Commission staff working document accompanying the Report from the Commission on Competition Policy 2008 {COM(2009)374 final}
Date: 2009-07-23
Institutions: European Commission
Subjects: competition law, competition policy, control of State aid, free competition, international competition, merger control, report, restriction on competition

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.7.2009 
SEC(2009)1004 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

REPORT FROM THE COMMISSION 

on Competition Policy 2008 

{COM(2009)374 final} 

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TABLE OF CONTENTS 

I – Instruments............................................................................................................................ 8 

A – Anti-trust – Articles 81, 82 and 86 EC................................................................................ 8 

1. 

Applicable rules ........................................................................................................... 8 

1.1.  White Paper on damages actions for breach of the EC anti-trust rules........................ 8 

1.2. 

Cartels .......................................................................................................................... 9 

1.2.1.  The Settlements Package.............................................................................................. 9 

1.3. 

Other agreements and concerted practices................................................................. 10 

1.3.1.  Vertical agreements.................................................................................................... 10 

1.3.2.  The Review of the Motor Vehicle Block Exemption Regulation .............................. 11 

1.3.3.  Review of the Insurance Block Exemption Regulation ............................................. 13 

1.4. 

Abuse of dominant positions (Article 82 EC)............................................................ 14 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

Application of Articles 81, 82 and 86 EC .................................................................. 14 

Cartels ........................................................................................................................ 14 

Other agreements and concerted practices................................................................. 16 

Abuse of dominant positions (Article 82 EC)............................................................ 16 

State measures: Public undertakings and/or undertakings with exclusive or special 
rights........................................................................................................................... 17 

Selected Court cases................................................................................................... 18 

The CFI upholds the Commission's Deutsche Telekom decision.............................. 18 

AC Treuhand v. Commission..................................................................................... 19 

Lelos & others v. GlaxoSmithKline........................................................................... 19 

Competition Authority v. Beef Industry Development Society................................. 20 

The ECJ clarifies the obligations of collecting societies as regards royalties setting 
under Article 82 EC ................................................................................................... 20 

The ECJ rules against the Italian scheme of frequency allocation for terrestrial 
television broadcasting............................................................................................... 21 

B – Merger control ................................................................................................................... 21 

1. 

Applicable rules ......................................................................................................... 21 

1.1. 

The Remedies Notice ................................................................................................. 21 

2. 

Application of the merger control rules ..................................................................... 22 

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3. 

3.1. 

3.2. 

3.3. 

Selected Court cases................................................................................................... 23 

Sony BMG/Impala ..................................................................................................... 23 

MyTravel.................................................................................................................... 24 

Application of Article 21 of the EC Merger Regulation (ECMR)............................. 26 

C – State aid control ................................................................................................................. 27 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

Applicable rules ......................................................................................................... 27 

Application of the State aid rules ............................................................................... 32 

Applying the State aid Framework for Research, Development and Innovation 
(R&D&I) .................................................................................................................... 33 

Assessing risk capital financing for SME .................................................................. 34 

Industrial restructuring ............................................................................................... 34 

Sports.......................................................................................................................... 35 

State aid in the agricultural sector.............................................................................. 35 

Coal ............................................................................................................................ 36 

Selected Court cases................................................................................................... 37 

The concept of aid...................................................................................................... 37 

Compatibility assessment........................................................................................... 40 

Procedural issues........................................................................................................ 40 

Recovery of aid .......................................................................................................... 41 

II – Sector Developments......................................................................................................... 42 

A – Energy and environment ................................................................................................... 42 

1. 

2. 

2.1. 

2.2. 

2.3. 

Overview of the sector ............................................................................................... 42 

Policy developments .................................................................................................. 42 

Anti-trust enforcement ............................................................................................... 44 

Mergers ...................................................................................................................... 46 

State aid...................................................................................................................... 47 

B – Financial services .............................................................................................................. 49 

1. 

2. 

Overview of the sector ............................................................................................... 49 

Policy developments .................................................................................................. 50 

2.1. 

The financial crisis ..................................................................................................... 50 

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2.1.1. 

Impact on financial markets ....................................................................................... 50 

2.1.2. 

Impact on the real economy ....................................................................................... 52 

2.2. 

Single Euro Payments Area (SEPA) .......................................................................... 53 

C – Electronic communications ............................................................................................... 55 

1. 

2. 

2.1. 

2.2. 

Overview of the Sector............................................................................................... 55 

Policy Developments ................................................................................................. 56 

Application of the Regulatory Framework and other policy developments .............. 56 

Developments in the area of State aid........................................................................ 59 

D – Information technology ..................................................................................................... 60 

1. 

2. 

2.1. 

2.2. 

Overview of the sector ............................................................................................... 60 

Policy developments .................................................................................................. 61 

Anti-trust .................................................................................................................... 61 

Merger control............................................................................................................ 61 

E – Media ................................................................................................................................. 63 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

Overview of the sector ............................................................................................... 63 

Policy developments .................................................................................................. 64 

Roundtable on opportunities for and barriers to on-line retailing and the European 
Single Market ............................................................................................................. 64 

Rights management and on-line distribution ............................................................. 64 

Digital broadcasting ................................................................................................... 65 

Public service broadcasting........................................................................................ 65 

State aid for films ....................................................................................................... 67 

Application of merger control.................................................................................... 67 

F – Transport ............................................................................................................................ 68 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

Overview of the sector ............................................................................................... 68 

Policy developments .................................................................................................. 69 

Road Transport........................................................................................................... 69 

Rail Transport and Combined Transport.................................................................... 71 

Inland Navigation....................................................................................................... 73 

Maritime Transport .................................................................................................... 73 

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2.5. 

Aviation...................................................................................................................... 75 

2.5.1. 

International aviation policy – EU-US cooperation................................................... 79 

G – Pharmaceutical industry .................................................................................................... 79 

1. 

2. 

Overview of the sector ............................................................................................... 79 

Policy Developments ................................................................................................. 80 

2.1. 

Pharmaceutical Sector Inquiry ................................................................................... 80 

2.1.1.  Competition between originator companies and generic companies......................... 81 

2.1.2.  Competition between originator companies............................................................... 82 

2.1.3.  Comments on the regulatory framework.................................................................... 83 

2.1.4.  Next steps ................................................................................................................... 84 

H – Food Industry .................................................................................................................... 84 

1. 

2. 

2.1. 

2.2. 

2.3. 

Overview of the sector ............................................................................................... 84 

Policy developments .................................................................................................. 85 

Anti-trust .................................................................................................................... 85 

Mergers ...................................................................................................................... 86 

State aid...................................................................................................................... 87 

I – Postal Services .................................................................................................................... 87 

1. 

2. 

Overview of the sector ............................................................................................... 87 

Policy developments .................................................................................................. 88 

III – Consumer activities .......................................................................................................... 90 

IV – The European Competition Network and cooperation with National Courts .................. 94 

A – General overview .............................................................................................................. 94 

1. 

Cooperation on policy issues ..................................................................................... 94 

1.1. 

Convergence of national laws and instruments.......................................................... 95 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

Cooperation in individual cases ................................................................................. 96 

Case allocation ........................................................................................................... 96 

Consistent application of the rules ............................................................................. 97 

Application of EU Competition rules by National Courts in the EU......................... 97 

Assistance in the form of information or in the form of an opinion .......................... 97 

Judgments of national courts...................................................................................... 97 

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3.3. 

3.4. 

Amicus curiae intervention ........................................................................................ 97 

Financing the training of national judges in EU competition law ............................. 98 

V – International activities ....................................................................................................... 98 

A – Enlargement, Western Balkans and Neighbourhood policy ............................................. 98 

B – Bilateral cooperation.......................................................................................................... 99 

1. 

2. 

Agreements with the USA, Canada and Japan........................................................... 99 

Cooperation with other countries and regions ......................................................... 100 

C – Multilateral cooperation .................................................................................................. 101 

1. 

2. 

3. 

International Competition Network ......................................................................... 101 

OECD....................................................................................................................... 101 

UNCTAD ................................................................................................................. 101 

VI – Inter-institutional cooperation........................................................................................ 102 

1. 

2. 

3. 

European Parliament ................................................................................................ 102 

Council ..................................................................................................................... 103 

European Economic and Social Committee and Committee of the REGIONS....... 103 

VII – Outlook for 2009........................................................................................................... 103 

A – Anti-trust ......................................................................................................................... 103 

B – Mergers............................................................................................................................ 104 

C – State aid ........................................................................................................................... 104 

D – Sector Developments....................................................................................................... 105 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

4. 

5. 

6. 

Energy and environment .......................................................................................... 105 

Financial services sector .......................................................................................... 106 

Financial crisis ......................................................................................................... 106 

Economic crisis ........................................................................................................ 106 

Single Euro Payments Area (SEPA) ........................................................................ 106 

Electronic communications...................................................................................... 106 

Information Technology........................................................................................... 107 

Media........................................................................................................................ 107 

Transport .................................................................................................................. 108 

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7. 

8. 

9. 

Pharmaceutical industry ........................................................................................... 109 

Food industry ........................................................................................................... 109 

Postal services .......................................................................................................... 109 

E – International activities...................................................................................................... 110 

LIST OF ABREVIATIONS................................................................................................... 111 

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I – Instruments 

A – ANTI-TRUST – ARTICLES 81, 82 AND 86 EC 

1. 

APPLICABLE RULES 

1.1.  White Paper on damages actions for breach of the EC anti-trust rules 

1. 

2. 

3. 

On 2 April, the Commission adopted the White Paper on damages actions for breach 
of the EU anti-trust rules1, to which is annexed a Commission Staff Working Paper, 
which explains in more detail the policy proposals. The White Paper follows on from 
a  Green  Paper  on  the  same  subject,  published  in  December  2005,  on  the  public 
consultation and on opinions of the European Parliament (EP) and of the European 
Economic and Social Committee (EESC) on that Green Paper. 

The  White  Paper  is  part  of  an  ongoing  policy  project  of  the  Commission.  The 
European  Court  of  Justice  (ECJ)  has  stated  that,  under  EU  law,  any  individual  can 
claim  compensation  for  harm  suffered  where  there  is  a  causal  relationship  between 
that  harm  and  an  agreement  or  practice  prohibited  under  Article  81  EC2.  The 
Commission  has  found  that,  in  practice,  victims  of  anti-trust  infringements  only 
rarely  obtain  compensation.  The  White  Paper  is  focussed  on  changing  this  current 
ineffectiveness by making this right to compensation more effective in Europe. The 
White  Paper  puts  forward  concrete  proposals  to  overcome  the  obstacles  which  are 
currently standing in the way of effective compensation. 

The  primary  objective  pursued  is  to  improve  compensation  of  all  victims.  At  the 
same  time,  more  effective  compensation  mechanisms  will  inherently  produce 
beneficial  deterrent  effects.  The  proposals  in  the  White  Paper  consist  of  balanced 
measures which are rooted in European legal culture and traditions and are designed 
to overcome the obstacles identified by the Commission. 

4. 

The individual policy proposals of the Commission address the following issues: 

•  Collective  redress - through either (a) group actions  brought by victims acting 
together or (b) representative actions brought, for example, by a consumer group 
or  business  association  on  behalf  of  all  consumers  or  businesses  who  have 
suffered a harm; 

•  Access to evidence crucial for the bringing of the claim and under the control of 

the other party; 

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2 

Further  information  on  this  issue  and  on  the  policy  initiative  of  the  Commission  in  this  field  can  be 
accessed here: http://ec.europa.eu/competition/antitrust/actionsdamages/index.html 
Joined Cases C-295/04 to C-298/04 Manfredi [2006] ECR I-6619. See also Case C-453/99 Courage vs 
Crehan  [2001]  ECR  I-6297.  While  the  ECJ  only  refers  to  infringements  of  Article  81  EC,  it  follows 
from the Court's reasoning that the same considerations apply for Article 82 EC as well. 

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•  Final  Infringement  decisions  by  national  competition  authorities  are  binding 
in  subsequent  civil  actions  for  damages  –  a  similar  rule  already  exists  for 
Commission decisions under Article 16(1) of Regulation (EC) No 1/2003; 

•  If  an  element  of  fault  (intent  or  negligence)  has  to  be  proven  for  the  claim  to 

succeed, the burden of proof should lie with the infringer; 

•  Clarification of what type of damages compensation can be claimed for; 

•  Clear  rules  on  the  passing-on  defence,  making  it  easier  for  indirect  victims  to 
sue  and  making  it  clear  that,  while  the  passing-on  defence  is  admissible,  the 
burden of proof lies with the infringer; 

•  Clear limitation periods, taking into account in particular the case of continuous 

infringements; 

•  Cost rules for actions for damages; 

•  Interaction between leniency programmes and actions for damages. 

5. 

6. 

The White Paper triggered a broad debate among stakeholders, and a large number of 
comments  were  submitted  in  the  framework  of  the  public  consultation,  which 
resulted  in  an  almost  unanimous  approval  of  the  general  approach  to  antitrust 
damages  actions  pursued  by  the  Commission,  namely  the  guiding  principle  of 
compensation. There was a wide acknowledgement of the existence of obstacles that 
prevent  effective  redress  for  victims  of  infringements  of  the  competition  rules. 
Different opinions were voiced as to the substantive measures suggested in order to 
remedy the problems identified. 

In its White Paper, the Commission has stated that it intends to draw up non-binding 
guidance  for  quantification  of  damages  in  anti-trust  cases  in  order  to  facilitate  this 
calculation. The Commission has since awarded a contract for an external study on 
the quantification of damages. 

1.2. 

Cartels 

1.2.1.  The Settlements Package 

7. 

8. 

The Commission has introduced a new mechanism which will allow the Commission 
to settle cartel cases by means of a simplified procedure. Under this procedure, the 
parties - having seen the evidence in the Commission file - choose to acknowledge 
their  involvement  in  the  cartel,  the  precise  nature  of  their  infringement  and  their 
liability  for  it.  In  return  for  this  acknowledgement,  the  fine  is  reduced  by  10%. 
Settlements aim to simplify the administrative proceedings and could result in fewer 
Commission  resources  being  devoted  to  litigation  before  the  Community  courts  in 
cartel cases. This will in turn free up Commission resources to pursue other cases. 

Cooperation  within  the  Settlements  Package  is  different  from  the  voluntary 
production of evidence to initiate or advance the Commission's investigation, which 
is already covered by the Leniency Notice. The Leniency Notice rewards companies 
involved in a cartel which voluntarily disclose its existence to the Commission and 

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9. 

10. 

11. 

provide  evidence  to  prove  the  infringement.  The  Settlements  Notice  will  reward 
concrete contributions to procedural efficiency. 

Parties have neither the right nor the duty to settle, but in cases where companies are 
convinced  that  the  Commission  could  prove  their  involvement  in  a  cartel  to  the 
required  legal  standard,  a  settlement  can  be  reached  with  the  Commission  on  the 
scope  and  duration  of  the  cartel,  and  on  the  individual  liability  of  the  companies 
involved.  To  this  end,  parties  will  be  informed  about  the  likely  objections  and  the 
evidence supporting those objections, and will be given the opportunity to state their 
views  before  formal  objections  are  sent  out.  If  the  parties  choose  to  introduce  a 
settlement submission acknowledging the objections, the Commission's statement of 
objections  (SO)  would  reflect  the  contents  of  the  submission  by  the  parties  and 
therefore  could  be  much  shorter  than  a  SO  issued  without  prior  cooperation.  Since 
parties will have been heard in anticipation of the "settlement" SO, other procedural 
steps  can  be  simplified  in  order  that,  following  confirmation  by  the  parties,  the 
Commission  can  proceed  swiftly  to  adopt  a  final  decision  after  consulting  Member 
States in the Advisory Committee of representatives of all Member States. 

A  settlement  only  takes  place  when  the  Commission  decision  reflects  the  parties' 
settlement  submissions.  The  Commission  may  only  depart  from  the  parties' 
settlement  submissions  by  reverting  to  the  standard  procedure.  In  addition,  if  no 
settlement were explored or reached, the standard procedure would apply by default. 

The  legislative  package  consists  of  a  Commission  Regulation3  together  with  a 
Commission Notice (the settlement notice)4 explaining the new system in detail. The 
settlement package entered into force on 1 July 2008. 

1.3. 

Other agreements and concerted practices 

1.3.1.  Vertical agreements 

12. 

13. 

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4 

5 

6 

Vertical  agreements  are  agreements  for  the  sale  or  purchase  of  goods  or  services 
between  companies  operating  at  different  levels  of  the  distribution  chain,  for 
example  between  a  manufacturer,  a  wholesaler  and  a  retailer.  The  vast  majority  of 
agreements  entered  into  between  firms  are  vertical,  as  this  term  covers  agreements 
relating to the purchase of inputs and distribution of outputs. 

The  current  EU  block  exemption  regulation  applicable  to  vertical  agreements  (the 
BER)5  forms  a  package  with  the  guidelines  on  vertical  restraints  (the  Guidelines)6. 
This  package  was  the  first  of  a  new  generation  of  exemption  regulations  and 
guidelines inspired by a more economic and effects-based approach. The basic aim 
of  this  regulatory  framework  was  to  simplify  the  rules  applicable  to  supply  and 
distribution  agreements  and  to  reduce  the  regulatory  burden,  especially  for 

Commission Regulation (EC) No 622/2008 of 30 June 2008 amending Regulation (EC) No 773/2004, 
as regards the conduct of settlement procedures in cartel cases (OJ L 171, 1.7.2008, p. 3). 
Commission  Notice  on  the  conduct  of  settlement  procedures  in  view  of  the  adoption  of  Decisions 
pursuant to article 7 and Article 23 of Council Regulation (EC) No 1/2003 in cartel cases (OJ C 167, 
2.7.2008, p. 1). 
Commission  Regulation  (EC)  2790/1999  of  22 December  1999  on  the  application  of Article  81(3)  of 
the Treaty to categories of vertical agreements and concerted practices (OJ L 336, 29.12.1999, p. 21). 
Commission Notice Guidelines on Vertical Restraints (OJ C 291, 13.10.2000, p. 1). 

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companies  lacking  market  power,  such  as  small  and  medium-sized  enterprises 
(SME),  while  ensuring  a  more  effective  control  of  agreements  entered  into  by 
companies holding market power. 

14. 

In  early  2008,  the  Commission  began  to  review  the  regulatory  framework  for  the 
assessment of the vertical agreements under EU competition law, given that the BER 
is  due  to  expire  on  31  May  2010.  The  Commission  is  examining  how  the  rules  on 
vertical  agreements have been applied so far and whether there is a need to amend 
the  current  rules.  This  work  is  done  in  close  cooperation  with  the  NCA  in  the 
European Competition Network (ECN) in which context a working group has been 
set  up  to  discuss  the  application  of,  and  experience  with,  the  current  rules.  The 
review will continue throughout 2009. 

1.3.2.  The Review of the Motor Vehicle Block Exemption Regulation 

15. 

16. 

17. 

In accordance with Article 11(2) of Regulation 1400/2002, the Commission adopted, 
on  31 May,  an  evaluation  report  on  the  operation  of  the  motor  vehicle  block 
exemption  Regulation7  (MVBER).  The  adoption  of  this  report  was  the  first  formal 
step in a procedure that will ultimately decide the form and content of the regime that 
is  to  apply  to  the  motor  vehicle  sector  after  the  period  of  validity  of  the  MVBER 
ends  in  May  2010.  It  contains  an  in-depth  analysis  of  how  the  Regulation  has 
operated,  although  without  making,  at  this  stage,  any  concrete  proposals  for  the 
future. 

The  MVBER  sets  out  the  conditions  for  the  block  exemption  of  motor  vehicle 
distribution  and  after-sales  service  agreements.  It  was  adopted  in  July  2002  and 
became applicable on 1 October 2003. Its main goal was to create a safe harbour for 
such  agreements,  reflecting  the  more  economic  and  effects-based  approach  of 
Regulation 2790/19998 (which applies to vertical agreements in all sectors other than 
motor  vehicles),  but  at  the  same  time  introducing  more  detailed  provisions  and 
stricter conditions specific to the motor vehicle sector. 

industry.  In  summary, 

the  evidence  uncovered  by 

The  Evaluation  Report  was  drawn  up  on  the  basis  of  an  extensive  fact-finding 
exercise which began in 2007 and involved all the various groups of stakeholders in 
the 
the  motor  vehicle 
Commission's  fact-finding  exercise  shows  that,  on  the  market  for  the  sale  of  new 
vehicles,  competition  between  car  manufacturers  has  become  more  intense  mainly 
owing  to  external  factors  such  as  manufacturing  over-capacity,  technological 
the  aftermarkets, 
innovation  and  closer 
independent  repairers  now  have  better  access  to  technical  information,  thanks  to 
Commission  enforcement  actions9.  Meanwhile,  the  number  of  authorised  repair 
outlets  has  increased,  because  –  in  line  with  general  competition  policy  – 
manufacturers (whose networks have high market shares as regards the repair of their 

integration  of  global  markets.  On 

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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). 
See footnote 5. 
In September 2007, the Commission adopted four decisions that legally bind DaimlerChrysler, Toyota, 
General  Motors  and  Fiat  to  commitments  to  provide  technical  information  about  car  repairs  to  all 
independent garages in the EU. The decisions were adopted under Article 9(1) of Regulation 1/2003. 

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18. 

19. 

20. 

vehicles) must allow everyone into their networks, provided that quality criteria are 
met. Suppliers of spare parts have maintained their competitive position vis-à-vis the 
vehicle manufacturers' own spare parts distribution channels. 

The  report  concludes  that  the  general  framework  of  the  MVBER  has  had  positive 
effects  overall.  However,  many  of  the  detailed  sector-specific  provisions,  such  as 
those  allowing  dealers  to  run  showrooms  without  repair  shops,  have  proved 
unnecessary,  and  some  may  have  been  counter-productive.  For instance, the  higher 
(40%)  market  share  threshold  below  which  quantitative  selective  distribution 
agreements  may  benefit  from  the  exemption  may  have  skewed  manufacturers' 
choices towards a uniform distribution model. In addition, over-prescriptive rules in 
areas  such  as  multi-brand  vehicle  sales  and  the  opening  of  additional  sales  outlets 
may have encouraged the introduction of more onerous dealership standards, thereby 
making  distribution  more  expensive  –  to  the  detriment  of  consumers.  Other 
provisions, such as those obliging manufacturers to give independent repairers access 
to technical information, have been effective, but in the future will be superseded by 
rules  in  other  EU  policy  areas  (namely,  Council  Regulation  715/2007  on  motor 
vehicle  emissions10).  The  suggestion  from  this  report,  therefore,  is  that  car  owners 
might benefit from improvements in competition if less complex rules were to apply 
to the sector. 

Following  the  publication  of  the  Report,  the  Commission  received  around  115 
comments  from  a  wide  range  of  stakeholders,  including  vehicle  manufacturers, 
dealers  and  authorised  repairers,  the  independent  motor  trade,  consumers,  national 
authorities  and  the  legal  community.  By  far  the  most  contributions  came  from 
authorised  car  dealers,  but  there  were  only  a  limited  number  of  replies  from 
consumer associations. 

The main points raised by the stakeholders fall into two broad categories. In essence, 
the first category reflects a concern that bringing the motor vehicle sector under the 
common  rules  on  vertical  restraints  could  adversely  affect  the  current  level  of 
protection  of  competition  in  the  market.  These  provisions  in  the  regulation  include 
the  protection  of  parallel  trade,  the  exemption  of  location  clauses  in  selective 
distribution agreements (namely, in specific situations where the protection of intra-
brand  competition  might  deliver  benefits  to  consumers),  the  linking  of  sales  and 
after-sales  activities,  the  availability  of  technical  information  to  independent 
operators, and the protection of alternative channels for spare parts distribution. The 
second  category  seems  to  relate  less  to  competition  issues  than  to  commercial 
concerns,  although  the  latter  are  still  politically  sensitive  nevertheless.  These 
concerns relate to dealer protection and multi-branding.  

21. 

The  form  and  content  of  the  future  regime  will  be  decided  in  the  next  stage  of  the 
review  process,  which  will  include  as  a  next  step  the  publication  of  a  Commission 
Communication based on an impact assessment of a range of possible options. 

10 

Regulation (EC) No 715/2007 of the European Parliament and of the Council of 20 June 2007 on type 
approval  of  motor  vehicles  with  respect  to  emissions  from  light  passenger  and  commercial  vehicles 
(Euro 5 and Euro 6) and on access to vehicle repair and maintenance information (OJ L 171, 29.6.2007, 
p. 1). 

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1.3.3.  Review of the Insurance Block Exemption Regulation 

22. 

23. 

24. 

25. 

26. 

DG  Competition  is  currently  carrying  out  a  review  of  the  Block  Exemption 
Regulation in the insurance sector11 (hereinafter 'the Insurance BER') with a view to 
determining whether a new Insurance BER should be adopted before the current one 
expires on 31 March 2010. 

The  key  policy  issue  at  stake  is  whether  a  new  Insurance  BER  should  be  adopted, 
taking into consideration the reasons for the adoption of the current BER in 2003, the 
development of the sector since then, submissions from market participants and the 
Commission's overall policy objectives. 

The  Final  Report  of  the  Commission's  sector  inquiry  into  business  insurance  – 
published on 25 September 2007 – did not directly investigate this matter. However, 
some  comments  received  in  the  context  of  the  inquiry  argued  in  favour  of 
maintaining  an Insurance  BER beyond March 2010. Clearly, therefore, there was a 
need for full consultation and a review in order to analyse all issues and arguments, 
and to determine whether the insurance sector would still require specific rules on the 
application of Article 81(3) EC beyond March 2010. 

The  review  exercise  started  in  November  2007  with  the  consultation  of  the  ECN, 
followed by the publication of a consultation paper in April 200812. The Commission 
is  required  to  submit  to  the  EP  and  Council,  by  31 March  2009,  a  report  on  the 
functioning  of  the  Insurance  BER  together  with  options  for  amendment  as  may 
appear necessary in the light of experience. 

Of the 58 replies to the consultation, by far the majority (46) of respondents are in 
favour of renewal, 11 are equivocal and only one (an Italian Consumer Association) 
is  unequivocally  against  renewal.  Of  the  12  NCA  that  responded,  only  three  are 
unequivocally  against  renewal.  Four  are  in  favour  of  renewal,  one  is  in  favour  of 
renewal  with  amendments  and  four  are  undecided.  By  far  the  greatest  number  of 
contributions  came  from  insurers'  and  brokers'  associations  (26),  as  well  as  from 
insurance  companies  and  brokers  (8).  All  of  these  undertakings  were  in  favour  of 
renewal.  Other  entities,  such  as  law  firms,  actuaries  or  individual  citizens,  also 
replied  in  favour  of  renewal.  DG  Competition  sent  targeted  questionnaires  to  all 
national  consumer  associations  and  to  several  large  insurance  customers.  Seven 
consumer organisations/groups representing consumers replied: one was in favour of 
renewal, one was against and the five others were undecided, but reported a range of 
problems  in  relation  to  the  functioning  of  the  Insurance  BER.  Of  the  seven 
associations of undertakings representing customers to whom targeted questionnaires 
were  sent,  only  the  Federation  of  European  Risk  Management  Associations 
(FERMA) replied and it favoured renewal. Targeted questionnaires were also sent to 
Supervisory  Authorities  in  all  Member  States,  of  which  eight  replied.  Slovakia, 
Romania,  Spain  and  Latvia  were  unequivocally  in  favour  of  renewal;  Italy,  Czech 
Republic and Portugal were uncertain, but leaned in favour of renewal; Belgium was 
undecided. 

11 

12 

Commission Regulation (EC) No 358/2003 of 27 February 2003 on the application of Article 81(3) of 
the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector 
(OJ L 53, 28.2.2003, p. 8). 
See Press Release IP/08/596, 17.4.2008. 

EN 

13 

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27. 

Whether the Insurance BER should be renewed or not depends on the answers to the 
following questions: 

•  Do the business risks or other issues in this sector make it "special" and different 

from other sectors, and does this lead to an enhanced need for cooperation? 

•  If so, does this enhanced need for cooperation require a legal instrument such as 
the BER or Guidelines to protect or facilitate it (in comparison to other sectors, for 
example,  where  there  is  a  high  level  of  cooperation  without  such  a  legal 
instrument)? and 

•  If so, is the current BER the most appropriate legal instrument for this purpose (or 

would partial renewal, amended renewal or Guidelines be preferable)? 

28. 

If  it  is  decided  to  renew  the  Insurance  BER  or  any  part  of  it,  drafting  and  internal 
consultation will take place in the second half of 2009 with a view to adoption at the 
renewal,  a 
beginning  of  2010.  Should 
Communication to that effect will be published in 2009. 

the  Commission  decide  against 

1.4. 

Abuse of dominant positions (Article 82 EC) 

29. 

30. 

31. 

On  3 December,  the  Commission  issued  Guidance  on  its  enforcement  priorities  in 
applying Article 82 EC to abusive exclusionary conduct by dominant undertakings. 
This  followed  the  publication  by  the  Commission,  in  December  2005,  of  a 
Discussion Paper on the application of Article 82 to such conduct. 

The Guidance sets out an effects-based approach to Article 82. The Commission will 
pursue, as a matter of priority, exclusionary conduct by dominant undertakings that is 
likely to restrict competition in such a way as to have harmful effects on consumers. 
The Guidance establishes the analytical framework that the Commission employs in 
determining whether the exclusionary conduct of a dominant undertaking is likely to 
result in consumer harm. 

The  Guidance  consists  of  a  general  part,  which  sets  out  the  main  principles  of  an 
effects-based  approach  to  determining  enforcement  priorities  in  the  application  of 
Article 82, and then applies this general analytical framework to the most commonly 
encountered forms of exclusionary conduct, such as exclusive dealing, rebates, tying 
and  bundling,  predatory  practices,  refusal  to  supply  and  margin  squeeze.  This 
provides  transparency  and  predictability  as  to  the  circumstances  that  are  liable  to 
elicit  an  intervention  from  the  Commission.  Even  more  importantly,  it  is  meant  to 
dissuade dominant undertakings from engaging in certain types of conduct in the first 
place. 

2. 

APPLICATION OF ARTICLES 81, 82 AND 86 EC 

2.1. 

Cartels 

32. 

In  2008,  the  Commission  continued  to  attach  high  priority  to  the  detection, 
investigation and sanctioning of cartels. The Commission's activities were focused on 

EN 

14 

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significant hard-core cartels, in particular those with a European or worldwide scope. 
The Commission issued seven final decisions13 in which it fined 3414 undertakings a 
total  of  EUR  2 271 million  (compared  to  2007  when  eight  final  decisions  were 
issued,  and  41  undertakings  were  fined  a  total  of  EUR  3 338 million).  The 
Commission imposed the highest fine per cartel case to date of EUR 1 383 million in 
the Car Glass case and also, in the same case, the highest fine per undertaking for a 
cartel violation, imposing a penalty of EUR 896 million on Saint Gobain. 

A key aspect in the detection of cartels is the Commission's leniency policy, which 
offers incentives to cartel members to report their illegal activities. December 2006 
saw  the  introduction  of  a  revised  leniency  notice  (the  2006  Notice)15.  The  2006 
Notice is the Commission's third leniency notice, following earlier versions in 1996 
and  2002,  and  applications  under  the  revised  notice  were  made  in  2008.  The 
Commission  received  50  applications  for  immunity16  and  30  applications  for  a 
reduction  of  fines  under  the  2006  Notice  from  when  it  entered  into  force  up  to  the 
end of 2008. 

Although the leniency policy is an effective tool in detecting cartels, recent decisions 
such  as  NBR,  International  Removal  Services  and  Car  Glass  show  that  the 
Commission  is able  to  uncover cartel behaviour on its own initiative, outside of its 
leniency policy. The Commission continues to place considerable weight on such ex 
officio investigations, which may result from market monitoring, sector enquiries and 
complaints, and also via national competition authorities in the ECN. 

Once  it  has  detected  the  existence  of  a  cartel,  the  Commission  has  proceeded  to 
exercise its powers of investigation, in particular its power to conduct inspections of 
business premises. On-site inspections have taken place in a wide variety of sectors, 
which  include  ship  classification17,  cement18,  the  international  airline  passenger 
sector19,  consumer  detergents20,  traders  and  distributors  of  cereals  and  other 
agricultural products21 and smart card chips22. Moreover, the Commission exercised 
for the second time its power to conduct a search of a private home. 

33. 

34. 

35. 

36. 

The  Commission  has  also  sought  to  impose  appropriate  sanctions  to  punish  those 
participating  in  cartels  and  to  put  in  place  suitable  deterrence  against  entering  into 

13 

14 

15 

16 

17 
18 
19 
20 
21 
22 

Case  COMP/38.628  NBR  (not  yet  published  in  the  OJ),  Case  COMP/38.543  International  removal 
services  (not  yet  published  in  the OJ),  Case  COMP/38.695 Sodium  chlorate  (not  yet  published  in  the 
OJ), Case COMP/39.180 Aluminium fluoride (not yet published in the OJ), Case COMP/39.181 Candle 
Waxes  (not  yet  published  in  the  OJ),  Case  COMP/39.188  Bananas  (not  yet  published  in  the  OJ)  and 
Case COMP/39.125 Car Glass (not yet published in the OJ). 
This figure does not include the companies that received immunity from fines for cooperation under the 
Leniency Notice. 
Commission  Notice  on  Immunity  from  fines  and  reduction  of  fines  in  cartel  cases  (OJ C 298, 
8.12.2006, p. 17). 
Where several applications for immunity have been received for the same alleged infringement, the first 
application  is  counted  as  an  immunity  application  and  the  subsequent  ones  as  applications  for  a 
reduction of fines unless the first application is rejected. 
See MEMO/08/65, 30.1.2008. 
See MEMO/08/676, 5.11.2008. 
See MEMO/08/158, 11.3.2008. 
See MEMO/08/424, 20.6.2008. 
See MEMO/08/496, 10.7.2008. 
See MEMO/09/1, 7.1.2009. 

EN 

15 

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cartel  behaviour.  The  new  Guidelines  on  fines23,  introduced  in  2006,  were 
exclusively  applied  in  the  above  decisions.  Three  points  in  particular  are  evident 
from Commission's decisions to impose fines in 2008. First, companies that obstruct 
the Commission's investigations risk severe penalties of up to one percent of annual 
turnover. The Commission imposed a fine of EUR 38 million on E.ON for the breach 
of  a  Commission  seal  in  E.ON’s  premises  during  an  inspection.  Second,  repeat 
offenders  continued  to  see  a  significant  increase  in  the  amount  of  fine  imposed. 
Arkema's fine was increased by 90% in Sodium Chlorate and Saint Gobain's by 60% 
in  Car  Glass.  Moreover,  ENI  and  Bayer,  which  had  seen  their  fines  increased  as 
repeat  offenders  in  the  Chloroprene  Rubber  case  in  2007,  also  had  their  fines 
increased  for  that  reason in  the Candle Wax case (ENI) and  the NBR case  (Bayer). 
Third, the Commission has shown that, under exceptional circumstances, it may use 
its discretion to reduce a fine. In the International Removal Services case, although 
the  Commission  saw  no  grounds  for  reducing  the  amounts  of  the  fines  for  four 
undertakings,  who  claimed  their  inability  to  pay24,  the  Commission  exceptionally 
took into account the inability to pay and the particular circumstances concerning the 
individual situation of a fifth undertaking, Interdean, and reduced its fine by 70%. 

2.2. 

Other agreements and concerted practices 

37. 

In  the  context  of  rights  management,  the  Commission  adopted,  on  16 July25,  a 
decision  based  on  Article  81  EC  prohibiting  European  Economic  Area  (EEA) 
collecting  societies  which  are  members  of  the  International  Confederation  of 
Societies  of  Authors  and  Composers  (CISAC)  from  maintaining  membership 
restrictions  and  exclusivity  clauses  under  their  reciprocal  bilateral  agreement.  The 
decision  also  prohibits  a  concerted  practice  which  extended  the  traditional  national 
monopolies  of  collecting  societies  into  the  cable,  satellite  and  internet  sectors  and 
resulted in strict segmentation of the market along national borders. 

2.3. 

Abuse of dominant positions (Article 82 EC) 

38. 

In  November,  a  commitment  decision  was  adopted  rendering  legally  binding 
commitments  proposed  by  E.ON  to  address  concerns  raised  in  the  course  of  an 
investigation pursuant to Article 82 EC. This investigation was started as a follow up 
to the energy sector inquiry carried out in 2006. In the course of this investigation, 
the Commission came to the preliminary conclusion that E.ON might have infringed 
Article 82 by withdrawing available generation capacity from the German wholesale 
electricity  markets  and  have  deterred  new  investors  in  electricity  generation. 
Furthermore,  the  Commission  had  concerns  that  E.ON  may  have  favoured  its 
production  affiliate  in  terms  of  providing  balancing  services,  while  passing  the 
resulting costs on to final consumers, and thus prevented other power producers from 
exporting balancing energy into its transmission zone. E.ON offered to divest around 
5000  MW  of  its  generation  capacity  to  meet  concerns  regarding  the  generation 
market  and  to  divest  its  extra-high  voltage  network  to  remove  the  incentive  of  the 
operator of that network to favour a particular supplier. 

23 

24 
25 

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, p. 2). 
See paragraph 35 of the above mentioned Guidelines on fines. 
Case COMP/38.698 CISAC (not yet published in the OJ). 

EN 

16 

   EN 

 
                                                 
39. 

40. 

2.4. 

41. 

42. 

43. 

26 
27 
28 

29 

Microsoft  was  the  first  company  in  the  history  of  competition  policy  in  the  EU  to 
have penalty payments imposed on it for non-compliance with a previous decision of 
the  Commission.  The  Commission  pursued  its  proceedings  against  Microsoft  to 
ensure compliance with the 2004 Decision and with the principles laid down in the 
judgment of the Court of First Instance (CFI) of 17 September 2007, with regard to 
the pricing and licensing terms for the interoperability information that Microsoft has 
to  disclose  as  part  of  the  remedy  imposed  by  the  2004  Decision.  In  2006,  the 
Commission  had  imposed  on  Microsoft  a  definitive  penalty  payment  of  EUR 
280.5 million  for  not  providing  complete  and  accurate  interoperability  information. 
After a SO sent in March 2007, the Commission adopted on 27 February a decision 
concluding that Microsoft had not complied with its obligation to offer the complete 
and  accurate  interoperability  information  on  reasonable  and  non-discriminatory 
terms  by  21 October  2007.  A  definitive  penalty  payment  of  EUR  899 million  was 
imposed on Microsoft26. 

In  the  Intel  case,  a  supplementary  statement  of  objections  (SSO)  was  issued  on 
17 June reinforcing the Commission's preliminary view outlined in a SO of 26 July 
2007 that Intel had infringed EC Treaty rules on abuse of a dominant position with 
the  aim  of  excluding  its  main  rival,  AMD,  from  the  x86  Central  Processing  Units 
(CPU) market. 

State  measures:  Public  undertakings  and/or  undertakings  with  exclusive  or 
special rights 

The Commission was also active in the area of Article 86 EC in 2008. 

In  March,  the  Commission  adopted  a  decision  finding  that  the  Greek  State  had 
infringed Article 86 in conjunction with Article 82 EC by maintaining in force legal 
provisions  which  guaranteed  the  state-owned  incumbent  Public  Power  Corporation 
(PPC) access to almost all exploitable lignite mines in Greece27. Lignite-fired power 
generation being the cheapest form of electricity production in Greece, this situation 
created  an  inequality  of  opportunity  between  market  operators  and  allowed  PPC  to 
maintain  its  dominant  position  on  the  wholesale  electricity  market.  Greece  was 
requested  to  submit  proposals  on  how  to  ensure  that  competitors  obtain  sufficient 
access  to  lignite  which  -  should  the  Commission  consider  the  proposals  to  be 
satisfactory  –  be  made  legally  binding  on  the  Greek  State  by  way  of  a  second 
decision. 

On  7 October,  the  Commission  adopted  a  decision  finding  that,  by  extending  the 
monopoly of the postal incumbent, Slovenská Pošta, to services for the delivery stage 
of hybrid mail, without justification, the Republic of Slovakia had infringed Article 
86 EC (in conjunction with Article 82 EC)28. The decision finds that, in the Republic 
of  Slovakia,  the  delivery  of  hybrid  mail29  was  open  to  competition  until  recent 
amendments  to  the  postal  legislation,  and  that  several  private  operators  had 

Case COMP/34.792 Microsoft (not yet published in the OJ). 
See Press Release IP/08/386, 5.3.2008. 
Case  COMP/39.562  Slovakian  postal  Law  (OJ C 322,  17.12.2008,  p. 10).  See  also  Press  Release 
IP/08/1467, 7.10.2008. 
Hybrid mail is a specific form of postal services where the content is electronically transferred from the 
sender to the postal service operator who then prints, envelopes, sorts and delivers the postal items. 

EN 

17 

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accordingly  entered  that  market.  The  decision  also  finds  that  the  Republic  of 
Slovakia  failed  to  provide  evidence  that  this  re-monopolisation  of  the  delivery  of 
hybrid  mail  was  necessary  for  the  provision  of  the  postal  universal  service.  The 
Republic  of  Slovakia  had  one  month  to  inform  the  Commission  of  the  measures 
undertaken  to  put  an  end  to  the  infringement.  In  the  absence  of  any  such  measure 
being  submitted  to  the  Commission,  the  latter  initiated  an  infringement  procedure 
against  the  Republic  of  Slovakia,  for  non  compliance  with  the  decision  of 
7 October30. 

3. 

SELECTED COURT CASES 

3.1. 

44. 

45. 

46. 

47. 

48. 

The CFI upholds the Commission's Deutsche Telekom decision31 

On  10 April,  in  the  Deutsche  Telekom  v  Commission  case,  the  CFI  upheld  the 
Commission  decision  of  21  May  2003  and  confirmed  that  Deutsche  Telekom  had 
been  abusing  its  dominant  position  on  the  markets  for  direct  access  to  its  fixed 
telephone network32. 

The Commission had imposed a fine of EUR 12.6 million on Deutsche Telekom for 
charging its competitors for (wholesale) access to its network higher prices than the 
retail prices it charged its own retail customers. This pricing in the form of a margin 
squeeze  forced  competitors  to  charge  their  customers  prices  that  were  higher  than 
those charged by Deutsche Telekom to its own end-users, or incur losses. 

In its judgment the CFI rejected all the arguments put forward by Deutsche Telekom. 
The  Court  confirmed  that  the  Commission  had  correctly  found  that  Deutsche 
Telekom  can  be  held  responsible  under  competition  law  for  the  margin  squeeze 
although  its  fees  met  the  general  price  indications  imposed  by  the  competent 
National  Regulatory  Authority  (NRA).  The  CFI  found  that  during  the  period  when 
the anti-competitive conduct took place Deutsche Telekom had sufficient discretion 
to end or to reduce the margin squeeze, but did not use that discretion in a manner 
that would avoid violating competition law. 

