EUROPEAN COMMISSION Brussels, 4.6.2015 SWD(2015) 113 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

on Competition Policy 2014 {COM(2015) 247 final}



TABLE OF CONTENTS I. LEGISLATION AND POLICY DEVELOPMENTS State aid 1. State Aid Modernisation: reform in support of growth and jobs 2. Monitoring, recovery and cooperation with national courts 3. Significant judgments by EU Courts in the State aid area Antitrust & Cartels 1. Technology Transfer Agreements 2. Notice on Agreements of Minor Importance and accompanying Staff Working Document on Restrictions by Object 3. Directive on antitrust damages actions 4. Evaluation of access to file and complaints 5. Significant judgments by EU Courts in antitrust and cartels 6. Fight against cartels remains a top priority 7. Continuing the close cooperation within the European Competition Network (ECN) and with national courts Merger control 1. The White Paper "Towards more effective EU merger control" 2. Simplification Package successfully implemented 3. Recent enforcement trends 4. Significant judgments by EU Courts in mergers

Developing the international dimension of EU competition policy 1. Bilateral relations 2. Multilateral cooperation II. SECTORAL OVERVIEW 1. Energy & Environment 2. Information and Communication Technologies (ICT) and Media 3. Financial Services 4. Basic industries and Manufacturing 5. The agri-food industry 6. The Pharmaceutical and health services sector 7. Transport and postal services I.LEGISLATION AND POLICY DEVELOPMENTS EU competition policy's contribution to growth and jobs The European Union is the world's largest economic and trading area. The EU's unique asset and distinct comparative advantage on the global scene is its internal market, which encompasses over half a billion consumers and more than 20 million companies. Since its inception, the on-going process of improving and expanding the Single Market has gone hand in hand with the development of EU competition policy. Efficiently functioning markets in the EU will bring economic opportunities, improve productivity, drive down costs and boost competitiveness for companies of all sizes. This is key to creating growth and jobs in Europe. In addition, competition-friendly regulation and competition culture create favourable conditions for investments and innovation, which enhances consumer welfare and efficiently functioning markets, enables growth and contributes towards more convergence. Undistorted competition also fosters competitiveness in a global context. A competitive internal market also prepares European companies to succeed on global markets. State aid State aid control is an integral part of EU competition policy and a necessary safeguard to preserve effective competition and free trade in the Single Market. The Treaty establishes the principle that State aid which distorts or threatens to distort competition is prohibited in so far as it affects trade between Member States (Art. 107(1)). However, State aid, which contributes to well-defined objectives of common European interest without unduly distorting competition between undertakings and trade between Member States, may be considered compatible with the internal market (under Art. 107(3)). The objectives of Commission's control of State aid activity are to ensure that aid is growth-enhancing, efficient and effective, and better targeted in times of budgetary constraints and where aid is granted, it does not restrict competition but addresses market failures to the benefit of society as a whole. In addition to this, the Commission is effectively engaged in preventing and recovering incompatible State aid. 1.State Aid Modernisation: reform in support of growth and jobs

In 2014 the Commission completed its ambitious State Aid Modernisation (“SAM”) reform , which was launched in 2012 and aimed at promoting good aid that supports growth while contributing to Member States' efforts towards budgetary consolidation. Only one building block of SAM still needs to be put in place, namely a Commission's guidance on the notion of State aid, following important evolutions in case law and enforcement practice. SAM provides for more efficient decision making and procedures for granting growth-supporting aid that is not distortive to market functioning in the EU. Among the key objectives of the reform are tangible cuts in red tape, the promotion of a better use of limited public resources by Member States and of a higher contribution of aid measures to growth. If successfully implemented, the reform will contribute to better allocation of public resources and promote higher efficiency and better quality of policy interventions. As a result of the reform, a significantly larger number of smaller and unproblematic measures should be exempted from prior notification, in exchange for strengthened controls at Member State level, greater transparency and better evaluation of the impact of aid. Obtaining these results will not happen automatically, but requires significant efforts by the Commission and Member States. Chart 1. Overview of the SAM package Main changes: less administration and more flexibility and clarity for granting aid One of the cornerstones of the State Aid Modernisation reform was the new General Block Exemption Regulation (GBER), which simplifies aid granting procedures for Member States by authorising without prior notification a wide range of measures fulfilling horizontal common interest objectives. According to Commission's estimates, three-quarters of today's State aid measures and some two-thirds of aid amounts could be covered by the new GBER. That proportion could increase to 90% of all aid measures provided Member States use the GBER to the full extent. This means that only cases with the biggest potential to distort competition in the Single Market will remain for ex ante assessment (notification). That increased scope of the GBER will have a strong impact on aid beneficiaries and on granting authorities, leading to faster access to the aid (through avoidance of the notification process) and reduction of administrative burden (simpler conditions, e.g. for demonstrating the incentive effect). Throughout the State Aid Modernisation process, the Commission followed a consistent approach in establishing new Guidelines containing the criteria for assessing State aid compatibility. A key objective was to encourage Member States to ensure that aid granted is addressing the key market failures and bottlenecks. The common approach to compatibility helps to ensure that aid is well designed to meet its objective and that competition distorsions remain limited. The main principles behind the common approach: "Big on big, small on small" as SAM introduced higher thresholds for notifying aid aimed at addressing the well-known market failures (R&D&I aid, SME access to finance, regional aid). New categories of aid have been exempted from notifications, such as culture, sports, natural disasters, local infrastructures. Focus on criteria that matters. The new guidelines provide for effect-based analysis of large projects, bringing public intervention closer to best market practices. The guidelines also include criteria for supporting large infrastructure projects in the common EU interest, in a way that they do neither crowd-out private investments, nor result in undue distortions of competition and trade in the Single Market. What makes an aid measure compatible with the internal market? State aid modernisation clarifies the criteria for finding that an aid measure is compatible and hence can be approved: 1) the aid measure must aim at an objective of common interest; 2) it must be targeted towards a situation where aid can bring about a material improvement that the market cannot deliver itself, for example by remedying a market failure or addressing an equity or cohesion concern; 3) it must be an appropriate policy instrument to address the objective of common interest; 4) the aid must change the behaviour of the undertaking(s) concerned in such a way that it engages in additional activity that it would not carry out without the aid, or it would carry it out in a restricted or different manner or location; 5) the aid amount must be limited to the minimum needed to induce the additional investment or activity; 6) negative effects on competition and trade between Member States must remain sufficiently limited;

