Report from the Commission - Report on Competition Policy 2008 {SEC(2009) 1004}
Date: 2009-07-23
Institutions: European Commission
Subjects: European Commission, competition policy, control of State aid, merger control, report

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.7.2009 
COM(2009) 374 final 

REPORT FROM THE COMMISSION 

Report on Competition Policy 2008 

{SEC(2009) 1004}

EN 

   EN 

 
 
 
  
 
 
Introduction 

EN 

   EN 

 
 
 
 
REPORT FROM THE COMMISSION 

Report on Competition Policy 2008 

{SEC(2009) 1004}

EN 

3 

   EN 

 
 
 
Introduction 

1. 

2. 

3. 

This  year,  for  the  first  time,  the  Annual  Report  on  Competition  features  a  chapter 
focusing  on  a  topic  that  is  considered  to  be  of  particular  importance  in  the  field  of 
competition policy. The topic chosen for this year is "Cartels and consumers". 

The  first  section  of  this  report  provides  an  overview  of  how  the  instruments  of 
competition policy, namely the anti-trust rules and the rules on mergers and on State 
aid, were further developed and applied. The second section discusses how these and 
other instruments were deployed in selected sectors. Section three gives an overview 
of  consumer  related  activities  developed  in  the  past  year.  Section  four  focuses  on 
cooperation  within  the  European  Competition  Network  (ECN)  and  with  national 
courts, while section five deals with international activities. Lastly, section six gives 
a brief description of inter-institutional cooperation.  

Due  to  the  very  difficult  financial  and  economic  circumstances  that  Europe 
experienced  in  2008,  and  the  way  they  impacted  on  the  viability  of  European 
businesses,  particular  attention  is  paid  in  this  year's  Report  to  the  European 
Commission's assessment of rescue and restructuring measures. A request to that end 
was also  made  by  the  European  Parliament in its resolution concerning the Annual 
Reports on Competition Policy for the years 2006 and 20071. 

4. 

Further information can be found in a detailed Commission Staff Working Document 
and on the website of DG Competition2. 

1 

2 

See  point  30  of  the  European  Parliament  resolution  of  10 March  2009  on  the  Report  on  competition 
policy 2006 and 2007 (2008/2243(INI)). 
http://ec.europa.eu/competition/index_en.html 

EN 

4 

   EN 

 
                                                 
5. 

6. 

7. 

8. 

FOCUS CHAPTER: CARTELS AND CONSUMERS 

The  fight  against  cartels  is  central  to  ensuring  that  the  benefits  of  a  properly 
functioning competition regime are offered to the final consumer in a given market 
for  products  or  services.  Cartels  are  amongst  the  most  serious  violation  of 
competition  law.  They  shield  participants  from  competition,  thus  allowing  them  to 
raise prices, restrict output and divide markets. As a result, the money ends up in the 
wrong  place,  harming  consumers  through  higher  prices  and  leading  to  a  narrower 
choice of products and services. 

Cases  such  as  the  Banana  cartel3  show  that  the  impact  of  the  cartel  on  final 
consumers  may  be  direct  when  they  are  purchaser  or  user  of  a  product  or  service. 
Higher  prices  that  result  from  cartels  relating  to  consumer  products  are  felt  in  the 
pockets  of  those  buying  these  everyday  products  and  services.  Commission 
enforcement action – and that of the Competition Authorities in the Member States - 
puts  a  stop  to  this  overcharging,  preventing it  continuing  into  the  future  and  deters 
companies from engaging in such behaviour again. 

Also in markets where the direct customers are industrial clients – where the breach 
of  competition  law  takes  place  earlier  in  the  supply  chain  -  consumers  ultimately 
benefit from fighting such cartels. For instance, in the Car Glass4 case, the product 
was car windows which consumers purchase as part of their cars and when they want 
repairs done. Overcharging for component parts such as car windows will affect the 
overall  price  of  the  car  or  repair.  The  advantages  of  lower  prices  resulting  from 
competition  cannot  be  passed  on  to  consumers.  Even  if  a  higher  price  for  an  input 
product can be absorbed by a manufacturer before he sells on the final product, this 
can still ultimately create a detriment to the consumer – for example, if it results in 
other  services  being  cut  or  less  money  being  available  for  innovation  and  the 
development of future, better products. Although the amounts of price increases may 
be  small,  when  combined  these  increases  can  impact  on  large  investments  in 
innovation,  products  or  services.  In  turn,  the  benefits  of  competition  are  lost  and, 
hence, overall welfare suffers. 

The examples mentioned above demonstrate why it is essential that the Commission 
takes  action  to  both  stop  and  prevent  cartels.  When  the  Commission  prohibits 
anticompetitive behaviour and fines cartel members, its ultimate purpose is not only 
to  punish  those  members  for  past  behaviour,  but  above  all  to  deter  every  company 
from continuing or engaging in anti-competitive behaviour. The Commission itself is 
not involved in seeking compensation for customers in individual cases. Actions for 
recovery of damages following  Commission decisions can be submitted to national 
courts (for details, see Chapter 11 of the White Paper on damages actions for breach 
of the EC antitrust rules5, which puts forward concrete policy proposals to overcome 
the obstacles which currently limit effective compensation). 

3 
4 
5 

Press Release IP/08/1509, 15.10.2008 
Press Release IP/08/1685, 12.11.2008. 
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 

EN 

5 

   EN 

 
 
                                                 
9. 

10. 

11. 

The  preventive  effect  when  fines  are  imposed  is  wider  than  the  actual  individual 
case. Through its fining policy, the Commission encourages a culture of compliance 
with competition law at the level of the entire company group. Hence, even though 
the action leading to a breach of the law is committed by individuals within a smaller 
entity of an organisation or subsidiary company, the fine at corporate level shines the 
spotlight  on  the  responsibility  of  executives  and  management,  boards  and 
shareholders, to take competition law seriously and to strive to prevent breaches of 
the law by any member of staff within any of the businesses in which the group is 
involved.  In  this  way  a  cartel  fine  is  likely  to  have  an  impact  on  a  wider  sector  of 
industry, which is likely to learn about the case and the risks associated with entering 
into  cartel  arrangements.  Lastly,  the  Commission  imposes  higher  fines  on  repeat 
offenders:  where  multiple  infringements  of  competition  law  are  committed  by  the 
same  company,  it  is  clear  that  the  message  about  a  culture  of  compliance  has  not 
been  taken  sufficiently  seriously,  and  a  stronger  deterrent  would  seem  to  be 
necessary.  In  the  Car  Glass  case,  for  example,  the  Commission  increased  the  fines 
for  the  company  Saint-Gobain  by  60%  because  it  was  a  repeat  offender,  having 
previously been fined for two cartels in the flat glass sector6. Such signals underline 
the  need  for  compliance,  as  a  continued  or  new  offence  will  attract  a  much  higher 
fine. 

The Commission can uncover cartels in a number of ways; by analysing a market for 
evidence  of  anti-competitive  behaviour  or  by  obtaining  evidence  from  different 
sources. Such evidence may come directly from consumers or other customers of the 
infringing  companies.  Alternatively,  it  may  also  come  from  individuals  linked  to  a 
company who want to “blow the whistle”, or even from cartel members themselves, 
making  use of  the  Leniency Programme.  Indeed, strong cartel sanctions provide an 
incentive for them to withdraw from the secret agreement and to cooperate with the 
Commission  under  the  Leniency  Programme  by  providing  incriminating  evidence. 
This set of provisions is not aimed as such at enabling some infringers to escape fines 
for  breaching  the  law;  instead,  it  pursues  the  higher  objective  of  putting  an  end  to, 
and allowing a targeted investigation of, damaging corporate agreements. 

Under  the  2006  Leniency  Programme,  the  first  company  to  provide  evidence  can 
obtain full immunity from fines. This benefit acts as an extremely strong incentive to 
break the “code of silence” of cartels. In the Candle Waxes cartel, the first company 
to  contact  the  Commission  with  information  was  granted  full  immunity;  and  three 
other  cartel  members  each  received  a  reduction  in  fines  corresponding  to  the  time 
when they came forward and their level of cooperation. Indeed, the pre-condition for 
any beneficial treatment is that undertakings provide all evidence in their possession 
and hence help to prove the existence of a cartel. 

12. 

