Opinion procedure 2/15

Arguments

457.The Commission submits that Chapter Twelve essentially promotes and facilitates trade in goods and services between the European Union and Singapore. That chapter aims to prohibit anticompetitive practices with transnational dimensions, which are liable to impede effective market access or reduce the economic benefits of trade liberalisation that the EUSFTA intends to achieve. Furthermore, Chapter Twelve does not result in harmonisation and expressly refers to the relationship between anticompetitive behaviour and international trade. It therefore has direct and immediate effects on trade and falls entirely within the scope of the European Union’s exclusive competence under Article 207(1) TFEU. The Commission also refers to several WTO agreements which incorporate elements of competition policy.

458.The other parties have made no specific arguments in relation to Chapter Twelve.

Analysis

459.I agree with the Commission that the link between international trade and competition policy already appears from certain provisions in WTO agreements.(351) That said, no comprehensive WTO policy on competition and trade has yet been adopted.(352)

460.By contrast, Chapter Twelve of the EUSFTA seeks to address comprehensively the harmful effects on trade between the European Union and Singapore which might result from public or private anticompetitive conduct or practices. Thus, it requires each party to maintain and enforce in its respective territories comprehensive legislation governing agreements between undertakings, abuses of a dominant position and concentrations between undertakings which result in a substantial lessening of competition or which significantly impede competition, provided they affect trade between the European Union and Singapore.(353) Those types of anticompetitive conduct are considered to be liable to undermine the benefits of trade liberalisation which the EUSFTA aims to achieve, either by rendering rules on market access nugatory or by reducing the economic benefits which undertakings of one Party may hope to obtain by trading their goods or services in the territory of the other Party.(354)

461.Chapter Twelve is also directly connected to the regulation of trade in so far as it seeks to limit distortions of competition resulting from the possibility for each Party to establish or maintain public undertakings, or entrust undertakings with special or exclusive rights,(355) and regulates prohibited subsidies and other subsidies.(356)

462.Article 12.7.2 of the EUSFTA illustrates that relationship between Chapter Twelve and international trade. That provision, which also incorporates Article 3 of the SCM Agreement (on prohibited subsidies),(357) prohibits the granting of certain categories of subsidies ‘unless the subsidising Party upon request of the other Party has demonstrated that the subsidy in question does not affect trade of the other Party nor will be likely to do so’.(358) Similarly, Article 12.8.1 of the EUSFTA requires the Parties to ‘use their best endeavours’ to address distortions of competition caused by other specific subsidies related to trade in goods and services ‘in so far as they affect or are likely to affect trade of either Party’ and to prevent such distortions.

463.The fact that Chapter Twelve results in some degree of harmonisation of competition rules does not mean that its objective is to approximate the laws of the Member States in that area in order to improve the functioning of the internal market. Rather, Chapter Twelve extends some of the core rules and principles of EU competition law to Singapore in order to regulate trade in goods and services with that third country.(359) Those rules include Articles 101 and 102 TFEU, which govern agreements or concerted practices between undertakings and abuses by undertakings of their dominant position on a market, together with Council Regulation (EC) No139/2004 on the control of concentrations between undertakings.(360) Similarly, the EUSFTA provisions reflect Article 106 TFEU (which concerns public undertakings, undertakings to which Member States grant special or exclusive rights and undertakings entrusted with the operation of services of general economic interest) and Articles 107 to 109 TFEU (which are aimed at avoiding distortions of competition arising from State aid).

464.It is true that Chapter Twelve also contains provisions concerning cooperation and coordination in law enforcement, the protection of business secrets and other confidential information, consultation between the Parties on competition and the exclusion of the application of Chapters Fifteen (‘Dispute Settlement’) and Sixteen (‘Mediation’) to matters arising under Chapter Twelve (except for Article 12.7 of the EUSFTA, on prohibited subsidies). Those provisions are all ancillary to the main substantive obligations set out in Chapter Twelve. They do not therefore undermine my conclusion that Chapter Twelve is aimed at promoting, facilitating or governing trade and thus has direct and immediate effects on trade in goods and services.

465.As regards the provision on transparency in the area of subsidies related to trade in goods and the supply of services (Article 12.9 of the EUSFTA), I refer to my analysis of Chapter Fourteen and of transparency-related provisions in other chapters.(361)

466.I therefore conclude that Chapter Twelve falls entirely within the scope of the European Union’s exclusive competence under Article 207(1) TFEU.