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 2018
Date: 2019-07-15
Institutions: Directorate-General for Competition, European Commission
Subjects: EU competition policy, State aid, anti-trust legislation, competitiveness, control of State aid, control of restrictive practices, merger control, restriction on competition, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.7.2019  COM(2019) 339 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 2018 {SWD(2019) 297 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 2018 

1.  Fostering  a  competitive  internal  market  for  the  benefit  of  European  companies 

and consumers alike 

The  year  2018  marked  the  60th  anniversary  of  the  entry  into  force  of  the  Treaty  on  the 
European  Economic  Community,  the  foundation  for  today’s  European  Union.  Today,  the 
European Union, with its 24.5 million small, medium-sized and large companies competing to 
serve its 500 million consumers, continues to provide a vibrant internal market contributing to 
the  competiveness  of  EU  industry  and  sustainable  development  of  the  European  economy 
based on competitive social market values.  

From the very beginning, the EU has had Treaty rules1 that gave the Commission the power to 
protect fair, undistorted competition in the internal market. EU competition rules lay down a 
well-defined  legal  framework  for  companies  to  do  business  in  the  internal  market,  enabling 
businesses of all sizes to compete fairly. This legal framework has evolved during the past six 
decades but adheres strictly to the principle of the rule of law under the close scrutiny by the 
European  courts.  The  Commission  rigorously  applies  the  principles  of  non-discrimination, 
procedural  fairness,  transparency,  predictability,  the  right  to  be  heard  and  the  protection  of 
confidentiality in its daily enforcement practice. The predictability and credibility of the EU’s 
system  has  made  the  Commission  one  of  the  leading  and  most  influential  competition 
authorities in the world. 

In order to amplify the effects of its enforcement action, the Commission works hand in hand 
with  the  Member  States'  national  competition  authorities  and  national  courts,  and  actively 
cooperates  with  competition  agencies  across  the  world  –  both  at  the  bilateral  level  and  at 
several  international  fora  such  as  the  OECD,  the  International  Competition  Network  and 
UNCTAD - to develop a truly global level playing field and respect for the rule of law.  

On 7 June 2018, as part of the Multiannual Financial Framework (MFF) for the period 2021-
2027, the Commission adopted the proposal for the Single Market Programme2. This includes 
the  new  Competition  Programme,  with  an  indicative  budget  of  EUR  140  million  over  the 
programme period. When adopted by the co-legislators, the Competition Programme will help 
the Commission to tackle new challenges for EU competition policy linked to the use of big 
data, algorithms and further fast-moving developments in an increasingly digital environment, 
as  well  as  strengthen  cooperation  networks  between  Member  States'  authorities  and  the 
Commission to support fair competition in the Single Market. 

1  Art. 3(1)(b) Treaty on the Functioning of the European Union. The principal competition rules are enshrined in 
Chapter  1,  Title  VII  of  Part  Three,  Articles  101-109  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU) and in the EU Merger Regulation (Regulation (EC) No 139/2004). 
2 See Proposal for a Regulation of the European Parliament and of the Council establishing the Programme for 
Single  Market,  competitiveness  of  enterprises,  including  small  and  medium-sized  enterprises,  and  European 
statistics  and  repealing  Regulations  (EU)  No  99/2013,  (EU)  No  1287/2013,  (EU)  No  254/2014,  (EU)  No 
258/2014, 
(COD): 
-  2018/0231 
https://ec.europa.eu/commission/publications/single-market-programme-legal-texts-and-factsheets_en, 
http://europa.eu/rapid/press-release_IP-18-4049_en.htm. 

(EU)  2017/826  COM/2018/441 

(EU)  No  652/2014  and 

final 

1 

 
 
 
                                                           
In 2018, the Commission’s competition policy actions continued to target markets that matter 
for EU citizens and businesses in the EU, such as the telecommunications and digital sectors, 
financial  services,  energy  and  environment,  agriculture  and 
transport  and 
manufacturing.  This  report  is  a  non-exhaustive  summary  of  activities  undertaken  by  the 
Commission  in  the  field  of  competition  policy  over  the  year  2018.  Additional  and  more 
detailed  information  can  be  found  in  the  accompanying  Commission  Staff  Working 
Document and on the website of the Competition Directorate-General3. 

food, 

2. Enhancing the effectiveness of competition enforcement  

The  Commission  constantly  aims  at  streamlining  the  procedures  in  competition  cases  and 
evaluating  the  economic  effects  of  its  past  decisions,  in  order  to  enhance  further  the 
timeliness, efficiency and effectiveness of its enforcement actions under the EU competition 
rules. 

In  December  2018,  the  Commission  published  updated  guidance  for  companies  regarding 
business  secrets  and  other  confidential  information4  during  antitrust  proceedings,  as  well  as 
guidance  and  templates  for  the  use  of  so-called  confidentiality  rings5  for  access  to  file 
purposes.  The  access  of  companies  to  the  information  on  the  Commission's  file  is  a 
fundamental procedural step in antitrust cases. These two new guidance documents are part of 
the  Commission's  continued  work  to  increase  the  timeliness  and  efficiency  of  competition 
procedures,  while  guaranteeing  due  process  and  companies'  rights  of  defense.  They 
complement  previous  Commission  guidance  on  best  practices  on  data  rooms6,  guidance  on 
confidentiality claims for the process of preparing public versions of its decisions7, as well as 
recommendations for the use of electronic document submissions8.  