In 2008 the Commission continued its strong enforcement against cartels, fining 34 
undertakings7 a  total  of  EUR 2 271  million in seven cartel cases8. In the  Car  Glass 

6 

7 

8 

Commission Decision of 23 July 1984 in Case COMP/30.988 Flat Glass (Benelux), OJ L 212, 8.8.1984, 
p. 13 and Commission Decision of 7 December 1988 in Case COMP/31.906 Flat glass (Italy), OJ L 33, 
4.2.1989, p. 44. 
Figure excluding the companies that received immunity from fines for cooperation under the Leniency 
Notice. 
NBR, International Removal Services, Sodium Chlorate, Aluminium Fluoride, Candle Waxes, Bananas 
and Car Glass. 

EN 

6 

   EN 

 
                                                 
13. 

14. 

case the Commission imposed the highest fine for a cartel case to date, amounting to 
EUR 1 383 million. 

In 2008 the Commission services also made some general estimates of the harm to 
the  economy  caused  by  cartels.  The  Commission  services  looked  at  the  18  cartels 
which were the subject of Commission decisions during the years 2005 to 2007, the 
size  of  the  markets  involved,  the  cartels’  duration  and  the  very  conservative 
assumptions  regarding  the  estimated  overcharge.  Assuming  an  overcharge  of 
between  5%  to  15%,  the  harm  suffered  ranges  from  around  EUR 4 billion  to 
EUR 11 billion for these 18 cartels. Taking the middle point of this overcharge range 
-  10%  -  gives  a  conservative  estimate  of  consumer  harm  of  EUR 7.6 billion  due  to 
these cartels. Even this figure is probably too low. Indeed, economic literature on the 
subject suggests that the average overcharge in prices can be as high as 20% to 25%. 

In  addition,  this  figure  does  not  take  into  account  the  benefits  of  deterrence  and 
fostering  compliance  among  undertakings  through  prohibition  decisions  and  the 
imposition of fines. Strong cartel enforcement ensures that cartels that may otherwise 
be  formed  are  discouraged.  The  Office  of  Fair  Trading  (OFT)  has  recently  carried 
out a wide-ranging expert survey on this matter. This survey suggests that, for every 
cartel  discovered,  five  cartels  may  not  have  been  put  into  effect  or  may  have  been 
abandoned. This assumption suggests that an additional saving flowing from the 18 
cartel  decisions  in  2005-2007,  possibly  of  the  order  of  some  EUR 60 billion,  could 
have accrued. 

1. 

INSTRUMENTS 

1.1. 

Anti-trust – Articles 81 and 82 EC 

1.1.1. 

Shaping the rules and policy 

15. 

16. 

17. 

9 

10 

On  2 April,  the  Commission  adopted  the  White  Paper  on  damages  actions  for 
breach of the EU anti-trust rules9, which is part of an ongoing Commission policy 
project. 

The  European  Court  of  Justice  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 EC10; however, 
the Commission has found that, in practice, victims of anti-trust infringements only 
rarely obtain compensation. 

The  White  Paper  puts  forward  concrete proposals  to  overcome  the  obstacles  which 
currently  block  effective  compensation,  whilst  ensuring  respect  for  European  legal 
systems  and  traditions.  The  recommendations  balance  the  rights  and  obligations  of 
both  the  claimant  and  the  defendant,  and  include  safeguards  against  abuses  of 

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. 

EN 

7 

   EN 

 
                                                 
18. 

19. 

litigation. The primary objective pursued is to improve compensation for all victims. 
At the same time, more effective compensation mechanisms will inherently produce 
beneficial  deterrent  effects.  The  Commission  also  intends  to  draw  up  non-binding 
guidance  for  quantification  of  damages  in  anti-trust  cases  in  order  to  facilitate  this 
calculation. 

In the field of anti-cartel enforcement, a new mechanism has been introduced which 
will allow the Commission to settle cartel cases by means of a simplified procedure. 
The  settlements  package,  which  entered  into  force  on  1 July  2008,  consists  of  a 
Commission  Regulation11  accompanied  by  a  Commission  Notice12  explaining  the 
new system in detail. If companies, 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, the fine imposed on the parties will be reduced 
by 10%. Settlements aim to simplify the administrative proceedings and might result 
in  fewer  Commission  resources  being  devoted  to  litigation  before  the  Community 
Courts  in  cartel  cases,  which  in  turn  will  free  up  Commission  resources  to  pursue 
other cartel cases and open new investigations. 

On 3 December, the Commission issued Guidance on enforcement priorities when 
dealing  with  abusive  exclusionary  conduct  by  dominant  undertakings.  The 
Commission will, as a matter of priority, pursue 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 will use to determine whether the exclusionary conduct of a dominant 
undertaking  is  likely  to  result  in  consumer  harm.  The  Guidance  contains  a  general 
part,  which  sets  out  the  main  principles  of  an  effects-based  approach  determining 
enforcement  priorities  in  relation  to  Article  82  EC,  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  prompt  an  intervention  from  the 
Commission  and,  even  more  importantly,  should  dissuade  dominant  undertakings 
from engaging in certain types of conduct in the first place. 

20. 

During 2008 the Commission also initiated, or continued, the revision of the Block 
Exemption Regulation applicable to vertical agreements13, the Motor Vehicle Block 
Exemption  Regulation14  and  the  Block  Exemption  Regulation  in  the  insurance 
sector15. 

11 

12 

13 

14 

15 

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 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). 
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). 

EN 

8 

   EN 

 
                                                 
1.1.2.  Applying the rules 

21. 

22. 

23. 

24. 

25. 

16 

17 

18 
19 
20 

In  2008,  as  regards  the  application  of  the  anti-trust  rules  to  cartel  cases,  the 
Commission  adopted  decisions  to  fine  34  undertakings16  in  seven  cartel  cases17  a 
total of EUR 2 271 million. The Commission imposed the highest fine per cartel case 
to date of EUR 1 383 million in the Car Glass case.  

Concerning  the  application  of  the  anti-trust  rules  to  non-cartel  cases,  the 
Commission  adopted,  in  July,  a  decision18  prohibiting  EEA  collecting  societies 
which  are  members  of  the  International  Confederation  of  Societies  of  Authors  and 
Composers  (CISAC)  from  maintaining  membership  restrictions  and  exclusivity 
clauses  in  their  reciprocal  bilateral  agreement  and  a  concerted  practice  concerning 
the territorial delineation of these agreements. 

As  far  as  abuses  of  dominant  position  are  concerned,  following  a  statement  of 
objections  (SO)  in  the  Microsoft  case  in  March  2007,  the  Commission  adopted  on 
27 February  a  decision  concluding  that  Microsoft  had  not  complied  with  its 
obligation to offer complete and accurate interoperability information on reasonable 
and non-discriminatory terms. A definitive penalty payment of EUR 899 million was 
imposed  on  Microsoft19.  Microsoft  was  the  first  company  in  the  history  of 
competition  policy  in  the  EU  to  have  periodic  penalty  payments  imposed  on  it  for 
non-compliance  with  a  previous  decision  from  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 Decision20. 

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  has  infringed  EC  Treaty  rules  on  the  abuse  of  a  dominant  position 
(Article  82)  with  the  aim  of  excluding  its  main  rival,  AMD,  from  the  x86  Central 
Processing Units (CPU) market. 

Lastly,  the  Commission  adopted  in  November  a  commitment  decision  rendering 
legally  binding  commitments  offered  by  E.ON  to  address  concerns  raised  in  the 
course of an investigation pursuant to Article 82 EC, which started as a follow-up to 
the energy sector inquiry. 

Figure excluding the companies that received immunity from fines for cooperation under the Leniency 
Notice. 
NBR, international removal services, sodium chlorate, aluminium fluoride, candle waxes, bananas and 
car glass. 
Case COMP/38.698 CISAC. 
Case COMP/34.792 Microsoft (not yet published in the OJ). 
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. 

EN 

9 

   EN 

 
                                                 
1.2. 

26. 

27. 

28. 

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

The Commission has also been active in the area of Article 86 EC, which prevents 
Member  States  from enacting or maintaining in force any measures contrary to the 
EC  Treaty  rules,  in  general,  and  to  the  competition  rules,  in  particular,  regarding 
public  undertakings  and  undertakings  to  which  Member  States  grant  special  or 
exclusive rights. 

