EUROPEAN COMMISSION Brussels, 15.6.2016 SWD(2016) 198 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 Report on Competition Policy 2015 {COM(2016) 393 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 Report on Competition Policy 2015 TABLE OF CONTENTS I. LEGISLATION AND POLICY DEVELOPMENTS State aid 1. State Aid Modernisation: Implementation phase 2. State Aid Modernisation continues 3. Monitoring, recovery and cooperation with national courts 4. Significant judgments by EU Courts in the State aid area Antitrust and cartels 1. Guidance in antitrust and cartel proceedings 2. Significant judgments by the EU Courts in antitrust and cartels

3. Fight against cartels remains a top priority 4. Continuing close cooperation within the European Competition Network (ECN) and with national courts Merger control 1. Geographic market definition in European Commission merger control 2. Guidance on merger control proceedings 3. Recent enforcement trends 4. Significant judgments by the EU Courts in mergers Developing the international dimension of EU competition policy 1. Bilateral relations 2. Enlargement 3. Multilateral cooperation II. SECTORAL OVERVIEW 1. Energy & environment 2. Information and communication technologies (ICT) and media 3. Financial services 4. Taxation and State aid 5. Basic industries and manufacturing 6. Agri-food industry 7. Pharmaceutical and health services sector 8. Transport and postal services

I.LEGISLATION AND POLICY DEVELOPMENTS Competition policy boosting innovation and investment across the EU The EU remains the largest economic and trading area in the world, with more than half a billion consumers and 20 million companies forming its strongest lever – the internal market. The on-going process of improving and expanding the functioning of the single market goes hand in hand with developing competition policy. In essence, competition policy ensures that companies can compete on equal terms all across Europe. Competition can make a real difference by keeping the single market open and turning it into a driver of innovation and growth in Europe. Competition policy enables competitors to cooperate on innovation without misusing such cooperation to anti-competitive ends. In this way it ensures that mergers do not reduce or harm innovation and it enables EU governments to contribute to private-sector investments in innovation. In addition, competition-friendly regulation and competition culture create favourable conditions for investments and innovation, which enhances consumer welfare and efficiently functioning markets, enable growth and contribute towards more convergence. A competitive EU 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 (Article 107(1) TFEU). However, State aid, which contributes to well-defined objectives of common interest without unduly distorting competition between undertakings and trade between Member States, may be considered compatible with the internal market (under Article 107(3) TFEU). The objectives of the Commission's control of State aid 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 actively engaged in preventing and recovering incompatible State aid. 1. State Aid Modernisation: Implementation phase In 2014 the Commission largely completed its ambitious State Aid Modernisation (SAM) reform. The reform, which was launched in 2012, aimed at promoting good aid that supports investments and spurs growth while contributing to Member States' efforts towards budgetary consolidation. In 2015, work continued on the remaining item of the reform, namely the guidance on the notion of aid. 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 investment and growth. For instance, the new State aid rules under the research, development and innovation (R&D&I) framework encourage and contribute the spread of innovation in the EU for the benefit of businesses and consumers. 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. Only cases with the biggest potential to distort competition in the single market will still face ex ante assessment (notification). As a result of the reform, a significantly larger number of smaller and unproblematic measures are exempted from prior notification, in exchange for strengthened controls at Member State level, greater transparency and better evaluation of the impact of aid. Following the State Aid modernisation and the entry into force of the new GBER, Member States made extensive use of the possibilities offered by the comprehensive modernisation of State aid rules. Notably, a surge in aid excluded from prior Commission scrutiny indicates an important reduction of red tape. Indeed, the above chart highlights the fact that about 90 % of new measures in 2014 were registered as exempted from prior notification according to GBER. As regards the share of GBER expenditure in total aid measures, this amounted to approximately 40 % in 2014, and is expected to increase even further in 2015. Partnership with Member States To facilitate the implementation of SAM, the Commission is supporting Member States in various ways and has started a closer cooperation with them. Under the new partnership arrangements with Member States, the Commission provides pro-active support of Member States by the Commission through advocacy work and trainings. The Commission services have also set up a High Level Group (HLG) together with Member States and some other dedicated working groups to oversee implementation and facilitate compliance with the new requirements for transparency and evaluations. To facilitate the work of the central authorities in Member States, the Commission services have in place a network of State aid country coordinators. The coordinators help to address systemic issues in State aid enforcement at Member State level, help Member States prioritise their portfolio of cases and assist with providing training and guidance. The Commission services have also provided further guidance on the interpretation of the GBER . Collaboration with Member States takes multiple forms. One fruitful form of the multilateral partnership is the project between the Commission services and the Member States to facilitate compliance with the new transparency provisions of SAM. All Member States have committed to participating in the development of the Transparency Award Module – an IT platform that will facilitate data collection, storage and visualisation. Meanwhile, the discussions with Member States are ongoing about the institutional set up of granting authorities, national information systems for State aid, and methodology used for encoding information required by the transparency provisions of GBER (Article 9 and Annex III). Evaluation Evaluation of aid schemes is a new requirement introduced by SAM. The aim is to gather the necessary evidence to better identify impact, improve enforcement and inform future policy-making by Member States and the Commission.

Evaluation also complements the major expansion of the 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 as well as for some schemes notified under the new generation of State aid guidelines . By the end of 2015, the Commission had approved evaluation plans covering 17 large State aid schemes submitted by 10 Member States ; most of these decisions concerned either regional or R&D&I aid schemes. These schemes account in total for about EUR 10 billion of the annual State aid budget. General State aid scrutiny supporting innovation and growth More flexible rules following the finalisation of SAM made it easier in 2015 for Member States to implement R&D&I projects, risk finance schemes and other aid measures, as well as enabled the Commission to focus on projects with an important impact on competition. Aid for research, development and innovation One of the headline targets of Europe 2020 Strategy is for R&D&I investments in the EU to reach 3 % of GDP. However, R&D spending in Europe has been lagging behind major global competitors, now standing a touch above 2 % of GDP, compared with around 3 % in the United States of America and Japan. This is mainly the result of lower levels of private investment. The State aid rules for R&D&I aim to ensure that public funding goes to research projects that would not have happened otherwise, i.e. projects that truly go beyond the state of the art and which bring innovative products and services to the market and ultimately to consumers. The new State aid rules, which entered into force on 1 July 2014 aim at market efficiency and mobilising private investment in projects that would have not been implemented due to market failures. The rules also set the ground for EU companies to combine their efforts with Member States and invest further in R&D&I as a gateway for sustainable growth and job creation in Europe. The enlarged scope of the rules, as well as more flexible and simpler criteria under which the State aid is more likely to be found compatible with the internal market, facilitate the implementation of R&D projects by Member States. Aid measures enabling ground-breaking research In 2015, using the new rules the Commission approved ambitious projects in areas such as satellite launchers (i.e. access to space), electricity transportation and aeronautics. For instance, the SABRE project (United Kingdom) can lead to significant technological advances that would benefit consumers using products and services that depend on low Earth orbiting satellites, such as mobile communications and other services. Similarly the Supergrid project (France) has put in place a framework for collaboration between academia and industry over innovation in the field of technology for long-distance electricity transportation. Finally, the TS 3000 project (France) will encourage research in the field of aeronautics while putting in place higher standards for performance, environment and new materials. Nonetheless, the Commission has remained vigilant and decided to investigate further the impact on competition of a project establishing a test facility in the railway industry in Spain. According to the information submitted by the Member States to the Commission in 2015, the Member States implemented 603 R&D&I schemes covered by the new GBER (Articles 25 to 30), with an estimated annual expenditure of EUR 18.8 billion. Finally, in 2015 the Commission also approved eight evaluation plans covering research and development measures with an overall annual budget in excess of EUR 150 million. Aid to risk finance In addition to the new R&D&I State aid rules, the Commission has put in place a simpler, more flexible and generous State aid framework for risk finance for SMEs and mid-caps. The new rules, contained in the new Risk Finance Guidelines and in the new GBER, entered into force on 1 July 2014. SMEs across the EU remain heavily dependent on traditional bank lending, which is still limited by banks' refinancing capacity, risk appetite and capital adequacy. The financial crisis has exacerbated the problem with approximately one third of SMEs being unable to receive the necessary finance in recent years. Given the pivotal importance of SMEs and midcaps for the whole EU economy, the situation has a significant negative impact on growth and job creation. The new rules aim to offer better incentives for private sector investors - including institutional ones – to increase their funding activities in the critical area of SME and midcaps financing. The rules also mirror other EU initiatives designed to promote wider use of financial instruments in the context of new support programmes such as Horizon 2020 or COSME (the Programme for the Competitiveness of Enterprise and SMEs) . The new risk finance regime provides the framework for seamless support for new ventures from their creation to their development into global players. The aim is to help new ventures to get past the critical stages, namely the “valley of death”, where private financing is either unavailable or not available in the necessary amount or form. Aid measures encouraging investment and innovation In 2015, under the new Risk Finance Guidelines, the Commission adopted several decisions on schemes aimed at encouraging investment in innovative SMEs and midcaps. It approved one scheme in the United Kingdom (the EIS-VCT scheme, targeting innovative SMEs and midcaps) and two schemes in France (Amortissement exceptionnel des investissements des entreprises dans les PME innovantes and ISF-PME schemes). Taking the view that these measures covered a real gap in the market, the Commission worked together with the Member States on solutions to limit the impact on competition in the single market. The Commission considered that the risks inherent to the activities of these young firms and innovative companies (i.e. products/technologies not yet proven to be economically viable) and the lack of financial guarantees limited their capacity to access funding. In addition, their small size meant that they were not in a position to employ staff specifically dedicated to financial management. The in-depth analysis was performed on the basis of substantiated economic ex-ante assessment provided by the Member States to demonstrate the market failure affecting these specific categories of companies. The assessment showed that there are still specific funding needs for certain innovative SMEs beyond the criteria set out in the GBER (i.e. wider range of financial instruments, risk finance measure of up to EUR 15 million, possibility of capital replacement, tailored private participation ratio). The examination showed the existence of a funding gap for certain innovative SMEs and that the aid was necessary to stimulate investment that would not have been provided by the market unprompted. According to the information submitted by the Member States to the Commission, the Member States, implemented 161 measures, under Articles 21 to 24 of the new GBER to help SMEs to access finance. The measures had an estimated annual budget of EUR 7.015 million. Finally, in 2015 the Commission also approved four evaluation plans covering risk finance measures with an overall annual budget in excess of EUR 150 million. Regional aid Regional aid is an important instrument in the EU's toolbox to promote greater economic and social cohesion. The 2014-2020 regional aid framework has been fully in place since July 2014, following the adoption in June 2013 of the revised Regional Aid Guidelines for the period between July 2014 and 31 December 2020 (RAG 2014-20), the adoption of the regional aid provisions in the GBER and the approval of the 28 regional aid maps in 2014.

