REPORT 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 2017
Date: 2018-06-18
Institutions: Directorate-General for Competition, European Commission
Subjects: EU competition policy, State aid, anti-trust legislation, control of State aid, control of restrictive practices, digital single market, merger control, restriction on competition

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 18.6.2018 COM(2018) 482 final  REPORT 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 2017  {SWD(2018) 349 final}  
 
 
REPORT 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 2017 

1. Introduction 

2017  marked  the  60th  anniversary  of  the  signature  of  the  Treaty  of  Rome,  which  laid  the 
foundations  for  today's  European  Union.  That  means  that  EU  competition  policy,  too,  has 
now been in place for over sixty years. Indeed, from the very first day of its existence, the EU 
has had rules that defend fair, undistorted competition.  

In the past decades, competition policy has made a big difference in people's lives: European 
citizens  may  not  always  be  familiar  with  competition  rules,  but  they  deal  with  the  market 
every single day. Competition drives businesses to compete on the merits – on prices, quality 
and  innovation  –  and  to  meet  consumers’  needs.  By  pushing  companies  to  do  better, 
competition puts power in the hands of consumers. 

Also, through the decades, all companies active in the single market have been able to rely on 
a stable set of rules and on their impartial implementation. Robust, consistent and predictable 
enforcement  sends  the  clear  message  that  every  company  is  granted  equal  conditions  to 
operate and equal chances to succeed.  

Competition enforcement ensures that a world of global trade, and global businesses, can be a 
world  that  gives  small  business  and  individuals  a  fair  chance.  Also,  competition  rules 
guarantee  that  all  companies  doing  business  in  the  single  market  play  by  the  same  rules  – 
whether they're big or small, and wherever in the world they come from. 

Competition  policy  is  also  an  essential  player  in  supporting  the  Commission's  political 
priorities.  In  2017,  competition  policy  actions  contributed  to  bringing  the  Commission's 
agenda  to  life,  delivering  in  those  areas  that  matters  to  European  citizens.  The  digital 
economy,  energy,  the  pharmaceutical  and  agro-chemical  sector,  the  network  industries  and 
the financial markets are among the sectors where competition policy efforts kept making a 
difference for European consumers. 

The Commission works hand in  hand with  Member  States' national  competition  authorities, 
so that the benefits of competition can be multiplied and spread to every Member State in the 
EU. At the same  time,  the Commission  is  joining forces  with competition agencies all  over 
the world to achieve a truly global level playing field. 

For  the  last  sixty  years,  EU  competition  policy  has  been  empowering  businesses  and 
consumers,  by  making  sure  that  every  company  and  every  citizen  can  feel  the  benefits  that 
come from fair competition. 

This  report is  a non-exhaustive summary of activities  undertaken by the Commission  in the 
field  of  competition  policy  over  the  year  2017.  Further  information  can  be  found  in  the 

1 

 
 
accompanying Commission Staff Working Document and on the website of the Competition 
Directorate-General1.  

2. Enhancing the effectiveness of competition enforcement 

Effective  competition  enforcement  enables  EU  consumers  to  have  access  to  better  products 
and wider choice. Tackling anticompetitive practices also ensures that open markets work for 
the  benefit  of  all.  But  for  that  to  happen,  it  is  essential  to  make  sure  that  every  European 
benefits from the same protection. 

For more than ten years, the Commission and Member States' national competition authorities 
have  been  working  closely  on  enforcing  the  EU  antitrust  rules  in  the  framework  of  the 
European Competition Network (ECN)2. This network underpins the coherent application of 
the EU antitrust rules by all enforcers: It should not matter where a company is based within 
the single market when it comes to competition enforcement. 

In  March  2017,  the  Commission  proposed  new  rules  to  enable  Member  States'  competition 
authorities to be more effective enforcers of EU antitrust rules3 (the so-called "ECN+"). The 
proposal seeks to further empower Member States' competition authorities and make sure they 
have all the tools they require to achieve this.  

ECN+: how the proposed Directive will strengthen EU national competition authorities 

The proposed rules, once adopted, will provide the national competition authorities with a minimum 
common toolkit and effective enforcement powers, making sure that they will: 

a) act independently when enforcing EU antitrust rules and work in a fully impartial manner, without 
taking instructions from public or private entities;  

b) have the necessary financial and human resources to do their work; 

c)  have  all  the  powers  needed  to  gather  all  relevant  evidence,  such  as  the  right  to  search  mobile 
phones, laptops and tablets; 

d)  have  adequate  tools  to  impose  proportionate  and  deterrent  sanctions  for  breaches  of  EU  antitrust 
rules.  The  proposal  ensures  that  the  concepts  of  undertaking,  parental  liability  and  succession  are 
applied in line with the case law of the European Court of Justice, so that companies cannot escape 
fines through corporate re-structuring. National competition authorities will also be able to enforce the 
payment of fines against infringing companies that do not have a legal presence on their territory, an 
important feature since an increasing number of companies operate internationally; 

e)  have  harmonised  core  conditions  for  leniency  programmes  and  a  common  system  of  summary 
applications, which encourage companies to come forward with evidence of illegal cartels. This will 
increase  the  overall  incentives  for  companies  to  participate  in  leniency  programmes  and  report  their 
participation in a cartel. 

1 http://ec.europa.eu/competition/index_en.html  
2  See  Communication  of  9  July  2014  from  the  Commission  to  the  European  Parliament  and  the  Council,  Ten 
Years of  Antitrust Enforcement  under  Regulation 1/2003:  Achievements  and  Future  Perspectives,  COM(2014) 
453, available at http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52014DC0453. 
3 Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities 
of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, 
COM/2017/0142 final, available at http://ec.europa.eu/competition/antitrust/proposed_directive_en.pdf.  

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The Commission's proposal underlines the importance of companies' fundamental rights and 
requires  authorities  to  respect  appropriate  safeguards  for  the  exercise  of  their  powers,  in 
accordance with the EU Charter of Fundamental Rights and general principles of EU law. 

The proposal for new rules takes the form of a Directive that will allow national specificities 
to be respected. The Directive has been transmitted to the European Parliament and Council 
for adoption, in line with the normal legislative process. Once adopted, Member States have 
to transpose the provisions of the Directive into national law. 

A new whistleblower tool 

Until  now, most  cartels  have  been  detected  through  the  Commission's  leniency  programme, 
which  allows  businesses  to  report  their  own  involvement  in  a  cartel  in  exchange  for  a 
reduction  of  the  fine  imposed  on  them.  In  March  2017,  the  Commission  launched  a  new 
anonymous  whistleblower  tool,  which  gives  an  opportunity  also  to  individuals  who  have 
knowledge of the existence or functioning of a cartel, or other types of antitrust violations, to 
help end such practices4.  

If people are concerned by business practices that may be in violation of competition law, this 
new  tool  can  help  put  things  right  by  providing  information,  while  maintaining  anonymity. 
Inside knowledge  can  be  a powerful tool to  help the Commission  uncover cartels and other 
anti-competitive  practices.  The  new  system  increases  the  likelihood  of  detection  and 
prosecution and so stands to further deter businesses from entering or remaining in cartels, or 
carrying  out  other  types  of  illegal  anti-competitive  behaviour.  Information  can  contribute  to 
the  success  of  Commission's  investigations  quickly  and  more  efficiently,  to  the  benefit  of 
consumers and the EU's economy as a whole.  

The figures after the first months of use are positive and show that the new channel has been 
taken up by whistleblowers. Messages arrive on a regular basis. 

"Small on small" - towards a more effective State aid policy  

In  line  with  the  Commission's  "big  on  big,  small  on  small"  approach,  a  significantly  larger 
number  of  smaller  and  unproblematic  State  aid  measures  are  now  exempted  from  prior 
notification through  the General Block Exemption Regulation, in exchange for strengthened 
controls  at  Member  State  level,  greater  transparency  and  better  evaluation  of  the  impact  of 
aid.5  On  17  May  the  Commission  extended  the  scope  of  the  General  Block  Exemption 
Regulation  to  ports  and  airports  and  included  further  simplifications  in  other  areas,  such  as 
cultural projects and multi-purpose sport arenas and compensation for companies operating in 
the EU's outermost regions.6 This is expected to facilitate public investment in support of the 
Commission's common goals on jobs and growth, climate, innovation and social cohesion. 

The Commission continued providing guidance to the Member States' authorities by way of 
so-called  "analytical  grids"  on  the  application  of  State  aid  rules  to  the  public  financing  of 

4 See http://ec.europa.eu/competition/cartels/whistleblower/index.html. 
5 See 2017 Scoreboard confirms benefits of modernisation leading to quicker implementation on the ground of 
public  support  by  Member  States,  IP/18/263  of  16  January  2018  available  at  http://europa.eu/rapid/press-
release_IP-18-263_en.htm.  
6 Commission Regulation (EU) 2017/1084 of 14 June 2017 amending Regulation (EU) No 651/2014 as regards 
aid for port and airport infrastructure, notification thresholds for aid for culture and heritage conservation and for 
aid for sport and multifunctional recreational infrastructures, and regional operating aid schemes for outermost 
regions and amending Regulation (EU) No 702/2014 as regards the calculation of eligible costs – available at  
http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1497952641554&uri=CELEX:32017R1084. 

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infrastructure  projects,  which  were  revised  in  the  light  of  the  adoption  of  the  Commission 
Notice  on  the  notion  of  State  aid  in  2016.7  The  amended  General  Block  Exemption 
Regulation  and  the  analytical  grids  make  it  easier  to  implement  infrastructure  investments 
quicker and with full legal certainty for project developers and aid-granting authorities.  

The Commission services facilitated compliance with the transparency provisions of the State 
aid  Modernisation  (SAM)  by  developing,  in  cooperation  with  Member  States,  the 
Transparency Award Module – a new informatics tool for submission and publication of data 
on  State  aid.8  As  of  end  October  2017,  24  Member  States  have  joined  the  Transparency 
Award Module. Approximately 15 000 aid awards have been published by 22 Member States.  

The Commission also supports Member States in the framework of a multilateral partnership 
such as the Working Group on the implementation of the State aid Modernisation . The Group 
allows Member States to exchange best practices on their systems for State aid control, and 
acts as  a  network  for  the  informal  discussion  of  State  aid  issues  among  Member  States  and 
with the Commission.  