7) the relevant acts and pertinent information about aid awards must be transparent (public). Partnership, transparency and evaluation as key institutional pillars of modern state aid control The SAM programme also implies a greater role for Member States in State aid control, including in designing State aid measures to fit the rules (particularly the GBER), taking responsibility for compliance of the aid they grant, and making the transparency and evaluation requirements work. Partnership Implementing SAM requires Member States to take responsibility for ensuring compliance with the State aid rules and for limiting the use of notifications to those cases where they are really necessary. It also requires Member States and the Commission to work together more closely to improve the efficiency of procedures. The new partnership arrangements with Member States are built on a pro-active support of Member States by the Commission through advocacy work and trainings. To oversee implementation and facilitate compliance with the new requirements for transparency and evaluations, the Commission has set up a High Level Group (HLG) with Member States as well as some dedicated working groups. The HLG looks at best practices in ensuring compliance and common challenges with regard to SAM implementation. Alongside that process and to facilitate the work of the central authorities in Member States, DG Competition's newly created State aid country co-ordinators network helps to address systemic issues in State aid enforcement at Member State level, works to help Member States prioritise their portfolio of cases and assists with providing training and guidance. Transparency A way to ensure greater flexiblity and responsibility of Member States for compliance with State aid rules is to put emphasis on transparency. By providing third parties access to information about aid granted, transparency empowers markets and civil society to monitor the compliance, challenge poorly designed aid measures and signal breaches of the rules. Under SAM, the transparency requirement mandates Member States, as a condition for granting aid, to establish comprehensive State Aid websites containing information on aid measures and their beneficiaries, in a format that allows information to be searched, downloaded and easily used. Member States must publish full information on individual aid awards above EUR 500 000. The requirement will become mandatory gradually: there is a transition period until mid-2016 to ensure compliance. In order to guarantee tax confidentiality, the aid granted under fiscal schemes will only be published in ranges to prevent breaches of tax confidentiality, since knowledge of the exact amount of tax relief may allow a company's tax base to be reconstructed. Evaluation Evaluation of aid schemes is a new requirement introduced by State aid modernisation with the aim to gather the necessary evidence to better apprehend impact, improve enforcement and inform future policy-making by Member States and the Commission. It is also a complement to the major expansion of the General Block Exemption Regulation (GBER) and represents a necessary ex post safeguard, alongside transparency and monitoring, to promote quality and effectiveness of aid policies. Since 1 July 2014, evaluation is required for large GBER schemes in certain aid categories and is also provided for some notified schemes under the new generation of State aid guidelines . Better targeted growth-fostering aid addressing market failures (R&D&I aid, SME access to finance, regional aid) One of the headline targets of Europe 2020 Strategy is for R&D&I investments in the EU to reach 3% of GDP. As smart and sustainable growth depends on firms' ability to innovate, State aid rules have been deeply revised with a view to unleashing the EU's potential to invest in more and better R&D&I. More precisely, the Commission has adopted a new R&D&I Framework and new provisions for R&D&I aid under the General Block Exemption Regulation (GBER), both of which entered into force on 1 July. In total, R&D&I State aid awarded under the previous rules amounts to an estimated EUR 62.4 billion for the period 2008-2013. Nevertheless, R&D spending in Europe has been lagging behind major global competitors, as it now stands a touch above 2% of GDP, compared to around 3% in the US and Japan. This is mainly the result of lower levels of private investment. The new rules on R&D&I aid are aimed at enhancing market efficiency and mobilising private investment in projects that would otherwise not be implemented due to market failures (notably in the form of knowledge spill-over effects, imperfect information on the risks and benefits of R&D&I activities and coordination problems for cooperative research). The new rules are therefore designed to go hand in hand with other EU initiatives aimed at promoting R&D&I activities, such as Horizon 2020. New R&D&I State aid rules: main features The Commission has cut red tape by allowing Member States more flexibility in implementing R&D&I aid. In particular, a new category of aid for research infrastructure is covered by both the new GBER and the new R&D&I Framework, while the scope for aid for pilot projects and prototypes has been expanded. Moreover, aid for innovation clusters has been made more flexible. Notification thresholds have been doubled for aid for R&D projects and re-doubled for EUREKA projects and projects carried out in the context of EU Joint Undertakings. The new R&D&I Framework increases legal certainty, for instance the general non-economic activities of research organisations and the limits of certain ancillary economic activities for which public funding falls outside State-aid rules have been explained in more detail. A comprehensive guidance has been given for the first time on how to avoid State aid in the area of public procurement of R&D services. To help industry overcome financing gaps, the new rules on R&D&I aid establish more flexible and simpler criteria under which the aid is more likely to be found compatible with the internal market. Under the new R&D&I Framework, the allowed aid intensities have been increased in particular for close-to-the-market aid categories (applied research, including demonstrators and pilots, ranging from 60-90%, and innovation aid in general set at 50%, including for innovation clusters). In addition to the new R&D&I State aid rules, the Commission has set up a simpler, more flexible and generous State aid framework for the provision of risk finance to SMEs and mid-caps. Following extensive consultations with Member States and stakeholders,the new rules, contained in the new Risk Finance Guidelines and in the new GBER, entered into force on 1 July. SMEs across the EU remain heavily dependent on traditional bank lending which is still limited by the refinancing capacity, risk appetite and capital adequacy of banks. The financial crisis has exacerbated the problems with approximately one third of SMEs being unable to receive the necessary finance in recent years. Given the pivotal importance of SMEs and mid-caps for the whole EU economy, that situation has a significant negative impact on growth and job creation. The new rules aim to enhance the incentives of private sector investors - including institutional ones – to increase their funding activities in this critical area of SME and mid-caps financing, mirroring other EU initiatives designed to promote wider use of financial instruments in the context of new support programmes such as Horizon 2020 or the Programme for the Competitiveness of Enterprise and SMEs (COSME). In sum, the new risk finance regime will provide the framework for seamless support of new ventures from their creation to their development into global players, so as to help them overcome the critical stages – the so-called “valley of death” – where private financing is either unavailable or not available in the necessary amount or form. State aid framework for the provision of risk finance to SMEs and mid-caps: main features The new block exemption provide a radically enlarged scope, covering a much wider range of companies, irrespective of their location in assisted or non-assisted areas, including SMEs in later growth stages. Furthermore the new rules allow for a wider range of financial instruments (equity, quasi-equity, loans, guarantees or hybrid instruments) and funding structures whereas before they required 70% of the budget to be provided in the form of equity via private/public investment funds.

Risk finance measures of up to EUR 15 million per SME are now block-exempted (compared to the previous annual tranches of maximum EUR 1.5 million in GBER and EUR 2.5 million in the Guidelines). In addition, the new Guidelines set out compatibility conditions for amounts above EUR 15 million, without imposing any specific cap, as long as the aid measure is granted in cases where market failures have been convincingly demonstrated. Also, the new regime is a better reflection of market practices as it allows capital replacement operations as long as they are combined with the injection of new fresh capital into the company Finally, the new risk finance regime tailors the private participation ratio according to the inherent riskiness of the development stage of the final investee whereas the previous GBER required a private participation rate of least 50% in non-assisted areas and 30% in assisted areas. Moreover, while the previous GBER did not cover fiscal incentives to private investors the new regime has introduced more flexibility by bringing tax incentives to natural persons (including business angels) under the scope of the block exemption and by setting out detailed rules for fiscal incentives to corporate investors under the new Guidelines. Regional aid is an important instrument in the EU's toolbox to promote greater economic and social cohesion, Following the adoption in June 2013 of the revised regional aid guidelines for the period 2014-2020 the Commission took the necessary measures to ensure the continuity of the regional support systems of the 28 Member States after the expiry of the regional aid maps on 30 June 2014. By 16 September, the Commission had adopted approval decisions on the 28 regional aid maps covering the period between 1 July 2014 and 31 December 2020. With the adoption of the new General Block Exemption Regulation in May 2014, the full set of rules applicable to regional aid to be granted in the period 2014-2020 was in place. The new regulation further extended the range of regional aid measures which are exempted from the notification obligation (from 1 July 2014, the exemption also applied to ad hoc regional investment aid measures below the notification thresholds, transport aid schemes and operating aid schemes for Outermost Regions). Those changes will enable the Commission to focus its future enforcement activities on the potentially most distortive regional aid measures. In 2014, the Commission also adopted several decisions on a number of regional aid measures to support large investment projects. It took final decisions approving regional aid for investments by Porsche (cars) and Propapier (paper) in Germany. Regional aid to BMW (electric cars) in Germany was partially approved, partially prohibited and another formal investigation into aid for Ford Spain (cars) could be closed as Spain decided to withdraw the notification. The Commission also decided to open formal investigations into aid for Audi in Hungary and for Autoeuropa in Portugal (both the car sector). Following a preliminary examination, the Commission approved aid for Hankoog and Apollo in Hungary (both tyre production), for Premursa (theme park) in Spain and Baltic New Technologies (refinery) in Latvia. Finally, the Commission adopted a decision on the Bulgarian forest land swap case in which it ordered the recovery of all illegal and incompatible aid granted in the context of the land swap transactions concerned. 2.Monitoring, recovery and cooperation with national courts Increased monitoring of existing State aid to ensure a level playing field Over the years, the architecture of State aid control has evolved. Today, 32% of aid is granted under block-exempted schemes which are not examined by the Commission prior to their entry into force. Overall, 88% of aid is granted on the basis of previously approved aid schemes or Block Exemption Regulations. In that context, it is essential for the Commission to verify that Member States apply the schemes correctly and that they only grant aid when all required conditions are met. To this end, the Commission introduced in 2006 a regular, ex post, sample-based control of existing aid schemes ("monitoring"). After a modest start covering about 20 schemes and 10 Member States in each monitoring cycle, the Commission considerably stepped up monitoring since 2011. Building on the Court of Auditors recommendations and anticipating the further evolution of the State aid control architecture, the Commission practically almost quadrupled the size of the monitoring sample in the last three annual cycles to 75 schemes in the current 2014 review. It also extended the scope of its control. The 2014 cycle covered all Member States, all main types of aid approved as well as block-exempted schemes. The Commission follows-up systematically all irregularities and uses the means at its disposal, as appropriate, to address the competition distortions that these may have induced. In some cases, Member States offer to voluntarily redress the problems detected (to amend national legislation, to recover the excess aid granted etc.). In other cases, formal action may be necessary. In 2014, the Commission adopted two final decisions in cases where it had opened a formal investigation procedure in 2013, considering that the additional information provided by the Member States set aside the doubts on the misapplication of the schemes that had triggered their monitoring. Four other formal investigation procedures relating to issues detected in the context of monitoring were still ongoing in 2014. Restoring competition through recovery of State aid granted in contravention of the rules To ensure the integrity of the Single Market, the Commission has the power and the duty to request Member States to recover unlawful and incompatible aid which has unduly distorted competition and trade between Member States. In 2014, further progress was made to ensure that recovery decisions are enforced effectively and immediately. Continued efforts to recover illegal aid By 31 December 2014, the amount of illegal and incompatible aid recovered from beneficiaries had increased to EUR 9.6 billion, from EUR 7.3 billion in December 2004. This means that the percentage of illegal and incompatible aid still to be recovered fell from 75% at the end of 2004 to around 52% at the end of 2014. In 2014, the Commission adopted 18 decisions ordering recovery of incompatible aid. As of the end of December, the Commission had 57 pending recovery cases. In the same year, Member States recovered a total amount of approximately EUR 301 million from beneficiaries. Recovery decisions adopted in 2014 18 Amount recovered in 2014 (in EUR million) 301 Pending recovery cases on 31 December 2014 57 As a guardian of the Treaty, the Commission may use all legal means at its disposal to ensure that Member States implement their recovery obligations, including launching infringement procedures. In 2014, the Court of Justice condemned two Member States pursuant to Article 108(2) TFEU (Italy and Germany) and one Member State pursuant to Article 260(2) TFEU (Spain) . Cooperation with national courts to ensure the effectiveness of State aid rules The Commission continued its cooperation with national courts under the notice on the enforcement of State aid law by national courts of 2009 (the 'Enforcement Notice'). That cooperation includes direct case-related assistance to national courts when they apply EU state aid law. The courts can ask the Commission to provide case related information, or to provide an opinion on the application of the competition rules. The Commission may also submit amicus curiae observations on its own initiative. In 2014, the Commission responded to three requests for information and four requests for an opinion pursuant to Article 23(1) of the Procedural Regulation. The requests for information were all issued by German courts and concerned the state of the proceedings before the Commission or the transmission of documents in the possession of the Commission. The requests for an opinion came from Finnish, Croatian, German and Dutch courts and concerned the application of Article 107 TFEU, in particular the notion of aid, the application of the market economy operator test and the applicability of the General Block Exemption Regulation.