The new GBER has extended the range of regional aid measures, enabling Member States to put in place aid schemes and individual aid measures without having to notify them to the Commission. Examples of these are ad hoc regional investment aid measures below the notification thresholds, transport aid schemes and operating aid schemes for outermost regions. In 2015 the Commission advised Member States' authorities on how to interpret and implement the new regional aid provisions of GBER, thus helping them to make a success of the reforms introduced under SAM. Since its adoption in June 2014, the Commission services have answered some 120 sets of questions on how to interpret the regional aid provisions in GBER, and have provided guidance on how to implement of GBER measures as part of numerous pre-notification contacts. Regional aid measures In 2015, the Commission adopted several decisions on regional aid measures under the new provisions, e.g. on investment aid schemes , operating aid schemes in the outermost regions , and on evaluation plans for exempted large regional aid schemes . The Commission also adopted several decisions on regional aid measures to support large investment projects under the preceding rules: in particular, it took a final decision authorising regional aid for investments by Volkswagen in Portugal (cars) and approved aid for Nexen in the Czech Republic (tyre production), for Nitrogénművek in Hungary and for Duslo in Slovakia (both in the fertiliser sector). European Fund for Strategic Investments In November 2014, President Juncker announced the creation of the European Fund for Strategic Investments (EFSI), with the objective to generate EUR 315 billion in investment in Europe. The Regulation setting up the EFSI was adopted in July 2015. In that context the Commission has put in place an accelerated procedure for approving within six weeks Member State co-financing constituting notifiable State aid. This process should contribute to the necessary public and private financing to reach concrete infrastructure and innovation projects as quickly as possible. 2. State Aid Modernisation continues Notion of aid / effect on trade One building block of SAM still needs to be put in place, namely a Commission guidance document on the notion of State aid in the light of important changes in case law and enforcement practice. Given the high level of economic integration achieved within the EU, aid that distorts competition between companies will in most cases also have an impact on intra-EU trade. However, if State support is granted to an activity which has a purely local impact, there may not be an effect on intra-EU trade, e.g. where the beneficiary supplies goods or services to a limited area within a Member State and is unlikely to attract customers from other Member States. Moreover, the measure should have no - or at most marginal – foreseeable effects on cross-border investments in the sector or the establishment of firms within the EU's internal market. In this context, the European Commission has concluded on 29 April that seven measures granting public support to purely local operations did not involve State aid within the meaning of the EU rules, since they were unlikely to have a significant effect on trade between Member States. The decisions concerned the Czech Republic, Germany, the Netherlands and the United Kingdom . These decisions provide Member States and stakeholders with additional guidance to determine which cases do not need to be cleared by the Commission under EU State aid rules. They complement the Commission's revised GBER. To provide further guidance to Member States, the Commission services have updated the analytical grids on the financing of infrastructure projects . The grids explain when, in view of the Commission services, no State aid is involved and when notification for State aid clearance is needed. They also explain the framework for services of general economic interest. The analytical grids explain the current rules and the Commission's decisional practice on the application of State aid rules to the public financing of infrastructure projects. The grids were updated following the State aid modernisation. The previous grids dated from 2012 and followed the Leipzig-Halle judgment. Further extension of the scope of the GBER Recital 1 of the GBER already announced that the Commission planned to propose criteria for exempting port and airport infrastructure provided that sufficient case experience was developed. The first public consultations will take place early 2016. 3. 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 before entering 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 that 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 has considerably stepped up monitoring since 2011. Building on the Court of Auditors recommendations and anticipating future changes in how State aid is controlled, the Commission has substantially increased the size of the monitoring sample in the last three annual cycles to 96 schemes in the current 2015 review. It also extended the scope of its control.

The 2015 cycle covered all Member States, all main types of aid approved as well as block-exempted schemes. Furthermore, the sample contained a number of block-exempted schemes under the new GBER . Also, the Commission carried out two pilot projects on targeted monitoring. First, the Commission assessed aid schemes in one particular Member State in order to examine whether accumulation rules were correctly observed when aid for the same project was granted under different schemes. Second, the Commission monitored a number of large investments projects in order to assess whether they had been correctly implemented. The Commission follows up systematically on all irregularities and uses the means at its disposal, as appropriate, to address the competition distortions that these may have caused. In some cases, Member States offer to voluntarily redress the problems detected, for example to amend national legislation or to recover the excess aid granted. In other cases, the Commission may need to take formal action. In 2015, the Commission adopted two final decisions in cases where it had opened a formal investigation procedure in 2013. In those cases, the Member States provided additional information that removed the Commission's concerns that the schemes had been misapplied . It also adopted one final decision, after the Member State concerned, France, committed itself to making an incompatible aid scheme compatible with the State aid rules . Restoring competition through recovery of State aid granted in breach of the rules To ensure the integrity of the single market, the Commission has the power and the duty to request that Member States recover unlawful and incompatible aid which has unduly distorted competition and trade between Member States. In 2015, further progress was made to ensure that recovery decisions are enforced effectively and immediately. By 31 December, the amount of illegal and incompatible aid recovered from beneficiaries had increased to EUR 13.5 billion , from EUR 8.5 billion in December 2004 . This means that the percentage of illegal and incompatible aid still to be recovered fell slightly from 74 % at the end of 2004 to around 55 % at the end of 2015. In 2015, the Commission adopted 17 new recovery decisions and EUR 6.1 million was recovered by the Member States. As of the end of December, the Commission had 54 pending recovery cases. Recovery decisions adopted in 2015 17 Amount recovered in 2015 (EUR million) 6.1 Pending recovery cases on 31 December 2015 54 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 2015, the Court of Justice condemned two Member States under Article 108(2) TFEU (France and Germany) and one Member State under Article 260(2) TFEU (Italy) . Cooperation with national courts to ensure the effectiveness of State aid rules The Commission continued its cooperation with national courts under the Commission Notice on the enforcement of State aid law by national courts of 2009 (the "Enforcement Notice"). This 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 at its own initiative. In 2015, the Commission responded to two requests for information and two requests for an opinion under Article 29 of the Procedural Regulation . The requests for information were issued by a Spanish and a German court. They concerned the state of the proceedings before the Commission of a complaint and the transmission of documents in the possession of the Commission as well as questions on how to interpret the notion of State aid. The requests for an opinion came from two German courts: one related to the aid element in a bank guarantee and the other to the existence of alleged State aid. The Commission received also questions from third parties bringing cases to the attention of the Commission and asking the Commission to submit observations as amicus curiae. However, under the Procedural Regulation, the Commission has the duty to reply only to requests made by national courts, not to requests made by third parties. This provision is intended to preserve the independence of the national courts, even though requests made by third parties can be a useful tool to inform the Commission about ongoing cases where the submission of observations ex officio can be presented. As a result of 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 29 of the Procedural Regulation mirrors in that respect Article 15 (3) of Regulation 1/2003 in the field of antitrust. In 2015, the Commission submitted observations before a French court on questions related to the execution of recovery decisions and observations were submitted to various courts in Romania, a court in Belgium and in the United States concerning the recognition and enforcement of an arbitration award, the implementation of which the Commission deems to constitute the grant of State aid. Further observations regarding the recognition and enforcement of that award will be submitted, in France, the United Kingdom and Luxembourg, but these were not yet filed in 2015. The Commission intends to publish its opinions and amicus curiae observations on its website as soon as it receives approval from the courts concerned . The Commission also continued its advocacy efforts. In 2015, the Commission was actively involved in evaluating the financing of training programmes for national judges and in assessing judges' needs. It also sent officials to teach at such workshops and conferences . 4. Significant judgments by EU Courts in the State aid area In 2015, the EU Courts adopted a number of important judgments in the State aid area in particular on the concept of State resources, advantage and selectivity. The following overview is based on a selection of Court judgments. State resources and effect on trade By judgment of 14 January in Eventech, the Court of Justice rendered a preliminary ruling in response to a reference by the Court of Appeal of England & Wales by which it concluded that the policy by which London taxis (black cabs) were allowed to drive in publicly funded bus lanes, but minicabs were excluded, did not give rise to State aid. The Court of Justice ruled, first, that the policy did not involve State resources because, black cab's use of those lanes being permitted by law, their "exemption" from fines did not involve additional burdens on the public authorities which could entail a commitment of such resources. The Court of Justice ruled, next, that since roads and bus lanes are not operated commercially by the public authorities the policy does not entail forgoing revenues they would have otherwise received in the absence of that policy. The Court of Justice further elaborated that where the State grants a right of privileged access to public infrastructure that is not operated commercially by the public authorities to users of that infrastructure in order to pursue the realisation of an objective laid down by that State’s legislation, the State does not necessarily confer an economic advantage on those users. On selectivity, the Court of Justice ruled that black cabs and minicabs were not in a comparable factual or legal situation on the basis of physical and licensing characteristics, so that the permission of one and the exclusion of the latter from the bus policy did not constitute State aid. Finally, the Court of Justice upheld the Altmark case law on the effect on trade between Member States, although invited by the Advocate General and the ESA to revisit that case law, by concluding that it was feasible that the policy was liable to affect such trade since it could render less attractive the provision of minicab services in London.