3. Tapping the full potential of the Digital Single Market 

Digital technology is now an integral part of EU citizens' life at home, at work, while studying 
or  when  travelling.  360  million  Europeans  use  the  internet  every  day,  with  almost  60%  of 
them  getting  access  through  a  mobile  or  smart  phone.  To  make  the  most  of  the  new 
opportunities  this  brings,  Europe  needs  a  genuinely  connected  Digital  Single  Market. 
Competition policy is an integral part of the Commission's strategy to improve and strengthen 
the Digital Single Market, creating new growth and generating hundreds of thousands of new 
jobs9.   

Antitrust enforcement to uphold innovation in the online markets 

In the digital sector, it is crucial that successful companies, which dominate the market, are 
prevented  to  use  their  power  to  shut  down  competition,  because  that  can  end  up  severely 
harming innovation.  

In  June  2017,  the  Commission  found  that  Google  abused  its  market  dominance  as  a  search 
engine by promoting its own comparison shopping service in its search results10. 

The "Google Shopping" case: widening choice for consumers  

Google's  flagship  product  is  the  Google  search  engine,  which  provides  search  results  to  consumers, 
who pay for the service with their data. In 2004, Google entered  the separate  market of comparison 
shopping  in  Europe,  with  a  product  now  called  "Google  Shopping".  From  2008,  Google  began  to 
implement in European markets a strategy to favour its comparison shopping service which relied on 
Google's  dominance  in  general  internet  search,  instead  of  competition  on  the  merits  in  comparison 
shopping markets. Google systematically gave prominent placement to its own comparison shopping 
service, and demoted rival comparison shopping services in its search results. Evidence showed that 
even the most highly ranked rival service appeared on average only on page four of Google's search 

7 OJ C 262, 19.7.2016 p. 1 
8 For further information see the Transparency Award Module available at  
https://webgate.ec.europa.eu/competition/transparency/public/search/chooseLanguage.  
9 For further information, see https://ec.europa.eu/commission/priorities/digital-single-market_en.  
10 Case AT.39740 Google search (Shopping), see IP/17/1784 of 27 June 2017, available at http://europa.eu/rapid 
/press-release_IP-17-1784_en.htm.  

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 results, and others appeared even further down. Google's own comparison shopping service was not 
subject to Google's generic search algorithms, including such demotions. Consequently, Google's  

comparison  shopping  service  was  much  more  visible  to  consumers  in  Google's  search  results, 
compared to rival comparison shopping services. 

The evidence shows that consumers click far more often on results that are more visible, i.e. the results 
appearing  higher  up  in  Google's  search  results.  As  a  result  of  Google's  illegal  practices,  traffic  to 
Google's  comparison  shopping  service  increased  significantly, whilst  rivals  suffered  very  substantial 
losses of traffic on a lasting basis. 

The  Commission  fined  Google  EUR  2.42  billion  for  breaching  EU  antitrust  rules.  The 
Commission's  decision  also  ordered  Google  to  comply  with  the  principle  of  giving  equal 
treatment to rival comparison shopping services and its own service. 

Market  dominance  is,  as  such,  not  illegal  under  EU  antitrust  rules.  However,  dominant 
companies  have  a  special  responsibility  not  to  abuse  their  powerful  market  position  by 
restricting  competition,  either  in  the  market  where  they  are  dominant  or  in  separate,  but 
linked,  markets.  Google's  behaviour  denied  other  companies  the  chance  to  compete  on  the 
merits and to innovate and was therefore in breach of EU antitrust rules. Most importantly, it 
denied European consumers a genuine choice of services and the full benefits of innovation. 

The  Commission  continues  investigating  Google’s  possible  abuses  of  dominant  position  in 
two  other  cases,  concerning  mobile  apps  and  services  (Android11)  and  Google  search 
advertisements that appear on other websites (AdSense12). 

The Commission also looked into Amazon's distribution agreements with  e-book publishers 
in Europe13. The Commission opened an investigation because it had concerns about clauses 
included in Amazon's e-books distribution agreements that could have breached EU antitrust 
rules.  These  clauses,  sometimes  referred  to  as  "most-favoured-nation"  clauses,  required 
publishers  to  offer  Amazon  similar,  or  better,  terms  and  conditions  as  those  offered  to  its 
competitors  and/or  to  inform  Amazon  about  more  favourable  or  alternative  terms  given  to 
Amazon's  competitors.  The  Commission  considered  that  such  clauses  could  make  it  more 
difficult for other  e-book platforms  to  develop innovative services for e-books and compete 
effectively with Amazon. 

Amazon sought to address the Commission's concerns by offering not to enforce, introduce or 
to  change  the  terms  of  its  agreements  with  publishers.  Amazon's  originally  proposed 
commitments were amended following feedback received from interested parties. In May, the 
Commission concluded that the amended final version of the commitments offered a timely, 
effective  and  comprehensive  solution  to  the  competition  concerns  it  had  identified14.  The 
commitments  will  help  ensure  innovation  and  fair  competition  in  Europe's  e-books  market 
worth  more  than  EUR  1  billion,  and  increase  choice  and  competition  to  the  benefit  of 
European consumers.  

Antitrust enforcement in sports markets 

11  Case  AT.40099  Google  Android,  available  at  http://ec.europa.eu/competition/elojade/isef/case_details. 
cfm?proc_code=1_40099.  
12  Case  AT.40411  Google  Search  (AdSense),  available  at  http://ec.europa.eu/competition/elojade/isef/case_ 
details.cfm?proc_code=1_40411.  
13  Case  AT.40153  E-book  MFNs  and  related  matters,  Commission  decision  of  4  May  2017,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40153 
14 See IP/17/1223 of 4 May 2017, available at http://europa.eu/rapid/press-release_IP-17-1223_en.htm.  

5 

 
                                                            
On  8  December  2017,  the  Commission  adopted  a  decision  finding  that  the  International 
Skating  Union  (ISU)'s  eligibility  rules  were  in  breach  of  Article  101  TFEU15.  The  rules 
concerned  imposed  severe  penalties  on  athletes  participating  in  speed  skating  competitions 
that were not authorised by the ISU, even when such competitions posed no risk to legitimate 
sports  objectives,  such  as  the  protection  of  the  integrity  and  proper  conduct  of  sport,  or  the 
health and safety of athletes.  

The Commission found that, as a result of the ISU eligibility rules, athletes were not allowed 
to  compete  in  skating  events  not  organised  by  the  ISU  and  could  be  deprived  of  additional 
sources  of  income  during  their  relatively  short  speed  skating  careers.  Further,  the  ISU 
eligibility  rules  made  it  difficult  for  independent  organisers  to  put  together  their  own  speed 
skating  competitions  because  they  were  unable  to  attract  top  athletes.  This  limited  the 
development  of  alternative  and  innovative  speed  skating  competitions,  to  the  detriment  of 
fans and spectators.  

While the Commission considered that its intervention was necessary in the circumstances of 
the case, the decision does not mean that the Commission is aiming to be the referee in every 
dispute about sport. 

The Commission's e-commerce sector inquiry 

in  European  e-commerce  markets16.  During 

E-commerce  should  give  consumers  a  wider  choice  of  goods  and  services,  as  well  as  the 
opportunity  to  make  purchases  across  borders.  However,  despite  more  and  more  goods  and 
services traded over the internet worldwide, cross-border online sales within the EU are only 
growing  slowly.  In  2015,  the  Commission  launched  a  sector  inquiry  to  identify  possible 
competition  concerns 
the 
Commission  gathered  evidence  from  nearly  1  900  companies  operating  in  e-commerce  of 
consumer  goods  and  digital  content,  and  analysed  around  8  000  distribution  and  license 
contracts. In May 2017, the Commission published the sector inquiry's final report17, taking 
account of comments received on the preliminary report of September 2016. The findings are 
already helping the Commission to better target the enforcement of EU competition rules in e-
commerce markets. Furthermore, the sector inquiry has prompted a number of companies to 
review their commercial practices on their own initiative.  

inquiry, 

the 

Tackling price restrictions and geo-blocking practices 

In  February  2017,  the  Commission  launched  three  separate  investigations  to  assess  if  certain  online 
sales practices prevent consumers from enjoying cross-border choice and being able to buy consumer 
electronics,  video  games  and  hotel  accommodation  at  competitive  prices18.  The  three  investigations 
aim to tackle the specific issues of retail price restrictions, discrimination on the basis of location and 
geo-blocking  included  in  vertical  agreements  among  companies.  The  preliminary  results  of  the 
Commission's  competition's  e-commerce  sector  inquiry  show  that  the  use  of  these  restrictions  is 
widespread throughout the EU. 

15 Case AT.40208 International Skating Union’s Eligibility rules available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40208. 
16 For further information, see http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html.  
17 Report from the Commission to the Council and the European Parliament,  Final report on the E-commerce 
Sector 
final,  available  at  http://ec.europa.eu/competition/antitrust/sector_ 
inquiry_final_report_en.pdf . 
18 See IP/17/201 of 2 February 2017, available at http://europa.eu/rapid/press-release_IP-17-201_en.htm.  

Inquiry,  COM(2017)  229 

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In addition, in June 2017, the Commission opened a formal antitrust investigation into the distribution 
agreements  and  practices  of  clothing  manufacturer  and  retailer  Guess19.  The  Commission  has  also 
launched three separate antitrust investigations to assess whether Nike, Sanrio and Universal Studios 
are  restricting  cross  border  and  online  sales  of  merchandising  products20.  The  Commission  is 
examining  whether  the  licensing  and  distribution  practices  of  these  companies  may  be  denying 
consumers access to wider choice and better deals in the single market. 

One of the main goals of the Commission's Digital Single Market strategy21 is to grant better 
access  for  consumers  and  businesses  to  goods  and  services,  for  example  by  ensuring 
compliance with EU competition rules, ending unjustified geo-blocking22 and enabling cross-
border portability of online content services.  

Ensuring vibrant competition in the media sector 

The media sector is vital for the progress of information and communication technologies, as 
well  as  to  develop  and  preserve  culture,  information,  education  and  democracy.  As  digital 
content  is  increasingly  available  and  distributed  across  various  platforms  (digital  terrestrial, 
cable,  satellite,  Internet,  mobile  networks),  firms  tend  to  engage  to  combine  production  of 
content  and  its  distribution.  When  assessing  mergers  in  the  media  sector,  one  of  the 
Commission's main concerns is that access to key elements - whether content, technology or 
interconnection - is not negatively affected. 