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 Greece21. 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 decision22 finding that the amendment of 
the Slovak Postal Act constituted an infringement of Article 86 in conjunction with 
Article  82  EC  since  it  included  into  the  reserved  area  ("postal  monopoly")  the 
delivery  stage  of  hybrid  mail  services23,  a  service  which  had  previously  been 
liberalised. Neither the Slovak State nor the Slovenská Pošta (the postal incumbent) 
had  demonstrated  that  this  extension  of  the  postal  monopoly  was  necessary  for  the 
provision  of  the  postal  universal  service.  Since  the  Republic  of  Slovakia  failed  to 
inform  the  Commission  about  any  measures  undertaken  to  put  an  end  to  the 
infringement,  the  latter  initiated  an  infringement  procedure  against  the  Republic  of 
Slovakia for non compliance with the decision of 7 October24. 

1.3.  Merger control 

1.3.1. 

Shaping the rules and policy 

29. 

Remedies are modifications to a merger proposed by the merging parties to eliminate 
competition concerns identified by the Commission. To provide improved guidance 
on  questions  related  to  remedies,  the  Commission  adopted,  on  22 October,  a  new 
Notice  on  Remedies25  while  also  amending  the  Implementing  Regulation26.  The 

21 
22 
23 

24 
25 

26 

See Press Release IP/08/386, 5.3.2008. 
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. 
See Press Release IP/08/1997, 17.12.2008. 
Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under 
Commission  Regulation  (EC)  No  802/2004,  (the  "Merger  Implementation  Regulation"),  (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). 

EN 

10 

   EN 

 
                                                 
remedies  reform  is  mainly  a  codification  of  recent  past  practice  of  the  Community 
Courts, but also takes into account the conclusions drawn from the Remedies Study27 
and the replies to the public consultation on a draft Remedies Notice. 

30. 

The  reform  imposes  more  stringent  information  requirements  on  merging  parties, 
requiring the notifying parties to systematise the information to be provided. It also 
clarifies and tightens up the requirements for the sufficient scope of divestitures and 
for  the  suitability  of  purchasers,  and  explains  the  application  of  "up-front  buyer" 
provisions  and  "fix-it-first"  solutions.  The  Notice  underlines  that  non-divestiture 
remedies  are  only  acceptable  where  they  are  equivalent  in  their  effects  to  a 
divestiture and that difficulties in monitoring and risks of ineffectiveness may lead to 
the rejection of such remedies. 

1.3.2.  Applying the rules 

31. 

The  level  of  merger  notifications  continued  at  record  levels  in  2008  with  a  total  of 
347 transactions being notified to the Commission, the third highest level on record. 
The Commission adopted a total of 340 final decisions during the year. Of these final 
decisions, 307 transactions were approved without conditions during Phase I. A total 
of 118 decisions were approved 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. 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 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. 

1.4. 

State aid control 

1.4.1. 

Shaping the rules and policy 

32. 

33. 

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)28. However, 
the 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 crisis, the Commission first gave initial guidance on 
the  application  of  State  aid  rules  to  measures  taken  in  relation  to  financial 
institutions29, which exceptionally were based on Article 87(3)(b) of the EC Treaty 
which allows for aid to remedy a serious disturbance in the economy of a Member 
State.  Subsequently,  the  Commission  supplemented  and  refined  its  guidance  with  a 
new  Communication  on  how  Member  States  can  recapitalise  banks  in  the  current 
financial crisis30 to ensure adequate levels of lending to the rest of the economy and 

27 
28 

29 
30 

Merger Remedies Study, DG Competition, European Commission, October 2005. 
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. 
OJ C 270, 25.10.2008, p. 8. 
OJ C 10, 15.1.2009, p. 2. 

EN 

11 

   EN 

 
                                                 
34. 

35. 

36. 

stabilise  financial  markets,  whilst  avoiding  excessive  distortions  of  competition.  In 
addition, the Commission adopted a new temporary framework31 providing Member 
States with additional possibilities to tackle the effects  of the  credit squeeze  on  the 
real  economy.  All  measures  are  time-limited  until  the  end  of  2010,  although  the 
Commission,  based  on  Member  States'  reports,  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)32  giving  automatic 
approval for a range of aid measures33 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.  In  the  context  of  the  Climate  Change 
Package,  the  Commission  adopted  new  guidelines  on  State  aid  for  environmental 
protection34  which  introduce  a  standard  assessment  for  minor  cases  and  a  detailed 
assessment  for  cases  that  may  involve  significant  distortions  of  competition.  The 
Commission also prolonged the Framework on State aid rules for shipbuilding35 for a 
further three years, until 31 December 2011. A new Notice on State aid in the form 
of  guarantees36  sets  out  clear  and  transparent  methodologies  to  calculate  the  aid 
element in a guarantee and provides simplified rules for SMEs, including predefined 
safe-harbour premiums and single premium rates for low-amount guarantees. 

the  possible  extension  until  2012  of 

In  addition,  public  consultations  were  launched  on  new  rules  relating  to  public 
service  broadcasting, 
the  Cinema 
Communication  (scheduled  for  adoption  in  January  2009),  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 on disadvantaged and 
disabled workers for State aid cases subject to individual notification. 

The  Commission  also  launched  in  2008  a  number  of  public  consultations  on 
procedural  issues,  such  as  a  consultation  on  a  draft  Best  Practice  Code  (BPC)37  on 
the  conduct  of  State  aid  control  proceedings  and  the  draft  notice  on  Simplified 
procedure  (SP)  for  the  treatment  of  certain  types  of  State  aid.  The  aim  of  both 
documents is to ensure greater transparency, predictability and efficiency of State aid 
procedures in line with the SAAP. The discussion with the Member States and other 
stakeholders  regarding  the  BPC  and  SP  will  take  place  early  2009.  The  drafts  are 
currently due to be adopted in the first half of 2009. The Commission also consulted 
on  a  draft  Commission  Notice  on  the  enforcement  of  State  aid  law  by  national 
courts38. 

37. 

In  2008,  the  Commission  continued  its  efforts  to  improve  the  enforcement  and 
monitoring  of  State  aid  decisions.  The  Commission  is  seeking  to  achieve,  on  the 

31 
32 
33 

34 
35 
36 
37 
38 

OJ C 16, 21.1.2009, p. 1. 
OJ L 214, 9.8.2008, p. 3. 
Aid in favour of SME, research, innovation, regional development, training, employment, risk capital, 
environmental protection and entrepreneurship, among others. 
OJ C 82, 1.4.2008, p. 1. 
OJ C 173, 8.7.2008, p. 3. 
OJ C 155, 20.6.2008, p. 10 and OJ C 244, 25.9.2008, p. 32. 
See Press Release IP/08/1950, 11.12.2008. 
It would replace the 1995 Notice on Cooperation between national courts and the Commission in the 
State aid field (OJ C 312, 23.11.1995, p. 8). 

EN 

12 

   EN 

 
                                                 
basis  of  the  recovery  notice  adopted  in  200739,  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. 
This  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 actually been recovered by 
the end of 2008. In addition, a further EUR 2.5 billion in recovery interest had been 
recovered. 

38. 

As announced in the SAAP, the Commission continued to take a strict line towards 
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 decided to initiate Article 88(2) EC in five cases involving Italy and Slovakia, as 
well as decisions to proceed with Article 228(2) EC in eight cases involving Italy and 
Spain. 

39. 

In the interest of increased transparency and better communication, DG Competition 
has  published  on  its  webpage  a  Vademecum  on  State  aid  rules40  summarizing  the 
main rules applicable to State aid control. 

1.4.2.  Applying the rules 

40. 

41. 

42. 

The update of the State aid Scoreboard41 in autumn 2008 shows that Member States 
are  increasingly  making  use  of  the  possibilities  offered  by  the  recently  revised  EU 
State aid rules to better target their aid. Member States awarded on average 80% of 
their  aid  to  horizontal  objectives  in  2007,  compared  with  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 have been implemented promptly in compliance with State aid rules. 

Over the last 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,  following  the  recent  financial  crisis,  the  share  of  rescue 
and restructuring aid is likely to increase significantly for some countries in 2008. 

In  2008,  the  Commission  approved  88  notified  schemes  on  the  basis  of  the  2006 
Community  Framework  for  research  and  development  and  innovation42;  66  of 
these were purely R&D schemes, nine were innovation-oriented aid schemes and 13 
were mixed, pursuing both R&D and innovation objectives. 