The concept of advantage and quantification As regards the concept of advantage, the Court of Justice ruled in OTP Bank Nyrt on the basis of another reference for a preliminary ruling that a Hungarian aid scheme to facilitate access to housing via banks provided an advantage to credit institutions established in Hungary. This enabled the banks to conclude loan agreements without having to assume the financial risk. The Court of Justice also ruled that in addition to the fact that the scheme enabled banks to conclude loans, it allowed them to provide additional services against remuneration, such as the opening of a current account. Such advantage was also selective as it concerned the economic sector of credit establishments (to the exclusion of other economic sectors). Also as regards the concept of advantage and in particular the issue of quantification of advantage, the General Court handed down two judgments (Aer Lingus v Commission , Ryanair v Commission ) on a Commission decision declaring the application by Ireland of differentiated air travel tax rates as illegal State aid. The General Court confirmed the assessment of the Commission that had found the higher rate of EUR10 per passenger as the normal tax rate and the lower tax rate of EUR 2 per passenger travelling to destinations located at maximum 300 km from Dublin the exception from the normal rate, constituting State aid to certain airlines. However, the General Court found that the Commission was wrong in quantifying the economic advantage as the difference between the two rates, since it should have taken into account the degree to which the airlines could have fully or partially passed on the advantage to the passengers. Thus, the advantage actually obtained by the airlines did not necessarily consist in the difference between the two rates, but rather in the possibility of offering more attractive prices and thereby increasing the turnover. Recovery should therefore also be limited to what was actually withheld by the airlines. Market economy investor principle As regards the application of the market economy investor principle, the General Court ruled in a judgment of 2 July in joined cases France and Orange (former France Télécom) v Commission , following a referral from the Court of Justice that the Commission was wrong to consider that the offer of a loan made to Orange was a State aid and thereby annulled the Commission decision. The General Court held that the relevant moment at which the Commission must apply the "Market Economy Investor Principle" (MEIP) is when the State financial support measure that may be characterised as State aid is adopted (i.e. December 2002) and not to the situation as it existed before July 2002 when the French Minister publicly stated that the French State would take the appropriate measures to rescue France Télécom. While the General Court accepted that it is possible to take account of prior events and objective facts, it did not consider that those earlier events and facts alone can conclusively form the relevant reference framework for the purposes of applying the MEIP. As for the July 2002 ministerial statement, the General Court noted that the Commission did not succeed in proving that the intention of the French authorities was sufficiently genuine, reliable, specific and unconditional for them to be legally bound by such statements. The concept of selectivity On the concept of selectivity, the Court of Justice in Commission v MOL Nyrt upheld the judgment of the General Court that had annulled a Commission decision concerning State aid granted to the oil and gas company MOL. The Commission had considered that the agreement between the Hungarian government and MOL which provided for a prolongation of the mining authorisation and a 2008 amendment to the Mining Act constituted a selective aid measure. This prolongation significantly increased the mining fees for all mining companies except for those which had already signed a prolongation agreement, i.e. in practice only MOL. With reference to the 2005 agreement between the Hungarian government and MOL, the Court of Justice concluded that, firstly, the selectivity requirement differs depending on whether the measure in question constitutes a scheme or individual aid. In the case of individual aid, the identification of the economic advantage is, in principle, sufficient to support the presumption that it is selective. In the case of a scheme, it is necessary to identify whether the measure in question, notwithstanding the fact that it confers an advantage, does so to the exclusive benefit of certain undertakings or certain sectors of activity. Secondly, there is a fundamental difference between the assessment of the selectivity of general schemes for exemption or relief, which, by definition, confer an advantage, and the assessment of the selectivity of optional provisions of national law prescribing the imposition of additional charges. In cases in which the national authorities impose additional charges in order to maintain equal treatment between operators, the simple fact that those authorities enjoy discretion defined by law, and not unlimited discretion, cannot be sufficient to establish that the corresponding scheme is selective. As regards both the 2005 agreement and the 2008 amendment taken together, the Court of Justice concluded that there was no chronological and/or functional link between the 2005 agreement and the 2008 amendment and could therefore not be considered as a single aid measure. The concept of Services of General Economic Interest The EU Courts also handed down two important judgments on the concept of Services of General Economic Interest (SGEI). In TV2/Denmark v Commission and Viasat v Commission , the General Court confirmed the Commission's assessment that the Altmark conditions were not fulfilled with respect to the financing of the Danish public broadcaster but disagreed with the Commission that the second Altmark condition requires the beneficiary of the SGEI compensation to be operating efficiently. According to the General Court, this would lead to confusion between the second and the fourth Altmark conditions. In addition, the notion of a typical well-run company as stated in the fourth Altmark condition requires the beneficiary of the compensation to be compared with another company which is not a beneficiary. It is not sufficient for that purpose to argue that there is no comparable company because of the specific public service task entrusted to the beneficiary and on that basis argue that the beneficiary itself constitutes such a typical well-run company. Finally, as regards the question whether advertising revenue generated by commercials broadcast by TV2 but channelled to a fund and consequently disbursed back to TV2 constitute State resources, the General Court held that the State's intervention was limited to the fixing of amounts to be channelled to TV2. Thus, the State could only decide that TV2 would not receive all of the funds, but only a certain part of it, which is not sufficient to find that they constitute State resources. The funds keep their character as income generated by commercial activities of TV2. Social housing constitute an existing aid scheme Finally, in an order of 12 May in RENV Stichting Woonlinie v Commission , the General Court confirmed the Commission's decision of 15 December 2009 which found the Dutch social housing scheme to constitute an existing aid scheme compatible with the EU State aid rules on SGEI further to commitments by the Netherlands. The General Court gave its decision by reasoned order which is available only in cases where the action is manifestly lacking any foundation in law (or manifestly inadmissible). The General Court rejected all the arguments put forward that were mainly directed against the changes in the Dutch social housing scheme, in particular an income limit in order to benefit from social housing.



Antitrust and cartels Articles 101, 102 and 106 TFEU According to Article 101 TFEU, anti-competitive agreements are prohibited as incompatible with the internal market. Article 101 TFEU prohibits agreements with an anti-competitive object or effects where companies coordinate their behaviour instead of competing independently. Even if a horizontal or a vertical agreement could be viewed as restrictive (for example by combining the production of two competing companies) it might be allowed under Article 101(3) TFEU if it ultimately fosters competition (for example by promoting technical progress or by improving distribution).