In April 2017, the Commission cleared under the Merger Regulation the proposed acquisition 
of  Sky  by  Twenty-First  Century  Fox,  a  United  States  of  America-based  diversified  global 
media company23. Sky is the leading pay-TV operator in Austria, Germany, Ireland, Italy and 
the United Kingdom, whereas Twenty-First Century Fox is one of the six major Hollywood 
film studios, and a TV channel operator. Fox and Sky are mainly active in different markets in 
Austria,  Germany,  Ireland,  Italy  and  the  United  Kingdom.  The  Commission  concluded  that 
the transaction would not raise competition concerns in Europe.  

In May, the Commission approved the acquisition of de facto control over Telecom Italia by 
Vivendi24. Both Telecom Italia (Italy) and Vivendi (France) are active in the market for the 
wholesale access to digital terrestrial networks for the broadcast of TV channels, through their 
respective  stakes  in  two  other  companies,  Persidera  and  Mediaset.  The  Commission  found 
that,  post-transaction,  Vivendi  would  have  had  an  incentive  to  raise  prices  charged  to  TV 
channels in the market for wholesale access to digital terrestrial television networks. In order 
to  address  the  competition  concerns  identified  by  the  Commission,  Vivendi  committed  to 
divest Telecom Italia's stake in Persidera. The Commission's decision is conditional upon full 
compliance with the commitments. 

19  Case  AT.40428  Guess,  available  at  http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code 
=1_40428.  
20  Case  AT.40432  Licensed  merchandise  –  Sanrio,  AT.40433  Licensed  merchandise  -  Universal  Studios, 
AT.40436  Licensed  merchandise  –  Nike,  see  IP/17/1646  of  14  June  2017,  available  at  http://europa.eu/rapid/ 
press-release_IP-17-1646_en.htm. 
21 See https://ec.europa.eu/digital-single-market/.  
22  See  Regulation  (EU)  2018/302  of  the  European  Parliament  and  of  the  Council  of  28  February  2018  on 
addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of 
residence  or  place  of  establishment  within  the  internal  market  and  amending  Regulations  (EC)  No  2006/2004 
and (EU) 2017/2394 and Directive 2009/22/EC, OJ L 60I , 2.3.2018, p. 1. 
23  Case  M.8354  Fox  /  Sky,  Commission  decision  of  7  April  2017,  available  at  http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=2_M_8354.   
24 Case M.8465 Vivendi / Telecom Italia, Commission decision of 30 May 2017, available at http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=2_M_8465.  

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The Commission has exclusive jurisdiction to assess the impact of the proposed transactions 
on competition in  the various  markets affected within the European Economic Area  (EEA). 
However,  the  EU  Merger  Regulation  recognises  that  Member  States  may  take  appropriate 
measures,  including  prohibiting  proposed  transactions,  to  protect  other  legitimate  interests, 
such  as  media  plurality.  In  this  regard,  the  United  Kingdom  Secretary  of  State  for  Culture 
Media  and  Sport  is  currently  considering  whether  to  take  appropriate  measures  to  protect 
media  plurality  in  the  United  Kingdom  in  relation  to  the  proposed  acquisition  of  Sky  by 
Twenty-First Century Fox. 

The  Commission  also  approved  two  aid  schemes  supporting  the  development  and  the 
promotion  of  educational  and  culturally  valuable  digital  video  games  in  Germany25  and 
Denmark26.   

Merger control and the importance of providing correct information 

When  assessing  a  proposed  merger  transaction,  the  Commission  must  be  able  to  take 
decisions in full knowledge of accurate facts. The EU Merger Regulation obliges companies 
in  a  merger  investigation  to  provide  correct  information  that  is  not  misleading,  as  this  is 
essential  for  the  Commission  to  review  mergers  and  takeovers  in  a  timely  and  effective 
manner. This obligation applies, regardless of whether the information has an impact on the 
ultimate outcome of the merger assessment. 

When Facebook notified the acquisition of WhatsApp in 201427, it informed the Commission 
that  it  would  be  unable  to  establish  reliable  automated  matching  between  Facebook  users' 
accounts and WhatsApp users' accounts. However, later on, the Commission found out that, 
contrary to Facebook's statements in the 2014 merger review process, the technical possibility 
of automatically matching Facebook and WhatsApp users' identities already existed in 2014, 
and that Facebook was aware of such a possibility. Following a Statement of Objections, in 
May  2017  the  Commission  imposed  a  fine  of  EUR  110  million  on  Facebook  for  providing 
incorrect  or  misleading  information28.  The  decision  sends  a  clear  signal  to  companies  that 
they  must  comply  with  all  aspects  of  EU  merger  rules,  including  the  obligation  to  provide 
correct information. 

Supporting connectivity across the EU 

Internet connections and coverage are a precondition for digital development and innovation. 
As part of its Digital Single Market strategy, the Commission aims to encourage broadband 
roll-out, especially in underserved areas, and to ensure a high level of connectivity in the EU. 
The  Commission  has  set  a  target  of  internet  connections  with  download/upload  speeds  of  1 
Gigabit  of  data  per  second  by  2025  for  all  schools,  transport  hubs  and  main  providers  of 
public services, as well as digitally intensive enterprises. In addition, all European households 
should have access to networks offering a download speed of at least 100 Mbps, which can be 

25 State aid cases SA.46572 – Germany – Bavarian games support measure, Commission decision of  
4 September 2017 available at 
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result&policy_area_id=3. 
26 SA.45735 – Denmark - Scheme for the development, production and promotion of cultural and educational 
digital games, Commission decision of 12 May 2017 available at 
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result&policy_area_id=3. 
27  Case  M.7217  Facebook 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7217. 
28  Case  M.8228  Facebook  /  Whatsapp  (Art.  14.1  proc.),  see  IP/ 17/1369  of  18  May  2017,  available  at 
http://europa.eu/rapid/press-release_IP-17-1369_en.htm. 

/  Whatsapp,  Commission  decision  of  3  October  2014,  available  at 

8 

 
                                                            
upgraded to 1 Gigabit by 202529. Finally, also by 2025, all urban areas and all major terrestrial 
transport paths should have uninterrupted 5G coverage. 

The  General  Block  Exemption  Regulation  (GBER)  which  is  intended  particularly  for 
underserved areas and allows Member States to deploy broadband networks without State aid 
notification and the Commission's Guidelines for the application of State aid rules in relation 
to  the  rapid  deployment  of  broadband  networks30  offer  stability  and  legal  certainty  for 
broadband investment. Those rules encourage the rapid roll-out of publicly funded broadband 
infrastructure  with  public  funds  whilst  minimising  the  risk  of  crowding  out  of  private 
investments or of creating monopolies. All Member States have now adopted and/or updated 
national and/or regional broadband strategies and are progressively adapting them to the new 
connectivity  strategic  objectives  for  2025.  Extensive  national  and  regional  broadband 
schemes  have  been  approved  by  the  Commission  during  2017,  in  particular  for  Lithuania, 
Croatia,  Austria,  Germany  and  Poland.  The  planned  measures  will  bring  faster  internet  to 
consumers and businesses. In 2017, Directorate-General for Competition actively contributed 
with  its  expertise  on  competition  law,  in  particular  State  aid  rules,  to  the  new  European 
network  of  Broadband  Competence  Offices31  and  the  Toolkit  for  Rural  Broadband32.  Both 
initiatives  aim  at  building  up  capacities  (legal,  technical  or  financial)  and  dissemination  of 
knowledge  in  broadband,  including  the  exchange  of  current  best  practices  for  a  fast 
implementation of broadband plans in Europe.  

4.  Promoting  fair  competition  in  concentrated  markets,  to  the  benefit  of  citizens  and 
businesses 

High  market  concentration  means  that  a  few  companies  have  high  market  shares  in  a 
particular  sector.  Rigorous  competition  enforcement  ensures  that  large  and  powerful 
companies  are  prevented  from  misusing  their  market  power  to  the  disadvantage  of  their 
customers  and  the  rest  of  the  economy.  The  Court  of  Justice  has  in  September  clarified  the 
framework for assessing the legality of exclusivity rebates applied by dominant companies. It 
confirmed that such rebates are as a starting point illegal and that anticompetitive effects can 
be shown through many different means.33 From a procedural perspective, the Court also sent 
a  reminder  about  the  importance  of  keeping  records  of  contacts  with  companies  and  other 
parties  involved  in  competition  investigations,  which  is  fully  in  line  with  the  Commission's 
emphasis on fairness and respect for companies' rights of defence. 

Antitrust enforcement in the pharmaceutical sector 

European  citizens  need  access  to  innovative,  safe  and  affordable  pharmaceutical  products. 
When  pharmaceutical  companies,  medical  device  companies  or  other  health-related 
companies  are  deterred  from  unfair  practices,  citizens  win.  New,  better  products  are 

29 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social  Committee  and  the  Committee  of  the  Regions,  Connectivity  for  a  Competitive  Digital  Single  Market  - 
Towards  a  European  Gigabit  Society  -  COM(2016)587  and  Staff  Working  Document  -  SWD(2016)300, 
available  at  https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-
single-market-towards-european-gigabit-society. 
30 Communication from the Commission, EU Guidelines for the application of State aid rules in relation to the 
rapid  deployment  of  broadband  networks,  OJ  2013  C  25,  26.1.2013,  available  at  http://eur-lex.europa.eu/ 
LexUriServ/LexUriServ.do?uri=OJ:C:2013:025:0001:0026:en:PDF. 
31 For further information see https://ec.europa.eu/digital-single-market/en/broadband-competence-offices. 
32  For further information see https://ec.europa.eu/digital-single-market/en/news/european-commission-joins-
forces-help-bringing-more-broadband-rural-areas.  
33C-413/14 P Intel v Commission, judgment of the European Court of Justice of 6 September 2017, 
ECLI:EU:C:2017:632.  

9 

 
                                                            
developed, prices go down and health budgets are spared. In the EU, each Member State has 
different  pharmaceutical  pricing  and  reimbursement  policies,  adapted  to  its  own  economic 
and  health  needs;  nonetheless,  all  pharmaceutical  companies  operating  in  the  EU  single 
market must respect competition rules. 

In  May  2017,  the  Commission  opened  a  formal  investigation  into  concerns  that  Aspen 
Pharma has engaged in excessive pricing concerning five life-saving cancer medicines34. The 
Commission is investigating whether Aspen has abused a dominant market position in breach 
of  EU  antitrust  rules.  The  Commission  will  now  carry  out  its  in-depth  investigation  as  a 
matter of priority. The opening of formal proceedings does not prejudge the outcome of the 
investigation. 

