may be transferred to Atlas on condition that the Commission is satisfied that these services can be separated from the German activities of Info AG without significantly lessening the value of those activities.

(5) With immediate effect from the date of notification of this Decision and until one year after the date of signature of the agreements between Transpac and the purchaser of Info AG, neither DT, FT, Atlas nor GlobalOne shall compete with Info AG for the provision of telecommunications services to customers of Info AG whose headquarters are located within Germany except where such customers decline to deal with Info AG.

(6) If the sale of Info AG's business does not seem likely to occur by the date stated in point (1) (i), FT shall, at least two months before that date, submit alternative remedies sufficiently satisfactory to safeguard actual competition in the German market. These alternative remedies must be executed by the date stated in point (1) (i).

(b) Non-discrimination

(1) DT and FT shall not grant to any entity created pursuant to the Atlas Agreements terms and conditions dissimilar to the terms and conditions applied to other providers of similar services, nor exempt such entity from any usage restrictions which would enable such entity to offer services which competing providers are prevented from offering with regard to the following facilities-related telecommunications services provided by FT and DT in France and Germany respectively:

(i) leased lines services, in particular international leased lines (half-circuits) and domestic leased lines, including any discounts, as the case may be; and

(ii) PSTN/ISDN services including both access to such networks (namely analogue access; basic ISDN access; ISDN access to the public packet-switched data networks; special access from the public packet-switched data networks to ISDN; and national and international voice VPN and VPN interconnection services) and traffic over such networks.

Atlas shall not be granted more favourable treatment than third parties in connection with reserved facilities and services and with such facilities and services which remain an essential facility after full and effective liberalization of telecommunications infrastructure and services in France and Germany.

(2) DT and FT shall grant any entity created pursuant to the Atlas Agreement and any third party operating a telecommunications facility that apply for the interconnection of such facility with DT or FT's networks such interconnection on non-discriminatory terms that enable such entity or person to provide telecommunications services or provide its telecommunications facilities without limitation in any respect within the reasonable capabilities of the operator concerned.

(3) DT and FT shall not in any way discriminate between any entity created pursuant to the Atlas Agreements and any other service provider competing with such entity in connection with:

(i) either a decision substantially to modify technical interfaces for the access to reserved services and/or essential facilities or services, or the disclosure of any other technical information relating to the operation of the PSTN/ISDN; competitors shall in particular have access to such software and interface information as is indispensable for maintaining the technical features of voice services where such competitors interconnect to the German or French PSTN/ISDN; and

(ii) the disclosure of any commercial information that would confer a substantial competitive advantage and is not readily and equally available elsewhere by service providers competing with such entity.

(4) Breaches of the requirements set out in points 1, 2 and 3 shall not be considered to infringe this condition unless such breaches have a substantial impact on the market.

(c) Interconnection to DT and FT's public packet-switched data networks

(1) FT and DT shall immediately:

(i) establish and maintain standardized X.75 interfaces to access their national public packet-switched data networks;

(ii) offer such access on non-discriminatory terms, including price, availability of volume or other discounts and the quality of interconnection provided; and

(iii) publish the standard terms and conditions for such X.75 interface standards, including, if any, volume discounts and other discounts and make any agreements relating to such X.75 interfaces, including all specifically agreed terms, available for inspection by the Commission.

(2) Transpac France and T-Data shall, until such time as Transpac France and T-Data are integrated into Atlas, not disclose to any entity created pursuant to the Atlas Agreement any such specifically agreed terms as are identified and maintained as confidential by the party obtaining interconnection through standardized X.75 interfaces to access the French or German national public packet-switched data networks.

(3) The conditions set out in points (1) and (2) shall likewise apply to any generally used CCITT-standardized interconnection protocol that may modify, replace or co-exist as a standard related to the X.75 standard and is used by FT and DT.

(4) Any entity created pursuant to the Atlas Agreements may access the French and German public packet-switched data networks through proprietary interfaces, even for the provision of data communications services, provided that access granted to such entity through such interfaces is economically equivalent to third-party access to those networks.

(5) Breaches of the requirements set out in points 1 to 4 shall not be considered to infringe this condition unless such breaches have a substantial impact on the market.

(d) Interconnection to DT and FT's other networks and facilities

(1) DT and FT shall grant to any third party that operates a telecommunications facility ('telecommunications operator`) and applies for the interconnection of such facility or systems facilities with DT or FT's networks, such interconnection on non-discriminatory terms as compared to the terms applied to Atlas. Such terms shall enable the telecommunications operator to provide telecommunications services or provide its telecommunications facilities without limitation in any respect within the reasonable capabilities of the telecommunications operator concerned.

(2) Breaches of the requirements set out in point 1 shall not be considered to infringe this condition unless such breaches have a substantial impact on the market.

(e) Cross-subsidization

(1) All entities created pursuant to the Atlas Agreements shall be established as distinct entities separate from DT and FT.