39 
40 

41 
42 

OJ C 272, 15.11.2007, p. 4. 
The Vademecum is available at 
http://ec.europa.eu/competition/state_aid/studies_reports/studies_reports.html#vademecum 
COM(2008) 751 final, 17.11.2008. 
OJ C 323, 30.12.2006, p. 1. 

EN 

13 

   EN 

 
                                                 
43. 

44. 

45. 

In  addition,  an  important  decision43  was  adopted  in  several  individual  cases 
involving  the  Italian  aeronautic  sector,  following  an  assessment  on  the  basis  of  the 
Community frameworks for State aid for R&D of 199644 and 198645. The decision, 
adopted  on  11 March,  covers  17  individual  R&D  projects  in  the  aeronautic  sector 
supported  by  the  Italian  authorities  during  the  1990s.  The  decision  requires  the 
immediate  reimbursement  of  the  loans  for  most  of  the  individual  projects,  plus 
interest  on  arrears  in  certain  cases.  The  beneficiaries  have  reimbursed  around 
EUR 350 million within the time limit of two months laid down by the decision. 

In  the area of risk  capital financing for  SMEs, the Commission approved 18 risk 
capital schemes under the Risk Capital Guidelines46. Eleven schemes were assessed 
on the basis of Chapter 4 of the guidelines, since they complied with the safe harbour 
provisions allowing a light assessment; three schemes were assessed under Chapter 
5, following a detailed assessment47. In three cases the Commission considered that 
the scheme did not involve State aid48. One scheme was partly considered as no aid 
and partly assessed under Chapter 4 of the Guidelines49. 

In the field of industrial restructuring, the Commission adopted a decision requesting 
Romania  to  recover  EUR  27 million  unlawful  aid  in  relation  to  the  privatisation  of 
Automobile Craiova, which had been sold on conditions aiming at ensuring a certain 
level  of  production  and  employment,  accepting  in  exchange  a  lower  sales  price50. 
Furthermore,  following  several  years  of  investigation,  the  Commission  concluded 
that the attempts of the Polish authorities to restructure the shipyards in Gdynia and 
Szczecin  and  to  return  them  to  viability  had  failed51.  As  a  result,  the  Commission 
required  Poland  to  recover  the  illegal  State  aid  from  the  shipyards  through  a 
controlled sale of the yards' assets and subsequent liquidation of the companies. 

2. 

SECTOR DEVELOPMENTS 

2.1. 

Energy and environment 

46. 

The  Internal  Energy  Market  package  proposed  by 
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 

43 
44 
45 
46 
47 

48 

49 
50 

51 

Case C 61/2003 Loi aéronautique italienne N808/85 cas individuels. 
OJ C 45, 17.2.1996, p. 5. 
OJ C 83, 11.4.1986, p. 2. 
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  Press  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 

14 

   EN 

 
                                                 
47. 

48. 

49. 

50. 

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. 

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  policies  on  climate  change  and 
renewable  energy,  the  package  also  includes  new  guidelines  on  State  aid  for 
environmental  protection,  specifying 
for 
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 is exempted from notification if certain criteria are met.  

the  conditions  under  which  aid 

On  13 November  the  Commission  adopted  a  Second  Strategic  Energy  Review 
package52,  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 the security of energy supply. 

Properly functioning energy markets require that entrants can have access to energy 
networks  and  customers.  The  Commission  has  continued  to  focus  in  particular  on 
three general types of abuses in the electricity and gas sectors that involve the main 
areas  of  market  malfunctioning  identified  by  the  sector  inquiry.  These  antitrust 
investigations focus on exclusionary conduct, exploitative abuses and collusion. 

In  2006  the  Commission  initiated  investigations  into  the  German  electricity  market 
as  a  follow-up  to  the  energy  sector  inquiry53.  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.  Moreover,  the  Commission  had 
concerns  that  E.ON  had  devised  and  implemented  a  strategy  to  deter  third  parties 
from investing in electricity generation; and secondly that, as a transmission system 
operator, it was favouring its own production in the secondary electricity balancing 
market54.  In  June,  the  Commission  consulted  interested  parties  on  the  structural 

52 
53 
54 

See Press release IP/08/1696, 13.11.2008. 
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. 

EN 

15 

   EN 

 
                                                 
commitments  proposed  by  E.ON  to  address  these  concerns  of  anticompetitive 
behaviour  on  the  German  electricity  markets55.  The  results  confirmed  that  the 
commitments were proportionate and necessary to remedy the concerns. As a result, 
the  Commission  adopted  a  decision  on  26 November  rendering  the  commitments 
offered by E.ON legally binding, and closed its investigation56. 

51. 

As  regards  other  cases  concerning  the  electricity  market,  the  Commission  issued  a 
statement  of  objections  to  Electricité  de  France  (EdF)  in  December  alleging 
customer  foreclosure  through  de  facto  and/or  de  iure  exclusive  long-term  contracts 
between  EdF  and  large  industrial  users  in  France57.  Furthermore,  the  Commission 
continued  its  investigation  in  Suez/Electrabel  dealing  with  the  same  alleged 
behaviour  in  Belgium58.  After  having  carried  out  surprise  inspections  in  2006  on 
E.ON  AG  (E.ON),  E.ON  Ruhrgas  AG  and  Gaz  de  France  (GdF)  premises  in 
Germany  and  France59  and  formally  opening  proceedings  in  July  200760,  the 
Commission issued a statement of objections to E.ON and GdF. 

2.2. 

Financial services 

52. 

53. 

54. 

55. 

At  the  beginning  of  the  autumn,  the  financial  crisis  hit  the  economies  of  EU 
Member  States  in  a  systemic  manner.  Many  EU  governments  took  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 of State aid control in particular – the role 
of  the  Commission  has  been  to  support  financial  stability  by  promptly  giving  legal 
certainty to the measures taken by Member States. The Commission also contributed 
to  maintaining  a  level  playing  field  and  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"61, the Commission clarified its general approach and provided guidance on a 
number of State interventions, particularly on State guarantees, which had been the 
most widespread form of response to the crisis in the initial phase. 

Then, the recapitalisation of banks became 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"62. 

56. 

The  consistent  methodology  set  out  in  these  guidance  documents  has  enabled  the 
rapid  design  and  approval  of  a  large  number  of  national  schemes  and  individual 

55 
56 
57 
58 
59 
60 
61 
62 

See MEMO/08/396, 12.6.2008. 
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. 
OJ C 270, 25.10.2008, p. 8. 
OJ C 10, 15.1.2009, p. 2. 

EN 

16 

   EN 

 
                                                 
57. 

58. 

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  LB63;  IKB64;  West  LB65;  Roskilde  Bank66;  Hypo  Real  Estate67; 
Bradford and Bingley68. 

Due  to  the  deepening  of  the  crisis,  the  Commission  decided  at  the  beginning  of 
October  to  approve  State  aid  under  Art.  87(3)(b)  on  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 
(Denmark69,  Finland70,  France71,  Ireland72,  Italy73,  Latvia74,  the  Netherlands75, 
Portugal76,  Slovenia77,  Spain78  and  Sweden79);  two  recapitalisation  schemes 
(France80  and  Italy81);  one  asset  purchase  scheme  (Spain82);  and  four  holistic 
schemes  containing  two  or  more  of  the  above  elements  (Austria83,  Germany84, 
Greece85, United Kingdom86). 

59. 

The  Commission  also  approved  a  number  of  individual  cases  in  2008,  including 
recapitalisation, guarantee and liquidity cases: ING87, KBC88, Parex89, SNS Reaal90, 
Bayern LB91, Fortis92, Dexia93, Nord LB94, guarantee for IKB95, Carnegie Sweden96, 
Aegon97, Fortis Bank and Fortis Bank Luxembourg98. 

63 
64 
65 
66 
67 
68 
69 
70 
71 

72 
73 
74 
75 
76 
77 
78 
79 
80 
81 
82 
83 
84 
85 
86 
87 
88 
89 
90 
91 
92 
93 
94 

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. 
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. 

EN 

17 

   EN 

 
                                                 
60. 

61. 

62. 