Regarding the methods used by the Commission to assess the existence of a margin 
squeeze,  the  CFI  held  that  the  abusive  nature  of  the  conduct  in  question  was 
connected to the spread between the prices for wholesale access and the related retail 
prices.  For  this  reason,  the  Commission  was  not  required  to  demonstrate  that  the 
retail prices of Deutsche Telekom were, as such, abusive. 

The CFI also ruled that the decisions of national authorities in respect of Community 
telecommunications  law  do  not  in  any  way  affect  the  Commission’s  power  to  find 
infringements of competition law. 

30 
31 
32 

See Press Release IP/08/1997, 17.12.2008. 
Case T-271/03 Deutsche Telekom AG v Commission, not yet reported in the ECR. 
Deutsche  Telekom  decided  to  appeal  against  the  CFI  judgment  and  the  case,  C-280/08 P  Deutsche 
Telekom v Commission, is pending before the ECJ. 

EN 

18 

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3.2. 

49. 

50. 

3.3. 

51. 

52. 

AC Treuhand v. Commission33 

In its appeal, the applicant, AC Treuhand, essentially disputed the importance that the 
Commission attributed to its activity in the organic peroxides cartel34. AC Treuhand 
was not a producer of the cartel products but a consultancy firm which provided the 
cartel members with clerical-administrative services subject to their instructions. 

In order to hold this consultancy firm liable under Article 81(1) EC, the CFI stated 
that  an  agreement  incompatible  with  Article  81  EC  is  merely  another  way  of 
indicating  coordinated  and/or  collusive  conduct  which  is  restrictive  of  competition 
and in which at least two distinct undertakings participate, after expressing their joint 
intention to conduct themselves on the market in a particular way. In that regard, any 
restriction  of  competition  within  the  common  market  which  comes  as  a  result  of 
collusive conduct may be qualified as an agreement restrictive of competition under 
Article  81(1)  EC.  For  this  provision  to  apply,  it  is  not  relevant  whether  the 
undertaking  concerned  is  active  on  the  particular  market  where  the  restriction  of 
competition  takes  place.  The  CFI  also  stated  that,  under  Article  81(1)  EC,  the 
undertaking  may  participate  in  the  implementation  of  a  restriction  of  competition 
even  if  it  does  not  restrict  its  own  freedom  of  action  on  the  market  on  which  it  is 
primarily active. 

Lelos & others v. GlaxoSmithKline35 

The  background  to  this  judgment  is  an  Article  234  EC  procedure  (preliminary 
reference)  which  relates  to  the  application  of  Article  82  EC  in  the  pharmaceutical 
sector. Specifically, the ECJ had to address the question of whether the refusal by a 
dominant  pharmaceuticals  company  to  supply  certain  medicinal  products  to 
wholesalers  engaged  in  parallel  trade  may  constitute  an  abuse  of  that  company's 
dominant  position.  In  that  context,  the  national  court  making  the  referral  asked  the 
ECJ  about  the  relevance  of  a  series  of  factors,  such  as  the  degree  of  regulation  to 
which the pharmaceuticals sector is subject in Member States, the impact of parallel 
trade on the revenues of the pharmaceuticals companies, and the question of whether 
parallel trade is capable of generating financial benefits for the ultimate consumers of 
the medicinal products. 

The  ECJ  held  that  Article  82  EC  must  be  interpreted  to  mean  that  a  dominant 
pharmaceuticals company which, in order to put an end to parallel exports carried out 
by  certain  wholesalers  from  one  Member  State  to  other  Member  States,  refuses  to 
meet  ordinary  orders  from  those  wholesalers,  is  abusing  its  dominant  position.  In 
other  words,  the  ECJ  found  that  a  refusal  to  meet  orders  which  are  out  of  the 
ordinary  will  not  be  considered  an  abuse  of  dominance.  The  ECJ  left  it  to  the 
national courts to determine whether the orders in dispute are out of all proportion to 
those previously sold by the same wholesalers to met the needs of the market in that 
Member  State  in  the  light  of  both  (i)  the  size  of  those  orders  in  relation  to  the 
requirements of the market in the (exporting) Member State concerned, and (ii) the 

33 

34 
35 

Case T-99/04 AC - Treuhand AG v Commission of the European Communities, not yet reported in the 
ECR. 
Case COMP/37.857 Organic peroxides (OJ L 110, 30.4.2005, p. 44). 
Joined  Cases  C-468/06  to  C-478/06  Sot.  Lelos  kai  Sia  EE  &  Others  v  GlaxoSmithKline  AEVE 
Farmakeftikon Proionton, formerly Glaxowellcome AEVE, not yet reported in the ECR. 

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19 

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53. 

3.4. 

54. 

55. 

3.5. 

56. 

previous business relations between the dominant pharmaceuticals company and the 
wholesalers concerned. 

It  is  noteworthy  that  the  ECJ  also  stressed  the  relevance  of  the  single  market 
imperative in European competition law. To this end, the ECJ reiterated its previous 
case-law in relation to Article 81 EC, whereby any agreement which tends to restore 
national  divisions  in  trade  between  Member  States  –  i.e.  which  may  frustrate  the 
objective of the EC Treaty to achieve the integration of national markets through the 
establishment of a single market – is considered to have as its object a restriction of 
competition within the meaning of Article 81 EC. Hence, the ECJ made it clear that 
vertical  agreements  which  aim  at  preventing  or  restricting  parallel  exports  are  still 
considered  anti-competitive  by  object  –  i.e.  it  is  not  necessary  to  show  that  the 
agreement  has  anti-competitive  effects  in  order  to  find  an  infringement  of  Article 
81(1) EC. 

Competition Authority v. Beef Industry Development Society36 

In this preliminary ruling under Article 234 EC, the ECJ had to rule on the scheme of 
the  Beef  Industry  Development  Society  in  Ireland  under  which  some  of  the  beef 
to  reduce 
the  processing 
processors  undertake 
overcapacity.  This  scheme  came  out  of  a  market  study  commissioned  by  the  Irish 
Government  and  industry  representatives,  which  found  that  there  was  considerable 
overcapacity  in  the  processing  industry,  which  would  lead  to  a  decline  in 
profitability. 

in  order 

industry 

leave 

to 

The ECJ found that a reduction of capacity under the circumstances of this case has 
as  its  object  a  restriction  of  competition  and,  consequently,  an  assessment  of  its 
actual effects was not necessary in order to deem it incompatible with Article 81(1) 
EC. In its ruling, the ECJ did not expressly exclude the possibility that a reduction of 
overcapacity  could  result  in  economies  of  scale  among  processors  that  stay  in  the 
industry.  However,  it  was  for  the  defendant  to  prove  under  Article  81(3)  EC  that 
these  positive  effects  offset  the  negative  effects  associated  with  reductions  of 
capacity. 

The  ECJ  clarifies  the  obligations  of  collecting  societies  as  regards  royalties 
setting under Article 82 EC 

On 11 December, the ECJ issued a preliminary ruling in a case brought by two TV 
channels,  Kanal  5  and  TV  4  AB,  against  STIM,  the  Swedish  collecting  society,  for 
abuse  of  a  dominant  position37.  The  ruling  is  important  in  two  respects.  The  Court 
first  held  that  a  copyright  management  organisation  with  a  dominant  position  does 
not abuse that position when it bases its music royalties charges to commercial TV 
channels  partly  on  the  broadcasters'  revenues,  under  the  condition  that  the  sum  is 
proportionate to the amount of music used and provided that no other viable method 
of supervision enables the use of those works and the audience to be identified more 
precisely. Secondly, the Court also held that a copyright management organisation is 

36 

37 

Case  C-209/07  Competition  Authority  v  Beef  Industry  Development  Society  Ltd.  and  Barry  Brother 
(Carrigmore) Meats Ltd., not yet reported in the ECR. 
Case  C-52/07  Kanal  5  Ltd  TV  4  AB  v  Föreningen  Svenska  Tonsättares  Internationella  Musikbyra 
(STIM) upa, not yet reported in the ECR.  

EN 

20 

   EN 

 
                                                 
3.6. 

57. 

likely to exploit its dominant position in an abusive manner if it applies with respect 
to  private  and  public  broadcasters  dissimilar  conditions  for  the  calculation  of 
royalties to equivalent services, unless such a practice can be objectively justified. 

The ECJ rules against the Italian scheme of frequency allocation for terrestrial 
television broadcasting 

On 31 January, the ECJ delivered its judgment in a reference for a preliminary ruling 
in  the  case  Centro  Europa 738.  The  judgment  arose  from  a  referral  by  a  national 
Court  (the  "Consiglio  di  Stato")  originating  from  the  fact  that  Centro  Europa 7, 
though holding a legitimate title to broadcast in Italy since 1999, was never granted 
the necessary frequencies to start operating, while other TV operators in Italy were 
allowed to broadcast on the basis of temporary titles. The ECJ ruled that a national 
system of frequency allocation "which makes it impossible for an operator holding 
rights to broadcast in the absence of broadcasting radio frequencies granted on the 
basis  of  objective,  transparent,  non-discriminatory  and  proportionate  criteria"  is 
incompatible  with  Article  49  EC  and  with  Directives  2002/21/EC  (the  Framework 
Directive39),  2002/20/EC  (the  Authorisation  Directive40)  and  2002/77/EC  (the 
Competition Directive41). 

B – MERGER CONTROL 

1. 

APPLICABLE RULES 

1.1. 

The Remedies Notice 

58. 

38 
39 

40 

41 

42 

43 

44 

Remedies are modifications to a merger proposed by the merging parties to eliminate 
competition  concerns  identified  by  the  Commission.  In  order  to  provide  improved 
guidance on questions related to remedies, the Commission adopted, on 22 October, 
a  new  notice  on  Remedies42  (the  Remedies  Notice)  while  also  amending  the 
Implementing  Regulation43  (together  known  as  the  remedies  reform  or,  simply, 
reform).  The  Remedies  Notice  replaces  and  updates  the  previous  remedies  notice 
from  2001.  The  remedies  reform  is  mainly a  codification  of  recent  past  practice  of 
the  Community  Courts44  and  of  the  Commission,  but  it  also  provides  a  number  of 

Case C-380/05 Centro Europa 7 [2008] ERC I-349. 
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  2002/20/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). 
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). 
Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under 
Commission Regulation (EC) No 802/2004 (OJ C 267, 22.10.2008, p. 1). 
Commission  Regulation  (EC)  No  1033/2008  of  20 October  2008  amending  Regulation  (EC) 
No 802/2004  implementing  Council  Regulation  (EC)  No 139/2004  on  the  control  of  concentrations 
between undertakings (OJ L 279, 22.10.2008, p. 3). 
See,  in  particular,  Cases  C-12/03  P  Commission  v  Tetra  Laval  [2005]  ECR  I-987,  C-202/06  P 
Cementbouw  Handel  &  Industrie  v  Commission  [2007]  ECR  I-12129,  T-119/02  Royal  Philips 

EN 

21 

   EN 

 
                                                 
59. 

60. 

61. 

62. 

2. 

63. 

64. 

clarifications, taking into account the conclusions drawn from the Remedies Study45 
and the replies to the public consultation on a draft Remedies Notice. 

First, the reform imposes more stringent information requirements on the parties. It is 
essential  that  the  Commission  should  be  able  to  conclude  with  certainty  that  the 
remedies  will  be  viable  and  effective.  The  Commission  must  therefore  have  all 
necessary  information  in  order  to  assess  remedy  proposals.  For  this  purpose,  the 
reform introduces a new "Form RM". This is a form that enables the notifying parties 
to  systematise  the  information  to  be  provided  and  also  allows  the  Commission  to 
assess the precise scope of the business to be divested and its links to the parties. 

Secondly,  the  reform  clarifies  and  tightens  up  the  requirements  for  the  sufficient 
scope of divestitures and for the suitability of purchasers. In particular, it explains the 
application of "up-front buyer" provisions and "fix-it-first" solutions that can address 
possible uncertainties in finding a suitable purchaser. 

the  reform  provides 

that  carve-outs  may  be  accepted 

in  certain 
Thirdly, 
circumstances, but that the parties are obliged to finalise such carve-outs prior to the 
sale to a purchaser, in order to minimise the risk of deterioration of the business to be 
divested while it is in the hands of the parties pending divestiture. In this respect, as 
well  as  generally,  the  reform  also  provides  for  strengthened  powers  for  monitoring 
trustees. 

Finally,  as  to  non-divestiture  remedies,  the  Remedies  Notice  -  consistent  with  past 
practice  -  underlines  that  such  remedies  are  only  acceptable  where  they  are 
equivalent in their effects to a divestiture. Access commitments are only acceptable if 
there  is  a  sufficient  likelihood  that  they  will  actually  be  used  by  competitors  in 
practice.  The  Remedies  Notice  further  stresses  that  difficulties  of  monitoring  and 
risks concerning effectiveness may lead to non-divestiture remedies being rejected. 

APPLICATION OF THE MERGER CONTROL RULES 

The level of merger notifications continued at record levels in 2008, with a total of 
347  transactions  being  notified  to  the  Commission.  Although  this  is  lower  than  the 
record level reached the previous year, it is still the third highest level on record. 

In total, the Commission adopted 340 final decisions during the year. Of these final 
decisions, 307 transactions were cleared without conditions during Phase I. A total of 
118  decisions  were  cleared  without  conditions  under  the  normal  procedure  and  a 
further  189  were  cleared  using  the  simplified  procedure.  There  were  also  19 
transactions cleared in Phase I, but subject to conditions. 

65. 

The  Commission  initiated  ten  Phase  II  proceedings  during  the  year.  There  was  a 
notable  increase  in  the  number  of  Article  8  decisions  adopted  (14,  or  4.0%  of  all 

Electronics v Commission [2003] ECR II-1433, T-158/00 ARD v Commission [2003] ECR II-3825, T-
210/01 General Electric v Commission [2005] ECR II 5575, T-87/05 EDP v Commission [2005] ECR 
II-3745 and T-177/04 Easy Jet v Commission [2006] ECR II-1931. 
Merger  Remedies  Study,  DG  Competition,  European  Commission,  October  2005,  Office  for  Official 
Publications of the European Communities, ISBN 92-79-00420-4. 

45 

EN 

22 

   EN 

 
                                                                                                                                                         
notifications  as  opposed  to  2.5  %  the  previous  year)  and  in  the  number  of  Phase  I 
(10, representing 2.9% in 2008 as opposed to 1.2% in 2007) and II withdrawals (3, 
amounting  to  0.9%  in  2008  against  0.7%  in  2007)..  No  prohibition  decisions  were 
taken during the year. In general, the proportion of notified concentrations resulting 
in either a prohibition or withdrawal in 2008 was within the usual range, as the chart 
below indicates. 

Chart 1 –Prohibitions and Phase II withdrawals, 1998-2008 

1999  2000 

2001  2002 

2003  2004  2005 

2006  2007 

2008  Total

Notifications  276 

330 

335 

277 

211 

247 

313 

356 

402 

347 

3094 

Prohibitions 

Phase 
II 
withdrawals 

1 

5 

2 

5 

5 

4 

0 

1 

0 

0 

1 

2 

0 

3 

0 

2 

1 

2 

0 

3 

10 

27 

Regulatory 
Risk 

2.2%  2.1%  2.7%  0.4%  0.0%  1.2%  1.0%  0.6%  0.7%  0.9%  1.2%

3. 

SELECTED COURT CASES 

3.1. 

Sony BMG/Impala 

66. 

On 10 July, the ECJ set aside the CFI ruling concerning the Commission's decision to 
clear  a  joint  venture  between  the  two  recorded  music  divisions  of  Sony  and 
Bertelsmann46.  The  CFI  had  annulled  the  Commission  decision  on  a  number  of 
procedural and substantive grounds. The case has now been referred back to the CFI. 
The ruling provides a number of clarifications as regards the substantive assessment 
of  collective  dominance,  and  the  Commission's  merger  review  process  more 
generally. First, it makes clear that there is no higher standard of proof in relation to 
decisions  prohibiting  concentrations  than  in  relation  to  decisions  approving  them. 
Thus, the standard of proof for prohibiting mergers must be the same as that applied 
when clearing them. Second, the ECJ clarifies the role of the SO and acknowledges 
that  the  Commission  is  not  obliged  to  maintain  the  preliminary  factual  or  legal 
assessments set forth in the SO. Third, the ECJ considers that there is no ground to 
apply  particularly  demanding  requirements  as  regards  the  probative  value  of  the 
evidence  and  arguments  put  forward  by  the  notifying  parties  in  reply  to  the  SO 
compared  to  those  of  other  interested  parties.  Finally,  the  ruling  provides  some 
clarification with regard to the standard of reasoning in Article 8(2) ECMR decisions 
and points out that the Commission is not obliged to state reasons as to the appraisal 
of  a  number  of  aspects  of  the  concentration  which  appear  to  it  to  be  manifestly 
irrelevant  or  insignificant  or  of  secondary  importance  to  the  appraisal  of  the 
concentration. 

46 

Case C-413/06 P Bertelsmann and Sony Corporation of America v Impala, not yet reported in the ECR. 

EN 

23 

   EN 

 
 
                                                 
3.2.  MyTravel 

67. 

68. 

47 

48 

49 

50 

51 

52 

53 

On  9 September,  the  CFI  dismissed,  in  the  MyTravel  judgment47,  the  claim  for 
damages  that  followed  the  annulment48  of  the  Commission's  1999  decision 
prohibiting the concentration between Airtours (renamed MyTravel in the meantime) 
and  First  Choice49.  MyTravel  had  applied  for  damages  for  the  loss  it  allegedly 
suffered  by  reason  of  the  unlawfulness  of  the  proceedings  for  determining  whether 
the  concentration  referred  to  the  CFI  was  compatible  with  the  common  market.  In 
particular,  MyTravel  had  requested  the  CFI  to  order  the  Commission  to  pay  it  an 
amount in respect of the period between the adoption of the prohibition decision and 
the date on which it could, in principle, have acquired First Choice50. 

According to settled case-law, in order for the Commission to incur non-contractual 
liability  under  the  second  paragraph  of  Article  288  EC  for  unlawful  conduct  of  its 
institutions  a  number  of  conditions  must  be  satisfied:  (i)  the  institution’s  conduct 
must be unlawful, (ii) actual damage must have been suffered and (iii) there must be 
a  causal  link  between  the  conduct  and  the  damage  pleaded51.  In  its  judgment  of 
9 September,  the  CFI  confirmed  that,  as  regards  the  first  of  these  conditions,  the 
mere annulment of a decision prohibiting a merger is not, in itself, sufficient to make 
the  Commission  liable  for  damages,  in  the  absence  of  a  "manifest  and  grave" 
infringement  of  EC  law52.  The  CFI  based  itself  on  the  landmark  judgment 
Bergaderm53 and concluded that a Community institution may only be liable where it 
commits  a  sufficiently  serious  breach  of  a  rule  of  law  intended  to  confer  rights  on 

Case T-212/03 My Travel v Commission, not yet reported in the ECR. In a related case, the CFI rejected 
almost in its entirety the applicant's request to be granted access to a number of internal documents of 
the Commission (See Case T-403/05 My Travel v Commission, not yet reported in the ECR). 
Case  T-342/99  Airtours v  Commission [2002]  ECR  II  2585.  The  CFI  declared  the  plea  related  to  the 
lawfulness of the Commission’s assessment of the effects of the Airtours/First Choice concentration on 
competition in the common market to be well founded, without examining the plea which concerned the 
lawfulness  of  the  Commission’s  assessment  of  the  commitments  submitted  during  the  administrative 
procedure. 
Case  COMP/M.1524  Airtours/First  Choice  (OJ L 093,  13.4.2000.  p. 1).  The  Commission  had 
considered that the acquisition by Airtours of First Choice would create a collective dominant position 
on the market for UK short-haul holiday packages. 
MyTravel had originally estimated the damage at (at least) GBP 518 million. This amount included loss 
of profits of First Choice, loss of synergy savings and abortive bid costs, less successful bid execution 
costs. 
Case  26/81  Oleifici  Mediterranei v  EEC  [1982]  ECR  03057.  Case  T-383/00  Beamglow  v  Parliament 
and Others [2005] ECR II-5459. 
It shall be recalled that the non-contractual liability of the Community in the exercise of merger control 
has  also  been  the  object  of  a  recent  judgment  of  the  CFI  (Case  T-351/03  Schneider  Electric  v 
Commission, not yet reported in the ECR). The illegality identified in that case did not concern errors in 
the substantive assessment of the Commission but a procedural violation affecting the rights of defence 
of  the  applicant  (see  Case  T-310/01  Schneider  Electric  v  Commission  [2002]  ECR  II-4071).  In  its 
judgment in Case T-351/03, the CFI ordered the Community to make good, first, the expenses incurred 
by the applicant in respect of its participation in the resumed merger control procedure which followed 
the  judgment  annulling  the decision  prohibiting  its  proposed  concentration  and,  second,  two  thirds of 
the loss sustained as a result of the reduction in the transfer price of the target which the applicant had to 
concede to the transferee in exchange for the postponement of the effective date of sale. This judgment 
is  currently  under  appeal  (Case  C-440/07  P  Commission  v  Schneider  Electric):  on  3 February  2009 
Advocate General Ruiz-Jarabo adopted his Opinion proposing to set aside in part the CFI judgment and 
limit the compensation granted to Schneider Electric. 
Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291. 

EN 

24 

   EN 

 
                                                 
69. 

70. 

71. 

individuals.  The  decisive  criterion  is,  in  that  regard,  whether  the  institution 
manifestly and gravely disregarded the limits on its discretion. 

Thus,  according  to  the  CFI,  equating  the  annulment  of  a  merger  decision  with  a 
sufficiently  serious  breach  of  EC  law  without  further  analysis  would  risk 
compromising  the  Commission's  capacity  to  fully  function  as  a  regulator  of 
competition,  as  a  result  of  the  inhibiting  effect  that  the  risk  of  having  to  bear  the 
losses  alleged  by  the  undertakings  concerned  might  have  on  the  control  of 
concentrations. This effect would be contrary to the general Community interest. The 
CFI  noted,  however,  that  the  right  to  compensation  for  damage  resulting  from  the 
conduct  of  the  Commission  comes  into  play  where  such  conduct  takes  the  form  of 
action that is manifestly contrary to the rule of law and seriously detrimental to the 
interests of persons outside the institution and cannot be justified or accounted for by 
the  particular  constraints  to  which  the  staff  of  the  latter,  operating  normally,  are 
subject. 

In its MyTravel judgment, the CFI concluded that, in the case at issue, there was not 
such  a  sufficiently  serious  breach  of  a  rule  of  law,  either  at  the  stage  of  the 
Commission’s assessment of the effects of the Airtours/First Choice concentration on 
competition in the common market or at the stage of its analysis of the commitments 
submitted by the parties. 

In particular, the CFI, although recognizing that manifest and grave defects affecting 
the economic analysis underlying a prohibition decision of a concentration could in 
principle  give  rise  to  compensation,  stressed  the  fact  that  the  application  of 
competition law involves complex and difficult intellectual exercises, in particular in 
the field of merger control, in view of the time constraints to which the Commission 
is  subject  and  the  prospective  nature  of  its  analysis.  In  the  case  at  issue,  the  CFI 
considered that the economic situation in question was especially complex, inasmuch 
as  the  Commission  was  required  to  assess  the  possible  creation  of  a  collective 
dominant  position  of  an  oligopolistic  nature  on  a  market  for  a  product  combining 
different  services  and  on  which  competition  was  practised  more  in  relation  to 
capacity than to prices. The CFI also took account of the discretion enjoyed by the 
Commission  in  maintaining  control  over  Community  competition  policy.  On  this 
basis, the CFI concluded that the errors of assessment established by the Court in its 
judgment  annulling  the  Airtours'  prohibition  decision,  taken  either  individually  or 
cumulatively,  was  not  sufficient  to  give  rise  to  the  non-contractual  liability  of  the 
Community in the case at issue. 

72. 

Lastly,  it  should  be  noted  that  the  MyTravel  judgment  also  gives  some  guidance 
regarding  the  possibility  for  the  Commission  to  reject  remedies  submitted  after  the 
relevant  deadline.  The  CFI  reiterated,  in  line  with  the  EDP  case  law54,  that  the 
Commission  has  a  duty  of  diligence  in  that  it  has  to  examine  whether  or  not  those 
commitments  clearly,  and  without  the  need  for  further  investigation,  resolve  the 
competition concerns previously identified, except where there is not, in any event, 
sufficient time to consult the Member States about those proposed remedies. 

54 

Case T-87/05 EDP v Commission [2005] ECR II-3745. 

EN 

25 

   EN 

 
                                                 
3.3. 

Application of Article 21 of the EC Merger Regulation (ECMR) 

73. 

74. 

75. 

76. 

In  2008,  both  the  ECJ  and  the  CFI  reminded  Member  States  of  their  obligations 
under  Article  21  of  the  EC  Merger  Regulation  (ECMR)  and  of  the  powers  of  the 
Commission to ensure the effective application of this provision. 

It  is  recalled  that,  pursuant  to  Article  21  ECMR,  the  Commission  has  exclusive 
competence  to  assess  the  competitive  impact  of  concentrations  with  a  Community 
dimension, and Member States cannot apply their national competition law to such 
operations.  However,  Member  States  may  take  appropriate  measures  to  protect 
legitimate  interests  other  than  those  taken  into  consideration  by  the  ECMR55  and 
compatible  with  the  general  principles  and  other  provisions  of  Community  law. 
Public security, plurality of the media and prudential rules are expressly regarded as 
legitimate  interests  in  that  connection.  Before  these  measures  may  be  taken,  any 
other public interest must be communicated to the Commission by the Member State 
concerned  and  shall  be  recognised  by  the  Commission  after  an  assessment  of  its 
compatibility with Community law. 

On  25 April  2006,  the  Commission  authorized  the  concentration  by  which  E.ON 
would  acquire  control  of  Endesa  by  way  of  public  bid56.  On  27 July  2006,  the 
Spanish  authorities  (the  Comisión  Nacional  de  la  Energía,  the  Energy  Regulator) 
made the authorization of the said concentration subject to a number of conditions57, 
subsequently modified by decision of the Ministro de Industria, Comercio y Turismo 
(Minister  of  Industry,  Tourism  and  Trade).  By  decisions  of  26 September  and 
20 December 2006, the Commission found that Spain had violated Article 21 ECMR 
by imposing the said conditions without previous communication to the Commission 
and without its prior authorization, and ordered that these conditions be withdrawn. 
Owing  to  the  failure  of  the  Spanish  authorities  to  comply  with  the  decisions  in 
question, the Commission started infringement proceedings under Article 226 EC. In 
April  2007,  the  Comisión  Nacional  del  Mercado  de  Valores  (the  Spanish  Stock 
Exchange authority) officially declared that E.ON's public bid had failed to attain a 
majority of Endesa's share capital. The operation was therefore abandoned. 

In its judgment in Commission v Spain58, the ECJ found that Spain had violated EC 
law  by  failing  to  comply  with  the  above-mentioned  Article  21  decisions.  The  ECJ 
confirmed  that,  before  adopting  the  contested  measures,  Spain  should  have 
communicated  to  the Commission  the legitimate  interests  that  those measures were 
intended  to  protect  (namely,  the  guarantee  of  the  supply  of  energy).  The  ECJ  also 
stated  that,  when  a  Member  State  disagrees  with  an  Article  21  decision  by  the 
Commission,  it  must  challenge  the  legality  of  that  decision  before  the  Community 
Courts  and  cannot  simply  fail  to  comply  with  it.  The  ECJ  declared  finally  that, 
contrary  to  what  the  Spanish  authorities  had  argued,  the  mere  fact  that  the 

55 

56 
57 

58 

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). 
Case COMP/M.4110 E.ON/Endesa (OJ C 114, 16.5.2006, p. 4). 
The Comisión Nacional de la Energía acted in implementation of its newly-acquired powers granted by 
Royal  Legislative  Decree  4/2006,  of  24 February 2006.  The  ECJ  has  later  found  that,  by  attributing 
these powers to the Energy Regulator, Spain had infringed Articles 43 and 56 EC (see Case C-207/07 
Spain v Commission, not yet reported in the ECR). 
Case C-196/07 Commission/Spain, not yet reported in the ECR. 

EN 

26 

   EN 

 
                                                 
77. 

1. 

78. 

79. 

concentration had been abandoned in the meantime did not render the infringement 
proceedings  devoid  of  purpose  and  did  not  make  it  impossible  to  implement  the 
Commission's decisions. 

The Endesa undertaking was the subject of a subsequent public bid, on this occasion 
a  joint  offer  by  Acciona  and  Enel,  notified  to  the  Commission  on  31 May  200759. 
This  concentration  was  approved  on  5 July  2007.  The  Comisión  Nacional  de  la 
Energía  had  authorised  the  operation  on  4 July  2007,  subject  to  a  number  of 
conditions,  which  were  later  modified  by  the  competent  Minister.  By  decision  of 
5 December 2007, the Commission found that Spain had violated Article 21 ECMR, 
as well as the Treaty provisions on free movement of capital and goods and freedom 
of  establishment,  and  demanded  that  the  said  conditions  be  withdrawn.  Spain 
challenged the legality of this decision before the CFI60 and filed an application for 
interim  measures  requesting  the  suspension  of  the  implementation  of  the  said 
decision.  By  order  of  its  President  in  Spain  v  Commission,  the  CFI  rejected  this 
application of interim measures61. 

C – STATE AID CONTROL 

APPLICABLE RULES 

At  the  beginning  of  2008  the  Commission's  focus  in  the  State  aid  field  was  to 
continue with the implementation of the State Aid Action Plan (SAAP)62. However, 
the  sudden  onset  of  the  financial  and  economic  crisis  shifted  that  focus,  and  the 
Commission rapidly issued three Communications on the role of State aid policy in 
the context of the crises and the recovery process. 

In  the  context  of  the  financial  crises,  the  Commission  first  gave  guidance  on  the 
application of State aid rules to measures taken in relation to financial institutions63. 
By way of exception these guidelines were based on Article 87(3)(b) EC providing 
for aid to remedy serious disturbances in the economy of a Member State. The rules 
require  that  the  measures  taken  do  not  give  rise  to  disproportionate  distortions  of 
competition,  for  example  by  discriminating  against  financial  institutions  based  in 
other  Member  States  and/or  allowing  beneficiary  banks  to  unfairly  attract  new 
additional  business  solely  as  a  result  of  government  support.  Other  requirements 
include measures being limited in time and adequate contributions from the private 
sector.  The  Commission  announced  the  aim  to  approve  schemes  that  comply  with 
this guidance within very short deadlines (24 hours, if possible). 

80. 

Subsequently,  the  Commission  complemented  and  refined  its  guidance  in  a  new 
Communication  on  how  Member  States  can  recapitalise  banks  under  the  current 

59 
60 
61 
62 

63 

Case COMP/M.4685 Acciona/Enel/Endesa (OJ C 130, 12.6.2007, p. 19). 
Case T-65/08 Spain v Commission, not yet reported in the ECR. 
Case T-65/08 R Spain v Commission, not yet reported in the ECR. 
State Aid Action Plan – Less and better targeted State aid: a roadmap for State aid reform 2005-2009 
(COM(2005)107 final, 7.6.2005). 
Communication  from  the  Commission  —  The  application  of  State  aid  rules  to  measures  taken  in 
relation  to  financial  institutions  in  the  context  of  the  current  global  financial  crisis  (OJ C 270, 
25.10.2008, p. 8). 

EN 

27 

   EN 

 
                                                 
81. 

82. 

financial crisis64 to ensure adequate levels of lending to the rest of the economy and 
to  stabilise  financial  markets  whilst  avoiding  excessive  distortions  of  competition. 
The Communication entails, in particular, guidance on the adequate pricing of State 
capital  injections  into  banks  designed  to  stabilise  the  banks  themselves.  Also,  it 
addresses the necessity of appropriate safeguards to ensure that the public capital is 
used to sustain lending to the real economy and not to finance commercial conduct to 
the  detriment  of  competitors  who  manage  without  State  aid.  Furthermore,  it 
distinguishes  between,  on  the  one  hand,  banks  that  are  fundamentally  sound  and 
receive  temporary  support  to  enhance  the  stability  of  financial  markets  and  foster 
undisturbed  access  to  credit  for  citizens  and  companies  and,  on  the  other  hand, 
distressed banks whose business model has brought about a risk of insolvency. 

In  addition,  the  Commission  adopted  a  new  temporary  framework65  providing 
Member States with additional possibilities to tackle the effects of the credit squeeze 
on  the  real  economy.  The  temporary  framework  introduces  a  number  of  temporary 
measures  to  allow  Member  States  to  address  the  exceptional  difficulties  of 
companies  to  obtain  finance.  In  particular,  Member  States  will  be  able,  without 
notification  of  individual  cases,  to  grant  subsidised  loans,  loan  guarantees  at  a 
reduced premium, risk capital for SMEs and direct aids of up to EUR 500 000. All 
measures  are  limited  until  the  end  of  2010  although,  based  on  Member  States' 
reports,  the  Commission  will  evaluate  whether  the  measures  should  be  maintained 
beyond 2010, depending on whether the crisis continues. 

As  regards  the  implementation  of  the  SAAP,  the  Commission  adopted,  as 
announced,  a  General  Block  Exemption  Regulation  (GBER)66  giving  automatic 
approval for a  range  of aid measures and so allowing Member States to grant such 
aid  without  first  notifying  the  Commission,  provided  that  they  fulfil  all  the 
requirements laid down in the Regulation. The Regulation authorises aid in favour of 
SME, research, innovation, regional development, training, employment, risk capital, 
environmental  protection  and  entrepreneurship.  As  well  as  encouraging  Member 
States to focus their State resources on aid that will be of real benefit to job creation 
and  Europe's  competitiveness,  the  Regulation  reduces  the  administrative  burden  on 
public  authorities,  the  beneficiaries  and  the  Commission.  This  new  GBER 
harmonises and consolidates into one text the rules which previously existed in five 
separate  Regulations,  and  it  broadens  the  categories  of  State  aid  covered  by  the 
exemption. 

83. 

In  the  context  of  the  Climate  Change  Package  the  Commission  adopted  new 
Environmental  aid  guidelines67.  In  line  with  the  reform  of  the  State  aid  assessment 
architecture,  the  guidelines  introduce  a  standard  assessment  for  minor  cases  and  a 
detailed assessment for cases that may involve significant distortions of competition. 

64 

65 

66 

67 

Communication  from  the  Commission  —  The  recapitalisation  of  financial  institutions  in  the  current 
financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of 
competition (OJ C 10, 15.1.2009, p. 2). 
Communication from the Commission — Temporary Community framework for State aid measures to 
support access to finance in the current financial and economic crisis (OJ C 16, 21.1.2009, p. 1). 
Commission  Regulation  (EC)  No  800/2008  of  6 August 2008  declaring  certain  categories  of  aid 
compatible with the common market in application of Articles 87 and 88 of the Treaty (General block 
exemption Regulation) (OJ L 214, 9.8.2008, p. 3). 
Community Guidelines on state aid for environmental protection (OJ C 82, 1.4.2008, p. 1). 

EN 

28 

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84. 

85. 

86. 

87. 

88. 

Compared  to  the  guidelines  from  2001,  the  aid  intensities  have  been  increased 
considerably;  in  some  cases  they  have  been  doubled.  Furthermore,  rules  have  been 
established  for  trading  schemes  and  a  refined  economic  approach  has  been 
introduced  for  the  analysis  of  reductions  in,  or  exemptions  from,  environmental 
taxes. The new rules require a facts-based necessity and proportionality test, unless 
the resulting tax level is above a harmonised minimum level. 

The Commission prolonged the Framework on State aid rules for shipbuilding68 for 
three  more  years,  until  31 December  2011.  This  extension  followed  an  earlier 
extension in 2006 of the Framework, which came into effect on 1 January 2004. 

A new Notice on State aid in the form of guarantees69 sets out clear and transparent 
methodologies to calculate the aid component of a guarantee and provides simplified 
rules  for  SMEs,  including  predefined  safe-harbour  premiums  and  single  premium 
rates for low-amount guarantees. The SAAP provides for a new Notice as part of the 
Commission's efforts to clarify and simplify the State aid rules. 

the  possible  extension  until  2012  of 

In addition, public consultations were launched on the following: new rules on public 
service  broadcasting, 
the  Cinema 
Communication, the guidance documents on the in-depth assessment of regional aid 
to large investment projects and on criteria for the compatibility analysis in the field 
of training, as well as disadvantaged and disabled workers for State aid cases subject 
to individual notification. 

As far as public broadcasting is concerned, based on recent decision-making practice 
and  the  results  of  the  public  consultation  held  between  January  and  March,  the 
Commission launched a review of the Broadcasting Communication. The main aims 
of the review are to provide greater clarity to all market participants and to secure a 
future-proof  framework 
technological 
is  suitably  adapted 
environment. In November, the Commission presented a draft new Communication 
for further public consultation. 

the  new 

that 

to 

As regards the Cinema Communication, the Commission proposed that the validity 
of the State aid assessment criteria used for the 2001 Cinema Communication should 
be extended by a further three years until 31 December 2012. This proposal followed 
the  publication  of  the  final  report  of  a  study  financed  by  the  Commission,  which 
examined the economic and cultural impact of territorial spending obligations in film 
support schemes. The conclusions of the report were not conclusive one way or the 
other, which suggested a need for further reflection. At the same time, the proposed 
text  of  the  extension  identified  a  number  of  trends  affecting  the  film  sector  which 
may need to be reflected in a future Cinema Communication (scheduled for adoption 
in  January  2009).  By  December,  when  the  public  consultation  of  the  proposed  text 
closed,  a  broad  consensus  in  favour  of  the  proposed  text  had  emerged  from  those 
who contributed to the consultation. 

68 

69 

Communication  from  the  Commission  concerning  the  prolongation  of  the  Framework  on  State  aid  to 
shipbuilding (OJ C 173, 8.7.2008, p. 3). 
Commission Notice on the application of Articles 87 and 88 EC to State aid in the form of guarantees 
(OJ C 155, 20.6.2008, p. 10) and Corrigendum to Commission notice on the application of Articles 87 
and 88 EC to State aid in the form of guarantees (OJ C 244, 25.9.2008, p. 32). 

EN 

29 

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89. 

90. 

91. 

92. 

93. 

70 
71 

72 

73 

The  Commission  also  launched  a  number  of  public  consultations  on  procedural 
issues such as a consultation on a draft Best Practice Code (BPC) on the conduct of 
State aid control proceedings70 and on the draft notice on Simplified procedure (SP) 
for  the  treatment  of  certain  types  of  State  aid.  The  aim  of  both  documents,  in  line 
with  the  SAAP,  is  to  ensure  greater  transparency,  predictability  and  efficiency  of 
State aid procedures. 

The draft BPC seeks to streamline the procedures by fostering cooperation between 
the Commission and Member States within the framework of the existing Procedural 
Regulation n° 659/199971. Specifically, the draft BPC proposes to introduce: (i) more 
systematic  pre-notification  contacts  to  improve  the  quality  of  notifications,  (ii)  a 
mutually  agreed  planning  of  the  handling  of  cases  between  the  Member  State 
concerned  and  the  Commission  for  more  complex  cases,  (iii)  improvements  in  the 
information exchange between the Commission and (iv) a streamlined processing of 
complaints.  Finally,  in  the  event  of  Member  States  not  providing  the  necessary 
information within the prescribed deadlines, the Commission would enforce existing 
procedural  options  more  strictly  than  it  has  done  in  the  past.  This  might  involve 
deeming notifications to have been withdrawn or adopting decisions on the basis of 
the information available. 

The  existing  simplified  notification  procedure  provided  for  in  Article  4  of 
Implementing  Regulation  n°  794/200472  has  reached  its  limits  in  terms  of 
contributing  to  the  efficiency  of  State  aid  procedures.  Therefore,  the  draft  SP 
proposes  the  setting  up  of  a  fully  fledged,  simplified  approval  procedure  which 
would apply to measures squarely falling under the standard assessment sections (so-
called  "safe  harbours")  of  existing  horizontal  Commission  instruments,  inspired  by 
the  merger  simplified  procedure73  and  going  beyond  simplified  notification  forms. 
By means of enhanced cooperation between the Member States and the Commission, 
these straightforward cases would be dealt with in an accelerated timeframe of one 
month after notification. In particular, the draft SP proposes the introduction of: (i) 
to  ensure  quality  notifications  and  (ii) 
mandatory  pre-notification  contacts 
predictable  stages  of  the  procedure  with  clear  deadlines,  leading  to  a  standardised 
short-form decision. 

The  discussion  with  the  Member  States  and  other  stakeholders  regarding  the  BPC 
and SP will take place early in 2009. The drafts are currently due to be adopted in the 
first half of 2009. 

The  Commission  also  consulted  on  a  draft  Commission  Notice  concerning  the 
enforcement  of  State  aid  law  by  national  courts  (the  Enforcement  Notice).  The 
Enforcement Notice would replace the 1995 Notice on Cooperation between national 

See Press Release IP/08/1950, 11.12.2008. 
Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application 
of Article 93 (now Art.88) EC (OJ L 83, 27.3.1999, p. 1). 
Commission  Regulation  (EC)  No  794/2004  of  21  April  2004  implementing  Council  Regulation  (EC) 
No  659/1999  laying  down  detailed  rules  for  the  application  of  Article  93  EC  (OJ L 140,  30.4.2004, 
p. 1). 
Commission  notice  on  a  simplified  procedure  for  treatment  of  certain  concentrations  under  Council 
Regulation (EEC) No 4064/89 (OJ C 217, 29.7.2000, p. 32). 

EN 

30 

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courts and the Commission in the State aid field74 and its aim is to give clearer and 
more  practical  guidance  to  courts  and  potential  claimants  on  legal  issues  in 
connection  with  domestic  State  aid  litigation.  In  addition,  the  Enforcement  Notice 
seeks to intensify the Commission's cooperation with national courts in the State aid 
area. In that respect, the Notice envisages the provision of Commission support for 
national courts based on the mechanisms already applied in the anti-trust field: 

•  National  courts  would  be  able  to  ask  the  Commission  for  information  in  its 

possession, and 

•  National courts would also be able to ask the Commission for its opinion on State 

aid issues which are relevant to a pending case. 

•  The Commission would aim to issue such opinions within four months. 

