Opinion of the European Economic and Social Committee on the Report from the Commission — Report on Competition Policy 2006 COM(2007) 358 final
Date: 2008-02-13
Institutions: European Economic and Social Committee
Subjects: competition policy, control of State aid, control of restrictive practices, merger control, report

25.6.2008

EN

Official Journal of the European Union

C 162/35

Opinion of the European Economic and Social Committee on the Report from the Commission —
Report on Competition Policy 2006

COM(2007) 358 final

(2008/C 162/05)

On 25 June 2007 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the

Report from the Commission — Report on Competition Policy 2006

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 31 January 2008. The rapporteur was
Mr Chiriaco.

At its 442nd plenary session, held on 13 and 14 February 2008 (meeting of 13 February 2008), the Euro-
pean Economic and Social Committee adopted the following opinion by 141 votes to 3 with 5 abstentions.

1. Introduction

In its opinion on the Green Paper (3), the EESC also welcomed
the Commission initiative, following a wide-ranging discussion.

The 2006 Report on Competition Policy highlights the
1.1
changes to the internal organisation and working methods of
the Commission in this field and provides evidence of the way
the Commission ensures consistent European economic govern-
ance in line with the objectives of the Lisbon strategy.

2.1.3
Regarding action taken on cartels, the Commission
issued seven final decisions, fining 41 companies a total of
EUR 1 846 million (as against 33 companies fined a total of
EUR 683 million in 2005).

2. Instruments

2.2 Merger control (4)

2.1 Antitrust (1) — Articles 81 and 82 EC (2)

2.1.1
tance in deterring companies from breaking competition rules.

In the Commission's view, fines are of central impor-

A new threshold for immunity and reduction of fines was
adopted for cartel cases. Under new guidelines, the amount of
the fine is based on a percentage of the company's yearly sales
of the relevant product (up to 30 %) multiplied by the number
of years of its participation in the infringement. The fine may
be increased up to 100 % for repeat offenders.

2.1.2 With a view to a more effective control system, a
Green Paper on damages actions for breach of the EU anti-
trust rules as contained in Articles 81 and 82 of the EC Treaty
was adopted. The Green Paper generated intense discussion
across Europe, resulting in over 150 submissions from govern-
ments, competition authorities,
industry, consumer organisa-
tions,
lawyers and academics within the individual Member
States.

(1) The following Commission decisions are the subject of appeals before the
Court of Justice of the European Communities. There have been no defi-
nitive rulings to date, except in the De Beers case, in which the Commis-
sion decision was annulled by the Court: Cases COMP/38.638 Synthetic
rubber, Commission decision 29.11.2006; COMP/39.234 Alloy surcharge
(re-adoption) Commission decision 20.12.2006; COMP/38.907 Steel
beams
decision 8.11.2006; COMP/
38.121 Fittings, Commission decision 20.9.2006; COMP/38.456
Bitumen Netherlands, Commission decision 13.9.2006; COMP/38.645
Methacrylates, Commission decision 31.5.2006; COMP/38.620 Hydrogen
peroxide and perborate, Commission decision 3.5.2006; COMP/38.113
Prokent/Tomra; COMP/38.348 Repsol CCP, Commission decision
12.4.2006;
and COMP/38.381 De Beers, Commission decision
22.2.2006.

(re-adoption) Commission

(2) OJ C 321 E, 29.12.2006.

2.2.1
consultation,
questions (5)
Merger Regulation (6).

The Commission has undertaken,

through public
to provide better guidance on jurisdictional
that arise regarding merger control under the

A new Notice, which was expected to be adopted in 2007, will
replace the existing Notices on this issue.

2.2.2
In terms of application of the rules, the number of
mergers notified to the Commission in 2006 reached 356. In
total
the Commission adopted 352 final decisions, 207 of
which were taken in accordance with the simplified procedure.

2.3 State aid control

2.3.1
The Commission simplified the approval of regional
aid by adopting a block exemption Regulation (7); aid for
Research, Development and Innovation (R, D&I) (8) by
adopting a new framework; aid for investment in SMEs (9) by
improving access to finance for SMEs; and environmental
protection aid.

(3) INT/306. The EESC opinion is available at:

http://eescopinions.eesc.europa.eu/EESCopinionDocument.aspx?iden-
tifier=ces\int\int306\ces1349-2006_ac.doc&language=EN.

(4) Only one Commission decision was appealed before the Court of Justice
of the European Communities: Case COMP/M.3796 Omya/J. M. Huber
PCC.