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

The financial crisis had a severe impact on the real 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. The challenge for 
the  Commission  was  to  avoid  public  intervention  which  would  distort  competitive 
conditions on the Internal Market and undermine  the objective of properly targeted 
State  aid.  Nevertheless,  the  Commission  has  acknowledged  that,  under  certain 
conditions, there is a need for State aid to tackle the crisis. However, State aid should 
not  be  used  to  postpone  or  avoid  a  necessary  restructuring  of  companies  facing 
structural difficulties. With this objective in mind, the Commission took several steps 
to address the situation in the real economy, in addition to the specific actions taken 
in the financial and banking sector. 

In  particular,  the  Commission  adopted  the  "Temporary  Framework  for  State  aid 
measures to support access to finance in the current financial and economic crisis"99. 
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, for example, under certain conditions and until the 
end of 2010, grant: 

– 

– 

– 

– 

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; 

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

63. 

The Commission adopted a proactive approach by ensuring that crisis measures were 
approved  very  swiftly.  The  first  measures  were  approved  at  the  end  of  the  year  (N 
661/08 KfW-run loan component of the German Konjunkturprogramm and N 668/08 
Federal Framework "Small amounts of compatible aid", both in Germany). 

95 
96 
97 
98 
99 

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. 
OJ C 16, 22.1.2009, p. 1. 

EN 

18 

   EN 

 
                                                                                                                                                         
2.3. 

Electronic communications 

64. 

65. 

66. 

The  electronic  communications  sector  in  the  EU  continues  to  experience  rapid 
technological and commercial change and, in 2008, for the sixth consecutive year, it 
increased  investment  in  the  sector.  The  transition  from  former  national  monopolies 
towards competition continued in 2008. 

The  EU  regulatory  framework  for  electronic  communications  (Regulatory 
Framework)100, which is designed to facilitate access to legacy infrastructure, foster 
investment in alternative network infrastructure and bring choice and lower prices for 
consumers,  still  continues  to  provide  the  legal  framework  for  the  vast  majority  of 
providers of electronic communications services. In 2008, the Commission assessed 
121  notifications  from  National  Regulatory  Authorities  and  adopted  83  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. 

The Regulatory Framework and the underlying competition law principles allow the 
defining  of  sub-national  geographic  markets  where  different  conditions  of 
competition  clearly  arise,  which  allows  regulation  to  focus  on  those  areas  where 
there is still a need for ex ante regulation. This approach has been adopted by several 
National  Regulatory  Authorities  (NRA)  in  their  efforts  at  deregulation  and 
assessment  of  electronic  communication  markets.  Against  the  background  of 
increasing  competition,  particularly  in  the  retail  markets,  the  2007  Commission 
Recommendation101 on the relevant markets susceptible to ex ante regulation is now 
producing  results.  In  2008,  most  NRAs  concluded,  that,  even  when  national 
specificities were taken into account, all or a number of the markets no longer listed 
in the Recommendation needed to be deregulated. 

67. 

The Commission continued its work on the review of the Regulatory Framework 
in  2008.  On  24 September,  the  European  Parliament  adopted  opinions  on  the 
Commission's  legislative  proposals  in  its  first  reading,  and  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. 

100 

101 

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

EN 

19 

   EN 

 
                                                 
68. 

69. 

In  view  of  the  fact  that  termination  rates  in  the  EU  are  high  and  not  regulated 
consistently  in  the  EU,  the  Commission  has  proposed  a  Recommendation,  to  be 
adopted  in  2009,  that  would  bring  termination  rates  down  to  an  efficient  level, 
thereby  ensuring  a  consistent  approach  to  regulating  these  rates.  In  addition,  the 
Commission is currently working towards a Recommendation on the appropriate 
regulatory  approach  and  remedies  applicable  in  the  context  of  new  generation 
network  access.  The  Commission  also  streamlined  its  Recommendation  on 
notifications,  time  limits  and  consultations  provided  for  in  Article  7  of  the 
Framework  Directive102  with  a  view  of  reducing  bureaucracy  and  improving 
efficiency in the cooperation between the NRA and the Commission. 

In  the  field  of  State  aid  in  the  electronic  communications  sector,  the  Commission 
encourages  State  aid  measures  that  are  aimed  at  providing  equitable  broadband 
coverage  at  affordable  prices  for  European  citizens.  In  2008,  the  Commission 
identified  two  major  trends  of  public  interventions  on  the  broadband  market. 
Whereas  some  Member  States  focus  primarily  on  supporting  affordable  basic 
broadband services, typically in rural areas where such services do not exist, with a 
view  to  providing  broadband  services  for  all  citizens  and  companies,  the 
Commission has noted that public intervention in some Member States is gradually 
shifting towards support for very high speed broadband networks, the so-called "next 
generation"  networks103.  Commission  decisions  on  State  aid  to  broadband  fell  into 
the former category in 2008. 

70. 

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. 

2.4. 

Information technology 

71. 

72. 

The  information  and  communication  technology  (ICT)  sector  is  characterised  by 
digital convergence and the concomitant and growing importance of interoperability 
and  standard  setting.  The  market  is  moving  towards  more  convergent  services  and 
vertical and horizontal integration, where companies seek to control digital as well as 
physical networks, and are aiming to set and control the standard platforms. 

As  regards  competition  enforcement  in  the  ICT  sector,  and  following  up  the 
Commission's proceedings against Microsoft and the reduction in its licence fees for 
interoperability 
its 
"interoperability  principles"  and  disclosed  a  wide  range  of  information  relating  to 
interoperability on its website on 21 February. 

in  2007,  Microsoft  voluntarily 

information 

launched 

73. 

In  the  Intel  case,  the  Commission  issued  a  SSO  on  17 June,  reinforcing  its 
preliminary view expressed in a SO of July 2007 that Intel had infringed EC Treaty 

102 

103 

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). 
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 

20 

   EN 

 
                                                 
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.  

74. 

In the field of merger control, the Commission issued two decisions in the field of 
the  satellite  navigation  industry.  On  14 May,  the  Commission  approved104  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  proposed  acquisition105  of 
NAVTEQ,  the  only  credible  competitor  to  Tele  Atlas,  by  Nokia,  a  manufacturer  of 
mobile  handsets,  was  approved.  Both  transactions  were  vertical  in  nature  and 
required an in-depth analysis applying the recently adopted Non-Horizontal Merger 
Guidelines. 

2.5.  Media 

75. 

76. 

77. 

78. 

104 
105 
106 
107 

On  17 September,  at  the  Roundtable  on  opportunities  and  barriers  to  on-line 
retailing  in  the  European  Single  Market,  high-level  discussions  were  held  with 
senior  consumer  and  industry  representatives  on  the  business  opportunities  created 
by  the  Internet  and  the  existing  barriers  to  increased  online  retailing  of  music  and 
goods in Europe. More than 30 contributions were received in response to an issues 
paper published for the group by DG Competition, and a follow-up meeting focusing 
on the online distribution of music was held on 16 December. 

As  regards  the  management  of  music  rights,  the  Commission  issued  on  16 July  an 
important decision against 24 EEA collecting societies106 which manage music rights 
on  behalf  of  their  authors  (both  composers  and  lyricists).  The  CISAC  decision 
prohibits  membership  and  exclusivity  clauses  in  the  reciprocal  representation 
agreements between collecting societies for all modes of exploitation and a concerted 
practice concerning the territorial delineation of these representation agreements for 
internet, cable retransmission and satellite exploitation of these rights. 

The prohibited restrictions protected an exclusive position for collecting societies on 
their respective territories for both the management of rights and the licensing of the 
repertoires to users. The membership clause prevented right holders from appointing 
a  collecting  society  of  their  choice  as  their  rights  manager.  The  exclusivity  clause 
and the concerted practice impeded the emergence of competition between societies 
for licensing of rights and the emergence of multi territorial licenses. 

In  2008,  the  Commission  continued  to  further  monitor  the  transition  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  the  complaint  by  the  Italian  consumers'  association  Altroconsumo107,  the 
Commission  services  reviewed  the  new  amendments  to  the  Italian  broadcasting 

Case COMP/M.4854 TomTom/Tele Atlas. 
Case COMP/M.4942 Nokia/NAVTEQ. 
Case COMP/38.698 CISAC Agreement. 
See Press Release IP/07/1114, 18.8.2007 and document submitted by Altroconsumo to the Commission 
http://www.altroconsumo.it/mercato-e-
available 
in 
concorrenza/altroconsumo-esposto-alla-commissione-europea-sul-passaggio-al-digitale-si-parte-il-15-
ottobre-ma-la-concorrenza-e-all-italiana-s222543.htm. 

