kom (2016) 0393 - Ingen titel

Europaudvalget 2016
KOM (2016) 0393
Offentligt

EUROPEAN

COMMISSION

Brussels, 15.6.2016

SWD(2016) 198 final

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE

COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE

COMMITTEE OF THE REGIONS

Report on Competition Policy 2015

{COM(2016) 393 final}

kom (2016) 0393 - Ingen titel

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE

COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE

COMMITTEE OF THE REGIONS

Report on Competition Policy 2015

TABLE OF CONTENTS

LEGISLATION AND POLICY DEVELOPMENTS.................................................................................... 4

State aid............................................................................................................................................... 4

1. State Aid Modernisation: Implementation phase ....................................................................... 4

2. State Aid Modernisation continues ............................................................................................. 9

3. Monitoring, recovery and cooperation with national courts .................................................... 10

4. Significant judgments by EU Courts in the State aid area ......................................................... 13

Antitrust and cartels .......................................................................................................................... 17

1. Guidance in antitrust and cartel proceedings ........................................................................... 17

2. Significant judgments by the EU Courts in antitrust and cartels............................................... 18

3. Fight against cartels remains a top priority ............................................................................... 25

4. Continuing close cooperation within the European Competition Network (ECN) and with

national courts............................................................................................................................... 28

Merger control .................................................................................................................................. 30

1. Geographic market definition in European Commission merger control ................................. 30

2. Guidance on merger control proceedings ................................................................................. 31

3. Recent enforcement trends ...................................................................................................... 32

4. Significant judgments by the EU Courts in mergers .................................................................. 33

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Developing the international dimension of EU competition policy .................................................. 33

1. Bilateral relations ...................................................................................................................... 33

2. Enlargement .............................................................................................................................. 34

3. Multilateral cooperation ........................................................................................................... 35

II.

SECTORAL OVERVIEW.................................................................................................................... 36

1. Energy & environment ...................................................................................................................... 36

2. Information and communication technologies (ICT) and media ...................................................... 41

3. Financial services ............................................................................................................................... 48

4. Taxation and State aid ....................................................................................................................... 56

5. Basic industries and manufacturing .................................................................................................. 60

6. Agri-food industry ............................................................................................................................. 64

7. Pharmaceutical and health services sector ....................................................................................... 68

8. Transport and postal services ........................................................................................................... 71

kom (2016) 0393 - Ingen titel

LEGISLATION AND POLICY DEVELOPMENTS

Competition policy boosting innovation and investment across the EU

The EU remains the largest economic and trading area in the world, with more than half a

billion consumers and 20 million companies forming its strongest lever – the internal market.

The on-going process of improving and expanding the functioning of the single market goes

hand in hand with developing competition policy. In essence, competition policy ensures that

companies can compete on equal terms all across Europe.

Competition can make a real difference by keeping the single market open and turning it into

a driver of innovation and growth in Europe. Competition policy enables competitors to

cooperate on innovation without misusing such cooperation to anti-competitive ends. In this

way it ensures that mergers do not reduce or harm innovation and it enables EU governments

to contribute to private-sector investments in innovation. In addition, competition-friendly

regulation and competition culture create favourable conditions for investments and

innovation, which enhances consumer welfare and efficiently functioning markets, enable

growth and contribute towards more convergence. A competitive EU internal market also

prepares European companies to succeed on global markets.

State aid

State aid control

is an integral part of EU competition policy and a necessary safeguard to preserve effective

competition and free trade in the single market.

The Treaty establishes the principle that State aid which distorts or threatens to distort competition is prohibited

in so far as it affects trade between Member States (Article 107(1) TFEU). However, State aid, which contributes

to well-defined objectives of common interest without unduly distorting competition between undertakings and

trade between Member States, may be considered compatible with the internal market (under Article 107(3)

TFEU).

The objectives of the Commission's control of State aid are to ensure that aid is growth-enhancing, efficient and

effective, and better targeted in times of budgetary constraints and where aid is granted; it does not restrict

competition but addresses market failures to the benefit of society as a whole. In addition to this, the

Commission is actively engaged in preventing and recovering incompatible State aid.

1. State Aid Modernisation: Implementation phase

In 2014 the Commission largely completed its ambitious State Aid Modernisation (SAM)

reform.

The reform, which was launched in 2012,

aimed at promoting good aid that supports

investments and spurs growth while contributing to Member States' efforts towards budgetary

consolidation. In 2015, work continued on the remaining item of the reform, namely the

guidance on the notion of aid.

SAM provides for more efficient decision-making and procedures for granting growth-

supporting aid that is not distortive to market functioning in the EU. Among the key

objectives of the reform are: tangible cuts in red tape, the promotion of a better use of limited

public resources by Member States and of a higher contribution of aid measures to investment

For a comprehensive overview of State Aid Modernisation see DG Competition webpage:

http://ec.europa.eu/competition/state_aid/modernisation/index_en.html

Communication of 8 May 2012 from the Commission to the European Parliament, the Council, the European

Economic and Social Committee and the Committee of the Regions,

EU State Aid Modernisation (SAM),

COM(2012) 209 final.

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and growth. For instance, the new State aid rules under the research, development and

innovation (R&D&I) framework encourage and contribute the spread of innovation in the EU

for the benefit of businesses and consumers.

One of the cornerstones of the State Aid Modernisation reform was the new General Block

Exemption Regulation (GBER)

, which simplifies aid granting procedures for Member States

by authorising without prior notification a wide range of measures fulfilling horizontal

common interest objectives. Only cases with the biggest potential to distort competition in the

single market will still face ex ante assessment (notification). As a result of the reform, a

significantly larger number of smaller and unproblematic measures are exempted from prior

notification, in exchange for strengthened controls at Member State level, greater

transparency and better evaluation of the impact of aid.

Following the State Aid modernisation and the entry into force of the new GBER, Member

States made extensive use of the possibilities offered by the comprehensive modernisation of

State aid rules. Notably, a surge in aid excluded from prior Commission scrutiny indicates an

important reduction of red tape. Indeed, the above chart highlights the fact that about 90 % of

new measures in 2014 were registered as exempted from prior notification according to

GBER. As regards the share of GBER expenditure in total aid measures, this amounted to

approximately 40 % in 2014, and is expected to increase even further in 2015.

Partnership with Member States

To facilitate the implementation of SAM, the Commission is supporting Member States in

various ways and has started a closer cooperation with them. Under the new partnership

arrangements with Member States, the Commission provides pro-active support of Member

Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with

the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European

Union (TFEU), OJ L 187, 26.6.2014, p. 1.

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States by the Commission through advocacy work and trainings. The Commission services

have also set up a High Level Group (HLG) together with Member States and some other

dedicated working groups to oversee implementation and facilitate compliance with the new

requirements for transparency and evaluations. To facilitate the work of the central authorities

in Member States, the Commission services have in place a network of State aid country

coordinators. The coordinators help to address systemic issues in State aid enforcement at

Member State level, help Member States prioritise their portfolio of cases and assist with

providing training and guidance. The Commission services have also provided further

guidance on the interpretation of the GBER

Collaboration with Member States takes multiple forms. One fruitful form of the multilateral

partnership is the project between the Commission services and the Member States to

facilitate compliance with the new transparency provisions of SAM. All Member States have

committed to participating in the development of the Transparency Award Module – an IT

platform that will facilitate data collection, storage and visualisation. Meanwhile, the

discussions with Member States are ongoing about the institutional set up of granting

authorities, national information systems for State aid, and methodology used for encoding

information required by the transparency provisions of GBER (Article 9 and Annex III).

Evaluation

Evaluation of aid schemes is a new requirement introduced by SAM. The aim is to gather the

necessary evidence to better identify impact, improve enforcement and inform future policy-

making by Member States and the Commission.

Evaluation also complements the major expansion of the GBER and represents a necessary ex

post safeguard, alongside transparency and monitoring, to promote quality and effectiveness

of aid policies. Since 1 July 2014, evaluation is required for large GBER schemes in certain

aid categories

as well as for some schemes notified under the new generation of State aid

guidelines

By the end of 2015, the Commission had approved evaluation plans covering 17 large State

aid schemes submitted by 10 Member States

; most of these decisions concerned either

regional or R&D&I aid schemes. These schemes account in total for about EUR 10 billion of

the annual State aid budget.

General State aid scrutiny supporting innovation and growth

More flexible rules following the finalisation of SAM made it easier in 2015 for Member

States to implement R&D&I projects, risk finance schemes and other aid measures, as well as

enabled the Commission to focus on projects with an important impact on competition.

General Block Exemption Regulation (GBER) Frequently Asked Questions

of July 2015, prepared by the

Commission services available at

http://ec.europa.eu/competition/state_aid/legislation/practical_guide_gber_en.pdf

Schemes with an average annual State aid budget above EUR 150 million in the fields of regional aid, aid for

SMEs and access to finance, aid for research and development and innovation, energy and environmental aid and

aid for broadband infrastructures.

Evaluation might apply to notified aid schemes with large budgets, containing novel characteristics or when

significant market, technology or regulatory changes are foreseen.

Czech Republic, Germany, Spain, France, Hungary, Austria, Poland, Portugal, Finland, and United Kingdom.

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Aid for research, development and innovation

One of the headline targets of Europe 2020 Strategy

is for R&D&I investments in the EU to

reach 3 % of GDP. However, R&D spending in Europe has been lagging behind major global

competitors, now standing a touch above 2 % of GDP, compared with around 3 % in the

United States of America and Japan. This is mainly the result of lower levels of private

investment.

The State aid rules for R&D&I aim to ensure that public funding goes to research projects that

would not have happened otherwise, i.e. projects that truly go beyond the state of the art and

which bring innovative products and services to the market and ultimately to consumers.

The new State aid rules, which entered into force on 1 July 2014 aim at market efficiency and

mobilising private investment in projects that would have not been implemented due to

market failures. The rules also set the ground for EU companies to combine their efforts with

Member States and invest further in R&D&I as a gateway for sustainable growth and job

creation in Europe. The enlarged scope of the rules, as well as more flexible and simpler

criteria under which the State aid is more likely to be found compatible with the internal

market, facilitate the implementation of R&D projects by Member States.

Aid measures enabling ground-breaking research

In 2015, using the new rules the Commission approved ambitious projects in areas such as satellite launchers

(i.e. access to space), electricity transportation and aeronautics. For instance, the SABRE project (United

Kingdom) can lead to significant technological advances that would benefit consumers using products and

services that depend on low Earth orbiting satellites, such as mobile communications and other services.

Similarly the Supergrid project (France) has put in place a framework for collaboration between academia and

industry over innovation in the field of technology for long-distance electricity transportation. Finally, the TS

3000 project (France) will encourage research in the field of aeronautics while putting in place higher standards

for performance, environment and new materials. Nonetheless, the Commission has remained vigilant and

decided to investigate further the impact on competition of a project establishing a test facility in the railway

industry in Spain.

According to the information submitted by the Member States to the Commission in 2015, the Member States

implemented 603 R&D&I schemes covered by the new GBER (Articles 25 to 30), with an estimated annual

expenditure of EUR 18.8 billion. Finally, in 2015 the Commission also approved eight evaluation plans covering

research and development measures with an overall annual budget in excess of EUR 150 million.

Aid to risk finance

In addition to the new R&D&I State aid rules, the Commission has put in place a simpler,

more flexible and generous State aid framework for risk finance for SMEs and mid-caps. The

new rules, contained in the new Risk Finance Guidelines and in the new GBER, entered into

force on 1 July 2014.

SMEs across the EU remain heavily dependent on traditional bank lending, which is still

limited by banks' refinancing capacity, risk appetite and capital adequacy. The financial crisis

has exacerbated the problem with approximately one third of SMEs being unable to receive

the necessary finance in recent years. Given the pivotal importance of SMEs and midcaps for

the whole EU economy, the situation has a significant negative impact on growth and job

Communication of 3 March 2010 from the Commission,

Europe 2020 A Strategy For Smart, Sustainable And

Inclusive Growth,

COM(2010) 2020 final available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=

1427303331326&uri=CELEX:52010DC2020

Communication from the Commission,

Guidelines on State aid to promote risk finance investments,

OJ C 19,

22.1.2014, p. 4 available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52014XC0122(04)

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creation. The new rules aim to offer better incentives for private sector investors - including

institutional ones – to increase their funding activities in the critical area of SME and midcaps

financing. The rules also mirror other EU initiatives designed to promote wider use of

financial instruments in the context of new support programmes such as Horizon 2020 or

COSME (the Programme for the Competitiveness of Enterprise and SMEs)

The new risk finance regime provides the framework for seamless support for new ventures

from their creation to their development into global players. The aim is to help new ventures

to get past the critical stages, namely the “valley of death”, where private financing is either

unavailable or not available in the necessary amount or form.

Aid measures encouraging investment and innovation

In 2015, under the new Risk Finance Guidelines, the Commission adopted several decisions on schemes aimed

at encouraging investment in innovative SMEs and midcaps. It approved one scheme in the United Kingdom

(the EIS-VCT scheme, targeting innovative SMEs and midcaps) and two schemes in France (Amortissement

exceptionnel des investissements des entreprises dans les PME innovantes and ISF-PME schemes). Taking the

view that these measures covered a real gap in the market, the Commission worked together with the Member

States on solutions to limit the impact on competition in the single market. The Commission considered that the

risks inherent to the activities of these young firms and innovative companies (i.e. products/technologies not yet

proven to be economically viable) and the lack of financial guarantees limited their capacity to access funding.

In addition, their small size meant that they were not in a position to employ staff specifically dedicated to

financial management. The in-depth analysis was performed on the basis of substantiated economic ex-ante

assessment provided by the Member States to demonstrate the market failure affecting these specific categories

of companies. The assessment showed that there are still specific funding needs for certain innovative SMEs

beyond the criteria set out in the GBER (i.e. wider range of financial instruments, risk finance measure of up to

EUR 15 million, possibility of capital replacement, tailored private participation ratio). The examination showed

the existence of a funding gap for certain innovative SMEs and that the aid was necessary to stimulate

investment that would not have been provided by the market unprompted.

According to the information submitted by the Member States to the Commission, the Member States,

implemented 161 measures, under Articles 21 to 24 of the new GBER to help SMEs to access finance. The

measures had an estimated annual budget of EUR 7.015 million. Finally, in 2015 the Commission also approved

four evaluation plans covering risk finance measures with an overall annual budget in excess of EUR 150

million.

Regional aid

Regional aid is an important instrument in the EU's toolbox to promote greater economic and

social cohesion. The 2014-2020 regional aid framework has been fully in place since July

2014, following the adoption in June 2013 of the revised Regional Aid Guidelines for the

period between July 2014 and 31 December 2020 (RAG 2014-20), the adoption of the

regional aid provisions in the GBER and the approval of the 28 regional aid maps in 2014.

The new GBER has extended the range of regional aid measures, enabling Member States to

put in place aid schemes and individual aid measures without having to notify them to the

Commission. Examples of these are ad hoc regional investment aid measures below the

notification thresholds, transport aid schemes and operating aid schemes for outermost

regions. In 2015 the Commission advised Member States' authorities on how to interpret and

implement the new regional aid provisions of GBER, thus helping them to make a success of

the reforms introduced under SAM. Since its adoption in June 2014, the Commission services

have answered some 120 sets of questions on how to interpret the regional aid provisions in

For an overview on the EU programme for the Competitiveness of Enterprises and Small and Medium-sized

Enterprises available at

http://ec.europa.eu/enterprise/initiatives/cosme/index_en.htm

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GBER, and have provided guidance on how to implement of GBER measures as part of

numerous pre-notification contacts.

Regional aid measures

In 2015, the Commission adopted several decisions on regional aid measures under the new provisions, e.g. on

investment aid schemes

, operating aid schemes in the outermost regions

, and on evaluation plans for

exempted large regional aid schemes

. The Commission also adopted several decisions on regional aid measures

to support large investment projects under the preceding rules: in particular, it took a final decision authorising

regional aid for investments by Volkswagen in Portugal (cars) and approved aid for Nexen in the Czech

Republic (tyre production), for Nitrogénművek in Hungary and for Duslo in Slovakia (both in the fertiliser

sector).

European Fund for Strategic Investments

In November 2014, President Juncker announced the creation of the European Fund for

Strategic Investments (EFSI), with the objective to generate EUR 315 billion in investment in

Europe. The Regulation setting up the EFSI was adopted in July 2015. In that context the

Commission has put in place an accelerated procedure for approving within six weeks

Member State co-financing constituting notifiable State aid. This process should contribute to

the necessary public and private financing to reach concrete infrastructure and innovation

projects as quickly as possible.

2. State Aid Modernisation continues

Notion of aid / effect on trade

One building block of SAM still needs to be put in place, namely a Commission guidance

document on the notion of State aid in the light of important changes in case law and

enforcement practice.

Given the high level of economic integration achieved within the EU, aid that distorts

competition between companies will in most cases also have an impact on intra-EU trade.

However, if State support is granted to an activity which has a purely local impact, there may

not be an effect on intra-EU trade, e.g. where the beneficiary supplies goods or services to a

limited area within a Member State and is unlikely to attract customers from other Member

States. Moreover, the measure should have no - or at most marginal – foreseeable effects on

Case SA.39869

Corporate tax exemption scheme

(BG), Commission decision of 14 September 2015 available

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39869

Cases SA.38536

Aide fiscale à l’investissement outre-mer,

Commission decision of 2 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38536

and SA.38823

Reduced

rate of excise duty applied to rum and liqueurs produced and consumed in Madeira (2014-2020),

Commission

decision of 2 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38823

Cases SA.39460

Evaluation plan for the block exempted large aid scheme "Bund-Länder-

Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftsstruktur - Gewerbliche Wirtschaft"

(DE),

Commission decision of 22 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39460;

SA.39669

Evaluation

plan of the Development Tax Benefit Scheme

(HU), Commission decision of 16 January 2015 available at,

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39669;

SA.38830

Evaluation

plan Polish SEZ scheme

(PL), Commission decision of 16 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38830

and SA.42136

Evaluation Plan: Inovação Empresarial

(PT), Commission decision of 19 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_42136

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cross-border investments in the sector or the establishment of firms within the EU's internal

market.

In this context, the European Commission has concluded on 29 April that seven measures

granting public support to purely local operations did not involve State aid within the meaning

of the EU rules, since they were unlikely to have a significant effect on trade between

Member States. The decisions concerned the Czech Republic, Germany, the Netherlands and

the United Kingdom

These decisions provide Member States and stakeholders with additional guidance to

determine which cases do not need to be cleared by the Commission under EU State aid rules.

They complement the Commission's revised GBER.

To provide further guidance to Member States, the Commission services have updated the

analytical grids on the financing of infrastructure projects

. The grids explain when, in view

of the Commission services, no State aid is involved and when notification for State aid

clearance is needed. They also explain the framework for services of general economic

interest.

The analytical grids explain the current rules and the Commission's decisional practice on the

application of State aid rules to the public financing of infrastructure projects. The grids were

updated following the State aid modernisation. The previous grids dated from 2012 and

followed the

Leipzig-Halle

judgment.

Further extension of the scope of the GBER

Recital 1 of the GBER already announced that the Commission planned to propose criteria for

exempting port and airport infrastructure provided that sufficient case experience was

developed. The first public consultations will take place early 2016.

3. Monitoring, recovery and cooperation with national courts

Increased monitoring of existing State aid to ensure a level playing field

Over the years, the architecture of State aid control has evolved. Today, 32 % of aid is granted

under block-exempted schemes which are not examined by the Commission before entering

into force

. Overall, 88 % of aid is granted on the basis of previously approved aid schemes

Cases SA.37432

Hradec Králové public hospitals

(CZ), Commission decisions of 29 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37432;

SA.37904

Medical

centre in Durmersheim

(DE) available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37904;

SA.33149

Städtische

Projektgesellschaft "Wirtschaftsbüro Gaarden - Kiel"

(DE) available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33149;

SA.38035

Landgrafen-

Klinik

(DE); SA.39403

Investment aid for Lauwersoog port

(NL) available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38035;

SA.37963

Glenmore

Lodge

(UK), available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37963

and SA.38208

Member-owned golf clubs

(UK) available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38208

For further information see analytical grids on the financing of infrastructure projects available at

http://ec.europa.eu/competition/state_aid/studies_reports/state_aid_grids_2015_en.pdf

Joined cases T-443/08 and T-455/08

Freistaat Sachsen, Flughafen Leipzig/Halle et al v Commission,

judgment of the General Court of 24 March 2011 [2011] ECR II-1311.

This percentage concerns aid in terms of volume. Banking schemes are not considered here. See latest publicly

available figures (2012), Scoreboard, EU 27 (2006-2012) available at

http://ec.europa.eu/competition/state_aid/scoreboard/graph8.jpg

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or Block Exemption Regulations

. In that context, it is essential for the Commission to verify

that Member States apply the schemes correctly and that they only grant aid when all required

conditions are met.

To that end, the Commission introduced in 2006 a regular,

ex post,

sample-based control of

existing aid schemes ("monitoring"). After a modest start covering about 20 schemes and 10

Member States in each monitoring cycle, the Commission has considerably stepped up

monitoring since 2011. Building on the Court of Auditors recommendations

and anticipating

future changes in how State aid is controlled, the Commission has substantially increased the

size of the monitoring sample in the last three annual cycles to 96 schemes in the current 2015

review. It also extended the scope of its control.

The 2015 cycle covered all Member States, all main types of aid approved as well as block-

exempted schemes. Furthermore, the sample contained a number of block-exempted schemes

under the new GBER

. Also, the Commission carried out two pilot projects on targeted

monitoring. First, the Commission assessed aid schemes in one particular Member State

order to examine whether accumulation rules were correctly observed when aid for the same

project was granted under different schemes. Second, the Commission monitored a number of

large investments projects in order to assess whether they had been correctly implemented.

The Commission follows up systematically on all irregularities and uses the means at its

disposal, as appropriate, to address the competition distortions that these may have caused. In

some cases, Member States offer to voluntarily redress the problems detected, for example to

amend national legislation or to recover the excess aid granted. In other cases, the

Commission may need to take formal action. In 2015, the Commission adopted two final

decisions in cases where it had opened a formal investigation procedure in 2013. In those

cases, the Member States provided additional information that removed the Commission's

concerns that the schemes had been misapplied

. It also adopted one final decision, after the

Member State concerned, France, committed itself to making an incompatible aid scheme

compatible with the State aid rules

Restoring competition through recovery of State aid granted in breach of the rules

To ensure the integrity of the single market, the Commission has the power and the duty to

request that Member States recover unlawful and incompatible aid which has unduly distorted

competition and trade between Member States. In 2015, further progress was made to ensure

that recovery decisions are enforced effectively and immediately.

See previous footnote.

In its 2011 report on the efficiency of State aid procedures, the Court of Auditors considered that, in view of

the importance of aids granted under existing aid schemes, the Commission's monitoring activity should be

reinforced. See the recommendation n° 1 of the Court of Auditors Report recital 96, p. 41, publicly available at

http://eca.europa.eu/portal/pls/portal/docs/1/10952771.PDF

Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible

with the internal market in application of Articles 107 and 108 TFEU; OJ L 187, 26.6.2014, p. 1.

United Kingdom.

Cases SA.15373

Enterprise Capital Funds,

Commission decision of 9 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_15373

and SA.20326

Mesures

de dispense partielle de précompte professionnel en faveur de la R&D,

Commission decision of 23 January 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_20326

Case SA.14551

Taxation au tonnage,

Commission decision of 4 February 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_14551

For further information

see IP/15/4105 of 4 February 2015 available at

http://europa.eu/rapid/press-release_IP-15-4105_en.htm

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By 31 December, the amount of illegal and incompatible aid recovered from beneficiaries had

increased to EUR 13.5 billion

, from EUR 8.5 billion in December 2004

. This means that

the percentage of illegal and incompatible aid still to be recovered fell slightly from 74 % at

the end of 2004 to around 55 % at the end of 2015.

In 2015, the Commission adopted 17 new recovery decisions and EUR 6.1 million was

recovered by the Member States. As of the end of December, the Commission had 54 pending

recovery cases.

Recovery decisions adopted in 2015

Amount recovered in 2015 (EUR million)

Pending recovery cases on 31 December 2015

6.1

As a guardian of the Treaty, the Commission may use all legal means at its disposal to ensure

that Member States implement their recovery obligations, including launching infringement

procedures. In 2015, the Court of Justice condemned two Member States under Article 108(2)

TFEU

(France and Germany)

and one Member State under Article 260(2) TFEU (Italy)

Cooperation with national courts to ensure the effectiveness of State aid rules

The Commission continued its cooperation with national courts under the Commission Notice

on the enforcement of State aid law by national courts of 2009

(the "Enforcement Notice").

This cooperation includes direct case-related assistance to national courts when they apply EU

State aid law. The courts can ask the Commission to provide case related information, or to

provide an opinion on the application of the competition rules. The Commission may also

submit

amicus curiae

observations at its own initiative.

In 2015, the Commission responded to two requests for information and two requests for an

opinion under Article 29 of the Procedural Regulation

. The requests for information were

issued by a Spanish and a German court. They concerned the state of the proceedings before

the Commission of a complaint and the transmission of documents in the possession of the

Commission as well as questions on how to interpret the notion of State aid. The requests for

an opinion came from two German courts: one related to the aid element in a bank guarantee

and the other to the existence of alleged State aid.

The Commission received also questions from third parties bringing cases to the attention of

the Commission and asking the Commission to submit observations as

amicus curiae.

However, under the Procedural Regulation, the Commission has the duty to reply only to

requests made by national courts, not to requests made by third parties. This provision is

intended to preserve the independence of the national courts, even though requests made by

The reference period is 1 January 1999 to 31 December 2015.

The reference period is 1 January 1999 to 31 December 2005.

Consolidated version of the Treaty on the Functioning of the European Union, 2008 OJ C 115, 9.5.2008, p.47.

Cases C-63/14

Commission v France,

judgment of the Court of 9 July 2015, ECLI:EU:C:2015:458 and C-

674/13,

Commission v Germany,

judgment of the Court of 6 May 2015, ECLI:EU:C:2015:302.

C-367/14

Commission v Italy,

judgment of the Court of 17 September 2015, ECLI:EU:C:2015:611, and C-

302/09

Commission v Italy,

judgment of the Court of 6 October 2011, ECLI:EU:C:2011:634.

Commission Notice on the enforcement of State aid law by national courts, OJ C 85, 9.4.2009, p. 1.

Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article

108 TFEU, OJ L 248 of 24.9.2015, p. 9–29.

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third parties can be a useful tool to inform the Commission about ongoing cases where the

submission of observations

ex officio

can be presented.

As a result of the 2013 amendment to the Procedural Regulation, the Commission has the

possibility to submit

amicus curiae

observations on its own initiative before national courts.

Article 29 of the Procedural Regulation mirrors in that respect Article 15 (3) of Regulation

1/2003 in the field of antitrust. In 2015, the Commission submitted observations before a

French court on questions related to the execution of recovery decisions and observations

were submitted to various courts in Romania, a court in Belgium and in the United States

concerning the recognition and enforcement of an arbitration award, the implementation of

which the Commission deems to constitute the grant of State aid. Further observations

regarding the recognition and enforcement of that award will be submitted, in France, the

United Kingdom and Luxembourg, but these were not yet filed in 2015.

The Commission intends to publish its opinions and

amicus curiae

observations on its website

as soon as it receives approval from the courts concerned

The Commission also continued its advocacy efforts. In 2015, the Commission was actively

involved in evaluating the financing of training programmes for national judges and in

assessing judges' needs. It also sent officials to teach at such workshops and conferences

4. Significant judgments by EU Courts in the State aid area

In 2015, the EU Courts adopted a number of important judgments in the State aid area in

particular on the concept of State resources, advantage and selectivity. The following

overview is based on a selection of Court judgments.

State resources and effect on trade

By judgment of 14 January in

Eventech,

the Court of Justice rendered a preliminary ruling

in response to a reference by the Court of Appeal of England & Wales by which it concluded

that the policy by which London taxis (black cabs) were allowed to drive in publicly funded

bus lanes, but minicabs were excluded, did not give rise to State aid. The Court of Justice

ruled, first, that the policy did not involve State resources because, black cab's use of those

lanes being permitted by law, their "exemption" from fines did not involve additional burdens

on the public authorities which could entail a commitment of such resources.

