Report from the Commission - Report on Competition Policy 2006 {SEC(2007)860}
Date: 2007-06-25
Institutions: European Commission
Subjects: competition policy, control of State aid, merger control, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 25.6.2007 
COM(2007) 358 final 

REPORT FROM THE COMMISSION 

Report on Competition Policy 2006 

{SEC(2007)860} 

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1. 

2. 

In 2006, competition policy continued to safeguard and create the conditions which 
allow  markets  to  function  competitively  to  the  benefit  of  European  consumers  and 
businesses.  This  entailed addressing market failures resulting from anti-competitive 
behaviour  by  market  participants  and  from  certain  market  structures,  on  the  one 
hand,  and  contributing  to  an  overall  economic  policy  framework  across  economic 
sectors that is conducive to effective competition, on the other hand. 

The  first  section  of  this  report  provides  an  overview  of  how  the  instruments  of 
competition  policy,  namely  the  antitrust,  merger  and  State  aid  rules,  were  further 
developed and applied in general. The second section discusses how the mix of these 
and  other  instruments  was  used  in  selected  priority  sectors  to  pursue  the  aims  of 
competition  policy.  The  third  section  gives  an  overview  of  cooperation  within  the 
European  Competition  Network  (ECN)  and  with  national  courts.  In  section  four, 
international  activities  are  discussed.  Finally,  in  section  five,  a  brief  description  of 
interinstitutional cooperation is given. Further information can be found in a detailed 
Commission  Staff  Working  Document1  and  on  the  website  of  the  Competition 
Directorate General2. 

1. 

INSTRUMENTS 

1.1. 

Antitrust – Articles 81 and 82 EC 

1.1.1. 

Shaping the rules and policy 

3. 

4. 

1 
2 
3 

4 
5 

In addition to the appropriate sanctions to punish and deter cartels, effective action 
against cartels requires incentives to participants to report cartels. The Commission 
took an important step towards uncovering and putting an end to cartels by adopting 
a  revised  Notice  on  Immunity  from  Fines  and  Reduction  of  Fines  in  Cartel 
Cases3. Improvements have been made in several areas to provide more guidance to 
applicants  and  to  increase  the  transparency  of  the  procedure.  These  amendments 
reflect more than four years of experience in applying the 2002 Leniency Notice4 and 
are fully in line with the ECN's Model Leniency Programme, also adopted in 2006. 
Improvements include clarification of the thresholds for immunity and reduction of 
fines and the conditions that must be fulfilled by applicants, and amendments to the 
procedure, such as introducing a discretionary marker system. 

Fines  are  of  central  importance  in  deterring  companies  from  breaking  competition 
rules.  In  order  to  increase  the  deterrent  effect  of  its  sanctions,  the  Commission 
adopted  new  Guidelines  on  the  method  of  setting  fines  imposed  on  undertakings 
that have infringed Article 81 or Article 82 EC5. According to the new Guidelines, 
for each participant in the infringement, the basic amount of the fine will be based on 
a percentage  of its  yearly  sales of the product to which the infringement relates, in 

SEC(2007)860 
http://ec.europa.eu/comm/competition/ 
Commission  Notice  on  Immunity  from  fines  and  reduction  of  fines  in  cartel  cases  (OJ  C  298, 
8.12.2006). 
Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 45, 19.2.2002). 
Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 
(OJ C 210, 1.9.2006). 

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5. 

6. 

the geographic area concerned, and may be up to 30 % of the relevant sales. In order 
to fully reflect the duration of the infringement, the corresponding amount will then 
be multiplied by the number of years of the undertaking's participation. Furthermore, 
in the case of repeat offenders, the Commission may increase the fine by up to 100 % 
– with each prior infringement justifying an increase of the fine – and it will take into 
account not only its own previous decisions but also those of National Competition 
Authorities (NCAs) applying Article 81 or Article 82 EC. 

that 

those  damaged  by 
Facilitating  private  enforcement  will  help  ensure 
infringements  of  EC  competition  law  can  exercise  their  right  to  compensation, 
adding  to  overall  deterrence  levels  as  a  complement  to  public  enforcement.  The 
Green  Paper  on  damages  actions  for  breach  of  the  EU  antitrust  rules  as 
contained in Articles 81 and 82 of the EC Treaty6 has been met with broad interest in 
the  antitrust  community  and  has  been  discussed  widely  in  Europe  and  elsewhere. 
During a public consultation the Commission received almost 150 submissions from 
governments, competition authorities, industry, consumer organisations, lawyers and 
academics. The vast majority of the respondents agreed that victims of competition 
law infringements are entitled to damages, and that national procedural rules should 
be conducive to exercising this right effectively. The European Economic and Social 
Committee  also  welcomed  the  Commission  initiative  in  its  opinion  on  the  Green 
Paper7. As a follow-up to the Green Paper, the Commission has included in its 2007 
legislative  and  work  programme  the  preparation  of  a  White  Paper  on  antitrust 
damages actions8. 

The  promotion  of  competition  principles  through  advocacy  continued  both  within 
and  outside  the  Commission,  the  aim  being  to  ensure  that  legislation,  at  EU  or 
Member State level, that pursues legitimate policy objectives, does not cause undue 
harm  to  competition.  Competition  advocacy  had,  in  particular,  an  important  role  to 
play  in  the  legislative  process  relating  to  the  REACH  Regulation9.  Similarly,  the 
Commission continued its efforts to encourage Member States to review restriction 
of competition in the key area of professional services as an important contribution 
towards meeting the Lisbon objectives. 

1.1.2.  Applying the rules 

7. 

6 

7 

8 

9 

10 

The Commission continued to give a high priority to the detection and deterrence of 
cartels. It focused its actions on significant hard-core cartels of mainly worldwide or 
European  scope  and  involving  a  number  of  economic  entities.  The  Commission 
issued  seven  final  decisions10  in  which  it  fined  41  undertakings11  a  total  of  EUR 

of 

EESC 

opinion 

found  at 

the  Commission 

in  December  2005,  can  be 

The  Green  Paper,  adopted  by 
http://ec.europa.eu/comm/competition/antitrust/actionsdamages/documents.html 
The 
be 
the 
http://eescopinions.eesc.europa.eu/EESCopinionDocument.aspx?identifier=ces\int\int306\ces1349-
2006_ac.doc&language=EN  
The  Commission's 
http://ec.europa.eu/atwork/programmes/index_en.htm  
Commission  proposal  for  a  Regulation  concerning  the  Registration,  Evaluation,  Authorisation  and 
Restriction of Chemicals, COM(2003) 644 final. 
Case  COMP/38.620  Hydrogen  peroxide  and  perborate  (Bleaching  chemicals)  Commission  decision, 
3.5.2006;  Case  COMP/38.645  Methacrylates  (Acrylic  glass)  Commission  decision,  31.5.2006;  Case 
COMP/38.456  Bitumen  Netherlands  Commission  decision,  13.9.2006;  Case  COMP/38.121  Fittings 

and  work 

programme 

legislative 

available 

found 

2007 

can 

for 

at 

at 

is 

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1 846 million  (compared  with  33  undertakings  and  a  total  of  EUR  683 million  in 
fines  in  2005).  The  decisions  issued  show  the  economic  significance  of  the  sectors 
involved and the duration of the cartels, hence the average fine per undertaking has 
increased significantly. 

At  the  end  of  2006  the  Commission  had  received  a  total  of  104  applications  for 
immunity  and  99  applications  for  a  reduction  of  fines  under  the  2002  Leniency 
Notice.  Four  of  the  cartel  decisions  adopted  in  2006  were  based  on  the  2002 
Leniency  Notice  and  one  on  the  1996  Leniency  Notice.  In  these  cases  the 
Commission also granted substantial reductions of fines for a total of 10 companies 
in return for evidence provided to the Commission. 

Further  steps  were  taken  to  sanction  abuses  of  dominance.  The  Commission 
focussed  on  network  industries  that  are  key  for  European  competitiveness  and  the 
development  of  the  knowledge  economy  in  Europe:  the  Commission  opened 
proceedings  against  Telefónica,  for  an  alleged  "margin  squeeze"  in  the  Spanish 
broadband  Internet  access  markets12,  and  against  Distrigaz,  for  an  alleged  practice 
preventing new  suppliers from entering the Belgian gas market13. The Commission 
also  adopted  a  final  decision  finding  that  Tomra,  a  producer  of  reverse-vending 
machines,  violated  Article  82  EC  by  operating  a  system  of  exclusivity  agreements, 
individualised quantity commitments and individualised retroactive rebate schemes, 
which  restricted  or  at  least  delayed  the  market  entry  of  other  manufacturers  of 
reverse-vending machines14.  

