COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Report on Competition Policy 2011
Date: 2012-05-30
Institutions: European Commission
Subjects: State aid, competition policy, competitiveness, consumer protection, economic recession, financial aid, financial institution, interinstitutional cooperation (EU), job creation, public borrowing

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
COM(2012) 253 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Report on Competition Policy 2011 

{SWD(2012) 141 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Report on Competition Policy 2011 

Introduction 

2011 was a year of turbulence. The financial crisis turned into a sovereign debt crisis in parts 
of the euro area, threatening the banking sector and the fiscal sustainability of many European 
governments. It also severely impaired credit flows towards the real economy. 

In that economic context, fair competition continues to be an essential condition for the full 
realisation of the Internal Market and a key component of a common strategy to contribute to 
the recovery of the European economy and thrive at the global level. 

This  Communication  presents  how  in  2011  the  Commission  used  competition  policy  as  an 
instrument  in  the  resolution  of  the  financial  and  sovereign  debt  crises  and  how,  generally, 
competition  policy  and  enforcement  actions  taken  during  the  year  contributed  to  the  wider 
policy  objectives  of  the  Europe  2020  strategy  and  supported  growth,  jobs  and  the 
competitiveness of the EU economy. 

Using  a  new  format,  this  Communication  gives  a  non-exhaustive  overview  of  Commission 
activities in  the field of competition policy  in  2011,  with  a  particular  focus  on  the  financial 
services,  food  and  airline  sectors.  The  new  structure  aims  at  better  explaining  how  the 
Commission implements competition policy and how the policy contributes to the European 
economy and to increasing the welfare of EU citizens.  

A dedicated section on interinstitutional relations reports on the continuous dialogue with the 
European Parliament and how the Commission responds to its requests. Further information 
can  be  found  in  a  more  detailed  Commission  Staff  Working  Document  (SWD)  and  on  the 
website of the Competition Directorate-General. 

1. 

COMPETITION POLICY IN THE CURRENT ECONOMIC CONTEXT 

The fragile signs of economic recovery in 2010 and early 2011 were not sustained throughout 
the year. In fact, the last months were marked by increasing instability and difficulties in the 
public sector. Member States continued to assist financial institutions, many of which had to 
receive liquidity support from central banks. Public deficits have become a source of concern 
regarding sovereign risk, which has led to disturbances on financial markets. 

The financial crisis has had a dramatic effect on the real economy, through reduced lending to 
households  and  businesses,  with  serious  knock-on  effects  on  investment  and  employment. 
Several Member States had to implement austerity measures and cuts in their public spending, 
instead of further investing in measures aiming at re-launching the economy. 

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As soon as the crisis broke out, the EU coordinated the European economic stimulus package 
to promote recovery. It applied the State aid regime firmly but flexibly to avoid distortions of 
competition while requiring banks to restructure and address the weaknesses of their business 
models.  Following  that  first  wave  of  “emergency”  measures,  the  Commission  launched  a 
programme of reforms to tackle more structural issues in the financial sector through a clear, 
comprehensive  and  consistent  scheme  of  measures  with  a  timetable  and  end  date1.  That 
programme  is  linked  with  the  Commission's  overall  strategy  for  growth  and  jobs,  as  the 
stability  of  the  financial  sector  is  clearly  one  of  the  key  objectives  in  the  Annual  Growth 
Survey2.  In  addition,  the  Commission  subsequently  launched  regulatory  initiatives  for 
changing  the  financial  industry's  regulatory  landscape.  Their  focus  lies  on  re-orienting  the 
sector towards its core function: meeting the financing needs of companies and households. 

How State aid policy contributes to financial stability 

The EU State aid framework remains a unique coordination tool at EU level 

The worsening of the sovereign debt crisis during the summer led the Member States and the 
Commission  to  agree  on  a  package  of  measures  to  strengthen  banks'  capital  and  provide 
guarantees  on  their  liabilities  (the  banking  package)3.  On  1  December,  the  Commission 
prolonged  the  State  aid  crisis  measures  for  the  financial  sector,  clarifying  and  updating  the 
rules on pricing and other conditions4. Once the situation stabilises, a more permanent set of 
State aid rules will be established for banks. 

Since the beginning of the crisis, and until 31 December 2011, EUR 1.6 trillion of State aid 
have  been  used  to  rescue  and  restructure  European  banks.  The  Commission  has  taken  39 
decisions on restructuring, for which the Commission monitors the effective implementation 
of  the  restructuring  plans.  24  banks  are  still  undergoing  restructuring  The  Commission  has 
also approved national schemes in 20 Member States that use an array of tools provided under 
the  crisis  regime.  They  include  capital  injections,  support  for  the  divestment  of  impaired 
assets, and guarantees. 

In  October,  the  ECOFIN  Council  concluded  that  the  EU  State  Aid  Framework  should 
continue  as  the  sole  EU  level  coordination  tool  and  that  –  in  the  short-/medium-term  –  no 
further  frameworks  are  required.  The  Commission  has  used  the  State  aid  instrument  in  a 
manner  that  has  fostered  bank  restructuring  while  maintaining  a  level  playing  field  in  the 
market. Conditions for crisis State aid rules for banks were set down with a triple objective: 
safeguarding  financial  stability,  preserving  the  internal  market,  and  restructuring  aid 
beneficiaries for long-term viability. Banks were required to move away from unsustainable 
business  models  based  on  excessive  leverage  and  overreliance  on  short-term  wholesale 
funding  and  encouraged  to  focus  again  on  their  core  business.  The  Commission  is  the  only 
institution  that  explicitly  imposes  burden-sharing  conditions  on  bailouts,  helping  to  curtail 
moral hazard in the future. 

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4 

The roadmap for this programme was first laid out in the Commission Communication of 4 March 
2009, “Driving European Recovery”, and the plans were described in detail in its Communication of 
2 June 2010 “Regulating financial services for sustainable growth”. 
Commission Communication of 23 November 2011 “Annual Growth Survey 2012”. 
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/125621.pdf 
Communication  from  the  Commission  on  the  application,  from  1  January  2012,  of  State  aid  rules  to 
support measures in favour of banks in the context of the financial crisis, OJ C 356, 6.12.2011, p. 7-10; 
IP/11/1488. 

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Responding  to  a  call  from  the  European  Parliament5,  the  Commission  prepared  a  Staff 
Working Document which explains how the Commission's State aid policy responded to the 
financial and economic crisis6. 

In  2011,  the  Commission  continued  its  approach  to  failing  banks  through  a  number  of 
important State aid decisions. The troubled Irish lender Anglo Irish Bank7 is a good example. 
The Commission approved the plan submitted by the Irish authorities, which foresees a joint 
wind-down  of  Anglo  Irish  Bank  together  with  Irish  Nationwide  Building  Society  over  a 
period  of  ten  years.  The  case  of  long-time  ailing  German  Landesbank  WestLB8  is  another 
prominent  example.  WestLB  will  ultimately  be  split  up;  the  remaining  assets  and  liabilities 
will be transferred to a bad bank in order to be wound down. By 30 June 2012 WestLB will 
stop its banking activities and henceforth only provide asset management services. Only the 
small  part  of  WestLB’s  most  conservative  business  activities  -  the  services  it  provides  to 
small local savings banks - will stay in the market, but they will be taken over by Landesbank 
Hessen-Thüringen (Helaba). 

Banks which relied heavily on State aid can be allowed to stay on the market where parts of 
their activities have a realistic prospect to return to viability, provided that they considerably 
reduce  their  size  and  substantially  change  their  business  model  to  focus  only  on  the  viable 
activities. That approach is well illustrated by the approval of the restructuring of the German 
bank, Hypo Real Estate9. The bank will shrink to 15% of its pre-crisis balance sheet and phase 
out  a  number  of  business  fields.  Similarly,  the  Commission  approved  restructuring  aid  to 
another German bank HSH Nordbank10 in light of a commitment to reduce its balance sheet 
size by 61% compared to pre-crisis levels by exiting certain business lines. The Commission 
also  applied  that  approach  in  the  context  of  smaller  banks.  For  instance  Eik  bank11  in 
Denmark  was  split  into  a  bad  bank  put  in  liquidation,  while  the  good  part  of  the  bank  was 
subject  to  a  sale  via  a  bidding  process.  A  similar  line  was  taken  for  Austrian 
Kommunalkredit12  which  had  to  be  nationalised  in  a  rescue  operation.  The  bank's  business 
was  split  into  non-strategic  activities  (to  be  wound  down)  and  strategic  activities 
(corresponding to approximately 40% of the balance sheet) which will be re-privatized. 

In the case of ABN Amro Bank13, the need for State aid stemmed primarily from the specific 
separation  context:  separation  of  the  Dutch  bank  activities  from  the  ailing  Fortis  group  and 
from  the  previously  existing  ABN  Amro  Group.  The  two  businesses  were  left  with 
insufficient  capital  to  face  the  crisis  and  finance  their  merger.  The  Commission  took  into 

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and 

crisis. 

Available 

Texts adopted, P7_TA(2011)0023. 
Commission Staff Working Paper, The effects of temporary State aid rules adopted in the context of the 
financial 
at: 
economic 
http://ec.europa.eu/competition/publications/reports/temporary_stateaid_rules_en.html 
Case  SA.32504  Joint  restructuring  plan  for  Anglo  Irish  Bank  and  Irish  Nationwide  Building  Society, 
decision of 29 June 2011; IP/11/801. 
Case SA.29590, WestLB, decision of 20 December 2011. 
Case  SA.28264  Restructuring  aid  for  Hypo  Real  Estate,  decision  of  18  July  2011,  OJ  L  60/2012; 
IP/11/898. 
Case SA.29338 Restructuring of HSH Nordbank AG, decision of 20 September 2011. 
Case SA.31945 Aid for the liquidation of Eik Banki P/F and Eik Bank Denmark A/S, decision of 6 June 
2011, OJ C 274 17.9.2011, p. 3-6; IP/11/677. 
Case  SA.32745  Restructuring  of  Kommunalkredit  Austria  AG,  decision  of  23  June  2011,  OJ  C  239, 
17.8.2011, p. 1-3; IP/11/389 
Case SA.26674 Restructuring aid to ABN AMRO, decision of 5 April 2011, OJ L 333, 15.12.2011, p.1-
46; IP/11/406. 