The Court of Justice ruled, next, that since roads and bus lanes are not operated commercially

by the public authorities the policy does not entail forgoing revenues they would have

otherwise received in the absence of that policy. The Court of Justice further elaborated that

where the State grants a right of privileged access to public infrastructure that is not operated

commercially by the public authorities to users of that infrastructure in order to pursue the

realisation of an objective laid down by that State’s legislation, the State does not necessarily

confer an economic advantage on those users. On selectivity, the Court of Justice ruled that

black cabs and minicabs were not in a comparable factual or legal situation on the basis of

physical and licensing characteristics, so that the permission of one and the exclusion of the

latter from the bus policy did not constitute State aid. Finally, the Court of Justice upheld the

Commission notice on the enforcement of State aid law by national courts, OJ C 85, 9.4.2009, p. 22, paragraph

98.

See also the dedicated section

Cooperation with national courts,

Antitrust and Cartels Section, item 7.

Case C-518/13

The Queen, on the application of Eventech Ltd, v The Parking Adjudicator,

judgment of the

Court of 14 January 2015, ECLI:EU:C:2015:9

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Altmark

case law on the effect on trade between Member States, although invited by the

Advocate General and the ESA to revisit that case law, by concluding that it was feasible that

the policy was liable to affect such trade since it could render less attractive the provision of

minicab services in London.

The concept of advantage and quantification

As regards the concept of advantage, the Court of Justice ruled in

OTP Bank Nyrt

on the

basis of another reference for a preliminary ruling that a Hungarian aid scheme to facilitate

access to housing via banks provided an advantage to credit institutions established in

Hungary. This enabled the banks to conclude loan agreements without having to assume the

financial risk. The Court of Justice also ruled that in addition to the fact that the scheme

enabled banks to conclude loans, it allowed them to provide additional services against

remuneration, such as the opening of a current account. Such advantage was also selective as

it concerned the economic sector of credit establishments (to the exclusion of other economic

sectors).

Also as regards the concept of advantage and in particular the issue of quantification of

advantage, the General Court handed down two judgments (Aer

Lingus v Commission

Ryanair v Commission

) on a Commission decision declaring the application by Ireland of

differentiated air travel tax rates as illegal State aid. The General Court confirmed the

assessment of the Commission that had found the higher rate of EUR10 per passenger as the

normal tax rate and the lower tax rate of EUR 2 per passenger travelling to destinations

located at maximum 300 km from Dublin the exception from the normal rate, constituting

State aid to certain airlines. However, the General Court found that the Commission was

wrong in quantifying the economic advantage as the difference between the two rates, since it

should have taken into account the degree to which the airlines could have fully or partially

passed on the advantage to the passengers. Thus, the advantage actually obtained by the

airlines did not necessarily consist in the difference between the two rates, but rather in the

possibility of offering more attractive prices and thereby increasing the turnover. Recovery

should therefore also be limited to what was actually withheld by the airlines.

Market economy investor principle

As regards the application of the market economy investor principle, the General Court ruled

in a judgment of 2 July in joined cases

France and Orange (former France Télécom) v

Commission

, following a referral from the Court of Justice that the Commission was wrong

to consider that the offer of a loan made to Orange was a State aid and thereby annulled the

Commission decision. The General Court held that the relevant moment at which the

Commission must apply the "Market Economy Investor Principle" (MEIP) is when the State

financial support measure that may be characterised as State aid is adopted (i.e. December

2002) and not to the situation as it existed before July 2002 when the French Minister publicly

stated that the French State would take the appropriate measures to rescue France Télécom.

Case C-672/13

OTP Bank Nyrt v Magyar Állam, Magyar Államkincstár,

judgment of the Court of 19 March

2015, ECLI:EU:C:2015:185.

Case T-473/12

Aer Lingus Ltd v Commission,

judgment of the General Court of 5 February 2015,

ECLI:EU:T:2015:78. The judgment is under appeal before the Court of Justice (cases C-164/15 P and C-

165/15).

Case T-500/12

Ryanair Ltd v Commission,

judgment of the General Court of 5 February 2015,

ECLI:EU:T:2015:73.

Joined cases T-425/04

RENV

and T-444/04

RENV France and Orange v Commission,

judgment of the General

Court of 2 July 2015, ECLI:EU:T:2015:450.

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While the General Court accepted that it is possible to take account of prior events and

objective facts, it did not consider that those earlier events and facts alone can conclusively

form the relevant reference framework for the purposes of applying the MEIP. As for the July

2002 ministerial statement, the General Court noted that the Commission did not succeed in

proving that the intention of the French authorities was sufficiently genuine, reliable, specific

and unconditional for them to be legally bound by such statements.

The concept of selectivity

On the concept of selectivity, the Court of Justice in

Commission v MOL Nyrt

upheld the

judgment of the General Court that had annulled a Commission decision concerning State aid

granted to the oil and gas company MOL. The Commission had considered that the agreement

between the Hungarian government and MOL which provided for a prolongation of the

mining authorisation and a 2008 amendment to the Mining Act constituted a selective aid

measure. This prolongation significantly increased the mining fees for all mining companies

except for those which had already signed a prolongation agreement, i.e. in practice only

MOL.

With reference to the 2005 agreement between the Hungarian government and MOL, the

Court of Justice concluded that, firstly, the selectivity requirement differs depending on

whether the measure in question constitutes a scheme or individual aid. In the case of

individual aid, the identification of the economic advantage is, in principle, sufficient to

support the presumption that it is selective. In the case of a scheme, it is necessary to identify

whether the measure in question, notwithstanding the fact that it confers an advantage, does

so to the exclusive benefit of certain undertakings or certain sectors of activity.

Secondly, there is a fundamental difference between the assessment of the selectivity of

general schemes for exemption or relief, which, by definition, confer an advantage, and the

assessment of the selectivity of optional provisions of national law prescribing the imposition

of additional charges. In cases in which the national authorities impose additional charges in

order to maintain equal treatment between operators, the simple fact that those authorities

enjoy discretion defined by law, and not unlimited discretion, cannot be sufficient to establish

that the corresponding scheme is selective. As regards both the 2005 agreement and the 2008

amendment taken together, the Court of Justice concluded that there was no chronological

and/or functional link between the 2005 agreement and the 2008 amendment and could

therefore not be considered as a single aid measure.

The concept of Services of General Economic Interest

The EU Courts also handed down two important judgments on the concept of Services of

General Economic Interest (SGEI). In

TV2/Denmark v Commission

and

Viasat v

Commission

, the General Court confirmed the Commission's assessment that the

Altmark

conditions were not fulfilled with respect to the financing of the Danish public broadcaster but

Case C-15/14 P

Commission v MOL Magyar Olaj- és Gázipari Nyrt,

judgment of the Court of 4 June 2015,

ECLI:EU:C:2015:362.

Case T-674/11

TV2/Denmark v Commission,

judgment of the General Court of 24 September 2015,

ECLI:EU:T:2015:684.

Case T-125/12

Viasat Broadcasting UK Ltd v Commission,

judgment of the General Court of 24 September

2015, ECLI:EU:T:2015:687.

Case C-280/00

Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft

Altmark GmbH, and Oberbundesanwalt beim Bundesverwaltungsgericht,

judgment of the Court of 24 July 2003,

ECLI:EU:C:2003:415.

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disagreed with the Commission that the second

Altmark

condition requires the beneficiary of

the SGEI compensation to be operating efficiently.

According to the General Court, this would lead to confusion between the second and the

fourth

Altmark

conditions. In addition, the notion of a typical well-run company as stated in

the fourth

Altmark

condition requires the beneficiary of the compensation to be compared

with another company which is not a beneficiary. It is not sufficient for that purpose to argue

that there is no comparable company because of the specific public service task entrusted to

the beneficiary and on that basis argue that the beneficiary itself constitutes such a typical

well-run company. Finally, as regards the question whether advertising revenue generated by

commercials broadcast by TV2 but channelled to a fund and consequently disbursed back to

TV2 constitute State resources, the General Court held that the State's intervention was

limited to the fixing of amounts to be channelled to TV2. Thus, the State could only decide

that TV2 would not receive all of the funds, but only a certain part of it, which is not

sufficient to find that they constitute State resources. The funds keep their character as income

generated by commercial activities of TV2.

Social housing constitute an existing aid scheme

Finally, in an order of 12 May in

RENV Stichting Woonlinie v Commission

, the General

Court confirmed the Commission's decision of 15 December 2009 which found the Dutch

social housing scheme to constitute an existing aid scheme compatible with the EU State aid

rules on SGEI further to commitments by the Netherlands. The General Court gave its

decision by reasoned order which is available only in cases where the action is manifestly

lacking any foundation in law (or manifestly inadmissible). The General Court rejected all the

arguments put forward that were mainly directed against the changes in the Dutch social

housing scheme, in particular an income limit in order to benefit from social housing.

Case T-202/10

Stichting Woonlinie v Commission,

judgment of the General Court of 12 May 2015,

ECLI:EU:T:2015:287. The judgment is under appeal before the Court of Justice (case C-414/15 P).

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Antitrust and cartels

Articles 101, 102 and 106 TFEU

According to Article 101 TFEU, anti-competitive agreements are

prohibited as incompatible with the internal

market.

Article 101 TFEU prohibits agreements with an anti-competitive object or effects where companies

coordinate their behaviour instead of competing independently. Even if a horizontal or a vertical agreement

could be viewed as restrictive (for example by combining the production of two competing companies) it might

be allowed under Article 101(3) TFEU if it ultimately fosters competition (for example by promoting technical

progress or by improving distribution).

Article 102 TFEU prohibits abuse of a dominant position. It is not in itself illegal for an undertaking to be in a

dominant position or to acquire such a position. Dominant undertakings, the same as any other undertaking in

the market, are entitled to compete on the merits. However, Article 102 TFEU prohibits the abusive behaviour of

such dominant undertakings which prevents new entry or squeezes competitors out of the market. These

practices hamper competition and negatively affect incentives to innovation and growth, as well as consumer

welfare.

Finally, Article 106 TFEU prevents Member States from enacting or maintaining in force any measures contrary

to the Treaty rules regarding public undertakings and undertakings to which Member States grant special or

exclusive rights (privileged undertakings).

1. Guidance in antitrust and cartel proceedings

In 2015, in order to further increase transparency and to offer guidance to parties and

practitioners the Commission published a number of guidance documents on its procedures:

Based on the experience gained in the past years, the purpose of the

Best Practices on the

disclosure of information in data rooms

in proceedings under Articles 101 and 102 TFEU

and under the EU Merger Regulation is to provide practical guidance on when and how to use

data rooms to disclose in a restricted manner business secrets and other confidential

information obtained during antitrust and merger proceedings.

Guidance on the preparation of public versions of Commission Decisions

was also adopted

under Articles 7 to 10, 23 and 24 of Regulation 1/2003. It sets out how the Commission

prepares the public version of antitrust decisions. It describes (i) what information

undertakings can claim should be redacted and how they should substantiate their claims; (ii)

what the Commission redacts on its own initiative and (iii) the procedure that is followed to

settle confidentiality claims.

The guidance paper titled

Recommendations for the Use of Electronic Document Submissions

in Antitrust and Cartel Case Proceedings

contains guidance in particular on how to submit

documents electronically to the Commission (either by e-mail, via eTrustEx or by e-

questionnaire), their format and size, protection, encryption, naming, languages, and non-

confidential versions.

Commission guidance (2015)

Best Practices on the disclosure of information in data rooms

available at

http://ec.europa.eu/competition/mergers/legislation/disclosure_information_data_rooms_en.pdf

Commission guidance (2015)

Guidance on the preparation of public versions of Commission Decisions

available at

http://ec.europa.eu/competition/mergers/legislation/guidance_on_preparation_of_public_versions_mergers_2605

2015.pdf

and

http://ec.europa.eu/competition/antitrust/guidance_on_preparation_of_public_versions_antitrust_04062015.pdf

Commission guidance (2015)

Recommendations for the Use of Electronic Document Submissions in Antitrust

and Cartel Case Proceedings

available at

http://ec.europa.eu/competition/contacts/electronic_documents_en.pdf

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2. Significant judgments by the EU Courts in antitrust and cartels

Article 101 TFEU

Communications between competitors, single and continuous infringement

In the

Dole

judgment

, pertaining to the bananas cartel, the Court of Justice entirely

dismissed the appeal brought by banana importer Dole against the General Court judgment.

The Court of Justice confirmed that communications between competitors leading to

horizontal price-fixing are anti-competitive by their very object and amount to a violation of

EU antitrust rules, without requiring an analysis of their effect on competition in the market.

The Court of Justice agreed with the Commission that the cartelists' communications before

setting the quotation prices for bananas reduced uncertainty for each of the participants as to

the conduct of their competitors. This had the objective of creating competitive conditions

that did not correspond to the normal conditions on the market without such collusive contacts

and therefore gave rise to a concerted practice between the companies with the object to

restrict competition.

In the

Del Monte

judgment

also pertaining to the bananas cartel, the Court of Justice

dismissed the appeal brought by Del Monte against the General Court judgment and accepted

the appeal of the Commission brought against the same judgment. The judgment of the Court

of Justice gives an important precedent clarifying aspects of the case law concerning the

concept of a single continuous infringement. The Court of Justice confirmed that parties'

unawareness of certain elements of a cartel does not alter the finding of a single and

continuous infringement. The Court of Justice upheld the Commission's appeal against the

fine reduction for cooperation awarded by the General Court and found that a reply to a

simple request for information is not sufficient for a fine reduction.

Liability of facilitator

AC-Treuhand

judgment

the Court of Justice confirmed the General Court's judgment and

thus, the Commission's decision to hold AC-Treuhand liable as a cartel facilitator under

Article 101 TFEU. In its decision, the Commission fined AC-Treuhand because it played an

essential role in the two infringements (ESBO/esters - Heat Stabilisers). It organised a number

of meetings at its Zürich premises in which it actively participated, collecting from and

supplying to the producers of heat stabilisers data on sales on the relevant markets, offering to

act as a moderator in the event of tensions between those producers and encouraging the latter

to find compromises, for which it received remuneration.

In the judgment the Court of Justice interpreted Article 101 TFEU as referring to all

agreements and concerted practices which distort competition, irrespective of the markets the

parties operate on. The Court of Justice held that to be held liable for an infringement of

Article 101 TFEU, it is not required to restrict one's freedom of action on a particular market

and that the effectiveness of Article 101 TFEU would be endangered if undertakings such as

AC-Treuhand were allowed to escape liability simply because they do not contribute actively

to the restriction of competition in a particular market. On fines, the Court of Justice agreed

Case C-286/13 P

Dole v European Commission,

judgment of the Court of 19 March 2015,

ECLI:EU:C:2015:184.

Joined cases C-293/13 P and 294/13 P

Del Monte e.a. v European Commission,

judgment of the Court of 19

March 2015, ECLI:EU:C:2015:416.

Case C-194/14 P

AC-Treuhand v Commission,

judgment of the Court of 22 October 2015,

ECLI:EU:2015:717.

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that the Commission was entitled to deviate from the usual calculation method and to impose

a lump sum on AC-Treuhand.

Parental liability, fines calculation

On 9 September, the General Court handed down five judgments

in the TV and Computer

monitor tubes cartel involving seven undertakings which participated in either one or both of

two distinct cartels in the cathode ray tubes sector. The General Court found that the

Commission had jurisdiction notwithstanding the fact that the cartels were formed outside the

EEA. The cartel arrangements directly influenced the setting of prices and of volumes

delivered to the EEA either as direct sales or as products processed by vertically integrated

companies.

On substance, the General Court upheld the majority of the Commission's findings with the

exception of the individual participation of Toshiba in the early period of the cartel, for which

the General Court found that that Commission had not sufficiently established its awareness

of the overall cartel.

The judgments also upheld the Commission's decision regarding parental liability. In

particular, the General Court confirmed, in line with established case law, that parent

companies were liable for the illegal anti-competitive behaviour of joint ventures irrespective

of the ownership shares (regarding both the Philips/LG Electronics and the Toshiba/Panasonic

joint ventures).

The General Court also upheld the fines methodology and confirmed by reference to the

Innolux judgment

of the Court of Justice the Commission's right to consider sales of

finished products sold to third parties in the European Economic Area (EEA) in which a

vertically integrated cartelist had incorporated cathode ray tubes into its finished products

outside the EEA. Finally, the General Court decided to reduce the fines for Panasonic,

Toshiba and MTPD as it had found that the companies provided a more detailed value of sales

figures than what the Commission had used. The fine, however, set at just over EUR 1.4

billion, remains the highest ever total fines imposed in a cartel case.

Calculation of fines

In its

judgment

of 23 April, the Court of Justice upheld the judgment of the General

Court concerning the

LCD panels

cartel

. The main issue at stake was whether sales to

parents of a joint venture could be taken into account in the calculation of fines. The Court of

Justice held that the Commission was entitled to take into account such sales. This was

because even if these sales were made at a preferential price (and might therefore not be

influenced by the cartel), they were made on the market affected by the infringement and

should be included to correctly reflect the importance of the parties on that market. The Court

of Justice further held that these sales must be regarded a sales made to independent third

parties (external sales) since the joint venture and its parent companies did not constitute a

single undertaking.

Cases T-82/13

Panasonic/MTPD,

T-84/13

Samsung SDI,

T-91/13

LG Electronics,

T-92/13

Philips

and T-

104/13

Toshiba,

judgments of the General Court of 9 September 2015, ECLI:EU:T:2015:612

See section

Calculation of fines

below.

Case C-227/14 P

LG Display and LG Display Taiwan v Commission,

judgment of the Court of 23 April 2015,

ECLI:EU:C:2015:258.

Case AT.39309

LCD – Liquid Crystal Displays,

Commission decision of 8 December 2010 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39309

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In another judgment

in the

LCD panels

case adopted on 9 July, the Court of Justice upheld

the fine imposed on another cartelist (Innolux). The main issue at stake was whether the intra-

group sales of cartelised products (LCD panels) outside the EEA which were incorporated

into the finished products (TVs) within the group to which the producer belongs and then sold

in the EEA can be taken into account when calculating the fine (direct sales through

transformed products). The Court of Justice concluded that when the goods concerned by the

cartel were incorporated into finished products by a vertically integrated undertaking outside

the EEA, the Commission may take into account, for the purposes of calculating the fine to be

imposed on that undertaking and up to the value of the incorporated panels, the sales of its

finished products in the EEA to independent third-party undertakings.

Single and continuous infringement, agent as economic unit

In 10 judgments handed down on 15 July

, the General Court dismissed nearly all actions

brought against the Commission's Pre-stressing Steel cartel decision of 30 June 2010

. The

General Court upheld entirely the Commission's finding that the cartel involving 17

undertakings and lasting for more than 18 years constituted a single and continuous

infringement of EU competition law. The cartel consisted of a complex set of arrangements at

European (Club Zurich/Club Europe) and regional (Club Italia/Club Spain) level, involving

quota fixing, client sharing, price fixing and exchange of sensitive commercial information on

pricing, customers and volume/shares in nearly the whole EEA.

voestalpine

and

voestalpine Austria Draht

the General Court not only confirmed

established case law (notably

Suiker unie

) that an agent and its principal can be regarded as

an economic unit in analogy with an employee. It also brought a novel finding,

acknowledging that an agent acting for two principals at the same time (both involved in the

cartel) can be an economic unit with each principal and thus the latter can be held liable for

the conduct of the agent, despite the non-exclusive relationship with each of them. The

General Court clarified that such liability was to be found as long as the commercial agent

was acting within his authority: in those cases, he had to be regarded as forming part of the

undertaking. On the other hand, the General Court took the view that the liability for that

agent’s anti-competitive actions outside his mandate could not be imputed to voestalpine

Case C-231/14 P

InnoLux Corp. v European Commission,

judgment of the Court of 9 July 2015

ECLI:EU:C:2015:451.

Cases T-406/10

Emesa-Trefilería and Industrias Galycas v. Commission;

ECLI:EU:T:2015:499; T-436/10

HIT Groep v. Commission;

ECLI:EU:T:2015:514; T-391/10

Nedri Spanstaal BV v. Commission;

ECLI:EU:T:2015:509; T-389/10

SLM v. Commission;

ECLI:EU:T:2015:513; T-419/10

Ori Martin v.

Commission;

T-422/10 (ex EMME) now:

Trafilerie Meridionali SpA, già Holding SpA v. Commission;

ECLI:EU:T:2015:512; T-423/10

Redaelli Tecna v. Commission;

ECLI:EU:T:2015:511; T-393/10

Westfälische

Drahtindustrie and Others v. Commission;

ECLI:EU:T:2015:515; T-418/10

voestalpine and voestalpine Austria

Draht v. Commission;

ECLI:EU:T:2015:516; T-398/10

Fapricela - Indústria de Trefilaria v. Commission;

ECLI:EU:T:2015:498; T-413/10, T-414/10 and T-409/13

Socitrel + Companhia Previdente v. Commission,

ECLI:EU:T:2015:500, judgments of the General Court of 15 July 2015. T-388/10

Proderac v. Commission

was

closed for reasons of bankruptcy. No judgments rendered yet in cases T-429/10, T-578/10 and T-438/12

Global

Steel Wire, SA v. Commission;

and T-427/10, T-576/10 and T-439/12

Trefilerías Quijano, SA v. Commission

and; T-428/10, T-577/10 and T-441/12

Trenzas y Cables de Acero PSC, SL v. Commission;

and T-426/10 and T-

575/10 and T-440/12

Moreda-Riviere Trefilerías, SA v. Commission.

Case AT.38344

Pre-stressing Steel,

Commission decision of 30 June 2010, amended by Commission decision

of 30 September 2010 and Commission decision of 4 April 2011 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_38344

For further information see

IP/ 11/403 of 4 April 2011 available at

http://europa.eu/rapid/press-release_IP-11-403_en.htm?locale=en

Case T-418/10

voestalpine and voestalpine Wire Rod Austria.

Note that

voestalpine Austria Draht

is now

called Voestalpine Wire Rod Austria.

Case 40/73 et alia

Suiker Unie

et alia, judgment of the Court of 16 December 1975, ECLI:EU:C:1975:174.

kom (2016) 0393 - Ingen titel

Austria Draht and reduced the fine imposed jointly and severally on those two companies for

those conducts.

Inconsistency between reasoning of decision and operative part

In 13 judgments handed down on 16 December 2015

relating to the

Airfreight

decision the

General Court found an inconsistency between the reasoning of the contested decision and its

operative part. On the one hand, the reasoning describes a single and continuous infringement

in which all of the addressees of that decision participated. On the other hand, the first four

articles of the operative part do not each set out all of the addressees of the contested decision.

The General Court therefore fully annulled the decision for all but one party which lodged an

appeal

. The General Court did not take a position on whether the Commission could prove

the infringement or not.

Article 102 TFEU

Action for injunction constituting an abuse of a dominant position

In a judgment adopted following a preliminary reference, the Court of Justice provided legal

clarity on certain controversial aspects of licensing of standard-essential patents

. It

concluded that the bringing of an action for an injunction for prohibition against an alleged

infringer by the proprietor of a standard-essential patent holding a dominant position may

constitute an abuse of that dominant position under certain circumstances

The judgment is important because it confirms that competition policy has an important role

to play in the standardisation arena. It also confirms the Commission's approach in the

Motorola

and

Samsung

cases. According to this approach, seeking injunctions based on

Standard-Essential Patents (SEPs), where a commitment to license on Fair, Reasonable and

Non-Discriminatory (FRAND) terms has been given, can be an abuse of a dominant position

where the prospective licensee is willing to enter into a licensing agreement on FRAND

terms.

Standardised retroactive rebate scheme under Article 102 TFEU

Post Danmark II

the Court of Justice gave a preliminary ruling on questions concerning

the criteria for assessing standardised retroactive rebate schemes under Article 102 TFEU. In

Cases T-9/11

Air Canada v Commission,

ECLI:EU:T:2015:994, T-28/11

KLM v Commission,

ECLI:EU:T:2015:995, T-36/11

Japan Airlines v Commission,

ECLI:EU:T:2015:992, T-38/11

Cathay Pacific

Airways v Commission,

ECLI:EU:T:2015:985, T-39/11

Cargolux Airlines v Commission,

ECLI:EU:T:2015:991,

T-40/11

Latam Airlines Group and Lan Cargo v Commission,

ECLI:EU:T:2015:986, T-43/11

Singapore Airlines

and Singapore Airlines Cargo PTE v Commission,

ECLI:EU:T:2015:989, T-46/11

Deutsche Lufthansa and

Others v Commission,

ECLI:EU:T:2015:987, T-48/11

British Airways v Commission,

ECLI:EU:T:2015:988, T-

56/11

SAS Cargo Group and others v Commission,

ECLI:EU:T:2015:990, T-62/11

Air France – KLM v

Commission,

ECLI:EU:T:2015:996, T-63/11

Air France v Commission,

ECLI:EU:T:2015:993and T-67/11

Martinair Holland v Commission,

ECLI:EU:T:2015:984, judgments of the General Court of 16 December 2015.

For British Airways, only part of the findings and the whole fine are annulled for procedural reasons. See Case

C-122/16 P, pending.

Case C-170/13

Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland GmbH,

judgment of the

Court of 16 July 2015, ECLI:EU:C:2015:477.

Case AT.39985

Motorola Mobility,

Commission decision of 29 April 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39985

Case AT.39939

Samsung,

Commission decision of 29 April 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39939

Case C-23/14

Post Danmark A/S v Konkurrencerådet,

judgment of the Court of 6 October 2015,

ECLI:EU:C:2015:651.

kom (2016) 0393 - Ingen titel

particular, the Court of Justice was asked to provide guidance on what relevance should be

attached to the fact that the rebate scheme is applicable to the majority of customers in the

market and also to the "as efficient competitor test".

The Court of Justice reiterated that the assessment of such rebate scheme should be carried

out in the light of all relevant circumstances, including the rules and the criteria governing the

grant of the rebates, the number of customers concerned and the characteristics of the market

in which the dominant undertaking operates. The fact that the rebate scheme concerns a large

proportion of customers may constitute a useful indication as to the extent and impact of the

practice and thus to the likelihood of an anti-competitive exclusionary effect, but it is not a

necessary condition for the finding of an abuse. Such an assessment seeks to determine

whether the conduct of the dominant undertaking is capable of producing an actual or likely

exclusionary effect to the detriment of competition, and, thereby of consumers' interest.

The Court of Justice also made clear that the "as efficient competitor test" is not relevant for

finding a rebate scheme abusive in the context such as that of the main proceeding, but made

clear that the application of the test is not excluded on principle and that the test must be

regarded as one tool amongst others for the purpose of assessing whether there is an abuse in

the context of rebate schemes.

The Court of Justice also took a position on whether there is an appreciability (de minimis)

threshold in the application of Article 102 TFEU. The Court of Justice ruled that if a

dominant position is present, competition in the market is already restricted and therefore

abuses should be considered by their very nature liable to give rise to an appreciable

restriction of competition.

Article 106 TFEU

On 25 March the General Court in its judgment in

Slovenská pošta

rejected an application

for annulment brought against a Commission decision concerning the application of Article

86(1) EC.

The General Court dismissed all the pleas of the applicants. Most importantly the General

Court found that an infringement of Article 106(1) TFEU in conjunction with Article 102

TFEU may be established irrespective of whether any abuse actually materialises. All that is

necessary is for the Commission to identify a potential or actual anti-competitive consequence

liable to result from the State measure at issue. Such an infringement may thus be established

where the State measure at issue affects the structure of the market by creating unequal

conditions of competition between companies, by allowing the public undertaking or the

undertaking which was granted special or exclusive rights to maintain (for example by

hindering new entrants to the market), strengthen or extend the dominant position over

another, but neighbouring market, without objective justification.

Procedural issues

Rejection of complaints

In its judgments in

Si.mobil

and

EasyJet

the General Court interpreted Article 13 of

Regulation (EC) No 1/2003 for the first time. This provision allows the Commission and

Case T-556/08

Slovenská pošta a.s. v European Commission,

judgment of the General Court of 25 March

2015, ECLI:EU:T:2015:189. Article 86 EC has since become Article 106 TFEU, without material changes. The

judgment is under appeal before the Court of Justice (case C-293/15P).

kom (2016) 0393 - Ingen titel

National Competition Authorities (NCAs) to reject a complaint on the grounds that another

NCA "is dealing" or "has dealt" with the same case.

Si.Mobil

the General Court held that the Commission can reject a complaint solely on the

basis of Article 13, without the need to also show a lack of EU interest in the case. Moreover,

the General Court emphasised that Article 13 does not create individual rights for companies

to have their case dealt with by a particular authority. The General Court further clarified that

for the purpose of Article 13; "the same case" means the same infringement, in the same

market and within the same time frame. The condition "dealing with" the same case is met

when the NCA has taken follow-up steps, but not when the NCA has merely received the

complaint or has decided to open an investigation.

EasyJet,

the General Court clarified that the Commission can reject a complaint on the

grounds that an NCA has dealt with the same case, even if the NCA has rejected the

complaint on priority grounds and/or has not adopted a formal decision in the meaning of

Article 5 of Regulation 1/2003.

