[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 15.6.2006

SEC(2006)761 final

REPORT FROM THE COMMISSION

Report on Competition Policy 2005

TABLE OF CONTENTS

Introduction 7

I – Antitrust – Articles 81, 82 and 86 EC 12

A – Legislative, interpretative and procedural rules 12

1. Abuse of dominance 12

2. Agreements and concerted practices 13

2.1. Transport block exemption Regulations 13

2.1.1. Maritime transport 13

2.1.2. Air transport 14

2.2. Motor vehicle distribution block exemption Regulation 14

3. Procedural rules 16

3.1. Access to file 16

3.2. Dealing with market information and complaints 17

Box 1: Articles 81 and 82 EC: Community interest in pursuing allegations of infringement and priority setting 18

4. Competition screening of EU legislation 20

5. Green Paper on damages actions for breach of the EC antitrust rules 20

B – Application of Articles 81, 82 and 86 23

1. Energy, basic industries, chemicals and pharmaceuticals 23

1.1. Energy 23

1.2. Basic industries 28

1.3. Chemicals 29

1.4. Pharmaceuticals 30

Box 2: AstraZeneca: abuse of government procedures in the pharmaceutical sector 31

2. Information, communications and media 32

2.1. Electronic communications and postal services 32

2.2. Media 37

2.3. Information industries, Internet and consumer electronics 40

3. Services 41

3.1. Financial services 41

3.2. Transport 44

3.2.1. Air transport 44

3.2.2. Inland transport 46

3.3. Distributive trades and other services 46

3.3.1. Professions 46

3.3.2. Waste management 48

4. Industry, consumer goods and manufacturing 49

4.1. Consumer goods and foodstuffs 49

4.2. Mechanical and other manufacturing industries including transportation equipment 50

5. Cartels 54

5.1. Overview of developments in cartel policy 54

5.1.1. A new Directorate 54

5.1.2. The Commission’s leniency programme 56

5.2. Cases 58

C – ECN: Overview of cooperation 62

1. General overview 62

1.1. Cooperation on policy issues 62

1.2. Adapting national laws to ensure efficient enforcement by NCAs 63

1.3. Cooperation in individual cases 63

2. Application of EU competition rules by national courts in the EU: Report on the implementation of Article 15 of Regulation (EC) No 1/2003 66

2.1. Assistance in the form of information or in the form of an opinion 66

2.2. Judgments by national courts 66

2.3. Amicus curiae intervention 67

2.4. Financing the training of national judges in EU competition law 67

2.5. Summaries of opinions issued by the Commission under Article 15(1) of Regulation (EC) No 1/2003 67

3. ECN cooperation in the different sectors 69

D – Selected Court cases 72

E – Statistics 78

II – Merger control 81

A – Legislative and interpretative rules 82

1. Remedies Study 82

2. New guidance on abandonment of mergers 84

3. Streamlined case allocation in action – experience during 2005 85

3.1. Statistical overview 85

3.2. Practicalities of pre-notification referral 85

B – Commission decisions 87

1. Decisions taken under Article 8 87

2. Decisions taken under Article 6(1)(b) and Article 6(2) 92

3. Referrals 95

4. Notifications withdrawn/abandoned operations 100

C – Selected Court cases 104

D – Statistics 109

III – State aid control 111

A – Legislative and interpretative rules 111

1. Regulations, guidelines and communications 111

1.1. State Aid Action Plan 111

Box 3: State Aid Action Plan 111

1.2. Guidelines on national regional aid for 2007–13 112

1.3. Future Framework for R&D and Innovation 113

1.4. Communication on state aid to export-credit insurance 115

1.5. Revision of the Environmental Aid Guidelines 115

1.6. Services of general economic interest 116

Box 4: Services of general economic interest 116

2. Agriculture 117

2.1. New annual reporting on state aid 117

2.2. Transparency 117

3. Coal 118

4. Transport 119

5. Transparency 120

6. Enlargement 120

6.1. Existing aid in the new Member States 120

6.2. Accession of Bulgaria and Romania 121

B – Cases 122

1. Rescue and restructuring aid 122

1.1. Rescue aid 122

1.2. Restructuring aid 123

2. Shipbuilding 128

3. Steel 131

4. Public broadcasting, broadband, film industry 132

5. Banking 136

6. Regional aid 137

7. Research and development aid, innovation aid 141

8. Environmental and energy saving aid 145

9. Aid for training, employment and small and medium-sized enterprises 148

10. Fiscal aid 150

11. Aid to make good the damage caused by natural disasters 154

12. Other: health, postal services, defence 155

13. Agriculture 157

14. Fisheries 161

15. Coal 162

16. Transport 162

16.1. Rail transport 162

16.2. Combined transport 163

16.3. Road transport 163

16.4. Air transport 164

C – Enforcement of state aid decisions 167

1. Introduction 167

2. Individual cases 168

D – Selected Court cases 169

E – Statistics 176

IV – International activities 178

A – Enlargement and Western Balkans 178

B – Bilateral cooperation 179

1. Introduction 179

2. Agreements with the USA, Canada and Japan 179

3. Cooperation with other countries and regions 182

C – Multilateral cooperation 185

1. International Competition Network 185

2. OECD 187

V – Outlook for 2006 191

1. Antitrust 191

2. Mergers 192

3. State aid 192

4. International activities 193

Annex – Cases discussed in the Report 194

1. Articles 81, 82 and 86 EC 194

2. Merger control 196

3. State aid 197

Introduction

INTRODUCTION BY THE DIRECTOR-GENERAL FOR COMPETITION

In 2005, the Competition DG made substantial progress towards a more effective and targeted application of the competition rules across all of our areas of activity.

It saw the launching of the State Aid Action Plan (SAAP), a far-reaching reform package designed to deliver more focused state aid rules in order to promote better-targeted aid, for example, aid which aims at promoting innovation, risk capital, research and development. The ultimate goal of the SAAP is to offer more predictability in the control of state aid, better economic results and better governance. State aid control also saw a significant increase of workload in case-handling activities, with 676 new cases registered in 2005 (an 8% increase compared with the previous year).

In antitrust enforcement, the Competition DG gave the highest priority to detecting, dismantling and sanctioning cartels, the most pernicious form of anticompetitive behaviour. Cartels artificially raise the price of goods and services, reduce supply and hamper innovation (so that consumers end up paying more for less quality), and can significantly increase the input costs for European businesses. The success of the Commission’s leniency programme, which has led to an increasing number of cartel investigations, is an encouraging sign of our policy’s effectiveness. In 2005, the Commission adopted five decisions against cartels; the fines imposed totalled EUR 683.029 million. In order to reinforce cartel-fighting capabilities, in 2005 a dedicated Cartels Directorate was created in the Competition DG.

The Competition DG’s other antitrust enforcement activity was marked by an increasing focus on addressing cases which involve practices most harmful to consumers. By way of example, the Commission sanctioned AstraZeneca for misusing the regulatory system in order to delay market entry of generic drugs competing with its blockbuster product Losec. Apart from formal infringement proceedings, use was also made of the new possibility offered by Regulation (EC) No 1/2003 to obtain binding commitments by undertakings with a view to solving competition issues. This was the case, for example, in relation to Coca-Cola’s commercial policy.

A milestone in the implementation of Regulation (EC) No 1/2003 was the launching of the first two sector inquiries pursuant to Article 17: one in the financial services sector and one in the energy sector (gas and electricity), both of them key for the achievement of the Commission’s wider policy objective of Growth and Jobs. With these sector inquiries, the Commission delivered on its commitment to a more proactive and economics-based approach to enforcement. The Commission will use the results of these inquiries to determine if and what enforcement and regulatory actions are necessary in these sectors to ensure the proper functioning of the internal market. Analysing the results of these sectoral inquiries and giving them the appropriate follow-up will be major tasks for the Competition DG in 2006 and beyond.

In the field of mergers, the enforcement activity in 2005 increased, due to the current general upward trend in merger and acquisition activity. There were 313 notified merger cases, which represented an increase of 25% compared with 2004. Investigations by the Competition DG also tend to rely on an increasingly thorough fact finding. The focus is on identifying competition concerns that correspond to a sound economic analysis and are grounded in facts. Particular attention was paid to mergers which might impede the achievement of EU liberalisation objectives.

Enhancing the effectiveness of the EU competition rules was a major aim of modernisation, one that can only be achieved by ensuring the proper functioning of the European Competition Network (ECN), which brings together the Commission and the national competition authorities (NCAs) of the Member States. Its main aim is to ensure the coherent and consistent application of the EU’s competition rules in the enlarged EU. In that context, the Commission was informed, pursuant to Article 11(4) of Regulation (EC) No 1/2003, of almost 80 cases where an NCA envisaged adopting a decision pursuant to Article 81 and/or 82.

The Competition DG plays, in coordination with the Information Society DG, an important role in the implementation of the regulatory framework for electronic communications adopted by the Commission in 2002, which builds on principles of EU competition law. Under that framework, the Competition DG is co-responsible, with the Information Society DG, for reviewing notifications by national regulatory authorities of regulatory measures for electronic communications markets. In 2005, 201 such notifications (more than twice the corresponding figure for 2004: 89) were dealt with. Decisions adopted by the Commission on such notifications have also nearly doubled in 2005 compared with 2004, going from 64 to 117.