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account that the bank did not need aid primarily because of mismanagement or excessive risk 
taking  at  its  level  and  therefore  only  requested  behavioural  safeguards  (i.e.  it  did  not  seek 
divestment of businesses by the bank). 

The specific situation of Programme Countries 

Competition  policy  contributes  to  financial  stability  and  structural  reforms  related  to  the 
adjustment programmes 

The  crisis  has  led  to  major  economic  imbalances  in  most  Member  States  and  as  from  2010 
some  had  no  option  but  to  request  external  help  from  the  European  Commission  and  the 
International Monetary Fund (IMF). Financial stability is indeed of the utmost importance for 
the European Union, as three of those Member States (Greece, Ireland and Portugal) are also 
members  of  the  wider  Eurozone.  Those  so-called  “Programme  countries”  are  subject  to 
economic  adjustment  programmes.  Those  programmes  impose  a  wide  range  of  conditions, 
which  may  include  restructuring  of  the  financial  sector  and  the  need  to  introduce  structural 
reforms  for  other  sectors  of  the  economy,  the  administration  and  the  judiciary14.  On  the 
economic  structural  side,  the  programmes  may  include,  inter  alia,  the  privatisation  and/or 
restructuring  of  State-owned  enterprises  (SOEs).  Such  steps  may  entail  State  aid  issues  that 
the  Commission  will  need  to  address  promptly  so  that  the  programmes  can  be  successfully 
implemented.  Privatisation  objectives  are  particularly  important  for  Greece,  Portugal  and 
Romania. The programmes for those Member States also aim at making the competition law 
enforcement  regime  as  effective  and  efficient  as  possible,  with  National  Competition 
Authorities (NCAs) asking for increased powers and (human) resources. 

The  Commission,  together  with  the  IMF  and  the  European  Central  Bank  (ECB),  has  been 
closely  associated  with  the  restructuring  of  the  financial  sector  in  Programme  countries,  to 
ensure that the massive support necessary to keep those institutions alive in a difficult macro-
economic environment does not result in undue distortions of competition. The Commission 
has  authorized  the  prolongation  of  the  existing  bank  guarantee  and  recapitalisation  schemes 
for the three Eurozone countries. The Commission verifies that the State aid is limited to the 
minimum  necessary  and  that  moral  hazard  is  properly  addressed,  notably  by  requiring  not 
only that banks remunerate and eventually repay the aid they received, but also that they share 
the  burden  of  the  restructuring  and  take  measures  to  address  the  competition  distortions 
brought by the aid. 

In Greece, the situation is very complex. The banking sector suffers both from deep recession 
and from its large holding of sovereign bonds. The restructuring of the banks which received 
State  aid  as  of  2009  onwards  continues  in  that  very  difficult  context.  Agricultural  Bank  of 
Greece's  (ATE)  restructuring  plan  was  approved  on  23  May.  Following  the  write-downs  in 
September due to the participation of ATE in the Private Sector Involvement (PSI) which was 
decided  in  July  2011,  ATE  needed  a  further  capital  injection  by  the  State.  That 
recapitalisation requires the submission of an updated restructuring plan to the Commission. 
The decision of the European Council of 27 October to increase private sector contribution to 
Greece's  rescue  by  increasing  the  cut  on  Greek  bonds  from  21%  to  50%  will  significantly 
affect the Greek banks, in proportion to their holding of sovereign bonds. To fill the resulting 
capital needs, the second programme for Greece which was decided on the same day provides 

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In addition to these Eurozone members, Romania and Latvia are also concerned. 

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a  significantly  increased  budget  for  aiding  banks,  the  use  of  which  the  Commission  will 
scrutinize. 

Unlike Greece, Ireland's debt crisis originates from the banks yielding massive losses after the 
property bubble burst. The EC/IMF/ECB Programme of 28 November 2010 has a budget of 
EUR 85 billion, of which EUR 35 billion are earmarked for the financial sector. Major steps 
have been taken towards the recapitalisation, restructuring and deleveraging objectives of the 
Programme. In terms of recapitalisation, the authorities have carried out an extensive analysis 
of  the  capital  requirements  of  the  four  remaining  Irish  banks  (BOI,  AIB/EBS  and  IL&P) 
through  the  Prudential  Capital  Adequacy  Review  (PCAR)  2011.  That  review  included  an 
analysis of the expected loan losses by external independent advisors. It covers the expected 
losses  on  the  loan  book  and  the  costs  of  the  deleveraging  process  necessary  to  shrink  the 
banks  to  a  sustainable  size  and  reduce  their  reliance  on  Central  Bank  funding.  The  Irish 
authorities  recapitalised  the  banks  by  the  Programme  deadline  of  31  July.  They  spent 
considerably less than initially earmarked, due to liability management exercises carried out 
by  the  banks  and  private  participation  in  the  capital  raising  of  BOI.  In  July,  the  Irish 
authorities  presented  restructuring  plans  for  the  banks,  containing  their  deleveraging  targets 
and  other  actions.  The  plan  for  BOI  was  approved  under  State  aid  rules  on  20  December, 
while the others are currently being assessed. 

In  May,  the  ECOFIN  Council  and  the  IMF  Executive  Board  agreed  on  a  EUR  78  billion 
support  package  for  Portugal.  In  order  to  strengthen  confidence  in  the  financial  sector,  the 
Programme  requires  banks  to  deleverage  in  an  orderly  manner  and  achieve  higher  levels  of 
capital. So, a new recapitalisation scheme was put in place with an increased budget of EUR 
12 billion (from EUR 3 billion). The banks benefitting from that capital support will have to 
submit a restructuring plan to the European Commission in line with State aid rules. A formal 
State aid procedure was opened for the aid granted to BPN (Banco Português de Negócios), 
which  was  nationalised  in  November  2008;  a  formal  decision  was  to  be  taken  in  the  spring 
2012. 

How antitrust enforcement fosters fair competition and transparent financial markets 

Europe needs transparent, open and innovative financial markets 

Financial markets, as any other market, provide more efficient service when they are open and 
competitive.  This  is  exactly  what  the  Commission  is  striving  to  accomplish  through  its 
antitrust  investigations  in  the  Over-the-Counter  (OTC)  derivatives  market,  the  payments 
services sector, and the distribution of trading data and financial information to the market. 

Over-the-Counter Derivatives and Credit Default Swaps 

The  lack  of  transparency  in  relation  to  the  trading  of  OTC  derivatives  and  financial 
instruments  became  apparent  during  the  recent  financial  crisis.  Drawing  lessons  from  that 
crisis, the G20 agreed at the 2009 Pittsburgh summit on the need to improve the transparency 
and oversight of less regulated markets, with specific focus on OTC derivatives. In 2010, the 
Commission therefore proposed to improve the regulation of Credit  Default  Swaps (CDS15) 

15 

CDS are traded between financial institutions or investors. They are derivatives originally created to 
provide protection to investors in the event a company or State they have invested in default on their 
payments. They are also used as speculative tools. 

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and other OTC derivatives through the European market infrastructure regulation (EMIR16). 
Moreover,  in  October  2011  the  Commission  also  tabled  proposals  to  revise  the  Markets  in 
Financial Instruments Directive (MiFID) to further enhance transparency of OTC markets17. 

Ongoing antitrust investigations in relation to CDS and the EURIBOR 

Competition  policy  supports  these  legislative  initiatives.  Lack  of  transparency  on  the  market  can  work  to  the 
benefit of certain market players, which therefore have an incentive in maintaining it, to the detriment of new 
entrants into the market and of final consumers. More generally, financial information is of central importance 
for  the  financial  markets  and  prone  to  the  risk  of  collusion  or  abuse,  so  particular  vigilance  on  the  part  of 
competition authorities is justified.  

In  2011  the  Commission  opened  two  antitrust  investigations  regarding  possible  collusion  and/or  abuses  of 
dominance  by  investment  banks  in  the  markets  for  CDS  trade  data  and  for  CDS  clearing  services18.  The  first 
antitrust  case  concerns  16  investment  banks  and  Markit,  the  leading  provider  of  financial  information  on  the 
CDS market, where the Commission is investigating whether the parties have colluded and/or may have abused a 
dominant position in order to control financial information on CDS. The second case concerns nine of the dealer 
banks and ICE Clear Europe, the leading clearing house for CDS. The Commission will investigate in particular 
whether the preferential tariffs granted by ICE to the nine banks have the effect of locking them  into the ICE 
system, to the detriment of other competing clearing systems. 

In  addition,  in  October  the  Commission  undertook  unannounced  inspections  at  the  premises  of  a  number  of 
companies  active  in  the  sector  of  financial  derivative  products  linked  to  the  Euro  Interbank  Offered  Rate 
(EURIBOR) in a number of Member States, as it has concerns these companies may have violated EU antitrust 
rules. 

Both  the  Commission's  antitrust  action  and  the  regulatory  measures  are  complementary,  as 
they seek to ensure safe, sound and efficient financial markets. 

Single Euro Payments Area (SEPA) 

Seamless,  efficient  and  innovative  payment  markets  are  key  to  a  well-functioning  single 
market  and  to  economic  integration.  SEPA  is  an  excellent  example  of  how  self-regulation, 
regulation  and  competition  law  enforcement  can  and  should  work  together  to  create  open, 
efficient  and  innovative  market  structures.  This  multipronged  approach  has  proven  very 
successful  when  adopting  in  2010  a  Commission  proposal  for  a  Regulation  to  promote  the 
transition  from  the  current  domestic  to  new,  pan-European  SEPA  credit  transfer  and  direct 
debit schemes. 

