[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 25.6.2007

SEC(2007) 860

COMMISSION STAFF WORKING DOCUMENT

Annex to the REPORT FROM THE COMMISSION Report on Competition Policy 2006 {COM(2007) 358 final}

TABLE OF CONTENTS

I – Instruments 8

A – Antitrust – Articles 81, 82 and 86 EC 8

1. Legislative, interpretative and procedural rules 8

1.1. Rewarding companies that report cartels: the revised Leniency Notice 8

1.2. Increasing the deterrent effect of sanctions: new Guidelines on the method of setting fines 9

1.3. Facilitating the recovery of losses from the infringement of competition law: Green Paper on damages actions for breach of the EU antitrust rules 10

1.4. Ensuring that legislation does not lead to distortions of competition: competition advocacy 11

2. Application of Articles 81, 82 and 86 EC 11

2.1. Stepping up the fight against cartels 12

2.2. Sanctioning anti-competitive behaviour: abuse of dominant positions (Article 82 EC) 14

2.2.1. Exclusionary abuses – Case COMP/38.113 – Prokent/Tomra 14

2.3. Commitments 15

2.4. Compelling undertakings to bring infringements to an end: periodic penalty payments 15

3. Selected Court cases 16

3.1. The notion of undertaking 16

3.2. The notion of agreement 16

3.3. Market partitioning 17

3.4. The application of Article 81(1) and 81(3) to parallel trade 17

3.5. Duration of proceedings 18

3.6. Procedural rights of third parties 19

3.7. Publication and protection of confidential information 19

3.8. The application of competition law to sporting rules 19

B – Merger control 21

1. Legislative, interpretative and procedural rules 21

1.1. Giving guidance on jurisdiction in merger control: draft Commission Consolidated Notice on Jurisdiction 21

2. Application of the merger control rules 22

2.1. Overview 22

2.2. Applying the new substantive test 23

2.2.1. T-Mobile Austria/tele.ring 23

2.2.2. Linde/BOC 24

2.3. Assessing efficiencies 25

3. Selected Court cases 27

3.1. Jurisdiction 27

3.1.1. Cementbouw v Commission 27

3.1.2. Endesa v Commission 28

3.2. Standard of remedies 29

3.2.1. easyJet v Commission 29

C – State aid control 30

1. Legislative, interpretative and procedural rules 30

1.1. State aid reform – Modernising the current framework 30

1.2. Simplifying the approval of regional aid - new block exemption Regulation 31

1.3. Facilitating the use of State aid to boost private-sector R&D&I projects - New framework for Research, Development and Innovation 32

1.4. Assessing risk capital financing for SMEs - new set of risk capital guidelines 33

1.5. Evaluating Block Exemption Regulations 34

1.6. Exempting small subsidies from the notification obligation – the new de minimis Regulation 34

2. Application of the State aid rules 35

2.1. Overview 35

2.2. Applying regional aid rules 35

2.3. Applying the State aid Framework for R&D&I 36

2.4. Risk capital cases 37

2.5. Authorising environmental aid 37

2.6. Assessing training aid 38

2.7. Taxation cases 38

2.8. Enforcing and monitoring state aid decisions 39

3. Selected Court cases 39

3.1. Definition of aid 39

3.2. State responsibility for recovery 41

3.3. Procedural issues 41

II – Sector Developments 43

A – Energy 43

1. Overview of sector 43

2. Policy developments 44

2.1. Antitrust enforcement 45

2.2. Merger control 46

2.3. State aid control 47

B – Financial services 50

1. Overview of sector 50

2. Policy developments 51

2.1. Merger control 51

2.2. State aid 52

C – Electronic communications 53

1. Overview of sector 53

2. Policy developments 54

2.1. Review of the regulatory framework 54

2.2. Broadband markets 55

2.3. Mobile telephony 56

2.4. Regulatory consistency in call termination 57

2.5. Broadcasting transmission services 58

D – Information technology 59

1. Overview of sector 59

2. Policy developments 60

2.1. Enforcing the Microsoft decision 60

2.2. Controlling concentrations of network equipment manufacturers 60

2.2.1. Nokia/Siemens 60

2.2.2. Alcatel/Lucent 61

2.3. State support for the creation of video games 61

E – Media 62

1. Overview of sector 62

2. Policy developments 63

2.1. Digital broadcasting 63

2.2. Public service broadcasting 64

2.3. Premium sports content 65

2.4. Films and other audiovisual works 66

2.5. Rights management and online distribution 67

F – Transport 69

1. Overview of sector 69

1.1. Road transport 69

1.1.1. Transport of goods 69

1.1.2. Transport of passengers 69

1.2. Rail transport 70

1.3. Maritime transport 70

1.4. Air transport 70

2. Policy developments 71

2.1. Road transport 71

2.1.1. Applying State aid rules to road transport 71

2.2. Rail transport 71

2.2.1. Railways liberalisation: Implementation of Rail Infrastructure Package 71

2.2.2. Applying State aid rules to rail transport 72

2.3. Maritime transport 72

2.3.1. Repeal of the liner conference block exemption regulation 72

2.3.2. Ensuring competition between ports is not distorted – The Sea-Invest/Emo-Ekom merger case 73

2.3.3. Applying State aid rules to maritime transport 74

2.4. Air transport 74

2.4.1. Block exemption of consultations on passenger tariffs and slot allocation - Commission Regulation (EC) No 1459/2006 74

2.4.2. Enforcement of Article 81 – SkyTeam global airline alliance 75

2.4.3. International aviation policy – application of Regulation (EC) No 847/2004 75

2.4.4. International aviation policy – application of the Horizontal Mandate 76

2.4.5. Applying State aid rules to air transport 76

G – Postal services 78

1. Overview of sector 78

2. Policy developments 79

2.1. Objectives of the Commission 79

2.2. Initiatives of the Commission 80

Box 1: The application of State aid rules in particular sectors 83

III – The European Competition Network and National Courts – Overview of cooperation 87

1. General overview 87

1.1. Cooperation on policy issues 87

1.2. Evolution of national laws and instruments for efficient enforcement by NCAs 88

1.3. Cooperation in individual cases 89

1.3.1. Case allocation 89

1.3.2. Coherent application of the rules 89

2. Application of EU competition rules by national courts in the EU: Report on the implementation of Article 15 of Regulation 1/2003 90

2.1. Assistance in the form of information or in the form of an opinion 90

2.1.1. The opinion provided to a court in the Netherlands 90

2.1.2. The opinion requested by a Belgian court 90

2.2. Judgments by national courts 91

2.3. Amicus curiae intervention under Article 15(3) of Regulation 1/2003 91

2.4. Financing the training of national judges in EU competition law 91

IV – International activities 92

1. Enlargement, Western Balkans and Neighbourhood policy 92

2. Bilateral cooperation 92

2.1. Introduction 92

2.2. Agreements with the USA, Canada and Japan 92

2.3. Cooperation with other countries and regions 94

3. Multilateral cooperation 95

3.1. International Competition Network 95

3.2. OECD 95

V – Outlook for 2007 96

A – Instruments 96

1. Antitrust 96

2. Mergers 96

3. State aid 97

B – Sector Developments 98

1. Energy 98

2. Financial services 98

3. Electronic communications 99

4. Information technology 100

5. Media 100

6. Transport 101

7. Postal services 101

C – International activities 103

VI – Interinstitutional cooperation 104

1. European Parliament 104

2. Council 105

3. European Economic and Social Committee and Committee of the Regions 105

I – Instruments

A – ANTITRUST – ARTICLES 81, 82 AND 86 EC

1. LEGISLATIVE, INTERPRETATIVE AND PROCEDURAL RULES

1.1. Rewarding companies that report cartels: the revised Leniency Notice

1. On 6 December, the Commission took another important step towards uncovering and putting an end to hard-core cartels by adopting a revised Notice on Immunity from Fines and Reduction of Fines in Cartel Cases (the "Leniency Notice")[1]. Improvements have been made in several areas to provide more guidance to applicants and to increase the transparency of the procedure. These amendments reflect more than four years of experience in applying the 2002 Leniency Notice[2] and are also fully in line with the European Competition Network's (ECN's) Model Leniency Programme, which was adopted on 29 September by the heads of the EU competition authorities[3]. The revision of the Notice also takes account of public consultations held in February and October.

2. Improvements include clarification of the thresholds for immunity and reduction of fines, the conditions that must be fulfilled by applicants and amendments to the procedure, such as introducing a discretionary marker system. The immunity threshold now sets out explicitly and clearly what type of information and evidence the applicants should submit to qualify for immunity and makes it clear that the applicants need to disclose their own participation in the cartel. The threshold is linked to information needed by the Commission to carry out a "targeted" inspection in connection with the alleged cartel, which will allow the inspections to be better focused.

3. Concerning the threshold for reduction of fines, the Notice makes it clear that evidence requiring little or no corroboration will have greater value. Such evidence will also be rewarded outside the normal bands for reduction of fines, when it is used to establish any additional facts increasing the gravity or duration of the infringement.

4. The conditions for immunity and reduction of fines have been made more explicit. The revised Notice introduces flexibility as to the point in time when applicants should terminate their participation in the alleged cartel activities. It highlights the fact that genuine cooperation requires the applicant to provide accurate and complete information that is not misleading. The obligation not to destroy, falsify or conceal information is extended to cover also the period when the applicant was contemplating making an application. The Notice now also states explicitly that the obligation to cooperate on a continuous basis concerns also applications for a reduction of fines.

5. Another innovation in the revised Notice is the introduction of a discretionary marker system for immunity applicants. Where justified, an immunity application can be accepted on the basis of only limited information, as specified in the Notice. The applicant is then granted time to perfect the information and evidence to qualify for immunity.