In 2005, we also took important steps to ensure the effective implementation of Commission decisions in the competition field, as shown by the opening of formal proceedings for non-compliance in the Microsoft case (December). In the state aid area, too, the amount of illegal and incompatible state aid to be recovered on the basis of decisions adopted between 2000 and mid-2005 has been reduced: of the EUR 9.4 billion total, some EUR 7.9 billion had been effectively recovered by the end of June 2005.

In addition to the SAAP, the Competition DG made important progress on its ambitious review process in competition policy, which aims at extending competition enforcement to both enhance the effectiveness of the EU’s competition rules and promote competitiveness. The Competition DG discussion paper on the application of Article 82 EC to exclusionary abuses and the adoption of the Green Paper on damages claims will contribute to a strengthened competition culture in the EU. As a further example, the Commission proposed to repeal the block exemption of liner conferences from the EU competition rules’ ban on restrictive business practices. Repealing the exemption will benefit EU exporters by lowering transport prices while maintaining reliable services, thus enhancing the competitiveness of the EU industry.

Finally, the Competition DG also invested considerable resources in 2005 in support of better regulation initiatives. This included in particular the screening of new initiatives by the Commission to assess their impact on competition as well as competition advocacy vis-à-vis Member States. Together with our own policy development work, these actions contributed to improving the effectiveness of competition rules and to providing transparency and predictability to the business community and consumers.

All in all, 2005 was a year of important progress both in terms of consolidation of the reformed competition regime for antitrust and mergers, and in the far-reaching reform of the state aid area. 2005 also brought important advances in the implementation of a more impact-oriented, economics-based approach to competition problems across existing instruments. Finally, in 2005 the Competition DG launched important new projects – most notably the sector inquiries – whose results will lead to new initiatives and/or enforcement actions in the years to come. These will benefit EU consumers, whether individuals or businesses, and contribute to the competitiveness of the EU.

MESSAGE FROM THE HEARING OFFICER

The Commission created the post of Hearing Officer in order to entrust the conduct of administrative proceedings in antitrust and merger cases to an independent person experienced in competition matters, with the integrity necessary to contribute to objectivity, transparency and efficiency of those proceedings. The Hearing Officer carries out this task in accordance with the Mandate.

Confidentiality versus access to the file in the context of the Notice on the rules for access to the file

In 2005, difficult issues relating to access to the file arose in a number of cases. Specifically, in some cases where the case file contained thousands of documents for which confidentiality had reasonably been claimed, requests for access resulted in delays in the procedure. In view of the need to verify for each document whether the claimed interest in access for the purposes of the rights of defence prevailed over confidentiality, a thorough preparation of access to the file is essential to a timely procedure.

It is in the interests of all participants that the procedure moves swiftly and expeditiously. Thus, the guiding principles for confidentiality should be observed by the providers of information and those requesting access to confidential information. In particular:

- Providers of information should submit requests for confidentiality that are sufficiently reasoned and limited to the specific passages for which the danger of serious harm can reasonably be claimed. A non-confidential version of the information must be provided, and a concise description of each piece of deleted information should be included. It is important that the non-confidential versions and the descriptions of the deleted information be established in a manner that enables any party with access to the file to determine whether the information deleted is likely to be relevant for its defence and therefore whether there are sufficient grounds to request the Commission to grant access to the information claimed in question.

- Parties requesting access to confidential information should submit detailed, substantiated requests that clearly demonstrate their interest in specific documents in terms of the right of defence.

Decisions of the Hearing Officers

In the course of their activities dealing with individual requests for access to file, the Hearing Officers took 13 decisions under Article 8 of their Mandate in seven cases in 2005. Under Article 8, parties can request access to documents which they believe necessary for the proper exercise of their right to be heard and which have not been disclosed to them for reasons of confidentiality. The Hearing Officer may decide to refuse, or to grant full or partial access to such documents.

It was not necessary for the Hearing Officers to take any Article 9 decisions in 2005. Under this article of the Mandate, the Hearing Officers decide that the Commission may disclose information even if an undertaking objects to such disclosure, if they find that the information is not protected, or if the balance between the interest in disclosing the information and the damage that might result by disclosing it falls on the side of disclosure. An appeal against such a decision can be brought before the European courts, and the process is commonly referred to as the Akzo procedure.

In order to avoid a burdensome procedure, the Hearing Officers have instituted the practice of sending so-called “pre-Article 9 letters”. These inform undertakings about the Hearing Officers’ preliminary position before taking a definitive and legally binding decision pursuant to Article 9. A number of such letters were sent in 2005.

Scope of the case file

In the course of 2005, the Hearing Officers acknowledged that, in line with the case law, the parties should be entitled, upon request, to access all documents that are objectively related to the alleged infringement, subject to the normal exceptions on grounds of confidentiality or the internal nature of the documents concerned. However, the relevant Commission departments enjoy a certain margin of discretion in their decision to join investigations that they consider to be sufficiently related. Objective reasons may lead the relevant Commission departments to decide that a comprehensive and thorough analysis of the anticompetitive behaviour under investigation requires an exploration into different product or geographic markets at the same time, or not.

Hearing Officer reports and oral hearings

The Hearing Officers drew up interim and/or final reports in three merger and twelve antitrust cases in 2005, the hearings for some of which had been held in 2004. In 2005, oral hearings were requested in eight antitrust cases. There were no hearings in merger cases. The decreasing interest in oral hearings in merger cases might result from the parties’ desire to use the limited time available for remedy negotiations instead of calling into question the Commission’s assessment in front of a wider audience which might also include companies hostile to the concentration.

Procedure for oral statements

In 2005 a new procedure was put into place to ensure that undertakings wishing to cooperate with the Commission under the Leniency Notice are not dissuaded from doing so as a result of discovery in civil damage proceedings in non-EU jurisdictions. This implies that the other members of the suspected cartel do not have access to corporate statements in the usual manner (that is, by CD-ROM/DVD or in the form of hard copies). Instead, the parties are permitted to take notes of the recording of the leniency applicant’s statements.

I – Antitrust – Articles 81, 82 and 86 EC

A – Legislative, interpretative and procedural rules

1. ABUSE OF DOMINANCE

1. On 19 December, the Competition DG issued a discussion paper on the application of the EU competition rules on the abuse of dominance (Article 82 EC)[1]. The discussion paper is designed to promote a debate as to how EU markets are best protected from exclusionary conduct by dominant companies, which is likely to limit the remaining competitive constraints on markets. The paper suggests a framework for the continued rigorous enforcement of Article 82 EC, building on the economic analysis carried out in recent cases, and setting out one possible methodology for the assessment of some of the most common abusive practices, such as predatory pricing, single branding, tying, and refusal to supply. Other forms of abuse, such as discriminatory and exploitative conduct, will be the subject of further work by the Commission in 2006. The Competition DG has invited comments on the present discussion paper by 31 March 2006.

2. Article 82 EC prohibits the abuse of a dominant position. Abuses are commonly divided into exclusionary abuses, which exclude competitors from the market, and exploitative abuses, where the dominant company exploits its market power by – for example – charging excessive prices. The discussion paper deals only with exclusionary abuses.

3. The paper describes a general framework for analysing abusive exclusionary conduct by a dominant company. Where a dominant company is present on a market, competition on that market is already weak. The object of the competition rules is therefore to prevent conduct by that dominant company which risks weakening competition still further, and harming consumers, whether that harm is likely to occur in the short, medium or long term. For price-based conduct, such as rebates, the paper considers whether only conduct which would risk excluding equally efficient competitors should be considered as abusive. The paper also considers whether efficiencies should be taken into account under Article 82 EC, and, if so, how. If they are to be taken into account, the claimed efficiencies would have to outweigh the restrictive effect of the conduct in question.

4. The Competition DG is consulting widely on the discussion paper. It has already discussed the paper in the European Competition Network and has now opened the consultation to the public. As part of this consultation process the Commission will hold a public hearing in spring 2006 on abuse of dominance, and in particular concerning the proposed framework set out in the discussion paper.

2. Agreements and concerted practices

2.1. Transport block exemption Regulations

2.1.1. Maritime transport

Repeal of Council Regulation (EEC) No 4056/86 – Liner conference block exemption

5. On 14 December, the Commission adopted a proposal[2] for a Council Regulation repealing Regulation (EEC) No 4056/86 applying Articles 81 and 82 EC to maritime transport[3]. The Council will decide on this proposal by qualified majority having consulted the European Parliament.

6. The objective is to put an end to the liner conference block exemption which allows shipping lines meeting in conferences to fix freight prices and to regulate capacity. After a three-year review the impact assessment carried out shows that liner conferences do not fulfil the four cumulative conditions of Article 81(3) and that the repeal of the block exemption is likely to lower transport prices whilst maintaining reliable services and enhancing the competitiveness of European industry, in particular that of EU exporters. The proposal envisages a two-year transition period from the time of the adoption of the Regulation by the Council for the provisions regarding the liner conference block exemption.

7. The proposal also aims to amend Council Regulation (EC) No 1/2003[4] by extending its scope to cabotage and tramp vessel services, thus applying the same general competition implementing rules to all sectors of economic activity.

8. To ease the transition to a fully competitive regime, the Commission plans to issue appropriate guidelines on competition in the maritime sector in 2007.

Prolongation of and amendments to Commission Regulation (EC) No 823/2000 – Consortia block exemption Regulation

9. On 20 April, the Commission adopted Regulation (EC) No 611/2005 amending the existing block exemption Regulation for liner shipping consortia[5]. It prolongs Commission Regulation (EC) No 823/2000 until 25 April 2010 and introduces two minor amendments. The amendments allow a consortium member the right to withdraw from a consortium agreement without financial penalty after an initial period of up to 24 months, which constitutes an extension of six months as compared with the previous regime. In addition, this initial period now also applies where the parties to an existing agreement have agreed to make substantial new investment in the maritime transport services offered by the consortium. Such investment must constitute at least half of the total investment made by the consortium members. Finally, one of the basic conditions for exemption, namely the existence of effective price competition within the consortium, has been amended: “individual confidential contracts” may now also be taken into consideration to demonstrate the existence of such competition.