(2) Atlas SA, T-Data and Transpac France shall obtain their own debt financing on their own credit, provided that FT and DT:

(i) may make capital contributions or commercially normal loans to Atlas SA, T-Data and Transpac France, to enable them to conduct their respective businesses;

(ii) may pledge their venture interests in such entities, in connection with non-recourse financing for such entities; and

(iii) may guarantee any indebtedness of such entities, provided that FT and DT may only make payments pursuant to any such guarantee following a default by such entities in respect of such indebtedness.

(3) All entities created pursuant to the Atlas Agreement, T-Data and Transpac France shall not allocate directly or indirectly any part of their operating expenses, costs, depreciation, or other expenses of their business to any parts of FT or DT's business units (including without limitation the proportionate costs based on work actually performed that are attributable to shared employees or sales or marketing of Atlas products and services by DT or FT employees). These undertakings may bill DT or FT for products and services supplied to DT or FT by such undertakings at:

(i) the same price charged third parties in the case of products or services sold to third parties in commercial quantities; or

(ii) on the basis of the full cost reimbursement or other arm's length pricing method in the case of products and services not sold to third parties in commercial quantities.

(4) Breaches of the requirements set out in points 1, 2 and 3 shall not be considered to infringe this condition unless such breaches have a substantial impact on the market.

(f) Bundling

(1) DT and FT shall sell their services under contracts separate from the contracts for the sale of Atlas services concluded as distributors of Atlas in Germany and France respectively. Each separate contract shall set out the terms and conditions of each individual service sold thereunder and notably attribute any quantity or other discounts to a particular service, as the case may be.

(2) Breaches of the above requirements shall not be considered to infringe this condition unless such breaches have a substantial impact on the market.

(g) Accounting

(1) T-Data, Transpac France (including all their subsidiaries) as well as all entities created pursuant to the Atlas Agreements which are operating in the EEA shall keep separate accounting records using international accounting standards for each service they provide in any country. DT and FT (including all subsidiaries) shall keep separate accounting records using international accounting standards for each service they provide to any entity created pursuant to the Atlas Agreements, operating in the EEA.

(2) DT and FT shall, within one year of the date defined in Article 1, implement an accounting system which generates sufficiently detailed records of the services covered by point (1). Those records shall detail the following:

(i) the cost standard used;

(ii) the accounting conventions used for the treatment of costs;

(iii) the allocation and attribution of expenses or costs, revenues, assets and liabilities shared between any entity created pursuant to the Atlas Agreements and DT and/or FT; and

(iv) the attribution method chosen.

(3) The accounting records referred to in points (1) and (2) shall identify all services provided to any entity created pursuant to the Atlas Agreements by DT and FT or transfers to or from DT and FT.

(4) No entity created pursuant to the Atlas Agreement, nor T-Data or Transpac France shall receive any material subsidy directly or indirectly from DT or FT, nor any investment or payment from DT or FT that is not recorded in the books of such entities as an investment in debt or equity.

Article 5

The exemption granted under this Decision is subject to the following obligations:

(a) Auditing

(1) Atlas SA and any consolidated subsidiary of Atlas SA, Transpac France and T-Data shall be audited by an independent external auditor every 12 months, provided that such audit shall certify from an accounting viewpoint that:

(i) all transactions between those undertakings, on the one hand, and FT and DT, on the other hand, have been conducted at arm's length;

(ii) the undertakings have adhered to the accounting procedures; and

(iii) the calculation numbers are accurate.

(2) The first auditing report and certificate complying with point (1), covering the 12-month period starting on the date on which this Decision takes effect, shall be submitted to the Commission within 15 months of that date.

(b) Other obligations

DT, FT, T-Data, Transpac France and all entities created pursuant to the Atlas Agreements shall each, for the purpose of ascertaining and ensuring compliance by these undertakings with the conditions set out in Article 4:

(1) keep all detailed records and documents necessary to prove complete compliance with the terms of the conditions set out in Article 4 ready for inspection by the Commission and to enable the Commission to verify the correctness of the audit certificate referred to in point (a) (2);

(2) give the Commission access to their business premises to inspect records and documents covered by the obligations set out under heading (a) and to receive oral explanations relating to such documents on reasonable notice, during office hours, and without the need for the Commission to invoke the powers of inspection pursuant to Regulation No 17; and

(3) provide the Commission with:

(i) any records and documents in the possession or control of those undertakings necessary for that determination;

(ii) unaudited accounting data as specified in points (1) and (2) every six months, starting one year after the commencement date of the exemption pursuant to Article 1; and

(iii) further oral or written explanations.

Article 6

This Decision is addressed to:

Deutsche Telekom AG,

Friedrich-Ebert-Allee 140,

D-53105 BONN;

France Télécom,

Place d'Alleray,

F-75505 PARIS.

Done at Brussels, 17 July 1996.

For the Commission

Karel VAN MIERT

Member of the Commission

(1) OJ No 13, 21. 2. 1962, p. 204/62.

(2) OJ No C 337, 15. 12. 1995, p. 2.

(3) OJ No C 175, 26. 6. 1993, p. 11.

(4) OJ No C 184, 18. 7. 1995, p. 11.

(5) See p. 57 of this Official Journal.