With the 2013 amendment to the Procedural Regulation, the Commission has the possibility to submit amicus curiae observations on its own initiative before national courts. Article 23a(2) of the Procedural Regulation mirrors in that respect Article 15 (3) of Regulation 1/2003 in the field of antitrust. To date, the Commission submitted observations before a French court on questions related to the definition of a service of general economic interest (SGEI) and the tender procedure for the selection of an SGEI provider and in Romania concerning the implementation of an arbitration award. The Commission intends to publish its opinions and amicus curiae observations on its website as soon as it receives approval from the courts concerned . Furthermore, the Commission's advocacy efforts continued. In 2014, the Commission was actively involved in financing training programmes for national judges following an annual call for projects, and also sent trainers to teach at such workshops and conferences. 3.Significant judgments by EU Courts in the State aid area In 2014, the EU courts handed down a number of important judgments in particular as regards the existence of State aid pursuant to Article 107(1) TFEU. The judgments, shortly presented in the following, clarify among others the notions of transfer of state resources, advantage and selectivity and the definition of a service of general economic interest. On 11 December, the General Court rendered a judgment on the issue of transfer of State resources in the context of a financing mechanism to support green electricity in Austria. In 2008, Austria amended its Green Electricity Act guaranteeing each green electricity producer the possibility of disposing of green electricity at a fixed price. The purchases were made by a public limited company under the supervision of the State. Given that the price was higher than the market price, the extra costs incurred by the public limited company were reimbursed by the final consumers. It was also planned that the purchase obligation of green electricity for energy-intensive businesses would be capped. The Commission declared the measure to constitute State aid and the General Court confirmed that finding. In particular it held that the mandatory surcharge for green electricity laid down by the Green Electricity Act amounted to a parafiscal levy under the control of the public limited company supervised by the State. The aid mechanism for green energy and the exemption mechanism for energy-intensive businesses were established by law and therefore attributable to the State. In addition, the partial exemption for energy-intensive users resulted in a loss of State revenue which selectively favoured energy-intensive businesses active in a limited number of sectors. The General Court has upheld the Commission's decision and confirmed previous jurisprudence, notably the Court of Justice’s judgments in Essent and Vent de Colère. Regarding the application of the private investor test, the Court of Justice confirmed the General Court’s partial annulment of the Commission decision relating to aid granted to the Dutch bank ING because of the financial crisis. In the context of the restructuring of ING, the Dutch State had amended the repayment terms of the original capital injection. This amendment had been considered by the Commission to constitute aid, over and above additional to the restructuring aid that had already been granted, without applying the market economy operator test to that amendment. The Court disagreed with the Commission stating that the Commission was required to apply the private investor test to the amendment of the repayment terms. The Court held that where it appears that the private investor test may be applicable, the Commission is under a duty to ask the Member State concerned to provide it with all relevant information as regards the applicability and the application of the private investor test. When applying the test, what is decisive is whether the amendment to the repayment terms satisfies an economic rationality test so that a private investor may also be in a position to accept such an amendment. In an interesting case dealing with the question whether certain companies benefit from a State aid relevant advantage derived from their special status under national law, the Court of Justice upheld a previous ruling by the General Court confirming a Commission decision finding that French La Poste’s status as an EPIC (établissement public à caractère industriel et commercial) resulted in an advantage to the undertaking in the form of an implicit unlimited guarantee. That guarantee derives from the fact that the EPIC is not subject to the ordinary compulsory administration and winding-up procedures under national law. It thereby grants an immediate advantage to that undertaking which enjoys lower interest rates or a lower level of security when it has to refinance itself on the market. With respect to the burden of proof on the Commission as regards the existence of that implicit guarantee, the Court confirmed that the Commission may rely on the method of a firm, precise and consistent body of evidence (faisceau d’indices) to determine whether the State is required under national law to use its own resources to cover the losses of an EPIC and thereby giving rise to a sufficiently concrete economic risk of a burden on the State’s budget. In the context of selectivity of an aid measure, the General Court rendered two important judgments, both dealing with the correct definition of the (group of) companies that are allegedly favoured as compared to another (group of) companies. In a judgment of 9 September, the General Court held, contrary to the assessment of the Commission, that unless the airport operator and the airline concluded a specific agreement, a schedule of airport charges applied to all airline companies using the Lübeck airport did not constitute a selective aid measure. The General Court considered that airlines departing from other airports than Lübeck are not in a comparable legal and factual situation and that the test to be applied is to verify whether the schedule of charges discriminates between the actual and potential users of the airport in question and not with respect to users of other airports that cannot or do not want to use that airport. In the so-called Spanish Goodwill judgment of 7 November, the General Court annulled two Commission decisions which had found tax rules allowing for the deduction of shareholdings in foreign companies to be incompatible State aid. The Commission had concluded that the scheme amounted to incompatible State aid since it treated more favourably foreign acquisitions as opposed to domestic transactions without any objective reason. The General Court did not agree as it found that the Spanish regime was not aimed at favouring any particular category of undertakings but a category of economic transactions. However, the application of Article 107(1) TFEU requires that a measure "favours certain undertakings or the production of certain goods". It thereby also rejected the Commission’s approach that had limited the selectivity test to establishing the existence of a derogation from the reference framework, i.e. without identifying a specific group of companies that were selectively favoured. As regards the notion of services of general economic interest (SGEI), the General Court clarified in two important judgments the manifest error test that the Commission should apply to verify whether the Member State correctly defined the service as a SGEI. In the German Land Rhineland-Palatinate, the disposal of animal carcasses is carried out by a public law body (Zweckverband Tierkörperbeseitigung). The service is set-up as a SGEI and compensated accordingly. The Commission in its final negative decision with recovery considered, inter alia, that the SGEI in the form of the disposal of animal carcasses contravened the polluter pays principle and that the German authorities had therefore committed a manifest error. According to the polluter pays principle, it is the owners or producers of animal by-products that are responsible for the proper disposal and not another entity such as the Zweckverband. The General Court agreed with the Commission and confirmed that Germany had indeed committed a manifest error in defining the service as a SGEI. In a second judgment on the notion of SGEI rendered on 3 December, the General Court was asked to verify whether the Commission had correctly considered that security of supply concerns on the Spanish electricity market justified the putting in place of a SGEI in the form of a preferential dispatch mechanism according to Art. 11(4) of Directive 2003/54/EC. This mechanism provided that electricity produced by power plants using indigenous (i.e. Spanish) coal must be bought in preference to electricity produced by power plants using imported coal or other fuels. The power plants benefitting from the measure received compensation related to their additional production costs. The General Court concluded that the Commission had not committed a manifest error when recognizing the justified and proportionate nature of the measure. In addition, when assessing the measure, the Commission was not required to verify that the measure did not infringe EU provisions relating to the protection of the environment given that the aid measure did not pursue an environmental objective. Antitrust & Cartels 1.Technology Transfer Agreements On 21 March, the Commission adopted new rules for the assessment of technology transfer agreements under EU antitrust rules. It consists of a revised Technology Transfer Block Exemption Regulation (TTBER), which exempts certain licensing agreements from Article 101 TFEU, and the Technology Transfer Guidelines, which provide further guidance on the application of the rules. Licensing helps to spread innovation and allows companies to offer new products and services. It also strengthens incentives for research and development by creating additional revenue streams to recoup costs. Licensing therefore plays an important part in economic growth and consumer welfare. In the knowledge-based sectors, vibrant competition is essential to stimulate innovation and allow more and more citizens to benefit from technological development. The revised regime continues to reflect that licensing is in most cases pro-competitive. The Commission has made incremental improvements to the current regime, which overall received positive feedback from stakeholders in the two public consultations. The revised rules facilitate licensing of intellectual property rights, including through patent pools, and provide clearer guidance to firms on licensing agreements that stimulate competition and innovation as well as preserve a level playing field in the internal market. 2.Notice on Agreements of Minor Importance and accompanying Staff Working Document on Restrictions by Object