10. The consortia block exemption is closely linked to the block exemption for liner shipping conferences (Council Regulation (EEC) No 4056/86). Due to the close links between the two block exemptions, the Commission considered that it is neither necessary nor appropriate to introduce substantial modifications to the consortia block exemption before the end of the review of Council Regulation (EEC) No 4056/86.

2.1.2. Air transport

Replacement of Commission block exemption Regulation (EEC) No 1617/93

11. The Commission pursued the consultation process launched in 2004 concerning the revision of Commission Regulation (EEC) No 1617/93[6], with the publication on 2 March of a paper discussing the submissions received in the context of the consultation.

12. On 15 November, the Commission adopted a preliminary draft block exemption regulation, with a view to replacing Commission Regulation (EEC) No 1617/93. The draft is due to be discussed by the Advisory Committee on Restrictive Practices and Abuses of Dominant Positions. The preliminary draft block exemption regulation provides that:

- consultations on tariffs for the carriage of passengers for intra-EU air services would benefit from a block exemption until 31 December 2006; this exemption would not be prolonged after that date;

- consultations on slot allocation and airport scheduling would benefit from a block exemption until 31 December 2006; this exemption would not be prolonged after that date;

- consultations on tariffs for passenger air services between the EU and third countries would benefit from a block exemption subject to data-reporting obligations until 31 December 2008.

13. In parallel with the preparation of a new block exemption Regulation, Commission departments have engaged in consultations with IATA and several individual airlines on the future of interlining.

2.2. Motor vehicle distribution block exemption Regulation

Location clauses in car distribution agreements no longer block exempted

14. On 1 October, the final part of the Commission’s reform of the competition rules applicable to motor vehicle distribution came into force: “location clauses” in distribution contracts between carmakers and dealers are now no longer covered by the Commission’s motor vehicle block exemption Regulation (EC) No 1400/2002. Location clauses are provisions in car distribution agreements which assign a specific main location to the dealer and prohibit the dealer from operating additional sales or delivery outlets at other locations.

15. The new rule concerns passenger cars and light commercial vehicles. It does not apply to exclusive distribution systems, or agreements which only have minimal effects on the market[7]. For selective distribution agreements, the new rule means that location clauses prohibiting dealers from opening additional sales or delivery outlets will fall outside the “safe harbour” created by the block exemption Regulation.

16. The underlying policy objective of the new rule is twofold[8]:

- to reduce territorial restrictions so that consumers can benefit from effective competition between dealers, particularly on prices and in areas where they have no real opportunity to choose between dealers of the same brand; and

- to facilitate the development of innovative forms of distribution such as multi-brand outlets.

17. By dealing with location clauses under Article 5 of the Regulation, the Commission recognised the greater scope for individual assessment, on a case-by-case basis, of whether a clause meets all conditions required to justify an exception under Article 81(3). The most likely potential positive effects of location clauses in selective distribution systems are that they may prevent free-riding on the investments and promotion efforts of established dealers.

18. With respect to the first type of location clauses mentioned in the Regulation – i.e. clauses prohibiting additional sales outlets – it is difficult to see how restrictions on additional sales outlets could be required by carmakers to avoid free-riding. The Regulation allows carmakers to require that secondary sales outlets comply with all qualitative standards applicable to dealerships in the area where the outlet is to be opened, and to check this compliance in advance. This will normally avoid the danger of unfair free-riding on the investment and promotion efforts of existing dealers. Moreover, secondary sales outlets are unlikely to increase carmakers’ transactional and logistical costs, as the contract in force with the dealer will continue to determine where the carmaker must deliver the cars ordered by the dealer. This means that where dealers open a secondary sales outlet in another Member State, an additional contract with the local importer is not needed, although the carmaker can of course delegate to the local importer functions such as checking compliance with the qualitative criteria. The purchasing conditions and sales targets will remain those determined in accordance with the existing dealership agreement.

19. With respect to the second type of location clause mentioned in the Regulation − i.e. clauses prohibiting dealers from setting up additional delivery outlets − an individual analysis under Article 81 EC might be more likely to lead to a different result. There may be a greater risk that such delivery points are (mis)used to free-ride on the investments, marketing efforts and goodwill of the dealer established in the target territory. In practice, if delivery points are de facto used to carry out “sales” (as opposed to mere “handover services”), a manufacturer might successfully invoke the derogation under Article 81(3), provided that limiting the opening of delivery outlets is the only way to prevent such free-riding risks, which could lead to a destabilisation of its distribution network.

3. PROCEDURAL RULES

3.1 . Access to file

20. On 13 December, the Commission adopted a Notice on the rules for access to the Commission file in antitrust and merger cases[9]. The Notice provides the framework for the exercise of the right to access to the file in accordance with the provisions referred to expressly in the Notice. It does not cover the possibility of the provision of documents in the context of other proceedings. The right of access to the file described in the Notice - which is distinct from the general right to access to documents under Regulation (EC) No 1049/2001[10] - enables the persons to whom the Commission has addressed a statement of objections to effectively exercise their rights of defence.

21. The purpose of the Notice – which replaces the Notice on access to the file adopted in 1997 – is to enhance transparency and clarity of the Commission’s procedure in processing requests for access to the file in antitrust and merger cases. To that end, the Notice notes that the addressees of the Commission’s objections have a right of access to the file, either in electronic or paper form. The Notice indicates when access to the file is granted to the parties. It specifies that the “Commission file” includes all documents associated with the specific procedure that has led to the Commission’s statement of objections. Internal documents of the Commission (which includes documents exchanged with Member States), business secrets and other confidential information are, however, not accessible to the parties. The Commission interprets the concept of internal documents as including, in principle, all correspondence between the Commission and its external experts. However, the results of a study commissioned in connection with proceedings as well as documents that are necessary to understand the methodology applied in the study or to test its technical correctness are accessible.

22. The Notice includes a thorough description of procedures for treatment of confidential information and for implementing access to the file. It also describes the procedure for resolution of disagreements on confidentiality claims, including the role of Hearing Officers.

23. The Notice also covers the related question of access to specific documents for complainants in antitrust proceedings and other parties involved in merger proceedings. Such a right is, however, more limited in scope than the right of access to the file.

3.2. Dealing with market information and complaints

24. The Commission values information provided by businesses and consumers as this information helps to ensure the effective enforcement of the competition rules. The Commission welcomes information about areas in which the market is not functioning well and about suspected infringements of the competition rules.

25. This information can be provided to the Commission in various ways:

- Whistleblowing and leniency applications[11] are given the highest priority. Cartels are the worst form of anticompetitive activity and the Commission devotes significant resources to taking action against them.

- Market information[12] is always welcome, whether or not it leads to an investigation in an individual case. Only by gathering a range of information from a range of sources can the Commission build up a coherent understanding of the market.

- Formal complaints[13] that raise clear issues of Community interest and that contain appropriate background information are also welcomed. Many important Commission decisions may not have been possible without the information provided by, and the active support of, a complainant. It is usually helpful to contact the Competition DG before submitting a formal complaint. Informal pre-complaint contacts make it possible to have early discussions concerning the information available to the potential complainant and can help to clarify whether a case is likely to be a priority for the Commission.

26. Each of these ways of supplying information is important and can lead to enforcement action. The Commission will consider carefully and respond to every submission received.

Box 1: Articles 81 and 82 EC: Community interest in pursuing allegations of infringement and priority setting Potential complainants are invited to take into account the following considerations before lodging a formal complaint with the Commission. Member States’ competition authorities and courts When considering whether to send a formal complaint to the Commission, consumers and businesses should bear in mind that Member States’ competition authorities also apply EU competition law and work together with the Commission in the European Competition Network (ECN). Potential complainants should therefore consider whether a Member State competition authority is likely to be well placed to act. For example, where a suspected infringement affects competition mainly in the territory of one Member State it may be that the national competition authority (NCA) of that country will want to take a case forward. Even where a case has effects on competition in more than one Member State, NCAs can cooperate in gathering evidence for a competition case, and two or three Member States’ competition authorities can take a case forward together. More extensive guidance on work-sharing in the ECN is available on the Commission’s website[14]. Potential complainants should also consider bringing an action before a national court. Many cases can appropriately be dealt with by national courts including claims for performance of contractual obligations, the application of the civil sanction of nullity in Article 81(2) or applications for interim measures[15]. The Commission also strongly supports the right of those harmed by anticompetitive conduct to seek damages before national courts[16], and has issued a Green Paper[17] which discusses options as to how to make damages claims easier. Priorities Any potential complainant considering submitting a formal complaint to the Commission should also bear in mind that, although the Commission takes all information supplied to it very seriously, it does not have the resources to investigate every problem brought to its attention. The Commission has to set priorities and focus its limited resources on investigating and prosecuting the most serious infringements and on handling cases that are relevant for developing EU competition policy and for ensuring coherent application of Articles 81/82 EC[18]. Basing itself on the information available, the Commission uses one or several of the following criteria, as appropriate in the individual case, in order to decide whether or not there is sufficient Community interest to carry out an in-depth investigation into a complaint[19]: the significance of the impact on the functioning of competition in the internal market, as indicated in particular by: the geographic scope of the conduct complained of, or the economic significance of the conduct complained of, or the size of the market, or the importance for end consumers of the products concerned or of the conduct complained of; or the market position of the undertakings targeted by the complaint or the overall functioning of the market in question; the extent or complexity of the investigation required, the likelihood of establishing an infringement and whether in light of these elements it is proportionate to conduct an in-depth investigation; the possibility for the complainant to bring the case before a national court in a Member State, in particular taking into account whether the case is or has already been the subject of private enforcement or is of a type that can appropriately be dealt with in this way; the appropriateness of acting on an individual complaint that concerns (a) specific legal issue(s) which the Commission is already in the process of examining in one or several other cases or which it has already examined and/or which is the subject of proceedings before the Community Courts; the cessation or modification of the conduct complained of, in particular where commitments have been made binding by a Commission decision pursuant to Article 9 of Regulation (EC) No 1/2003 or where the undertaking(s) complained of has/have changed its/their conduct for other reasons, provided that neither significant persisting anticompetitive effects nor the seriousness of the alleged infringement(s) give the complaint a Community interest in spite of the cessation or modification; the importance of other areas of Community or national law affected by the conduct complained of compared with the importance of competition concerns raised by the complaint. However, these criteria are applied flexibly. It is impossible to define abstract rules as to when it would or would not be right for the Commission to act. There will always be factors, not mentioned in the paragraphs above, that may increase or decrease the degree of priority of a particular case. Moreover, the Commission is not obliged to set aside a case for lack of Community interest. But where the Commission does not believe there is a sufficient Community interest to warrant an in-depth investigation, it will normally reject the complaint with reference to one or more of these criteria. The Commission endeavours to inform complainants within four months from the receipt of a complaint whether or not it intends to investigate the case. |