Inspections

The Court of Justice confirmed in its

Deutsche Bahn

judgment the Commission's position

that inspections may be carried out based solely on a Commission decision and do not require

a prior judicial authorisation. This does not infringe the rights of defence or the protection of

the home as safeguarded in the European Charter of Human Rights.

The Court of Justice annulled the second and third inspection decisions. These two decisions

were based on information found during the first inspection at Deutsche Bahn. However, this

information was outside the scope of the first inspection decision. The Commission can

actively search only for information that falls within the scope of the inspection decision. If

the Commission happens to obtain information which is outside the scope of the inspection

decision, it can use this information to justify a further inspection in order to verify or

supplement this information. In this specific case the Court of Justice found that the

Commission had informed its inspectors prior to the first inspection about another complaint

lodged against Deutsche Bahn without referring to it in the first inspection decision. The

Commission thereby infringed the obligation to state reasons and the rights of defence of

Deutsche Bahn and was barred from using the information found outside the scope of the first

inspection decision to justify a further inspection.

Publication of Commission decisions

The publication of cartel decisions is an important element in the Commission's enforcement

activities. On 28 January, the General Court handed down two judgments

concerning a more

extensive publication of a 2006 cartel decision of the Commission

. For the first time, the

General Court provided guidance on the application of Article 30 of Regulation 1/2003 on the

publication of Commission decisions and the publication of certain leniency information.

Case C-583/13 P

Deutsche Bahn e.a. v Commission,

judgment of the Court of 18 June 2015,

ECLI:EU:C:2015:404.

T-341/12

Evonik Degussa GmbH v Commission,

judgment of the General Court of 28 January 2015,

ECLI:EU:T:2015:51 and T-345/12

Akzo Nobel NV and others v Commission,

judgment of the General Court of

28 January 2015, ECLI:EU:T:2015:50.

Case AT.38620

Hydrogen Peroxide and Perborate,

Commission decision of 3 May 2006 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_38620

kom (2016) 0393 - Ingen titel

Both applicants had appealed the Hearing Officer´s decisions in which most of their

confidentiality claims had been rejected.

The General Court dismissed both applications in their entirety and found that the disputed

information, which was based on material voluntarily provided by the applicants in order to

benefit from the leniency programme, was not confidential. The General Court confirmed that

the publication of this information would not result in the communication to third parties of

the leniency material provided by the parties. The General Court further confirmed that the

applicants cannot legitimately oppose the publication by the Commission of information

revealing the details of their participation in the infringement penalised in the decision on the

ground that such publication would expose them to increased risk of civil liability. It

highlighted the wide discretion of the Commission to decide whether to publish information

which does not benefit from the protection of professional secrecy.

The July judgments in the

Carglass

case

also confirm the Commission's right to publish its

decisions, including information received in the context of leniency applications, as well as

names of customers and models exchanged by the cartel, pricing information and the number

of parts and shares of customers' business allocated among the members of the cartel. The

General Court dismissed almost entirely the action brought by Pilkington and entirely

dismissed the action brought by AGC against the Hearing Officer's decisions of 6 August

2012 concerning the publication of a detailed version of the Commission's cartel decision of

12 November 2008 in

Carglass.

The General Court ruled,

inter alia,

that the publication of facts on AGC's and Pilkington’s

participation in the

Carglass

cartel did not breach the Commission's obligations of

professional secrecy or the various rights of defence invoked by the applicants, such as the

rights to equal treatment and legitimate expectations. The General Court also confirmed that

the Commission is entitled to publish the information acquired from leniency applications in

its cartel decisions.

Public access to table of contents

The

AXA

judgment of 7 July is closely related to the

Carglass

decisions and is of

importance to the Commission's policy on publications. In this case, AXA requested, under

Regulation (EC) No 1049/2001, access to: (i) the table of contents (TOC); and (ii) a large

number of documents contained in the

Carglass

file. The Commission gave access to a

version of the TOC in which, inter alia, all items with leniency-related information had been

redacted. It based its decision on a general presumption of non-disclosure accepted by the EU

Courts for documents in the case file and performed no individual analysis of the entries in

question. The Commission also refused access to the documents requested by AXA, based on

the same general presumption.

According to the General Court, the Commission applied correctly the general presumption

that disclosure of the documents in its file would undermine the protection of the purpose of

inspections. However, the General Court annulled the part of the Commission's decision that

rejected AXA's request for access to references to leniency documents in the TOC of the

Carglass file. The TOC was not part of the case file and was, therefore, not covered by the

Cases T-462/12

Pilkington v Commission,

judgment of the General Court of 15 July 2015,

ECLI:EU:T:2015:508 and T-465/12

AGC v Commission,

judgment of the General Court of 15 July 2015,

ECLI:EU:T:2015:505.

Case T-677/13

Axa Versicherung AG v Commission,

judgment of the General Court of 7 July 2015,

ECLI:EU:T:2015:473.

kom (2016) 0393 - Ingen titel

general presumption. The General Court, meanwhile, did uphold the Commission's refusal,

when making an individual examination, to disclose information on the identity of physical

persons, the names of third-party undertakings and sensitive commercial information

contained in the TOC.

Hybrid settlement in cartels

The judgment in

Timab

was the first time the General Court reviewed a Commission

decision in the context of a hybrid settlement procedure. This is the first "hybrid" cartel case,

in which both the settlement procedure and the standard procedure were used, in this case in

parallel. Timab was the only undertaking that decided not to make a settlement submission

after having participated in settlement talks and the case reverted to the ordinary procedure as

regards Timab.

The General Court held that in the ordinary procedure, the Commission was not bound by the

fines ranges discussed during settlement discussion, especially since the Commission must

establish the liabilities of the undertakings concerned while taking account of new arguments

on evidence brought to its attention (which may have an impact on the size of the fine to be

imposed). The General Court also rejected Timab's claims that the Commission penalised

them with a higher fine because they did not settle. The General Court reviewed in detail how

the fines were calculated in both procedures, checked that the Commission had not

discriminated compared with other companies in the same cartel case and concluded that the

Commission had applied the Fines Guidelines correctly.

3. Fight against cartels remains a top priority

Well-functioning, competitive markets give rise to innovation and investment because

companies are forced to innovate and to use their resources in the most efficient way.

Collusive arrangements may have the effect of preventing the restructuring of economic

sectors, thereby reducing innovation. The surplus paid by the cartel victims also reduces the

victims' ability to invest in new areas or purchase other products As the object of cartels is

precisely to eliminate differences between competitors in critical parameters of competition

such as prices, the Commission's anti-cartel enforcement has positive effects on

differentiation between companies.

The Commission's strong enforcement record against hard core cartels continued in 2015. As

in preceding years, the Commission adopted cartel decisions in important sectors for

innovation and investment, such as the financial markets and the automotive industry.

Settlement cases have accounted for a significant proportion of the decisions adopted this

year, confirming that this instrument is now fully established. As discussed above, it is of

major importance for the Commission's enforcement practice that the General Court

confirmed in

Timab

the legality of "hybrid" cases in which both ordinary and settlement

decisions are adopted in the same investigation. This is because some parties do not wish to

follow the settlement route.

The flow of immunity and leniency applications continues to be substantial in a large number

of economic sectors. The Antitrust Damages Directive that entered into force on 26 December

Cases T-456/10

Timab Industries

and

Cie financière et de participations Roullier (CFPR) v Commission,

judgment of the General Court of 20 May 2015, ECLI:EU:T:2015:296 and T-456/10

Timab Industries and Cie

financière et de participations Roullier (CFPR) v Commission

judgment of the General Court of 20 May 2015,

ECLI:EU:T:2015:296.

kom (2016) 0393 - Ingen titel

2014 endorsed the effectiveness of the public enforcement system by setting out that leniency

statements and settlement submissions can never be disclosed in the context of private

damages litigation.

This year, the Commission adopted two settlement decisions against all of the participants in

the cartels concerning

Parking Heaters

(17 June) and

Blocktrains

(15 July).

The Blocktrains settlement case

The

Blocktrains

case is the first cartel case in the rail cargo transport services sector.

The Commission imposed fines of EUR 49.1 million on three companies for operating a cartel for so-called

cargo "blocktrain" services. "Blocktrains" are a rail shipping system to transport cargo from one hub to another

without wagons being split up or stored on the way. This saves time and money for customers from a wide range

of industries, in particular those with large volumes to transport. In principle, blocktrains are economically more

efficient than traditional rail cargo transport, particularly for single commodity shipping.

The "blocktrains" covered by the cartel, named "Balkantrain" and "Soptrain", were jointly operated by

Kühne+Nagel, Express Interfracht

and

Schenker

and connect central Europe with south eastern Europe.

The three undertakings fixed prices and allocated customers of their "Balkantrain" and "Soptrain" services in

Europe between July 2004 and June 2012. The infringement concerned the down-stream sales of cargo transport

services in connection with the blocktrains mentioned above.

The Commission's investigation in this case started with unannounced inspections in June 2013. The

Blocktrains

decision was adopted under the settlement procedure concerning all three parties.

Kühne+Nagel

received full

immunity under the Commission's Leniency Notice for revealing the existence of the cartel, while the two other

undertakings received fines reductions as leniency applicants.

On 4 February, the Commission completed its investigation of seven cartels in the

Yen

interest rate derivatives

(YIRD) sector by adopting an ordinary decision against the UK-based

broker ICAP, who acted as a facilitator in six of those collusions

. In December 2013, the

Commission imposed fines on a number of major banks that decided to settle the case with

the Commission.

Ordinary procedures remain significant because not all investigations may be eligible for

settlement discussions. Relevant factors include the number of parties, the proportion of

leniency applicants in relation to the total number of parties, the degree of contestation,

conflicting positions between the parties and the existence of novel features or aggravating

circumstances in the investigated practices.

When the right circumstances are not met, the Commission will apply the ordinary procedure.

Two ordinary decisions were adopted in 2015:

Retail Food Packaging

(24 June) and

Optical

Disc Drives

(21 October).

Case AT.40055

Parking Heaters,

Commission decision of 17 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40055

For further information see

IP/15/5214 of 17 June 2015 available at

http://europa.eu/rapid/press-release_IP-15-5214_en.htm

and Section 5

"Basic industries and Manufacturing".

Case AT.40098

Blocktrains,

Commission decision of 15 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40098

For further information see

IP/15/5376 of 15 July 2015, available at

http://europa.eu/rapid/press-release_IP-15-5376_en.htm

Case AT.39861

Yen Interest Rate Derivatives,

Commission decision of 4 February 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39861

For further information see

IP/15/4014 of 4 February 2015 available at

http://europa.eu/rapid/press-release_IP-15-4104_en.htm

and Section

3 "Financial Services".

Case AT.39563

Retail Food Packaging,

Commission decision of 24 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39563

For further information see

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The Optical Disc Drives (ODDs) case

ODDs are devices where optical discs (such as CDs, DVDs or Blu-ray) are inserted in order to read and/or

record data. They are used for instance in personal computers, CD and DVD players or even video game

consoles.

In this case, the cartel related to ODDs used for laptops and desktops. Leading suppliers of ODDs (Philips, Lite-

On, their joint venture Philips & Lite-On, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology,

Sony, Sony Optiarc and Quanta Storage) manipulated the procurement events organised by two major

customers, Dell and Hewlett-Packard. The investigation revealed that between June 2004 and November 2008,

the companies discussed their intentions regarding bidding strategies, shared the results of procurement events,

and exchanged other commercially sensitive information. The cartel consisted of a network of parallel bilateral

contacts, which pursued a single plan of avoiding aggressive competition.

The ODD decision was adopted in ordinary (non-settlement) procedure on 21 October. The aggregate fine

imposed amounted to EUR 116 million. Philips, Lite-On and Philips & Lite-On jointly received full immunity

from fines as they were the first to reveal the cartel to the Commission, thereby avoiding a total fine of EUR 63.5

million. No inspections were conducted in this case because the participants were based outside the EU.

The Commission remains committed to pursuing all cartels across all sectors where it has

sufficient evidence of an infringement (more information on the cartel decisions is available

in the sectoral overview). A number of statements of objections were also adopted by the

Commission, such as against the non-settling parties in mushrooms

, in car battery

recycling

and capacitors

The Commission's cartel enforcement record remains strong and effective, with five

decisions, fines totalling approximately EUR 365 million and solid work for enforcement in

future years.

Case name

Yen interest rates

derivatives

Parking heaters

Retail food packaging

Blocktrains

Optical disc drives

Adoption

date

04/02/2015

17/06/2015

24/06/2015

15/07/2015

21/10/2015

Fine imposed Undertaking

EUR s concerned

14 960 000

68 175 000

115 865 000

49 154 000

116 377 000

Prohibition

Procedure

Hybrid*

Settlement

Normal

Settlement

Normal

*normal procedure part of a hybrid case with a settlement decision in December 2013

IP/15/5253 of 24 June 2015 available at

http://europa.eu/rapid/press-release_IP-15-5253_en.htm

and Section 5

"Basic industries and Manufacturing".

Case AT.39639

Optical Disc Drives,

Commission decision of 21 October 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39639

For further information see

IP/15/5885 of 21 October 2015 available at

http://europa.eu/rapid/press-release_IP-15-5885_en.htm

For further information see IP/15/5065 of 28 May 2015 available at

http://europa.eu/rapid/press-release_IP-15-

5065_en.htm

For further information see IP/15/5254 of 24 June 2015 available at

http://europa.eu/rapid/press-release_IP-15-

5254_en.htm

For further information see IP/15/5980 of 4 November 2015 available at

http://europa.eu/rapid/press-

release_IP-15-5980_en.htm

kom (2016) 0393 - Ingen titel

Antitrust and cartel output

4. Continuing close cooperation within the European Competition Network (ECN)

and with national courts

The national competition authorities (NCAs) are essential partners of the Commission for

enforcing the EU competition rules. Since the entry into force of Regulation 1/2003 in 2004,

NCAs are empowered to apply the EU competition rules in full alongside the Commission.

This is done in close cooperation in the European Competition Network (ECN). Together the

Commission and the NCAs have adopted more than 1000 decisions in antitrust cases of which

85 % have been taken by NCAs. Through their enforcement work, the NCAs play a key role

in making sure that the single market works well and fairly for the benefit of consumers and

businesses and driving economic growth. However, while Regulation 1/2003 focused on

giving the NCAs the power to co-enforce the EU competition rules, the 2014 Commission

Communication on Ten Years of Regulation 1/2003

identified a number of areas of action to

strengthen the enforcement powers of NCAs. It showed that there is still room for

improvement to further boost competition enforcement in Europe, make markets more

competitive and give consumers a better choice of goods and services at lower prices.

Therefore, in November the Commission launched a public consultation on empowering the

NCAs to be more effective enforcers

. The Commission invites feedback from a broad range

of stakeholders on potential improvements to guarantee that NCAs (i) have the right tools to

detect and sanction violations of the EU competition rules; (ii) have effective leniency

programmes that encourage companies to come forward, possibly in several jurisdictions,

with evidence of illegal cartels; and (iii) have adequate resources and are sufficiently

independent when enforcing EU competition law. The Commission will carefully review all

Communication from the Commission of 9 July 2014,

Ten Years Of Antitrust Enforcement Under Regulation

1/2003: Achievements And Future Perspectives,

COM/2014/0453 available at

http://ec.europa.eu/competition/

antitrust/legislation/antitrust_enforcement_10_years_en.pdf

For further information see IP/15/5998 of 4 November 2015 available at

http://europa.eu/rapid/press-

release_IP-15-5998_en.htm

kom (2016) 0393 - Ingen titel

input received in the public consultation before deciding whether and to what extent it should

take further action, possibly including an EU legislative initiative.

Cooperation with national courts

In addition to its cooperation with NCAs in the context of the ECN, the Commission also

continued its cooperation with national courts (NCs) under Article 15 of Regulation 1/2003.

The Commission helps NCs to enforce the EU competition rules in an effective and coherent

manner by providing case-related information or an opinion on matters of substance or by

intervening as

amicus curiae

in proceedings pending before the NCs.

In 2015, the Commission thus replied to one request for information and four requests for

opinion from NCs under Article 15(1) of Regulation 1/2003. The request for information was

combined with one of the requests for an opinion and was issued by a United Kingdom court

in a case relating to financial services. One of the remaining three requests for opinion was

issued by a Hungarian court and related to the notion of anti-competitive effects of an

infringement and the extent to which they have to be proven in order to serve as evidence.

Another request for opinion was submitted by a Latvian court and related to the question of

interaction between the EU antitrust rules (Article 102 TFEU) and the State aid rules (Article

107 TFEU). The remaining request for opinion was issued by a Romanian court and

concerned potential infringements in the framework of

Buy Back

campaigns under the

Directive 2002/96/EC of the European Parliament and of the Council of 27 January 2003 on

waste electrical and electronic equipment.

In 2015, the Commission also intervened as

amicus curiae

in two court proceedings:

One of the interventions related to the application of the EU competition rules in the fruit and

vegetables sector. In the underlying case, the French NCA had imposed fines on several

chicory producer organisations and associations of producer organisations for an infringement

of Article 101 (1) TFEU and the equivalent national rules. The Court of Appeal quashed the

NCA decision based, inter alia, on the ground that fixing minimum prices and volumes and

exchanging commercially sensitive information by chicory producers does not constitute an

infringement of competition rules.

According to the Court of Appeal, the NCA had failed to demonstrate that the producers

exceeded the scope of the legal missions conferred on them by the EU and/or national

agricultural rules. The applicable agricultural legislation had therefore authorised the practices

of chicory producers and Article 101(1) TFEU was inapplicable to the behaviour at hand. The

case was appealed before the French Court of Cassation.

In its observations, the Commission rebutted the claim of non-applicability of competition

rules in the agricultural sector by referring in general terms to the existence of general and

specific derogations from EU competition rules. It also underlined that both derogations from

EU competition rules should be interpreted in a restrictive manner and be limited to the

specific activities described in the derogations. The Commission also pointed out that it had

held exclusive competence for allowing a general derogation from the EU competition rules

(e.g. Article 2(2) of Council Regulation No 26/1962) at the time of the facts of the case, but

had not granted such derogation at the time. The Court of Cassation suspended the

proceedings and asked for a preliminary ruling from the Court of Justice under Article 267

TFEU.

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The second

amicus

intervention took place in a transport case before the Spanish Supreme

Court and related to the interpretation of the national provisions on the 10 % cap on fines and

in particular on the notion of "sales volumes" and "total turnover". Although the calculation of

fines imposed by NCAs is not regulated or harmonised in EU legislation, the Commission

underlined in its observations the need for imposing effective sanctions. This is ensured,

among others, through the deterrent character of the fines imposed.

The Commission publishes its opinions and

amicus curiae

observations on its website

(http://ec.europa.eu/competition/court/overview_en.html) as soon as it receives approval from

the courts concerned.

Merger control

EU merger control

The purpose of EU merger control is to ensure that market structures remain competitive while facilitating

smooth restructuring of the industry. This applies not only to EU-based companies, but also to any company

active on the EU markets. Industry restructuring is an important way of fostering efficient allocation of

production assets. However, there are also situations where industry consolidation can give rise to harmful

effects on competition, taking into account the merging companies' degree of market power and other market

features. EU merger control ensures that changes in the market structure which lead to harmful effects on

competition do not occur.

Competition is one of the key drivers for innovation and investment. In protecting competitive

market structures, EU merger control also contributed to innovation and investment across

Europe in 2015. The substantive test for assessing mergers under the current legal framework

is based on a significant impediment of effective competition. This test covers all aspects of a

loss of competition, including harm to innovation. Moreover, EU merger control takes into

account efficiencies brought about by mergers, which bring positive effects on innovation

provided they are verifiable, merger-specific and likely to be passed on to consumers. The

Commission's enforcement practice in 2015 shows that it considers innovation and

investments as important aspects of competition (see section below on recent enforcement

trends).

As highlighted in previous reports on competition policy, the Commission continuously

evaluates the substantive and procedural rules that make up the legal framework, in force for

merger control. In this context, the Commission also assesses concerns voiced by industry

representatives and other stakeholders and checks that its policies and enforcement practices

do not unduly create red-tape for companies and thereby hamper innovation and investment.

If necessary, policy changes are proposed (see points 1 to 3 below).

1. Geographic market definition in European Commission merger control

In recent years, some stakeholders have raised concerns that the Commission fails to take due

account of increasing globalisation and therefore assesses mergers using too narrowly defined

geographic markets. Some stakeholders have also claimed that when the Commission defines

the relevant geographic market for the purpose of assessing mergers notified to it, it does not

sufficiently take into account that potential competitors who were previously not active in a

specific market may start supplying that market following a merger ("supply-side

substitution").

kom (2016) 0393 - Ingen titel

Responding to these views, the Commission published a policy brief entitled "Market

definition in a globalised world"

in March

. The brief sets out the Commission's principles

for determining the geographic area affected by a merger. It also analyses how globalisation

affects how the relevant geographic market is defined.

The Commission also commissioned an independent economic report on the topic of

"Geographic

Market Definition in European Commission Merger Control".

The authors,

Professors Lyons and Fletcher, were asked to evaluate the Commission's approach to

geographic market definition on the basis of a sample of 10 recent decisions in merger cases.

In their report, the authors largely confirm the Commission's approach to geographic market

definition and found that the Commission's geographic market definition practice took

sufficient account of globalisation. They also disagreed with the specific suggestions to

strengthen the weight of supply side factors in defining relevant geographic markets. The

report also made some technical recommendations on how the Commission could further

improve its assessment of the relevant geographic dimensions for a notified transaction. The

authors recommend in particular that the Commission adopts an even stricter approach to

supply-side substitutability at the market definition stage, applies greater flexibility in the use

of non-political geographic market boundaries, such as isochrones, and adopts a formal

methodology for the treatment of transport costs.

The White Paper "Towards more effective EU merger control"

In the White Paper "Towards

more effective EU merger control"

adopted in July 2014

, the

Commission made some concrete proposals to improve the Merger Regulation in a few areas.

Those mainly concern the possible extension of the EU Merger Regulation to minority

shareholdings and a proposed streamlining of the referral system and other procedures.

In light of the views expressed by stakeholders during the public consultation on the White

Paper, the proportionality of a possible review system for minority shareholdings will be

further assessed. For this purpose, the Commission engaged in further discussions with

relevant stakeholders on how to design an effective system for reviewing minority

shareholdings that would pose as little administrative burden as possible on companies.

2. Guidance on merger control proceedings

In 2015, the Commission published two guidance documents on procedural aspects of EU

merger control, which make the Commission's proceedings more transparent for companies

and their legal representatives and thereby increase predictability and efficiency:



The

Guidance on the preparation of public versions of Commission Decisions adopted

under the Merger Regulation,

published on 26 May

; and

The

Best Practices on the disclosure of information in data rooms in proceedings under

Articles 101 and 102 TFEU and under the EU Merger Regulation

, published on 2 June.

Commission policy brief

Market definition in a globalised world

(March 2015) available at

http://ec.europa.eu/competition/publications/cpb/2015/002_en.pdf

White Paper

Towards more effective EU merger control,

COM(2014) 449 final available at

http://ec.europa.eu/competition/consultations/2014_merger_control/mergers_white_paper_en.pdf

Guidance from the Commission of 26 May 2015,

Guidance on the preparation of public versions of

Commission Decisions adopted under the Merger Regulation

(2015) available at

http://ec.europa.eu/competition/mergers/legislation/guidance_on_preparation_of_public_versions_mergers_2605

2015.pdf

kom (2016) 0393 - Ingen titel

3. Recent enforcement trends

The number of notified mergers increased significantly in 2015 compared with the previous

six years. Overall, 360 transactions were notified, including 33 reasoned pre-notification

submissions by the notifying parties to request the referral of a case from the Commission to a

Member State or from a Member State to the Commission. In 11 cases, the Commission

opened in-depth investigations (second phase). These cases concerned various industry

sectors, including the manufacture of engines and turbines, energy production, telecoms,

music rights management, the manufacture of paper and packaging material, the distribution

of office products, the manufacture of beverage cans and aluminium bottles, food &

beverages and small package delivery services.

In 2015 the Commission took 318 final decisions in merger cases

. In two cases, the parties

abandoned a transaction during the in-depth investigation. The number of 22 interventions in

2015 was significantly higher compared with the average of the last six years, which

amounted to around 15 interventions per year. In 2015, 13 mergers were cleared subject to

commitments in first phase and seven in the second phase. There was no case where the

Commission had to prohibit a notified transaction.

Merger decisions:

Guidance from the Commission of 2 June 2015,

Best Practices on the disclosure of information in data rooms

in proceedings under Articles 101 and 102 TFEU and under the EU Merger Regulation

available at

http://ec.europa.eu/competition/mergers/legislation/disclosure_information_data_rooms_en.pdf

For the purposes of this report, decisions based on Articles 6(1)b, 6(1)b in combination with 6(2), 8(1), 8(2)

and 8(3) of the Merger Regulation are considered as final decisions. Commission interventions in merger cases

include prohibition decisions and mergers cleared subject to commitments, as well as withdrawals during second

phase in-depth investigation.

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4. Significant judgments by the EU Courts in mergers

On 9 March, the General Court dismissed the action for annulment brought by Deutsche

Börse against the Commission decision of February 2012

declaring the proposed merger

between Deutsche Börse and NYSE Euronext incompatible with the internal market

. The

General Court's judgment is of general interest in relation to the Commission's assessment of

efficiencies submitted by the notifying party. The General Court supported the Commission's

analytical framework for efficiencies as set out in the in the Horizontal Merger Guidelines and

explicitly stated that the burden of proof for efficiency claims is on the notifying party.

On 13 May, the General Court dismissed the action for annulment brought by Niki Luftfahrt

against the Commission decision of August 2009

declaring the proposed acquisition of

Austrian Airlines by Deutsche Lufthansa AG compatible with the internal market subject to

conditions and obligations

. The judgment follows the line of the previous case law regarding

airline mergers. It confirmed the methodology for defining markets (according to the origin &

destination approach), the competitive assessment (focused on individual routes but also

taking into account network effects) and the design of remedies in the industry (in particular

slot remedies).

Developing the international dimension of EU competition policy

The globalisation of the economy calls for closer cooperation among competition authorities

not only in Europe, but also across the globe. International cooperation between competition

agencies helps to ensure that the challenges of globalisation are managed in an effective

manner and promotes convergence on competition policy principles and practices

implemented throughout the world. This is why the Commission is seeking to strengthen the

role of competition policy in international negotiations and in international organisations and

cooperates with competition agencies globally. Such regulatory and enforcement cooperation

helps to ensure effective enforcement and a level playing field for European companies active

on global markets.

1. Bilateral relations

At the international level, the Commission is holding negotiations on Free Trade Agreements

(FTAs) with the aim to include competition and State aid provisions in such agreements. In

2015 Commissions international priorities included the negotiations with the United States on

a Transatlantic Trade and Investment Partnership Agreement (TTIP), launched in 2013. In

addition, significant progress was made during in 2015 on another important agreement

currently being negotiated, namely the FTA with Japan. In 2015 the Commission also focused

its efforts on negotiating the competition provisions included in the FTA with Vietnam. The

competition provisions in this FTA on which an agreement in principle was reached, might

help to set a new standard for the region or even further afield.

Case M.6166

Deutsche Börse/NYSE Europnext,

Commission decision of 1 February 2012 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6166

Case T-175/12

Deutsche Börse v Commission,

judgment of the General Court of 9 March 2015,

ECLI:EU:T:2015:148.

Case M.5440

Lufthansa/Austrian Airlines,

Commission decision of 28 August 2009 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_5440

Case T-162/10

Niki Luftfahrt GmbH v Commission,

judgment of the General Court of 13 May 2015,

ECLI:EU:T:2015:283.

kom (2016) 0393 - Ingen titel

The Commission also assists in the implementation of the competition provisions included in

recent FTAs with neighbouring countries. It is involved in negotiating the necessary

implementing rules to this effect with Tunisia and Morocco, as well as monitoring the

implementation of the EU competition acquis, including the State aid rules, in countries such

as Ukraine and Moldova. Moreover, in September a first meeting took place with Korea on

the implementation of the chapter on competition of the EU-Korea FTA. The discussion in

particular covered progress on the implementation of the provisions on subsidies and an

exchange of experiences.

Negotiations between the Commission and its Canadian counterparts to include provisions on

the exchange of information into the existing EU-Canada Cooperation agreement have made

good progress. The present agreement does not make provision for the Commission and the

Canadian Competition Bureau to exchange evidence collected in the course of their respective

proceedings. The possibility to exchange such evidence would improve cooperation between

both competition authorities in all competition cases which affect both markets and would

lead to more effective and more efficient competition law enforcement.