On 25 June, the Commission adopted a revised Notice on Agreements of Minor Importance (De Minimis Notice) accompanied by a Staff Working Document providing guidance on restrictions of competition by object. The 2014 De Minimis Notice, like the 2001 De Minimis Notice, defines what the Commission considers not to be an appreciable restriction of competition under Article 101 TFEU by reference to market share thresholds. The main novelty in the 2014 De Minimis Notice, which reflects the ruling in the Expedia case, is the clarification that any agreement which has an anticompetitive object constitutes, by its nature and independently of any concrete effects it may have, an appreciable restriction of competition. Such agreements can therefore never benefit from the de minimis safe harbour. Unlike the 2001 De Minimis Notice which listed specific severe restrictions that did not benefit from the safe harbour, the 2014 De Minimis Notice states that the Commission will not apply the safe harbour to agreements containing any restriction "by object" or any of the restrictions that are listed as "hardcore restrictions" in current or future Commission block exemption regulations. In that context it is clarified that "hardcore restrictions" are considered by the Commission to generally constitute restrictions by object. To facilitate companies' assessment of whether their agreements benefit or not from the safe harbour set out in the De Minimis Notice, the Commission also published a Guidance on what agreements or practices constitute restrictions of competition "by object" and lists the types of restrictions that have been regarded as by object restrictions or hard core restrictions in the case law of the Union courts, Commission practice, block exemption regulations and guidelines. This guidance paper is intended to serve as a practical check-list for companies and to reduce their costs for complying with EU competition rules. The Guidance is without prejudice to any developments in case law and in the Commission's decisional practice. DG Competition will regularly update the examples listed in the document in the light of such developments. 3.Directive on antitrust damages actions The Directive on antitrust damages actions was adopted and entered into force in 2014. Member States are required to implement it by 27 December 2016. The Commission will proactively assist Member States in their implementation efforts. The Directive aims to help citizens and companies claim damages if they are victims of an infringement of the EU antitrust rules, such as cartels or abuses of dominant market positions. For instance, claimants will be able to rely on a final decision of a national competition authority finding an infringement as such decisions will constitute proof before courts of the same Member State that the infringement occurred, thus preventing the issue of an infringement being reargued. The Directive is also designed to fine-tune the interplay between damages actions and public enforcement preserving the attractiveness of EU and national public enforcement tools. For example, to maintain the incentive for companies to cooperate with competition authorities in the context of their leniency programme – a key instrument without which many cartels would never be discovered in the first place – leniency statements can never be disclosed in damages actions. The Directive includes other substantive and procedural rules on crucial aspects of antitrust damages actions, such as limitation periods for bringing an action, joint and several liability of the infringers, and the burden of proof with regard to compensation for overcharges passed on along the distribution chain. 4.Evaluation of access to file and complaints In 2014, DG Competition also launched, in partnership with external consultants, the evaluation of the procedural rules on access to file and on complaints in order to assess whether they efficiently meet the need they are supposed to address and the objectives they must achieve. With regard to access to file, this evaluation aims to provide DG Competition with better information on the respective costs and benefits of the access-providing methods set out in the Notice on the rules for access to the Commission file and in the Notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU, concerning the disclosure of information in data rooms and confidentiality rings. With regard to complaints, this evaluation aims to assess whether the current system of antitrust complaints, in particular the procedure for rejecting such complaints, meets the needs of, on the one hand, the complainants by allowing them to effectively draw DG Competition's attention to alleged infringements and, on the other hand DG Competition's need to optimally allocate resources with a view to detecting cases that could lead to final decisions. 5.Significant judgments by EU Courts in antitrust and cartels Greek Lignite On 17 July, the Court of Justice upheld a Commission decision applying Article 106 TFEU together with Article 102 TFEU to state measures. The case is commonly referred to as Greek lignite. In 2008 the Commission found that the Hellenic Republic violated these treaty provisions because the Hellenic Republic had maintained a quasi-exclusive right of access to domestic lignite (often referred to as brown coal) in favour of the incumbent electricity provider PPC. Given that lignite was the cheapest source of production of electricity available in Greece, the Commission considered that this access distorted competition and protected the dominant position of PPC on the Greek electricity wholesale market. The General Court considered in 2012 that the Commission was wrong to make such a finding: according to the General Court the Commission should have identified an abuse that PPC was led to, or could have been led to commit, as a result of the state measures. The Court of Justice, however, annulled the General Court ruling and considered that it was sufficient that the Commission proves that the measures have "an anti-competitive effect" such as reinforcing the dominant position of a public undertaking as in the case at hand. Intel On 12 June, in the Intel judgment, the General Court upheld entirely the Commission's prohibition decision finding that Intel had abused its dominant position by making rebates to PC and server manufacturers conditional on those customers obtaining all, or almost all, of their supplies from Intel and by making direct payments to one retailer conditional on it only selling computers containing Intel's products, confirming in particular the legal assessment of the exclusionary rebates at issue. The General Court held that three categories of rebates can be identified: (i) quantity rebates, (ii) exclusivity rebates, and (iii) rebates where the financial incentive is not directly linked to quasi-exclusivity (e.g. individualized retroactive rebates). The General Court confirmed established case law (notably Case 85/76 Hoffman La Roche) and held that Intel's rebates were inherently abusive (since they fall into the category of exclusivity rebates). The General Court found that such rebates, when applied by a dominant firm, are incompatible with the objective of undistorted competition as they are designed to prevent customers from obtaining their supplies from competing producers. There is therefore, in the General Court's view, no need to undertake an economic analysis of an exclusivity rebate in order to find that it infringes Article 102 TFEU. However, the General Court also clarified that exclusivity rebates do not constitute an abuse under Article 102 TFEU if they are objectively necessary or if they bring about efficiencies that outweigh the negative effects. Intel did not, however, seek to show that its practices resulted in such efficiencies. EnBW In the EnBW judgment of 27 February, the Court of Justice endorsed the general presumption that documents in an ongoing cartel investigation should not be disclosed to the public. In this judgment the Court of Justice confirmed that the principles for State aid and mergers in this area apply also to antitrust cases. The Court of Justice held that, according to a coherent interpretation, based on the interaction between specific competition legislation (on the access to file for parties) and Regulation 1049/2001 (on public access to documents), granting public access to documents in an ongoing cartel investigation would undermine the balance of interests in antitrust legislation. EnBW considered itself affected by the practices covered by the Commission's decision regarding a cartel in respect of the gas insulated switchgear. While the decision was being challenged before the European Courts, EnBW asked for access to documents in the Commission's file with a view to substantiating its damages claims. The Court of Justice emphasised that the investigation is not considered closed as long as the contested decision is not definitive and that therefore all documents in the file remain covered by the presumption of non-disclosure. The Court of Justice noted that this general presumption does not exclude the possibility of demonstrating that disclosure of a specific document is not covered by that presumption, or that there is an overriding public interest in that document being disclosed. However, in the absence of any evidence capable of rebutting that presumption, the Commission is not under an obligation to carry out a specific, individual examination of each document in the file, in order to ascertain whether, in the light of its specific content, it should be protected from disclosure. Groupement des Cartes Bancaires