- 4. Competition screening of EU legislation

27. A key action identified in the Lisbon Strategy, which was relaunched on 22-23 March, was to improve the regulatory environment at both EU and national level in order to enhance competitiveness. Work aimed at achieving “better regulation” began in 2002 under a Commission Action Plan, which was revised on 16 March. This covers all pending EU legislative proposals, existing rules (simplification) and new legislative and policy proposals. In line with the Action Plan, the Commission adopted revised Impact Assessment Guidelines in June[20], covering all legislative and policy initiatives included in the Commission’s Annual Work Programme. Such assessments explore alternative options to solve a defined problem and evaluate their economic, environmental and social impact.

28. The Impact Assessment Guidelines recognise that “vigorous competition in a supportive business environment is a key driver of productivity growth and competitiveness”[21]. Competition screening therefore forms an integral part of impact assessment. The Impact Assessment Guidelines list – non-exhaustively – the types of proposals which need to be screened for possible negative impacts on competition (for instance rules on liberalised network industries, measures which have an impact on barriers to entry and exit, exemptions from competition rules, etc.)[22].

29. The basic “competition test” applied in the context of competition policy screening involves asking two fundamental questions at the outset. First: what restrictions of competition may directly or indirectly result from the proposal (does it place restrictions on market entry, does it affect business conduct, etc.)? Second: are less restrictive means available to achieve the policy objective in question? Competition screening may result in the choice of less restrictive regulatory or in market-based methods to achieve certain policy objectives, thereby avoiding unnecessary or disproportionate restrictions of competition. This is in the interests of both consumers and industry.

5. Green Paper on damages actions for breach of the EC antitrust rules

30. The competition rules set out in Articles 81 and 82 EC can be enforced both by competition authorities (public enforcement) and by private parties bringing proceedings before a national court (private enforcement). One of the aims of the modernisation of EC antitrust rules was to revitalise the role of national courts and national competition authorities (NCAs) in the enforcement of these rules. Regulation (EC) No 1/2003 emphasizes the joint responsibility of the Commission, the national courts and the NCAs in that regard, and provides the necessary tools to achieve an increased and coherent enforcement of the EC antitrust rules. With regard to public enforcement, the Commission and the NCAs now work closely together within the ECN (European Competition Network) to apply the EC antitrust rules. With regard to private enforcement, Regulation (EC) No 1/2003 abolished the Commission’s monopoly on the application of Article 81(3), thus empowering national courts to apply Articles 81 and 82 EC in their entirety. Those national courts have exclusive competence to award damages to the victims of competition law infringements.

31. Antitrust damages actions are the focus of the Green Paper adopted by the Commission on 19 December[23]. The Commission wishes to encourage this kind of action, of which there have been very few so far[24], because it serves a double purpose. Not only do actions for damages allow victims of infringements of EC antitrust law to obtain compensation, they also create an additional incentive for undertakings to respect the EC antitrust rules. Actions for damages do not merely reinforce the effects of infringement findings by competition authorities, they should also be an autonomous means of enforcement. Private enforcement of EC antitrust rules thus becomes a tool to widen the scope of enforcement of Articles 81 and 82 EC. Moreover, by being able effectively to bring a damages claim, individual firms or consumers in Europe become directly engaged in the enforcement of the competition rules. Such first-hand experience increases the direct relevance of the competition rules for firms and consumers. By increasing the level of enforcement of the EC antitrust rules, actions for damages contribute to the observance of those rules and thus to effective competition in Europe. They are thus important tools in creating and sustaining a competitive economy, a key element of the Lisbon Strategy, which aims at making the economy of the European Union grow and create employment for Europe’s citizens.

32. In its 2001 judgment in Courage v Crehan , the Court of Justice confirmed that victims of an infringement of the EC antitrust rules have a right to claim damages and that Member States have to provide for a procedural framework allowing for an effective system of redress[25]. The main objective of the Green Paper is 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 EC antitrust law.

33. The Green Paper addresses a number of key issues, such as access to evidence, the necessity to prove fault, calculation of damages, the possibility to invoke the passing on defence, standing for indirect purchasers, the possibility of representative and collective action, the costs of actions, the coordination of public and private enforcement and the rules on jurisdiction and applicable law.

34. The purpose of the Green Paper is to provoke discussion on how to increase the number of successful actions for damages relating to infringements of the EC antitrust rules. On the basis of the responses received to the Green Paper, the Commission will assess what action, if any, is necessary to further promote such claims.

B – Application of Articles 81, 82 and 86

1. ENERGY, BASIC INDUSTRIES, CHEMICALS AND PHARMACEUTICALS

1.1. Energy

Sector inquiries in gas and electricity

35. As regards the application of the EU antitrust rules in the energy sector the single most important action taken in 2005 was the launch of the sector inquiries into gas and electricity. On 13 June, the Commission adopted a decision[26] launching sector inquiries into the gas and electricity sectors pursuant to the Commission’s powers under Article 17 of Council Regulation (EC) No 1/2003. The justification for the sector inquiries was set out in a Communication from the Commissioner for Competition, in agreement with the Commissioner for Energy[27].

36. The sector inquiries are part of the Commission’s efforts to relaunch the Lisbon Strategy with its goals of boosting economic growth, increasing employment and transforming the European Union into “the most competitive and dynamic knowledge-based economy in the world”. To help put the Lisbon Strategy back on track, the Commission decided to pursue a more proactive application of the competition rules, notably through sectoral screenings, in order to ensure open and competitive markets in Europe in particular in the energy sector[28].

37. The inquiries focus on the recently liberalized electricity and gas industries. Market integration has been disappointingly slow and has so far failed to make a significant dent in the often high levels of concentration that are a characteristic of both sectors. Significant price rises occurred in 2004 and 2005 and customers have increasingly complained of their inability to secure competitive offers from suppliers. These elements suggested that the markets are not functioning optimally and justified the opening of an inquiry under Article 17 of Regulation (EC) No 1/2003 and the use of the investigative instruments available to the Commission.

38. In the electricity sector, the inquiry focuses on the price formation mechanisms on the electricity wholesale markets, electricity generation and supply, and factors determining generators’ dispatching and bidding strategies. There is a special focus on whether electricity generators possess significant market power and can influence electricity wholesale prices. Econometric analyses are likely to be part of this assessment. In addition, a close look will be taken at entry barriers and barriers to cross-border flows such as those that may arise from long-term supply agreements in certain Member States and the legal and operational regimes for the interconnectors that link national electricity grids.

39. In gas, the inquiry focuses on the long-term import contracts, swap agreements and barriers to cross-border flows of gas. The balancing requirements for gas network users and gas storage will also be investigated closely as well as downstream long-term contracts and the effects they may have on switching costs and market entry.

40. The gas and electricity inquiries examine different issues because competition in these sectors is at different stages of development and because they have quite different production structures. Nevertheless, the links between these sectors will be taken into account. Indeed, gas is an increasingly important primary fuel for electricity generation and more competitive gas markets could have an immediate beneficial impact on the electricity markets.

41. The Competition DG’s objective is to identify whether infringements of Articles 81, 82 and 86 EC are responsible for the apparent malfunctioning of the electricity and gas markets, in which case the Commission could undertake proactive corrective action. Based on the facts collected in the inquiry and consequent priorities for enforcement, the Competition DG will take up cases under Articles 81, 82 or 86 EC as soon as they emerge. The results of the inquiries are also expected to play a role in assessing the effectiveness of the current legislative framework in the liberalisation of the gas and electricity markets.