Sound  economic  assessment  and  a  focus  on  conduct  which  is  likely  to  harm 
competition, and consequently consumers, improve the effectiveness of competition 
policy.  Reflections  continued  in  this  area  following  the  public  consultation  on  the 
Discussion Paper on the application of Article 82 EC to exclusionary abuses. The 
most important topics raised by the submissions were discussed at a public hearing 
held  in  Brussels,  attracting  about  350  participants  from  Europe,  the  United  States, 
Japan and Korea. 

Article  9  of  Regulation  1/2003  allows  the  Commission  to  make  commitments 
binding  on  undertakings,  when  such  commitments  meet  the  concerns  expressed  by 
the Commission in antitrust proceedings. Commitments continued to be an effective 
means  of  addressing  competition  problems.  In  2006,  the  Commission  adopted  four 
commitment decisions15. 

(Copper  fittings)  Commission  decision,  20.9.2006;  Case  COMP/38.907  Steel  beams  (re-adoption) 
Commission  decision,  8.11.2006;  Case  COMP/38.638  Synthetic  rubber  (BR/ESBR)  Commission 
decision,  29.11.2006;  Case  COMP/39.234  Alloy  surcharge  (re-adoption)  Commission  decision, 
20.12.2006. 
This figure does not include the companies that received immunity from fines for cooperation under the 
Leniency Notice. 
Case COMP/38.784 Telefónica (for details of the case see point 0). 
Case COMP/37.966 Distrigaz, see Commission press release MEMO/06/197, 16.5.2006. 
Case COMP/38.113 Prokent/Tomra. 
Case  COMP/38.381  De  Beers  Commission  decision,  22.2.2006;  Case  COMP/38.173  FA  Premier 
League  Commission  decision,  22.3.2006;  Case  COMP/38.348  Repsol  CPP  Commission  decision, 
12.4.2006; Case COMP/38.681 Cannes Extension Agreement Commission decision, 4.10.2006. 

8. 

9. 

10. 

11. 

11 

12 
13 
14 
15 

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12. 

13. 

2006 was the first year when the Commission had to use its powers to fix a periodic 
penalty payment, under Article 24(2) of Regulation 1/2003, in order to compel an 
undertaking to comply with a decision ordering it to bring an infringement of Article 
81 or 82 EC to an end. It imposed on Microsoft a definitive penalty payment of EUR 
280.5 million for non-compliance with certain of its obligations under the decision of 
2004, which found an infringement of Article 82 EC. 

Regulation  773/2004  provides  that  the  time-limit  for  the  reply  to  the  Statement  of 
Objections  shall  have  regard  both  to  the  time  required  for  the  preparation  of  the 
submission and to the urgency of the case and shall be at least four weeks from the 
point in time when access to file is given16. In order to better reflect this regulatory 
framework  and  to  ensure  the  timely  enforcement  of  the  competition  rules,  the 
Commission  will  modify  its  current  practice  for  setting  time-limits  for  replying  to 
Statements  of  Objections17.  A  longer  period  than  the  minimum  foreseen  in 
Regulation 773/2004 will be granted where the circumstances of the case so require, 
in  particular  in  complex  cases,  in  cases  with  a  voluminous  file  or  where  holiday 
periods affect the ability of the given undertaking to reply. This is without prejudice 
to the possibility for undertakings to ask the Hearing Officer for an extension. 

1.2.  Merger control 

1.2.1. 

Shaping the rules and policy 

14. 

In order to provide better guidance on jurisdictional questions in merger control, the 
Commission  published  a  new  draft  Commission  Consolidated  Jurisdictional 
Notice  under  the  Merger  Regulation18  for  public  consultation.  This  Notice  will 
replace  the  existing  four  Jurisdictional  Notices,  all  adopted  by  the  Commission  in 
1998  under  the  previous  Merger  Regulation  4064/8919.  These  are  (i)  the  Notice  on 
the  concept  of  concentration20,  (ii)  the  Notice  on  the  concept  of  full-function  joint 
ventures21, (iii) the Notice on the concept of undertakings concerned22, and (iv) the 
Notice  on  calculation  of  turnover23.  The  new  Notice  will  therefore  cover,  in  one 
document,  all  issues  of  jurisdiction  which  are  relevant  for  establishing  the 
Commission's  competence  under  the  Merger  Regulation  (except  for  referrals).  It  is 
expected to be adopted in 2007. 

1.2.2.  Applying the rules 

15. 

The  number  of  mergers  notified  to  the  Commission  in  2006  reached  a  record 
level of 356, surpassing the previous record number reached during the last merger 
wave in 2000. In total the Commission adopted 352 final decisions during the year, 

16 
17 
18 

19 

20 
21 
22 
23 

See Case T-44/00 Mannesmannröhren-Werken AG [2004] ECR II-2223, para. 65.  
See XXIIIrd Report on Competition Policy 1993, point 207. 
Council  Regulation  (EC)  No  139/2004  of  20  January  2004  on  the  control  of  concentrations  between 
undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1). 
Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between 
undertakings (OJ L 395, 30.12.1989, p. 1). Regulation as last amended by Regulation (EC) No 1310/97 
(OJ L 180, 9.7.1997, p. 1). 
OJ C 66, 2.3.1998, p. 5. 
OJ C 66, 2.3.1998, p. 1. 
OJ C 66, 2.3.1998, p. 14. 
OJ C 66, 2.3.1998, p. 25. 

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207 of which were taken in accordance with the simplified procedure. In Phase I, 323 
transactions were cleared without conditions and 13 transactions were cleared subject 
to  conditions.  There  was  a  slight  increase  in  the  number  of  Phase  II  proceedings, 
with  13  such  cases  being  opened  during  the  year,  compared  to  10  in  2005.  There 
were  10  decisions  adopted  pursuant  to  Article  8,  with  two  concentrations  being 
abandoned  by  the  notifying  parties  during  Phase  II.  There  were  no  prohibition 
decisions. 

The  Commission  gained  further  experience  applying  the  new  substantive  test, 
introduced  in  the  Merger  Regulation  in  2004.  Two  noteworthy  cases  of  "non-
coordinated"  effects  were  Linde/BOC24,  concerning  –  inter  alia  -  the  worldwide 
wholesale  market  for  helium,  and  T-Mobile  Austria/tele.ring25,  concerning  the 
Austrian  retail  market  for  the  provision  of  mobile  telephony  services  to  end 
customers. In both cases, the Commission found that the merger would significantly 
impede competition, although the merged entity would not become the market leader 
in  the  relevant  market.  Both  cases  were  cleared  subject  to  sufficient  remedies 
proposed by the parties. 

Careful  consideration  was  given  to  substantiated  claims  that  efficiencies  would  be 
likely  to  result  from  the  notified  transactions  in  three  decisions,  Korsnas/AD 
Cartonboard26,  Inco/Falconbridge27  and  Metso/Aker  Kvaerner28.  The  Commission 
assessed the extent to which these efficiencies would impact on an overall appraisal 
of the competitive effects of the transactions in question, in line with the approach set 
out in the Horizontal Merger Guidelines29. 

16. 

17. 

1.3. 

State aid control 

1.3.1. 

Shaping the rules and policy 

18. 

Significant progress was made in modernising the current framework of State aid 
rules, in line with the State Aid Action Plan (SAAP) launched by the Commission in 
2005. The four guiding principles of this modernisation are: less and better targeted 
State  aid;  greater  emphasis  on  economic  analysis;  more  effective  procedures, 
including better enforcement, higher predictability and enhanced transparency; and a 
shared  responsibility  between  the  Commission  and  the  Member  States.  The 
consultation process showed clear support for these principles and they were at the 
heart of the policy developments in 2006. 

19. 

The  Commission  simplified  the  approval  of  regional  aid  by  adopting  a  block 
exemption  Regulation  for  regional  investment  aid30.  Member  States  no  longer 
have to notify regional investment aid schemes to the Commission if those schemes 

24 
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26 
27 
28 
29 

30 

Case COMP/M.4141 Linde/BOC Commission decision, 6.6.2006. 
Case COMP/M.3916 T-Mobile Austria/tele.ring Commission decision, 26.4.2006. 
Case COMP/M.4057 Korsnäs/Assidomän Cartonboard Commission decision, 12.5.2006. 
Case COMP/M.4000 Inco/Falconbridge Commission decision, 4.7.2006. 
Case COMP/M.4187 Metso/Aker Kvaerner Commission decision, 12.12.2006. 
Guidelines  on  the  assessment  of  horizontal  mergers  under  the  Council  Regulation  on  the  control  of 
concentrations between undertakings, paragraphs 76-88 (OJ C 31, 5.2.2004, p. 5). 
Commission Regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 
88 of the Treaty to national regional investment aid (OJ L 302, 1.11.2006, p. 29). 

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comply with the new Regional Aid Guidelines31 and the approved regional aid map 
for  2007-2013.  In  2006,  regional  aid  maps  identifying  the  disadvantaged  regions 
eligible  for  aid  and  the  maximum  aid  intensities  allowed  in  these  regions  were 
approved for 18 Member States. 

