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1999 EN Official Journal of the European Communities C 220/23

Commission notice pursuant to Article 19(3) of Council Regulation No 17 (1) and Article 3 of
Protocol 21 of the European Economic Area Agreement concerning

Case No IV/37.459 — Global One II

(1999/C 220/06)

(Text with EEA relevance)

A. INTRODUCTION The purpose of the Parties in requesting the deletion of

Article 2(e) of the Decision is:
1. By its decision (2) of 17 July 1996 in Case No. IV/35.617
Phoenix/Gobal One (‘the Decision’), the Commission,
pursuant to Article 81(3) of the EC Treaty, as last
(iii) to enable FT and DT to be free to sell Global One
amended by the Treaty of Amsterdam and Article 53(3)
services along with their own services in one contract.
of the EEA Agreement, declared inapplicable, for a period
of seven years (3), the provisions of Articles 81(1) of the EC
Treaty and Article 53(1) of the EEA Agreement to the
creation of the Global One (4) joint venture by Deutsche
Telekom AG (‘DT’), France Télécom (‘FT’) and Sprint B. THE PARTIES
Corporation (‘Sprint’). The exemption granted by the
Commission is subject to a number of conditions and 4. DT and FT are respectively the German and French former
obligations which are attached in Articles 2 and 3 of monopoly telecommunication operators. Sprint is a United
that decision. States telecommunications group. Global One is the joint
venture created by Atlas — a point venture company itself
owned 50 % by DT and 50 % FT — and Sprint for the
provision of corporate telecommunications services,
2. By letter dated 25 March 1999, Global One on behalf of traveller services and carrier services both globally and
itself and its shareholders, FT, DT and Sprint (the ‘Parties’) regonally. The world-wide turnover in 1998 was for FT:
requested that the Commission exercise its powers FF [. . .] million (EUR [. . .] million), DT: estimated to be
pursuant to Article 8.3(a) of Council Regulation 17/62 DEM [. . .] (EUR [. . .] million), Sprint: USD [. . .] million
and Paragraph 76 of the Decision by amending the (EUR [. . .] million) and Global One: USD [. . .] million
Decision in the light of the substantial changes to the (EUR [. . .] million). Further details of those undertakings
facts on which the Decision was based that have taken are provided in the Decision.
place since its adoption.

3. The purpose of the Parties in requesting the deletion of the C. THE RELEVANT MARKET
limitation in paragraph 7 of the Decision is to enable
Global One to be free to:
1. Product market

5. The Commission has described in the Decision (i) the

(i) provide all telecommunications services (5) including
markets for non-reserved corporate telecommunications
voice telephony on both a resale and facilities basis
services both globally and regionally, (ii) the market for
in all the EC Member States (in addition to those
traveller services and (iii) the market for so-called carrier
covered by the Decision); and
services addressed by Global One.

(ii) provide, on an agent or reseller basis, all voice and

data services of FT and DT available to third parties 6. In addition to the provision of those services, Global One
in addition to those covered by the Decision. wishes to provide public telecommunications services
(either as part of a package or separately). It is the
Commission's established practice to consider the
(1) OJ Special English Edition 1959-62, p. 87. relevant product markets as being the markets for
(2) OJ L 239, 19.9.1996, p. 57. domestic and international voice and data telecommuni-
(3) The exemption was granted for a period of seven years from the cations services, with a segmentation between the voice
date on which two or more licences for alternative infrastructure market (in which both private households and business
networks took effect in France and Germany. In its Notice relating customers participate) and the data market (primarily
to Cases IV/35.337 — Atlas and IV/35.617 — Phoenix/Global One used by business), and further segmentation into
(OJ C 47, 15.2.1997, p. 8), the Commission stated that the
conditions referred to in Article 1 of the Phoenix/Global One domestic and international markets (6). As in past
Decision were fulfilled and the exemptions took effect on 1 decisions, however, the precise product market delimi-
December 1996.
(4) Previously named ‘Phoenix’. (6) Case IV/M.570 — TBT/BT/Tele Danmark/Telenor of 24 April 1995;
(5) As defined in the seventh indent of Article 1 of Commission Case IV/M.900 — BT/Tele DK/SBB/Migros/UBS of 16 April 1997;
Directive 90/388/EEC of 28 June 1990 on competition in the Case IV/M.1025 — Mannesmann/Olivetti/Infostrada of 15 January
markets for telecommunication services (OJ L 192, 24.7.1990, p. 10). 1998; and Case IV/JV.7 — Telia/Sonera/Lietavos of 18 August 1998.
C 220/24 EN Official Journal of the European Communities 31.7.1999