Following  the  effective  framework  for  rewarding  cooperation  by  companies  investigated  in 
the  area  of  cartels  and  a  first  non-cartel  case  in  20169,  in  2018  the  Commission  concluded 
several  non-cartel  antitrust  cases  on  the  basis  of  cooperation  by  the  companies  under 
investigation10. Such cooperation allows the Commission to increase the relevance and impact 
of  its  decisions  by  speeding  up  its  investigations,  while  companies  can  benefit  from 
significant reductions of the fines depending on the nature and timing of their cooperation. In 
December  2018,  the  Commission  published  informal  guidance  on  how  companies  can 
cooperate in antitrust probes in exchange for lower fines11. 

in 

to 

the 

access 

contained 

information 

confidential 

3 See http://ec.europa.eu/competition/index_en.html.    
4 See http://ec.europa.eu/competition/antitrust/business_secrets_en.pdf.  
5  A confidentiality ring is a negotiated disclosure procedure through  which a restricted  circle  of  individuals is 
given 
See 
http://ec.europa.eu/competition/antitrust/conf_rings.pdf.  
6 See http://ec.europa.eu/competition/mergers/legislation/disclosure_information_data_rooms_en.pdf.  
7 http://ec.europa.eu/competition/antitrust/guidance_on_preparation_of_public_versions_antitrust_04062015.pdf.  
8 See http://ec.europa.eu/competition/contacts/electronic_documents_en.pdf.  
9  Case  AT.39759  ARA 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39759. 
10 Commission decisions of 24 July 2018 in cases: AT.40181  Philips, AT.40182  Pioneer, AT.40465  Asus and 
AT.40469  Denon  &  Marantz;  and  Commission  decision  of  17  December  2018  in  case  AT.40428  Guess.  For 
more information, see Chapter 3 of this Report. 
11 The factsheet setting out the framework for such cooperation was published at the occasion of the adoption of 
the 
see 
decision 
http://ec.europa.eu/competition/publications/data/factsheet_guess.pdf. 

foreclosure,  Commission  decision  of  20  September  2016,  available  at 

Commission's 

prohibition 

AT.40428 

Guess, 

case 

file. 

in 

– 

2 

 
 
                                                           
The  European  Parliament  and  the  Council  adopt  the  Commission's  proposal  to  make  the 
Member States' competition authorities more effective 

On 11 December 2018, the European Parliament and the Council adopted the so-called ECN+ 
Directive12 empowering Member States' competition authorities to be more effective enforcers 
of EU competition rules in the field of antitrust. The Directive was based on the Commission 
proposal  of  March  201713  following  a  public  consultation  between  November  2015  and 
February 2016. 

The  ECN+  Directive  will  ensure  that  when  applying  the  same  legal  provisions  –  the  EU 
antitrust rules – national competition authorities have the effective enforcement tools and the 
resources necessary to detect and sanction companies that break EU competition rules. It will 
also ensure that they can take their decisions in full independence, based on the facts and the 
law.  The  new  rules  contribute  to  the  objective  of  a  genuine  single  market,  promoting  the 
overall goal of competitive markets, jobs and growth. 

The ECN+ Directive shall be transposed by 4 February 2021. The Commission will monitor 
the  transposition  process  and  assist  the  Member  States  in  transposing  the  Directive  into 
national law within the two-year implementation period, starting from the publication of the 
Directive in the Official Journal.  

Reaping the benefits of the modernisation of State aid rules  

Since  May  2012,  the  Commission  has  implemented  a  major  reform  package,  the  State  Aid 
Modernisation. This consistent reform package allows Member States to implement State aid 
measures  that  foster  investment,  economic  growth  and  job  creation  swiftly.  As  part  of  that 
package,  new  rules  were  introduced  in  2014  –  in  particular  the  so-called  General  Block 
Exemption  Regulation  (GBER)14,  which  was  further  amended  in  2017.  These  rules  reduced 
the  administrative  burden  for  less  distortive  aid  measures,  which  Member  States  no  longer 
have  to  notify  to  the  Commission.  At  the  same  time,  measures  that  might  seriously  harm 
competition  or fragment the Single Market  continue to  be subject  to careful scrutiny.  In the 
context  of  the  Multiannual  Financial  Framework  2021-2027,  the  Commission  proposed  to 
simplify  co-investment  involving  both  EU  funding  and  Member  State  investment,  through 
further  expansion  of  the  EU  State  aid  Enabling  Regulation,  which  is  the  legal  basis  for  the 
adoption of the General Block Exemption Regulation.  

The  2018  State  Aid  Scoreboard15  confirmed  the  benefits  of  the  State  Aid  Modernisation 
package.  Since  2015,  over  96%  of  new  implemented  aid  measures  fell  under  the  GBER 
allowing  more  rapid  implementation  by  Member  States  and  the  focus  of  State  aid  control 
being  more  "big  on  big  things  and  small  on  small  things".  The  growing  share  of  spending 
falling  under  the  GBER  also  implies  that,  on  average,  State  aid  measures  registered  by  the 

12 Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the 
competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning 
of the internal market, OJ L 11, 14.01.2019, pp. 3–33. 
13 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, 
available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0114. 
14 See http://ec.europa.eu/competition/state_aid/legislation/block.html. 
15 See http://ec.europa.eu/competition/state_aid/scoreboard/index_en.html.  

3 

 
 
                                                           
Commission  have  been  implemented  by  Member  States  much  faster  than  in  the  past: 
compared to 2013, the average time to implement State aid measures decreased by 15%16.  

In the field of Services of General Economic Interest (SGEI), more than 90% of aid measures 
are  also  block-exempted  under  the  SGEI  Decision  according  to  the  annual  SGEI  reports 
submitted by Member States.  

The  greater  the  transparency  surrounding  the  use  of  State  aid,  the  more  likely  it  is  that 
enforcement  will  be  more  effective.  To  that  end,  the  Commission  services  facilitate 
compliance  with  the  transparency  provisions  of  the  State  Aid  Modernisation  Package  –  by 
developing,  in  cooperation  with  Member  States,  the  Transparency  Award  Module17  –  an 
informatics tool for submission and publication of data on State aid awards above EUR 500 
000.  At  the  end  of  2018,  25  Member  States  have  joined  the  Transparency  Award  Module. 
More than 43 000 aid awards have been published by 25 Member States and Iceland. 

In 2018, the Commision launched, in  line with  Commission's Better Regulation  Guidelines, 
the evaluation of State aid rules adopted as part of the State Aid Modernisation Package, as 
well  as  of  the  railways  guidelines,  and  of  the  short  term  export  credit  insurance.  The 
evaluation  takes  the  form  of  a  “fitness  check”18  to  verify  whether  the  rules  have  actually 
worked in the way intended and are fit for purpose. It will provide a basis for decisions, to be 
taken by the Commission in the future, about whether to further prolong or update the rules. 

The fight against cartels continues 

The Commission recently set up an Anonymous Whistleblower Tool19, which makes it easier 
for  individuals  with  insider  knowledge  of  cartel  conduct  or  other  antitrust  infringements  to 
inform  the  Commission  via  a  two-way  encrypted  messaging  system  about  anti-competitive 
behaviour, while maintaining their anonymity. 

