European Scrutiny Committee Contents

30 Annual Report on Competition Policy 2009



COM(10) 282

Commission Report on Competition Policy 2009

Legal base
Document originated3 June 2020
Deposited in Parliament9 June 2010
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 29 June 2010
Previous Committee ReportNone
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionCleared


30.1 Each year, the Commission produces a report on competition policy, and the present document relates to 2009. 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 second time a chapter on a topic considered to be of particular importance — in this case, the contribution of competition policy to the fight against the financial and economic crisis.

The current document


State Aid Control

30.2 The Commission says that implementation of the State Aid Action Plan (SAAP) continued in 2009, with the adoption of guidance on aid for training and for disabled and disadvantaged workers, and on the in-depth assessment of regional aid to large investment projects. In addition, it approved a wide range of measures under existing guidelines, covering environmental aid, risk capital financing for small and medium sized enterprises, and regional aid, and the research and development and innovation framework. The Commission also adopted a Simplification Package, aimed at improving the effectiveness, transparency and predictability of its State aid procedures, as well as issuing clarification regarding services of general economic interest and on state aid enforcement by national courts.

30.3 The Commission also draws attention to the fact that, by the end of the year, some €10.4 billion of illegal and incompatible aid had been recovered, compared with €2.3 billion in December 2004.

Anti-trust — Articles 101,102 and 106 — Treaty on the Functioning of the European Union (TEFU)

30.4 The Commission recalls that it adopted in April 2009 a Report on the functioning of Council Regulation 1/2003, which takes stock of how the Regulation has worked since it came into force on 1 May 2004, and highlights a number of aspects which merit further evaluation. It also notes that both the European Parliament and the European Economic and Social Committee adopted opinions supporting the approach in its 2008 White Paper[133] on damages actions for breach of the EC anti-trust rules, and that its services have started work on the technical instruments needed to give effect to the objectives of the White Paper.

30.5 Other actions highlighted by the Commission include reviews for the renewal of Block Exemption Regulations (BERs)[134] relating to motor vehicles, vertical and horizontal distribution agreements, and the insurance sector; publication in February 2009 of guidance on its enforcement priorities in applying Article 102 TFEU (formerly Article 82 EC) to abusive exclusionary conduct by dominant undertakings; and the adoption of final decisions in several exclusionary conduct cases, including in the energy and IT sectors.

30.6 The Commission says that in 2009 it continued to attach high priority to the detection, investigation and sanctioning of cartels, adopting six decisions and imposing fines amounting to €1.62 billion on 43 undertakings.

Merger Control

30.7 The Commission notes that, despite the financial and economic crisis, the European Community Merger Regulation and its procedures continued to be well suited to their task of regulating mergers under its jurisdiction, a key issue being whether nationalisation of a financial institution needed to be notified for the Commission's clearance. This was finally determined on the basis of whether they were holding arrangements or a nationalised entity became a single economic entity alongside other State controlled undertakings. It noted that only one such nationalisation (in Germany) was notified.

30.8 The Commission reports that 259 mergers were notified to it. 243 were adopted, of which 225 were cleared outright (143 using the Commission's simplified procedure) and 13 subject to conditions. It adds that a further five mergers were cleared after a more extensive examination, three of which were subject to conditions, but that it did not block any merger notified to it in 2009.

Sector Developments

30.9 The Commission reports on developments in key sectors including financial services, energy and environment, electronic communications, information technology, media, healthcare services, transport, postal services, the automotive industry and the food industry, giving in each instance details of its work in policy development and enforcement. It also summarises the findings from its inquiry into the pharmaceutical sector, outlining concerns with patents, market authorisations and pricing and reimbursement, and reaffirming the call for a Community patent.

Consumer Activities

30.10 The Commission notes that the Directorate General for Competition's Consumer Liaison Unit has been in place for over a year, with the aim of deepening its engagement with consumer representatives and developing new ways of communicating directly with the broader public. The Commission also hosted in October 2009 a public event on "Competition and Consumers in the 21st Century", and has updated the consumer pages of the competition website to include more user-friendly information.

The European Competition Network (ECN) and National Courts

30.11 The Commission confirms the importance of the ECN as an effective platform for national competition authorities to coordinate enforcement action, ensure consistency and discuss enforcement policy issues of common interest. It says that it was informed of 129 new investigations launched by national authorities in 2009, and of 69 decisions in competition cases being conducted by them (an increase of 15% as compared with 2008).


30.12 The Commission notes the importance of competition policy adopting a global outlook in an increasingly globalised economy, and it says that in 2009 its Competition Directorate General reinforced its relations with partners from all over the world in both bilateral and multilateral fora, including in the International Competition Network (ICN) and the OECD Competition Committee. It also notes that it cooperated closely with the United States of America on several cases and on general competition issues; that a bilateral cooperation agreement with South Korea in the field of competition entered into force on 1 July 2009, and that a Memorandum of Understanding (MOU) was signed with Brazil on competition cooperation.