Article 102 TFEU prohibits abuse of a dominant position. It is not in itself illegal for an undertaking to be in a dominant position or to acquire such a position. Dominant undertakings, the same as any other undertaking in the market, are entitled to compete on the merits. However, Article 102 TFEU prohibits the abusive behaviour of such dominant undertakings which prevents new entry or squeezes competitors out of the market. These practices hamper competition and negatively affect incentives to innovation and growth, as well as consumer welfare. Finally, Article 106 TFEU prevents Member States from enacting or maintaining in force any measures contrary to the Treaty rules regarding public undertakings and undertakings to which Member States grant special or exclusive rights (privileged undertakings). 1. Guidance in antitrust and cartel proceedings In 2015, in order to further increase transparency and to offer guidance to parties and practitioners the Commission published a number of guidance documents on its procedures: Based on the experience gained in the past years, the purpose of the Best Practices on the disclosure of information in data rooms in proceedings under Articles 101 and 102 TFEU and under the EU Merger Regulation is to provide practical guidance on when and how to use data rooms to disclose in a restricted manner business secrets and other confidential information obtained during antitrust and merger proceedings. Guidance on the preparation of public versions of Commission Decisions was also adopted under Articles 7 to 10, 23 and 24 of Regulation 1/2003. It sets out how the Commission prepares the public version of antitrust decisions. It describes (i) what information undertakings can claim should be redacted and how they should substantiate their claims; (ii) what the Commission redacts on its own initiative and (iii) the procedure that is followed to settle confidentiality claims. The guidance paper titled Recommendations for the Use of Electronic Document Submissions in Antitrust and Cartel Case Proceedings contains guidance in particular on how to submit documents electronically to the Commission (either by e-mail, via eTrustEx or by e-questionnaire), their format and size, protection, encryption, naming, languages, and non-confidential versions. 2. Significant judgments by the EU Courts in antitrust and cartels Article 101 TFEU Communications between competitors, single and continuous infringement In the Dole judgment , pertaining to the bananas cartel, the Court of Justice entirely dismissed the appeal brought by banana importer Dole against the General Court judgment. The Court of Justice confirmed that communications between competitors leading to horizontal price-fixing are anti-competitive by their very object and amount to a violation of EU antitrust rules, without requiring an analysis of their effect on competition in the market. The Court of Justice agreed with the Commission that the cartelists' communications before setting the quotation prices for bananas reduced uncertainty for each of the participants as to the conduct of their competitors. This had the objective of creating competitive conditions that did not correspond to the normal conditions on the market without such collusive contacts and therefore gave rise to a concerted practice between the companies with the object to restrict competition. In the Del Monte judgment , also pertaining to the bananas cartel, the Court of Justice dismissed the appeal brought by Del Monte against the General Court judgment and accepted the appeal of the Commission brought against the same judgment. The judgment of the Court of Justice gives an important precedent clarifying aspects of the case law concerning the concept of a single continuous infringement. The Court of Justice confirmed that parties' unawareness of certain elements of a cartel does not alter the finding of a single and continuous infringement. The Court of Justice upheld the Commission's appeal against the fine reduction for cooperation awarded by the General Court and found that a reply to a simple request for information is not sufficient for a fine reduction. Liability of facilitator In AC-Treuhand judgment the Court of Justice confirmed the General Court's judgment and thus, the Commission's decision to hold AC-Treuhand liable as a cartel facilitator under Article 101 TFEU. In its decision, the Commission fined AC-Treuhand because it played an essential role in the two infringements (ESBO/esters - Heat Stabilisers). It organised a number of meetings at its Zürich premises in which it actively participated, collecting from and supplying to the producers of heat stabilisers data on sales on the relevant markets, offering to act as a moderator in the event of tensions between those producers and encouraging the latter to find compromises, for which it received remuneration. In the judgment the Court of Justice interpreted Article 101 TFEU as referring to all agreements and concerted practices which distort competition, irrespective of the markets the parties operate on. The Court of Justice held that to be held liable for an infringement of Article 101 TFEU, it is not required to restrict one's freedom of action on a particular market and that the effectiveness of Article 101 TFEU would be endangered if undertakings such as AC-Treuhand were allowed to escape liability simply because they do not contribute actively to the restriction of competition in a particular market. On fines, the Court of Justice agreed that the Commission was entitled to deviate from the usual calculation method and to impose a lump sum on AC-Treuhand. Parental liability, fines calculation On 9 September, the General Court handed down five judgments in the TV and Computer monitor tubes cartel involving seven undertakings which participated in either one or both of two distinct cartels in the cathode ray tubes sector. The General Court found that the Commission had jurisdiction notwithstanding the fact that the cartels were formed outside the EEA. The cartel arrangements directly influenced the setting of prices and of volumes delivered to the EEA either as direct sales or as products processed by vertically integrated companies. On substance, the General Court upheld the majority of the Commission's findings with the exception of the individual participation of Toshiba in the early period of the cartel, for which the General Court found that that Commission had not sufficiently established its awareness of the overall cartel. The judgments also upheld the Commission's decision regarding parental liability. In particular, the General Court confirmed, in line with established case law, that parent companies were liable for the illegal anti-competitive behaviour of joint ventures irrespective of the ownership shares (regarding both the Philips/LG Electronics and the Toshiba/Panasonic joint ventures). The General Court also upheld the fines methodology and confirmed by reference to the Innolux judgment of the Court of Justice the Commission's right to consider sales of finished products sold to third parties in the European Economic Area (EEA) in which a vertically integrated cartelist had incorporated cathode ray tubes into its finished products outside the EEA. Finally, the General Court decided to reduce the fines for Panasonic, Toshiba and MTPD as it had found that the companies provided a more detailed value of sales figures than what the Commission had used. The fine, however, set at just over EUR 1.4 billion, remains the highest ever total fines imposed in a cartel case.

Calculation of fines In its LG judgment of 23 April, the Court of Justice upheld the judgment of the General Court concerning the LCD panels cartel. The main issue at stake was whether sales to parents of a joint venture could be taken into account in the calculation of fines. The Court of Justice held that the Commission was entitled to take into account such sales. This was because even if these sales were made at a preferential price (and might therefore not be influenced by the cartel), they were made on the market affected by the infringement and should be included to correctly reflect the importance of the parties on that market. The Court of Justice further held that these sales must be regarded a sales made to independent third parties (external sales) since the joint venture and its parent companies did not constitute a single undertaking. In another judgment in the LCD panels case adopted on 9 July, the Court of Justice upheld the fine imposed on another cartelist (Innolux). The main issue at stake was whether the intra-group sales of cartelised products (LCD panels) outside the EEA which were incorporated into the finished products (TVs) within the group to which the producer belongs and then sold in the EEA can be taken into account when calculating the fine (direct sales through transformed products). The Court of Justice concluded that when the goods concerned by the cartel were incorporated into finished products by a vertically integrated undertaking outside the EEA, the Commission may take into account, for the purposes of calculating the fine to be imposed on that undertaking and up to the value of the incorporated panels, the sales of its finished products in the EEA to independent third-party undertakings. Single and continuous infringement, agent as economic unit In 10 judgments handed down on 15 July , the General Court dismissed nearly all actions brought against the Commission's Pre-stressing Steel cartel decision of 30 June 2010 . The General Court upheld entirely the Commission's finding that the cartel involving 17 undertakings and lasting for more than 18 years constituted a single and continuous infringement of EU competition law. The cartel consisted of a complex set of arrangements at European (Club Zurich/Club Europe) and regional (Club Italia/Club Spain) level, involving quota fixing, client sharing, price fixing and exchange of sensitive commercial information on pricing, customers and volume/shares in nearly the whole EEA. In voestalpine and voestalpine Austria Draht , the General Court not only confirmed established case law (notably Suiker unie) that an agent and its principal can be regarded as an economic unit in analogy with an employee. It also brought a novel finding, acknowledging that an agent acting for two principals at the same time (both involved in the cartel) can be an economic unit with each principal and thus the latter can be held liable for the conduct of the agent, despite the non-exclusive relationship with each of them. The General Court clarified that such liability was to be found as long as the commercial agent was acting within his authority: in those cases, he had to be regarded as forming part of the undertaking. On the other hand, the General Court took the view that the liability for that agent’s anti-competitive actions outside his mandate could not be imputed to voestalpine Austria Draht and reduced the fine imposed jointly and severally on those two companies for those conducts. Inconsistency between reasoning of decision and operative part In 13 judgments handed down on 16 December 2015 relating to the Airfreight decision the General Court found an inconsistency between the reasoning of the contested decision and its operative part. On the one hand, the reasoning describes a single and continuous infringement in which all of the addressees of that decision participated. On the other hand, the first four articles of the operative part do not each set out all of the addressees of the contested decision. The General Court therefore fully annulled the decision for all but one party which lodged an appeal. The General Court did not take a position on whether the Commission could prove the infringement or not. Article 102 TFEU Action for injunction constituting an abuse of a dominant position In a judgment adopted following a preliminary reference, the Court of Justice provided legal clarity on certain controversial aspects of licensing of standard-essential patents . It concluded that the bringing of an action for an injunction for prohibition against an alleged infringer by the proprietor of a standard-essential patent holding a dominant position may constitute an abuse of that dominant position under certain circumstances The judgment is important because it confirms that competition policy has an important role to play in the standardisation arena. It also confirms the Commission's approach in the Motorola and Samsung cases. According to this approach, seeking injunctions based on Standard-Essential Patents (SEPs), where a commitment to license on Fair, Reasonable and Non-Discriminatory (FRAND) terms has been given, can be an abuse of a dominant position where the prospective licensee is willing to enter into a licensing agreement on FRAND terms. Standardised retroactive rebate scheme under Article 102 TFEU In Post Danmark II the Court of Justice gave a preliminary ruling on questions concerning the criteria for assessing standardised retroactive rebate schemes under Article 102 TFEU. In particular, the Court of Justice was asked to provide guidance on what relevance should be attached to the fact that the rebate scheme is applicable to the majority of customers in the market and also to the "as efficient competitor test". The Court of Justice reiterated that the assessment of such rebate scheme should be carried out in the light of all relevant circumstances, including the rules and the criteria governing the grant of the rebates, the number of customers concerned and the characteristics of the market in which the dominant undertaking operates. The fact that the rebate scheme concerns a large proportion of customers may constitute a useful indication as to the extent and impact of the practice and thus to the likelihood of an anti-competitive exclusionary effect, but it is not a necessary condition for the finding of an abuse. Such an assessment seeks to determine whether the conduct of the dominant undertaking is capable of producing an actual or likely exclusionary effect to the detriment of competition, and, thereby of consumers' interest. The Court of Justice also made clear that the "as efficient competitor test" is not relevant for finding a rebate scheme abusive in the context such as that of the main proceeding, but made clear that the application of the test is not excluded on principle and that the test must be regarded as one tool amongst others for the purpose of assessing whether there is an abuse in the context of rebate schemes. The Court of Justice also took a position on whether there is an appreciability (de minimis) threshold in the application of Article 102 TFEU. The Court of Justice ruled that if a dominant position is present, competition in the market is already restricted and therefore abuses should be considered by their very nature liable to give rise to an appreciable restriction of competition. Article 106 TFEU On 25 March the General Court in its judgment in Slovenská pošta rejected an application for annulment brought against a Commission decision concerning the application of Article 86(1) EC. The General Court dismissed all the pleas of the applicants. Most importantly the General Court found that an infringement of Article 106(1) TFEU in conjunction with Article 102 TFEU may be established irrespective of whether any abuse actually materialises. All that is necessary is for the Commission to identify a potential or actual anti-competitive consequence liable to result from the State measure at issue. Such an infringement may thus be established where the State measure at issue affects the structure of the market by creating unequal conditions of competition between companies, by allowing the public undertaking or the undertaking which was granted special or exclusive rights to maintain (for example by hindering new entrants to the market), strengthen or extend the dominant position over another, but neighbouring market, without objective justification.