6. In order to maintain the effectiveness of the leniency policy, applicants that cooperate with the Commission should not be impaired in their position in civil proceedings, as compared to companies which do not cooperate. Therefore, the Notice introduces a procedure, reflecting current Commission practice, to protect corporate statements given under the Leniency Notice from discovery in civil damage procedures, in particular in third-country jurisdictions. The special protection for corporate statements is, however, no longer justified in the event and from the moment that the applicant itself discloses the content of such statements to third parties. In order to ensure this special protection, the Commission has, in a number of cases, filed amicus curiae briefs with US Courts or informed the parties in its proceedings on its position, thus enabling the parties to refer to the Commission position at the Court.

1.2. Increasing the deterrent effect of sanctions: new Guidelines on the method of setting fines

7. On 28 June, the Commission adopted new Guidelines on the method of setting fines imposed on undertakings that have infringed Article 81 or Article 82 of the Treaty[4].

8. The Commission has the power to impose fines on undertakings which, intentionally or negligently, infringe competition rules. This is one of the means employed to achieve a general policy in favour of competition and to steer the conduct of undertakings in the light of the principles laid down. To that end, the Commission must ensure that its action has the necessary deterrent effect, not only in order to sanction the undertakings concerned but also in order to deter them as well as other undertakings from engaging in, or continuing, an infringement of competition rules.

9. The new Guidelines update the guidelines of 1998[5], thereby reflecting the latest case law and the Commission's fining practice, but also introduce the following significant changes:

10. First, for each participant in the infringement, the basic amount of the fine will be based on a percentage of its yearly sales of the product to which the infringement relates, in the geographic area concerned. The year of reference will normally be the last year of participation in the infringement. The percentage of yearly turnover will vary depending on the gravity of the infringement. It may be up to 30 % of the relevant sales; for cartels, the Commission will apply a percentage at the higher end of this range.

11. Second, in order to fully reflect the duration of the infringement, the corresponding amount will then be multiplied by the number of years of the undertaking's participation.

12. Third, in order to deter undertakings from even entering into seriously illegal conduct, the Commission will, or may, depending on the nature of the infringement, add to the amount as calculated above a sum amounting to between 15 % and 25 % of the relevant yearly sales, irrespective of the duration of the infringement.

13. Fourth, the Guidelines introduce significant changes with regard to repeat offenders. Up to now, the Commission's practice has been to increase a fine by 50 % where the undertaking is found to have been previously involved in one or more similar infringements. The new Guidelines change this approach in three ways: the Commission will take into account not only its own previous decisions but also those of national competition authorities (NCAs) applying Articles 81 or 82 EC; the increase may be up to 100 %; each prior infringement will justify an increase of the fine.

14. The new Guidelines will apply in every case for which a Statement of Objections is notified to the parties after 1 September.

1.3. Facilitating the recovery of losses from the infringement of competition law: Green Paper on damages actions for breach of the EU antitrust rules

15. In December 2005, the Commission adopted the Green Paper on damages actions for breach of the EU antitrust rules as contained in Articles 81 and 82 of the EC Treaty[6]. The main objective of the Green Paper was to identify the principal obstacles to a more effective system of damages claims and to set out different options for further reflection and possible action to facilitate damages claims for breaches of EU antitrust law.

16. The Green Paper has been met with broad interest in the antitrust community and has been discussed at a number of conferences both in Europe and elsewhere. During the public consultation, which was open until 21 April, the Commission received almost 150 submissions from governments, competition authorities, industry, consumers' organisations, lawyers and academics[7].

17. The vast majority of responses are favourable to the objective of facilitating private enforcement. Practically all the responses accept the complementary role of private actions in the overall enforcement of the EU competition rules. More particularly, there is general agreement that victims of competition law infringements are entitled to damages, and that national procedural rules should be conducive to exercising this right effectively.

18. Although the objective of the Green Paper thus meets with a broad consensus, respondents' opinions diverge with respect to the analysis of the current situation, the question of whether there are obstacles to actions for damages, and the appropriate methods to remedy any shortcomings.

19. On 26 October, the European Economic and Social Committee (EESC) adopted its opinion on the Green Paper, welcoming the Commission's initiative[8]. The European Parliament is still in the process of drafting an opinion on facilitating actions for damages. It is expected that Parliament will adopt its response to the Green Paper in the first half of 2007.

1.4. Ensuring that legislation does not lead to distortions of competition: competition advocacy

20. Competition advocacy is an increasingly important part of competition policy both within and outside the Commission. The aim is to ensure that legislation, at EU or Member State level, pursuing legitimate policy objectives, does this with the least possible harm to competition.

21. In 2006 competition advocacy had, in particular, an important role to play in the legislative process relating to the REACH Regulation (Commission proposal for a Regulation concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals)[9]. Once adopted, REACH will provide for registration of some 30 000 already existent chemicals, as well as future ones. The role of competition policy in this field has been to ensure that REACH, and in particular the information exchange provided for by the draft Regulation, does not lead to distortions of competition.

22. Similarly, the Commission continued its efforts to promote the removal of disproportionate restriction of competition in the key area of professional services as an important contribution towards meeting the Lisbon objectives. Keeping up the pressure resulted in the professional services reform becoming firmly embedded in the better regulation agendas of many Member States. The European Parliament resolution of 12 October supports the Commission in its efforts to rid the sector of overly restrictive regulation which inhibits competition. The European Parliament argues that this would be beneficial to the EU economy and consumers.

2. APPLICATION OF ARTICLES 81, 82 AND 86 EC

23. This part provides an overview of the application of Articles 81, 82 and 86 EC, illustrating how each particular instrument of competition policy was used. The application of Articles 81, 82 and 86 EC, together with other instruments of competition policy, in selected priority sectors is discussed under Sector Developments (Section II).

2.1. Stepping up the fight against cartels

24. In 2006, the Commission continued to give a high priority to the detection and deterrence of cartels. It focused its actions on significant hard-core cartels of mainly worldwide or European scope and involving a number of economic entities. The Commission issued seven final decisions[10] in which it fined 41 undertakings[11] a total of EUR 1 846 million (compared with 33 undertakings and a total of EUR 683 million in fines in 2005). The decisions issued show the economic significance of the sectors involved and the duration of the cartels, hence the average fine per undertaking has increased significantly.

25. In addition to the appropriate sanctions to punish and deter cartels, effective action against cartels also requires incentives to participants to report cartels. The Commission's leniency policy has offered such incentives since 1996 and it has resulted in numerous applications for immunity and/or reduction of fines. The Leniency Notice of 1996, which resulted in more than 80 applications, was replaced on 19 February 2002 by a new Notice under which the Commission received, up to the end of 2006, a total of 104 applications for immunity and 99 applications for a reduction of fines[12]. In December 2006 the Commission adopted a revised Leniency Notice (see section A.1 above). In the period from 19 February 2002 until the end of 2006, the Commission granted conditional immunity in 51 cases[13]. Over the same period, the Commission rejected or decided not to deal any further with 34 applications and had 13 more recent applications under scrutiny. The Commission will close a case that originates from a leniency application if, for instance, it finds that an NCA is well placed to deal with the case or it finds that it does not have conclusive evidence on the alleged cartel. The Commission may also decide, following a Statement of Objections, to close an investigation against an individual company for lack of conclusive evidence, as it did in the Bitumen Netherlands, Acrylic glass and Synthetic rubber cases following a careful analysis of the facts and arguments put forward in response to the Statement of Objections.

26. In respect of the cartel decisions adopted in 2006, four were adopted whilst the 2002 Leniency Notice was in effect[14] and one whilst the 1996 Leniency Notice was in effect. In these cases the Commission also granted substantial reductions of fines to a total of 10 companies in return for evidence provided to the Commission. In both the Acrylic glass and Bleaching chemicals cases a company had provided evidence under the Leniency Notice relating to facts previously unknown to the Commission and having a direct bearing on the duration of the cartel. In accordance with the last paragraph of point 23 of the 2002 Leniency Notice, the extra duration brought to light by this evidence was not taken into account in setting the fine imposed on those undertakings. The Commission considers that a company providing this level of evidence should be certain that the effects of such an extension in duration, or in gravity, of the infringement, which is directly linked to its contribution, will not increase its own fine.

27. It should be noted that, while the leniency policy has been a successful tool for detecting and terminating cartels, the leniency applications do not reflect the total number of cartel investigations. The Commission continues to gather information from complaints, market monitoring and via NCAs in the ECN.

28. Recent cartel decisions show the determination of the Commission to take strong action when it finds that the undertakings are obstructing its investigation. In the Bitumen Netherland case, the Commission increased the fine imposed on KWS by 10 % for obstructing its investigation. During the Commission inspection in October 2002, KWS twice refused the Commission inspectors access to premises, forcing the Commission to invoke the aid of the Netherlands Competition Authority and the Netherlands police. In the Copper fittings case, the Commission increased the fines of four companies – Aalberts, Delta, Advanced Fluid Connections and Legris – by 60 % because they had continued their illegal arrangements after the Commission's inspection. Advance Fluid Connections' fine was increased by a further 50 % for providing the Commission with misleading information. These examples send a strong signal to companies that the Commission will not only punish firms severely for cartel behaviour, but it is also ready to increase the fines considerably if the companies hinder its investigation.

29. Repeat offenders can also expect more severe sanctions. In 2006, the Commission increased by 50 % the fines imposed on a total of nine addressees in the Acrylic glass , Bleaching chemicals, Bitumen Netherlands and Synthetic Rubber decisions, as they were found to have been repeat offenders. The directors and shareholders of such companies should ask why the cartel practices were allowed to continue after the companies had already been condemned by the Commission for cartel infringements. The seriousness with which the Commission views repeated offences is also reflected by the fact that, under the new Guidelines on Fines, the increase of fines in such situations could be up to 100 %.