In 2018, the Commission's strong enforcement record against hard-core  cartels  continued to 
demonstrate  the  effectiveness  of  the  settlement  procedure,  which  accounted  for  75%  of  the 
decisions  adopted  throughout  2018.  The  settlement  procedure  helps  bring  secret  cartels  to 
light  faster,  freeing  up  valuable  resources  for  other  investigations.  Under  a  settlement, 
undertakings  that  have  participated  in  a  cartel  acknowledge  their  participation  in  the 
infringement  and  their  liability  for  it.  A  settlement  allows  the  Commission  to  apply  a 
simplified procedure and reduce the duration and costs of the investigation, while companies 
benefit from swifter decisions and a 10% reduction in fines. 

16  For  additional  and  more  detailed  information,  see  Part  I  of  the  Commission  Staff  Working  Document 
accompanying this Report. 
17 See https://webgate.ec.europa.eu/competition/transparency/public/search/chooseLanguage. 
18  The  current  fitness  check  will  cover:  the  General  Block  Exemption  Regulation  (GBER);  the  ‘De  minimis’ 
Regulation;  the  Regional  aid  Guidelines;  the  Research,  Development  and  Innovation  (RDI)  Framework;  the 
Communication on State aid for important projects of common European interest (IPCEI Communication); the 
Risk  finance,  Airport  and  aviation  Guidelines;  the  Energy  and  Environmental  Aid  Guidelines  (EEAG);  the 
Rescue  and  restructuring  Guidelines;  the  the  Railways  Guidelines;  as  well  as  the  Short  term  export  credit 
Communication  (the  two  latter  were  not  included  in  the  2012  State  Aid  Modernisation  package).  See 
https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-6623981_en. 
19 See http://ec.europa.eu/competition/cartels/whistleblower/index.html.  

4 

 
 
                                                           
On 21 February 2018, the Commission imposed a total of EUR 546 million in fines for cartel 
participation in three different cases concerning the maritime transport of cars and the supply 
of car parts20.  

Commission  decisions  on  maritime  car  carriers  and  automotive  suppliers:  the  fight  against 
hard-core cartels affecting European consumers and industries 

In three separate decisions, the Commission fined maritime car carriers EUR 395 million, suppliers of 
spark plugs EUR 76 million, and suppliers of braking systems EUR 75 million, for breaching the EU 
antitrust rules. All companies acknowledged their involvement in the cartels and agreed to settle the 
cases.  All  cases  started  with  applications  under  the  Leniency  Notice.  The  successful  immunity 
applicants involved in these cartels avoided fines because they revealed the existence of the cartels to 
the Commission.  

For  almost  six  years,  from  October  2006  to  September  2012, five carriers  (Chilean  maritime  carrier 
CSAV,  the Japanese  carriers "K"  Line,  MOL  and  NYK,  and the  Norwegian/Swedish  carrier  WWL-
EUKOR)  formed  a  cartel  in  the  market  for  deep-sea  transport  of  new  cars,  trucks  and  other  large 
vehicles, on various routes between Europe and other continents. The carriers agreed to maintain the 
status  quo  in  the  market  and  to  respect  each  other's  traditional  business  on  certain  routes  or  with 
certain customers, by quoting artificially high prices or not quoting at all in tenders issued by vehicle 
manufacturers.  The  cartel  affected  car  importers,  vehicle  manufacturers  (as  exporters)  and  final 
customers  within  the  European  Economic  Area  (EEA).  During  its  investigation,  the  Commission 
cooperated  with  several  competition  authorities  around  the  world,  including  in  Australia,  Canada, 
Japan and the US. MOL revealed the existence of the cartel, thus receiving full immunity and avoiding 
a fine of ca. EUR 203 million. 

Within  the  automotive  sector,  the  Commission  imposed  sanctions  in  two  further  cartel  cases.  One 
concerned spark plugs (automotive electric devices), in respect of which suppliers Bosch (Germany) 
and NGK (Japan) had colluded with Denso (Japan). The cartel lasted from 2000 until 2011 and aimed 
at avoiding competition by respecting each other's traditional customers and maintaining the existing 
status  quo  in  the  spark  plugs  industry  in  the  EEA.  Denso  received  full  immunity  for  revealing  the 
existence of the cartel and avoided a fine of ca. EUR 1 million. The other Commission decision related 
to two infringements in the field of braking systems. The first cartel concerned the supply of hydraulic 
braking  systems  and  involved  TRW  (USA;  now  ZF  TRW,  Germany),  Bosch  (Germany)  and 
Continental  (Germany),  and  lasted  from  February  2007  to  March  2011.  The  second  infringement 
lasted  from  September  2010  to  July  2011,  related  to  the  supply  of  electronic  braking  systems  and 
involved  Bosch  and  Continental.  In  both  infringements, the  car  part  suppliers aimed  at coordinating 
their  market  behaviour  by  exchanging  sensitive  information,  including  on  pricing  elements.  By 
revealing  the  cartels  and  receiving  full  immunity,  TRW  avoided  a  fine  of  ca.  EUR  54  million,  and 
Continental of ca. EUR 22 million. 

The  cartel  decisions  concerning  spark  plugs  and  braking  systems  are  part  of  a  series  of  major 
investigations into cartels in the automotive parts sector. The Commission had already fined suppliers 
of automotive bearings21, wire harnesses in cars22, flexible foam used (inter alia) in car seats23, parking 

20  Commission  decisions  of  21  February  2018:  cases  AT.40009  Maritime  car  carriers,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40009;  AT.40113  Spark  plugs, 
available  at  http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40113;  and  AT.39920 
Braking systems, available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39920.  
21  Case  AT.39922  Automotive  bearings,  Commission  decision  of  19  March  2014,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39922.  
22  Case  AT.39748  Automotive  Wire  Harnesses,  Commission  decision  of  10  July  2013,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39748.  
23  Case  AT.39801  Polyurethane  Foam,  Commission  decision  of  29  January  2014,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39801. 

5 

 
 
                                                           
heaters  in  cars  and  trucks24,  alternators  and  starters25,  thermal  systems26,  lighting  systems27,  and 
occupant safety systems28. 

