REPORT FROM THE COMMISSION Report on Competition Policy 2012
Date: 2013-05-07
Institutions: European Commission
Subjects: Spain, available energy, banking system, cartel, competition policy, economic recession, fine, information technology, transmission network

EUROPEAN 
COMMISSION 

Brussels, 7.5.2013  
COM(2013) 257 final 

REPORT FROM THE COMMISSION 

Report on Competition Policy 2012 

{SWD(2013) 159 final} 

EN 

   EN 

 
 
 
 
  
 
INTRODUCTION 

The European Union (EU) is the world's largest economic and trading area. The EU's unique 
asset  and  distinct  comparative  advantage  on  the  global  scene  is  its  Single  Market,  which 
encompasses over half a billion consumers and more than 20 million firms. 

Since its inception, the on-going process of improving and expanding the Single Market has 
gone hand in hand with the development of EU competition policy. The first seminal antitrust 
cases targeting impediments to trade in the Single Market date back to the 1960s, notably the 
pioneering decision in 1964 against Grundig-Consten. That case concerned an agreement to 
partition the market, which had resulted in substantial price differences between France and 
Germany.  The  Court  of  Justice  upheld  the  Grundig-Consten  decision  and  reiterated  its 
position  on  private  impediments  to  cross-border  trade  and  competition  in  subsequent 
judgments1. The  adoption  of  the  merger control regulation in 1989 represented a qualitative 
leap in EU competition policy reflecting the development of the internal market after the entry 
into force of the Single European Act in 1987. EU competition policy took into account the 
new  market  realities  of  increased  opportunities  for  European  firms  to  merge  and  acquire 
assets  across  national  borders.  Likewise,  State  aid  control  has  also  gradually  become  an 
essential  pillar  of  the  Single  Market,  ensuring  that  companies  are  able  to  compete  on  equal 
terms  independently  of  where  they  are  located  and  providing  safeguards  against  Member 
States  engaging  in  mutual  subsidy  races  at  the  expense  of  each  other  and  of  the  general 
European interest. Finally, the adoption of Regulation 1/2003 ten years ago marked a new era 
in the enforcement of the EU antitrust rules, in which national competition authorities (NCAs) 
have become very active players. The enforcement of the EU antitrust rules is now carried out 
by  a  multiplicity  of  enforcers  in  the  Single  Market  according  to  the  same  standard  of 
assessment.  That  regime  has  significantly  enhanced  the  level  of  enforcement  of  the  EU 
antitrust rules  and  underpins  the level playing field for companies operating cross-border in 
Europe. 

Without an effective EU competition policy, the Single Market cannot reach its full potential. 
There  would  be  nothing  to  prevent  private  barriers  to  trade  and  competition  from  replacing 
the public barriers that free movement rules have dismantled over more than half a century. 
Nor  would  Member  States  be  prevented  from  distorting  trade  and  competition  through  a 
myriad of subsidies, a scenario which naturally favours the fiscally stronger. Weakening EU 
competition  policy  would  undermine  the  Single  Market  to  the  detriment  of  the  growth 
potential of the EU, the individual economies of which – in particular in the eurozone – are 
increasingly interdependent. At the same time, competition policy is also crucial in allowing 
the  EU  to  crack  down  on  abuses  of  dominant  position,  cartels  and  concerted  practices  that 
harm consumers. 

In  2012  the  European  Commission  continued  to  ensure  the  sound  functioning  of  the  Single 
Market, despite occasional calls for a softer stance towards anticompetitive conduct by firms 
or Member States in view of the economic crisis.  

No time to relax the enforcement of competition rules  

The decade-long world-wide cartels for colour display tubes and for colour picture tubes, which exhibited all the 
worst kinds of anticompetitive behaviour in the Single Market, is a case in point. Colour display tubes and colour 

1 Joined Cases C-56/64 and C-58/64 Grundig-Consten [1966] ECR 299, Judgment of 13 July 1966. See also 
Judgment of 4 October 2011 in Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and 
Others, judgment of 4 October 2011 

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picture tubes are key components that go into the making of television and computer screens, accounting for 50 
to  70%  of  the  price.  On  5  December  2012,  the  European  Commission  fined  seven  international  groups  of 
companies a total of EUR 1 470 515 000 for the two cartels.  

Throughout  2012,  all  the  tools  of  the  EU  competition  policy  –  antitrust  and  merger 
enforcement  as  well  as  State  aid  control  –  continued  to  be  deployed  as  levers  across 
significant parts of the Single Market. The year 2012 also marked the 20th anniversary of the 
relaunch  in  1992  of  the  European  Single  Market.  This  Report  on  competition  policy  thus 
focuses on the role of competition policy in leveraging the Single Market for growth. In 2012, 
the  Commission  also  continued  working  with  national  competition  authorities  (NCAs)  to 
ensure a coherent application of the EU antitrust rules. In particular, the Commission engaged 
in  close  cooperation  with  the  national  competition  authorities  within  the  European 
Competition Network (ECN), including efforts to foster convergence of national procedures 
for the enforcement of the EU antitrust rules which are not generally regulated by EU law. 

This past year EU competition enforcement focused in particular on sectors of systemic and 
cross-cutting importance to the EU economy: financial services; key network industries such 
as  energy,  telecoms  and  postal  services;  as  well  as  knowledge-intensive  markets  such  as 
smartphones,  e-books  and  pharmaceuticals.  In  those  sectors,  EU  competition  enforcement 
(which mainly operates ex post) complements Single Market regulation. 

Many  of  the  issues  addressed  in  this  Report  were  already  examined  in  the  course  of  the 
Commission's  continuous  structured  dialogue  with  the  European  Parliament  throughout  the 
year (see section 5 on Competition Dialogue with Other Institutions and, for further detail, the 
Commission Staff Working Document (SWD) accompanying this Report).  

1.  COMPETITION  POLICY  SUPPORTING  A  FAIRER  AND  MORE 
TRANSPARENT FINANCIAL SECTOR  

A viable, transparent and competitive banking system providing finance to the real economy 
is a necessary precondition to restore sustainable growth. The current financial and economic 
crisis  has  its  origins  in  the  financial  sector  and  any  exit  strategy  necessarily  requires 
addressing the root causes of the crisis. With that in mind, in 2012 the European Commission 
continued to apply the State aid rules to control the parts of the EU banking sector concerned. 
The bulk of the activity involved the restructuring of banks, so that no more taxpayer funding 
will  be  needed  for  the  foreseeable  future.  In  cases  where  banks  were  beyond  restructuring, 
State aid control continued to be used as a de facto resolution mechanism in anticipation of 
more  comprehensive  Single  Market  legislation2.  Merger  and  antitrust  rules  were  also 
employed  to  ensure  that  the  Single  Market  is  underpinned  by  a  transparent  and  competitive 
financial sector3.  

The temporary emergency regime as a tool for bank restructuring and de facto resolution  

At the outbreak of the financial crisis in 2008 and 2009, State aid control became – more by 
default than by design - the principal tool at EU level to tackle the unprecedented situation. 
The Commission promptly put in place a special State aid regime to control government bail-

2 The Commission will come forward with a proposal for a single resolution mechanism for banks. The 
December 2012 European Council agreed that this proposal "would be to be examined by the co-legislators as a 
matter of priority with the intention of adopting it during the current parliamentary cycle" 
3 Responding to European Parliament and the Economic and Social Committee calls for action in favour of fair, 
well-regulated and transparent financial markets  

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outs of distressed banks to safeguard the stability of the wider financial system.4 The special 
regime  was  also  designed  to  ensure  the  sound  functioning  of  the  Single  Market.  The 
existential  threat  to  the  Single  Market  was  evident  from  the  sheer  scale  of  government 
intervention.  Between  1  October  2008  and  the  end  of  2011,  approximately  EUR  1.6 trillion 
were  transferred  to  banks.  The  amount  pledged  by  EU  governments  was  in  fact  three  times 
greater. The bulk of that amount took the form of government guarantees of banks' liabilities 
and  other  forms  of  liquidity  support,  accounting  for  over  9%  of  EU  GDP,  while 
recapitalisations  and  impaired-asset  support  totalled  over  3%  of  EU  GDP.  The  special 
temporary regime continued to ensure that the banks concerned were supported on the same 
conditions across the Single Market. Under these temporary rules, which remain in force as 
long as market and economic conditions require, EU banks in distress can receive government 
support on the condition that they restructure.  