The  Commission  also  adopted  the  new  State  aid  framework  for  Research, 
Development and Innovation (R,D&I)32. The objective of the framework is to help 
Member  States  channel  a  larger  share  of  their  total  State  aid  budgets  towards 
boosting R,D&I and to help them target R,D&I State aid on the best projects, on the 
basis  of  economic  analysis.  This  should  minimise  distortions  of  competition  and 
trade and maximise public spending efficiency. It is clear from the new rules that the 
refined economic approach developed in the SAAP is now a reality and is becoming 
a cornerstone of the Commission's State aid policy. 

Furthermore, new Risk capital Guidelines33 were adopted, allowing Member States 
to  improve  access  to  finance  for  SMEs.  They  cover  risk  capital  measures  for 
investment  in  SMEs  in  their  early  (seed,  start-up)  and  expansion  stages.  Given  the 
importance  of  SMEs  in  terms  of  spurring  economic  growth  and  creating  lasting 
employment, 
the  Commission's 
competitiveness strategy34. 

the  guidelines  form  an 

important  part  of 

Finally, the Commission adopted a new de minimis Regulation35 exempting small 
subsidies from the obligation to be cleared by the Commission in advance. Under the 
new Regulation, aid of up to EUR 200 000 granted over three fiscal years will not be 
regarded as State aid. 

In  2007,  the  Commission  intends  to  continue  to  implement  the  SAAP  by  adopting 
new  guidelines  on  environmental  protection,  new  rules  for  aid  in  the  form  of 
guarantees,  a  new  notice  on  the  Commission's  reference  rates  and  a  notice  on  the 
recovery of illegal or incompatible aid. 

20. 

21. 

22. 

23. 

1.3.2.  Applying the rules 

24. 

31 

32 
33 
34 

35 

36 

There was a significant increase in the State aid control workload, with 921 new 
cases  registered  in  2006  (a  36 %  increase  compared  with  the  previous  year).  The 
Commission  took  710  final  decisions36,  a  12 %  increase  compared  to  2005.  In  the 
vast majority of cases, the Commission approved the measures, concluding that the 
examined aid was compatible (91 % of all decisions) with the State aid rules or did 
not  constitute  State  aid  (4 %  of  all  decisions).  Where  the  Commission  had  doubts 
whether  certain  aid  measures  complied  with  the  rules,  it  carried  out  a  formal 
investigation. At the end of this investigation procedure, the Commission either took 

The Commission adopted new Regional Aid Guidelines (RAG) for the period 2007-2013 in December 
2005 (OJ C 54, 4.3.2006, p. 13). 
OJ C 323, 30.12.2006, p. 1. 
OJ C 194, 18.8.2006, p. 2. 
See  Communication  "Working  together  for  growth  and  jobs  –  A  new  start  for  the  Lisbon  strategy", 
COM(2005) 24 final, 2.2.2005. 
Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 
88 of the Treaty to de minimis aid (OJ L 379, 28.12.2006). 
Excluding decisions to open the formal investigation procedure, corrigenda, injunctions, proposals for 
appropriate measures. 

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a positive, conditional or no aid decision (3 % of all decisions) or found that the aid 
did not comply with State aid rules (2 % of all decisions). 

The  main  regional  aid  cases  concerned  large  investment  projects  covered  by  the 
2002  Multisectoral  framework  on  regional  aid  for  large  investment  projects37.  The 
Commission approved aid in 9 Polish cases concerning investment for the production 
of  flat  screen  TV  modules  by LG Philips LCD Poland Sp. z o.o.38. In addition, the 
Commission  approved  aid  for  two  German  investment  projects  in  the  solar 
(photovoltaic)  energy  sector,  namely  First  Solar  GmbH39  and  HighSi  GmbH40,  and 
one investment in a new tyre production plant from a Korean firm in Hungary41. 

In  the  area  of  State  aid  for  R,D&I,  a  major  scheme  concerning  the  French 
Innovation Agency42 was approved, for which the  State allocated a budget  of  EUR 
2 billion. In line with the new framework, the impact of the aid on competition was 
carefully analysed in some aeronautic cases - concerning aid to Rolls-Royce43 and to 
Eurocopter44  -  and  in  the  first  large  project  notified  by  the  French  Agency,  called 
BioHub45. 

Concerning  risk  capital  measures,  the  Commission  approved  Investbx46,  an 
investment  vehicle  creating  a  means  for  SMEs  in  the  West  Midlands  region  of  the 
UK  to  raise  equity  capital.  Scouting  costs,  i.e.  costs  linked  to  the  selection  of 
innovative  companies  for  the  purpose  of  investment  by  risk  capital  funds  (such  as 
screening costs, consultancy on the business  plan, etc.)  have also been approved in 
an Italian case47. 

Whilst the "polluter pays principle" means that polluters should not be relieved of the 
obligation to pay for their own waste, the Commission has allowed environmental 
aid in several cases. A large number of the measures approved serve the support of 
renewable energy production, using different aid instruments for that purpose, mostly 

OJ C 70, 19.3.2002, p. 8. 
Case  N  245/2006  LG  Philips  LCD  Poland  Sp.  z  o.o.  (not  yet  published),  Case  N  246/2006  Ohsung 
[Dong Seo] Display Poland Sp. z o.o. (not yet published), Case N 247/2006 Lucky SMT Sp. z o.o. (not 
yet  published),  Case  N  248/2006  Dong  Yang  Electronics  Sp.  z  o.o.  (not  yet  published),  Case 
N 249/2006  Heesung  Electronics  Poland  Sp.  z  o.o.  (not  yet  published),  Case  N  250/2006  LG  Chem 
Poland  Sp.  z  o.o.  (not  yet  published),  Case  N  251/2006  LG  Innotek  Poland  Sp.  z  o.o.  (not  yet 
published), Case N 256/2006 LG Electronics Wroclaw Sp. z o.o.- House appliances (not yet published), 
Case N 257/2006 LG Electronics Wroclaw Sp. z o.o.-TV sets (not yet published). 
Case N 17/2006 First Solar GmbH (OJ C 259, 27.10.2006, p. 13). 
Case N 409/2006 HighSi GmbH (not yet published). 
Case N 34/2006 Hankook Tire Hungary Ltd (OJ C 232, 27.9.2006, p. 2). 
N  121/2006  Soutien  de  l'Agence  de  l'innovation  industrielle  en  faveur  des  programmes  mobilisateurs 
pour l'innovation industrielle (not yet published). 
N  193/2006  Large  R&D  aid  to  Rolls  Royce  et  al.  –  Environmentally  Friendly  Engine  (EFE)  (not  yet 
published). 
N 186/2006 Soutien d'Eurocopter pour le développement d'un hélicoptère de transport moyen tonnage 
EC175 (not yet published). 
N 708/2006 Soutien de l'Agence de l'innovation industrielle en faveur du programme de R&D BioHub 
(not yet published). 
C 36/2005 Investbx (not yet published). 
N 9/2006 Risk capital funds in favour of innovative SME located in Mezzogiorno (OJ C 218, 9.9.2006, 
p. 9). 

25. 

26. 

27. 

28. 

37 
38 

39 
40 
41 
42 

43 

44 

45 

46 
47 

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investment aid and operating aid in the form of tax reductions or feed-in tariffs48. As 
regards  waste  management,  the  Commission  continued  its  practice  and  assessed 
recycling management measures in the Czech republic49 and the UK50 on the basis of 
Article 87(3)(c). 

Training aid can contribute to the European common interest by increasing the pool 
of  skilled  workers  and  improving  the  competitiveness  of  Community  industry.  In 
2006,  there  were  57  measures  submitted  by  Member  States  under  the  block 
exemption  Regulation  for  training  aid51.  In  addition,  the  Commission  received  a 
number  of  notifications  concerning,  in  particular,  training  aid  in  the  car  industry52. 
The Commission  verified that  the  aid indeed supports training activities that would 
not have been undertaken in the absence of aid. 

Rescue  and  restructuring  (R&R)  aid  to  firms  in  difficulty  may  be  regarded  as 
legitimate only if strict conditions are fulfilled. During 2006 the Commission applied 
the amended rules, laid down in the 2004 R&R Guidelines, in a number of decisions. 
On  the  basis  of  these  Guidelines  it  took  three  rescue  aid  decisions53,  two  no 
objections  decisions  as  regards  restructuring  aid54,  one  positive  decision55  and  no 
negative  decision.  In  addition,  a  number  of  decisions  taken  were  still  based  on  the 
1999 R&R Guidelines56. 

In  the  field  of  fiscal  aid,  the  Commission  found  that  a  preferential  tax  regime  in 
Spain in favour of outward foreign direct investments was State aid, improving the 
trading conditions of the beneficiaries in exporting goods and services from Spain to 
foreign  markets57.  It  concluded  that  the  aid  was  incompatible  with  the  common 
market because it remitted internal taxes on export in breach of Article 92 EC. 

