15 ANNUAL REPORT ON COMPETITION
POLICY 2008
(30850)
12567/09
+ ADD 1
COM(09) 374
| Commission Report on Competition Policy 2008
|
| Legal base | —
|
| Document originated | 23 July 2009
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| Deposited in Parliament |
7 August 2009 |
| Department | Business, Innovation and Skills
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| Basis of consideration |
EM of 7 September 2009 |
| Previous Committee Report |
None |
| To be discussed in Council
| No date set |
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
15.1 Each year, the Commission produces a report on competition
policy, and the present document relates to 2008. As is customary,
it is in various sections, dealing with how the policy instruments
have been developed and applied; how they have been deployed in
specific sectors; consumer related activities; cooperation within
the European Competition Network and with national courts; international
cooperation; and inter-institutional cooperation. It also includes
for the first time a chapter on a topic considered to be of particular
importance —
in this case, cartels and consumers.
The current document
POLICY INSTRUMENTS
Anti-trust measures
15.2 The Commission notes that, although the European
Court of Justice has stated that individuals can claim compensation
for harm suffered as a result of prohibited anti-trust measures,
they very rarely do so in practice, and that it therefore produced
in April 2008 a White Paper[51]
on damages action for breach of the EU anti-trust rules. In addition,
it introduced a new mechanism enabling cartel cases to be settled
by a simplified procedure, including reduced fines for companies
acknowledging their involvement in such cases; guidance on enforcement
priorities when dealing with abusive exclusionary conduct by dominant
undertakings; and revisions of the Block Exemption Regulation
applicable to vertical distribution agreements, as well as those
applying to motor vehicles and the insurance sector.
15.3 As regards the application of the anti-trust
rules, the Commission notes that it adopted in 2008 decisions
to fine 34 undertakings in seven cartel cases a total of €2.27
billion (including €1.38 billion in the Car Glass
case, involving a repeat offender); that, as regards non-cartel
cases, it adopted a decision prohibiting members of the International
Confederation of Societies and Authors and Composers from
maintaining membership restrictions and exclusivity clauses; and
that it also took action against abuses of dominant position in
cases involving Microsoft, Intel and E.ON.
State measures
15.4 The Commission says that it been active in relation
to Article 86 (which prevents measures by Member States which
are contrary to competition rules, particularly as regards public
undertakings granted special rights). This included decisions
regarding Greek restrictions on access to lignite mines, and the
provision of postal services in Slovakia.
Merger control
15.5 The Commission notes that it introduced a new
Notice on Remedies,[52]
which imposes more stringent information conditions and clarifies
a number of requirements. It also points out that it received
347 merger notifications — the third highest on record,
though 14% below the level in 2007 — and that it adopted
340 decisions during the year, of which 307 were without conditions
(118 under the normal procedure, and 189 using the simplified
procedure). A further 19 notifications were cleared subject to
conditions, whilst ten were subjected to more detailed examination,
though no prohibition decisions were taken during the year.
State aid control
15.6 The Commission recalls that, whilst its focus
at the beginning of 2008 was on the implementation of the State
Aid Action Plan (SAAP), the financial and economic crisis subsequently
required it to issue three Communications on the role of state
aid policy in connection with the recovery process.[53]
As regards the SAAP, it points out that it adopted a General Block
Exemption Regulation giving automatic approval for a range of
aid measures (allowing aid fulfilling the necessary conditions
to be granted without prior notification); that it adopted new
guidelines on state aid for environmental protection, extended
the framework on rules for shipbuilding, and introduced a new
notice of state aid in the form of guarantees. In addition, it
launched public consultations relating to public service broadcasting,
training, disadvantaged and disabled workers, as well as on a
number of procedural issues, and it published a vade mecum summarising
the main rules applicable to state aid control. It also continued
its efforts to improve enforcement and monitoring, notably in
relation to recovery decisions, where it notes that, of the €10.3
billion of aid to be recovered
under decisions adopted since 2000, €9.3
billion had been recovered by the end of 2008: and it highlights
the strict line taken towards Member States which had failed to
implement recovery decisions effectively. The Commission also
draws attention to the state aid scoreboard[54]
it produced in autumn 2008, and to the extent to which Member
States are now directing aid at horizontal objectives, such as
research and development, rather than sectoral measures.