Repairing the financial sector to support the real economy while protecting taxpayers  

The  restructuring  of  individual  banks  continued  to  be  guided  by  the  imperative  of  ensuring 
viable  business  models  that  support  the  real  economy.  Decisions  involving  cost-cutting, 
divestments  and  focusing  on  core  activities  were  taken  in  relation  to  inter  alia  some  of  the 
German Landesbanken (NordLB and BayernLB), the Spanish banks CAM and UNNIM and the 
Latvian mortgage bank.5 Particular care was taken to ensure that taxpayer money is used to 
return  banks  to  long-term  viability  and  that  in  the  medium  term  the  taxpayers  will  be  paid 
back without losses; indeed, some aid beneficiaries have already started to repay the support 
they received to their governments6. 

As part of the economic adjustment programmes for Ireland, Portugal and Greece, State aid 
control  continued  to  contribute  significantly  to  the  restructuring7  of  those  countries´  entire 
banking sectors as part of a wider effort involving not only the Commission but also the ECB 
and  in  most  cases  the  IMF.  Again,  a  key  concern  was  to  ensure  the  integrity  of  the  Single 
Market in a context of massive public financial support.  

Restructuring the Spanish banking sector 

In July 2012 the Eurogroup agreed to a Memorandum of Understanding (MoU) on a sector programme for the 
Spanish  financial  sector.  Under  the  MoU,  a  rigorous  stress  test  was  carried  out  covering  a  three-year  period 
through 2014. The stress test identified a capital shortfall of around EUR 60 billion in ten banks. Two of those 
banks, Banco Popular and Ibercaja, raised the necessary capital on the market or through management actions. 
The  eight  remaining  banks  that  could  not  meet  the  shortfall  through  private  resources  were  recapitalised  with 
programme funds and are being restructured or resolved in line with the State aid rules. A first group involved 
banks  already  controlled  by  the  Spanish  authorities:  BFA/Bankia,  Catalunya  Caixa,  Nova  Caixa  Galicia  and 
Banco de Valencia. The restructuring plans for those banks were approved on 28 November 2012. For a second 
group,  including  Banco  Mare  Nostrum,  Banco  CEISS,  Caja3  and  Liberbank,  restructuring  decisions  were 
adopted on 20 December 2012. As a result, the whole Spanish financial system was fully capitalised by the end 
of 2012. The restructuring plans for those banks aim to restore their viability and capacity to provide credit to the 
real economy, while minimising the cost to taxpayers and limiting to the minimum distortions of competition. Of 
the  EUR  57 billion  capital  need  for  the  eight  remaining  banks,  EUR  37 billion  will  come  from  the  EU 
programme for the Spanish financial sector. As regards to the remaining EUR 18 billion, EUR 12 billion is in the 
form  of  burden-sharing  by  junior  debt  holders,  EUR  5 billion  from  asset  disposals  by  the  banks  and  EUR 

4 In essence the special rules mean that the normal rules for aid for rescue and restructuring do not apply to the 
financial sector (see IP/11/1488) 
5 For a comprehensive picture, see Annex 2 to the Staff Working Document accompanying this report 
6 See, among others cases, SA.28487 (see press release IP/12/847) 
7 As well as resolution when needed, as in the case of the Agricultural Bank of Greece 

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1 billion  is  in  the  form  of  the  transfer  of  real  estate  loans  to  SAREB,  the  bad  bank  set  up  by  the  Spanish 
authorities. 

Competition  policy  accompanies  EU  Single  Market  legislation  aimed  at  increasing  the 
transparency, fairness and soundness of financial markets  

An  ambitious  Single  Market  regulation  package  is  being  put  in  place  to  make  financial 
markets  more  transparent  to  address  the  roots  of  the  financial  crisis  in  areas  such  as 
derivatives. EU competition policy naturally supports that legislative effort. Transparency is 
essential for competitive markets.  

In 2012, the Commission continued to investigate a number of antitrust cases relating to the 
Libor, Euribor and Tibor benchmark rates. A number of banks and brokers are subject to the 
investigation.  The  importance  of  financial  derivative  products  linked  to  these  benchmarks 
cannot  be  overstated.  According  to  the  bank  for  International  Settlements  (BIS)  the 
outstanding gross market value of the interest rate derivatives in all currencies was USD 19 
trillion in June 2012.8 Those products play a key role in the management of risk in the Single 
Market.  The  Commission's  antitrust  investigations  were  launched  before  the  Libor  scandal 
which  was  triggered  by  the  revelations  of  manipulation  of  the  Libor/Tibor  and  later  on  the 
Euribor  benchmark  rates,  which  also  gave  rise  to  criminal  investigations  and  investigations 
under financial regulation across many jurisdictions. In July 2012 the Commission amended a 
previous legislative proposal so as to cover the sort of manipulation that is emerging from the 
Libor scandal, making it a criminal offence.  

The Commission also pursued two antitrust investigations in the credit default swaps (CDS) 
market which were opened in 2011. The Commission has continued to analyse, in particular, 
the  cooperation  between  a  number  of  leading  investment  banks  and  an  information  service 
provider.  The  purpose  of  the  investigation  is  to  establish  whether  those  players  acted  to 
preserve their stronghold in the profitable Over-The-Counter (OTC) CDS market by hindering 
the development of exchange traded CDS derivatives in a way which may have infringed EU 
competition law. 

The concerted attempts by the Commission and the EU legislature to increase transparency in 
financial  markets  through  Single  Market  legislation  can  be  subverted  by  anticompetitive 
collusion and abuses. EU competition policy can be, and is, deployed as part of a wider mix 
of remedies9.  

The Commission also used in 2012 its merger control tools to ensure competitive prices for 
companies  which  manage  their  risks  by  investing  in  derivatives  in  the  EU.  On  1  February 
2012,  the  Commission  prohibited  the  proposed  merger  between  Deutsche  Börse  and  New 
York  Stock  Exchange  Euronext.  The  Commission  came  to  the  conclusion  that  the  merger 
would  eliminate  competition  and  lead  to  a  quasi-monopoly  in  some  derivatives  markets,  in 
particular the worldwide markets for European single stock and equity index derivatives and 
European interest rate derivatives. In those areas, the two exchanges were  de facto the only 
credible global players. The Commission took the view that the merger was likely to lead to 
higher prices and less innovation for derivatives customers and that the remedies proposed by 
the parties were insufficient to address these concerns. 

8 Bank for International Settlements, November 2012, available at http://www.bis.org/statistics/derstats.htm, 
figures available at http://www.bis.org/statistics/otcder/dt21a21b.pdf 
9 As called for by the European Parliament 

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Facilitating  transactions  across  the  Single  Market  through  better  functioning  payment 
systems 

In  2012,  the  Commission  pursued  its  antitrust  enforcement  action  against  anticompetitive 
behaviour  relating  to  the  multilateral  interchange  fees  (MIFs)  charged  by  credit  card 
companies, in particular Visa's and MasterCard. MIFs make up a significant part of the total 
cost  that  retailers  must  pay  for  accepting  payment  cards.  In  2010,  35 billion  card  payments 
were made in the European Economic Area (EEA), totalling EUR 1.8 trillion. 