Furthermore, on 18 September 2018, the Commission  opened an in-depth  investigation into 
the possible collusion of car manufacturers regarding technological development of emission 
cleaning  systems  for  passenger  cars.  In  October  2017,  the  Commission  had  carried  out 
inspections at the premises of BMW, Daimler, Volkswagen and Audi in Germany as part of 
its  initial  inquiry  in  this  case.  The  Commission  is  investigating  whether  these  companies 
agreed not to compete against each other on the development and roll-out of emission control 
systems  of  cars  sold  in  the  EEA.  The  emission  control  systems  concerned  are  Selective 
Catalytic  Reduction  (SCR)-systems,  which  reduce  nitrogen  oxide  (NOx)  emissions  of 
passenger  cars  with  diesel  engines,  and  Otto  Particulate  Filters  (OPF),  which  reduce 
emissions of particulate matter of passenger cars with petrol engines. The formal opening of 
proceedings does not prejudge the outcome of the investigation. 

On 21 March 2018, the Commission issued a decision29 in respect of a cartel in the capacitors 
sector. Capacitors are electrical components that store energy and are found in a wide variety 
of  electronic  devices  used  by  consumers.  Eight  producers  were  fined  a  total  of  EUR  254 
million for engaging in cartel practices from 1998 to 2012. 

June  2015,  available  at 

24  Case  AT.40055  Parking  Heaters,  Commission  decision  of  17 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40055.  
25  Case  AT.40028  Alternators  and  Starters,  Commission  decision  of  27  January  2016,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40028.  
26  Case  AT.39960  Thermal  Systems,  Commission  decision  of  8  march  2017,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39960.  
27  Case  AT.40013  Lighting  Systems,  Commission  decision  of  21 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40013.  
28  Case  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.  
29  Case  AT.40136  Capacitors,  Commission 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40136. 

June  2017,  available  at 

21  March 

available 

decision 

2018, 

of 

at 

6 

 
 
 
                                                           
The Commission sanctions early implementation in the merger area 

EU merger rules require that companies notify to the Commission  their planned mergers of 
EU  dimension  for  review  ("the  notification  requirement")  and  do  not  implement  them  until 
cleared by the Commission ("the standstill obligation"). The standstill obligation prevents the 
potentially  irreparable  negative  impact  of  transactions  on  the  single  market,  pending  the 
outcome of the Commission's investigation. 

On 24 April 2018, the Commissioned fined Altice30, headquartered in the Netherlands, EUR 
124.5 million for implementing its acquisition of the Portuguese telecommunications operator 
PT Portugal before notification or approval by the Commission (so-called gun jumping). The 
fine  should  deter  other  companies  from  breaking  the  rules.  Implementing  mergers  before 
notification  or  clearance  undermines  the  effectiveness  of  the  EU  merger  control  system, 
which  protects  European  consumers  from  a  merger  that  would  lead  to  higher  prices  or 
reduced choice.  

3. Tackling new challenges in the digital economy  

Over  the  past  six  decades  of  European  competition  policy,  markets  have  changed 
significantly.  In  particular,  the  digitalisation  of  the  economy  has  profoundly  transformed 
consumer behaviour and how markets operate.  

A  particular  challenge  concerns  data,  against  the  background  of  the  growing  importance  of 
algorithms. Algorithms need data to learn: the greater the quantity of data, the more intelligent 
the algorithms. Another point of interest is the increasing market power of digital platforms 
with  a  dual  role,  providing  for  a  distribution  channel  for  others  while  marketing  their  own 
products. To make the most of the potential and opportunities that digital technology brings, 
Europe needs a genuinely connected Digital Single Market. Competition policy is an integral 
part of creating a well-functioning Digital Single Market.  

The digital era has also brought entirely new market players to the fore, some of which have 
grown very rapidly and risen to become major technology providers. While the innovations of 
these successful companies, which dominate many recent and emerging digital markets, have 
made the lives  of citizens and businesses easier, it remains essential that they are prevented 
from  using  their  clout  to  undermine  competition  from  others.  To  ensure  that  markets  in 
Europe serve people and not the contrary, a regulation regarding data protection rules already 
exists31 and a regulation promoting transparency obligations from online platforms32 is being 
examined by the Council and the Parliament. 

In 2018, the Commission started a reflection process how competition policy can best serve 
European  consumers  in  a  fast-changing  world.  To  this  end,  the  Commission  appointed, 
Professors  Heike  Schweitzer,  Jacques  Crémer  and  Assistant  Professor  Yves-Alexandre  de 

30  Case  M.7993  Altice  /  Portugal  (Art.  14.2  proc.),  Commission  decision  of  24  April  2018,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_7993.  
31  See  Regulation  (EU)  2016/679  of  the  European  Parliament  and  of  the  Council  of  27  April  2016  on  the 
protection of natural persons with regard to the processing of personal data and on the free movement of such 
data, and repealing Directive 95/46/EC (General Data Protection Regulation), OJ L 119, 4.5.2016, pp. 1–88.  
32 See the Commission proposal for a Regulation on promoting fairness and transparency for business users of 
online  intermediation  services  https://ec.europa.eu/digital-single-market/en/news/regulation-promoting-fairness-
and-transparency-business-users-online-intermediation-services.  

7 

 
 
                                                           
Montjoye as Special Advisers on the future challenges of digitisation for competition policy.33 
The  Special  Advisers’  Report  “Competition  Policy  for  the  Digital  Era”  was  published  on  4 
April  2019.34  In  their  report,  the  Special  Advisers  (i)  identify  what  they  see  as  the  main 
specific  features  of  digital  markets;  (ii)  provide  their  views  on  the  goals  of  EU  competition 
law in the digital era; and (iii) discuss the application of competition rules to digital platforms 
and data, as well as the role of merger control in preserving competition and innovation. The 
report is designed to provide input to the Commission's ongoing reflection process about how 
competition policy can best serve European consumers in a fast-changing world.  

Antitrust enforcement defending innovation in the digital markets 

On  18  July  2018,  the  Commission  took  a  decision35  finding  that  Google  had  abused  its 
dominant position and fined the company EUR 4.34 billion for anticompetitive restrictions it 
had imposed, since 2011, on mobile device manufacturers and network operators to cement its 
dominant position in general internet search. 

The “Google Android” case: restoring the benefits of effective competition in the mobile sphere 
for European consumers 

Google's  search  engine  is  its  flagship  product,  with  yearly  adverts  revenues  above  95  billion  US 
dollars, mostly due to increased use of smart mobile devices. Today, mobile internet makes up more 
than  half  of  global  internet  traffic.  Moreover,  around  80%  of  smart  mobile  devices  in  Europe  and 
worldwide run on Android, which makes for more than 2.2 billion devices in total.  