In Groupement des Cartes Bancaires judgment of 11 September, the Court of Justice annulled the decision of the General Court (which had upheld the Commission's decision) and held that it erred in law when accepting that a series of measures introduced by an association of French banks were to be seen as restrictions of competition by object. The Court of Justice stressed that the concept of restriction by object should be interpreted restrictively. The Court of Justice re-affirmed the settled case law that a restriction by object applies only to a form of coordination between undertakings that reveals in itself a sufficient degree of harm to competition based on an examination of the content, objectives and context of the behaviour. In particular the Court of Justice pointed out that, in the case at hand, the two-sided nature of the market was not adequately taken into account by the General Court. The Court of Justice found that the General Court was entitled at the most to infer that the measures at issue had as their object the imposition of a financial contribution on the members of the Cartes Bancaires but that such an object cannot be regarded as being, by its very nature, a restriction of competition. Furthermore, in the Court of Justice's view, the General Court (when confirming that the measures were to be seen as restrictions by object), had in fact assessed the potential effects of the measures. The Court of Justice said that this indicated that the measures at issue could not be considered "by their very nature" harmful to the proper functioning of normal competition. Therefore, the Court sent the case back to the General Court. In particular, the General Court now needs to examine the part of the Commission's decision alleging that the measures were likely to restrict competition by effect. This was not addressed in the General Court's judgment since it confirmed the decision on the basis of the Commission's finding of a restriction by object. MasterCard In the MasterCard judgment of 11 September, the Court of Justice upheld the General Court's judgment which concluded that MasterCard's multilateral interchange fees ("MIFs") had the effect of restricting competition. The Court of Justice thereby fully confirmed the Commission's prohibition Decision on MasterCard of 2007. The Court of Justice found that MasterCard could be classified as an association of undertakings even after it was listed on the stock exchange. Regarding the issue whether MIFs could be seen as objectively necessary to operate the MasterCard system (and therefore not necessarily contrary to Article 101(1)) the Court of Justice held that the MIF was not objectively necessary, since the system was capable of functioning without these fees. Finally, the Court of Justice found that in the absence of any proof of the existence of appreciable objective advantages attributable to the MIF in the acquiring market and enjoyed by merchants, the General Court did not need to examine the advantages flowing from the MIF for cardholders, since such advantages cannot compensate for the disadvantages resulting from those fees. Parker In the Parker judgment, concerning the Marine Hoses cartel, the Court of Justice followed the Commission's appeal on questions of principle related to liability due to economic succession in case of transfer of activities within a group pf companies. In particular the Court of Justice confirmed that for the purpose of establishing the existence of economic continuity, the relevant date for assessing whether the transfer of activities is within a group or between independent undertakings, must be the date of the transfer itself. The purpose of the transfer and the period after the transfer of assets are irrelevant for the purposes of economic succession for past acts of the undertaking. In respect of the structural links, the Court of Justice considered the ownership links between a parent and a 100% subsidiary a relevant criterion. It then confirmed that the Commission lawfully relied on a presumption of decisive influence in this regard during the administrative procedure. However, since the General Court failed to assess the arguments of the parties on the possible rebuttal of the presumption of decisive influence with regard to the transferor and the recipient of the assets, the case was sent back to the General Court for it to rule on the merits. YKK In the YKK (Hard Haberdashery: Fasteners) the Court of Justice ruled that the 10% turnover cap on the part of the fine for which a company is held solely liable must be determined only by reference to that company's turnover and not that of the group that subsequently acquired the company and participated in the same cartel. For the part of the fine imposed jointly on both the parent and subsidiary, the parent's 10% cap applies. CEEES This case concerns a complaint about a possible breach of an Article 9 commitment decision. According to the General Court, the principles set out in established case-law on the Commission's margin of discretion to reject complaints also apply to complaints about an alleged breach of commitments made binding by means of an Article 9 decision. Further, the General Court concluded that the parallel competence of national competition authorities to apply Articles 101 and 102 TFEU is not pre-empted by the adoption of a commitment decision by the Commission. In the case at hand the General Court did not consider the exercise of the Commission's margin of discretion to contain a manifest error of assessment. Nexans The Court of Justice confirmed the investigation powers of the Commission. With regard to inspection decisions, in Nexans (Power cables), the Court of Justice rejected an appeal by considering that a Commission inspection decision can by its very nature not be as detailed and precise as other Commission legal acts. The Commission is not required to communicate to the addressee all the information at its disposal when adopting the inspection decision. Therefore, it is not required to define precisely the relevant market, to set out the exact legal nature of the presumed infringements or to indicate the period during which those infringements were committed, provided however that the Commission inspection decision clearly indicates the essential elements, i.e. the presumed facts which the Commission intends to investigate, the subject matter and the purpose of the investigation . Cement judgments With regard to a request for information adopted under Article 18 of Regulation 1/2003 in the form of a decision referring solely to a potential infringement, in the Cement judgments , the General Court took the view that such level of motivation is in line with the minimum standard of reasoning of Commission acts. It is also held that requests for information by decision are not subordinated to the previous sending of a simple request (without binding effect), however, remain subject to the General Court's scrutiny under the principle of proportionality. The General Court concluded that given the fact that the information requested related to several undertakings and considering the significant amount of data to be collected and processed, it was not disproportionate to adopt a decision in order to assure that the Commission would obtain complete and comparable information within the set time frame. Cartel judgments: fine for breach of Article 101 TFEU in case of joint and several liability With regard to the question of fixation of a fine for breach of Article 101 TFEU in case of joint and several liability, the General Court had criticised the Commission not to have defined the concrete method of internal allocation of the fine. In Siemens Österreich and Areva (Gas Insulated Switchgear), the Court of Justice reversed the General Court judgment as regards the internal allocation of a fine imposed jointly and severally to a number of companies by holding that it is for national courts to decide on the shares of companies in a fine for which they are held jointly and severally liable by the Commission. The Commission has no power, notes the Court, when holding companies jointly and severally liable for a fine, to determine their respective shares in the fine imposed. Indeed, the fact that that share is not determined in the Commission's decision imposing joint and several liability for payment of a fine cannot constitute an infringement of legal certainty or any unlawful delegation of its powers . Deltafina The Commission leniency program is crucial to detect cartels, given their secret nature. Therefore, its efficiency depends on a very important feature of it, namely the obligation of cooperation of the leniency applicant with the Commission on a continuous basis and expeditiously, until the end of the Commission procedure. The obligation of cooperation was infringed by the immunity applicant by having disclosed its immunity application to the other cartel participants in a meeting with the latter before the Commission carried out unannounced inspections. In Deltafina (Italian Raw tobacco), the Court of Justice endorsed this view and confirmed the General Court's judgment upholding the Commission's decision which refused to grant immunity and only granted a 50% fine reduction outside of the leniency program. 6.Fight against cartels remains a top priority

2014 continued DG Competition’s strong enforcement record against hard core cartels. In 2014, the Commission continued to receive a constant flow of immunity and leniency applications, close to the long term trend for applications of around 2 applications per month. The leniency system destabilises cartels in that a Commission investigation of a cartel may through internal audits conducted by the cartelist lead to uncover other cartel activity. This may lead to further immunity applications. As indicated in the 2013 Report on Competition Policy, this led to a range of cases in the car parts sector. Bearing case in the car parts sector The Bearings case is part of a major investigative effort into suspected cartels in the sector of car parts. The Commission already found cartels for wire harnesses in cars and for flexible foam used in car seats and conducted inspections inter alia into thermal systems, occupant safety systems, lighting systems and exhaust systems. On 19 March, the European Commission found that two European companies (SKF and Schaeffler) and four Japanese companies (JTEKT, NSK, NFC and NTN with its French subsidiary NTN-SNR) operated a cartel in the market for automotive bearings and imposed a total fine of EUR 953 million. Automotive bearings are supplied to automotive Original Equipment Manufacturers ("OEMs"), which are car, truck and automotive component manufacturers. Cars and trucks contain numerous bearings, for example wheel bearings, bearings for gearbox, transmission, alternator or air conditioning systems. The companies involved in the bearings cartel coordinated the passing-on of steel price increases to their automotive customers, colluded on Requests for Quotations and for Annual Price Reductions from customers and exchanged commercially sensitive information for more than seven years, from April 2004 until July 2011, in the whole European Economic Area (EEA). The Commission's investigation in the bearings industry started with unannounced inspections in November 2011. The bearings decision is adopted under the settlement procedure with all parties involved. JTEKT received full immunity under the Commission's Leniency Notice for revealing the existence of the cartel and therefore avoided a fine of EUR 86 million. More recently, the Commission has dealt with a number of cases in financial services, and in particular in relation to the fixing or alleged fixing of benchmark rates for various currencies based derivatives and for foreign exchange transactions. On 21 October, two further decisions concerning the financial sector were adopted via the settlement route, highlighting the continued success of this instrument, even in complex areas. Two other cases highlight that the Commission is fully prepared to bring contested cases to a successful conclusion via the normal cartel procedure if the settlement discussions cannot be successfully concluded like on 2 April, when the Commission adopted a decision against a long running cartel in respect of power cables and on 3 September in the Smart Card Chips case. The power cables case On 2 April, the Commission adopted a decision against a long running cartel in respect of power cables, fining the companies involved a total of over EUR 302 million. The cartel concerned an almost worldwide market and customer allocation scheme amongst the major power cables producers that lasted for almost a decade (1999 to 2009). Several European, Japanese and Korean producers of submarine and underground power cables agreed to stay out of each other's home territories and allocated projects amongst themselves based on the geographic region or customer. The cartel included cables used for the transmission and distribution of electrical power such as the connection of wind farms and power grids in different Member States. The decision was also addressed to several companies that did not directly participate in the infringement but, as parent companies, exercised a decisive influence over the direct participants. This included companies that participated in the cartel in the early period and later merged their activities into joint ventures (who continued the cartel activities) as well as to the investment company Goldman Sachs, which is a former owner of one of the cartelists. The Commission remains committed to pursuing all cartels across all sectors where it has sufficient evidence of an infringement (more information on the cartel decisions is available in the sectoral overview). 2014 was another very effective year of enforcement as illustrated by the record number of cartel decisions adopted. A number of statements of objections were also adopted by the Commission, such as against the non-settling parties in the Yen Libor, Euribor and Steel Abrasives cases for their alleged participation to a possible cartel and against a number of truck producers. With 10 decisions, fines totaling approximately EUR 1.69 billion, and solid work for enforcement in future years, the Commission’s cartel enforcement record remains strong and effective. Case name Adoption date Fine imposed

EUR Undertakings concerned Procedure PU Foam 22/01/2014 114 077 000 5 settlement Power exchanges 05/03/2014 5 979 000 2 settlement Automotive bearings 19/03/2014 953 306 000 6 settlement Steel abrasives 02/04/2014 30 707 000 4 settlement Power cables 02/04/2014 301 639 000 18 normal Mushrooms 25/06/2014 32 225 000 3 settlement Smart card chips 03/09/2014 138 048 000 4 normal Swiss Franc Interest rates derivatives (spreads) 21/10/2014 32 355 000 4 settlement Swiss Franc Interest rates derivatives (derivatives) 21/10/2014 61 676 000 2 settlement Paper envelopes 10/12/2014 19 485 000 5 settlement Antitrust and cartel output 7.Continuing the close cooperation within the European Competition Network (ECN) and with national courts Regulation 1/2003 empowers the Commission, National Competition Authorities (NCAs) and national courts to apply Articles 101 and 102 TFEU to agreements and practices that are capable of affecting trade between Member States. Since May 2004, the Commission has investigated potential antitrust infringements across almost all sectors of the economy and has adopted over 130 decisions, many of which landmark precedents. NCAs have investigated more than 1800 cases in this period, giving rise to enforcement decisions in more than 800 cases. DG Competition and the NCAs continued to coordinate competition enforcement in the ECN in 2014. Convergence of enforcement powers In 2014, ECN activities focused on enhancing the functioning and convergence of the enforcement frameworks in the Member States. On 9 July, the Commission adopted a Communication on "Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives". This Communication took stock of the enforcement record by the Commission and the NCAs. Furthermore, it calls upon creation of a truly common competition enforcement area in the EU, building on the current achievements. It identifies the need for appropriate initiatives in a number of areas: to further guarantee the independence of NCAs in the exercise of their tasks and that they have sufficient resources; to ensure that NCAs have a complete set of effective investigative and decision-making powers at their disposal; to ensure that powers to impose effective and proportionate fines and well-designed leniency programmes are in place in all Member States and to consider measures to avoid disincentives for corporate leniency applicants.