tation in this case can be left open since even on the Global One's market share was less than 1 % in each of
narrowest possible definitions the information available these countries. In 1999, Global One's market shares in
to the Commission suggest that it can take a favourable the domestic markets are expected to be less than 5 % in
view on the notified transaction. each country.

2. Geographic market
2. Markets for customised packages of corporate
7. Global One will primarily continue to offer large global telecommunications services
telecommunications users seamless end-to-end services
anywhere by overcoming the difficulties inherent in the (a) EEA-wide market
current market structure split along national borders.
Along the lines of the Commission's findings in its
Decision, the geographic scope of the market for 10. In 1998 the EEA-wide market for customised packages of
customised packages is at least cross-border regional and corporate telecommunications services has been estimated
even possibly global. If the geographic market is by Global One to be EUR 7,4 billion. Global One
considered to be global rather than EC wide, any appre- estimates that its market share was less than 5 %. In
ciable effect on competition in the Common Market or a 1999 Global One estimates that its market share will
substantial part thereof is to be excluded. In relation to remain less than 5 %.
voice services, the markets may be domestic or EC

(b) National markets (including international

portion) ( 10)

In 1998, Global One had sales in all the EC Member States

1. Market for public telecommunications services and Norway. In 1998, Global One's market share was less
than 12 % in each country. In 1999, Global One estimates
8. Global One has focused on providing information on the that its markets shares will continue to be less than 12 %
EEA-wide Market as this seems to be most relevant to the in each country (11).
Commission's analysis (7).

(a) EEA-wide market

9. In 1998 the EEA-wide market for public basic telecom- 1. Markets for public telecommunications services
munications (including local, long distance and inter-
national services) is estimated to be in excess of EUR 11. With the ability to provide public telecommunications
96,2 billion (8). In 1998 Global One only provided services, Global One's competitors will consist of the
public voice telephony services in the UK and Sweden. following operators: 1. the former monopoly operators
Therefore, Global One's market share in the EEA was (which are referred to as TOs below) in each country,
less than 1 %. In 1999 (9) Global One's market share for 2. new national operators (such as COLT in the UK and
the provision of public basic telephony throughout the other countries, Tele2 in Sweden, Finnet International in
EEA is expected to continue to be less than 1 %. Finland, Infostrada in Italy, and Telenet in Belgium) and 3.
global/regional alliance operators (such as BT/AT&T,
Cable & Wireless, MCI Worldcom, Unisource, Telenor/Telia,
GTS/Hermes/Esprit, Viatel and Level 3).
(b) National markets (including international
(10) The market for customised packages primarily consists of products
and services for business users covering more than one business
As mentioned above, in 1998 Global One only provided site and accessed in more than one country, although to a much
public voice telephony services in Sweden and the UK. lesser extent it also includes packages for business users accessed in
many sites in one country as well. The Parties considers that there
is not a distinct national market for customised packages. However,
(7) However, where EEA figuresare not available, if appropriate, the EC Global One does provide packages for business users having sites
figures have been used. in one country, this information has been provided. The estimate
(8) The Fourth EC Report on Implementation of Telecommunications of the market size is based on cross-border customised packages
Regulatory Framework, dated 20 November 1998, estimates that and does not include national packages, so that Global One's
the EC market for public fixed telephony is approximately EUR market share will in fact be even smaller.
96,2 billion. (11) The estimates of the market size for the national markets are based
(9) Various estimates exist for growth of the market for public tele- on the Parties' estimate of the market for cross border customised
communications services. According to the European Information packages divided by an estimate of percentage of the total
Technology Observatory 1998 Report, for example, the public tele- accounted for by each Member State based on the estimates in
communications services market will grow 8 % in terms of revenues the Fourth EC Report on Implementation dated 20 November
in 1999. 1998.
31.7.1999 EN Official Journal of the European Communities C 220/25