The proposed regulation also addresses the issue of interchange fees for financing the SEPA 
Direct  Debit  (SDD)  model  as  the  industry  requires  greater  clarity  and  predictability  on  the 
lawfulness of such collective agreements. The main objectives of the Commission proposal on 
interchange fees include establishing a level playing field between payment service providers, 
establishing a single market for credit transfer and direct debit payments, fostering migration 
to  SDD  and  achieving  efficient  direct  debit  services.  The  regulation  was  adopted  by  the 
Parliament in plenary session on 14 February 2012 (following the adoption of a report by the 

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Commission  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  OTC 
derivatives, central counterparties and trade repositories, 15 September 2010, COM/2010/0484 final – 
COD 2010/0250*; IP/10/1125. 
IP/11/1219, 20.10.2011. 
CaseCOMP/39730 CDS (Credit Default Swaps) – Clearing and Case COMP/39745 CDS – Information 
market; IP/11/509. 

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Economic and Monetary Affairs (ECON) Committee19) and by the Council on 28 February. It 
will enter into force upon publication in the second quarter of 2012. 

Standardisation of e-payments 

Along  with  these  regulatory  initiatives,  the  Commission  is  seeking  to  tackle  barriers  to  new  entrants  and 
innovation  through  antitrust  scrutiny  in  order  to  promote  efficient  pan-European  payment  systems  that  would 
lower the costs of payments, produce innovative payment methods, and ultimately facilitate trade across the EU. 
In  September  2011,  it  opened  an  antitrust  investigation  into  the  standardisation  process  for payments  over  the 
internet ('e-payments') undertaken by the European Payments Council (EPC)20. The investigation will focus in 
particular  on  whether  the  standardisation  process  limits  market  entry  or  innovation,  for  example  through  the 
exclusion of new entrants and payment providers who are not controlled by a bank. 

Financial services data sector 

Well-functioning financial markets rely on access to information and the availability of high 
quality  and  timely  market  data  on  the  price  and  structure  of  financial  instruments.  The 
markets for the provision of financial information are often characterised by a high degree of 
concentration. This means that the major global financial institutions and information services 
providers  enjoy  significant  market  power.  Industry  standardisation  in  such  markets  can  also 
lead  to  the  development  of  de  facto  market  standard  products,  services,  financial  identifiers 
and  indices.  The  Commission  is  currently  investigating  a  number  of  issues  in  this  sector, 
(including  access  to  information  or  services,  standard  setting,  IP  rights  and  interoperability 
between different products or services. 

Legally binding commitments for ISIN 

International  Securities  Identifier  Numbers  (ISIN)  codes are  12-character  alpha-numerical  codes  that  serve  for 
uniform  identification  of  a  security  at  trading  and  settlement,  but  do  not  contain  information  characterizing 
financial instruments. The Commission initiated an investigation because the use of ISIN records was subject to 
a  licensing  fee  charged  by  Standard  &  Poor's  (S&P)  and  on  15  November  made  binding  for  five  years 
commitments offered by S&P. These commitments are two-fold: first, indirect end users will no longer have to 
pay licensing fees to S&P for the use of ISIN records; second, S&P will also offer a new service consisting only 
of ISIN records, at a price of USD 15 000 per annum for the provision of the new service to Information Service 
Providers and direct end users.  

Credit Rating Agencies (CRA) 

CRAs are companies that assign credit ratings for issuers of certain types of debt obligations 
(such  as  governments),  as  well  as  for  the  debt  instruments  themselves  (i.e.  sovereign  debt). 
Those  ratings  are  then  used  by  investors,  issuers,  investment  banks,  broker-dealers,  and 
governments.  Ratings  have  become  important  parameters  to  assess  the  risks  related  to 
financial investments. 

In  the  turmoil  of  the  financial  crisis,  concerns  have  been  raised  about  the  market  for  CRAs 
and  the  modus  operandi  of  certain  companies  active  in  this  field.  In  November,  the 

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20 

Draft Report on the proposal for a regulation of the European Parliament and of the Council 
establishing technical requirements for credit transfers and direct debits in euros and amending 
Regulation (EC) No 924/2009 (COM(2010)0775 – C7-0434/2010 – 2010/0373(COD)) – The Essayah 
Report, http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&reference=A7-2011-
0292&language=EN 
Case COMP/39876 EPC online payments, Opening of Proceedings 5 October 2011; IP/11/1076.  

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Commission  proposed  amendments  to  the  existing  regulation  on  CRA21  to  address  certain 
issues  of  overreliance  on  ratings  and  relating  to  conflicts  of  interest,  market  structure  and 
accountability of CRA. The Commission also continues to monitor the competitive situation 
in  the  CRA  market,  which  has  an  oligopolistic  structure  with  high  barriers  to  entry.  No 
indication of anti-competitive practices in this market has been found so far. 

How the application of the EU merger rules contributes to maintaining fair competition 
in financial markets 

Trading and post-trading infrastructures, for cash and derivatives, operating in a safe, efficient 
and  competitive  manner  are  essential  components  of  modern  and  dynamic  capital  markets 
which  ultimately  allow  companies  and  investors  to  remain  competitive  at  a  European  and 
global level. Since stock exchanges are crucial actors in capital markets, competition between 
them is of utmost importance. 

Competition for exchanges in European financial derivatives 

On 29  June,  Deutsche  Börse (the owner inter  alia of  the Frankfurt  Stock  exchange)  and NYSE  Euronext  (the 
owner inter alia of the New York, Paris, Brussels, Amsterdam and Lisbon Stock exchanges) formally notified 
their  proposed  merger  to  the  Commission  under  the  EU  Merger  Regulation  (EUMR)22.  The  operation  would 
have combined the two leading European stock exchanges active over the entire life chain of trading, clearing 
and  settlement  of  financial  instruments  (both  cash  instruments  and  derivatives).  Following  an  initial  market 
investigation, the Commission initiated an in-depth investigation with a particular focus on derivatives trading, 
as  the  transaction  would  have  brought  together  the  two  largest  derivatives23  exchanges  in  European  financial 
derivatives.  The  Commission  concluded  that  the  merger  would  have  led  to  a  near-monopoly  in  the  area  of 
exchange-traded  European  financial  derivatives  resulting  in  fewer  possibilities  for  free  competition  and  less 
innovation.  Customers  who  would  have  been  affected  by  this  include  pension  funds,  mutual  funds  and  retail 
banks, as well as professional brokers and investment banks. In the absence of access to the merged company's 
enlarged post-trade clearing facilities (i.e. in the presence of a closed “vertical silo”), entry by rival derivatives 
platforms  would  be  made  more  difficult  in  a  market  already  characterised  by  high  barriers  to  entry.  The 
Notifying  Parties  claimed  that  the  merger  would  result  in  significant  efficiencies.  However,  any  such  benefits 
would be significantly less than argued by the Notifying Parties and they could in part be achieved without the 
merger. In any case, any efficiencies would not be substantial enough to outweigh the harm to customers caused 
by the merger and because of the creation of a near monopoly, any benefits would also be unlikely to be fully 
passed  on  to  customers.  The  Notifying  Parties  submitted  proposed  remedies  to  address  the  Commission's 
concerns, but these were ultimately deemed insufficient. 

2. 

COMPETITION POLICY IN THE BROADER CONTEXT 

Against that background, a major part of the Commission's actions in the field of competition 
policy and enforcement in 2011 addressed the effects of the crisis in the financial markets. 

Nevertheless,  competition  enforcement  and  advocacy  also  serve  other  wider  longer-term 
objectives  such  as  enhancing  consumer  welfare,  supporting  the  EU's  growth,  jobs  and 

21 

22 
23 

Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 
on credit rating agencies, OJ L 302, 17.11.2009, p. 1-31. 
Case COMP/M.6166 Deutsche Börse / NYSE Euronext, OJ C 199, 7.7.2011, p. 9. 
Derivatives are financial contracts whose value is derived from an underlying asset or variable, such as 
stocks, interest rates or currencies. Derivatives are generally used for hedging, investment purposes, and 
overall risk management in financial markets. Clearing plays an important role in derivatives trading. 
The purpose of clearing is to manage the risk of the trading parties in the interim period between trading 
and settlement. 

EN 

9 

   EN 

 
                                                 
competitiveness  in  line  with  the  Europe  2020  Strategy  for  smart,  sustainable  and  inclusive 
growth24. 

The Strategy sets out concrete targets to be achieved within the next decade in areas such as 
employment,  education,  migration,  energy  use  and  innovation  as  well  as  milestones  for 
resource efficiency, in order to overcome the impact of the financial crisis and place the EU 
back  on  track  for  economic  growth.  Competition  and  a  strong  competition  policy,  designed 
and  implemented  by  the  European  Commission  and  the  Member  States  in  the  European 
Competition Network (ECN), play a major role in ensuring that the Europe 2020 objectives 
can be reached, as competition has a direct impact on the key drivers for productivity growth. 

Sound framework for enforcement of competition rules 

2011 was also  an important year for issues of due process concerning the EU's institutional 
framework  for  the  enforcement  of  competition  law.  Both  the  European  Court  of  Human 
Rights (ECtHR)25 and the Court of Justice26 confirmed that the institutional framework for the 
enforcement of competition law, by which and administrative organ as the Commission takes 

24 
25 

26 

http://ec.europa.eu/europe2020/index_en.htm 
Judgment  of  the  ECtHR  of  27  September  2011  in  case  A.  Menarini  Diagnostics  S.R.L.  v  Italy 
(Application No 43509/08), paras 57-67. 
Cases C-272/09 P KME Germany AG and Others v Commission, C-386/10 P Chalkor AE Epexergasias 
Metallon v Commission and C-389/10 P KME Germany AG and Others v Commission, judgments of 8 
December 2011. 