42. When preparing the inquiries, the Competition DG consulted industry associations, consumer groups, other Commission departments (including the Transport and Energy DG), and national competition authorities (NCAs) and national regulatory authorities (NRAs) and their European representatives in order to focus the inquiry and ensure its effectiveness. The Competition DG’s goal is to ensure transparency throughout the process. The Commission presented a set of issues resulting from a first analysis of the responses to a number of fora and, in particular, the Energy Council on 1 December, at which the Commission also reported on the implementation of the legislative package for energy liberalisation. The main concerns identified by the Competition DG in its Issues Paper[29] relate to the prevailing levels of concentration, vertical foreclosure, the lack of market integration, the lack of transparency and the price formation mechanism. A preliminary report is due to be presented in early 2006, followed by an intensive public consultation on the report. The final report on the energy sector inquiry is due at the end of 2006.

43. The sector inquiries substantially reinforce the Commission’s ability to proactively foster competition in the recently liberalised gas and electricity sectors, but enforcement activities in specific cases to support the liberalisation process were also vigorously pursued in 2005.

Long-term gas supply agreements in downstream markets

44. A particular problem that arose following the opening-up of the gas sector to competition in 2005 is possible foreclosure of the downstream market through long-term gas supply contracts between the traditional suppliers on the one hand and distribution companies and industrial and commercial users on the other hand.

45. Long-term contracts prevent customers from switching to alternative suppliers ready to offer better value for money. In some cases, contracts currently in force are not due to end for many years and these customers are therefore unable to benefit from the developing competition in the sector. Also, there are significant economies of scale in the gas supply market, due for example to the high cost of balancing and flexibility, which decrease in relative terms as supplied gas volumes increase. So long-term contracts in the downstream gas market can also delay the ability of alternative suppliers to build up sufficient market share to compete effectively. Such long-term contracts may therefore foreclose markets and give rise to competition concerns when they are not indispensable to generate countervailing benefits for consumers.

46. The Competition DG and the NCAs and NRAs discussed the issue of long-term downstream contracts in the European Competition Network (ECN) Energy subgroup on two occasions. The Bundeskartellamt published a report on the question of long-term contracts in the market for the supply of gas to local utilities (“ Stadtwerke ”) in Germany. It then entered into negotiations with the 15 largest suppliers on this market to introduce clear limits on the duration of their supply contracts. These negotiations broke down in September, and the Bundeskartellamt announced that it would launch formal prohibition proceedings[30]. The Competition DG is also investigating a case concerning long-term gas supply contracts in the Belgian market.

Territorial restrictions cases

47. In the course of 2005, the Competition DG continued its endeavours to ensure that pre-liberalisation commercial practices in the energy markets do not undermine the liberalisation process. These endeavours were rewarded by the removal of territorial restrictions from the gas supply contracts concluded by Gazprom with a number of important historic wholesalers in the EU. Territorial restrictions prevent gas importers from exporting gas to other Member States and/or limit their incentives to do so, thereby frustrating market integration and competition between incumbents.

48. In 2003, the Competition DG had ensured that Gazprom and the Italian oil and gas company Eni Spa[31] would abandon such practices. In February[32], the Competition DG secured improvements to gas supply contracts between the Austrian incumbent gas wholesaler OMV and Russian gas producer Gazprom. In particular, OMV will no longer be prevented from reselling, outside Austria, the gas it buys from Gazprom, and Gazprom will be free to sell to other customers in Austria without having to first offer the gas to OMV (so-called right of first refusal). OMV also agreed to contribute to increasing capacity on the TAG pipeline that transports Russian gas, through Austria, to Italy. This outcome is similar to that reached with respect to Eni in 2003. The undertakings given are identical in substance to those given to the Commission by Eni, the other shareholder of the TAG pipeline, in October 2003. In light of these developments, it was decided to close the investigation.

49. In June[33], the Competition DG closed its investigation into the gas supply contracts between Gazprom and the biggest German wholesale company E.on Ruhrgas AG, which is part of the E.on group, having obtained the removal of territorial restrictions from these contracts. Moreover, Gazprom will no longer be bound by a “most favoured customer” provision previously included in these contracts. These clauses obliged Gazprom to offer Ruhrgas similar conditions to those it offered to Ruhrgas’ competitors on the wholesale market in Germany.

50. The closure of these two cases implies that all Commission cases opened in 2001 into export restrictions on Russian gas (Austria, France, Germany, Italy and the Netherlands) have now been closed. Investigations, also opened in 2001, continue as concerns imports by Italian and Spanish operators of Algerian gas.

Regulatory framework

51. During 2005, the regulatory framework for the internal market in electricity and gas was further developed. On 28 September the Council and Parliament adopted a Regulation on the conditions for third party access to the natural gas transmission network, which is expected to improve opportunities for cross-border trade by new entrants[34]. A Directive on security of supply and infrastructure development in electricity will be adopted in early 2006[35]. It is expected to provide a reliable regulatory framework conducive to new investments in electricity generation and infrastructure.

52. During 2005, the Commission continued its efforts to ensure that Member States implement the Second Gas[36] and Electricity[37] Directives, which constitute the regulatory cornerstones of the energy markets’ liberalisation process. Significant progress has been made. The Second Gas and Electricity Directives also obliged the Commission to report, by the end of 2005, on the progress made in the creation of an internal gas and electricity market. The Commission presented its report to the Energy Council on 1 December. It is coherent with the analysis of the Competition DG in its sector inquiries, and suggests carrying out country reviews before deciding at the end of 2006 about the need for a third liberalisation package.

53. The Court of Justice also clarified some important aspects of the regulatory framework when, on 7 June, it handed down its judgment in the VEMW case[38]. Although the case specifically concerned long-term reservations of interconnector capacity into the Netherlands, it has important implications for many historic long-term capacity reservations on interconnectors that continued to exist after the entry into force of the First Electricity Directive[39].

54. The Court found that the priority access granted by Dutch legislation and regulation to historic supply contracts (23% of the overall interconnector capacity in this particular case) constituted discrimination prohibited by the 1996 Electricity Directive, because Articles 7 and 16 of that Directive require all old and new users of the network to be treated equally. The Court adopted this approach on the basis of the reasoning that any other interpretation would risk jeopardising the transition from a monopolistic, compartmentalised market to an open, competitive one. The Court also considered that the Netherlands could have asked for an exemption under the Directive for existing contracts, but failed to do so in good time.

55. This judgment could be followed by further court cases at national level and by action from NRAs. As regards antitrust enforcement, the judgment opens the door for possible cases to be brought by the Competition DG even though the Court’s judgment did not explicitly address competition issues.

56. The sector inquiry is likely to provide the Competition DG with a good overview of factual issues surrounding long-term reservations and about the need for any follow-up investigations.

57. Finally, 2005 also saw the start of trading in CO2 emission rights[40]. Although not relevant only to the energy sector, its effects are possibly most clearly felt in electricity markets. The emissions trading system appears to have had an effect on electricity prices as electricity generators partly factor the price of emission rights into the prices they charge end consumers. Certain electricity consumers have complained that price increases should not have occurred as emission rights were mostly allocated free of charge.

REPSOL

58. Although during 2005 the Commission gave priority to the recently liberalised gas and electricity sectors, action against infringements in other energy sectors, such as distribution of motor fuels, continued.

59. On 20 October 2004, the Commission published a notice[41] pursuant to Article 27(4) of Regulation (EC) No 1/2003 in order to market test commitments submitted by REPSOL C.P.P. (REPSOL) within the meaning of Article 9(1) of Regulation (EC) No 1/2003. The subject matter of the Commission’s investigation pursuant to Article 81 EC is the use of exclusivity clauses for the supply of motor fuels in distribution contracts signed by REPSOL, which led to foreclosure of the Spanish market for wholesale and retail sales of motor fuels. The contracts were originally notified to the Commission, but this notification lapsed on 1 May 2004.

60. On 17 June 2004, a preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003 was sent to REPSOL.

61. This preliminary assessment suggests that market access is difficult and that REPSOL’s contracts contribute significantly to a possible foreclosure of the market because they tie a large part of the market to REPSOL and are of long duration (the “tenancy” and “usufruct” contracts in particular, where REPSOL had a time-limited property right, have durations of 25 to 40 years).

62. The commitments offered by REPSOL grant a number of dealers with a “tenancy” or “usufruct” contract (“U/S contract”) a right of early termination, subject to payment of compensation to REPSOL. REPSOL would also not conclude any new agreement with DODO[42] stations longer than five years; and until the end of 2006, not buy any new DODO station. The implementation of the proposed commitments would be monitored by a trustee appointed by REPSOL.

63. Following the outcome of the market test of the proposed commitments, REPSOL submitted revised commitments and the Commission envisages proceeding to the adoption of a decision pursuant to Article 9(1) of Regulation (EC) No 1/2003, which would make these revised commitments binding.

1.2. Basic industries

ALROSA – De Beers trade agreement

64. On 3 June, the Commission published a notice[43] pursuant to Article 27(4) of Regulation (EC) No 1/2003 in order to market test commitments[44] submitted by ALROSA and De Beers within the meaning of Article 9(1) of Regulation (EC) No 1/2003. The subject matter of the Commission’s investigation pursuant to Articles 81 and 82 EC and to Articles 53 and 54 EEA is a trade agreement between these two companies, which are both active in the mining and supply of rough diamonds. The agreement was originally notified to the Commission, but this notification lapsed on 1 May 2004.

65. The statements of objections addressed to the companies in January and July 2003 constituted the Commission’s preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003.