The Commission’s decision covers three types of restrictions that Google imposed on mobile device 
manufacturers and network operators to ensure that traffic was directed to Google Search: 

-  First,  Google  required  manufacturers  to  pre-install  the  Google  search  and  browser  applications  on 
devices  running  on  the  Android  mobile  operating  system.  Manufacturers  had  to  comply  if  they 
wanted to be able to sell devices with the Google applications store. 

- Second, Google paid manufacturers and network operators to make sure that only the Google search 

application was pre-installed on such devices. 

- Third, Google obstructed the development of competing mobile operating systems. These could have 
provided a platform for rival search engines to gain traffic.  

33 See https://ec.europa.eu/commission/commissioners/2014-2019/vestager/announcements/commission-
appoints-professors-heike-schweitzer-jacques-cremer-and-assistant-professor-yves_en and 
http://ec.europa.eu/competition/scp19/.  
34 See http://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf 
35  Case  AT.40099  Google  Android,  Commission  decision  of  18 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40099.  

July  2018, 

available 

at 

8 

 
 
                                                           
The Commission decision concluded that these three types of abuse form part of an overall strategy by 
Google to cement its dominance in general internet search, at a time when the importance of mobile 
internet was growing significantly.  

While market dominance is, as such, not illegal under EU antitrust rules, dominant companies 
have  a  special  responsibility  not  to  abuse  their  dominant  market  position  by  restricting 
competition, either in the market where they are dominant or in separate, but related, markets. 
Google's behaviour denied other companies the chance to compete and innovate on the merits 
and  was  therefore  in  breach  of  EU  antitrust  rules.  Most  importantly,  it  denied  European 
consumers the benefits of effective competition in the important mobile sphere.  

The  Commission  decision  required  Google  to  bring  its  illegal  conduct  to  an  end  in  an 
effective manner within 90 days of the decision. At a minimum, the Commission's  decision 
requires Google to stop and not re-engage in the three types of restrictions described above. 
The  decision  also  requires  Google  to  refrain  from  any  measure  that  has  the  same  or  an 
equivalent object or effect as these practices. The Commission will monitor compliance with 
the  decision  very  closely.  The  decision  does  not  prevent  Google  from  putting  in  place  a 
reasonable,  fair  and  objective  system  to  ensure  the  correct  functioning  of  Android  devices 
using Google proprietary apps and services, without however affecting device manufacturers' 
freedom to produce devices based on Android forks. 

In 2018, the Commission continued to investigate restrictions that Google had placed on the 
ability  of  certain  third  party  websites  to  display  search  advertisements  from  Google's 
competitors (AdSense). On 20 March 2019, the Commission fined Google EUR 1.49 billion 
for those restrictions.36 

On  24  January  2018,  the  Commission  fined  Qualcomm37  EUR  997  million  for  abusing  its 
market  dominance  in  LTE  baseband  chipsets,  in  breach  of  EU  antitrust  rules.  The 
Commission’s decision requires Qualcomm to refrain from any practices that have the same 
or  an  equivalent  object  or  effect  in  the  future.  The  market  for  LTE  baseband  chipsets  is 

36  Case  AT.40411  Google  Search  (AdSense),  available  at  http://ec.europa.eu/competition/elojade/isef/case_ 
details.cfm?proc_code=1_40411. See also: http://europa.eu/rapid/press-release_IP-19-1770_en.htm.  
37  Case  AT.40220  Qualcomm  (exclusivity  payments),  Commission  decision  of  24  January  2018,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40220.  

9 

 
 
 
                                                           
characterised by  high barriers  to  entry and in  which Qualcomm  is  by far the world's largest 
supplier.  Between  2011  and  2016,  Qualcomm  made  significant  payments  to  Apple  on 
condition  that  it  would  exclusively  use  Qualcomm  chipsets  in  its  iPhone  and  iPad  devices. 
The  exclusivity  payments  denied  rivals  the  possibility  to  compete  on  merits  and  deprived 
European consumers of genuine choice and innovation. 

Effective cartel enforcement protects competitive input prices for digital devices 

On  21  March  2018,  the  Commission  fined  eight  producers  of  capacitators  (Elna,  Hitachi 
Chemical,  Holy  Stone,  Matsuo,  NEC  Tokin,  Nichicon,  Nippon  Chemi-Con  and  Rubycon) 
EUR  254  million38  for  participating  in  a  14-year  long  cartel  for  the  supply  of  electrolytic 
capacitors.  Capacitors  are  electrical  components  that  store  energy  electrostatically  in  an 
electric field, and are used in a wide variety of electric and electronic products.  

The  cartel  meetings  and  contacts  took  place  mainly  in  Japan  but  the  cartel  conduct  was 
implemented  on  a  global  scale,  including  in  the  EEA  The  companies  met  regularly  and 
exchanged  commercially  sensitive  information  on  future  prices  and  on  future  supply  and 
demand needs. The objective was to coordinate future behaviour and avoid price competition. 
Sanyo  Electric  Co.,  Ltd.  and  its  parent  Panasonic  Corporation  received  full  immunity  for 
revealing the existence of the cartel to the Commission avoiding a fine. 

The  Commission's  investigation  was  part  of  a  global  effort.  The  competition  authorities  in 
Brazil,  Japan,  Singapore  and  Taiwan  had  already  imposed  fines  on  participants  in  the 
capacitors cartel prior to the decision by the Commission. In October 2018, Nippon Chemi-
Con was the eighth company to be fined in the United States. The South Korean competition 
Authority followed suit in December 2018 by fining nine companies. 

EU antitrust rules protecting price competition and better choice for consumers in the area of 
e-commerce  

E-commerce  creates  significant  possibilities  for  consumers  as  well  as  for  businesses. 
European consumers can have access to a wider choice of goods and services, as well as the 
opportunity  to  make  purchases  across  borders,  and  are  able  to  compare  prices  of  sellers  all 
over Europe. Similarly, businesses can trade throughout the Single Market of more than 500 
million  people  using  a  single  website  as  their  shop  window.  The  rapidly  growing  online 
commerce market is now worth over EUR 500 billion in Europe every year, with more than 
half of Europeans shopping online.  