EN 

10 

   EN 

 
 
 
                                                 
decisions  which  are  subject  to  full  judicial  review,  ensures  an  adequate  protection  of  the 
fundamental  rights  of  the  persons  concerned  by  those  decisions.  The  Commission  is 
committed to further improving its investigative procedures and increasing transparency. This 
is  demonstrated  by  the  adoption  of  a  package  of  measures  in  201127,  consisting  of  Best 
practices  for  proceedings  under  Article  101  and  10228  (similar  best  practices  are  already 
available  in  merger  control  and  State  aid),  revised  Terms  of  Reference  of  the  Hearing 
Officer29 (extending the  role  of  the  Hearing  Officer to the investigative phase), as well as a 
Staff  Paper  on  the  submission  of  economic  evidence30.  The  purpose  of  this  package  is  to 
enhance  transparency  and  help  parties  in  their  interaction  with  the  Commission  and  the 
Hearing Officers in antitrust and merger investigations. 

Better rules for compensation of public service obligations 

The  new  Services  of  General  Economic  Interest  (SGEI)  package31  provides  Member  States 
with  a  simpler,  clearer  and  more  flexible  framework  for  supporting  the  delivery  of  high-
quality public services to citizens. Member States are largely free to define which services are 
of  general  interest,  but  the  Commission  must  ensure  that  public  funding  granted  to  provide 
such  services  does  not  unduly  distort  competition  in  the  single  market.  Previously  only 
hospitals  and  social  housing  were  exempted,  but  with  the  new  package  many  more  social 
services are exempt from the obligation to notify to the Commission, regardless of the amount 
of the compensation received. The services must meet social needs (i.e. health and long term 
care,  childcare,  access  to/reintegration  in  the  labour  market,  social  housing,  care  and  social 
inclusion of vulnerable groups). Conversely, the Commission will undertake greater scrutiny 
of other SGEIs for which the compensation exceeds EUR 15 million a year. 

2.1. 

How competition enhances consumer welfare 

In  difficult  times,  there  may  be  calls  to  set  up  protectionist  lines  of  defence.  However,  as 
history has confirmed, competition enforcement and advocacy cannot be reduced in times of 
economic crisis, as any weakening of the competition framework would worsen the medium- 
to long-term growth trend. 

Consumers are better off when they have access to open and competitive markets 

27 

28 

29 
30 

31 

at 

and 

Asked 

release 

available 

Questions 

Frequently 

and  102  TFEU 

Press 
http://ec.europa.eu/competition/antitrust/legislation/legislation.html 
Best Practices in proceedings concerning articles 101 and 102 TFEU, OJ C 308, 20.10.2011, p. 6-32, 
available at http://ec.europa.eu/competition/antitrust/legislation/legislation.html 
Terms of Reference of the Hearing Officer, OJ L 275, 20.10.2011, p. 29. 
Best  Practices  for  the  submission  of  economic  evidence  and  data  collection  in  cases  concerning  the 
at 
application  of  Articles  101 
http://ec.europa.eu/competition/antitrust/legislation/legislation.html 
Communication  from  the  Commission  on  the  application  of  the  European  Union  State  aid  rules  to 
compensation granted for the provision of services of general economic interest, OJ C 8, 11.1.2012, p. 
4-14. 
Commission Decision of 20 December 2011 on the application of Article 106(2) of the Treaty on the 
Functioning of the European Union to State aid in the form of public service compensation granted to 
certain  undertakings  entrusted  with  the  operation  of  services  of  general  economic  interest  (notified 
under 
3-10.  
Communication from the Commission – European Union framework for State aid in the form of public 
service 
15-22. 
(2011), 
Available at http://ec.europa.eu/competition/state_aid/legislation/sgei.html 

compensation 

in  merger 

11.1.2012, 

11.1.2012, 

document 

available 

C(2011) 

9380), 

cases, 

and 

OJ 

OJ 

8, 

p. 

p. 

7, 

C 

L 

EN 

11 

   EN 

 
                                                 
The  fight  against  collusive  agreements  and  abuses  of  dominance  is  an  on-going  priority  for 
the  Commission.  In  2011,  the  Commission  adopted  four  cartel  decisions,  including  two 
relating  to  consumer  products  (consumer  detergents  and  exotic  fruit)  imposing  fines 
exceeding  EUR  614 million  on  14  undertakings32.  Three  out  of  these  four  decisions  were 
settlements.  Settlements  are  important,  as  they  allow  the  Commission  to  proceed  more 
swiftly,  bringing  benefits  as  regards  both  time  and  resources.  They  also  contribute  to 
increasing the deterrent effect of the Commission's fight against cartels. 

Consumers are also the main beneficiaries of the decision adopted against the Polish telecoms 
incumbent in June, for stifling the development of competition on Polish broadband markets 
for  over  four  years33.  The  Commission  opened  the  case  on  its  own  initiative  in  2009,  after 
having observed that Poland had one of the lowest broadband penetration rates in Europe, that 
consumers  suffered  from  lower  connection  speeds  and  that  monthly  prices  per  advertised 
Mbit/s were much higher than the prices in other Member States (and among the highest in 
the OECD). 

The Commission also protects competition and enhances consumer welfare when applying its 
merger  policy,  striking  a  balance  between  the  economic  benefits  of  the  merger  and  other 
parameters such as price, choice, quality or innovation. This approach has proven effective in 
the  IT  sector,  where  the  Commission  has  reviewed  and  approved  mergers  amongst 
competitors in already concentrated markets, such as the hard disk industry34 and the plans by 
some  companies  to  modify  their  business  model  (such  as  the  acquisition  by  chip  producer 
Intel of IT security producer McAfee, subject to commitments to ensure interoperability)35 or 
diversify  their  portfolio  of  activities  (such  as  the  acquisition  by  Microsoft,  producer  of 
operating systems, of Internet voice and video communication provider Skype)36. Consumers 
are  also  expected  to  benefit  from  wider  choice  and  better  prices  when  travelling  by  rail  on 
certain  European  routes,  following  the  approved  joint  ventures  paving  the  way  for  the 
introduction of new high speed services on the Paris-Milan37 and Vienna-Salzburg routes38, in 
competition with existing rail services provided by incumbent operators. 

Improving consumer welfare: the practical example of the food sector 

Rising and volatile food prices might adversely impact the European economy 

The  way  competition  enforcement  and  advocacy  can  effectively  contribute  to  improving 
consumer  welfare  is  well  illustrated  in  relation  to  the  food  sector,  where  citizens  are 

32 

33 

34 

35 
. 
36 

37 

38 

Cases  COMP/39579Consumer  Detergents,  decision  of  13  April  2011,  OJ  C  193,  02.07.2011,  p  14-
16,COMP/39482 Exotic Fruit, decision of 12 October 2011, COMP/39605 CRT Glass, decision of 19 
October 2011; IP/11/1214 and COMP/39600 Refrigeration compressors, decision of 7 December 2011. 
Case COMP/39525 Telekomunikacja Polska, decision of 22 June 2011, OJ C 324, 9.11.2011, p. 7-10; 
IP/11/771. 
Cases COMP/M.6214 Seagate Technology / the HDD business of Samsung Electronics. decision of 19 
October 2011; IP/11/1213 and COMP/M.6203 Western Digital Ireland / Viviti Technologies, decision 
of 23 November 2011; IP/11/1395. 
Case COMP/M.5984, Intel / McAfee, decision of 26 January 2011, OJ C 98, 30.3.2011, p. 1; IP/11/70. 

Case  COMP/M.6281,  Microsoft  /  Skype,  decision  of  7  October  2011,  OJ  C  341,  22.11.2011,  p.  2; 
IP/11/1164. 
Case  COMP/M.6150  Veolia  Transport/Trenitalia/JV,  decision of 20  July  2011, OJ  C 249,  26.8.2011, 
p.3;IP/11/917.  
Case COMP/M.6269 SNCF/HFPS/Wehinger GmbH/Rail Holding, decision of 20 July 2011, OJ C 222, 
28.7.2011, p. 1. 

EN 

12 

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confronted  with  the  reality  of  the  market  on  a  daily  basis.  Food  represents  a  large  part  of 
citizens' budgets, accounting on average for about 14.1% of total household expenditure in the 
EU in 201139. 

The  food  supply  chain  connects  three  important  sectors  of  the  European  economy:  (1) 
agricultural production; (2) food processing; and (3) distribution (wholesale and retail). They 
play  a  significant  role  in  Europe's  economic,  social,  and  political  life  and  are  considerable 
contributors to EU added value, trade and employment, especially in rural areas40. From about 
mid-2007  onwards,  food  prices  increased  significantly  at  all  levels  of  the  supply  chain,  and 
consumer  food  prices  have  become  a  major  contributor  to  overall  inflation41.  At  the  same 
time, volatility of prices, notably producer prices for food commodities, has also increased. 

The Commission has responded on several fronts 

Rising  and  volatile  food  prices  have  raised  the  awareness  of  policymakers  and  regulators 
about potential problems in the food supply chain, for which actions have been taken. At EU 
level, the Commission established in 2010 a High Level Forum for a Better Functioning Food 
Supply  Chain  (HLF),  with  a  mandate  until  the  end  of  201242.  The  HLF  brings  together  a 
number  of  Commission  initiatives  in  different  policy  fields.  It  has  established  a  number  of 
expert platforms to focus on different aspects of the food chain. Among these platforms, three 
are of particular interest from a competition policy perspective: (i) a platform on business-to-
business (B2B) contractual relations; (ii) an expert group developing a food price monitoring 
tool; and (iii) a platform on competitiveness in the agro-food industry. 

For instance, the work of the platform on B2B contractual practices deals with concerns about 
uneven bargaining power in the food supply chain, which is an issue often raised in relation to 
competition  law  enforcement.  Within  this  platform,  stakeholders  have  agreed  on  common 
principles  of  fairness  guiding  commercial  relationships  in  the  food  sector  as  well  as  on 
examples  of  fair  and  unfair  trading  practices,  which  are  however  not  captured  by  EU 
competition law. The work of this platform is ongoing. 

The reforms of the Common Fisheries (CFP) and Agricultural Policies (CAP) put forward by 
the Commission in 2011 also have important repercussions for competition in these sectors43. 
In particular the CAP rules play a significant role in competition in the upstream food supply 
chain. Although Articles 101 and 102 TFEU apply to agricultural products, the CAP proposal 
maintains certain derogations from Article 101TFEU, despite the general objective to increase 
the market orientation of the CAP. 