66. The preliminary assessment suggests that De Beers holds a dominant position in a worldwide market for rough diamonds. By entering into the trade agreement with ALROSA, its largest competitor, De Beers would gain control over a significant source of supply on the rough diamonds market and obtain access to an extended range of diamonds otherwise not accessible to it. This would, on the one hand, eliminate ALROSA as a source of supply on the market outside Russia, and would enhance the already existing market power of De Beers with the effect of hindering the growth or maintenance of competition in a market for rough diamonds.

67. The preliminary assessment also noted that pursuant to the trade agreement, De Beers, the largest diamond producer in the world, would act as a distributor for around half the production of its largest competitor. In view of the fact that the quantities traded would be substantial and that the agreement was made between the two largest undertakings active in trading rough diamonds, competition on the market would be substantially weakened as a result of the trade agreement.

68. The commitments offered by ALROSA and De Beers proposed to gradually decrease the value of sales of rough diamonds between them to USD 700 million in 2005, USD 625 million in 2006, USD 550 million in 2007, USD 475 million in 2008, USD 400 million in 2009 and USD 275 million in 2010 and beyond. With respect to pricing, sorting and valuation, ALROSA and De Beers would conclude an agreement similar to the trade agreement. The implementation of the proposed commitments would be monitored by trustees appointed by ALROSA and De Beers, respectively.

69. Following the outcome of the market test of the proposed commitments, the Commission is considering whether to proceed to the adoption of a decision pursuant to Article 9(1) of Regulation (EC) No 1/2003, which would make revised commitments binding.

1.3. Chemicals

70. During 2005 the Competition DG carried out “competition screening” exercises in relation to a number of draft legislative texts in the chemicals sector, such as the planned revision of the Plant Protection Directive 91/414/EEC[45], which regulates the placement of plant protection products on the market, and the Commission’s proposal for a Regulation concerning the registration, evaluation, authorisation and restriction of chemicals[46] (REACH), which will provide for registration of some 30 000 already existing chemicals, as well as of any future ones.

71. The competition analysis, which is ongoing in view of possible amendments to be made to the text of the proposals in the course of the legislative process, has focused on ensuring that these legislative texts and, in particular, the costs imposed on the industry do not lead to distortions of competition.

1.4. Pharmaceuticals

Generic competition

72. A competitive European pharmaceutical industry is high on the agenda of the Commission, notably in view of the Lisbon Strategy. It is necessary to ensure that innovative products enjoy strong intellectual property protection so that companies can recoup their R&D expenditure and be rewarded for their innovative efforts. But if companies try to unlawfully prolong this protection, it acts as a disincentive to innovation and can be a serious infringement of EU competition rules. Competition from generic products, produced by third parties after a patent has expired, normally encourages further innovation in pharmaceuticals.

73. Within the framework of the AstraZeneca case (see Box 2 below) and in parallel to it, the Competition DG has become aware of potentially anticompetitive behaviour aimed at excluding or delaying generic competition. These indications have resulted in intensified monitoring of competition within the sector of generic medicines.

Parallel trade in pharmaceuticals

74. The Commission considers parallel trade in pharmaceutical products to be a means of arbitration between high-price and low-price Member States, contributing to the creation of a common market in pharmaceutical products. The European Courts have taken a narrow view concerning the application of Article 81 EC to supply quota systems which limit or make impossible trade between Member States, on the ground that such systems constitute unilateral behaviour on the part of the undertakings.

75. Unilateral supply quota systems could nonetheless be caught by Article 82 EC. Possible objective justifications for such systems may however have to be taken into consideration.

Box 2: AstraZeneca: abuse of government procedures in the pharmaceutical sector On 15 June, the Commission adopted a decision fining AstraZeneca AB and AstraZeneca Plc (AZ) EUR 60 million for having infringed Article 82 EC and Article 54 EEA by misusing public procedures and regulations in a number of EEA States with a view to excluding generic firms and parallel traders from competing against AZ’s anti-ulcer product Losec[47]. The fine took into account that some features of the abuses – i.e. misuses of government procedures – can be considered novel. 1. The relevant market The relevant market comprises national markets for so-called proton pump inhibitors (PPIs) sold on prescription which are used for gastro-intestinal acid related diseases (such as ulcers). AZ’s Losec was the first PPI. 2. AZ’s dominance on the national PPI markets concerned The Commission’s findings on dominance during the relevant years in the countries concerned are based inter alia on AZ’s high market shares and position as incumbent on the PPI market. The first mover in a pharmaceutical market is generally able to obtain and maintain higher prices than later entrants to the market. The Commission’s decision also considers the issue of monopsony buyers (i.e. national health systems) and price regulation. It observes that the bargaining power of monopsony buyers is considerably reduced vis-à-vis companies offering genuinely innovative new products (such as Losec). Moreover, the monopsony buyers are not in a position to control entry to the market. 3. Misuse of the regulatory system AZ’s first abuse involved misuse of a Council regulation adopted in 1992[48] creating a supplementary protection certificate (SPC) under which the basic patent protection for pharmaceutical products can be extended. The abuse essentially consisted of a pattern of misleading representations made by AZ as of mid-1993 before patent offices in a number of EEA countries in connection with its SPC applications for omeprazole (the active substance in AZ’s product Losec). Due to this misleading information AZ obtained extra protection in several countries. The entry of cheaper generic versions of Losec was thus delayed, entailing costs for health systems and consumers. The Commission found that the use of such procedures and regulations may be abusive in specific circumstances, in particular where the authorities or bodies applying such procedures have little or no discretion. The existence of remedies under other legal provisions cannot by itself exclude the application of Article 82 EC, even if they cover aspects of the exclusionary conduct. The Commission found in its decision that there is no reason to limit the applicability of competition law to situations where such conduct does not violate other laws and where there are no other remedies. 4. Misuse of drug authorisation procedures The second abuse took place towards the end of the 1990s and consisted of AZ’s requests for the deregistration of its market authorisation for Losec capsules in Denmark, Norway and Sweden in a context where Losec capsules were withdrawn from the market and Losec MUPS tablets were launched in those three countries. The selective deregistration removed the reference market authorisation on which generic firms and parallel traders arguably needed to rely at the time to enter and/or remain on the market. The Commission found that through its conduct AZ sought to extend, and in part succeeded in extending, de facto the protection afforded well beyond the period provided for in the applicable rules. This second abuse is also characterised by exclusionary intent in a regulatory context characterised by limited or no discretion on the part of the authorities concerned. Dominant companies have a special responsibility to use specific entitlements, whether private or public, in a reasonable way in respect of market access for other parties. The Commission observed in its decision that single acts involving the launch, withdrawal or requests for deregistration would not normally as such constitute an abuse. |

2. Information, communications and media

2.1. Electronic communications and postal services

Mobile telephony roaming charges

76. Concerning roaming (i.e. charges for the use of mobile telephones when travelling abroad), on 10 February the Commission sent statements of objections to the German mobile network operators T-Mobile International AG & Co. KG (T-Mobile) and Vodafone D2 GmbH (Vodafone) . The objections relate to the rates that both T-Mobile and Vodafone charged foreign mobile network operators for international roaming at the wholesale level (so-called inter-operator tariffs – IOTs). The provisional conclusions of the Commission’s investigation into T-Mobile were that T-Mobile abused its dominant position in Germany for the provision of international roaming services at wholesale level on its own network from 1997 until at least the end of 2003, by charging unfair and excessive prices. The Commission has reached the same provisional conclusions as regards the tariffs charged by Vodafone for the period 2000 until at least the end of 2003.

Broadband services

77. As regards broadband services, in 2004 the Commission accepted commitments by Deutsche Telekom AG (DT) to terminate behaviour, in the form of a “margin squeeze” as regards shared access to the local loop (line sharing) in Germany, that had provisionally been found to amount to an abuse of a dominant position[49]. The resulting settlement was based on the margin squeeze methodology as established in the Deutsche Telekom decision[50]. After consulting the German national regulatory authority – the Bundesnetzagentur (BNetzA) – the settlement was accepted by the Commission and led to a substantial decrease in line-sharing fees. Subsequently, several companies started to roll out networks in order to provide broadband services on the basis of line sharing. However, in an application to the BNetzA dated 24 May, DT announced its intention to increase line-sharing fees again. After verifying that this would have led to a reoccurrence of the margin squeeze which took place prior to the settlement, the Commission’s departments intervened and requested DT to comply with its commitments. In order to prevent the Commission from starting formal proceedings, DT filed a new application with the BNetzA in which it applied for the same tariffs as in 2004. BNetzA – with which the Commission’s departments cooperated closely in this case – finally approved wholesale tariffs which were lower than those applied for and lower than necessary for DT to comply with its commitments[51]. The Commission expects the improved conditions for the provision of broadband services via line sharing to influence competition positively and increase broadband penetration in Germany, which will ultimately increase consumer choice and decrease consumer prices.

3G sector inquiry

78. In September, the Commission concluded its sector inquiry into the competitive situation in the market for new systems of mobile communication that are able to transmit audiovisual content (3G). The findings of the sector inquiry had been the subject of a public presentation on 27 May and market participants had commented on the findings.

79. The sector inquiry, which was a joint initiative by the Commission and the EFTA Surveillance Authority, was carried out in 2004 and the first half of 2005 and was initiated because the Commission wanted to ensure that sports content, which is critical for the take-up of new mobile services, is not held back by anticompetitive conduct. It involved a comprehensive review of the behaviour of all actors involved in the acquisition, resale and exploitation of mobile rights to sports events.

80. Around 230 organisations responded to the questionnaires sent out in 2004. Furthermore, when reviewing the data collected the Competition DG analysed 50 case situations where competition problems arose at the time of selling 3G rights.