The Commission's e-commerce sector inquiry, the results of which the Commission published 
on  10  May  201739  as  part  of  its  Digital  Single  Market  strategy,  showed  that  resale-price 
related restrictions are by far the most widespread restrictions of competition in e-commerce 
markets.  Effective  competition  enforcement  in  this  area  is  therefore  very  important.  The 
findings  also  shed  light  on  the  increased  use  of  automatic  software  applied  by  retailers  for 
price monitoring and price setting.  

38  Case  AT.40136  Capacitors,  Commission 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40136.  
39 See http://ec.europa.eu/competition/antitrust/sector_inquiry_final_report_en.pdf.  

decision 

of 

21  March 

2018, 

available 

at 

10 

 
 
                                                           
Tackling price intervention: the Commission fines four consumer electronics manufacturers for 
fixing online resale prices  

On 24 July 2018, the Commission took separate decisions40 fining Asus (Taiwan), Denon & Marantz, 
Pioneer (Japan) and Philips (the Netherlands) a total of 111 million euros, for restricting the ability of 
their online retailers to set their own retail prices for widely used consumer electronics products such 
as  kitchen  appliances,  notebooks  and  hi-fi  products.  This  type  of  conduct  is  called  resale  price 
maintenance.  The  four  companies  engaged  in  such  conduct  between  2011  and  2015.  The  price 
interventions limited effective price competition between retailers and led to an immediate effect on 
millions of European consumers, who faced higher prices for kitchen appliances, hair dryers, notebook 
computers, headphones and many other products available from online retailers. 

The four manufacturers intervened particularly with online retailers, who offered their products at low 
prices.  If  those  retailers  did  not  follow  the  prices  requested  by  manufacturers,  they  would  face 
sanctions such as blocking of supplies. Many companies use pricing algorithms automatically adapting 
their  prices  to  those  of  competitors.  Thus,  the  pricing  restrictions  imposed  on  low  pricing  online 
retailers  ended  up  having  a  broader  impact  on  overall  online  prices  for  those  consumer  electronics 
products. Moreover, the use of sophisticated monitoring tools allowed the manufacturers to effectively 
track resale price setting in the distribution network and to intervene swiftly in case of price decreases.  

All four companies cooperated with the Commission by providing relevant evidence and by expressly 
acknowledging  the  facts  and  the  infringements  of  EU  antitrust  rules.  Such  cooperation  resulted  in 
speeding up the Commission’s investigation and increasing the impact and relevance of its decision. 
At the same time, companies benefitted from reductions to the fines depending on the extent of their 
cooperation, ranging from 40% (for Asus, Denon & Marantz and Philips) to 50% (for Pioneer). 

In  its  final  report  on  the  e-commerce  sector  inquiry,  the  Commission  also  found  that  more 
than  one  in  ten  surveyed  retailers  experienced  cross-border  sales  restrictions  in  their 
distribution agreements. 

On 17 December 2018, the Commission fined the clothing company Guess close to EUR 40 
million  for  anticompetitive  agreements  to  block  cross-border  sales.  Guess'  distribution 
agreements tried to prevent EU consumers from shopping in other Member States by blocking 
retailers  from  advertising  and  selling  cross-border.  This  allowed  the  company  to  maintain 
artificially  high  retail  prices, in  particular in  Central  and Eastern European countries. Guess 
fully  cooperated  with  the  Commission  by  acknowledging  the  infringement  and  providing 
relevant evidence, and was able as a result to benefit from a 50% reduction of its fine.41  

The Guess decision follows up on the results of the sector inquiry. The Commission launched 
the investigation as a stand-alone procedure, independent of the sector inquiry. Moreover, the 
decision addresses the issue of sales restrictions that are at odds with the Single Market and 
complements  the  rules  on  unjustified  geo-blocking,  which  are  in  force  as  of  3  December 
201842. 

40  Commission  decisions  of  24  July  2018:  cases  (vertical  restraints)  AT.40181  Philips,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40181; 
Pioneer, 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40182;  AT.40465  Asus  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40465;  and  AT.40469  Denon  & 
Marantz, available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40469.  
41 Commission decision of 17 December 2018: antitrust case AT.40428 Guess, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40428 
42 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, pp. 1–15. 

AT.40182 

11 

 
 
                                                           
EU State aid rules enabling European governments to support broadband deployment 

The  Commission  has  defined  its  “digital  agenda”  targets  and  its  targets  for  the  “Gigabit 
Society”43  as  one  of  its  strategic  priorities.  Reaching  the  Digital  Single  Market  connectivity 
objectives for 2020 and 2025 is estimated to require an overall investment of around EUR 500 
billion over the coming  decade. While private funding is  expected to  cover a large share of 
such investment, public funding is required to ensure that rural and remote areas are not left 
behind.  State  aid  control  seeks  to  ensure  that  such  public  investments  do  not  crowd  out 
(planned) private investments and that publicly-financed infrastructure is open to all operators 
to  compete.  In  this  context,  in  2018,  the  European  Commission  approved,  under  the 
Broadband  Guidelines44,  a  Bavarian  project45  to  deploy  very  high  capacity  networks  in  six 
municipalities.  This  was  the  first  time  the  Commission  looked  at  a  support  measure  as 
envisaged by the objectives of the Gigabit Communication. The transmission speeds are far 
above  those  that  users  have  had  so  far  in  the  target  areas.  The  new  networks  will  therefore 
bring  about  a  significant  improvement  in  line  with  the  strategic  objectives  of  the  Gigabit 
Communication. 

EU State aid rules enabling Member States jointly to support important projects of common 
European interest  

In June 2014, the Commission adopted a Communication on Important Projects of Common 
European  Interest  (IPCEI)46,  aiming  to  encourage  Member  States  to  support  projects  that 
make a clear contribution to economic growth, jobs and the competitiveness of Europe. The 
IPCEI  framework  complements  other  State  aid  rules  such  as  the  General  Block  Exemption 
Regulation47  and  the  Research,  Development  and  Innovation  Framework48,  which  allows 
supporting  innovative  projects  whilst  ensuring  that  potential  competition  distortions  are 
limited.  The  rules  thus  enable  ground-breaking  research  and  innovation  and  sharing  of  the 
results  widely,  whilst  ensuring  that  the  support  by  taxpayer  money  truly  serves  European 
citizens. 