The Commission is looking into pricing practices for life-saving medicines: the Aspen case 

Aspen is a global pharmaceutical company headquartered in South Africa, with several subsidiaries in 
the  EEA.  The  investigation  concerns  Aspen's  pricing  practices  for  niche  medicines  used  for  treating 
cancer,  such  as  hematologic  tumours.  The  medicines  are  sold  with  different  formulations  and  under 
multiple brand names. Aspen acquired these medicines after their patent protection had expired.  

The  Commission  is  investigating  allegations  indicating  that  Aspen  has  imposed  very  significant  and 
unjustified price increases of up to several hundred percent, so-called 'price gouging'. To impose such 
price increases, Aspen has threatened to withdraw the medicines in question in some Member States 
and has actually done so in certain cases. The investigation covers all of the EEA except Italy, where 
the Italian competition authority already adopted an infringement decision against Aspen in September 
2016.  

This  is  the  Commission's  first  investigation  into  concerns  about  excessive  pricing  practices  in  the 
pharmaceutical industry. 

The Commission has also been vigilant to tackle attempts by originator companies to delay or 
hamper the introduction of generic medicines into the market. In July 2017, the Commission 
sent a Statement of Objections to pharmaceutical company Teva35. The Commission informed 
Teva of its preliminary view that an agreement concluded with its competitor Cephalon was 
in breach of EU antitrust rules. Under the agreement, Teva committed not to market a cheaper 
generic version of Cephalon's drug for sleep disorders, modafinil.  

Market  entry  and  competition  by  generic  drugs  is  an  essential  element  to  improve  the 
affordability  of  healthcare.  The  Statement  of  Objections  alleges  that  the  patent  settlement 
agreement  between  Cephalon  and  Teva  may  have  delayed  the  entry  of  a  cheaper  generic 
medicine, leading to higher prices for modafinil and causing substantial harm to EU patients 
and  health  service  budgets.  The  companies  have  now  the  opportunity  to  respond  to  the 
Commission's  concerns.  The  sending  of  a  Statement  of  Objections  does  not  prejudge  the 
outcome of the investigation. 

The key merger operations in the pharma sector  

In  June,  the  Commission  approved  the  acquisition  of  Actelion  by  Johnson  &  Johnson36, 
subject to remedies. While the activities of the two companies were largely complementary, 

34 Case AT.40394  Aspen, see IP/17/1323 of 15 May 2017, available at  http://europa.eu/rapid/press-release_IP-
17-1323_en.htm. 
35  Case  AT.39686  Cephalon,  see  IP/17/2063  of  17  July  2017,  available  at  http://europa.eu/rapid/press-
release_IP-17-2063_en.htm. 
36 Case M.84401 J&J/Actelion. For further information, see  
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8401. 

10 

 
                                                            
they  were  both  working  on  a  treatment  for  insomnia,  based  on  a  novel  way  to  cure  this 
condition.  The  Commission’s  market  investigation  indicated  that  the  transaction  as  notified 
would give Johnson & Johnson the ability and incentive to rationalise its competing insomnia 
research  and  development  programmes  by  either  delaying  or  discontinuing  one  of  them.  In 
order  to  address  these  competition  concerns  Johnson  &  Johnson  offered  remedies  to  ensure 
that it cannot influence negatively the development of either insomnia research programme. 

The key merger operations in the agro-chemical sector 

Seeds  and  pesticide  products  are  essential  for  farmers  and  ultimately  consumers.  The 
Commission  ensures  effective competition in this sector,  so that  farmers can  have  access  to 
innovative  products,  better  quality  and  competitive  prices.  In  this  market,  the  Commission 
assessed under the EU Merger Regulation the recent mergers between Dow and Dupont and 
between Syngenta and ChemChina, as well as Bayer and Monsanto. Both decisions followed 
an in-depth review of the proposed transactions. 

The  conditional  approval  of  the  Dow  and  DuPont  merger  and  of  ChemChina  acquisition  of 
Syngenta 

In  March  2017,  the  Commission  approved  the  merger  between  US-based  chemical  companies  Dow 
and  DuPont,  subject  to  conditions  on  the  divestiture  of  major  parts  of  DuPont's  global  pesticide 
business, including its global Research & Development organisation37. The Commission had concerns 
that  the  merger  as  notified  would  have  reduced  competition  on  price  and  choice  in  a  number  of 
markets for existing pesticides. Furthermore, a detailed  investigation of the effects of the merger on 
innovation  competition  in  a  number  of  innovation  spaces  in  which  the  R&D  efforts  of  the  parties 
where  competing  against  each  other  as  well  as  on  pesticides  innovation  competition  overall  showed 
that  the  merger  would  also  have  significantly  reduced  innovation.  The  commitments  submitted  by 
Dow and DuPont addressed all these concerns in full. 

In April 2017, the Commission cleared ChemChina's acquisition of Syngenta (based, respectively, in 
China and Switzerland), subject to conditions38. The Commission had concerns that the transaction as 
notified  would  have  reduced  competition  in  a  number  of  existing  markets  for  pesticides  within  the 
European  Economic  Area.  Furthermore,  the  Commission  had  concerns  that  the  transaction  could 
reduce  competition  for  plant  growth  regulators.  The  approval  was  therefore  conditional  on  the 
divestiture  of  significant  parts  of  ChemChina's  European  pesticide  and  plant  growth  regulator 
business.  The  Commission's  investigation  focused  on  competition  for  existing  pesticides,  since 
ChemChina does not compete with Syngenta for the development of new and innovative pesticides. 

In  August,  the  Commission  opened  an  in-depth  investigation  to  assess  the  proposed 
acquisition of Monsanto  (US) by  Bayer  (Germany) under  the EU Merger Regulation39. The 
merged entity would hold  both  the largest portfolio of pesticides  products and the strongest 
global  market  positions  in  seeds  and  traits,  making  it  the  largest  integrated  company  in  the 
industry.  The  Commission  had  preliminary  concerns  that  the  proposed  acquisition  could 
reduce competition in a number of different markets resulting in higher prices, lower quality, 
less  choice  and  less  innovation.  In  particular,  the  initial  market  investigation  identified 
preliminary concerns in the areas of pesticides, seeds and traits, as well as digital agriculture. 

37  Case  M.7932  Dow  /  DuPont,  Commission  decision  of  27  March  2017,  available  at  http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=2_M_7932. 
38 Case M.7962 ChemChina / Syngenta, Commission decision of  5 April 2017, available at http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=2_M_7962. 
39 Case M.8084 Bayer / Monsanto, see IP/17/2762 of 22 August 2017, available at http://europa.eu/rapid/press-
release_IP-17-2762_en.htm.  The 
taken  on  21  March  2018,  available  at 
http://europa.eu/rapid/press-release_IP-18-2282_en.htm. 

final  decision  was 

11 

 
                                                            
The  Commission  also  investigated  whether  competitors'  access  to  distributors  and  farmers 
could  become  more  difficult  if  Bayer  and  Monsanto  were  to  bundle  or  tie  their  sales  of 
pesticide products and seeds, notably with the advent of digital agriculture. Digital agriculture 
consists  in  the  collection  of  data  and  information  about  farms  with  the  aim  of  providing 
tailored advice or aggregated data to farmers. Both Bayer and Monsanto have been investing 
in this emerging technology. Given the worldwide scope of Bayer and Monsanto's activities, 
the  Commission  has  cooperated  closely  with  other  competition authorities,  notably with  the 
Department  of  Justice  in  the  United  States  of  America  and  the  antitrust  authorities  of 
Australia, Brazil, Canada and South Africa. 

Securing competitive input prices for European industries 

In  April  2017,  the  Commission  prohibited  the  proposed  takeover  of  Cemex  Croatia  by 
HeidelbergCement  and  Schwenk  under  the  EU  Merger  Regulation40.  The  Commission  had 
strong  concerns  that  the  takeover  would  have  significantly  reduced  competition  in  grey 
cement markets and increased prices in Croatia. 

The  takeover  would  have  eliminated  competition  between  companies  that  were  competing 
head-to-head for the business of Croatian cement customers and could have led to a dominant 
position in  the  market.  The  combined  market  shares  of  the  parties  would  have  been  around 
45-50%  and  reached  more  than  70%  in  parts  of  the  country.  Following  an  in-depth 
investigation,  the  Commission  concluded  that  the  proposed  remedy  wasn't  sufficient  to 
replace the competition that would disappear with the merger.  

Cement  is  an  important  input  to  the  building  industry,  which  delivers  many  jobs  in  Croatia 
and  which  has  been  suffering  in  recent  years.  The  Commission  took  action  to  protect 
customers and prevent the negative effects from higher input prices to this important sector. 

5. Boosting growth by protecting competition in network industries  

In the energy sector, the Commission continues working towards a European Energy Union in 
which  clean  energy  can  flow  freely  and  securely.  Reliable  energy  supplies,  at  reasonable 
prices for businesses and consumers and with the minimum environmental impact, are crucial 
to the European economy.  

State aid measures to ensure security of energy supply for European citizens and businesses 

The  Commission's  2016  sector  inquiry  into  capacity  mechanism41  has  formed  the  basis  for  a  close 
cooperation between the Commission and the EU Member States to ensure that capacity mechanisms 
are well-designed and fit for purpose. In 2017, the Commission started its enforcement actions based 
on  the  findings  of  the  Report  and  took  a  final  decision  on  a  capacity  mechanism  in  France.42  In 
addition, the first joint capacity mechanism for Ireland and Northern Ireland was approved.43 This 

40 Case M.7878 HeidelbergerCement / Schwenk / Cemex Hungary / Cemex Croatia, Commission decision of 5 
April 2017, available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7878. 
41 On 16 November 2016, the Commission published the final report of its capacity mechanism sector inquiry, 
see IP/2016/4021 of 16 November 2016 http://europa.eu/rapid/press-release_IP-16-4021_en.htm.  
42 Case SA.40454 Tender for additional capacity in Brittany, for further information see IP/17/1325 of 15 May 
2017 available at http://europa.eu/rapid/press-release_IP-17-1325_en.htm.  
43 Case SA.44464 Irish Capacity Mechanism: reliability option scheme, Commission decision of 24 November 
2017  available  at  http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44464,  and 
SA.44465 Northern Irish Capacity Mechanism: reliability option scheme, Commission decision of 24 November 
2017  available  at  http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44465.  For 
further information see IP/17/4944 of 24 November 2017 available at http://europa.eu/rapid/press-release_IP-17-
4944_en.htm. 