(a) EEA wide market traffic and over 80 % of the business market for local
12. In the provision of local, long distance and international
voice telephony services, provided to either one or more
customer sites in one or more countries within the EC, 16. In 1999 it is expected that each TO will lose some market
competition is expected to be between TOs providing share, but less than 10 % in each case, to a combination of
international services on a bilateral basis, global/regional global/regional alliance operators and new/alternative
alliance operators, as well as new/alternative national national operators.
operators who are able to provide services in more than
one EC country. For cross-border services, TOs will have
the largest market share in the form of their bilateral
international services. New/alternative national operators 2. Markets for customised packages
and global/regional alliance operators will have small
shares compared to the TOs.

(a) EEA-wide market

13. In 1998, on the EUR 96,2 billiion market, TOs still had
the overwhelming majority of the market due to their 17. The Parties has estimated the total Europe market for
strong national positions. Thereafter, global/regional customised packages to be approximately EUR 7,4
alliance operators had the largest market shares, in the billion in 1998 and EUR 9,2 billion in 1999. Competitors
following approximate order: 1. BT/AT&T, which is to Global One have or will have a market share of
expected to have revenues 10 times that of Global One, approximately over 95 per cent in 1998 and over 95 %
2. Cable & Wireless, 3. MCI Worldcom, 4. Unisource, 5. in 1999. The global/regional alliance operators, led by
Telenor/Telia, and 6. Others, including Esprit, Viatel and AT&T/BT (with or without IBM), Cable & Wireless,
Level 3. Finally, new/alternative national operators had the Equant, MCI/Worldcom, and others will have most of
smallest market shares. this market share, followed by new/alternative national
operators and TOs.
14. In 1999, global/regional alliance operators and new/alter-
native national operators are expected to gain market
share more quickly than the TOs. F. THE REQUESTED AMENDMENTS

18. The Parties ask for the removal of a number of conditions

(b) National markets and obligations. The following are the object of this Notice
published pursuant to Article 19(3) of Regulation No
15. The main competitors in the national markets for public 17/62:
telecommunications services are the TOs. As set fourth in
chart 13 of Section 2.1.4 of the Fourth Commission
Report, in 1997-1998, the TO in each country of the EC
has had from 80 to 100 % of the national market for fixed (a) Deletion of the limitation in paragraph 7 of
voice telephony, with the following exceptions: the Decision

(i) Additional public telecommunications services

(a) In the Netherlands, KPN has approximately 75 % of
international call traffic.
19. Global One wishes to provide all telecommunications
services as defined in the 7th indent of Article 1 of
(b) In Finland, either Sonera or Finnet International has Directive 90/388. This limitation was created at a time
50 % to 70 % of the market for each of local calls, when FT and DT still were monopoly providers of voice
long distance calls and international calls. telephony services, the future nature and scope of voice
telephony competition was unclear and Global One had no
need to provide such services. The market and regulatory
(c) In Sweden, Telia has approximately 70 % of inter- situation have substantially changed sincen then: voice
national calls. telephony has been liberalised, the voice telephony
market has become competitive, users are demanding
other new services, and it is becoming difficult to sell to
(d) In Denmark, Tele Danmark has approximately 65 % of corporate users without also being able to offer, on an
international traffic, followed by Tele2A/S with 15 % immediate basis, voice telephony and other services. In
and Telia A/S with 12 %. addition, to keep pace with the continually evolving
market. Global One needs the ability rapidly to develop
and provide new services within the definition of public
(e) In the UK, BT has approximately 70 % of the resi- telecommunications services. The Parties has argued that
dential market for international traffic, 65 % of the this restriction limits competition and harms both users
business market for national traffic and 40 % of the and Global One, and that the provision of these services
business market for international traffic (but still over by Global One does not restrict competition and, in fact,
80 % of the residential market for local and national will promote competition.
C 220/26 EN Official Journal of the European Communities 31.7.1999