Visa's credit and debit cards represent approximately 41% of all payment cards issued in the 
EEA. Over five million merchants accept Visa's payment cards. In 2012, the Commission sent 
a  supplementary  statement  of  objections  to  Visa  relating  to  the  MIFs  it  charges  for 
transactions  with  consumer  credit  cards  in  the  EEA10.  The  Commission  reached  the 
preliminary  conclusion  that  these  MIFs  reduce  price  competition  between  acquiring  banks, 
inflate  the  cost  of  credit  card  acceptance  for  merchants  and  ultimately  increase  consumer 
prices. The Commission also found that the obligation on cross-border acquirers to pay MIFs 
applicable  in  the  country  of  transaction  hindered  cross-border  acquiring  and  maintained  the 
segmentation  of  the  Single  Market  into  national  markets,  preventing  merchants  from 
benefiting from lower MIFs in other Member States.  

The Commission's analysis in the Visa case closely followed the judgment of the EU General 
Court in May in the MasterCard case, which fully upheld the Commission's findings on the 
anticompetitive nature of MIFs11. 

2.  STATE  AID  REFORM  TO  FURTHER  DEVELOP  THE  SINGLE  MARKET  AND 
SUPPORT GROWTH IN A CONTEXT OF SCARCE PUBLIC RESOURCES 

The past year saw the first decisions applying the new framework on State aid for Services of 
General Economic Interest (SGEIs) adopted in 2011. In May 2012, the Commission launched 
an even more ambitious reform agenda: State Aid Modernisation.  

Entry into force of new rules on SGEIs: extracting the maximum from scarce public budgets 
in support of the European social and economic model 

SGEIs are public services that would not be provided by market forces alone or at least not in 
a form that would be available to all. SGEIs are an integral part of the European social market 
economy model.  

The new SGEI rules (effective  as  of  31 January 2012)  assist public  authorities in designing 
smarter,  more  efficient  and  more  effective  services  in  areas  such  as  energy,  transport, 
telecommunications and postal services. The new approach means that the Commission will 
focus on SGEIs that receive large government funds and, therefore, are more liable to distort 
competition  in  the  Single  Market.  The  first  decisions  (e.g.  Post  Office  Limited)12  illustrate 

10 Following the opening of proceedings in March 2008, the Commission sent Visa a statement of objections in 
April  2009  concerning  multilateral  interchange  fees  ("MIFs")  for  consumer  debit  and  credit  card  transactions 
(see  MEMO/09/151).  Visa  Europe  offered  commitments  to  cap  its  debit  card  MIFs  at  0.20%,  which  the 
Commission  made  binding  in  December  2010  (see  IP/10/1684).  The  proceedings  regarding  consumer  credit 
MIFs continue 
11 Case T-111/08, judgment of 24 May 2012, not yet published 
12 Case COMP/SA.33054 Post Office Limited: Compensation for net costs incurred to keep a non-commercially 
viable network for the period 2012-15 and the continuation of a working capital facility (see IP/12/320). The 
case was assessed under Article 106 TFEU 

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how the State aid rules can guarantee continued delivery of postal and other essential public 
services while ensuring fair competition in the Single Market13 (see also section 3.3 below). 

State Aid Modernisation: Tackling the twin challenges of growth and budgetary constraints 
while safeguarding the Single Market 

On 8 May 2012 the Commission launched the State Aid Modernisation (SAM), a reform of 
the whole of State aid policy. Prioritising enforcement on cases with a significant impact on 
the  Single  Market  is  one  of  the  keys  objectives  of  the  SAM.  Another  key  objective  is  to 
ensure  that  scarce  public  budgets  are  targeted  at  real  market  failures,  i.e.  that  they  are  not 
wasted on projects that would have been carried out in any case. In other words, SAM's aim is 
to facilitate the treatment of aid which is well-designed, targeted at identified market failures 
and  objectives  of  common  interest,  and  least  distortive.  Aid  which  does  not  provide  real 
incentives for companies crowds out private investment and keeps inefficient and non-viable 
companies on life support ("bad aid")14. Good aid strengthens the Single Market while bad aid 
weakens it. State aid is a horizontal tool which extends its scope across the Single Market, not 
least  the  recently  liberalised  network  industries.  Thus,  it  can  and  must  be  designed  and 
leveraged so as to help Member States re-launch growth while ensuring fiscal sustainability.  

The process of translating SAM into reality began through revisions of a number of key State 
aid  guidelines  and  frameworks.  The  objective  is  to  bring  them  all  in  line  with  a  coherent 
overall  philosophy  and  methodology.  To  this  end,  the  Commission  launched  public 
consultations  on  the  current  rules  on  State  aid  to  broadband  infrastructure,  environmental 
protection  and  regional  development.  Work  also  progressed  on  reviews  launched  earlier  on 
aid for research, development and innovation, risk capital and rescue and restructuring.  The 
intention is for the bulk of the SAM related rules to be in place by the end of the term of the 
current European Parliament15.  

3.  PROMOTING  COMPETITION  IN  NETWORK  INDUSTRIES:  THE  BACKBONE 
OF THE SINGLE MARKET 

3.1 Integrating energy markets in support of sustainability  

Removing  the  remaining  obstacles  in  gas  and  electricity  markets  requires  Single  Market 
legislation supported by competition policy  

In  2005,  the  Commission  carried  out  an  in-depth  sector  inquiry  into  gas  and  electricity 
markets  which  revealed  that  -  despite  efforts  to  integrate  the  Single  Market  since  the  late 
1990s  through  EU  sectoral  regulation  -  serious  obstacles  to  competition  remained,  in 
particular  concentrated  markets  with  high  entry  barriers,  often  dominated  by  vertically 
integrated incumbents. The problems were compounded by limited interconnection capacities 
between  Member  States.  That  state  of  affairs  had  led  to  divergent  prices  and  conditions  of 
supply  throughout  the  Single  Market.  The  Commission  followed  up  its  inquiry  through 

13 Responding to calls from EP and ECOSOC 
14 Speech of Vice-President Almunia on 8 October 2012 (see SPEECH/12/701) at the European Parliament 
Presenting the Competition Policy Work Programme for 2013/14. Available at: http://europa.eu/rapid/press-
release_SPEECH-12-701_en.htm 
15 Idem 

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antitrust enforcement often using decisions accepting commitments offered by dominant gas 
and electricity players in several countries16. 

EU competition policy cannot on its own integrate the EU gas and electricity markets, ensure 
competitive prices and security of supply. A third legislative  package  on gas and electricity 
was therefore adopted in 2011 and is currently in the process of implementation with a view 
to creating an EU-wide Single Energy Market by 2014. 

Shifting the focus of antitrust enforcement in the energy sector eastwards 

Most  antitrust  investigations  and  decisions  in  this  area,  since  the  publication  of  the  sector 
inquiry into gas and electricity in 2005, have focused on western European markets. Recently, 
and  in  particular  during  2012,  the  emphasis  has  shifted  eastwards.  Central  and  eastern 
European gas networks tend to be less interconnected across borders than western European 
networks.  

In the CEZ case, concerning an alleged abuse of a dominant position by the Czech electricity 
incumbent,  the  Commission  market-tested  in  2012  structural  commitments  aimed  at 
remedying  foreclosure  of  the  Czech  electricity  market.  In  Bulgaria,  the  Commission  is 
investigating potential foreclosure by the national company BEH gas, as well as obstacles to 
cross-border trade in electricity. In addition, on 11 December 2012 the Commission opened 
formal  antitrust  proceedings  against  OPCOM,  which  allows  producers  and  buyers  to  trade 
electricity in Romania, and its parent company Transelectrica, a state-owned enterprise which 
controls  the  power  grid  in  that  Member  State.  The  Commission  has  concerns  that  OPCOM 
may  be  abusing  its  dominant  position  by  discriminating  against  companies  on  the  basis  of 
their  nationality  or  place  of  establishment.  Power  exchanges  are  crucial  for  the  transparent 
and reliable formation of electricity prices.  

