EUROPEAN COMMISSION Brussels, 7.7.2021 SWD(2021) 177 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 2020 {COM(2021) 373 final}



Table of Contents INTRODUCTION I. LEGISLATION AND POLICY DEVELOPMENTS 1. State aid control 1.1 Temporary State aid Framework to mitigate the effects of the COVID-19 pandemic 1.2 Preparing for the exit from the crisis – Recovery and Resilience Facility (RRF) 1.3 Outcome of the State Aid Fitness Check 1.4 Aid for horizontal objectives 1.5 Monitoring, recovery and cooperation with national courts 1.6 Significant judgments by the European Union Courts in the State aid area 1.7 Audit by the European Court of Auditors (ECA) on the Commission’s control of State aid to financial institutions 2. Antitrust and cartels 2.1 Review of antitrust rules and guidance 2.2 Important judgments by the European Union Courts 2.3 The fight against cartels remains a top priority 2.4 Cooperation within the European Competition Network and with national courts 2.5 Audit by the European Court of Auditors on antitrust 3. Merger control

3.1 Recent enforcement trends 3.2 The evaluation of selected procedural and jurisdictional aspects of EU merger control 3.3 Market definition notice 3.4 Significant judgments by EU courts in merger control 3.5 Audit by the European Court of Auditors on merger control 4. Developing the international dimension of EU competition policy 4.1 Control of foreign subsidies – a new policy initiative to strengthen the Commission toolbox 4.2 Multilateral relations 5. External Communication 6. The Single Market Programme II. SECTORAL OVERVIEW 1. Energy & environment 2. Information and Communication Technologies and media 3. Financial services 4. Taxation and State aid 5. Basic industries and manufacturing 6. Agri-food industry 7. Pharmaceutical and health services sectors 8. Transport, tourism, and postal services



INTRODUCTION The Report on Competition Policy 2020 and this Staff Working Document provide the first account of the competition policy developments under the Commission led by President von der Leyen. Covering the developments in EU competition policy in 2020, it also is the 50th year the Commission submits such a report. When the EU now faces one of its biggest crises, a robust competition policy in the EU is more important than ever. EU competition policy and enforcement preserves the EU single market, benefits consumers, businesses and society alike. It also projects competition values in the efforts to launch a pathway to recovery from the current health and economic crisis to achieve a greener, more digital and more resilient EU economy, in line with the Commission’s broader agenda. Throughout 2020, EU competition policy contributed to the Commission’s efforts to respond to and overcome the health and economic crisis due to COVID-19. The Commission adjusted the State aid framework and swiftly adopted a number of State aid decisions in various sectors to help Member States alleviate the economic effects of the pandemic, while limiting negative effects on the internal market. In antitrust, the Commission provided to companies guidance and an ad hoc comfort letter, setting out the main criteria when assessing cooperation projects in essential products and services during the pandemic. In addition, the Commission closely cooperated and coordinated COVID-19 related competition issues in the European Competition Network (ECN). Finally, in the area of merger control, the Commission took measures to ensure business continuity for companies notifying transactions, while ensuring compliance with legal obligations, and continued to safeguard the implementation of the EU merger rules. In addition, the Commission took major steps in 2020 to launch important new policy initiatives to ensure that the competition rules remain fit for purpose fully able to deal with challenges, such as structural problems in digital markets and foreign subsidies, which could distort competition in EU markets. The Commission also engaged with stakeholders to reflect how competition rules could better support the green transition and started a process to assess whether there is a need for measures to ensure EU competition law does not stand in the way of collective bargaining for self-employed in need of protection. The Commission further continued to advance on its significant policy review agenda encompassing a large number of its key block exemption regulations, guidelines and notices. EU competition policy enforcement in 2020 targeted a wide range of economic sectors in the EU. It was above all the demonstrated flexibility of the State aid instrument that came to the forefront to support the efforts of the EU and the Member States to alleviate the consequences of the pandemic. The present Staff Working Document is composed of two parts. The first part presents the main legislative and policy developments in 2020 across the three competition instruments: State aid, antitrust (including cartels) and mergers. In the second part, specific enforcement actions are detailed in a sectoral overview. I.LEGISLATION AND POLICY DEVELOPMENTS 1.State aid control 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, that aid does not restrict competition but addresses market failures for the benefit of society as a whole. In addition to this, the Commission acts to prevent and recover State aid which is incompatible with the internal market. The Commission enforces State aid rules to make sure that the support Member State governments grant to companies does not give them an unfair advantage in the Single Market. In 2020, State aid policy played an important role in the crisis response to stabilise the economy. The Temporary Framework adopted at the beginning of the crisis, and amended several times, set out the conditions the Commission would apply to declare aid compatible. Well-targeted public support helped counter the damage inflicted on healthy undertakings and to preserve the continuity of economic activity. To prepare the exit from the crisis towards a sustainable and resilient recovery of the EU economy with focus on green and digital transition, DG Competition together with other Commission services assisted Member States preparing their Recovery and Resilience Plans (RRPs). However, year 2020 was not limited to crisis response and recovery. The extensive review of the State aid rules and enforcement work continued across sectors. A new policy initiative was started to consider the impact of subsidies granted by non-EU governments to companies in the EU, as these fall outside EU State aid control. To launch a debate on new tools to address this regulatory gap, the Commission adopted a White Paper on foreign subsidies in June 2020. An extensive consultation of stakeholders was carried out in 2020. 1.1Temporary State aid Framework to mitigate the effects of the COVID-19 pandemic

The COVID-19 outbreak has had significant negative repercussions on the economy of Member States. The various containment measures adopted by Member States, such as social distancing measures, travel restrictions, quarantines and lockdowns have affected undertakings and their employees in all sectors. Well-targeted public support has been necessary to ensure that sufficient liquidity remains available in the markets, to counter the damage inflicted on healthy undertakings and to preserve the continuity of economic activity during and after the COVID-19 outbreak. On 13 March 2020, the Commission set out in its Communication on a coordinated economic response to the COVID-19 outbreak the various options available to Member States outside the scope of EU State aid control and which they may put in place without the involvement of the Commission. These include measures applicable to all undertakings regarding wage subsidies, suspension of payments of corporate and value added taxes or social welfare contributions, or financial support directly to consumers for cancelled services or tickets not reimbursed by the concerned operators. The in-built flexibility of the EU State aid rules enable Member States to take swift and effective action to support citizens and undertakings, in particular SMEs, facing economic difficulties due to the COVID-19 outbreak. At the same time, they ensure that State aid is effective in reaching those companies in need and that harmful subsidy races are avoided. Member States may design support measures in line with de minimis Regulations or the Block Exemption Regulations without the involvement of the Commission. In addition, on the basis of Article 107(3)(c) TFEU and as further specified in the Rescue and Restructuring State aid Guidelines, Member States can notify to the Commission aid schemes to meet acute liquidity needs and support undertakings facing financial difficulties, also due to or aggravated by the COVID-19 outbreak. Furthermore, on the basis of Article 107(2)(b) TFEU Member States can also compensate undertakings that have been particularly hit by the outbreak (e.g. in the sectors of transport, tourism, culture, hospitality and retail) and/or organisers of cancelled events for damages suffered due to and directly caused by the outbreak. Member States can notify such damage compensation measures and the Commission will assess them directly under Article 107(2)(b) TFEU. 1.1.1.The Temporary Framework: adoption, expansion and prolongation To complement the above-mentioned possibilities, on 19 March 2020, the Commission adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy. The Temporary Framework was initially established with an expiry date of 31 December 2020. It provides for a number of aid measures that the Commission considers compatible under Article 107(3)(b) TFEU, such as limited amount of aid, selective tax advantages and State guarantees for loans. The aim of the Temporary Framework is to allow Member States to tackle the difficulties undertakings are currently encountering whilst maintaining the integrity of the EU internal market and ensuring a level playing field. The Commission set out in the Temporary Framework the compatibility conditions it will apply in principle to the aid granted by Member States under Article 107(3)(b) TFEU. Pursuant to that article the Commission may declare compatible with the internal market aid ‘to remedy a serious disturbance in the economy of a Member State’. Member States must therefore show that the measures notified to the Commission under the Temporary Framework are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned and that all the conditions of that framework are fully respected. The Temporary Framework includes certain requirements related to the green and digital transformation. Indeed, large undertakings that received recapitalisation aid must report on how the aid received supports their activities in line with EU objectives and national obligations linked to the green and digital transformation, including the EU objective of climate neutrality by 2050. The Commission has amended the Temporary Framework several times to adapt the State aid framework to the various needs of the EU economy that arise in the context of the COVID-19 outbreak. In particular: ·On 3 April 2020, the Commission amended the Temporary Framework to enable Member States to accelerate research, testing and production of COVID-19 relevant products. to protect jobs and to further support the economy, among other things, through tax payments deferrals and wage subsidies for employees. ·On 8 May 2020, the Commission adopted a second amendment of the Temporary Framework introducing further exemptions for recapitalisation and subordinated debt measures to further support the economy in the context of the COVID-19 outbreak applicable until the end of June 2021. ·On 29 June 2020, the Commission adopted a third amendment of the Temporary Framework enabling Member States to further support micro, small and start-up companies and incentivise private investments. ·On 13 October 2020, the Commission prolonged the Temporary Framework for six months until 30 June 2021 (until 30 September 2021 for recapitalisations) and introduced a new measure enabling Member States to support companies facing a decline in turnover of at least 30% compared to 2019 due to the outbreak. The new measure contributes to part of the beneficiaries’ fixed costs that are not covered by their revenues, up to a maximum amount of EUR 3 million per undertaking. ·On 28 January 2021, the Commission prolonged all measures set out in the Temporary Framework, including recapitalisation measures, until 31 December 2021, and expanded the scope of the Temporary Framework by increasing the ceilings set out in it and by allowing the conversion of certain repayable instruments into direct grants until the end of 2021. The Commission has put in place all necessary procedural facilities to enable a swift approval process. Where necessary, decisions are taken within days of receiving a complete State aid notification from Member States, and the Commission assists Member States with any queries. 1.1.2.Measures authorised in the context of the COVID-19 outbreak In 2020, the Commission took 408 decisions approving 497 national measures notified by 27 Member States and the United Kingdom. On this basis, the amount of around EUR 3.08 trillion of total State aid approved so far can be estimated. There are a number of important caveats: for some measures under the Temporary Framework, it is not necessary to indicate an amount. Therefore, the amounts included are best estimates based on amounts approved in State aid decisions and other available statistics, e.g. mentioned in public communication by national authorities, and in official information communicated by the national authorities. All State aid approved was necessary and proportionate to support businesses and remedy the serious disturbance to the European economy due to the Coronavirus outbreak. At the same time, there were major differences in the amounts approved across Member States, which appears linked to the fiscal space they have as well as the respective size of their economies. More specifically, around 51.5% of State aid approved was notified by Germany. Italy notified measures that represent around 14.7% of the entire amount of State aid approved, while the aid notified by France represented 13.9% of this amount. The aid notified by Spain represented 4.8% of the entire amount of State aid approved, while the aid notified by Poland and Belgium corresponded to around 2% and 1.8% respectively. Aid notified by other Member States is estimated to be between 0.01% and 1.5% of the total estimated amount of EUR 3.08 trillion.