Finally,  continuing  efforts  were  made  to  implement  recovery  decisions  more 
effectively  and  immediately.  The  number  of  outstanding  recovery  decisions 
continues to decrease. At the end of 2006, there were 60 pending recovery decisions, 

See  for  example:  NN162/A/2003  and  N317/A/2006,  Austria, support  of  electricity  production  from 
renewable  sources  under  the  Green  Electricity  Act  (feed-in  tariffs)  (OJ  C  221,  14.9.2006,  p.  9), 
NN162/B/2003  and  NN317/B/2006,  Austria,  support  of  CHP  production  under  the  Green  Electricity 
Act (support tariff) (OJ C 221, 14.9.2006, p. 9.) 
OJ C 202, 25.8.2006, p. 9. 
OJ C 209, 31.8.2006, p. 8. 
Commission Regulation (EC) No 68/2001 of 12 January 2001, as amended by Commission Regulation 
(EC)  No  363/2004  of  25  February  2004  and  by  Commission  Regulation  (EC)  No  1976/2006  of  20 
December 2006, on the application of Articles 87 and 88 of the EC Treaty to training aid. 
Two cases were decided in 2006: C 40/05 Ford Genk (Belgium) and N 653/05 Webasto (Portugal). For 
three other cases, the Commission had not taken a final decision by the end of 2006. 
Cases NN 14/06 Ottana Energia Commission decision, 12.12.2006 (not yet published), NN 16/06 CIT 
Commission  decision,  7.7.2006  (OJ  C  244,  11.10.2006,  p.  14),  N  28/06  Techmatrans  Commission 
decision, 20.2.2006 (OJ C 87, 11.4.2006, p. 2). 
Cases  N  464/05  AB  Kauno  Commission  decision,  22.2.2006  (OJ  C  270,  7.11.2006,  p.  2),  N 632/05 
Energetyka Wislosan Commission decision, 19.7.2006 (OJ C 232, 27.9.2006, p. 2). 
Case C 44/2005 Huta Stalowa Wola Commission decision, 20.12.2006 (not yet published). 
Cases C 3/2005 FSO Commission decision, 20.12.2006 (not yet published), C 25/2005 Frucona Košice 
Commission decision, 7.6.2006 (not yet published), C 42/2005 Konas Commission decision, 26.9.2006 
(not  yet  published),  C  1/2005  Euromoteurs  Commission  decision,  26.4.2006  (OJ  L  307,  7.11.2006, 
p. 213). 
Case E22/2004 Incentives for export related investments. 

29. 

30. 

31. 

32. 

48 

49 
50 
51 

52 

53 

54 

55 
56 

57 

EN 

9 

   EN 

 
                                                 
compared  to  75  at  the  end  of  2005.  During  2006,  21  pending  recovery  cases  were 
closed, whilst six new recovery decisions were taken. Of the EUR 8.7 billion of aid 
to be recovered under decisions adopted since 2000, some EUR 7.2 billion (i.e. 83 % 
of  the  total  amount)  had  been  effectively  recovered  by  the  end  of  2006.  The 
Commission  took  legal  action  against  Member  States  under  either  Article  88(2)  or 
Article 228(2) EC for not effectively implementing recovery decisions in five cases 
involving three Member States58. 

2. 

SECTOR DEVELOPMENTS 

2.1. 

Energy 

33. 

34. 

35. 

58 

59 
60 

61 

Despite two waves of liberalisation efforts at European level, significant rises in gas 
and  electricity  wholesale  prices,  persistent  complaints  about  entry  barriers,  and 
limited customer choice led the Commission to open an inquiry into the functioning 
of European gas and electricity markets in June 2005. The final report on the sector 
inquiry,  which  was  adopted  by  the  Commission  on  10  January  200759,  provided  a 
broad  insight  into  the  functioning  of  gas  and  electricity  markets  at  all  levels  of  the 
supply chain. The core competition problems identified include highly concentrated 
wholesale  markets,  insufficient  unbundling  of  network  and  supply  activities, 
insufficient  or  unavailable  cross-border  capacity,  lack  of  reliable  and  timely 
information on network availability, limited retail competition and the small size of 
balancing  zones.  The  sector  inquiry's  findings  have  informed  the  Commission's 
competition enforcement policy in separate individual cases, and have made a major 
contribution to policy formulation as regards the next steps in liberalising European 
electricity and gas markets. 

The Commission has carried out a number of own-initiative antitrust investigations, 
in  addition  to  having  received  and  investigated  several  complaints.  The  issues  that 
are being investigated  include  hoarding of network and  storage  capacity,  long-term 
capacity  reservations,  strategic  underinvestment  in  networks  to  protect  downstream 
supply interests, blocking of interconnectors to favour domestic consumption, market 
sharing  and  long-term  contracts  between  wholesalers/retailers  and  downstream 
customers. Important investigations have also been conducted at Member State level, 
for instance by the Danish, German and Italian Competition Authorities60. 

Long-term  contracts  with  customers  have  also  been  identified  as  a  competition 
problem in energy markets outside the gas and electricity sectors. The Commission 
adopted  a  commitment  decision  under  Article 9  of  Regulation  1/2003  concerning 
the  petrol  station  network  of  Repsol,  a  Spanish  supplier  of  motor  fuels61.  The 
commitments offered by Repsol will free hundreds of service stations from long-term 

CR  57/03  Tremonti  Bis,  CR  36/01  Beaulieu  Ter  Lembeek,  CR  8/04  Fiscal  incentives  for  newly  listed 
companies, CR 13/B/03 France Telecom Business tax Scheme and CR 57/02 Article 44 Septies CGI. 
COM(2006) 851 final. 
The Danish Competition Authority has intervened against excessive prices and market manipulation in 
Western  Denmark,  the  German  Competition  Authority  has  intervened  against  long-term  gas  supply 
agreements between wholesalers and Stadtwerke, and the Italian Competition Authority has intervened 
against failure to expand capacity in order to protect dominance on the downstream supply market. 
Commission decision in Case COMP/38.348 Repsol CPP, 12.4.2006. 

EN 

10 

   EN 

 
                                                 
36. 

37. 

exclusive  supply  contracts,  thereby  bringing  a  wider  choice  and  scope  for  reduced 
prices to the benefit of the consumer. 

In the field of energy mergers, the Commission adopted a large number of decisions. 
from  a  competition  point  of  view  were 
The  most  complex  cases 
DONG/Elsam/Energi E262  and  Gaz  de  France/Suez63.  Both  concentrations,  as 
originally  notified,  would  have  resulted  in  a  significant  impediment  to  effective 
competition and were only cleared on the basis of comprehensive structural remedies 
offered by the parties. In the E.ON/Endesa case, the Commission took two decisions 
pursuant to Article 21 of the Merger Regulation requiring Spain to withdraw certain 
conditions illegally imposed on the transaction, which itself had already been cleared 
by the Commission. 

In the area of State aid control, work has continued with a view to finding a solution 
to the problems caused by long-term contracts between public network operators and 
generators in Hungary64 and Poland65, foreclosing significant parts of the wholesale 
markets.  The  Commission  also  analysed  several  regulated  tariff  schemes  in  Italy66, 
where  certain  industrial  companies  benefit  from  favourable  electricity  tariffs  below 
the market price. The State aid aspects of the reorganisation of nuclear liabilities of 
the  public  sector  were  considered  in  a  case  concerning  the  United  Kingdom67.  The 
State  aid  decisions  in  the  area  of  renewable  energy  have  focused  on  verifying  the 
necessity  of  such  aid  and  ensuring  that  the  public  financing  covers  only  the  extra 
costs  in  respect  of  generation  and  supply  as  compared  to  conventional  energy 
sources.  Finally,  under  the  EU  Emission  Trading  Scheme  (EU  ETS),  the 
Commission  has  assessed  the  National  Allocation  Plans  (NAPs)  for  the  second 
trading  period  (2008-2012)  under  the  criteria  of  Annex  III  of  the  ETS  Directive68, 
including  criterion  5  providing  that  allocation  must  not  discriminate  between 
companies  or  sectors  in  such  a  way  as  to  unduly  favour  certain  undertakings  or 
activities, in accordance with the requirements of the Treaty, in particular Articles 87 
and 88 EC thereof. The Commission took decisions under the EU ETS on the NAPs 
for the second trading period of 10 Member States. 

2.2. 

Financial services 

38. 