To  make  the  use  of  these  cooperation  mechanisms  as  user-friendly  as  possible,  the 
Commission  would  establish  a  dedicated  contact  point  for  national  courts  and 
introduce  better  guidance  on  practical  issues,  such  as  the  protection  of  confidential 
information. A first discussion of the draft Notice with Member States already took 
place  in  2008.  Based  on  the  positive  comments  received,  the  Commission  expects 
that the final version will be adopted in early 2009. 

In  2008,  the  Commission  continued  its  efforts  to  improve  the  enforcement  and 
monitoring  of  State  aid  decisions.  The  Commissions  is  seeking  to  achieve,  on  the 
basis  of  the  recovery  notice  adopted  in  2007,  a  more  effective  and  immediate 
execution  of  recovery  decisions.  Information  submitted  by  the  Member  States 
concerned shows that good progress towards recovery was made during that period. 
The  number  of  recovery  decisions  awaiting  implementation  was  slightly  reduced 
from 47 at the end of 2007 to 46 at the end of 2008. In all, 17 recovery cases were 
closed, or provisionally closed, in 2008: those are cases where the recovery decisions 
were  considered  as  being  fully  or  provisionally  implemented.  In  2008,  the 
Commission adopted 16 new recovery decisions. The progress made is also reflected 
in the amounts of aid recovered. Of the EUR 10.3 billion of illegal and incompatible 
aid  to  be  recovered  under  decisions  adopted  since  2000,  some  EUR 9.3 billion  (i.e. 
90.7% of the total amount) had been actually recovered by the end of 2008. A further 
EUR 2.5 billion in recovery interests had also been recovered. 

As  announced  in  the  SAAP,  the  Commission  continued  to  take  a  strict  line  with 
Member States that failed to effectively implement recovery decisions addressed to 
them. In 2008 the Commission initiated legal action under either Article 88(2) EC or 
Article 228(2) EC for failure by Member States to comply with recovery obligations. 
It  took  decisions  initiating  Article  88(2)  EC  in  five  cases,  involving  Italy  and 
Slovakia,  as  well  as  decisions  to  proceed  under  Article  228(2)  EC  in  eight  cases 
involving Italy and Spain. 

94. 

95. 

96. 

97. 

As indicated above, the new GBER will lead to a substantial rise in the number and 
categories of measures which Member States may implement in the absence of prior 
notification  to  the  Commission.  The  Commission,  in  its  role  as  guardian  of  the 

74 

OJ C 312, 23.11.1995, p. 8. 

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31 

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98. 

Treaty, will have to ensure that Member States implement those measures correctly, 
as set out in Article 10, paragraph 1, of the GBER. The GBER, in this perspective, 
sets  out  a  series  of  measures  to  ensure  the  general  transparency  of  block  exempted 
measures,  but  also  to  enable  effective  Commission  monitoring.  More  particularly, 
Article 9 GBER requires that the full text of aid schemes be published on the internet 
in order to ensure that GBER provisions are respected at Member State level. 

Against  this background, the Commission has,  as announced in the  SAAP, stepped 
up  its  ex  post  monitoring  of  several  BER  predating  the  GBER,  on  the  basis  of  the 
experience  gained  in  the  2006  monitoring  pilot  project.  After  three  rounds  of 
monitoring  exercises,  DG  Competition  has  covered  a  significant  part  of  the  main 
substantive  types  of  aid  implemented  under  BER.  DG  Competition  has  now  also 
addressed  aid  measures  adopted  by  almost  all  of  the  27  Member  States  of  the 
Community, thereby ensuring a balanced geographical coverage. The analysis of the 
results of the first two exercises shows that, overall, the part of the existing State aid 
architecture  allowing  the  approval  of  aid  schemes  and  enabling  Member  States  to 
implement aid measures under BER is working satisfactorily. In a minority of cases, 
substantive problems or procedural issues (such as transparency, reporting, speed and 
quality  of  answers)  were  identified.  Those  cases  in  which  no  appropriate  solution 
could be found are still being investigated. 

99. 

In the interests of increased transparency and better communication, DG Competition 
has published on its webpage a Vademecum on State aid rules75 a concise summary 
of  the  main  rules  applicable  to  State  aid  control.  It  can  serve  as  a  first  point  of 
reference  for  Community,  national  and  local  stakeholders  dealing  with  State  aid 
control issues, and directs the reader to the relevant legal texts. 

2. 

APPLICATION OF THE STATE AID RULES 

100. 

101. 

The autumn 2008 update of the State aid Scoreboard76 shows that Member States are 
increasingly using the possibilities offered by the recently revised EU State aid rules 
to  better  target  their  aid.  On  average,  Member  States  granted  80%  of  their  aid  to 
horizontal  objectives  in  2007,  compared  to  around  50%  in  the  mid-1990s,  with 
increased spending on Research and Development (R&D) and environmental aid. In 
the face of the current financial crisis, coordinated action by Member States and the 
Commission has ensured that support schemes for the financial sector were able to be 
implemented quickly in compliance with State aid rules. 

Over the past 25 years, the overall level of State aid has fallen from over 2% of GDP 
in  the  1980s  to  around  0.5%  in  2007.  Whilst  highlighting  the  continuing  trend  for 
Member  States  to  focus  their  aid  on  horizontal  objectives,  the  Scoreboard 
nevertheless  showed  that,  in  the  wake  of  the  recent  financial  crisis,  the  share  of 
rescue and  restructuring aid  is likely to increase  significantly for  some  countries  in 
2008. 

75 

76 

The Vademecum is available at 
http://ec.europa.eu/competition/state_aid/studies_reports/studies_reports.html#vademecum 
Report  from  the  Commission,  State  Aid  Scoreboard  -  Autumn  2008  Update  (COM(2008)  751  final, 
17.11.2008). 

EN 

32 

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102. 

2.1. 

103. 

104. 

Already  in  2007,  before  the  new  GBER  entered  into  force,  block  exempted  aid 
measures accounted for 65% of all measures, compared with 40% in 2002. However, 
this is not yet reflected to the same extent in expenditure terms: 13% of total aid was 
awarded through the block exemptions in 2007 (compared with 6% in 2006). 

Applying the State aid Framework for Research, Development and Innovation 
(R&D&I) 

In  2008,  the  Commission  approved  88  notified  schemes  on  the  basis  of  the  2006 
Community  Framework  for  research  and  development  and  innovation77;  66  were 
purely  R&D  schemes,  nine  were  innovation  oriented  aid  schemes  and  13  were 
mixed, pursuing both R&D and innovation objectives. 

In  three  aid  schemes78  and  two  individual  cases79,  the  Commission  concluded  that 
there  was  no  aid.  In  addition,  two  individual  aid  measures  were  approved  after  an 
examination  on  the  basis  of  Chapter  580  of  the  Framework,  and  16  individual  aid 
measures  were  approved  after  a  detailed  assessment  under  Chapter  7  of  the 
Framework81. Furthermore, the Commission adopted one decision to initiate a formal 
investigation  procedure82  and  one  decision  to  close  an  opened  Article  88(2)  EC 
procedure following the withdrawal of the notification by the Member State83. 

105. 

In  addition,  an  important  decision84  was  adopted  on  several  individual  cases  in  the 
Italian  aeronautical sector, following  an assessment on the  basis of the  Community 
frameworks  for  State  aid  for  R&D  of  199685  and  198686.  The  decision,  adopted  on 

77 

78 

79 

80 

81 

82 
83 
84 
85 
86 

Community  Framework  for  state  aid  for  research  and  development  and  innovation  (OJ C 323, 
30.12.2006, p. 1). 
Fully in cases N 480/2007 Reducción del impuesto sobre activos intangibles (OJ C 80, 1.4.2008, p. 3) 
and  N  234/2007  Fomento  de  I+D+i  (OJ  C  229  6.9.2008,  p.  1),  and  partially  in  case  N  355/2007 
Modulation  des  cotisations  sur  le  chiffre  d'affaires  des  spécialités  pharmaceutiques  remboursables 
(OJ C 229, 6.9.2008, p. 5). 
Cases  N  365/2007  Errichtung  des  Fraunhofer  Center  for  Silicon  Photovoltaics  (OJ C 91,  12.4.2008, 
p. 10) and N 343/2008 Individual aid to the College of Nyíregyháza (OJ C 35, 12.2.2009, p. 4). 
N  474/2007  NEDERLAND  GATE  –  Innovative  Pilot  Safety.  Individuele  O&O-steun  aan  THALES 
(OJ C 94,  16.4.2008,  p. 11)  and  N  343/2008  Individual  aid  to  the  College  of  Nyíregyháza  for  the 
development of the Partium Knowledge Centre (OJ C 35, 12.2.2009, p. 4). 
List  of  individual  aid  measures  approved  after  detail  assessment  under  Chapter  7  of  the  R&D&I 
Framework:  N  447/2007  Turbomeca  (OJ C 94,  16.4.2008);  C  51/2007  Programme  VHD  (OJ C 189, 
26.7.2008,  p. 14),  N  365/2007  Errichtung  des  Fraunhofer  Center  for  Silicon  Photovoltaics  (OJ C 91, 
12.4.2008,  p. 10),  N  435/2007  Programme  MINimage  (OJ C 137,  4.6.2008,  p. 1),  N  195/2007  FuE-
Einzelbeihilfe für Rolls-Royce Deutschland – Entwicklungsprojekt BR725 (OJ C 118, 15.5.2008, p. 1), 
N  469/2007  Programme  "QUAERO"  (OJ C 243,  24.9.2008,  p. 13),  N  602/2007  Programme 
MaXSSIMM (OJ C 177, 12.7.2008, p. 3), N 603/2007 Programme GENESIS (Not yet published in the 
OJ),  N  597/2007  Programme  LowCO2MOTION  (OJ C 299,  22.11.2008,  p. 6),  N  647/2007  Projet 
"PAMELAT,  Pointe  avant  mixte  Latécoère,  Recherche  et  innovation  dans  la  filière  composite 
aéronautique" (OJ C 206, 13.8.2008, p. 4), N 732/2007 (C 33/2008) Large R&D aid to Volvo Aero – 
Genx  (OJ C 253,  4.10.2008,  p. 31),  N  1/2008  Programme  H2O  (Not  yet  published  in  the  OJ),  N 
679/2007  Programme  "DEFI  COMPOSITE"  (OJ C 2,  7.1.2009,  p. 18),  C  9/07  Industria  de  Turbo 
Propulsores (ITP) (Not yet published in the OJ), N 709/2007 Programme ADNA (Not yet published in 
the OJ) and N 733/2007 Programme "ISEULT-INUMAC"(Not yet published in the OJ). 
Case N 732/2007 Large R&D aid to Volvo Aero – Genx (OJ C 253, 4.10.2008, p. 31). 
Case C 51/2007 Programme VHD (OJ C 189, 26.7.2008, p. 14). 
Case C 61/2003 Loi aéronautique italienne N808/85 cas individuels (OJ C 284, 28.10.2008, p. 1). 
OJ C 45, 17.2.1996, p. 5. 
OJ C 83, 11.4.1986, p. 2. 

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33 

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11 March, covers 17 R&D individual projects in the aeronautical sector supported by 
the  Italian  authorities  during  the  1990s.  The  decision  requires  an  immediate 
reimbursement  of  the  loans  for  most  of  the  individual  projects,  with  interest  on 
arrears in certain cases. The beneficiaries have reimbursed around EUR 350 million 
within the time limit of two months set by the decision. 

2.2. 

Assessing risk capital financing for SME 

106. 

In  2008,  the  Commission  approved  18  risk  capital  schemes  under  the  Risk  Capital 
Guidelines87.  Eleven  schemes  were  assessed  on  the  basis  of  Chapter  4  of  the 
guidelines  since  they  complied  with  the  safe  harbour  provisions  of  the  guidelines 
which allow a light assessment. Three schemes were assessed under Chapter 5 of the 
guidelines,  following  a  detailed  assessment88.  In  three  cases,  the  Commission 
considered  that  the  scheme  did  not  involve  State  aid89.  One  scheme  was  partly 
considered as no aid and partly assessed under Chapter 4 of the Guidelines90. 

2.3. 

Industrial restructuring 

107. 

On  27 February,  the  European  Commission  closed  its  in-depth  investigation  under 
EC State aid rules into the privatisation of Automobile Craiova91. The investigation, 
which was opened in October 2007, found that Romania had imposed conditions on 
the  sale  that  were  not  aiming  at  obtaining  the  highest  possible  sales  price,  but  at 
ensuring a certain level of production and employment. Since the conditions attached 
to the sale directly reduced the sales price, the Commission found that the difference 
between  the  market  value  of  the  company  and  the  sales  price  received  by  the 
Romanian  authorities  constituted  State  aid.  In  order  to  avoid  companies  receiving 
unfair advantages over competitors, aid can only be granted under strict conditions. 
None  of  these  conditions  applied  to  the  privatisation,  and  the  aid  is  therefore 
incompatible with the Single Market. In order to rectify the distortion of competition 
caused  by  the  unlawful  aid,  the  Romanian  Government  will  have  to  recover 
EUR 27 million from Automobile Craiova. 

108. 

On  6 November,  following  more  than  four  years  of  investigation,  the  Commission 
concluded  that  the  attempts  of  the  Polish  authorities  to  restructure  the  shipyards  in 
Gdynia and Szczecin92 and to return them to viability have failed. Since the State aid 
granted  to  the  shipyards  over  the  years  gave  rise  to  disproportionate  distortions  of 
competition in breach of the EC Treaty State aid rules, that aid had to be recovered. 

87 

88 

89 

90 
91 

92 

Community  guidelines  on  state  aid  to  promote  risk  capital  investments  in  small  and  medium-sized 
enterprises (OJ C 194, 18.8.2006, p. 2). 
Cases  N  263/2007  Technology  Founder  Fund  Saxony  (OJ C 93,  15.4.2008,  p. 1),  N  521/2007 
Risikokapitalregelung,  Clusterfonds  Start-up!“  Freistaat  Bayern  (OJ C 100,  22.4.2008,  p. 2)  and  N 
700/2007 Finance Wales JEREMIE Fund (OJ C 331, 31.12.2008, p. 2). 
N  836/2006  Mittelstandsfonds  Schleswig-Holstein  (OJ C 67,  12.3.2008,  p. 1),  C  33/2007  IBG 
Beteiligungsgesellschaft Sachsen-Anhalt mbH (OJ C 246, 20.10.2007, p. 20), N 389/2007 Risk capital 
fund Niedersachen (OJ C 145, 11.6.2008, p. 1). 
N 696/2007 ERDF Risk Capital Fund Brandenburg (OJ C 180, 17.7.2008, p. 3). 
Case  C  46/2007  Privatisation  of  Automobile  Craiova  (OJ C 239,  6.9.2008,  p. 12).  See  Pres  Release 
IP/08/315, 27.2.2008. 
Cases  C  17/2005  Restructuring  aid  for  Stoczni  Gdynia  (OJ C 220,  8.9.2005,  p. 7)  and  C  19/2005 
Restructuring  aid  for  Szczecin  shipyard  (OJ C 220,  9.9.2005,  p. 7).  See  Press  Release  IP/08/1642, 
6.11.2008. 

EN 

34 

   EN 

 
                                                 
109. 

The  Commission  required  Poland  to  recover  the  illegal  State  aid  from  Gdynia  and 
Szczecin  shipyards  through  a  controlled  sale  of  the  yards'  assets  and  subsequent 
liquidation  of  the  companies.  Such  a  solution  should  maximise  opportunities  for 
viable  economic  activities  to  continue  at  these  sites,  with  good  prospects  for 
sustainable  jobs  there,  while  putting  an  end  to  the  undue  distortion  of  competition 
caused  by  the  huge  subsidies  received  by  these  yards  in  recent  years.  The  Polish 
authorities have undertaken to sell the yards' assets through open, transparent, non-
discriminatory and unconditional tenders. Given the fact that companies buying the 
assets under such tendering procedures will be free of the burden of having to repay 
past illegal State aid, the final outcome might be even more jobs secured than would 
have been the case if the proposed restructuring plans, which assumed significant job 
cuts, had been implemented. 

2.4. 

Sports 

110. 

111. 

In the field of State aid control, the Commission adopted a final decision approving 
the investment of the municipality of Rotterdam in the Sports Palace, forming part of 
the Ahoy complex93. This measure had been notified by the Dutch authorities in order 
to  obtain 
to 
EUR 42 million in the renovation and development of the Sports Palace, whereby the 
municipality  acts  as  the  owner  of  the  complex,  which  has  been  leased  to  a  private 
operator. 

legal  certainty.  The  measure 

investment  of  up 

involves  an 

The  Commission  opened  the  formal  investigation  essentially  because  it  had  doubts 
about whether the private operator of the Ahoy complex would benefit unduly from 
the investment by the municipality. As part of the investigation, the Dutch authorities 
provided  further  information  concerning,  inter  alia,  the  contractual  relationship 
between  the  municipality  and  the  operator  as  well  as  the  multi-functionality  of  the 
Ahoy complex. Following an in-depth assessment of the case, the Commission found 
that the investment did not give undue advantages to the operator of the complex or 
any other company as the investment was properly taken into account in the sale and 
lease  transactions  concluded  between  the  municipality  and  the  operator.  Therefore, 
the Commission concluded that no state aid was involved. 

2.5. 

State aid in the agricultural sector 

112. 

Notifications  were  assessed  on  the  basis  of  the  Guidelines  for  State  aid  in  the 
agriculture and forestry sector 2007 to 201394. 

93 

94 

Case C 4/2008 Investment of the municipality of Rotterdam in the Ahoy complex (OJ C 68, 13.3.2008, 
p. 14). 
OJ C 319, 27.12.2006, p. 1. 

EN 

35 

   EN 

 
                                                 
Final decision96 

2007 

New cases registered95 
N 
NN 
C 
Total 

Investigations 

Compatible 
Does not constitute State aid 
Total 
positive decision 
conditional decision 
no aid decision 
negative decision 
withdrawal 
corrigenda 
Total 

→31/12/2008
144 
121 
18 
3 
142 

139 
1 
140 
2 
1 
0 
3 
0 
0 
6 

254 
187 
18 
5 
210 

202 
2 
204 
0 
0 
0 
0 
4 
2 
6 

113. 

In  2007-2008,  the  Commission  approved  several  aid  schemes  for  the  promotion  of 
agricultural  products97.  The  Commission  decided  that  for  advertising  that  was 
generic  in  character  no  mention  may  be  made  of  product  origin  and  that,  for 
Community-recognised  denominations,  the  reference  to  the  origin  must  correspond 
exactly to those references which have been registered by the Community. The origin 
of the products may be mentioned in the case of national or regional quality labels as 
a  subsidiary  message.  The  Commission  allowed  the  use  of  corporate  logos  and 
names in State aid schemes under strict conditions only. 

2.6. 

Coal 

114. 

115. 

95 
96 

97 

98 

99 

100 

In  2008  coal  spot  market  prices  were  extremely  volatile.  After  strong  rises  from 
January  to  September,  reflecting  increased  demand  from  the  high-growth  emerging 
countries, prices fell substantially in the last quarter following the financial crisis and 
was close to the levels registered at the beginning of the year. 

In  the  same  year  the  Commission  approved  aid  to  the  coal  sector  in  Poland98, 
Hungary99,  Germany100  and  Spain101.  These  aid  schemes  are  intended  to  support 
access to coal reserves and to restructure the coal sector in these countries. 

10 NN cases not included. 
Excluding  decision  to  open  the  formal  investigation  procedure,  corrigenda,  injunctions  and  proposals 
for appropriate measures. 
Example of cases: N 135/2008 Promotion Fund Law (Absatzfondsgesetz) (OJ C 30, 6.2.2009, p. 14), N 
529/2007  Agriculture  and  Horticulture  Levy  Board  —  Promotion  and  Advertising  (OJ C 101, 
23.4.2008,  p. 18),  N  653/2007  Welsh  Red  Meat  —  Advertising  and  Promotion  Scheme  (OJ C 165, 
28.6.2008, p. 1), N 659/2007 QMS Meat Quality Advertising Scheme (OJ C 241, 20.9.2008, p. 9) and N 
697/2007 QMS Meat Generic Advertising Scheme (OJ C 207, 14.8.2008, p. 1). 
Case  N  575/07  Secteur  du  charbon  2008-2015  (OJ C 137,  4.6.2008,  p. 2),  the  aid  covers  the  period 
2008-2010. 
Case NN 3/08 Aid for coal industry (2007-2010) (OJ C 323, 18.12.2008, p. 3), the aid covers the period 
2007-2010. 
Case N 631/07 Aides au charbon pour l'année 2008(OJ C 42, 20.2.2009, p. 7), the aid covers year 2008. 

EN 

36 

   EN 

 
 
 
 
                                                 
116. 

117. 

The  Commission  also  approved  an  aid  scheme  aimed  at  supporting 
the 
implementation  of  environmental  rehabilitation  projects  in  coal  mines  in  Bulgaria 
that  have  ceased  operating102.  The  projects  are  targeted  at  cleaning  up  the  previous 
coal mining sites and re-cultivating land for agricultural and forestry purposes. 

Lastly, the Commission approved the prolongation of an aid scheme implemented by 
the  Spanish  region  of  Castilla-León  for  research,  development  and  innovation 
projects, as well as for projects aimed at environmental improvement related to coal 
mining, to be implemented in the period 2008-2012103. 

3. 

SELECTED COURT CASES 

118. 

In 2008, the Community Courts delivered several judgments which had implications 
for  State  aid  control  in  general,  and  for  the  areas  of  definition  of  State  aid, 
compatibility  of  aid,  procedural  issues  and  recovery  in  particular.  A  summary  of 
these judgments is set out below. 

3.1. 

The concept of aid 

119. 

120. 

In  the  case  BUPA  and  Others  v  Commission104,  the  CFI  upheld  a  Commission 
decision raising no objection to the establishment of a risk equalisation system on the 
private  health  insurance  market  in  Ireland.  The  CFI  confirmed  that  Member  States 
have a wide margin of discretion in defining a SGEI mission and the conditions of its 
implementation,  including  the  assessment  of  the  additional  costs  incurred  in 
discharging  this  mission.  The  Commission  control  is  limited  solely  to  ascertaining 
whether  there  is  a  manifest  error  of  assessment.  In  particular,  the  CFI  judgment 
found  that  the  scheme  did  meet  the  Altmark  criteria,  thereby  enabling  an 
interpretation  of  these  criteria  that  makes  it  possible  to  apply  them  to  complex 
systems  with  several  operators,  unconventional  public  service  obligations  and 
sophisticated compensation formulas 

In the NOx trading permits case105, the CFI examined the notions of advantage and 
the  justification  of  the  selective  nature  of  such  trading  permits.  As  to  the  notion  of 
advantage, the CFI confirmed the Commission's finding that, where the State grants 
tradable emission permits to undertakings free of charge, it provides an advantage in 
the form of forgone revenues resulting from the market value of an intangible asset 
which the State could have sold or auctioned. As regards the notion of selectivity, the 
CFI ruled that the grant of emission credits was correctly limited under the scheme in 
question  to  a  select  group  of  beneficiaries  with  relevant  thermal  capacity.  For  the 
CFI, such a scheme is not selective, to the extent that the grant of credits is aimed at 
all  those  undertakings  which  are  the  biggest  polluters,  and  that  such  a  criterion  is 
general and in conformity with the aim of the scheme of reference. It is justified by 

101 

102 

103 
104 
105 

Case NN 80/06 and NN 81/06 Aides à l'industrie du charbon pour l'année 2006 (OJ C 297, 20.11.2008, 
p. 1), the aid covers the period 2006-2007. 
Case N 261/07 Coal sector (8 companies) (OJ C 177, 12.7.2008, p. 1), the aid covers the period 2006-
2007. 
Case N 131/08 Castilla-Leon - Aides aux mines de charbon, (OJ C 329, 24.12.2008, p. 3). 
Case T-289/03 BUPA and Others v Commission, not yet reported in the ECR. 
Case T-233/04 NOx trading permits, not yet reported in the ECR. 

EN 

37 

   EN 

 
                                                                                                                                                         
121. 

122. 

the  logic  of  the  general  system  of  which  it  is  part.  On  23  June,  the  Commission 
appealed  this  decision  before  the  ECJ.The  CFI  partially  annulled  a  Commission 
decision concerning the broadcasting sector, case SIC v Commission106, insofar as it 
found that the exemption from registration charges does not constitute State aid. 

In  case  Chronopost  v  UFEX  and  Others107,  the  ECJ  annulled  the  CFI  judgment 
which,  in  turn,  annulled  a  Commission  decision  concluding  that  the  logistical  and 
commercial assistance provided by La Poste to SFMI-Chronopost did not constitute 
State  aid.  The  ECJ  stated  that  it  is  necessary  to  take  into  account  the  fact  that  the 
transaction  takes  place  between  two  companies  within  the  same  group  and  that,  in 
those circumstances, the strategic considerations and synergies arising from the fact 
that  Chronopost  and  La  Poste  belonged  to  the  same  group  cannot  be  disregarded. 
Further,  the  CFI  could  not,  without  erring  in  law,  conclude  that  it  was  unable  to 
review  whether  the  method  used  and  the  stages  of  the  analysis  followed  by  the 
Commission  were  free  from  error  and  compatible  with  the  principles  laid  down  by 
the ECJ for determining the existence or absence of State aid. The ECJ stated that the 
Commission cannot be criticised for having based the contested decision on the only 
data  available  at  the  time.  Therefore,  it  confirmed  the  Commission  Decision  in 
question. 

In the case Deutsche Post AG (DPAG)108 the CFI annulled the Commission Decision 
stating that DPAG had used public funds – which were intended to compensate for 
universal service costs – to finance an aggressive pricing policy in its door-to-door 
parcel  business.  This  behaviour  was,  therefore,  not  in  line  with  the  key  principle 
according  to  which  companies  that  receive  State  funding  for  services  of  general 
interest may not use these resources to subsidise activities open to competition, and 
the CFI ordered the recovery of the aid. It considered that the Commission had not 
shown  that  the  transfer  payments  of  public  funds  exceeded  the  amount  of  DPAG’s 
uncontested  net  additional  costs  of  providing  a  universal  postal  service.  The 
Commission therefore failed to check whether the total amount of transfer payments 
made was less than the total amount of the net additional costs of providing a service 
of  general  economic  interest,  for  which  the  company  received  compensation  (in 
accordance with the conditions laid down in the Altmark judgment). 

123. 

By  its  judgment  in  case  Alitalia  v  Commission109,  the  CFI  confirmed  the 
Commission's complex assessment adopted in its Decision of 18 July 2001 leading it 
to  consider  that  the  capital  injection  by  Italy  constituted  compatible  State  aid  and 
validated all the conditions resulting from the commitments provided by the Italian 
authorities. This judgment also shows that, notwithstanding the annulment in 2000 of 
a previous decision that came to the same conclusion, the Commission's assessment 
was correct in substance. 

124. 

In case Unión General de Trabajadores de La Rioja110, the ECJ did not agree with 
the Commission's arguments alleging that the fiscal autonomy of the Basque Country 

106 
107 
108 
109 
110 

Case T-442/03 SIC v Commission, not yet reported in the ECR. 
Joined cases C-341/06 P and C-342/06 P Chronopost v UFEX and Others, not yet reported in the ECR. 
Case T-266/02 Deutsche Post AG (DPAG), not yet reported in the ECR. 
Case T-301/01 Alitalia v Commission, not yet reported in the ECR 
Joined cases C-428/06 to C-434/06 Unión General de Trabajadores de La Rioja, not yet reported in the 
ECR. 

EN 

38 

   EN 

 
                                                 
125. 

126. 

constitutes  State  aid.  The  ECJ  declared  that,  in  order  to  determine  whether  laws 
adopted  by  an  infra-State  body  constitute  selective  State  aid,  it  is  necessary  to 
establish  whether  that  body  has  sufficient  institutional,  procedural  and  economic 
autonomy (the Azores' criteria) in order for a law which it adopts within the limits of 
the  powers  conferred  on  it  to  be  considered  as  being  of  general  application  within 
that  infra-State  body  and  as  being  non-selective.  However,  in  that  case  the  Court 
stated that it was for the national court to determine whether the Historical Territories 
and the Autonomous Community of the Basque Country have such autonomy. 

The CFI examined a range of issues concerning broadcasting public services in the 
joined case TV 2 Denmark v Commission111. As to the definition of the public service 
mandate, the CFI upheld the findings of the Commission and confirmed the powers 
of  the  Member  States  to  define  broadcasting  SGEI  in  broad  and  qualitative  terms. 
The  CFI  held  that  the  definition  of  the  public  service  mandate  should  not  be 
dependent on the activities of commercial broadcasters. The dual funding model of 
public  service  broadcasters  was  also  confirmed.  The  CFI  equally  upheld  the 
Commission’s  decision  on  the  qualification  of  the  licence  fee  revenues  –  collected 
from viewers but imposed by the Danish authorities – as State resources. At the same 
time, the CFI annulled the Commission decision finding that the Commission did not 
take all the information submitted during the investigation duly into account. 

The  CFI  annulled  the  Commission  decision  on  advantages  granted  by  the  Walloon 
Region  and  by  Brussels  South  Charleroi  Airport  (BSCA)  to  Ryanair112.  The  CFI 
rejects  the  Commission's  view  that,  as  the  Walloon  Region  acted  in  its  capacity  of 
public authority, the fixing of landing charges and the guaranteed indemnity did not 
constitute an economic activity and therefore cannot be assessed by reference to the 
private investor principle. Instead, it considered the fixing of the amount of landing 
charges and the accompanying indemnity to be an activity that is directly connected 
with  the  management  of  airport  infrastructure  which  constitutes,  by  reason  of  its 
nature,  its  purpose  and  the  rules  to  which  it  is  subject,  an  economic  activity. 
Moreover,  the  airport  charges  must  be  regarded  as  consideration  for  services 
rendered  at  Charleroi  Airport.  With  respect  to  BSCA,  the  CFI  notes  that  it  is 
economically  dependent  on  the  Walloon  Region  and  should  therefore  have  been 
considered  by  the  Commission  to  be  one  and  the  same  entity  for  the  purposes  of 
determining whether, taken together, they had acted as rational operators in a market 
economy. 

127. 

In  British  Aggregates  Association  v  Commission113,  the  ECJ  sets  aside  a  previous 
CFI judgment. With regard to material selectivity the Court focused on the effects of 
a  measure,  while  taking  the  view  that  its  objective  is  only  of  relevance  for  the 
assessment of compatibility. In contrast, the CFI had accepted that the pursuance of a 
policy objective (here: environmental protection)  may  render  a  dedicated  levy  non-
selective.  The  ECJ  also  dismisses  the  distinction  made  by  the  CFI  between,  on  the 
one  hand,  a  partial  exemption  of  certain  companies  from  a  levy  and,  on  the  other 
hand, the definition of the material scope of a levy. Finally, the ECJ confirmed that, 

111 

112 
113 

Joined  Cases  T-309/04,  T-317/04,  T-329/04  and  T-336/04  TV  2  Denmark  v  Commission,  not  yet 
reported in the ECR. 
Case T-196/04 Ryanair Ltd v Commission, not yet reported in the ECR. 
Case C-487/06 P British Aggregates Association v Commission, not yet reported in the ECR. 

EN 

39 

   EN 

 
                                                 
128. 

when it comes to assessing the concept of aid, the Community Courts are called upon 
to carry out a comprehensive review (which the CFI had failed to conduct). 

justification 

for  compatibility.  Concerning 

In the Gibraltar case114 the CFI annulled the Commission's decision that declared the 
tax  reform  introduced  in  Gibraltar  to  be  incompatible  with  the  common  market  on 
account  of  the  fact  that  the  tax  measures  were  both  regionally  and  materially 
selective, thus constituting State aid within the meaning of Article 87(1) EC without 
there  being  any 
(i.e. 
geographical) selectivity, the CFI applied the Azores test and found that the Gibraltar 
measures comply with all three criteria. In particular, it found that the mere existence 
of financial transfers from the central government to the region (as was the case with 
Gibraltar)  is  not  sufficient  to  infringe  the  third  criterion.  On  the  contrary,  that 
criterion is not met only if the transfers are actually linked to the loss of tax revenue. 
Concerning  material  selectivity,  the  CFI  found  that  the  Commission  had  failed  to 
carry  out  a  proper  assessment  in  that  it  failed  to  identify  the  general  system,  a 
possible derogation from which might have been regarded as selective and therefore 
as aid. The Commission will appeal this ruling before the ECJ. 

regional 

3.2. 

Compatibility assessment 

129. 

In  case  Olympiaki  Aeroporia  Ypiresies  AE  v  Commission115,  the  CFI  partially 
annulled  a  Commission  decision  inasmuch  as  it  declares  incompatible  certain 
measures  to  compensate  for  losses  in  the  airline  industry  following  the  terrorist 
attacks  of  11 September  2001.  The  CFI  considered  that  where  an  aid  measure 
satisfies  the  conditions  of  Article  87(2)(b)  EC  it  must  be  declared  compatible  with 
the  common  market,  even  if  the  Commission  adopted  a  different  position  in  the 
context of an earlier notice concerning the measure in question. Accordingly, even if, 
in  accordance  with  that  communication,  any  compensation  paid  under  Article 
87(2)(b) EC must concern costs incurred during a defined period, aid compensating a 
loss  which  arose  after  that  period,  but  having  a  direct  causal  connection  with  the 
exceptional occurrence concerned and being accurately evaluated, must be held to be 
compatible with the common market. 

3.3. 

Procedural issues 

130. 

The  CFI  partially  annulled  a  Commission  decision  in  case  SIDE  v  Commission116. 
The CFI stated that while the Commission enjoys a wide discretion to allow aid by 
way  of  derogation  from  the  general  prohibition  in  Article  87(1)  EC,  that  discretion 
cannot be used in order to disregard the fact that during the period in which the aid in 
question  was  unlawfully  paid,  it  could  have  distorted  competition  in  a  manner 
contrary  to  the  Community  interest,  as  determined  under  the  existing  legislative 
framework. 

131. 

The ECJ found in case Athinaïki Techniki AE v Commission117 that the CFI erred in 
law  in  considering  an  action  for  annulment  as  being  inadmissible  because  it 

114 

115 
116 
117 

Joined Cases T-211/04 and T-215/04 Government of Gibraltar v Commission, not yet reported in the 
ECR. 
Case T-268/06 Olympiaki Aeroporia Ypiresies AE v Commission, not yet reported in the ECR. 
Case T-348/04 SIDE v Commission, not yet reported in the ECR. 
Case C-521/06 P Athinaïki Techniki AE v Commission, not yet reported in the ECR. 

EN 

40 

   EN 

 
                                                 
132. 

concerned  an  act  that  has  no  legal  effect  (an  administrative  letter  rejecting  a 
complaint).  Where  it  is  apparent  from  the  progress  of  the  administrative  procedure 
that  the  Commission  has  decided  to  bring  an  end  to  the  preliminary  investigation 
procedure on the ground that the State measure at issue does not constitute State aid, 
the contested act must be classified as a decision within the meaning of Article 4(2) 
of  Regulation  No  659/1999,  read  in  conjunction  with  Articles  13(1)  and  the  third 
sentence of Article 20(2) of that Regulation. Such decision constitutes an act open to 
challenge for the purposes of Article 230 EC (action for annulment). 

In  the  case  Freistaat  Sachsen118  the  ECJ  set  aside  the  judgment  of  the  CFI,  which 
partially annulled a Commission decision concerning the application of SME BER to 
projects notified to the Commission before the entry into force of that Regulation and 
referred the case back. The ECJ ruled that a notification by a Member State of an aid 
or a proposed aid scheme does not give rise to a definitely-established legal situation 
which would require the Commission to rule on its compatibility with the common 
market  by  applying  substantive  rules  in  force  on  the  notification  date.  On  the 
contrary, it is up to the Commission to apply the rules in force at the time when it 
announces its decision. 

3.4. 

Recovery of aid 

133. 

134. 

In the CELF119 case, the ECJ clarified that once the Commission has taken a positive 
view  on  an  unnotified  aid,  EC  law  does  not  require  the  immediate  recovery  of  the 
full amount of aid. However, national courts have to take into account the undue time 
advantage  gained  by  the  beneficiaries  of  unlawful  aid  which  is  subsequently  found 
compatible  by  the  Commission.  In  this  case  the  national  court  must  order  the  aid 
recipient to pay interest in respect of the period of unlawfulness. Under national law, 
the  court  may  also  order  the recovery  of  the  unlawful  aid,  without  prejudice  to  the 
Member State’s right to re-implement it subsequently. Finally, it may be required to 
uphold claims for compensation for damage caused by reason of the unlawful nature 
of the aid. 

In case Commission v Salzgitter120, the ECJ sets aside the judgment of the CFI which 
annulled  a  Commission  decision  concerning  the  obligation  for  Germany  to  recover 
incompatible  State  aid  from  the  applicant  and  refers  the  case  back  to  the  CFI.  The 
ECJ stated that, even though the CFI was entitled to hold that a beneficiary of State 
aid can rely on the principle of legal certainty to support an action for annulment of a 
decision ordering recovery of that aid, the CFI wrongly applied the principle in this 
case because it failed to examine whether the Commission had manifestly failed to 
act  and  had  clearly  breached  its  duty  of  diligence  in  the  exercise  of  its  supervisory 
powers (which are the only grounds which can render illegal a Commission decision 
ordering recovery of unlawful aid under the ECSC Treaty). 

135. 

The ECJ confirmed in case Commission v France121 that France had failed to fulfil 
its recovery obligations. 

118 
119 
120 
121 

Case C-334/07 P Freistaat Sachsen v Commission, not yet reported in the ECR.. 
Case C-199/06 Centre d'exportation du livre français, not yet reported in the ECR. 
Case C-408/04 P Commission v Salzgitter, not yet reported in the ECR. 
Case C-214/07 Commission v France, not yet reported in the ECR. 

EN 

41 

   EN 

 
                                                 
136. 

In Wienstrom v Bundesminister für Wirtschaft und Arbeit122, the ECJ concluded that 
the  prohibition  on  putting  State  aid  measures  into  effect  laid  down  in  the  last 
sentence  of  Article  88(3) EC  does  not  require  a  national  court  to  dismiss  an  action 
brought  by  a  recipient  of  State  aid  against  the  Member  State  granting  the  aid 
concerning the amount of that State aid allegedly due in respect of a period predating 
a positive Commission decision. 

II – Sector Developments 

A – ENERGY AND ENVIRONMENT 

1. 

OVERVIEW OF THE SECTOR 

137. 

138. 

European energy policy is built around three pillars: sustainability, security of supply 
and  competitiveness.  Reducing  greenhouse  gases  is  vital  to  combating  climate 
change,  and  all  European  consumers  (households  as  well  as  commercial  and 
industrial  users)  depend  heavily  on  the  secure  and  reliable  provision  of  energy  at 
competitive prices. These objectives can only be met effectively through a properly 
functioning and competitive European energy market which sends the right signals to 
investors and policy makers. This requires continued efforts to open up Europe’s gas 
and electricity markets to competition and to create a single European energy market. 

The aim of competition policy in the energy field is ensuring a secure flow of energy, 
in  particular  electricity  and  gas,  at  competitive  prices  to  the  EU’s  households  and 
businesses.  An  open  and  competitive  single  EU  market  would  also  guarantee  a 
secure  provision  of  energy  in  the  future  by  sending  the  necessary  signals  for 
investment and making the European market attractive to external suppliers. Such a 
market  would  also  be  open  to  new  energy  mixes  and  would  play  a  major  role  in 
developing  and  deploying  new  environmentally  friendly  technologies.  Prices  that 
reflect costs will help encourage energy efficiency, thereby supporting sustainability 
and security of supply. 

2. 

POLICY DEVELOPMENTS 

139. 

On 10 January 2007, the Commission adopted a comprehensive package of measures 
to establish a new Energy Policy for Europe to combat climate change and boost the 
EU's  energy  security  and  competitiveness123.  Together  with  this  package,  the 
Commission  also  adopted  the  Final  Report  on  the  energy  sector  inquiry124.  On  the 
basis of a general endorsement of the package by the Council in March 2007 and by 
the  Parliament  in  July  2007,  the  Commission  put  forward  a  proposal  for  a  third 

122 
123 

124 

Case C-384/07 Wienstrom v Bundesminister für Wirtschaft und Arbeit, not yet reported in the ECR. 
Communication  from  the  Commission  to  the  European  Council  and  the  European  Parliament  –  an 
energy policy for Europe (COM(2007) 1 final, 10.1.2007). 
Communication  from  the  Commission:  Inquiry  pursuant  to  Article  17  of  Regulation  (EC)  No  1/2003 
into the European gas and electricity sectors (Final report) (COM(2006) 851 final, 10.1.2007), and DG 
Competition report on energy sector inquiry (SEC(2006) 1724, 10.1.2007). 

EN 

42 

   EN 

 
                                                 
for 

liberalisation  package 
the  European  electricity  and  gas  markets  on 
19 September 2007125.  It  focuses  in  particular  on  (i)  effective  unbundling  of 
transmission  networks;  (ii)  strengthening  of  the  powers  and  independence  of 
regulators;  (iii)  cooperation  between  regulators;  and  (iv)  cooperation  among 
transmission system operators. 

Internal  Energy  Market  package  proposed  by 

The 
the  Commission  on 
19 September 2007  was  the  subject  of  intensive  discussions  between  the  three 
institutions in 2008. The Parliament adopted its first-reading opinions on the Energy 
Package in the summer (on 18 June for electricity and on 9 July for gas). The Energy 
Council reached a political compromise on 10 October 2008. 

On 23 January the Commission put forward a far-reaching package of proposals that 
will deliver on the EU's ambitious commitments to fight climate change and promote 
renewable  energy  up  to  2020  and  beyond.  In  December,  fully  in  line  with  the 
Commission's proposals, the European Parliament and Council reached an agreement 
on  targets  which  will  become  legally  binding  by  2020.  It  has  been  agreed  to  cut 
greenhouse  gas  emissions  by  20%,  to  establish  a  20%  share  for  renewable  energy, 
and to improve energy efficiency by 20%. The agreement concerned revisions to the 
emissions  trading  system,  the  distribution  of  the  reduction  effort  outside  of  the 
emissions trading system, binding national targets for the share of renewable energy 
produced,  a  legal  framework  for  environmentally  safe  carbon  capture  and  storage 
(CCS) as well as related proposals on CO2 emissions from cars and on fuel quality. 
This will help transform Europe into a low-carbon economy and increase its energy 
security.  In  support  of  the  Commission's  overall  climate  change  and  renewable 
energy  policies,  the  package  also  includes  new  guidelines  on  State  aid  to 
to 
environmental  protection,  specifying 
environmental  protection  may  be  declared  compatible  with  the  Treaty.  These 
Guidelines  became  applicable  in  April.  In  July,  the  Commission  adopted  the  new 
General  Block  Exemption  Regulation  under  which  State  aid  for  renewable  energy 
and energy efficiency are exempted from notification when certain criteria are met.  

the  conditions  under  which  aid 

On  13 November,  the  Commission  adopted  a  Second  Strategic  Energy  Review 
package126,  containing  wide-ranging  proposals  on  enhancing  the  security  of  energy 
supply  and  stressing,  inter  alia,  the  importance  of  the  functioning  of  a  competitive 
Internal Energy market for security of energy supply. 