39 

40 

41 

42 
43 

5, 

in 

the 

page 

price 

available 

6,  Graph 

developments 

See the provisional figures by DG Agriculture, June 2011 update on recent agricultural commodity and 
food 
at 
EU, 
http://ec.europa.eu/agriculture/analysis/markets/foodprices/food06_2011_en.pdf 
For  an  overview,  see  the  Report  on  the  Competitiveness  of  the  European  Agro-Food  Industry  of 
17 March  2009  (“Competitiveness  Report”),  page  59,  available  at  http://ec.europa.eu/enterprise/ 
sectors/food/files/high_level_group_2008/documents_hlg/final_report_hlg_17_03_09_en.pdf 
When  looking  at  aggregate  figures  for  the  EU,  it  is  important  to  keep  in  mind  that  food  price 
developments often vary strongly not only from Member State to Member State but also from product 
to  product,  see  e.g.  DG  Agriculture,  January  2012  update  on  recent  agricultural  commodity  and  food 
price 
at 
http://ec.europa.eu/agriculture/analysis/markets/foodprices/food01_2012_en.pdf 
http://ec.europa.eu/enterprise/sectors/food/competitiveness/forum_food/index_en.htm 
http://ec.europa.eu/fisheries/reform/index_en.htm 
2013/legal-proposals/index_en.htm 

http://ec.europa.eu/agriculture/cap-post-

developments 

available 

Table 

page 

EU, 

and 

the 

in 

3, 

4, 

EN 

13 

   EN 

 
                                                 
Uneven  bargaining  power  has  also  been  an  issue  in  discussions  regarding  CAP  reform,  as 
many stakeholders have stressed that primary food producers lack bargaining power because 
of the high fragmentation of the agricultural sector compared to the other levels of the food 
supply  chain.  This  view  is  also  expressed  in  recent  reports  by  the  European  Parliament  on 
CAP reform44. To remedy the lack of bargaining power, the CAP proposal seeks to strengthen 
the  role  of  Producer  Organisations  (POs)  in  all  sectors  of  agricultural  production.  As  the 
members of POs are independent agricultural producers and their production is integrated to 
varying degrees in the POs, it is however essential to ensure that the POs function in a pro-
competitive way. 

Competition authorities ensure that food markets work well for consumers … 

High  food  prices  result  from  a  number  of  factors  beyond  the  scope  of  competition  policy. 
Recent price increases can mainly be explained by rising commodity prices, which are passed 
along the food chain resulting in higher consumer prices. Nevertheless, competition law plays 
an  important  role  in  ensuring  that  food  markets  work  well  for  the  consumer.  In  this  vein, 
many NCAs in the EU have conducted inquiries into the food sector in recent years with the 
aim  of  clarifying  how  these  markets  work,  of  identifying  potential  problems  and  proposing 
solutions. 

At the retail level, food markets are often national or regional in scope. NCAs play a key role 
in applying competition law in this sector. The Competition DG has cooperated closely with 
NCAs within the framework of the ECN to further develop a coherent and common approach 
and to ensure that food markets remain competitive and work efficiently. One of the results of 
this  cooperation  is  the  preparation  of  an  ECN  Report  on  the  most  significant  enforcement, 
advocacy and monitoring actions undertaken by European Competition Authorities in the last 
eight years45. The draft report illustrates the impressive work of NCAs in this field, with about 
170  antitrust  enforcement  cases,  1300  merger  control  cases  and  around  100  market 
monitoring  actions  (including  sector  inquiries,  market  studies  and  advocacy  opinions).  The 
cases and monitoring actions covered a wide range of products and sectors, across all levels of 
the supply chain. 

As  the  Report  outlines,  cereals,  dairy  and  a  category  of  multi-products  are  the  most 
investigated  sectors  in  antitrust  cases.  The  main  competition  concerns  related  to  cartel 
behaviour, but also included vertical restraints and abuses of dominance. The main purpose of 
market monitoring actions has been to better understand the functioning of food markets, such 
as the way prices are passed along the different supply chain levels. NCAs have, as a result of 
these  actions,  put  forward  a  number  of  recommendations  to  improve  competition  in  the 
relevant  markets.  Some  of  them  have  also  established  principles  for  contractual  relations 
between retailers and suppliers. 

44 

45 

EN 

food 

chain 

supply 

See,  e.g.  European  Parliament  resolution  of  7  September  2010  on  fair  revenues  for  farmers:  A  better 
at 
(2009/2237(INI)), 
functioning 
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2010-
0302&language=EN&ring=A7-2010-0225; The CAP towards 2020: meeting the food, natural resources 
and 
at 
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+REPORT+A7-2011-
0202+0+DOC+XML+V0//EN&language=EN 
To be published in the second quarter 2012. 

(2011/2051(INI)), 

challenges 

territorial 

available 

available 

Europe 

future 

the 

of 

in 

14 

   EN 

 
                                                 
Alongside  NCAs,  the  Commission  has  also  enforced  competition  rules  in  the  food  sector, 
notably  by  investigating  and  fining  illegal  cartels  as  well  as  through  merger  control.  For 
example, in October, the Commission adopted a decision in which it found that the Chiquita 
and Pacific Fruit groups had operated a price fixing cartel for their banana sales in Southern 
Europe46.  The  companies  had  fixed  weekly  sale  prices  and  exchanged  price  information  in 
relation to their brands. 

… and that consolidation does not harm the competitive process 

The  food  sector  is  subject  to  ongoing  globalisation  and  consolidation,  as  reflected  in  the 
number  of  merger  notifications  the  Commission  dealt  with  in  201147.  In  particular, 
consolidation  can  be  observed  in  the  dairy  sector,  where  the  Commission  approved  three 
proposed  concentrations48.  In  the  case  of  Arla  taking  over  Allgäuland,  the  Commission 
opened an in-depth investigation but ultimately decided that the commitment offered by the 
notifying  party  was  not  necessary;  the  proposed  transaction  was  thus  approved  without 
conditions.  The  orange  juice49  and  sugar  industries  also  were  subject  to  merger  review  in 
2011. 

Ongoing consolidation in the sugar sector 

The sugar sector is a concentrated market, with high entry barriers. The regulatory reform of the sugar sector has 
accelerated  market  dynamics,  resulting  in  a  smaller  number  of  players  active  in  several  Member  States.  The 
Commission decided to deepen its probe into the acquisition of control by Südzucker over sugar trader ED&F 
MAN50 as the preliminary investigation had indicated potential competition concerns on the markets for white 
sugar, in particular in Southern Europe; for imports of raw cane sugar for refining for the whole of the European 
Economic Area (EEA)51; and for molasses, especially in Central Europe. The Commission's decision is expected 
in April 2012. 

2.2. 

How competition policy supports growth, jobs and competitiveness 

In advanced economies, total factor productivity is the main source of growth. In recent years 
a broad consensus has emerged as to the main drivers of total factor productivity: knowledge-
based innovation and an economy that facilitates dynamic reallocation of production factors 
across  different  sectors  and  industries.  Competitive  markets  are  best  placed  to  deliver  firms 
that  are  equipped  for  long-term  success.  A  strong  competition  policy  is  a  key  element  of  a 
coherent and integrated policy to foster the competitiveness of Europe’s industries. 

46 
47 

48 

49 
50 

51 

Case COMP/39482 Exotic fruit, decision of 12 October 2011. 
In  2011  the  Commission  received  16  notifications  in  relation  to  proposed  concentrations  in  the  agro-
food sector. 
Cases  COMP/M.6119  Arla/Hansa,  decision  of  1  April  2011,  OJ  C  122,  20.4.2011,  p.  6;  IP/11/397, 
M.6242  Lactalis/Parmalat,  decision  of  14  June  2011,  OJ  C  209,  15.07.2011,  p.  14;  IP/11/701and 
M.6348  Arla  Foods/Allgäuland,  decision  of  7  November  2011,  OJ  C  343,  23.11.2011,  p.  14; 
IP/11/2011. 
Case COMP/M.5907 Votorantim /Fischer/JV, decision of 4 May 2011; IP/11/531. 
Case COMP/M.6286 Südzucker/ED&F Man, decision of 9 November 2011, OJ C 335, 16.11.2011, p. 
2; IP/11/1327.  
The EU, Iceland, Liechtenstein and Norway. 

EN 

15 

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Research, Development and Innovation 

Competition is a fundamental driver of innovation and total factor productivity 

By stimulating innovation of technologies and methods of production – either incrementally 
or  in  breakthrough  fashion  –  competition  policy  can  make  a  significant  contribution  to 
productivity and growth. Cartels prevent industries from reinventing themselves and turn the 
focus  of  activity  to  the  maximisation  of  rent  extraction  rather  than  on  innovation.  The 
Commission's investigation of alleged practices by some publishing houses to exert collective 
control over the development of e-books, possibly hurting the prospect of development of a 
competitive and digital single market in this area, is one example of the Commission's actions 
in this field52. 

In  highly  innovative  environments,  established  firms  may  also  be  tempted  to  control  the 
process of innovation to their own advantage and to the detriment of new entrants. Antitrust 
enforcement must ensure that dominant firms are not able to use their dominance to thwart the 
entry of smaller challengers with viable new ideas. The Commission's ongoing investigations 
against  Google  with  regard  to  its  activities  in  online  search,  online  search  advertising  and 
online  search  advertising  intermediation53  demonstrates  the  Commission's  commitment  to 
enforcing  the  competition  rules  in  fast-moving  digital  sectors  with  a  view  to  ensuring  their 
proper  functioning  as  part  of  the  broader  Digital  Agenda  goals.  The  Commission  is 
considering in particular allegations that Google is lowering the ranking of the unpaid search 
results  of  competing  search  service  providers,  while  according  preferential  treatment  to  the 
results  of  its  own  vertical  search  services  as  well  as  allegations  that  it  imposes  exclusivity 
obligations on advertising partners and restricts the portability of online advertising campaign 
data to competing online advertising platforms. 

