Opinion of the European Economic and Social Committee on the "XXXIst Report on Competition Policy 2001" (SEC(2002) 462 final)
Date: 2003-01-22
Institutions: European Economic and Social Committee
Subjects: competition, competition policy, report

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Reason

The way in which financial aid is distributed under the first pillar of the CAP has a decisive influence on the type of
cultivation and crops selected by farmers. This pattern of distribution of aid therefore determines, to a decisive
degree, whether or not pesticides are required at a later stage and how much is used.

Result of the vote

For: 26, against: 53, abstentions: 5.

Opinion of the European Economic and Social Committee on the ‘XXXIst Report on Competition
Policy 2001’

(SEC(2002) 462 final)

(2003/C 85/25)

On 29 April 2002, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the ‘XXXIst Report
on Competition Policy 2001’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 19 December 2002. The rapporteur was
Mr Barros Vale.

At its 396th plenary session of 22 and 23 January 2003 (meeting of 22 January), the European Economic
and Social Committee adopted the following opinion by 120 votes in favour, nine votes against and five
abstentions.

1.

Introduction

1.1.
The report opens with a reaffirmation of the import-
ance of enforcing competition rules as one of the central
elements in the economic functioning of the single market and
as one of the Commission’s key tasks. Emphasis is placed on
the essential role of competition policy in establishing an ever
more balanced and equitable framework which becomes more
forceful the more the economy becomes globalised.

1.2.
Referring to the main topics to be addressed, the
introduction sketches out the broad content of the report,
covering antitrust rules, EU enlargement, state aid and the
prominence which all these measures should be given as
instruments of benefit to European citizens.

2. General background

The final phase of

2.1.
unprecedented enlargement of

introducing the euro and the
the EU create a need to

modernise the rules on antitrust, mergers and state aid, which,
if not met, will mean that the Commission’s action is out of
step with this rapidly evolving economic environment.

2.1.1.
In this respect, ensuring a level playing field in the
new markets where competition is not yet fully established
will continue to be a priority activity for the Commission.

2.2. With the globalisation of markets,
there are now
worldwide concentrations, making it necessary to intensify
international cooperation between various bodies, namely
through the International Competition Network.

The adoption of the state aid scoreboard and the
2.3.
opening to the public of an online state aid register are
evidence of significant improvements in this field in 2001.

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2.4.
The present report covers the broad areas in which the
Commission plays an active role in the field of competition
policy. These are identified as constituting major obstacles to
free competition. However, there is no mention of mechanisms
to address other distorting factors which,
looked at on a
Europe-wide scale, have considerable significance.

2.5.
Similarly, there does not seem to be any cooperation
between the various Commission DGs to forge a concerted
policy to promote free competition which goes beyond the
components explicitly mentioned in the report and referred to
in points 3.2.1, 3.2.2, 3.2.3 and 3.2.4 of this opinion. The
EESC feels it would be useful to have some indication of
whether or not procedures of this kind are in place to address
issues which are very relevant
to ensuring effective free
competition.

3. Main topics of the report

3.1.
In general terms, the report may be described as very
comprehensive, not only in the large amount of information
it contains, but also the many real-life cases which are
described, the questions raised throughout and the solutions
proposed, documenting as it does the Commission’s intense
activity in this area in 2001. The total number of new
proceedings for that year was 1036, slightly less than the 2000
figure, which was 1211. Meanwhile, the number of cases
settled rose to 1204, with a noteworthy reduction in the
backlog.

3.2.
The XXXIst Report on Competition Policy 2001 retains
the same thematic structure and presentation as the 2000
report, divided as it is into five broad chapters covering the
main topics. There follows a brief summary of these topics:

3.2.1. A n t i t r u s t — A r t i c l e s 8 1 a n d 8 2 ; s t a t e
m o n o p o l i e s a n d m o n o p o l y r i g h t s —
A r t i c l e s 3 1 a n d 8 6

3.2.1.1.
The modernisation of the legislative framework of
competition, particularly the rules implementing Articles 81
and 82, is still on the Commission’s work agenda. A proposal
for a regulation introducing a new system for implementing
Articles 81 and 82 was adopted in September 2000.