(5) Available at:

http://ec.europa.eu/comm/competition/mergers/legislation/jn_en.pdf.

(6) Regulation (EC) No 139/2004.
(7) Regulation (EC) No 1628/2006.
(8) OJ C 323, 30.12.2006, p. 1.
(9) OJ C 194, 18.8.2006, p. 2.

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Finally, the Commission adopted a new de minimis Regu-
lation (10) under which aid of up to EUR 200 000 (11) granted
over three fiscal years will not be regarded as State aid.

2.3.2
In terms of implementing the rules, the Commission
examined 921 State aid cases in 2006, which represents a 36 %
increase on 2005. The Commission adopted 710 final decisions,
in most cases — 91 % — approving the aid without a formal
investigation, deeming it compatible with the rules on free
competition.

2.3.3
Furthermore, while the Commission has considered
that training aid can contribute to the European common
interest,
it has taken a strict stance on rescue and restruc-
turing (R&R) aid to firms in difficulty, considering it legitimate
only if stringent conditions were fulfilled (12).

3. Sector developments

3.1 Energy

3.1.1
The Final report on the energy sector inquiry,
adopted by the Commission on 10 January 2007 (13), high-
lighted Europe's steadily rising gas and electricity wholesale
prices and relatively limited customer choice due to entry
barriers for energy products.

3.1.4 Work on State aid control has shown that contracts
between public network operators and generators in Hungary
and Poland has foreclosed parts of the wholesale markets and
that in Italy favourable electricity tariffs for certain companies
have been distorting competition. Also important was the State
aid decision in the area of renewable energy aimed at ensuring
that public financing covers only exceptional cases and does not
favour businesses or activities that do not meet the required
standards.

3.2 Financial services

3.2.1
In 2005 the Commission launched an inquiry into
the retail banking sector (16), focusing particularly on cross-
border competition. The final report was published on 31
identified included entry
January 2007 and the problems
barriers, market fragmentation and the high degree of concen-
tration among issuers and acquirers of payment cards.

The Commission published its interim report on its
3.2.2
extensive inquiry into business insurance on 24 January
2007.

Furthermore, the Commission cleared a large number
3.2.3
of mergers in the area of financial services, as in the case of
Talanx Aktiengesellschaft (17).

Through its State aid control, the Commission has
3.2.4
ensured a level playing field in financial services, especially for
new entrants and foreign banks. It also demanded the repeal of
Luxembourg's system of hidden subsidies for holdings.

The Commission carried out a number of antitrust
3.1.2
investigations into hoarding of network and storage capacity,
long-term capacity reservations, market sharing and long-term
contracts between wholesalers/retailers and downstream custo-
mers.

3.3 Electronic communications

3.1.3
The Commission considered and issued decisions on
many energy mergers. The most significant cases were DONG/
Elsam/Energi E2 (14) and Gaz de France/Suez (15).

(10) Regulation (EC) No 1998/2006.
(11) Amount doubled with regard to the previous Regulation (Cf. Regu-

lation (EC) No 69/2001, OJ L 10, 13.1.2001, p. 30).

(12) Cf. case of Northern Rock (IP/07/1859). The Commission concluded
that the emergency liquidity assistance provided by the Bank of England
on 14 September 2007, which was secured by sufficient collateral and
was interest-bearing, does not constitute state aid. However the guar-
antee on deposits granted by the Treasury on 17 September, as well as
the measures granted on 9 October, which provided further liquidity and
guarantees to Northern Rock and were secured by a Treasury indemnity,
do constitute state aid. These aid measures can be authorised as rescue
aid in line with the Community Guidelines on state aid for rescuing and
restructuring firms in difficulty. Under these rules, rescue aid must be
given in the form of loans or guarantees lasting no more than six
months, although there are certain exceptions to these rules in the
banking sector, in order to allow for prudential requirements, which
have been applied in this case. Also in line with the rules, the UK authori-
ties have given a commitment to deliver to the Commission by 17
March 2008 a plan for Northern Rock going beyond the short term
rescue. If a restructuring plan were to involve state aid, it would have to
be assessed on its own merits under the rules on restructuring aid.

(13) COM(2006) 851 final.
(14) Case COMP/M.3868 DONG/Elsam/Energi E2 Commission decision,

14.3.2006.