Based on the replies of all 27 Member States to two consecutive surveys carried out by the European Commission, in the period between mid-March and end of December 2020, EUR 2.96 trillion in aid approved by then, around 544 billion euros was actually spent. In absolute terms, according to the preliminary data sent by Member States, France has granted more than a fourth of the total aid paid out (EUR 155.36 billion), followed by Italy with 19.8% of the total aid paid out (EUR 107.9 billion), Germany with 19.1% of the total aid paid out (EUR 104.25 billion) and Spain at 16.7% (EUR 90.8 billion). In relative terms, according to the preliminary data sent by Member States, Spain is the country that has disbursed the most as compared to its own GDP (7.3%), followed by France (6.4%), Italy (6.0%), Greece (4.39%), Malta (3.9%), Hungary (3.7%), Portugal (3.6%), Poland (3.6%) and Cyprus (3.5%). At EU 27 level, the Coronavirus related State aid spending corresponds to around 3.9% of EU GDP. A number of these aid measures have been co-financed by cohesion policy, notably thanks to the two emergency response packages proposed by the Commission, and approved by the European Parliament and the European Council in 2020: the Coronavirus Response Investment Initiative (CRII) and the Coronavirus Response Investment Initiative Plus (CRII+). Beyond aid notified under the Temporary Framework, State aid considered less distortive, for example aid based on the de minimis regulations or certain block exemption regulations , can be adopted without prior approval of the Commission. In 2020, these included measures such as wage subsidies, payment suspensions of corporate taxes and VAT and social welfare contributions. Moreover, the Commission approved under Article 107(3)(b) TFEU measures adopted by Member States for undertakings particularly hit by the outbreak (for example in transport, tourism, culture, hospitality and retail sectors) to compensate for damages incurred because of the crisis (See further the Annex 2). 1.2Preparing for the exit from the crisis – Recovery and Resilience Facility (RRF) The Commission supports the implementation of the first pillar of the Next Generation EU, the Recovery and Resilience Facility (RRF) to facilitate a sustainable and resilient recovery of the EU economy with focus on green and digital transition. With funds of EUR 672.5 billion, the RRF accounts for the largest part by far of the EUR 750 billion NextGenerationEU recovery package. The RRF will support public investments and reforms in the Member States, helping them to address the economic and social impact of the COVID-19 pandemic as well as to facilitate the green and digital transitions. To receive grants and low-interest loans under the RRF, Member States must submit Recovery and Resilience Plans (RRPs) to be assessed by the Commission before disbursement of any funds. In 2020, the Commission assisted Member States in the preparation of their RRPs in compliance with competition rules and in particular with the State aid rules. To this end, the Commission published a set of guiding templates in December 2020 and updated them in January 2021. 1.3Outcome of the State Aid Fitness Check In 2020, the Commission concluded the “ fitness check ” of the State aid rules adopted as part of the State Aid Modernisation (‘SAM’), together with the Railway Guidelines and the Short-term export credit Communication (‘STEC’), which were not part of the State Aid Modernisation. The Commission looked into whether the rules are fit for purpose, also in view of the European Green Deal, Industrial Strategy and Digital Strategy. The Fitness check, the results of which were published on 30 October 2020, suggests that, overall, the SAM architecture and State aid rules which were reformed under the SAM initiative, are broadly fit for purpose. There is no need to reform the State aid framework of SAM as such. However, the individual sets of rules need revision and/or update, including clarifications, further streamlining and simplification, as well as adjustments to reflect recent legislative developments, current priorities, as well as market and technology developments. The rules also need to be aligned with future challenges and the Commission priorities. This is particularly important as State aid can, and should, contribute to the Green Deal as well as the Digital and Industrial Strategies. The short-term export-credit insurance Communication (STEC) was adopted in 2013 with the purpose of ensuring that State aid does not distort competition in the internal market among private and public or publicly-supported export-credit insurers as well as among exporters in different Member States. In the fitness check, STEC rules were found as fit for purpose. In 2020, STEC was prolonged until the end of 2021 and revised to provide for more flexibility in response to the COVID-19 outbreak. Under the revised rules, all commercial and political risks associated with exports to the countries listed in the Annex to the Communication (including all Member States) are considered as temporarily non-marketable until 31 December 2021, in line with the duration of the Temporary Framework. 1.4Aid for horizontal objectives Aid for horizontal objectives in the common interest generally accounts for the overwhelming majority of all aid. As illustrated by the graphs below, much of horizontal aid falls under the General Block Exemption Regulation (GBER) . Already now, the GBER allows Member States to implement a wide range of public support measures in areas such as research and development, environmental protection or support to SMEs. GBER State aid expenditure by objective in the EU, excluding aid for agriculture, fisheries and railways To ensure that national and EU funds can be combined seamlessly under the proposed Multiannual Financial Framework for 2021-2027 without undermining competition in the internal market, the objective is to improve the interplay between EU funding rules and State aid rules and streamline State aid control of national funds, including EU shared management funds, combined with funds from EU programmes managed centrally by the Commission. In 2020, the Commission continued to assess evaluations of the impact of large national aid schemes involving horizontal objectives. 1.4.1.Evaluation of aid schemes The State Aid Modernisation (SAM) introduced the requirement to evaluate aid schemes. The aim is to gather the necessary evidence to better identify the impact, positive and negative, of the aid and to provide input for future policy-making by the Member States and the Commission. Since 1 July 2014, evaluation is required for large GBER schemes in certain aid categories as well as for a selection of notified schemes under the new generation of State aid guidelines . By the end of 2020, the Commission had approved Member States’ evaluation plans covering 54 State aid schemes. Thirteen additional schemes are currently under analysis, covering a total of 14 Member States and the United Kingdom. Most of these decisions concerned either large regional aid projects or Research, Development and Innovation (RDI) aid schemes under GBER or notified energy and broadband schemes. In total, these schemes account for over EUR 57 billion in annual State aid budget. By the end of 2019, the Member States had delivered to the Commission 21 interim and 24 final evaluation reports. They were assessed by the Commission services and considered to be of average to good quality . In 2020, the Commission also completed a fact-finding study to assess the implementation of the evaluation requirement as foreseen by the GBER and relevant guidelines. The results of the study indicate that State aid evaluation works already quite well and does not need drastic changes in the future. The study offers suggestions for the development of strategies to support the development of evaluation capacity among Member States, for broadening the possible methodological approaches maintaining high quality standards, and for fostering a wider use of the evaluation results.