30. The Commission's cartel enforcement activity also shows that in the case of a company acquisition, the acquiring parties should pay particular attention to possible involvement of the target company in cartel activity. Often during the lifetime of the cartel or during the Commission investigation, companies directly involved in the infringement are sold to or taken over by other companies that have not been involved in the infringement. A new owner may, however, become liable for the conduct of the newly acquired business.

31. The Commission may also reopen proceedings if the Community Courts annul a decision due to a procedural mistake. The decisions adopted in 2006 concerning hot-rolled steel beams used in the construction industry ( Steel beams case) and stainless steel products ( Alloy Surcharge case) were issued in cases where the Community Courts had partially annulled previous Commission decisions in those cases because of procedural errors. These errors, which were due to complex intra-group liability issues, were corrected by reopening the proceedings and addressing new Statements of Objections to companies that had not been fully heard on the original Statements of Objections. Final decisions were thereafter addressed in the Steel beams case to Arcelor Luxembourg SA (formerly Arbed SA), Arcelor International SA (formerly TradeArbed SA) and Arcelor Profil Luxembourg SA (formerly ProfilArbed SA), imposing a total fine of EUR 10 million, and in the Alloy Surcharge case to ThyssenKrupp Stainless AG, imposing a fine of EUR 3 168 000.

2.2. Sanctioning anti-competitive behaviour: abuse of dominant positions (Article 82 EC)

32. On 19 December 2005, the Competition DG published a Discussion Paper on the application of Article 82 EC to exclusionary abuses. The Discussion Paper was in public consultation until 31 March. More than 100 submissions were received and published on the Competition DG's website. The most important topics raised by the submissions were discussed at a public hearing held in Brussels on 14 June. The event attracted about 350 participants from Europe, the United States, Japan and Korea.

33. On the basis of the reactions to the Discussion Paper, the Commission continued its internal reflections and discussions on the application of Article 82 EC.

34. In 2006, the Commission continued its efforts to sanction abuses of dominance that had an anti-competitive effect on the market. It adopted one final decision and sent two Statements of Objections[15].

2.2.1. Exclusionary abuses – Case COMP/38.113 – Prokent/Tomra

35. On 29 March, the Commission adopted a decision imposing a fine on the Norwegian group Tomra, a supplier of so-called reverse-vending machines used by retail outlets to collect empty drink containers. The Commission found that the dominant company violated Article 82 EC by operating a system of exclusivity agreements, individualised quantity commitments and individualised retroactive rebate schemes, which restricted or at least delayed the market entry of other machine manufacturers.

36. The decision establishes, in line with the case law of the Community Courts, that Tomra's practices tended to restrict competition and thus were likely and capable of having anticompetitive effects. In addition, the Commission also performed a quantitative analysis of the actual effects of such conduct on the market. The decision examines in particular several developments on the market which tend to confirm that Tomra's exclusionary strategy did have the likely effect , such as (i) the comparatively strong market position of the dominant company in relation to its rivals despite the non-recurring nature of the demand, (ii) the absence of successful entry in spite of the fact that the market was characterised by demand shocks and low entry barriers, and (iii) increases in Tomra's sales following increased intensity of its anti-competitive practices.

2.3. Commitments

37. Article 9 of Regulation 1/2003 allows the Commission to make commitments binding on undertakings, when the latter offer them to meet the concerns expressed by the Commission in antitrust proceedings. Commitments continue to be an effective means of addressing competition problems. In 2006, the Commission adopted four commitment decisions[16].

2.4 . Compelling undertakings to bring infringements to an end: periodic penalty payments

38. The Microsoft case marks the first time the Commission has had to use its powers to fix a periodic penalty payment under Article 24(2) of Regulation (EC) No 1/2003 in order to compel an undertaking to bring an infringement of Article 81 or 82 EC to an end, in accordance with a decision previously taken pursuant to Article 7.

39. On 10 November 2005, the Commission had already issued a decision pursuant to Article 24(1) of Regulation 1/2003 ("the Article 24(1) Decision") according to which Microsoft was still not complying with certain of its obligations under the original Commission decision of 24 March 2004 ("the Decision"), which found an infringement of Article 82, namely the obligations to (i) supply complete and accurate interoperability information, and (ii) make that information available on reasonable terms. The Article 24(1) Decision imposed a periodic penalty payment of EUR 2 million per day from 15 December 2005, if Microsoft did not comply with the specified obligations by that date. On 21 December 2005, the Commission duly issued a Statement of Objections based on its preliminary assessment that Microsoft had still not provided the required complete and accurate interoperability information.

40. Having taken into account Microsoft's response to the Statement of Objections, and following an Oral Hearing held on 30 and 31 March 2006, the Commission adopted on 12 July 2006 a decision pursuant to Article 24(2) of Regulation 1/2003 fixing for Microsoft a definitive penalty payment of EUR 280.5 million for non-compliance with its obligations for the period from 16 December 2005 to 20 June 2006 (calculated at EUR 1.5 million per day).

41. In its decision of 12 July 2006, the Commission also increased the level of the periodic penalty payment under Article 24(1) from EUR 2 million to EUR 3 million per day as from 31 July 2006. This increase was imposed in the light of the urgent need to establish compliance on Microsoft's part. This increased sum applies not only to the disclosure of interoperability information but also to the need to make that information available on reasonable terms, because a failure to do either is capable of depriving the decision of its effectiveness.

3. SELECTED COURT CASES

42. In 2006, the Court of First Instance (CFI) and the Court of Justice (ECJ) rendered several judgments that have important implications for the application of Articles 81 and 82 EC. A short summary of these is set out below.

3.1. The notion of undertaking

43. The judgment of the ECJ on 11 July in the case FENIN v Commission (C-205/03 P) concerns the application of EU competition rules to public bodies entrusted with the task of managing the Spanish social security system. Since it is the activity consisting in offering goods and services on a given market that is the characteristic feature of an economic activity, the CFI rightly deduced, in the judgment under appeal, that there is no need to dissociate the activity of purchasing goods from the subsequent use to which they are put in order to determine the nature of that purchasing activity, and that the nature of the purchasing activity must be determined according to whether or not the subsequent use of the purchased goods amounts to an economic activity.

44. Similarly, the judgment of the CFI on 12 December in the case Selex (formerly Alenia) v Commission (T-155/04) concerns the application of EU competition rules to a public body entrusted with the tasks of air space management and air navigation safety (Eurocontrol). The CFI further clarified the notion of undertaking, confirming that the various activities of an entity entrusted with public authority must be considered individually insofar as they are separable, and that the powers of public authority do not exclude the qualification of certain of its activities as economic in character. The CFI also found that the purchase of goods cannot be dissociated from the subsequent use to which the goods are put. The CFI confirmed the Commission's findings that the activities of technical standardisation and research and development are not economic, but did qualify the assistance to national administrations as economic.

3.2. The notion of agreement

45. On 13 July, the ECJ rejected the Commission's appeal against the judgment of the CFI by which it annulled the Commission decision imposing a EUR 30.96 million fine on Volkswagen AG for retail price maintenance on the German car market[17].

46. The judgment primarily concerned the notion of "agreement" within the meaning of Article 81(1) EC, specifically in the context of selective distribution networks. The judgment rejected the Commission's appeal, but brought an important clarification to the notion of "agreement", rectifying one aspect of the CFI's reasoning which the Commission had attacked in its appeal. In particular, the ECJ held that the CFI made an error of law in its reasoning in finding that clauses of a dealership agreement which comply with the competition rules may not be regarded as authorising calls by the supplier which are contrary to those rules.

47. This judgment follows a series of cases before the ECJ and the CFI concerning the notion of "agreement" within the meaning of Article 81(1) in the presence of seemingly "unilateral" measures by a supplier. The ECJ has confirmed the analytical approach taken in its previous judgments (especially in the Adalat and Volkswagen I cases) and has shed additional light on the scope of the notion of agreements in the context of distribution networks with many members.

3.3. Market partitioning

48. On 6 April, the ECJ rejected General Motor's appeal and upheld the previous ruling of the CFI, which essentially confirmed the Commission's decision finding that General Motors (through its subsidiary Opel Nederland) had imposed restrictions on export sales by its dealer network in the Netherlands, contrary to Article 81 EC. The Commission found that there was a systematically restrictive strategy in relation to supply and bonuses, resulting in an indirect prohibition on exports to final consumers and to Opel dealers established in other Member States. In particular, Opel Nederland refused to grant a bonus to authorised dealers for cars sold and registered outside the Netherlands. This restriction discriminated between domestic and export sales in a way that reduced dealers' margin of manoeuvre to sell to end-users resident in other Member States. It was therefore restrictive of competition by object, contrary to Article 81 EC.

49. The judgment of the ECJ on 21 September in the case C-167/04 P JCB Service v Commission , brought by JCB Service against the Commission decision of December 2000, concerned the market partitioning policy implemented by JCB Service in its distribution system for no less than 10 years in five different Member States. The products concerned were earthmoving machines (e.g. loaders). JCB was the EU market leader for specific categories of products, i.e. backhoe loaders, with market share around 45 %. The ECJ reiterated that geographic market partitioning agreements which jeopardise the benefits accruing to EU citizens and companies from healthy competition in the internal market are inadmissible under EU competition rules, where they provide for export bans in the distribution network in the sector concerned.

3.4. The application of Article 81(1) and 81(3) to parallel trade

50. On 27 September, the CFI annulled the Commission 's decision adopted in 2001 under Article 81 EC against Glaxo Smith Kline (GSK) regarding the dual pricing system GSK had implemented in Spain.