20. As a result, the Parties request that the statement, in border IPLs including MCI WorldCom, Hermes, Viatel,
paragraph 7 of the Decision, that the Decision relates Global Crossing AC-1 and Pan-European Crossing (Global
only to Phoenix's range of products and business scope Crossing PEC), Qwest/KPN, Flute Concerto network
as notified and that any substantial change of products (Europe), FLAG, Level 3 and that BT and AT&T will be
or business scope, including the offering by Phoenix of significant providers of IPLs.
public telecommunications services requires a new notifi-
cation be deleted. No other market player has been placed
under such a restriction. The removal of this broad
constraint would obviously be without prejudice to the
Parties' obligation to notify any specific matters falling 24. As noted above, the removal of this broad constraint
within the scope of Article 81(1) of the EC Treaty for would be without prejudice to the Parties' obligation to
which they wish to seek exemption. notify any specific matters falling within the scope of
Article 81(1) of the EC Treaty for which they wish to
seek exemption.

(ii) Distribution of additional FT and DT products

(b) Deletion of Article 2(e) of the Decision —
21. The demand for greater seamlessness continues to grow bundling
among users. Both traditional carriers and newer
entrants have responded to this market development by
selling across borders (i.e., selling on a resale or agency 25. The inclusion of multiple services into a single contract
basis the services of other carriers). This satisfies, generally, (bundling) is a characteristic of the provision of seamless
one of the seamless requirements that users now have. As services. In addition to demanding one point of contact
to the Parties, as the notification to the Commission in and one bill, customers demand one contract for
1995 only included a small set of FT and DT products, uniformity of conditions and ease of reference. The
the Parties understood this as limiting the FT and DT Parties claims that bundling is not anti-competitive as it
products that it may sell, with the result that Global does not imply any tying in the sale of any service
One has not met all customer requests for seamless provided by FT and/or DT with any service provided by
services into the French and German markets. Users find Global One. The inability of FT and DT, under Article 2(e)
this limitation both surprising and inconvenient, especially of the Decision, to present a single seamless contract to
since it realtes to the two largest economies in Europe and users which contains both FT/DT and Global One products
markets in which multinationals have the most need for harms both users in their ability to obtain a seamless
seamless service. solution and Global One by putting Global One at a disad-
vantage as a substantial amount of time and effort is
required to administer a system of two contracts and to
explain to customers why a one-stop offer cannot be
made, with very uncertain results as to the customer
22. To be competitive in the provision of seamless services for reaction. Users find this limitation both surprising and
corporate customers, one of the core reasons for the extremely inconvenient.
creation of Global One, Global One needs the ability to
sell all of the voice and data products of FT and DT which
are available to third parties. Since liberalisation of the
French and German telecommunications markets, the
seamless sale of such products is done by all other 26. Moreover, the bundling of services into a single contract is
market players (i.e., Global One is the only entity so standard practice in the market today and no carriers
restricted in its provision of seamless services). Global except FT and DT are so constrained by the Commission.
One envisages that it would obtain FT and DT products (Such a constraint is not part of the BT/AT&T author-
for resale as well as provide such products on an agency isation nor is the prohibition on a single contract
basis, in both cases on terms and conditions consistent included in the Unisource Decision).
with the provisions notified to the Commission in 1995
and the national and European requirements concerning
non-discrimination and cross-subsidisation. Global One
would in the short term sell domestic VPN, domestic 27. As noted above, the removal of this broad constraint
private lines and domestic toll free service and, in the would be without prejudice to the Parties' obligation to
longer term, any voice, data and multimedia services notify any specific matters falling within the scope of
over ATM, IP or a more advanced platform offered by Article 81(1) of the EC Treaty for which they wish to
FT and DT to third parties. seek exemption.