The Commission continued to accompany the implementation of the evaluation requirement by publishing policy briefs and by organising dedicated workshops with Member States' representatives and evaluation experts. The current priority of the Commission is to comprehensively assess evaluation reports, both intermediate and final ones, in order to: (i) give appropriate feedback to Member States, (ii) make sure that results are used for better policy-making, and (iii) provide evidence to assist Member States when reflecting on future legal developments. 1.4.2.Aid for research, development and innovation (RDI) RDI spending in the EU has traditionally been lagging behind major global competitors, mainly due to lower levels of private investment. To achieve the greatest possible impact with the available budgets, RDI aid measures should not replace or crowd out private financing. On the contrary, efforts should be directed at encouraging more private investments. RDI aid can help where market forces alone do not deliver necessary investments in promising but high-risk innovative projects. Therefore, the State aid rules for RDI help ensuring that public funding goes to projects that otherwise would not be realised due to market failures. In particular, this includes projects that go far beyond the state of the art, and which bring innovative products or services (including digitalisation) to the market and ultimately to consumers. The RDI State aid rules provide for flexible and simple criteria for assessing the compatibility of State aid and thereby facilitate the implementation of support for RDI projects by Member States. In 2020, the Commission continued to ensure that aid schemes and individual measures notified or pre-notified under the RDI State aid rules were well targeted to projects enabling ground-breaking research and innovation activities. Its State aid control activities covered a variety of sectors including the aeronautic, as well as research and technology infrastructures, innovation clusters, high power computing, with a focus on support for the development of new clean technologies supporting Europe’s green transition. In a significant number of cases the Commission cooperated with Member States with a view to enabling them to adjust envisaged RDI measures and bring them in line with the GBER. This way, aid measures could be granted swiftly without having to be notified to the Commission, thereby speeding up public support for RDI. It is noteworthy that following the State Aid Modernisation in 2014, total RDI State aid expenditure under the GBER as well as the RDI Framework rose from EUR 8.9 billion in 2014 to EUR 11.27 billion in 2018, with EUR 9.94 billion disbursed in 2018 under the GBER alone. Following the second public consultation, in 2020, the Commission continued work on its proposals for RDI-related amendments to the GBER to facilitate and simplify the way in which centrally managed funding from Horizon Europe can be combined or, in cases of projects having received a Seal of Excellence, in particular by SMEs, be substituted by national funding. The proposed amendments aim to align certain aspects of State aid rules on the one hand and Horizon Europe rules on the other. This will allow preventing potential discrepancies causing delays or difficulties in the roll-out of RDI funding under the next Multiannual Financial Framework (MFF). Finally, following the Fitness check of the State aid rules for RDI (the results of which were published in October 2020 in a Commission Staff Working Document which included an independent evidence-based evaluation on the implementation of the 2014 State aid rules for RDI, as well as of their effects on RDI investments and competition), in 2020, the Commission continued work on revising the State aid for RDI. The objective is to ensure that the revised State aid rules in the area of RDI are fit for purpose taking into account the market evolution, in particular the technological development, as well as the specific objectives of the twin transition to a green and digital economy, and the EU research and innovation policy. 1.4.3.Aid enabling Member States jointly to support important projects of common European interest The Commission assesses proposed State aid for the execution of important projects of common European interest (IPCEI) based on the compatibility criteria set in a dedicated Communication adopted in 2014. In order to be deemed compatible under these rules, eligible projects must address a market failure or other important systemic failures and (I)significantly contribute to strategic EU objectives; (II)involve several Member States; (III)involve private financing by the beneficiaries; (IV)generate positive spill over effects across the EU that limit distortions to competition. Depending on the type of project supported, additional specific conditions apply: a)RDI activities must be of a major innovative nature or constitute an important added value in terms of research and innovation and must go beyond the state-of-the-art; b)First industrial deployment activities must allow for the development of a new product or service with high research and innovation content or the deployment of a fundamentally innovative production process, excluding incremental development; c)Projects in the areas of energy, transport or the environment must either be of great importance for the environmental, energy, including security of energy supply, or transport strategy of the Union or contribute significantly to the internal market. In line with the Commission’s battery alliance initiative, throughout 2020 intensive discussions took place between several Member States and the Commission for a second IPCEI on the battery value chain, following the first IPCEI which was approved in December 2019. In December 2020, twelve Member States jointly notified the second IPCEI on batteries for e-mobility and energy storage. This is consistent with the Commission’s policies to shift from the use of environmentally harmful fossil fuels to alternative fuel technologies and the twin transition of the EU economy under the Green Deal and the Digital Strategy. The Commission approved the second IPCEI on batteries on 26 January 2021. In addition, in line with the recommendations of the strategic forum for IPCEI, discussions with Member States and industry for possible new IPCEIs in the areas of hydrogen technologies and systems, low carbon industry and microelectronics intensified in 2020. Concrete projects in these areas are expected to emerge in the course of 2021. In 2020, the Commission finalised the evaluation of the IPCEI Communication in the context of the fitness check of the State aid modernisation package. The results showed that the IPCEI rules are broadly fit for purpose but that some targeted modifications may be warranted notably in light of the practical experience gained from IPCEI cases (on microelectronics and batteries) and to ensure that the IPCEI rules fully support the Commission priorities, in particular the European Green Deal and the Digital Strategy. The Commission prolonged the rules until the end of 2021 and plans a revision of the IPCEI Communication in 2021.

1.4.4.Regional aid Regional aid is an important instrument in the EU toolbox to promote economic and social cohesion. The regional aid framework 2014-2020 was due to expire at the end of 2020. The Commission extended, however, the regional aid provisions in the GBER for three years and the Regional Aid Guidelines (RAG) by one year until the end of 2021 . Related to that extension, the Commission also adopted a one year prolongation of its regional aid map for each Member State. In 2020, the Commission finalised the evaluation of the regional aid framework in the context of the State aid fitness check. The results showed that the rules worked well in principle but required some adjustments, notably in light of the new Commission priorities. Based on this, the Commission published in July 2020 a draft text of the new RAG for stakeholder comments. The new RAG are expected to be adopted in the first half of 2021 and will apply from 2022. In 2020, the Commission also adopted several regional aid decisions, authorising regional investment aid for the large investment project of Toray for a new battery separator film plant in Hungary and also approving the amendment of an evaluation plan of a large block exempted French scheme. The Commission further initiated a formal investigation procedure in relation to the large investment project of the chemical company LG Chem Group, expanding its battery cell production of electric vehicles in Poland. Finally, the Commission decided that the Madeira Free Zone scheme had not been implemented in line with earlier Commission decisions and Portugal will have to recover aid from companies that did not create real economic activity and jobs in Madeira. In 2020, the Commission continued advising Member States’ authorities on how to interpret and implement the regional aid provisions of the GBER, thus helping them to make a success of the reforms introduced under the 2014 State aid modernisation to the benefit of both consumers and businesses. 1.4.5.Aid to risk finance The Risk Finance Guidelines, which were adopted in 2014 as part of the State Aid Modernisation package, set out the conditions under which aid to promote risk finance investments may be considered compatible with the internal market. They are due to expire in 2021, following a prolongation adopted by the Commission on 2 July 2020 . Their recent evaluation in the framework of the comprehensive State aid fitness check in 2019-2020 showed that the rules are broadly fit for purpose but that they could be updated to reflect regulatory, technological and market developments. On 17 December 2020, the Commission announced the revision of the Risk Finance Guidelines to render the rules more effective and efficient. 1.4.6.Infrastructure support measures The Commission approved several support measures for infrastructure projects. On 20 March 2020, the Commission concluded that the public financing model of the Fehmarn Belt coast-to-coast infrastructure between Denmark and Germany is in line with EU State aid rules. The Commission also approved two measures to encourage the shift from road to rail: on 17 February 2020 the Commission approved an aid scheme, as well as individual aid measures, to encourage the shift of freight transport in the Land of Saxony-Anhalt in Germany and on 31 March 2020, the Commission approved State aid to Treeden Group for the construction of a transhipment terminal in Poland. Finally, on 7 August 2020 the Commission approved a Croatian plan to prolong the Istrian Y motorway concession agreement between Croatia and the company Bina-Istra. 1.5Monitoring, recovery and cooperation with national courts 1.5.1.Increased monitoring of existing State aid to ensure competition on fair and equal terms Over the years, the architecture of State aid control has evolved. Today, a substantial part of aid is granted under block-exempted schemes which are not examined by the Commission before entering into force. Pursuant to the most recent figures available, approximately 95% of the new State aid measures adopted in 2018 are covered by GBER and, among all the State aid measures active in the same year, 86% are GBER measures. These figures show that it is essential for the Commission to verify that Member States apply State aid rules for the schemes correctly and that they only grant aid when all required conditions are met. Therefore, monitoring is the counterweight to the State aid architecture based on ‘self-assessment’ by Member States resulting from the exemption from the notification obligation (e.g. GBER) or the approval by the Commission of State aid schemes. The Commission introduced monitoring in 2006 as a regular, ex post, sample-based control of existing aid schemes, which comprises a monitoring sample of approximately 50 schemes per year. The goals of monitoring are (i) to identify and seek correcting of irregularities by Member States concerned, (ii) to expand the awareness of State aid rules among national granting authorities, (iii) to contribute to improving State aid rules, (iv) to detect errors in reporting and (v) to act as a deterrence. In the context of the COVID-19 crisis, all Member States have focussed their administrative resources on fighting the pandemic. For this reason, unlike in previous years in which the monitoring cycle was run on a yearly basis, the 2020 monitoring cycle covers two years, 2020 and 2021. It monitors 19 Member States, all main types of aid both approved and block exempted, the Member States’ transparency obligations, and puts an emphasis on the criterion “undertakings in difficulty”. The Commission follows up on irregularities and uses the means at its disposal to address the competition distortions that these irregularities have caused. In some cases, Member States offer to voluntarily redress the problems detected, for example to amend national legislation or to recover excess aid granted. In other cases, the Commission may need to take formal action. 1.5.2.Restoring competition by recovering of State aid granted in breach of the rules To ensure the integrity of the internal market, Member States must take all necessary measures to recover unlawful and incompatible aid. The purpose of recovery is to restore the situation that existed on the internal market prior to the granting of the aid; this is necessary to ensure that competition in the internal market can take place on fair and equal terms. In 2020, the Commission made further progress to ensure that recovery decisions are enforced effectively and immediately. By 31 December 2020, the sum of unlawful and incompatible aid recovered from beneficiaries amounted to EUR 28.4 billion. At the same point in time, the outstanding amount pending recovery was EUR 6.7 billion. In 2020, the Commission adopted six new recovery decisions and an amount of EUR 126 million was recovered by the Member States. As of the end of December, the Commission had 52 pending recovery cases. Recovery decisions adopted in 2020 6 Amount recovered in 2020 (EUR million) 126 Pending recovery cases on 31 December 2020 52