51. GSK charged a different price to Spanish wholesalers depending on the final destination of the product, i.e. if the product was consumed in Spain a lower price would apply, and if it was exported a higher price would apply. The Commission found in the decision that dual pricing systems create a clear distinction between domestic markets and export markets, and are an obvious tool to impede parallel trade and therefore infringe Article 81(1) EC by object. The Commission also concluded that the agreement had restrictive effects on competition and the conditions for an exemption under Article 81(3) EC were not fulfilled.

52. GSK appealed the decision to the CFI. In its judgment, the CFI confirmed that GSK's dual pricing scheme constituted an "agreement between undertakings" in the sense of Article 81(1) EC. The CFI did not agree with the Commission that GSK's dual pricing scheme had as its object to restrict competition in the sense of Article 81(1) EC. The CFI stresses that the Commission failed to examine the "specific and essential characteristic of the sector". According to the Court, the prices of medicines are to a large extent shielded from the free play of supply and demand owing to the applicable regulations and are set or controlled by the public authorities. In such a context, the CFI considers that it could not automatically be presumed that parallel trade would lead to lower prices in the import country. Nevertheless, the CFI agreed with the Commission that GSK's dual pricing scheme had the anti-competitive effect of depriving final consumers of the advantage which they would have derived, in terms of price and costs, from the participation of the Spanish wholesalers in intrabrand competition on the national markets of destination of the parallel trade originating in Spain. By conclusion, the CFI approved the Commission's conclusion that the dual-pricing scheme infringed Article 81(1) EC.

53. However, the CFI also found that the Commission did not conduct an appropriate examination of the factual arguments and evidence put forward by GSK when evaluating whether the agreement could have received an individual exemption under Article 81(3). In particular, the CFI found that the Commission's decision had not undertaken a sufficiently serious examination of the arguments put forward in support of the claim that dual pricing entailed a gain in efficiency by contributing to innovation in the pharmaceutical sector. The CFI therefore annulled Article 2 of the decision.

54. The Commission has decided to appeal the judgment to the ECJ.

3.5. Duration of proceedings

55. By its judgments of 21 September in the cases C-105/04P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied (FEG)/Commission and C-113/04P Technische Unie BV (TU)/Commission, the ECJ confirmed definitively and in its entirety the decision of the Commission of 26 October 1999 (IV/33.884), under which fines had been imposed on the Dutch association of wholesalers of electro-technical equipment FEG and its main member TU for a violation of Article 81 (a collective exclusive dealing arrangement with suppliers and a price-fixing arrangement). The most delicate point in the proceedings before the CFI and ECJ concerned the duration of the Commission proceedings leading up to the adoption of its decision. Although the Commission itself had recognised in its decision that the duration of its proceedings had been significant and for that reason, on its own initiative, had decided to reduce the amount of the fine by EUR 100 000, FEG and TU asked for annulment of the entire decision. Both the CFI and the ECJ found that FEG and TU had been unable to demonstrate in any concrete manner that the duration of the Commission's proceedings had breached their rights of defence.

3.6. Procedural rights of third parties

56. On 7 June, in the Österreichische Postsparkasse [18] case, the CFI delivered a judgment upholding a decision by the Hearing Officer that the political party FPÖ should be provided[19] with the non-confidential versions of the SOs in the Austrian banks' price cartel case, commonly referred to as the "Lombard Club" [20]. The Hearing Officer based its decision on the fact that FPÖ was recognised as a formal complainant by the Commission[21].

57. Following an appeal brought by two banks, the CFI confirmed that third parties have certain procedural rights in the Commission's antitrust proceedings depending on their status as complainant, third party with a sufficient interest to be heard or other third party. Complainants enjoy more extensive procedural rights than any other category of third party.

3.7. Publication and protection of confidential information

58. In its judgment of 30 May, in the Bank Austria [22] case, the CFI upheld the decision by the Hearing Officer to reject the objection of several banks to the publication of a non-confidential version of the Commission's final decision in the above-mentioned "Lombard Club" case. The Hearing Officer considered that the non-confidential version, which partially took account of the banks' request for confidentiality, did not contain information for which confidential treatment was guaranteed by Community law.

59. Following an appeal by one of the banks, the CFI clarified that the protection to be afforded to information acquired in the course of antitrust proceedings depends on the degree of confidentiality (special protection is to be afforded to business secrets, whilst professional secrets require only less extensive protection) and on a balancing of interests for and against disclosure. Furthermore, the CFI held that the concept of professional secrecy cannot be detached from secondary Community legislation in fields other than EU competition law (in particular Regulation 45/2001 on the protection of personal data and Regulation 1049/2001 regarding public access to documents).

3.8. The application of competition law to sporting rules

60. In the Meca Medina case, the ECJ decided on 18 July[23] that the anti-doping rules of the International Olympic Committee (IOC) do not constitute an infringement of Article 81(1) EC and dismissed the action for annulment of the decision of 1 August 2002[24] by which the Commission rejected a complaint. This is one of the first rulings of the ECJ on whether sporting rules are subject to the Treaty provisions on competition. It confirms the Commission's policy in the field of sports.

61. The ECJ held that the qualification of a rule as being of a "purely sporting nature" unrelated to an economic activity is not sufficient in itself to remove the rule in question from the scope of EU competition provisions. It found that the specific requirements of Articles 81 and 82 EC must be examined irrespective of the nature of the rule.

62. The ECJ concluded that the anti-doping rules in question did not infringe Article 81(1) EC on the basis of the application of the principles established in its Wouters judgment[25]. It reiterated that account must be taken of (i) the overall context in which the rules were adopted or produce their effects and of their objectives and (ii) whether the restrictive effects are inherent in the pursuit of the objectives and are proportionate to them. The ECJ found that the objective of the anti-doping rules was to ensure fair sporting competitions with equal chances for all athletes as well as the protection of athletes' health, the integrity and objectivity of competitive sport and ethical values in sport. The restrictions caused by the anti-doping rules were considered by the ECJ to be inherent in the organisation and proper conduct of competitive sport and proportionate.

B – MERGER CONTROL

1. LEGISLATIVE, INTERPRETATIVE AND PROCEDURAL RULES

1.1. Giving guidance on jurisdiction in merger control: draft Commission Consolidated Notice on Jurisdiction

63. On 28 September, the Commission published a new draft Commission Consolidated Jurisdictional Notice under the Merger Regulation[26] for public consultation. This Notice will replace the current four Jurisdictional Notices, all adopted by the Commission in 1998 under the previous Merger Regulation 4064/89[27]. These are (i) the Notice on the concept of concentration[28], (ii) the Notice on the concept of full-function joint ventures[29], (iii) the Notice on the concept of undertakings concerned[30], and (iv) the Notice on calculation of turnover[31]. The new Notice will therefore cover, in one document, all issues of jurisdiction which are relevant for establishing the Commission's competence under the Merger Regulation (except for referrals).

64. The new draft Notice draws upon three general sources for making amendments to the existing Notices. Firstly, the draft Notice takes into account the changes introduced by the new Merger Regulation in relation to jurisdictional issues. Secondly, the draft Notice incorporates recent case law. A number of issues arising from the judgments of the CFI in the cases Cementbouw v Commission [32] and Endesa v Commission [33] are, for instance, included in the draft Notice. Thirdly, the experience gained in the Commission's decisional practice in recent years is also reflected in the new draft Notice.

65. The draft Notice explains a number of issues not previously covered in the existing Notices concerning the concept of control. In particular, the draft Notice extends the discussion of the acquisition of control on a contractual basis, clarifies the circumstances under which the turnover of all the portfolio companies held by several investment funds – all set up by the same investment company – is to be taken into account when one of the funds is involved in an acquisition, and explains the circumstances under which a concentration arises if a company out-sources the provision of services or the production of goods, previously performed in-house, to a third party. The Notice also explains how the Commission deals with operations where a target company is acquired in order to immediately divide the assets between several ultimate acquirers. Under the heading "interrelated transactions", the draft Notice clarifies the circumstances in which several transactions are to be considered a single concentration under Article 3.

66. In other areas, the new Notice clarifies the treatment of joint ventures under the Merger Regulation, particularly as regards the requirements for considering joint ventures as full-function undertakings. It also includes a section on the requirements to be met by parties demonstrating abandonment of a concentration. If the transaction is abandoned in line with those requirements, the concentration ceases to exist and the Commission is no longer competent to take a decision under the Merger Regulation. The draft also includes a revised section on the calculation of turnover. In this context, the new Notice determines the relevant date for establishing the jurisdiction of the Commission or of NCAs over a given concentration.

67. In the framework of the public consultation, the Commission received a significant number of comments which can be accessed via the Competition DG's website. It is expected that the Commission Jurisdictional Notice under the Merger Regulation will be finally adopted by summer 2007.

2. APPLICATION OF THE MERGER CONTROL RULES

2.1. Overview

68. The number of mergers notified to the Commission in 2006 reached record levels , surpassing the previous record number reached during the last merger wave in 2001. This record level of 356 notifications continued a trend towards increased merger activity already noted in 2005 and is consistent with the widely reported increase in merger activity in Europe and worldwide.

69. In total the Commission adopted 352 final decisions during the year. Of these final decisions, 323 transactions were cleared without conditions during Phase I. A further 13 transactions were cleared in Phase I subject to conditions. Finally, 207 decisions (or 64 % of all Phase I clearance decisions) were taken in accordance with the simplified procedure.

70. As regards referrals, the Commission received 13 requests pursuant to Article 4(4) of the Merger Regulation (for referral from the Commission to an NCA), representing a slight decline compared to the previous year. However, the number of Article 4(5) requests (for referral from the NCAs to the Commission) increased considerably from 28 in 2005 to 38 in 2006. In addition, the Commission referred six cases to NCAs pursuant to Article 9 of the Merger Regulation during the year and received four requests for referral from Member States pursuant to Article 22.