12 

 
 
                                                            
capacity mechanism is open to all potential types of capacity providers, including demand response, in 
the  'all-island  market'.  Furthermore,  in  close  cooperation  with  the  relevant  national  authorities,  the 
Commission continued to ensure that six further capacity mechanisms44 in Belgium, France, Germany, 
Greece, Italy and Poland - which concern more than half of EU's population - are well-designed and 
meet the strict criteria under EU State aid rules, in particular the Commission's 2014 Guidelines on 
State Aid  for Environmental Protection  and Energy.45  In particular,  the award of the aid  takes place 
through  competitive  tenders,  open  to  all  technologies  capable  of  providing  the  desired  services, 
including  the  demand  response.  These  enforcement  activities  complement  the  Commission's  Energy 
Union Strategy46 to delivery secure, sustainable and competitive energy in Europe. 

Promoting an open and integrated market for gas 

In  2017,  the  Commission  continued  investigating  the  business  practices  of  Gazprom  in 
Central  and  Eastern  Europe47.  According  to  the  Commission's  preliminary  assessment, 
Gazprom  had  been  breaking  EU  antitrust  rules  by  pursuing  an  overall  strategy  to  partition 
Central and Eastern European gas markets. 

Gazprom  has  offered  commitments  to  resolve  the  Commission's  competition  concerns.  The 
Commission  found  that  the  commitments  offered  by  Gazprom  covered  its  competition 
concerns,  and  decided  to  submit  them  to  a  market  test.  In  March  2017,  the  Commission 
invited all interested parties to submit their views on the commitments offered by Gazprom, 
receiving  a  significant  number  of  comments  and  submissions48.  In  light  of  the  comments 
received in the market test, the Commission may ask  for modifications to  the commitments 
and  then  adopt  a  decision  making  the  commitments  legally  binding  on  Gazprom.  If  a 
company breaks such commitments, the Commission can impose a fine of up to 10% of the 
company's worldwide turnover, without having to prove an infringement of the EU antitrust 
rules. 

The Commission also continued its investigation into the possible foreclosure of gas markets 
in Bulgaria by the Bulgarian incumbent, Bulgarian Energy Holding ("BEH")49. 

Competition on equal ground across the European energy markets 

State aid rules also play a key role in meeting the EU's ambitious energy and climate targets at 
the least possible cost for taxpayers and without undue distortions of competition in the single 
market. In particular, the Commission's Guidelines on State Aid for Environmental Protection 
and  Energy50  require  competitive  auctions  for  renewables  support  since  2017.  The  auctions 
are to be based on clear, transparent and non-discriminatory criteria. This requirement ensures 
that the use of public funds is limited and there is no overcompensation.  

44 See IP/18/682 of 7 February 2018 available at http://europa.eu/rapid/press-release_IP-18-682_en.htm.  
45 See IP/14/400 of 9 April 2014 available at http://europa.eu/rapid/press-release_IP-14-400_en.htm.  
46 For further information see https://ec.europa.eu/commission/priorities/energy-union-and-climate_en.  
47  Case  AT.39816  Upstream  gas  supplies  in  Central  and  Eastern  Europe,  available  at  http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=1_39816.     
48 See IP/17/555 of 13 March 2017, available at http://europa.eu/rapid/press-release_IP-17-555_en.htm.  
49  Case  AT.39849  BEH  gas, 
cfm?proc_code=1_39849. 
50 Communication from the Commission, Guidelines on State aid for environmental protection and energy 2014-
2020,  OJ  C  200,  28.6.2014,  p. 1,  available  at  http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX: 
52014XC0628(01).  

at  http://ec.europa.eu/competition/elojade/isef/case_details. 

available 

13 

 
                                                            
For example, in July the Commission approved under EU State aid rules the new Hungarian 
support scheme for renewable electricity51. Under this scheme, several technologies and plant 
sizes are eligible. Installations with a capacity above 1 megawatt and wind installations will 
be selected in a technology-neutral competitive bidding process. 

In  September,  the  Commission  approved  under  EU  State  aid  rules  four  schemes  to  support 
electricity  production  from  onshore  wind  and  solar  on  buildings  and  on  the  ground  in 
France52.  The  schemes  will  allow  France  to  develop  over  seven  additional  gigawatts  in 
renewable  energy,  helping  it  achieve  its  2020  target  of  producing  23%  of  the  energy  needs 
from  renewable  sources.  Also,  in  November  the  Commission  found  a  Spanish  scheme  for 
renewable electricity to be in line with EU State aid rules53. The scheme supports electricity 
generation  from  renewable  energy  sources,  high  efficiency  cogeneration  of  heat  and  power 
and waste, and contributes to Spain's transition to a low carbon, environmentally sustainable 
energy supply. 

All those schemes are accompanied by a detailed evaluation plan to assess their impact. The 
final results of the evaluations will have to be submitted to the Commission. 

A sound Energy Union requires strong and innovative technology providers which should be 
able to compete on equal grounds. A case in point is the restructuring of the French nuclear 
technology provider Areva54. In January 2018, Areva changed its name to Oreno. 

The Areva restructuring 

In 2016, France notified the Commission of a restructuring plan to restore Areva's competitiveness and 
improve its financial position. The plan included State aid in the form of a public capital injection of 
over EUR 4 billion.  

Companies in financial difficulty can receive State aid only for the objective of restoring their long-
term  viability.  Aid  granted  to  companies  in  difficulty  is  highly  distortive  as  it  artificially  keeps  a 
company in the market that would otherwise have left it. It can therefore only be granted under strict 
conditions. 

The  Commission  analysed  whether  the  planned  injections  of  public  capital  into  the  company  would 
not unduly favour Areva over its competitors, by giving it access to finance at terms not available on 
the market. In January 2017, the Commission adopted two decisions, one approving the rescue aid (in 
Case  SA.46077)  and  another  on  the  restructuring  aid  (Case  SA.44727)  to  the  Areva  group.  The 
Commission concluded that the French plans are in line with EU State aid rules, allowing the company 
to become viable without unduly distorting competition in the single market. The French authorities 
will  submit  regular  monitoring  reports  to  the  Commission,  to  ensure  that  the  restructuring  plan  is 
implemented in full and in line with the Commission's decision, until the restructuring period of Areva 
comes to an end in 2019. 

51 SA.44076 RES support scheme – METÁR, Commission decision of 11 July 2017, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44076.  
52  Cases  SA.46552,  SA.47753,  SA.48066  and  SA.48238,  see  IP/17/3581  of  29  September  2017,  available  at 
http://europa.eu/rapid/press-release_IP-17-3581_en.htm.  
53  Case  SA.40348  Support  for  electricity  generation  from  renewable  energy  sources,  cogeneration  and  waste, 
Commission  decision  of  10  November  2017,  available  at  http://ec.europa.eu/competition/elojade/isef/ 
case_details.cfm?proc_code=3_SA_40348.  
54  Case  SA.44727  Restructuring  aid  to  Areva,  Commission  decision  of  10  January  2017,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44727 and M.7764 EDF / Areva 
reactor  business,  Commission  decision  of  29  May  2017,  available  at  http://ec.europa.eu/competition/ 
elojade/isef/case_details.cfm?proc_code=2_M_7764.  

14 

 
                                                            
The  plan  included  the  divestiture  of  Areva's  reactor  business  to  the  French  energy  company  EDF, 
subject to the Commission's review of the planned transaction under EU merger control rules. In May 
2017, the Commission found that the transaction did not raise competition concerns under the Merger 
Regulation.  

In  such  complex  restructurings,  competition  tools  such  as  merger  and  State  aid  control 
contribute  to  ensuring  that  markets  continue  delivering  incentives  for  companies  to  be 
efficient and innovative, to the benefit of EU households and businesses. 

In addition, in March 2017 the Commission approved under State aid rules Hungary's support 
for  the  construction  of  two  new  nuclear  reactors  in  Paks  (Paks  II)55.  The  new  reactors  will 
replace  the four  reactors  currently  operating  at  the  Paks  site,  which  were  constructed  in  the 
1980s  and  currently  account  for  approximately  50%  of  Hungary's  domestic  electricity 
production. Under the EU Treaties, Member States are free to determine their energy mix and 
have the choice to invest in nuclear technology. The Commission's role is to ensure that the 
distortion of competition on the energy market as a result of the State support is limited to a 
minimum.  During  the  investigation  carried  out  by  the  Commission,  the  Hungarian 
Government  made  substantial  commitments,  which  allowed the  Commission  to  approve  the 
investment. 

Fostering a competitive and efficient transport sector 

The transport sector represents a key sector for European households: transport-related goods 
and services are the second biggest household budget item after house-related expenditure56. 
Competitive prices for transport services are directly important for millions of Europeans. The 
Commission  is  active  to  promote  vibrant  competition  and  tackle  competition  distortions 
across all transport modes. 

The  air  transport  sector  is  still  very  fragmented  in  the  EU  and  the  need  for  further 
consolidation was underpinned by the insolvency of a number of EU airlines in 2017. Against 
this  background,  the  Commission  reviewed  the  acquisition  of  certain  Air  Berlin  assets  by 
Lufthansa57 and easyJet58.While the Commission's investigation was still on-going, Lufthansa 
rescinded the NIKI transaction on 13 December, leading to NIKI filing for insolvency on the 
same  day.59  The  Commission  eventually  approved,  subject  to  appropriate  remedies,  the 
remaining part of the transaction between Lufthansa and Air Berlin on 21 December.60 In this 
context  it  is  important  that  creditors'  committees  and  insolvency  administrators  do  not 
underestimate  the  risk  that  a  transaction  may  not  be  implemented  on  regulatory  grounds 
(including, but not limited to, State aid and merger control rules). While the potential acquirer 

55  Case  SA.38454  Possible  aid  to  the  Paks  nuclear  power  station,  Commission  decision  of  6  March  2017, 
available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38454.  
56 Source: Eurostat. See http://ec.europa.eu/eurostat/statistics-explained/index.php/Archive:Household_ 
consumption_expenditure_-_national_accounts  
57 Case M.8633 Lufthansa/certain Air Berlin assets. Further information available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8633. 
58 Case M.8672 easyJet/ certain Air Berlin assets. Further information available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8672. 
59  Following  a  decision  of  NIKI's  creditors  committee,  the  assets  of  NIKI  were  sold  in  January  2018  to  its 
founder, Mr Niki Lauda, and rebranded as Laudamotion. 
60  Case  M.8633  Lufthansa/certain  Air  Berlin  assets,  Commission  decision  of  21  December  2017  pursuant  to 
Article  6(1)(b)  in  conjunction  with  Article  6(2)  of  Council  Regulation  No  139/2004  and  Article  57  of  the 
Agreement  on 
the  European  Economic  Area,  available  at  http://europa.eu/rapid/press-release_IP-17-
5402_en.htm.  