(15) Case COMP/M.4180 Gaz de France/Suez Commission decision,

14.11.2006.

electronic

3.3.1
The vast majority of providers of electronic communi-
cation services operate within the confines of the EU regulatory
framework for
and
services. The Commission has thus recommended 18 specific
product and services markets at both wholesale and retail
level for ex ante regulation by national regulators (18). Broad-
band access markets provide an example of the application of
ex ante sector-specific regulation and ex post competition law.

communications networks

3.4 Information technology

The Commission continued to ensure that competition
3.4.1
is not distorted in the IT sector, which is currently characterised
by digital convergence and the growing importance of intero-
perability.

(16) Commission decision, 13.6.2005 (OJ C 144, 14.6.2005, p. 13).
(17) Case COMP/M.4055 Talanx/Gerling Commission decision, 5.4.2006.
(18) Commission Recommendation 2003/311/EC of 11 February 2003 on rele-
vant product and services markets within the electronic communications sector
susceptible for ex ante regulation in accordance with 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, OJ L
114, 8.5.2003, p. 45. The Commission approved a new recommenda-
tion on 17 December 2007 (OJ L 344, 28.12.2007, p. 65) which refers
to only eight markets.

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Of huge significance in this regard is the case of Microsoft,
which was fined for not providing the information requested by
the Commission, within the deadline set. Microsoft's appeal
against the Commission decision (19) was rejected by the Court
of First Instance in its judgment of 17 September 2007 (20).

3.4.2
In the area of merger control the Commission cleared
the mergers between Nokia and the network equipment business
of Siemens AG and between Alcatel and Lucent Technologies, as it
considered that the supply of optical networking equipment and
broadband access solutions would not become less competitive.

3.5 Media

3.5.1
The 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.

January 2007,
the exemption from the prohibition under
Article 81(1) EC of IATA passenger tariffs for routes within the
EU as well as the exemption for slots and scheduling.

3.7 Postal services

3.7.1
Following significant changes in the postal market, the
Commission proceeded to reduce the services for which mono-
poly rights are granted to Universal Service Providers, on the
one hand, and preserve competition in liberalised areas, to avoid
de facto re-monopolisation, on the other hand.

Also of

3.7.2
importance was the Commission's decision
that compensation for Services of General Economic Interest
should only be considered compatible with the State aid rules in
cases where the amount of the compensation did not exceed the
cost of the public service obligation and provided that the other
conditions were also met.

In the area of digital broadcasting, the Commission
3.5.2
opened infringement proceedings against
Italy to investigate
whether, in the digital switchover, restrictions had been placed
on broadcasters and competitive advantages granted to existing
analogue operators, in clear violation of the Competition Direc-
tive.

The Commission also examined whether postal operators were
enjoying other advantages. In this context, it recommended that
France (22) should end the unlimited State guarantee enjoyed by
the French Post office in its capacity as a public body by the end
of 2008.

3.5.3 With regard to premium content, State aid for films
and other audiovisual works and rights management, the
intervened repeatedly to ensure effective
Commission has
competition.

3.6 Transport

3.6.1
The main problem areas are protected national markets
in the case of road transport, low levels of interoperability in
rail transport, and a lack of transparent access to competitive
port services.

3.6.2
In the case of road transport, the Commission has
maintained its policy of approving State aid in order to favour
the uptake of cleaner technology and for public service obliga-
tions.

3.6.3
Regarding rail transport, the Commission issued an
important decision concerning State aid for rail infrastructure,
which was considered to be within the remit of the public
authorities and not to constitute State aid (21).

3.6.4
In the area of maritime transport, the Commission has
undertaken to issue guidelines on the application of competition
law so as to help smooth the transition to a fully competitive
regime. Concerning State aid, the Commission has insisted on
the dismantling of any nationality clause exempting ship-owners
from payment of the social contributions of their seafarers.

3.6.5
Finally, in the area of air transport, the Commission
adopted Regulation (EC) No 1459/2006 discontinuing, from 1

4. The European Competition Network (ECN) and national

courts

4.1
2006 was an important year, in which the system set up
by Regulation (EC) No 1/2003 was further bedded down and
cooperation strengthened both between the members of the
ECN, i.e. between national competition authorities (NCAs) and
the Commission, and between the national courts and the
Commission.

Cooperation between the ECN members is organised
4.2
around two principal obligations on the part of
the NCAs,
namely to inform the Commission when new cases are opened
and to do so before the final decision is taken. The Commission
was informed of some 150 case investigations launched by
NCAs, and reviewed or advised NCAs regarding 125 of these.

4.3
Close cooperation within the ECN included a meeting
between the Director-General of the Competition DG and the
NCAs, where
the ECN leniency model programme was
endorsed. The Commission and the NCAs also met to discuss
issues relating to antitrust policy, sector inquiries and particular
sectors.