In 2012, the Commission also opened antitrust proceedings against Gazprom in relation to its 
alleged conduct in a number of central and eastern European gas markets. The opening of the 
proceedings  was  due  to  the  Commission's  concerns  that  Gazprom  may  have  and  may  be 
abusing its dominant position in upstream gas supply markets in central and eastern Europe, 
in some of which Gazprom is virtually the sole supplier. The proceedings focus on whether 
Gazprom has divided gas  markets  by preventing the free flow of gas between EU countries 
and  whether  it  is  imposing  conditions  relating  to  the  use  of  infrastructure  that  prevent  the 
diversification of sources of gas supply. The scope of the proceedings also covers the possible 
imposition of unfair prices on customers. 

Taking account of energy-intensive firms in the context of the EU Emissions Trading System  

Protecting energy-intensive industry against carbon leakage while safeguarding the integrity of the Single 
Market  

The  Commission  also  adopted  important  State  aid  rules  related  to  electricity  markets.  The  reform  of  the  EU 
Emissions Trading System (ETS) agreed in 2009 which takes effect from 2013 onwards means that electricity 
production will no longer receive free allowances to emit CO2, which could lead to higher electricity bills for 

16  For  example,  as  a  result  of  the  Commission's  antitrust  investigation,  Germany’s  E.On  committed  to  sell  its 
electricity generation assets and its high-voltage transmission grid business in 2008, a milestone in opening up 
the  market  in  Germany.  Other  investigations  have  helped  lift  restrictions  on  cross-border  trading  of  gas  and 
electricity.  For  instance,  the  Commission's  investigation  resulted  in  changes  to  the  Swedish  electricity 
transmission system that was hindering exports by limiting interconnection capacity with neighbouring countries 

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companies in the EU. The rules adopted allow Member States to compensate installations in the most electricity-
intensive sectors for part of any higher electricity costs resulting from the ETS, as from 2013.17 The rules were 
shaped so as to minimise competition distortions in the Single Market in the form of subsidy races at a time of 
economic  uncertainty  and  need  for  budgetary  discipline;  for  example,  by  not  allowing  full  compensation  for 
higher electricity prices and by reducing the compensation over time. At the same time they were designed to 
preserve  the  EU  objective  of  decarbonising  the  European  economy.  The  sectors  eligible  for  compensation 
include producers of aluminium, copper, fertilisers, steel, paper, cotton, chemicals and some plastics. The new 
aid  regime  enables  Member  States  to  prevent  production  shifts  from  the  EU  to  third  countries  with  less 
environmental  regulation,  which  could  undermine  the  objective  of  a  global  reduction  of  greenhouse  gas 
emissions.  

3.2 Accompanying Single Market legislation in telecoms 

Over  the  past  15  years,  EU  Single  Market  legislation  has  made  great  strides  in  injecting 
competition into telecoms markets. Today, incumbents no longer hold monopolies and must 
provide wholesale services  and  network access to  alternative  operators.  However,  many  ex-
monopolists  still  maintain  strong  market  positions  by  virtue  of  their  ownership  of  the  fixed 
networks they rolled out during the monopoly era.  

Moreover,  as  regards  mobile  networks,  four  out  of  five  EU  citizens  possess  mobile 
subscriptions with one of four major groups. At the same time, many features of the telecoms 
markets  remain  predominantly  national  such  as  licensing  of  operators  and  the  spectrum  for 
mobile services. We are still far from realising the EU Single Market for telecoms; instead we 
are confronted with many operators active in 27 separate markets. Furthermore, there are still 
persistent barriers that limit consumers' ability to take full advantage of market liberalisation. 
A  recent  study  on  Internet  service  provision18  shows  that  the  lack  of  transparent  and 
comparable  information  as  well  as  contractual  barriers  (such  as  long  contract  duration  and 
charges for early contract termination) discourage consumers from switching. 

Tackling market power and fragmentation in telecoms markets in parallel with Single Market 
legislation  

Against that background, ex post EU competition law enforcement is required to accompany 
Single  Market  ex  ante  regulation,  in  particular  to  ensure  equal  access  conditions  for  new 
entrants.  

In  2012,  the  Union  Courts  upheld19  a  2007  Commission  decision  fining  Telefónica  for  an 
abuse  of  its  dominant  position  in  the  Spanish  broadband  market.  The  prices  that  Telefónica 
charged its wholesale clients – which were at the same time competitors at the retail level - 
forced them to make losses if they wanted to continue to operate on the market. 

The  Commission  pursued  an  antitrust  case  relating  to  potential  anticompetitive  conduct  by 
Slovak Telekom on several wholesale broadband markets in Slovakia and investigated whether 
its parent company Deutsche Telekom may be held liable for Slovak Telekom's conduct.  

The  Commission  also  pursued  an  antitrust  case  against  Telefónica  and  Portugal  Telecom 
concerning their agreement not to compete with each other on the Iberian telecommunications 

17 The rules allow subsidies of up to 85% of the increase faced by the most efficient companies in each sector 
from 2013 to 2015, a cap that will gradually fall to 75% in 2019-2020 
18 The functioning of the market for internet access and provision from a consumer perspective in the European 
Union. Study on behalf of the European Commission, Directorate General for Health and Consumers (expected 
to be published in April 2013) 
19 Case T-336/07, judgment of 29 March 2012, not yet published 

8 

  
 
                                                            
markets. This is the first antitrust case in the telecoms sector which concerns a cross-border 
market  sharing  agreement.  It  is  of  particular  importance  for  the  Commission  to  investigate 
this  issue  in  order  to  avoid  that  the  Single  Market  is  artificially  compartmentalised  along 
national borders.  

The Commission also examined the manner in which five large telecom operators (the "E5": 
Deutsche Telecom, France Télécom, Telefónica, Vodafone and Telecom Italia) as well as the 
mobile  sector  association  GSMA  developed  standards  for  future  mobile  communications 
services. The Commission's action was meant to ensure that the standardisation process was 
not being used to foreclose competitors. 

Under  the  EU  Merger  Regulation,  the  European  Commission  unconditionally  approved  the 
creation  of  a  joint  venture between Vodafone, Telefónica and Everything Everywhere in the 
field of mobile commerce in the United Kingdom. Mobile commerce or "mobile wallets" is a 
nascent fast-moving sector. The Commission's central concern was to ensure that these types 
of markets remain open so that a number of competing solutions can emerge without undue 
obstacles. The investigation revealed that a number of alternatives already existed and many 
more were very likely to emerge in the near future to ensure adequate competitive pressure on 
the UK joint venture's mobile wallet platform.  

In December 2012, the Commission also approved the acquisition by Hutchison 3G Austria of 
its competitor Orange, the reducing the number of operators from to three. The approval was 
subject  to  a  number  of  conditions.  Hutchinson  committed  to  making  spectrum  available,  a 
necessary  condition  for  the  entry  of  new  mobile  network  operators.  Hutchinson  also 
committed  to  make  wholesale  access  available  to  up  to  16  virtual  operators  without  a  full 
network of their own. Before the implementation of the merger the parties had to conclude an 
agreement with the upfront entrant.  

Supporting the roll-out of broadband infrastructure across the Single Market  

The roll-out of new infrastructure for broadband networks across the Single Market was another strategic focus 
of EU competition policy in 2012. Here the main challenge was that while commercial operators are shouldering 
most  of  the  investment,  they  have  little  incentive  to  extend  the  reach  of  their  networks  into  remote,  sparsely 
populated and rural areas where the market alone will not bear their costs. At the same time the Digital Agenda – 
one of the Europe 2020 Strategy Flagship Initiatives – aims to bring basic broadband to all Europeans by 2013 
and seeks to ensure that, by 2020, (i) all Europeans have access to much higher internet speeds (above 30 Mbps) 
and (ii) 50% or more of European households subscribe to very fast internet connections (above 100) Mbps. It is 
clear that government subsidies are required in some instances to address the market failures; indeed, over the 
past two years the Commission approved aid of about EUR 4 billion, verifying inter alia that public funds do not 
crowd out private investment.  