SECTORAL DEVELOPMENTS
15.7 This section deals in greater detail with developments
in a number of sectors which have a bearing on competition. As
regards energy and environment, it notes the internal energy
package proposed in September 2007, the various measures proposed
to deal with climate change, the Second Strategic Energy Review,
and the steps taken by the Commission to ensure that new entrants
have access to energy networks and customers; it expands on the
various measures taken in relation to financial services;
it summarises action taken under the EU regulatory framework for
electronic communications, and the continuing work to review
that framework; it recalls the action on information technology,
including that taken against Microsoft and Intel, and in relation
to the satellite navigation industry; as regards the media,
it details the action taken on music rights, the monitoring of
the transition from analogue to digital terrestrial broadcasting,
the state financing of public service broadcasters, and support
for the cinema; in the case of transport, it says that
the Commission continues to monitor public service contracts and
obligations on road transport, state aid for railways, the application
of Article 81 of the Treaty to maritime transport, the application
of the new Air Services Regulation, various rescue and restructuring
measures relating to airlines, state aids for airport infrastructure,
and the signing of the EU-US open aviation agreement; it notes
the launching of an enquiry into the pharmaceutical sector
and the subsequent publication of a preliminary report; it recalls
the Commission's Communications on food prices and the
functioning of the food chain within the Community; and the adoption
of the third Postal Directive.
CONSUMER ACTIVITIES
15.8 The Commission says that consumer concerns are
at the heart of its competition activities, and that the main
thrust of competition should be to maximise consumer welfare,
as is evidenced by the action it has taken in various areas. It
also notes the establishment of a dedicated Consumer Liaison Unit
within its Competition Directorate.
EUROPEAN COMPETITION NETWORK AND NATIONAL COURTS
15.9 The Commission summarises the actions of the
Network, including the development of its Model Leniency Programme
(and the related steps taken by Member States) and the cooperation
between national competition authorities on individual cases.
It also notes the mechanisms which exist for cooperation with
national courts.
INTERNATIONAL ACTIVITIES
15.10 The Commission says that, in an increasingly
globalised world economy, competition policy must also adopt a
global outlook, and that it has reinforced and extended its relations
with other competition authorities on both a bilateral and multilateral
basis. It also notes the cooperation with Croatia and Turkey in
connection with the prospective further enlargement of the Community.
INTER-INSTITUTIONAL COOPERATION
15.11 The Commission records its continuing cooperation
with other Community institutions, notably the European Parliament,
the Council, the Economic and Social Committee and the Committee
of the Regions.
FOCUS CHAPTER: CARTELS AND CONSUMERS
15.12 The Commission regards cartels as among the
most serious violation of competition law, and the fight against
them as central to ensuring that markets benefits are felt by
consumers, noting that the effect can be either direct or indirect
(as for example where a cartel operates further up the supply
chain). It also points out that fines imposed on a cartel are
intended, not only to punish its members, but to deter others
from engaging in anti-competitive behaviour and to encourage a
culture of compliance more widely, and that it has made a practice
of imposing higher fines on repeat offenders. The Commission notes
that it can uncover cartels in a number of ways, for example by
analysing markets, or by obtaining evidence from different sources,
including consumers and individual "whistle blowers":
and it points out that its Leniency Programme, under which the
first company to provide evidence can obtain full immunity from
fines, provides an incentive to cartel members to withdraw from
a secret agreement and cooperate with it.
The Government's view
15.13 In his Explanatory Memorandum of 7 September
2009, the Minister for Further Education, Skills, Apprenticeships
and Consumer Affairs at the Department for Business, Innovation
and Skills (Kevin Brennan) says that the UK supports the
proactive competition policy of the Commission, and in particular
welcomes its commitment to more evidence-based, impact driven
and output focussed policies as a means of facilitating a better
functioning Single Market and competitiveness in key strategic
sectors. He also notes that the UK has been actively engaged in
a number of areas, such as the Motor Vehicle Block Exemption,
work on private damages, and the inquiry into the pharmaceutical
sector, and says that it continues to support the goals of the
State Aid Action Plan, as well as the need for temporary measures
to alleviate the effects of the financial and economic crisis.
Conclusion
15.14 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 2008 — we think
it right to draw it to the attention of the House.
51 (29603) 8235/08: see HC 16-xxviii (2007-08), chapter
6 (22 July 2008). Back
52
Modifications proposed by merging parties to remove competition
concerns identified by the Commission. Back
53
The action taken in connection with the recovery process was recorded
at greater length in the Commission's State Aid Scoreboard for
spring 2009 (30548) 8812/09: see HC 19-xviii (2008-09), chapter
14 (3 June 2009). Back
54
(30200) 15977/08: see HC 19-ii (2008-09), chapter 13 (17 December
2008). Back
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