Another key area of Commission activity at the international level is technical cooperation

with main trading partners that are developing their competition policy and enforcement

regime and with which the Commission has signed Memoranda of Understanding (MoUs).

The Commission has signed MoUs with most BRICS countries in recent years and has

engaged in technical cooperation with these countries to varying degrees. The Commission's

technical cooperation activities with the Chinese competition authorities is particularly

noteworthy and continued throughout 2015 under the cooperation programme (EUCTP II

On enforcement, on 15 October the Ministry of Commerce of the People's Republic of China

and the Commission signed a Practical Guidance for Cooperation on Reviewing Merger

Cases with a view to making cooperation on merger review more efficient. Finally, the

programme for technical cooperation with the Indian competition authorities, CITD

continued and will run until 2018.

2. Enlargement

The Commission's main policy objective in the accession negotiations with candidate

countries, in addition to fostering a competition culture, is to further help candidate countries

and potential candidate countries to build up a proper legislative framework, well-functioning

competition authorities and an efficient enforcement practice in order for them to meet the

conditions for EU accession in the competition policy field.

The opening benchmarks for negotiations of the competition chapter with Serbia are

identified in the 2015 Serbia Report

. The Stabilisation and Association Agreement with

Bosnia and Herzegovina entered into force on 1 June. The European Union concluded a

Stabilisation and Association Agreement with Kosovo in October 2015, The agreement is

expected to enter into force in the first half of 2016 after ratification by the European

Parliament.

EU-China Trade Project II.

Capacity Building Initiative for Trade Development programme launched in 2014.

See Report on

Serbia

(2015), Chapter 8 on Competition available at

http://ec.europa.eu/enlargement/pdf/key_documents/2015/20151110_report_serbia.pdf

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3. Multilateral cooperation

The Commission also continued its active engagement in competition-related international

fora such as the Competition Committee of the OECD, the International Competition

Network (ICN), the World Bank and UNCTAD.

Three major work streams of the OECD to which the Commission contributed in 2015 were

ex post evaluation, competitive neutrality and disruptive innovation. On ex post evaluation,

the Commission contributed to the drafting of a practical OECD Guide. Also, at the particular

initiative of the Commission, the OECD organised a hearing and roundtable discussion on

different aspects of competitive neutrality. This discussion resulted in an OECD advocacy

document, informing other policy communities how competition law can level the

competitive field and serve other policies, and in an inventory on competitive neutrality

frameworks and provisions under national law. On disruptive innovation, the Commission

contributed to three dedicated OECD sessions addressing the enforcement and specific

sectorial aspects of this topic.

In 2015 the Commission continued co-chairing the Mergers Working Group of ICN and one

of the sub-groups of the Cartel Working Group. It also organised a Merger Working Group

workshop which took place in Brussels (24-25 September) and which was used to road-test

the Merger Working Group's Practical Guide for International Merger Enforcement

Cooperation, adopted in May, for which the Commission was the project leader

. As co-chair

of the ICN Cartel Working Group's Subgroup I on Legislation, the Commission contributed to

developing a Catalogue on investigative powers and the organisation of several webinars on

different aspects of anti-cartel enforcement.

The Commission participated in the Inaugural Conference on Competition Policy, Shared

Prosperity and Inclusive Growth organised by the World Bank

in partnership with the

OECD. The paper it presented illustrated the redistributive effects of competition policy in

favour of poorer households. The same issue was discussed at the OECD Global Competition

Forum

held later in the year.

The Commission also participated in the seventh UNCTAD Review Conference on

competition in Geneva in July 2015. The conference included discussion of the benefits and

the role of competition for consumers in the pharmaceutical sector and the role of

international cooperation in merger cases as a tool for effective enforcement of competition

law. The Commission submitted written contributions to both discussions.

See International Competition Network (ICN) (September 2015),

Merger Working Group's Practical Guide

for International Merger Enforcement Cooperation

available at

http://www.internationalcompetitionnetwork.org/uploads/library/doc1031.pdf

See Inaugural Conference on Competition Policy (2015),

Shared Prosperity and Inclusive Growth

organised

by the World Bank available at

http://www.worldbank.org/en/events/2015/06/23/promoting-effective-

competition-policies-for-shared-prosperity-and-inclusive-growth

See OECD Global Competition Forum (2015) available at

http://www.oecd.org/competition/globalforum/links-drivers-competition-employment.htm

kom (2016) 0393 - Ingen titel

II.

SECTORAL OVERVIEW

This section provides an overview of policy developments and enforcement activities in a

number of selected sectors that the Commission particularly focused on in 2015. These were

energy and environment, ICT and media, financial services, tax planning practices, basic

industries and manufacturing, pharmaceutical and health services and transport and postal

services.

1. E

NERGY

ENVIRONMENT

Overview of key challenges in the sector

On 25 February the Commission published a new energy policy framework entitled "the

Energy Union framework strategy"

. The strategy addresses three long-standing challenges

in the energy sector: security of supply, sustainability and competitiveness. To address these

challenges, the Energy Union Strategy focuses on five mutually supportive dimensions:



energy security, solidarity and trust;

the internal energy market;

energy efficiency as a contribution to the moderation of energy demand;

decarbonisation of the economy and;

research, innovation and competitiveness.

The European Council endorsed this framework in its conclusions of 19-20 March

Key figures to illustrate the challenges to reach a low-carbon, secure and competitive EU energy system

The EU is the largest energy importer in the world, importing 53 % of its energy, at an annual cost of around

EUR 400 billion. A few Member States are dependent on one single external supplier for all their gas

imports.Almost half of the Member States do not meet the EU's minimum interconnection target for at least 10

% of installed electricity production capacity to be able to "cross borders". An appropriately interconnected

European energy grid could save consumers up to EUR 40 billion a year. Over EUR 1 trillion needs to be

invested into the EU energy sector by 2020 alone in order to achieve the EU climate and energy targets.

Wholesale electricity prices in Europe are 30 % higher and wholesale gas prices over 100 % higher than in the

United States. By 2030, the EU aims to cut greenhouse gas emissions by at least 40 % compared to 1990, boost

renewable energy to achieve the target of at least 27 % of renewables in its energy mix, and improve energy

efficiency by at least 27 %.

Contribution of EU competition policy to tackling the challenges

The main challenges in 2015 continued to be high energy prices, the slow pace of investment

in the energy sector and security of supply concerns stemming from i) lack of competition;

and ii) insufficient diversification of gas supplies in eastern Europe.

In 2015, EU competition policy contributed to tackling those challenges in several ways.

Antitrust and mergers enforcement contributed by lifting obstacles to competition and barriers

to trade between Member States and by ensuring that investments in the energy sector do not

hamper competition.

Communication of 25 February 2015 from the Commission to the European Parliament, the Council, the

European Economic and Social Committee, the Committee of the Regions and the European Investment Bank

Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy,

COM/2015/080 final available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52015DC0080

Conclusions of the European Council from 19 and 20 March 2015, EUCO 11/15.

For further information see IP/15/4497 of 25 February 2015 available at

http://europa.eu/rapid/press-

release_IP-15-4497_en.htm

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Improving competitiveness across the energy sector

Competition enforcement and advocacy play a key role in making the internal energy market

work. Competition enforcement leads to opening markets, creating a level playing field

between competitors and ultimately promoting investment and innovation. Competition

enforcement sanctions collusion and abuses of dominant positions, ensures that mergers do

not hamper effective competition and creates a framework for investment that avoids

distortions and ensures the efficient allocation of public resources. In 2015, antitrust

enforcement actions have challenged practices that partition the internal markets and practices

that prevent new entrants from accessing the market. These behaviours lead to higher energy

prices.

On 10 December, the Commission accepted

the commitments offered by the Bulgarian

Energy Holding (BEH) to solve competition concerns in the wholesale electricity markets in

Bulgaria. The Commission was concerned that BEH had been selling electricity to traders

using contracts which prohibited them from reselling the electricity outside Bulgaria. As a

result BEH was hindering the resale of electricity and abusing its dominance by imposing

territorial restrictions on traders. BEH has committed to solving these concerns by setting up

an independent and liquid power exchange in Bulgaria through which electricity can be traded

anonymously, with no possibility of checking where it is resold.

On 22 October, the Commission sent a Letter of Formal Notice to France setting out its

concerns that France may be in breach of EU antitrust rules by having granted to state-owned

Electricité de France (EDF) most of the country's concessions for exploiting hydropower

100

The Commission is concerned that granting most of the country's hydropower concessions to

EDF at preferential financial conditions, without a tendering procedure and for very long

periods has maintained or strengthened EDF's dominance in the French electricity markets

possibly counter to Article 106 TFEU in conjunction with Article 102 TFEU.

A key principle underlying the Commission's State aid policy is that public support should

result in a positive balance between the objectives achieved and the potentitial negative

effects of State intervention on the European energy market. In this context the Commission

pays special attention to any market distortions that may arise as a result of public financing,

such as the crowding out of investment, negative effects on upstream or downstream markets

and excessive profits which may lead to strengthened market posititions, deterrence of new

entrants and ultimately market foreclosure. To ensure that such market distortions are avoided

the Commission launched two formal investigation procedures– the first into public measures

taken by the United Kingdom in favour of the Lynemouth power plant

101

and the second into

the project to build the new Paks II

102

nuclear power plant in Hungary.

Contributing to a low-carbon economy

The EU is committed to reducing by at least 40 % its greenhouse gas emissions compared

with 1990. The EU has also set a target that by 2030 renewable energy will account for at

Case AT.39767

BEH Electricity.

For further information see IP/15/6289 of 10 December 2015 available at

http://europa.eu/rapid/press-release_IP-15-6289_en.htm

100

Infringement number 20152187

Concessions hydroélectriques en France.

101

Case SA.38762

UK - Lynemouth Biomass Conversion.

For further information see IP/15/4456 of 19 February

2015 available at

http://europa.eu/rapid/press-release_IP-15-4456_en.htm

102

Case SA.38454 (2015/N)

Hungary

–

Possible aid for the construction of Paks nuclear power station.

For

further information see IP/15/6140 of 23 November 2015 available at

http://europa.eu/rapid/press-release_IP-15-

6140_en.htm

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least 27 % of the energy consumed in the EU. This will require significant investment and the

progressive integration of renewables into a market that promotes competitive renewables and

drives innovation.

The rules passed in July 2014 (Guidelines

on State aid for environmental protection and

energy

103

) require renewable electricity producers to sell the electricity directly on the market.

In addition, Member States may grant a premium to compensate for the extra costs of those

technologies that are not yet able to compete with conventional generation technologies.

Furthermore, renewable electricity producers will be subject to standard balancing

responsibilities and production should not be incentivised when wholesale prices turn

negative. The Commission approved several support schemes which follow already these

market-based assessment criteria.

In 2015 the Commission adopted a number of decisions aimed at incentivising investment in

renewable energy sources while applying the requirements for a market-based approach to the

selection of beneficiaries and the form of aid. Among the support measures approved in 2015

for renewable generation the ones that stand out are the aid to 20 individual offshore wind

farms

104

in Germany, the support scheme to renewable energy sources in Croatia

105

and the

amendments to the Romanian green certificates support system for promoting renewable

electricity

106

The Commission strives to ensure that public support is granted in a way that fosters

investments in new and innovative technologies that will not only make the European energy

sector more competitive but will also spur research and innovation in clean and sustainable

generation. During 2015, the Commission adopted two decisions on support measures aimed

at developing ocean energy and offshore power generation technologies in experimental or

pre-commercial stage

107

The new Guidelines on State aid for environmental protection and energy 2014-2020 also

bring under the scope of the Guidelines support for Carbon Capture and Storage (CCS) and

infrastructure.

Finally, the new Framework for State aid for R&D&I offers important opportunities as it

allows tailored support to projects which are not, in themselves, profitable but might generate

beyond R&D specific externalities, important environmental benefits to society.

103

Communication from the Commission —

Guidelines on State aid for environmental protection and energy

2014-2020,

OJ C 200, 28.6.2014, p.1-55 available at

http://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A52014XC0628(01)

104

Cases SA.39723, SA.39724, SA.39725, SA.39726, SA.39731, SA.39732, SA.39733, SA.39735, SA.39738,

SA.39739, SA.39741, SA.39742, SA.39722, SA.39727, SA.39728, SA.39729, SA.39730, SA.39734, SA.39736,

SA.39740

Germany

–

Support to 20 large offshore wind farms under the EEG Act 2014,

OJ C 292, 4.9.2015,

p.9. For further information see IP/15/4788 of 16 April 2015 available at

http://europa.eu/rapid/press-release_IP-

15-4788_en.htm

105

Case SA.38406

Renewables support scheme in Croatia 2014-2015,

Commission decision of 1 September

2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38406

106

Case SA.37177

Romania

Amendments to the green certificates support system for promoting electricity

from renewable sources,

Commission decision of 4 May 2015, OJ C 343, 16.10.2015, available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37177

107

Cases SA.39347

Portugal

Support scheme for experimental and pre-commercial renewable technologies,

and SA.40227

Portugal - Windfloat Project.

For further information see IP/15/4836 of 23 April 2015 available at

http://europa.eu/rapid/press-release_IP-15-4836_en.htm

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Furthermore, the Commission approved State aid for the deployment of publicly available

charging infrastructure for electrical vehicles

108

, which will also increase sustainability and

reducing emissions.

The Commission's antitrust enforcement is also contributing to the objective of a low carbon

economy. The Commission is investigating whether ethanol producers may have colluded to

manipulate ethanol benchmarks published by the price reporting agency Platts, for example

by agreeing between each other to submit or support bids with a view so as push benchmarks

upwards and thus drive up ethanol prices

109

. Such practices, if confirmed, harm competition

and undermine EU energy objectives by increasing prices for renewable energy, in this case

biofuels used for transport. This could lead to a reduction of the use of biofuels as an

alternative to fossil fuels, with negative consequences both for consumers and the objective of

a low-carbon economy. The on-going antitrust investigation into Austria's waste management

markets also feeds into action to achieve greater sustainability

110

Contributing to security of supply

In the gas sector, lack of diversification and consequently of competition in sources of supply

is a concern for the security of supply in the EU. Some Member States continue to rely on one

single supplier and often on one single supply route for 80 % to 100 % of their gas

consumption

111

, whereas those Member States with a diverse portfolio of gas suppliers and

supply routes and with well-developed gas markets reap the benefit of paying less for imports.

In 2015 the Commission adopted a decision on public support for nine gas infrastructure

projects in Poland

112

, which will help diversification of gas supplies. In addition to

strengthening the security of supply in central Europe, the decision to support the realisation

of the nine gas projects also incentivesed investment in gas infrastructure which would not

have been possible without the State aid contribution.

Nine gas infrastructure projects in Poland

The Commission found that Poland's plans to grant aid of PLN 3,13 billion (EUR 758 million) for nine gas

projects in Poland are compatible with EU State aid rules.

Five of the nine gas infrastructure projects will connect European gas supply sources from the Baltic, Adriatic

and the Black Sea to the rest of Europe via Poland (as part of the "North-South gas interconnection priority

corridor") thus increasing the diversification of gas supply in Poland. The rest of the projects will contribute to

an increase in the overall level of security of supply in Poland by eliminating bottlenecks and providing

additional capacity to the existing gas networks.

108

Case SA.38769

Netherlands

Green Deal for Electric Vehicle Charging Infrastructure,

Commission decision

of 11 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38769

For further information

see IP/15/5441 of 27 July 2015 available at

http://europa.eu/rapid/press-release_IP-15-5441_en.htm

109

Case AT.40054

Oil and Biofuel Markets.

For further information see IP/15/6259 of 7 December 2015

available at

http://europa.eu/rapid/press-release_IP-15-6259_en.htm

110

Case AT.39759

ARA.

For further information see IP/13/711 of 18 July 2103 available at

http://europa.eu/rapid/press-release_IP-13-711_en.htm?locale=en

111

See Commission's contribution to the European Council

Energy challenges and policy

available at

http://ec.europa.eu/europe2020/pdf/energy2_en.pdf

112

Case SA.39050

Aid to gas infrastructure in Poland,

Commission decision of 17 July 2015,

OJ C 325,

2.10.2015,

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39050

For

further information see IP/15/5403 of 17 July 2015 available at

http://europa.eu/rapid/press-release_IP-15-

5403_en.htm

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The Commission's antitrust enforcement can also help to solve security of supply issues by

facilitating access to the market and encouraging investment. On 22 April, the Commission

sent a Statement of Objections to Gazprom for allegedly abusing its dominant position in the

supply of natural gas in central and eastern Europe

113.

The Commission considers that

Gazprom is abusing its dominant position

inter alia

by imposing territorial restrictions in its

supply agreements with wholesalers and with some industrial customers. The Commission

has concerns that this market segmentation may also have enabled Gazprom to charge unfair

prices in several of the countries concerned.

On 23 March, the Commission sent a Statement of Objections to BEH

114

, and its gas supply

and gas infrastructure subsidiaries, Bulgargaz and Bulgartransgaz over a possible abuse of

dominant position on the Bulgarian natural gas markets. The Commission is concerned that

BEH and its subsidiaries have refused to give competitors access to the Bulgarian gas

transmission network and the only gas storage facility in Bulgaria and may have booked

capacity they do not need on Bulgaria's only viable gas import pipeline.

In the electricity sector, there are increasing concerns about generation adequacy and

insufficient investment in new capacity due to market uncertainties and regulatory

interventions. An increasing number of Member States are introducing capacity mechanisms

to encourage investment in new capacity e.g. power plants or to provide incentives that power

plants to continue to operate, so that the supply of electricity meets demand at all times. In

April, the Commission launched a State aid sector inquiry into existing and planned capacity

mechanisms in the EU. The purpose of the inquiry is to analyse the need for such mechanisms

and to identify design features that distort competition between capacity providers or hinder

cross-border electricity trade.

State aid sector inquiry – Existing and planned capacity mechanisms in the EU

115

Capacity mechanisms are measures taken by Member States to ensure that electricity supply can match demand

in the medium and long-term at all times. They are designed to support investment to fill an expected capacity

gap and ensure security of supply.

The Commission sent different sets of questions to selected public authorities and market participants in 11

Member States - Belgium, Croatia, Denmark, France, Germany, Ireland, Italy, Poland, Portugal, Spain and

Sweden. It assessed the replies and invites comments on its preliminary findings in early 2016. The final results

will be published by the end of 2016.

The sector inquiry will supplement and support the implementation of the

Guidelines on State aid for

environmental protection and energy

116

that entered into force in July 2014. Moreover, the sector inquiry will

contribute to the Commission's legislative proposal on electricity market design under the EU's Energy Union

Strategy.

Merger control

In the field of merger control, the trend for investments in European energy infrastructure by

investment companies persisted

117

. In 2015, as in the previous years, a number of companies

113

Case AT.39816

Upstream Gas Supplies in central and eastern Europe.

For further information see

IP/15/4828 of 22 April 2015

available at

http://europa.eu/rapid/press-release_IP-15-4828_en.htm

114

Case AT.39849

BEH gas.

For further information see IP/15/4651 of 23 March 2015 available at

http://europa.eu/rapid/press-release_IP-15-4651_en.htm

115

For further information see IP/15/4891 of 29 April 2015 available at

http://europa.eu/rapid/press-release_IP-

15-4891_en.htm

116

See footnote 103.

117

Cases M.7840

Letterone Holdings/E.On E&P Norge;

Commission decision of 2 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7840;

M.7490

Macquarie/ Wren

kom (2016) 0393 - Ingen titel

invested in development

118

and production from renewable sources

119

such as wind parks

120

solar parks

121

and waste-to-energy plants

122

The Commission also observed that some oil and gas markets players reorganised their

business by streamlining their activities in the upstream segment of exploration and

development of reservoirs

123

while partially divesting their presence in the downstream/retail

segment to other oil companies, traders or financial investors

124

. The upstream segment for

the exploration and development of reservoirs is fragmented, with a significant number of

players competing and with national oil companies playing a significant role.

2. I

NFORMATION AND COMMUNICATION TECHNOLOGIES

(ICT)

AND MEDIA

Overview of key challenges in the sector

ICT and media are key sectors for the EU economy. As well as being important consumer

businesses, they play a critical role as inputs to the wider economy. They are a driver for

innovation and growth in many other sectors, such as energy, transportation, public services,

health and education

125

The nature of these industries presents both opportunities and challenges. If the right

framework conditions are in place, including appropriate competition rules, these sectors can

make a decisive contribution to growth and employment. In the period 2005-2010, ICT

House/ E.On Spain;

Commission decision 2 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7490;

M.7608

Borealis Siegfried

Holdings/Fortum Distribution Ab,

Commission decision of 8 May 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7608

and M.7633

Kia/Gas

Natural Fenosa/Gpg,

Commission decision of 11 September 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7633

118

Case M.7539

Gip Ii/ Acs/ Devco,

Commission decision of 27 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7539

119

Case M.7633

Kia/ Gas Natural Fenosa/ Gpg,

Commission decision of 11 September 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7633

120

Case M.7609

Omnes Capital/ Predica Prevoyance/ Quadran/ Quadrica,

Commission decision of 8 May 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7609

121

Case M.7816

EGP / F2I / JV,

Commission decision of 7 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7816

122

Case M.7745

Fortum / Lietuvos Energija / JV,

Commission decision of 23 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7745

123

Cases M.7631

Royal Dutch Shell / BG Group;

Commission decision of 2 September 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7631,

M.7519

Repsol/ Talisman

Energy,

Commission decision of 7 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7519

and M.7840

Letterone

Holdings/ E.On E&P Norge,

Commission decision of 2 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7840

124

Cases M.7508

Dcc Energy / Esso Saf,

Commission decision of 12 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7508;

M.7579

Royal Dutch

Shell/Keele Oy/Aviation Fuel Services Norway,

Commission decision of 19 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7579

and M.7694

World Fuel

Services/ BB Aviation Fuel Divestment Business,

Commission decision of 6 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7694

125

See, e.g., the study

Unlocking the ICT Growth Potential in Europe: Enabling people and businesses

(2013)

prepared by the Conference Board for the European Commission available at

http://ec.europa.eu/digital-

agenda/en/news/new-study-unlocking-ict-growth-potential-europe-enabling-people-and-businesses

kom (2016) 0393 - Ingen titel

investment accounted for one-third of EU growth

126

. However, the importance of these

sectors and the very rapid pace of change also create challenges for regulators in ensuring that

regulatory rules and enforcement keep pace with technological change.

One of the 10 political priorities of the present Commission is to complete a Digital Single

Market in which the free movement of goods, persons, services and capital is ensured and

where individuals and businesses can seamlessly access and exercise online activities under

conditions of fair competition, and a high level of consumer and personal data protection,

irrespective of their nationality or place of residence. Bringing down barriers within the

Digital Single Market could contribute an additional EUR 415 billion to EU GDP

127

Digital Single Market (DSM)

The Commission adopted its Digital Single Market (DSM) strategy in May. The strategy comprises 16 actions

under three pillars: (i) better access for consumers and businesses to online goods and services across Europe;

(ii) creating the right conditions for digital networks and services to flourish; and (iii) maximising the growth

potential of our European Digital Economy. Competition policy is directly involved through the e-commerce

sector inquiry, which is one of the 16 actions. Reaching the goals of the DSM also requires competition

enforcement to help ensure competitive markets for ICT and media services.

In order to fully benefit from the deployment of new innovative digital services, consumers in all Member States

need to have access to high performance networks. By 2020, the Digital Agenda for Europe (DAE) aims at

achieving (i) full coverage of 30 Mbps services (fast broadband) and (ii) provision of 100 Mbps services (ultra-

fast broadband) to 50 % of Europeans. Building on the results of its public consultation on the needs for internet

speed and quality beyond 2020 and in order to ensure that everyone can reap the benefits of the DSM, the

Commission is developing broadband vision beyond 2020.

One of the key actions under the second pillar of the DSM strategy is the review of the telecoms regulatory

framework, the preparatory work for which has already started.

In addition, on 25 November, the European Parliament and the Council adopted a Regulation laying down

measures concerning open internet access and roaming on public mobile communication networks

128

Contribution of EU competition policy to tackling the challenges

E-commerce sector inquiry

Eurostat figures for 2014 show that while 50 % of Europeans had shopped online in the past

year, only 15 % had done so cross-border

129

. There are indications that one of the reasons for

the lack of cross-border online trade is the existence of contractual barriers, particularly

distribution agreements which may restrict the cross-border sale of goods and digital content.

For example, 22 % of wholesale and retail trade companies say the fact that their suppliers

restrict or forbid them to sell abroad is a problem

130

. It is estimated that welfare gains from e-

126

See Koutroumpis, Leiponen and Thomas,

ICT innovation in Europe: Productivity gains, start-up growth and

retention,

Imperial College Business School, p. 2.

127

Communication of 6 May 2015 from the Commission to the European Parliament, the Council, the Economic

and Social Committee and the Committee of the Regions

A Digital Single Market Strategy for Europe,

COM(2015) 192 final available at

https://ec.europa.eu/digital-agenda/en/news/digital-single-market-strategy-

europe-analysis-and-evidence-swd2015-100-final

128

Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying

down measures concerning open internet access and amending Directive 2002/22/EC on universal service and

users' rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on

roaming on public mobile communications networks within the Union, OJ L 310, 26.10.2015, p.1, available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32015R2120

129

Eurostat ICT survey of households and businesses.

130

Flash Eurobarometer 413, 2015.

kom (2016) 0393 - Ingen titel

commerce in goods in an integrated DSM could reach over EUR 200 billion, with two thirds

of these gains coming from increased online choice

131

E-commerce sector inquiry

The Commission launched a sector inquiry into e-commerce markets in May

132

. The inquiry aims to gather

market information in order to better understand the nature, prevalence and effects of barriers to online trade

erected by companies, and to assess them in light of EU antitrust rules. If, after analysing the results, the

Commission identifies specific competition concerns, it may open individual investigations to enforce the

competition rules and provide guidance to businesses on the types of restrictions that are permissible online. The

results may also be useful as inputs into the other actions within the DSM strategy.

The Commission expects to publish a preliminary report for consultation in mid-2016. The final report is

expected to follow in 2017.

Antitrust enforcement linked to media and sports.

In the broadcasting sector, the Commission adopted a Statement of Objections in July against

six major United States film studios

133

(Disney, NBC Universal, Paramount Pictures, Sony,

Twentieth Century Fox and Warner Bros.) and Sky UK. The Commission's preliminary view

is that clauses in licensing agreements between the studios and Sky UK that restrict, e.g.

through geo-blocking, cross-border access to films, thereby limit Sky UK's ability to accept

unsolicited requests for its pay-tv services from consumers located outside the United

Kingdom and Ireland (so-called "passive sales"). Certain agreements also contain clauses

requiring the film studios to ensure that, in their licensing agreements with broadcasters other

than Sky UK, these broadcasters are prevented from making their pay-tv services available in

the United Kingdom and Ireland.

In April, the Court of Justice confirmed the Commission's findings on the assignment of

broadcasting authorisations for digital terrestrial television in Bulgaria. In January 2013, the

Commission referred Bulgaria to the Court of Justice considering that the procedure followed

by Bulgaria was based on disproportionately restrictive award conditions, leading to the

exclusion of potential candidates and hampering competition.

In the publishing sector, the Commission opened a formal investigation into some of

Amazon's e-book distribution arrangements in June. The Commission will, in particular,

investigate clauses in Amazon's contracts with publishers requiring them to inform Amazon

about more favourable or alternative terms offered to Amazon's competitors and/or offer

Amazon similar terms and conditions to its competitors. The Commission has concerns that

such clauses may make it more difficult for other e-book distributors to compete with

Amazon.

In the sports sector, the Commission opened a formal antitrust investigation in October into

the International Skating Union's (ISU) rules that permanently ban skaters from certain

competitions if they take part in events not approved by the ISU. The Commission considers

that ISU rules may create disproportionate and unjustified obstacles for companies not linked

131

Civic Consulting for the European Commission, Consumer market study on the functioning of e-commerce

and Internet marketing and selling techniques in the retail of goods, 2011 – the consumer welfare gains from an

integrated EU market for e-commerce in goods assuming 15 % share of internet retailing was estimated at EUR

204.5 billion per year (EUR 70.4 billion from lower online prices and EUR 134.1 billion from increased choice).

132

For further information see IP/15/4921 of 6 May 2015 available at

http://europa.eu/rapid/press-release_IP-15-

4921_en.htm

133

Case AT.40023

Cross-border access to pay-tv content.

For further information see IP/15/5432 of 23 July

2015 available at

http://europa.eu/rapid/press-release_IP-15-5432_en.htm

kom (2016) 0393 - Ingen titel

to the ISU that want to organise alternative ice-skating events, which would prevent them

from entering the market or driving them out of business.