In  December  2018,  the  Commission  found  that  an  integrated  project  jointly  notified  by 
France49,  Germany50,  Italy51  and  the  United  Kingdom52  for  research  and  innovation  in 

– 

See 

See 

also 

pilot 

Case 

gigabit 

Germany, 

SA.48418 

https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-
https://ec.europa.eu/digital-single-

43 
single-market-towards-european-gigabit-society. 
market/en/broadband-europe.  
44 Communication from the Commission — EU Guidelines for the application of State aid rules in relation to the 
rapid deployment of broadband networks, OJ C 25, 26.1.2013, pp. 1–26. 
45 
project 
Bavarian 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48418.  
46 Communication from the Commission - Criteria for the analysis of the compatibility with the internal market 
of State aid to promote the execution of important projects of common European interest, OJ C 188, 20.6.2014, 
pp. 4–12. 
47 See http://ec.europa.eu/competition/state_aid/legislation/block.html#gber.  
48  Communication  from  the  Commission  -  Framework  for  State  aid  for  research  and  development  and 
innovation, OJ C 198, 27.6.2014, pp. 1–29. 
49 
SA.46705 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46705. 
50 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46578. 
51 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46595. 
52 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46590. 

Microelectronics 

Microelectronics 

Microelectronics 

Microelectronics 

SA.46595 

SA.46578 

SA.46590 

Germany, 

available 

available 

available 

available 

available 

France, 

IPCEI 

IPCEI 

IPCEI 

IPCEI 

Italy, 

Case 

Case 

Case 

Case 

UK, 

on 

on 

on 

on 

– 

- 

- 

- 

at 

at 

at 

at 

at 

12 

 
 
                                                           
microelectronics  is  in  line  with  EU  State  aid  rules  and  contributes  to  a  common  European 
interest.  The  Commission  has  identified  microelectronics  as  one  of  six  Key  Enabling 
Technologies deemed to be crucial for future industrial development.53 

The four Member States will provide up to EUR 1.75 billion in funding for this project aimed 
at  enabling  research  and  developing  innovative  technologies  and  components  (e.g.  chips, 
advanced optical equipment, integrated circuits, and smart sensors) that can be integrated in a 
large set of downstream applications. These include consumer devices, e.g. home appliances 
and automated vehicles, and commercial and industrial devices, e.g. management systems for 
batteries  used  for  electric  mobility  and  energy  storage.  In  particular,  it  is  expected  that  the 
project will stimulate additional downstream research and innovations in particular in relation 
to  the  broad  area  of  the  Internet  of  Things  and  to  connected  or  driverless  cars.  The  project 
aims at additionally unlocking EUR 6 billion in private investment, and it is to be completed 
by 2024. 

4. Competition policy in support of the EU's energy and environment objectives   

The Commission continues to work towards a European Energy Union in which clean energy 
can flow freely and securely. Reliable energy supplies, at reasonable prices for businesses and 
consumers  alike,  causing  minimal  environmental  impact,  are  essential  to  the  European 
economy.  

State aid in support of greening the economy  

State  aid  rules  play  a  key  role  in  promoting  green  and  energy-efficient  means  of  electricity 
production and consumption. They also support the investments necessary to provide security 
of supply, whilst decarbonising the European energy system. To this extent, the State aid rules 
help  the  EU  reach  its  ambitious  energy  and  climate  targets  at  lowest  possible  cost  for 
taxpayers  and  without  unduly  distorting  competition  in  the  Single  Market,  as  well  as 
contributing to the achievement of the Paris Agreement pledge to cut emissions in the EU by 
at least 40% by 2030. 

In 2018, the enforcement of State aid rules in the renewable energy field remained very high. 
The Commission approved 21 schemes in support of renewables and energy-efficient power 
plants. As a result, almost all Member States have now received State aid clearance for their 
renewables and combined heat and power (CHP) support schemes. For example, in Flanders, 
high-efficiency CHP installations receive certificates in exchange for their energy savings and 
can then sell these certificates on the market in order to obtain additional revenues on top of 
the usual electricity market price54. 

The  State  aid  clearances  granted  in  2018  in  the  renewable  energy  field  were  based  on  the  
2014 Guidelines on State aid for environmental protection and energy. These Guidelines have 
enabled  an  increasing  number  of  Member  States  to  foster  sustainable  energy  through 
competitive and technologically neutral tenders and to integrate renewables in the electricity 
market. This has resulted in lower cost for consumers in the electricity system as a whole. As 
an example, the first  technologically neutral  tender in  Denmark  approved in  2018 delivered 
record low prices, with both solar and on-shore wind projects winning the support. 

53 See http://europa.eu/rapid/press-release_IP-18-6862_en.htm 
54 See http://europa.eu/rapid/press-release_IP-18-821_en.htm 

13 

 
 
                                                           
Moreover, on 26 February 2018, the Commission approved55 EUR 70 million public support 
scheme  for  electric buses and charging infrastructure in  Germany until  the end of 2021. To 
qualify for the support, public transport operators must ensure that their electric and plug-in 
hybrid  buses  operate  with  electricity  from  renewable  sources.  On  14  November  2018,  the 
Commission  approved56  EUR  107  million  public  support  for  greener  buses  in  Germany,  by 
retrofitting  diesel  buses  used  for  public  passenger 
in  approximately  90 
municipalities where the limits for nitrogen oxides emissions were exceeded in 2016 or 2017. 
Both  measures  are  in  line  with  the  EU  environmental  goals,  as  well  as  with  the  European 
Strategy  for  low-emission  mobility,  and  its  support  for  the  move  towards  zero-emission 
vehicles in cities and for creating a market for such vehicles. 

transport 

 Regulating the electricity market while delivering on the EU’s energy and climate objectives 

Capacity  mechanisms  aim  at  ensuring  the  security  of  electricity  supply.  Typically,  capacity 
mechanisms  offer  additional  rewards  to  capacity  providers,  on  top  of  income  obtained  by 
selling  electricity  on  the  market,  in  return  for  maintaining  existing  capacity  or  investing  in 
new  capacity  needed  to  guarantee  security  of  electricity  supplies.  However,  capacity 
mechanisms  cannot  substitute electricity market  reforms  at  national  and European levels.  In 
parallel  Member  States  must  implement  market  reforms  to  address  market  or  regulatory 
failures  that  undermine  the  incentive  for  energy  operators  to  invest  in  energy  capacity  in 
accordance with the decarbonisation objectives of the Union. 

