A French holding company, Alstom S. A., has majority shares in three companies on the Hungarian market and its other companies, registered abroad, trading through subsidiaries in Hungary.

ABB Handels und Verwaltungs A. G. (hereinafter: ABB H. V.), registered in Switzerland, is a subsidiary of ABB Asea Brown Bovery Ltd, acting on the market of energy (e. g. production, distribution and producing facilities for energy industry) and financial services. There are nine Hungarian undertakings operating under its control.

Alstom and ABB H. V. made an agreement on establishing a joint venture in the Netherlands to concentrate their undertakings within the energy business. The share of both the ownership and the control would be 50-50 per cent between the parties.

Parallel with the contract on establishing the joint venture the parties undertook in their Agreement of Shareholders that, without the prior approval of the joint venture, nor themselves or their subsidiaries will not enter any market as a competitor of the joint venture.

The aim of the concentration was to establish an undertaking on the market of energetic equipment to be able to compete with multinational companies on the global market.

The Competition Council stated that the planned transaction does not strengthen a dominant position of anyone of the parties.

Next the Competition Council examined the relevance and necessity of the exemption from competition clause of the Agreement of Shareholders and stated that the parties involved will not be competitors of the joint venture since they concentrate their whole energetic equipment business into the joint venture. Further, the Competition Council examined whether the restrictive agreement satisfies the criteria of exemption from the prohibition of agreement restricting competition covered by the Competition Act and stated that:
- the cost reduction coming from the effective operation of the joint venture increases the possibility of competition,
- the competition on the relevant market forces the joint venture to increase efficiency resulting in lower prices and let the consumers to get fair share from the benefit,
- elimination of competition is not possible because of the position of the present and potential competitors on the relevant market.

The Competition Council authorised the establishment of the joint venture.

January 13, 2000. Budapest

Fógel Jánosné dr. sk. előadó
dr. Bodócsi András sk.
dr. Sólyom Eszter sk.
Ágoston Marika