During the year – as part of the comprehensive State Aid Modernisation project - the Commission completed its 
update of the rules on State aid for broadband infrastructure, i.e. the Broadband Guidelines, to bring them further 
in line with the ambitious Digital Agenda objectives of promoting very fast broadband connections throughout 
the  EU.  To  this  end,  the  new  Guidelines  aim  to  achieve  the  right  mix  between  public  and  private  investment 
while building a pro-competitive environment (e.g. by ensuring open access to all operators in the Single Market 
to  State  funded  infrastructure).  National  incumbents  still  dominate  broadband  markets,  except  in  the  few 
countries  where  a  nationwide  cable  infrastructure  has  been  put  in  place.  To  help  achieve  the  Digital  Agenda 
objective of delivering very fast connections (of more than 100 Mbps) to half of European households by 2020, 
the revised guidelines will allow public funding also in urban areas but subject to very strict conditions to ensure 
a pro-competitive outcome. 

The European Commission also adopted a proposal to amend the Enabling Regulation of 1998. This would allow 
the Commission to exempt certain categories of aid for broadband infrastructure from prior notification to the 
Commission and simplify the approval of certain type of projects. This concerns notably: 

9 

  
 
•             aid covering basic broadband in regions where there is no broadband infrastructure and where no such 
infrastructure  is  likely  to  be  developed  in  the  near  future  (‘white’  areas),  and  small  individual  aid  measures 
covering very high-speed next-generation access (‘NGA’) networks in ‘white NGA’ areas; 

•             aid for broadband-related civil engineering works and passive broadband. 

3.3 Promoting efficient cross-border postal services while ensuring public service  

Postal  services  are  another  classic  network  industry  crucial  to  the  functioning  of  the  Single 
Market. Many European  firms rely  increasingly on  just in-time deliveries to keep inventory 
costs  at  an  optimal  level.  They  often  use  parcel  express  delivery  services  as  part  of  their 
logistic chains, notably for cross-border shipments. From a growth perspective, it is essential 
that cross-border postal deliveries operate as efficiently as possible. Efficient postal services 
are also a tool to tap the growing potential of cross-border e-commerce. 

At  the  same  time,  the  postal  sector  constitutes  a  fundamental  service  of  general  economic 
interest (SGEI) which may need State aid in situations where the market by itself would not 
guarantee  universal  and  affordable  services.  EU  competition  and  Single  Market  rules 
reconcile those two imperatives.  

Phasing  in  the  new  rules  ensuring  the  viability  of  SGEIs  and  fair  competition  across  the 
Single Market 

Indeed, the first application of the new framework for State aid for SGEIs which came into 
effect  on  31  January  2012  concerned  the  postal  sector.  In  March  2012,  the  Commission 
adopted  two  decisions  concerning  UK  Post  Office  Limited  based  on  the  new  SGEI 
framework.  The  Commission  found  that  the  aid  did  not  exceed  the  net  cost  of  the  public 
service mission entrusted to the Post Office Ltd and that its entrustment complied with public 
procurement  rules.  Moreover,  the  entrustment  letter  and  funding  agreement  governing  the 
payment  of  the  compensation  contained  appropriate  provisions  to  incentivise  an  efficient 
provision of the public service, in line with the Post Office Ltd's strategic plan for the period 
2012-2015  which  aims  at  modernising  and  improving  the  provision  of  services  over  its 
network according to yearly efficiency milestones. 

Similarly,  the  Commission  approved  a  tax  relief  measure  of  EUR  764 million  granted  by 
France to La Poste, the French incumbent, to enable it to cover costs related to maintaining a 
high  density  of  postal  services  from  2008  to  2012.  It  also  authorised  compensation  of  EUR 
1.2 billion  for  the  costs  incurred  by  La  Poste  in  carrying  out  its  task  of  transporting  and 
delivering  the  press  over  that  same  period  of  time.  The  two  aid  measures  were  found  to  be 
compatible with EU State aid rules as they only partially offset the net costs of the important 
public  service  tasks  incumbent  on  La  Poste  and  thus  did  not  give  it  any  unfair  competitive 
advantage in the Single Market. 

The postal sector deserved particular scrutiny given that the sector was fully liberalised across 
the  EU  by  the  end  of  2012.  To  that  end,  the  Commission  adopted  four  major  decisions  on 
State  aid  granted  by  Germany,  Belgium,  France  and  Greece  to  their  respective  incumbent 
postal  operators.  For  Germany  and  Belgium,  the  Commission  ordered  the  recovery  of 
substantial amounts of incompatible aid, whereas it approved the French and Greek support. 
Deutsche Post and the Belgian Post had received an amount of aid that exceeded the level of 
compensation  required  for  the  provision  of  the  SGEIs  that  public  authorities  had  entrusted 
them with. For that reason the Commission decided that that extra aid was incompatible with 

10 

  
 
the Single Market since it gave those two companies an advantage over their competitors in 
commercial activities beyond their public service mandate. 

Merger scrutiny to ensure continued competition in cross-border parcel markets 

Developments in the postal sector were also subject to merger scrutiny. The proposed merger 
involving  the  takeover  by  UPS  of  TNT  would  have  reduced  the  number  of  companies  that 
control pan-European express parcel-transport networks from four to three. On 20 July 2012, 
the  Commission  opened  an  in-depth  investigation  into  the  planned  merger  and  finally 
prohibited the proposed acquisition on 30 January 2013. The transaction would have restricted 
competition  in  fifteen  Member  States  in  the  express  delivery  of  small  packages  to  other 
European countries. In those Member States, the acquisition would have reduced the number 
of significant players to only three or two, sometimes leaving DHL as the only alternative to 
UPS.  The  concentration  would  therefore  have  likely  harmed  customers  by  causing  price 
increases  and  by  removing  the  competitive  constraint  exercised  by  TNT.  The  Commission 
carried  out  an  in-depth  assessment  of  the  proposed  remedies  including  a  market  test  where 
customers  and  other  interested  parties  were  consulted.  However,  those  remedies  proved 
inadequate to remove the identified competition concerns. 

4. HELPING TO UNLOCK THE POTENTIAL OF THE KNOWLEDGE ECONOMY  

4.1 Preventing misuses in nascent and fast-moving digital sectors  

In digital industries, network effects and lock-in can create entrenched market positions which 
could be used to exclude competitors or new entrants. The Commission has previously taken 
decisions  in  high-tech  sectors,  preventing  dominant  companies  from  abusing  proprietary 
technologies or engaging in other forms of anticompetitive behaviour20. A central challenge in 
digital  economy  cases  is  that  the  markets  in  question  usually  move  at  great  speed, 
necessitating  timely  and  effective  intervention21.  As  stated  by  the  ECJ  in  its  Telia  Sonera 
ruling:  "the  […]  application  of  [competition  rules]  cannot  depend  on  whether  the  market 
concerned has already reached a certain level of maturity. Particularly in a rapidly growing 
market, Article 102 TFEU requires action as quickly as possible, to prevent the formation and 
consolidation in that market of a competitive structure distorted by the abusive strategy of an 
undertaking […]”22. 