15 

 
                                                            
of the insolvent  company  may take certain interim  measures to  preserve the viability  of the 
latter, these measures must be subject to compliance with the Merger Regulation. 

The  EU's  rail  freight  market  was  liberalised  in  2007.  Since  then,  the  Commission  has  been 
working to complete the single market for rail services, including by ensuring the independent 
management  of  rail  infrastructure  and  fostering  investment  in  tracks  that  interconnect 
Member  States.  In  this  context,  the  enforcement  of  EU  competition  rules  is  important  to 
ensure that regulatory barriers are not replaced by anti-competitive behaviour of dominant rail 
companies, which would prevent the EU from achieving its goals for rail transport. 

The  Commission  fined  Lithuanian  Railways  for  hindering  competition  on  the  rail  freight 
market61  

The  Commission's  investigation  found  that  actions  by  the  Lithuanian  incumbent  state-owned  rail 
company responsible for both railway infrastructure and rail transport hindered competition on the rail 
freight market by dismantling a 19km long section of track connecting Lithuania and Latvia and thus 
preventing a major customer of Lithuanian Railways from using the services of another rail operator. 
Lithuanian Railways could not show any objective justification for the removal of the track.  

The  Commission  decided  to  fine  Lithuanian  Railways  for  abusing  its  dominant  position  in  the 
management of rail infrastructure in Lithuania an amount of EUR 27.9 million. The Commission also 
ordered Lithuanian Railways to rebuild the tracks.  

In  June,  the  Commission  approved  under  State  aid  rules  restructuring  aid  to  Greek  railway 
companies OSE and TRAINOSE.62 .  For the aid measures to OSE and TRAINOSE that the 
Commission found to be in line with EU state aid rules, the Commission took into particular 
account  the  difficulties  the  Greek  railway  sector  is  facing  and  the  importance  of  a  well-
functioning railway service for the population. The measures have the legitimate objective of 
avoiding a serious disturbance of the Greek economy, without unduly distorting competition 
in the Single Market. The aid will also facilitate the future privatisation of TRAINOSE, which 
is expected to support the opening of the Greek railway market to competition and to have a 
positive  impact  on  the  quality  of  transport  services.  The  Commission  also  took  a  decision 
finding that Bulgarian support measures in favour of the publicly-owned railway incumbent 
BDZ are in line with EU State aid rules.63 

Both  the  decisions  concerning  OSE  and  TRAINOSE  and  the  decision  on  the  Bulgarian 
support  measures in  favour of BDZ show how State aid  control can  help  address  the issues 
around  debt  levels  that  some  incumbent  rail  operators  are  carrying.  State  aid  rules  allow 
Member  States  to  help  these  companies  avoid  serious  financial  difficulties  or  having  to 
significantly reduce staff, while easing the transition to an open and competitive rail market to 
the benefit of consumers and taxpayers alike. 

61  Case  AT.39813  Baltic  rail,  Commission  decision  of  2  October  2017,  available  at  http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=1_39813.  
62 Case SA.32543 Measures in favour of OSE group and SA.32544 Restructuring of the Greek Railway Group - 
TRAINOSE  S.A.,  see  IP/17/1661  of  16  June  2017,  available  at  http://europa.eu/rapid/press-release_IP-17-
1661_en.htm.  
63 Case SA.31250 Measure implemented by Bulgaria in favour of BDZ Holding EAD SA, BDZ Passenger EOOD 
and 
at 
Commission 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_31250.  

available 

decision 

EOOD, 

Cargo 

2017, 

BDZ 

June 

16 

of 

16 

 
 
 
                                                            
Anti-cartel enforcement to underpin EU competitiveness  

Road  haulage  is  an  essential  part  of  the  European  transport  sector  and  its  competitiveness 
depends on truck prices.  

The Commission fined Scania for participating in a cartel64 

In September, the Commission imposed a fine of EUR 880  million  on Scania,  for participating  in a 
cartel  in  the  market  for  the  manufacturing  of  medium  (weighing  between  6  to  16  tons)  and  heavy 
trucks  (weighing  over  16  tons).  In  July  2016,  the  Commission  had  reached  a  settlement  decision 
concerning the trucks cartel with MAN, DAF, Daimler, Iveco and Volvo/Renault65. Scania decided not 
to  settle  this  cartel  case  with  the  Commission,  unlike  the  other  five  participants.  As  a  result,  the 
Commission's investigation against Scania was carried out under the ordinary cartel procedure. 

In February66, in what became the first cartel case in the circular economy, the  Commission 
imposed a total fine of EUR 68 million on four European recycling companies of scrap lead-
acid  automotive  batteries  (Campine,  Eco-Bat  Technologies,  Johnson  Controls  and  Recylex) 
for having participated between 2009 and 2012 in a cartel to fix the purchase prices of scrap 
lead-acid automotive batteries in Belgium, France, Germany and the Netherlands. 

Furthermore, the Commission has been conducting a number of investigations in the car parts 
sector,  sanctioning  the  undertakings  involved  in  three  cartels67  with  a  total  amount  of  fines 
amounting  to  EUR  220  million.  Cartels  for  car  parts  increase  the  input  costs  for  car 
manufacturers,  thereby  impair  the  competitiveness  of  the  automotive  sector  and  artificially 
raise the price paid by European consumers who buy cars.  

Simplified rules for public investment in ports and airports, culture and the outermost regions 

The  Commission  has  been  focusing  its  State  aid  control  efforts  on  large  cases  that 
significantly impact competition in the single market, to the greatest benefit of consumers. In 
this  spirit,  the  General  Block  Exemption  Regulation68,  adopted  in  2014  as  part  of  the  State 
Aid Modernisation initiative69, enabled Member States to implement a wide range of State aid 
measures without prior Commission approval. In 2017, the Commission extended the scope 
of this Regulation to ports and airports.70 It also included a number of new simplifications in 

at 

of 

19 

July 

2016, 

decision 

available 

64 See IP/17/3502 of 27 September 2017 available at http://europa.eu/rapid/press-release_IP-17-3502_en.htm.  
65  Case  AT.39824 
Trucks,  Commission 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39824. 
66  Case  40018  Car  battery  recycling,  Commission  decision  of  8  February  2017,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40018. 
67 Cases: AT.4000 Thermal Systems, Commission decision of 8 March 2017, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39960; AT.40013 Lighting systems, 
Commission decision of  21 June 2017, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40013; AT.39881 Occupant Safety 
Systems, Commission decision of 22 November 2017, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39881. 
68  Commission  Regulation  (EU)  No  651/2014  of  17  June  2014  declaring  certain  categories  of  aid  compatible 
with the internal market in application of Articles 107 and 108 of the Treaty, OJ L 187, 26.6.2014, available at 
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.187.01.0001.01.ENG. 
69 For further information, see http://ec.europa.eu/competition/state_aid/modernisation/index_en.html.  
70 Commission Regulation (EU) 2017/1084 of 14 June 2017 amending Regulation (EU) No 651/2014 as regards 
aid for port and airport infrastructure, notification thresholds for aid for culture and heritage conservation and for 
aid for sport and multifunctional recreational infrastructures, and regional operating aid schemes for outermost 
regions  and  amending  Regulation  (EU)  No  702/2014  as  regards  the  calculation  of  eligible  costs.,  OJ  L  156, 
20.6.2017,  available  at  http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1497952641554&uri=CELEX 
:32017R1084.  

17 

 
                                                            
other areas. For example, the Commission will only look at bigger State aid cases that involve 
a higher amount of aid for culture projects. 

New  State  aid  measures:  Commission  simplifies  rules  for  public  investment  in  ports  and 
airports, culture and the outermost regions  

As regards airports, Member States can now make public investments in regional airports handling up 
to 3 million passengers per year with full legal certainty and without prior control by the Commission. 
This will facilitate public investment in more than 420 airports across the EU (which account for about 
13%  of  air  traffic).  The  Regulation  also  allows  public  authorities  to  cover  operating  costs  of  small 
airports handling up to 200 000 passengers per year. These small airports account for almost half of all 
airports  in  the  EU,  but  less  than  1%  of  air  traffic.  They  may  not  always  be  as  profitable  as  larger 
airports, but they can play an important role for the connectivity of a region and are unlikely to distort 
competition in the EU single market. 
With regard to ports, Member States can now make public investments of up to EUR 150 million in 
sea ports and up to EUR 50 million in inland ports with full legal certainty and without prior control 
by the Commission. This includes dredging costs that certain ports need to incur to keep the waterway 
deep  enough for ships to dock.  For ports these costs  are non-negotiable because of their geography, 
regardless of how efficient and competitive they are. 

6. Tackling competition distortions in the taxation and financial sector for a fairer single 
market  

Confidence in the EU single market depends on creating a level playing field for companies 
to  compete  on  merit,  also  when  it  comes  to  taxation.  For  example,  a  Member  State  cannot 
give  tax  benefits  to  multinational  groups  which  are  not  available  to  stand  alone  companies 
(often local businesses), since that would severely distort competition. 

In  October  2017,  the  Commission  concluded  that  Luxembourg  gave  illegal  tax  benefits  to 
Amazon71.  

Putting a stop to selective tax advantages: The Amazon decision 

Following an in-depth investigation launched in October 2014, the Commission concluded that a tax 
ruling  issued  by  Luxembourg  in  2003,  and  prolonged  in  2011,  lowered  the  tax  paid  by  Amazon  in 
Luxembourg without any valid justification. 

The  tax  ruling  enabled  Amazon  to  shift  the  vast  majority  of  its  profits  from  an  Amazon  group 
company that is subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax 
(Amazon Europe Holding Technologies), without valid economic justification. Transactions between 
companies in a corporate group must be priced in a way that reflects economic reality. This means that 
the payments between two companies in the same group should be in line with arrangements that take 
place  under  commercial  conditions  between  independent  businesses  (so-called  "arm's  length 
principle"). 