Addressing competition problems along the whole of the gas and electricity supply 
chains and making combined use of the full range of the Commission's powers, from 
anti-trust  rules  (Articles  81,  82  and  86  EC)  to  merger  control  rules  (Regulation 

This  package  includes  the  following  proposals:  Proposal  for  a  Directive  amending  Directive 
2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules 
for  the  internal  market  in  electricity  (COM(2007)  528  final,  19.9.2007);  Proposal  for  a  Directive 
amending  Directive  2003/55/EC  of  the  European  Parliament  and  of  the  Council  of  26 June  2003 
concerning common rules for the internal market in natural gas (COM(2007) 529, 19.9.2007); Proposal 
for  a  Regulation  establishing  an  Agency  for  the  Cooperation  of  Energy  Regulators  (COM(2007)  530 
final,  19.9.2007);  Proposal  for  a  Regulation  amending  Regulation  (EC)  No  1228/2003  (electricity) 
(COM(2007)  531  final,  19.9.2007)  and  Proposal  for  a  Regulation  amending  Regulation  (EC)  No 
1775/2005 (gas) (COM(2007) 532 final, 19.9.2007). 
See Press release IP/08/1696, 13.11.2008. 

140. 

141. 

142. 

143. 

125 

126 

EN 

43 

   EN 

 
                                                 
139/2004) and State aid rules (Articles 87 and 88 EC), continues to be of relevance 
in order to maximize the overall enforcement impact. 

2.1. 

Anti-trust enforcement 

144. 

145. 

146. 

147. 

Properly  functioning  energy  markets  require  entrants  to  be  able  to  access  energy 
networks  and  customers.  The  Commission  has  continued  to  focus  in  particular  on 
three general types of abuses in the electricity and gas sectors in order to address the 
main  areas  of  market  malfunctioning  identified  by  the  sector  inquiry.  These 
investigations  focus  on  exclusionary  conduct,  exploitative  abuses  and  collusion. 
Exclusionary conduct covers practices of vertically integrated incumbents relating to 
the networks. More specifically, the Commission investigated incumbents suspected 
of engaging in the foreclosure both of rivals and of customers. 

Investigations  concerning  exploitative  abuses  include  conduct  engaged  in  by 
incumbents to decrease production to the detriment of consumers. The Commission 
is  also  investigating  alleged  collusion  between  incumbents  in  the  form  of  market 
sharing. 

In  2006  the  Commission  initiated  investigations  into  the  German  electricity  market 
as a follow-up to the energy sector inquiry127. In the course of its investigation, the 
Commission came to the preliminary view that E.ON might have abused its dominant 
market  position  in  two  ways:  first,  as  a  wholesaler  on  the  electricity  market,  by 
strategically  withholding  production  capacity  of  certain  power  plants  on  the 
wholesale market in order to drive up the price (the Commission also had concerns 
that  E.ON  had  devised  and  implemented  a  strategy  to  deter  third  parties  from 
investing in electricity generation); and, secondly, as a transmission system operator, 
favouring its own production in the secondary electricity balancing market128. 

To address the concerns raised in the first case, E.ON proposed to divest about 5 000 
MW,  i.e.  more  than  20%  of  its  generation  capacity,  from  different  types  of 
technologies and fuels in Germany, effectively rendering E.ON unable to withdraw 
capacity  in  order  to  raise  prices  and  also  providing  generation  capacity  to  its 
competitors.  To  address  the  Commission's  concerns  in  the  second  case,  E.ON 
proposed  to  divest  its  transmission  system  business  consisting  of  an  Extra-High-
Voltage  line  network  and  system  operations  currently  run  by  E.ON  Netz.  This  will 
remove the operator's incentive to favour a particular supplier and demonstrates how 
the  general  concerns  expressed  by  the  Commission  in  the  sector  inquiry  on  the 
consequences of vertical integration in this sector can be dealt with effectively. 

148. 

On  12 June,  the  Commission  consulted  interested  parties  on  the  structural 
commitments  proposed  by  E.ON  to  address  these  concerns  of  anticompetitive 
behaviour  on  the  German  electricity  markets129.  The  results  confirmed  that  the 
commitments were proportionate and necessary to remedy the concerns. As a result, 

127 
128 

129 

See MEMO/06/483, 12.12.2006. 
Balancing  energy  is  last  minute  electricity  supply  to  maintain  the  frequency  of  the  current  in  the 
network. The Commission had concerns that E.ON was favouring its own production affiliate, even if it 
charged  higher  prices,  passing  on  the  increased  costs  to  the  final  customer,  and  that  E.ON  prevented 
other power producers from selling balancing energy into the E.ON markets. 
See MEMO/08/396, 12.6.2008. 

EN 

44 

   EN 

 
                                                 
149. 

150. 

151. 

152. 

the Commission adopted a decision on 26 November which made the commitments 
offered by E.ON legally binding and closed its investigation130. 

As  regards  other  cases  concerning  the  electricity  market,  the  Commission  issued  a 
SO  to  Electricité  de  France  (EdF)  on  23 December  alleging  customer  foreclosure 
through de facto and/or de jure exclusive long-term contracts between EdF and large 
industrial  users 
its 
investigation 
in 
Belgium132. 

in  France131.  Furthermore, 
in  Suez/Electrabel  concerning 

the  Commission  continued 
the  same  alleged  behaviour 

After conducting surprise inspections in 2006 on E.ON AG (E.ON), E.ON Ruhrgas 
AG  and  Gaz  de  France  (GdF)  premises  in  Germany  and  France133  and  formally 
opening proceedings in July 2007134, the Commission issued a SO to E.ON and GdF. 
The alleged infringement takes the form of a suspected agreement and/or concerted 
practice between E.ON and GdF, according to which they would not sell gas in the 
other party's home market even after the liberalisation of the European gas markets. 
This alleged agreement and/or concerted practice concerns, in particular, supplies of 
natural  gas  transported  via  the  MEGAL  pipeline,  which  is  jointly  owned  by  E.ON 
and  GdF  and  transports  gas  across  southern  Germany  between  the  German-Czech 
and German-Austrian borders on the one side and the French-German border on the 
other side. 

Furthermore,  on  22 May  the  Commission  decided  to  open  formal  proceedings 
against  GdF  for  a  suspected  breach  of  EC  competition  law135.  The  Commission 
proceedings focus on behaviour which may prevent or reduce competition on supply 
markets  for natural gas  in France. The potential infringement consists of behaviour 
that might prevent or reduce competition on downstream supply markets for natural 
gas in France via, in particular, a combination of long-term reservation of transport 
capacity  and  a  network  of  import  agreements,  as  well  as  through  strategic 
underinvestment in import infrastructure capacity. 

The  Commission  continued  in  2008  to  investigate  RWE's  alleged  behaviour  on  the 
German gas transmission market after initiating proceedings in 2007136. According to 
the  Commission's  preliminary  assessment,  RWE  may  have  abused  its  dominant 
position on the gas transmission market within its network area, notably by refusing 
to supply gas transmission services to third parties and by trying to lower the profit 
margins of its downstream competitors in gas supply137. 

153. 

RWE  offered  structural  commitments  as  a  result  of  the  preliminary  assessment.  It 
proposed  to  undertake  to  sell  its  gas  transmission  system  network  in  the  west  of 

130 
131 
132 
133 
134 
135 
136 
137 

See Press Release IP/08/1774, 26.11.2008. 
See MEMO/08/809, 29.12.2008. 
See MEMO/07/313, 26.7.2007. 
See MEMO/06/205, 17.5.2006. 
See MEMO/07/316, 30.7.2007. 
See MEMO/08/328, 22.5.2007. 
See MEMO/07/186, 11.5.2007. 
In particular the German gas supply market has been foreclosed by a) discriminatory rebate systems, b) 
inflation  of  network  costs,  c)  maintenance  of  sub-networks  and  d)  lack  of  effective  congestion 
management. 

EN 

45 

   EN 

 
                                                 
Germany  to  an  independent  operator138.  The  Commission  invited  comments  from 
interested  parties  on  the  commitments  offered  on  5 December  by  RWE  to  meet 
concerns  that  it  may  have  infringed  EC  Treaty  rules  on  the  abuse  of  a  dominant 
market  position139.  If  the  result  of  the  market  test  is  positive,  the  Commission  will 
adopt  a  decision  under  Article  9  of  Regulation  1/2003,  making  the  commitments 
legally binding on RWE. 

154. 

The  investigation  that  was  opened  in  2007  into  alleged  capacity  hoarding,  capacity 
degradation  and  strategic  underinvestment  by  the  Italian  energy  group  ENI  on  the 
Tag  and  the  TENP  gas  pipelines,  resulting  in  suspected  downstream  market 
foreclosure, is still ongoing140. 

2.2.  Mergers 

155. 

156. 

On 21 October, the Commission cleared – subject to conditions - the acquisition of 
the  retail  motor  fuel  businesses  in  Scandinavia  (JET  Scandinavia  belonging  to  the 
American  energy  firm,  ConocoPhillips')141  by 
the  Norwegian  energy  firm 
StatoilHydro. This firm is an integrated oil and gas company active in the exploration 
and  production  of  crude  oil  and  natural  gas.  The  company  also  refines  and  sells 
motor fuels and other oil derivatives. StatoilHydro operates fuel station networks in 
Scandinavia  under  the  Statoil,  Hydro  and  Uno-X  brands.  Jet  Scandinavia  operated 
fuel station networks in Denmark, Norway and Sweden under the JET brand. 

The Commission found that the proposed transaction – as originally notified – would 
have  raised  serious  competition  concerns  in  Norway  and  Sweden.  In  Norway,  the 
proposed  transaction  would  have  reinforced  the  oligopolistic  structure  of  the 
Norwegian market, and StatoilHydro's position as the largest provider of motor fuels 
in Norway would have been strengthened. In Sweden, StatoilHydro was already the 
market's largest supplier and, by acquiring one of its main competitors, the company 
would  have  obtained  a  market  share  that  was  more  than  double  the  share  of  the 
second  largest  competitor.  The  Commission  had  further  concerns  because  JET  was 
the most efficient low-cost operator in both Norway and Sweden, with a strong brand 
and  a  proven  track  record  of  undercutting  competitors'  prices  in  markets  with  high 
entry barriers. To address the Commission's concerns, StatoilHydro offered to divest 
the  entire  JET  network  in  Norway  and  a  158-station  network  in  Sweden,  made  up 
entirely of unmanned fuel stations. In view of these commitments, the Commission 
concluded that the transaction would no longer raise serious competition concerns in 
Norway and Sweden. Independently of the competition assessment, StatoilHydro had 
decided to close a number of less efficient fuel stations in Sweden. 

157. 

On  22 December,  the  Commission  approved142  the  proposed  acquisition  of  British 
Energy  (BE)  by  Electricité  de  France  S.A  (EdF).  BE,  active  only  within  Great 
Britain,  is  present  in  the  generation  and  wholesale  trading  of  electricity  and  in  the 

138 
139 

140 
141 
142 

See MEMO/08/355, 31.5.2008. 
A  summary  of  the  commitments  proposed  by  RWE  has  been  published  in  the  EU  Official  Journal 
(OJ C 310, 5.12.2008, p. 23) and the full non-confidential version of the commitments is available on 
the Europa Competition website. 
See MEMO/07/187, 11.5.2007. 
Case COMP/M.4919 StatoilHydro/ConocoPhillips. 
Case COMP/M.5224 EdF/BE. 

EN 

46 

   EN 

 
                                                 
158. 

159. 

retail supply of electricity to industrial and commercial customers. It focuses mainly 
on nuclear generation, and operates most of the nuclear generation capacity in Great 
Britain. EdF is a global company active in the generation and wholesale of electricity 
and in the  transmission, distribution and retail supply of electricity  to  all  groups of 
customers.  The  main  effects  of  the  transaction  were  therefore  felt  in  the  UK 
electricity markets. 

This  transaction  has  to  be  seen  in  the  context  of  the  UK  government's  objective  of 
developing  new  nuclear  power  generation  in  the  UK.  Despite  the  fact  that  the 
proposed  transaction  did  not  lead  to  very  high  levels  of  concentration  in  terms  of 
market  shares  in  the  affected  markets  (generation  and  wholesale  of  electricity;  and 
the  retail  supply  of  electricity  to  industrial  and  commercial  customers),  the  market 
investigation  led  the  Commission  to  conclude  that  the  transaction  raised  serious 
doubts  as  to  its  compatibility  with  the  common  market  in  four  specific  areas: 
(i) withdrawal  of  flexible  generation  capacity  leading  to  price  increases  in  the 
electricity wholesale market, (ii) decrease of liquidity in the wholesale market due to 
the increased use of own generated electricity to supply customers of the new entity 
instead of selling it in the wholesale market, (iii) very strong position with respect to 
the ownership of sites likely to be suitable for the development of new nuclear power 
generation sites and (iv) very strong position with respect to the ownership of rights 
to obtain additional connections to the transmission network. 

In  order  to  dispel  these  competition  concerns,  the  Commission  has  accepted  a 
remedy  package  proposed  by  the  parties,  which  consists  of  the  divestiture  of  two 
flexible generation power plants, a commitment to sell certain volumes of electricity 
on  the  wholesale  market  for  a  given  period  of  time,  the  unconditional  sale  of  one 
good site (to be selected by the purchaser from two alternatives) for the development 
of new nuclear generation capacity and, finally, the release of a transmission network 
connection  agreement.  The  Commission  considered  that  these  commitments  are 
sufficient  to remove the competitive problems  identified,  as they  significantly limit 
the  ability  and  incentives  of  the  new  entity  to  engage  in  anti-competitive  capacity 
withdrawal  strategies  or  to  reduce  wholesale  market  liquidity.  They  facilitate  new 
entry into the generation market in two ways: by facilitating access to new sites and 
by doing away with restrictions on connection to the transmission network. 

2.3. 

State aid 

160. 

In the area of State aid control, the Commission requested Hungary to end several 
long-term power purchase agreements (PPA)143. These agreements grant favourable 
conditions  to  electricity  generators  selling  electricity  to  the  State-owned  Magyar 
Villamos Művek Zrt.  (MVM). Hungary is also requested to recover the aid granted 
since  its  accession  to  the  EU  in  2004.  The  PPA  cover  around  two  thirds  of  the 
electricity generated in Hungary. Even though these PPA agreements were concluded 
before  the  accession,  they  fall  within  the  scope  of  EC  State  aid  rules  because  they 
were  applicable  after  accession  (pursuant  to  point  3  of  Annex  IV  to  the  Accession 
Act).  They  prevent  competition  on  merits  and  close  off  a  significant  part  of  the 

143 

Case  C  41/2005  Hungarian  stranded  costs  (not  yet  published  in  the  OJ).  A  few  months  before  the 
Commission  requested  Poland  to  end  similar  long  term  power  purchase  agreements  (Case  C  43/2005 
Stranded costs compensation in Poland, not yet published in the OJ). 

EN 

47 

   EN 

 
                                                 
market from new entrants, thus distorting competition to the detriment of Hungarian 
electricity consumers. Nevertheless, the Commission has consistently acknowledged 
the  major  investments  in  power  plants  that  were  made  by  the  power  generators 
before  the  liberalisation  of  the  electricity  markets.  The  Commission  has  allowed 
other Member States to grant State aid in order to help power generators to recover 
such  investments.  In  this  context,  in  2001,  the  Commission  issued  the  "Stranded 
Costs Methodology"144, which sets out the principles for assessing this form of aid. 
However,  the  PPA  did  not  meet  the  criteria  laid  down  in  that  methodology.  If 
Hungary were to decide to notify a genuine stranded costs compensation scheme, this 
would need to be assessed on its own merits. 

the  area  of 

renewable  energies 

In 
the  Commission  approved  aid  of 
EUR 2 350 million  for  the  use  of  renewable  energies  in  Germany145.  Furthermore, 
the  Commission  authorised  two  Italian  cases  of  State  aid  in  the  form  of  tax 
reductions to stimulate the production and the use of biodiesel146. In both cases the 
tax reductions were accompanied by supply obligations. This coexistence of supply 
obligations and tax reductions was a novelty. Such a situation may raise the question 
of the need for aid, since both instruments (i.e. tax exemption and supply obligation) 
pursue  the  same  goal  of  bringing  biofuels  to  the  market.  However,  for  the  cases  at 
hand, this problem remained limited in the short run and the Commission was able to 
approve the schemes until the end of 2010. This timeframe should also be adequate 
to collect sufficient data in order to assess in more detail the long-run effects that the 
coexistence of these two instruments will have on the market. 

In Austria, the Commission investigated the partial sale of a State-owned electricity 
provider147. The Commission found that the market value of the shares was fixed by 
two  independent  experts  on  the  basis  of  generally  accepted  market  indicators  and 
valuation  standards.  The  Commission  approved  the  sale  on  the  grounds  that  the 
measure  did  not  constitute  State  aid,  since  the  State  acted  like  a  market  economy 
investor operating under normal market economy conditions. 

The Commission also investigated a public service compensation scheme notified by 
Spain.  Under  the  scheme,  Spain  granted  financial  compensation  to  certain  power 
generators  for  electricity  produced  from  indigenous  coal.  Following  extensive 
discussions  with  the  Commission,  Spain  decided  to  withdraw  the  notification.  The 
use of indigenous primary energy resources for power generation may, under certain 
circumstances,  be  regarded  as  a  genuine  Service  of  General  Economic  Interest 
(SGEI).  However,  the  notified  scheme  was  not  in  line  with  the  rules  applicable  to 
State aids in the form of public service compensation. 

161. 

162. 

163. 

144 

145 

146 

147 

Commission  letter  SG  (2001)  D/290869  of  6.8.2001  -  Commission  Communication  relating  to  the 
methodology for analysing State aid linked to stranded costs. 
Case  N  287/2005  Modification  and  prolongation  of  the  aid  scheme  "Aid  for  the  use  of  renewable 
energies" (OJ C 261, 14.10.2008, p. 2). 
Cases  N  326/2007  Prolongation  tax  exemption  biodiesel  (OJ C 134,  31.5.2008,  p. 1)  and  N  63/2008 
Excise duty reduction for biofuels (OJ C 323, 18.12.2008, p. 4). 
Case  N  90/2008  Partial  privatisation  of  Energie  AG  Oberösterreich  by  a  private  equity  operation 
(OJ C 216, 23.8.2008, p. 13). 

EN 

48 

   EN 

 
                                                 
164. 

As  regards  preferential  electricity  tariffs  in  Italy,  the  Commission  opened  a  new 
procedure148 in addition to the ongoing investigations (concerning, in particular, the 
aluminium  producer  Alcoa149).  Also,  the  Commission  is  continuing  to  investigate 
State aid cases related to regulated electricity tariffs in France150 and Spain151. 

B – FINANCIAL SERVICES 

1. 

OVERVIEW OF THE SECTOR 

165. 

166. 

167. 

168. 

169. 

2008  proved  to  be  extremely  difficult  for  the  financial  sector,  since  the  financial 
crisis hit the European economies in the autumn. Many EU governments reacted to 
this unprecedented crisis by taking measures to support financial stability (see 2.1.1. 
below). 

Financial  markets  are  crucial  to  the  functioning  of  modern  economies.  The  more 
integrated  and  the  more  competitive  they  are,  the  more  efficient  the  allocation  of 
capital  and  the  long-run  economic  performance  will  be.  Banking,  insurance  and 
securities are three major areas of the financial services sector. 

The  European  banking  sector  has  undergone  significant  growth  and  diversification 
over the last two decades. Today it directly provides over four million jobs in the EU. 
Retail banking remains the most important sub-sector of banking, representing over 
50% of total EU banking activity in terms of gross income. However, the final report 
of the inquiry into the retail banking sector published in January 2007 underlined a 
number of competition issues. 

Following  the  sector  inquiry,  and  on  the  basis  of  cases  which  had  already  been 
investigated  during  the  inquiry,  several  decisions  were  adopted  in  the  area  of 
financial  services  during  2007.  At  the  end  of  2007,  the  Commission  adopted  a 
decision prohibiting the cross-border Multilateral Interchange Fees (MIF) applied by 
MasterCard.  In  March  2008,  the  Commission  opened  an  investigation  regarding 
VISA's  cross-border  MIF.  In  June,  MasterCard  repealed  these  interchange  fees152. 
The Decision in the MasterCard case is currently under appeal before the CFI. 

To underpin the development of a single market for financial services and to harness 
the  full  potential  benefits  of  the  euro,  the  European  banking  industry  is  creating  a 
Single  Euro  Payments  Area  (SEPA).  SEPA  is  a  self  regulatory  initiative  from  the 
European  Payments  Council  (EPC),  an  association  of  undertakings,  to  move  to  an 
integrated euro payments area, ensuring that cross border payments become as easy 
and efficient as domestic payments. The SEPA framework for payment cards and the 
credit  transfer  scheme  were  launched  in  2008  and  the  launch  of  the  direct  debit 

148 
149 

150 
151 
152 

Case C 36/2008 State aid in favour of the Sulcis integrated power plant (OJ C 240, 19.9.2008, p. 14). 
Cases 38a/2004 Preferential electricity tariff in favour of Alcoa (OJ C 30, 5.2.2005, p. 7), C 38b/2004 
Preferential electricity tariff in favour of Portovesme, ILA and Euroallumina (OJ C 30, 5.2.2005, p. 7), 
C 13/2006  Preferential  Electricity  Tariff  for  Energy  Intensive  Industry  in  Sardinia  (OJ C 145, 
21.6.2006, p. 8) and C 36b/2006 Preferential electricity tariff – Alcoa (OJ C 214, 6.9.2006, p. 5). 
Case C 17/2007 Regulated electricity tariffs in France (OJ C 164, 18.7.2007, p. 9). 
Case C 3/2007 Regulated electricity tariffs in Spain (OJ C 43, 27.2.2007, p. 9). 
See MEMO/08/397, 12.6.2008. 

EN 

49 

   EN 

 
                                                 
170. 

171. 

scheme  is  scheduled  for  2 November 2009.  SEPA  is  intended  to  facilitate 
competition between banks by removing national barriers. 

The  SEPA  project  is  supported  by  the  European  Commission  and  the  European 
Central  Bank  (ECB).  However,  as  the  project  is  being  led  by  the  EPC,  its 
implementation  requires  close  competition  scrutiny.  Against  this  background,  the 
Commission, together with the NCA, has addressed a number of SEPA related issues 
as part of an ongoing dialogue with the EPC. 

Insurance  is  another  financial  service  of  vital  importance  for  big  and  small 
businesses throughout the European Union. Business insurance is the most important 
sector  of  non-life  insurance.  A  competitive  environment  in  business  insurance  is 
therefore key to European economic growth. A number of competition issues in the 
sector  were  underlined  in  the  Commission's  final  report  on  the  sector  inquiry  into 
business  insurance,  which  was  published  in  September  2007153,  and  in  particular 
concerns  related  to  the  operation  of  the  subscription  process  in  coinsurance  and 
reinsurance markets and conflicts of interest in brokerage. The former issue has been 
partly  addressed  by  an  industry  initiative  which  the  Commission  is  continuing  to 
monitor,  whilst  the  latter  is  more  systemic  in  nature  and  will  need  to  be  addressed 
through channels other than competition policy. 

2. 

POLICY DEVELOPMENTS 

2.1. 

The financial crisis 

2.1.1. 

Impact on financial markets 

172. 

173. 

174. 

At  the  beginning  of  the  autumn  the  financial  crisis  had  a  systemic  impact  on  the 
economies  of  EU  Member  States.  Many  EU  governments  have  taken  measures  to 
support  financial  stability,  to  restore  confidence  in  the  financial  markets  and  to 
minimize the risk of a serious credit crunch. 

In the field of competition policy – and, in particular, State aid control – the role of 
the  Commission  has  been  to  support  financial  stability  by  rapidly  giving  legal 
certainty to the measures taken by Member States. The Commission also contributed 
to maintaining a level playing field and to ensuring that national measures would not 
simply export problems to other Member States. 

In  its  October  Communication  on  the  "Application  of  State  aid  rules  to  measures 
taken in relation to financial institutions in the context of the current global financial 
crisis"154, the Commission clarified its general approach and provided guidance on a 
number of State interventions, particularly on State guarantees, which were the most 
widespread response to the crisis in the initial phase. 

153 

154 

Communication  form  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions, Sector Inquiry under Article 17 of 
Regulation (EC) No 1/2003 on business insurance (Final Report) (COM(2007) 556 final, 25.9.2007). 
OJ C 270, 25.10.2008, p. 8. 

EN 

50 

   EN 

 
                                                 
175. 

176. 

177. 

178. 

179. 

Subsequently, the recapitalisation of banks moved into the focus of Member States' 
attention.  In  December,  the  Commission  provided  guidance  on  the  assessment  of 
such measures under EU State aid rules in the Communication "The recapitalisation 
of  financial  institutions  in  the  current  financial  crisis:  limitation  of  aid  to  the 
minimum necessary and safeguards against undue distortions of competition"155. 

The  two  communications  provided  crucial  guidance  to  Member  States  on  how  to 
take effective measures to stabilise financial markets and ensure sustained lending to 
the  real  economy  without  creating  undue  distortions  of  competition  by  exporting 
problems from one Member State to the others. 

The  consistent  methodology  set  out  in  these  guidance  documents  has  permitted  the 
swift  design  and  approval  of  a  large  number  of  national  schemes  and  individual 
measures to tackle the crisis, whilst avoiding harmful economic imbalances between 
banks and between Member States. 

The Commission approved aid in the following decisions on the basis of Article 
87(3)(c): Sachsen LB156, IKB157, West LB158, Roskilde Bank159, Hypo Real Estate160, 
Bradford and Bingley161. 

Due  to  the  deepening  of  the  crisis,  the  Commission  decided  at  the  beginning  of 
October  2008  to  approve  State  aid  under  Art.  87(3)(b)  –  aid  to  remedy  a  serious 
disturbance in the economy of a Member State. In 2008, the Commission approved 
the following aid schemes supporting financial stability:  
•  eleven guarantee schemes (Denmark162, Finland163, France164, Ireland165, Italy166, 
Latvia167, the Netherlands168, Portugal169, Slovenia170, Spain171 and Sweden172); 

•  two recapitalisation schemes (France173 and Italy174); 

•  one asset purchase scheme (Spain175); and 

155 
156 
157 
158 
159 
160 
161 
162 
163 
164 

165 
166 
167 
168 
169 
170 
171 
172 
173 
174 
175 

OJ C 10, 15.1.2009, p. 2. 
C 9/2008 Restructuring aid to Sachsen LB, Germany. 
C 10/2008 Restructuring aid to IKB, Germany. 
C 43/2008 Restructuring aid to West LB, Germany. 
N 366/2008 Rescue aid to Roskilde Bank, Denmark. 
NN 44/2008 Rescue aid to Hypo Real Estate, Germany. 
NN 41/2008 Rescue aid to Bradford and Bingley, UK. 
NN 51/2008 Guarantee scheme for banks in Denmark. 
N 567/2008 Finnish guarantee scheme. 
N  548/2008  Financial  support  measures  to  the  banking  industry  in  France  (refinancing),  not  yet 
published. 
NN 48/2008 Guarantee scheme for banks in Ireland. 
N 520a/2008 Guarantee scheme for Italian banks. 
N 638/2008 Guarantee scheme for banks. 
N 524/2008 Guarantee scheme for Dutch financial institutions. 
NN 60/08 Guarantee scheme for credit institutions in Portugal. 
N 531/2008 Guarantee scheme for credit institutions in Slovenia. 
NN 54b/2008 Spanish guarantee scheme for credit institutions. 
N 533/2008 Support measures for the banking industry in Sweden. 
N 613/2008 Financial support measures to the banking industry in France (recapitalisation). 
N 648/2008 Recapitalisation scheme. 
NN 54a/2008 Fund for the Acquisition of Financial Assets in Spain. 

EN 

51 

   EN 

 
                                                 
180. 

181. 

182. 

•  four  holistic  schemes  with  two  or  more  of  the  above  elements  (Austria176, 

Germany177, Greece178, United Kingdom179). 

The  Commission  also  approved  a  number  of  individual  cases  in  2008,  including 
recapitalisation,  guarantee  and  liquidity  cases:  ING180,  KBC181,  Parex182,  SNS 
Reaal183,  Bayern  LB184,  Fortis185,  Dexia186,  Nord  LB187,  guarantee  for  IKB188, 
Carnegie Sweden189, Aegon190, Fortis Bank and Fortis Bank Luxembourg191. 

The Commission has acted quickly to restore confidence in the market. In adopting 
these decisions, it has provided clarity and legal certainty to the Member States and 
demonstrated that EU State aid policy reacts in a pragmatic and responsible manner 
to the evolving market circumstances. 

Recapitalization  in  some  cases  has  led  to  the  State  acquiring  control  over  financial 
institutions,  and  the  resulting  issues  to  be  considered  under  the  ECMR.  In  keeping 
with the principle of neutrality as regards public or private ownership of the means of 
production which is set out in the Treaty, and more specifically  with the  principles 
laid  out  in  the  Merger  Regulation  and  Jurisdictional  Notice  themselves,  the 
Commission has considered that such operations are not notifiable concentrations in 
the  event  that  the  acquired  institutions  retain  their  independent  power  of  decision-
making  and  are  not  subject 
to  commercial  coordination  with  other  State 
undertakings.  In  the  opposite  case  the  Commission  would  review  such  operations 
under the Merger Regulation as usual. 

2.1.2. 

Impact on the real economy 

183. 

184. 

176 
177 
178 
179 
180 
181 
182 
183 
184 
185 
186 
187 
188 
189 
190 
191 

The  financial  crisis  had  a  severe  impact  on  the  economy  of  the  EU.  Banks  were 
deleveraging  and  becoming  much  more  risk-averse  than  in  previous  years. 
Companies  started  to  experience  difficulties  with  access  to  credit.  A  serious 
downturn was starting to affect the wider economy. 

The  challenge  for  the  Commission  was  to  avoid  public  intervention  which  would 
distort competitive conditions on the Internal Market and undermine the objective of 
a  well  targeted  State  aid.  Nevertheless,  the  Commission  has  recognised  that,  under 
certain conditions, there is a need for State aid to tackle the crisis. However, State aid 

N 557/2008 Aid scheme for the Austrian financial sector. 
N 512/2008 Aid scheme for financial institutions in Germany. 
N 560/2008 Aid scheme to the banking industry in Greece. 
N 507/2008 Aid scheme to the banking industry in the UK. 
N 528/2008 Measure in favour of ING (recapitalisation), Netherlands. 
N 602/2008 KBC Recapitalisation, Belgium. 
NN 68/2008 Support measures for JSC Parex Banka, Latvia. 
N 611/2008 SNS Reaal/New capital injection by the Dutch authorities, Netherlands. 
N 615/2008 Guarantee and recapitalisation for Bayern LB, Germany. 
N 574/2008 Measures in favour of Fortis, Belgium/Luxembourg/Netherlands. 
NN 45-49-50/2008 Guarantee on liabilities of Dexia, Belgium. 
N 655/2008 Guarantee for Nord LB, Germany. 
N 639/2008 Guarantee for IKB, Germany. 
NN 64/2008 Emergency rescue measures regarding Carnegie Investment Bank, Sweden. 
N 569/2008 Measure in favour of Aegon, Netherlands. 
NN 42-46-53A/2008 Restructuring aid to Fortis Bank and Fortis Bank Luxembourg. 

EN 

52 

   EN 

 
                                                 
should not be used to postpone or avoid a necessary restructuring of companies faced 
with structural difficulties. 

185.  With this objective in view, the Commission has taken several steps to address the 
situation in the real economy, in addition to specific actions taken in the financial and 
banking sector. 

186. 

187. 

In  particular,  the  Commission  adopted  the  "Temporary  Framework  for  State  aid 
measures to support access to finance in the current financial and economic crisis"192. 

This  Temporary  Framework  gives  Member  States  additional  possibilities  to  tackle 
the  effects  of  the  credit  squeeze  on  the  real  economy.  In  order  to  meet  these 
objectives, Member States may, under certain conditions and until the end of 2010, 
grant e.g.:  

– 

– 

– 

– 

a lump sum of aid up to EUR 500 000 per company for the next two years to 
relieve their current difficulties, 

State guarantees for loans at a reduced premium, 

subsidised  loans,  in  particular  for  the  production  of  'green'  products  (meeting 
environmental protection standards early or going beyond such standards), 

risk capital aid up to EUR 2.5 million per SME per year (instead of the current 
EUR 1.5 million) in cases where at least 30% (instead of the current 50%) of 
the investment cost comes from private investors. 

Also the burden of proof of market failures in the export credit insurance market is 
lowered. 

188. 

The Commission adopted a "can do" approach, thereby ensuring that crisis measures 
are approved very swiftly. The first measures were approved at the end of 2008193. 

2.2. 

Single Euro Payments Area (SEPA) 

189. 

SEPA  has  been  an  important  focus  of  anti-trust  advocacy  in  the  field  of  financial 
services  in  2008.  SEPA  is  a  self-regulatory  initiative  launched  by  the  European 
Banking Industry and led by the European Payments Council (EPC) to move to an 
integrated  euro  payments  area.  Its  aim  is  to  ensure  that  cross  border  payments 
become  as  easy  and  efficient  to  make  as  domestic  payments.  Once  implemented, 
SEPA will cover credit transfers, payment cards and direct debit. SEPA is expected 
to enhance competition and to lead to efficiency gains. It is strongly supported by the 
Commission and the ECB. 

190. 

However,  since  the  implementation  of  SEPA  is  based  on  decisions  by  the  EPC, 
which is an association of banks and banking associations representing the European 
banking  industry,  and  is  thereby  based  on  decisions  by  and  agreements  between 

192 
193 

OJ C 16, 22.1.2009, p. 1. 
Cases N 661/2008 KfW run loan component of German Konjunkturprogramm (OJ C 29, 5.2.2009, p. 3) 
and N 668/2008 Federal Framework "Small amounts of compatible aid" (not yet published in the OJ), 
both in Germany. 

EN 

53 

   EN 

 
                                                 
undertakings that are (potential) competitors, it requires close competition scrutiny. It 
also needs to be implemented in accordance with the existing Community framework 
for payment services. 

In  a  detailed,  in-depth  analysis,  Commission  and  NCA  experts  jointly  identified 
competition  concerns  and  raised  a  number  of  questions.  In  view  of  the  exceptional 
character  of  the  project  and  its  important  potential  consequences  for  European 
companies  and  consumers,  it  was  decided  to  address  these  concerns  in  an  informal 
dialogue with the EPC which began in October 2007. Given the need for a common 
European  approach, the ECB and DG  Internal Market were closely involved in the 
dialogue. 

The  first  milestone  was  reached  in  December  2007.  This  was  an  urgent  priority  as 
banks had to start making their card payments SEPA compliant by 1 January 2008. 
As  a  result  of  the  dialogue,  the  SEPA  Card  framework  (SCF)  was  clarified  by  the 
EPC, which explained that SEPA compliant card schemes did not need to cover all 
31  States  of  the  SEPA  territory194.  To  be  compliant,  a  scheme  is  only  required  to 
operate  in  such  a  way  that  there  are  no  barriers  to  effective  competition  between 
issuers, acquirers and processors. SEPA compliant card schemes should therefore be 
capable of being acquired or issued in any SEPA country. An obligation to cover the 
whole  of  the  SEPA  territory  could  have  caused  banks  and  national  banking 
associations to abandon cheap and efficient national systems for one of the only two 
existing (more expensive) international schemes (i.e. Maestro/V-Pay for debit cards 
or MasterCard/Visa for credit cards). On the basis of the clarification provided, the 
geographical  coverage  will  be  decided  by  market  forces  alone.  New  schemes  will 
now stand a real chance of entering the market, which should encourage the creation 
of a competitive SEPA-wide payment cards market. On 26 June the EPC published 
easy-to-read  Questions  and  Answers  document195  clarifying  key  aspects  of 
compliance with the SCF. 

Intensive discussions also took place in meetings running from May until June, with 
a  number  of  subsequent  follow-up  meetings.  The  dialogue  will  still  be  ongoing  in 
2009,  but  it  can  already  be  called  a  success,  since  the  EPC  was  able  to  provide 
satisfactory  clarifications  on  a  number  of  the  competition  issues  identified.  For 
instance, the EPC clarified that national banking communities were not in a position 
to  foreclose  the  market  through  national  specifications  (the  so-called  "Additional 
Options  Services").  The  rules  and  conditions  of  access  to  schemes  by  payment 
institutions  and  equal  treatment  for  payment  institutions  and  banks  under  the  SCF 
were also clarified. 

The  dialogue  with  the  EPC  on  SEPA  provided  substantial  clarification  to  market 
players  and  other  stakeholders  in  2008,  and  is  still  on  track  for  2009.  Interchange 
fees  for  SEPA  Direct  Debit,  governance  of  the  EPC  and  of  the  schemes,  and  also 
standardisation, will be on the agenda for discussion. The momentum created in the 
earlier  stages  of  the  Dialogue  should  help  tackle  the  remaining  obstacles  to  the 
achievement of a truly competitive European payment cards market. Reinforcing the 

EU27, other EEA countries (Norway, Iceland and Liechtenstein) and Switzerland 
Questions 
http://www.europeanpaymentscouncil.eu/documents/EPC075-
SCF%20QAs%20Version10%20Final.pdf  

and  Answers 

clarifying 

aspects 

key 

of 

the  SEPA  Cards  Framework, 

191. 

192. 

193. 

194. 

194 
195 

EN 

54 

   EN 

 
                                                 
competition dimension of SEPA will in turn help to achieve better services at a better 
price for retailers and consumers. 

C – ELECTRONIC COMMUNICATIONS 

1. 

OVERVIEW OF THE SECTOR 

195. 

196. 

197. 

198. 

The  electronic  communications  sector  in  the  EU  is  characterised  by  rapid 
technological  and  commercial  changes.  2008  was  the  sixth  consecutive  year  of 
increased  investment  in  the  sector.  However,  based  on  final  data  provided  by  the 
National Regulatory Authorities (NRAs), the rate of investment growth in 2007 was 
less than in 2006 and the trend is flattening out. 

Growth of revenue was again slightly slower in 2008 than in the previous years. Due 
to more effective competition, technological developments and new business models, 
the  broadband  markets  are  developing  rapidly.  Penetration  in  the  mobile  voice 
markets  increased  again  ,  while  the  growth  of  revenues  slowed.  Traditional  fixed 
voice  telephony  continued  to  decline,  whereas  a  steady  rise  of  Voice  over  Internet 
Protocol  (VoIP)  and  a  continuing  shift  from  fixed  to  mobile  voice  services  were 
taking place. 

In reaction to increased competition, mainly from new entrants and cable operators, 
many telecom network operators started to offer their customers convergent services 
(fixed  and  mobile  voice  telephony,  broadband  internet  and  television)  some  years 
ago.  To  support  this  strategy,  as  well  as  to  reduce  costs  in  the  medium  term, 
investments  by  the  network  operators  in  the roll-out  of  optical  fibre  networks  have 
already taken  place or have been announced. The roll-out of optical fibre networks 
itself will support new broadband applications and services that increasingly require 
higher bandwidths. 

Retail  competition  has  resulted  in  lower  prices  for  electronic  communications 
services.  Consumers  with  a  high  usage  profile,  in  particular,  can  in  many  cases 
benefit from flat rate fees for both fixed voice telephony and broadband internet. In 
general,  prices  for  mobile  services  have  also  fallen  during  the  year.  The  picture  is 
one of increasing volume of communications and falling prices, suggesting that the 
average  European  consumer  of  electronic  communications  services  in  2008  was 
better off than in the previous year. 

199.  With  regard  to  broadband  internet  services  customers  have  enjoyed  higher 

bandwidths at lower prices. 

200. 

Providers  of  electronic  communications  services  continued  to  operate  within  the 
confines of the EU regulatory framework for electronic communications (Regulatory 
Framework)196, which is designed to facilitate access to legacy infrastructure, foster 

196 

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 

EN 

55 

   EN 

 
                                                 
investment in alternative network infrastructure and bring choice and lower prices for 
consumers. 

2. 

POLICY DEVELOPMENTS 

2.1. 

Application of the Regulatory Framework and other policy developments 

201. 

202. 

203. 

Ex  ante  regulation  under  the  Regulatory  Framework  builds  on  competition  law 
principles.  This  approach  has  been  adopted  by  National  Regulatory  Authorities 
(NRAs)  in  their  assessment  of  electronic  communication  markets.  National 
regulators  concluding  that  a  market  is  not  actually  competitive  must  identify 
operators  with  significant  market  power  and  impose  appropriate  regulatory 
obligations.  Regulators  are  required  to  notify  the  Commission  and  the  other 
regulators  of  their  proposals  under  a  consultation  mechanism  provided  by  the 
Framework Directive (the so-called "Article 7 procedure"). The other regulators can 
comment  on  the  notifying  regulator's  draft  measures.  The  Commission  may  also, 
following  an  in-depth  investigation,  ask  the  notifying  regulator  to  withdraw  a  draft 
measure if it does not comply with EU law. In its new Recommendation on relevant 
product  and  service  markets  within  the  electronic  communications  sector  the 
Commission  has  identified  seven  specific  product  and  services  markets,  at  both 
wholesale and retail levels, as susceptible to ex ante regulation197. 

In  2008  the  Commission  received  123  notifications  from  NRAs  and  adopted  85 
comments  letters  and  33  no-comments  letters  within  the  Community  consultation 
mechanism  under  Article  7  of  the  Framework  Directive.  In  five  cases,  the 
Commission  raised  serious  doubts  as  to  the  compatibility  of  the  notified  measures 
with  EU  law  and  opened  second-phase  investigations  under  Article  7(4)  of  the 
Framework Directive. 