81. The results of the sector inquiry gave the Commission a clear view of current market developments and the prevailing marketing and exploitation patterns along the entire value chain of sports content for mobile platforms. The findings of the sector inquiry and follow-up actions have been described in a report summarising the conclusions of the sector inquiry[52].

82. This report highlights a number of potentially anticompetitive business practices, which were found during the sector inquiry, which may limit the availability of innovative mobile sport services to consumers. The report focuses on four main areas of competition concerns revealed by the inquiry:

- Bundling: situations where powerful media operators have bought all audiovisual rights to premium sports in a bundle in order to secure exclusivity over all platforms with no view to exploiting or sublicensing 3G rights.

- Embargoes: situations where overly restrictive conditions (serious time embargoes or unnecessary limitations of clip length) are imposed upon mobile rights that limit the practical availability of 3G content.

- Joint selling: situations where 3G rights remain unexploited, because collective selling organisations do not manage to sell the 3G rights of individual sports clubs.

- Exclusivity: exclusive attribution of 3G rights in situations leading to the monopolisation of premium content by powerful operators.

83. The report invited market players to review their business practices and to redress in time possible anticompetitive effects resulting from their business practices. It also announced that the Competition DG will, together with the national competition authorities concerned, review potentially harmful case situations with a national dimension which were identified during the sector inquiry.

Consultation procedure under Article 7 of the Framework Directive (2002/21/EC)

84. Under the EU regulatory framework for electronic communications networks and services[53], national regulatory authorities (NRAs) are obliged to define relevant electronic communication markets appropriate to national circumstances in accordance with the principles of EU competition law.

85. Following the market analysis procedure, NRAs must make accessible to the Commission all draft regulatory measures concerning the definition of the relevant markets, the finding or non-finding of significant market power (SMP) and the regulatory remedies proposed, if any. The Commission may either issue comments, which NRAs must take utmost account of, or request the NRA to withdraw the draft measure if the market definition and/or the determination of SMP is incompatible with Community law. In 2005, the Commission received 201 notifications from NRAs (a net increase compared with 89 notifications in 2004).

86. In 2005, the Commission adopted one decision requesting the withdrawal of notified measures[54]. In that case – which concerned wholesale fixed call termination in Germany – the NRA had proposed to designate Deutsche Telekom as an operator having SMP in the market for the provision of wholesale termination services on its own network. The NRA concluded that the 53 alternative fixed network operators in Germany did not have SMP, despite their monopoly positions for the provision of wholesale termination services on their respective networks, in light of Deutsche Telekom’s countervailing buyer power. The Commission considered, however, that the NRA had not provided sufficient evidence to support the countervailing buyer power argument.

87. The Commission furthermore assessed three notifications in which the NRA found two or more operators to be collectively dominant in a relevant market. In two of these cases the NRA withdrew the notification prior to the Commission adopting a decision, on the basis of preliminary concerns expressed by the Commission’s departments[55]. In the third case – which concerned the market for wholesale mobile access and call origination in Ireland – the Commission did not object to the NRA’s finding of collective dominance.

88. Finally, the Commission accepted the French NRA’s proposal to include in the relevant market for fixed voice calls so-called “voice over the Internet protocol” (VoIP) services, which enable customers to make and receive calls in the same manner as traditional telephony services[56]. The French NRA made a distinction between pure internet-based VoIP services that resemble Instant Messaging and other peer-to-peer internet-based communications such as Skype, and VoIP services that are provided by alternative broadband operators that have invested in local loop unbundling and other broadband access products and are thus in a position to offer to their customers voice services that are of a higher quality than and have the same functionality as traditional telephony.

Infringement proceedings under Article 226 EC concerning the Competition Directive (2002/77/EC)

89. In addition to and in combination with the EU competition rules and the consultation procedure provided for in Article 7 of the Framework Directive, infringement proceedings under Article 226 EC are used by the Commission to ensure that Member States (i) transpose EC directives into national law and (ii) transpose them correctly. It is the responsibility of the Competition DG to monitor Member States’ compliance with one of the directives in the EU regulatory framework for electronic communications, namely the so-called Competition Directive[57]. The purpose of the Competition Directive is primarily to ensure that Member States do not grant or maintain in force any exclusive or special rights for the provision of electronic communications networks and electronic communications services contrary to Article 86 EC, and thus to ensure that competitive market conditions prevail across the EU.

90. The Commission continued its infringement proceedings against those Member States which were late in adopting the necessary measures under national law to comply with the requirements of the Competition Directive. In the course of 2005, the Commission closed the proceedings pending against Belgium, Estonia and the Czech Republic after these Member States informed the Commission of the adoption of national measures. On the other hand, by judgment of 14 April the Court of Justice found that Greece had not yet adopted the necessary measures to comply with the Competition Directive[58]. Similarly, in a judgment of 16 June the Court of Justice concluded that Luxembourg had failed to adopt the measures necessary to comply with this Directive[59]. However, on 23 June Luxembourg notified measures to the Commission which will bring the country’s legislation into line with the Competition Directive.

91. In 2004 it was brought to the Commission’s attention that regulations remained in force in Sweden which oblige television broadcasters to acquire terrestrial broadcasting and transmission services exclusively from the state-owned company Teracom AB. The Commission therefore opened infringement proceedings against Sweden[60]. The Swedish Government’s response to the Commission’s letter of formal notice – which concerned analogue broadcasting services – did not contain any clear commitment to bring the infringement to an end within a reasonable timeframe. Therefore, on 16 March, the Commission adopted a reasoned opinion against Sweden under Article 226 EC. The Commission concluded that the requirement that broadcasters must acquire analogue broadcasting services exclusively from Teracom is in breach of the Competition Directive. Further investigation in 2005 showed that the Swedish regulation of digital broadcasting services had similar effects. Broadcasters that wish to distribute their programming via a digital terrestrial network in Sweden are obliged to cooperate with Teracom for certain key aspects of the digital distribution chain (such as multiplexing). The Commission concluded that Teracom has de facto been awarded a special or exclusive right also for digital broadcasting services which infringes the Competition Directive. The Commission therefore sent a complementary letter of formal notice to the Swedish Government on 12 October.

92. On the same day, the Commission sent a letter of formal notice to Hungary, stating its view that the Hungarian Media Act is incompatible with the Competition Directive. By limiting the rights of cable-TV operators to provide broadcasting transmission services in a territory which may not include more than one third of the population, the Hungarian Media Act restricts the right to establish or provide electronic communications networks or services and prevents further consolidation of the cable-TV market. Abolishing the restriction would increase competition between cable operators as well as between cable operators and operators using other types of infrastructure.

Postal services

93. EU competition policy in the postal sector is applied in a context of yet incomplete liberalisation of postal markets. The Postal Directive[61] allows that, to the extent necessary to ensure the operation of the universal service under financially balanced conditions, Member States may reserve certain postal services to the universal postal service operators, which still account for a vast portion of the market. By 31 December 2006 at the latest, the Postal Directive requires the Commission to table proposals introducing, if appropriate, the full liberalisation of the EU postal market by 2009. Certain Member States have abolished their monopolies or announced plans to do so in advance of that date.

94. Against that background, in 2005, the Commission examined the draft laws on postal services in a number of Member States. The Commission took the view that the draft postal law of the Czech Republic contained provisions which would have extended the monopoly of the incumbent operator beyond the scope of the Postal Directive and would thus have remonopolised a market previously open to competition in that Member State. The Commission takes the view that, where the scope of exclusive rights does not go beyond the postal services that may be reserved, as defined in the Postal Directive, they may prima facie be justified in the light of Article 86(2)[62]. Subsequent to informal contacts between the Commission and the Czech government, the law was amended in a manner which did not extend the monopoly and permitted competition to develop further in the market at hand.

95. In addition, the Competition DG is currently investigating certain practices which may obstruct competition in intra-Community cross-border mail, which has in principle been liberalised under EU rules. In most of these cases, the allegedly abusive behaviour relates to practices which leverage the dominant position from the market of monopoly services into adjacent markets open to competition. Such practices are likely to become increasingly common as liberalisation progresses. Therefore, the Commission and NCAs must remain vigilant so as to ensure that anticompetitive behaviour does not cancel out the benefits of the gradual liberalisation process decided upon by the Council and Parliament.

2.2. Media

German Bundesliga

96. On 19 January, the Commission adopted the German Bundesliga[63] decision – the first commitment decision pursuant to Article 9 of Regulation (EC) No 1/2003. The decision declared the commitments of the German football league concerning the joint and exclusive selling of media rights for football matches legally binding and ended the proceedings.

97. With the Bundesliga decision, the Commission confirmed its antitrust policy in the media field with regard to the sale and acquisition of valuable audiovisual sports rights. Because of the structure of the media sector, where a limited number of operators are trading a small amount of valuable exclusive audiovisual sports rights, competition concerns easily arise in this sector. On the supply side, there are often only a few providers of premium sports rights. The concentration on the supply side is increased by joint selling, i.e. the pooling of club rights and marketing by a single entity[64]. There is also substantial concentration on the buying side, which can raise concerns given its potential effects on access to content for other operators in the market[65].