October 

which 

2008, 

at 

is 

EN 

21 

   EN 

 
                                                 
regime108 and exchanged views with the Italian authorities as regards 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. 

The  Commission  also  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 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 of these concerned 
the  general  financing  system  of  the  Belgian  (Flemish)  public  service  broadcaster 
VRT109.  The second decision  concerned the financing regime in favour of the Irish 
public service broadcasters RTÉ and TG4110. The Commission also approved urgent 
State  aid  to  remedy  the  tight  financial  situation  of  two  public  broadcasters,  France 
Télévisions111, under Article 86(2) EC and TV2 Danmark112, under Article 87(3)(c) 
EC and the provisions on aid to rescue and restructuring. 

In  November,  following  a  public  consultation  carried  out  between  January  and 
March, the Commission presented a new draft Broadcasting Communication113 for 
further public consultation, aiming to provide more clarity to all market participants 
and  to  secure  a  framework  which  is  suitably  adapted  to  the  new  technological 
environment. 

In October, the Commission launched a public  consultation on its plans to  extend 
the  State  aid  assessment  criteria  of  its  Cinema  Communication114.  Under  the 
current  criteria,  State  support  for  film  production  can  be  exempted  under  certain 
conditions, in particular where such support concerns cultural films, while respecting 
certain thresholds regarding territorial requirements and aid intensity. 

In 2008, the Commission approved several film support schemes, examples of which 
include  the  Hungarian  film  support  scheme115,  the  Italian  film  production  tax 
incentives116,  the  Finnish  film  support  scheme117,  and  the  German  film  support 
scheme118. 

79. 

80. 

81. 

82. 

83. 

Finally, the Commission approved two major acquisitions in the field of media in 
2008. On 14 February, the Commission cleared the proposed acquisition of the UK-

108 

109 
110 
111 
112 
113 
114 
115 
116 
117 
118 

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. 
Case E 8/2006 State funding for Flemish public broadcaster VRT. 
Case E 4/2005 State aid financing of RTE and TNAG (TG4). 
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). 
See IP/08/1626 of 4.11.2008. 
See IP/08/1580 of 24.10.2008. 
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). 

EN 

22 

   EN 

 
                                                 
based  Reuters  Group  by  the  Canadian  Thomson  Corporation,  subject  to  conditions 
and obligations. On 11 March the Commission, applying the Non-Horizontal Merger 
Guidelines  for  the  first  time,  approved  the  proposed  acquisition  by  Google  of  the 
online advertising technology company DoubleClick119. 

2.6. 

Transport 

84. 

85. 

86. 

119 
120 

121 

122 
123 
124 

125 

The  year  2008  proved  a  challenging  one  for  the  transport  sector,  which  first 
experienced the steady increase in fuel prices in the first half of the year and then the 
economic crisis in the second half. The slowdown of the economy has significantly 
affected both freight and passenger services of all types of transport services. Against 
this general background of economic crisis, further consolidation has taken place in 
the transport sector and is likely to continue in 2009. 

In the road transport sector, the Commission continues to apply the existing State 
aid rules to public service contracts and public service obligations, since the revised 
Regulation  for  public  services  in  the  field  of  land  transport120  is  not  in  force. 
Following the Altmark-ruling121, the Commission has received and examined a large 
number  of  complaints,  as  well  as  certain  notifications  of  subsidies  to  local  and 
regional bus services, mainly focusing on contracts that have been awarded without a 
prior  public  tender.  The  Commission  issued  a  final  positive  decision  concerning  a 
public service contract for public passenger transport by bus in the district of Lienz 
in Austria122. It also opened a formal investigation procedure on measures in favour 
of  the  French  company  Sernam,  which  is  the  road  transport  subsidiary  of  Société 
national  des  chemins  de  Fer  Français  (SNCF),  due  to  concerns  about  whether  the 
conditions laid down in its decision of 20 October 2004 have been complied with. 

In  the  field  of  rail  transport  and  combined  transport,  rail  transport  services  for 
freight  were  fully  opened  to  competition  in  the  EU  on  1 January  2007,  whereas 
international passenger rail services will be opened to competition as from 1 January 
2010. The Guidelines on State aid for railway undertakings123 entered into force 
in July. These guidelines set out in detail the Commission's approach to State aid to 
railway undertakings as defined in Directive 91/440/EEC124 and to urban, suburban 
and  regional  passenger  transport  undertakings  with  the  aim  of  improving  the 
transparency  of  public  financing  and  legal  certainty.  In  2008,  the  Commission 
adopted  several  decisions  to  promote  rail  transport  and  combined  transport125.  In 
2008, the Commission also issued a number of decisions in the field of mergers. On 
19 March, the Commission cleared the acquisition of the Spanish logistics provider 

Case COMP/M.4731. 
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). 
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). 
Cases N 685/2007 (OJ C 140, 6.6.2008, p. 1); N 495/2007 (OJ C 152, 18.06.2008, p.21); N 11/2008 and 
N 34/2008 (OJ C 38, 17.02.2009, p.3); N 159/2008 (OJ C202, 08.08.2008, p.2); N 195/2008 (OJ C 329, 
24.12.2008, p. 3); and N 352/2008 (OJ C 7, 13.01.2008, p.1). 

EN 

23 

   EN 

 
                                                 
Transfesa  by  the  German  State-owned  railway  company  Deutsche  Bahn126.  On 
25 November, the Commission approved127 the acquisition of Hungarian MÁV Cargo 
by the Austrian company RCA subject to conditions. 

On 1 July, the Commission adopted Guidelines on the application of Article 81 of 
the  EC  Treaty  to  maritime  transport  services128  in  view  of  the  repeal  of 
Regulation  4056/86  on  liner  conferences  as  of  18 October  and  the  extension  of  the 
scope  of  Regulation  1/2003  to  include  cabotage  and  international  tramp  vessel 
services. 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  tramp 
vessel services. 

On 21 October, the Commission published the Draft Block Exemption Regulation 
on  the  application  of  Article  81(3)  of  the  EC  Treaty  to  certain  categories  of 
agreements,  decisions  and  concerted  practices  between  liner  shipping  companies 
(“consortia”)129, in view of the expiration of the block exemption Regulation in 2010. 
Once the BER is adopted, the reform of the competition rules that apply to maritime 
transport services - initiated in 2003 - will be completed.  

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 sea130 with the intention of aligning the maximum aid intensity and duration 
provided for in the Community guidelines on State aid to maritime transport131 so as 
to include 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")132  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)133. 

Finally, in the field of services of general economic interest, following an in-depth 
investigation,  the  Commission  deemed  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  to  be  compatible  with  the 
common  market134.  In  contrast,  the  Commission  decided  to  initiate  a  formal 
investigation procedure regarding a compensation system for CalMac and Northlink 

Case COMP/M.4786 Deutsche Bahn/Transfesa. 
Case COMP/M.5096 RCA/MÁV Cargo. 
OJ C 245, 26.9.2008, p. 2. See also Press release IP/08/1063, 1.7.2008. 
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 C 58/2002 (not yet published in the OJ). 

87. 

88. 

89. 

90. 

126 
127 
128 
129 
130 

131 
132 

133 
134 

EN 

24 

   EN 

 
                                                 
to  discharge  public  service  obligations  related  to  the  operation  of  ferry  boats  for 
passenger traffic between the Scottish islands135. 

In  the  field  of  aviation,  the  Air  Service  Regulation136  entered  into  force  on 
1 November  and  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.  In  addition,  the 
Commission  continued  its  work  towards  a  new  Regulation  simplifying  and 
modernising the rules relating to computer reservation systems (CRS)137. 

In  2008,  the  Commission  was  called  upon  to  decide  on  several  rescue  and 
restructuring  measures  when  air  transport  companies  were  first  faced  with  high 
crude  oil  prices  and  then  falling  demand  as  a  result  of  the  financial  and  economic 
crisis. In the case 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 met138. In a separate but 
related decision139, the Commission held that, since its last decision in 2005, Greece 
had granted further State aid to the flagship carrier, and ordered the recovery thereof. 
In June, the Commission opened the formal investigation procedure with regard to a 
EUR 300 million  loan  by  the  Italian  State  to  Alitalia140.  In  November,  the 
Commission  issued  a  final  negative  decision  ordering  recovery  of  the  incompatible 
aid141. Simultaneously, the Commission approved the liquidation plan of Alitalia142. 