71. There was a slight increase in the number of Phase II proceedings, with 13 such cases being opened during the year as against 10 in 2005. Ten decisions were adopted pursuant to Article 8 during the year. This represents a doubling in the number of such decisions compared to the previous year, with four decisions being adopted pursuant to Article 8(1)[34] and six decisions being adopted pursuant to Article 8(2)[35]. In addition, two notifications were withdrawn by the notifying parties during Phase II. No outright prohibition decisions were taken during the year. In general, there is little change in the percentage of notified concentrations resulting in a prohibition decision, averaging around 1.25 % (including Phase II withdrawals), as the chart below indicates.

Chart 1 – Prohibitions and Phase II withdrawals, 1997-2006

147. III – The European Competition Network and National Courts – Overview of cooperation

1. GENERAL OVERVIEW

148. 2006 was the second full year of implementation of the enforcement system set up by Regulation 1/2003. It saw a further strengthening of cooperation between the members of the ECN, i.e. the EU Member States' NCAs and the Commission. The ECN continues to function well, with the mechanisms provided for by Regulation 1/2003, aiming at ensuring efficient and consistent enforcement of the law, operating smoothly throughout the year.

1.1. Cooperation on policy issues

149. The strength and the potential of the ECN cooperation go beyond the legal obligations set out in the Regulation. The ECN also provides a useful platform for EU competition authorities to discuss general policy issues. During 2006, such work took place in four different fora:

150. First, the Director General of the Competition DG and the heads of all NCAs met for their annual meeting in the ECN context to discuss important competition policy issues. The 2006 meeting focused on the ECN Leniency Model Programme, which was developed in response to requests for a one-stop leniency shop and is intended to improve the handling of parallel leniency applications in the ECN without jeopardising the flexible work-sharing arrangements between the ECN members. The aim of the Model Programme is to set out the basis for soft harmonisation of all European leniency programmes and to persuade the few Member States that do not yet have a programme in place to adopt one. The programme sets out the main procedural and substantive rules which the ECN members believe should be common to all such programmes. It also introduces a model for a uniform summary application system at national level for immunity applications in cases concerning more than three Member States. The Directors General endorsed the ECN Model Programme[232] and agreed to make every effort to align their current and future European leniency programmes with its provisions.

151. Second, the NCAs and the Commission met at regular intervals, on three occasions, in so-called "plenary meetings", during which general issues of common interest relating to antitrust policy were debated and experiences and know-how were exchanged. Such discussions and exchanges are intended to foster the creation of a common competition culture within the ECN. In particular, based on the work of the Leniency working group, preparations were made for launching the ECN Leniency Model Programme. Useful discussions also took place on cooperation within the ECN for sector inquiries.

152. Third, during 2006, six working groups dealt with specific issues. One working group was dedicated to preparing the ECN Leniency Model Programme. The mandate of a second working group, initially created to explore transitional issues, was adapted to cover cooperation issues more generally; the group focused closely on the subject of sector inquiries, exploring options for cooperation in the network. The third working group addressed issues related to the diversity of procedures and sanctions in the Member States as well as the interface of competition enforcement procedures with certain third pillar instruments. A fourth working group dealt with information and communication about the ECN. In particular, it prepared the launch of a website that provides information about the ECN and its basic texts and facilitates access to the annual reports and news releases of all the authorities in the network[233]. A fifth working group was dedicated to issues relating to abuse of dominant position, and the sixth working group consists of chief competition economists from the agencies within the ECN. These working groups provide an excellent forum for sharing experiences on concrete issues and developing best practices.

153. Finally, 15 ECN sectoral subgroups dedicated to particular sectors[234] addressed specific issues and engaged in a useful exchange of experience and best practices. For example, in 2006, the professional services subgroup discussed reforms and transparency in the professional services sector across the EU. The sectoral subgroups ensure good upstream coordination and engender a common approach and broad consistency in the application of EU competition law, beyond individual cases[235].

1.2. Evolution of national laws and instruments for efficient enforcement by NCAs

154. The year 2006 saw the continuation of the 'convergence' process observed in the context of Regulation 1/2003. Over and above legal obligations arising from the implementation of the Regulation, there is a trend towards greater approximation of national procedural laws and policies. A major example of this is the continued trend towards introduction of leniency programmes. By the end of 2006, all but six Member States were operating a leniency programme or were in the process of introducing one. The first indications are that new or revised programmes are aligning on the provisions of the ECN Leniency Model Programme. There is also a sustained trend in respect of the abolition of notification systems for the purposes of national competition laws. Currently, all but five Member States have abolished (or are in the process of abolishing) their notification system. The new, largely similar, instruments are increasingly being used in practice. For example, a large number of NCAs now have the power to adopt commitment decisions in line with Article 9 of Regulation 1/2003. In consequence, a significant increase in such decisions could be observed in 2006 among the decisions communicated to the Commission on the basis of Article 11(4) of Regulation 1/2003.

1.3. Cooperation in individual cases

155. Cooperation between the ECN members in individual cases is organised around two principal obligations on the part of the NCAs, namely to inform the Commission when new cases are opened (Article 11(3) of the Regulation) and before the final decision is taken (Article 11(4) of the Regulation). The first requirement of informing the Commission and the network facilitates the swift reallocation of cases on the few occasions where it appears necessary and promotes enhanced and effective enforcement, whereas the second plays an important role in ensuring consistent application of EU law.

1.3.1. Case allocation

156. The Commission was informed of some 150 new case investigations launched by NCAs in 2006. Amongst the new cases about which the Commission was informed under Article 11(3) of the Regulation, 45 % concerned the application of Article 81 EC, 37 % concerned the application of Article 82 EC and 18 % concerned the application of both Article 81 and 82 EC.

157. The experiences of work-sharing within the Network have so far confirmed that the flexible and pragmatic approach introduced by the Regulation and the Network Notice[236] functions very well in practice. As in previous years, there were in 2006 few instances where case-allocation discussions took place, and even fewer occasions where a case changed hands. The situations where work-sharing plays a role typically occur when a complainant or a leniency applicant chooses to contact both the Commission and one or more NCAs. In 2006, a small number of complaints were re-allocated from the Commission to NCAs that were willing to follow up the matters raised. Furthermore, in a limited number of instances, NCAs expressly drew the Commission's attention to suspected competition problems that appeared to have effects in several Member States. To date, there have been no instances where allocation of an individual case has not been solved through bilateral discussions.

1.3.2. Coherent application of the rules

158. In 2006, the Commission and its services reviewed or advised on, either on the basis of the formal cooperation provisions or on an informal basis, some 125 cases originating from NCAs. These cases related to a broad range of infringements in different sectors of the economy.

159. To date, the Commission has not made use of the possibility of relieving an NCA of its competence in a given case by initiating proceedings under Article 11(6). In several instances, the services of the Competition DG entered into discussions with the NCA and provided comments and advice to the authority on an informal basis.

160. The aim of such observations is to draw the NCA's attention to certain issues or to raise points which might merit further consideration. The possibility of submitting (oral or written) observations informally has proved to be very helpful for achieving smoother and more consistent enforcement of EU competition law. The willingness of the authorities to engage in these dialogues and to take account of suggestions has turned this voluntary cooperation instrument into a useful complement to the formal powers given to the Commission.

2. Application of EU competition rules by national courts in the EU: Report on the implementation of Article 15 of Regulation 1/2003

2.1. Assistance in the form of information or in the form of an opinion

161. Article 15(1) of Regulation 1/2003 allows national judges to ask the Commission for information in its possession or for an opinion on questions concerning the application of the EU competition rules. In 2006, the Commission issued an opinion following a request made in 2005 by a court in the Netherlands. During 2006, the Commission received two requests from national judges (Belgium and Sweden) for an opinion under Article 15(1). In response to these requests, the Commission issued one opinion to the Belgian judge, whereas the Swedish request was still pending at the end of the year.

2.1.1. The opinion provided to a court in the Netherlands

162. Further to a request received in 2005, the Commission provided an opinion to the Gerechtshof in The Hague in a case that concerned quota allocations for mussel seeds in the Netherlands, set by an association of mussel farmers for its members. The Court essentially asked the Commission for its opinion on whether the EU competition rules applied to this practice or whether it fell within the scope of Regulation 26/62 on the application of competition rules to agricultural products.

163. In its opinion, the Commission examined in particular the conditions of the application of Article 2(1) of the above-mentioned Regulation to the case at issue and expressed the view that those conditions seemed to be fulfilled.

2.1.2. The opinion requested by a Belgian court

164. In 2006, an opinion was requested by the Antwerp Court of Appeal. The case before this court concerned an accident in the port of Antwerp in 1995, in which a ship hit a container crane while a pilot was onboard assisting the master of the vessel. The accident resulted in the death of the crane operator and considerable damage to the port infrastructure. One of the main issues at stake in this case related to the liability of the pilot and the company that holds the concession for the provision of pilot services in the port of Antwerp. In particular, the Court of Appeal asked for the Commission's opinion on the conformity, with Article 82 EC, of the general conditions in the pilotage contract, including both an exoneration of responsibility and an indemnity clause, while also taking into account the apparent contradiction in the exoneration clause and the circumstances in which these conditions were proposed by the concession holder to potential users of pilotage services.

165. In its reply, the Commission commented on the existence of a dominant position and abuse of that position under Article 82(a) EC. The opinion highlighted principles that could be derived from the case law concerning exploitative abuses and the imposition of unfair trading conditions. In this respect, the Commission drew the Court's attention in particular to the BRT v SABAM case. The Commission also reminded the Court of Appeal of the need to take into account all relevant interests in a case when analysing whether trading conditions are unfair, and the need for the liability clause to be seen in the light of the overall contract and the relevant context, rather than viewed in isolation. In particular, as regards the question of whether contractual exclusion of liability is an abuse, it seemed relevant to the Commission to analyse whether the dominant undertaking would have been able to impose a similar exclusion of liability if there had been normal and sufficiently effective competition and whether the contractual clause raises obstacles, the effect of which goes beyond the objective to be obtained.