In a wide-ranging debate on the subject

3.2.1.2.
in
May 2001, the Council highlighted the functioning of the
network of competition authorities in the interests of ensuring
that these rules are implemented consistently in all Member
States.

eradication of cartels, especially those involved in price-fixing.
As part of the fight against cartels, the Commission Notice on
immunity from fines and reduction of fines in cartel cases was
revised after five years (1).

3.2.1.4.
Secret cartel agreements continue to be among the
most serious restrictions of competition, but 2001 was a
record year for cartel decisions, as shown in the significant
increase in the number of cases dealt with.

3.2.1.5.
In December the Commission adopted a report
evaluating the functioning of the technology transfer block
exemption regulation (TTBE). The report finds that the TTBE
uses criteria relating more to the form of the agreement than
to the actual effects on the market. The regulation is also felt
to be too prescriptive and its scope is in need of review.

In December the Commission adopted a notice on
3.2.1.6.
agreements of minor importance (‘de minimis’) which do not
appreciably restrict competition under Article 81(1), defining
more clearly and comprehensively when agreements between
companies are not prohibited by the Treaty.

3.2.1.7.
In May 2001 a decision was adopted on the
terms of reference of hearing officers in certain competition
proceedings, aimed at reinforcing the independence and
authority of the hearing officer (who will now be attached to
the Member of the Commission with special responsibility for
competition).

3.2.1.8.
The sector-by-sector evolution of competition is
described in detail in the present report, focusing in particular
on the energy sector (specifically the liberalisation of electricity
and gas), postal services, telecommunications, transport (air,
sea and rail), the media, motor vehicle distribution, financial
services (implementing competition policy is intended to make
Europe’s financial markets more competitive and efficient), the
information society and the Internet, sport and pharmaceut-
icals.

3.2.2. M e r g e r c o n t r o l

3.2.2.1.
There was a slight decline in merger operations in
2001 (after seven years of rapid growth), which by no means
signalled a decline in the Commission’s activities in this field.
In fact, even though the number of notifications decreased,
the Commission took 339 final decisions,
including five
prohibition decisions (the highest number of prohibitions to
date in one year (2).

3.2.1.3.
Another important point was the approval in 2001
of new draft rules aimed at facilitating the detection and

(1) EESC Opinion: OJ C 48, 21.2.2002.
(2) Two of these decisions have since been annulled by the Court of

Justice.

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3.2.2.2.
The remedies found in 2001 were not restricted to
directly restoring effective competition conditions by creating
the conditions for the emergence of new competitors. The
Commission showed itself to be open to other divestment
remedies, as well as to more complicated commitments than
straightforward divestment.

3.2.2.3.
At the same time, significant progress was made in
2001 in relation to remedies decided upon in 2000, with
considerable progress seen in the implementation of remedies
by enterprises involved in authorised operations.

specifically with regard to multiple transactions. It also opens
a debate on the virtues of the dominance test in effect in the
current Regulation as a means of assessing mergers, but does
not arrive at any conclusions.

Various measures are proposed for procedural
3.2.2.6.4.
simplification, particularly with regard to cases where there
are no competitive concerns and certain venture capital
transactions.

3.2.2.4.
The fundamental objective of controlling mergers
continues to be to protect consumers from the implications of
monopoly power or of a dominant position (higher prices,
lower quality and less innovation).

3.2.2.6.5.
Lastly, it is worth noting that that Commission
has built up cooperation with third countries in the field of
competition, culminating in the creation of the International
Competition Network. 2001 also saw a new development in
the referral of merger analysis to national authorities.

in competition analysis.