23. Finally, Global One would like to sell FT and DT inter-

national private lines (‘IPLs’) on an agency basis. The G. MARKET DEVELOPMENTS SINCE THE 1996 DECISION
Parties has submitted that, in the current climate, such
representation would not restrict competition given that 28. This request for a modification to the Decision is based on
there are a large number of other suppliers for cross- several developments the Parties see in the market place.
31.7.1999 EN Official Journal of the European Communities C 220/27

29. The telecommunications market in the EC and globally has 32. The Commission's analysis of the global telecommuni-
changed substantially since the 1995/1996 time period in cations market (12) shows that the market has changed
which the Commission considered the Global One venture. considerably since 1996, when the Decision was
Since that date, the process of liberalisation in the adopted, in all the market's segments where Global One
Community triggered an opportunity to meet previously is present or intends to be present.
unsatisfied demands and altered the structure of the
industry. In the Community, this is leading to a change
from a patchwork of national monopolistic operators to a
series of competing players at both Community and 33. The BT/AT&T venture, which will have initial revenues
national level. All services and infrastructure have been approximately ten times greater than those of Global
liberalised in almost all of the Member States and new One, will not be restricted in the same manner as
entrants have entered the national markets and they and Global One. The creation of the joint venture effectively
traditional carriers now compete vigorously to meet user involves the merger of all the international assets and
needs in all segments of the market. services of BT and AT&T. AT&T and BT are two primary
suppliers of international services to multinational
customers and other carriers, and each is the major
30. Further liberalisation of the telecommunications industry supplier in its own market for these services.
arose from the World Trade Organisation (WTO) Global
Agreement on Trade in Basic Telecommunications Services,
which was signed on 15 February 1997 and came into
force on 5 February 1998. As a result, the changes that H. THE COMMISSION'S INTENTIONS
have been seen in liberalised countries such as the Member
States of the Community and the United States can now be 34. On the basis of the foregoing, the Commission intends to
achieved world-wide take a favourable view on the notified transaction pursuant
to Article 81 of the EC Treaty as last amended by the
Treaty of Amsterdam. Before doing so, it invites interested
31. As a result of the evolutions and events described above, third parties to submit their comments, within one month
the telecommunications sector has seen the emergence of of the date of publication of this notice, quoting the
alternative telecommunications operators, either vertically reference IV/37.459 — Global One II, to the following
integrated or not, alternative telecommunications service address:
providers, alternative carriers, providing either domestic or
international telecommunications services or both, on a
local/regional, national or more global basis. The sector
subsequently saw the development of upstream and European Commission
wholesale activties enabling such new market players to Directorate-General for Competition (DG IV)
deliver their telecommunications services, such as Directorate C
carriers' carrier services, including direct/indirect trans- Rue de la Loi/Wetstraat 200
mission means, offerings of capacity, as well as inter- B-1049 Brussels
national/domestic call termination services, i.e. the Fax (32-2) 296 70 81.
unbundled provision of all the elements necessary for an
operator to carry international calls from end-to-end or
close to, from their setting-up to their termination on
the local loop, as an alternative to the traditional
accounting rate system. (12) In its decision on Case IV/JV.15 BT/AT&T of 30.3.1999.

Non-opposition to a notified concentration

(Case No IV/M.1562 — Heidelberger Zement/Scancem)

(1999/C 220/07)
(Text with EEA relevance)

On 12 July 1999, the Commission decided not to oppose the above notified concentration and to declare it
compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EEC)
No 4064/89. The full text of the decision is only available in German and will be made public after it is
cleared of any business secrets it may contain. It will be available:

— as a paper version through the sales offices of the Office for Official Publications of the European
Communities (see list on the last page),