30 Annual Report on Competition Policy
2009
| (31680)
10763/10
COM(10) 282
| Commission Report on Competition Policy 2009
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| Legal base | —
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| Document originated | 3 June 2020
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| Deposited in Parliament | 9 June 2010
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 29 June 2010
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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
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
POLICY INSTRUMENTS
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).
INTERNATIONAL ACTIVITIES
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.
INTER-INSTITUTIONAL 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.
FOCUS CHAPTER: COMPETITION POLICY AND THE FINANCIAL
AND ECONOMIC CRISIS
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.
Restructuring
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.
Conclusion
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
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