Antitrust enforcement in technology markets

The Commission's enforcement action in technology markets focused on cases where

dominant companies may have used their position in the market to restrict competition in an

anti-competitive manner. Taking action against such conduct helps to keep markets

competitive, and therefore to maintain incentives to innovate.

Search engines are of central importance to a well-functioning Internet. In April, the

Commission sent a Statement of Objections to Google

134

alleging that the company had

abused a dominant position in the markets for general internet search services by

systematically favouring its own comparison shopping product in its general search results

pages. The Commission continues to investigate Google's conduct with regard to other

specialised search services as well as: (i) the copying of third-party content for use in

Google's own specialised search services; (ii) exclusivity agreements with publishers for

search advertising; and (iii) restrictions on the portability and management of search

advertising campaigns across search advertising platforms.

Access to the internet increasingly takes place through mobile devices, including smartphones

and tablets

135

. A lack of competition for the supply of hardware and software for those devices

could have important effects in terms of continued innovation. Therefore, in April, the

Commission opened formal proceedings to examine in-depth Google's conduct as regards the

mobile operating system, Android. The investigation is focusing on whether Google has

breached EU antitrust rules by hindering the development and market access of rival mobile

operating systems, applications and services, to the detriment of consumers and developers of

innovative services and products.

In the area of baseband chipsets, which process the core communication functions in

smartphones, tablets and other mobile broadband devices, the Commission opened formal

proceedings in July, to examine in-depth Qualcomm's conduct in two regards: (1) financial

incentives to a major smartphone and table manufacturer on condition that it exclusively uses

Qualcomm baseband chipsets in its smartphones and tablets; and (2) whether Qualcomm

engaged in "predatory pricing" by charging prices below costs with a view to forcing its

competition out of the market. Statements of Objections were sent to the company on 8

December

136

ICT and media in the context of the Merger Regulation

The Commission's merger review activities ensure that mergers do not result in less

competition. By safeguarding competition, merger review in turn contributes to maintaining

an environment conducive to innovation and investments.

2015 saw significant merger activity in the EU's telecommunications sector.

134

Case AT.39740

Google.

For further information see IP/15/4780 of 15 April 2015 available at

http://europa.eu/rapid/press-release_IP-15-4780_en.htm

135

Eurostat figures for 2014 show that 51 % of Europeans used the Internet on mobile devices. For these

purposes “mobile” Internet usage includes all use while away from home or work, including access through a

laptop computer.

136

Cases AT.39711 and AT.40220

Qualcomm.

For further information see IP/15/6271 of 8 December 2015

available at

http://europa.eu/rapid/press-release_IP-15-6271_en.htm

kom (2016) 0393 - Ingen titel

In April, the Commission conditionally cleared the merger between Altice and PT Portugal

137

Altice operated via two subsidiaries in Portugal, Cabovisão and ONI. Cabovisão provided

pay-tv, fixed internet access and fixed telephony services essentially to residential customers.

ONI provided services to business customers, including fixed telecommunication services, in

particular voice, data and internet access services as well as IT services. PT Portugal, a

telecommunications and multimedia operator with activities extending across all

telecommunications segments in Portugal, offered fixed, mobile voice and data services;

broadband internet access services and pay-tv services to residential customers. PT Portugal's

offer for business customers included fixed and mobile voice services data services and IT

services, comprising data centre solutions, virtualisation services, cloud, business outsourcing

process and other additional value-added services. The Commission was concerned that the

merger, as initially notified, would have reduced competition in a number of

telecommunications markets in Portugal and that the merger would have removed a strong

competitor from these markets, with the risk of leading to higher prices and less competition

in Portugal. To remove these concerns, Altice offered to sell its Portuguese subsidiaries

Cabovisão and ONI. These clear-cut commitments completely removed the overlap between

the activities of Altice and PT Portugal within Portugal and ultimately the merger was cleared

by the Commission.

In May, the Commission conditionally cleared the merger between Orange and Jazztel, two of

Spain's four providers of nationwide fixed telephony and internet access

138

. The two

companies had been the most dynamic fixed internet providers in Spain in recent years and

both were investing in their own high-speed Fibre-To-The-Home (FTTH) network. The

Commission was concerned that the merger would reduce competition in the market for fixed

internet access because the competitive constraints which Orange and Jazztel exerted on each

other would be lost. Ultimately, the merger was cleared based on remedies that ensured the

entry of a new nationwide player, able to replicate Jazztel's competitive pressure.

The Commission reviewed the proposed merger of the Danish businesses of Telenor and

TeliaSonera

139

. The merger would have combined the second and third largest operators in the

Danish mobile retail market, leading to the creation of the largest mobile player both in terms

of revenue and subscribers. The Commission had concerns that the merger would have led to

higher prices, loss of innovative offers and lower quality. The remedies submitted by the

parties to the transaction fell short of addressing these concerns. However, before any

decision was taken, the parties abandoned the transaction.

The Commission is reviewing the merger between Liberty Global and BASE

140

. Liberty

Global operates a cable network in Belgium and is also a mobile virtual network operator

(MVNO). BASE is one of Belgium's three mobile network operators. The merger therefore

combines a mobile network operator with a fixed network operator which is also an MVNO.

The review continues in 2016.

137

Case M.7499

Altice/PT Portugal,

Commission decision of 20 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7499

138

Case M.7421

Orange / Jazztel,

Commission decision of 19 May 2015 available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7421_3082_3.pdf

139

Case M. 7419

TeliaSonera / Telenor / JV,

Commission decision of 11 September available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7419

140

Case M. 7637

Liberty Global / BASE Belgium

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7637

kom (2016) 0393 - Ingen titel

In addition, the Commission is reviewing the merger between two of the United Kingdom's

four mobile network operators, namely Hutchison and Telefónica UK

141

. In October 2015, it

opened an in-depth investigation into the transaction, based on concerns that the merger could

lead to higher prices, less choice and reduced innovation. The review continues in 2016.

In the IT sector, the Commission dealt with a series of multi-billion mergers in the

semiconductor industry. In September, it cleared NXP's acquisition of Freescale, subject to

remedies aimed at preserving competition in the market for radio frequency power

transistors

142

. These transistors are used in the base stations of mobile networks and are used

to make radio frequency signals more powerful. Other transactions in the semiconductor

sector were unconditionally cleared since they did not raise competition concerns. This was

the case for Intel's acquisition of Altera

143

, cleared in October, and Avago Technologies'

acquisition of United States chipmaker Broadcom

144

, cleared in November.

In the media sector, the Commission conditionally cleared the acquisition by Liberty Global

of a stake in De Vijver Media

145

, a Belgian TV broadcasting and production company in

February. The commitments ensure that TV distributors that compete with Liberty Global's

Belgian operation Telenet will still have access to the two TV channels broadcast by De

Vijver Media. The commitments can be invoked not only by existing players but also by new

players who want to offer TV services to consumers in novel ways. In June, the Commission

conditionally approved the creation of a joint venture for cross-border licensing of online

music

146

, set up by three music collecting societies from the United Kingdom, Sweden and

Germany. The joint venture will allow online music platforms such as Spotify and iTunes to

obtain a single music licence for the entire EU.

State aid enforcement in ICT and media

The achievement of the Digital Agenda targets for broadband coverage, despite substantial

progress, represents a significant challenge, in particular for the second objective

147

According to the Commission's analysis on the funding gap to meet the EU broadband targets

by 2020, in the most optimistic scenario, the coverage target of 30 Megabits per second

(Mbps) for all European households will be reached only if and additional EUR 34 billion are

invested

148

. The further investment to reach the take-up target (half of the European

households with 100 Mbps subscription) is estimated at EUR 92.4 billion.

The broadband sector is highly commercial and most of the financing for the upgrade and

deployment of next-generation networks comes from the private sector. State aid control

141

Case M.7612

Hutchison 3G UK / Telefónica UK

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7612

142

Case M. 7585

NXP Semiconductors / Freescale Semiconductor,

Commission decision of 17 September 2015

available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7585_20150917_20212_4572466_EN.pdf

143

Case M.7688

Intel / Altera,

Commission decision of 14 October 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7688

144

Case M.7686

Avago / Broadcom,

Commission decision of 23 November available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7686

145

Case M.7194

Liberty Global / Corelio / W&W / De Vijver Media,

Commission decision of 24 February 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7194

146

Case M.6800

PRSfM / STIM / GEMA / JV,

Commission decision of 16 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6800

147

In January 2014, about 20 % of all EU subscriptions were at least 30 Mbps and only 5.3 % at least 100 Mbps

(European Commission, Digital Agenda Scoreboard 2014).

148

This estimate is based on Fibre-to-the-Cabinet (FTTC) coverage as a proxy for the achievement of universal

coverage by 2020 in the EU 28 (on top of FTTC already in place).

kom (2016) 0393 - Ingen titel

seeks to ensure that publicly funded networks do not crowd out private investments. Private

companies tend to invest mostly in urban, highly populated areas which can assure rapid

return on investment. As a result, in certain areas - in particular rural - public funds are needed

to ensure investment supporting the deployment of broadband networks, within the broader

objectives of inclusion and economic development. State involvement (via State aid and

regulation) has been very important in this regard

149

and will continue to be needed in the

coming years.

With a view to stimulating overall investment in next-generation access (NGA) infrastructure

and ensure that customers benefit from State intervention, where a broadband infrastructure is

built using State aid, operators must fulfil a number of conditions which include measures to

ensure third parties' effective wholesale access to the subsidised broadband infrastructure as

specified in the Broadband State Aid Guidelines

150

This helps to ensure that the positive

effects of the aid measure outweigh its potential negative effects and minimises any distortive

effect.

An example of a case where these principles have been enforced is the NGA Germany case.

In 2015, the Commission approved Germany's federal State aid scheme for NGA

deployment

151

. The EUR 3 billion plan aims to fill the gaps in NGA coverage, achieving full

coverage with connection speeds of preferably 50 Mbps (but at least 30 Mbps). To support the

goals of the programme, Germany intends to employ "vectoring" technology, which can boost

connection speeds for subscribers in a very cost-efficient way, while also inhibiting open

access and multi-operator competition at the same. Therefore the Commission approved the

scheme on the condition that vectoring would only be deployed once Germany demonstrated

to the Commission a way (either regulatory or technological) to remedy its anti-competitive

effect.

The principle of technological neutrality is important in various areas including platforms for

transmission of television signals. In November, the General Court dismissed several actions

for annulment of a Commission decision on the deployment of digital terrestrial television in

remote and less urbanised areas of Spain

152

. The General Court concluded that public funding

granted by Spain to facilitate the transition from analogue to digital television in remote and

less urbanised areas provided a selective advantage to terrestrial platform operators over

competitors using other transmission technologies, in breach of EU State aid rules. Moreover,

149

Since 2003, the Commission adopted over 130 decisions approving more than EUR 13 billion of State

subsidies across Europe.

150

Communication from the Commission

EU Guidelines for the application of State aid rules in relation to the

rapid deployment of broadband networks,

OJ C 25, 26.1.2013, p.1 available at

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:EN:PDF

151

Case SA.38348

NGA Germany,

Commission decision of 18 February 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38348

152

Case SA.28599

Aid for the deployment of digital terrestrial television (DTT) – Spain,

Commission decision

of 19 June 2013 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_28599;

Cases T-461/13

Spain v

Commission,

judgment of the General Court of 26 November 2015, ECLI:EU:T:2015:891; T-462/13

Comunidad

Autónoma del País Vasco and Itelazpi v Commission,

judgment of the General Court of 26 November 2015,

ECLI:EU:T:2015:902; and Joined Cases T-463/13 and T-464/13

Comunidad Autónoma de Galicia v

Commission and Retegal v Commission,

judgment of the General Court of 26 November 2015,

ECLI:EU:T:2015:901 and in Cases T-465/13

Comunidad Autónoma de Cataluña and CTTI v Commission,

judgment of the General Court of 26 November 2015, ECLI:EU:T:2015:900; T-487/13

Navarra de Servicios y

Tecnologías v Commission,

judgment of the General Court of 26 November 2015, ECLI:EU:T:2015:899; and T-

541/13

Abertis Telecom and Retevisión I v Commission,

judgment of the General Court of 26 November 2015,

ECLI:EU:T:2015:898.

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the General Court confirmed that the Commission was correct in holding that the aid was

incompatible with the single market, in particular as it did not respect the principle of

technological neutrality. These judgments confirm the Commission's analysis of how Member

States can support the transmission of TV coverage in line with EU law in a technologically

neutral way.

3. F

INANCIAL SERVICES

Overview of the key challenges in the sector

Financial services represent about 5 % of the EU's GDP but, more importantly, they play an

essential role in providing access to finance for the real economy. In 2015, the situation of

financial markets improved as the situation of the banks is normalising in several Member

States, with banks returning to decent profitability levels and being able to raise new private

capital when needed.

Due to its systemic importance, the Commission has remained very active in the financial

services sector also in 2015. It continued to enforce State aid rules for the financial sector

with the aim of ensuring that aided financial institutions restructure adequately or exit the

market in an orderly way, and limiting competition distortions from State aid within the

internal market, while limiting the use of taxpayers' money to the minimum necessary. At the

same time, the Commission continued its role in merger control as well as in antitrust

enforcement, investigating anti-competitive behaviours in the area of financial services.

Since its launch in June 2012, completing the Banking Union remains a key priority on the

EU agenda

153

. Progress continued in 2015:



The Bank Recovery and Resolution Directive (BRRD) entered into force on 1 January

2015

154

. It sets out the resolution rules for banks and large investment firms in all Member

States and aims to better protect taxpayers from having to bail out banks in distress. The

Member States had to transpose the directive into national law by 31 December 2014. 17

Member States have complied with this deadline. On 28 May, the European Commission

issued a reasoned opinion to request the full implementation of the directive by the

remaining 11 Member States

155

The members of the Single Resolution Board

156

were appointed by the Council on 19

December 2014 and took up their posts in March 2015. As of 2016, the Single Resolution

Board will be the resolution authority for the significant and cross-border banking groups

established within participating Member States in the Single Resolution Mechanism

(SRM). It will enable the formulation of resolutions plans for the banks within their

responsibility, and calculate the annual contributions of all institutions authorised in the

Member States participating in the Single Supervisory Mechanism (SSM) and the SRM.

In the context of the SRM it will work in close cooperation with the national resolution

authorities.



153

President Barroso described it as “the

first and most urgent phase on the way to deepen our economic and

monetary union"

in his annual State of the Union speech to the European Parliament on 11 September 2013.

154

European Parliament and Council Directive 2014/59/EU of 15 May 2014 establishing a framework for the

recovery and resolution of credit institutions and investment firms, OJ L 173, 12.6.2014 available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1427289116879&uri=CELEX:32014L0059

155

Bulgaria, Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania

and Sweden. A reasoned opinion is the second stage of the EU infringement procedures.

156

Members of the SRB are the Chair, the Vice-Chair and four other permanent members.

kom (2016) 0393 - Ingen titel



In November, the Commission put forward a proposal for a European Deposit Insurance

Scheme (EDIS)

157

, aiming to provide a stronger and more uniform degree of insurance

cover for all retail depositors in the banking union.

Contribution of EU competition policy to tackling the challenges

Contribution of EU competition policy to innovation and investment in payments

The European payments market is developing rapidly with lots of innovation and investments;

there were 26 deals raising USD 417.9 million in venture capital up to September 2014, an

increase that surpassed the dot-com levels and showed a faster pace in Europe than

worldwide.

2015 has been an important year for this market, with the adoption and entry into force of a

legislative "payment package". These new rules will profoundly change the way payment

providers can operate in the EU.

In April, the Interchange Fee Regulation was adopted. It introduced, as of 9 December, EEA

wide harmonised caps on inter-bank fees for the most-used credit and debit cards

158

. The

Regulation will generate substantial savings for retailers and consumers, as it is expected to

reduce hidden fees on card payments by EUR 6 billion annually. It will also make business

practices fairer and more transparent and allow competition to be more effective

159

2015 also saw the publication of the revised Payment Services Directive (PSD II)

160

. This

Directive will allow regulated access to the internet payments market by non-banks to the

benefit of retailers and consumers

161

In most Member States credit cards are the main means of internet payment. But card

payments over the internet are cumbersome, expensive to merchants (with traditionally very

high interchange fees for card transactions over the internet) and insecure with high levels of

fraud

162

. Moreover, only 60 % of EU citizens possess such cards. The PSD II will open the

market for (bank-owned and non-bank owned) regulated third-party players who offer

alternative means of internet payments (e.g. through credit transfers via the consumer's bank's

157

For further information see MEMO/15/6153 of 24 November 2015 available at

http://europa.eu/rapid/press-

release_MEMO-15-6153_en.htm

158

European Parliament and Council Regulation (EU) No 2015/751 of 29 April 2015 on interchange fees for

card-based payment transactions, OJ L 123, 19.5.2015, p.1 available at

http://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=uriserv:OJ.L_.2015.123.01.0001.01.ENG

159

The Interchange Fee Regulation was preceded by extensive legal action by the Commission challenging the

interchange fees applied by MasterCard and Visa, including in particular the prohibition of MasterCard's intra-

regional MIFs in 2007 and commitments from Visa Europe in 2010 and 2014 to reduce significantly all the MIFs

it fixes in the EU. In September 2014 the Court of Justice endorsed the Commission's decision in the MasterCard

case. For further information see Case C-382/12 P -

MasterCard and Others v Commission,

judgment of the

Court of 11 September 2014, ECLI:EU:C:2014:2201.

160

European Parliament and Council Directive (EU) 2015/2366 of 25 November 2015 on payment services in

the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No

1093/2010, and repealing Directive 2007/64/EC, OJ L 337, 23.12.2015, p. 35 available at

http://ec.europa.eu/finance/payments/framework/index_en.htm#151008

161

The Directive was preceded by competition enforcement action against the European Payments Council

('EPC'), the coordination and decision-making body of the European banking industry for payments. For further

information see memo for Commission decision of 13 June 2013 available at

http://europa.eu/rapid/press-release_MEMO-13-553_en.htm.

The Commission then proposed PSD II which

provided a clear legal basis for such bank-independent players, who will become Payment Institutions and be

regulated by financial supervisors.

162

Estimated by the ECB to represent about two-thirds of total card fraud in the EU, worth €800 million in 2014.

kom (2016) 0393 - Ingen titel

website, including most importantly the Single Euro Payment Area (SEPA) Credit Transfer

system).

The PSD II will also enhance the security of internet payments in general. It will open the

market to a whole range of other secure and efficient services building on the consumer's

bank account, including account information services (allowing consumers to keep track on

their mobile phone of their spending on different bank accounts) and payment instrument

issuers (who are third parties who can issue cards and other payment instruments to

consumers). Some of these services are already on the market and many more are expected

after the transitional period of two years.

The "payment package" therefore opens the door for innovation and investment in the

payments sector.

Antitrust and cartel investigations in the financial services sector

In 2015, the Commission continued its antitrust investigations in the financial sector, one of

the Commission's priority areas to achieve a fairer and more integrated internal market.

In July, a Statement of Objections was sent to MasterCard

163

in the proceedings against its

interchange fees for transactions in the EEA made with cards issued outside the EEA ("inter-

regional transactions") and rules hindering cross-border acquiring, which allegedly artificially

segments the internal market and prevents the usual competitive process in acquiring. The

proceedings against Visa Inc. and Visa International as regards their fees for inter-regional

transactions also continue

164

. The inter-regional interchange fees of Visa and MasterCard

together represent about EUR 1 billion each year. The Commission is concerned that they

increase prices for EEA retailers and may in turn lead to higher prices for products and

services for all consumers. Linked to these proceedings, the Commission had commissioned a

detailed study into the cost for merchants of receiving payments by card and by cash. This

was carried out by Deloitte. Initial results were published in 2014 about the costs for the

merchants that took part in the study. A final report was published in March

165

estimating

these costs for merchants in the whole of the EU.

The investigative efforts into the credit default swaps (CDS) market continued throughout

2015. On 4 December, the Commission decided to partially close the proceedings against all

banks involved in the investigation. The investigation continued against the International

Swaps and Derivatives Association (ISDA) and data provider Markit.

YIRD (ICAP)

On 4 February, the Commission fined the UK-based broker ICAP EUR 14,96 million for facilitating six cartels

in the sector of Yen interest rate derivatives between 2007 and 2010. In this sector, the Commission had already

uncovered several distinct bilateral infringements and imposed fines on the banks UBS, RBS, Deutsche Bank,

Citigroup, JPMorgan and on the broker RP Martin in December 2013.

These companies had admitted their involvement in one or more cartels in the YIRD sector, which allowed the

Commission to settle the case with them. ICAP chose not to settle the case and proceedings continued against it

under the normal procedure. The investigation uncovered that ICAP had facilitated six out of the seven cartels in

163

Case AT.40049

MasterCard II.

For further information see IP/15/5323 of 9 July 2015 available at

http://europa.eu/rapid/press-release_IP-15-5323_en.htm

164

These proceedings were closed as regards Visa Europe following its commitments, Case AT.39398

VISA MIF,

Commission decision of 26 February 2014 available at

http://ec.europa.eu/competition/antitrust/cases/dec_docs/39398/39398_9728_3.pdf

165

See, e.g. the

Survey on merchants’ costs of processing cash and card payments,

(March 2015) prepared by

Deloitte available at

http://ec.europa.eu/competition/sectors/financial_services/dgcomp_final_report_en.pdf

kom (2016) 0393 - Ingen titel

the YIRD sector through various actions that contributed to the anti-competitive objectives pursued by the

cartelists and in particular by: disseminating misleading information to certain JPY Libor panel banks which

were portrayed as "predictions" or "expectations" of where the JPY LIBOR rates would be set. This misleading

information was aimed at influencing certain panel banks (which were not participating in these infringements)

to submit JPY LIBOR rates in line with the adjusted "predictions" or "expectations"; using its contacts with

several JPY LIBOR panel banks (which were not participating in the infringements) with the aim of influencing

their JPY LIBOR submissions; and serving as a communications channel between a trader of Citigroup and a

trader of RBS and thereby enabling the anti-competitive practices between them.

Review of the Insurance Block Exemption Regulation

The Commission continued in 2015 with the Impact Assessment procedure for the review of the

Insurance Block Exemption Regulation (EU) No. 267/2010 (IBER)

166

. It assessed the replies to

targeted questionnaires

167

received following the public consultation in 2014 and took further

stakeholder contacts. Preparatory steps were taken for the Report

168

on the functioning and

future of the regulation, which has to be submitted to Parliament and Council by March 2016.

To gain additional input for the forthcoming Impact Assessment the Commission commissioned

two studies on issues regarding the functioning of the regulation raised by stakeholders in the

context of the consultation process. The studies will be undertaken in the first half of 2016.

Merger investigations in the financial sector

The Commission continued to ensure that concentrations in the financial services sector do

not lead to market distortions. The Commission assessed several mergers in the banking,

insurance and capital markets sectors. For example, the acquisition of Instituto Centrale delle

Banche Popolari Italiane by Advent International and Bain Capital, involving markets related

to payment cards

169

or the acquisition by Aviva of Friends Life and Tenet which affected the

United Kingdom life insurance market

170

. As these transactions did not raise competition

concerns, they were cleared in the first phase investigation and without the need for remedial

action to be ordered.

State aid investigations in the financial sector

The special EU State aid crisis rules, first adopted in 2008 and amended in 2010 and

2011, were restructured in the Banking Communication

171

that was adopted on 1

August 2013. Those rules, in line with the BRRD, allow State aid control to continue to

ensure a consistent policy response to the financial crisis throughout the EU. They also

played an important role in limiting distortions of competition in the internal market.

Furthermore, they contribute to the restoration of confidence in the European financial

166

Insurance Block Exemption Regulation (EU) No. 267/2010 (IBER), OJ L 83, 30.3.2010, p. 1. The regulation

contains a sunset clause which foresees expiry in March 2017.

167

Targeted questionnaires were sent to pools, customers, insurance intermediaries federations/brokers and mutual

insurance associations.

168

The report will present the Commission´s preliminary views on the functioning and future of the IBER at this

stage and will not prejudge the final decision that the Commission will take on its future once the Impact

Assessment is completed.

169

Case M.7711

Advent International / Bain Capital / Icbpi,

Commission decision of 16 September 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7711

170

Case M.7478

Aviva / Friends Life / Tenet,

Commission decision of 13 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7478

171

Communication from the Commission on the

Application of State aid rules to support measures in favour of

banks in the context of the financial crisis (Banking Communication),

OJ C 216, 30.7.2013, p.1 available at

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013XC0730%2801%29&from=EN

kom (2016) 0393 - Ingen titel

sector so that it can again provide affordable lending to the real economy, including

SMEs, and support economic growth.

Until 31 December, the Commission has analysed 117 banks, or around one quarter of

Europe's banking sector by assets, under the special crisis rules. Of those banks, 61 were

restructured and 41 were orderly liquidated. As of 31 December, one case is still

pending.

It is important to note that only a part of approved State aid to the financial sector has

actually been used. In particular, only around a third of the guarantees approved by the

Commission were eventually necessary to be provided to banks by the respective

Member States.

In the period of 2008 until 2014, the volume of aid in the form of capital (i.e.

recapitalisations and asset relief measures) amounted to EUR 617 billion (4.4 % of EU

2014 GDP). More specifically, recapitalisations totalled EUR 432 billion (3.1 % of EU

GDP), whilst asset relief measures amounted to EUR 185 billion (1.3 % of EU GDP).

The volume of guarantees and other liquidity support reached its peak in 2009, with the

outstanding amount of EUR 906 billion (7.4 % of EU 2009 GDP). Since then the crisis has

gradually receded in many Member States, and the outstanding amount of liquidity

support dropped to EUR 215 billion (1.5 % of EU 2014 GDP) in 2014. That year the

outstanding amount of guarantees was EUR 186 billion, whilst other outstanding

liquidity measures amounted to EUR 28 billion (0.2 % of EU GDP).

State aid rules ensure that banks remunerate Member States for aid and that this aid is

repaid. For aid in the form of capital, Member States have received EUR 15 billion in

dividends and other remuneration by end-2014. During the same period, Member States

have received EUR 40 billion in guarantee fees, compared to EUR 4 billion of guarantees

actually called. For liquidity support in the form of loans, Member States had received

EUR 68 billion in interest by end-2014.

Data on aid repayments in 2015 will include a repayment by KBC in Belgium and partial

re-privatisations of such banks as Deutsche Pfandbriefbank in Germany, ABN Amro in

the Netherlands, as well as Lloyds and Royal Bank of Scotland in the United Kingdom

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and if those Member States recouped some of the funds provided during the financial

crisis.

Non-performing loans (NLP)

A dominant topic in the Commission's discussions with Member States is the management of non-performing

loans (NPLs). As a result of the economic recession or bursting of real estate bubbles, many banks throughout

Europe have large volumes of NPLs on their books. However, the legal framework for dealing with these is very

different in each Member State. In some Member States, strong creditor protection prevents banks from

managing their NPL effectively, e.g. by seizing collateral. Consequently, some national administrations have

tried to devise other ways to reduce the burden of NPL on their banks' balance sheets so that these banks can

better fulfil their role of lenders to the real economy. Currently, the Commission is discussing this topic with

Italy and Hungary. Both States have decided to set up asset management companies (AMC) which should take

over NPL from existing banks. While discussions on Italy's plans are still ongoing, Hungary has already begun

to set up an AMC in 2014.

In general, AMC give rise to a number of questions from a State aid perspective. The most important question is

at what price the transfer of an NPL from a bank to a State-funded AMC takes place. In principle, a transfer at

market value does, in all likelihood, not entail State aid. However, if the transfer is conducted at a price above

the market value of the NPL, the transferring bank receives State aid amounting to the difference between the

market value of the loan and the transfer price.

It is important to highlight that this selective economic advantage to the bank in question comes at the expense of

the taxpayer, who is buying the defaulted loans at a price considered by the private investors to be too high

compared to the risk of losses. Under State aid rules, such type of aid has to be strictly limited to distressed

banks and given only under the condition that the banks in question are restructured. In other words, under State

aid rules, it is not allowed that, when creditors default on their loans, the banks are able to sell these loans to the

State at inflated prices without having to restructure. Consequently, the Commission will keep monitoring

Member States' plans for AMC closely in order to protect the European taxpayers from unnecessary burdens and

to avoid undue advantages to banks. No decisions have been taken on AMC in 2015.

On 9 April, the Commission approved under State aid rules the restructuring plan of

Permanent TSB

172

. The third-largest domestically owned Irish bank received a significant

capital injection from the Irish State in 2011 and benefited from various asset relief measures

and guarantee schemes. These measures had been temporarily approved by the Commission

subject to the submission of a restructuring plan. The initial plan submitted by Ireland was

subsequently adjusted and updated several times to account for changing market conditions,

the results of the October 2014 comprehensive assessment conducted by the ECB, and

difficulties to agree on terms to ensure the bank's long-term viability. The restructuring plan

includes a set of commitments that Permanent TSB will respect until the end of 2018,

including commitments to deleverage and reduce costs.