Cooperation with national courts Regulation 1/2003 empowers national courts to apply Articles 101 and 102 TFEU and to ask the Commission to provide case-related information or an opinion on the application of EU competition rules (Art. 15(1)). The Commission may also submit amicus curiae observations to national courts on its own initiative when the coherent application of EU competition law is at stake (Art. 15(3)). In 2014, the Commission responded to three requests for transmission of documents by Spanish, Belgian and United Kingdom courts. The Commission also replied to four requests for opinions: two on the protection of confidential information in damage actions to the United Kingdom High Court of Justice; one on certification agreements to a Belgian Court of First Instance; and one on the abuse of dominant position in the form of discrimination to a French Court of Appeal. In addition, the Commission submitted amicus curiae observations in three cases pending at the Supreme Courts of Spain, United Kingdom and Germany concerning respectively the concept of infringement and the interpretation of one of the Block Exemption Regulations in relation to practices on the insurance market, limitation periods for damages actions and succession of companies that are subject to fines. Cooperation with national courts also includes the Grant Programme "Training of National Judges in EU Competition Law" aimed at promoting the convergence of competition law enforcement by national courts throughout the EU and boosting cross-border exchanges. In 2014, fourteen projects were funded for about EUR 1 million, including: training activities for around 1000 judges of more than 20 nationalities; the creation of websites, a database and an enforcement observatory; and the drafting of manuals and other publications. Merger control Merger control makes an essential contribution to growth and jobs in the European economy. Effective control of mergers maintains competitive pressure on market participants, which stimulates innovation and efficient distribution of scarce resources. It also ensures that European industries maintain access to critical input at competitive prices. Swift approval of mergers that do not raise competition concerns, as well as the approval of effective, tailor-made remedies to remove such concerns, where needed, enable industries to restructure and adapt to new market challenges. As highlighted in the 2013 Annual Competition Report, the Commission continuously evaluates the substantive and procedural rules in force for merger control and, if necessary, launch policy changes. 1.The White Paper "Towards more effective EU merger control" In July, the Commission launched a public consultation putting forward proposals to improve merger control at EU level outlined in a White Paper "Towards More Effective EU Merger Control" . The White Paper takes stock of the working of the Merger Regulation 10 years after the last reform in 2004. It discusses ways to enhance cooperation and convergence of the different merger control systems in the European Union at the EU and national level, following suggestions made in 2010 by Mario Monti in his report to President Barroso on the internal market and in 2013 by the French Autorité de la Concurrence to create a "European Merger Area" in which both the Commission and national competition authorities (NCAs) would review mergers under the same substantive rules. The key proposals of the White Paper include the following: (i) policy choices and proposals for a light and tailor-made review of acquisitions of non-controlling minority shareholdings – these do not currently fall under the EU Merger Regulation but can cause significant harm to competition and consumers; (ii) making case referrals between Member States and the Commission more business-friendly and effective; (iii) making procedures simpler – this can be achieved for example by exempting certain non-problematic transactions from the notification obligation, or by excluding the creation of joint ventures that will operate outside the European Economic Area (EEA) and have no impact on European markets from the scope of the EU merger review; and (iv) fostering coherence and convergence – the White Paper takes stock of the use of current EU merger control rules and proposes to reflect on ways to foster convergence between Member States and the Commission as well as among Member States with a view to creating a truly level playing field and to avoid inconsistent outcomes. 2.Simplification Package successfully implemented The Merger Simplification Package adopted in December 2013 became applicable as of 1 January 2014. The package widened the scope of the simplified procedure to review unproblematic mergers, thus significantly reducing the administrative burden for parties notifying mergers to the Commission. Streamlining of notification forms in cases of candidates for simplified procedure, which represented nearly 70% of all mergers notified to the Commission in 2014, resulted in DG Competition being able to devote more resources to problematic merger cases. 3.Recent enforcement trends The number of notified mergers increased in 2014 compared to the last four years. Overall, 338 transactions were notified, including 35 referrals from Member States. In eight cases, the Commission opened in-depth investigations (second phase). These cases concerned media, basic industries, pharmaceuticals and energy sectors. In 2014 the Commission took 300 decisions. The number of interventions remained stable at 18 compared with the average of the last four years. 13 mergers out of them were cleared subject to commitments in first phase and five in second phase . There was no case where the Commission had to prohibit a notified transaction. In one case, the Commission fined a notifying party for having implemented the transaction before it was notified to and cleared by the Commission . The breach of those obligations is considered to be serious by its nature in so far as the ex ante notification system and the prohibition of implementing a concentration without prior approval from the Commission ensure that the Commission can assess mergers before they are implemented – a key safeguard that protects direct customers and final consumers from the harm that anticompetitive mergers could create. Merger decisions Merger cases have remained complex in 2014. Second phase investigations involve sophisticated qualitative and quantitative analyses. In some cases, complex remedies packages including far-reaching divestitures have been needed to allow a merger to go ahead while keeping markets competitive and protecting industries downstream from price rises for critical inputs. 4.Significant judgments by EU Courts in mergers

In 2014 the EU Courts handed down two judgments in the field of merger control. On 3 July the Court of Justice rejected Electrabel's appeal against the General Court judgment confirming the legality of the EUR 20 million fine imposed by the Commission in 2009 for early implementation of the acquisition of Compagnie Nationale du Rhône. This judgment sends an important message that the stand-still obligation is an essential element of the EU merger control process and breaches of that obligation should be treated as serious offences even in cases where ultimately no competition concerns arise. On 5 September the General Court rejected an action brought by Editions Odile Jacob against a Commission decision of May 2011 approving the purchaser of the business that Lagardère had to divest as a condition for clearance of its acquisition of Vivendi Universal Publishing in 2004. The Commission had already approved the purchaser in 2004 but that decision was annulled by the General Court on formal grounds in 2010. The Court's new judgment confirms that the Commission had taken the necessary action in order to comply with that first judgment. Developing the international dimension of EU competition policy The globalisation of the economy calls for closer cooperation among competition authorities not only in Europe, but also across the globe. International cooperation between competition agencies assists with the effective management of the challenges of globalisation and promotes convergence on competition policy principles and practices implemented throughout the world. That is why the Commission seeks to reinforce the role of competition policy in international negotiations and cooperates with competition agencies globally. Such regulatory and enforcement cooperation helps to ensure an effective enforcement and a level playing field for European companies active on global markets. 1.Bilateral relations One of DG Competition's important field of activity at the international level is constituted by the negotiations on Free Trade Agreements (FTAs) aiming to include competition and State aid provisions in those agreements. In 2014 the negotiations with the US on a Transatlantic Trade and Investment Partnership Agreement (TTIP), launched in 2013, were one of the priorities for DG Competition's international efforts. Another important agreement being negotiated is the FTA with Japan. The proposed agreement includes competition provisions which DG Competition is following closely. In 2014 DG Competition also focused its efforts on intensive negotiations with Vietnam as the competition provisions in this free trade agreement might help to set a new standard for the region or even wider. The Cooperation Agreement with Switzerland in competition matters was signed in May 2013. An innovative feature of that agreement is that it will enable both competition agencies to exchange evidence they have obtained in their respective investigations. In 2014 both sides completed their internal approval processes and ratified the agreement in October 2014. The Agreement entered into force on 1 December. Negotiations between the Commission and its Canadian counterparts to include provisions on exchange of evidence into the existing EU-Canada Cooperation Agreement have been progressing well. Another key area of activity of DG Competition at the international level is technical cooperation with main trading partners which are developing their competition policy and enforcement regime and with which DG Competition has signed Memoranda of Understanding (MoUs). DG Competition has signed MoUs with most BRICs countries in recent years and has engaged in technical cooperation with these countries to varying degrees. DG Competition's technical cooperation activities with the Chinese competition authorities are most notable and will continue under the on-going cooperation programme (EUCTP II). A significant programme for technical cooperation with the Indian competition authorities, CITD, took off in 2014 and will run until 2018. As to the accession negotiations with candidate countries, the main policy objective, in addition to fostering a competition culture, is to further assist the candidate countries and potential candidate countries in building up a proper legislative framework and developing well-functioning competition authorities and an efficient enforcement practice in order for them to meet the conditions for EU accession in the competition policy field. In 2014, the screening of the Serbian legislation took place. DG Competition also assisted Montenegro to fulfil the Opening benchmarks of the Competition negotiations. The negotiations for a Stabilisation and Association Agreement with Kosovo were successfully concluded, and the Agreement was initialled by the Chief Negotiators in July 2014. 2.Multilateral cooperation The Commission also continued to participate actively in international fora such as the Competition Committee of OECD, International Competition Network (ICN) and the United Nations Conference on Trade and Development (UNCTAD). In relation to ICN, in 2014 DG Competition continued co-chairing the Mergers Working Group of ICN and one of the Sub-Groups of the Cartel Working Group. It was also, together with US Federal Trade Commission (FTC), the project leader for the Steering Group project on investigative processes in competition enforcement activities and on the Merger Working Group International Merger Enforcement Cooperation Project. In OECD, DG Competition maintained its leading role together with the US DoJ and US FTC in setting the agenda of the OECD Competition Committee, contributed to the long term strategic OECD projects on evaluation and international cooperation, leading to the adoption of a Recommendation on International Cooperation and manuals on ex ante and ex post evaluation in 2014. In addition, DG Competition continued to submit written submissions for OECD Roundtable discussions on a wide variety of competition related issues and actively participate in OECD discussions on other competition related or multidisciplinary topics. In UNCTAD, DG Competition will continue to participate actively in competition related activities by sharing its experience with other delegates (by means of written contributions and its participation in oral discussions) and by being actively involved in country peer reviews. II.SECTORAL OVERVIEW This section provides an overview of policy developments and enforcement activities in a number of selected sectors, which the Commission particularly focused on in 2013: energy and environment, ICT and media, financial services, manufacturing, the agri-food industry, pharmaceutical and health services and transport. 1. Energy & Environment Overview of key challenges in the sector In its Political Guidelines, the Commission President called for a reform of EU energy policy into a new European Energy Union . Competition is part of the policy mix that can address this challenge. The EU energy policy pursues the triple objective of sustainability, competitiveness and security of supply. These objectives have been once more reiterated in the Commission's Communication A policy framework for climate and energy in the period from 2020 to 2030 . This framework has been endorsed in the Council conclusions, which include a political commitment to a binding Union target of at least 40% reduction of greenhouse gas emissions, a Union target of at least 27% share of renewable energy in final gross energy consumption and the completion of the internal market, including an objective to reach 15% level of interconnection by 2030. As energy is a key input across all economic sectors, affordable energy prices and security of supply are vital for a competitive European industry. General challenges to reach the pillars of competitiveness, sustainability and security of supply