62 
63 
64 
65 
66 
67 
68 

69 

A  number  of  indicators  such  as  market  fragmentation,  price  rigidity  and  lack  of 
customer mobility suggest that competition in the EU retail banking market does not 
work  effectively.  Therefore,  the  Commission  decided  in  June  200569  to  open  an 
inquiry  into  the  retail  banking  sector,  in  particular  in  relation  to  cross-border 
competition.  Two  interim  reports,  one  on  card  payments  and  another  on  current 
accounts  and  related  services,  were  published  for  consultation  and  presented  at  a 
public  hearing  in  2006.  The  final  report  on  retail  banking  was  published  on  31 

Case COMP/M.3868 DONG/Elsam/Energi E2 Commission decision, 14.3.2006. 
Case COMP/M.4180 Gaz de France/Suez Commission decision, 14.11.2006. 
OJ C 324, 21.12.2005, p. 12. 
OJ C 52, 2.3.2006, p. 8. 
OJ C 145, 21.6.2006, p. 8 and OJ C 214, 6.9.2006, p. 5. 
OJ L 268, 27.9.2006, p. 37. 
Directive  2003/87/EC  establishing  a  scheme  for  greenhouse  gas  emission  trading,  OJ  L  275, 
25.10.2003, p. 32, as amended by Directive 2004/101/EC, OJ L 338, 13.11.2004, p. 18. 
Commission decision, 13.6.2005 (OJ C 144, 14.6.2005, p. 13). 

EN 

11 

   EN 

 
                                                 
39. 

40. 

41. 

January  2007.  Potential  competition  problems  identified  included  entry  barriers, 
market  fragmentation  along  national  lines  and  the  high  degree  of  concentration 
among issuers and acquirers of payment cards. 

The Commission also continued its extensive sector inquiry in business insurance, 
also launched in June 2005. The interim report on business insurance was published 
on 24 January 2007, and the final report is scheduled for September 2007. 

In 

involving 

the  case 

financial  services. 

The Commission assessed and cleared a large number of concentrations in the area 
of 
the  acquisition  of  Gerling 
Versicherungsgruppe  by  Talanx  Aktiengesellschaft70,  the  Commission's  extensive 
market investigation revealed that the proposed acquisition was likely to significantly 
reduce  competition  as  regards  liability  insurance  for  pharmaceutical  companies  in 
Germany. To address these concerns, Talanx committed to divest the pharmaceutical 
liability  business  of  its  subsidiary  HDI  as  far  as  it  concerns  insurance  for  German 
companies outside the obligatory product liability insurance. 

The  Commission  also  had  to  ensure,  through  its  State  aid  control,  a  level  playing 
field in financial services, especially for new entrants and foreign banks. As regards 
Crédit  Mutuel71,  the  Commission  continued  to  investigate  the  possible  existence  of 
an  overcompensation  for  distributing  the  'livret  bleu'  and,  in  addition,  infringement 
proceedings were opened against the special rights granted to La Poste, the Caisses 
d’Épargne  and  Crédit  Mutuel  to  distribute  the  ‘livret  A’  and  the  ‘livret  bleu'.  The 
Commission  took  a  final  negative  decision  demanding  the  repeal  of  Luxembourg's 
existing fiscal aid scheme in favour of the "1929 exempt, milliardaire and financial 
holdings"72.  The  scheme  was  considered  as  hidden  subsidy  to  holdings  providing 
certain  financial  services  to  related  and  unrelated  business  entities  within  a 
multinational group. 

2.3. 

Electronic communications 

42. 

70 
71 
72 
73 

The vast majority of providers of electronic communication services operate within 
the  confines  of  the  EU  regulatory  framework  for  electronic  communications 
networks  and  services73.  This  framework  is  designed  to  facilitate  access  to  legacy 
infrastructure,  foster  investment  in  alternative  infrastructure  and  bring  about  choice 
and  lower  prices  for  consumers.  It  currently  recommends  18  specific  product  and 

Case COMP/M.4055 Talanx/Gerling Commission decision, 5.4.2006. 
OJ C 210, 1.9.2006, p. 12. 
OJ L 366, 21.12.2006, p. 47. 
Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common 
regulatory framework for electronic communications networks and services (Framework Directive) (OJ 
L  108,  24.4.2002,  p.  33),  Directive  2002/19/EC  of  the  European  Parliament  and  of  the  Council  of  7 
March 2002 on access to, and interconnection of, electronic communications networks and associated 
facilities  (Access  Directive)  (OJ  L  108,  24.4.2002,  p.  7),  Directive  2002/20/EC  of  the  European 
Parliament  and  of  the  Council  of  7  March  2002  on  the  authorisation  of  electronic  communications 
networks and services (Authorisation Directive) (OJ L 108, 24.4.2002, p. 21), Directive 2002/22/EC of 
the  European  Parliament  and  of  the  Council  of  7  March  2002  on  universal  service  and  users'  rights 
relating to electronic communications networks and services (Universal Service Directive) (OJ L 108, 
24.4.2002, p. 51), Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 
concerning  the  processing  of  personal  data  and  the  protection  of  privacy  in  the  electronic 
communications sector (Directive on privacy and electronic communications) (OJ L 201, 31.7.2002, p. 
37). 

EN 

12 

   EN 

 
                                                 
43. 

44. 

services markets at both wholesale and retail level for ex ante regulation by national 
regulators.  In  June,  the  Commission  published  a  draft  revised  text  of  the  list  of 
markets  susceptible  to  ex  ante  regulation74,  which  recommends  a  significant 
reduction in the number of markets on that list. In general, the Commission considers 
that where wholesale regulation is efficient, the conditions at retail level should allow 
effective competition. 

Under  the  Article  7  procedure75,  the  Commission  continued  to  ensure  that 
regulation  across  the  EU  is  consistent  and  based  on  competition  law  principles,  is 
limited to markets where there is a persistent market failure and is rolled back only 
where  an  effectively  competitive  outcome  would  no  longer  depend  on  ex  ante 
regulatory  intervention.  The  Commission  assessed  244  notifications  from  national 
regulators and adopted 156 decisions. The Commission did not require any NRA to 
withdraw  the  draft  measure.  The  draft  measure  was  withdrawn  by  the  NRA  on  its 
own motion in one case. 

Broadband  access  markets  provide  an  interesting  example  of  the  simultaneous 
application  of  ex  ante  sector-specific  regulation  and  ex  post  competition  law.  The 
Commission  sent  a  statement  of  objections  to  the  Spanish  incumbent  operator 
preliminarily finding that Telefónica had been abusing its dominant position on the 
broadband access markets in Spain by way of a margin squeeze infringing Article 82 
EC. Under the Article 7 procedure, the Commission ensured that national regulators 
would  also  include  very  high  speed  digital  subscriber  line  access  in  the  relevant 
market for wholesale broadband access where these are substitutable independently 
of the infrastructure over which they are delivered. Finally, under the State aid rules, 
the Commission has approved several projects involving State funding for broadband 
infrastructure and services, mostly concerning rural or remote areas with no or only 
limited  broadband  coverage76.  On  the  other  hand,  the  Commission  decided  to 
prohibit public funding for the planned construction of a fibre access network in the 
Dutch  town  of  Appingedam77,  as  the  project  concerned  an  area  already  served  by 
broadband networks at prices similar to other regions. 

45. 

In the area of mobile telephony, the Commission has so far not objected, under the 
Article  7  procedure,  to  the  view  of  some  national  regulators  that  regulatory 
intervention on the wholesale market for mobile access and call origination might be 
necessary to avoid consumer harm78. The merger control instruments were also used 

74 

75 

76 

77 
78 

'Commission staff working document, public consultation on a draft Commission recommendation on 
Relevant  Product  and  Service  Markets  within  the  electronic  communications  sector  susceptible  to  ex 
ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council 
on a common regulatory framework for electronic communications networks and services', available at: 
http://europa.eu.int/information_society/policy/ecomm/doc/info_centre/public_consult/review/recomme
ndation_final.pdf 
Under  Article  7  of  the  Framework  Directive,  national  regulators  must  notify  to  the  Commission  the 
results of their competition law based analysis of the 18 markets. 
See  for  instance  Cases  N 398/2005 Development  Tax  benefit  for  broadband  in Hungary  Commission 
decision, 16.5.2006, N 118/2006 Development of broadband communication networks in rural areas of 
Latvia Commission decision, 7.6.2006, N 264/05 Broadband for rural Tuscany Commission decision, 
13.9.2006, N 222/2005 Aid to bridge the digital divide in Sardinia Commission decision, 22.11.2006. 
Case C 35/2006 Broadband development Appingedam Commission decision, 19.7.2006. 
See  notifications  from  Cyprus,  Ireland,  Malta,  Spain  and  Slovenia.  The  Irish  NRA  has,  however, 
withdrawn its SMP designation in the course of national court procedures. 

EN 

13 

   EN 

 
                                                 
to  ensure  that  concentrations  between  mobile  operators  would  not  significantly 
impede effective competition79. 

2.4. 

Information technology 

46. 

47. 

48. 

49. 

