2 Competition policy in 2006
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11296/07
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COM(07) 358
| Commission Report on Competition Policy 2006
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| Legal base | — |
| Document originated | 25 June 2006
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| Deposited in Parliament | 29 June 2007
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| Department | Business, Enterprise & Regulatory Reform
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| Basis of consideration | EM of 16 July 2007
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
2.1 The purpose of the Community's competition rules is to prevent
the restriction or distortion of competition in the Single Market
through restrictive practices or the abuse of a dominant position,
although certain restrictive agreements considered by the Commission
to have a beneficial effect are permitted under procedures for
individual or block exemptions. Competence in this area is shared,
with the Commission being particularly concerned with anti-competitive
practices which affect trade between Member States.
The current document
2.2 The Commission reports annually on the exercise of its powers
in this area, and the current document is the latest in this series,
relating to the activities which took place in 2006 under the
following main headings.
INSTRUMENTS
Anti-trust measures
2.3 In 2006, the Commission adopted decisions against 7 cartels,
which led to it fining 41 undertakings a total of €1,846
million,[6] and, in order
to increase the deterrent effect of such fines, it adopted new
guidelines on how they should be set. It also comments that the
leniency programme,[7]
helped by a revised Leniency Notice which provided more guidance
to whistle-blowers, continued to be an effective tool in breaking
up cartels, with a total of 104 applications for immunity and
99 applications for a reduction in fines having been received
at the end of 2006.
2.4 Other activities in this area included abuses
of dominance, where the Commission says that it concentrated on
network industries which are key for European competitiveness,
and the application of its power to make commitments binding on
undertakings in anti-trust proceedings. It also notes that 2006
was the first year in which it had to use its powers to fix a
periodic payment in order to compel an undertaking to bring an
infringement to an end, a penalty of €280.5 million having
been imposed on Microsoft for non-compliance with an infringement
decision made in 2004 under Article 82 of the Treaty.
Mergers
2.5 The Commission investigated a record number of
mergers in 2006, adopting 352 final decisions, of which about
two-thirds made use of simplified procedures, with only 13 cases
requiring an in-depth investigation. The Commission says that
it did not prohibit any of the mergers it investigated, and that,
in only a few cases, was the clearance given subject to certain
conditions being met. It also published in 2006 a draft "Consolidated
Jurisdictional Notice" which covered all issues of jurisdiction
relevant to the establishment of its competence under merger regulations,
and which will replace four existing Notices adopted in 1998.
State aid
2.6 The Commission says that significant progress
was made in modernising the current framework of state aid rules
in line with the State Aid Action Plan which it launched in 2005,
the four guiding principles being less and better targeted state
aid, greater emphasis on economic analysis, more effective procedures,
and a shared responsibility with the Member States. In addition,
the approval of regional aid was simplified through the adoption
of a block exemption regulation, which releases Member States
from the need to notify regional investment aid schemes if they
comply with new guidelines and the approved regional aid map for
2007-13; a new state aid framework was put in place for research,
development and innovation; new risk capital guidelines were adopted,
which the Commission says mark a step forward in targeting public
subsidies on proven market failures in order to help promote conditions
for economic growth and jobs; and a new de minimis regulation
was adopted, exempting small subsidies (up to €200,000
over three years) from the need to be cleared by the Commission
in advance.
SECTORAL DEVELOPMENTS
2.7 The Commission undertook two major sector enquiries
in 2006 — on energy and financial services. In the former
case, it concluded that there were core competition problems,
including highly concentrated wholesale markets, insufficient
unbundling of network and supply activities, insufficient or unavailable
cross-border capacity, and limited retail competition. In view
of this, it plans to present proposals in September 2007 for a
further legislative package to promote effective competition in
the gas and electricity sectors. In the case of financial services,
a report on retail banking (based on two interim reports on card
payments and current accounts) found that there were a number
of competition concerns, with large variations in fees for payment
cards, barriers to entry to markets for payment systems and credit
registers, obstacles to customer mobility, and product tying.
Also, an interim report on business insurance, to be followed
in September 2007 by a final report, produced evidence of fragmented
markets and highlighted factors which may adversely affect competition.
2.8 In addition, the Commission provides a more detailed
account of its activities in a range of sectors, including electronic
communication, information technology, media, transport and postal
services.
EUROPEAN COMPETITION NETWORK
2.9 The Commission notes that 2006 saw a further
strengthening of cooperation between members of the European Competition
Network. In particular, national competition authorities are obliged
to inform the Commission where new cases are opened and before
a final decision is taken, and it says that it received 150 new
notifications during the year, of which it has reviewed or given
advice on 125 (without having had so far to take action to ensure
a consistent application of the competition rules). The Commission
also comments on the application of Community competition rules
by national courts, notably as regards requests made to it for
information or opinions, the receipt by it of written judgements
issued by such courts, the exercise of its right to submit written
observations on individual cases, and the co-financing of training
programmes for national judges on Community competition law.
INTERNATIONAL ACTIVITIES
2.10 The Commission says that it monitored the preparations
for Romania and Bulgaria joining the Community. More generally,
cooperation was continued on a bilateral basis with the United
States, Canada and Japan, and the Commission offered assistance
in the drafting of competition law in China and Russia. It also
took an active role in the International Competition Network,
which promotes best practice among competition authorities, and
in the OECD.
The Government's view
2.11 In his Explanatory Memorandum of 16 July 2007,
the Parliamentary Under-Secretary of State for Trade and Consumer
Affairs at the Department of Business, Enterprise & Regulatory
Reform (Mr Gareth Thomas) comments on a number of the issues raised
in the report. He says that the work on anti-trust measures has
been strongly supported by the UK, and that the relevant policy
departments recently organised an informal discussion between
Member States and the Commission to help prepare for the Commission
White Paper which is due in early 2008; that the sectoral enquiries
have been important in furthering the Single Market, and that
the UK is planning a follow-up seminar this autumn; and that the
UK also strongly supports an effective state aid regime, being
committed to the Lisbon aim of reducing such aid as a percentage
of GDP. It therefore supports the Commission's commitment to reforming
the state aid regime, and would like to see it placing more emphasis
on a much lower burden of administration where competition is
not, or hardly, distorted at all. It also considers that block
exemptions are a valuable tool in dealing with the administration
surrounding state aids.
Conclusion
2.12 For the reasons set out in the Commission's
report, competition is an important area. Consequently, although
we are clearing this document, which gives a useful summary of
ongoing activity and of developments in 2006, we think it right
to draw it to the attention of the House.
6 In 2005, 33 undertakings were fined €683 million. Back
7
Under which immunity from fines can be available for the first
undertaking to provide evidence of a cartel to the Commission,
with a substantial reduction for any subsequent applicant. Back
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