Procedural issues Rejection of complaints In its judgments in Si.mobil and EasyJet the General Court interpreted Article 13 of Regulation (EC) No 1/2003 for the first time. This provision allows the Commission and National Competition Authorities (NCAs) to reject a complaint on the grounds that another NCA "is dealing" or "has dealt" with the same case. In Si.Mobil the General Court held that the Commission can reject a complaint solely on the basis of Article 13, without the need to also show a lack of EU interest in the case. Moreover, the General Court emphasised that Article 13 does not create individual rights for companies to have their case dealt with by a particular authority. The General Court further clarified that for the purpose of Article 13; "the same case" means the same infringement, in the same market and within the same time frame. The condition "dealing with" the same case is met when the NCA has taken follow-up steps, but not when the NCA has merely received the complaint or has decided to open an investigation. In EasyJet, the General Court clarified that the Commission can reject a complaint on the grounds that an NCA has dealt with the same case, even if the NCA has rejected the complaint on priority grounds and/or has not adopted a formal decision in the meaning of Article 5 of Regulation 1/2003. Inspections The Court of Justice confirmed in its Deutsche Bahn judgment the Commission's position that inspections may be carried out based solely on a Commission decision and do not require a prior judicial authorisation. This does not infringe the rights of defence or the protection of the home as safeguarded in the European Charter of Human Rights. The Court of Justice annulled the second and third inspection decisions. These two decisions were based on information found during the first inspection at Deutsche Bahn. However, this information was outside the scope of the first inspection decision. The Commission can actively search only for information that falls within the scope of the inspection decision. If the Commission happens to obtain information which is outside the scope of the inspection decision, it can use this information to justify a further inspection in order to verify or supplement this information. In this specific case the Court of Justice found that the Commission had informed its inspectors prior to the first inspection about another complaint lodged against Deutsche Bahn without referring to it in the first inspection decision. The Commission thereby infringed the obligation to state reasons and the rights of defence of Deutsche Bahn and was barred from using the information found outside the scope of the first inspection decision to justify a further inspection. Publication of Commission decisions The publication of cartel decisions is an important element in the Commission's enforcement activities. On 28 January, the General Court handed down two judgments concerning a more extensive publication of a 2006 cartel decision of the Commission . For the first time, the General Court provided guidance on the application of Article 30 of Regulation 1/2003 on the publication of Commission decisions and the publication of certain leniency information. Both applicants had appealed the Hearing Officer´s decisions in which most of their confidentiality claims had been rejected. The General Court dismissed both applications in their entirety and found that the disputed information, which was based on material voluntarily provided by the applicants in order to benefit from the leniency programme, was not confidential. The General Court confirmed that the publication of this information would not result in the communication to third parties of the leniency material provided by the parties. The General Court further confirmed that the applicants cannot legitimately oppose the publication by the Commission of information revealing the details of their participation in the infringement penalised in the decision on the ground that such publication would expose them to increased risk of civil liability. It highlighted the wide discretion of the Commission to decide whether to publish information which does not benefit from the protection of professional secrecy. The July judgments in the Carglass case also confirm the Commission's right to publish its decisions, including information received in the context of leniency applications, as well as names of customers and models exchanged by the cartel, pricing information and the number of parts and shares of customers' business allocated among the members of the cartel. The General Court dismissed almost entirely the action brought by Pilkington and entirely dismissed the action brought by AGC against the Hearing Officer's decisions of 6 August 2012 concerning the publication of a detailed version of the Commission's cartel decision of 12 November 2008 in Carglass. The General Court ruled, inter alia, that the publication of facts on AGC's and Pilkington’s participation in the Carglass cartel did not breach the Commission's obligations of professional secrecy or the various rights of defence invoked by the applicants, such as the rights to equal treatment and legitimate expectations. The General Court also confirmed that the Commission is entitled to publish the information acquired from leniency applications in its cartel decisions. Public access to table of contents The AXA judgment of 7 July is closely related to the Carglass decisions and is of importance to the Commission's policy on publications. In this case, AXA requested, under Regulation (EC) No 1049/2001, access to: (i) the table of contents (TOC); and (ii) a large number of documents contained in the Carglass file. The Commission gave access to a version of the TOC in which, inter alia, all items with leniency-related information had been redacted. It based its decision on a general presumption of non-disclosure accepted by the EU Courts for documents in the case file and performed no individual analysis of the entries in question. The Commission also refused access to the documents requested by AXA, based on the same general presumption. According to the General Court, the Commission applied correctly the general presumption that disclosure of the documents in its file would undermine the protection of the purpose of inspections. However, the General Court annulled the part of the Commission's decision that rejected AXA's request for access to references to leniency documents in the TOC of the Carglass file. The TOC was not part of the case file and was, therefore, not covered by the general presumption. The General Court, meanwhile, did uphold the Commission's refusal, when making an individual examination, to disclose information on the identity of physical persons, the names of third-party undertakings and sensitive commercial information contained in the TOC. Hybrid settlement in cartels The judgment in Timab was the first time the General Court reviewed a Commission decision in the context of a hybrid settlement procedure. This is the first "hybrid" cartel case, in which both the settlement procedure and the standard procedure were used, in this case in parallel. Timab was the only undertaking that decided not to make a settlement submission after having participated in settlement talks and the case reverted to the ordinary procedure as regards Timab. The General Court held that in the ordinary procedure, the Commission was not bound by the fines ranges discussed during settlement discussion, especially since the Commission must establish the liabilities of the undertakings concerned while taking account of new arguments on evidence brought to its attention (which may have an impact on the size of the fine to be imposed). The General Court also rejected Timab's claims that the Commission penalised them with a higher fine because they did not settle. The General Court reviewed in detail how the fines were calculated in both procedures, checked that the Commission had not discriminated compared with other companies in the same cartel case and concluded that the Commission had applied the Fines Guidelines correctly. 3. Fight against cartels remains a top priority