On 2 July, the Commission took an amendment decision on Österreichische Volksbanken AG

(ÖVAG) and the Austrian Volksbanken sector, a network of cooperative banks

173

. ÖVAG, the

central institution of the Volksbanken sector, had already received State aid in 2009 and was

subsequently been put under restructuring through a Commission decision

174

. In October

2014, the ECB stress test revealed a capital shortfall of EUR 865 million for the Volksbanken

sector including ÖVAG. To make up for the shortfall the bank and the Austrian authorities

proposed to transfer ÖVAG's functions as a central institution to another Volksbank and to

put ÖVAG itself in wind-down. The Commission agreed to this plan on condition that the

172

Case SA.33442

Restructuring of Irish Life and Permanent Group Holdings plc,

Commission decision of 9

April 2015 available at

http://ec.europa.eu/competition/state_aid/cases/241557/241557_1662492_396_2.pdf

173

Case SA.31883

Restructuring of Österreichische Volksbanken AG,

Commission decision of 2 July 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_31883

174

Case SA.31883

Restructuring of Österreichische Volksbanken AG,

Commission decision of 19 September

2012 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_31883

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Volksbanken sector repays EUR 300 million to the Austrian State which Austria had given to

ÖVAG as part of an injection of EUR 1 billion in participation capital in 2009. Previously, the

Austrian State had already lost EUR 700 million of this sum due to ÖVAG's continued loss-

making.

On 22 November, the Commission found the resolution plans for four small Italian banks

175

to be in line with State aid rules

176

. The four institutions constitute around 1 % of the Italian

banking sector. All of them had already been placed under special administration between

2013 and 2015. Under the decisions a bridge bank will be created for each bank. These bridge

banks are to be sold in a profit-maximising way at a later stage. The Italian national resolution

fund will provide EUR 3.6 billion to the bridge banks, minimising the need for State aid and

consequently the burden for the Italian taxpayer. On 23 December, the Commission found

that the support granted by the Italian mandatory deposit guarantee scheme to Banca Tercas, a

small Italian bank with a market share of about 0.1 % of total banking assets in Italy,

constitutes incompatible State aid

177

. This decision followed the opening of an in-depth probe

into the support measures in February 2015. The decision exemplifies the Commission's

continued vigilance regarding State aid rules in the European financial sector – including the

requirement that State aid must be kept to the necessary minimum.

The specific situation of Programme Countries

In Greece, the situation of the banking sector deteriorated dramatically over the first half of

2015 amid uncertainties about the financing of the Greek State, which eventually led to a new

European Stability Mechanism (ESM) support programme for Greece agreed in August 2015.

In that context, the European Central Bank's Single Supervisory Mechanism (SSM) carried

out a comprehensive assessment of the four systemic Greek banks, to ensure that they are

adequately capitalised. This revealed - on 31 October - large capital shortfalls. The banks

aimed to cover their capital needs from private sources (existing creditors, voluntary exchange

of their bonds for new shares, and new investors). Two of the banks succeeded in doing so

fully, while the other two raised significant amounts of private capital and received capital

injections from the State for the difference. All of them benefited from an aid measure in the

form of a Hellenic Financial Stability Fund commitment to cover any capital needs not

covered from private sources. The Commission found the aid measure provided by the Fund

and the capital injections, to be in line with State aid rules, on the basis of amended

restructuring plans submitted for the banks, which included new restructuring measures and

commitments, proportional to the amount of aid received by each of the banks.

In Cyprus, the Single Supervisory Mechanism concluded two assessments with respect to the

Cypriot Central Cooperative Banks (CCB) in 2015. The first, a Supervisory Review

Evaluation Process (SREP), led to a decision that CCB must at all times have an overall

capital ratio equal in quality to Common Equity Tier 1 (CET1). The second assessment was

related to an on-site inspection that identified a shortfall in provisioning. As a result of both

175

Banca delle Marche, Banca dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara, and Cassa di Risparmio

della Provincia di Chieti.

176

Cases SA.39453, SA.41134, SA.41925 and SA.43547, Commission decision of 22 November 2015. The non-

confidential versions of the four decisions will be published in the State aid register on the competition website

under the case numbers SA.39453, SA.41134, SA.41925 and SA.43547 once potential confidentiality issues

have been resolved.

177

Case SA.39451

Banca Tercas,

Commission decision of 23 December 2015. For further information see

IP/15/ 6395 of 23 December 2015 available at

http://europa.eu/rapid/press-release_IP-15-6395_en.htm.

The non-

confidential version of the decision will be published in the State aid register on the competition website under

the case number SA.39451 once potential confidentiality issues have been resolved.

kom (2016) 0393 - Ingen titel

reviews, the CCB needed additional capital. Since their legal structure did not allow them to

raise the new capital from private sources, the Commission received a request for new State

aid. The new capital injection was approved subject to significant additional restructuring of

the CCB. Further operational integration was demanded, including further centralisation of

employees to allow for their easier redeployment and the governance structure of the group

was further simplified as well as the centralisation of ownership and control of physical

assets. In order to restore market access of the CCB, a progressive divestment by the State has

been demanded to start before the end of the restructuring period – before 2018.

In May, Portugal successfully exited a financial assistance programme, during which a large

part of the banking sector had been subject to restructuring decisions under State aid rules.

State aid control in the financial sector continues to play a relevant role in the post-

programme context.

In December, the Commission took decisions on two Portuguese banks, Novo Banco and

Banif. Novo Banco, which was established following the resolution of BES in August

2014

178

, had to be sold by August 2016 in a transaction that was to be approved by the

Commission. A sales process run in 2015 did not find a buyer. At the same time, the

European Central Bank's Single Supervisory Mechanism carried out a comprehensive

assessment of the bank, revealing on 14 November a shortfall of EUR 1.4 billion in the

adverse stress test scenario, adding to the complexity of the bank's situation. In December, the

Commission adopted a decision

179

, amending the BES resolution, postponing the deadline to

sell and declaring the prolongation of existing Government Guarantee Bank Bonds to be

compatible, based on a strengthened set of commitments by the Portuguese authorities and an

increased focus by Novo Banco on its core activities. The Commission did not approve any

other measures for Novo Banco.

In December, the Commission also adopted a decision

180

approving the resolution of Banif,

through the sale of assets to Banco Santander Totta and a transfer of assets to an asset

management vehicle (Oitante). The resolution strategy was chosen by the Portuguese

authorities, who notified it to the Commission. The transfer of assets to the asset management

vehicle was only approved on a temporary basis under the State aid framework, a final

decision is expected in 2016.

In the case of Banif, on 24 July the Commission opened an in-depth investigation to assess

whether EUR 1.1 billion of State aid, granted by Portugal to the bank in January 2013 under a

temporary Commission approval

181

, was compatible with EU State aid rules. Several

amended versions of the restructuring plan for Banif had been submitted to the Commission

since the 2013 rescue decision. However, the opening of the investigation was necessary

because of the doubts about the viability of the bank and on the measures proposed to ensure

adequate burden sharing and limitation of competition distortions. On 21 December, the

Commission approved a series of State aid measures by Portugal amounting to up to EUR 3

billion to put Banif into resolution. The viable parts of Banif were sold to Santander Totta.

178

Case SA.39250

Resolution of Banco Espírito Santo,

Commission decision of 3 August 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39250

179

Case SA.43976

Amendment to the resolution of Banco Espirito Santo,

Commission decision of 19 December

2015, available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_43976

180

Case SA.43977

Resolution of Banif – Banco Internacional do Funchal SA,

Commission decision of 21

December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_43977

181

Case SA.34662

Rentipar/BANIF – Rescue decision – PT,

Commission decision of 21 January 2013 available

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_34662

kom (2016) 0393 - Ingen titel

The rest of the bank will be wound down and cease to compete on the market. The State

support therefore preserves financial stability and preserves the lending capacity to the

Madera region but without artificially keeping alive non-viable activities. Hence the

Commission concluded that this aid does not lead to undue distortions of competition and is

compatible with the internal market.

4. T

AXATION AND

TATE AID

Overview of key challenges on tax evasion and avoidance and fiscal aid

The focus the Commission has put on fighting tax evasion and tax avoidance echoes the

priorities set by President Juncker upon taking office in November 2014, and is also

underscored in Commissioner Vestager's Mission Letter. This is also in line with efforts at

international level, namely by the OECD, to tackle tax base erosion and profit shifting to

better align rights to tax with economic activity

182

. State aid investigations into Member

States' tax ruling practices, which began in 2013, before the Luxleaks revelations, are one of

the tools the Commission has to ensure companies pay the taxes they owe in the Member

States where they generate economic value.

Tax evasion and avoidance can be the result of aggressive tax planning strategies, in so far as

they shift profits to low or no-tax locations where there is little or no economic activity,

resulting in little or no overall corporate tax being paid. Aggressive tax planning can be

pursued by making use of preferential tax schemes, or by requesting individual tax rulings.

They all have in common that they result in a loss of tax revenue in the Member State where

economic value is generated but not taxed, and in Europe as a whole because the tax

eventually paid is less than it would have been if the profits had not been shifted.

The side effects of aggressive tax planning for the EU are particularly negative: first, it results

in undue tax reliefs that distort competition by granting advantages only to selected

companies; second, it entails a social equity issue, as the revenues foregone from untaxed

multinationals need to be compensated, which normally shifts the burden to less mobile

income of SMEs and labour; third, from the perspective of the dislocation of activities,

aggressive tax planning can present a threat to the sustainable growth of the internal market if

some Member States were to offer exit points for European profits of multinationals in

exchange for creating jobs on their territory and a limited tax payment.

Both collecting taxes and combating tax evasion are normally competences of the Member

States. However, even in this area where the Member States enjoy fiscal autonomy, any

national tax measures adopted have to comply with internal market rules and, amongst others,

abide by competition law

183

182

183

OECD (2013), Action Plan on Base Erosion and Profit Shifting, OECD Publishing, Paris.

The Commission work in the area of tax rulings was closely followed by the European Parliament's Special

Committee on Tax Rulings and Measures Similar in Nature or Effect (TAXE). On 25 November, European

Parliament adopted a Report on tax rulings and other measures similar in nature or effect prepared by the TAXE

Committee, which viewed positively the contribution of State aid control to tax fairness in Europe. In fact, it

"strongly

welcomes and supports the key role of the Commission as the competent competition authority in the

ongoing State aid inquiries dealing with tax rulings"

(para. 130). On 25 November, the Committee issued a

report which broadly endorsed the Commissions approach on State aid.

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Contribution of EU competition policy to tackling the challenges

State aid investigations and decisions concerning aggressive tax planning

Since 2013, the Commission has been looking into tax planning practices via its dedicated

Task Force.

Throughout 2014 and 2015, the Commission has continued to gather information on tax

planning practices. At an initial stage, relevant information was requested from certain

Member States where allegations of preferential treatment through tax rulings had been drawn

to the Commission's attention, notably Luxembourg, Ireland and the Netherlands. In addition

to the above, requests for information on tax planning practices were sent to Cyprus, Malta

and the United Kingdom.

In December 2014

184

, the Commission extended its State aid enquiry to include all Member

States. The enquiry is aimed at clarifying allegations that tax rulings may constitute State aid

and to allow the Commission to take an informed view of the practices of all Member States.

On the basis of the information received, in June, the Commission requested 15 Member

States to provide a substantial number of individual tax rulings

185

. Requesting these tax

rulings does not prejudge whether this will lead to individual State aid investigations

concerning the recipients of these tax rulings.

Overall, in the context of the rulings enquiry, Member States have shown good cooperation,

except for, initially, Estonia and Poland. Therefore, in June, the Commission adopted two

information injunctions ordering Estonia and Poland to deliver the information the

Commission needs to assess whether certain tax practices favour certain companies, in breach

of State aid rules. After the injunctions, the Member States submitted the requested

information.

Specific cases

In 2014, the Commission opened four formal investigations where it raised concerns that tax

rulings may entail State aid issues. These investigations concern rulings for Apple in

Ireland

186

, Starbucks in the Netherlands, Fiat Finance & Trade in Luxembourg, and Amazon

in Luxembourg

187

. Two of these cases were concluded on 21 October with negative decisions

with recovery

188

Both of those decisions find that by issuing tax rulings in favour of integrated group

companies that endorse a method allowing those companies to determine their taxable profit

in a manner that deviates from a reliable approximation of a market-based outcome, the

Member States in question confer a selective advantage on those companies and the

multinational corporate groups to which they belong. That is because those tax rulings allow

those group companies to reduce their taxable profit and thus their tax liability under the

184

For further information see IP/14/2742 of 17 December 2014 available at

http://europa.eu/rapid/press-

release_IP-14-2742_en.htm

185

For further information see IP/15/5140 of 8 June 2015 available at

http://europa.eu/rapid/press-release_IP-15-

5140_en.htm

186

Case SA.38373

Alleged aid to Apple,

Commission decision of 11 June 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38373

187

Case SA.38944

Alleged aid to Amazon,

Commission decision of 7 October 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38944

188

For further information see IP/15/5880 of 21 October 2015 available at

http://europa.eu/rapid/press-

release_IP-15-5880_en.htm

kom (2016) 0393 - Ingen titel

ordinary rules of taxation of corporate profits in the Member State concerned, as compared to

independent standalone companies, whose taxable profits are the result of prices negotiated at

arm's-length and thus determined by the market. That the method for determining an

integrated group company's taxable profit for corporate taxation purposes should comply with

this "arm's-length" principle flows from Article 107(1) TFEU, as interpreted by the case law

of the Union Courts

189

Luxembourg - Fiat Finance and Trade (FFT)

One of the decisions adopted by the Commission in 2015

190

concerns the intra-group treasury

company of Fiat Chrysler Automobile. Its Luxembourg subsidiary Fiat Finance and Trade

(FFT) provides financial services, such as intra-group loans, to other Fiat group car

companies in Europe, excluding Italy. The tax ruling issued by Luxembourg to that company

endorsed an artificial and extremely complex transfer pricing methodology that the

Commission did not find appropriate for determining that company's taxable profits in manner

that reliably reflects market conditions. As a result, FFT's tax base was significantly reduced

as compared to independent standalone companies in a comparable factual and legal situation.

The Commission concluded that because FFT's activities can (as also claimed by the company

and Luxembourg) be compared to those of a bank, the taxable profits of FFT could in order to

be at arm's length, be determined in a similar way as for a bank, which means a calculation of

return on capital deployed by the company for its financing activities. This requires, as a

matter of principle that if the taxable profits are calculated based on capital, the level of

capitalisation in the company has to be adequate compared to financial industry standards.

Additionally, the remuneration applied has to correspond to market conditions. The

Commission's assessment showed that, in the case of FFT, if the estimations of capital and

remuneration applied had corresponded to market conditions, the taxable profits declared in

Luxembourg would have been 20 times higher.

The Netherlands - Starbucks Manufacturing EMEA BV (Starbucks Manufacturing)

The other decision adopted by the Commission in 2015

191

concerns a Dutch-based subsidiary

of the Starbucks Corporation. The Dutch subsidiary Starbucks Manufacturing EMEA BV

(Starbucks Manufacturing) is the only coffee roasting company of the Starbucks group in

Europe. It sells and distributes roasted coffee and coffee-related products (e.g. cups, pastries,

etc.) to Starbucks outlets in Europe, the Middle East and Africa.

A tax ruling issued by the Dutch tax authorities in 2008 significantly lowered Starbucks

Manufacturing's tax base as compared to its accounting profit. The core of the Commission's

decision concerned the payment of a substantial royalty fee to another Starbuck's group

subsidiary based in the United Kingdom for the use of coffee-roasting IP and know-how,

which is not liable for corporate tax in either the United Kingdom or the Netherlands.

Moreover, the company also paid an inflated price for green coffee beans to a Switzerland-

based Starbucks group company.

189

Joined cases C-182/03 and C-217/03

Belgium and Forum 187 ASBL v Commission,

judgment of the Court of

22 June 2006, ECLI:EU:C:2006:416.

190

Case SA.38375

Alleged aid to FFT,

Commission decision of 21 October 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38375

191

Case SA.38374

Alleged aid to Starbucks,

Commission decision of 21 October 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38374

kom (2016) 0393 - Ingen titel

The Commission's investigation established that the tax ruling endorsed a transfer pricing

methodology that did not produce a reliable approximation of a market-based outcome, since

it did not properly examine or price the royalty paid by Starbucks Manufacturing for the

coffee-roasting IP and know-how to a Starbucks subsidiary in the United Kingdom and the

price paid by Starbucks Manufacturing for green coffee beans to a Starbucks subsidiary in

Switzerland. The Commission further found that the royalty fee in question cannot be justified

since it did not reflect a reliable approximation of a market price. In particular, the

Commission noted that Starbucks does not charge a royalty for the use of its coffee-roasting

IP and know-how when that IP is licensed to third parties that do not exploit the finished

product on the market. In addition, the Commission found that certain competitors of

Starbucks do not charge a royalty for the use of their coffee-roasting IP and know-how when

this is licensed to a coffee roasting toll manufacturer. The Commission therefore concluded

that, by allowing Starbucks Manufacturing as a result of the tax ruling to shift a considerable

portion of its accounting profit to another Starbucks group entity in the guise of a royalty

which was not justified by the market, the Dutch tax authorities conferred a selective

advantage upon that company in the form of a reduction of its taxable profit and thus its

corporate income tax liability under the ordinary rules of corporate taxation in the

Netherlands as compared to independent companies whose taxable profits are the result of

prices negotiated at arm's-length and thus determined by the market. In the case of Starbucks

Manufacturing, however, the existence and level of the royalty means that a large part of its

taxable profits are unduly shifted out of the country. In addition, the Commission's

investigation found that Starbucks Manufacturing's tax base was also unduly reduced by the

inflated price it pays for green coffee beans to a Starbuck's subsidiary based in Switzerland.

The investigation concluded that by the tax ruling issued in 2008, the Netherlands gave a

selective advantage to Starbucks Manufacturing, which has unduly reduced Starbucks

Manufacturing's tax burden since 2008 by EUR 20 - EUR 30 million.

The two afore-mentioned decisions do not question the practice of issuing tax rulings as such,

in so far as they are used to obtain clarity on how corporate tax will be calculated or on the

use of special tax provisions. The two decisions expose two tax rulings endorsing artificial

and unnecessarily complex transfer pricing methods to establish taxable profits for the

companies in question, which did not reflect economic reality and in no way corresponded to

market conditions. Member States have to scrutinise requests for tax rulings and not accept

the establishment of transfer prices with no economic justification and which unduly shift

profits to reduce the taxes paid by companies in their jurisdictions. Otherwise the

beneficiaries of the ruling will obtain an unfair competitive advantage over other companies

(in particular independent stand-alone companies, typically SMEs) that are taxed on their

actually recorded profits which are determined by prices negotiated at arm's length on the

market for the goods and services they use.

Belgian excess profit system

In February, the Commission launched an in-depth investigation into the Belgian excess profit

system

192

. The scheme provides certain Belgian entities that are part of a multinational group

with a reduction of their tax base. The tax base reduction concerns a part of an entity's actually

recorded profit which exceeds the alleged hypothetical average profit of a stand-alone entity

(i.e. not part of a group) deemed to be comparable. Belgium deems that part of the profit

192

For further information see IP/15/4080 of 3 February 2015 available at

http://europa.eu/rapid/press-

release_IP-15-4080_en.htm

and Case SA.37667

Excess profit tax ruling system in Belgium,

Commission

decision of 11 January 2016 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37667

kom (2016) 0393 - Ingen titel

"excess profit". This unilateral downward adjustment of the tax base, is claimed to be granted to

prevent double taxation, but it applies irrespective of any risk of double taxation. The benefits

of the scheme are available subject to an advance ruling issued by a special ruling commission.

On 11 January 2016, the Commission adopted a negative decision with recovery

193

, concluding

that selective tax advantages granted by Belgium under its "excess profit" tax scheme are illegal

under EU State aid rules. The scheme has benefited at least 35 multinationals mainly from the

EU, who must now return unpaid taxes to Belgium.

Luxembourg - McDonald's

Finally, on 3 December the Commission opened a formal probe into Luxembourg's tax

treatment of McDonald's

194

. Its preliminary view is that a tax ruling granted by Luxembourg

may have granted McDonald's an advantageous tax treatment in breach of EU State aid rules. In

particular, the Commission will assess whether Luxembourg authorities selectively derogated

from the provisions of their national tax law and the Luxembourg-United States Double

Taxation Treaty and thereby gave McDonald's an advantage not available to other companies in

a comparable factual and legal situation.

State aid investigation of sector specific tax issues - investigation into three Hungarian

schemes with progressive tax rates

In 2014, Hungary introduced (1) a tax on the turnover derived from the publication of

advertisements in the media (advertisement tax); (2) a tax on the annual turnover derived from

the production and trade of tobacco products, and (3) widened an existing tax on the annual

turnover of food chain operators, to include retail stores selling items of daily consumption.

These three turnover tax measures had progressive rates depending on annual turnover, and

placed companies with low turnover in an advantaged position compared to others.

In March and July, the Commission launched formal investigations

195

into these measures,

(combined with suspension injunctions), considering the progressivity of the tax rates grants a

selective advantage to undertakings with low turnover and constitutes State aid, which does not

appear compatible with the internal market. In reaction, on all three measures Hungary signalled

its willingness to abolish the progressive elements and either abolish the measures or transform

them into flat-rate measures compatible with the State aid rules.

193

For further information see IP/16/42 of 11 January 2016 available at

http://europa.eu/rapid/press-release_IP-

16-42_en.htm

194

For further information see IP/15/6221 of 3 December 2015 available at

http://europa.eu/rapid/press-

release_IP-15-6221_en.htm

195

Cases SA.39235

Hungarian advertisement tax,

Commission decision of 12 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39235;

SA.40018

Amendment to

the Hungarian food chain inspection fee,

Commission decision of 15 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_40018

and SA.41187

Hungarian health contribution of tobacco industry businesses,

Commission decision of 15 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result

kom (2016) 0393 - Ingen titel

5. B

ASIC INDUSTRIES AND MANUFACTURING

Overview of key challenges in the sector

Manufacturing is key to the European economy, though it contributes slightly less in terms of

GDP than it has in the past

196

. However, the economic importance of industrial activity is much

greater than bare GDP figures may suggest. Industry accounts for over 80 % of Europe's exports

and 80 % of private research and innovation. Nearly one in four private-sector jobs are in

manufacturing, while each additional manufacturing job creates up to two jobs in other

sectors

197

Recognising the central importance of industry for boosting competitiveness and sustainable

growth in Europe, the Commission has signalled its commitment to industrial modernisation

and promoting a competitive framework for EU industry through investments in innovation,

resource efficiency, new technologies, skills and access to finance to increase the industry's

share of EU GDP to as much as 20 % by 2020

198

Contribution of EU competition policy to tackling the challenges

Healthy and vigorous competition enhances the incentives for innovation, and therefore sets

the scene for economic growth and job creation. The Commission must therefore be vigilant

to ensure that Europe's future prospects are not harmed by anti-competitive practices which

introduce rigidities, push prices up and reduce the competitiveness of EU companies and the

real income of EU consumers. By maintaining a level playing field, EU competition policy

contributes to Europe's growth agenda and underpins the international competitiveness of the

European manufacturing sectors.

Antitrust investigations in basic industries

Basic manufacturing and consumer goods industries continue to represent a significant share

of the Commission's enforcement practice. In 2015, the Commission continued its lines of

action (including individual case work, market surveillance and advocacy) in these sectors,

EU value-added industry requires access to basic materials at affordable prices that reflect

international cost conditions. In 2015, the Commission actively monitored the markets for

these inputs to ensure there is adequate access in a healthy and competitive environment. In

particular, the Commission continued to monitor the ongoing reform of the London Metal

Exchange rules on warehousing

199

, while also focusing on other commodities such as

chemicals.

Cartel investigations in basic industries

Parking Heaters

196

André Sapir and Reinhilde Veugelers (2013),

Manufacturing Europe's growth – policies should focus on

high-end industries driving productivity growth,

Brussel Opinions available at

http://www.bruegel.org/

nc/blog/detail/article/1185-manufacturing-europes-growth

197

Communication of 22 January 2014 from the Commission to the European Parliament, the Council, the

European Economic and Social Committee and the Committee of the Regions

For a European Industrial

Renaissance,

COM(2014) 14 final.

198

See previous footnote.

199

For further details about the 12 elements of the LME warehousing reform package, see

http://www.lme.com/trading/warehousing-and-brands/warehousing/lme-warehouse-reform/

kom (2016) 0393 - Ingen titel

On 17 June, the Commission adopted its 18

settlement decision, imposing a total fine of

more than EUR 68 million

200

on two Germany-based undertakings, Webasto and Eberspächer

that had coordinated prices and allocated customers with regard to fuel-operated parking

heaters (which heat parked cars or trucks) and auxiliary heaters (which support the heating

system of a running car or truck) between September 2001 and September 2011. The cartel

covered supplies of parking heaters to major manufacturers of both cars and trucks across the

EEA as well as the aftermarket sales in Germany and Austria.

The parties formed a "basic understanding" according to which competition between them

should primarily focus on quality and technology, rather than price. They also agreed to

comply with the incumbent supplier principle, which meant that they would not aggressively

pursue individual customers or specific models supplied historically by the other undertaking.

The ultimate aim of the agreement was to generate reasonable margins by limiting price

competition. For 10 years, Webasto and Eberspächer engaged into regular bilateral contacts,

during which they coordinated prices and exchanged other commercially sensitive

information.

The investigation started with an immunity application submitted by Webasto which was

followed by an unannounced inspection at Eberspächer's premises in July 2013. Shortly after,

Eberspächer applied for leniency. Eberspächer benefited from a reduction of its fine under the

2006 Leniency Notice for its cooperation as well as a further reduction of 10 % for agreeing

to settle the case with the Commission. Webasto received full immunity for revealing the

existence of the cartel.

Retail Food Packaging

On 24 June, the Commission adopted a decision

201

against 10 companies (Linpac, Vitembal,

Coopbox, Sirap-Gema, Huhtamäki, Silver Plastics, Nespak, Magic Pack, Ovarpack and

Propack) for their participation in one or more cartels within the retail food packaging sector.

The products concerned were polystyrene plastic trays ("foam trays") and, in respect of one of

the cartels, also polypropylene plastic trays ("rigid trays") - both used for retail packaging of

fresh food such as meat, poultry, fruits and fish.

The Decision concerns five cartels which each took place in a different geographical region

within the EEA, namely Italy, south-west Europe (covering Spain and Portugal), France,

central-eastern Europe (covering Poland, Slovakia, Czech Republic and Hungary) and north-

west Europe (covering Belgium, Denmark, Finland, Germany, Luxembourg, the Netherlands,

Norway and Sweden). The cartels were undertaken in different periods and with varying

durations between March 2000 and February 2008 by tray manufacturers and, in relation to

south-west Europe and central-eastern Europe, also by distributors.

With some differences between the five cartels, the cartel participants engaged in price fixing,

customer allocation and market sharing, exchange of price-sensitive information and bid-

rigging, mainly with the objectives of maintaining high prices, passing on raw material price

increases in a coordinated manner and preserving the status quo with regard to the historically

allocated clients and markets. The Commission imposed fines amounting to a total of EUR

115 865 000 for the five cartels. Under the Commission's 2006 Leniency Notice, Linpac

received full immunity for revealing the existence of the cartels and avoided fines of totalling

200

Case AT.40055

Parking Heaters,

Commission decision of 17 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result

201

Case AT.39563

Retail food packaging,

Commission decision of 24 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39563

kom (2016) 0393 - Ingen titel

of EUR 145 065 000. Vitembal, Sirap-Gema, Coopbox, Magic Pack, Silver Plastics and

Ovarpack were all granted reductions of their fine/fines on the basis of their cooperation in

the Commission's investigation providing information on one or more cartels. Finally, all the

undertakings were exceptionally granted a 5 % reduction of their fines to reflect the

considerable duration of the proceeding (seven years) and the special circumstances of the

case.

Merger investigations in basic industries

GE/Alstom

In 2015, the Commission cleared the acquisition of the Thermal Power, Renewable Power

and Grid businesses of Alstom by General Electric (GE), subject to conditions

(GE/Alstom

202

). Following an in-depth investigation, the Commission found that the

transaction, as initially notified, would have created significant horizontal overlaps in the gas-

related part of Alstom's Thermal Power business, mainly in relation to the supply of Heavy

Duty Gas Turbines (HDGTs), where the global market leader GE would have acquired the

third largest competitor in the EEA.