As guardian of the Treaties, the Commission may use all legal means at its disposal to ensure that Member States implement their recovery obligations, including launching infringement procedures. In 2020, the Commission launched one action under Article 108(2) TFEU and an additional action under Article 260(2) TFEU (both instances concerning Greece). 1.5.3.Cooperation with national courts to ensure the effectiveness of State aid rules The Commission continued its cooperation with national courts and tribunals under Article 29 of the Procedural Regulation. This includes direct case-related assistance to national courts when they apply EU State aid law. The courts and tribunals can ask the Commission to provide case related information, or to provide an opinion on the application of State aid rules. The Commission may also submit amicus curiae observations at its own initiative. While the Commission received no requests for information in 2020, it received two requests for opinion from Belgian courts. The first request by Ondernemingsrechtbank Gent concerned the interpretation of a 2001 Commission decision proposing appropriate measures on the sale of industrial lands at a preferential rate. The second by Hof Van Beroep te Gent concerned an alleged State aid in the context of the sale of agricultural land. In 2020 the Commission intervened in recognition and enforcement proceedings before the U.S. District Court of the District of Columbia in two cases. To make its views publicly known, the Commission publishes its opinions and amicus curiae observations, as well as observations to others, e.g. arbitration courts, on its website. Following the publication of the study on the state of play of the enforcement of State aid rules by national courts on 30 July 2019 and based on the assessment of its main findings on the enforcement of State aid rules at national level, the Commission is currently revising the Communication on the Enforcement of State aid rules by national courts. In 2020 the Commission continued its advocacy efforts; it was actively involved in evaluating the training programmes for national judges and in assessing their needs and also provided training during workshops and conferences. 1.6Significant judgments by the European Union Courts in the State aid area The European Courts in 2020 brought clarifications on -the notion of aid, including on the (non) economic nature of certain activities, on State resources, on selective advantage and the market economy operator principle; -Services of General Economic Interest (SGEI), and on the compatibility assessment under Article107(3)(c) TFEU; as well as -procedural matters and recovery. In a judgment of 11 June 2020, Commission and Slovak Republic v Dôvera, the Court of Justice brought clarifications on the non-economic nature of compulsory health insurance systems. It considered that the existence of a certain degree of competition in the provision of healthcare services was not such as to call into question the social and solidarity-based nature of a compulsory health insurance system. The system was characterised by compulsory membership, an absence of direct link between the amount of the social security contributions and the benefits provided, the presence of a risk equalisation mechanism between insurers, and a State supervision. In this context, the presence of competition is secondary and not capable of changing the non-economic nature of the scheme. In the judgment Larko v Commission of 26 March 2020, the Court of Justice clarified the burden of proof in relation to the market economy operator principle (MEOP). The Court recalled that it is for the Member State to prove that the MEOP is applicable, by establishing unequivocally and on the basis of objective and verifiable evidence that the measure implemented falls to be ascribed to the State acting as a private operator. However, once it is established that the MEOP is applicable, it is for the Commission to prove the advantage, and to not only rely on a negative assumption of the existence of an advantage in the absence of other positive evidence. In the judgment of 22 September 2020, Austria v Commission (Hinkley Point C), the Court of Justice clarified certain aspects of the compatibility assessment under article 107(3)(c) TFEU. Under that Treaty provision the Commission must verify that two conditions are fulfilled to declare an aid compatible: the aid must facilitate the development of an economic activity, and the aid shall not adversely affect the trading conditions to an extent contrary to the common interest. When assessing the first condition the Commission identifies the economic activity that the aid aims at developing, but is not required to identify the relevant product market. When assessing the second condition, the Commission balances the positive and the negative effects of the aid; but when assessing the latter, it is only required to identify the negative effects of the aid on competition on the relevant product market and intra-EU trade. When adopting State aid guidelines, the Commission can also not unduly restrict the scope of Article 107(3)(c) TFEU by adding conditions which are not present in that Treaty provision. In C-212/19 Compagnie des pêches de Saint Malo, the Court of Justice declared a State aid decision invalid in the context of a reference for a preliminary ruling. The Court considered the questions admissible despite the fact that they were more than just interpretation questions and related to the validity of the decision. On substance, the Court clarified that in case of relief from social security contributions owed to the State by the employee but paid to the State by the employer (i.e. the undertaking), direct aid to the employer is excluded if there is an obligation on the undertaking to pass on that advantage to the employee. In such a case, the undertaking acts as a mere intermediary. In the judgment Kerkosand vs Commission of 9 September 2020 the General Court clarified that a Commission decision confirming that an aid measure fulfils the conditions of the GBER and is hence exempt from the notification requirement, is a no objection decision in the meaning of article 4(3) of Regulation 2015/1589. 1.7Audit by the European Court of Auditors (ECA) on the Commission’s control of State aid to financial institutions In October 2020, the European Court of Auditors (ECA) published the conclusions and recommendations related to its audit of the Commission’s control of State aid to EU financial institutions. The audit focused on the application of financial-sector State aid rules since August 2013 (when the Commission started to apply the 2013 Banking Communication) until the end of 2018. In its Special Report, ECA acknowledged that, overall, the EU has developed appropriate means and powers for the efficient control of State aid to banks and that the rules for the control of State aid to the financial sector were well drafted and clear. It also concluded that the Commission allocated the necessary resources and expertise to State aid enforcement in this sector and established a robust ethical framework. On the other hand, ECA was of the view that, in some areas, State aid enforcement in the financial sector could be improved. To that end, ECA recommended the Commission to conduct an evaluation of the existing rules after the current COVID-19 crisis and by 2023 at the latest, to work on document management and to encourage Member States to better respect best practices, and to improve performance management indicators.

The Commission strives to improve its enforcement action in the area of State aid, as it does in all other areas. Therefore, the Commission agreed to put forward a series of actions to follow up on ECA’s recommendations. For instance, the Commission will continue to work on the improvement of its internal processes and document management system to further increase efficiency. This process has already started. The Commission will also encourage Member States to respect the existing best practices on, for example, the length of pre-notification contacts. In addition, the Commission will revisit the existing performance indicators in its management reports to increase accuracy of the monitoring of its enforcement action in the relevant area. Finally, in the context of the ECA Special Report, the Commission also committed to carry out an evaluation of current financial-sector State aid rules. At the same time, the Commission has announced a review of the EU bank crisis management framework, i.e. the Bank Recovery and Resolution Directive and the Deposit Guarantee Scheme Directive. As a follow-up to the Eurogroup statement of 30 November 2020, the Commission continues its process towards reviewing its State aid framework for banks in the context of the review of the bank crisis management framework (the Bank Recovery Resolution Directive and the Deposit Guarantee Scheme Directive), using a holistic approach to ensure consistency in particular in relation to adequate burden sharing of shareholders and creditors to protect taxpayers, and the preservation of financial stability. 2.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. However, even if a horizontal or a vertical agreement could be viewed as restrictive 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, as any other undertaking in the market, are entitled to compete on the merits. However, Article 102 TFEU prohibits the abusive behaviour by dominant undertakings that, for example, directly or indirectly impose unfair purchase- or selling prices or other unfair trading conditions. Finally, Article 106 TFEU prevents Member States from enacting or maintaining in force measures contrary to the Treaty rules regarding public undertakings and undertakings to which Member States grant special or exclusive rights. Preserving market discipline to secure the functioning of the Single Market is essential especially in times of crisis. Effective enforcement of the EU competition rules is of vital importance to the digital transformation of the EU economy and a resilient recovery after the pandemic; antitrust enforcement can contribute in tearing down remaining barriers to the Single Market and eliminating restrictions in the development of clean technologies and the free flow of resources necessary for the circular economy and the Green Deal’s objectives. The present Staff Working Document highlights the recent antitrust and cartel decisions, while the graphs below give an overview of antitrust enforcement activity in the past ten years, including also decisions rejecting complaints. Alongside enforcement, reforms are also crucial to ensure competition policy is fully effective: the Commission advanced on its review agenda encompassing a large number of its key block exemption regulations, guidelines and notices as well as moved forward the work on a number of ongoing initiatives to ensure fair competition in the single market. Antitrust and cartel decisions 2011-2020 2. 2.1Review of antitrust rules and guidance Due to the COVID-19 outbreak, the Commission and the national competition authorities took action and provided guidance on antitrust rules and cooperation between companies in the context of the pandemic. In 2020, the Commission also advanced on its review of antitrust rules and guidance to ensure that they are fit for a changing market environment, including the accelerating digitalisation of the economy as well as a new initiative. The review also follows from the input provided by the three independent Special Advisers in their report of April 2019 on digitisation and competition law. 2.1.1.COVID-19 related guidance On 8 April 2020, the Commission adopted a “Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak”. The document lays down the main criteria that the Commission will use when assessing cooperation projects aimed at addressing a shortage of supply of essential products and services during the COVID-19 outbreak. The Temporary Framework is not sector specific, but refers to and builds on experience gained by the Commission in discussions with stakeholders in the health sector.