Similarly,  the  pharmaceutical  sector  is  Research  and  Development  driven  and  highly 
regulated. As the Commission's report on the Pharmaceutical Sector Inquiry shows, some of 
the main competition concerns in the sector relate to the potential undue delay or blocking of 
entry  of  generic  medicines  and  the  development  and  launch  of  innovative  medicines54.  In 
view of the global nature of the pharmaceutical industry, preserving a sound competition in 
this  sector  is  not  only  necessary  for  domestic  reasons,  but  also  to  enhance  the  provision  of 
affordable and innovative medicines to those in need in developing countries. Agreements and 
contractual  arrangements  to  delay  market  entry  for  generic  products  have  hence  been  under 
the spotlight in 2011, as the Commission opened two cases55 in this context. 

The amount of State aid to support expenditure in research, development and innovation has 
increased from EUR 6.2 million in 2005 to EUR 10.9 million in 2010 (+75%) to support job 
creation  and  increase  Europe's  competitiveness,  through  individual  cases  and  regimes.  In 
2011,  the  Commission  cleared  Member  States'  support  for  such  objectives  in  at  least  33 

52 
53 
54 

55 

Case COMP/39847 Ebooks,; IP/11/1509. 
Case COMP/39740 Foundem/Google and related cases; IP/10/1624. 
For  more  details  on  those  issues  see  the  Final  Report  of  the  Sector  Inquiry  from  2009,  available  at 
http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/index.html; IP/09/1098, 8.7.2009. 
Case  COMP/39686  Cephalon;  IP/11/511,  28.4.2011;  Case  COMP/39685  Fentanyl;  IP/11/1228.  , 
21.10.2011. 

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instances  relating  to  environmental  protection,  43  relating  to  regional  development,  20 
relating to research and development, and at least 11 relating to support to SMEs56. 

Greener growth 

Europe needs competitive energy prices, security of supply, investments in infrastructure and 
energy sources that respect environmental targets 

In  line  with  the  objective  of  supporting  sustainable  growth,  the  Commission  has  started  to 
prepare guidelines for the treatment of State aid in relation to the Emissions Trading System 
(ETS).  They  will  aim  at  balancing  three  objectives:  to  prevent  a  significant  risk  of  carbon 
leakage  due  to  the  increase  of  CO2  costs  in  electricity  prices;  to  preserve  the  price  signals 
created  by  the  EU  ETS  to  achieve  cost-effective  decarbonisation;  and  to  minimise 
competition  distortions  in  the  internal  market  by  avoiding  subsidy  races  within  the  EU  at  a 
time of economic uncertainty and budgetary discipline. 

Competition policy encourages the most efficient use of existing technologies and resources 

Figures show a growing demand for meeting energy requirements from sustainable sources. 
The Commission has authorised joint ventures in the solar (both thermal and photo-voltaic)57 
and  wind  power58  sectors.  Member  States  have  provided  funding  to  measures  in  support  of 
energy from renewable sources under the horizontal Environmental Aid Guidelines59, while at 
the  same  time  several  Member  States  aimed  at  promoting  environmental  friendly  cars  and 
green products. 

Network industries 

The  Commission's  work  in  the  antitrust  field  has  focused  on  improving  the  market 
functioning of key sectors of the economy such as network industries. 

Competition  policy  promotes  efficient  and  integrated  services  and  prevents  market 
segmentation 

The  completion  of  the  single  market  cannot  become  a  reality  if  companies  conclude 
agreements  to  share  the  market  along  national  borders.  Agreements  which  include  non-
compete clauses put the integration of the single market at risk. The Commission thus sent a 

56 

57 

58 

59 

Those figures relate to cases where the stated objective was the primary objective of the aid. The figure 
on support to SMEs also includes aid to risk capital injections in SMEs. The figures refer to decisions 
where  the  aid  was  found  compatible  with  the  internal  market  and  also  six  decisions  where  the 
Commission found that the State support concerned did not constitute aid in the first place. 
Cases COMP/M.6112 Good Energies/NEIF/Newco, decision of 13 April 2011, OJ C 122, 20.04.2011, 
p. 6, COMP/M.6238 RREEF/SMAG/OHL/Arenales, decision of 10 August 2011, OJ C 255, 31.08.2011, 
p. 1, COMP/M.6303 Antin/RREEF/Andasol 1&2, decision of 22 August 2011, OJ C 253, 30.08.2011, p. 
1 and COMP/M.6273 Samsung/Korea Development Bank/KNS Solr, decision of 3 August 2011, OJ C 
236, 12.08.2011, p. 6. 
Cases  COMP/M.6233  FOEW/Dong  Energy/Novasion/Aalborg  Universitet/Universal  Foundation, 
decision of 27 July 2011, OJ C 228, 03.08.2011, p. 4, COMP/M.6176 Mitsubishi Corp/Barclays Bank/ 
Walney Topco I&II/SheringhamsShoal Topco, decision of 29 August 2011, OJ C 261, 03.09.2011, p. 1, 
COMP/M.6155 GEM/DEME/Electrawinds Offshore/SRIWE/Z-Kracht/Power@sea/Rent a Port Energy, 
decision of 6 June 2011and COMP/M.6206 Iberdrola/Caja Rural de Navarra/Renovables de la Ribera, 
decision of 30 June 2011, OJ C 198, 06.07.2011, p. 1. 
Community guidelines on State aid for environmental protection, OJ C 82, 1.4.2008, p. 1-33. 

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Statement of Objections to Telefónica and to Portugal Telecom, as the companies had agreed 
not to compete on their respective telecommunications markets within the Iberian Peninsula60. 

Growth is also at the heart of State aid policy  in the telecommunication sector. In 2011 the 
Commission  scrutinised  almost  EUR  2  billion  of  State  funds  to  finance  the  rollout  of 
broadband  and  next  generation  networks  in  various  European  countries.  As  a  result,  18  aid 
schemes were approved to build  new telecommunication infrastructure in underserved areas 
of  Europe.  They  contribute  to  reducing  the  gap  with  more  advanced  countries  worldwide, 
increasees competitiveness of the markets and ultimately brings new services to consumers. 

Competition policy facilitates a dynamic reallocation of resources (entry and exit) 

In the energy sector, competition enforcement can contribute to resolving security of supply 
issues,  by  facilitating  access  to  the  market  and  encouraging  investment.  In  2011,  the 
Commission initiated a formal investigation against electricity provider ČEZ, upon suspicion 
that it may have had abused a dominant position by, hindering the entry of competitors, on the 
Czech electricity market61. The Commission also carried out unannounced inspections at the 
premises  of  gas  companies  in  Central  and  Eastern  Europe,  regarding  the  existence  of 
behaviour  that  might  potentially  exclude  competitors  from  providing  alternative  sources  of 
gas, or that might involve the abuse of a dominant position in the supply of gas, for instance 
by the charging of excessive prices. 

Improving the functioning of the air transport sector: the role of competition policy 

Air passenger transport has been less affected by financial crisis than air transport of goods 

Today air travel is taken for granted. The number of air passengers tripled between 1980 and 
2000 and is expected to further double by 2020. In 2010 the number of air passengers carried 
on routes involving EU airports reached 777 million, a 3% increase in comparison with 2009. 
Around two-thirds of that travel was within the EU. That steady growth illustrates the benefits 
of market liberalisation supported by competition policy enforcement. Forecasts indicate that 
over the next decade air traffic will continue to grow by around 4% annually62. Civil aviation 
greatly  contributes  to  the  European  economy  as  it  involves  more  than  150  scheduled 
passenger  carriers,  a  network  of  over  450  airports  and  some  4.5  million  employees63.  Its 
activities  contribute  1.5%  to  the  EU  GDP.  The  fact  that  the  civil  aviation  sector  has  grown 
significantly since the early nineties is mainly a result of the liberalisation of the sector, which 
led to price decreases and the entry of numerous new companies. The number of intra-Union 
routes increased by 140% between 1992 and 2010. 

In 2010, 13.1 million tons of cargo was transported by air, 20% being intra-EU freight. This 
represents a 16% increase as compared to 2009, when the European air freight transport sector 
was hard hit by the collapse in trade resulting from the financial crisis. 

Liberalisation has fostered competition and increased choice for passengers, but … 

60 
61 
62 

63 

Case COMP/39839 Telefónica and Portugal Telecom; IP/11/1241, 25.10.2011. 
Case COMP/39727 CEZ; IP/11/891, 15.7.2011. 
Facts  and  Key  developments  on  Air  Transport,  European  Commission  –  DG  Mobility  and  Transport 
available at http://ec.europa.eu/transport/air/doc/03_2009_facts_figures.pdf 
'Flightpath 2050': Europe's visions for aviation. Report of the High Level Group on Aviation Research. 

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The process of liberalisation in air transport is at a relatively advanced stage. Following the 
completion  of  the  single  market  in  air  transport  in  1997,  a  number  of  new  airlines  have 
entered  the  market  and  developed  swiftly,  increasing  competition  and  providing  a  wider 
choice to passengers. This has also been reflected in the relatively sharp increase in passenger 
numbers at regional airports. However, over the past couple of years the competitive position 
of regional airports appears to have weakened: airports with less than five million passengers 
per year now have growth rates that are similar to those of larger airports. 

… consolidation has raised concerns about various forms of cooperation between airlines 

At the same time, there has been substantial consolidation amongst airlines, notably because 
the  previous  market  structure,  based  on  the  existence  of  national  flag  carriers,  proved  to  be 
inefficient  in  an  open  European  market.  A  number  of  mergers  have  taken  place,  notably 
involving some of the smaller and/or less efficient flag carriers – which used to be protected 
by  legal  monopolies.  Looser  and  various  forms  of  cooperation  have  also  developed,  which 
range  from  bilateral  code  share  arrangements  to  alliances  (a  large  number  of  airlines  within 
Europe and beyond are part of the big three alliances, Oneworld, Star Alliance and SkyTeam) 
or joint ventures. Restrictions on foreign investment across different jurisdictions (such as the 
EU  and  the  US)  are  a  major  reason  for  the  popularity  of  such  looser  forms  of  cooperation 
between international carriers. 