In  the  field  of  airport  infrastructure,  the  Commission  closed  the  formal 
investigation procedure concerning State measures involving the DHL Group and the 
Leipzig-Halle Airport143. The Commission held that the capital injections to Leipzig 
Airport were compatible with the Treaty rules. In contrast, the assurances granted to 
DHL  and  the  comfort  letter  in  favour  of  DHL  were  deemed  incompatible  with  the 
Treaty rules. The Commission ordered the recovery of the incompatible aid linked to 
the  assurances  and  prohibited  the  granting  of  the  comfort  letter.  The  Court  of  First 
Instance  annulled  a  Commission  decision  of  2004  ordering  Belgium  to  recover 
incompatible  aid  extended  to  Ryanair  linked  to  its  establishment  at  Charleroi 
airport144. The Court held 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 were close economic links binding these two entities. 

Case C16/2008 (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). 
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 NN 31/2008 (OJ C 184, 22.7.2008, p. 34). 
Case C 26/2008 (not yet published in the OJ). 
Case N 510/2008 (OJ C 46, 25.2.2009, p. 6). 
Case C 48/2006 (OJ L 346, 23.12.2008, p. 1). 
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. 

91. 

92. 

93. 

135 
136 

137 
138 
139 
140 
141 
142 
143 
144 

EN 

25 

   EN 

 
                                                 
94. 

95. 

In  the  area  of  mergers,  on  6 August  the  Commission  approved  the  proposed 
acquisition  of  Northwest  Airline  Corporation  ("NWA")  by  Delta  Air  Lines,  Inc. 
("Delta")145 - both U.S. carriers - under the EU Merger Regulation. On 17 December, 
after an in-depth investigation, the Commission approved the concentration between 
KLM and Martinair146. 

In  the  framework  of  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 alliances147 in March. The aim of this project is 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. 

2.7. 

Pharmaceutical industry 

96. 

97. 

98. 

145 
146 
147 
148 

As  regards  the  application  of  EU  anti-trust  rules  in  the  pharmaceutical  sector,  the 
most  important  action  taken  by  the  Commission  in  2008  was  to  launch  the  sector 
inquiry into pharmaceuticals148 on 15 January. 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. 

The sector inquiry was opened in response to information indicating that competition 
in the pharmaceutical market in the EU may not be working properly. The signs of 
this  were  a  decline  in  innovation,  measured  by  the  decreasing  number  of  novel 
medicines  reaching  the  market  each  year,  and  instances  of  delayed  market  entry  of 
generic  medicines.  The  inquiry  sought  to  examine  whether  certain  practices  of 
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  not  only  competition  by  generic 
companies,  but  also  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 

Case COMP/M.5181. 
Case COMP/M.5141. 
See Press Release IP/08/459, 18.3.2008. 
Case  COMP/39.514  Commission  Decision  of  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 on: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html 

EN 

26 

   EN 

 
                                                 
99. 

100. 

101. 

prescription medicines for human use, which were sold in the EU in the period 2000 
to 2007. 

On  28 November,  the  Commission  published  its  preliminary  report  on  the 
pharmaceutical sector inquiry149. 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. 

The sector inquiry findings indicate that originator companies design and implement 
a variety of strategies (a so-called "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. 

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 
also  support  these  views.  Stakeholders  also  highlight  what  they  perceive  as 
bottlenecks 
the  marketing  authorisation  and  pricing  and  reimbursement 
procedures,  which  may  contribute  to  delays  in  bringing  pharmaceutical  products  to 
market. 

in 

2.8. 

Food industry 

102. 

In response to the soaring food prices in the latter part of 2007 and the first half of 
2008,  the  Commission  issued  the  Communication  "Tackling  the  challenge  of 
rising food prices - Directions for EU action" in May150 creating a Task Force with 
the  objective  to  examine  the  functioning  of  the  food  supply  chain,  including 
concentration and market segmentation of the food retail and distribution sectors in 
the  EU.  This  was  followed  by  a  second  Communication  on  "Food  Prices  in 
Europe" in December151, which proposed a roadmap to improve the functioning of 
the food supply chain. 

149 
150 

151 

Pharmaceutical Sector Inquiry, Preliminary Report, DG Competition Staff Working Paper, 28.11.2008. 
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 
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). 

EN 

27 

   EN 

 
                                                 
103. 

104. 

105. 

In terms of competition policy, the Communication calls for ensuring a vigorous and 
coherent  enforcement  of  competition  rules  in  the  food  supply  markets  by  the 
Commission  and  national  competition  authorities  (NCA),  whilst  emphasising  the 
importance of anti-trust and merger instruments. 

In 2008, the Commission continued to ensure the compliance by Coca-Cola with its 
earlier  commitments  and  fined  a  cartel  of  banana  traders  under  Article  81  EC.  At 
national level, Competition Authorities have closely scrutinised food-related sectors 
and have initiated a number of investigations. A coherent and coordinated approach 
is crucial, given that retail markets are often defined at most as national in scope. In 
this context, DG Competition held two meetings of the ECN Food Subgroup in July 
and November to discuss and exchange best practices on issues related to food retail 
markets. 

The  consolidation  of  the  food  sector  is  reflected  in  several  merger  cases  that  were 
notified to the Commission in 2008. A number of these concentrations were subject 
to an in-depth investigation or approved in the first phase only following important 
divestitures.  In  the  Friesland/Campina  case152  the  Commission  undertook  an  in-
depth  investigation  of  the  proposed  merger  between  two  Dutch  Dairy  cooperatives 
that  are  active  in  a  range  of  dairy  markets.  This  concentration  was  approved 
following commitments submitted by the parties and ensuring access to raw milk in 
the Netherlands. In ABF/GBI153, the Commission conducted an in-depth investigation 
of the acquisition of parts of GBI by Associated British Foods (ABF) and approved 
the  transaction  subject  to  conditions.  Finally,  in  the  food  retail  sector,  the 
Commission examined the proposed acquisition of ADEG of Austria by the German 
REWE Group154 and approved the transaction subject to conditions. 

2.9. 

Postal services 

106. 

A  major  new  phase  for  postal  services  is  marked  by  the  third  Postal  Directive 
adopted by the Parliament and the Council in February155. Under this Directive, full 
market  opening  will  have  to  be  accomplished  by  most  Member  States  by 
31 December 2010, with a further two years allowed for some Member States. The 
Directive  provides  for  the  abolition  of  the  reserved  area  in  all  Member  States,  the 
confirmation  of  the  scope  and  standard  of  a  universal  postal  service  and  the 
upgrading of the role of national regulatory authorities to allow a variety of measures 
that  Member  States  may  take,  if  necessary,  to  safeguard  and  finance  the  universal 
service.  The  role  of  State  aid  and,  hence,  the  Commission's  control  thereof  will 
consequently increase in importance. 

107. 

As  regards  the  application  of  State  aid  rules  to  the  postal  sector  in  2008,  the 
Commission  adopted  several  decisions  aimed  at  ensuring  that  postal  operators 
entrusted  with  services  of  general  economic  interest  and  their  subsidiaries  do  not 
enjoy  unduly  granted  advantages.  The  Commission  continued  its  investigation 

152 
153 
154 
155 

Case COMP/M.5046 Friesland Foods/Campina (not yet published in the OJ). 
Case COMP/M.4980 ABF/GBI BUSINESS (not yet published in the OJ). 
Case COMP/M.5047 REWE/ADEG (not yet published in the OJ). 
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). 

EN 

28 

   EN 

 
                                                 
concerning  the  alleged  overcompensation  of  Deutsche  Post  AG156  for  the  carrying 
out  of  its  universal  service  obligations,  and  in  October  enacted  an  information 
injunction  against  Germany  due  to  the  refusal  by  Germany  to  supply  the  requested 
information.  Lastly,  the  Commission  also  examined  whether  postal  operators 
received other forms of aid from the State. In this context it closed the investigations 
into  aid  granted  to  Leipzig  Airport  and  DHL157.  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 guarantees which DHL received as 
aid  for  the  move  of  its  European  hub  to  Leipzig.  The  aid  which  had  already  been 
made available to DHL will have to be reimbursed. 

3. 