The  Commission's  investigation  showed  that  the  level  of  the  royalty  payments,  endorsed  by  the  tax 
ruling, was inflated and did not reflect economic reality. As a result, these profits were not taxed. In 
fact, the ruling enabled Amazon to avoid taxation on almost three quarters of the profits it made from 
all  Amazon  sales  in  the  EU.  On  this  basis,  the  Commission  concluded  that  the  tax  ruling  granted  a 
selective economic advantage to Amazon. 

A  stand-alone  company,  also  based  in  Luxembourg  and  subject  to  the  same  national  taxation  laws, 
would have had to pay four times as much in tax as Amazon on the same profits. Thus, the tax ruling 

71  Case  SA.38944  Alleged  aid  to  Amazon,  Commission  decision  of  4  October  2017,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38944. 

18 

 
                                                            
gave Amazon a competitive advantage which was not available to comparable undertakings and gave 
rise to illegal State aid. 

Luxembourg  must  recover  about  EUR  250  million  in  unpaid  tax  from  Amazon,  plus  interest.  This 
amount  covers  the  eight  year  period  during  which  Amazon  relied  on  the  tax  ruling  to  determine  its 
corporate  income  tax  liability  in  Luxembourg.  It  is  for  the  Luxembourg  tax  authorities  to  now 
determine the exact amount, based on the method set out in the Commission's decision. 

On  26  October,  the  Commission  opened  an  in-depth  investigation  into  the  United  Kingdom 
scheme  that  exempts  certain  transactions  by  multinational  groups  from  the  application  of 
national  rules  targeting  tax  avoidance.72  The  United  Kingdom's  Group  Financing  Exemption 
exempts from reallocation of the Controlled Foreign Company (CFC) income received by the 
offshore  subsidiary  from  another  foreign  group  company.  At  this  stage,  the  Commission  has 
doubts whether this exemption is consistent with the overall objective of the United Kingdom 
CFC rules, which is to reallocate income artificially shifted to offshore subsidiaries of United 
Kingdom parent companies to the United Kingdom for taxation. The Commission does at this 
stage consider that the United Kingdom should apply the anti-abuse rule to all companies which 
artificially divert income, including those earning group financing income, since they all are in a 
comparable factual and legal situation with regard to the objective of that measure.  

On  18  December,  the  European  Commission  opened  an  in-depth  investigation  into  the 
Netherlands' tax treatment of Inter IKEA, one of the two groups operating the IKEA business.73 
Inter  IKEA  Systems,  a  Dutch  entity  part  of  the  Inter  IKEA  group,  records  all  revenues  from 
franchise fees paid by IKEA shops worlwide. The Commission's investigation concerns two tax 
rulings,  granted  by  the  Dutch  tax  authorities  in  2006  and  2011,  which  have  significantly 
reduced Inter IKEA Systems' taxable profits in the Netherlands. The Commission considers at 
this  stage  that  the  treatment  endorsed  in  the  two  tax  rulings  may  have  resulted  in  a  selective 
advantage in favour of Inter IKEA Systems, which was not available to other companies subject 
to the same national taxation rules in the Netherlands. 

Financing companies provide financial services intra-group and their profit is the remuneration 
for their financing activities. This remuneration has to be in line with the arm's length principle. 
This issue has been one of the Commission's key areas since it started looking into the tax ruling 
practices of Member States. The Working Paper published as part of this review in June 2016 
indicated concerns that some tax rulings for financing companies endorse very low margins and 
a low taxable base.74  

DG Competition supported Luxembourg and Cyprus in their efforts to amend their tax rules in 
order  to  avoid  undue  advantages  to  financing  companies.  Luxembourg  amended  its  rules  on 
financing companies at the end of 2016, by way of a national administrative circular75. These 
rules  entered  into  effect  as  of  1  January  2017.  Similarly,  with  a  circular  dated  30  June  2017, 

financing  exemption,  Commission  decision  of  26  October  2017, 

72   State aid case SA.44896 – United Kingdom – Potential State aid scheme regarding United Kingdom CFC 
group 
is  available  at 
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=dsp_result&policy_area_id=1,2,3&case_title=
cfc and the press release at http://europa.eu/rapid/press-release_IP-17-4201_en.htm. 
73  State  aid  case  SA.46470  –  Netherlands  –  Potential  State  aid  to  Inter  Ikea,  Commission  decision  of  
18 December 2017 (to be available soon). For further information see IP/17/5343 of 18 December 2017 available 
at http://europa.eu/rapid/press-release_IP-17-5343_en.htm. 
74 DG Competition working paper on state aid and tax rulings, Internal Working Paper – Background to the High 
Level Forum on State Aid of 3 June 2016 available at 
http://ec.europa.eu/competition/state_aid/legislation/working_paper_tax_rulings.pdf.  
75 Circular of the Director of Contributions, L.I.R. n° 56/1 – 56bis/1 of 27 December 2016 available at 
http://www.impotsdirects.public.lu/content/dam/acd/fr/legislation/legi16/circulairelir561-56bis1-27122016.pdf.   

letter 

the 

19 

 
                                                            
Cyprus introduced changes to their national rules to make them more stringent as regards the 
tax treatment of financing companies. 

Merger control preventing a de-facto monopoly in the financial sector 

The  European  economy  depends  on  well-functioning  financial  markets.  That  is  not  just 
important  for  banks  and  other  financial  institutions.  The  whole  economy  benefits  when 
businesses can raise money on competitive financial markets. 

In  March  2017,  the  Commission  prohibited  under  the  EU  Merger  Regulation  the  proposed 
merger between Deutsche Börse and London Stock Exchange Group76. The proposed merger 
would  have  combined  the  activities  of  the  two  largest  European  stock  exchange  operators. 
They own the stock exchanges of Germany, Italy and the United Kingdom, as well as several 
of  the  largest  European  clearing  houses.  The  Commission's  investigation  concluded  the 
merger  would  have  created  a  de  facto  monopoly  in  the  markets  for  clearing  fixed  income 
instruments. 

Clearing  services  essentially ensure the execution of trades made  on stock exchanges. They 
are provided by clearing houses, which sit in between the two trading parties – the seller and 
the  buyer  -  and  assume  the  risk  of  default  of  each  trading  party  vis-à-vis  the  other.  Thus, 
clearing houses are essential for the stability of financial markets. They avoid a domino effect 
if one party defaults. The Commission's decision will therefore preserve effective competition 
in the market of financial infrastructure. 

State aid control to protect the level playing field in the banking sector 

Consumers  and  businesses  alike  use  the  financial  services  provided  by  the  banking  sector. 
Europe needs a robust banking system that can support growth for the long term, where banks 
with sound business models are able to lend to companies so that they can grow and create jobs.  

The turmoil in the financial markets, which was triggered by the financial crisis in 2008, has 
called for government interventions to restore confidence in the financial sector and prevent a 
systemic  crisis.  The  Commission  applies  State  aid  rules,  together  with  the  Banking  Union 
rules. In order to protect the level playing field when assessing public support to the financial 
sector,  the  Commission  carries  out  a  thorough  analysis  of  the  impact  of  State  aid    ensuring 
that  taxpayers  do  not  have  to  contribute  more  than  strictly  necessary  and  addressing  also 
undue competition resulting from the aid.  

In  June  2017,  following  the  European  Central  Bank’s  decision  to  determine  that  Banca 
Popolare di Vicenza and Veneto Banca were failing or likely to fail, and the decision of the 
EU  Single  Resolution  Board  that  resolution  action  under  the  Single  Resolution  Mechanism 
was  not  in  the  public  interest  for  either  bank,  both  banks  had  to  be  liquidated  under  Italian 
national insolvency procedures. In this context, Italy determined that the winding up of these 
banks had a serious impact on the real economy and decided to provide state support for the 
orderly liquidation.  

Upon assessment of the Italian notification, the Commission approved, under State aid rules, 
the national support to facilitate the liquidation and the exit from the banking market of both 

76  Case  M.7995  Deutsche  Börse  /  London  Stock  Exchange  Group,  Commission  decision  of  29  March  2017, 
available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7995.  

20 

 
                                                            
banks under national insolvency law77. Outside the banking resolution framework, EU rules 
foresee  the  possibility  to  use  national  funds  to  facilitate  the  liquidation  and  to  mitigate  the 
above-mentioned  economic  effects,  subject  to  the  Commission’s  approval  under  State  aid 
rules.  Shareholders  of  Banca  Popolare  di  Vicenza  and  Veneto  Banca  were  wiped  out  and 
junior creditors fully contributed EUR 1.2 billion to the liquidation, reducing the costs to the 
Italian  State,  whilst  depositors  remained  fully  protected.  As  the  aided  banks  have  not  been 
artificially kept alive but have exited the market, competition in the banking market has been 
preserved.  Around  EUR  17.8  billion  (gross  book  value)  in  non-performing  loans  were 
removed from the Italian banking system.  

EU rules, in particular the Bank Recovery and Resolution Directive, offer a possibility for the 
State to  inject  capital  on  a  temporary  basis  into  a  solvent  bank  without  triggering  failing or 
likely  to  fail,  provided  that  certain  criteria  are  met  (i.e.  the  so-called  "precautionary 
recapitalisation").  In  July,  the  Commission  approved  under  State  aid  rules  Italy's  plan  to 
provide a precautionary recapitalisation to the Italian bank Monte dei Paschi di Siena78, on the 
basis of a detailed restructuring plan. Precautionary recapitalisation aid can only be granted to 
prepare a bank for unlikely capital needs that would only materialise if economic conditions 
were to substantially worsen. The restructuring measures ensure that the bank remains viable 
in  the  longer  term,  whilst  limiting  competition  distortions.  In  line  with  burden-sharing 
requirements,  shareholders  were  diluted  and  junior  bondholders  were  converted  into  equity 
thereby reducing the capital needs by EUR 4.3 billion. Furthermore, the bank is in the process 
of  selling  non-performing  loans  with  a  gross  book  value  of  EUR  26.1  billion  to  a 
securitisation vehicle. 

In October 2017, the Commission approved, under State aid rules, Portuguese aid for the sale 
of Novo Banco79, the bridge bank that Portugal had created in 2014 in the framework of the 
resolution of Banco Espirito Santo80. The aid approval was based on the viability of the sold 
entity ensured through a plan proposed by the buyer, which also contained measures to limit 
distortions of competition.  