The Temporary Framework also introduced a new and temporary tool – so called ad hoc ‘comfort letters’ – that allows the Commission to exceptionally give not only swift guidance but also adequate certainty and comfort to individual initiatives. The Commission decided to add this new instrument, as an exception to the self-assessment rule, and in addition to the existing routes for providing guidance in specific situations, since these existing routes cannot address situations of extreme urgency due to their procedural requirements. This does not mean that the Commission has re-introduced a notification system or abandoned its discretion to decide how and when to give guidance. Self-assessment remains the rule, but the Commission is ready to engage and discuss and will ensure that its extensive general guidance reflects today’s needs and business realities. The Commission will decide on a case-by-case basis what the appropriate form of response to individual requests will be, based on e.g. the public interest, complexity, urgency and the risks that the companies will be exposed to. By maintaining its discretion to decide when and how to give guidance, the Commission can prioritise the investigations that require its action. On the same day it adopted the Temporary Framework, the Commission issued the first – and so far, the only – comfort letter, addressed to the European association of generic pharmaceutical manufacturers “Medicines for Europe”. The letter concerns a specific cooperation among pharmaceutical producers, targeting the risk of shortage of critical hospital medicines for the treatment of Coronavirus patients. The cooperation consists in modelling demand, identifying production capacity and existing stocks, adapting or reallocating production and stocks based on projected and actual demand and, potentially, addressing the distribution of COVID-19 medicines. The Commission concluded that this temporary cooperation did not raise competition concerns under Article 101 TFEU, provided that a number of conditions stipulated in the letter are satisfied. 2.1.2.Digital Markets Act As a centerpiece of the European Digital Strategy, presented by the Commission in February 2020, the Commission put forward two Digital Acts aimed at creating a safer digital space for all users where their fundamental rights are protected, as well as a level playing field to allow innovative digital businesses to grow within the Single Market and compete globally. In addition to a Digital Services Act (DSA), the Commission adopted, on 15 December 2020, a proposal for a Regulation for a Digital Markets Act (DMA). Both Commission proposals are subject to the ordinary legislative procedure and will be discussed in Parliament and Council during 2021. The proposal for a Digital Markets Act builds on the horizontal Platform to Business Regulation, on the findings of the EU Observatory on the Online Platform Economy and on the Commission’s extensive experience in dealing with digital and online markets through competition law enforcement. The proposal seeks to address more effectively the problems arising in digital markets, such as the gatekeeper power of large digital platforms. These are large companies that have a significant impact on the internal market, serve as an important gateway for business users to reach their customers and which enjoy, or will foreseeably enjoy, an entrenched and durable position. The Commission’s proposal establishes three objective cumulative criteria to identify the “gatekeepers” that will fall under the scope of the Regulation. Each of those qualitative criteria is accompanied by a series of quantitative criteria. If all of the quantitative thresholds are met, the company concerned is presumed to be a gatekeeper, unless it submits substantiated arguments to demonstrate the contrary. The criteria are the following: 1.A size that impacts the internal market: represented by an annual turnover in the European Economic Area (EEA) equal to or above EUR 6.5 billion in the last three financial years, or where the company’s average market capitalisation or equivalent fair market value amounted to at least EUR 65 billion in the last financial year, and it provides a core platform service in at least three Member States; 2.The control of an important gateway for business users towards final consumers: met when the company operates a core platform service with more than 45 million monthly active end users established or located in the EU and more than 10 000 yearly active business users established in the EU in the last financial year; 3.An (expected) entrenched and durable position: this is presumed to be the case if the company met the other two criteria in each of the last three financial years. If not all these thresholds are met, the Commission may designate a company as a gatekeeper on the basis of a qualitative assessment following a market investigation. This mechanism would also allow the Commission to designate as a gatekeeper a company which can be foreseen to enjoy such a position in the near future. The proposed Regulation sets out harmonised rules addressing practices by gatekeepers that limit the contestability of core platform services or are unfair vis-à-vis their business users. Designated gatekeepers have to ensure compliance with the obligations of the proposed Regulation within six months after one or more of the core platform services they provide have been identified as fulfilling the thresholds of the proposed Regulation. To ensure the effectiveness of the rules, the proposed Regulation foresees the possibility of sanctions for non-compliance with the obligations, including fines of up to 10% of the company’s worldwide turnover. In case of systematic non-compliance, the Commission can impose additional behavioural or structural remedies to the extent that they are necessary to ensure compliance and proportionate to the infringement. Finally, to keep the rules future-proof, the proposal for a Digital Markets Act provides the Commission with the possibility to carry out market investigations to examine whether new services in the digital sector should be added to the list of core platform services. Moreover, the same tool would allow the Commission to detect new practices by gatekeepers that are not effectively addressed by the proposed Regulation. 2.1.3.Guidance on vertical agreements The Commission finalised the evaluation of the Vertical Block Exemption Regulation (VBER), and the accompanying Guidelines on Vertical Restraints (Vertical Guidelines). The findings of this evaluation phase are set out in the Staff Working Document that the Commission published in September 2020. A key finding was that the VBER and the Vertical Guidelines are useful tools, which significantly facilitate the self-assessment of vertical agreements, but that there is room for improvement. On this basis, the Commission launched an impact assessment to have revised rules in place when the currently applicable rules of the VBER expire in May 2022. In October 2020, the Commission asked stakeholders for feedback setting out the scope of the impact assessment and proposed policy options. In December 2020, the Commission launched a public consultation on the basis of an online questionnaire to collect more specific input from stakeholders to inform the drafting of the revised rules. The Commission also continued its review of the Motor Vehicle Block Exemption Regulation (MVBER), which will expire in May 2023 and mandated an evaluation report by May 2021. In this context, the Commission appointed consultants to carry out a fact-finding study that was delivered in November 2020. Most importantly, an online public consultation with stakeholders was launched on 12 October 2020, and ran until 25 January 2021. The information gathered through different processes will feed into the Commission’s evaluation report, which will in turn form the basis for drawing up and assessing the options for the future regime and deciding among them. The COVID-19 pandemic proved a challenging environment for the manufacturing sectors, which were faced with both plant shutdowns and falls in demand. In this context, the Commission has been open to engage with stakeholders on the potential application of the antitrust rules to co-operative schemes intended to facilitate recovery in the aftermath of the COVID-19 crisis. For example, in the automotive sector, the Commission had fruitful exchanges with representatives of companies who approached it for feedback on particular frameworks for cooperation. The Commission provided informal clarifications as to what kinds of cooperation were likely to be unproblematic, and identified the necessary safeguards for the cooperation to bring benefits without the risk of anticompetitive effects. 2.1.4.Guidance on horizontal agreements In 2020, the Commission progressed with the evaluation of the rules exempting certain horizontal agreements from the EU’s general competition rules. The EU competition rules on horizontal agreements include two Block Exemption Regulations for horizontal co-operation agreements that exempt, respectively, certain research & development and specialisation agreements from Article 101 TFEU. The accompanying guidelines on horizontal cooperation agreements (Horizontal Guidelines) provide further guidance to help companies in their efforts to engage in competition law compliant cooperation agreements, giving also detailed recommendations on topics such as the competitive assessment of information exchanges, joint purchasing, joint commercialisation and standardisation.