4.4 Application of EU competition rules by national courts in the EU

Article 15(1) of Regulation (EC) No 1/2003 allows
4.4.1
national courts to ask the Commission for its opinion or for
information in its possession. The same Article also requires the
Member States to forward to the Commission a copy of any
judgment issued by national courts.

(19) The text of the decision is available at: http://ec.europa.eu/comm/
competition/antitrust/cases/decisions/37792/art24_2_decision.pdf.

(20) Case T-201/04 (OJ C 269, 10.11.2007, p. 45).
(21) Case N 478/2004, 7.6.2006 (OJ C 209, 31.8.2006).

(22) 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).

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Continuous training of national

4.4.2
judges is of crucial
importance for increasing knowledge of EU competition law. To
this end, the Commission co-finances training projects each year
in all Member States.

policies, such as the internal market and consumer policy, with
a view to creating better functioning markets for the benefit of
consumers and European competitiveness.

5. International activities

5.1
In preparation for their accession to the EU, the Commis-
sion helped promote the enforcement of the competition rules
in Romania and Bulgaria, as it is now doing in Croatia and
Turkey.

7.1.2
Based on an update for the seven largest Member
States, the Commission forecast economic growth in 2007 at
2.8 % in the EU and 2.5 % in the euro area (25). Despite the
IMF's downward revision of the growth forecast for the euro
area from 2.1 % a 1.6 %, the EESC maintains that European
growth should continue, supported by sound fundamentals and
a favourable global environment.

Bilateral dialogue on competition was

5.2
stepped up
between the Commission and numerous competition authori-
ties, as well as contacts with the United States, Canada and
Japan. The Competition DG also assisted China and Russia in
the drafting of competition law.

7.1.3
The EESC considers it important that the EU achieves
balanced economic growth and price stability, a highly competi-
tive social market economy that promotes training and aims at
full employment and social progress, and a high level of protec-
tion and improvement of the quality of the environment.

5.3
Finally, in the framework of multilateral cooperation,
the Competition DG is playing a leading role in the Interna-
tional Competition Network and participates in the work of the
OECD Competition Committee.

7.1.4
In a market where competition policy will continue to
gain importance, economic, social and environmental indicators
are key factors in measuring competitiveness, not only for end
consumers but particularly for business.

6. Interinstitutional cooperation

6.1
Each year, the European Parliament issues an own-initia-
tive report on the Commission's annual competition report. The
Commissioner responsible for competition policy holds regular
talks with the Council and the relevant Parliamentary Commit-
tees.

6.2
Also noteworthy is that the Commission informs the
EESC and the CoR about major initiatives and participates in
the debate on the adoption of the EESC's yearly opinion on the
Commission's annual Report on Competition Policy.

7. Conclusions and comments

7.1 Relationship between competition policy and economic growth

policy

By restoring entire economic sectors to the logic and dynamic
of the market, competition policy has made a practical contribu-
tion to the creation of a cohesive single European market, with
fewer rules and regulations.

7.1.1
Competition policy is playing an increasingly important
role in European economic policy. Both the Commission (23)
and the EESC (24) have on previous occasions pointed out the
need to launch new economic policy instruments aimed at
directing both competition and industrial policy towards the
objectives of increased economic and social cohesion, employ-
ment protection, inter alia through control systems on State aid
and forms of relocation, environmental protection and the
promotion of major, weighty research and development
programmes.

Competition policy is currently closely coordinated with other

(23) Fostering structural change: an industrial policy for an enlarged Europe,

COM(2004) 274 final.

7.1.5
The EESC maintains that the competitiveness of Euro-
pean businesses and services must be safeguarded by a clear
regulatory framework based on the proper application of
competition policies hand in hand with trade policies.

The EU is currently the world's most open market to foreign
goods; abolishing the EU's most fundamental safeguards against
dumping and subsidies would indiscriminately hit all EU manu-
facturers that operate in compliance with the competition and
legal trade rules and EU standards and without recourse to State
aid.

In this regard, the EESC calls on the Commission to, on the one
hand, to be more attentive to reporting to the WTO cases of
distorted international competition and, on the other, to under-
take to insert a clause into bilateral
trade agreements that
requires its trading partners to comply with competition rules,
including the effective control of State aid.

7.2 State aid control

7.2.1
The EESC appreciates the Commission's modernisation
strategy with regard to the State aid action plan, which is based
on: targeted State aid, economic analysis, effective procedures
and shared responsibility between the Commission and the
It also supports the stance taken by the
Member States.
Commission to welcome State aid for technology transfer, inno-
vation and the multisectoral framework for major investment
projects and treat such aid differently.