Taking account of the Commission's positions under Article 7(4) of the Framework 
Directive,  several  NRAs  opted  for  the  withdrawal  of  draft  measures.  This  was  the 
case  in  second-phase  investigations  concerning  the  wholesale  national  market  for 
trunk  segments  of  leased  lines198  and  the  market  for  transit  services  in  the  fixed 
public telephony network199 in Poland. In both cases the Commission took the view, 
that in particular the data provided did not support the finding of significant market 
power in the markets concerned. The Slovenian NRA withdrew the notification in a 
case  that  concerned  the  wholesale  market  for  access  and  call  origination  on  public 

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). 
Commission  recommendation  of  17.12.2007  on  relevant  product  and  service  markets  within  the 
electronic communications sector (OJ L 344, 28.12.2007, p. 65). 
Case PL/2008/0772 (SG-Greffe (2008) D/203315). 
Case PL/2008/0766 (SG-Greffe (2008) D/203269). 

56 

   EN 

197 

198 
199 

EN 

 
                                                                                                                                                         
204. 

205. 

mobile  telephone  networks  in  Slovenia200.  With  regard  to  a  notification  on  the 
wholesale broadband access market in Spain, the Commission closed a second-phase 
investigation  with  comments  after  the  Spanish  NRA  had  responded  to  the  serious 
doubts  of  the  Commission  by  amending  the  proposed  draft  measure  during  the 
second-phase investigation201. 

The  transition  of  the  electronic  communications  sector  from  former  national 
monopolies  towards  competition  continued  in  2008.  Pursuant  to  the  2007 
Recommendation  on  the  relevant  markets  susceptible  to  ex  ante  regulation202,  the 
overall  number  of  markets  susceptible to ex  ante regulation has  been  reduced from 
18 to 7. According to the Recommendation when NRAs intend to regulate markets 
which  are  no  longer  listed,  they  should  have  recourse  to  the  so  called  "three 
criteria"203  test.  By  stating  these  rules,  the  Recommendation  is  following  the 
principles of the Regulatory Framework, the aim of which is to gradually reduce ex 
ante  regulation  as  competition  in  the  market  develops.  The  new  Recommendation 
has proved to be a strong instrument of deregulation. In 2008 most NRAs concluded 
that,  even  when  national  specificities  are  taken  into  account,  a  number  of  (and 
possibly  all)  markets  that  are  no  longer  listed  in  the  Recommendation  have  to  be 
deregulated. A good example is the Czech market for retail fixed calls, which is no 
longer  listed  in  the  Recommendation  on  relevant  markets.  The  Czech  NRA,  Český 
telekomunikační úřad (CTU), carried out the three criteria test, found the barriers to 
entry to be low and, consequently, proposed to withdraw the existing regulation. In 
contrast,  the  Polish  NRA,  Urząd  Komunikacji  Elektronicznej  (UKE),  proposed  to 
maintain  regulation  on  the  market  of  transit  services  in  the  fixed  public  telephony 
network After the Commission issued a letter expressing serious doubts in this case 
did  the  Polish  NRA  decide  to  withdraw  the  notification.  Later,  UKE  re-notified  its 
draft  measure,  concluding  that  the  market  was  competitive,  and  proposed  to 
withdraw the regulation. 

The  market  analyses  by  NRAs  have  demonstrated 
increasing  competition, 
particularly in the retail markets as a result of wholesale regulation. The regulatory 
framework  allows  also  defining  sub-national  geographic  markets  where  clear 
different  conditions  of  competition  arise.  Some  NRA  have  indeed  demonstrated 
differentiated  competitive  conditions  in  certain  markets,  which  has  allowed 
regulation to focus on those areas where a need for ex ante regulation persists. As a 
consequence  of  this  increased  competition  the  British  regulator,  the  Office  of 
Communications  (OFCOM),  was  the  first  NRA  to  identify  different  broadband 
markets  in  different  geographic  areas  in  a  single  country  and  proposed  removing 
regulation  in  those  geographic  areas  where there  is  now  effective  competition.  The 
Commission  approved  the  proposal  on  the  basis  of  extensive  data  provided  by 

200 
201 
202 

203 

Case SI/2008/0806. 
Case ES/2008/0805. 
Commission  recommendation  of  17.12.2007  on  relevant  product  and  service  markets  within  the 
electronic  communications  sector 
replacing  Commission 
Recommendation 2003/311/EC (2). 
The "three criteria" are: (i) high and non-transitory barriers to entry, (ii) a market structure which does 
not  tend  towards  effective  competition  within  the  relevant  time  horizon,  (iii)  the  insufficiency  of 
competition  law  alone  to  adequately  address  the  market  failure(s)  concerned  (see  Commission 
recommendation  of  17.12.2007  on  relevant  product  and  service  markets  within  the  electronic 
communications sector, cited above). 

(OJ  L  344,  28.12.2007,  p.  65), 

EN 

57 

   EN 

 
                                                 
OFCOM.  Following  this  decision,  several  other  NRAs  also  examined  geographic 
segmentation.  In  a  case  concerning  the  wholesale  broadband  access  market  in 
Austria,  the  Austrian  NRA,  Rundfunk  und  Telekom  Regulierungs-GmbH  (RTR) 
proposed  defining  a  national  market,  albeit  acknowledging  certain  geographic 
variations  in  competitive  conditions  when  defining  the  remedies204.  In  a  case 
concerning  the  market  for  wholesale  broadband  access  and  high-speed  broadband 
access in Portugal, the Portuguese regulator, Autoridade Nacional De Comunicações 
(ANACOM), examined two different geographic areas where competitive conditions 
differed.  ANACOM  then  decided  to  deregulate  the  geographic  zones  where 
structural competition problems no longer persist (e.g. densely populated zones like 
Lisbon or Porto). 

The  work  on  the  review  of  the  Regulatory  Framework  continued  during  2008.  On 
24 September,  the  European  Parliament  adopted  opinions  on  the  Commission's 
legislative  proposals  at  its  first  reading.  On  27 November,  the  Council  of  the 
European Union reached a political agreement on the package of measures to reform 
the EU electronic communications framework. 

Termination  rates  in  the  EU  are  high  and  are  also  not  regulated  consistently 
throughout the EU205. This allows operators to exploit their monopolistic termination 
market,  which  runs  counter  to  the  principles  of  competition  law.  This  puts  other 
operators  and,  ultimately, consumers at  a  disadvantage. Therefore, the Commission 
has already proposed a recommendation that should bring termination rates down to 
an efficient level, ensuring a consistent approach to regulating these rates. There are 
plans to adopt such a recommendation as early as possible in 2009. 

Access  to  next  generation  networks  is  critically  important  for  alternative  network 
operators that have invested in infrastructure at the level of local exchanges. In order 
to provide more regulatory certainty for market players and to foster investment and 
competition  in  this  area,  the  Commission  is  currently  working  towards  a 
Recommendation on the appropriate regulatory approach and remedies applicable in 
the context of new generation network access. 

For  the  purpose  of  simplifying  and  accelerating  the  implementation  of  regulatory 
measures  the  Commission  has  streamlined  its  Recommendation  on  notifications, 
time limits and consultations provided for in Article 7 of the Framework Directive206. 
The  aim  of  the  new  Recommendation  is  to  reduce  bureaucracy  and  ensure  greater 
efficiency  in  the  cooperation  between  NRAs  and  the  Commission.  In  particular,  it 
allows national regulators to use a simplified and shortened standard form to notify 
certain decisions to the Commission. The simplified procedure applies, for instance, 
to decisions to withdraw regulation on markets which the Commission has removed 
from the list of markets susceptible to ex ante regulation. It further invites NRAs to 

206. 

207. 

208. 

209. 

204 
205 

206 

Later, the decision by the Austrian NRA was overturned by the Austrian Administration Court. 
According to the snapshot of mobile termination rates from the European Regulators Group (ERG (08) 
41 final) mobile termination rates range from 2€c/min (in Cyprus) to above 15€c/min (in Bulgaria), the 
average being about 8.7€c/min. 
Commission Recommendation of 15.10.2008 on notifications, time limits and consultation provided for 
in  Article  7  of  Directive  2002/21/EG  of  the  European  Parliament  and  of  the  Council  on  a  common 
regulatory  framework  for  electronic  communications  networks  and  services  (OJ L 301,  12.11.2008, 
p. 23). 

EN 

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submit  the  proposed  market  definition,  the  market  analysis  and  the  proposed 
remedies in a single stage instead of in several notifications. 

2.2. 

Developments in the area of State aid 

210. 

211. 

212. 

The  Commission  encourages  State  aid  measures  that  aim  to  provide  equitable 
broadband coverage at  affordable prices  for European  citizens.  In its  assessment of 
public  funding  schemes  under  the  State  aid  rules,  the  Commission  acknowledges 
that,  due  to  the  economic  principles  or  technological  restrictions  of  broadband 
networks,  private  operators  do  not  have  sufficient  market  incentives  to  provide 
adequate  broadband  services,  typically  in  rural  and  remote  areas.  The  Commission 
has  built  up  a  clear  and  consistent  State  aid  policy  in  the  last  years  and  endorses 
properly  justified  and  proportionate  broadband  schemes  if  the  distortion  of 
competition and the effect on trade is limited. 

In  2008,  some  Member  States  focused  primarily  on  supporting  affordable  basic 
broadband  services,  typically  in  rural  areas where  such  services  do  not  exist.  Their 
ultimate  aim  is  to  provide  broadband  services  for  all  citizens  and  companies  no 
matter where they live or where they are located. 

Commission  decisions  concerning  State  aid  to  broadband  fell  into  this  category  in 
2008. Several Member States took significant steps to bridge the "digital divide" in 
their territory, aiming to overcome the gap in terms of access to adequate broadband 
services between well-supplied urban areas and rural areas that were under-supplied 
or  receiving  no  services  at  all.  In  general,  after  the  public  authorities  had  clearly 
identified  the  targeted  areas  requiring  public  support,  via  thorough  market  research 
and  consultation  with  existing  operators,  the  Commission  asked  for  several 
safeguards to be implemented to limit distortion of competition and to minimize the 
use of public funds. Such safeguards included, inter alia, conducting an open tender 
procedure to grant aid, providing open wholesale access on the subsidized networks 
to other operators who could introduce competition where citizens had previously not 
had a choice, technological neutrality of the measures so that citizens should secure 
the  best  offer,  or  monitoring  of  the  use  of  public  monies  by  the  granting 
authorities207. 

213. 

Public intervention in some Member States is gradually shifting towards support for 
very  high  speed  broadband  networks,  the  so-called  "next  generation"  networks208, 
targeting not only under-served areas but also areas where basic broadband services 
are already available, with the aim of accelerating the deployment of such networks 

207 

208 

See Cases N 412/2007 Aid to reduce digital divide in Piedmont (OJ C 113, 8.5.2008, p. 1), N 14/2008 
Broadband  in  Scotland  -  Extending  broadband  reach  (OJ C 150,  17.6.2008,  p. 3),  N  73/2008  Public 
support to broadband (OJ C 290, 13.11.2008, p. 1), N 250/2008 Broadband connections for Alto Adige 
II  (OJ C 289,  12.11.2008,  p. 2),  N  115/2008  Broadband  in  rural  areas  of  Germany  (OJ C 194, 
31.7.2008, p. 3), N 497/2007 Broadband infrastructure in Lazdijai and Alytus (OJ C 290, 13.11.2008, 
p. 3),  N  150/2008  Broadband  in  rural  areas  of  Freistaat  Sachsen  (OJ C 12,  17.1.2009,  p. 2),  N 
237/2008 Broadband support in Niedersachsen (OJ C 18, 24.1.2009, p. 1), N 266/2008 Broadband in 
rural areas of Bayern (OJ C 12, 17.1.2009, p. 2), N 508/2008 Provision of Remote Broadband Services 
in Northern Ireland (OJ C 18, 24.1.2009, p. 2). 
Next generation access networks is a broad term to describe the new, typically fibre-based, broadband 
networks that will provide much faster and more symmetrical broadband connection for the end-users 
than the current ones (for instance, ADSL). 

EN 

59 

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in the absence of private initiatives. In 2008, the Commission did not endorse such 
measure under the State aid rules and it is currently examining these issues. 

D – INFORMATION TECHNOLOGY 

1. 

OVERVIEW OF THE SECTOR 

214. 

215. 

216. 

217. 

218. 

219. 

The  information  and  communication  technology  (ICT)  sector  is  characterised  by 
digital convergence and the concomitant growing importance of interoperability and 
standards.  The  sector  accounts for  around 5-6% of the GDP in the EU. Because of 
the  economic  downturn,  ICT  spending  has  been  reduced,  but  growth  in  OECD 
countries for 2008 is still expected to be around 4%209. 

Given  the  network  effects  that  prevail  in  the  ICT  sector,  interoperability  is  an 
important market feature. Although personal computers (PC) are considered to be the 
main  gateway  to  the  digital  world,  users  are  increasingly  accessing  data  through 
other devices such as smart-phones, which are able to communicate with each other 
and  with  computing  devices.  This  reinforces  the  need  for  interoperability  between 
software products and devices. 

Standards  can  play  a  key  role  in  this  context  by  facilitating  interoperability.  It  is 
important  that  standard-setting  organisations  establish  rules  which  ensure  fair, 
transparent  procedures  and  early  disclosure  of  relevant  intellectual  property.  The 
Commission will continue to monitor the operation of standard-setting organisations 
in this regard. 

On  a  parallel  track,  business  models  are  moving  towards  convergent  services  and 
vertical  and  horizontal  integration.  The  sale  of  software  applications  and  the 
provision  of  content  are  becoming  increasingly  interwoven.  There  is  an  increasing 
trend for companies to try to control digital as well as physical networks and to aim 
to set and control the standard platforms. 

Intellectual  Property  Rights  (IPR)  have  become  a  key  element  of  the  digital 
environment.  Use  and  control  of  IPR,  in  the  form  of  content  or  applications,  has 
become  central  in  business  models  and  strategies.  Their  use  has  thereby  become  a 
horizontal issue. 

Open source software has become an established feature of the mainstream software 
market.  In  many  software  markets,  open  source  software  has  become  a  strong 
competitor. 

209 

See OECD Information Technology Outlook 2008 Highlights. 

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60 

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2. 

POLICY DEVELOPMENTS 

2.1. 

Anti-trust 

220. 

221. 

222. 

On 22 October 2007, Microsoft announced a significant reduction in its licence fees 
for  interoperability  information.  On  21 February  2008,  Microsoft  voluntarily 
launched its "interoperability principles" and disclosed a wide range of information 
relating  to  interoperability  on  its  website.  At  this  stage  the  Commission  does  not 
know with certainty whether this information is indeed complete and accurate. 

In  the  Intel  case,  a  SSO  was  issued  on  17 June,  reinforcing  the  Commission's 
preliminary  view  outlined  in  a  SO  of  26 July  2007  that  Intel  infringed  EC  Treaty 
rules on abuse of a dominant position (Article 82) with the aim of excluding its main 
rival, AMD, from the x86 Central Processing Units (CPU) market.  

In June, Google and Yahoo announced they would enter into an agreement under the 
terms of which Google would provide some of the advertisements to be displayed on 
Yahoo’s  properties.  The  Commission  examined  the  agreement  in  close  cooperation 
with  the  US  Department  of  Justice  (DoJ).  The  parties  finally  announced  on 
5 November that the deal was not being pursued. 

2.2.  Merger control 

223. 

224. 

In 2008 the Commission issued decisions in two vertical merger cases in the satellite 
navigation  industry.  Both  transactions  were  cleared  without  conditions.  On  14 May 
the  Commission  approved  the  acquisition  by  TomTom,  a  manufacturer  of  Portable 
Navigation  Devices  (PND)  and  navigation  software,  of  Tele  Atlas,  one  of  two 
suppliers  of  navigable  digital  map  databases  with  EEA-wide  coverage.  On  26 June 
the  Commission  approved  the  acquisition  by  Nokia,  a  manufacturer  of  mobile 
handsets,  of  NAVTEQ,  the  only  credible  competitor  to  Tele  Atlas.  Both 
TomTom/Tele  Atlas210  and  Nokia/NAVTEQ211  were  vertical  transactions  and  were 
examined  strictly  in  the  light  of  the  recently  adopted  non-horizontal  merger 
guidelines212. 

Navigable  digital  map  databases,  such  as  those  supplied  by  Tele  Atlas  and 
NAVTEQ, are one of the key structural components of dedicated navigation devices 
and  other  navigation  applications.  The  digital  map  databases  include  geographic 
information  containing  the  position  and  shape  of  each  feature  on  a  map,  additional 
attributes  (street  names,  addresses,  turn  restrictions,  etc.)  and  display  information. 
Digital  map  databases  are  said  to  be  navigable  when  they  include  sufficient 
functionalities to provide real-time turn-by-turn navigation. 

225. 

Over the past several years satellite navigation capabilities and navigable digital map 
databases have been included in a growing number of mobile devices, such as mobile 
phones,  handheld  computers  and  PND.  Both  purchasers,  i.e.  TomTom  and  Nokia, 
embed digital maps in the devices they manufacture. Due to the high costs of entry 

210 
211 
212 

Case COMP/M.4854 TomTom/Tele Atlas. 
Case COMP/M.4942 Nokia/NAVTEQ. 
Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings (OJ C 265, 18.10.2008, pp. 6-25). 

EN 

61 

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and  the  significant  time  required  to  create  a  navigable  digital  map  with  sufficient 
coverage and accuracy, the Commission found that the market for navigable digital 
maps  with  EEA-wide  coverage  was  essentially  a  duopoly,  where  the  two  main 
companies  had  market  shares  of  approximately  50%  each.  The  Commission  found 
that the product lines of other digital map suppliers were unlikely to be comparable 
with Tele Atlas or NAVTEQ in the short-to-medium term. 

Although the satellite navigation industry has expanded very rapidly, it still remains 
a  nascent  market  in  which  different  technologies  and  business  models  compete.  It 
was therefore crucial to properly assess the competitive impact of these transactions 
on the further development of the satellite navigation industry. 

The  theory  of  harm  at  the  heart  of  both  TomTom/Tele  Atlas  and  Nokia/NAVTEQ 
concentrated  on  input  foreclosure.  In  both  cases,  the  merger  led  to  the  vertical 
integration  of  one  of  the  two  companies  supplying  navigable  digital  maps  to  the 
downstream  competitors  of  the  purchaser.  The  two  transactions  had  only  a  limited 
impact on each other in terms of competitive assessment, as TomTom and Nokia are 
active on what the Commission found to be different downstream markets. 

The  concerns  were  that  the  merged  entities  could  block  the  access  of  downstream 
competitors to navigable digital map databases, degrade the quality of map databases 
supplied  to  competitors  or  use  sensitive  information  passed  by  competing  device 
manufacturers to Tele Atlas and NAVTEQ. The merged entities would have had an 
incentive  to  engage  in  input  foreclosure  if  an  increase  in  sales  on  the  downstream 
market, at the expense of competitors, had allowed them to compensate for lost sales 
of digital map databases. 

The  Commission  conducted  an  in-depth  qualitative  and  quantitative  analysis  to 
assess  the  incentive  of  TomTom  and  Tele  Atlas,  and  of  Nokia  and  NAVTEQ,  to 
foreclose their competitors in their respective downstream markets or to degrade the 
quality of digital map databases offered to competitors. 

In  both  cases  the  economic  analysis  conducted  by  the  Commission  concluded  that, 
under a foreclosure strategy, the merged entity would capture only relatively limited 
sales  downstream  by  increasing  map  database  pricing  or  lowering  quality  for  their 
competitors,  and  that  the  loss  of  revenue  due  to  decreasing  sales  of  map  databases 
would not be  replaced  by  additional  sales of mobile handsets by Nokia or PND by 
TomTom. 

The  Commission  finally  concluded  that  the  merging  parties  had  no  incentive  to 
foreclose their competitors and that they would continue to sell digital map databases 
to  other  manufacturers  of  mobile  navigation  devices,  including  PND  and  mobile 
phones. 

226. 

227. 

228. 

229. 

230. 

231. 

EN 

62 

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E – MEDIA 

1. 

OVERVIEW OF THE SECTOR 

232. 

233. 

234. 

235. 

As  new  technology  increases  the  number  of  ways  people  can  access  entertainment 
and information, there is tough competition in the media sector to attract audiences. 
Traditional  distribution  channels  such  as  newspapers,  television  and  compact  discs 
are facing competition from new distribution platforms such as the internet or mobile 
devices.  The  increase  in  the  overall  number  of  distribution  channels  is  fuelling  the 
demand  for  content.  User-generated  content  is  another  nascent  market  that  puts 
pressure  on  traditional  content  providers.  As  a  result,  there  is  a  trend  towards 
consolidation  between  the  more  established  media  players  and  new  media 
businesses, as well as between the owners of infrastructure and content producers. 

Technological  developments  are  also  affecting  the  way  copyright  is  administered, 
especially for works distributed over the internet. The tradition of managing rights on 
a territorial basis is not suited to the on-line environment. EEA-wide distribution of 
media content could bring benefits to artists and consumers. 

Ongoing technological development and changing consumption patterns are breaking 
down  barriers  between  broadcasters  and  other  media  operators.  Private  media 
operators  continue  to  be  concerned  about  State  aid  for  public  service  broadcasters, 
with whom they compete for audience share, especially for what they consider to be 
purely commercial offers. They also allege that the State funding for public service 
broadcasters may exceed what is necessary for their public service mission, allowing 
them to subsidise commercial activities and to engage in anti-competitive practices. 
Private  operators  claim  that  the  public  funding  of  public  service  broadcasters'  new 
media  activities  distorts  competition  and  discourages  private  initiatives  to  develop 
new and innovative services. 

The switch from analogue to digital broadcasting,  which Member States  are due to 
complete  by  the  beginning  of  2012213,  is  increasingly  providing  consumers  with  a 
greater  number  of  TV  channels  and  radio  stations,  and  better  sound  and  picture 
quality.  The  digital  switchover  concerns  all  commonly  available  broadcasting 
transmission  platforms  such  as  satellite,  cable  and  terrestrial,  obliging  broadcasters 
and network operators to update their transmission equipment and viewers to install 
digital decoders. The Commission is committed to support the switch off of analogue 
terrestrial  TV  broadcasting  and  recognises  that  the  process  may  be  delayed  if  left 
entirely to market forces. A number of Member States are providing public funding 
to  encourage  broadcasters  and  consumers  to  facilitate  the  switchover.  The 
Commission  has  no  general  objection  to  the  granting  of  State  aid  in  this  area. 
However,  Member  States  have  to  demonstrate  that  the  aid  is  a  necessary  and 
appropriate  instrument,  is  limited  to  the  minimum  necessary  and  does  not  unduly 
distort competition. 

213 

Commission Communication on accelerating the transition from analogue to digital broadcasting (COM 
(2005) 204 final, 24.5.2005). 

EN 

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236. 

Across  Europe,  an  estimated  EUR  1.6 billion214  is  spent  on  national  film  support 
each year, most of which is for film production. This mainly takes the form of direct 
grants  or  tax  incentives.  Films  produced  or  part-financed  by  the  major  US  film 
studios accounted for 70% of total EU box office data in 2008215. 

2. 

POLICY DEVELOPMENTS 

237. 

2.1. 

238. 

239. 

The  Commission's  main  objective  from  a  competition  perspective  is  to  ensure  that 
there  is  a  level  playing  field  in  the  media  sector,  whether  between  different 
commercial  operators  or  between  commercial  operators  and  publicly-funded 
operators. 

Roundtable  on  opportunities  for  and  barriers  to  on-line  retailing  and  the 
European Single Market 

On  17 September,  Competition  Commissioner  Neelie  Kroes  discussed  with  senior 
consumer  and  industry  representatives  the  business  opportunities  created  by  the 
Internet and the existing barriers to increased online retailing of music and goods in 
Europe. The aim was to explore how to increase the business opportunities and how 
to ensure that European consumers have access to the widest possible range of goods 
and services online. The services of DG  Competition published an  issues paper for 
the  group  and  invited  all  interested  parties  to  submit  their  own  comments  on  this 
paper (more than 30 contributions were received)216. 

On  16 December  a  follow-up  meeting  took  place  which  focused  on  the  online 
distribution  of  music.  The  participants  discussed  in  particular  how  the  practices  of 
licensing  music  rights  can  be  improved  in  order  to  facilitate  Europe-wide  online 
music  offers.  The  possibility  of  EEA-wide  licensing  of  all  rights  concerned  and 
competition between several rights managers was addressed. Further, the conditions 
for setting up and maintaining a database which contains comprehensive information 
about the ownership of rights were explored. 

2.2. 

Rights management and on-line distribution 

240. 

As  regards  the  management  of  music  rights,  the  Commission  issued  a  decision 
against  24  EEA  collecting  societies  on  16 July217.  Collecting  societies  manage  the 
music  rights  of  authors  (both  composers  and  lyricists)  on  their  behalf.  The  CISAC 
reciprocal 
decision  prohibits  membership  and  exclusivity  clauses 
representation  agreements  between  collecting  societies  and  a  concerted  practice 
concerning the territorial delineation of these representation agreements. 

the 

in 

241. 

According  to  the  membership  clause,  neither  of  the  contracting  collecting  societies 
may,  without  the  consent  of  the  other,  accept  as  a  member  an  author  who  is  either 
already  a  member  of  another  collecting  society  or  who  is  a  national  of  the  country 

214 

215 
216 
217 

Based on the survey of 2002-2005 EU film subsidy data prepared for the Copenhagen Think Tank on 
European Film and Film Policy. 
European Audiovisual Observatory, Focus 2009: World film market trends, p. 14. 
Further information is available in the On-line Commerce section of the Europa Competition website. 
Case COMP/38.698 CISAC Agreement (summary decision published in OJ C 323, 18.12.2008, p. 12). 

EN 

64 

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242. 

where the other collecting society operates. The membership clause thereby prevents 
authors from choosing or moving to another collecting society. Under the exclusivity 
clause,  a  collecting  society  authorises  another  collecting  society  to  administer  its 
repertoire  on  a  given  territory  on  an  exclusive  basis.  This  prevents  the  collecting 
society from licensing its repertoire itself in the territory of the domestic collecting 
society or from allowing an additional collecting society to do so. 

The  decision  also  prohibits  a  concerted  practice  between  collecting  societies 
according  to  which  the  collecting  societies  limit  their  mandates  to  the  domestic 
territory of the other collecting societies. The result is a de facto exclusivity for the 
granting  of  licences  which  cover  the  repertoire  of  more  than  one  collecting  society 
and  a  strict  segmentation  of  the  market  on  a  national  basis.  The  systematic 
delineation  of  the  domestic  territory  amounts  to  a  concerted  practice,  because  it 
cannot  be  explained  by  individual  market  behaviour  or  by  an  objective  need  for 
geographic  proximity  between  the  collecting  society  and  the  commercial  user.  The 
modes of transmission covered by the decision concerning this specific infringement 
are  internet,  cable  retransmission  and  satellite  exploitation.  Twenty-two  parties 
appealed against the decision and eight requested interim measures218. The President 
of the CFI rejected the requests for interim measures. 

2.3. 

Digital broadcasting 

243. 

In  2008,  the  Commission  continued  to  monitor  the  transition  (switch-over)  from 
analogue to digital terrestrial broadcasting in the EU Member States. In the context 
of the ongoing infringement procedure under Article 226 EC against Italy, following 
a complaint by the Italian consumers' association Altroconsumo219, the Commission 
services reviewed the new amendments to the Italian broadcasting regime220 and had 
various contacts with the Italian authorities on the scope of the new legislation and 
criteria  for  the  digitalization  of  terrestrial  television  networks.  The  amendments  to 
the  regime  should  lead  to  more  frequencies  being  available  to  new  entrants  and 
smaller existing broadcasters. In parallel, the Italian authorities adopted a timetable 
for  the  implementation  of  the  national  "switch-off"  plan  by  2012  (which  is  the 
current "switch-off" date) and completed the process of "digitisation" of the Sardinia 
Region. 

2.4. 

Public service broadcasting 

244. 

In line with the interpretative Protocol to the Treaty of Amsterdam on the system of 
public  service  broadcasting  (the  Amsterdam  Protocol),  the  Commission  recognises 
that  it  is  the  prerogative  of  Member  States  to  organise  and  fund  public  service 
broadcasting. The objective of the Commission's policy towards State aid for public 

218 

219 
220 

Cases T-392/08 R AEPI v Commission, T-398/08 R Stowarzyszenie Autorów ZAiKS v Commission, T-
401/08 R Säveltäjäin Tekijänoikeustoimisto Teosto v Commission, T-410/08 R GEMA v Commission, 
T-411/08  R  Artisjus  v  Commission,  T-422/08  R  Sacem  v  Commission,  T-425/08  R  KODA  v 
Commission and T-433/08 R SIAE v Commission. 
See Press Release IP/07/1114, 18.8.2007. 
Article  8-novies  of  Law  n.  101/08  (Legge  06/06/2008,  n.  101  –  Conversione  in  legge,  con 
modificazioni,  del  decreto-legge  8  aprile  2008,  n.  59,  recante  disposizioni  urgenti  per  l'attuazione  di 
obblighi  comunitari  e  l'esecuzione  di  sentenze  della  Corte  di  giustizia  delle  Comunità  europee), 
published in Gazzetta Ufficiale della Repubblica Italiana – Serie Generale, numero 132, 7 giugno 2008. 

EN 

65 

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245. 

246. 

247. 

service  broadcasters  is  to  ensure  that  public  funding  does  not  exceed  what  is 
necessary  to  fulfil  their  public  service  mission  and  does  not  lead  to  unnecessary 
distortions of competition. 

The  Commission  considers  that  State  aid  to  public  service  broadcasters  may  be 
declared  compatible  where  the  requirements  laid  down  in  the  Commission’s 
Broadcasting  Communication221  are  fulfilled.  The  Commission  has  assessed  the 
numerous  notifications  and  complaints  concerning  the  financing  of  public  service 
broadcasters  on  the  basis  of  the  Broadcasting  Communication  and  has  further 
clarified and developed the requirements in its decisions. 

The Commission accepts a broadly defined public service mission to offer balanced 
and  varied  programmes,  including  information  as  well  as  entertainment  and  sports. 
The  Commission  also  recognises  that  the  public  service  remit  may  include  new 
media  activities,  provided  that  they  serve  the  same  democratic,  social  and  cultural 
needs of society as traditional broadcasting and are properly defined and entrusted. 

The  Commission  continued 
to  approve  State  financing  for  public  service 
broadcasters where both the public service remit and the financing are determined in 
full transparency and where the State funding does not exceed what is necessary to 
fulfil  the  public  service  mission.  In  2008  the  Commission  adopted  two  decisions 
concerning the financing of public service broadcasters pursuant to Article 86(2) EC 
in  combination  with  the  Broadcasting  Communication.  The  first  concerned  the 
general financing system of the Belgian (Flemish) public service broadcaster VRT222. 
The  second  decision  concerned  the  financing  regime  in  favour  of  the  Irish  public 
service  broadcasters  RTÉ  and  TG4223.  In  both  cases,  the  Commission  closed  the 
investigation,  having  received  commitments  from  Belgium  and  Ireland.  These 
commitments ensure a more precise definition and a proper entrustment of the public 
service  mission  as  regards  new  media  activities,  adequate  safeguards  against 
overcompensation and cross-subsidisation, and respect for market principles in terms 
of the public service broadcasters' commercial activities. In particular as regards the 
possible  offer  of  new  media  activities,  prior  evaluation  procedures  allow  for  new 
offers  to  be  evaluated  taking  into  account  their  public  service  character,  as  well  as 
their impact on the market. Moreover, in 2008, the Commission also cleared urgent 
State  support  to  remedy  the  tight  financial  situation  of  two  public  broadcasters, 
France  Télévisions224  under  Article  86(2)  EC,  and  TV2  Danmark225  under  Article 
87(3)(c) EC and the provisions on aid to rescue and restructuring. 

248. 

Based on recent decision-making practice and the  results  of  the public consultation 
held  between  January  and  March,  the  Commission  has  launched  a  review  of  the 
Broadcasting  Communication226.  The  main  aims  of  the  review  are  to  provide  more 
clarity  to  all  market  participants  and  to  secure  a  future-proof  framework,  properly 

221 

222 
223 
224 
225 
226 

Communication  from  the  Commission  on  the  application  of  State  aid  rules  to  public  service 
broadcasting (OJ C 320, 15.11.2001, p. 5). 
Case E 8/2006 State funding for Flemish public broadcaster VRT (OJ C 143, 10.6.2008, p. 7). 
Case E 4/2005 State aid financing of RTE and TNAG (TG4) (OJ C 121, 17.5.2008, p. 5). 
Case N 279/2008 Capital injection for France Télévisions (not yet published in the OJ). 
Case N 287/2008 Rescue Aid to TV2/Danmark A/S (OJ C 9, 14.1.2009, p. 3). 
IP/08/1626. 

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adapted  to  the  new  technological  environment.  The  Commission  presented  a  draft 
new Communication for further public consultation in November. 

249. 

Under the Commission's rules concerning SGEI, compensation paid to small local or 
regional  public  service  broadcasters  may  be  compatible  with  Article  86(2)  EC  and 
not subject to prior notification under certain conditions227. 

2.5. 

State aid for films 

250. 

As part of its proposal to extend the validity of the State aid assessment criteria in the 
2001  Cinema  Communication228,  the  Commission  identified  a  number  of  trends  it 
had detected in State aid notifications for film support schemes by mid-2008. These 
included  support  for  a  wider  range  of  film-related  activities  beyond  the  film  and 
audiovisual production referred to in the 2001 Cinema Communication, such as aid 
for  film  distribution  and  for  digitisation  of  cinemas.  At  the  same  time,  the 
Commission has been receiving a  growing number  of notifications of regional film 
support schemes and is increasingly aware of the competition among some Member 
States to use State aid to attract inward investment from large-scale, mainly US, film 
production  companies.  During  2008,  the  Commission  continued  to  closely  monitor 
these  developments  when  deciding  on  its  approach  towards  notified  film  support 
schemes. 

251. 

As in previous years, there were several State aid decisions approving film support 
schemes.  The  most  notable  of  these  in  2008  were  the  Hungarian  film  support 
scheme229,  the  Italian  film  production  tax  incentives230,  the  Finnish  film  support 
scheme231 and the German film support scheme232. 

2.6. 

Application of merger control 

252. 

On  11 March,  the  Commission  cleared  the  proposed  acquisition  by  Google  of  the 
online  advertising  technology  company  DoubleClick233.  This  merger  generated 
considerable  public  interest  as  it  concerned  the  ubiquitous  search  engine  that  most 
Europeans use in their daily lives. Google offers search capabilities for end-users free 
of charge and provides on-line advertising space on its own websites and on partner 
websites through its intermediation network called "AdSense". DoubleClick mainly 
sells  ad  serving,  management  and  reporting  technology  worldwide  to  website 
publishers and to advertisers and agencies. 

253. 

From a competition policy perspective, it was the first major concentration for which 
the  Commission  had  to  assess  non-horizontal  effects  following  its  adoption  of  the 
Non-Horizontal  Merger  Guidelines.  The  investigation  concerned  a  relatively  new 
industry, which is constantly and rapidly evolving and in which reliable market data 

227 

228 
229 
230 
231 
232 
233 

Commission decision, 28.11.2005, on the application of Article 86(2) of the EC Treaty to State aid in 
the form of public service compensation granted to certain undertakings entrusted with the operation of 
services of general economic interest (OJ L 312, 29.11.2005, p. 67). 
IP//08/1580. 
Case N 202/2008 Hungarian film support scheme (OJ C 237, 28.10.2008, p. 1). 
Case N 595/2008 Tax incentives for film production (not yet published in the OJ). 
Case NN 70/2006 Aid Scheme to cinema in Finland (not yet published in the OJ). 
Case N 477/2008 German film support scheme (not yet published in the OJ). 
Case COMP/M.4731 Google/ DoubleClick. 

EN 

67 

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254. 

255. 

are  extremely  difficult  to  obtain.  The  Commission  found  that  Google  and 
DoubleClick  were  not  exerting  major  competitive  constraints  on  each  other’s 
activities  and  therefore  could  not  be  considered  as  competitors.  Furthermore,  the 
elimination  of  DoubleClick  as  a  potential  competitor  in  the  on-line  intermediation 
advertising services market would not have an adverse impact on competition, since 
other players would continue to exert sufficient competitive pressure. 

The  Commission  also  analysed  the  potential  effects  of  non-horizontal  relationships 
between Google and DoubleClick following concerns raised by third parties during 
the  market  investigation.  The  Commission  found  that  the  merged  entity  would  not 
have the ability to engage in strategies aimed at marginalising Google’s competitors, 
mainly  because  of  the  presence  of  credible  ad  serving  alternatives  to  which 
customers  (publishers,  advertisers  and  ad  networks)  can  switch,  in  particular 
vertically  integrated  companies  such  as  Microsoft,  Yahoo!  and  AOL.  The  market 
investigation also found that the merged entity would not have an incentive to close 
off access for competitors in the ad serving market, mainly because such strategies 
would be unlikely to be profitable. 

On 14 February, the Commission cleared the proposed acquisition of the UK-based 
Reuters  Group  by  the  Canadian  Thomson  Corporation,  subject  to  conditions  and 
obligations234.  Both  Thomson  and  Reuters  are  leading  providers  of  financial 
information.  These  companies  source,  aggregate  and  disseminate  financial  data  to 
respond  to  the  needs  of  various  financial  professionals  such  as  traders,  financial 
analysts, fund managers and corporations. Reuters is best known as one of the largest 
international news agencies. The Commission's market investigation showed that the 
concentration  would  give  rise  to  competition  concerns  in  the  supply  and  access  of 
financial  information,  such  as  databases  of  aftermarket  research  (broker  reports), 
earning  estimates  and  fundamental  financial  data  of  enterprises  and  time  series  of 
economic data. The proposed transaction would have eliminated the rivalry between 
the two main and closest suppliers of such products, leaving financial customers with 
a  reduced  choice  and  with  a  severe  risk of  discontinuation  of  overlapping  products 
and  of  price  increases.  The  merging  parties  undertook  to  divest  the  databases 
containing  the  content  sets  of  these  financial  information  products,  together  with 
relevant  assets,  personnel  and  customer  base  as  appropriate.  These  commitments 
should allow third party purchasers of such assets to quickly establish themselves as 
a credible competitive force in the marketplace in competition with the merged entity 
in  the  respective  fields  where  rivalry  was  warranted  pre-merger.  On  this  basis,  the 
Commission  concluded  that  the  proposed  concentration  was  compatible  with  the 
common market. 

F – TRANSPORT 

1. 

OVERVIEW OF THE SECTOR 

256. 

The transport industry accounts for about 7% of European GDP and for around 5% 
of employment in the EU. 

234 

Case COMP/M.4726 Thomson Corporation/Reuters Group. 

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68 

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257. 

258. 

Competition policy in the transport sector seeks to ensure the efficient functioning of 
markets  which  have  been  recently  liberalised  or  which  are  in  the  process  of 
liberalisation.  Making  liberalisation  a  success  requires  action  on  two  fronts.  First, 
ensuring  that  the  existing  regulatory  framework  continues  to  be  modernised  where 
this  has  not  been  done  to  a  sufficient  extent.  For  decades,  sector-specific  rules 
governed the application of the competition rules (both substantive and procedural) 
in  the  field  of  transport.  Bringing  transport  within  the  generally  applicable 
competition  law  framework  remains  a  general  objective  of  competition  policy. 
that  regulatory  efforts  are  not  hindered  by 
Second,  since 
anticompetitive  conduct,  vigilant  monitoring  of  market  developments  and  targeted 
enforcement actions are another objective of competition policy in this sector. This is 
particularly  true  for  markets  where  incumbents  retain  significant  market  power  or 
where market players are now subject to the full force of competition law. 

is  essential 

it 

2008 has been a challenging year in the transport sector in general, as it was hit by 
the  steady  increase  of  fuel  prices  in  the  first  half  of  the  year  and  by  the  economic 
crisis  in  the  second  half.  The  slowdown  of  the  economy  has  significantly  affected 
both freight and passenger services for all sorts of transport services. This situation 
has  led  to  a  number  of  problems,  in  particular  in  the  air  transport  sector  where 
several  flag  carriers  have  been  severely  affected  (see  for  instance,  Alitalia's 
liquidation).  Against 
this  general  background  of  economic  crisis,  further 
consolidation has taken place in the transport sector and is likely to continue in 2009. 

2. 

POLICY DEVELOPMENTS 

2.1. 

Road Transport 

259.  While the revised Regulation for public services in the field of land transport235 is not 
in  force,  the  Commission  continues  to  apply  the  existing  State  aid  rules  to  public 
service  contracts  and  public  service  obligations.  In  its  Altmark  ruling236,  the  ECJ 
clarified the circumstances under which public service subsidies will not be regarded 
as constituting State aid. Since announcing this clarification of the applicable rules, 
the  Commission  has  received  a  large  number  of  complaints  as  well  as  some 
notifications of subsidised local and regional bus services. Such complaints focus in 
the  main  on  contracts  that  have  been  awarded  without  prior  public  tender.  Indeed, 
without  such  a  prior  tender  procedure,  it  is  difficult  to  prove  that  the  so-called 
"Altmark  criteria"  are  satisfied  and,  hence,  that  the  compensation  does  not  involve 
State aid. 

260. 

Following  these  complaints,  the  Commission  started  investigations  in  several 
Member States. In 2008, it took a final positive decision concerning a public service 
contract for public passenger transport by bus in the district of Linz in Austria237. The 
contract  was  awarded  to  Postbus AG  without  a  public  procurement  procedure.  The 

235 

236 

237 

Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on 
public  passenger  transport  services  by  rail  and  by  road  and  repealing  Council  Regulations  (EEC)  no. 
1191/69 and no. 1107/70 (OJ L 315, 3.12.2007, p. 1). 
Case C-280/00 Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft 
Altmark GmbH ("Altmark") [2003] ECR I-7747. 
Case C 16/2007 (not yet published in the OJ). 

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69 

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Commission  came  to  the  conclusion  that  the  compensation  that  was  extended  to 
Postbus AG  under  the  terms  of  the  contract  constituted  State  aid,  but  that  such 
compensation  did  not  exceed  the  costs  incurred  in  discharging  the  public  service 
obligations.  The  Commission  also  closed  its  formal  investigation  procedure  on 
compensation granted to five companies operating public passenger transport by bus 
in  the  South  Moravia  region  of  the  Czech  Republic238.  Unlike  the  Austrian  case, 
however,  the  Czech  authorities  had  conducted  a  public  tender  procedure  before 
awarding  the  public  service  contract.  Other  investigations  concerning  similar 
complaints  are  ongoing.  The  Commission  also  initiated  the  formal  investigation 
procedure  concerning  compensation  granted  by  the  Czech  Republic  to  various 
municipal  transport  operators  for  discharging  public  service  obligations  in  the 
Ustecký Region239. Lastly, the Commission approved an aid scheme to modernise the 
outdated  Czech  passenger  bus  fleet  operating  under  public  service  contracts240.  In 
connection with the improvement of the public transport infrastructure, and in order 
to facilitate an integrated passenger transport system, the Commission approved two 
Czech  aid  schemes  supporting  the  provision  of  'park  and  ride'  facilities241  and 
alternative refuelling stations242 in the region of Střední Čechy. 