The definition of the relevant geographic market is
3.2.2.5.
In 2001 the
a central element
Commission analysed market definitions adopted in its merger
decisions over the last five years. The Commission has also
carried out detailed research into product markets, reaching
the conclusion that neither product market definition nor
geographic market definition result in a static analysis of
simple market share addition, but form the starting point for
an analysis of the market dynamics prevailing in a specific
industry.

3.2.2.6.
The most important development on the subject
of mergers was the publication in December of the Green
Paper on the Review of the Merger Regulation (1), which
looks at the new challenges posed by global mergers, the
introduction of the euro and EU enlargement to 25 or more
Member States.

The Green Paper proposes substantive, procedural and jurisdic-
tional amendments:

3.2.2.6.1. With regard to competition, the Commission
proposes to introduce automatic Community competence
over cases subject to multiple filing requirements in three
or more Member States. This would remove the turnover
thresholds.

3.2.2.6.2.
The Green Paper also proposes simplifying the
requirements for referrals by facilitating proper work-sharing
between the Commission and the Member States.

3.2.2.6.3.
Business practices have evolved, which provides
grounds for updating the concept of a concentration. The
Green Paper points out the difficulties perceived in this area,
but does propose some amendments to the current provisions,

( 1) The EESC has already issued a favourable opinion on this subject

(OJ C 241, 27.10.2002).

3.2.3.

S t a t e a i d

3.2.3.1.
The need to achieve further reductions in overall
aid levels and to redirect aid towards horizontal objectives of
Community interest was underlined by the Stockholm Euro-
pean Council of March 2001.

Among advances in transparency are a new state
3.2.3.2.
aid register which is accessible to the public and the publication
of the state aid scoreboard.

3.2.3.3.
also begun, especially for clear-cut cases.

A process of simplifying state aid procedures has

3.2.3.4.
In October 2001 a draft regulation was adopted
which provides for exempting from notification state aid
aimed at creating new jobs.

3.2.3.5.
The Commission adopted a Communication on
state aid and risk capital designed to promote the provision of
risk capital in different Member States, which illustrates how
these rules are geared to market developments.

3.2.3.6.
The monitoring of state aid in the form of taxation
remains one of the Commission’s priorities. Tax schemes
conferring advantages on certain types of activity (financial
services, off-shore activities) continue to warrant special atten-
tion. This form of state aid should also be given particular
attention in the context of EU enlargement.

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3.2.3.7.
One aspect which is dealt with in this section of
the report is the concept of aid. It lays down the principle of
disallowing all those cases where aid granted by a Member
States distorts or threatens to distort competition by conferring
an advantage on certain undertakings or types of production.

3.2.3.8.
The issue of granting direct EU aid to enterprises is
not addressed. Such aid should come under the heading of
public aid, thus warranting appropriate examination by the
Commission in future.

3.2.4.

S e r v i c e s o f g e n e r a l i n t e r e s t

The importance of services of general economic
3.2.4.1.
interest continues to be highlighted, especially in view of the
role they play in promoting social and territorial cohesion in
the EU, that is, as an essential component of the European
social model.

3.2.4.2.
The Laeken European Council of December 2001
recommended increased legal certainty in the application of
competition rules to services of general
interest. It is also
suggested that there should be better coordination between
methods of funding services of general economic interest and
the monitoring of state aid, as well as a regular assessment of
such services.

In the interests of greater transparency, the Com-
3.2.4.3.
mission undertakes to devote a specific section of its annual
competition report to services of general interest.

3.2.4.4.
Following the guidelines set by the Lisbon Euro-
pean Council of March 2000, the Commission continued in
2001 to promote market opening in areas such as gas,
electricity, postal services and transport by making legislative
proposals and by monitoring the implementation of existing
EU legislation on competition.

3.2.4.5.
The preparation and negotiation of the accession
processes for new EU Member States, bilateral cooperation
(especially with the USA, Canada and other OECD countries)
and multilateral cooperation were the broad areas covered by
the Commission in 2001 in terms of general economic
interests.