The  Commission  continued  to  ensure  that  competition  is  not  distorted  in  the 
information  technology  sector,  characterised  by  digital  convergence,  the  growing 
importance of interoperability and the key role of standard-setting organisations. 

Further steps were taken to ensure that Microsoft complies with its obligations under 
the decision of 200480, which found an infringement of Article 82 EC, namely to (i) 
supply  complete  and  accurate  interoperability  information,  and  (ii)  make  that 
information available on reasonable terms. As Microsoft did not provide the required 
complete  and  accurate  interoperability  information,  the  Commission  adopted  a 
decision  imposing  on  Microsoft  a  penalty  payment  of  EUR  280.5 million  for  non-
compliance with its obligations. 

In  the  area  of  merger  control,  the  Commission  assessed  whether  or  not 
concentrations  of  network  equipment  manufacturers  significantly  impede  effective 
competition.  In  this  context,  the  Commission  cleared  the  proposed  merger  between 
Nokia  and  the  network  equipment  business  of  Siemens  AG,  concluding  that  the 
transaction  would  not  significantly  impede  effective  competition  in  the  mobile 
network equipment sector81. Similarly, the Commission cleared the proposed merger 
between  Alcatel  and  Lucent  Technologies,  concluding  that  the  market  structure  for 
the  supply  of  optical  networking  equipment  and  broadband  access  solutions  would 
remain competitive even after the proposed transaction82. 

In the field of State aid control, the Commission reviewed the proposed French tax 
incentive  to  support  the  creation  of  video  games.  It  decided  to  open  a  formal 
investigation on whether this tax incentive pursues a genuine cultural goal, in view of 
the  wider  context,  in  particular  the  fierce  competition  from  US,  Canadian  and 
Japanese video-game makers as well as the technological and economic leap of new-
generation consoles. 

2.5.  Media 

50. 

Market developments in the media sector include an increase in the overall number 
of  distribution  channels,  greater  consumer  choice  and  demand  for  content,  and  the 
switch from analogue to digital broadcasting, which is already providing consumers 
with better picture quality and a greater variety of programmes. The main objective 
of  competition  policy  in  the  media  sector  is  to  guarantee  a  level  playing  field, 
whether  between  different  commercial  operators  or  between  commercial  operators 
and publicly-funded operators. 

79 

80 
81 
82 

Case COMP/M.3916 T-Mobile Austria/tele.ring Commission decision, 26.4.2006. See also paragraph 0 
above. 
See also paragraph 0 above. 
Case COMP/M.4297 Nokia/Siemens Commission decision, 13.11.2006. 
Case COMP/M.4214 Alcatel/Lucent Commission decision, 24.7.2006. 

EN 

14 

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51. 

52. 

53. 

83 

84 

85 

86 

87 

88 

89 

90 

91 

92 

93 

In the area of  digital broadcasting, following a complaint by the Italian consumer 
association  Altroconsumo,  the  Commission  opened  infringement  proceedings  to 
investigate  whether  the  Italian  legislation  regulating  digital  switchover  imposes 
restrictions  on  broadcasters  and  grants  competitive  advantages  to  existing  analogue 
operators,  contrary  to  the  Competition  Directive83  and  other  relevant  provisions  of 
the  Regulatory  Framework  for  telecommunications.  It  has  opened  formal  State  aid 
inquiries concerning measures facilitating digital switchover in two German Länder, 
Bavaria84  and  North  Rhine-Westphalia85,  to  see  whether  the  aid  is  limited  to  the 
minimum necessary and does not unduly distort competition. In decisions concerning 
France86  and  Italy87,  the  Commission  has  given  more  details  of  the  conditions  for 
granting  subsidies  to  consumers  to  buy  digital  decoders,  such  as  respecting  the 
principle of technological neutrality. 

In  line  with  the  "Broadcasting  Communication"88,  the  Commission  continued  to 
approve State financing for public service broadcasters where the State funding did 
not exceed the public service costs89. In recent cases, the Commission has also asked 
Member  States  to  introduce  mechanisms  to  avoid  overcompensation90  and  it  has 
asked for aid to be recovered if a public service broadcaster has received more public 
funds  than  necessary.  However,  the  Commission  has  accepted  that  it  may  be 
justifiable  for  public  service  broadcasters  to  keep  a  surplus  as  a  buffer  against 
possible fluctuations in costs/revenues91. 

The Commission continued to give high priority to ensuring that premium content 
is  made  available  under  open  and  transparent  conditions  allowing  a  maximum 
number  of  operators  to  bid  for  the  rights.  In  the  English  Premier  League  (FAPL) 
commitment  decision92,  the  Commission  confirmed  the  basic  principles  established 
in  the  UEFA  Champions  League  and  Bundesliga  decisions  with  respect  to  joint 
selling  of  sport  media  rights93.  In  the  area  of  mergers,  the  acquisition  by  CVC,  a 

à 

la 

les 

sans 

TNT 

Aide 

dans 

régions 

(DVB-T) 

simulcast 

Subsidies 

television 

terrestrial 

N270/2006 

in  Bavaria  at 

Commission Directive 2002/77/EC of 16 September 2002 on competition in the markets for electronic 
communications networks and services (OJ L 249, 17.9.2002, p. 21). 
Case  C33/2006 
Introduction  of  digital 
http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/C-33-2006-WLWL-en-19.07.2006.pdf 
Case  C34/2006  Introduction  of  digital  terrestrial  television  (DVB-T)  in  North  Rhine-Westphalia  at 
http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/C-34-2006-WLWL-en-19.07.2006.pdf 
Case  N111/2006 
at 
http://ec.europa.eu/community_law/state_aids/comp-2006/n111-06.pdf;  Case  N546/2006  Fonds  d'aide 
à  des  particuliers  sous  conditions  de  ressources  dans  la  perspective  de  la  fin  de  la  radiodiffusion 
analogique at http://ec.europa.eu/community_law/state_aids/comp-2006/n546-06.pdf 
Case 
digital 
to 
http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/N-270-2006-en-WLWL-24.01.2007.pdf 
Communication  from  the  Commission  on  the  application  of  State  aid  rules  to  public  service 
broadcasting (OJ C 320, 15.11.2001, p. 5). 
Cf.  Commission  decision  approving  the  financial  restructuring  plan  for  the  Portuguese  PSB  in  July 
2006 (State aid NN 31/2006 – Portugal). 
Cf. Commission decision closing the existing aid investigation concerning the general financing regime 
for the Portuguese public service broadcaster RTP (State aid E 14/2005 – Portugal). 
Cf. Commission decision concerning the ad hoc financing of Dutch public service broadcasters adopted 
in 2006 (State aid C 2/2004 –the Netherlands). 
Case  COMP/38.173  Joint  selling  of 
http://ec.europa.eu/comm/competition/antitrust/cases/index/by_nr_76.html#i38_173 
Case COMP/37.398, Joint selling of the commercial rights of the UEFA Champions League (OJ L 291, 
8.11.2003, p. 25) and Case COMP/37.214, Joint selling of the media rights to the German Bundesliga 
(OJ L 134, 27.5.2005, p. 46). 

the  FA  Premier  League  at 

the  media  rights 

decoders 

open 

with 

API 

to 

at 

EN 

15 

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54. 

55. 

private  equity  firm,  of  SLEC,  the  owner  of  the  Formula  One  Group  and  of  all  TV 
rights to the Formula One competition94, was cleared on the condition of a divestiture 
ensuring that competition would not be significantly impeded as regards the selling 
of the TV rights in Italy and Spain to the two most popular motor sport events in the 
EU. 

The  Commission  assessed  State  aid  measures  for  films  and  other  audiovisual 
works on the basis of the "Cinema Communication"95, which sets out the criteria for 
approval of such aid under the cultural exemption from the general ban on State aid. 
The  three  most  significant  decisions  in  2006  concerned  the  French  film  support 
schemes96, the UK film tax incentive scheme97 and the new German Film Fund98. All 
these measures were approved by the Commission on the basis of an undertaking that 
they would be amended by the national authorities to take account of any changes in 
the State aid rules during their period of operation. 

In  the  context  of  rights  management,  the  Commission  adopted  the  Cannes 
Extension  Agreement  commitment  decision99,  ensuring  that  record  producers  can 
continue  to  receive  rebates  from  collecting  societies  on  copyright  licence  fees  paid 
and  that  potential  entry  by  collecting  societies  into  the  music  publishing  or  record 
production  markets  is  not  impeded.  The  Commission  also  issued  a  Statement  of 
Objections against CISAC (the "International Confederation of Societies of Authors 
and Composers") and the individual collecting societies in the EEA Member States 
which are members of CISAC100. The Commission expressed concerns about certain 
provisions in the CISAC model contract and in bilateral agreements between CISAC 
and  its  members  which  extend  the  traditional  offline  national  monopolies  of 
collecting societies into the online sector. 

2.6. 