In the area of the environment, the Commission maintained its policy of approving 
aid to favour the uptake of cleaner technology, in particular on old vehicles. In 2008 
the  Commission  continued  approving  State  aid  for  the  acquisition  of  lorries 
satisfying  the  Euro  V  pollution  standard243  in  anticipation  of  the  compulsory 
application of the standard from October 2009 onwards. Favourable decisions were 
taken concerning an Italian scheme244 and the prolongation of the German scheme245. 
The  Commission  also  approved  a  French  scheme246  giving  incentives  to  private 
individuals,  undertakings  and  associations  to  buy  vehicles  which  consume  less 
energy and are less polluting. The measure also aims to reduce traffic volumes and to 
transfer road traffic to less energy-hungry and less polluting means of transport, such 
as rail and inland waterways. 

261. 

262. 

As  regards  public  infrastructures,  the  Commission  took  the  view  that  measures  to 
assist the construction and operation of a number of motorways and national roads in 
Greece247 did not constitute State aid, because the respective concession agreements 
had been concluded following tendering procedures conducted on an open and non-
discriminatory basis, ensuring the selection of the bids that were the least costly for 
the State and which incorporated the strictest profit-capping arrangements. 

263. 

The  Commission  approved  one  restructuring  aid  measure  and  opened  an 
investigation procedure on another restructuring aid measure concerning two Polish 
undertakings  involved  in  transport  and  freight  forwarding  services,  respectively 

238 
239 
240 
241 
242 
243 
244 
245 
246 
247 

Case C 3/2008 (not yet published in the OJ). 
Case NN 1/2006 (OJ C 187, 24.7.2008, p. 14). 
Case N 350/2007 (OJ C 140, 6.6.2008, p. 2). 
Case N 370/2008 (not yet published in the OJ).  
Case N 371/2008 (not yet published in the OJ).  
See Press Release IP/06/1800, 13.12.2006. 
Case N 463/2007 (OJ C 70, 15.3.2008, p. 4). 
Case N 106/2008 (OJ C 137, 4.6.2008, p. 4). 
Case N 387/2008 (not yet published in the OJ). 
Cases  N  565/2007,  N566/2007  and  N  633/2007  (OJ C 70,  15.3.2008,  p. 3-6)  and  Case  N  45/2008 
(OJ C 177, 12.7.2008, p. 1). 

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Hartwig-Warszawa248  and  Hartwig-Katowice249.  While,  in  the  first  case,  the 
Commission considered the restructuring plan to be in line with State aid rules, in the 
second case it had doubts about whether the plan would be such as to restore long-
term viability and about the adequacy of the planned compensatory measures and the 
contribution of the beneficiary to the restructuring. 

264. 

The Commission opened a formal investigation procedure on measures in favour of 
the  French  company,  Sernam,  which  is  the  road  transport  subsidiary  of  the  Société 
nationale  des  chemins  de  fer  français  (SNCF).  The  Commission  has  doubts  about 
whether  the  conditions  laid  down  in  its  decision  of  20 October  2004  have  been 
complied with. The 2004 decision declared part of the aid in favour of Sernam to be 
incompatible with State aid rules and ordered the recovery thereof. It also laid down 
certain  measures  to  be  implemented  by  France  to  ensure  the  compatibility  of  the 
activities of Sernam. 

2.2. 

Rail Transport and Combined Transport 

265. 

As  from  1 January  2007,  rail  transport  services  for  freight  were  fully  opened  to 
competition  in  the  EU.  As  regards  passenger  transport,  the  third  railway  package 
adopted  by  the  Council  and  the  Parliament  in  2007  provides  that  international 
passenger  rail  services  will  be  opened  to  competition  from  1 January  2010.  The 
Regulation  on  public  passenger  transport  services  by  rail  and  by  road  adopted  in 
2007 also  introduced some  degree of  liberalisation into  local transport. On 22 July, 
the Community guidelines on State aid for railway undertakings250 came into effect. 
These  guidelines  lay  down  the  Commission's  approach  to  State  aid  to  railway 
undertakings  as  defined  in  Directive  91/440/EEC251  and  to  urban,  suburban  and 
regional passenger transport undertakings. The guidelines are based in particular on 
the  principles  established  in  the  three  successive  railway  packages.  Their  aim  is  to 
improve  the  transparency  of  public  financing  and  legal  certainty  with  regard  to  the 
Treaty  rules  in  the  context  of  the  opening-up  of  the  markets.  They  deal  with  the 
following  aspects:  (i)  public  financing  of  railway  undertakings  by  means  of 
infrastructure funding, (ii) aid for the purchase and renewal of rolling stock, (iii) debt 
cancellation  by  States  with  a  view  to  the  financial  rejuvenation  of  railway 
undertakings, (iv) aid for restructuring railway undertakings, (v) aid for the needs of 
transport coordination and (vi) State guarantees for railway undertakings. 

266. 

The  Commission  adopted  several  decisions  to  promote  rail  transport  and  combined 
transport. It authorised the renewal of a Czech aid measure which guarantees a loan 
to Czech Railways (Česke ráhy)252 to facilitate the purchase of new passenger rolling 
stock and an aid scheme for the acquisition and modernisation of rolling stock in the 
Czech Republic intended to improve the provision of a service of general economic 
interest253. The Commission also approved the prolongation254, for the period 2007-

248 
249 
250 
251 

252 
253 
254 

Case N 506/2007 (OJ C 140, 6.6.2008, p. 1). 
Case N 909/2006 (OJ C 288, 11.11.2008, p. 3). 
OJ C 184, 22.7.2008, p. 13. 
Council  Directive  91/440/EEC  of  29 July  1991  on  the  development  of  the  Community's  railways 
(OJ L 237, 24.8.1991, p. 25). 
Case N 685/2007 (OJ C 140, 6.6.2008, p. 1). 
Case N 495/2007 (OJ C 152, 18.6.2008, p. 21). 
Cases N 11/2008 and NN 34/2008 (OJ C 38, 17.2.2009, p. 3). 

EN 

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2009,  of  the  financial  support  by  the  Italian  and  French  governments  for  the 
experimental  transalpine  railway  motorway  service  previously  approved  for  the 
period 2003-2006. The project has been developed in parallel with the re-opening of 
the  Mont  Blanc  road  tunnel  in  order  to  test  an  efficient,  safe  and  environmentally 
friendly way to cross the Alps, one of the biggest bottlenecks for terrestrial traffic in 
the EU. 

During the year, the Commission approved several measures in favour of alternatives 
to  road  transport,  including  combined  transport,  in  France255,  Poland256  and 
Belgium257. 

In 2008, the Commission opened the formal investigation procedure concerning the 
compensation  for  the  provision  of  SGEI  by  Danske  Statsbaner  (DSB),  which  has 
historically been the railway operator in Denmark. The transport services in question 
are  provided  on  the  basis  of  two  public  service  contracts,  concerning  the  periods 
2000-2004  and  2005-2014,  between  the  Danish  Ministry  of  Transport  and  DSB, 
which  were  concluded  without  a  prior  tendering  procedure.  The  Commission  has 
doubts about the absence of overcompensation in this case. 

In the area of mergers,  on  19 March the Commission cleared the acquisition of the 
Spanish logistics provider, Transfesa, by the German state-owned railway company, 
Deutsche  Bahn  (DB)258.  DB's  and  Transfesa's  activities  mainly  overlapped  with 
regard  to  rail  logistics  services  for  car  components  and  finished  vehicles.  In  these 
areas  the  merged  entity  might  have  had  a  competitive  advantage  due  to  the 
ownership of certain transport equipment which would be particularly suitable for the 
transport  of  cars  and  component  parts.  However,  the  Commission's  investigation 
found the market characterised by the existence of current and potential competitors, 
by  competitive  constraints  from  road  and  sea  and  by  a  limited  number  of  large 
customers  with  very  specific  needs  and  considerable  know-how  in  logistics.  The 
Commission  therefore  concluded  that  the  proposed  transaction  did  not  give  rise  to 
competition concerns. 

On  25 November  the  Commission  approved259  the  acquisition  of  Hungarian  MÁV 
Cargo by the Austrian company RCA, subject to conditions. Both MÁV Cargo and 
RCA  are  active  in  the  provision  of  rail  freight  transport  and  freight  forwarding 
services,  and  each  is  a  subsidiary  of  the  respective  incumbent  State-owned  railway 
companies. The rail freight transport markets, notwithstanding their full liberalisation 
in  2007,  are  still  characterised  by  limited  competition  and  strong  incumbents  co-
operating in the area of cross-border rail freight transport. 

According to the initial notification, MÁV Cargo should have been acquired by RCA 
in a consortium together with GySEV, an integrated rail and infrastructure company 
with its own rail network located both in Austria and in Hungary, and active in rail 
passenger  and  freight  transport  in  Austria  and  Hungary  with  a  focus  on  rail  freight 
cross-border  transport.  After  the  notification,  new  facts  relating  to  the  transaction 

267. 

268. 

269. 

270. 

271. 

255 
256 
257 
258 
259 

Case N 159/2008 (OJ C 202, 8.8.2008, p. 1). 
Case N 195/2008 (OJ C 329, 24.12.2008, p. 3). 
Case N 352/2008 (OJ C 7, 13.1.2008, p. 1). 
Case COMP/M.4786 Deutsche Bahn/Transfesa. 
Case COMP/M.5096 RCA/MÁV Cargo. 

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272. 

were  communicated  to  the  Commission  by  RCA  and  by  the  Republic  of  Hungary. 
The Commission considered that these facts constituted material changes to the facts 
contained in the notification and which came to light after the notification. As these 
changes in the factual record could have a significant effect on the appraisal of the 
concentration, the Commission considered the notification pursuant to Article 5(3) of 
Commission  Regulation  (EC)  No  802/2004260  as  becoming  effective  on  the  date 
when it had received all the relevant information. 

In the assessment of the transaction, the Commission identified serious competition 
concerns  that  would  have  arisen  from  the  implementation  of  the  proposed 
transaction,  as  initially  notified,  because  it  would  have  resulted  in  removing  the 
closest potential competitor of RCA on the Austrian rail freight transport market and 
for  MÁV  Cargo  on  the  Hungarian  market.  To  remedy  these  concerns,  the 
Commission accepted a commitment package proposed by RCA, which consisted of 
cutting  all  its  structural  links  and  reviewing  its  contractual  links  to  GySEV.  The 
commitments are supported by the Austrian and Hungarian Governments who, as the 
main  shareholders  of  GySEV,  will  ensure  that  the  structural  links  to  the  merged 
entity  are  cut  and  that  the  influence  of  the  Republic  of  Austria  over  GySEV's  rail 
freight  activities  is  limited.  After  market  testing  of  the  proposed  commitments,  the 
Commission  concluded  that  they  were  viable  measures,  suitable  to  address  the 
competition concerns identified in its investigation, namely by strengthening GySEV 
as an independent player and a competitor of the new entity created by the merger. 

2.3. 

Inland Navigation 

273. 

As  in  previous  years,  several  decisions  were  adopted  in  2008  to  promote  this 
environmentally friendly mode of transport in the Czech Republic261, France262 and 
Austria263. The main objective of these measures is to encourage the shift of freight 
transport  from  road  to  inland  waterways.  This  is  achieved  by  supporting  the 
modernisation  of  inland  waterway  transport  infrastructures  and  vessels  which, 
besides increasing the competitiveness of the sector, also raises the transport safety 
level and reduces the environmental impact of this mode of transport. 

2.4.  Maritime Transport 

274. 

On 1 July, the Commission adopted Guidelines on the application of Article 81 EC to 
maritime  transport  services264.  The  Guidelines  set  out  the  principles  that  the 
Commission will follow when defining markets and assessing information exchange 
schemes  in  liner  shipping,  as  well  as  cooperation  agreements  involving  maritime 
cabotage, liner and/or international tramp vessel services. This follows the repeal of 
Regulation 4056/86 containing the liner conference block exemption, which became 
fully effective on 18 October, and the resulting extension of the scope of Regulation 
1/2003  to  include  cabotage  and  tramp  vessel  services.  The  Guidelines  have  been 
adopted following a consultation on a draft published at the end of 2007. 

260 
261 
262 
263 
264 

OJ L 133, 30.4.2004, p. 1. 
Case N 358/2007 (OJ C 177, 12.7.2008, p. 1). 
Case N 651/2007 (OJ C 216, 23.8.2008, p. 12). 
Case N 31/2008 (OJ C 253, 4.10.2008, p. 1). 
OJ C 245, 26.9.2008, p. 2. See also Press Release IP/08/1063, 1.7.2008. 

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275. 

276. 

277. 

278. 

279. 

On 21 October, the Commission published a draft block exemption Regulation on the 
application  of  Article  81(3)  EC  to  certain  categories  of  agreements,  decisions  and 
concerted practices between liner shipping companies ("consortia")265, looking ahead 
to  the  expiry  of  the  current  block  exemption  Regulation  in  2010.  The  proposed 
changes take into account the necessary amendments due to the repeal of Regulation 
4056/86  and  seek  to  better  reflect  the  current  market  situation.  The  review  of  the 
BER  on  consortia  will  complete  the  reform  of  the  competition  rules  that  apply  to 
maritime transport services which was initiated in 2003. 

On  12 December,  the  Commission  issued  guidance  on  the  treatment  of  State  aid 
measures complementing Community funding for the launching of the motorways of 
the sea266. 

This guidance is intended to align the maximum aid intensity and duration provided 
for  in  the  Community  guidelines  on  State  aid  to  maritime  transport267  to  the  more 
favourable  conditions  allowed  for  projects  covered  by  the  second  "Marco  Polo" 
programme  for  the  granting  of  Community  financial  assistance  to  improve  the 
environmental performance of the freight transport system ("Marco Polo II")268 and 
by  Decision  No.  1692/96/EC  of  the  European  Parliament  and  of  the  Council  of 
23 July  1996  on  Community  guidelines  for  the  development  of  the  trans-European 
transport network (TEN-T)269. 

In the area of port infrastructure, the Commission approved a measure to support the 
construction of a new port in Wilhelmshaven, Germany270 (Jade Weser Port project). 
The  Commission  concluded  that  the  public  financing  of  the  planned  infrastructure 
does  not  constitute  State  aid  in  favour  of  the  shipping  companies  using  the  Jade 
Weser  Port,  as  long  as  access  to  this  infrastructure  is  allowed  on  equal  and  non-
discriminatory terms. As regards the concession agreement for the construction and 
operation of the terminal, the Commission found that it did not contain any State aid 
element, since it had been awarded on the basis of a Europe-wide, open, transparent 
and non-discriminatory public tender. 

This  decision  is  in  line  with  previous  case  practice  and  confirms  the  Commission's 
view  that,  in  general,  no  form  of  State  aid  is  present  at  the  users'  level  if  transport 
infrastructure  is  open  to  all  potential  users  on  equal  and  non-discriminatory  terms. 
On  the  other  hand,  when  the  construction  of  public  infrastructure  is  directed  at  a 
particular  user,  giving  it  an  unfair  advantage  over  its  competitors,  the  respective 
financing normally falls within the scope of Article 87(1) EC. 

280. 

In  2008,  as  in  previous  years,  the  Commission  adopted  favourable  decisions  with 
regard  to  social  aid  for  seafarers  in  France271,  Sweden272  and  Italy273.  A  positive 

265 
266 

267 
268 

269 
270 
271 
272 

OJ C 266, 21.10.2008, p. 2. See also Press release IP/08/1566, 22.10.2008. 
Communication from the Commission providing guidance on State aid complementary to Community 
funding for the launching of the motorways of the sea (OJ C 317, 12.12.2008, p. 10). 
OJ C 13, 17.1.2004, p. 3. 
Established  by  Regulation  (EC)  no.  1692/2006  of  the  European  Parliament  and  of  the  Council  of 
24 October 2006 (OJ L 328, 24.11.2006, p. 1). 
OJ L 228, 9.9.1996, p. 1. 
Case N 110/2008 (not yet published in the OJ). 
Cases N 538/2005 (OJ C 202, 8.8.2008, p. 1) and NN 40/2008 (OJ C 23, 29.1.2009, p. 1). 
Case N 442/2008 (OJ C 329, 24.12.2008, p. 3). 

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281. 

282. 

decision  was  also  adopted  concerning  a  reduction  in  the  excise  duty  imposed  on 
mineral  oil  used  by  stevedoring  companies  in  German  maritime  ports274.  The 
Commission  also  approved  a  regional  aid  scheme  aimed  at  compensating  the 
additional costs of the operation of the inter-island carriage of goods and passengers 
in the autonomous region of Azores in Portugal275. 

The  Commission  initiated  a  formal  investigation  procedure  regarding  a  planned 
change  of  the  Irish  tonnage  tax  scheme.  The  scheme,  which  had  previously  been 
approved  by  the  Commission,  imposed  a  limit  of  75%  on  the  net  tonnage  of  the 
qualifying  ships  of  a  beneficiary  that  could  be  rented  with  a  crew  provided  by  the 
charterer  ("chartered  in"  ships).  The  Irish  authorities  intend  to  abolish  this  charter 
limit.  The  Commission  took  the  view  that  such  abolition  may  trigger  fiscal 
competition  between  different  tonnage  tax  schemes  across  the  EU  and  therefore 
decided to undertake an in-depth investigation. 

In the field of SGEI, following an in-depth investigation the Commission considered 
that the compensation paid by the French State to Société Nationale Maritime Corse-
Méditerranée (SNCM) for discharging public service obligations in the period 1991-
2001  was  compatible  with  the  common  market276.  In  the  same  decision,  it  was 
considered  that  certain  measures  in  favour  of  SNCM  in  the  context  of  its  partial 
privatisation did not constitute State aid. Finally, as regards the support given by the 
State  for  the  restructuring  of  SNCM,  the  Commission  considered  that  it  was 
compatible  with  State  aid  rules.  However,  the  Commission  decided  to  start  the 
formal  investigation  procedure  regarding  a  compensation  system  for  CalMac  and 
Northlink  to  discharge  public  service  obligations  related  to  the  operation  of  ferry 
boats  for  passenger  traffic  between  the  Scottish  islands277.  The  Commission  has 
doubts  about  whether  the  public  service  obligations  have  been  sufficiently  well 
defined  and  entrusted.  In  the  absence  of  a  clear  definition  of  the  public  service 
missions, it is not possible, at this stage, to determine whether the beneficiaries have 
been overcompensated for fulfilling those missions. 

2.5. 

Aviation 

283. 

On  1 November,  the  Air  Service  Regulation  entered  into  force278.  This  Regulation, 
by simplifying and updating the text of the so-called "Third Package", now provides 
the legal framework for air transport in the EU, setting out the rules on the grant and 
oversight  of  operating  licences  of  Community  air  carriers,  market  access,  aircraft 
registration  and  leasing,  public  service  obligations,  traffic  distribution  between 
airports and pricing. 

284. 

At  the  end  of  2007,  the  Commission  adopted  a  proposal  aiming  at  simplifying  and 
modernising  the  rules  relating  to  computer  reservation  systems  (CRS),  which  were 

273 
274 
275 
276 
277 
278 

Case N 80/2008 (OJ C 113, 8.5.2008, p. 1). 
Case N 643/2006 (OJ C 108, 29.4.2008, p. 3). 
Case N 503/2007 (OJ C 229, 6.9.2008, p. 1). 
Case C 58/2002 (not yet published in the OJ). 
Case C 16/2008 (OJ C 126, 23.05.2008, p.16) 
Regulation (EC) No 1008/2008 on the common rules for the air services in the Community replacing 
regulations 2407/92, 2408/92 and 2409/92 (the "so-called Third Package") (OJ L 293, 31.10.2008, p. 3). 

EN 

75 

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285. 

286. 

defined 20 years ago279. The proposed new Regulation is expected to enter into force 
in  2009.  The  new  rules  will  partially  liberalise  the  market,  provide  margins  of 
negotiation for airlines and CRS and will allow CRS providers and the travel agents 
who are subscribed to a CRS to broaden their offer, thereby improving competition 
in  the  air  tickets  distribution  market.  Competition  will  be  further  strengthened  by 
new  safeguard  measures  designed  to  protect  consumers  and  to  prevent  competitive 
abuses. 

This  was  a  difficult  year  for  air  transport  companies,  which  were  faced  with 
consistently high crude prices in the first half of the year followed by falling demand 
towards the end of the year as a side-effect of the financial and economic crisis. In 
this  market  context,  the  Commission  was  called  upon  to  take  decisions  on  several 
rescue and restructuring measures. 

In  relation  to  the  long-running  cases  of  Olympic  Airways  /  Olympic  Airlines,  the 
Commission  found  that  a  privatisation  plan  submitted  by  the  Greek  authorities 
involving  the  sale  of  certain  assets  of  the  two  companies  in  bundled  form  did  not 
involve State aid, provided that the undertakings given by the Greek authorities were 
fully  met280.  The  privatisation  process  must  be  overseen  by  an  independent 
monitoring  trustee  who  will  ensure  compliance  with  the  decision  and  the 
commitments made. In a separate but related decision281, after having carried out an 
in-depth study of the finances of Olympic Airways Services and of Olympic Airlines, 
the  Commission  found  that,  since  its  last  decision  in  2005,  Greece  had  granted 
further  State  aid  to  the  flagship  carrier.  This  aid  was  considered  to  be  illegal  and 
incompatible  with  the  Treaty,  and  the  Commission  ordered  the  recovery  thereof. 
Since  part  of  the  investigation  into  the  payment  by  the  State  to  Olympic  Airways 
Services of "damages" following a series of arbitration panel awards required further 
detailed  investigation,  this  part  of  the  investigation  remains  open.  In  addition,  the 
Court of Justice declared that Greece had failed to fulfil its obligation to recover the 
aid  which  the  Commission  had  deemed  incompatible  in  2005,  from  Olympic 
Airlines282. 

287. 

In  June,  the  Commission  opened  the  formal  investigation  procedure  on  a  EUR 
300 million loan by the Italian State to Alitalia283. The loan did not appear to be in 
line  with  the  State  aid  guidelines  concerning  the  aviation  sector,  nor  with  the 
guidelines  on  rescue  and  restructuring  operations.  In  particular,  there  were  no 
guarantees  that  the  loan  would  be  repaid  or  that  a  restructuring  or  liquidation  plan 
would  be  submitted  within  a  period  of  six  months.  Moreover,  the  "one  time,  last 
time"  requirement  for  approving  rescue  and  restructuring  aid  was  not  met;  since 
Alitalia  had  previously  benefited  from  both  rescue  and  restructuring  aid.  In 
November  the  Commission  confirmed  this  preliminary  assessment  with  a  final 
negative decision ordering recovery of the incompatible aid284. At the same time, the 

279 
280 
281 
282 

283 
284 

The proposed Regulation will replace Regulation (EC) n° 2299/89 (OJ L 220, 29.7.1989, p. 1). 
Cases N 321/2008, N 322/2008 and N 323/2008 (not yet published in the OJ). 
Case C 61/2007 (not yet published in the OJ). 
Case  C  419/06  Application  by  the  Commission  against  Olympic  Airlines  for  non-compliance  with 
Commission  decision  C(2005)  2706  of  14 September  2005  ordering  the  Greek  authorities  to  recover 
incompatible aid extended to Olympic Airlines [2008] ECR I-00027. 
Case NN 31/2008 (OJ C 184, 22.7.2008, p. 34). 
Case C 26/2008 (not yet published in the OJ). 

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Commission approved Alitalia's liquidation plan285. It came to the conclusion that the 
sale  of  certain  of  Alitalia's  assets  did  not  constitute  State  aid,  provided  that  it  took 
place on market terms in accordance with the commitments of the Italian authorities. 
In  order  to  ensure  compliance  with  the  decision,  the  procedure  for  the  sale  of  the 
assets  provides  for  different  levels  of  monitoring,  in  particular  through  the 
appointment of a trustee. The solution found for the privatisation of Alitalia is similar 
to  the  process  for  the  liquidation  of  Sabena  and  Olympic  Airways  /  Olympic 
Airlines.  In  addition,  the  CFI  confirmed  a  Commission  decision  of  2001  declaring 
that restructuring aid granted by the Italian State to Alitalia was compatible with the 
common market subject to compliance with certain obligations and conditions286. 

In November, the Commission approved a rescue aid in favour of Alpi eagles SpA, a 
regional air carrier based in the Veneto region of Italy287. It was found that the aid, in 
the form of a loan guarantee, met the conditions of the State aid guidelines on rescue 
and restructuring aid. 

In the field of airport infrastructure, the Commission closed the formal investigation 
procedure  concerning  State  measures  involving  the  DHL  Group  and  the  Leipzig-
Halle Airport288. The three measures under investigation were: capital contributions 
to  Leipzig  Airport  for  financing  the  construction  of  the  new  southern  runway;  an 
agreement  between  Leipzig  Airport,  its  parent  company  and  DHL,  which  provides 
several  assurances  to  DHL;  and  a  comfort  letter  issued  by  the  Land  Sachsen  in 
favour  of  Leipzig  Airport  and  DHL  which  guarantees  that  Land  Sachsen  will 
compensate DHL for damages in the event that DHL is no longer able to operate as 
planned  at  the  airport,  for  example  if  night  flights  are  banned  by  the  regulatory 
authorities.  The  Commission  concluded  that  the  capital  injections  into  Leipzig 
Airport were compatible with the Treaty rules. On the other hand, the Commission 
found that the assurances granted to DHL under the terms of the agreement and the 
comfort  letter  in  favour  of  DHL  chanelled  through  Leipzig  Airport  were 
incompatible.  The  Commission  consequently  ordered  recovery  of  the  incompatible 
aid linked to the assurances and prohibited the granting of the comfort letter. 

The  Commission  started  a  formal  investigation  procedure  concerning  the  loan 
financing  of  Terminal  2  at  Munich  Airport289.  The  Commission  has  doubts  about 
whether certain loans provided by the public banks to the two companies responsible 
for the construction and operation of Terminal 2 have been granted on terms which 
could  have  been  obtained  under  normal  market  conditions.  In  addition,  the 
Commission has doubts as to whether the price paid by one of these undertakings to 
the company operating Munich Airport for renting the land on which Terminal 2 is 
constructed  is  a  market  price.  In  the  same  decision,  the  Commission  came  to  the 
conclusion  that  the  capital  contribution  of  the  operator  of  Munich  Airport  and  the 
exclusive use of Terminal 2 by Deutsche Lufthansa AG do not involve State aid. 

288. 

289. 

290. 

285 
286 

287 
288 
289 

Case N 510/2008 (OJ C 46, 25.2.2009, p. 6). 
Case  T-301/01  Application  by  Alitalia  for  the  annulment  of  Commission  Decision  2001/723/EC  of 
18 July 2001 concerning the recapitalisation of Alitalia, not yet reported in the ECR. 
Case N 388/2008 (OJ C 53, 6.3.2009, p. 1). 
Case C 48/2006 (OJ C 346, 23.12.2008, p. 1). 
Case NN 53/2007 (OJ C 5, 10.1.2009, p. 4) as amended by Commission decision of 12.11.2008 (not yet 
published in the OJ). 

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77 

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291. 

292. 

Several State aids for investments in airport infrastructure were approved at airports 
in  Poland  (Lublin-Świdnik  Airport290,  Gdańsk  Rębiechowo  Airport291  and  Port 
Lotniczy Łódź Sp. z o.o.292). 

Another category of recurring support measures assessed by the Commission relates 
to  start-up  aid  for  airlines  departing  from  smaller  regional  airports,  where  such 
temporary support is earmarked to contribute to the development of the airport and of 
the  whole  region.  The  Commission  approved  measures  in  Cyprus293  and  Italy 
(Grosseto airport294). 

the  Commission 

transport  companies, 

293.  With  regard  to  the  contractual  arrangements  between  public  authorities,  airport 
operators  and  air 
initiated  a  formal 
investigation concerning alleged favourable treatment offered to Ryanair by Aarhus 
airport  in  Denmark295,  by  Bratislava  airport  in  Slovakia296  and  by  Frankfurt  Hahn 
airport in Germany297. In addition, the CFI annulled a Commission decision of 2004 
ordering  Belgium  to  recover  incompatible  aid  extended  to  Ryanair  linked  to  its 
establishment  at  Charleroi  airport298.  The  Court  considered  that  the  Commission 
should have examined the measures granted by the Walloon Region and by Brussels 
South  Charleroi  Airport  together  and  should  have  applied  the  private  investor 
principle  to  the  measures  adopted  by  the  Walloon  Region,  since  there  are  close 
economic links binding these two entities. 

294. 

295. 

In  the  social  aid  field,  the  Commission  approved  changes  to  a  scheme  aimed  at 
lowering the price of air transport between Guadeloupe and metropolitan France for 
certain  categories  of  Guadeloupe  residents299.  It  also  approved  the  extension  of  a 
discount scheme for air services available to people whose main residence is in one 
of the most peripheral parts of the Highlands and Islands of Scotland300. 

In the merger field, on 6 August, the Commission cleared the proposed acquisition of 
Northwest Airline Corporation ("NWA") by Delta Air Lines, Inc. ("Delta")301, both 
U.S. carriers, under the EU Merger Regulation. The Commission assessed the impact 
of  the  proposed  merger  on  transatlantic  scheduled  air  passenger  transport  between 
the U.S. and the EEA, taking into account the fact that Delta and Northwest are both 
SkyTeam members and already cooperate extensively on transatlantic routes with the 
European  SkyTeam  member  airlines.  To  the  extent  that  the  Commission  had 
previously found that the members of the SkyTeam alliance could not be considered 
as  actual  competitors  on  transatlantic  routes  as  a  result  of  their  membership  of 

290 
291 
292 
293 
294 
295 
296 
297 
298 

299 
300 
301 

Case N 158/2008 (OJ C 309, 4.12.2008, p. 5). 
Case N 153/2008 (OJ C 46, 25.2.2009, p. 7). 
Case N 638/2007 (OJ C 140, 6.6.2008, p. 1). 
Case N 52/2008 (OJ C 134, 31.5.2008, p. 1). 
Case N 754/2007 (OJ C 70, 15.3.2008, p. 7). 
Case NN 58/2007 (OJ C 109, 30.4.2008, p. 15). 
Case NN 74/2007 (OJ C 173, 8.7.2008, p. 9). 
Case NN 54/2007 (OJ C 12, 17.1.2009, p. 6). 
Case  T-196/04  Application  by  Ryanair  for  the  annulment  of  Commission  Decision  2004/393/EC  of 
12 February 2004 concerning advantages granted by the Walloon Region and Brussels South Charleroi 
Airport to Ryanair in connection with its establishment at Charleroi, not yet reported in the ECR. 
Case N 421/2008 (OJ C 7, 13.1.2009, p. 1). 
Case N 27/2008 (OJ C 80, 1.4.2008, p. 5). 
Case COMP/M.5181. 

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SkyTeam,  its  assessment  focused  on  the  possible  impact  of  the  creation  of  a 
permanent  structural  link  between  Delta  and  Northwest  as  a  result  of  the  proposed 
merger.  The  Commission  concluded  that  the  present  transaction  would  not  raise 
competition  concerns,  particularly  in  the  light  of  the  SkyTeam  members'  extensive 
cooperation  on  transatlantic  routes  independently  of  this  merger,  the  mainly 
complementary  nature  of  Delta's  and  Northwest's  respective  networks  as  regards 
transatlantic  routes,  and  the  generally  limited  increment  on  the  transatlantic  routes 
where both parties are present. 

296. 

On  17 December,  after  an  in-depth  investigation,  the  Commission  declared  the 
concentration  between  KLM  and  Martinair302  to  be  compatible  with  the  common 
market.  The  Commission  established  that  the  effects  of  the  proposed  transaction 
would be limited, not only because KLM already jointly controls Martinair, but also 
because  Martinair's  competitive  strength  has  been  falling  steadily  and,  in  order  to 
regain its strength, Martinair depends on KLM's agreement to a renewal of its long-
haul passenger fleet. 

2.5.1. 

International aviation policy – EU-US cooperation 

297. 

Under  the  EU-US  open  aviation  agreement  signed  in  April  2007,  which  includes 
provisions for the strengthening of cooperation between the Commission and the US 
Department of Transportation (DoT) in the field of competition, the Commission and 
the  US  DoT  launched  a  joint  research  project  on  airline  alliances303.  This  project 
aims  to  deepen  their  understanding  of  transatlantic  air  services,  the  effects  of 
alliances  on  airline  competition  and  possible  changes  in  the  role  of  alliances 
following the EU-US open aviation agreement. 

G – PHARMACEUTICAL INDUSTRY 

1. 

OVERVIEW OF THE SECTOR 

298. 

299. 

A properly functioning pharmaceutical sector is of key importance for the health of 
Europe's citizens who need access to innovative, safe and affordable medicines. Each 
European consumer paid almost EUR 430 for medicines in 2007. This amount will 
increase in the light of the ageing population in Europe. 

The  pharmaceutical  sector  is  also  still  a  strategic  sector  for  Europe  in  terms  of 
economic growth and sustainable employment. The market for prescription and non-
prescription  medicines  is  worth  over  EUR  138 billion  ex  factory  and  EUR 
214 billion  at  retail  prices.  The  pharmaceutical  sector  employs  more  than  634 000 
persons  and  spends  on  average  17%  of  its  turnover  on  research  and  development. 
Most  importantly,  innovation  in  human  medicines  has  enabled  patients  to  benefit 
from treatments considered unimaginable a few decades ago. 

300. 

The  pharmaceutical  sector  is  highly  regulated.  On  the  supply  side,  there  are  two 
types  of  companies.  So-called  "originator"  companies  are  active  in  research, 

302 
303 

Case COMP./M.5141. 
See Press Release IP/08/459, 18.3.2008. 

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development,  manufacturing,  marketing  and  supply  of  innovative  medicines.  Their 
products  are  usually  subject  to  patent  protection,  which  is  necessary  in  order  to 
provide  a  reward  for  innovation  and  incentives  for  future  research.  When  patent 
protection  expires, 
to 
manufacture and market these medicines. The second category of companies, namely 
manufacturers  of  generic  products,  can  enter  the  market  with  medicines  that  are 
equivalent to the original medicines, but typically at lower prices. This helps contain 
public  health  budgets,  contributes  to  an  increase  in  consumer  welfare  and  creates 
incentives for further innovation. 

the  originator  companies 

their  exclusive  rights 

lose 

301. 

302. 

Several "blockbuster" medicines (i.e. where annual global turnover for that medicine 
exceeds USD 1 billion) account for a substantial part of the sales and profits of large 
originator  companies.  Many  of  these  blockbusters  have  lost  patent  protection  in 
recent years and more will do so in the years to come. Combined with other factors, 
this has given originator companies an incentive to aim at maximising their revenues 
from these products for as long as possible. 

On  the  demand  side,  the  pharmaceutical  sector  is  unusual  in  that,  for  prescription 
medicines,  the  ultimate  consumer  (the  patient)  is  not  the  decision  maker  (generally 
the  prescribing  doctor  and,  in  certain  Member  States,  the  pharmacist  also  play  a 
role). Nor does the ultimate consumer usually directly bear most of the costs, as these 
are  generally  covered  and/or  reimbursed  largely,  or  even  entirely,  by  a  national 
health  scheme.  Because  of  this  unique  structure,  there  is  usually  limited  price 
sensitivity  for  prescription  medicines  on  the  part  of  decision  makers  and  patients, 
although  various  mechanisms  to  control  prescription  drug  budgets  do  exist.  Price 
sensitivity is greater for over-the-counter medicines and medicines used in a hospital 
context. 

2. 

POLICY DEVELOPMENTS 

2.1. 

Pharmaceutical Sector Inquiry 

303. 

One of the main pillars of the Lisbon strategy is the promotion of economic growth 
and  boosting  innovation.  In  this  context,  sector  inquiries  allow  the  Commission  to 
proactively screen economic sectors in the EU in order to detect potential barriers to 
competition  and  to  ensure  that  markets  function  properly,  also  with  the  aim  of 
promoting  innovation.  As  regards  the  application  of  the  EU  anti-trust  rules  in  the 
pharmaceutical sector, the most important action taken by the Commission in 2008 
was to launch, on 15 January, the sector inquiry into pharmaceuticals304. On the same 
date,  the  Commission  carried  out  unannounced  inspections  at  the  premises  of  a 
number of originator and generic companies in the EU. This was the first time that 
the Commission launched a sector inquiry with upfront inspections. 

304. 

The  sector  inquiry  was  opened  in  response  to  information  that  competition  in  the 
pharmaceutical market in the EU may not be working properly. This was indicated 
by a decline in innovation, measured by the decreasing number of novel medicines 

304 

Case  COMP/39.514  Commission  Decision  of  the  15 January  2008  initiating  an  inquiry  into  the 
pharmaceutical sector pursuant to Article 17 of Council Regulation (EC) No 1/2003. More information 
is available at: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html 

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inquiry  sought 

reaching  the  market  each  year  and  by  instances  of  delayed  market  entry  of  generic 
to  examine  whether  certain  practices  of 
medicines.  The 
pharmaceutical companies may be among the reasons for the generic delay and the 
decline  in  innovation.  The  inquiry  focused  in  particular  on  the  practices  which 
originator companies may use to block or delay competition by generic companies, 
as well as to delay or block the development of competing originator products. It also 
summarised  the  shortcomings  in  the  regulatory  framework  applicable  to  the 
pharmaceutical sector as reported by respondent companies and public authorities. 

In  the  course  of  the  inquiry,  the  Commission  consulted  all  interested  stakeholders, 
such  as  originator  and  generic  companies,  industry  associations,  consumer  and 
patients' associations, insurance companies, associations of doctors, pharmacists and 
hospitals, health authorities, the European Patent Office (EPO), parallel traders, and 
NCAs. The Commission gathered data on the basis of requests for information sent 
to over 100 pharmaceutical companies active in the EU, as well as to various other 
stakeholders.  The  data  concern  a  sample  of  219  chemical  molecules  relating  to 
prescription medicines for human use, which were sold in the EU in the period from 
2000 to 2007. 

On  28 November,  the  Commission  published  its  preliminary  report  on  the 
pharmaceutical sector inquiry305. The report confirmed that there is indeed a delay of 
generic  entry  and  a  decline  in  innovation,  and  it  examined  some  of  the  possible 
causes, most prominently those stemming from company behaviour. The preliminary 
report underlines the key role of patent rights for the pharmaceutical sector. It does 
not  identify  individual  cases  of  wrongdoing  or  provide  any  guidance  on  the 
compatibility of the practices examined with EC competition rules. 

305. 

306. 

2.1.1.  Competition between originator companies and generic companies 

307. 

308. 

The  findings  of  the  sector  inquiry  indicate  that  originator  companies  design  and 
implement  a  variety  of  strategies  (referred  to  as  a  "tool-box")  in  order  to  ensure 
continued  revenue  streams  from  their  medicines.  The  successful  implementation  of 
these  strategies  may  have  the  effect  of  delaying  or  blocking  entry,  but  the  report 
stresses that company behaviour might not be the only cause of the delays faced by 
generic companies as regards the market entry of their products. 

A strategy commonly applied by originator companies is to extend the breadth and 
duration  of  patent  protection  by  filing  numerous  patents  for  the  same  molecule, 
forming so-called "patent clusters". In some cases, individual blockbuster medicines 
were  protected  by  up  to  1 300  patents  and  pending  patent  applications  EU-wide, 
causing  uncertainty  for  generic  companies  seeking  to  enter  the  market  without 
infringing  an  originator  company's  patents  or  patent  applications.  Originator 
companies  also  engaged  in  close  to  700  cases  of  patent  litigation  with  generic 
companies in relation to the sample under investigation in the period 2000 to 2007. 
Generic  companies  won  62%  of  all  cases  where  a  final  judgment  was  given,  but  a 
final judgment in court took on average 2.8 years. 

305 

Pharmaceutical Sector Inquiry, Preliminary Report, DG Competition Staff Working Paper, 28.10.2008. 

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309. 

310. 

311. 

312. 

313. 

314. 

The  sector  inquiry  also  found  that,  between  2000  and  2008,  more  than  200  patent 
settlement agreements were concluded between originator and generic companies in 
the EU, with nearly half of these (48%) restricting the ability of the generic company 
to market its  medicine. 45 settlements contained – in addition  to the restriction – a 
value  transfer  from  the  originator  company  to  the  generic  company,  with  direct 
payments to generic companies alone amounting to more than EUR 200 million. 

Originator  companies  also  took  issue  with  national  marketing  authorisation  and 
pricing  and  reimbursement  authorities  regarding  the  quality  or  safety  of  generic 
products and claiming that the marketing of these products would violate their patent 
rights.  However,  originator  companies  were  rarely  successful  in  challenging  the 
decisions of national authorities in court. Nevertheless, such interventions can lead to 
substantial  delays  for  generic  companies  when  bringing  their  products  on  to  the 
market. 

Originator  companies  launched  second  generation  products  (known  as  “follow-on” 
products)  for  40%  of  the  medicines  in  the  sample  under  investigation  that  faced  a 
loss of exclusivity between 2000 and 2007, and they undertook intensive marketing 
efforts with the aim of switching patients to the new medicines prior to the market 
entry  of  a  generic  version  of  their  first  generation  product.  Other  stakeholders 
sometimes  criticise  patents  on  second  generation  products  as  weak  because  they 
show only a marginal – if any – improvement for the patient. Originator companies 
argue that incremental innovation deserves adequate protection. 

In  many  instances,  originator  companies  used  two  or  more  instruments  from  the 
"tool-box"  in  parallel  and/or  successively  in  order  to  protect  the  revenue  streams 
generated from their (best-selling) medicines. 

The sector inquiry also confirmed that, in many instances, generic entry takes place 
later than might be expected. For the sample of medicines facing loss of exclusivity 
in  the  period  2000  to  2007,  the  average  time  to  enter  after  loss  of  exclusivity  was 
about seven months on a weighted average basis, and still around four months for the 
most  valuable  medicines.  On  average,  price  levels  for  medicines  (originator  and 
generic together) in the sample facing loss of exclusivity in the period 2000 to 2007 
fell by nearly 20% one year after the first generic entry, and by about 25% after two 
years. Generic prices decreased at a significantly greater rate than these price levels. 