3.2.5. O u t l o o k f o r t h e f u t u r e

3.2.5.1.
implementing Articles 81 and 82 EC (1).

is a proposal

There

for a new regulation

3.2.5.2.
notice on enforcement activities.

There is a proposal to adopt an updated and revised

3.2.5.3.
It is proposed to continue the consultation work
started with publication of the Green Paper on the Review of
the Merger Regulation (2).

3.2.5.4.
There is a proposal to speed up and simplify the
handling of the simplest state aid cases, as well as making rules
and procedures more transparent.

In the international

3.2.5.5.
the Commission
intends to continue to pursue its dual policy of enhancing
bilateral cooperation with its foreign counterparts (USA and
Canada,
Japan) and exploring possibilities for expanding
multilateral cooperation.

sphere,

4. Conclusions/Recommendations

4.1. With a view to the forthcoming enlargement, the
Committee feels it is vital that the Commission focus greater
attention on the candidate countries so as to ensure that the
same rules are applied, with the same effectiveness, throughout
the EU.

In the context of the forthcoming enlargement, the
4.2.
Committee is anxious to know whether the CEECs will in fact
be able to comply with all the provisions of the acquis
communautaire on competition, bearing in mind the practice
and history of state aid to particular enterprises.

4.3.
The EESC feels that there is an urgent need to introduce
a new, more efficient and decentralised system which is less
bureaucratic. This will necessarily involve national authorities
taking greater responsibility for competition without under-
mining the Commission’s powers of investigation and moni-
toring in the process, so as to enhance the internal market and
guarantee a level playing field for enterprises.

3.2.4.6.
the progress made by each candidate country.

The Commission has drawn up regular reports on

(1) EESC Opinion, OJ C 155, 29.5.2001.
(2) The EESC has already issued a favourable opinion on this subject

(OJ C 241, 27.10.2002).

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4.3.1. With regard to consistency in implementing these
measures, it is worth highlighting the fact that notifications
are not compulsory and that agreements are always assumed
to be legal whenever they are below the threshold of established
market shares.

4.11.
The Commission report does not mention the ques-
tion of limitations imposed on competition by professional
associations. Bearing in mind the implications this can have,
the Committee feels that it merits attention and, if necessary,
intervention by the Commission.

4.4.
Given that the detection of secret cartels is one of the
key elements of competition policy, the Committee agrees that
it is vital to increase and extend the Commission’s powers of
investigation.

The EESC endorses the Commission proposal

for
4.5.
automatic Community competence, as referred to in point
3.2.2.6.1 of this opinion, as this will enable the Commission
to take direct action in such situations, thereby strengthening
the level playing field in European merger control.

the EESC feels that

4.6. With the globalisation of markets happening at an ever
there is a greater need
faster rate,
for cooperation between the relevant bodies in the various
countries and/or economic blocs responsible for controlling
competition. This cooperation must be developed further,
either within the WTO or on other, less formal levels, bearing
in mind the need to obviate tension and to seek compromise
between different conceptions/values found in the various
regional markets.

4.7.
The EESC agrees that it would be a positive step if the
block exemption regulation for technology transfer agreements
(RITT) were to stop working as a ‘straitjacket’, as it is described
in the report, instead serving to encourage more efficient and
balanced transactions.

4.8.
The Committee feels that the more economics-based
approach of the notice on agreements of minor importance
(‘de minimis’) is a positive development, as is the reduction of
the administrative formalities, which will benefit smaller
enterprises in particular.

The Committee feels it

to establish
4.9.
mechanisms to make competition more intense, especially in
highly regulated markets where competition is not very intense
and where customers are highly dependent given the small
number of suppliers.

is important

4.10.
In the EESC’s view, it would be very interesting if the
Commission report gave a clear account of how the candidate
countries have been prepared for competition, with particular
regard to their legal systems.