Transport 

56. 

94 

95 

96 

97 
98 

99 

100 

Further to the Commission's legislative initiatives in the field of transport policy with 
a view to creating EU-wide integrated and competitive transport markets, the goal of 
competition policy is to ensure that the efficient functioning of these markets is not 
hindered  by  anti-competitive  practices  or  distortions  of  competition.  Competition 
problems may exist, in particular, in the form of protected national haulage markets 
in the case of road transport, low levels of interoperability and weak coordination of 

Case  COMP/M.4066,  CVC/SLEC,  at  http://ec.europa.eu/comm/competition/mergers/cases/index/ 
m81.html#m_4066 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  Economic  and 
Social  Committee  and  the  Committee  of  the  Regions  on  certain  legal  aspects  relating  to 
cinematographic  and  other  audiovisual  works  (COM(2001)  534  final  of  26.9.2001,  OJ  C  43, 
16.2.2002). 
Case  NN  84/05:  http://ec.europa.eu/comm/competition/state_aid/register/ii/doc/NN-84-2004-WLWL-
fr-22.03.2006.pdf 
Case N 461/05: http://ec.europa.eu/community_law/state_aids/comp-2005/n461-05.pdf 
Case N 695/06: 
http://ec.europa.eu/comm/competition/state_aid/register/ii/by_case_nr_n2006_690.html#695 
Case COMP/38681 Cannes Agreement, commitments at 
http://ec.europa.eu/comm/competition/antitrust/cases/decisions/38681/commitments.pdf. See also Press 
Release IP/06/1311, 4.10.2006. 
Press Release MEMO/06/63, 7.2.2006. 

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infrastructure  in  the  case  of  rail  transport,  and  lack  of  transparent  access  to 
competitive port services in the case of maritime transport. 

In  the  case  of  road  transport,  the  Commission  maintained  its  policy  of  approving 
State  aid  in  order  to  favour  the  uptake  of  cleaner  technology,  in  particular  on  old 
vehicles101, and of approving State aid for public service obligations102. 

The  Commission  adopted  several  State  aid  decisions  to  promote  rail  transport.  It 
authorised a Czech aid measure consisting in guaranteeing a loan to Czech Railways 
to  facilitate  the  purchase  of  new  passenger  rolling  stock103  and  allowed  the 
Netherlands  to  grant  aid  for  the  deployment  of  the  European  Train  Control 
System104. Concerning State aid to rail infrastructure, the Commission decided in one 
case  that  the  financing  and  supervision  of  the  construction  of  new  railway 
infrastructure did not constitute economic activities, but fell within the public policy 
remit105. 

In the area of maritime transport, the liner conference block exemption contained 
in  Council  Regulation  4056/86  was  repealed  by  Council  Regulation  1419/2006106. 
This  was  done  since  the  four  cumulative  conditions  of  exempting  price  fixing  and 
capacity regulation under Article 81(3) EC were no longer met. The same Regulation 
also  extended  the  scope  of  Regulation  1/2003  so  as  to  include  cabotage  and  tramp 
vessel services. In line with a request from the European Parliament and given that 
Regulation  1/2003  did  not  apply  in  full  to  the  liner  sector,  the  Commission  has 
undertaken  to  issue  guidelines  on  the  application  of  competition  law  to  maritime 
services so as to help smooth the transition to a fully competitive regime. Concerning 
State  aid  in  maritime  transport,  the  Commission  favours  tight  convergence  of  aid 
schemes  to  achieve  the  best  possible  level  playing  field  within  Europe,  including 
towage and dredging activities. It has insisted on the dismantling of any nationality 
clause  attached  to  schemes  exempting  ship-owners  from  payment  of  the  social 
contributions of their seafarers. 

In  the  area  of  air  transport,  the  Commission  adopted  Regulation  1459/2006 
discontinuing the exemption, from the prohibition under Article 81(1) EC, of IATA 
passenger tariff conferences for routes within the EU from 1 January 2007. The new 
regulation also discontinues the exemption for slots and scheduling conferences for 
routes  within  the  EU.  In  two  of  its  decisions107  adopted  under  Council  Regulation 
847/2004108,  the  Commission  found  that  bilateral  air  service  agreements  concluded 
between Member States and third countries may infringe Articles 10 and 81 EC read 
jointly by requiring or encouraging air carriers designated under these agreements to 
agree on or coordinate tariffs and/or the capacity they operate. In the area of antitrust, 

N 400/2006 Italy adopted on 6.12.2006 and N 573/2005 Denmark to be adopted. 
See  Commission  decision  N  604/2005,  16.5.2006  (OJ  C  209,  31.8.2006)  and  Commission  decision 
N 556/2005, 19.7.2006 (OJ C 207, 30.8.2006). 
Commission decision N 565/2005, 22.2.2006, C(2006) 457 final. 
Commission decision N 622/2005, 7.6.2006, C(2006) 2077 final. 
N 478/2004, 7.6.2006 (OJ C 209, 31.8.2006). 
OJ L 269, 28.9.2006, p. 1. 
Commission decisions C(2006) 2009, 31.5.2006 and C(2006) 2010, 20.6.2006. 
Regulation (EC) No 847/2004 of the European Parliament and of the Council of 29 April 2004 on the 
negotiation and implementation of air service agreements between Member States and third countries 
(OJ L 157, 30.4.2004, p. 7). 

57. 

58. 

59. 

60. 

101 
102 

103 
104 
105 
106 
107 
108 

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the Commission sent a Statement of Objections to members of the SkyTeam airline 
alliance,  expressing  concerns  about  a  number  of  routes  in  respect  of  which  the 
SkyTeam cooperation could have a negative effect on competition. The Commission 
also  continued  its  examination  of  State  aid  to  carriers  in  difficulty109,  adopted  a 
number of decisions concerning start-up aid110 and aid to airports111, and dealt with 
cases involving aid to both airlines and airports112. Finally, the Commission decided 
to refer Greece to the European Court of Justice for its failure to recover illegal State 
aid,  estimated  to  amount  at  least  to  EUR  160 million,  granted  to  Olympic  Airways 
between 1998 and 2002. 

2.7. 

Postal services  

61. 

62. 

63. 

64. 

109 
110 
111 

112 
113 
114 
115 

116 

The  postal  sector  is  undergoing  significant  changes:  altered  customer  needs, 
organisational  change,  gradual  market  opening,  automation/new  technologies  and 
electronic  substitution.  In  this  market  environment  the  main  pillars  of  the 
Commission's  policy  have  been  a  staged  reduction  of  the  services  for  which 
monopoly rights are granted to Universal Service Providers (USPs), on the one hand, 
and the preservation of competition in liberalised areas of the postal market, to avoid 
de facto re-monopolisation by USPs, on the other hand. 

Regarding the application of State aid rules to the postal sector, in the light of the 
Chronopost113 and Altmark114 case law, the Commission has deepened its analysis of 
the accounts of USPs so as to ensure the absence of overcompensation and of cross-
subsidisation.  In  particular,  the  Commission  has  examined  the  methods  applied  by 
the  postal  operators  to  allocate  costs  between  universal  services  and  other  services 
and to calculate the financial burden of the public tasks. 

The Commission declared compensation for Services of General Economic Interest 
(SGEI)  compatible  with  the  State  aid  rules,  in  line  with  the  2005  Community 
Framework115, only where the amount of the compensation did not exceed the costs 
of  the  public  service  obligation  (provided  that  other  conditions  of  the  2005 
Framework were also met)116. 

Besides assessing the compatibility of compensation granted to postal operators for 
providing SGEI, the Commission examined whether postal operators were enjoying 
other  advantages.  For  example,  in  the  case  "France;  Recommandation  proposant 
l'adoption de mesures utiles concernant la garantie illimitée de l'Etat en faveur de La 

Cyprus Airways (OJ C 113, 13.5.2006, p. 2). 
Notably in relation to Malta (N640/06 - adopted on 22 November). 
Notably a case involving capital expenditure for six small airports in Ireland (N353/06 - adopted on 26 
September). 
DHL Leipzig – Halle Airport, adopted on 22 November. 
Joined cases C-83/01 P, C-93/01 P and C-94/01 P, Chronopost SA [2003] ECR I-6993. 
Case C-280/00, Altmark Trans GmbH [2003] ECR I-7747. 
Community  Framework  for  State  aid  in  the  form  of  public  service  compensation  (OJ  C  297, 
29.11.2005, p. 4). 
See, for example, Case N 165/2005, Government rural network support funding to Post Office Limited 
(POL) for 2006-2008 (OJ C 141, 16.6.2006, p. 2) and Case N 642/05, State compensation to Posten AB 
for providing basic payment and cash facility services. 

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Poste"117, the Commission recommended that France should end the unlimited State 
guarantee enjoyed by the French Post office in its capacity as a public body by the 
end of 2008. 