Reducing greenhouse gas emissions to combat climate change, maintaining secure and reliable provision of energy at competitive prices and improving interconnection between European gas and electricity grids remain a challenge also for the coming years. Given the Union's growing dependence on energy imports and the lack of sufficient diversification of supplies in particular for gas in certain areas of the Union, in 2014, a particular emphasis was put on energy security. The Commission’s Communication European Energy Security Strategy provided a comprehensive plan for the reduction of EU energy dependence and highlighted the need to perform risk assessments at regional and at Union level, to strengthen solidarity mechanisms, deepen market integration and improve diversification among others by accelerating the construction of key infrastructure projects and to increasingly focus on indigenous resources. Energy efficiency remains a cornerstone of the Union's energy and climate policy. The 2014 Energy Efficiency Communication took stock of the effectiveness of measures to reach the 20% reduction objective by 2020. Contribution of EU competition policy to tackling the challenges The main challenges identified in 2014 are increasing energy prices, the slow pace of investment in the energy sector and security of supply concerns which result from a lack of competition and in particular the insufficient diversification of gas supplies in Eastern Europe, as highlighted in the "stress tests" . 2014 has seen a substantial progress in the integration of the electricity market, as sixteen Member States have adopted the so-called "day-ahead market coupling" which provides for the most efficient use of cross-border infrastructures and facilitates price convergence. Nevertheless, more investment in cross-border infrastructures is needed to fully exploit the benefits of market integration. In 2014, EU competition policy contributed to tackling those challenges in several ways. Antitrust and mergers enforcement have notably contributed by lifting obstacles to competition and barriers to trade between Member States and by ensuring that investments in the energy sector do not impede competition. In State aid, the new Guidelines on State aid for environmental protection and energy (EEAG) foresee new assessment criteria aiming at bringing renewable energy electricity generation into the market and at preventing the fragmentation of the internal market by nationally conceived, uncoordinated generation adequacy measures. At the same time, the EEAG as well as the General Block Exemption Regulation also introduce new categories to facilitate and accelerate investment in the field of energy efficiency and energy infrastructures, making thus a concrete contribution to the energy and climate agenda. Enhancing competitiveness across the energy sector Competition enforcement and advocacy contribute to competitiveness of EU industry and the integration of the internal market by opening markets, creating a level playing field between competitors, preventing collusion and abuses of dominant positions, ensuring that mergers do not impede effective competition and creating a framework for investment that avoids distortions and ensures the efficient allocation of public resources. In 2014, antitrust enforcement actions have contributed to tackling this by combatting segmentation of markets and abusive or collusive behaviour, which all contribute to high energy prices. On 5 March, the Commission adopted two decisions concerning power exchanges: a decision under Article 101 TFEU fining two electricity power exchanges for agreeing not to compete with each other and allocating European territories amongst themselves , and a decision under Article 102 TFEU fining the Romanian power exchange OPCOM for discriminating against electricity traders based in other EU Member States. On 12 August, the Commission issued a Statement of Objections against the Bulgarian energy company BEH relating to territorial restrictions on the resale of electricity in Bulgaria . On the State aid side, the new EEAG makes it possible to safeguard a sufficient financing base for support to energy from renewable sources to reach the EU targets while maintaining the competitiveness of electro-intensive users, some targeted reductions from the financing of renewable energy support may be given for energy-intensive industries. During 2014, the Commission has approved three such schemes . Contributing to sustainability Sustainable development is the long term use of resources to meet human needs for energy, while preserving the environment. With the rising share of energy from renewable sources within the energy mix, it becomes more and more important that it gradually integrates the market with a view to functioning on a normal market basis. The new EEAG therefore requires direct selling of electricity from renewable sources in the market, on top of which Member States may grant a premium to cover for the extra-costs where the technologies are not yet competitive towards conventional generation. Furthermore, energy from renewable sources will underlie standard balancing responsibilities and its production should not be incentivised when wholesale prices turn negative. The Commission approved several support schemes which follow already these market-based assessment criteria . Actions for sustainability are also reflected in on-going anti-trust investigation in relation to Austrian waste management markets. Contributing to security of supply In the gas sector, lack of diversification and consequently competition in sources of supply is a concern for the security of supply in the EU, which is increasingly dependent on imports. Some Member States continue to rely on one single supplier and often on one single supply route for 80%-100% of their gas consumption, whereas those Member States with a diverse portfolio of gas suppliers and supply routes and with well-developed gas markets reap the benefit of paying less for imports. In the electricity sector, there are increasing concerns about generation adequacy. The new provisions under the State aid General Block Exemption Regulation (GBER) and the Environmental and Energy State Aid Guidelines (EEAG) greatly contribute to encourage investment in gas and electricity infrastructure in a manner which minimises market distortions. In the electricity sector Member States are considering measures to ensure medium and long-term security of supply. The EEAG assessment criteria on generation adequacy strive to ensure a level playing field between different generation technologies, including interconnectors or cross-border generation, as well as the demand-side. A first decision in this field was the approval of the UK capacity market. Furthermore, the Commission positively concluded the formal investigation into the aid destined to the construction of the new Hinkley point nuclear power generation. In the field of merger control, the trend towards investments into European energy infrastructure by investment companies persisted . Moreover, in 2014 a number of companies invested into "green" electricity such as wind parks , solar parks , pellet production as well as in energy saving measures and the marketing of green electricity . The Commission will also continue to ensure that input products for the energy sector will be sold on competitive markets . In addition, the Commission is conducting an in-depth investigation into the proposed acquisition of DESFA, the Greek transmission system operator in charge of the high-pressure pipeline grid and the only Greek LNG Terminal, by SOCAR, the Azeri State-owned gas producer. SOCAR is also a member of the Shah Deniz consortium that will sell natural gas to Europe as of 2019/2020. Due to this potential combination of a gas supplier and infrastructure operator, the investigation focuses on the possibility of network foreclosure, which would distort competition and ultimately lead to higher natural gas prices for Greek consumers. Similarly, the Commission's antitrust enforcement can help to resolve security of supply issues by facilitating access to the market and encouraging investment. Ongoing Commission investigations under Article 102 TFEU include the potential abuse by Gazprom of its dominant position in the supply of natural gas in Central and Eastern Europe and the possible foreclosure of gas markets in Bulgaria by the Bulgarian incumbent BEH as a result of obstacles to access to gas transport and storage infrastructure. The Commission also continued its investigation into potential distortions of price reporting in relation to oil and biofuels products price benchmarks established by a Price Reporting Agency, where inspections were carried out in 2013 and 2014 . 2. Information and Communication Technologies (ICT) and Media Overview of key challenges in the sector Information and Communication Technologies (ICT) are of paramount importance for Europe's future growth, competitiveness and job creation. The importance of ICT reaches far beyond the sector as such because ICT increasingly pervade all segments of society and the economy. They are a driver for innovation and growth in many other sectors, such as energy, transportation, public services, health and education . The role of ICT for achieving the European Union's objectives under the Europe 2020 Strategy has been, inter alia, recognised by the Digital Agenda for Europe (Digital Agenda) flagship initiative . It is estimated that the full implementation of the Digital Agenda would increase European GDP by 5% until 2020 and ensure that 900 000 digital jobs will get filled (resulting in a total of up to 3.8 million new jobs throughout the economy in the long term) . As stressed by President Juncker in his political guidelines for the next European Commission, the creation of a Digital Single Market alone is expected to generate up to EUR 250 billion of additional growth within the next five years and to create hundreds of thousands of new jobs, notably for younger job-seekers . One of the essential drivers of the digital economy is media content. The main trend observed in the media sector concerns technological convergence, i.e. the blurring of traditional lines existing in the analogue world between different media (broadcasting, paper, audio, internet) and increasing availability of online distribution.