2.2. Judgments by national courts

166. Article 15(2) of Regulation 1/2003 requires the EU Member States to forward to the Commission a copy of any written judgment issued by national courts deciding on the application of Articles 81 or 82 EC. The Commission received copies of some 30 judgments handed down in 2006, which were posted on the Competition DG's website in so far as the transmitting authority did not class them as confidential (confidential judgments are merely listed).

2.3. Amicus curiae intervention under Article 15(3) of Regulation 1/2003

167. Article 15(3) of Regulation 1/2003 provides that where the coherent application of Articles 81 or 82 EC so requires, the Commission, acting on its own initiative, may submit written observations to courts of the Member States, and may also make oral observations with the permission of the court in question.

168. In 2006, for the first time since the entry into force of Regulation 1/2003, the Commission made use of the amicus curiae possibility under Article 15(3), by presenting written observations to the Cour d'appel de Paris. The case in question relates to car distribution and involves a discussion of the concept of 'quantitative selective distribution' in Regulation (EC) No 1400/2002 (the motor vehicle block exemption regulation)[237]. The Commission's observations in this case restated its interpretation of the relevant provisions of the block exemption regulation with a view to raising awareness on the part of the court. Whilst not binding on the court, the Commission's observations could also prompt a referral for a preliminary ruling from the ECJ.

2.4. Financing the training of national judges in EU competition law

169. Continuous training and education of national judges in EU competition law is very important in order to ensure both effective and coherent application of those rules. Since 2002, the Commission has co-financed several training projects each year and did so again in 2006, co-financing 15 projects for the training of national judges from all 25 EU Member States.

IV – International activities

1. ENLARGEMENT, WESTERN BALKANS AND NEIGHBOURHOOD POLICY

170. In the run-up to the accession of Romania and Bulgaria in January 2007, the Commission closely monitored the preparations for membership and assisted in the enforcement of the competition rules.

171. The Commission reviewed the State aid measures which Bulgaria and Romania notified in accordance with the so-called existing aid mechanism established by the Accession Treaty. This mechanism provides that any State aid measure put into effect before and still applicable after accession is, upon accession, regarded as existing aid within the meaning of Article 88(1) EC only when the Commission has had an opportunity to review it and does not raise an objection.

172. In addition, with regard to Romania, the Commission closely monitored the State aid enforcement record by reviewing draft decisions before their final adoption by Romania.

173. The Competition DG assisted Croatia and Turkey and the Western Balkan countries in further aligning their competition rules with EU law. This included help in drafting competition and State aid laws and advice on setting up the necessary institutions for the enforcement of these rules.

174. The Competition DG was involved in negotiating with several neighbourhood policy countries the competition provisions in the action plans.

2. BILATERAL COOPERATION

2.1. Introduction

175. The Commission cooperates with numerous competition authorities on a bilateral basis and in particular with the authorities of the Community's major trading partners. The European Union has dedicated cooperation agreements in competition matters with the United States, Canada and Japan.

2. 2. Agreements with the USA, Canada and Japan

United States of America

176. Cooperation with the US competition authorities is based on two dedicated competition cooperation agreements[238]. During 2006, the Commission continued its close cooperation with the Antitrust Division of the US Department of Justice (DoJ) and the US Federal Trade Commission (FTC). Contacts between Commission officials and their counterparts at the two US agencies were frequent and intense. These contacts range from cooperation in individual cases to more general competition policy-related matters.

177. Case-related contacts usually take the form of regular telephone calls, e-mails, exchanges of documents and other contacts between the case teams. In cartel investigations, many of the case-related contacts took place as a result of simultaneous applications for immunity in the US and the EU. Furthermore, in a number of instances, coordinated enforcement actions took place in the US and the EU, in which the agencies tried to ensure that the time lapse between the start of the respective actions was as short as possible. Cooperation in merger control with the DoJ and the FTC continued at a high level of intensity during 2006. The 2002 EU-US best practices on cooperation in reviewing mergers provide a useful framework for cooperation, in particular by indicating critical points in the procedure where cooperation could be particularly useful.

178. Commissioner Kroes met the heads of the US antitrust agencies, Chairman Deborah Majoras of the FTC, and Tom Barnett, Assistant Attorney General at the DoJ, on several occasions. Director General Philip Lowe spoke on 12 September at the joint FTC/DoJ hearings on unilateral conduct. The annual bilateral EU/US meeting, attended by all heads of agencies, took place on 20 October in Brussels. Numerous other meetings and video- or teleconferences took place to discuss issues such as cooperation in cartel investigations, abuse of dominance or the application of the competition rules in particular sectors.

Canada

179. Cooperation with the Canadian Competition Bureau is based on the EU/Canada Competition Cooperation Agreement signed in 1999[239]. Contacts between the Commission and the Bureau, its Canadian interlocutor, have been frequent and fruitful. Case-related contacts concerned all areas of competition law enforcement, though the most frequent contacts concerned merger and cartel investigations. In the area of cartel cases, this includes the coordination of investigative measures; in the area of mergers, discussion on possible remedies. The Commission and the Canadian Competition Bureau also continued their dialogue on general competition issues of common concern and officials visited one another.

Japan

180. Cooperation with the Japan Fair Trade Commission (JFTC) is based on the 2003 Cooperation Agreement[240]. Contacts with the JFTC increased considerably in the course of 2006, in connection with both case-related issues and more general policy matters. Commissioner Kroes met JFTC Chairman Takeshima on the occasion of the annual bilateral meeting which took place on 7 March in Tokyo. In addition to numerous contacts on individual cases, the Commission and the JFTC continued their ongoing dialogue on general competition issues of common concern. In this context, four meetings took place in Brussels in 2006: one on 2 February focusing on IPR and technology transfer; one on 28 September focusing on merger analysis; and two on 22 November focusing on economic analysis and cartel cooperation.

2.3. Cooperation with other countries and regions

China

181. Cooperation with China continued under the "EU-China competition policy dialogue"[241]. Contacts dealt with general policy issues and questions concerning the drafting of the Chinese anti-monopoly law. Commissioner Kroes discussed the draft law with Ms Ma, Vice-Minister in charge of competition, in the margins of the annual bilateral meeting on 20 June.

182. The Competition DG took part in the EU-China Anti-Monopoly Law Workshop with representatives of the National People's Congress on 18 and 19 December in Beijing. The topics which were addressed included merger review, abuse of dominant market positions, enforcement and judicial review. This workshop, which was very well received on both sides, contributed to a better understanding of the approach taken by China and the EU respectively.

183. During the year, the Competition DG took various steps to help China develop its competition law by providing technical assistance. The Competition DG hosted two interns from the Chinese Ministry of Commerce for a period of five months.

European Free Trade Area

184. During the year, the European Commission continued its close cooperation with the EFTA Surveillance Authority in enforcing the Agreement on the European Economic Area.

Korea

185. The Competition DG continued its close cooperation with the competition authority of South Korea (Korean Fair Trade Commission – KFTC). Representatives of both parties met on several occasions to exchange views on individual cases and policy issues. At the annual bilateral consultation meeting in Seoul in June, Commissioner Kroes and Chairman Kwon agreed to enhance bilateral cooperation by exploring the possibility of an inter-governmental agreement between the European Communities and the Republic of Korea. This would replace the existing Memorandum of Understanding[242] between the Competition DG and the KFTC.

Russia

186. The chairman of the Russian Federal Anti-monopoly Service (FAS), Igor Artemyev, visited Brussels in October for bilateral discussions with Commissioner Kroes and the Competition DG. This visit marked the entry into force of the new Russian competition law, which embodies a certain convergence with EU law (for example, regarding criteria for exemption of anti-competitive practices, and as regards State aid). The Competition DG had been consulted by the FAS on the drafting of the law.

3. MULTILATERAL COOPERATION

3.1. International Competition Network

187. The Competition DG continued to play a leading role in the International Competition Network, in which it is a member of the Steering Group, co-chair of the Cartels Working Group, and an active member of the other Working Groups, on Mergers, Competition Policy Implementation, and Unilateral Conduct. This latter Working Group is a new ICN initiative, having been launched at the 2006 ICN annual conference, and aims to examine the approaches of different jurisdictions with regard to behaviour by individual undertakings (abuse of dominant positions, monopolisation and so forth). The first fruits of its work are expected to be presented at the 2007 ICN conference, in the form of reports covering the objectives of legislation on unilateral conduct and definitions of "dominance".

188. Particular mention should also be made of the Cartels Working Group, co-chaired by the Competition DG. At the 2006 ICN conference, this Working Group presented reports on cooperation between agencies in cartel investigations (drafted by the Competition DG), and interaction of public and private enforcement, along with a new chapter on electronic evidence gathering for the ICN's Anti-Cartel Enforcement Manual and a reinforced chapter on leniency. In addition, the Working Group organised the annual ICN cartel workshop, in the Netherlands in November, which was largely based on a hypothetical cartel case.

3.2. OECD

189. The Competition DG continued to participate actively in and contribute to the work of the OECD Competition Committee. The Competition DG participated in all competition policy round tables and also participated actively in the peer reviews of Sweden and South Korea. It attended the Global Forum and other competition-related OECD meetings (e.g. of the Investment Committee, Trade Committee and Group on Regulatory Policy).