7.2.2 When investigating State aid cases, the Commission
should accept as justified the specific tax treatment adopted by
Member States for mutual societies, such as cooperatives and
companies with a major social impact.

(24) Opinion of the European Economic and Social Committee on Fostering
structural change: an industrial policy for an enlarged Europe (COM
(2004) 274 final), OJ C 157 of 28.6.2005.

(25) Cf. IP/07/1295. More information is available at:

http://ec.europa.eu/economy_finance/publications/european_economy/
2007/interim_forecast_1107_en.pdf.

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7.3 Banks and financial markets

7.7 Enforcement of

the

competition rules and strengthening of

7.3.1
The EESC welcomes the action taken by the Commis-
sion to control cross-ownership of shares and the management
of financial products. It has happened in certain cases that credit
institutions were major shareholders (shareholders' agreements)
in other companies, and that therefore loans granted by banks
were ultimately used to finance the purchasing of shares in
those same banks.

7.4 Energy

7.4.1
The EESC emphasises that energy should not be viewed
as merely a market but also in terms of development, employ-
ment and the environment. Currently, the EU is faced with new
global competitors (26) and the new market structures must
often take account of power politics.

The EESC maintains that the specific nature of the gas
7.4.2
sector needs to be taken into account when addressing the issue
of separating generation from supply (unbundling) (27).

7.5 Plurality of information and competition law

7.5.1
The EESC recommends that a distinction be drawn in
the media field between rules specifically designed to defend the
pluralism of information and general antitrust rules. It must also
be stressed that while operational competition rules are a basic
condition for ensuring pluralism, they are not enough in them-
selves.

7.5.2
The danger of failing to properly understand this is
that the competition rules will be diminished and the principle
of pluralism weakened.

7.6 Telecommunications

7.6.1
The EESC maintains that the functional unbundling of
telecoms networks and the creation of a sectoral EU agency
must be properly assessed relative to other sectors given that
investment in a crucial sector for European competitiveness is
key to its competitive development, particularly considering the
speed of technological change.

Brussels, 13 February 2008.

national courts in the EU

To ensure effective enforcement of the rules, there is a
7.7.1
need for continuous training and education of national judges
and all legal professionals in EU competition law.

In this regard, the EESC calls on the Commission to adopt
guidelines, as soon as possible, on the application of Article 82
EC, particularly regarding exclusive practices.

7.7.2 While welcoming the co-financing of the projects set
up by the Commission, the EESC maintains that above and
beyond the 15 training projects launched in 2006 for the 25
Member States, more can and should be done to meet the chal-
lenges
the
problems that arise in relations between the Commission, busi-
ness, associations and consumers.

that competition policy poses and to address

In particular, EESC-Commission relations were recently
7.7.3
strengthened following the signing, at the EESC plenary session
of 30-31 May 2007 (28), of an addendum to the cooperation
protocol of November 2005. The agreement places the EESC at
the centre of the communication drive, thanks to the EESC's
privileged position as a facilitator of dialogue with the public.

7.7.4
The EESC calls on the Commission and the Parliament
to develop an interinstitutional cooperation policy aimed at
making national systems compatible with EU legislation.

The EESC supports the process of adopting a new treaty (the so-
called Treaty of Lisbon) to simplify the statutory framework and
meet the needs of a 27-Member-State EU, allowing the EU to
reach agreement on new policies and to take the necessary deci-
sions to overcome the new challenges it faces.

7.7.5
The EESC stresses that competition policy must not be
associated with separate objectives but must continue to be a
fully-fledged activity of the European Commission (29).

In a bid to bring more transparency to the ongoing negotia-
tions, the EESC held a conference at its headquarters on 27-28
September last. Entitled IGC 2007: organised civil society has its say
on the future of Europe, the conference achieved a high level of
participation.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(26) Particularly Gazprom and Sonatrach.
(27) Neelie Kroes, More competitive energy markets: building on the findings of the
sector inquiry to shape the right policy solution, Brussels, 19 September
2007.

(28) A summary of the opinions adopted at the above-mentioned plenary

session is available at:
http://www.eesc.europa.eu/activities/press/summaries_plenaries/2007/
grf_ces83-2007_d_en.pdf.

(29) The text of the Treaty of Lisbon, adopted in Brussels on 3 December
2007 by the Conference of the representatives of the governments of
the Member States is available at:
http://www.consilium.europa.eu/uedocs/cmsUpload/cg00014.en07.
pdf.