Lastly,  in  addition  to  checking  that  subsidiaries  of  postal  operators  active  in 
competitive  markets  outside  the  SGEI  were  not  cross-subsidised,  the  Commission 
continued to ensure that these subsidiaries were not enjoying State aids. For instance, 
in  the  "DHL  Leipzig  –  Halle  Airport"118  case,  the  Commission  decided  to  open 
proceedings to determine whether the Land Sachsen and the publicly owned Leipzig 
Airport had acted as private investors when providing DHL with infrastructures and 
guarantees in case of a ban on night flights. 

THE  EUROPEAN  COMPETITION  NETWORK  AND  NATIONAL  COURTS  –  OVERVIEW 
OF COOPERATION 

2006 has been the second full year of implementation of the enforcement system set 
up by Regulation 1/2003. It saw a further strengthening of the cooperation between 
the members of the ECN, i.e. the EU Member States' NCAs and the Commission, on 
the one hand, and between national courts and the Commission, on the other. 

65. 

3. 

66. 

3.1. 

General overview 

67. 

68. 

69. 

Cooperation between the ECN members in individual cases is organised around two 
principal  obligations  on  the  part  of  the  NCAs,  namely  to  inform  the  Commission 
when new cases are opened and before the final decision is taken. The Commission 
was  informed  of  some  150  new  case  investigations  launched  by  NCAs.  A  small 
number  of  complaints  were  re-allocated  from  the  Commission  to  NCAs  that  were 
willing  to  follow  up  the  matters  raised,  whereas  in  a  limited  number  of  instances 
NCAs expressly drew the Commission's attention to suspected competition problems 
that appeared to have effects in several Member States.  

The Commission - on the basis of the formal cooperation provisions – or its services 
–  on  an  informal  basis  -  have  reviewed  or  given  advice,  regarding  some  125  cases 
originating from NCAs. To date, the Commission has not made use of the possibility 
of relieving a NCA of its competence with a view to ensuring consistent application 
of  competition  rules  by  initiating  proceedings  under  Article  11(6)  of  Regulation 
1/2003. 

The  strength  and  the  potential  of  the  ECN  cooperation  go  beyond  the  legal 
obligations  set  out  in  Regulation  1/2003.  The  ECN  also  provides  a  useful  platform 
for EU competition authorities to coordinate enforcement action, ensure consistency 
upfront and discuss general policy issues. During 2006, such work took place in four 
different fora. First, the Director-General of the Competition DG and the heads of all 
the NCAs met for their annual meeting in the ECN context, where the ECN leniency 
model  programme  was  endorsed.  Second,  the  NCAs  and  the  Commission  met 
regularly in "plenary meetings" where general issues relating to antitrust policy were 

117 

118 

Case  E  15/2005,  Recommandation  proposant  l'adoption  de  mesures  utiles  concernant  la  garantie 
illimitée de l'Etat en faveur de La Poste (not yet published). 
Case N 227/2006; DHL – Leipzig Halle Airport (OJ C 48, 2.3.2007, p. 7). 

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debated.  Third,  six  working  groups  have  been  dealing  with  specific  issues,  such  as 
sector  inquiries  or  the  abuse  of  dominant  positions.  Finally,  15  ECN  sectoral 
subgroups were dedicated to particular sectors119. 

3.2. 

Application of EU competition rules by national courts in the EU 

70. 

71. 

72. 

73. 

4. 

74. 

Article 15(1) of Regulation 1/2003 allows national judges to ask the Commission for 
information  in  its  possession  or  for  an  opinion  on  questions  concerning  the 
application of the EU competition rules. In 2006, the Commission issued one opinion 
to a court in the Netherlands and another opinion to a Belgian judge. A request from 
a Swedish judge was pending at the end of the year. 

Article  15(2)  of  Regulation  1/2003  requires  the  Member  States  to  forward  to  the 
Commission  a  copy  of  any  written  judgment  issued  by  national  courts  deciding  on 
the application of Articles 81 or 82 EC. The Commission received copies of some 30 
judgments  handed  down  in  2006,  which  were  posted  on  the  Competition  DG's 
website in so far as the transmitting authority did not class them as confidential. 

Article  15(3)  of  Regulation  1/2003  provides  that  where  the  coherent  application  of 
Articles 81 or 82 EC so requires, the Commission, acting on its own initiative, may 
submit written observations to courts of the Member States, and may also make oral 
observations with the permission of the court in question. In 2006, for the first time 
since  the  entry  into  force  of  Regulation  1/2003,  the  Commission  made  use  of  this 
"amicus curiae" possibility, by presenting observations to the Cour d'appel de Paris 
concerning the interpretation of the motor vehicle block exemption regulation120. 

Continuous training and education of national judges in EU competition law is very 
important  in  order  to  ensure  both  effective  and  coherent  application  of  those  rules. 
Since 2002, the Commission has co-financed several training projects each year and 
did so again in 2006, co-financing 15 projects for the training of national judges from 
all 25 EU Member States. 

INTERNATIONAL ACTIVITIES  

In  the  run-up  to  the  accession  of  Romania  and  Bulgaria  in  January  2007,  the 
Commission closely monitored the preparations for membership and assisted in the 
enforcement  of  the  competition  rules.  It  reviewed  the  State  aid  measures  which 
Bulgaria  and  Romania  notified  in  accordance  with  the  existing  aid  mechanism 
established  by  the  Accession  Treaty.  The  Commission  continued  to  assist  Croatia 
and  Turkey,  as  well  as  the  Western  Balkan  countries,  in  further  aligning  their 
competition rules with EU law. 

75. 

The  Commission  continued  intensive  cooperation  with  numerous  competition 
authorities  on  a  bilateral  basis  and  in  particular  with  the  authorities  of  the 

119 

120 

Banking, Securities, Insurance, Food, Pharmaceuticals, Professional services, Healthcare, Environment, 
Energy, Railways, Maritime Transport, Motor vehicles, Telecoms, Media, and Sports. 
Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the 
Treaty  to  categories  of  vertical  agreements  and  concerted  practices  in  the  motor  vehicle  sector  (OJ 
L 203, 1.8.2002, p. 30). 

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Community's major trading partners. Based on dedicated cooperation agreements in 
competition matters, cooperation with the United States, Canada and Japan included 
case-related  contacts,  coordinated  enforcement  action  and  discussions  on  remedies. 
The Competition DG offered assistance in the drafting of competition law in China 
and Russia.  

In the framework of multilateral cooperation, the Competition DG continued to play 
a leading role in the International Competition Network, in which it is a member of 
the Steering Group, co-chair of the Cartels Working Group, and an active member of 
Working  Groups  on  Mergers,  Competition  Policy  Implementation,  and  Unilateral 
Conduct. Furthermore, the Competition DG continued to participate actively in and 
contributed to the work of the OECD Competition Committee. 

INTERINSTITUTIONAL COOPERATION 

The  Commission  continued  its  cooperation  with  the  other  Community  institutions 
and bodies. 

Each  year,  the  European  Parliament  issues  an  own-initiative  report  on  the 
Commission's Annual Competition Report121. The Commission has also participated 
in  discussions  held  in  the  European  Parliament  on  Commission  policy  initiatives, 
such  as  on  the  the  State  aid  reform  and  the  Green  Paper  on  damages  actions  for 
breach  of  EC  antitrust  rules.  The  Commissioner  responsible  for  Competition  holds 
regular  exchanges  of  views  with  the  responsible  Parliamentary  Committees  to 
discuss  competition  policy  matters.  The  Committee  in  charge  of  Economic  and 
Monetary Affairs receives regular lists of pending cases in the public domain as well 
as information on the main policy initiatives in the field of competition. Finally, the 
Commission  also  cooperates  closely  with  Members  of  the  European  Parliament, 
responding  to  Parliamentary  Questions  (both  oral  and  written)122  and  Petitions,  as 
well as with the European Ombudsman. 

The Commission also cooperates closely with the Council, informing it of important 
policy  initiatives  in  the  field  of  competition  such  as  the  State  aid  reform  and  the 
energy  and  financial  services  sector  inquiries,  and  participates  in  Council  working 
groups. 

the  Commission 

Furthermore, 
the  European  Economic  and  Social 
Committee  and  the  Committee  of  the  Regions  about  major  policy  initiatives  and 
participates  in  debates  that  may  be  held  by  either  Committee,  for  instance  in 
connection  with  the  adoption  of  the  yearly  report  by  the  European  Economic  and 
Social Committee on the Commission's annual Report on Competition Policy. 

informs 

76. 

5. 

77. 

78. 

79. 

80. 

121 

122 

In 2006, this concerned the Rapporteur Lipietz report on the Commission's 2004 Annual Competition 
Report. 
In  2006,  approximately  551  written  questions  and  66  oral  questions  addressed  to  the  Commission 
concerned (aspects of) competition policy. 

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