CONSUMER ACTIVITIES 

108. 

109. 

110. 

The Commission places consumers' concerns at the heart of its competition activities 
and  considers  it  essential  that  the  main  thrust  of  competition  policy  should  be  on 
maximizing consumer welfare. 

Integrating  the  consumers'  dimension  into  competition  policy  requires  a  proper 
dialogue  between  the  Commission  services  and  the  consumers  or  the  associations 
that represent them. That is why a dedicated Consumer Liaison unit was created in 
2008  within DG  Competition.  Consumers and  their representatives are now able to 
provide  the  Commission  services  with  information  that  is  helpful  both  for  a  better 
understanding of the markets and for identifying potential market malfunctioning158. 
They  are  also  best  placed  to  report  directly  on  how  they  perceive  the  impact  of  a 
particular action. 

In  developing  a  public  policy,  it  is  important  to  understand  the  concerns  of  and 
impacts  on  major  stakeholders,  and  consumers  are  no  exception.  Using  their  input, 
the  Commission  is  better  able  to  understand  how  these  policies  would  operate  in 
practice and to ensure that their objectives can be fully realised. By way of example, 
both  the  Roundtable  on  opportunities  and  barriers  to  online  retailing  and  the 
European  Single  Market159  and  the  White  Paper  on  Private  Damages  included 
extensive consultation, where the views of consumers and their representatives were 
actively sought. Also, in the course of the Pharmaceutical Sector Inquiry160 and on a 
regular basis, in a number of merger cases, the consumer perception has helped the 
Commission  services  to  better  place  all  aspects  of  the  market  in  context  when 
identifying  problems  and  solutions.  The  Guidance  on  enforcement  priorities  when 
dealing with exclusionary conduct161 reaffirmed the importance of this approach and 
these will be rolled out during 2009 and beyond. 

156 

157 

158 

159 
160 
161 

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 C 48/2006 Measures by Germany to assist DHL and Leipzig Halle Airport (OJ L 346, 23.12.2008, 
p. 1). 
During 2008, DG Competition received approximately 2 500 letters from citizens on anti-trust, mergers 
and State aid issues. 
For further details see http://ec.europa.eu/competition/sectors/media/online_commerce.html 
See Press Release IP/08/1829, 28.11.2008. 
See Press Release IP/08/1877, 3.12.2008. 

EN 

29 

   EN 

 
                                                 
4. 

THE EUROPEAN COMPETITION NETWORK AND NATIONAL COURTS 

111. 

112. 

113. 

114. 

115. 

The  ECN  provides  a  platform  for  EU  competition  authorities  to  constructively 
coordinate  enforcement  action,  ensure  consistency  and  discuss  policy  issues  of 
common interest. 

During 2008 the ECN met in different formations, ranging from the annual meeting 
of  the  heads  of  all  the  competition  authorities  to  the  sectoral  sub-groups,  without 
forgetting the plenary meetings and the working groups. The main topics discussed 
during  2008  were  (1)  recent  developments  in  competition  policy,  (2)  national 
competition  authorities'  experience  with  the  enforcement  instruments  of  Regulation 
1/2003,  (3)  the  revision  of  the  Commission  policy  on  horizontal  agreements  and 
vertical  restraints,  (4)  sectoral  issues  such  as  "sticky  retail  prices",  the  multilateral 
interchange  fees  (MIF)  and  Single  Euro  Payments  Area  (SEPA)  files  and  the 
pharmaceutical sector inquiry. 

2008 also saw the continuation of the "convergence" process observed in the context 
of  Regulation  1/2003.  A  prime  example  of  this  trend  is  the  ECN  Model  Leniency 
Programme.  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.  Moreover,  many  ECN  members  have  aligned  their 
programmes with the ECN Model Programme or are in the process of doing so. 

An  important  aspect  of  the  ECN  work  is  the  cooperation  on  individual  cases.  In 
2008,  under  Article  11(3)  of  Regulation  1/2003,  the  Commission  was  informed  of 
approximately  150  new  case  investigations162  launched  by  national  competition 
authorities. As in previous years and thanks to the flexible and pragmatic approach 
introduced by the Regulation and the Network Notice, there were very few instances 
where case-allocation discussions took place and even fewer occasions where a case 
changed  hands.  In  order  to  ensure  a  consistent  application  of  EU  law,  the 
Commission services reviewed or advised on 61 envisaged decisions communicated 
pursuant to Article 11(4) of Regulation 1/2003. 

Also  the  mechanisms  for  cooperation  with  national  courts  in  the  application  of  EU 
competition law, set out in Article 15 of Regulation 1/2003, functioned promptly in 
2008. The Commission received several requests for opinions which were pending at 
the end of the year, as well as copies of some 50 judgments handed down by national 
courts.  In  addition,  DG  Competition  concluded  fifteen  grant  agreements  for  the 
training of judges and launched a new call for proposals for this type of activity. 

5. 

INTERNATIONAL ACTIVITIES 

116. 

In an increasingly globalised world economy, competition policy must also adopt a 
global  outlook.  DG  Competition  responds  to  this  challenge  by  reinforcing  and 
extending  its  relations  with  partners  all  over  the  world  in  both  bilateral  and 

162 

More  than  55%  concerned  the  application  of  Article  81  EC  (mainly  in  the  area  of  cartels),  30% 
concerned the application of Article 82 EC and the remainder concerned the application of both Article 
81 and 82 EC (notably in the energy, food media, transport, telecommunications and postal sectors). 

EN 

30 

   EN 

 
                                                 
117. 

118. 

119. 

multilateral  fora.  Commissioner  Kroes  attaches  the  highest  importance  to  effective 
international cooperation in the area of competition. 

In  the  context  of  enlargement,  during  2008,  cooperation  with  Croatia  and  Turkey 
was particularly close. Considerable progress has been made by Croatia in fulfilling 
the opening benchmarks for the starting of accession negotiations on the competition 
chapter,  including  on  the  remaining  important  issue  of  the  restructuring  of  its 
shipyards, while Turkey has yet to introduce a system for the control and monitoring 
of  State  aid.  DG  Competition  also  assisted  the  Western  Balkan  countries  in  further 
aligning  their  competition  rules  with  EU  law,  which  included  help  in  drafting  laws 
on competition and State aid and advice on setting up the necessary institutions for 
the enforcement of these rules. 

As  far  as  bilateral  cooperation  is  concerned,  the  Commission  continued  its  close 
cooperation  with  the  European  Free  Trade  Association  (EFTA)  Surveillance 
Authority in enforcing the Agreement on the European Economic Area (EEA). As in 
previous  years  there  were  intensive  exchanges  under  dedicated  cooperation 
agreements  on  competition  matters  with  the  United  States,  Canada  and  Japan. 
Cooperation with China and Korea also remained a priority in 2008. 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  anti-
competitive practices (including State aid) do not erode the trade and other economic 
benefits sought through those agreements. 

In the area of multilateral cooperation, DG Competition continued to play a leading 
role  in  the  International  Competition  Network  (ICN),  where  it  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). DG Competition continued to contribute actively to the work 
of  the  OECD  Competition  Committee  and  played  a  leading  role  in  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). 

6. 

INTER-INSTITUTIONAL COOPERATION 

120. 

121. 

163 

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 institutions163. 

In  2008,  the  European  Parliament  (EP)  adopted  a  resolution  or  a  report  on  the 
following topics: the retail banking sector inquiry, the agreement concluded between 
the Government of the Republic of Korea and the European Community concerning 
cooperation on anti-competitive activities and the White Paper on Damages Actions. 

Framework  Agreement  of  26 May  2005  on  relations  between  the  European  Parliament  and  the 
Commission; 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. 

EN 

31 

   EN 

 
                                                 
122. 

123. 

The  Annual  Competition  Reports  2006  and  2007  were  also  discussed  at  committee 
level  during  2008  and  are  due  to  be  adopted  in  2009.  The  Commission  also 
participated  in  discussions  held  in  the  EP  on  other  related  topics,  including  the 
application of State aid response to the unfolding financial and economic crisis. 

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 
banking  industry  and  other  additional  State  aid  measures  in  the  context  of  the 
financial  and  economic  crisis.  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). 

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  participated  in  EESC  working 
group meetings  on Competition and Democracy in the Internal Market, the Annual 
Competition Report 2007, and the White Paper on damages actions. 

EN 

32 

   EN