Enabling continued innovation in digital sectors from smartphones to music  

Potential misuse of standard-essential patents in the so-called patent wars among smartphone 
manufacturers were a particular focus during the year. The Commission considered the issue 
of standard essential patents under the EU merger regulation in its approval of the acquisition 
of  Motorola  by  Google23.  It  also  opened  three  proceedings24  concerning  possible  abuses  by 
Samsung  and  Motorola  of  their  standard  essential  patents,  partly  in  order  to  provide  more 

20 Notably the Article 102 TFEU cases involving Microsoft (see Commission Decision 
of 24 March 2004 in Case COMP/C-3/Case COMP/C-3/37.792) and Intel (see Commission Decision  
of 13 May 2009 in Case COMP/C-3/37.990) 
21  See  speech  by  Joaquin  Almunia  Vice  President  of  the  European  Commission  of  8  October  2012 
(SPEECH/12/701) 
22 C-52/09 TeliaSonera Sverige  [2011] ECR I-527 
23 Case COMP/M.6381, Google/Motorola Mobility (see IP/12/129) 
24 Initiation of proceedings against Samsung on 30 January 2012 (Case COMP/C-3/39.939); initiation of 
proceedings against Motorola on 2 April 2012 (Cases COMP/C-3/39.985  and COMP/C-3/39.986) 

11 

  
 
                                                            
clarity in this field where the Commission received numerous complaints during the year. In 
On 21 December 2012, in respect of one of those three proceedings, the Commission sent a 
statement of objections to Samsung, informing it of the Commission’s preliminary view that 
Samsung's seeking of injunctions against Apple in various Member States on the basis of its 
mobile phone standard-essential patents amounts to an abuse of a dominant position25. 

The critical importance of standard-essential patents to innovation in the ICT sector 

Standard-essential patents are relevant for innovation across entire sectors. Such patents are, by definition, part 
of  a  standard  and  the  holders  of  those  patents  have  committed  to  licensing  them  on  fair,  reasonable  and  non-
discriminatory (FRAND) terms. A possible worst-case scenario is when a company willing to take a licence for 
standard-essential patents on FRAND terms is locked out of the market through court injunctions. Such litigation 
or threats thereof may thus hold up innovation in the entire industry. Standards can be enormously beneficial for 
a number of interconnected markets, fostering interoperability and enabling economies of scale and scope in the 
Single Market and beyond.  

On  the  merger  front,  the  Commission  approved  the  takeover  by  Universal  -  the  world´s 
leading  record  company  -  of  EMI´s  recorded  music  arm  after  having  verified  that  the 
concentration would not produce negative effects for digital customers and the development 
of new digital services. This is one of several sectors being transformed through digitisation. 
The Commission had concerns that the transaction, as initially notified, would have allowed 
Universal  to  significantly  worsen  the  licensing  terms  it  offered  to  digital  platforms  that  sell 
music  to  consumers.  To  meet  those  concerns,  Universal  offered  substantial  commitments 
(essentially  consisting  of  the  divestiture  of  a  significant  portion  of  EMI's  repertoire  in  the 
EEA,  including  top-selling  active  and  catalogue  artists,  as  well  as  of  a  commitment  by 
Universal not to include so-called "Most Favourite Nation" clauses in its licensing agreements 
with  digital  music  services  in  the  EEA  for  a  period  of  ten  years).  In  light  of  these 
commitments,  the  Commission  concluded  that  the  transaction  did  not  raise  further 
competition concerns. 

Commitment decisions as a flexible alternative to ensure the rapid restoration of competition 
in fast-moving digital markets 

Commitment decisions such as the one used in the e-books case (see below) can obviate the 
need  for  lengthy  proceedings  and  enable  the  Commission  to  obtain  concrete  results  for 
consumers.  However,  such  an  approach  only  works  if  the  commitments  entered  into  are 
scrupulously complied with. If not, the Commission has the power to impose fines.  

On  12  December  2012,  the  Commission  adopted  a  commitment  decision  in  the  e-books 
sector,  another  nascent  and  fast-moving  part  of  the  digital  economy,  that  rendered  legally 
binding  commitments  offered  by  Apple  and  four  international  e-book  publishers:  Simon  & 
Schuster (CBS Corp.), Harper Collins (News Corp.), Hachette Livre (Lagardère Publishing) 
and Verlagsgruppe Georg von Holtzbrinck (owner of inter alia Macmillan). 

The  Commission  had  opened  proceedings  in  December  2011  against  these  companies,  as 
well as a fifth international e-book publisher, Penguin (Pearson Group). While the December 
2012 decision was not addressed to Penguin as that publisher chose not to offer commitments 
to  the  Commission,  the  Commission  is  currently  engaged  in  constructive  discussions  with 

25 See press release at http://europa.eu/rapid/press-release_IP-12-1448_en.htm 

12 

  
 
                                                            
Penguin on commitments that would allow an early closure of proceedings also against that 
publisher.  

In its decision,  the Commission expressed concerns that Apple and the four international e-
book  publishers  may  have  colluded  to  limit  retail  price  competition  for  e-books  in  the 
European  Economic  Area  (EEA),  in  breach  of  EU  antitrust  rules.  Prior  to  January  2010,  e-
books  were  sold  by  publishers  to  retailers  mainly  under  the  so-called  "wholesale  model", 
whereby  retailers  would  buy  e-books  from  publishers  and  then  freely  determine  the  retail 
prices  for  those  e-books  when  sold  to  consumers.  In  January  2010,  Apple  and  the  four 
international  e-book  publishers  jointly  switched  to  agency  contracts  that  all  contained  the 
same key terms, with the result that retailers became sales agents for publishers who wanted 
to sell directly to consumers. Under this "agency model", the four publishers determined the 
retail prices for e-books according to pricing rules in the agency contracts. Those pricing rules 
were designed in a way that resulted in higher retail prices than those offered by certain major 
retailers at the time. In some countries in the EEA, they were designed in such a way as to 
exclude any possibility of lower prices being offered to consumers in the first place. 

In  order  to  address  the  Commission's  concerns,  Apple  and  the  four  international  e-book 
publishers  agreed  to  terminate  all  their  existing  agency  agreements  that  included  the  retail 
price  restrictions  and  the  pricing  rules  the  Commission  had  objected  to.  Apple  and  the  four 
international e-book publishers also committed, for a period of five years, not to enter into any 
new  agreements  containing  the  pricing  rules  the  Commission  had  objected  to.  The  four 
international e-book publishers further agreed, for a period of two years, to allow retailers to 
offer retail price discounts for e-books up to an amount equal to the commission the retailer 
receives from the publisher over a one year period. 

The  commitments  ended  the  practices  that  were  at  the  origin  of  the  Commission's  concerns 
and restored conditions that will allow the e-books market to reset itself. Where permitted by 
national retail price laws for e-books, this has the potential to result in lower e-book prices for 
consumers in the EEA. 

A case involving an alleged abuse of a dominant position concerns Google. The Commission 
has expressed concerns that four types of Google business practices may constitute an abuse 
of a dominant position within the meaning of Article 102 TFEU, namely: (i) the way in which 
Google’s vertical search services are displayed within general search results as compared to 
services  of  competitors;  (ii)  the  way  Google  may  use  and  display  third  party  content  on  its 
vertical  search  services;  (iii)  exclusivity  agreements  for  the  delivery  of  Google  search 
advertisements  on  other  websites;  and  (iv)  restrictions  in  the  portability  of  AdWords 
advertising  campaigns.  Google  submitted  a  detailed  commitment  text  at  the  end  of  January 
2013.  The  Commission's  services  are  currently  analysing  Google's  proposal  with  a  view  to 
deciding  whether  it  would  allow  the  Commission  to  start  the  process  for  the  adoption  of  a 
decision pursuant to Article 9 of Regulation 1/2003. 