Contribution of EU competition policy to tackling the challenges Policy initiatives Competition policy played an important role in shaping the Commission’s legislative proposals in the telecom and media sectors in the course of 2014. On 4 February, the European Parliament and the Council adopted Directive 2014/26/EU on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market. The Directive aims to further enhance the grant by collecting societies of multi-territorial licenses for the provision of on-line services, but also introduces some mechanisms to ensure better governance and greater transparency in authors' rights' management. The Directive contains a number of important competition law safeguards aimed at ensuring compliance with EU competition law in the collective management of copyright. In 2014, the Commission also continued its broad effort to review and modernise EU copyright rules. In December 2013, it launched a consultation, where it invited stakeholders to share their views on areas that include, inter alia, territoriality in the Single Market and fragmentation of the EU copyright market. A Report on the responses was published in July. The review exercise is currently on-going and DG Competition is actively contributing to the discussion. Enforcement action against telecommunication operators In 2014, the Commission continued to pursue enforcement actions against telecommunication operators suspected of engaging in anti-competitive conduct. On 15 October, the Commission adopted a prohibition decision imposing a fine of EUR 38.83 million jointly and severally on Slovak Telekom and its parent company, Deutsche Telekom. The Commission concluded that Slovak Telekom refused to supply unbundled access to its local loops to competitors and imposed a margin squeeze on alternative operators. Deutsche Telekom was found to have exercised decisive influence over Slovak Telekom and was thus held to be jointly and severally liable for Slovak Telekom's fine. Deutsche Telekom received an additional fine of EUR 31.07 million to ensure sufficient deterrence as well as to sanction its recidivism. Enforcement in technology markets In 2014, the Commission's enforcement action in technology markets mainly focused on unilateral conduct falling under Article 102 TFEU. On-going investigation in the markets for internet search and advertising (Google) In its on-going investigation of Google's business practices, the Commission is investigating four of Google's business practices that raise concerns: (i) Google’s preferential treatment of results from its own specialised search services to the detriment of results from competing specialised search services (including on mobile devices); (ii) copying of third party content for use in Google's own specialised search services; (iii) exclusivity agreements with publishers for search advertising; and (iv) restrictions on the portability and management of search advertising campaigns across search advertising platforms. The Digital Agenda identifies improved standard-setting procedures and increased interoperability as keys to success. Against this background, the Commission provided guidance by adopting two decisions in April (Motorola and Samsung). These decisions relate to the enforcement of standard essential patents (SEPs) and set limits on the use of these kinds of patents in what some observers have called the "smartphone patent wars". SEPs are patents essential for the implementation of an industry standard and it is technically impossible to make a standard-compliant product, such as a smartphone, without using the technology protected by SEPs. As a quid pro quo for the inclusion of their patents into the respective standards, Motorola and Samsung had committed to license them on fair, reasonable and non-discriminatory (FRAND) terms. In its prohibition decision against Motorola, the Commission held that Motorola abused its dominant position by seeking an injunction in Germany against Apple on the basis of a SEP, although Apple was willing to take a license and have the licensing terms be determined by a German court. In a similar case, the Commission rendered legally binding commitments offered by Samsung to address the competition concerns identified by the Commission in a Statement of Objections of December 2012. Under the commitments, Samsung agrees for a period of five years not to seek injunctions in the EEA on the basis of any of its SEPs, present and future, that relate to technologies implemented in smartphones and tablets against any company, if potential licensees agree to comply with a specified process for determining appropriate FRAND royalty rates by an independent third party. Enforcement linked to media, sports and digitalisation The Commission continued in 2014 to pursue enforcement actions in the media and the sport sectors. In the broadcasting sector, the Commission, having initiated formal proceedings in January, continues to investigate certain restrictions in licensing agreements for satellite broadcast and online distribution between several major US film studios and some of the EU's largest pay-TV broadcasters. Popular audiovisual content is licensed on a territorial basis by means of contracts that may impose "absolute territorial exclusivity" on broadcasters. In these proceedings, the Commission is examining whether certain clauses concerning satellite pay-TV broadcasting and online pay-TV services are in breach of Article 101 TFEU as they may prevent consumers from cross-border access to pay-TV content. In the publishing sector, the Commission continued to closely follow the development of the EU e-book distribution markets, including monitoring the compliance of the commitments made binding on Simon & Schuster, HarperCollins, Hachette Livre, Verlagsgruppe Georg von Holtzbrinck, Apple and Penguin Random House by the Commission's Article 9 decisions in December 2012 and July 2013 respectively. In the sports sector, the Commission continued to focus on competition issues related to revenue-generating activities. On 15 July, the Commission rejected a complaint from Topps, a producer of football collectibles against FIFA, UEFA, four national football federations and Panini, Topps' competitor. Topps alleged inter alia that the football federations license their right for the World Cup and EURO football tournaments to Panini in an anti-competitive way. However, on the basis of priority settings the Commission decided not to open an in-depth investigation in this matter, in view of the limited likelihood of establishing the existence of an infringement. Topps has brought an action before the General Court challenging the rejection decision. On 24 October, the Commission rejected a complaint against UEFA's Financial Fair Play Regulations submitted by a players' agent. The complainant claimed that the "break-even requirements", which in principle mean the clubs cannot spend more than they earn, were in violation of EU competition law. In parallel, the complainant has launched a civil action before the Court of First Instance of Brussels. The Commission decided to reject the complaint on the basis that there was an on-going procedure before a national court and this procedure could provide an effective remedy for the complainant. The decision did not take a view on the merits of the complaint.

The Commission also continued in 2014 to pursue enforcement actions related to the impact of the transition to digital networks. In this context, the Commission is closely monitoring the criteria and procedures used by Italy inter alia for granting new digital frequencies (multiplexes) to new entrants or smaller TV operators with a view to resolving the infringement procedure. The case concerning Bulgaria's assignment of digital broadcast spectrum is still pending before the Court of Justice . ICT and media in the context of the Merger Regulation 2014 saw the continuation of merger activity in the EU mobile telecommunications sector. In summer, following the in-depth phase II investigations, the Commission conditionally approved two mergers between mobile network operators in Ireland (Hutchison 3G UK/Telefónica Ireland) and Germany (Telefónica Deutschland/E-Plus). These mergers reduced the number of mobile network operators in those national markets from four to three. While neither transaction created or strengthened dominance, the Commission nevertheless concluded that each merger would significantly impede effective competition. This conclusion was justified inter alia on the grounds that both mergers led to the elimination of an important competitive force from an already highly concentrated market and lower incentives to compete of the parties and other operators. The Commission ultimately cleared the two mergers subject to remedies which (i) were designed to allow mobile virtual network operators to launch retail services by purchasing certain capacity of the merged entity's network upfront (potentially, up to 30% of the merged entity's total capacity), thus incentivising to compete strongly to fill this capacity, (ii) kept the door open for a new network operator to enter the market in the future; and (iii) as for Germany, were designed to allow non-network operators hosted on the merged entity's network to continue to effectively compete on the market. In fixed-line telecommunications, the Commission approved the combination of two regional cable networks of Liberty Global (UPC) and Ziggo into one near nationwide network in the Netherlands. The approval was subject to conditions aimed at preserving sufficient competition in the Dutch market for the wholesale supply of FTA/Basic Pay TV channels and of Premium Pay TV channels and ensuring that TV broadcasters' ability to deliver audio visual content directly to consumers via the Internet (OTT) would not be negatively affected – either by contractual or technical means. Furthermore, the Commission granted unconditional clearance to the acquisition by Vodafone, of cable operator ONO in Spain, since the parties' business activities were largely complementary. Also in Spain, the Commission is currently carrying out an in-depth investigation of the proposed merger between Orange and Jazztel, two of the four providers of nationwide fixed telephony and internet access. In the IT sector, the Commission scrutinised the acquisition of WhatsApp by Facebook, which both offer communications applications for smartphones. This merger was approved without conditions, in particular in light of the dynamic nature of the market, low entry barriers and sufficient remaining competition. Finally, in the media sector, the Commission is currently continuing its in-depth investigation of the proposed acquisition by Liberty Global, which controls cable operator Telenet, the leading TV retailer in Flanders, of De Vijver Media, a Belgian TV broadcasting and production company. State aid enforcement in ICT and media One of the major building blocks for a well-functioning Digital Single Market is a high-speed communication infrastructure. To realise the growth potential of the sector, the EU has set itself ambitious targets. By 2020, the Digital Agenda aims at achieving (i) full coverage of 30 Mbps services (