On  the  basis  of  a  sample  of  medicines  that  lost  exclusivity  in  the  period  2000  to 
2007,  representing  an  aggregate  post-expiry  expenditure  of  about  EUR  50 billion 
over  the  period  in  17  Member  States,  the  preliminary  report  estimates  that  generic 
entry resulted in savings of EUR 14 billion. However, the savings from generic entry 
could have been increased by around EUR 3 billion, or over 5% more, on the basis of 
that  sample  alone  if  generic  entry  had  taken  place  immediately  after  loss  of 
exclusivity. 

2.1.2.  Competition between originator companies 

315. 

As  regards  the  competition  between  originator  companies,  the  preliminary  findings 
of  the  inquiry  show  that  originator  companies  had  engaged  in  so-called  "defensive 
patent  strategies".  Patents  falling  into  this  category  were  primarily  used  in  order  to 
block the development of a new competing medicine. The sector inquiry also shows 

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that, in such cases, it is not the intention of the originator companies to pursue these 
patents in order to bring a new/improved medicine to the market. 

316.  When considering patent-related exchanges overall, the inquiry reveals at least 1 100 
instances  across  EU  Member  States  where  patents  held  by  an  originator  company 
relating  to  a  medicine  in  the  sample  investigated  might  overlap  with  the  R&D 
programme  and/or  patents  held  by  another  originator  company  for  their  medicine. 
Such  an  overlap  creates  a  significant  likelihood  that  originator  companies  will  find 
their research activities blocked, with detrimental effects on the innovation process. 
In  many  cases,  originator  companies  tried  to  settle  potential  disputes,  for  instance 
through licensing. However, in approximately 20% of the cases where a licence was 
requested, the patent holder refused to grant it. 

317. 

318. 

319. 

320. 

Originator companies also engage in litigation against other originator companies. In 
relation to the sample under investigation, these companies reported, for the period 
2000-2007,  a  total  of  66  cases  of  patent-related  litigation  which  concerned  18 
different  medicines.  Litigation  was  initiated  in  equal  measure  by  the  patent  holder 
and  by  the  originator  company  allegedly  violating  the  patent.  In  64%  of  the  cases, 
litigation  was  concluded  by  means  of  settlement  agreements.  The  number  of  cases 
where  a  final  judgment  was  reported  was  relatively  low  (13  of  the  66  cases).  The 
patent holders lost the majority (77%) of cases where final judgments were handed 
down. 

The  analysis  of  the  sample  of  medicines  under  investigation  also  reveals  that, 
between  2000  and  2007,  originator  companies  mainly  opposed  each  other's 
secondary  patents.  The  opposing  originator  companies  were  very  successful  in 
challenging  the  patents  of  other  originator  companies.  During  that  period,  they 
prevailed  in  approximately  89%  of  final  decisions  handed  down  by  the  EPO 
(including the Boards of Appeal). 

The  inquiry  confirmed  that  originator  companies  concluded  settlement  agreements 
with  other  originator  companies  in  the  EU  in  order  to  resolve  claims  in  patent 
disputes,  oppositions  or  litigation.  In  the  period  2000-2007,  some  27  settlement 
agreements relating to the sample under investigation were reported. Approximately 
67% of these settlement agreements concerned a licence agreement (including cross 
licensing). 

Besides  settlement  agreements,  the  preliminary  findings  of  the  inquiry  also  reveal 
that originator companies concluded many other agreements with each other. In total, 
some 1 450 originator-originator agreements were reported during the sector inquiry. 
For  certain  medicines,  a  wide  range  of  agreements  were  reported,  of  which  the 
majority concerned the commercialisation phase rather than the R&D phase. 

2.1.3.  Comments on the regulatory framework 

321. 

Stakeholders also submitted comments on the regulatory framework applicable to the 
pharmaceutical  sector,  highlighting  perceived  difficulties  and  shortcomings  in 
relation  to  market  entry  and  competition.  Generic  companies  and  originator 
companies  agree  on  the  need  for  a  single  Community  patent  and  a  unified  and 
specialised patent judiciary in Europe. The preliminary findings of the sector inquiry 
likewise  support  these  views.  Stakeholders  also  highlight  what  they  perceive  as 

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83 

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in 

bottlenecks 
the  marketing  authorisation  and  pricing  and  reimbursement 
procedures,  which  can  contribute  to  delays  in  bringing  pharmaceutical  products  to 
market. 

2.1.4.  Next steps 

322. 

The  final  report,  expected  in  the  summer  of  2009,  will  take  into  account  the 
comments received during the public consultation. As a follow-up, the Commission 
can launch investigations aimed at enforcing the competition rules in the sector. The 
Commission  may  also  make  recommendations  for  improving  the  regulatory 
framework. 

H – FOOD INDUSTRY 

1. 

OVERVIEW OF THE SECTOR 

323. 

324. 

325. 

The food supply chain combines the agricultural sector, the food processing industry 
and the distribution sector, altogether accounting for 6% of the EU added value and 
12% of EU employment. 

Reversing the three decades-long trend of declining agricultural prices, the prices of 
a  number  of  commodities  began  to  chart  a  steady  upward  course  in  2006.  Prices 
increased dramatically in the second half of 2007 and reached peak levels in the early 
part  of  2008.  Between  September  2006  and  February  2008,  world  agricultural 
commodity prices rose by 70% in dollar terms. In the EU, these price hikes caused a 
rapid  increase  in  consumer  food  prices,  which  led  to  wide  differences  between 
Member States and to reduced household purchasing power. 

The soaring food prices in the latter part of 2007 and the first half of 2008 were the 
result  of  the  coincidence  of  several  global  factors  and  trends,  some  structural  and 
others  temporary.  Although  in  2008  the  prices  of  most  major  agricultural 
commodities have dropped dramatically to levels comparable to or even lower than 
those recorded before the start of the price surge, EU consumer prices for retail food 
have  not  fallen  substantially  until  now.  The  observed  (unprecedented)  retail  price 
hikes  have  raised  concerns  regarding  the  possible  malfunctions  of  the  food  supply 
chain,  the  competitive  structure  of  food  retail  markets  generally  and  certain 
regulatory hurdles which existing and new market entrants face. Such malfunctions 
and regulatory hurdles have been identified as having a potentially negative impact 
on the transmission mechanisms linking agricultural commodity prices with producer 
and  consumer  prices.  In  response  to  these  concerns,  the  Commission  initiated  a 
process to provide both an immediate and a long-term response to the surge in food 
prices and to mitigate the impact that this trend has on final consumers. 

326. 

The Communication on "Tackling the challenge of rising food prices - Directions for 
EU  action"  of  May  2008306,  set  up  a  Task  Force  to  examine  the  functioning  of  the 

306 

Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of Regions - Tackling the challenge of rising food 
prices  Directions  for  EU  action  (COM(2008)  321  final,  20.5.2008).  The  Communication  analyses 

EN 

84 

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food  supply  chain,  including  concentration  and  market  segmentation  of  the  food 
retail and distribution sectors in the EU. The Task Force successfully produced a first 
Report on the situation before the end of 2008. The findings of this Report fed into a 
second  Communication  on  "Food  Prices  in  Europe"  that  was  adopted  in  December 
2008307. 

2. 

POLICY DEVELOPMENTS 

327. 

The  Communication  of  December  2008  proposes  a  roadmap  to  improve  the 
functioning  of  the  food  supply  chain.  In  terms  of  competition  policy,  the 
Communication calls  for  action by the Commission and NCA  to ensure  a vigorous 
and  consistent  enforcement  of  competition  rules  in  the  food  supply  markets,  whilst 
emphasising the importance of competition anti-trust and merger instruments. 

2.1. 

Anti-trust 

328. 

Through  this  Communication,  the  Commission  has  undertaken  to  pay  particular 
attention  to  a  number  of  specific  practices.  Apart  from  hard-core  restrictions  on 
competition, such as cartels and resale price maintenance, the following practices are 
singled out in the Communication as potentially harmful for competition and such as 
to merit closer scrutiny, on a case-by-case basis: 

•  Buying  alliances  which,  under  certain  circumstances,  can  be  used  as  a  tool  for 
foreclosing rivals' access to essential inputs or can relate to collusive behaviour on 
downstream markets, 

•  Exclusive supply agreements which can lead to foreclosure of competing buyers, 

•  Single  branding  obligations  possibly  restricting  in-store  inter-brand  competition 

and/or foreclosing competing suppliers, 

•  Use of private labels possibly foreclosing competing brands. 

329. 

330. 

On this basis, the Commission will endeavour to develop a consistent orientation in 
terms  of  its  forthcoming  advocacy,  monitoring  and  enforcement  efforts  so  as  to 
ensure that the food supply chain works optimally for the benefit of consumers. 

In 2008, the Commission has continued enforcing competition rules in food-related 
markets.  In  particular,  it  has  ensured  compliance  by  Coca-Cola  with  the 
commitments  it  undertook  in  2005  and  has  fined  a  cartel  of  banana  traders  under 
Article 81 EC. It has also launched investigations into an alleged cartel in the exotic 
fruit market and has raided cereal traders on suspicion of another cartel. At national 

structural  and  cyclical  factors  and  proposes  a  three-pronged  policy  response,  including  short-term 
measures in the context of the Health Check of the Common Agricultural Policy and in the monitoring 
of  the  retail  sector;  initiatives  to  enhance  agricultural  supply  and  ensure  food  security  including  the 
promotion of sustainable future generations of biofuels; and initiatives to contribute to the global effort 
to tackle the effects of price rises on poor populations. 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  Regions  –  Food  Prices  in  Europe 
(COM(2008)821 final, 9.12.2008). 

307 

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85 

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level, Competition Authorities have closely scrutinised food-related sectors and have 
initiated  a  number  of  investigations  (e.g.  bakery  sector  in  Italy,  olive  oil  sector  in 
Spain) and inquiries (e.g. the Grocery Monitor in Ireland), to name but a few. 

331. 

Given that retail markets are often defined at most as national in scope, it is crucial 
that Competition Authorities should address potential malfunctioning within the food 
supply  chain  by  adopting  a  consistent  and  coordinated  approach.  To  this  end,  in 
2008, the ECN has served as a forum for discussion and exchange of best practice on 
issues  related  to  food  retail  markets.  In  this  context,  DG  Competition  held  two 
meetings of the ECN Food Subgroup in July and November. 

2.2.  Mergers 

332. 

333. 

334. 

335. 

336. 

Consolidation in the food sector is taking place along the supply chain. The degree of 
concentration  varies  along  the  chain,  by  product  category,  and  in  the  different 
national markets. Downstream, the increased concentration of the retail sector, which 
affects  consumer  goods  generally,  has  often  been  identified  as  a  potential  cause  of 
high food prices. Several NCAs have investigated the functioning of the retail sector 
and are continuing to monitor developments. 

The consolidation of the food sector is reflected in several merger cases notified to 
the Commission. In 2008 a number of these were subject to in-depth investigations 
or cleared in the first phase only following important divestitures. 

the  Friesland/Campina  case308 

the  Commission  undertook  an 

In 
in-depth 
investigation  of  the  proposed  merger  between two Dutch  dairy cooperatives,  active 
in a range of dairy markets. This concentration was cleared following commitments 
by the parties to divest Friesland Food's fresh dairy business and a part of Campina's 
cheese  business,  as  well  as  two  Campina  brands  for  long-life  dairy  drinks.  The 
remedy  package  included  important  remedies  to  ensure  access  to  raw  milk  in  the 
Netherlands. 

In  ABF/GBI309,  the  Commission  carried  out  an  in-depth  investigation  of  the 
acquisition  of  parts  of  GBI  by  Associated  British  Foods  (ABF),  who  are  major 
producers of baker's yeast. The acquisition, as originally notified, would have raised 
competition  concerns  in  the  markets  for  compressed  baker's  yeast  in  Spain  and 
Portugal.  ABF  thus  undertook  to  divest  GBI's  distribution  business  in  Portugal  and 
Spain  to  a  suitable  buyer  with  sufficient  production  capacities  to  supply  those 
businesses. 

Also  in  2008  the  Commission  has  dealt  with  mergers  in  the  retail  sector.  The 
proposed  takeover  of  ADEG  of  Austria  by  the  German  REWE  Group310,  both  of 
which are active on the Austrian retail and wholesale markets for everyday consumer 
goods, was approved subject to conditions, namely the divestiture of outlets in those 
regions  where  the  Commission  was  concerned  that  the  strength  of  the  combined 
company could result in higher prices for consumer goods. 

308 
309 
310 

Case COMP/M.5046 Friesland Foods/Campina. 
Case COMP/M.4980 ABF/GBI BUSINESS. 
Case COMP/M.5047 REWE/ADEG. 

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2.3. 

State aid 

337. 

338. 

339. 

The framework of analysis of State aid to the food sector may vary depending on the 
type of products concerned. As a general rule, food products included in Annex I of 
the  EC  Treaty  fall  in  the  first  place  within  the  remit  of  the  State  aid  guidelines 
applicable  to  the  agriculture311  and  fisheries312  sectors.  These  guidelines  set  out 
special  rules  for  the  agricultural  and  fisheries  sector  in  order  to  ensure,  inter  alia, 
consistency with the Common Agricultural Policy (CAP) and the Common Fisheries 
Policy  (CFP),  but  refer  to  horizontal  rules  in  areas  such  as  R&D  or  Rescue  and 
Restructuring (R&R). The cases concerning food products falling within Annex I of 
the  EC  Treaty  are  dealt  with  in  the  Agriculture  section  of  this  report  (see 
I.C.2.5.above). 

Food products that do not fall within Annex I of the EC treaty are not subject to any 
specific  rules  and,  therefore,  fall  within  the  existing  horizontal  frameworks.  In 
addition,  because  of  the  similarities  between  food  processing  and  marketing 
companies  that  fall  within  the  scope  of  Annex  I  products  and  those  which  do  not, 
State  aid  rules  applying  to  food  processing  and  marketing  companies  that  concern 
Annex I products (except for the fisheries sector) have been harmonised with those 
applying to non-Annex I products. 

In  2008,  the  number  of  State  aid  cases  relating  to  the  food  sector  (non-Annex  I 
products) was fairly limited, with only two small R&R aid cases being notified. The 
first case concerned a restructuring aid package of EUR 580 000 in favour of Bäcker 
Legat  GmbH,  a  medium-sized  Austrian  industrial  baker,  and  was  approved  by  the 
Commission  on  2 July313.  The  second  case  concerned  a  six-month  rescue  loan  in 
favour of Delitzscher Schokoladen GmbH, a German chocolate manufacturer which 
was facing difficulties following its decision to sell part of its own brand chocolate 
production  and  focus  on  private  labels  for  major  retail  chains,  where  margins  are 
lower. The Commission approved the aid on 11 December314 since all the conditions 
of  the  Community  guidelines  on  rescue  and  restructuring  of  firms  in  difficulty315 
were fulfilled. 

I – POSTAL SERVICES 

1. 

OVERVIEW OF THE SECTOR 

340. 

Postal services in the EU generate about 0.9% of GDP. The postal sector is thus of 
great  significance  for  the  economy  of  the  EU.  Virtually  all  Universal  Service 
Providers (USP) in the EU are public undertakings controlled by the Member States, 
with Germany and the Netherlands being the notable exceptions. 

311 

312 
313 
314 
315 

Community  guidelines  for  State  aid  in  the  agriculture  and  forestry  sector  2007-2013  (OJ C 319, 
27.12.2006, p. 1). 
Guidelines for the examination of State aid to fisheries and aquaculture (OJ C 84, 3.4.2008, p. 10). 
N 92/2008 Restructuring aid to "Der Bäcker Legat" (OJ C 203, 9.8.2008, p. 3). 
NN55/2008 Rescue aid to "Delitzscher Schokolade" (OJ C 12, 17.1.2009, p. 4). 
OJ C 244, 1.10.2004, p. 2. 

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341. 

342. 

Postal services are an essential vehicle of communication and trade, and they are also 
vital  for  many  economic  and  social  activities.  Many  key  sectors,  such  as  e-
commerce, publishing, mail order, insurance, banking and advertising, depend on the 
postal  infrastructure.  Postal  services  bring  social  benefits  which  cannot  always  be 
qualified in economic terms. Postal services are labour intensive and are also one of 
the  principal  public  employers  in  Europe.  Employment  in  the  sector  is  principally 
provided by USP and is fairly stable, with about 1.71 million persons employed316. In 
total, roughly 5 million jobs are related to postal activities, i.e. are directly dependent 
on, or result from, the postal sector317. 

Postal services are changing rapidly. The sector is at the crossroads of three dynamic 
business  areas  which  are  vital  to  the  European  economy:  communications, 
advertising  and  transportation/logistics.  There  are  a  number  of  drivers  for  change 
within  the  postal  sector.  The  five  most  important  ones  are:  demand  and  changing 
customer  needs;  organisational  change;  market  opening;  automation/new 
technologies; and electronic substitution. 

343.  Most EU USP are active in at least five separate service markets in addition to the 
monopoly. All USP provide express and unaddressed mail services. Similarly, most 
USP  offer  mail  preparation  services,  hybrid  mail  services,  e-mail  services  and 
financial  services.  Eight  public  postal  operators  (PPOs),  mainly  active  in  Member 
States  with  high  volume  markets,  are  active  in  ten  or  more  different  mail  related 
markets. These activities share, to varying extents, the same commercial and logistic 
infrastructure which is also used for the provision of services under monopoly and/or 
universal service obligations. 

344. 

Objective analysis of market shares of competitors plus the subjective perception of 
key  players  confirm  that,  even  in  cases  where  the  monopoly  has  been  completely 
abolished  or  substantially  reduced,  genuine  competition  is  only  just  beginning  to 
emerge. Meaningful competition in the letter post market has yet to develop. In the 
letter  post  segment,  market  shares  of  competitors,  although  increasing,  remain  at  a 
low  level  even  in  Member  States  that  have  fully  liberalised  their  postal  markets. 
Estimated market shares of competitors in these Member States ranged from around 
8%  to  14%  in  2007.  In  the  majority  of  the  other  Member  States,  market  shares  of 
competitors were, with some exceptions, below 2%318. 

2. 

POLICY DEVELOPMENTS 

345. 

On 20 February, the Parliament and the Council adopted the third postal Directive319. 
Under  this  Directive,  full  market  opening  will  have  to  be  accomplished  by 
31 December  2010  by  most  Member  States,  with  a  further  two  years  allowed  for 
eleven  Member  States.  This  constitutes  a  major  new  phase  for  postal  services.  The 

316 
317 
318 

319 

Main Developments in the Postal Sector (2002-2004), Final Report, WIK Consult, 2006. 
Employment trends in the EU postal sector, Final Report, Pls Rambøll, October 2002. 
See Section 4.4 of Annex to Commission Report on the application of the Postal Directive (Directive 
97/67/EC as amended by Directive 2002/39/EC) (SEC(2006) 1293, 18.10.2006). 
Directive  2008/06/EC  of  the  European  Parliament  and  of  the  Council  of  20 February  2008  amending 
Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal 
services (OJ L 52, 27.2.2008, p. 3). 

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Directive provides in particular for the abolition of the reserved area in all Member 
States, the confirmation of the scope and standard of postal universal service and the 
upgrading  of  the  role  of  national  regulatory  authorities.  The  Directive  also  offers  a 
variety  of  measures  that  Member  States  may  take  to  safeguard  and  finance  the 
universal service, if this proves to be necessary. 

Regarding  the  application  of  State  aid  rules  to  the  postal  sector  in  2008,  the 
Commission adopted several decisions with a view to ensuring that postal operators 
entrusted with SGEI and their subsidiaries do not enjoy unduly granted advantages. 
In  particular,  the  Commission  looked  at  the  amount  of  compensation  granted  to 
postal  operators  in  order  to  ensure  that  these  compensations  do  not  exceed  what  is 
necessary  to  cover  the  costs  incurred  in  discharging  the  public  service  obligations, 
taking into account the relevant receipts and reasonable profit for discharging those 
obligations, and that commercial activities outside the SGEI are not cross-subsidised. 

Among the State aid decisions, one authorisation in favour of the Italian Post Office 
should  be  mentioned.  The  Commission  decided  not  to  raise  objections  under  EC 
Treaty State aid rules to a sum of EUR 1.1 billion compensation granted by Italy to 
Poste  Italiane from 2006 to 2008 to meet the costs of fulfilling its universal  postal 
service  obligations.  The  State  support  was  found  to  be  in  line  with  EU  rules  on 
public  service compensation,  because  it did not over-compensate Poste Italiane for 
providing these services, and did not allow cross-subsidies to other activities. 

On 12 November, the Commission found that La Banque Postale320 had not gained 
any advantage from the breakdown between La Poste and itself of the EUR 2 billion 
paid  by  La  Poste  in  2006  to  the  national  public  body  responsible  for  financing 
retirement  pensions.  La  Banque  Postale  did  not,  therefore,  receive  State  aid.  The 
Commission  was  particularly  concerned  to  ensure  that  the  calculation  of  the 
contribution by La Banque Postale took account of the share relating to the general 
purpose staff actually working for it. 

The  Commission  continued  its  investigation  into  the  alleged  overcompensation  of 
Deutsche  Post  AG321  for  carrying  out  its  universal  service  obligations.  Due  to  the 
refusal by Germany to supply the requested information, the Commission enacted an 
information injunction against Germany on 30 October. 

Furthermore, the CFI annulled322 the 2002 Commission decision which had already 
found  certain  aid  measures  for  Deutsche  Post  AG  to  be  incompatible.  The 
Commission has appealed against the judgment323. 

346. 

347. 

348. 

349. 

350. 

320 

321 

322 
323 

Case  NN  41/2006  Contribution  de  la  Banque  postale  à  la  réforme  du  financement  des  retraites  des 
fonctionnaires  rattachés  à  La  Poste  (OJ C 46,  25.2.2009,  p. 1).  The  public  version  of  this  decision  is 
not yet available. It will be displayed as soon as it has been cleansed of any confidential information. 
See Press release IP/08/1686, 12.11.2008. 
Case  C  36/2007  Complaint  against  the  German  State  for  unlawful  State  aid  to  Deutsche  Post 
(OJ C 245, 19.10.2007 p. 21). 
Case T-266/02 Deutsche Post AG v Commission , not yet reported in the ECR. 
Case C-399/08 Commission v Deutsche Post AG (OJ C 301, 22.11.2008, p. 18). 

EN 

89 

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351. 

352. 

353. 

354. 

355. 

356. 

During the year, as well as verifying the compatibility of the level of compensation 
granted  to  postal  operators  for  providing  SGEI,  the  Commission  also  examined 
whether postal operators were receiving other forms of aid from the State. 

The  Commission  closed  its  investigations  into  aid  granted  to  Leipzig  Airport  and 
DHL324. While it cleared the aid granted to Leipzig airport for the construction of the 
southern runway, the Commission prohibited the letter of comfort and certain other 
warranties which DHL received as aid for moving its European hub to Leipzig. The 
aid which had already been made available to DHL will have to be returned. 

The adoption of the third Postal Directive will mean that it is no longer possible to 
use the State monopoly in respect of certain services (the so-called "reserved area") 
to  finance  the  various  public  services  carried  out  by  postal  operators.  The  role  of 
State aid and, hence, the Commission's control thereof will consequently increase in 
importance. The Commission will pay particular attention to ensuring that State aid 
is  only  used  to  finance  public  services  and  is  not  abused  so  as  to  prevent  the 
development  of  competition,  or  to  block  the  entry  of  or  crowd  out  new  market 
players. 

III – Consumer activities 

It is as consumers that citizens interact most directly with the marketplace, through 
the  products  and  services  they  buy.  It  is  also  as  consumers  that  citizens  are  most 
vulnerable to behaviour intended to prevent the market operating fairly. Ultimately it 
is choice and purchasing decisions at the end of a market that drive its requirements 
and  needs  upstream,  and  it  is  these  choices  made  by  consumers  that  enable 
businesses  to  decide  where  to  focus  investment  and  innovation  in  order  to  be 
successful.  Where  the  benefits  of  this  investment,  innovation  and  efficiency  are 
passed on to end consumers, it further empowers them to make an informed choice, 
thereby building a virtuous circle and a strong economy. 

It  is  for  these  reasons  that  it  is  vital  that  markets  do  not  act  to  exclude  or  cause 
detriment to consumers, and - in response to this - it is essential that the impact of an 
effective competition policy is focused on maximising consumer welfare. Put simply, 
this means ensuring that the benefits of a functioning competition regime accrue to 
the  end  consumer  in  a  given  product  market.  To  achieve  these  objectives,  the 
Commission places consumer concerns and issues at the heart of all its competition 
actions,  and  ensures  that  the  results  of  this  work  are  presented  clearly  and 
transparently. 

The  Commission  can  undertake  this  work  by  analysing  how  markets  are  currently 
working  when  following  up  a  suspicion  or  allegation  of  an  infringement  of 
competition  rules,  with  a  view  to  remedying  and/or  imposing  a  fine  if  the 
infringement  is  substantiated.  Furthermore,  the  Commission  can  measure  the  likely 
impact on consumers and competition of a change to the structure in a market, either 
through concentration as a result of a merger or acquisition or through the input of 

324 

Case C 48/2006 Measures by Germany to assist DHL and Leipzig Halle Airport (OJ L 346, 23.12.2008, 
p. 1). 

EN 

90 

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357. 

358. 

359. 

360. 

additional funding through State aid. In performing this second type of analysis the 
Commission  can  establish  whether  the  change  is  going  to  have  a  small  impact  on 
consumers and competition, or whether it needs to be modified or rejected. 

In  anti-trust  actions  and  cartels,  the  vast  majority  of  cases  pursued  by  the 
Commission in 2008 concerned markets that impacted on consumers of a product. In 
such cases there may have been higher prices, lower quality or less choice than there 
would otherwise have been. 

In cases such as the Bananas cartel325, the potential effect on consumers can occur 
when consumers are a direct purchaser or user of a product or service. In other cases, 
such as the Car Glass cartel326, the product subject to a cartel may cause consumer 
detriment because either it is a raw material or component of the end product or it is 
a  service,  process  or  piece  of  machinery  used  in  the  manufacture,  transport  or 
distribution  of  a  product.  For  instance,  most  consumers  purchase  cars  rather  than 
windows as components (except in a small number of repair cases – although even 
here consumers are likely to choose the repairer rather than the glass manufacturer). 
It is important to note that in these types of cases, the purpose or intent of reducing 
competition  in  the  market  –  which  thus  creates  a  consumer  detriment  –  is  a  key 
driver for Commission actions, and fines are set so as to take this into account. 

This  approach  to  considering  whether  consumers  are  likely  to  have  suffered  past 
harm  as  a  result  of  an  infringement  of  competition  law  also  informs  the  thinking 
behind the proposals contained in the White Paper on Damages Actions, published in 
April 2008327. In many cases, individual consumers may only suffer a small amount 
of detriment. However, on aggregate, the total loss suffered by all consumers can be 
high.  Consumers  who  suffered  as  a  result  of  a  cartel  or  any  breach  of  competition 
law therefore need a collective redress mechanism: it is not just a matter of justice for 
them; it is also a matter of overall confidence in the market economy. 

The Commission also uses an analysis of how markets are operating when looking at 
the  effect  of  the  wider  market  and  regulatory  framework,  for  instance  when 
considering the markets for telecommunications or professional services. The study 
into  the  conveyancing  services  market,  published  in  January  2008328,  looked  at  a 
particular  market  served  by  professional  services  in  21  Member  States  that  had  a 
significant  economic  impact  on  consumers.  The  study  highlighted  the  interaction 
between the level of regulation of the market in various Member States, the price of 
services  and  the  outcomes  in  terms  of  quality.  It  concluded  that  high  levels  of 
regulation  generally  go  hand  in  hand  with  high  prices,  although  they  do  not 
necessarily  result  in  higher  levels  of  quality.  The  Commission  takes  the  view  that 
regulation  should  be  proportional  to  benefit  –  that  is  to  say,  where  there  are  clear 

325 

326 

327 
328 

On  15 October  2008  the  Commission  fined  banana  suppliers  EUR  60.3 million  for  running  a  price 
cartel between 2000 and 2002. See Press Release IP/08/1509, 15.10.2008. 
On  12 November  2008  the  European  Commission  imposed  fines  totalling  EUR  1 383 896 000  on 
Asahi, Pilkington, Saint-Gobain and Soliver for illegal market sharing, and exchange of commercially 
sensitive  information  regarding  deliveries  of  car  glass  in  the  EEA.  See  Press  Release  IP/08/1685, 
12.11.2008. 
See Press Release IP/08/515, 3.4.2008. 
Conveyancing  Services  Market:  Study  for  the  European  Commission,  DG  Competition  led  by  the 
Centre of European Law and Politics (ZERP) at Bremen University, December 2007. 

EN 

91 

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361. 

362. 

363. 

benefits  to  consumers,  regulation  may  be  appropriate;  but  this  should  be  done  in  a 
manner that is proportionate to its intended effect. 

Competition policy is, by its very nature, forward-looking: anti-trust policy itself is 
not only about punishing past misdeeds, but also explicitly about deterrence for the 
future,  through  an  appropriate  fining  policy.  Even  when  no  fine  is  imposed,  the 
Commission can approve commitments from businesses to stop certain practices or it 
can  undertake  certain  actions  in  order  to  facilitate  competition  and  ultimately 
improve  the  market  for  consumers.  As  regards  collecting  societies  (who  represent 
music authors and collect royalties on their behalf), the Commission decision in the 
CISAC case329 prohibited the use of territorial exclusivity clauses in contracts. This 
will  make  it  easier,  for  instance,  for  a  music  website  to  offer  online  content  to 
consumers  outside  its  own  territory.  However,  while  anti-trust  enforcement  puts  an 
end  to  anticompetitive  behaviour,  other  tools  available  to  the  Commission  are 
directly shaping the future for the benefit of consumers, on markets that concern their 
everyday life. 

In the context of merger control, the Commission assesses the likely consequences of 
a proposal by companies to merge. It can prohibit the transaction if it is likely to have 
negative  consequences  for  consumers  or  approve  such  a  transaction  subject  to 
conditions.  Even  where  a  merger  is  cleared  without  any  conditions,  it  is  still 
important  to  ascertain  that  there  will  be  no  negative  impact  on  consumers.  In 
practice, conditions or remedies often form part of a merger clearance. For instance, 
the purchase of Austrian retailer, ADEG, by the German supermarket chain REWE330 
raised  concerns  regarding  the  potential  for  increased  price  levels,  because  REWE 
would  not  face  enough  competition  in  several  Austrian  districts.  Therefore,  the 
acquisition  was  only  approved  subject  to  REWE  selling  all  ADEG-owned  shops  in 
the relevant districts and encouraging ADEG merchants to leave the ADEG network. 

Similarly,  and  given  the  importance  of  food  prices  for  consumers,  the  Dutch  dairy 
cooperatives Friesland Foods and Campina331 were only allowed to merge after the 
former  undertook  to  sell  its  fresh  dairy  product  business  (on  which  it  would  have 
become dominant) while the latter divested one cheese plant as well as two brands of 
long-life dairy drinks. However, even then, consumers buying these products would 
not  enjoy  the  full  benefits  of  competition  if  the  merged  entity  continued  to  control 
most of the raw material needed for these products, i.e. raw milk. Hence, additional 
commitments  were  made  to  ensure  that  competitors  in  the  fresh  dairy  and  cheese 
markets would  have  access  to raw milk, and to ensure lower exit barriers for dairy 
farmers wishing to leave the merged cooperative. 

364. 

The same concern was identified for motor fuel and fuel stations with the takeover 
by StatoilHydro of Jet Scandinavia332, which is the most efficient low-cost operator 
in  both  Norway  and  Sweden  with  a  strong  brand  and  a  proven  track  record  of 
undercutting competitors' prices in markets with high entry barriers. Since fuel prices 
are a major concern for consumers and since the transaction would have strengthened 

329 

330 
331 
332 

Case COMP/38.698 CISAC Agreement (not yet published in the OJ). See Press Release IP/08/1165 and 
MEMO/08/511, 16.7.2008. 
See Press Release IP/08/995, 23.6.2008. 
See Press Release IP/08/1994, 17.12.2008. 
See Press Release IP/08/1556, 21.10.2008. 

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365. 

366. 

367. 

368. 

the acquirer's position as the largest provider of motor fuels, the Commission cleared 
Statoil's bid only after it offered to divest the entire Jet network in Norway, as well as 
158 stations in Sweden. 

It  should  be  stressed  that  remedies  are  voluntary  in  that  they  are  offered  by  the 
parties,  but  the  Commission  will  only  accept  them  if  they  really  make  a  difference 
for consumers. If that is not the case, the parties will have to modify these remedies 
until  they  resolve  the  competition  concerns  identified  by  the  Commission  in  its 
investigation. 

The acquisition of British Energy (BE) by Électricité de France (EdF)333 was a case 
in point; it had to be watched closely, especially given the proportion of household 
incomes spent on energy. After a first set of remedies offered by EdF and BE were 
deemed  insufficient  in  relation  to  the  potential  problems  that  arose,  the  parties 
submitted  an  improved  remedy  package  ensuring  a  diversified  ownership  of  power 
generation  plants  and  more  open  access  to  electricity  for  competitors.  These 
commitments  were  seen  as  essential  to  maintaining  consumer  choice  in  the  market 
by avoiding a situation where one dominant player is able to raise prices without a 
sufficient alternative electricity supply being available. 

The  Commission  follows  the  same  preventive  or  proactive  approach  when 
authorising – or blocking – State aid schemes. Public subsidies can be fully justified 
when the market itself does not provide adequate solutions, as has obviously been the 
case  in  the  financial  sector  during  the  recent  financial  crisis.  Rescuing  banks  was 
required in this case in order to protect citizens' deposits and their ability to borrow 
money,  but  it  was  also  tempting  for  Member  States  to  give  priority  support  to 
national banks. However, uncoordinated reactions could only make the crisis worse 
by  exporting  problems  to  other  Member  States  and  distorting  the  Internal  Market 
with  money  flowing  to  banks  that  were  benefiting  from  guarantees,  while  leaving 
other banks in trouble. The latter would rapidly become bankrupt and their remaining 
clients would lose their deposits. Such a situation would then push each government 
into  a  subsidy  race,  thereby  reinforcing  the  market  positions  of  national  banks  on 
their respective territory. Reduced competition from foreign banks would then enable 
them to impose less favourable conditions on consumers. 

Dialogue  and  consultation  are  essential  to  any  properly  functioning  policy,  and  the 
Commission  is  committed  to  conduct  a  proper  dialogue  with  consumers  also  on 
competition issues. Therefore, a dedicated Consumer Liaison Unit was created in DG 
Competition in 2008. Consumers and their representatives are able to present helpful 
information  to  the  Commission  about  potential  market  failures.  Consumer  input  is 
also  an  important  asset  in  understanding  markets,  as  consumers  and  their 
representatives are best placed to explain directly how they perceive the impact of a 
particular action. During 2008, DG Competition received approximately 2 500 letters 
from  citizens  on  the  subject  of  mergers,  State  aid  and  anti-trust.  The  Commission 
asked for specific input in 2008 during the Pharmaceutical Sector Inquiry334 and, on 
a  regular  basis,  in  a  number  of  merger  cases.  By  understanding  this  consumer 

333 
334 

See Press Release IP/08/2048, 22.12.2008. 
See Press Release IP/08/1829, 28.11.2008. 

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perception, the Commission is better able to place all aspects of the market in context 
when identifying issues and remedies. 

369. 

In developing policy, it is also important to understand the concerns and impacts on 
our  major  stakeholders,  and  consumers  are  no  exception.  Both  the  Roundtable  on 
opportunities and barriers to online retailing and the European Single Market335 and 
the White Paper on Private Damages included extensive consultation through which 
the  views  of  consumers  and  their  representatives  were  actively  sought.  Using  their 
input,  the  Commission  was  better  able  to  understand  how  these  policies  would 
operate in practice and to ensure that their objectives are fully realised. 

370. 

Developing the linkages between competition and consumer welfare remains an area 
of  ongoing  importance  for  the  Commission.  The  guidelines  on  Article  82  EC336 
reaffirmed the importance of this approach, and these will be rolled out during 2009 
and beyond. 

IV – The European Competition Network and cooperation with 
National Courts 

A – GENERAL OVERVIEW 

371. 

The ECN is the network for cooperation between the EU Member States' NCAs and 
the Commission. In 2008 the ECN continued to be a very active forum for discussion 
and exchange on good practices. As in previous years, it also performed well under 
the  mechanisms  laid  down  in  Regulation  1/2003,  with  a  view  to  ensuring  the 
efficient and consistent enforcement of Articles 81 and 82 EC. 

1. 

COOPERATION ON POLICY ISSUES 

372. 

The  ECN  provides  a  platform  for  EU  competition  authorities  to  constructively 
coordinate  enforcement  action,  ensure  upstream  consistency  and  discuss  policy 
issues of common interest. During 2008 the ECN met in the following fora 

•  The annual meeting of the Director General of DG Competition and the heads of 
all  NCAs  in  the  ECN  context,  which  was  devoted  to  discussion  about  recent 
developments in competition policy. 

•  The so-called "plenary meetings", where  the  NCAs  and  the  Commission  met  on 
three occasions and which served as an important tool for debates about general 
issues  of  common  interest  relating  to  anti-trust  policy  and  exchange  of 
experiences and know-how. In this regard, the plenary engaged in discussions on 
the  experience  of  the  NCAs  with  the  enforcement  instruments  of  Regulation 
1/2003, as part of the preparatory fact-finding for the Report on the functioning of 

335 
336 

For further details see http://ec.europa.eu/competition/sectors/media/online_commerce.html 
See Press Release IP/08/1877, 3.12.2008. 

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Regulation  1/2003  which  the  Commission  is  called  upon  to  present  to  the 
European Council and Parliament in 2009337. 

•  Three  working  groups  dealt  with  specific 

issues,  such  as  enhancing 
communication  within  the  ECN,  and  examined  the  application  of  the  'effect  on 
trade' criterion in practice. These working groups provided an excellent forum for 
sharing experiences on concrete issues and exchanging good practices. Two new 
working groups were created as part of the review of the Commission's policy on 
horizontal  agreements  and  vertical  restraints.  These  new  working  groups  will 
explore  the  case  experience  of  enforcers  in  these  fields  and  will  feed  into  the 
Commission's review of the existing BER, and accompanying Guidelines, which 
are due to expire in 2010. 

•  Moreover,  fifteen  ECN  sectoral  subgroups338,  dedicated  to  particular  sectors, 
addressed specific issues and engaged in a useful exchange of experience and best 
practices.  For  example,  the  energy  and  food  subgroups  were  very  productive, 
most  notably  with  regard  to  the  analysis  of  "sticky  retail  prices".  The  banking 
subgroup  engaged  in  lively  and  wide-ranging  discussions  on  the  concepts  and 
follow-up  to  the  MasterCard  decision,  MIF  and  the  SEPA  file.  Lastly,  the 
pharmaceuticals subgroup focused primarily on the pharmaceutical sector inquiry. 

1.1. 

Convergence of national laws and instruments 

373. 

374. 

337 

338 

339 

340 

2008  saw the continuation of the "convergence" process observed in the context of 
Regulation  1/2003339.  Over  and  above  the  legal  obligations  arising  from  the 
implementation of the Regulation, there is a trend towards greater approximation of 
national procedural laws and policies. 

A  prime  example  of  this  trend  towards  further  convergence  is  the  ECN  Model 
Leniency  Programme340.  The  Programme  was  elaborated  within  the  ECN  during 
2006.  The  implementation  of  leniency  programmes,  in  general,  and  of  the  ECN 
Model Programme, in particular, by the Member States and NCAs has advanced at a 
considerable  pace.  By  the  end  of  2008,  twenty-five  Member  States  had  leniency 
programmes and the remaining two (Malta and Slovenia) are expected to introduce 
them  in  the  near  future.  Many  ECN  members  have  aligned  their  programmes  with 
the  ECN  Model  Programme  or  are  in  the  process  of  doing  so.  The  state  of 
implementation of the ECN Model Programme at the end of 2008 is currently being 
assessed by the Commission and the NCAs. 

See  Article  44  of  Regulation  1/2003:  "Five  years  from  the  date  of  application  of  this  Regulation,  the 
Commission  shall  report  to  the  European  Parliament  and  the  Council  on  the  functioning  of  this 
Regulation, in particular on the application of Article 11(6) and Article 17. On the basis of this report, 
the  Commission  shall  assess  whether  it  is  appropriate  to  propose  to  the  Council  a  revision  of  this 
Regulation". 
On  banking,  securities, 
environment, energy, railways, maritime transport, motor vehicles, telecoms, media and sports. 
See 
available 
http://ec.europa.eu/competition/annual_reports/2007/en.pdf 
: 
on 
Further 
http://ec.europa.eu/competition/ecn/model_leniency_en.pdf  together  with  a  list  of  frequently  asked 
questions (MEMO/06/356 of 29 September 2006). 

food,  pharmaceuticals,  professional  services,  healthcare, 

ECN  Model 

Competition 

information 

Programme 

insurance, 

available 

Report 

Policy 

p. 20, 

2007, 

the 

on 

at 

at 

is 

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375. 

During  2008,  the  Commission  and  the  NCAs  have  also  worked  together  on  a 
comparative analysis of commitment procedures. 

2. 

COOPERATION IN INDIVIDUAL CASES 

376. 

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  opened341  and  before  the  final  decision  is  taken342.  The  first 
requirement  of  informing  the  Commission  and  the  network  facilitates  the  swift 
reallocation of cases on the few occasions where it appears necessary and promotes 
enhanced  and  effective  enforcement,  while  the  second  plays  an  important  role  in 
ensuring the consistent application of EU law. 

2.1. 

Case allocation 

377. 

In 2008 the Commission was informed of approximately 150 new case investigations 
launched  by  NCAs.  Amongst  the  new  cases  about  which  the  Commission  was 
informed  under  Article  11(3)  of  the  Regulation,  more  than  55%  concerned  the 
application of Article 81 EC, 30% concerned the application of Article 82 EC and the 
remainder concerned the application of both Articles 81 and 82 EC. The figure for 
Article 81 cases includes the enforcement action of the NCAs in the area of cartels in 
particular. Clusters of cases were also observed inter alia in the energy, food, media, 
transport, telecommunication and postal sectors. 

378.  With regard to work-sharing within the network, the flexible and pragmatic approach 
introduced  by  the  Regulation  and  the  Network  Notice  continued  to  function  very 
well in practice. In 2008, as in previous years, there were very few instances of case-
allocation  discussions,  and  even  fewer  occasions  where  a  case  changed  hands.  The 
situations where work-sharing plays a role typically occur when a complainant or a 
leniency applicant chooses to contact both the Commission and one or more NCAs. 
In  2008,  a  small  number  of  complaints  were  re-allocated  from  the  Commission  to 
NCAs  that  were  willing  to  follow  up  the  matters  raised.  Furthermore,  in  a  limited 
number of instances, the Commission and the NCAs agreed on a way of dividing the 
work on a case–by-case basis. 