The Commission launched the evaluation in 2019, in view of the expiry of the two Horizontal Block Exemption Regulations (HBERs) on 31 December 2022. While the Horizontal Guidelines do not have an expiry date, they are evaluated together with the HBERs. In 2020, the Commission received the results of the public stakeholder consultation and the consultation of the national competition authorities. The Commission also launched an evaluation support study on the rules on horizontal agreements. The findings of the evaluation process will be set out in a Staff Working Document. 2.1.5.Sustainability and competition The European Green Deal aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy. Executive Vice-President Vestager stated that all of Europe’s policies – including competition policy – will have their role to play in the pursuit of these objectives . On 13 October 2020, DG Competition published a call for contributions on a number of issues about how competition rules – State aid, antitrust and merger control – can work together with sustainability policies . The purpose of the call was to gather the views and proposals from stakeholders, including competition experts, academia, industry, environmental groups and consumer organisations. The input from the public will be used to inform the on-going revisions of Commission block exemption regulations and guidelines in both the antitrust and State aid fields. 2.1.6.Collective bargaining of self-employed Digital platforms have changed the way people work. They provide access to work, and flexibility; but they can also leave some workers vulnerable. And those providing services through platforms do not always fit into traditional employment categories. That means that for these – as for a great many others in a changing EU economy – it is not always clear whether EU competition rules allow them to come to agreements to jointly negotiate on their working conditions. In June 2020, the Commission therefore launched a process to assess whether there is a need for measures at EU level to ensure that EU competition law does not stand in the way of collective bargaining for self-employed in need of protection. Following the initial information gathering process as part of the consultation on the Digital Services Act and discussions with social partners and businesses, the Commission published on 6 January 2021 an inception impact assessment describing the problem and outlining four policy options for future action. 2.2Important judgments by the European Union Courts 2.2.1.Review of decisions finding an infringement In 2020, the European Courts issued fewer judgments than usual concerning the Commission’s cartel enforcement. The judgments issued largely confirmed the Commission’s cartel enforcement practice. In particular, the European Courts confirmed to a large extent the Commission’s investigatory techniques during inspections of suspected infringements of EU competition, focusing in particular on the power to make copies of documents and the possibility to continue inspections in Brussels. At the same time, the European Courts highlighted the importance of having a certain level of evidence on file justifying the need for an inspection. Other judgments focussed on companies’ procedural rights during the Commission’s cartel investigations, largely confirming the Commission’s general handling of such investigations while drawing attention to the importance of setting out all allegations in the Statement of Objections prior to issuing an infringement decision. In relation to the question of liability for cartel conduct, the European Courts confirmed longstanding case law and Commission practice in relation to the concepts of ‘parental liability’ and ‘economic continuity’, and, in doing so, safeguarded the efficient enforcement of EU competition law. 2.2.2.Investigative powers In two judgments concerning the Power Cables cartel, the Court of Justice confirmed the Commission’s conduct during inspections carried out under Article 20 of Regulation 1/2003. According to the Court of Justice, the Commission had a “certain discretion regarding its specific examination procedures”. As part of that discretion, it was within the Commission’s right to make copies of electronic documents as an intermediate step in the investigation of the data. The Court of Justice rejected the argument that the powers conferred upon the Commission have to be interpreted narrowly, as long as it was ensured that the rights of the defence of the investigated undertakings were protected. Making copies of certain documents enabled the investigated undertaking to continue to use the original data, thus reducing the interference in that undertaking’s operation caused by the Commission’s inspections. In the same judgments, the Court of Justice also confirmed the Commission’s practice of so-called ‘continued inspections’ at its premises in Brussels. The Court confirmed that Article 20(2)(b) of Regulation No 1/2003 does not provide that the inspection must in all circumstances be carried out exclusively at the company’s premises. According to the Court of Justice, there can be legitimate reasons for continuing an inspection in Brussels “also in the interest of the undertakings concerned”, as, for example, the processing of “large volumes of data could have the effect of significantly extending the duration of the inspectors’ presence at the undertaking’s premises, which would be liable to hamper the effectiveness of the inspection and to needlessly increase the interference in that undertaking’s operations”. In the Alliance Casino & Intermarché investigations the General Court issued three judgments concerning inspection decisions adopted by the Commission in 2017 concerning inspections in the French retail sector. In its judgments the General Court largely confirmed the Commission’s powers in the early stages of an investigation. The General Court confirmed the clear distinction between “indicia”, relevant for the early stages of a Commission investigation leading to inspections, and “evidence” relevant for subsequent stages in order to demonstrate an infringement of competition rules. The General Court further recalled that, to order an inspection, the Commission must be in possession of sufficiently strong indicia. The General Court held that in the early stages of the investigation, in order to serve as indicia, informal minutes of meetings and conference calls did not have to comply with the formal requirements of Article 19 of Regulation 1/2003. It also found the minutes of the meetings and conference with manufacturers drafted by Commission officials as being credible. Furthermore, the General Court recalled that the information provided by manufacturers become indicia from the moment it is communicated to the Commission, and not when it materialised in the form of minutes. As regards the content of the indicia, the General Court, upheld one leg of the inspection decisions relating to exchanges of information on discounts obtained on the procurement markets of certain everyday consumer products and on prices on the market for the sale of services to brand manufacturers of those products. However, the General Court annulled the second leg of the inspection decisions relating to exchanges of information concerning future commercial strategies of the undertakings under suspicion, concluding that the indicia in possession of the Commission were not sufficiently strong. The General Court also examined if the dates chosen for the inspections caused “disproportionate and intolerable damage” to the undertakings’ business and found that this was not the case. It also considered that the dates chosen by the Commission were justified by the objective to have the maximum number of key staff present. Finally, the General Court also held that inspected undertakings were entitled to raise arguments related to the protection of their staff’s privacy and noted that the undertakings had not identified those documents where copies could have led to a violation of staff privacy. 2.2.3.Procedural rights in Commission investigations

In a judgment concerning the Retail Food Packaging cartel, the Court of Justice confirmed the General Court’s and the Commission’s handling of its cartel investigation (in particular in relation to the decision of both the Commission and the General Court not to hear or cross-examine a witness relied upon by the appellants). Nevertheless, the Court of Justice highlighted in a judgment concerning the Power Cables cartel the importance of setting out all allegations clearly in the Statement of Objections, thus allowing the undertakings investigated to submit their observations. Concerning the Commission’s pending investigation in Metal Packaging, the European Courts dealt with procedural issues concerning the conduct of the Commission’s investigation. In one court order, the Court of Justice confirmed the General Court’s finding that a decision to formally initiate proceedings according to Article 2(1) of Regulation 773/2004 did not negatively affect a company’s position and therefore did not constitute a challengeable act. In a second court order, the president of the General Court rejected an application for interim measures against a Commission request for information pursuant to Article 18(3) of Regulation 1/2003, as the applicants could not show any urgency resulting from providing replies while having to wait for a decision in the main proceedings, i.e. concerning the applicants’ action for annulment against the Commission’s Article 18(3) decision. 2.2.4.Use of evidence While generally confirming the Commission’s practice of assessing and relying on evidence, the Court of Justice nevertheless highlighted in one judgment concerning the Power Cables cartel that – in order to be held liable for the conduct of another participant in the context of a single and continuous infringement – the undertaking in question had to have been aware of it or reasonably able to foresee it. Without proving such awareness, the Commission was not entitled to hold the undertaking liable – even if the insufficient proof of awareness concerned “non-essential” parts of the cartel (in this case a refusal to supply accessories and technical assistance to competitors not participating in the cartel). 2.2.5.Liability for cartel conduct In two judgments concerning the Power Cables cartel, the Court of Justice confirmed the Commission’s interpretation of the concept of attributing liability for cartel conduct to undertakings. Concerning the concept of ‘economic continuity’, the Court of Justice confirmed that where two entities constitute one economic entity, the fact that the entity that committed the infringement still exists does not per se preclude imposing a penalty on the entity to which its economic activities were transferred. This is to avoid restructurings being used to escape the liability for competition law infringements. Concerning the concept of ‘parental liability’, the Court of Justice held that the General Court, in its original judgment, had been right to hold that the Commission did not have to consider each and every piece of evidence advanced by a company to reject the application of the presumption of parental liability to a former subsidiary in cases where the company held all or almost all of the shares in the subsidiary at that time. 2.2.6.Calculation of fines In the Smart Card Chips case, the General Court ruled on the proportionality of a fine imposed on Infineon. Both the General Court and the Court of Justice had already confirmed the existence and duration of the cartel, but the Court of Justice nevertheless sent the case back to the General Court because the latter had not reviewed all anti-competitive contacts. Such review was necessary to assess whether Infineon’s fine was commensurate with the number and intensity of anticompetitive contacts. In its second review, the General Court concluded that the Commission had not succeeded in proving to the requisite legal standard the existence of one contact (out of eleven) and that this reduced number of anticompetitive contacts warranted an increase of the reduction of the fine for mitigating circumstances from 20% to 25%, reducing the fine from EUR 82.8 million to EUR 76.8 million. In the Retail Food Packaging cases, the Court of Justice concurred with the Commission in relying on the company’s group turnover in the last full business year for purposes of calculating the 10% turnover cap according to Article 23(2) of Regulation 1/2003. In its GEA judgment in the Heat Stabilisers case, the Court of Justice confirmed the Commission’s practice when attributing joint and several liability for fines between several entities which were part of the same undertaking at the time of the infringement. The Court of Justice clarified that in such scenarios the Commission’s practice complies with the principle of equal treatment. The Court of Justice upheld the Commission’s appeal, annulled the judgment of the General Court and referred the matter back to the General Court to decide on the remaining pleas. 2.3The fight against cartels remains a top priority Cartels are the most serious form of competition infringements and cause significant harm to both consumers and the economy as a whole. They can lead to inflated prices, limit consumer choices and restrict innovation. The Commission’s enforcement against hard core cartels prevents companies from profiting from such illegal arrangements and ensures a level playing field for business. The fight against cartels therefore remained a top priority also during 2020, but the COVID-19 crisis had an impact on the Commission’s enforcement activities. Recognising the exceptional difficulties that companies faced, notably in the early phases of the lock-down, the Commission adjusted its priorities and reconsidered certain envisaged steps that would have triggered the need for immediate business reactions (such as requests for information or the notification of Statement of Objections), if and when warranted. It also temporally refrained from carrying out inspections that would have required a longer presence in the company premises. The Commission nevertheless stressed the need to ensure a vigorous cartel enforcement also during an economic crisis, when there might be an increased incentive to collude. The eLeniency tool, launched in 2019, enabled companies to submit statements with the same high level of protection as the oral procedure (that would have required a presence in the Commission’s premises). The tool was frequently used for documents submitted in the context of the leniency, the cartel settlement or the antitrust cooperation procedures. Despite the particular circumstances, the Commission nevertheless adopted three cartel decisions concerning six separate cartels in sectors which directly affected European consumers and European business; namely car parts, the chemical sector and retail food packaging. The decisions resulted in total fines of approximately EUR 288 million. Two of the decisions were adopted under the cartel settlement procedure, which again proved to be a successful and efficient tool to resolve cartel cases. The third decision was a re-adoption. In July 2020, the Commission adopted its second decision in recent times concerning a purchasing cartel. It found that four major purchasers of ethylene had colluded to buy ethylene for the lowest possible price on the ethylene merchant market in Germany, France, the Netherlands and Belgium. The Commission fined Celanese (based in US), Orbia (based in Mexico) and Clariant (based in Switzerland) totalling EUR 260 million. A fourth participant to the collusion, Westlake (based in US) was not fined as it received full immunity under the leniency procedure for revealing the cartel and cooperating with the Commission. All companies acknowledged their involvement in the cartel and agreed to settle the case. The decision demonstrates that the Commission does not tolerate any form of cartels and that the EU antitrust rules do not only prohibit cartels related to coordination of selling prices, but also cartels related to coordination of purchasing prices . In September 2020, the Commission fined Brose and Kiekert , two German suppliers of closure systems, for their respective participation in two separate cartels. Brose took part in a cartel coordinating the prices of door modules and window regulators supplied to Daimler and was fined EUR 3.2 million. Kiekert participated in a cartel coordinating the prices of latches and strikers supplied to BMW and Daimler and was fined EUR 15 million. A third participant to the collusion, Magna, based in Canada and Austria, escaped fines after having received full immunity under the EU leniency procedure. All companies acknowledged their involvement in the cartels and agreed to settle the case. This cartel decision is part of a series of major investigations into collusions in the automotive parts sector. The Commission has already fined suppliers of automotive bearings, wire harnesses in cars, flexible foam used (inter alia) in car seats, parking heaters in cars and trucks, alternators and starters, air conditioning and engine cooling systems, lighting systems, occupant safety systems, and spark plugs and braking systems . The 2020 decision brings the total amount of Commission fines for cartels in this sector to EUR 2.2 billion.