30.13 The Commission says that it continued its cooperation with other EU institutions, including the Council, the European Economic and Social Committee and the Committee of the Regions. Also, in addition to the regular dialogue between the Competition Commissioner and the European Parliament's Committee on Economic and Monetary Affairs (ECON), the Commission participated in discussions held in other Committees of the European Parliament on a wide range of subjects including state aid and the financial crisis, the Motor Vehicle Block Exemption Regulation, and the White Paper on Damages Actions.


30.14 The Commission says that during 2009 it continued to focus on addressing the financial and economic crisis, with approvals of schemes under the Banking Communications to address issues in the banking sector, and the Temporary Framework, to help Member States intervene in the real economy affected by the credit crunch. It comments on particular areas as follows:

Recapitalisation of banks

The Commission recalls that in October 2008 it adopted guidance on the application of State Aid rules to State support schemes and individual assistance for financial institutions (Banking Communication), and that in December 2008 it adopted the Recapitalisation Communication, which differentiates between fundamentally sound banks and those in distress, and lays down guidelines for evaluating the capital injections which constitute aid. It adds that both Communications have made it possible to preserve financial stability and to lessen restrictions on the availability of credit. whilst keeping distortions of competition to a minimum.

Impaired assets

The Commission comments that, although recapitalisation schemes had been put in place in many Member States, investors in early 2009 were not showing signs of confidence, and that, confronted with this situation, some Member States had proposed "asset protection schemes". It says that in February 2009 it adopted the Communication on the Treatment of Impaired Assets in the Community banking sector, based on the principles of transparency and disclosure, adequate burden sharing between the State and the beneficiary, and the prudent valuation of assets based on their real economic value.


The Commission says that in August it adopted a Communication on the return to viability and the assessment of restructuring measures in the financial sector in the current crisis under the State aid rules ("Restructuring Communication"). This sets out the principles applicable to beneficiaries which were not only in need of short-term rescue aid, but which required aid to implement structural changes to their business models. In doing so, it retains the main principles of the Community Guidelines on rescue and restructuring aid to companies in financial difficulties, but has been adapted to the circumstances of the financial crisis. The restructuring plans approved include the Royal Bank of Scotland (RBS) and Lloyds' Banking Group in the UK, whilst many other such plans are currently being formally assessed.

The Temporary Framework for State Aid

The Commission notes that, in response to the financial crisis, it introduced the Temporary Framework on State Aid, covers all sectors apart from banking, and is due to end on 31 December 2010. This gives some slight freedom in the usual rules with regard to small sums of notified aid, loans, loan guarantees, risk capital and export credit guarantees, but does not amount to a total withdrawal of the rules, as some had urged. By 31 December 2009, the Commission had approved 79 measures in 25 Member States aimed at stabilising companies and jobs.

The Government's view

30.15 In his Explanatory Memorandum of 29 June 2010, the Minister for Employment Relations, Consumer and Postal Affairs at the Department for Business, Innovation and Skills (Mr Edward Davey) notes the emphasis on the Commission's response to the economic crisis and, in particular, the lessons learnt from the need for flexibility and speedy responses. He also notes the general view that the competition regime proved flexible enough, and that the sheer pace of decision-making could only be sustained in the extraordinary circumstances of the crisis. Nevertheless, it has shown, and the Commission have fully acknowledged, that there is scope for further efficiencies in Commission processes in the field of competition.

30.16 This apart, the Minister says that:

  • the Commission's so-called proactive approach, in particular the focus on tackling hard core cartels and the review of the Block Exemption Regulations, has been broadly welcomed by stakeholders (including the CBI), and has set the tone for a more prioritised and open approach;
  • the State Aid framework serves to protect the single market from distortions, and is central to avoiding wasteful subsidy races between Member States;
  • the temporary flexibility which the Commission introduced through the Banking Communication allowed Member States (including the United Kingdom) to respond to the exceptional circumstances encountered in financial markets from late 2008;
  • that the Commission's focus is now on progressively reducing banks' reliance on State support, and that its Temporary State Aid framework is due to expire at the end of 2010, with a reversion to a more permanent framework for both the financial sector and the real economy: he adds that the Government is actively engaged with the Commission regarding the lessons to be learned through the state aid interventions during the financial crisis, and how best the permanent State Aid framework can reflect and incorporate these; and
  • the UK engaged actively in the reviews of the Block Exemptions in order to ensure that business and consumer views were properly reflected, making strong representations to the Commission on the right of access to information under the Motor Vehicle Block Exemption Regulation, particularly technical information for the independent aftermarket: it also participated constructively in discussions on the review of the Vertical Block Exemption and private damages work.


30.17 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 2009 — we think it right to draw it to the attention of the House.

133   (29603) 8235/08: see HC 16-xxviii (2007-08), chapter 6 (22 July 2008). Back

134   These provide a "safe harbour" from competition rules for distribution agreements where it can be shown that there are efficiency benefits for business and consumers alike. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 22 September 2010