341 

342 

See Article 11(3) of Regulation 1/2003: "The competition authorities of the Member States shall, when 
acting under Article 81 or Article 82 of the Treaty, inform the Commission in writing before or without 
delay  after  commencing  the  first  formal  investigative  measure.  This  information  may  also  be  made 
available to the competition authorities of the other Member States". 
See  Article  11(4)  of  Regulation  1/2003:  "No  later  than  30  days  before  the  adoption  of  a  decision 
requiring that an infringement be brought to an end, accepting commitments or withdrawing the benefit 
of  a  block  exemption  Regulation,  the  competition  authorities  of  the  Member  States  shall  inform  the 
Commission.  To  that  effect,  they  shall  provide  the  Commission  with  a  summary  of  the  case,  the 
envisaged  decision  or,  in  the  absence  thereof,  any  other  document  indicating  the  proposed  course  of 
action. This information may also be made available to the competition authorities of the other Member 
States. At the request of the Commission, the acting competition authority shall make available to the 
Commission  other  documents  it  holds  which  are  necessary  for  the  assessment  of  the  case.  The 
information  supplied  to  the  Commission  may  be  made  available  to  the  competition  authorities  of  the 
other  Member  States.  National  competition  authorities  may  also  exchange  between  themselves 
information necessary for the assessment of a case that they are dealing with under Article 81 or Article 
82 of the Treaty". 

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2.2. 

Consistent application of the rules 

379. 

Further  to  information  provided  under  Article  11(4)  of  Regulation  1/2003,  the 
Commission services reviewed or advised on 61 envisaged decisions, as well as on 
informal requests and queries from NCAs. The envisaged decisions submitted to the 
Commission  related  to  a  broad  range  of  infringements  in  different  sectors  of  the 
economy. The Commission noted that the trend of an increased use of commitment 
decisions by NCAs that was observed in 2007 continued in 2008. 

380. 

To date, the Commission has not had to initiate proceedings with a view to ensuring 
consistency of decision making343. 

3. 

APPLICATION OF EU COMPETITION RULES BY NATIONAL COURTS IN THE EU 

3.1. 

Assistance in the form of information or in the form of an opinion 

381. 

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 rules344. In 2008, the Commission received several requests for opinions 
which were pending at the end of the year. 

3.2. 

Judgments of national courts 

382. 

Regulation 1/2003 requires the EU 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  EC345.  The  Commission  received  copies  of  some  50  judgments 
handed  down  in  2008,  which  were  posted  on  DG  Competition's  website  insofar  as 
the transmitting authority did not class them as confidential (confidential judgments 
are merely listed). 

3.3. 

Amicus curiae intervention 

383. 

Regulation  1/2003  provides  that,  where  the  consistent  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  question346.  In  2008,  the  Commission  did  not 
intervene as amicus curiae pursuant to Article 15(3) of Regulation 1/2003. 

343 

344 

345 

346 

See  Article  11(6)  of  Regulation  1/2003:  "The  initiation  by  the  Commission  of  proceedings  for  the 
adoption of a decision under Chapter III shall relieve the competition authorities of the Member States 
of their competence to apply Articles 81 and 82 of the Treaty. If a competition authority of a Member 
State is already acting on a case, the Commission shall only initiate proceedings after consulting with 
that national competition authority". 
See Article 15(1) of Regulation 1/2003: "In proceedings for the application of Article 81 or Article 82 
of the Treaty, courts of the Member States may ask the Commission to transmit to them information in 
its  possession  or  its  opinion  on  questions  concerning  the  application  of  the  Community  competition 
rules". 
See Article 15(2) of Regulation 1/2003: "Member States shall forward to the Commission a copy of any 
written judgment of national courts deciding on the application of Article 81 or Article 82 of the Treaty. 
Such copy shall be forwarded without delay after the full written judgment is notified to the parties". 
See Article 15(3) of Regulation 1/2003: "Competition authorities of the Member States, acting on their 
own initiative, may submit written observations to the national courts of their Member State on issues 

EN 

97 

   EN 

 
                                                 
3.4. 

Financing the training of national judges in EU competition law 

384. 

Continuous training and education of national judges in EU competition law is very 
important in order to ensure both effective and consistent application of those rules. 
In 2008, fifteen  grant  agreements were concluded for the training  of judges. A call 
for new proposals was also launched in October347. 

V – International activities 

385. 

In an increasingly globalised world economy, competition policy must also adopt a 
global  outlook.  DG  Competition  is  responding  to  this  challenge  by  reinforcing  and 
extending  its  relations  with  partners  all  over  the  world  in  both  bilateral  and 
multilateral  fora.  Commissioner  Kroes  attaches  the  highest  importance  to  effective 
international  cooperation  in  the  area  of  competition.  Her  bilateral  meetings  with 
counterparts in the United States, Japan and China, as well as her participation in the 
International Competition Network (ICN) annual conference in Kyoto, testify to this 
commitment. 

A – ENLARGEMENT, WESTERN BALKANS AND NEIGHBOURHOOD POLICY 

386. 

387. 

In  the  context  of  enlargement,  candidate  countries  must  fulfil  a  number  of 
requirements  in  the  field  of  competition  policy  as  a  condition  for  joining  the 
European  Union.  Candidate  countries  must  adopt  national  legislation  compatible 
with  the  EU  acquis.  They  must  also  put  in  place  the  necessary  administrative 
capacity  and  demonstrate  a  credible  enforcement  record.  DG  Competition  provides 
technical  assistance  and  support  to  help  the  candidate  countries  fulfil  these 
requirements  and  it  continuously  monitors  the  extent  to  which  the  candidate 
countries are prepared for accession. 

During  2008,  there  was  particularly  close  cooperation  with  Croatia  and  Turkey. 
These two candidate countries have to fulfil "opening benchmarks" before accession 
negotiations  on  the  competition  chapter  can  start.  Croatia  has  made  important 
progress in meeting these opening benchmarks, including on the remaining important 
issue of the restructuring of its shipyards. Turkey has yet to introduce a system for 
the control and monitoring of State aid. 

388. 

DG  Competition  assisted  the  Western  Balkan  countries  in  further  aligning  their 
competition rules with EU law. This included, among others, help in drafting laws on 
competition  and  State  aid  and  advice  on  setting  up  the  necessary  institutions  to 

relating to the application of Article 81 or Article 82 of the Treaty. With the permission of the court in 
question, they may also submit oral observations to the national courts of their Member State. Where 
the consistent application of Article 81 or Article 82 of the Treaty so requires, the Commission, acting 
on  its  own  initiative,  may  submit  written  observations  to  courts  of  the  Member  States.  With  the 
permission  of  the  court  in  question,  it  may  also  make  oral  observations.  For  the  purpose  of  the 
preparation  of  their  observations  only,  the  competition  authorities  of  the  Member  States  and  the 
Commission may request the relevant court of the Member State to transmit or ensure the transmission 
to them of any documents necessary for the assessment of the case". 
Detailed 
on 
http://ec.europa.eu/dgs/competition/proposals2/#call_training2008 

information 

proposals 

available 

call 

this 

for 

at 

is 

98 

   EN 

347 

EN 

 
                                                                                                                                                         
enforce these rules. DG Competition helped Macedonia to improve the compliance 
of its fiscal legislation with Community rules on State aid. 

389. 

In  the  framework  of  the  European  Neighbourhood  Policy  (ENP),  DG  Competition 
monitored  the  implementation  of  the  competition-related  priorities  in  the  bilateral 
action plans agreed between the EU and ENP countries, which set out an agenda of 
political and economic reforms in the short and medium term. 

B – BILATERAL COOPERATION 

390. 

The  Commission  cooperates  with  numerous  competition  authorities  on  a  bilateral 
basis  and,  in  particular,  with  the  authorities  of  the  European  Union's  major  trading 
partners. The European Union has entered into dedicated cooperation agreements in 
competition matters with the United States, Canada and Japan. 

1. 

AGREEMENTS WITH THE USA, CANADA AND JAPAN 

391. 

392. 

393. 

394. 

348 

349 

As  in  previous  years,  cooperation  with  the  United  States  of  America  was  intense. 
Based  on  two  dedicated  competition  cooperation  agreements348,  contacts  between 
DG Competition and the Anti-trust Division of the US Department of Justice (DoJ) 
and the US Federal Trade Commission (FTC) were frequent. These contacts ranged 
from cooperation in individual cases to more general matters related to competition 
policy.  Numerous  meetings  and  video-  or  telephone-conferences  took  place  to 
discuss issues such as cooperation in cartel investigations, abuse of dominance or the 
application of the competition rules in particular sectors. 

In  case-related  contacts,  case  teams  usually  update  each  other  on  the  state  of 
investigations  (within  the  limits  of  the  above-mentioned  agreements).  Merger 
control,  in  particular,  requires  good  coordination  with  the  DoJ  and  the  FTC.  The 
2002  EU-US  best  practices  on  cooperation  in  reviewing  mergers  provide  a  useful 
framework  for  cooperation, especially by indicating critical  points in the procedure 
where  cooperation  could  be  particularly  useful.  The  cases  Thomson/Reuters  and 
Google/DoubleClick can be cited as examples of good cooperation between the EU 
and US agencies. 

Commissioner Kroes met her US counterparts, Chairman William E. Kovacic of the 
FTC  and  Tom  Barnett,  the  Assistant  Attorney  General,  at  the  annual  bilateral 
meeting which took place on 20 October in Brussels, and on several other occasions. 

Cooperation  with  the  Canadian  Competition  Bureau  is  based  on  the  EU/Canada 
Competition Cooperation Agreement which was signed in 1999349. Contacts between 
the  Commission  and  the  Bureau  have  been  frequent  and  fruitful.  Case-related 

Agreement between the European Communities and the Government of the United States of America 
regarding the application of their competition laws (OJ L 95, 27.4.1995, p. 47) and Agreement between 
the European Communities and the Government of the United States of America on the application of 
positive comity principles in the enforcement of their competition laws (OJ L 173, 18.6.1998, p. 26). 
Agreement  between  the  European  Communities  and  the  Government  of  Canada  regarding  the 
application of their competition laws (OJ L 175, 10.7.1999, p. 50). 

EN 

99 

   EN 

 
                                                 
contacts  concerned  mainly  merger  and  cartel  investigations.  In  the  area  of  cartel 
cases this also included the coordination of investigative measures and, in the area of 
mergers,  the  discussion  of  possible  remedies.  The  Commission  and  the  Canadian 
Competition  Bureau  continued  their  dialogue  on  general  competition  issues  of 
common concern. High level meetings took place both in Brussels and Ottawa, and 
officials from both sides conducted reciprocal visits. 

395. 

Cooperation  with  the  Japan  Fair  Trade  Commission  (JFTC)  is  based  on  the  2003 
Cooperation Agreement350. Commissioner Kroes met JFTC Chairman Takeshima at 
the occasion of the EU-Japan High Level meeting on competition policy on 13 April 
in Kyoto. At the centre of discussions were policy initiatives on both sides, as well as 
recent  enforcement  actions.  In  addition  to  contacts  on  individual  cases,  the 
Commission and the JFTC continued their ongoing dialogue on general competition 
issues of common concern. 

2. 

COOPERATION WITH OTHER COUNTRIES AND REGIONS 

396. 

397. 

398. 

The  European  Commission  continued  its  close  cooperation  with  the  European  Free 
Trade Association (EFTA) Surveillance Authority in enforcing the Agreement on the 
European Economic Area (EEA). 

Cooperation  with  China  under  the  EU-China  competition  policy  dialogue351 
remained  a  priority  in  2008.  Contacts  between  DG  Competition  and  the  Chinese 
administration  were  intense  and  dealt  mainly  with  questions  concerning  the  newly 
adopted  anti-monopoly 
the 
future 
administrative  structure  of  the  Chinese  enforcement  agencies.  DG  Competition 
organised  several  workshops  in  Beijing  on  EU  merger  control  and  anti-trust  issues 
for  high-level  representatives  from 
the  State 
Administration  of  Commerce  and  Industry,  and  the  National  Development  and 
Reform  Commission.  It  also  hosted  a  visitor  from  the  Ministry  of  Commerce  for  a 
period of five months. 

the  Ministry  of  Commerce, 

legislation  and 

implementing 

law, 

the 

In the course  of the  year, DG Competition and the Korean Fair Trade Commission 
(KFTC) finalised their negotiations for a bilateral cooperation agreement in the field 
of competition. This agreement will contain provisions on enforcement cooperation, 
notification,  consultation  and  exchange  of  non-confidential  information.  The 
adoption  process  is  at  a  fairly  advanced  stage.  The  European  Parliament  issued  a 
positive  opinion  on  the  proposal  in  December  2008.  When  it  enters  into  force  as 
scheduled,  in  early  2009,  the  agreement  will  replace  the  existing  Memorandum  of 
Understanding352 between DG Competition and the KFTC. 

399.  Moreover, DG Competition played an active role in the ongoing negotiations on Free 
Trade Agreements (FTA) with Ukraine, India and South Korea, and on the trade part 
of  the  Association  Agreement  with  Central  America,  with  a  view  to  ensuring  that 

350 

351 
352 

Agreement between the European Community and the Government of Japan concerning cooperation on 
anti-competitive activities (OJ L 183, 22.7.2003, p. 12). 
Terms of Reference of the EU-China competition policy dialogue (May 2004). 
Memorandum of Understanding on cooperation between the Fair Trade Commission of the Republic of 
Korea and the Competition Directorate-General of the European Commission (October 2004). 

EN 

100 

   EN 

 
                                                 
anti-competitive  practices  (including  State  aid)  do  not  erode  the  trade  and  other 
economic benefits sought through those agreements. 

C – MULTILATERAL COOPERATION 

1. 

INTERNATIONAL COMPETITION NETWORK 

400. 

401. 

402. 

403. 

DG Competition continued to play a leading role in the ICN. More specifically, DG 
Competition  is  a  member  of  the  Steering  Group,  co-chair  of  the  cartels  Working 
Group and an active member of the other Working Groups (on mergers, competition 
policy implementation, unilateral conduct and advocacy). 

At  the  2008  ICN  Annual  Conference,  held  in  Kyoto  (Japan)  from  14  to  16 April, 
Commissioner Kroes and Director-General Philip Lowe delivered keynote speeches. 

The Unilateral Conduct Working Group (UCWG), which was set up in 2006, worked 
on two reports on tying and bundled discounting and loyalty rebates. The reports are 
to  be  finalised  at  the  beginning  of  2009.  The  Working  Group  also  started 
preparations for the ICN Unilateral Conduct Workshop due to be held in Washington 
in March 2009. 

The Cartels Working Group, co-chaired by DG Competition, presented reports to the 
2008 annual conference on negotiated settlements in cartel cases and on determining 
fines for cartels where DG Competition contribution was key. Progress was made on 
drafting  a  chapter  for  the  ICN  anti-cartel  enforcement  manual  on  investigative 
strategy and interviewing. The 2008 ICN Cartels workshop was held in Lisbon from 
28 to 30 October. 

2. 

OECD 

404. 

DG  Competition  continued  to  contribute  actively  to  the  work  of  the  OECD 
Competition  Committee  and  participated  in  each  of  the  three  sessions  held  by  the 
Committee in 2008. It submitted contributions to most round tables on competition 
policy,  including  on  resale  price  maintenance,  buyer  power,  market  studies  and 
bundled and loyalty discounts and rebates, and gave presentations on several topics, 
including its decision in the MasterCard case. 

3. 

UNCTAD 

405. 

DG  Competition  played  a  leading  role  at  a  round  table  discussion  at  the  annual 
conference  of  the  Intergovernmental  Group  of  Experts  (IGE)  on  Competition  Law 
and  Policy  of  the  United  Nations  Conference  on  Trade  and  Development 
(UNCTAD),  which  discussed  the  division  of  competence  between  a  regional 
competition  authority  and  national  competition  authorities  in  the  enforcement  of 
competition laws. The topic was particularly important, as several regional groupings 
of third countries are in the process of setting up a regional competition regime for 
which the EU system serves as an obvious model. 

EN 

101 

   EN 

 
VI – Inter-institutional cooperation 

406. 

In  2008,  the  Commission  continued  its  cooperation  with  the  other  Community 
institutions in accordance with the respective agreements or protocols entered into by 
the relevant institutions353. 

1. 

EUROPEAN PARLIAMENT 

407. 

408. 

409. 

410. 

In  2008,  the  European  Parliament  (EP)  adopted  a  resolution  on  the  retail  banking 
sector  inquiry  following  an  exchange  of  views  on  the  issues  raised  by  its  own-
initiative report on this subject. The EP also adopted, via the consultation procedure, 
a  report  on  the  agreement  concluded  between  the  Government  of  the  Republic  of 
Korea  and  the  European  Community  concerning  cooperation  on  anti-competitive 
activities. 

Own  initiative  reports  on  the  White  Paper  on  Damages  Actions  and  the  Annual 
Competition  Reports  for  2006  and  2007  were  also  discussed  at  committee  level 
during 2008 and are due for adoption in 2009. 

The  Commission  also  participated  in  discussions  held  in  the  EP  on  Commission 
policy initiatives, including the application of State aid in response to the unfolding 
financial and economic crisis. The Commissioner holds regular exchanges of views 
with the responsible Parliamentary committees on the subject of competition policy. 
In  2008,  there  were  three  exchanges  of  views  with  the  Economic  and  Monetary 
Affairs  Committee,  namely  in  March,  June  and  October,  and  one  meeting  with  the 
Legal Affairs Committee in November. 

Outside the framework of these more formal meetings, cooperation with the EP also 
took  the  form  of  bilateral  meetings  with  individual  Members  of  Parliament  on 
specific topics of interest to them. The Commissioner and the Director-General have 
also  had  correspondence  with  the  Chair  of  the  Economic  and  Monetary  Affairs 
Committee  on  topics  including  competition  law  and  intellectual  property  rights, 
cooperatives,  Livret  A  and  financial  services,  the  follow-up  to  the  retail  banking 
sector  inquiry,  liner  shipping  consortia  and  the  review  of  the  block  exemption  on 
motor vehicles. 

411. 

The  Commission  also  cooperates  closely  with  both  the  European  Ombudsman  and 
Members  of  the  EP  by  replying  to  Parliamentary  Questions  and  Petitions.  In  2008, 
the  Commission  responded  to  549  written  questions,  65  oral  questions  and  33 
petitions  involving  matters  of  competition  policy354.  Moreover,  the  Commissioner 
also answered an oral question in Plenary on State aid to Polish shipyards. 

353 

354 

Framework  Agreement  of  26 May  2005  on  relations  between  the  European  Parliament  and  the 
Commission  (OJ C 117,  18.5.2006,  p. E/123);  Protocol  of  Cooperation  between  the  European 
Commission and the European Economic and Social Committee of 7 November 2005; Protocol on the 
Cooperation  Arrangements  between  the  European  Commission  and  the  Committee  of  the  Regions  of 
17 November 2005. 
Of  these  the  Commissioner  in  charge  of  Competition  directly  responded  to  162  written  questions,  18 
oral questions and 10 petitions. 

EN 

102 

   EN 

 
                                                 
2. 

COUNCIL 

412. 

413. 

3. 

414. 

The  Commission  cooperates  closely  with  the  Council  by  informing  it  of  important 
policy  initiatives  in  the  field  of  competition,  such  as  on  State  aid  measures  for  the 
bank industry and other additional State aid measures in the context of the financial 
and  economic  crisis.  The  Commission  also  attends  meetings  of  Council  working 
groups dealing either directly with competition policy matters or with files that have 
an  impact  on  competition  policy,  and  it  maintains  close  links  with  the  respective 
Presidencies.  Depending  on  the  case,  cooperation  may  also  consist  in  the 
participation  of  the  Commissioner  responsible  for  Competition  in  different  Council 
formations. The most usual ones are the Competitiveness Council or the Economic 
and  Financial  Affairs  Council.  In  addition,  the  Director-General  for  Competition 
regularly  attends  the  meetings  of  the  Economic  and  Financial  Committee  and 
contributes to meetings of the European Council. 

In 2008, the Commission made contributions on competition policy mainly in respect 
of  conclusions  adopted  in  the  Competitiveness  Council  (such  as  on  the  Lisbon 
strategy, industrial policy and SME policy), the Transport, Telecommunications and 
Energy  Council  (Internal  Energy  Market  Legislative  Package,  Energy/Climate 
package)  and  the  Economic  and  Financial  Affairs  Council  (Single  Market  Review, 
Single Euro Payments Area, risk capital, European Economic Recovery Plan). 

EUROPEAN  ECONOMIC  AND  SOCIAL  COMMITTEE  AND  COMMITTEE  OF  THE 
REGIONS 

The  Commission  informs  the  European  Economic  and  Social  Committee  (EESC) 
and the Committee of the Regions about major policy initiatives, and participates in 
debates  that  may  be  held  in  the  respective  Committee  on  those  initiatives.  One 
example is the adoption of the EESC report on the Commission's Annual Report on 
Competition  Policy.  During  2008  the  Commission  attended  EESC  working  group 
meetings  on  Competition  and  Democracy  in  the  Internal  Market,  the  Annual 
Competition Report 2007, and the White Paper on Damages Actions. 

VII – Outlook for 2009 

A – ANTI-TRUST 

415. 

The review of the current rules on vertical agreements, which was launched in 2008, 
will continue in 2009355. The aim is to have the new regime in place early in 2010, 
with entry into force in May 2010. To achieve this target, the Commission will have 
to adopt a draft proposal of the BER and Guidelines in summer 2009. Subsequently, 
the draft proposal will be subject to public consultation. 

355 

See DG Competition Annual Management Plan 2009, 28.11.2008, p. 22. 

EN 

103 

   EN 

 
                                                 
B – MERGERS 

416. 

417. 

418. 

419. 

420. 

421. 

422. 

By  1 July  2009  the  Commission  will  present  a  report  to  the  Council  on  the 
application of the Merger Regulation356. The Commission has an obligation to report 
to the Council on the application of the ECMR five years after its entry into force. In 
preparation  for  this  report,  the  Commission  launched  a  public  consultation  which 
focused,  in  particular,  on  the  application  of  the  jurisdictional  thresholds  and  the 
referral  mechanisms,  but  also  on  general  issues  relating  to  the  application  of  the 
Merger Regulation. The Commission's experience so far is that, overall, the Merger 
Regulation and related instruments work well. 

In  the  context  of  the  financial  crisis,  rescue  mergers  between  banks  and 
nationalisation  of  banks  by  Member  States  have  thrown  up  new  challenges  to  the 
application  of  EU  merger  control,  in  terms  of  jurisdictional,  procedural  and 
substantive issues. It is expected that these issues will continue to be a crucial part of 
the  enforcement  agenda  in  2009.  The  ECMR  is  an  appropriate  and  sufficiently 
flexible  tool  for  merger  control  enforcement,  including  in  such  circumstances.  The 
overall objective is to apply merger control in a manner that takes into account the 
requirements  of  financial  stability  for  the  banking  system,  whilst  not  allowing  the 
creation of anti-competitive market structures. 

C – STATE AID 

In 2009, the Commission will continue to implement the State aid action plan357. The 
Commission will in particular adopt guidelines for the in-depth assessment of large 
amounts  of  individual  aid  in  the  fields  of  training,  employment  and  regional  aid. 
These guidelines will improve predictability and increase legal certainty for Member 
States  and  companies.  The  Commission  will  also  actively  implement  the  economic 
analysis in the cases notified. 

As regards the Temporary framework, the Commission will analyse the reports to be 
submitted by Member States by the end of October 2009 and will assess whether an 
amendment of the Temporary framework is necessary. 

In 2009, the Commission will also continue its work regarding competition advocacy 
in  the  field  of  State  aid.  Such  advocacy  is  particularly  important  in  order  to 
encourage Member States to use existing possibilities, including the GBER adopted 
in 2008. 

Case workload pertaining to the financial crisis and its spill-over effects in the real 
economy will continue to be high in 2009. 

In  the  financial  sector,  existing  aid  schemes  approved  at  the  end  of  2008  must 
continue  to  be  monitored.  The  Commission  is  reviewing  their  functioning  and  will 
also  feed  into  the  work  of  the  Economic  and  Financial  Committee  on  the 
effectiveness  of  rescue  measures.  Also,  depending  on  the  circumstances,  some 

356 
357 

See DG Competition Annual Management Plan 2009, 28.11.2008, p. 22. 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 22. 

EN 

104 

   EN 

 
                                                 
emergency  measures  approved  will  need  to  be  followed  up  with  restructuring 
measures,  which  will  require  Commission  scrutiny.  In  2009  the  Commission  will 
provide  more  detailed  guidance  on  its  approach  to  the  assessment  of  restructuring 
and  viability  plans  of  individual  banks  under  the  state  aid  rules358.  It  will  make  a 
case-by-case  assessment,  taking  into  account  the  total  aid  received  through 
recapitalisation, guarantees or asset relief, to ensure long-term viability and a return 
to normal functioning of the European banking sector. 

423. 

Also,  outside  of  banking,  a  large  number  of  cases  are  expected,  either  under  the 
Temporary  framework  for  State  aid  measures  to  support  access  to  finance  in  the 
current  financial  and  economic  crisis,  or  under  the  rescue  and  restructuring 
guidelines, particularly in certain sectors which have been seriously affected by the 
crisis  or  which  were  already  in  serious  difficulty  (e.g.  through  structural 
overcapacity) before the crisis erupted. 

D – SECTOR DEVELOPMENTS 

1. 

ENERGY AND ENVIRONMENT 

424. 

425. 

426. 

427. 

428. 

In  2009,  the  Commission  will  continue  to  enforce  the  EC  competition  rules  in  the 
energy and environment sectors. 

From  an  anti-trust  point  of  view,  DG  Competition  will  ensure  the  follow-up  to  the 
sector inquiry, which has identified key obstacles along the electricity and gas supply 
chain  to  creating  integrated  and  competitive  markets359.  In  these  markets,  the 
Commission  will  continue  to  focus  on  abuses  such  as  exclusionary  conduct, 
exploitative  abuses  and  collusion.  A  number  of  ongoing  energy  anti-trust 
investigations launched in recent years are expected to be brought forward 

Continued attention will also be devoted to the Climate Change and Energy package 
as  well  as  to  the  Second  Strategic  Energy  Review  package  within  the  inter-
institutional  dialogue360.  If  necessary,  the  Commission  will  contribute  to  further 
refining relevant provisions, pending the final agreement between the institutions. 

Concerning  mergers,  DG  Competition's  action  will  focus  on  identifying  and 
addressing anti-competitive effects stemming from cross-border energy mergers. 

From  a  State  aid  viewpoint,  the  Commission  will  continue  to  apply  the  established 
policy,  in  particular  applying  the  new  guidelines  on  State  aid  to  environmental 
protection and the new GBER adopted in 2008361. 

358 

359 
360 
361 

Communication for the Spring European Council – Driving European Recovery (COM(2009)114 final, 
4.3.2009, p. 4). 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 19. 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 25. 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 14. 

EN 

105 

   EN 

 
                                                 
2. 

FINANCIAL SERVICES SECTOR 

2.1. 

Financial crisis 

429. 

430. 

431. 

The Commission will continue to examine national  measures in favour of financial 
institutions and contribute to financial stability by providing legal certainty. 

If  necessary,  the  Commission  will  give  further  guidance  to  Member  States  on  how 
new aid instruments should be designed in order to be compatible with EU State aid 
rules. 

DG  Competition  will  focus  on  reviewing  the  decisions  taken  in  2008  in  order  to 
assess  whether  the  national  schemes  need  to  be  extended  and  to  ensure  that 
inconsistencies between the national aid schemes are ironed out. 

2.2. 

Economic crisis 

432. 

433. 

Several more measures contributing to national recovery plans have been announced 
or  notified.  The  Commission  will  continue  to  examine  these  national  measures 
swiftly. 

However,  it  should  be  stressed  that  the  Temporary  Framework  does  not  apply  to 
companies  whose  problems  date  from  before  the  crisis,  i.e.  prior  to  1 July  2008  or 
that  it  may  not  be  sufficient  for  companies  which  face  structural  difficulties.  For 
those companies, the R&R Guidelines constitute the most appropriate tool to restore 
long-term viability. In such cases, a restructuring operation which ensures long-term 
viability is the proper response. 

2.3. 

Single Euro Payments Area (SEPA) 

434. 

In addition to the financial and economic crisis, the outlook of the financial services 
sector for 2009 is also determined by the SEPA project.  

435.  Whereas the SEPA framework for payment cards and the credit transfer scheme were 
launched  in  2008,  the  launch  of  the  direct  debit  scheme  is  not  scheduled  until 
2 November 2009. 

3. 

ELECTRONIC COMMUNICATIONS 

436. 

As the current economic crisis is hitting the wider economy hard, the call for national 
governments to take a more active role to foster broadband deployment as part of a 
wider stimulus initiative is becoming more vocal. President Barroso has announced 
that the Commission will channel an additional EUR 1 billion in 2009 and 2010 to 
accelerate  the  roll-out  of  broadband  deployment  in  under-served  areas  where  the 
market  does  not  have  sufficient  incentives  to  provide  affordable  broadband 
services362. Such types of well-targeted aid measures will significantly facilitate the 
widespread availability of affordable broadband service throughout Europe. 

362 

Communication from the Commission to the European Council: A European Economic Recovery Plan 
(COM(2008)800 final, 26.11.2008). 

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437. 

Furthermore,  DG  Competition  is  working  with  DG  Information  Society  on  two 
major recommendations. The Recommendation on the regulatory treatment of fixed 
and  mobile  termination  rates  in  the  EU  was  presented  as  a  draft  for  public 
consultation  on  26 June.  Its  aims  are  to  bring  wholesale  rates  for  termination  on 
individual  networks  down  to  an  efficient  level,  and  to  harmonize  the  approach  to 
regulating  these  rates.  The  Recommendation  on  next  generation  access  networks, 
published as a draft for public consultation on 18 September, addresses the regulation 
of next generation fibre optic networks in order to stimulate investment, while at the 
same time safeguarding competition in the market for high speed broadband services. 

438. 

The Commission is also preparing State aid guidelines on the application of EU state 
aid rules to public funding for the deployment of broadband networks, including the 
deployment of so-called next generation access broadband networks. 

4. 

INFORMATION TECHNOLOGY 

439. 

Due to the economic crisis, growth in the ICT sector is likely to be negative in 2009, 
in  spite  of  the  positive  growth  in  the  IT  services  and  software  sectors363.  The 
Commission  will  continue  to  monitor  market  developments  closely  and  ensure  that 
competition is not hindered, for example through reduced interoperability or through 
foreclosure  by  a  dominant  company  of  existing  or  emerging  markets364  It  will  also 
continue to monitor developments in standard-setting bodies, particularly in relation 
to intellectual property rights, so as to ensure that procedures within standard-setting 
bodies culminate in a transparent process and contribute to the achievement of pro-
competitive outcomes365. 

440. 

By removing and preventing anticompetitive barriers to innovation and market entry, 
DG  Competition  will  contribute  to  investment  and  growth  in  ICT  markets  and 
thereby  to  the  deepening  and  extension  of  the  European  knowledge  economy  as  a 
whole. 

5. 

MEDIA 

441. 

Following  up  on  the  Roundtable  on  opportunities  and  barriers  to  online  retailing, a 
report  will  be  drafted  on  the  basis  of  the  contributions  received  from  the  senior 
representatives  of  consumers  and  industry  who  attended  the  meeting  with 
Commissioner  Kroes  on  17 September.  The  report  and  contributions  from  all 
interested parties on the questions raised in the issues paper of the Commission will 
be  used  as  an  input  for  the  ongoing  review  of  the  rules  on  vertical  agreements  in 
relation  to  online  distribution.  On  the  subject  of  online  music  distribution, 
discussions with stakeholders will continue, with the aim of exploring models for the 
EEA-wide licensing of music rights in a competitive framework. 

442. 

The Commission will continue to closely monitor the implementation of the CISAC 
Decision  of  16 July.  The  abolition  of  territorial  restrictions  in  the  agreements 

363 
364 
365 

See OECD Information Technology Outlook 2008 Highlights. 
See Annual Policy Strategy for 2009 (COM (2008) 72 final), 13.2.2008, p. 4). 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 19. 

EN 

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443. 

444. 

445. 

between  collecting  societies  is  expected  to  lead  to  licensing  practices  which  better 
suit  the  online  environment  and  give  both  authors  and  commercial  users  a  choice 
between collecting societies. 

In  the  field  of  broadcasting,  the  Commission  is  continuing  its  review  of  the 
Broadcasting Communication, taking into account the comments received on the new 
draft  Communication.  After  having  analysed  the  submissions  received,  the 
Commission intends to adopt a revised Broadcasting Communication in the first half 
of 2009. 

The Commission will continue to implement its established policy concerning State 
aid  for  the  digital  switchover  in  the  field  of  broadcasting.  In  assessing  the  funding 
initiatives, the Commission will continue to pay particular attention to technological 
neutrality and to the ultimate objective of ensuring wide consumer access to digital 
broadcasting. 

Following  the  positive  reaction  to  its  public  consultation  on  the  proposal  to  extend 
the validity of the State aid assessment criteria in its 2001 Cinema Communication, 
the Commission intends to adopt a decision accordingly366. As a result, these criteria 
will now continue to be applied by the Commission until 31 December 2012 at the 
latest. They had been due to expire on 31 December 2009.  

6. 

TRANSPORT 

446. 

447. 

In  2009,  the  Commission  expects  that  the  consolidation  in  the  airline  sector  will 
continue, especially in light of the economic crisis. Such consolidation may take the 
form  of  either  new  mergers  between  airlines  or  enhanced  alliance  agreements, 
especially in relation to transatlantic flights. Such operations will have to be assessed 
either under the Merger Regulation or under Article 81 EC. The Commission and the 
US Department of Transportation also plan to publish the report on their joint project 
(see above, paragraph 297). 

The  severe  negative  effects  of  the  financial  and  real  economy  crisis  on  the  air 
transport  sector  in  2008  are  expected  to  be  further  aggravated  in  2009,  with  both 
passenger  and  freight  traffic  levels  declining  at  unprecedented  rates.  It  is  therefore 
expected  that  the  number  of  State  aid  cases  in  this  sector  will  increase.  The 
Commission  will  closely  monitor  sectoral  developments  in  2009  and  will  take  the 
necessary  steps  to  ensure,  through  State  aid  control,  that  the  measures  taken  by 
Member States to support the real economy and employment  are  implemented  in a 
timely, targeted and temporary manner. Such measures should respect the following 
guiding principles: promoting openness within the internal market and vis-à-vis third 
countries; ensuring non-discrimination of products and services from other Member 
States and ensuring consistency with long-term reform objectives. 

448. 

Following the public consultation (see above, paragraph 275), the Commission plans 
to  adopt  the  new  block  exemption  Regulation  on  consortia  in  2009367.  The 
Commission  will  also  monitor  the  market  for  maritime  transport  services, 

366 
367 

See IP/09/138 
See DG Competition Annual Management Plan 2009, 28.11.2008, p. 22. 

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108 

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particularly  in  the  light  of  the  recent  expiry  of  the  exemption  on  maritime 
conferences. 

7. 

PHARMACEUTICAL INDUSTRY 

449. 

In 2009, the focus of the Commission's activities in the pharmaceutical sector will be 
directed  at  concluding  the  sector  inquiry368.  The  final  report,  which  is  expected  in 
summer  2009,  will  take  into  account  the  comments  received  during  the  public 
consultation. As a follow-up, the Commission and/or national competition authorities 
may  launch  investigations  aimed  at  enforcing  competition  rules  in  the  sector.  The 
Commission  may  also  make  recommendations  for  improving  the  regulatory 
framework. A number of significant pharmaceutical mergers already appear to be in 
the  pipeline  for  2009,  and  so  it  is  likely  that  there  will  also  be  a  heavy  merger 
workload. 

8. 

FOOD INDUSTRY 

450. 

451. 

In the context of the current economic downturn, concerns related to the food supply 
chain  are  likely  to  remain  high  on  the  political  agenda  throughout  the  coming 
months.  As  a  follow-up  to  the  Communication  on  "Food  Prices  in  Europe"  (see 
paragraph 326 above), the work of the Commission's Food Taskforce will continue in 
2009  and  focus  on  the  actions  identified  in  this  Communication.  The  Commission 
will report to the Council on its progress in December. This work will also feed into 
the  forthcoming  Review  of  the  Single  Market,  to  be  completed  later  in  2009.  DG 
Competition  will  continue  to  actively  contribute  to  the  overall  work  of  the 
Commission both in the framework of the Food Task Force and in the context of the 
Single Market Review. 

Given  that  food retail markets are often defined, at most, as national in scope, it is 
crucial  for  Competition  Authorities  throughout  the  EU  to  address  potential 
malfunctioning within the food supply chain in a consistent and coordinated manner. 
To  this  end,  in  2009,  the  ECN  will  continue  to  be  used  as  a  forum  for  discussion, 
exchange of best practice and market intelligence-gathering on issues related to food 
retail markets. In parallel, DG Competition will strive to deepen its knowledge of the 
markets'  structure  and  practices  in  order  to  identify  and  remedy  any  possible 
breaches of competition rules. 

9. 

POSTAL SERVICES 

452. 

From a State aid viewpoint, the Commission will continue to ensure that there is no 
overcompensation  for  the  discharge  of  the  public  service  obligations  and  no  cross-
subsidization of commercial activities outside the SGEI. The Commission expects to 
close its investigations on alleged State aid granted by the UK and Germany to Royal 
Mail  and  Deutsche  Post  respectively.  Concerning  the  new  Postal  Directive,  the 
Commission  will  closely  monitor  the  implementation  process  and  also  provide 
Member States with the necessary assistance for that purpose. It will also reflect on 

368 

See DG Competition Annual Management Plan 2009, 28.11.2008, p. 20. 

EN 

109 

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the  possible  implications  of  the  new  method  of  calculating  the  net  cost  of  the 
universal service on State aid policy in the postal sector369. 

E – INTERNATIONAL ACTIVITIES 

453. 

454. 

455. 

456. 

457. 

DG Competition’s work with the candidate countries, the Western Balkan countries 
and the Neighbourhood Policy countries will continue in 2009. 

DG Competition intends to further strengthen its cooperation with the South Korean 
competition  authority  by  having  the  dedicated  intergovernmental  cooperation 
agreement  in  the  field  of  competition  signed,  as  planned,  in  early  2009.  It  also 
intends to hold a first bilateral meeting with the South Korean competition authority 
in 2009. 

The focus in 2009 will be on cooperation with emerging economies, such as China 
and India. 

The Commission will continue to participate actively in the negotiation of Free Trade 
Agreements  and Association  Agreements with a number of countries, e.g. Ukraine, 
South  Korea,  China,  India,  the  Andean  Community  and  Central  America.  DG 
Competition  will  contribute  to  the  negotiations  on  the  competition  provisions  of 
these  agreements  aimed  at  guaranteeing  a  level  playing  field  for  European 
companies. 

DG  Competition  will  continue  to  participate  actively  in  multilateral  organisations 
that are active in the area of competition. It will play an active role in all sessions of 
the  OECD's  Competition  Committee  in  2009,  as  well  as  in  the  activities  of  the 
International Competition Network (including the annual conference, which will be 
held in Zürich, Switzerland from 3-5 June 2009). 

369 

See Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008 amending 
Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal 
services (OJ L 52, 27.2.2008, p. 3). 

EN 

110 

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LIST OF ABREVIATIONS 

ANACOM 

Autoridade Nacional De Comunicações, Portuguese NRA 

BER 

BPC 

CAP 

CFI 

CFP 

Block Exemption Regulation 

Best Practices Code 

Common Agricultural Policy 

Court of First Instance 

Common Fisheries Policy 

CISAC 

International Confederation of Societies of Authors and Composers 

CPU 

CTU 

DoJ 

EC 

ECB 

ECJ 

Central Processing Unit 

Český telekomunikační úřad, Czech NRA 

US Department of Justice 

(Treaty of the) European Community 

European Central Bank 

European Court of Justice 

ECMR 

European Community Merger Regulation 

ECN 

ECSC 

EEA 

EESC 

EFTA 

ENP 

EP 

EPC 

EPO 

EU 

EUR 

European Competition Network 

European Coal and Steel Community 

European Economic Area 

European Economic and Social Committee 

European Free Trade Association 

European Neighbourhood Policy 

European Parliament 

European Payments Council 

European Patent Office 

(Treaty of the) European Union 

Euro 

EN 

111 

   EN 

 
FERMA 

Federation of Risk Management Associations 

FTA 

FTC 

GBER 

GDP 

ICN 

ICT 

IGE 

IPR 

JFTC 

KFTC 

MIF 

Free Trade Agreement 

US Federal Trade Commission 

General Block Exemption Regulation 

Gross Domestic Product 

International Competition Network 

Information and Communication Technologies 

Intergovernmental Group of Experts on Competition Law and Policy 

Intellectual Property Rights 

Japan Fair Trade Commission 

Korean Free Trade Commission 

Multilateral Interchange Fees 

MVBER 

Motor Vehicle Block Exemption Regulation 

NCA 

NRA 

OECD 

OEM 

National Competition Authority 

National Regulatory Authority 

Organisation for Economic Cooperation and Development 

Original Equipment Manufacturer 

OFCOM 

Office for Communications, British NRA 

OJ 

PC 

PND 

PPC 

PPO 

R&D 

Official Journal of the European Union 

Personal Computer 

Portable Navigation Devices 

Public Power Corporation 

Public Postal Operators 

Research and Development 

R&D&I 

Research, Development and Innovation 

R&R 

RTR 

EN 

Rescue and Restructuring 

Rundfunk und Telekom Regulierungs-GmbH, Austrian NRA 

112 

   EN 

 
SAAP 

SCF 

SEPA 

SGEI 

SME 

SMR 

SO 

SP 

SSO 

State Aid Action Plan 

SEPA Card Framework 

Single European Payments Area 

Services of General Economic Interest 

Small and Medium-sized Enterprises 

Single Market Review 

Statement of Objections 

Simplified Procedure 

Supplementary Statement of Objections 

UCWG 

Unilateral Conduct Working Group 

UK 

UKE 

United Kingdom 

Urząd Komunikacji Elektronicznej, Polish NRA 

UNCTAD 

United Nations Conference on Trade and Development 

US 

USD 

USP 

VoIP 

United States of America 

United States Dollar 

Universal Service Providers 

Voice over Internet Protocol 

EN 

113 

   EN