On 17 December, 2020 the Commission re-adopted a decision imposing total fines of EUR 9.4 million on the CCPL Group for its participation in three separate retail food packaging cartels. The General Court had in its judgement of 11 July 2019 annulled the fines imposed on CCPL in the original 2015 decision after having found that the Commission had insufficiently reasoned its inability to pay assessment. In line with its consistent practice, the Commission decided to re-adopt a fine that had been annulled for purely procedural reasons. Case name Adoption date Fine imposed

EUR Undertakings concerned Prohibition Procedure Ethylene purchases 14/07/2020 260 443 000 4 Settlement Closure Systems 29/09/2020 18 196 000 3 Settlement Retail food packaging 17/12/2020 9 441 000 1 Prohibition 2.4Cooperation within the European Competition Network and with national courts 2.4.1.Cooperation with national competition authorities within the European Competition Network Since 2004, the Commission and the national competition authorities in all EU Member States cooperate through the European Competition Network (ECN). The objective of the ECN is to build an effective legal framework to enforce European competition law against companies who engage in cross-border business practices which restrict competition. In 2020, the Commission continued to ensure the coherent application of Articles 101 and 102 through the ECN. Two of the key supporting cooperation mechanisms in Regulation 1/2003 are the obligation on national competition authorities to inform the Commission about a new investigation at the stage of the first formal investigative measure and to consult the Commission on envisaged decisions. In 2020, 139 new investigations were launched within the network, 97 envisaged decisions were submitted, compared to 138 new investigations, and 95 envisaged decisions in 2019. These figures include Commission investigations and decisions, respectively. On top of these cooperation mechanisms set out in Regulation 1/2003, other ECN cooperation work streams equally ensure a coherent enforcement of the EU competition rules. The network meets regularly to discuss cases at early stages, policy issues, as well as matters of strategic importance. In 2020, 24 meetings across horizontal working groups and sector-specific sub-groups were organised, where competition authorities’ officials exchanged views. 2.4.2.Transposition of the ECN+ Directive The ECN+ Directive empowering Member States’ competition authorities to be more effective enforcers of EU competition rules in the field of antitrust entered into force on 4 February 2019. The ECN+ Directive will ensure that when applying the same legal provisions – the EU antitrust rules – national competition authorities have the effective enforcement tools and the resources necessary to detect and sanction companies that infringe Articles 101 and 102 TFEU. It will also ensure that they can take their decisions in full independence, based on the facts and the law. The new rules contribute to the objective of a genuine single market, promoting the overall goal of competitive markets, jobs and growth. In 2020, the Commission has continued to monitor the transposition process and assisted the Member States in their efforts in incorporating the Directive into national law by 4 February 2021. Empowering NCAs to become more effective enforcers Once transposed by Member States into national law, NCAs will: The importance of companies’ fundamental rights is underlined: appropriate safeguards will be in place for the exercise of NCAs’ powers, in accordance with the EU Charter of Fundamental Rights and general principles of EU law. ·benefit from minimum guarantees of independence when applying EU competition rules; ·have the basic guarantee of the human and financial resources they need to perform their tasks; ·have an effective investigative and decision-making toolbox, including to gather digital evidence stored on mobile devices; ·be able to impose deterrent fines, for example companies will no longer be able to escape fines by restructuring; ·have effective leniency programmes in place which encourage companies to report cartels throughout the EU; ·provide each other with mutual assistance so that, for example companies with assets in other Member States cannot escape from paying fines. 2.4.3.Cooperation with national courts Effective overall enforcement of antitrust rules in the EU, for the benefit of both EU households and businesses, requires interplay between public and private enforcement. In addition to its cooperation with NCAs in the context of the ECN, the Commission also continued its cooperation with national courts under Article 15 of Regulation 1/2003. The Commission helps national courts 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 national courts. Following approval from the concerned courts, the Commission publishes its opinions and amicus curiae observations on its website. 2.4.4.Private enforcement Directive 2014/104/EU on antitrust damages actions (Damages Directive) aims at ensuring that anyone harmed by infringements of the EU competition rules can effectively avail itself of the right to compensation before national courts. To assist national courts in how to protect confidential information disclosed in private enforcement proceedings, the Commission adopted in 2020 a Communication on the protection of confidential information by national courts in proceedings for the private enforcement of EU competition law. The Communication seeks to provide practical guidance to national courts in selecting effective protective measures, considering among others the specific circumstances of the case, the type of information requested, the extent of the disclosure, the parties and relationships concerned as well as any administrative burdens and cost implications. It presents a number of measures (e.g. redactions, confidentiality rings, use of experts, closed hearings) national courts may, depending on their procedural framework, order to protect confidential information in the context of disclosure requests throughout and after the closing of the proceedings, and it describes how and when such measures could be effective. The Communication is non-binding and does not alter existing rules under EU law or the laws of the Member States. Its goal is, however, to be a source of inspiration, in particular for national courts that deal with damages actions for infringements of EU competition law. The Commission submitted in December 2020 a report about the implementation of the Damages Directive to the European Parliament and the Council. The report takes stock of the implementation of some of the core rules of the Directive, such as the right to full compensation, disclosure of evidence, evidentiary value of infringement decisions, limitation periods, passing on of overcharges and estimation of harm. The report also notes that since the adoption of the Damages Directive in 2014, the number of damages actions before national courts has significantly increased and damages actions have become much more widespread in the EU. Therefore, while the effectiveness of the measures will depend on their actual implementation by the national courts, the rights of victims of antitrust infringements have been already strengthened. Based on the findings of the report, the Commission has drawn positive conclusions as regards the consistent implementation of the rules. The Commission intends to continue to monitor the developments in the Member States with a view to evaluating the Directive, once sufficient experience from the application of its rules is available. 2.5Audit by the European Court of Auditors on antitrust In November 2020, the European Court of Auditors (ECA) published a Special Report on EU merger control and antitrust proceedings in the period 2010-2017. In the report, ECA concluded that the European Commission, the enforcer of EU competition rules, has generally made good use of its powers in antitrust proceedings and merger control, and addressed competition concerns with its decisions. ECA also found that overall the NCAs and the Commission cooperated well in the European Competition Network. However, ECA points to the increasing complexity of the context in which competition rules are enforced, especially due to the challenges relating to digital markets, and sees a need to scale up market oversight. The ECA acknowledges the efforts made by the Commission since 2017 to accelerate its antitrust proceedings, and takes note of the constantly high success rate of the Commission defending its competition decisions in EU Courts. The ECA report confirms the relevance of the Commission’s ongoing review of competition rules and of the tools at its disposal to ensure that they are fit for the changing market environment, including the accelerating digitalisation of the economy. As also detailed in this report, the Commission has a significant policy agenda in antitrust for the next years, including the review of its horizontal and vertical rules and guidance and of the market definition notice, as well as efforts to introduce new policy tools in digital markets, in line with the Commission Work Programme.