Non-compliance  with  a  previous  commitment  decision  was  at  issue  in  a  case  concerning 
Microsoft.  In  December  2009,  the  Commission  made  legally  binding  on  Microsoft 
commitments offered to address competition concerns related to the tying of Microsoft's web 
browser, Internet Explorer, to its dominant client PC operating system Windows. Specifically, 
Microsoft  committed  to  make  available  for  five  years  (i.e.  until  2014)  in  the  European 
Economic Area a "Choice Screen" enabling users of the Windows operating system to choose 
in an informed and unbiased manner which web browser(s) they wanted to install in addition 

13 

  
 
to, or instead of, Microsoft's web browser. The choice screen was to be provided as of March 
2010  to  European  Windows  users  who  have  Internet  Explorer  set  as  their  default  web 
browser.  

However, in a decision adopted on 6 March 2013, the Commission found that Microsoft had 
failed  to  roll  out  the  browser  choice  screen  with  its  Windows  7  Service  Pack  1  from  May 
2011 until July 2012, with the result that 15 million Windows users in the EU did not see the 
choice  screen  during  this  period.  Microsoft  has  publically  acknowledged  that  the  choice 
screen was not displayed during that time.  

4.2 Preventing misuses of IPRs in the pharmaceutical sector  

Pharmaceuticals are another sector where knowledge, inventions and ideas and the intellectual 
property rights (IPRs) they embody are of central importance. However, in that sector, patent 
holders    and  generic  companies  may  be  tempted  to  enter  into  anticompetitive  agreements 
delaying the entry of cheaper generic medicines, especially when the basic patent protection 
around the active substance nears expiry or after expiry. At the same time, many such patent 
settlements  may  be  a  rational  and  socially  beneficial  way  to  reduce  uncertainty  and  avoid 
litigation costs.  

Against this background, the Commission launched an inquiry into the pharmaceutical sector 
in 2008, the results of which were published in July 200926. During 2012, the follow-up to the 
inquiry advanced on several fronts. In terms of antitrust enforcement, on 25 July and 30 July 
2012 the Commission sent statements of objections to more than fourteen companies in two 
major cases involving possible anticompetitive agreements and unilateral practices.  

Statements  of  objections  in  respect  of  conduct  potentially  delaying  the  entry  of  generic  antidepressants 
and cardiovascular medicines in the Single Market  

One of the statements of objections concerned the Citalopram case where the originator company Lundbeck and 
several generic  competitors  entered  into  agreements  which  may  have hindered  the  entry  of generic  citalopram 
into  markets  in  the  EEA.  Citalopram  is  the  active  substance  of  a  class  of  antidepressants.  The  statement  of 
objections  was  also  addressed  to  Merck  KGaA,  Generics  UK,  Arrow,  Resolution  Chemicals,  Xellia 
Pharmaceuticals,  Alpharma,  A.L.  Industrier  and  Ranbaxy,  all  of  which  belonged  to  the  generic  groups  that 
concluded the agreements. The sending of a statement of objections does not prejudge the final outcome of the 
investigation. 

The companies concluded these agreements when generic entry in principle became possible due to the expiry of 
certain  of  Lundbeck's  citalopram  patents.  According  to  the  preliminary  findings  in  the  statement  of objections 
the  agreements  foresaw  substantial  value  transfers  from  Lundbeck  to  four  generic  competitors.  In  turn,  the 
generic  companies  abstained  from  entering  the  Single  Market  to  sell  generic  citalopram.  Lundbeck's  value 
transfers  to  the  generic  competitors  included,  among  other  things,  direct  payments  purchases  of  generic 
citalopram stock for destruction as well as guaranteed profits in distribution agreements offered to the generic 
firms.  The  Commission  took  the  preliminary  view  that  this  conduct,  if  proven,  may  have  caused  substantial 
consumer harm, since generic entry could have been delayed and prices kept higher as a result of the agreements.  

The second statement of objections concerned the Perindopril case where Les Laboratoires Servier and several 
generic  competitors  entered  into  agreements  which  may  have  hindered  the  entry  of  generic  perindopril  in  the 
Single  Market.  Perindopril  is  the  active  substance  in  a  class  of  cardiovascular  medicines.  According  to  the 
preliminary  view  set  out  in  the  statement  of  objections,  in  exchange  for  payments  by  Servier,  the  generic 
companies agreed not to enter the market with their cheaper generic products and/or not to further challenge the 
validity  of  the  patents  that  protected  Servier's  more  expensive  medicine.  Similarly,  Servier  may  have 
implemented a comprehensive strategy to prevent market entry of cheaper generic versions of perindopril at the 
time  when  the  patent  protection  for  Servier's  perindopril  was  nearing  expiry.  The  practices  under  analysis 

26 See IP/09/1098 and MEMO/09/321 

14 

  
 
                                                            
include  acquisitions  of  patents  that  could  potentially  exclude  competitors  from  the  market  as  well  as  patent 
settlements with other companies that included the type of reverse payments at issue in the Citalopram case. 

The practices at issue in the Citalopram and Perindopril cases could, if the allegations were to be proven, involve 
significant harm as national health services and insurance schemes would be forced to continue paying longer for 
the more expensive patent protected versions of a medicine. 

Sanctioning  such  anticompetitive  practices  is  necessary  to  preserve  incentives  to  innovate  in  this  sector. 
Anticompetitive  conduct  should  not  be  used  to  artificially  prolong  patent  protection  which  by  definition  is 
limited  in  time.  That  limitation  is  essential  to  preserve  incentives  for  continuous  innovation  in  knowledge-
intensive sectors such as pharmaceuticals. 

The  Commission  continued  to  monitor  potentially  harmful  patent  settlement  agreements 
between originators and generic firms  

In July 2012, the Commission issued its third monitoring report on patent settlements in the 
pharmaceutical  sector27.  The  report  confirmed  that,  while  the  overall  number  of  concluded 
settlements significantly increased, the proportion of settlements that may be problematic for 
competition fell by half as compared to the levels observed at the time of the sector inquiry. 
The proportion of potentially problematic settlements stabilised at 11% compared to the 21% 
identified  by  the  sector  inquiry.  At  the  same  time,  the  total  annual  number  of  concluded 
settlements  increased  by  500%  to  120  compared  to  the  findings  of  the  sector  inquiry.  Most 
settlements  appear to  be unproblematic from an antitrust perspective. The figures show that 
the  Commission's  scrutiny  has  not  hindered  companies  from  concluding  settlements  in  the 
Single Market, contrary to some initial fears expressed by certain stakeholders. 

In its judgment in the AstraZeneca case the Court of Justice ruled that EU competition law 
complements Single Market rules 

In  June  2005,  the  Commission  adopted  a  decision  sanctioning  AstraZeneca  (AZ)  for  two 
infringements  of  Article  102  TFEU  and  Article  54  of  the  European  Economic  Area  (EEA) 
Agreement. The decision found that AZ had misused public procedures and regulations in a 
number of EEA states aimed at excluding generic firms and parallel traders from competing 
against AZ’s bestselling antiulcer product Losec.  

In a judgment of 6 December 2012 (Case C-457/10 P) the Court of Justice upheld the General 
Court´s judgment of 2010 which had, to a very large extent, dismissed AstraZeneca´s appeal 
against  the  2005  Commission  decision,  the  first  decision  imposing  fines  for  an  abuse  of  a 
dominant  position  in  the  pharmaceutical  sector.  In  particular,  the  General  Court  had 
confirmed  that  misuses  of  regulatory  procedures  can  under  certain  circumstances  constitute 
abuses of a dominant position.  

The Court of Justice found that in a majority of cases abuses of dominant positions consist of 
behaviour which is otherwise lawful under branches of law other than competition law. This 
confirms  that  EU  competition  policy  is  complementary,  and  not  subordinate,  to  other 
branches of EU law, including Single Market rules. 

5. COMPETITION DIALOGUE WITH THE OTHER INSTITUTIONS 

5.1 Structured dialogue with the European Parliament 

27 See MEMO/12/593 

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DG Competition engages in a continuous structured dialogue on competition issues with the 
European  Parliament,  and  its  Economic  and  Monetary  Affairs  (ECON)  Committee  in 
particular. 