Well-functioning, competitive markets give rise to innovation and investment because companies are forced to innovate and to use their resources in the most efficient way. Collusive arrangements may have the effect of preventing the restructuring of economic sectors, thereby reducing innovation. The surplus paid by the cartel victims also reduces the victims' ability to invest in new areas or purchase other products As the object of cartels is precisely to eliminate differences between competitors in critical parameters of competition such as prices, the Commission's anti-cartel enforcement has positive effects on differentiation between companies. The Commission's strong enforcement record against hard core cartels continued in 2015. As in preceding years, the Commission adopted cartel decisions in important sectors for innovation and investment, such as the financial markets and the automotive industry. Settlement cases have accounted for a significant proportion of the decisions adopted this year, confirming that this instrument is now fully established. As discussed above, it is of major importance for the Commission's enforcement practice that the General Court confirmed in Timab the legality of "hybrid" cases in which both ordinary and settlement decisions are adopted in the same investigation. This is because some parties do not wish to follow the settlement route. The flow of immunity and leniency applications continues to be substantial in a large number of economic sectors. The Antitrust Damages Directive that entered into force on 26 December 2014 endorsed the effectiveness of the public enforcement system by setting out that leniency statements and settlement submissions can never be disclosed in the context of private damages litigation. This year, the Commission adopted two settlement decisions against all of the participants in the cartels concerning Parking Heaters (17 June) and Blocktrains (15 July). The Blocktrains settlement case The Blocktrains case is the first cartel case in the rail cargo transport services sector. The Commission imposed fines of EUR 49.1 million on three companies for operating a cartel for so-called cargo "blocktrain" services. "Blocktrains" are a rail shipping system to transport cargo from one hub to another without wagons being split up or stored on the way. This saves time and money for customers from a wide range of industries, in particular those with large volumes to transport. In principle, blocktrains are economically more efficient than traditional rail cargo transport, particularly for single commodity shipping. The "blocktrains" covered by the cartel, named "Balkantrain" and "Soptrain", were jointly operated by Kühne+Nagel, Express Interfracht and Schenker and connect central Europe with south eastern Europe. The three undertakings fixed prices and allocated customers of their "Balkantrain" and "Soptrain" services in Europe between July 2004 and June 2012. The infringement concerned the down-stream sales of cargo transport services in connection with the blocktrains mentioned above. The Commission's investigation in this case started with unannounced inspections in June 2013. The Blocktrains decision was adopted under the settlement procedure concerning all three parties. Kühne+Nagel received full immunity under the Commission's Leniency Notice for revealing the existence of the cartel, while the two other undertakings received fines reductions as leniency applicants. On 4 February, the Commission completed its investigation of seven cartels in the Yen interest rate derivatives (YIRD) sector by adopting an ordinary decision against the UK-based broker ICAP, who acted as a facilitator in six of those collusions. In December 2013, the Commission imposed fines on a number of major banks that decided to settle the case with the Commission. Ordinary procedures remain significant because not all investigations may be eligible for settlement discussions. Relevant factors include the number of parties, the proportion of leniency applicants in relation to the total number of parties, the degree of contestation, conflicting positions between the parties and the existence of novel features or aggravating circumstances in the investigated practices. When the right circumstances are not met, the Commission will apply the ordinary procedure. Two ordinary decisions were adopted in 2015: Retail Food Packaging (24 June) and Optical Disc Drives (21 October). The Optical Disc Drives (ODDs) case ODDs are devices where optical discs (such as CDs, DVDs or Blu-ray) are inserted in order to read and/or record data. They are used for instance in personal computers, CD and DVD players or even video game consoles. In this case, the cartel related to ODDs used for laptops and desktops. Leading suppliers of ODDs (Philips, Lite-On, their joint venture Philips & Lite-On, Hitachi-LG Data Storage, Toshiba Samsung Storage Technology, Sony, Sony Optiarc and Quanta Storage) manipulated the procurement events organised by two major customers, Dell and Hewlett-Packard. The investigation revealed that between June 2004 and November 2008, the companies discussed their intentions regarding bidding strategies, shared the results of procurement events, and exchanged other commercially sensitive information. The cartel consisted of a network of parallel bilateral contacts, which pursued a single plan of avoiding aggressive competition. The ODD decision was adopted in ordinary (non-settlement) procedure on 21 October. The aggregate fine imposed amounted to EUR 116 million. Philips, Lite-On and Philips & Lite-On jointly received full immunity from fines as they were the first to reveal the cartel to the Commission, thereby avoiding a total fine of EUR 63.5 million. No inspections were conducted in this case because the participants were based outside the EU. 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). A number of statements of objections were also adopted by the Commission, such as against the non-settling parties in mushrooms, in car battery recycling and capacitors. The Commission's cartel enforcement record remains strong and effective, with five decisions, fines totalling approximately EUR 365 million and solid work for enforcement in future years.

Case name Adoption date Fine imposed

EUR Undertakings concerned Prohibition Procedure Yen interest rates derivatives 04/02/2015 14 960 000 1 Hybrid* Parking heaters 17/06/2015 68 175 000 2 Settlement Retail food packaging 24/06/2015 115 865 000 10 Normal Blocktrains 15/07/2015 49 154 000 3 Settlement Optical disc drives 21/10/2015 116 377 000 7 Normal *normal procedure part of a hybrid case with a settlement decision in December 2013 Antitrust and cartel output 4. Continuing close cooperation within the European Competition Network (ECN) and with national courts The national competition authorities (NCAs) are essential partners of the Commission for enforcing the EU competition rules. Since the entry into force of Regulation 1/2003 in 2004, NCAs are empowered to apply the EU competition rules in full alongside the Commission. This is done in close cooperation in the European Competition Network (ECN). Together the Commission and the NCAs have adopted more than 1000 decisions in antitrust cases of which 85 % have been taken by NCAs. Through their enforcement work, the NCAs play a key role in making sure that the single market works well and fairly for the benefit of consumers and businesses and driving economic growth. However, while Regulation 1/2003 focused on giving the NCAs the power to co-enforce the EU competition rules, the 2014 Commission Communication on Ten Years of Regulation 1/2003 identified a number of areas of action to strengthen the enforcement powers of NCAs. It showed that there is still room for improvement to further boost competition enforcement in Europe, make markets more competitive and give consumers a better choice of goods and services at lower prices. Therefore, in November the Commission launched a public consultation on empowering the NCAs to be more effective enforcers. The Commission invites feedback from a broad range of stakeholders on potential improvements to guarantee that NCAs (i) have the right tools to detect and sanction violations of the EU competition rules; (ii) have effective leniency programmes that encourage companies to come forward, possibly in several jurisdictions, with evidence of illegal cartels; and (iii) have adequate resources and are sufficiently independent when enforcing EU competition law. The Commission will carefully review all input received in the public consultation before deciding whether and to what extent it should take further action, possibly including an EU legislative initiative. Cooperation with national courts In addition to its cooperation with NCAs in the context of the ECN, the Commission also continued its cooperation with national courts (NCs) under Article 15 of Regulation 1/2003. The Commission helps NCs to enforce the EU competition rules in an effective and coherent manner by providing case-related information or an opinion on matters of substance or by intervening as amicus curiae in proceedings pending before the NCs. In 2015, the Commission thus replied to one request for information and four requests for opinion from NCs under Article 15(1) of Regulation 1/2003. The request for information was combined with one of the requests for an opinion and was issued by a United Kingdom court in a case relating to financial services. One of the remaining three requests for opinion was issued by a Hungarian court and related to the notion of anti-competitive effects of an infringement and the extent to which they have to be proven in order to serve as evidence. Another request for opinion was submitted by a Latvian court and related to the question of interaction between the EU antitrust rules (Article 102 TFEU) and the State aid rules (Article 107 TFEU). The remaining request for opinion was issued by a Romanian court and concerned potential infringements in the framework of Buy Back campaigns under the Directive 2002/96/EC of the European Parliament and of the Council of 27 January 2003 on waste electrical and electronic equipment. In 2015, the Commission also intervened as amicus curiae in two court proceedings: One of the interventions related to the application of the EU competition rules in the fruit and vegetables sector. In the underlying case, the French NCA had imposed fines on several chicory producer organisations and associations of producer organisations for an infringement of Article 101 (1) TFEU and the equivalent national rules. The Court of Appeal quashed the NCA decision based, inter alia, on the ground that fixing minimum prices and volumes and exchanging commercially sensitive information by chicory producers does not constitute an infringement of competition rules. According to the Court of Appeal, the NCA had failed to demonstrate that the producers exceeded the scope of the legal missions conferred on them by the EU and/or national agricultural rules. The applicable agricultural legislation had therefore authorised the practices of chicory producers and Article 101(1) TFEU was inapplicable to the behaviour at hand. The case was appealed before the French Court of Cassation. In its observations, the Commission rebutted the claim of non-applicability of competition rules in the agricultural sector by referring in general terms to the existence of general and specific derogations from EU competition rules. It also underlined that both derogations from EU competition rules should be interpreted in a restrictive manner and be limited to the specific activities described in the derogations. The Commission also pointed out that it had held exclusive competence for allowing a general derogation from the EU competition rules (e.g. Article 2(2) of Council Regulation No 26/1962) at the time of the facts of the case, but had not granted such derogation at the time. The Court of Cassation suspended the proceedings and asked for a preliminary ruling from the Court of Justice under Article 267 TFEU. The second amicus intervention took place in a transport case before the Spanish Supreme Court and related to the interpretation of the national provisions on the 10 % cap on fines and in particular on the notion of "sales volumes" and "total turnover". Although the calculation of fines imposed by NCAs is not regulated or harmonised in EU legislation, the Commission underlined in its observations the need for imposing effective sanctions. This is ensured, among others, through the deterrent character of the fines imposed. The Commission publishes its opinions and amicus curiae observations on its website ( http://ec.europa.eu/competition/court/overview_en.html ) as soon as it receives approval from the courts concerned. Merger control EU merger control