7. Joining forces for a far-reaching competition culture 

As  world  markets  continue  to  integrate and  more  and  more  companies  rely  on  global  value 
chains, competition agencies need to agree on common standards and procedures more than 
ever  before.  Effectively  enforcing  competition  rules  depends  to  a  growing  extent  on  co-
operation  with  other  enforcers.  When  business  practices  of  a  company  harm  competition  in 
different  countries  and  continents,  fair  and  level  market  conditions  can  only  be  restored  if 
enforcement authorities play as a team. 

The  Commission  has  been  at  the  forefront  of  international  cooperation  in  the  competition 
field, both on the multilateral and bilateral levels. Back in 2001, the Commission was among 

77  Case  SA.45664  Orderly  liquidation  of  Banca  Popolare  di  Vicenza  and  Veneto  Banca  -  Liquidation  aid, 
Commission  decision  of  25  June  2017,  available  at  http://ec.europa.eu/competition/elojade/isef/case_details 
.cfm?proc_code=3_SA_45664.  
78 Case SA.47677 New aid and amended restructuring plan of Banca Monte dei Paschi di Siena, Commission 
decision  of  4  July  2017,  available  at  http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_ 
code=3_SA_47677.  
79 Case SA.49275 Sale of Novo Banco with additional aid in the in the context of the 2014 Resolution of Banco 
Espírito  Santo,  S.A.,  Commission  decision  of  11  October  2017,  available  at  http://ec.europa.eu/ 
competition/elojade/isef/case_details.cfm?proc_code=3_SA_49275.  
80  Case  SA.39250  Monitoring  of  Banco  Espirito  Santo,  Commission  decision  of  3  August  2014,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_39250.  

21 

 
                                                            
the  founding  members  of  the  International  Competition  Network  (ICN),  which  now  counts 
more  than  130  members.  The  Commission  is  also  active in  all  international  fora  devoted to 
competition, including the OECD, UNCTAD, the WTO, and the World Bank. 

At bilateral level, the Commission holds negotiations on Free Trade Agreements, with the aim 
to include competition and State aid provisions in such agreements. In 2017, the Commission 
continued negotiations with Mexico, Mercosur and Indonesia, and opened negotiations with 
Chile  and  Azerbaijan.  Moreover,  the  Commission  engages  in  a  wide  range  of  cooperation 
activities  with  competition  authorities  in  a  number  of  third  countries,  on  the  basis  of 
agreements  or  memoranda  of  understanding.  In  June  2017,  the  Commission  signed  a 
Memorandum  of  Understanding  with  China's  National  Development  and  Reform 
Commission, to start a dialogue on State aid control81. Furthermore, the Commission is in the 
process of negotiating an Institutional Facilitation Agreement with Switzerland.   

Decisions by one country to grant a subsidy to a company that operates globally may affect 
competition elsewhere. This new State aid cooperation dialogue will support EU's and China's 
mutual  interest  and joint work to  promote fair  global  competition. The dialogue  will enable 
sharing with China the EU experience in enforcing State aid control. It will also be used to 
learn more about the implementation of the newly adopted Fair Competition Review in China, 
which is designed to prevent public policies from distorting and restricting competition while 
maintaining fair market competition and promoting a unified market. 

This work strand is part of the Commission's broader strategy to foster a global competition 
culture, as well as promote a global level playing field where companies can compete on their 
merits.  To  that  end,  the  Commission  is  working  to  gather  momentum  in  the  World  Trade 
Organisation to foster a global level playing field regarding subsidies. In addition, it continues 
engaging  in  sectoral  initiatives  to  address  subsidies  in  the  international  context,  such  as  for 
steel  (G20  Global  Forum  on  steel  excess  capacity),  for  semiconductors  (Regional  support 
guidelines  for  the  semiconductor  industry),  and  for  shipbuilding  (OECD).  Finally,  the 
Commission  has  created  a  dedicated  forum  with  EU  Member  States  to  raise  awareness  as 
regards  international  subsidy  policies  and  to  exchange  views  on  ongoing  developments  at 
multilateral and bilateral level, as well as regards subsidies given by third countries. 

Upholding a regular and constructive inter-institutional dialogue  

The  European  Parliament,  the  Council,  the  Economic  and  Social  Committee  and  the 
Committee  of  the  Regions  are  key  partners  in  the  Commission's  efforts  to  explain  the 
relevance of competition policy to European citizens and stakeholders. 

In  2017,  Commissioner  Vestager  exchanged  views  with  various  Committees  in  the 
Parliament: the Economic and Monetary Affairs Committee, the Regional Affairs Committee 
and the Committee for Agriculture and Rural Development.  

As in previous years, the Parliament adopted a resolution on the Commission's annual report 
on  competition  policy.  The  Commission  welcomes  Parliament's  endorsement  that  a  robust 
competition  policy  is  needed  to  preserve  the  integrity  of  the  internal  market  and  that 
competition  empowers  citizens  by  offering  them  competitive  prices  and  a  choice  of 
innovative goods and services in the market place. In this spirit, the Commission will continue 
its work to tackle illegal cartels and abuse of dominant market positions by companies and to 

81 See IP/17/1520 of 2 June 2017, available at http://europa.eu/rapid/press-release_IP-17-1520_en.htm.  

22 

 
                                                            
review mergers and state aid in our internal market so as to avoid reductions or distortions of 
competition. 

The Commission welcomes Parliament's engagement in the fight against tax evasion and tax 
avoidance.  State  aid  control  has  proven  effective  in  tackling  selective  tax  advantages  for 
multinationals.  In  2017,  the  Commission  continued  to  take    important  actions  in  this  area82 
and it is systematically analysing the evidence on tax rulings from all Member States. In May, 
investigative  journalists  published  the  so-called  'Paradise  Papers'  that  include  details  on  the 
tax  arrangements  of  various  companies.  The  Commission  will  assess  this  information  as  it 
becomes  available  to  verify  whether  it  reveals  any  new  facts  on  potential  State  aid  to  these 
companies. 

The Commission welcomes the Parliament's support for its enforcement action in relation to 
"Google  Shopping"  and  other  initiatives  in  the  digital  economy.  Following  its  e-commerce 
sector inquiry, the Commission has launched investigations to assess if certain sales practices 
hamper consumers' online access to goods and services at competitive prices in other Member 
States.  The 
investigations  cover  consumer  electronics,  video  games  and  hotel 
accommodation.  The  Commission  is  also  assessing  the  importance  of  data,  algorithms  and 
other features of the digital economy in competition enforcement. 

As reiterated previously by the Commission, the Commission  would continue to  play a key 
role in controlling State aid in the financial sector, to ensure that aid to banks is kept to the 
minimum necessary, and that adequate measures are taken to return banks to viability and to 
minimise  distortions  of  competition  in  the  internal  market.  The  Commission  shares  the 
Parliament's goal of reducing State aid in the financial  sector  over time and stands ready to 
explain its actions in this field.  

The  Commission  shares  responsibility  for  enforcing  the  EU  competition  rules  with  national 
competition  authorities,  who  take  85%  of  decisions  based  on  EU  antitrust  rules.  The 
Commission  welcomes  the  support  of  both  Parliament  and  Council  for  its  proposal  for  a 
Directive  to  ensure  that  national  competition  authorities  can  be  effective  enforcers  of  EU 
competition rules. The Commission adopted the proposal on 22 March and both institutions 
are  making  very  good  progress  towards  adopting  the  proposed  Directive  within  the  current 
mandate of the Parliament. 

The  Commission  recognises  the  importance  that  both  Parliament  and  Council  attach  to 
effective  competition  throughout  the  food  chain.  In  2017,  the  Commission  cleared  two 
mergers in the agro-chemical sector but only on strict condition that important businesses and 
assets were sold to new buyers to ensure that farmers and consumers could continue to benefit 
from competition that brings affordable prices and innovation for crop protection products. In 
November,  the  Commission  sent  a  Statement  of  Objections  to  AB  InBev  concerning 
restrictions of parallel imports of its beers into Belgium. In 2017, the co-legislators decided to 
amend  the  application  of  the  competition  rules  to  the  agricultural  sector  by  amending  the 
Regulation on the common organisation in agricultural markets in the context of the so-called 
Omnibus  Regulation.  The  modifications,  which  entered  into  force  on  1  January  2018, 
introduced  an  explicit  competition  derogation  for  inter  alia  production  planning  and 
contractual negotiations (joint sales of the producer members via the producer organisations 
or associations of producer organisation) of recognised producer organisations or associations 
of producer organisation in all agricultural sectors under defined conditions. The Commission 
took note of those changes that the legislators made to competition rules in agriculture. In an 

82 For detailed information, see Chapter 2 of this Report. 

23 

 
                                                            
accompanying statement, the Commission expressed concern that some of the new provisions 
in  favour  of  producers'  organisations  might  have  the  effect  of  endangering  the  viability  and 
wellbeing of small farmers and the interest of the consumers and lead to legal and procedural 
uncertainty. The Commission or national competition authorities may have to intervene if, for 
example, a producer organisation, which covers a large share of the market, seeks to restrict 
the freedom of action of its members.  

The  Commission  also  engaged  actively  with  the  Economic  and  Social  Committee  and  the 
Committee of the Regions. In July, the Commission exchanged views with the  Economic and 
Social Committee, in particular on State aid enforcement in the tax field and other decisions 
of interest to the Committee. The Commission is grateful for the Committee's support for the 
modernisation  of  State  aid  control  and  for  more  transparency  in  public  spending  across  the 
EU.  On  1  December,  Commissioner  Vestager  discussed  the  impact  of  competition  in  our 
regions  in  the  plenary  debate  of  the  Committee  of  the  Regions.  The  Committee  expressed 
strong support for competition enforcement across the economy and for the expanded General 
Block Exemption Regulation for state aid, and reiterated the importance of services of general 
economic interest.  

Support  to  the  Task  Force  for  the  Preparation  and  Conduct  of  the  Negotiations  with  the 
United Kingdom under Article 50 TEU 

Following the  Article 50 TEU notification by the United  Kingdom, the Commission started 
preparing  the  withdrawal  of  the  United  Kingdom  from  the  European  Union.  Directorate-
General  for  Competition  supports  the  Commission's  Task  Force  for  the  Preparation  and 
Conduct  of  the  Negotiations  with  the  United  Kingdom  under  Article  50  TEU  (TF50) 
regarding the instruments in its portfolio (mergers, antitrust and State aid) in the context of the 
negotiations  as  regards  the  withdrawal  agreement  and  the  agreement  governing  the  future 
relationship with the United Kingdom. As set out by the European Council, any future trade 
agreement should ensure a level playing field, notably in terms of competition and State aid. 

24