190. OECD Competition Committee meetings were held in February (Global Forum), June and October. In February, the Global Forum on competition held a peer review of Chinese Taipei and round tables on concessions and on prosecuting cartels without direct evidence of agreement. The latter round table was followed by breakout sessions on cartel case studies. In June, the Competition Committee held two round tables, one on remedies and sanctions in abuse of dominance cases, and one on competition policy and environmental protection. The October meeting of the Competition Committee again featured two round tables. The first one, on competition, patents and innovation, addressed in particular the positive and negative ways in which competition and patents can influence innovation. The second one discussed competition in bidding markets, how to maximise competition in auctions (including the effect of transparency on competition in auctions and on corruption in the organisation of auctions), and how to carry out merger evaluations in bidding markets.

V – Outlook for 2007

A – INSTRUMENTS

1. ANTITRUST

191. The establishment of a dedicated Cartels' Directorate in the Competition DG in June 2005 and the resources invested in this work area, together with the revised leniency programme, are already bearing fruit. The Commission has, during the past year, adopted decisions on a number of cases and has opened numerous investigations. The revised Leniency Notice is now being applied and initial investigative measures have been taken. The Competition DG is also examining the possibility of introducing a form of direct settlements for cartels whereby companies that acknowledge their responsibility in a cartel infringement would, in line with conditions to be set out, benefit from a shorter administrative procedure and receive a reduction in the amount of fines that would have been applied otherwise. From the perspective of cartel prosecution and efficacious use of enforcement resources, this would herald a new phase of cartel deterrence.

192. As a follow-up to the Green Paper, the Commission has endorsed in its 2007 legislative and work programme the preparation of a White Paper on antitrust damages actions[243]. The White Paper will be accompanied by an impact assessment. The Commission would hope that such a White Paper will foster and put into sharper focus the ongoing discussions on private enforcement as the second pillar of enforcement of EU competition rules. It could also serve as a reference point for the Member States when they are reassessing their applicable national procedural rules. The White Paper will be followed by a period of consultation similar to that which followed the December 2005 Green Paper, during which all relevant stakeholders will be invited to comment.

2. MERGERS

193. In the area of mergers and with a view to building on past experience, the Commission will continue to ensure that the assessment of all proposed transactions is based on sound economic theory and analysis and high-quality investigative techniques. As part of these efforts the Commission also plans to continue its work on three sets of guidelines which are designed to improve the transparency, predictability and consistency of its policy and to ensure that it is based on a sound economic framework. These guidelines comprise:

194. guidance on non-horizontal mergers. It is planned to publish a draft Notice during the course of the year.

195. an amended Notice on Remedies. This will build on the experience gained and proposals contained in the Remedies Study published in 2005.

196. a consolidated jurisdictional Notice. It is hoped that the Commission will adopt this Notice by summer 2007 following finalisation of the consultation process initiated in 2006.

3. STATE AID

197. In the area of State aid, the Commission intends to continue work on the implementation of the State Aid Action Plan by adopting in 2007 new guidelines on environmental protection, new rules for aid in the form of guarantees, a new notice on the Commission's reference rates and a notice on the recovery of illegal or incompatible aid.

198. While priority will be given to completing this legislative package, the entry into force of the texts adopted in 2006 will also require a programme of training, help desks and scrutiny to ensure smooth and efficient implementation. Furthermore, the Commission intends to consolidate its practice with a more refined economic approach, which should lead to a guidance document.

199. In the course of 2007, the Commission will also reflect on the need to revisit the rules on rescue and restructuring, aid in the form of taxation and aid for broadcasting and cinema. In addition, the Commission will prepare a new general block exemption, to be adopted in 2008, which will simplify, rationalise, consolidate and significantly expand the possibilities for Member States to grant aid without having to notify it to the Commission. The current block exemption for SMEs already offers possibilities to support investment aid, aid for consultancy and other services activities and aid for R&D projects. The aim is to make the new block exemption even more comprehensive, with possible new exemptions for regional aid, R&D and innovation and environmental aid. This lightened administrative burden will mostly benefit SMEs.

B – SECTOR DEVELOPMENTS

1. ENERGY

200. The Commission intends to bring forward proposals in the summer of 2007 for a third legislative package to promote effective competition in the gas and electricity sectors. In addition, the Commission will pursue investigations into a number of antitrust, merger and State aid cases. The Distrigas case concerning long-term downstream contracts should be completed in 2007, and a number of other antitrust cases are likely to be opened, for example on the basis of the unannounced inspections the Commission carried out in 2006 and/or complaints the Commission has received. The consolidation of the energy sector is expected to continue and the Commission will investigate thoroughly all merger notifications that it receives.

201. With the cooperation of the Member States concerned, the Competition DG anticipates deploying resources in the State aid control field mainly on two issues in both upstream and downstream markets during 2007. In upstream markets, control of the State aid implications of long-term Power Purchase Agreements, with particular emphasis on the new Member States, will continue to be the focal point. Such contracts still foreclose significant parts of the wholesale markets. In downstream markets, the Competition DG anticipates a big workload in the field of regulated electricity tariffs. Favourable electricity tariffs undercut the market in a number of Member States. The cases are likely to concentrate mainly on energy-intensive undertakings and/or sectors.

2. FINANCIAL SERVICES

202. The Commission expects to finalise the sector inquiries both in retail banking and in business insurance in 2007. The Commission will decide on specific remedies to address the competition problems identified by the inquiries.

203. The Single Euro Payments Area (SEPA) will result in the creation of a single market for payments throughout the euro area. In 2007, competition policy will play an important role alongside other Community policies in ensuring that the European banking industry's efforts to implement a new framework for SEPA are successful. It is, however, essential that the SEPA framework be conceived in a way that supports competition and innovation and enables cost savings to be passed on to businesses and consumers.

204. For payment card networks, SEPA offers the potential to remove restrictive rules prohibiting co-branding of cards and surcharging of payment card transactions by retailers. The Commission will pay particular attention to ensuring that co-branding restrictions are not used to compartmentalise markets[244]. SEPA should make it easier to move away from blending of merchant fees, which weakens price competition between the major payment card networks. Crucially, the new framework should provide retailers with greater choice of supplier for acquiring services, opening up greater competition in this highly concentrated market[245].

205. Deregulation in financial services is of paramount importance for promoting competition and efficiency in the EU. In this respect, preferential taxation is critical for the success of national financial centres because it has a direct influence on the conditions under which financial providers compete. Unlike deregulation, however, preferential taxation does not promote efficiency or the optimal allocation of financial investments. Preferential taxation alters the level playing field between financial providers to compensate for extra production costs and inefficiencies, and it can make it more convenient to use unregulated and expensive closely held vehicles as opposed to more transparent lending institutions. Against this background, the Commission will continue to monitor the existing preferential tax regimes to eliminate possible competition distortions resulting from State aid. The Commission will also continue to ensure that capital injections to public financial institutions are exempt from State aid. In this respect, the ongoing investigations into the Landesbanken recapitalisations are expected to be completed in 2007.

3. ELECTRONIC COMMUNICATIONS

206. As far as the future regulatory framework is concerned, the draft revised Recommendation on relevant markets was subject to public consultation until the end of October 2006. The Commission plans to adopt the final revised Recommendation in the first half of 2007 and it will enter into force immediately thereafter. With the proposal to deregulate at least the retail calls markets, and with a clear opening created for NRAs to deregulate wholesale trunk leased lines and transit services where alternative infrastructures have been rolled out, the draft revised Recommendation would substantially reduce the scope of ex ante regulation.

207. The behaviour of operators on those markets will in the future be governed by ex post enforcement of competition law only, which will probably give rise to an increased number of complaints, investigations and decisions involving the national and European antitrust authorities. In this respect, particular attention will be paid to potential problems of margin squeeze between wholesale and retail level and anti-competitive bundling. Reducing the number of markets susceptible to ex ante regulation is, however, an important step towards introducing competition into the electronic communications sector in Europe, and the Commission is confident that competition policy will prove an effective tool to safeguard this process.

208. From the State aid perspective, while the Commission expects further cases of broadband support in remote and rural areas to be notified for State aid approval, there are signs that public intervention is shifting from basic broadband infrastructure to advanced broadband networks capable of delivering advanced services over fibre and wireless networks. If public authorities support the deployment of electronic communications networks in areas where several providers are already offering broadband services, state intervention raises a whole new set of issues as competition is more likely to be distorted. The Commission intends to monitor these developments closely and its policy will evolve in response to new patterns of public intervention.

4. INFORMATION TECHNOLOGY

209. Consistent with its approach under the Community Lisbon Programme for growth and jobs, the Commission will continue to monitor developing product markets in order to concentrate its efforts on those ICT sectors where it can produce the greatest effects on competitiveness. In particular, it will ensure that existing markets remain open and that new markets do not become closed, either via the unilateral actions of dominant companies in various markets or via restrictive agreements. It will promote investment and growth in ICT markets and by extension in the knowledge economy as a whole, for example by removing anti-competitive barriers to innovation and market entry.

210. The Commission will continue to make full use of its enforcement powers in order to benefit consumers by ensuring vigorous competition in the IT sector and creating incentives and space for companies to innovate. Specifically, the Commission will ensure that Microsoft respects its obligations set out in the Commission decision of 24 March 2004 (see for example MEMO/06/430).

211. The Commission will also investigate, inter alia, possible abusive practices by companies in both the software and hardware industries. As in previous years, it will continue to monitor developments in standard-setting bodies, so as to ensure that procedures within such bodies are transparent and that they contribute to the achievement of pro-competitive outcomes.

5. MEDIA

212. Technological developments in the media markets will continue to raise new issues for the Commission's enforcement activities. Priorities will be similar to those in 2006. The Competition DG will focus on ensuring that scarce premium media content is being made available in compliance with EU competition rules, monitor the transition from analogue to digital broadcasting and maximise consumer benefits from new forms of distribution by fighting anti-competitive restrictions at both the collective rights management level and the distribution level. Besides continuing its ongoing investigations, the Commission plans to adopt a White Paper on Sports in 2007, summarising, inter alia, the application of EU competition rules to sport media rights in the light of existing case law.