4.12.
On the subject of sport, and football in particular,
based on Box 5 of the Commission report, the Committee
would draw attention to the fact that the penalties mentioned
may act as an obstacle to the free movement of labour, thereby
distorting competition. The Commission should examine all
agreements that might
jeopardise the free movement of
workers.

4.13.
The Committee feels that it must be a concern of the
Commission to publicise the laws on competition widely, as
well as information on how to report infringements, so that
the general public, who are one of the most important allies in
the fight against anti-competitive conduct, are aware of this
issue and know how to go about reporting such cases.

4.14.
In the EESC’s view, it is important that the rules and
parameters for analysis of the relevant geographic markets are
transparent and clear.

4.15.
The Committee suggests that, for ease of reading, the
case studies should come at the end of the report, thereby
making it possible to get a rapid grasp of the content.

4.16.
Although not the direct responsibility of DG Compe-
tition, there are questions which have not been addressed
under the general headings of the Commission report and
which,
in the EESC’s view, should be considered in the
analysis of competition. Specifically, these include competition
between SMEs and big companies, between outlying and/or
disadvantaged regions and geographically more advantaged
regions, between rich and poor countries, and between the
European legal framework and accounting regulations and
those of North America, in particular, and the impact of these
accounting regulations on the ability to raise capital on stock
markets.

4.17.
In the EESC’s view, faced with globalised markets, the
revision of the EU merger regulation cannot be neglected
bearing in mind the ever more globalised environment in
which commercial relations are conducted, nor can cooper-
the
ation with international authorities, which can assist
Commission in implementing preventive measures to uphold
competition.

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the EESC,

In the view of

4.18.
from
point 3.2.2.6.3 of this opinion that a better and clearer
definition of concepts would certainly help to ensure more
consistent and effective implementation of the merger control
arrangements.

follows

it

it

For the EESC,

is extremely important that,

4.19.
in
response to the questions raised in the Green Paper, the review
of the merger regulation is carried out in an open manner,
with all
interested parties (enterprises and Member States)
being invited to submit constructive comments.

Although a public state aid register exists,

4.26.1.
it is
difficult to access, either because much of the information is
unavailable in more than one language, or because of the way
the information is structured. The Committee suggests that the
page containing this information be updated to make it clearer
and more transparent, and that a search engine be added.

4.27.
The Committee feels that efforts to simplify, modern-
ise and clarify the Community rules on state aid should
continue.

The Committee feels that the involvement of national
4.20.
authorities in mergers will bring advantages as they tend to be
far more qualified in terms of their knowledge of the industries
and markets concerned. Nevertheless, it should be very clear
that the Commission holds sway.

The Commission resources freed up in this process
4.27.1.
should be focused on the most serious cases of distortion of
competition.

4.21.
The enhancement of this kind of cooperation will
certainly reduce the risk of discrepancies and inconsistencies
in the decisions adopted.

4.28.
The Committee believes that actually laying down
Community guidelines for state aid granted to undertakings
entrusted with the provision of services of general economic
interest, as proposed for 2002, would increase legal certainty.

4.22.
Another important matter in the EESC’s view is the
distortion of competition that can be caused by the merger
and purchase of banks which, by reducing the number of
competitors, can have adverse consequences for consumers,
especially in the area of credit access.

4.29.
Finally, the EESC would like to express its appreci-
ation of the Commission’s hard work, while nevertheless
drawing attention to the need to substantiate any decision
thoroughly and rigorously.

4.23.
In the same way, large-scale distributors can cause
distortions of competition through their negotiating power,
which can enable them to hold in check both their suppliers
and their smaller-scale direct competitors. The EESC feels
that the Commission should also focus on this issue when
considering the abuse of dominant positions.

The mergers section of the competition DG has recently
5.
suffered a major setback with the Court of Justice deciding to
overturn certain decisions in this field, especially in two well-
known cases, Schneider-Legrand and Tetra-Laval.