98. The Commission made a preliminary assessment on 18 June 2004 in accordance with Article 9(1) of Regulation (EC) No 1/2003 which was made available to the League Association and the DFB. According to this preliminary assessment the joint and exclusive selling of media rights by the Liga-Fußballverband raised a number of competition concerns. Bundesliga clubs were possibly prevented from dealing independently with broadcasters and/or sports rights intermediaries and in particular from taking independent commercial decisions about the price and content of the rights packages, hence excluding competition between the clubs for the sale of rights. In addition, since access to football content plays an important role for broadcasters and new media operators, which are competing for advertising revenues and subscriptions, the joint selling of rights by Ligaverband could have risked adversely affecting the downstream television and new media markets by restricting output and foreclosing access.

99. To remedy these competition concerns, Ligaverband offered commitments which significantly modified its joint selling policy[66]. The proposed commitments were market tested in a notice published pursuant to Article 27(4) of Regulation (EC) No 1/2003[67]. In order to prevent the risk of foreclosure effects in the downstream markets, the media rights would be offered in a competitive bidding process under non-discriminatory and transparent terms. Moreover, whilst acknowledging the need for a certain degree of exclusivity to protect the value of sports rights, the risk of long-term market foreclosure has been addressed by a commitment to limit the duration of the exclusive vertical licence contracts to no more than three seasons. Longer contract duration would, according to the Commission’s preliminary assessment, risk creating a situation where a successful buyer would be able to establish a dominant position on the market reducing the scope for effective ex ante competition in the context of future bidding rounds.

100. Furthermore, in order to allow a range of potentially interested buyers to bid for the audiovisual rights, the Ligaverband undertook that the scope of exclusivity would be limited by unbundling the audiovisual rights into a reasonable number of separate packages, which would be designed in such a way that each package is individually exploitable by an operator. The sale of several meaningful packages would enable less powerful operators with lesser financial means to bid for rights that suit their needs. Some packages would be earmarked for special markets/platforms: due to the strong asymmetric value of rights for different distribution platforms, access to sport rights may be foreclosed to market operators in certain evolving market platforms; by undertaking to earmark the packages for certain distribution platforms, free-TV and pay-TV operators, mobile operators and Internet service providers would be enabled to acquire rights.

101. Finally, in order to limit the risk of output restrictions caused by collective selling of exclusive rights, the clubs would retain the right to sell certain rights individually. A fall-back clause is intended to ensure maximum exploitation of the rights and avoids the presence of unused rights, i.e. any rights which the Ligaverband fails to sell or rights purchasers do not fully exploit. Unused rights would fall back to the clubs for individual exploitation on a non-exclusive basis.

102. The Commission accepted that a transitional stage[68] applied to the entry into force of the commitments to ensure that the arrangements were brought into line with the competition rules without jeopardising the operation of the German football league.

103. The decision states that it deals solely with the joint and exclusive selling policy of Ligaverband with regard to the first and second German professional Football Leagues for men and does not cover competition issues arising from individually concluded licence contracts. For this purpose, the decision emphasises that future investigations by the Commission are not excluded, in particular if a single buyer purchases more than one of the rights packages.

104. The commitments offered by Ligaverband significantly improve the accessibility of the content for TV, radio and in particular for the operators in the emerging new media markets. They therefore comply with the Commission’s policy ensuring maximum availability of content in order to foster innovation and dampen concentration tendencies in the media markets taking the viewers’ interests fully into account.

Football Association Premier League [69]

105. In November, the Commission announced that it had received commitments from the FA Premier League (FAPL) in respect of their joint marketing in the UK of media rights to Premier League football matches. This follows a 2002 statement of objections and a public consultation on a first set of commitments in April 2004. The commitments are to apply for the sale of rights for the 2007 football season onwards. The main elements of the commitments are to create smaller and more evenly balanced packages of TV rights, to ensure that no one buyer can buy all of the packages, and to ensure that the sale of those rights is conducted fairly. To this end, the FAPL has committed itself to awarding the packages to the highest standalone bidder for each package, and to ensure that the process is overseen by an independent monitoring trustee. The commitments include various other elements that remove restrictions on output across various different media rights. On the basis of these commitments the Commission may adopt a decision under Article 9 of Regulation (EC) No 1/2003 in 2006.

2.3. Information industries, Internet and consumer electronics

Microsoft

106. On 28 July, the Commission adopted a decision concerning the monitoring trustee in the Microsoft case[70]. Article 7 of the Commission’s decision of 24 March 2004 in the Microsoft case (“the Decision”) provides for the setting-up of a suitable mechanism to monitor Microsoft’s compliance with the Decision, including a monitoring trustee who is to be independent of Microsoft. This is one of the rare occasions in which the Commission has used a trustee to monitor compliance with a cease and desist order pursuant to Article 82 EC. Trustees are more frequently used to monitor compliance in merger cases.

107. The primary responsibility of the trustee is to provide expert advice to the Commission concerning compliance with the Decision. In particular, the trustee will advise the Commission on whether (i) Microsoft makes interoperability information available both completely, accurately and in a timely manner, and does not impose any unreasonable or discriminatory restriction to the access to, or use of, such information and (ii) whether the unbundled version of the Windows client PC operating system that Microsoft makes available pursuant the Decision is full-functioning and does not include Windows Media Player and whether competing media player vendors have sufficient information so that their media player is not put at a disadvantage in interoperating with Microsoft’s dominant client PC operating system, compared with Windows Media Player. To this end the trustee will have access to the source code of Microsoft’s PC and server operating systems. All costs relating to the appointment and remuneration of the trustee are borne by Microsoft. The trustee was appointed on 4 October from a list of candidates presented by Microsoft.

108. After the rejection of Microsoft’s application for interim measures on 22 December 2004, the Commission engaged in discussions with Microsoft concerning its compliance with the Decision. As regards the interoperability remedy (Article 5 of the Decision), the Commission focused on Microsoft’s obligation to provide complete and accurate information which would allow Microsoft’s competitors to develop work group server operating system products that interoperate with Windows PCs and servers on an equal basis with Microsoft’s server operating system products. In order to comply with this obligation, Microsoft made available a technical description of the relevant software (“protocols”) used in the communication between Windows PCs and work group servers (the “Technical Documentation”).

109. This Technical Documentation was reviewed by the trustee, the Commission’s technical experts and several third parties. They all came to the conclusion that it failed to provide sufficient information to build competing interoperable work group server operating system products.

110. The second question with respect to Microsoft’s compliance with the interoperability remedy which the Commission extensively discussed with Microsoft in 2005 concerns the reasonableness of the conditions Microsoft imposes on beneficiaries of the remedy for access to and use of the Technical Documentation. Initially, Microsoft provided a set of agreements containing the terms it intended to impose on undertakings interested in using the Technical Documentation. Following discussions with the Competition DG, Microsoft amended these agreements several times. The Competition DG also conducted a market test consulting interested undertakings on Microsoft’s proposals.

111. In light of the results of that market test and on the basis of the expert opinions on the Technical Documentation, the Commission decided to open proceedings against Microsoft in order to compel it to comply with its obligations stemming from the Decision. Consequently, on 10 November, the Commission adopted a decision pursuant to Article 24(1) of Regulation (EC) No 1/2003 (“the Article 24(1) Decision”). This decision is the first step in a procedure pursuant to Article 24 of the Regulation. By means of this decision, a periodic penalty payment of EUR 2 million per day was imposed on Microsoft as from 15 December in the event that it were not to comply with Article 5(a) and (c) of the Decision, i.e. its obligations to (i) supply complete and accurate interoperability information; and (ii) to make that information available on reasonable terms.

112. On 21 December, the Commission issued a statement of objections in the procedure pursuant to Article 24 with regard to Microsoft’s obligation to supply complete and accurate interoperability information. The Commission’s objections are backed by further reports of the trustee in which he concludes that the Technical Documentation supplied by Microsoft in response to the Article 24(1) Decision was still incomplete and inaccurate.

3. Services

3.1. Financial services

113. Efficient financial services markets are vital to ensuring flexibility and dynamism in the European economy, raising productivity, growth and creating employment. Competition policy and internal market policy are complementary and can help deliver an integrated and competitive market for all financial services. The Commission is strengthening competition in financial services with the targeted use of sector inquiries, individual cases and the wider development of competition policy in this area.

Financial services sector inquiries

114. On 13 June, on the basis of its powers under Article 17 of Regulation (EC) No 1/2003, the Commission launched inquiries into the financial services sector. The justification for the sector inquiries was set out in a Communication from the Commissioner for Competition, in agreement with the Commissioner for Internal Market and Services[71].

115. The inquiries examine two significant sectors of financial services: retail banking and business insurance. These inquiries are being conducted in parallel. Within retail banking, the Commission is examining the area of payment cards and core retail banking services such as current accounts and financing for small and medium-sized enterprises[72]. In payment cards, the inquiry builds on the market knowledge the Commission has already developed through cases. On core retail banking services, the inquiry will explore, among other issues, low levels of market integration, effective choice on the demand side and barriers to market entry.

116. The inquiry into business insurance will examine in particular the extent of cooperation among insurers and insurance associations in areas such as the setting of standard policy conditions[73]. While in many cases such cooperation may create efficiencies, possibly distortive forms of cooperation may limit the potential for the demand side to negotiate terms of coverage and may also restrict competition and innovation in the market.

117. The analysis of the sector inquiries will rely largely on data provided by market participants. For instance, in July, on the basis of Article 18(1) of Council Regulation (EC) No 1/2003, the Commission undertook a survey of payment cards based on a representative sample of approximately 200 undertakings across the EU.

MasterCard Europe/International (multilateral interchange fees)

118. The Commission’s investigation into MasterCard’s MIF, opened on 24 September 2003, continued throughout 2005. After merchants had informed the Commission that banks were still reluctant to disclose the level of the MIF, Vi