In the report, ECA calls for the Commission to perform a study of the deterrent effect of its fines and update its fine-setting methodology as appropriate. The Commission envisages to conduct an external study on whether the fines imposed under its current fining methodology achieve that aim. Finally, ECA recommends that the Commission regularly carries out ex-post evaluations of its enforcement. The Commission accepts this recommendation subject to the availability of sufficient resources. 3.Merger control EU merger control The purpose of EU merger control is to ensure that market structures remain competitive while enabling 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. EU merger control ensures that all firms active in EU markets can compete on fair and equal terms. Proposed transactions which may distort competition are subject to close scrutiny by the Commission. If necessary to protect competition, the Commission can give merging firms the possibility to dispel competition concerns by offering commitments. If sufficient commitments cannot be found or agreed upon, the Commission may prohibit the transaction. In its assessments, the Commission takes into account efficiencies possibly brought about by mergers. Efficiencies may have positive effects on costs and innovation, for example, provided that they are verifiable, merger-specific and likely to be passed on to consumers. Despite the impact of the COVID-19 pandemic, the Commission’s enforcement activity in 2020 remained very similar to the previous year. 3. 3.1Recent enforcement trends In 2020, 361 mergers were notified to the Commission. While the number of merger notifications initially slowed down at the outbreak of the COVID-19 pandemic crisis, the overall number of merger notifications received in 2020 has remained relatively stable when compared with recent years. After years of continuous and significant increase in the number of notifications received in the period 2013-2018 (including an all-time record in 2018 with the highest number of notifications ever received), the number of notifications have experienced a slight decline in the last two years but still remain high. While in the period 2010-2014, the Commission received on average 289 notifications per year, in the period 2015-2019 the yearly average increased to 373. Moreover, there were 30 reasoned pre-notification submissions by notifying parties, requesting referral of a case from the Commission to a national competition authority or vice versa. Like in the previous years, most mergers notified in 2020 did not raise competition concerns and could be processed speedily. The simplified procedure was used in 76% of all notified transactions in 2020, showing the continuous positive impact of the simplification package adopted by the Commission in December 2013. The proportion of simplified cases in the period 2004-2013 was substantially lower, at 59%. Nevertheless, 2020 involved intensive work by the Commission both due to the large number of notified transactions and the complexity of a significant number of cases. An increasing number of notified transactions concerned already concentrated industries. This required the Commission to carefully assess their potential impact on competition, employing sophisticated quantitative techniques and comprehensive qualitative investigations. In 2020, the Commission opened in-depth investigations (second phase) in eight cases. These cases concerned diverse sectors such as manufacture and retail sale of lenses and eyewear, hydraulic components, automotive, digital healthcare and wearable devices, and financial markets. The Commission increasingly has to assess mergers involving digital issues, both in the digital and traditional industries, and their number is likely to continue growing. In 2020, the Commission cleared Google’s acquisition of Fitbit subject to commitments aimed at ensuring that the market for wearables and the nascent health digital space remain open and competitive. Despite the impact of the COVID-19 pandemic, the Commission’s enforcement activity in 2020 remained very similar to the previous year. The Commission adopted 352 merger decisions in 2020 and intervened in 18 cases, a slightly lower number than previous years but that remains in the 5-7% range (out of total decisions adopted) of previous years. In 2020, 13 mergers were cleared subject to commitments in first phase, three were cleared with remedies after a second phase and one was cleared unconditionally in second phase. Two cases were abandoned during the in-depth investigation. Finally, the Commission did not prohibit any transaction in 2020. Merger decisions 2011-2020: Most remedies accepted by the Commission in 2020 consisted of divestitures of tangible or intangible assets. This confirms the Commission’s general preference for structural remedies in merger cases as best suited to address in a durable manner competition concerns arising from a concentration. In 2020 some complex transactions were successfully resolved in Phase I subject to comprehensive remedy packages offered by the Notifying Parties in due time, such as in the Alstom/Bombardier case. The Commission accepted non-divestiture remedies in a few cases, where they were considered to solve effectively the underlying competition concerns in light of the specificities of the sector and the case at hand. Finally, in 2020, two procedural infringement cases continued to be under investigation. One against Merck GmbH concerning their alleged provision of incorrect and/or misleading information during the Commission’s merger review, and one against Telefonica for breach of the commitments given in relation to its acquisition of E-Plus in 2014. 3.2The evaluation of selected procedural and jurisdictional aspects of EU merger control In 2020, the Commission has entered the final stages of its evaluation of selected procedural and jurisdictional aspects of EU merger control. A Staff Working Document summarising the main findings of the evaluation was published on 26 March 2021. Following the results of the evaluation, the Commission adopted a communication providing guidance on the application of the referral mechanism between Member States set out in Article 22 of the Merger Regulation, and launched an impact assessment on exploring policy options for further targeting and simplification of merger procedures. 3.3Market definition notice

On 26 June 2020, as part of an evaluation, the Commission launched a public consultation to seek views from stakeholders whether the Notice on market definition (Market Definition Notice) is still fit for purpose, in particular in light of recent market developments, including digitalisation. The summary of the stakeholder views was published on 18 December 2020.The evaluation work is ongoing. 3.4Significant judgments by EU courts in merger control In its judgment of 4 March 2020 the Court of Justice dismissed Marine Harvest’s appeal against the General Court’s judgment whereby it upheld the Commission decision imposing a EUR 20 million fine to Marine Harvest for gun jumping. The Commission decision was therefore validated by the Court of Justice. In its judgment of 28 May 2020 the General Court annulled the Commission Decision adopted in 2016 which prohibited Hutchison’s acquisition of O2 UK and provided guidance on the assessment of whether a transaction gives rise to a significant impediment of effective competition when such a transaction does not result in the creation or strengthening of a dominant position. The Commission appealed the General Court judgment on 7 August 2020. In its judgment of 5 October 2020 the General Court upheld the Commission decision to prohibit the joint acquisition of Cemex Croatia by HeidelbergCement and SchwenkZement through their joint venture Duna Brava. The Court validated the Commission’s jurisdictional and substantive assessment of the transaction. In its judgment of 16 December 2020, in case T-430/18 American Airlines v Commission, the General Court upheld a 2018 Commission decision adopted in the context of the implementation of remedies made binding in 2013 to clear the merger between American Airlines and US Airways. The General Court validated the Commission’s interpretation of the threshold an airline has to fulfil to obtain grandfathering rights over remedy slots used on a given route on which competition problems have been identified. 3.5Audit by the European Court of Auditors on merger control As per section 2.5, the European Court of Auditors (ECA) published in November 2020 a Special Report on EU merger control and antitrust proceedings in the period 2010-2017. On merger control, ECA found that the Commission completed its merger reviews within the legal deadlines. However, the Commission has to cope with an increasing number of concentrations of companies and more and more data to be analysed. ECA concluded that the Commission successfully applied a simplified merger procedure but still can act upon further streamlining measures. In addition, ECA studied the turnover-based thresholds used for deciding whether a transaction would affect competition in the internal market, as well as the option of charging merger fees. The Commission accepts to look into possible ways to optimise merger procedures and case management. ECA’s recommendation of regular ex-post evaluations concerns also merger control, for example, when assessing whether assumptions about market developments after intervention in a merger operation were correct. While the Commission accepts the recommendation it notes that the implementation of the recommendation is subject to the availability of sufficient resources. 4.Developing the international dimension of EU competition policy As world markets continue to integrate and more companies rely on global value chains, competition agencies need to increase their collaboration and agree on common standards and procedures more than ever before. Effectively enforcing competition rules depends to a growing extent on co-operation with other enforcement authorities and having effective tools to ensure a fair business environment in the EU. 4. 4.1Control of foreign subsidies – a new policy initiative to strengthen the Commission toolbox Europe’s economy is open and closely interlinked with the rest of the world. Therefore, ensuring a fair business environment in the Single Market is key for companies in the EU. Subsidies given by Member States have always been subject to strict EU State aid rules. Subsidies granted by non-EU governments to companies active in the EU, however, seem to have an increasingly negative impact on the internal market, but fall outside EU State aid control. To launch a debate on new tools to address this regulatory gap, the Commission adopted a White Paper on foreign subsidies on 17 June 2020 . An extensive consultation was carried out in 2020, to which the Commission received 150 contributions from various stakeholders. The Commission also received 22 submissions on the Inception Impact Assessment, published on 6 October 2020, and carried out targeted consultations of stakeholders on the available policy options and their impacts. The White Paper put forward several complementary options to address the existing regulatory gap: Module 1 proposed the establishment of a general market scrutiny instrument to capture all possible market situations in which foreign subs