HDGTs are the prime mover of gas fired power plants, which are expected to play an

important role in the European energy mix in the coming decades as a flexible complement to

electricity generation from renewable energies. Moreover, it is likely that HDGTs will be

important in the possible phasing out of less energy-efficient and more polluting coal-fired

plants.

The Commission found that already before the transaction the choice of many HDGT

customers appeared to be limited to two or three options at most because of the (1) the highly

concentrated market structure, with only four full technology competitors, Alstom, GE,

MHPS and Siemens, (2) the high degree of product differentiation and (3) the high barriers to

entry. The Commission's investigation which, among other evidence, was based on a detailed

analysis of tenders over a five-year period, further showed that Alstom was, in particular in

Europe, an important HDGT competitor, and in both Europe and in the worldwide 50Hz

markets, a close competitor of GE for HDGTs. Therefore, further to the transaction,

customers would have suffered a significant reduction of choice, likely resulting in significant

price increases. Moreover, in the course of the Commission's investigation, Alstom emerged

as one of the most innovative OEMs in the HDGT market and, thus, the transaction would

also have significantly reduced innovation competition.

The commitments consisted in the divestment of the HDGT business of Alstom to the number

five player in the world, Ansaldo. The objective of the remedy is not only to guarantee the

continued availability of choice in the market for HDGTs, but also to replicate Alstom's

innovation capabilities. The divestiture therefore includes Alstom's technology for its most

advanced HDGTs, existing upgrades and pipeline technology for future upgrades, R&D

engineers, testing facilities, Alstom's servicing subsidiary PSM and servicing contracts for

some of the largest and most recent Alstom HDGTs.

The remainder of the transaction was cleared without commitments, as the Commission found

that GE's activities were largely complementary to Alstom's Grid and Renewables businesses

202

Case M.7278

General Electric/ALSTOM (Thermal Power — Renewable Power & Grid business),

Commission decision of 8 September 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7278

kom (2016) 0393 - Ingen titel

from a product and geographic point of view. The same applied to the coal-fired and nuclear-

related parts of Alstom's Thermal Power business.

State aid investigations in basic industries

Two notable State aid cases in manufacturing, in 2015 concerned measures (mostly loans)

provided by France as a part of an exceptional and temporary support package to help viable

intermediate–sized companies experiencing economic difficulties and undergoing collective

proceedings. The package was based on the French Economic and Social Development Fund

(FDES).

As regards the application of the FDES on 28 July, following an in-depth investigation, the

Commission approved EUR 125 million in restructuring aid to Kem One

203

. Kem One is a

French chlorochemicals and PVC producer which encountered severe financial difficulties

that led to the opening of a court-supervised administration procedure in March 2013. In July,

to help the company to survive, France notified a restructuring plan involving three types of

support measure: (i) a loan of EUR 30 million from the FDES, (ii) a grant of EUR 15 million

and (iii) repayable advances of EUR 80 million. During its in-depth investigation, the

Commission confirmed that the notified measures constituted State aid conferring an

economic advantage on Kem One because they had not been granted on the same terms as a

market operator would have required. However, the Commission found the aid to be

compatible with State aid rules for rescue and restructuring. In order to reach such conclusion

after having carefully examined the competitive situation in the increasingly concentrated

market for S-PVC in Europe, the Commission imposed three types of conditions: (i) the

freezing of Kem One’s current nominal production capacities of chlorine (and thus of PVC

for which chlorine is an essential input), (ii) to cap Kem One's expected market share on the

S-PVC market in northwest Europe, and (iii) an acquisition ban for Kem One and its

controlling shareholders on other businesses active on the same northwest European market as

Kem One. All conditions are limited in time and will be closely monitored in their market

context.

On 6 November, the Commission concluded

204

that a EUR 17.5 million loan as well as the

partial financing of the social plan through specific social measures, both granted by the

French State constituted incompatible State aid in favour of Mory-Ducros and its post-

insolvency successor Mory Global (both active in the market for supply of transport and

logistic services). Despite Mory-Ducros being the number two provider of logistic services in

France, artificially maintaining a failed business model (Mory-Ducros has been wound up and

Mory Global is currently facing a receivership procedure) would have prevented more

efficient competitors from growing and, over time, increased costs to customers. The French

State will have to claim recovery of the undue aid in the receivership procedure.

In addition, on 12 June, the Commission adopted a decision as regards the main Romanian

electricity generator Hidroelectrica, which is majority owned by the State. On 25 April, the

203

Case SA.38544

Dispositif exceptionnel et temporaire d'accompagnement des restructurations - KEM ONE

SAS,

Commission decision of 28 July 2015 available at.

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38544

204

Case SA.38545

Aide en faveur de Mory Ducros et Mory Global – prêt et mesures sociales,

Commission

decision of 6 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38545

kom (2016) 0393 - Ingen titel

Commission opened formal proceedings

205

in relation to sale of electricity by Hidroelectrica

to several industrial buyers (e.g. aluminium, steel, graphite electrode producers) at prices

allegedly set below market level. Following an in-depth investigation of market conditions

and prices in Romania, the Commission concluded that the contracts concluded by

Hidroelectrica with the alleged beneficiaries did not constitute State aid. By contrast, also

following an in-depth investigation, the Commission found that the contracts concluded by

Hidroelectrica with Electrocentrale Deva and Termoelectrica contained in years 2010 and

2011 preferential electricity tariffs in favour of the latter companies, and so constituted

incompatible State aid. Therefore, both beneficiaries (or their legal and economic successors)

were held liable to pay back the aid.

6. A

GRI

FOOD INDUSTRY

Overview of key challenges in the agricultural sector

EU agricultural markets have certain structural characteristics that contribute to create

difficult conditions for farmers placing them in a disadvantaged economic position in the food

chain. Agricultural producers tend to be highly atomised with many small holdings serving

the market, while their inputs suppliers and customers (processors, wholesalers and retailers)

are often much larger and more concentrated. Agricultural producers therefore typically have

very little bargaining power in their negotiations vis-à-vis large suppliers and buyers. In

addition, farmers face sustained and increased competition from non-EU producers.

To redress this situation, the 2013 Common Agricultural Policy reform, while maintaining the

application of competition laws to agriculture, set out derogations to antitrust rules for certain

agricultural sectors, in particular olive oil, beef and veal, and arable crops (cereals, oilseeds

etc.)

206

. The aim of these new rules is to increase the competitiveness and sustainability of EU

farmers (i.e. producers) in those sectors as well as strengthening their bargaining power vis-a-

vis their buyers, while preserving a market-oriented approach. The new rules allow joint

selling by producer organisations provided that the amounts sold remain at moderate levels in

the relevant market (15 % or 20 %), the producer organisation integrates other activities than

selling (for instance, storage or distribution) and that such integration between producers

creates significant efficiencies.

In November 2015, the Commission adopted new Guidelines on the application of Articles

169, 170 and 171 of

Regulation 1308/2013 establishing a Common Market Organisation for

agricultural products

(CMO Regulation) for the olive oil, beef and veal and arable crops

sectors

207

. The Guidelines are intended to ensure the new derogations are applied consistently,

helping farmers and other market operators to understand how to apply such derogations and

how to obtain efficiencies in joint activities. In addition, the Commission has set up a task

force of experts, whose mandate is to take a thorough look at the challenges faced in EU

agricultural markets.

205

Case SA.33451

Alleged preferential tariffs in contracts of Hidroelectrica SA with electricity traders,

Commission decision of 12 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33451

206

European Parliament and Council Regulation (EU) No 1308/2013 of 17 December 2013 establishing a

common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No

922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 available at

http://eur-

lex.europa.eu/legal-content/en/ALL/?uri=CELEX:32013R1308

207

Commission notice

Guidelines on the application of the specific rules set out in Articles 169, 170 and 171 of

the CMO Regulation for the olive oil, beef and veal and arable crops sectors,

OJ C 431, 22.12.2015, p.1

kom (2016) 0393 - Ingen titel

Contribution of EU competition policy to tackling the challenges

In light of the continuing difficult situation in several agricultural sectors, the Commission

continued its work throughout 2015 in order to address the main challenges arising out of the

supply chain, in particular the competitive position of the farmers and the practices of large

retailers and manufacturers. The sector faced particular difficulties in the spring and summer

of 2015. Dairy farmers and pork producers were strongly hit by a number of factors, including

weakening demand, increased production in all major producing regions (Europe, United

States, New Zealand and Australia), the Russian ban on agricultural products and ongoing

export bans linked with African swine fever in parts of the EU. As a consequence, prices fell

sharply due to a worsening of oversupply in the market.

Given these difficult market conditions, farmers demonstrated across France, Belgium and

other Member States throughout the summer against the low farm-gate prices. The protests

were largely targeted at retailers, arguing that price competition between retailers drives retail

prices down and that retailers are able to use their superior bargaining power to bring down

the price paid to farmers. In response to the summer's agricultural crisis, the Commission

focused on addressing the underlying structural issues in the market rather than adopting

"sticking-plaster" solutions. Many market operators responded to the low prices in the

agricultural sector by taking initiatives that favour national production. Such initiatives may

be incompatible with the goals of a single market for food products since they can hinder

imports from other Member States and raise concerns under competition rules. The

Commission intervened in several such cases, demonstrating its stance regarding conduct that

segments the market along national borders and ensuring that farmers in all Member States

have fair access to the market.

In early 2015, the Commission initiated an investigation into an agreement between the

French retailer, Carrefour, and the main French federation of vegetable growers, Les

Producteurs de Légumes de France (Légumes de France). The agreement aimed to restrict

most of Carrefour's procurement of certain seasonal vegetables in France to the members of

Légumes de France, excluding vegetable producers from other Member States from the

French market. The agreement, which was the first of its kind and was only limited to one

retailer (Carrefour), was renounced by the retailer after the Commission initiated its

investigation. The investigation was therefore closed without a finding of an infringement.

In the aftermath of the agricultural crisis in summer 2015, a number of market participants at

various levels of the supply chain in France and Belgium agreed on initiatives aiming at

improving the remuneration of producers of milk and pork. At the end of 2015 the

Commission started to collect information in order to assess complaints that the alleged

agreements could potentially restrict competition from farmers from other Member States

exporting their products to those national markets.

Prevention of parallel trade by food manufacturers and processors

The Commission has also been looking into consumer price differences among Member

States for identical food products. This is not in itself a breach of the EU competition rules,

and can be explained by several factors. First, there are regulatory factors including

differences in fiscal and labour market policies which differ across Member States. Shop

opening regulations can also in some cases limit competition and raise prices. Second,

product markets and supply chains operate differently in each Member State. For example,

consumers can have different purchasing powers and price sensitivity, and the levels of

competition at retail and wholesale levels differ between Member States.

kom (2016) 0393 - Ingen titel

However, these factors may only explain a part of retail price differences between Member

States. Another possible reason can be that suppliers can charge different prices in different

markets and prevent retailers from bringing products from lower-priced markets to higher-

priced markets. In 2015 the Commission started looking into instances of possible restrictions

by suppliers of the cross-border distribution of food products by retailers from one Member

State to another Member State (so-called "parallel trade").

Issues concerning modern retail

In October 2014 the Commission published its study,

The Economic Impact of Modern Retail

on Choice and Innovation in the EU Food Sector.

Throughout 2015, the Commission

conducted its follow up to the study, engaging with industry stakeholders to analyse the

results.

A key question raised by the study is the decrease in innovation and in particular whether the

position of retailers as both customers and competitors of brand manufacturers simultaneously

through their offer of Private Label (retailer own brand) products can be used to their

advantage, creating an uneven playing field in the wholesale market. Brand manufacturers

argue that certain retailer practices concerning their Private Labels reduces incentives to

innovate. As part of the follow-up to the study, in 2015 the Commission started looking into

whether such practices can reduce innovation available to consumers at the market level.

Merger investigations in the agri-food industry

DEMB/Mondelez/Charger Opco

In May, the Commission cleared, subject to remedies

208

, the creation of a joint venture

between Mondelēz (United States) and DEMB (Netherlands) - two of the world's leading

manufacturers of branded coffee products available on retailers' shelves. In addition to

investigating traditional Roast and Ground (‘R&G’) and instant coffee products, the

Commission also took a close look at the effects of the transaction in respect of innovative

single-serve coffee products. Mondelēz produces and markets T-discs, which are consumables

for the Tassimo single-serve machines, while DEMB manufactures and sells filter pads,

which are consumables for Senseo single-serve machines. Due to IPR protection, T-discs can

only be manufactured by Mondelēz whilst all coffee companies (including Mondelēz) and

retailers can manufacture filter pads in competition with DEMB. Although neither Mondelēz

nor DEMB manufactures and sells single-serve machines (this is done by their partners Bosch

and Philips), they are able, and have the incentive, to influence the prices of these machines

by using coupons, cash-backs and other promotional levers to increase sales, and thus

penetration, of these systems.

The Commission conducted an in-depth investigation on whether the combination of Senseo

and Tassimo would lead to higher prices and less innovation. Ultimately, the Commission

concluded that due to the dynamic and growing nature of single-serve coffee machines and

their consumables, the joint venture would have no incentives to raise prices of the Senseo

and Tassimo machines through reduced subsidies. On the contrary, the incentive would be to

increase penetration of the machines in order to ensure continued and increased sales of

corresponding filter pads and T-discs, which is where the joint venture would make its profits.

208

Case M.7292

DEMB/Mondelēz/Charger OpCo,

Commission decision of 5 May 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7292

kom (2016) 0393 - Ingen titel

Competitive pressure from Nestlé, which owns the other two single-serve systems – Dolce

Gusto and Nespresso, was also taken into account.

The Commission did raise concerns in respect of the combination of leading consumer brands

in R&G coffee in France, Denmark and Latvia as well as in the filter pads (compatible with

the Senseo system) markets in Austria and France. To alleviate these concerns, the parties

sold their Carte Noire and Merrild businesses and, in Austria, granted a licence for the Senseo

brand, to Lavazza.

State aid enforcement in the agricultural and forestry sectors and rural areas

In 2014 the Commission adopted a block exemption regulation

209

and Guidelines on State

aids in the agricultural and forestry sectors and rural areas

210

as part of the SAM initiative. In

2015, the Commission dealt with more than 700 cases in these fields, about 90 % of which

were block exemptions. Many of the cases related to the rural development measures

providing State aid clearance for the implementation of Rural Development programs of the

Member States. Thus, it contributed to the growth in the rural economy and the improvement

of the business and living conditions in the rural areas.

7. P

HARMACEUTICAL AND HEALTH SERVICES SECTOR

Overview of key challenges in the sector

A key feature of the pharmaceutical and health services sector in the EU is the high degree of

regulation at Member State level which leads to significant national variations of medicine

pricing and wholesale and pharmacy margins. Nevertheless, EU competition policy in this

sector can contribute to promoting innovation, R&D and growth while providing access to

cheaper medicines for European citizens.

The legislative framework, including the patent system, has a special significance in allowing

pharmaceutical companies to reap the benefits of their successful R&D activities. Upon the

expiry of data exclusivity and patent protection, generic and bio-similar companies typically

enter the market with much lower priced versions of the originator's product. Generic entry

therefore contributes to cost-containment. Competition by generics is also a dynamic force

that incentivises originator companies to continue investing in R&D to bring innovative

medicines to the market. Competition in innovation is also crucial between originator

medicines, particularly during the period when these medicines are protected by data

exclusivity and/or patents. EU competition policy aims to protect European citizens from anti-

competitive practices of pharmaceutical companies in order to support innovation and

facilitate access to cheaper medicines

211

209

Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the

agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles

107 and 108 of the Treaty on the Functioning of the European Union European Parliament, OJ L 193, p.1.

210

Commission notice

Guidelines on State aids in the agricultural and forestry sectors and rural areas,

OJ C

204, 1.7.2014, p.1.

211

For more information regarding market features of the pharmaceutical sector, see

Executive Summary of the

Report on the pharmaceutical sector inquiry

of 8 July 2009 available at

http://ec.europa.eu/competition/sectors/

pharmaceuticals/inquiry/communication_en.pdf

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Contribution of EU competition policy to tackling the challenges

In 2015, the Commission published the non-confidential version of its decisions in the

Lundbeck

212

Fentanyl

213

and Servier

214

investigations, which provide a detailed legal and

economic analysis of agreements between originator and generic pharmaceutical companies

that delayed the market entry of cheaper generic medicines. Such practices were deemed to

harm patients, national health systems and taxpayers because prices for the originator

medicines could remain artificially high. In the Servier case, the Commission also assessed an

abuse of dominance by Servier which consisted in using methods others than those of

competition on the merits to delay and prevent generic entry. While the Lundbeck and Servier

decisions are under appeal, a fourth investigation by the Commission in relation to the market

entry of generic

modafinil

(sleeping disorder medicine) in the EEA is currently ongoing

215

Pay-for-delay deals have also been investigated by national competition authorities and

courts. For example, in France, the Paris Court of Appeal has rejected Reckitt Benckiser's

appeal of the French Competition Authority's decision to fine Reckitt Benckiser for its

agreement with Schering-Plough to delay the entry of generic

subutex

(anti-heroin addiction

medicine)

216

. The Commission continued monitoring patent settlements between originator

and generic companies. The sixth report published on 2 December 2015 confirmed the

continued use of settlement agreements which reached 76 in total in 2014, the year covered by

the sixth monitoring exercise. The portion of B.II settlements (i.e. those containing a

limitation on generic entry and a value transfer from the originator to the generic company)

remained low, constituting 12 % of all settlements concluded in 2014

217

Recent enforcement trends

Merger enforcement practice focused on innovation and investments as important competitive

dimensions

The Commission's enforcement practice in 2015 shows, that the likely impact on innovation

and investment plays an important role in the Commission's assessment of mergers.

In March, the Commission conditionally approved the acquisition of Biomet Inc. by Zimmer

Holdings Inc.

218

, both companies producing orthopaedic implants and related surgical

products. The Commission had concerns that the merger could have resulted in price increase

for a number of orthopaedic implants in the EEA. Therefore, the Commission made its

clearance decision conditional upon Zimmer divesting its knee implant business across the

EEA and its system for primary and revision implants in Denmark and Sweden, granting non-

exclusive licenses to the rights and know-how currently used and needed to manufacture,

market and sell an identical knee implant (including appropriate intellectual property,

212

Case AT.39226

Lundbeck,

Commission decision of 19 June 2013 available at

http://ec.europa.eu/competition/antitrust/cases/dec_docs/39226/39226_8310_11.pdf

213

Case AT.39685

Fentanyl,

Commission decision of 10 December 2013 available at

http://ec.europa.eu/competition/antitrust/cases/dec_docs/39685/39685_1976_7.pdf

214

Case AT.39612

Perindopril (Servier),

Commission decision of 9 July 2014 available at

http://ec.europa.eu/competition/antitrust/cases/dec_docs/39612/39612_11972_5.pdf

215

Case AT.39686

Cephalon.

For further information see IP/11/511 of 28 April 2011 available at

http://europa.eu/rapid/press-release_IP-11-511_en.htm?locale=fr

216

For more information see

http://www.autoritedelaconcurrence.fr/doc/ca_subutex_13d21.pdf

217

For more information on the 6

monitoring exercise see

http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/patent_settlements_report6_en.pdf

218

Case M.7265

Zimmer / Biomet,

Commission decision of 30 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7265

kom (2016) 0393 - Ingen titel

technology and know-how) and a transitional period to supply the divestment businesses'

product lines at reasonable conditions. This remedy will preserve the future competition and

innovation in orthopaedic implants and related surgical products.

The proposed acquisition of Hospira by Pfizer, both players in the pharmaceutical industry,

concerned bio-similar medicines. Bio-similar medicines are those that have the same

therapeutic mechanism as originator's biological medicine, which may be patented, but are

expected to significantly lower prices for patients. Similarly to what has been the case for

mergers between originators and generic businesses, the Commission found that following the

merger, Pfizer would be likely to either delay or discontinue the development of its own bio-

similar medicine in order to focus on Hospira's product, leading to the net loss of future

competition. Therefore, the Commission made its clearance decision of 4 August

219

conditional upon Pfizer fully divesting the development, manufacturing and EEA-wide

marketing rights of its relevant bio-similar medicine currently under development (including

appropriate intellectual property, technology and know-how). This remedy will preserve

future innovation in bio-similar medicines.

The consolidation trend affecting the pharmaceutical industry continued over the course of

2015, and the Commission had adopted 15 decisions covering the sector by the end of the

year, with more to come in 2016. In the four cases which raised competition concerns

(Novartis

/ GSK Oncology

220

GSK / Novartis Vaccines and Consumer Health

221

Mylan /

Abbott-EPD-DM

222

and

Pfizer / Hospira

223

); the transaction was cleared subject to remedies,

following a phase I investigation. This illustrates the Commission's ability to clear complex

cases, often involving novel product markets in a challenging industry, without opening in-

depth investigations.

The main change in the Commission's practice regarding pharmaceutical mergers is the

deepening of its impact assessment on innovation competition, including for medicines that

are yet to be approved. In

Novartis / GSK Oncology,

the Commission extended its analysis of

pipeline pharmaceutical products beyond those that are in advanced stages of development, in

order to fully assess the impact of the merger on clinical research programs. The Commission

found that the acquisition of GlaxoSmithKline's oncology business by Novartis entailed the

risk that Novartis would likely stop developing two innovative medicines that show great

promise for the treatment of skin cancer, because Novartis would acquire similar medicines

from GlaxoSmithKline. Therefore, the Commission insisted on remedies which ensured

effective competition in the development of medicines against cancer post transaction and

made its clearance decision of January conditional upon compliance of the merged entity with

those remedies

224

. In

Pfizer / Hospira,

the Commission investigated markets for bio-similar

medicines, and found that they present some features that distinguish them from markets for

219

Case M.7559

Pfizer / Hospira,

Commission decision of 4 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7559

220

Case M.7275

Novartis / GlaxoSmithKline Oncology Business,

Commission decision of 28 January 2015

available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7275_20150128_20212_4158734_EN.pdf

221

Case M.7276

GlaxoSmithKline / Novartis Vaccines Business (excl. Influenza) / Novartis Consumer Health

Business,

Commission decision of 28 January 2015 available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7276_3115_2.pdf

222

Case M.7379

Mylan / Abbott EPD-DM,

Commission decision of 28 January 2015 available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7379_2336_2.pdf

223

Case M.7559

Pfizer / Hospira,

Commission decision of 4 August 2015 available at

http://ec.europa.eu/competition/mergers/cases/decisions/m7559_20150804_20212_4504355_EN.pdf

224

Case M.7275

Novartis / GlaxoSmithKline's oncology business,

Commission decision of 28 January 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7559

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generics medicines. This led to the divestment of a bio-similar medicine that was still under

development.

Accordingly, the Commission's assessment of pharmaceutical mergers to ensure not only that

a healthy price competition is maintained for the benefit of payers and healthcare services, but

also that research and development efforts are not diminished for the benefit of patients and

healthcare providers.

State aid actions in the health services sector

The Commission's State aid actions in the health services sector mainly concern hospitals,

related services (such as ambulance transport and medical laboratories) and health insurance.

The Commission decision of 20 December 2011 (based on Article 106(2) TFEU

225

) specifies

the conditions under which compensation to companies for providing public services is

compatible with the EU State aid rules and does not have to be notified to the Commission in

advance. Compensation granted to hospitals, including emergency services and ancillary

services, for services of general economic interest, benefits from the decision irrespective of

the amounts involved provided that the conditions are met. Accordingly, the Commission

very rarely takes decisions on financing covered by this exemption decision.

During 2015, the Commission continued examining a number of complaints lodged by private

health service providers about their allegedly unfair treatment or potentially excessive

compensation of publicly-owned hospitals. Those complaints usually came from operators in

Member States with healthcare markets more open to competition (e.g. Belgium, France, and

Germany

226

). On 29 April, as part of a larger package of cases, the Commission adopted three

decisions concerning small-scale public support for specific health service providers, finding

that in all three cases the particular circumstances were such that the measure in question had

no effect on trade and thus did not constitute State aid

227

8. T

RANSPORT AND POSTAL SERVICES

Overview of key challenges in the sector

Towards a competitive and innovate European industry

The transport and postal services sectors account for about 4.9 % of the EU economy

228

, and

their performance can have many beneficial effects for other sectors of the European

225

Commission decision of 20 December on the application of Article 106(2) of the Treaty on the Functioning of

the European Union to State aid in the form of public service compensation granted to certain undertakings

entrusted the with operation of services of general economic interest, OJ L 7, 11.1.2012, p.3.

226

In 2014 the Commission opened the formal investigation procedure in one of these cases, and the

investigation continued throughout 2015. See Case SA.19864

Public financing of Brussels public IRIS hospitals,

Commission decision of 1 October 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_19864

227

Cases SA.37432

Funding to public hospitals in the Hradec Králové Region,

Commission decision of 29 April

2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37432;

SA.37904

Alleged State aid to medical centre in Durmersheim,

Commission decision of 29 April 2015 available

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37904

and SA.38035

Alleged

aid to a specialised rehabilitation clinic for orthopaedic medicine and trauma surgery,

Commission decision of

29 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38035

228

See,

EU transport in figures Statistical pocketbook

(2015) available at

http://ec.europa.eu/transport/facts-

fundings/statistics/doc/2015/pocketbook2015.pdf,

p.19, prepared by the Commission with around € 562 billion

in Gross Value Added (GVA) at basic prices, the transport and storage services sector (including postal and

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economy. In 2015, the emphasis was on how competition tools can help improve performance

in these sectors, especially through innovation and improvements to infrastructure.

Contribution of EU competition policy to tackling the challenges

Antitrust enforcement in air transport

The Commission continued its work on the transatlantic airline alliances.

In May, it adopted a decision

229

accepting commitments offered by SkyTeam alliance

members Air France/KLM, Alitalia and Delta on three transatlantic routes. These

commitments related to agreements these members signed in 2009 and 2010, establishing a

transatlantic joint venture. The Commission had concerns that the extensive cooperation

between the parties, involving profit-sharing and the joint management of schedules, pricing

and capacity, might result in higher prices for premium passengers on the Paris-New York

route and for all passengers on the Amsterdam-New York and Rome-New York routes. In this

context the Commission initially concluded that the competition between the parties to the

joint venture was unlikely to be replaced by competition from existing competitors or from

likely, timely and sufficient new entry or expansion, because there are significant barriers to

entry and expansion in these markets.

The commitment package seeks to address this problem by making landing and take-off slots

available to new competitors thus facilitating entry on these routes. The parties also offered to

enter into agreements allowing competitors to get better access to the parties' connecting

traffic. The commitment package is legally binding on these airlines for 10 years.

As a result, the Commission concluded its investigation of the three transatlantic airline joint

venture agreements within the major global alliances (Oneworld; Star; SkyTeam), which

contributes towards a genuine level playing field in transatlantic aviation markets. The

Commission adopted commitment decisions in the

Oneworld case

230

and in the

Star Alliance

case

231

respectively in July 2010 and May 2013.

Merger review in air transport

The air transport sector is still very fragmented. In the EU there are more than 150 airlines

offering scheduled air passenger transport. The five largest airlines in the EU (i.e. Lufthansa,

AirFrance/KLM and International Consolidated Airlines Group (IAG, the holding company

of British Airways and Iberia), Ryanair and EasyJet) account for only 50 % of the EU market.

In contrast, in the United States, the three legacy carrier groups American Airlines, Delta and

United together with low cost carrier Southwest jointly control more than 80 % of the United

States market. The drive towards further consolidation of the EU market in 2015 was lessened

by low fuel costs which had a positive impact on airline profitability.

courier activities) accounted for about 4.9 % of total GVA in the EU-28 in 2012 (or 4.4 % excluding postal and

courier services).

229

Case AT.39964

Air France-KLM/Delta/Alitalia,

Commission decision of 12 May 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39964

230

Case AT.39596

BritishAirways/AmericanAirlines/Iberia,

Commission decision of 14 July 2010

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39596

231

Case AT.39595

Continental/United/Lufthansa/AirCanada,

Commission decision of 23 May 2013

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39595

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In this context the Commission reviewed the acquisition of the Irish carrier Aer Lingus by

IAG

232

. The Commission's investigation indicated that the merger would raise two types of

competition concerns. Firstly, on certain routes where both the airlines operated there would

not be sufficient competition. Secondly, the choices of airlines available for connecting long-

haul flights would have decreased if Aer Lingus were to connect only to long-haul flights

operated by IAG and vice versa - especially considering that before the merger Aer Lingus

had agreements with a number of third-party carriers to bring passengers to their hubs for

certain long-haul flights. Consequently, the transaction was cleared subject to (i) the release

of five slots at London Gatwick Airport to entice new entrants on the Dublin-London and

Belfast-London routes and (ii) IAG entering into agreements with competing airlines which

operate long-haul flights out of London Heathrow, London Gatwick, Manchester,

Amsterdam, Shannon and Dublin, so that Aer Lingus will continue to provide these airlines

with connecting passengers. Passengers will therefore continue to have a choice of using other

airlines than IAG when connecting at these airports, for instance when on routes such as

Heathrow–New York, Gatwick–Las Vegas, Manchester–Orlando, Shannon–Chicago or

Dublin–Chicago.