The  Commission's  merger  and  antitrust  investigations  in  2011  have  considered  both  the 
competitive  effects  of  the  increased  concentration  of  supply  on  certain  routes  and  the 
competitive impact of coordination between airlines. 

The Commission proposes a new Slot Regulation aimed at increasing competition 

In March, the Commission adopted a comprehensive strategy setting out a roadmap towards a 
competitive  and  resource  efficient  transport  system64.  The  roadmap  contains  40  concrete 
initiatives aimed at increasing mobility while reducing carbon emissions in transport by 60% 
by  2050.  Adopted  in  December  2011,  the  Better  Airports  Package  insists  on  the  capacity 
challenge. In the context of growing airport congestion and the limited development of major 
new airport infrastructure, access to airport slots, a rare resource, limits competition. One of 
these initiatives is a proposal for a new Slot Regulation65 adopted on 1 December, which aims 
at  facilitating  market  entry  and  encourages  more  efficient  use  of  airport  capacity.  The 
proposed  regulation  strengthens  the  independence  of  slot  coordinators,  foresees  increases  in 
the  required  slot  utilisation  rates,  and  expressly  allows  secondary  trading  of  slots,  which 
would  favour  entry  of  competitors,  to  the  detriment  of  incumbents.  At  the  same  time, 
competition authorities will need to ensure that the increased ease of secondary trading will 
not be used by incumbent airlines to further strengthen their positions. 

64 

65 

Roadmap  to  a  Single  European  Transport  Area  –  Towards  a  competitive  and  resource  efficient 
transport system, European Commission White Paper, COM (2011) 144 final, 28.3.2011. 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  common  rules  for  the 
allocation of slots at European Union airports (Recast), European Commission, COM(2011) 827 final, 
1.12.2011. 

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The  Better  Airports  Package  contains  also  a  new  Groundhandling  Regulation66aiming  to 
enhance efficiency and overall quality of groundhandling services, by ensuring an increased 
competition within the sector. 

Slot commitments have been offered as remedies in merger and antitrust cases 

In  a  number  of  merger  and  antitrust  cases,  parties  have  offered  slots  as  a  way  to  facilitate 
entry  of  competitors,  thereby  aiming  to  address  the  concerns  raised  by  competition 
authorities. Slot commitments are particularly effective at congested airports, where access to 
slots is essential for airlines to be able to compete.  

Slot commitments were implemented by a transatlantic airline joint venture, but … 

In 2010, British Airways, American Airlines and Iberia, members of the Oneworld alliance, 
agreed to coordinate flight schedules, fares and capacity on routes between Europe and North 
America.  The  Commission's  investigation  of  this  joint  venture  led  to  a  decision  that  made 
binding  the  commitments  by  the  three  carriers67.  Subsequently,  several  competitors  applied 
for slots or other special arrangements offered by the joint venture partners. Following review, 
the  Commission  approved  on  20  December  2010  Delta  Airlines'  application  for  slots, 
allowing  it  to  start  new  services  from  London  Heathrow  to  Boston  and  Miami.  The 
Commission continued in 2011 to investigate arrangements under the Star68 and SkyTeam69 
alliances  and  opened  two  investigations70  to  verify  the  legality  of  code-share  agreements 
implemented,  in  one  case,  between  Lufthansa  and  Turkish  Airlines  and,  in  the  second  case, 
between TAP Air Portugal and Brussels Airlines. 

… were considered insufficient in the proposed Aegean Olympic merger 

Preserving consumer choice and price competition on Greek routes  

On 26 January, the Commission prohibited the proposed merger between Aegean Airlines and Olympic Air, the 
two  largest  airlines  in  Greece,  which  had  been  notified  in  June  2010.  As  with  previous  airline  mergers  the 
Commission  analysed  the  combined  effects  of  the  proposed  merger  on  the  individual  routes  on  which  both 
companies operate. The Commission found that the proposed merger would have resulted in a quasi-monopoly 
for the merged entity on nine routes, including between Athens and Thessaloniki, Herakleion or Rhodes, to the 
detriment of the over four million passengers who travel on those routes each year. As part of a remedy package 
Olympic and Aegean offered to make available to any potential new entrant certain take-off and landing slots at 
Athens  and  other  Greek  airports.  However,  the  Commission  considered  that  these  remedies  were  insufficient 
because neither Athens nor any of the other Greek airports are congested. 

Indeed, unlike in previous airline cases, the problem was not the availability of slots. The problem was that even 
with slots available, there was no company that would credibly enter the market. Therefore, the release of slots 
would not have improved the likelihood of, or made it easier for, a new entrant to emerge on these routes. In the 
absence of any suitable remedy the Commission had no choice but to prohibit the proposed merger71. 

66 

67 

68 
69 
70 

71 

Proposal for a Regulation of the European Parliament and of the Council on groundhandling services 
at Union airports and repealing Council Directive 96/67/EC, European Commission, COM(2011) 824 
final, 1.12.2011. 
Case COMP/39596 BA/AA/IB, Commitments Decision of 14 July 2010, OJ C 278, 15.10.2010, p. 14-
15. 
Case COMP/39595 Continental/United/Lufthansa/Air Canada. See MEMO/09/168, 20.4.2009. 
Case COMP/37984 SkyTeam  
Cases COMP/39794 Lufthansa/Turkish Airlines and COMP/39860 Brussels Airlines/TAP Air Portugal. 
IP/11/147, 11.2.2011. 
Case COMP/M.5830 Olympic/Aegean Airlines; IP/11/68, 26.1.2011. 

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Emergence of low-cost carriers and their attractiveness for regional airports… 

The  air  transport  sector  has  changed  dramatically  in  recent  years,  especially  because  of  the 
spectacular rise of low-cost carriers since 2005. Those carriers have gained substantial market 
shares but have also benefitted from considerable public support. For example, in a number of 
cases the public authorities have offered discount schemes to low cost carriers for the use of 
regional  airports,  which  have  also  benefitted  from  public  money.  In  addition,  some  former 
flag carriers may not survive the current economic crisis and have requested public support. 
So  it  should  not  come  as  a  surprise  that  the  Commission  has  received  complaints  from 
competitors. 

… feed reflection on the Aviation Guidelines. 

The  current  legal  framework,  which  consists  of  the  199472  and  200573  Aviation  Guidelines, 
addresses  such  concerns  mainly  by  providing  compatibility  criteria  for  the  assessment  of 
investment aid for airport infrastructure and start-up aid to airlines from regional airports. In 
2011, the Commission launched a public consultation on the application and possible revision 
of these guidelines. The Commission is considering adopting new guidelines in 2012, which 
would  take  into  account  the  positive  regional  development  impact  of  airports  and  airlines 
while  avoiding  distortions  in  competition  conditions  and  duplication  of  non-profitable 
airports. 

Commission increases scrutiny of aid to regional airports and low cost carriers, and …  

Currently, the majority of regional airports in Europe are not profitable and can only survive 
thanks  to  the  subsidies  they  receive  from  local  authorities.  Only  8%  of  the  airports  in  the  
EU-27  are  privately  owned,  while  77%  are  public  and  another  14%  have  mixed  ownership. 
However, airport closure may not be an option, because of the important role regional airports 
play in local/regional development. Nevertheless, State aid scrutiny needs to ensure that such 
public  ownership  does  not  unfairly  benefit  some  airports  and  airlines  to  the  detriment  of 
others, thereby contributing to correct allocation of public resources. Importantly, a number of 
judgments in the sector have upheld that more stringent role for State aid review. In its recent 
judgment  on  the  Leipzig-Halle  airport  case,  the  General  Court  confirmed  that  airport 
infrastructure construction is subject to State aid scrutiny, because it is intrinsically linked to 
the operation of an airport as an economic activity74. 

In 2011, the Commission  opened  formal State  aid  investigation procedures in six cases75  of 
investment  and  start-up  aid  to  airlines  or  regional  airports.  Most  of  those  cases  involve 

72 

73 

74 

75 

Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to State aids 
in the aviation sector (OJ C 350, 10.12.1994, p. 5). 
Community  Guidelines  on  financing  of  airports  and  start-up  aid  to  airlines  departing  from  regional 
airports, OJ C 312, 9.12.2005, p. 1-14. 
Joined  Cases  T-443/08  and  T-455/08,  Freistaat  Sachsen  and  Others  v  Commission,  Judgment  of  the 
General Court of 24 March 2011 
Cases SA.31662 Alleged State aid to Timisoara airport, airlines operating from the airport and WIZZ 
AIR, decision of 22 July 2011, OJ C 270, 13.09.2011, p. 11-31, SA.29064 Unlawful State aid by Ireland 
to  Aer  Lingus,  Aer  Arann  and  Dublin  Airport  Authority,  decision  of  13  July  2011,  OJ  C  306, 
18.10.2011,  p.  10-16;  IP/11/874,  SA.30743  Leipzig-Halle  airport  –  further  infrastructure  measures, 
decision of 15 June 2011, OJ C 284, 28.09.2011, p. 6-23, SA.32833 Frankfurt-Hahn - Alleged State aid 
to  the  airport  and  Ryanair,  Decision  of  13  July  2011;  IP/11/874,  SA.22932  Air  France  complaint 
against aid granted to Ryanair by Marseille, decision of 13 July 2011, OJ C 334, 15.11.2011, p. 8-61; 

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discount  schemes  on  airport  charges  given  to  low  cost  carriers,  often  in  combination  with 
marketing agreements of doubtful value to the airports. 

… continues investigating restructuring aid to flag carriers 

At the same time, incumbent carriers have been consolidated and restructured, giving rise to 
important  State  aid  cases.  The  opening  of  the  formal  investigation  procedure  on  the 
restructuring aid for the Czech and Maltese national flag carriers (Czech Airlines (ČSA)76 and 
Air Malta77) are two good examples. 

2.3. 