4.24. With regard to state aid, the EESC feels that there are
grounds for greater efforts in the practical implementation of
the rules already adopted on risk capital and credit aid for
SMEs, as well as for proceeding with the policy reviews
concerning aid for employment, for research and development
and for large regional investment projects.

The Court’s rulings were based on its finding that the
information underpinning the Com-

5.1.
quality of
mission’s decisions was clearly insufficient.

technical

4.25.
In the EESC’s view, it is essential to exercise effective
control over state aids to ensure that funds are used efficiently,
thus helping to create a strong economic framework, specifi-
cally by creating sustainable employment opportunities for
European citizens.

5.2.
The Commission’s reaction to these legal rulings has
been to defend its position, but nevertheless to admit that
there are some weaknesses in the system and that there is a
need to take on a chief economist to take responsibility for
coordinating this area.

On the subject of

the
4.26.
Committee believes it would be appropriate to carry out ex-
ante and ex-post assessments of aid arrangements.

the state aid scoreboard,

5.3.

The EESC conducted a survey of the human, financial

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and technical economic information resources available to the
Competition DG, which revealed the following:

— Staff

— with an economics degree: 71

— with a law degree: 141

— with another degree (maths, engineering, philosophy

etc.): 59

— with other qualifications: 187

— annual budget (2002): EUR 1 414 417 (not including

staff)

— outside studies commissioned: 31, involving a sum of

EUR 939 475.

5.4.

The EESC also established that:

— The Competition DG is also an important centre of
revenue for the Commission, specifically in view of the
funds generated by fines, which amounted to some EUR
2 000 million in 2001. However, there has not been a
matching input of resources into supporting the DG’s
decisions with sufficient detail.

— The Competition DG relies very sparingly on the help of
outside specialist bodies either to collect and process
technical economic data to back up its decisions, or to
support its positions when they are contested in the
courts.

Brussels, 22 January 2003.

— The Competition DG does not make full use of the
technical economic data which national competition
authorities hold or could hold (at the Commission’s
request).

— The large-scale mergers which the Commission is expect-
ed to pronounce upon involve major economic interests
and very large sums, which means that the parties
involved are able to afford powerful resources in support
of their case (economic studies, international consultancy
firms) and highly competent specialist
lawyers. The
Commission does not seem to have the same level of
resources to support its position.

— Companies which, under current regulations, require the
authorisation of the Commission to carry out any kind
of merger or acquisition are not charged for the public
service involved, unlike what happens in the courts,
where legal costs are charged whenever a case is heard.

the deployment of

In the EESC’s view,

the reshaping/restructuring of
5.5.
the Competition DG’s services, which the Commissioner
responsible admits is necessary, should be preceded by a series
of studies including:
its human and
budgetary resources, the need to increase these and the ways
of doing so; guaranteeing independence in the performance of
its functions; the quality and detail of the technical economic
and legal information used both as a basis for the Commission’s
decisions and to defend its positions in court and, finally, a
study of the compatibility of the statutory deadlines with the
quality and detail of the information collected and processed,
which is crucial in taking decisions.

The President

of the European Economic and Social Committee

Roger BRIESCH

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendment, which received at least a quarter of the votes cast, was defeated in the course of the
discussion of the text of the opinion:

Point 4.12

Delete the point.

Reason

The draft paper sweepingly describes all rules imposed by professional associations as limitations. For the European
Economic and Social Committee to take a confrontational stand against these decisions is neither expedient nor
objectively necessary, particularly as both the European Parliament (Committee on Legal Affairs and the Internal
Market) and the European Court of Justice have, in various resolutions and decisions, addressed the rules governing
the liberal professions and found them to be, in principle, both permissible and useful.

Furthermore, the draft fails to address other, broader considerations in favour of establishing and maintaining the
rules governing the liberal professions, such as the special position of trust and commitment to the public interest of
these professions. In any case, a debate on a matter as complex as this would go beyond the paper’s scope and shift
its focus completely.

Result of the vote

For: 31, against: 80, abstentions: 12.