Rescue and restructuring aid in air transport

In 2015, the Commission adopted two negative decisions closing in-depth investigations

concerning aid to Cyprus Airways and Estonian Air

233

. The Commission concluded that

repeated public support granted by Cyprus and Estonia over many years to their ailing

national flag carriers breached EU State aid rules, in particular the so called "one time, last

time principle" providing that rescue and restructuring aid can be granted only once in a 10-

year period. Furthermore, both airlines did not have credible restructuring plans capable of

ensuring their long-term viability without continued State support. Cyprus Airways also did

not provide a sufficient own contribution to the restructuring costs while Estonian Air did not

offer sufficient measures to limit the distortions of competition caused by the aid.

Consequently, the Commission ordered Cyprus and Estonia to recover the incompatible aid

received by the airlines of around EUR 65 million and EUR 85 million, respectively. In

addition, it continued to monitor the implementation of previously approved restructuring aid,

notably to Adria Airways, airBaltic, Air Malta and LOT Polish Airlines.

State aid to airports and airlines

2015 was the first full year of application of the Guidelines on State aid to airports and

airlines, which entered into force on 4 April 2014

234

. Following the previous year's

introduction of the guidelines, and the adoption of a large number of decisions on long-

232

Case M.7541

IAG / AerLingus,

Commission decision of 14 July 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7541

233

Cases SA.35888

Rescue aid for Cyprus Airways (Public) Ltd,

Commission decision of 9 January 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35888;

SA.37220

Restructuring aid for Cyprus Airways (Public) Ltd,

Commission decision of 9 January 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_37220;

SA.38225

Training aid

for Cyprus Airways,

Commission decision of 9 January 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38225;

SA.35956

Rescue aid to

Estonian Air,

Commission decision of 6 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35956

and SA.36868

Restructuring aid to Estonian Air,

Commission decision of 6 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_36868

For further information

see IP/15/6023 of 7 November 2015 available at

http://europa.eu/rapid/press-release_IP-15-6023_en.htm.

234

Communication from the Commission,

Guidelines on State aid to airports and airlines,

OJ C 99, 4.4.2014, p.

3 available at

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2014.099.01.0003.01.ENG

kom (2016) 0393 - Ingen titel

running investigations, 2015 was a rather more balanced year, for developing the new

approach that the guidelines set out.

In this regard, the first national schemes to be adopted under the new guidelines aim to serve

as a model of how the different categories of aid that can be authorised in the airports and

airlines sector can be applied. In particular, France was authorised to have three separate

national schemes (investment aid, operating aid for airport infrastructure

235

, and "start-up" aid

for airlines operating from regional airports)

236

. The United Kingdom also had a national

start-up aid scheme authorised

237

, and Ireland had a national scheme covering investment and

operating aid for airport infrastructure authorised

238

The guidelines make it clear that both the Commission and Member States can achieve a

lower administration burden by using schemes in this sector. However, decisions were also

taken throughout the year on individual airports, either when such airports could not be

covered by a national scheme, or when the Member State concerned had so far not put such a

scheme into place

239

The application of the guidelines was also consolidated by opening of new investigations,

notably two investigations were opened on the same day concerning two Romanian airports in

relatively close proximity, as well as the airlines that operate from those airports

240

As an expected consequence of the very active 2014, a number of appeals were lodged in

2015 in the General Court by various parties against decisions taken in 2014, in particular

against the negative decisions ordering the recovery of aid for airlines or airports. The

Commission has begun its work to defend these decisions.

Maritime transport

On State aid control, the emphasis in 2015 was on ensuring continued compliance with the

Maritime State aid guidelines

241

. The most important decision in this respect requested

Cases SA.38937

Régime d'aide à l'investissement des petits et moyens aéroports,

Commission decision of 8

April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38937

and SA.38938

Régime d'aide au démarrage des compagnies aériennes,

Commission decision of 8 April 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38938

236

Case SA.38936

Régime d'aide à l'exploitation des petits et moyens aéroports,

Commission decision of 8

April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38936

237

Case SA.39466

Start-up aid to airlines operating in the United Kingdom,

Commission decision of 31 July

2015 available at

http://ec.europa.eu/competition/state_aid/cases/258034/258034_1678164_84_3.pdf

238

Case SA.39757

Ireland support scheme for aid for regional airports,

Commission decision of 31 July 2015

available at

http://ec.europa.eu/competition/state_aid/cases/258116/258116_1676549_114_2.pdf

239

For example, cases SA.39315

Tallinn Airport airside area development project,

Commission decision of 10

November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39315,

and SA.40433

Investitionsprogramm Flughafen Klagenfurt,

Commission decision of 6 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_40433.

240

Cases SA.32963

State aid to Wizz Air and Cluj-Napoca Airport,

Commission decision of 31 July 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_32963

and

SA.33769

Alleged aid to Târgu Mureş Transilvania Airport, Wizz Air, Ryanair and other airlines,

Commission

decision of 31 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33769

241

Commission Communication C (2004) 43

Community guidelines on State aid to maritime transport,

OJ C 13,

17.01.2004, p.3.

235

kom (2016) 0393 - Ingen titel

appropriate measures regarding the existing Greek tonnage tax scheme

242

. Greece was

requested to exclude from preferential tax treatment shareholders of shipping companies and

wider maritime cluster companies (including insurance intermediaries). Similarly, Greece was

asked to ensure that its shipping companies respect the obligation to keep or increase the

share of the fleet under EU/EEA flags. The Commission also adopted final decisions in the

French tonnage tax case, which concentrated on enforcing rules on time chartered fleet and

the flag link

243

. More generally, in 2015 the Commission paid specific attention that maritime

aid schemes, including the tonnage tax notifications that it handled

244

, excluded ship lessors,

and that the maximum aid ceiling of the guidelines was not exceeded through e.g. transitional

arrangements related to the switch from profit taxation to tonnage taxation.

In 2015, the Commission accepted start-up State aid to a new Franco-Spanish short-sea

shipping route between Algeciras/Vigo and Havre/Nantes-Saint Nazaire, enabling a freight

traffic shift from road to sea

245

In terms of merger review, maritime transport can be roughly divided into three segments: (i)

transport on inland waterways (rivers, canals and lakes, etc.); (ii) deep-sea shipping

(intercontinental); and (iii) short-sea shipping (between ports in the EU and other European

ports on the Mediterranean or Black Sea).

Short-sea shipping plays a major role for many EU industries, which rely on it for their

deliveries; for instance 58 % of total EU maritime transport of goods happened via short-sea

shipping in 2013

246

. On certain routes short-sea shipping competes (or in some cases

complements) multi-modal transport services such as rail and road transportation. The short-

sea shipping sector enjoys healthy competition and low barriers to entry. Indeed when in June

2015 the Commission reviewed the acquisition of Oldenburg-Portugiesische Dampfschiffs-

Rhederei (OPDR) of Germany by CMA CGM of France

247

it concluded that the acquisition

would raise no competition concerns given the low switching costs for customers, who can

also use alternative means of transport such as road or rail, and given the low barriers for

competitors to enter or expand their services by adding new ships or new ports of call.

State aid enforcement in port infrastructure

Under the current legal framework, where there are no specific instruments regarding State

aid to ports, the Commission assesses notifications and complaints in the field of aid for port

infrastructure directly under Articles 107(3)(c) TFEU or 93 TFEU depending on the type of

242

Case SA.33828 (2012/E)

Greek tonnage tax scheme and other State measure in favour of shipping

companies,

Commission decision of 18 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33828

243

Case SA.14551

Taxation au tonnage,

Commission decision of 4 February 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_14551

244

Cases SA.37912

Croatia - Tonnage Tax Scheme,

Commission decision of 1 April 2015 available at

http://ec.europa.eu/competition/state_aid/cases/251015/251015_1667829_98_2.pdf

and SA.38085

Italy -

Prolongation of the tonnage tax scheme,

Commission decision of 13 April 2015 available at

http://ec.europa.eu/competition/state_aid/cases/251318/251318_1667835_99_2.pdf

245

Cases SA.41620 and SA.41651

Start-up aid for motorway of the sea between ports of Algeciras y Vigo in

Spain and ports of Havre and Nantes-Saint Nazaire,

Commission decisions of 17 September 2015 available at

http://ec.europa.eu/competition/state_aid/cases/258208/258208_1699829_86_2.pdf

and

http://ec.europa.eu/competition/state_aid/cases/258252/258252_1699831_91_2.pdf

246

Eurostat Statistics Explained,

Maritime transport statistics – short sea shipping of goods

(April 2015)

available at

http://ec.europa.eu/eurostat/statistics-explained/index.php/Maritime_transport_statistics_-

_short_sea_shipping_of_goods.

247

Case M.7523

CMA CGM / OPDR,

Commission decision of 29 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7523.

kom (2016) 0393 - Ingen titel

port (seaport or inland). In 2015, the Commission continued its case-by-case approach and

adopted 16 decisions on State aid for port infrastructure, which have clarified a number of

important points

248

. In particular, the Commission found that public funding of EUR 270

million to build a new cross-Channel terminal in the Port of Calais was in line with EU State

aid rules

249

. The new infrastructure furthers EU transport policy objectives without unduly

distorting competition in the internal market. In addition, with the decisions in the

Lauwersoog

250

and Maasholm

251

cases, the Commission clarified that in some circumstances

a potential effect on competition and trade may be excluded. The Commission also confirmed

that the construction of access infrastructure to ports (e.g. public roads, rail connections,

utilities etc.) which is made available free of charge to all users and is thus not commercially

exploitable, may be regarded as non-economic, if it is not specifically dedicated to

commercially exploited port infrastructure

252

248

Cases SA.39403

Investment in the port of Lauwersoog,

Commission decision of 29 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39403;

SA.39637

Cruise Ship

Terminal in Wismar,

Commission decision of 30 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39637;

SA.39608

Sea port

extension Wismar,

Commission decision of 30 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39608;

SA.39542

Dredging and

disposal of dredged materials in the Port of Tarant,

Commission decision of 19 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39542;

SA.39688

Port of

Calais,

Commission decision of 2 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39688;

SA.41865

Extension of

the Port of Sassnitz,

Commission decision of 13 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_41865;

SA.40838

Modification

to the public support measures for the Port of Ventspils,

Commission decision of 22 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_40838;

SA.41275

Port of

Mohacs,

Commission decision of 18 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_41275;

SA.39177

The

Intermodal development of the Port of Baja,

Commission decision of 21 August 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39177;

SA.42219

Refurbishment of the Schuhmacher-quay in the port of Maasholm,

Commission decision of 24 November 2015

available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_42219;

SA.42538

Dredging in the Port of Ventspils,

Commission decision of 25 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_42538;

SA.43250

Cruise ship

terminal Porto de Leixões,

Commission decision of 26 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_43250;

SA.41734

Dredging of

Port of Liepaja,

Commission decision of 30 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_41734;

SA.39232

Port of

Mykonos,

Commission decision of 2 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39232;

SA.43376

Port of

Rostock,

Commission decision of 16 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_43376

and SA.28876

Piraeus

Container Terminal,

Commission decision of 23 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_28876

249

Case SA.39688

Port of Calais,

Commission decision of 2 July 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39688

250

Case SA.39403

Investment in the port of Lauwersoog,

Commission decision of 29 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39403

251

Case SA.42219

Refurbishment of the Schuhmacher-quay in the port of Maasholm,

Commission decision of

18 June 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_42219

252

Case SA.39637

Cruise Ship Terminal in Wismar,

Commission decision of 30 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39637

and SA.39608

Sea port

extension Wismar

Commission decision of 30 April 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39608

kom (2016) 0393 - Ingen titel

Moreover, the Commission adopted a negative final decision as regards certain fiscal benefits

granted by Greece in favour to port operator Piraeus Container Terminal S.A. and required

recovery of the unjustified advantage to the Greek State

253

Antitrust enforcement in the rail sector

On 5 January, the Commission sent a Statement of Objections to the Lithuanian railway

incumbent AB Lietuvos Geležinkeliai

254

in which it informed this company that it may have

breached competition rules by removing a railway track connecting Lithuania with Latvia.

The Commission is concerned that removing this track may have impeded customers from

switching to other rail operators for transporting freight between Lithuania and Latvia. The

Commission's investigation continues.

Rail and intermodal State aid enforcement

In 2015, the Commission approved a number of schemes supporting rail and intermodal

transport, which aim to support the transfer of cargo from the road to the safer and more

environmentally friendly rail transport mode

255

. The Commission also approved the financing

of the Fehmarn Belt fixed rail-road link

256

, a key element for completing the main north-south

route connecting central Europe and the Nordic countries. The costs of this project are

estimated to be EUR 8.7 billion, part of which is funded by the EU through the Connecting

Europe Facility

257

. The Commission approved this financing, as it was in line with State aid

rules since the funding promotes the execution of an important project of common interest.

The tunnel will be approximately 19 kilometres long and will consist of an electrified, double-

track railway and a four-lane motorway with emergency lanes.

During 2015, the Commission closely followed the negotiations in the Council concerning the

fourth railway package. This bundle of legislation should help further open up the railway

sector to competition.

Merger review in the rail sector

Rail passenger transport in the EU has been on an upward trend since 2010

258

and over the

last decade the share of rail passengers using high speed trains has also been growing;

253

Case SA.28876

Pireaus Container Terminal,

Commission decision of 23 March 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_28876

254

Case AT.39595

Baltic rail transport.

For further information see IP/15/2940 of 5 January 2015 available at

http://europa.eu/rapid/press-release_IP-15-2940_en.htm

255

See for example Cases SA.38229

Régime d'aides luxembourgeoises au transport combiné,

Commission

decision of 3 June 2015 available at

http://ec.europa.eu/competition/state_aid/cases/251592/251592_1663755_60_2.pdf;

SA.39883

State aid scheme

for RO-LA combined transport,

Commission decision of 22 April 2015 available at

http://ec.europa.eu/competition/state_aid/cases/255363/255363_1660684_121_2.pdf;

SA.39606 and SA.40404

Régime d'aide transitoire au service transitoire d'autoroute ferroviaire alpine,

Commission decisions of 26 May

2015 not yet published; SA.41100

Special Guidelines for the Programme of Aid for Innovative Combined

Transport for 2015-2020,

Commission decision of 11 August 2015 available at

http://ec.europa.eu/competition/state_aid/cases/257224/257224_1695429_150_2.pdf

and SA.41472

Prolongation of a scheme to operate scheduled services of combined transport of goods,

Commission decision

of 9 July 2015 available at

http://ec.europa.eu/competition/state_aid/cases/257959/257959_1695341_91_2.pdf

256

Case SA.39078

Financing of the Fehmarn Belt Fixed Link project,

Commission decision of 23 July 2015

available at

http://ec.europa.eu/competition/state_aid/cases/256101/256101_1677572_164_2.pdf

257

For further information see IP/15/5433 of 23 July 2015 available at

http://europa.eu/rapid/press-release_IP-

15-5433_en.htm

258

Eurostat Statistics Explained,

Railway passenger transport statistics – quarterly and annual data

(December

2015) available at

kom (2016) 0393 - Ingen titel

similarly, investments in infrastructure such as high speed train tracks has been constantly

expanding

259

. The fourth railway package aims to provide non-discriminatory access to the

EU rail network

260

. In this context, the Commission cleared the acquisition of sole control of

Eurostar by the French rail operator SNCF subject to commitments designed to facilitate the

entry of new rail operators onto the London-Brussels and London-Paris routes

261

. The

Commission was concerned that the deal as originally notified might hinder the entry of

competitors on these routes, mainly as regards access to stations in France and Belgium and to

maintenance centres in France, Belgium and the United Kingdom.

State aid review in the road sector

The Commission continued to enforce Regulation (EC) No 1370/2007 on public passenger

transport services

262

. In two cases, the Commission took a negative decision on retroactive

public service compensations awarded by judgments of Italy's

Consiglio di Stato

(Council of

State)

263

. In one similar case the Commission opened a formal investigation procedure against

Italy

264

. This was a continuation of a series of cases following the so-called

Simet

case

265

In addition, the Commission initiated a formal investigation procedure with respect to a set of

measures implemented by a public bus company in Finland, raising concerns that the public

authorities had acted as a private market investor would have done

266

Continuing to apply the new rules ensuring the viability of SGEIs and fair competition across

the single market in postal services

The postal sector continues to evolve and traditional letter delivery, against the backdrop of

electronic substitution, remains on a declining trajectory. Nevertheless, postal services have

retained a very significant economic and social value. In a shrinking market of traditional

letter delivery, many postal incumbents are being forced to diversify the portfolio of their

activities and innovate in order to stay competitive. At the same time, the explosive growth of

e-commerce necessitates a well-functioning parcel delivery market linking buyers and sellers.

Efficient postal services are thus a key factor in allowing e-commerce to realise its potential in

propelling growth and creating jobs.

http://ec.europa.eu/eurostat/statistics-explained/index.php/Railway_passenger_transport_statistics_-

_quarterly_and_annual_data

259

See,

EU transport in figures Statistical pocketbook

(2015) available at

http://ec.europa.eu/transport/facts-

fundings/statistics/doc/2015/pocketbook2015.pdf,

p.19, prepared by the Commission.

260

See, European Council press release 709/15 of 8 October 2015 available at

http://www.consilium.europa.eu/en/press/press-releases/2015/10/08-railway-market-opening-and-governance/

261

Case M.7449

SNCF Mobilities/Eurostar International Limited,

Commission decision of 13 May 2015. For

further information see IP/15/4976 of 13 May 2015 available at

http://europa.eu/rapid/press-release_IP-15-

4976_en.htm

262

Regulation (EC) No 1370/2007 of the European Parliament and the Council of 23 October 2007 on public

passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and

1107/70, OJ L 315, 3.12.2007, p. 1.

263

Cases SA.35842

PSO compensation for CST,

Commission decision of 19 January 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35842

and SA.35843

PSO

compensation for Buonotourist,

Commission decision of 19 January 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35843

264

Case SA.38132

PSO compensation to ARFEA,

Commission decision of 23 February 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38132

265

For further information see IP/13/902 of 2 October 2013 available at

http://europa.eu/rapid/press-release_IP-

13-902_fr.htm

266

Case SA.33846

Helsingin Bussiliikenne Oy,

Commission decision of 16 January 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33846

kom (2016) 0393 - Ingen titel

Through State aid control in the postal sector, the Commission pursues multiple related goals.

First, State aid control ensures that where a postal service provider – typically a postal

incumbent – is entrusted with a costly public service obligation, any compensation paid to the

provider does not undermine a level playing field between postal incumbents and new

entrants. State aid should not relieve recipients of competitive pressures and market

developments incentivising efficiency, propelling innovation and promoting investment.

Second, where compensation for public service obligation is not funded directly from the

State budget, but from contributions collected by all postal operators (a "compensation fund"),

the Commission ensures that the contribution mechanism is designed in a way that does not

disincentivise market entry and expansion of new entrants. Three examples can illustrate how

the Commission strives to achieve both goals:

First, on 19 March, the Commission approved United Kingdom plans to grant GBP 640

million to the UK Post Offices Ltd for delivering a range of public services over three

years

267

. In this case the Commission assessment showed that the compensation to Post

Offices Ltd, paid directly from the State budget, was designed to ensure that it would not

exceed the cost of the public service obligation. In particular, the payment depended on Post

Offices Ltd reaching certain annual milestones, giving Post Offices Ltd a strong incentive to

be efficient in providing the public services.

Secondly, on 26 November, the Commission approved compensation granted by Poland to

Polish Post for the delivery of the universal postal service in 2013-15

268

. In this case, the

compensation was partly funded from a compensation fund relying on contributions from all

postal operators in Poland. The Commission thoroughly assessed every element of the design

of the contribution mechanism before concluding that postal operators' contributions were

neither discriminatory nor disproportionate. In consequence, it was concluded that the

compensation fund did not lead to serious distortions of competition in the Polish postal

market. The approval decision in this case was the Commission's second decision addressing

the issue of compensation funds and the first one to approve a compensation fund

mechanism

269

Third, on 4 December the Commission approved State financing for Poste Italiane's universal

service obligation

270

. The Commission's assessment showed that the compensation to be

granted to Poste Italiane is based on a conservative methodology, which ensures that it will

not exceed the cost of the public service mission. In particular, all intangible benefits related

to the status of being the provider of the universal service obligation, such as the synergies

between postal and financial services, are taken into account in the calculation. Furthermore,

the amount of aid granted decreases significantly over time, taking account of significant

267

Case SA.38788

Compensation to Post Office Limited for costs incurred to provide SGEIs 2015-2018,

Commission decision of 19 March 2015 available at

http://ec.europa.eu/competition/state_aid/cases/256622/256622_1651530_118_2.pdf

268

Case SA.38869

Compensation of Poczta Polska for the net cost of USO 2013-2015,

Commission decision of

26 November 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38869

269

The first Commission decision addressing a compensation fund was a decision opening the formal

investigation procedure: see case SA.35608

Hellenic Post (ELTA) – Compensation fund for the financing of the

universal postal service,

Commission decision of 1 August 2014 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35608

270

Case SA.43243

State compensations granted to Poste Italiane SpA for the delivery of the universal postal

service over the periods 2012-2015 and 2016 -2019,

Commission decision of 4 December 2015 available at

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_43243

kom (2016) 0393 - Ingen titel

efficiency gains that will be made over the period of entrustment of the universal service

obligation.

Merger review in postal services

Postal services play a crucial role in allowing e-commerce to develop, the promotion of which

is one of the goals of the Digital Single Market strategy. The Commission investigation of the

acquisition of TNT Express by FedEx

271

focused on ensuring that prices for customers,

including SMEs active in e-commerce, and ultimately consumers, would not rise for cross-

border small package deliveries, and that the quality of service would not be degraded as a

result of the merger.

271

Case M.7630

FedEx / TNT,

notified to the Commission on 26 June 2015; in-depth investigation opened on 31

July 2015. Final decision planned for January 2016.

kom (2016) 0393 - Ingen titel

Annexes

Banking State aid cases: Decisions adopted by the Commission in 2015

By country

Member State

Austria

Case number/Title

SA.31883 – 2015/N, 2011/C –

ÖVAG (amendment)

State Aid SA.40965 (2015/N)

Restructuring guarantee scheme

for small undertakings in

difficulty in Upper Austria

Belgium

SA.43306 (2015/N)

Amendment to the restructuring

plan of Ethias –Approval of

issuance of additional

subordinated debt

SA.40027 (2014/N) – Fifth

prolongation of Cypriot

guarantee scheme for banks H1

2015

SA.42080 (2015/N) – Sixth

prolongation of Cypriot

Guarantee Scheme for Banks

H2 2015

Denmark

SA.40029 (2014/N) –

Reintroduction of the winding-

up scheme, compensation

scheme, Model I and Model II –

H1 2015

SA.42405 (2015/N)

Prolongation of the Danish

winding-up scheme,

compensation scheme, Model I

and Model II – H2 2015

France

SA.39690 (2015/N) – Extension

du champ d'activité de SFIL-

CAFFIL au financement des

crédits à l'exportation

SA.40836 (2015/N)

Amendment to the methodology

for calculating the aid element

in guarantees (Germany)

No objection

23/10/2015

Type of Decision

No objection

272

No objection

Date of adoption

02/07/2015

11/08/2015

Cyprus

No objection

14/01/2015

No objection

13/07/2015

No objection

13/02/2015

No objection

18/09/2015

No objection – no aid

05/05/2015

Germany

No objections

27/07/2015

272

For further information see IP/15/5302 of 2 July 2015 available at

http://europa.eu/rapid/press-release_IP-15-

5302_en.htm

kom (2016) 0393 - Ingen titel

Greece

SA.40030(2014/N) –

Prolongation of the Guarantee

Scheme and Bond Loan Scheme

for Credit Institutions in Greece

HT.4524 – STEC 2015

SA.41503 (2015/N) –

Resolution of Panellinia Bank

through a transfer order to

Piraeus Bank

SA.42215 (2015/N) –

Prolongation of the Greek

Financial Support Measure

HT.4524 – STEC 2015

SA.43364 (2015/N) -

Amendment of the restructuring

plan approved in 2014 and

granting of new aid to Piraeus

SA.43366 (2015/N) -

Amendment of the restructuring

plan approved in 2014 and

granting of new aid to Alpha

Bank

SA.43363 (2015/N) –

Amendment of the restructuring

plan approved in 2014 and

granting of new aid to Eurobank

No objection

14/01/2015

Communication

No objection

273

26/01/2015

16/04/2015

No objection

29/06/2015

Communication

No objection

274

30/06/2015

29/11/2015

No objection

275

26/11/2015

No objection

276

26/11/2015

Ireland

SA.39837 (2014/N) – Sixth

prolongation of the Credit

Union Resolution Scheme H1

2015

SA.33442 (2011/N) –

Restructuring of Irish Life &

Permanent Group Holdings plc

(PTSB)

SA.41371 (2015/N) – First

prolongation of the Credit

Union restructuring and

stabilisation scheme

No objection

29/01/2015

No objection

277

09/04/2015

No objection

05/05/2015

273

274

http://europa.eu/rapid/press-release_STATEMENT-15-4799_en.htm

For further information see IP/15/6193 of 29 November 2015 available at

http://europa.eu/rapid/press-

release_IP-15-6193_en.htm

275

For further information see IP/15/6181 of 26 November 2015 available at

http://europa.eu/rapid/press-

release_IP-15-6184_en.htm

276

For further information see IP/15/6184 of 26 November 2015 available at

http://europa.eu/rapid/press-

release_IP-15-6184_en.htm

277

For further information see IP/15/4755 of 9 April 2015 available at

http://europa.eu/rapid/press-release_IP-

15-4755_en.htm

kom (2016) 0393 - Ingen titel

SA.42083 (2015/N) – Seventh

prolongation of the Credit

Union Resolution Scheme H2

2015

SA.43423 (2015/N) - Ireland

2nd prolongation of the Credit

Union restructuring and

stabilisation Scheme

Italy

SA.39451 (2015/C) ex 2015/NN

– State support to Banca

TERCAS

SA.43547 (2015/N) – Italy

Resolution of Carichieti

SA.41925 (2015/N) – Italy -

Resolution of Carife

SA.41134 (2015/N) – Italy -

Resolution of Banca Etruria

SA.39543 (2015/N) – Italy -

Resolution of Banca Marche

Latvia

SA.36904 (2014/N) – MLB

development segment &

creation of the Latvian Single

Development Institution

SA.40096 (2014/N) – Second

prolongation of the Credit

Unions Orderly Liquidation

Scheme H1 2015

SA.40480 (2015/N) – Eleventh

prolongation of the Polish Bank

guarantee scheme – H1 2015

SA.37421 (2014/N) – Polish

Guarantee Methodology

SA.42078 (2015/N) – Third

prolongation of the Credit

Unions Orderly Liquidation

Scheme – H2 2015

SA.42560 (2015/N) – Poland -

Twelfth prolongation of the

Polish bank guarantee scheme

Portugal

SA.39991 (2014/N) – Eleventh

Prolongation of the Portuguese

Guarantee Scheme

No objection

02/07/2015

No objection

16/11/2015

Opening

27/02/2015

No objection

22/11/2015

09/06/2015

Poland

No objection

27/01/2015

No objection

27/01/2015

No objection

01/07/2015

06/07/2015

No Objection

24/08/2015

No objection

04/02/2015

kom (2016) 0393 - Ingen titel

SA.39958 (2014/N) – Third

prolongation of the Portuguese

Guarantee Scheme on EIB

lending

SA.42156 (2015/N) – Fourth

prolongation of the Portuguese

Guarantee Scheme on EIB

lending

SA.42404 (2015/N) – Twelfth

Prolongation of the PT

Guarantee Scheme

SA.36123 (2013/N) – Banif

United Kingdom

SA.38535 (2014/N) – State

support to the flood reinsurance

scheme

SA.40188 (2015/N) – UK –

Green Investment Bank

No objection

06/02/2015

No objection

15/07/2015

No objection

22/07/2015

No objection

278

No objection

21/12/2015

29/01/2015

No objection

16/11/2015

278

For further information see IP/15/5439 of 24 July 2015 available at

http://europa.eu/rapid/press-release_IP-

15-5439_en.htm