The purpose of EU merger control is to ensure that market structures remain competitive while facilitating smooth restructuring of the industry. This applies not only to EU-based companies, but also to any company active on the EU markets. Industry restructuring is an important way of fostering efficient allocation of production assets. However, there are also situations where industry consolidation can give rise to harmful effects on competition, taking into account the merging companies' degree of market power and other market features. EU merger control ensures that changes in the market structure which lead to harmful effects on competition do not occur. Competition is one of the key drivers for innovation and investment. In protecting competitive market structures, EU merger control also contributed to innovation and investment across Europe in 2015. The substantive test for assessing mergers under the current legal framework is based on a significant impediment of effective competition. This test covers all aspects of a loss of competition, including harm to innovation. Moreover, EU merger control takes into account efficiencies brought about by mergers, which bring positive effects on innovation provided they are verifiable, merger-specific and likely to be passed on to consumers. The Commission's enforcement practice in 2015 shows that it considers innovation and investments as important aspects of competition (see section below on recent enforcement trends). As highlighted in previous reports on competition policy, the Commission continuously evaluates the substantive and procedural rules that make up the legal framework, in force for merger control. In this context, the Commission also assesses concerns voiced by industry representatives and other stakeholders and checks that its policies and enforcement practices do not unduly create red-tape for companies and thereby hamper innovation and investment. If necessary, policy changes are proposed (see points 1 to 3 below). 1. Geographic market definition in European Commission merger control In recent years, some stakeholders have raised concerns that the Commission fails to take due account of increasing globalisation and therefore assesses mergers using too narrowly defined geographic markets. Some stakeholders have also claimed that when the Commission defines the relevant geographic market for the purpose of assessing mergers notified to it, it does not sufficiently take into account that potential competitors who were previously not active in a specific market may start supplying that market following a merger ("supply-side substitution"). Responding to these views, the Commission published a policy brief entitled "Market definition in a globalised world" in March . The brief sets out the Commission's principles for determining the geographic area affected by a merger. It also analyses how globalisation affects how the relevant geographic market is defined. The Commission also commissioned an independent economic report on the topic of "Geographic Market Definition in European Commission Merger Control". The authors, Professors Lyons and Fletcher, were asked to evaluate the Commission's approach to geographic market definition on the basis of a sample of 10 recent decisions in merger cases. In their report, the authors largely confirm the Commission's approach to geographic market definition and found that the Commission's geographic market definition practice took sufficient account of globalisation. They also disagreed with the specific suggestions to strengthen the weight of supply side factors in defining relevant geographic markets. The report also made some technical recommendations on how the Commission could further improve its assessment of the relevant geographic dimensions for a notified transaction. The authors recommend in particular that the Commission adopts an even stricter approach to supply-side substitutability at the market definition stage, applies greater flexibility in the use of non-political geographic market boundaries, such as isochrones, and adopts a formal methodology for the treatment of transport costs. The White Paper "Towards more effective EU merger control" In the White Paper "Towards more effective EU merger control" adopted in July 2014, the Commission made some concrete proposals to improve the Merger Regulation in a few areas. Those mainly concern the possible extension of the EU Merger Regulation to minority shareholdings and a proposed streamlining of the referral system and other procedures. In light of the views expressed by stakeholders during the public consultation on the White Paper, the proportionality of a possible review system for minority shareholdings will be further assessed. For this purpose, the Commission engaged in further discussions with relevant stakeholders on how to design an effective system for reviewing minority shareholdings that would pose as little administrative burden as possible on companies. 2. Guidance on merger control proceedings In 2015, the Commission published two guidance documents on procedural aspects of EU merger control, which make the Commission's proceedings more transparent for companies and their legal representatives and thereby increase predictability and efficiency: The Guidance on the preparation of public versions of Commission Decisions adopted under the Merger Regulation, published on 26 May; and The Best Practices on the disclosure of information in data rooms in proceedings under Articles 101 and 102 TFEU and under the EU Merger Regulation, published on 2 June. 3. Recent enforcement trends The number of notified mergers increased significantly in 2015 compared with the previous six years. Overall, 360 transactions were notified, including 33 reasoned pre-notification submissions by the notifying parties to request the referral of a case from the Commission to a Member State or from a Member State to the Commission. In 11 cases, the Commission opened in-depth investigations (second phase). These cases concerned various industry sectors, including the manufacture of engines and turbines, energy production, telecoms, music rights management, the manufacture of paper and packaging material, the distribution of office products, the manufacture of beverage cans and aluminium bottles, food & beverages and small package delivery services. In 2015 the Commission took 318 final decisions in merger cases. In two cases, the parties abandoned a transaction during the in-depth investigation. The number of 22 interventions in 2015 was significantly higher compared with the average of the last six years, which amounted to around 15 interventions per year. In 2015, 13 mergers were cleared subject to commitments in first phase and seven in the second phase. There was no case where the Commission had to prohibit a notified transaction. Merger decisions: 4. Significant judgments by the EU Courts in mergers