Structured dialogue with the ECON Committee 

As part of the structured dialogue, the Vice President in charge of Competition visited ECON twice in 2012. In 
June, he presented the Annual Report on Competition Policy and in October, the Commission Work Programme 
for 2013. The Vice President also maintains regular contacts with the European Parliament outside the structured 
dialogue. On 22 May 2012, he attended a workshop on the European Competition Report on the food sector28. 
On  24  September  2012,  he  participated  in  a  hearing  on  LIBOR-EURIBOR  market  manipulation.  The  Vice 
President  also  attended  a  workshop  on  State  aid  modernisation  (25  September  2012)  and  an  event  on  data 
protection and competition rules (26 November 2012).  

In  the  context  of  the  cooperation,  on  7  June  2012  DG  Competition  organised  a  seminar  for 
assistants and political advisers of the members of the ECON covering the main themes in the 
2011 Competition Work Programme29. The Vice President exchanged views with the IMCO 
committee  on  28  February  2012  on  competition  and  growth.  DG  Competition  regularly 
informs the relevant committees of public consultations and the adoption of new guidelines. 
All  in  all,  the  Vice  President  made  eight  appearances  before  the  European  Parliament  (see 
table). 

Date 
28/02/2012 

22/05/2012 

Meeting 
EP IMCO committee 

Issue 
Exchange of views on competition and growth 

EP  ECON  Competition  Working 
Group  

ECN report and CAP reform 

19/06/2012  

EP ECON structured dialogue  

11/09/2012 

EP Plenary Question Time 

Presentation  of  Annual  Competition  Report 
2011 

State of play of the energy market acquis (3rd 
package) implementation - Gazprom 

24/09/2012 

EP ECON Public Hearing - Libor  Market manipulation - Libor 

25/09/2012 

EP ECON Workshop – SAM 

State aid modernisation 

08/10/2012  

EP ECON structured dialogue 

Presentation of work programme for 2013 

26/11/2012 

EP Event – Privacy Platform 

Competition and Privacy in Markets of Data 

Public consultations and Impact assessments 

DG Competition provides information on the launch of public consultations to the secretariat of the ECON  and 
more  generally  welcomes  timely  contributions  by  the  members  of  the  EP.  Its  services  are  available  to  brief 
MEPs  on  aspects  of  particular  interest.  Public  consultations  and  the  responses  thereto,  studies  related  to 
competition policy, studies which are commissioned, Impact Assessments in the area of competition policy as 
well as any related Staff Working Papers are published on DG Competition's website30. 

In  response  to  the  interest  expressed  by  the  members  of  the  ECON  committee  in  the 
Commission's  State  aid  modernisation  communication,  the  Vice  President  and  DG 

28 http://ec.europa.eu/competition/ecn/food_report_en.pdf  
29 Issues covered included State aid in the financial sector the food sector, the aviation sector, the financial sector 
and the State aid modernisation initiative 
30 http://ec.europa.eu/competition/index_en.html  

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Competition  officials  attended  a  State  aid  modernisation  workshop  in  Parliament  on  8 
October 2012. 

As part of the discussion on the reform of the Common Agricultural Policy, MEPs called on 
the  Commission  to  have  a  closer  look  at  the  issue  of  producers'  bargaining  power  vis-à-vis 
retailers  in  the  food  supply  chain.  While  the  Commission  did  not  identify  particular 
competition problems in the retail sector, as expressed in the report published by the European 
Competition Network31, it nonetheless launched a study to assess the impact of retail market 
structure on product innovation and choice in the food sector in December 2012. 

MEPs  frequently  ask  the  Commission  questions  on  individual  on-going  competition  cases. 
The Commission is unable to reply on certain aspects of those cases due to the confidentiality 
requirement of the investigative procedures.  

On-going investigations and sector inquiries 

DG Competition staff regularly  meet MEPs at their request to explain the procedural steps in an investigation 
and to engage in a general discussion on a particular sector, as far as possible under the confidentiality obligation 
in  relation  to  the  parties.  DG  Competition  has  a  range  of  tools  at  its  disposal  for  the  enforcement  of  EU 
competition  law  and  making  markets  more  competitive  by  other  means,  such  as  investigations  in  individual 
cases,  sector  inquiries  and  working  with  other  Directorates  General  on  regulatory  measures  impacting 
competition in the Single Market.  

5.2 Follow-up to Parliament's Resolution on the 2010 Report on Competition Policy 

In  January  2012,  the  Parliament  adopted  its  Resolution  on  the  2010  Report  on  Competition 
Policy32, making a series of requests to the Commission. In addition to the official response 
by the Commission to Parliament's Resolution, the Commissioner for Competition responded 
in April 2012 through a letter to the Chair of the ECON committee, and DG Competition also 
submitted a detailed response to all of the points made in the Parliaments Resolution. 

Topics covered by the European Parliament's Resolution 

The  Parliament  was  particularly  interested  in  the  DG  Competition's  activities  linked  to  the  financial  and 
economic crisis and the role of State aid control in that context. In its response, the Commission stressed the 
types of conditions routinely imposed as part of the application of the temporary State aid rules applying to the 
banking  sector  for  the  time  being.  That  so-called  conditionality  includes  burden  sharing  and  restructuring 
imposed on banks and financial institutions to ensure that their viability is restored on a long-term basis while 
preserving the integrity of the Single Market.  
In  its  Resolution,  the  Parliament  also  recalled  its  earlier  requests33  for  the  Commission  to  bring  forward 
legislation  to  facilitate  effective  compensation  for  damages  resulting  from  breaches  of  antitrust  law.  The 
Commission's  Work  Programme  for  2012  includes  a  proposal  on  antitrust  private  damages  actions.  The  Vice 
President  in  charge  of  Competition  confirmed  that  such  a  proposal  will  be  tabled  in  2013.  In  response  to  the 
Parliament's  call  to  investigate  competition  in  the  food  sector, DG  COMP  set  up  an internal  task force on  the 
food  sector  which  coordinated  a  European  Competition  Network  study  on  the  food  sector.  In  addition,  in 
December 2012 the Commission launched a study on modern retail sector impact on food product choice and 
innovation. 

5.3 Competition DG Competition's engagement with the EESC and the CoR  

The Commission also informs the European Economic and Social Committee (EESC) and the 
Committee of the Regions (CoR) about major policy initiatives. It also participates in study 

31 http://ec.europa.eu/competition/ecn/food_report_en.pdf  
32 P7_TA(2012)0031 
33 Resolutions by the European Parliament in 2007, 2009, 2010 and 2011 

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group  and  section  meetings.  On  4  September  2012,  Vice  President  Almunia  met  the  EESC 
rapporteur  on  the  State  Aid  Modernisation  initiative  and,  on  7  December  2012,  the  CoR 
rapporteur on the revision of the Regional aid guidelines. On 14 November 2012, the EESC 
adopted an opinion on the State aid modernisation initiative34 and, on 4 December 2012, the 
INT section of the EESC adopted an opinion on the Annual Competition Report 201135. On 
29 November 2012, the CoR adopted an opinion on the State Aid mModernisation initiative36 
and,  on  7  December  2012,  the  COTER  commission  of  CoR  adopted  an  opinion  on  the 
Regional aid guidelines37. 

34 Available at http://www.eesc.europa.eu/?i=portal.en.int-opinions.23584 
35 Available at http://www.eesc.europa.eu/?i=portal.en.int-opinions.24209 
36 Available at http://www.toad.cor.europa.eu/corwipdetail.aspx?folderpath=ECOS-V/035&id=21619 
37 Available at http://www.toad.cor.europa.eu/corwipdetail.aspx?folderpath=COTER-V/034&id=21792 

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