(6) The parties have submitted that T-Data is the new name of DT's former Datex-P division for the provision of X.25 packet-switched data communications services, incorporated after publication of the Commission notice pursuant to Article 19 (3) of Council Regulation No 17 and Article 3 of Protocol 21 of the European Economic Area Agreement in this case; OJ No C 337, 15. 12. 1995, p. 2 (hereinafter the 'Article 19 (3) notice`).

(7) See Commission Decision 94/579/EC of 27 July 1994 in Case No IV/34.857 - BT-MCI; OJ No L 223, 27. 8. 1994, p. 36.

(8) Defined in the seventh indent of Article 1 of Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services; OJ No L 192, 24. 7. 1990, p. 10, hereinafter 'Services Directive`, as last amended by Directive 96/19/EC; OJ No L 74, 22. 3. 1996, p. 13.

(9) Commission's Guidelines on the application of Community competition rules in the telecommunications sector, OJ No C 233, 6. 9. 1991, p. 2, at paragraph 27.

(10) Defined as 'packet- and circuit-switched services` in the ninth indent of Article 1 (1) of the Services Directive - see footnote 8.

(11) See Phoenix Decision in Case No IV/35.617, at recital 27.

(12) See footnote 7.

(13) Notification of a joint venture (Case No IV/35.337 - Atlas), OJ No C 377, 31. 12. 1994, p. 9 and the Article 19 (3) notice (see footnote 6 and recitals et seq.).

(14) See Commission Decision 94/895/EC of 15 December 1994 (Case No IV/34.768 - International Private Satellite Partners); OJ No L 354, 31. 12. 1994, p. 75.

(15) Notification of a joint venture (Case No IV/35.830 - Unisource/Telefónica); OJ No C 94, 30. 3. 1996, p. 5.

(16) Notification of a joint venture (Case No IV/35.738 - Uniworld); OJ No C 276, 21. 10. 1995, p. 9.

(17) The originally envisaged Strategic Board of Atlas SA, described in the Article 19 (3) notice (footnote 6) at paragraph 20 (b), was deleted from the final Atlas Agreements.

(18) OJ No L 395, 30. 12. 1989, p. 1 (corrected version in OJ No L 257, 21. 9. 1990, p. 13); as amended by the Act of Accession of Austria, Finland and Sweden.

(19) Reserved services are services which are provided pursuant to special or exclusive rights granted by the EU Member States to their respective TOs.

(20) Council Directive 90/387/EEC of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision; OJ No L 192, 24. 7. 1990, p. 1.

(21) See footnote 2.

(22) BT-MCI Decision (footnote 7), at recital 41.

(23) See Commission Decision 93/49/EEC of 23 December 1992 - Ford/Volkswagen, OJ No L 20, 28. 1. 1993, p. 14, at recitals 18 to 21; Decision 94/322/EC of 18 May 1994 - Exxon/Shell, OJ No L 144, 9. 6. 1994, p. 20, at recitals 42 et seq.; and Decision 94/896/EC of 16 December 1994 - Asahi/Saint Gobain, OJ No L 354, 31. 12. 1994, p. 87, at recitals 16 to 22.

(24) Footnote 9, at paragraph 39.

(25) See notice published in OJ No C 276, 21. 10. 1995, p. 9.

(26) Commission Directive 96/19/EC of 13. 3. 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in the telecommunications markets; OJ No L 74, 22. 3. 1996, p. 13.

(27) In addition to BT-MCI's Concert (footnote 7), the Commission has granted regulatory approval in Case No IV/M.595 - BT/VIAG, OJ No C 15, 20. 1. 1996, p. 4; Case No IV/M.618 - Cable & Wireless/VEBA, OJ No 23, 5. 9. 1995, p. 3, and Case No IV/M.689 - ADSB/Belgacom (Decision of 29 February 1996; OJ No C 194, 5. 7. 1996, p. 4).

(28) Major digital protocol/signalling system for managing and transmitting control and routing information in networks.

(29) The Commission has decided similarly in previous cases featuring similar market structures and problems, e.g. Decision 93/403/EEC of 11 June 1993 - EBU/Eurovision System, OJ No L 179, 22. 7. 1993, p. 23, at recital 82; Decision 94/594/EC of 27 July 1994 - ACI, OJ No L 224, 30. 8. 1994, p. 28, at recital 66; and Decision 94/663/EC of 21 September 1994 - Night Services, OJ No L 259, 7. 10. 1994, p. 20, at recitals 80 and 82.

(30) Articles 7 and 10 of Council Directive 92/44/EC of 5 June 1992 on the application of open network provision to leased lines, OJ No L 165, 19. 6. 1992, p. 27.

(31) See Articles 6 and 7 of the modified proposal for a European Parliament and Council Directive on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of open network provision (ONP), OJ No C 178, 21. 6. 1996, p. 3.

(32) See Commission notice on cooperation between national courts and the Commission in applying Articles 85 and 86 of the EEC Treaty, OJ No C 39, 13. 2. 1993, p. 6.

(33) Business secret.

(34) Business secret.

(35) Business secret.