On 9 March, the General Court dismissed the action for annulment brought by Deutsche Börse against the Commission decision of February 2012 declaring the proposed merger between Deutsche Börse and NYSE Euronext incompatible with the internal market. The General Court's judgment is of general interest in relation to the Commission's assessment of efficiencies submitted by the notifying party. The General Court supported the Commission's analytical framework for efficiencies as set out in the in the Horizontal Merger Guidelines and explicitly stated that the burden of proof for efficiency claims is on the notifying party. On 13 May, the General Court dismissed the action for annulment brought by Niki Luftfahrt against the Commission decision of August 2009 declaring the proposed acquisition of Austrian Airlines by Deutsche Lufthansa AG compatible with the internal market subject to conditions and obligations. The judgment follows the line of the previous case law regarding airline mergers. It confirmed the methodology for defining markets (according to the origin & destination approach), the competitive assessment (focused on individual routes but also taking into account network effects) and the design of remedies in the industry (in particular slot remedies). 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 helps to ensure that the challenges of globalisation are managed in an effective manner and promotes convergence on competition policy principles and practices implemented throughout the world. This is why the Commission is seeking to strengthen the role of competition policy in international negotiations and in international organisations and cooperates with competition agencies globally. Such regulatory and enforcement cooperation helps to ensure effective enforcement and a level playing field for European companies active on global markets. 1. Bilateral relations At the international level, the Commission is holding negotiations on Free Trade Agreements (FTAs) with the aim to include competition and State aid provisions in such agreements. In 2015 Commissions international priorities included the negotiations with the United States on a Transatlantic Trade and Investment Partnership Agreement (TTIP), launched in 2013. In addition, significant progress was made during in 2015 on another important agreement currently being negotiated, namely the FTA with Japan. In 2015 the Commission also focused its efforts on negotiating the competition provisions included in the FTA with Vietnam. The competition provisions in this FTA on which an agreement in principle was reached, might help to set a new standard for the region or even further afield. The Commission also assists in the implementation of the competition provisions included in recent FTAs with neighbouring countries. It is involved in negotiating the necessary implementing rules to this effect with Tunisia and Morocco, as well as monitoring the implementation of the EU competition acquis, including the State aid rules, in countries such as Ukraine and Moldova. Moreover, in September a first meeting took place with Korea on the implementation of the chapter on competition of the EU-Korea FTA. The discussion in particular covered progress on the implementation of the provisions on subsidies and an exchange of experiences. Negotiations between the Commission and its Canadian counterparts to include provisions on the exchange of information into the existing EU-Canada Cooperation agreement have made good progress. The present agreement does not make provision for the Commission and the Canadian Competition Bureau to exchange evidence collected in the course of their respective proceedings. The possibility to exchange such evidence would improve cooperation between both competition authorities in all competition cases which affect both markets and would lead to more effective and more efficient competition law enforcement. Another key area of Commission activity at the international level is technical cooperation with main trading partners that are developing their competition policy and enforcement regime and with which the Commission has signed Memoranda of Understanding (MoUs). The Commission has signed MoUs with most BRICS countries in recent years and has engaged in technical cooperation with these countries to varying degrees. The Commission's technical cooperation activities with the Chinese competition authorities is particularly noteworthy and continued throughout 2015 under the cooperation programme (EUCTP II ). On enforcement, on 15 October the Ministry of Commerce of the People's Republic of China and the Commission signed a Practical Guidance for Cooperation on Reviewing Merger Cases with a view to making cooperation on merger review more efficient. Finally, the programme for technical cooperation with the Indian competition authorities, CITD , continued and will run until 2018. 2. Enlargement The Commission's main policy objective in the accession negotiations with candidate countries, in addition to fostering a competition culture, is to further help candidate countries and potential candidate countries to build up a proper legislative framework, 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. The opening benchmarks for negotiations of the competition chapter with Serbia are identified in the 2015 Serbia Report . The Stabilisation and Association Agreement with Bosnia and Herzegovina entered into force on 1 June. The European Union concluded a Stabilisation and Association Agreement with Kosovo in October 2015, The agreement is expected to enter into force in the first half of 2016 after ratification by the European Parliament. 3. Multilateral cooperation The Commission also continued its active engagement in competition-related international fora such as the Competition Committee of the OECD, the International Competition Network (ICN), the World Bank and UNCTAD. Three major work streams of the OECD to which the Commission contributed in 2015 were ex post evaluation, competitive neutrality and disruptive innovation. On ex post evaluation, the Commission contributed to the drafting of a practical OECD Guide. Also, at the particular initiative of the Commission, the OECD organised a hearing and roundtable discussion on different aspects of competitive neutrality. This discussion resulted in an OECD advocacy document, informing other policy communities how competition law can level the competitive field and serve other policies, and in an inventory on competitive neutrality frameworks and provisions under national law. On disruptive innovation, the Commission contributed to three dedicated OECD sessions addressing the enforcement and specific sectorial aspects of this topic. In 2015 the Commission continued co-chairing the Mergers Working Group of ICN and one of the sub-groups of the Cartel Working Group. It also organised a Merger Working Group workshop which took place in Brussels (24-25 September) and which was used to road-test the Merger Working Group's Practical Guide for International Merger Enforcement Cooperation, adopted in May, for which the Commission was the project leader . As co-chair of the ICN Cartel Working Group's Subgroup I on Legislation, the Commission contributed to developing a Catalogue on investigative powers and the organisation of several webinars on different aspects of anti-cartel enforcement. The Commission participated in the Inaugural Conference on Competition Policy, Shared Prosperity and Inclusive Growth organised by the World Bank in partnership with the OECD. The paper it presented illustrated the redistributive effects of competition policy in favour of poorer households. The same issue was discussed at the OECD Global Competition Forum held later in the year. The Commission also participated in the seventh UNCTAD Review Conference on competition in Geneva in July 2015. The conference included discussion of the benefits and the role of competition for consumers in the pharmaceutical sector and the role of international cooperation in merger cases as a tool for effective enforcement of competition law. The Commission submitted written contributions to both discussions.





II.SECTORAL OVERVIEW This section provides an overview of policy developments and enforcement activities in a number of selected sectors that the Commission particularly focused on in 2015. These were energy and environment, ICT and media, financial services, tax planning practices, basic industries and manufacturing, pharmaceutical and health services and transport and postal services. 1. Energy & environment Overview of key challenges in the sector On 25 February the Commission published a new energy policy framework entitled "the Energy Union framework strategy" . The strategy addresses three long-standing challenges in the energy sector: security of supply, sustainability and competitiveness. To address these challenges, the Energy Union Strategy focuses on five mutually supportive dimensions: energy security, solidarity and trust; the internal energy market; energy efficiency as a contribution to the moderation of energy demand; decarbonisation of the economy and; research, innovation and competitiveness. The European Council endorsed this framework in its conclusions of 19-20 March . Key figures to illustrate the challenges to reach a low-carbon, secure and competitive EU energy system The EU is the largest energy importer in the world, importing 53 % of its energy, at an annual cost of around EUR 400 billion. A few Member States are dependent on one single external supplier for all their gas imports.Almost half of the Member States do not meet the EU's minimum interconnection target for at least 10 % of installed electricity production capacity to be able to "cross borders". An appropriately interconnected European energy grid could save consumers up to EUR 40 billion a year. Over EUR 1 trillion needs to be invested into the EU energy sector by 2020 alone in order to achieve the EU climate and energy targets. Wholesale electricity prices in Europe are 30 % higher and wholesale gas prices over 100 % higher than in the United States. By 2030, the EU aims to cut greenhouse gas emissions by at least 40 % compared to 1990, boost renewable energy to achieve the target of at least 27 % of renewables in its energy mix, and improve energy efficiency by at least 27 %. Contribution of EU competition policy to tackling the challenges The main challenges in 2015 continued to be high energy prices, the slow pace of investment in the energy sector and security of supply concerns stemming from i) lack of competition; and ii) insufficient diversification of gas supplies in eastern Europe. In 2015, EU competition policy contributed to tackling those challenges in several ways. Antitrust and mergers enforcement contributed by lifting obstacles to competition and barriers to trade between Member States and by ensuring that investments in the energy sector do not hamper competition. Improving competitiveness across the energy sector Competition enforcement and advocacy play a key role in making the internal energy market work. Competition enforcement leads to opening markets, creating a level playing field between competitors and ultimately promoting investment and innovation. Competition enforcement sanctions collusion and abuses of dominant positions, ensures that mergers do not hamper effective competition and creates a framework for investment that avoids distortions and ensures the efficient allocation of public resources. In 2015, antitrust enforcement actions have challenged practices that partition the internal markets and practices that prevent new entrants from accessing the market. These behaviours lead to higher energy prices. On 10 December, the Commission accepted the commitments offered by the Bulgarian Energy Holding (BEH) to solve competition concerns in the wholesale electricity markets in Bulgaria. The Commission was concerned that BEH had been selling electricity to traders using contracts which prohibited them from reselling the electricity outside Bulgaria. As a result BEH was hindering the resale of electricity and abusing its dominance by imposing territorial restrictions on traders. BEH has committed to solving these concerns by setting up an independent and liquid power exchange in Bulgaria through which electricity can be traded anonymously, with no possibility of checking where it is resold.

On 22 October, the Commission sent a Letter of Formal Notice to France setting out its concerns that France may be in breach of EU antitrust rules by having granted to state-owned Electricité de France (EDF) most of the country's concessions for exploiting hydropower. The Commission is concerned that granting most of the country's hydropower concessions to EDF at preferential financial conditions, without a tendering procedure and for very long periods has maintained or strengthened EDF's dominance in the French electricity markets possibly counter to Article 106 TFEU in conjunction with Article 102 TFEU. A key principle underlying the Commission's State aid policy is that public support should result in a positive balance between the objectives achieved and the potentitial negative effects of State intervention on the European energy market. In this context the Commission pays special attention to any market distortions that may arise as a result of public financing, such as the crowding out of investment, negative effects on upstream or downstream markets and excessive profits which may lead to strengthened market posititions, deterrence of new entrants and ultimately market foreclosure. To ensure that such market distortions are avoided the Commission launched two formal investigation procedures– the first into public measures taken by the United Kingdom in favour of the Lynemouth power plant and the second into the project to build the new Paks II nuclear power plant in Hungary. Contributing to a low-carbon economy The EU is committed to reducing by at least 40 % its greenhouse gas emissions compared with 1990. The EU has also set a target that by 2030 renewable energy will account for at least 27 % of the energy consumed in the EU. This will require significant investment and the progressive integration of renewables into a market that promotes competitive renewables and drives innovation. The rules passed in July 2014 (Guidelines on State aid for environmental protection and energy) require renewable electricity producers to sell the electricity directly on the market. In addition, Member States may grant a premium to compensate for the extra costs of those technologies that are not yet able to compete with conventional generation technologies. Furthermore, renewable electricity producers will be subject to standard balancing responsibilities and production should not be incentivised when wholesale prices turn negative. The Commission approved several support schemes which follow already these market-based assessment criteria. In 2015 the Commission adopted a number of decisions aimed at incentivising investment in renewable energy sources while applying the requirements for a market-based approach to the selection of beneficiaries and the form of aid. Among the support measures approved in 2015 for renewable generation the ones that stand out are the aid to 20 individual offshore wind farms in Germany, the support scheme to renewable energy sources in Croatia and the amendments to the Romanian green certificates support system for promoting renewable electricity . The Commission strives to ensure that public support is granted in a way that fosters investments in new and innovative technologies that will not only make the European energy sector more competitive but will also spur research and innovation in clean and sustainable generation. During 2015, the Commission adopted two decisions on support measures aimed at developing ocean energy and offshore power generation technologies in experimental or pre-commercial stage . The new Guidelines on State aid for environmental protection and energy 2014-2020 als