213. The Commission will continue with the policy established in 2005 and 2006 towards State aid to promote digital broadcasting. As the target date for switching from analogue to digital broadcasting approaches, Member States are likely to propose more initiatives to facilitate the switchover. In assessing these initiatives, the Commission will pay particular attention to technological neutrality and to the ultimate objective of ensuring wide consumer access to digital broadcasts.

214. The Commission intends to review the Broadcasting Communication in 2007/2008, particularly regarding the scope of public service activities in view of new digital technologies and of Internet-based services.

215. The Commission's Cinema Communication of 2001[246] is due to expire on 30 June 2007 but is expected to be extended until a new policy is in place, or 31 December 2009 at the latest. When reviewing the Cinema Communication, the Commission will take into account the results of a study it has launched to examine the economic and cultural effects of conditions which require that a proportion of the film production expenditure be incurred in the territory providing the aid ("territorial conditions"). The results of the study should be available in late 2007.

6. TRANSPORT

216. The Commission plans to adopt and publish, in 2007, draft guidelines on the application of competition law to maritime transport services. It will also initiate a review of Commission block exemption Regulation (EC) No 823/2000 of 19 April 2000 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia)[247].

217. As to the application of competition rules, the Commission will follow up the proceedings in the Skyteam global alliance case in the air transport sector. It will also launch actions with a view to improving competition in the railway sector in order to ensure that anti-competitive practices do not countervail the effects of liberalisation.

7. POSTAL SERVICES

218. In 2007, while the legislative process continues on the Commission proposals regarding full market opening by 2009, most EU Member States will still maintain monopoly rights to USPs. Some Member States have completely abolished the reserved area (Finland, Sweden, United Kingdom), while others have a substantially more reduced reserved area than permitted in the Directive. Two other Member States (Germany, the Netherlands) have decided or are deciding to move to full market opening. This means that around 60 % of the EU letter post volumes are expected to be completely open to competition in advance of the 2009 deadline proposed by the Commission. Irrespective of de jure market opening, the fact remains that for most market segments and services, USPs in each Member State will remain predominant. This trend and the focus of operators on business segments is expected to continue as the growth rates of business products (unaddressed and addressed direct mail in particular) are substantially higher than those of traditional letter mail.

219. In 2007, EU competition rules, notably Articles 81-82 and 86 EC, will thus still apply in a context in which most USPs in the EU retain legal monopolies or positions of unrivalled strength and in which the most dynamic segments of the market are vying with such monopolies. The preparation of a more competitive environment by 2009 entails the risk of attempts by USPs to diversify and expand their operations and, possibly, leverage their market power unlawfully in service or geographic markets rivalling their monopoly, e.g. direct or express mail, business segments. The preservation of residual or nascent competition in service markets adjacent to the monopoly will thus remain a key concern. The Commission will therefore continue to give priority to investigations which i) concern EU-wide or cross-border issues, ii) address barriers to competition set up by State measures or by attempts to unlawfully leverage market power, iii) set a legal or economic precedent.

220. From a State aid point of view, the Commission will continue to ensure that Member States do not overcompensate undertakings entrusted with SGEI, in order that commercial activities outside the SGEI should not be improperly cross-subsidised. In this regard, it is worth recalling that Member States which have agreed to the appropriate measures proposed by the Commission under the 2005 Community Framework for State aid in the form of public service compensation[248] will have to bring existing schemes of public service compensation into line with the Framework before 29 May 2007. This implies that from that date, any existing or new aid of these Member States will have to abide by the conditions imposed by the 2005 Framework. In particular, under Article 12 of the 2005 Framework, any aid will have to be based on an instrument specifying the public service obligations, the parameters for calculating, controlling and reviewing the compensation and the arrangements for avoiding and repaying any overcompensation. Member States which had not approved the appropriate measures by the end of 2006 were formally reminded to do so. Similarly, those Member States which had not yet transposed Commission Directive 2005/81/EC amending Directive 80/723/EEC (on the transparency of financial relations) were also sent an official reminder.

C – INTERNATIONAL ACTIVITIES

221. THE COMPETITION DG 's work with the candidate countries, the Western Balkan countries and the neighbourhood policy countries will continue in 2007.

222. Regarding bilateral cooperation, the Competition DG will explore ways to enhance cooperation with other agencies which would make it possible to exchange confidential information, in particular in relation to cartel investigations.

223. The cooperation with China will continue, in particular with the National People's Congress, which is expected to adopt the draft anti-monopoly law in the course of 2007.

224. The Competition DG intends to further strengthen its cooperation with the Korean competition authority. The Commission has presented to the Council a draft mandate for a dedicated intergovernmental cooperation agreement in the field of competition. Once the mandate is adopted, negotiations will formally start.

225. The Commission will negotiate free trade agreements with a number of countries, e.g. Ukraine. The Competition DG will provide input as far as the competition provisions of these agreements, including State aids, are concerned.

226. The International Competition Network's annual conference will be held in Moscow from 30 May to 1 June 2007. The Working Group on Unilateral Conduct will deliver its first results there, which are of particular interest to the Commission. The 2007 ICN cartel workshop will be held in El Salvador. The Competition DG will continue to co-chair the Cartels Working Group.

VI – Interinstitutional cooperation

227. The Commission continued its cooperation with the other Community institutions in accordance with the respective agreement or protocols entered into by the relevant institutions[249].

1. EUROPEAN PARLIAMENT

228. As is the case each year, the European Parliament issued an own initiative report on the Commission's annual Report on Competition Policy of the previous year, after an exchange of views was held on the issues raised in the report.

229. The Commission also participated in discussions held in the European Parliament on Commission policy initiatives, such as on State aid reform (in particular on R&D and Innovation) and the Green Paper on damages actions for breach of EC antitrust rules.

230. The Commissioner and/or the Director General responsible for Competition hold regular exchanges of views with the responsible Parliamentary Committees to discuss competition policy matters. In 2006, four exchanges of views were held with the Economic and Monetary Affairs Committee and further meetings with the Internal Market and Consumer Protection Committee and the Committee on Industry, Research and Energy respectively. Issues of major importance during these 2006 meetings were the energy sector inquiries, implementation of the state aid action plan, the Green Paper on damages actions for breach of EC antitrust rules and the continued efforts to bring down illegal cartels. Outside the framework of these more formalised meetings, the cooperation with the European Parliament may also take the form of bilateral meetings with individual Members of Parliament on specific topics of interest to them.

231. The Committee in charge of Economic and Monetary Affairs also receives regular lists of pending cases in the public domain as well as information on the main policy initiatives in the field of competition.

232. Finally, the Commission also cooperates closely with Members of the European Parliament responding to Parliamentary Questions (both oral and written) and Petitions as well as with the European Ombudsman. In 2006, the Commission responded to 551 written questions, 66 oral questions and 48 petitions involving matters of competition policy[250].

2. COUNCIL

233. The Commission also closely cooperates with the Council, informing the Council of important policy initiatives in the field of competition such as on the State aid reform and the energy and financial services sector inquiries and it participates in Council working groups dealing with competition policy matters, maintaining close links with the respective Presidencies. As the case may be, the cooperation may also consist of participation in informal Council formations, such as there have been for the Competitiveness Council. In 2006, the Commission informed for instance the Council on the results of the electricity and gas markets sector inquiries.

3. EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND COMMITTEE OF THE REGIONS

234. The Commission further informs the European Economic and Social Committee and the Committee of the Regions on major policy initiatives and participates in debates that may be held at the respective Committee, such as for instance for the adoption of the yearly report by the European Economic and Social Committee on the Commission's annual Report on Competition Policy. In 2006, the Commissioner responsible for Competition met with the Employers' Group of the EESC holding an exchange of views on major policy developments, such as in the fields of state aid, energy sector inquiries and the fight against cartels.

[1] Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 298, 8.12.2006).

[2] Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 45, 19.2.2002).

[3] For details see point 315.

[4] OJ C 210, 1.9.2006, p. 2.

[5] OJ C 9, 14.1.1998, p. 3.

[6] The Green Paper can be found at http://ec.europa.eu/comm/competition/antitrust/actionsdamages/documents.html

[7] The submissions received by the Commission are available at http://ec.europa.eu/comm/competition/antitrust/others/actions_for_damages/gp_contributions.html

[8] The opinion of the EESC can be found at http://eescopinions.eesc.europa.eu/EESCopinionDocument.aspx?identifier=ces\int\int306\ces1349-2006_ac.doc&language=EN

[9] COM(2003) 644 final.

[10] Case COMP/38.620 Hydrogen peroxide and perborate (Bleaching chemicals) Commission decision, 3.5.2006; Case COMP/38.645 Methacrylates (Acrylic glass) Commission decision, 31.5.2006; Case COMP/38.456 Bitumen Netherlands Commission decision, 13.9.2006; Case COMP/38.121 Fittings (Copper fittings) Commission decision, 20.9.2006; Case COMP/38.907 Steel beams (re-adoption) Commission decision, 8.11.2006; Case COMP/38.638 Synthetic rubber (BR/ESBR) Commission decision, 29.11.2006; Case COMP/39.234 Alloy surcharge (re-adoption) Commission decision, 20.12.2006.

[11] This figure does not include the companies that received immunity from fines for cooperation under the Leniency Notice.

[12] Where several immunity applications have been received for the same alleged infringement, the first application is counted as an immunity application and the subsequent ones as applications for a reduction of fines unless the first application for immunity is rejected.

[13] In cases where a final prohibition decision has been adopted by the Commission, and thus a final decision on immunity, conditional immunity is no longer counted in order to avoid double counting. The total number of conditional immunity