How the Commission fosters a competition culture 

Enforcement and advocacy are the two arms of an effective competition policy 

Knowledge of the benefits of competition is essential for citizens to exploit their opportunities 
as consumers, for businesses to compete on the merits and for policy makers at EU, national, 
regional and local level, to bring initiatives that support sustainable growth. 

Companies and Member States need to be aware and comply with the rules … 

Markets work better where consumers make informed choices between products and services 
offered,  businesses  refrain  from  anti-competitive  agreements  and  practices  and  public 
administrations  realise  how  competition  can  contribute  to  addressing  wider  economic 
problems.  In  times  of  economic  slowdown,  it  is  particularly  important  that  policy  makers 
understand  the  beneficial  effects  competition  has  on  growth  and  the  harm  that  could  result 
from  a  relaxation  of  the  rules.  To  foster  awareness  of  the  rules  and  promote  compliance 
efforts  by  companies  the  Commission  issued  a  brochure  entitled  'Compliance  Matters'  and 
opened on its website an area guiding readers to available materials on effective compliance 
strategies78. 

In  2011,  further  progress  was  made  to  ensure  that  the  Commission's  state  aid  recovery 
decisions  are  enforced  effectively  and  immediately  by  the  Member  State  concerned.  The 
purpose  of  recovery  is  to  re-establish  the  situation  that  existed  on  the  market  prior  to  the 
granting  of  the  aid,  in  order  to  ensure  that  the  level  playing  field  in  the  internal  market  is 
maintained.  The  percentage  of  illegal  and  incompatible  aid  still  to  be  recovered  has  fallen 
from  75%  at  the  end  of  2004  to  around  12.3%  on  31  December  2011,  while  the  amount  of 
illegal and incompatible aid recovered increased from EUR 2.3 billion in December 2004 to 
EUR 12.3 billion. Infringement procedures and judicial actions against Member States that do 
not comply with a state aid recovery decision have proven effective. In 2011, five cases were 
closed after judicial actions before the Court of Justice; 29 out of the 45 open cases are still 
subject to litigation. 

… while Competition authorities increase their cooperation within the EU and internationally 

IP/11/874 and SA.30931 Scheme investment aid to airports in Romania, decision of 23 June 2011, OJ C 
207, 13.07.2011, p. 3-15. 
Case SA.30908 CSA - Czech Airlines – Restructuring Plan, decision of 23 February 2011, OJ C 182, 
23.06.2011, p. 13-28; IP/11/214. 
Case SA.33015 Air Malta plc. 
See at: http://ec.europa.eu/competition/antitrust/compliance  

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Both the Commission and NCAs play important roles in fostering a competition culture. They 
cooperate not only on cases but also on policy developments through various fora within the 
ECN.  Subgroups  active  in  2011  covered  sectors  such  as  food,  financial  services  and 
pharmaceuticals. 

Globalised markets need a competition culture fostered internationally, and the Commission 
is promoting convergence on substantive and procedural rules. Cooperation agreements have 
been concluded with the competition authorities of the US, Canada, Japan and Korea. Farther 
reaching agreements are currently being discussed with the Swiss and Canadian authorities, to 
enhance the efficiency and effectiveness of case cooperation. 

3. 

COMPETITION DIALOGUE WITH OTHER INSTITUTIONS 

3.1. 

Structured dialogue with the European Parliament 

While  the  Commission  has  full  competence  for  the  enforcement  of  EU  competition  law, 
subject  to  the  control  of  the  European  Courts,  the  Commissioner  for  Competition  and  his 
services take part in a continuous structured dialogue on competition issues with the European 
Parliament, in particular its committee on Economic Affairs (ECON). 

Structured dialogue with the ECON Committee 

In 2011, the Commissioner for Competition visited the ECON committee three times in order to take part in the 
structured  dialogue,  to  present  the  Commission  Work  Programme  for  2011  (March),  the  Annual  Report  on 
Competition  Policy  (July)  and  the  Commission  Work  Programme  for  2012  (November).  He  also  attended  a 
hearing on collective redress and a meeting with the competition working group.  

3.2. 

Follow-up to Parliament's Resolution on the 2009 Report on Competition Policy 

In January 2011, the Parliament adopted its Resolution on the Commission's 2009 Report on 
Competition Policy79. In that Resolution, it made a series of requests to the Commission. In 
addition  to  its  official  response  to  the  Resolution,  the  Commissioner  for  Competition 
responded with a letter to the Chair of the ECON Committee in March, and his services also 
submitted a detailed response to all of the points made by Parliament in its Resolution. 

Topics covered by the European Parliament's Resolution 

Parliament was particularly interested in the Commission's activities linked to the financial and economic crisis, 
and asked the Commission to conduct an evaluation of the temporary State aid measures introduced during the 
crisis. In response, the Competition DG prepared an extensive Staff Working Document on the temporary State 
aid rules during the financial and economic crisis80, submitted by the Commissioner for Competition to the Chair 
of ECON in September. 

In its Resolution, Parliament also recalled its earlier requests for the Commission to bring forward legislation to 
facilitate  individual  and  collective  claims  for  effective  compensation  for  damages  resulting  from  breaches  of 
antitrust law. In response to Parliament's call for a coherent approach across sectors, the Commission launched a 
public consultation on collective redress in March. The Commission Work Programme for 2012 also includes a 
proposal  on  antitrust  damages  actions,  which  the  Commissioner  for  Competition  intends  to  present  to  the 
College in 2012. 

79 
80 

Texts adopted, P7_TA(2011)0023. 
Commission Staff Working Document on the effects of temporary State aid rules adopted in the context 
of the financial and economic crisis economic crisis SEC(2011) 1126 final (5.10.2011). 

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3.3. 

DG Competition engagement with Parliament's ECON committee 

The  Competition  DG  organised  two  seminars  for  assistants  and  political  advisers  of  the 
members of the ECON committee in 2011. The first (February) covered the main themes in 
the 2011 Competition Work Programme81. The second (July) was organised to coincide with 
the  presentation  by  the  Commissioner  for  Competition  of  the  2010  Annual  Competition 
Report.  In  addition,  the  Director  General  of  the  Competition  DG  spoke  at  an  Open 
Coordinators meeting of the ECON Committee in May. 

Public consultations and Impact assessments 

The Competition DG provides information on the launch of public consultations to the secretariat of the ECON 
committee and, more generally, welcomes timely contributions by Parliament. The services of the Competition 
DG are available to brief MEPs on aspects of particular interest. Responses to public consultations, background 
studies  commissioned,  the  Commission's  Impact  Assessments,  and  any  related  Staff  Working  Papers  are 
published on the internet. All information on current and previous public consultations and Impact Assessments 
are also available on the Competition DG website82. 

The Commissioner for Competition and his staff participated in meetings of the Public Services Intergroup on 
SGEI  before  the  launch  of  the  public  consultation  in  March.  The  Commissioner  presented  the  Commission's 
initial  thinking  to  ECON  in  March,  reported  back  to  the  committee  in  July  and  subsequently  in  November. 
During  the  process  the  Commission  amended  its  initial  proposal  to  accommodate  some  of  Parliament's 
suggestions. 

The members of the ECON Committee have also expressed concerns about the Commission's 
fining policy and in response the services of the Competition DG have explained the fining 
methodology in seminars and through a detailed reply to an MEP's letter. 

The Commission's fining policy 

In 2011, the Competition DG published a factsheet on fines83, which seeks to explain the reasons for fines and 
how  they  are  calculated.  It  also  published  a  brochure  on  compliance  for  companies,  which  addresses  the 
importance of encouraging compliance, as well as ensuring effective deterrence. The Commission also published 
its  revised  Best  Practices  package  in  October.  It  outlines  measures  to  increase  the  transparency  of  antitrust 
investigations. In particular, all Statements of Objections, which set out the Commission's arguments at an early 
stage  in  the  case,  and  to  which  parties  can  respond  in  detail,  now  include  an  indication  of  the  parameters  of 
possible fines. 

MEPs frequently ask the Commission questions about individual ongoing competition cases, 
to  which  the  Commission  is  unable  to  reply  due  to  the  confidentiality  requirement  of  the 
investigative procedures. 

Ongoing investigations and sector inquiries 

Competition DG staff regularly meet MEPs at their request, to explain the procedural steps in an investigation, 
and  to  have  a  general  discussion  on  a  particular  sector,  as  far  as  is  possible  within  the  confines  of  the 
confidentiality  obligation  to  parties.  Parliament  has  also  repeatedly  called  for  sector  inquiries  in  a  number  of 
areas, which the Commission has noted. The Commission has a range of tools at its disposal for the enforcement 
of  EU  competition  law,  such  as  investigations  in  individual  cases,  sector  inquiries,  and  working  with  other 
Directorates-General  on  regulatory  measures.  Sector  inquiries  are  very  resource-intensive,  and  sometimes  the 
same objectives can be achieved as effectively through other types of investigation.  

81 

82 
83 

Issues covered included Services of General Economic Interest, the Rescue and Restructuring 
Guidelines, the Commission's public consultation on Collective Redress and fines. 
http://ec.europa.eu/competition/index_en.html  
Available at http://ec.europa.eu/competition/antitrust/compliance/factsheet_fines_nov_2011_en.pdf  

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3.4. 

Competition DG engagement with the EESC 

The Commission also keeps the European Economic and Social Committee (EESC) informed 
about  major  policy  initiatives,  and  participates  in  study  group  and  section  meetings. 
Moreover,  on  4  October  the  Commissioner  for  Competition  attended  the  Section  for  the 
Single  Market,  Production  and  Consumption,  where  he  presented  the  Staff  Working 
Document  on  the  temporary  State  aid  rules  during  the  financial  and  economic  crisis.  On  7 
December, the EESC adopted an opinion on the Report on Competition Policy 201084. 

84 

Opinion  of  the  European  Economic  and  Social  Committee  on  the  'Report  from  the  Commission  – 
Report on Competition Policy 2010', 7 December 2011, OJ C 43, 15.2.2012, p. 25 – 29. Available at 
http://www.eesc.europa.eu/?i=portal.en.int-opinions.19680  

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