In  its  2016  report  of  the  Sector  Inquiry  on  Capacity  Mechanisms57,  the  Commission 
concluded that capacity  mechanisms can  affect  the generation mix and in particular interact 
with  instruments  aimed  at  fostering  decarbonisation.  To  promote  non-fossil  based  capacity, 
the Commission recommended that eligibility or allocation criteria for capacity mechanisms 
allow renewables and demand-side operators to compete alongside other capacity. Otherwise, 
capacity mechanisms may risk jeopardising  decarbonisation objectives while pushing up the 
price for security of supply. 

On  18  December  2018,  a  political  agreement  was  reached  on  the  Clean  Energy  for  All 
Europeans Package58. The Package constitutes an important step towards the decarbonisation 
of  the  European  energy  system.  Future  capacity  mechanisms  will  incorporate  new  caps 
regarding the carbon emissions of fossil fuel origin. Moreover, the Package introduces a new 
market design to create the right investment incentives and to enable further development of 
renewables in the electricity sector.  

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

On  7  February  201859,  the  Commission  approved  six  electricity  capacity  mechanisms  to  ensure 
security  of  supply  in  Belgium60,  France61,  Germany62,  Greece63,  Italy64  and  Poland65.  An  additional 

for  retrofitting  diesel  buses 

55 Case SA.48190 Support scheme for the acquisition of electric buses for urban public transport, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48190.  
56  Case  SA.51450  Scheme 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_51450.  
57 See http://ec.europa.eu/competition/sectors/energy/capacity_mechanisms_final_report_en.pdf 
58 See https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/clean-energy-all-europeans 
59 See http://europa.eu/rapid/press-release_IP-18-682_fr.htm 
60 Case SA.48648 Belgian Strategic Reserve, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48648. 

transport,  available  at 

local  public 

in 

14 

 
 
                                                           
capacity mechanism was approved for Greece in on 30 July 2018.66 Basing its decisions  on the 2014 
Guidelines  on  State  Aid  for  Environmental  Protection  and  Energy,  the  Commission  found  that  the 
measures  will  contribute  to  ensuring  security  of  supply  without  causing  higher  electricity  prices  for 
consumers or hindering electricity flows across EU borders and that they were thus in line with the EU 
State aid rules. 

The seven capacity mechanisms approved, concern more than half of the EU population. They cover a 
range of different types of mechanism that address the specific need in each Member State. The seven 
decisions support the Commission's Energy Union Strategy to deliver secure and competitive energy 
in Europe.  

By means of the EU Emissions Trading System (ETS), State aid rules also play a key role in 
delivering on climate objectives by lowering the indirect costs of the EU’s carbon market for 
the most electricity-intensive industries. The core principle of the ETS is that polluters should 
pay  for  their  carbon  emissions.  However,  outside  of  the  EU,  not  all  countries  apply  this 
principle. If enterprises were to delocalise some of their production outside the EU as a result 
of  carbon  costs,  this  would  result  in  an  increase  of  global  carbon  emissions.  Because 
electricity  generators  do  not  receive  free  allowances,  they  have  to  buy  them,  thereby 
increasing  the  electricity  price  for  consumers.  To  this  end,  Member  States  may  partially 
compensate electricity-intensive consumers for the indirect costs resulting from the ETS.  

In  2012,  the  Commission  adopted  Guidelines  setting  the  conditions  under  which  Member 
States  can grant  such partial compensation regarded as constituting State aid  for the trading 
period 2012-2020. On 14 March 2018, the Council and the Parliament adopted a revised ETS 
Directive for the period 2021-2030. It underlines that Member States should seek to limit their 
compensation to 25% of their ETS auction revenues. The Commission therefore launched on 
20 December 2018 the revision process of the ETS State aid Guidelines.  

Supporting open and integrated markets for gas and electricity 

To  achieve  its  ambitions  enshrined  in  the  Paris  Agreement67,  the  EU  needs  to  increase  the 
share  of  renewable  energy  in  its  energy  mix,  such  as  wind  and  solar,  while  ensuring 
availability of competitively priced gas as a flexible back-up capacity. Effective competition 
in European gas markets does not only depend on the enforcement of EU competition rules 
but  also  on  investment  in  gas  supply  diversification,  well-targeted  European  and  national 
energy legislation and their proper implementation. All this builds into the European Energy 
Union, which is a key priority of the Commission. 

In 2018, the Commission continued to promote the development of an open and competitive 
energy market to the benefit of consumers, in line with Energy Union objectives. 

61 Case SA.48490 Specific demand response tender in France, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48490.  
62 Case SA.45852 German capacity reserve, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_45852.  
63 Case SA.48780 Prolongation of the Greek interruptibility scheme, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48780.  
64 Case SA.42011 Italian capacity mechanism, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_42011.  
65 Case SA.46100 Planned Polish capacity mechanism, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46100.  
66 http://ec.europa.eu/competition/sectors/energy/state_aid_to_secure_electricity_supply_en.html 
67 See https://ec.europa.eu/clima/policies/strategies/2030_en.  

15 

 
 
                                                                                                                                                                                     
On  24  May  2018,  the  Commission  adopted  a  decision68  removing  obstacles  created  by 
Gazprom,  which  affected  free  flow  of  gas  in  Central  and  Eastern  Europe,  and  imposing  on 
Gazprom a set of obligations for its future conduct. 

The Gazprom decision: enabling free flow of gas at competitive prices 

Gazprom is the dominant gas supplier in a number of Central and Eastern European countries. In April 
2015, the Commission set out its concerns that Gazprom breached EU antitrust rules by pursuing an 
overall strategy to partition gas markets along national borders in eight Member States: Bulgaria, the 
Czech  Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Poland  and  Slovakia.  This  strategy  enabled 
Gazprom  to  charge  higher  gas  prices  in  five  of  these  Member  States  (Bulgaria,  Estonia,  Latvia, 
Lithuania and Poland). 

To address the Commission's competition concerns, Gazprom must comply with a set of obligations 
aimed at ensuring the free flow of gas at competitive prices across Central and Eastern Europe. These 
obligations on Gazprom will be in place for eight years. They reflect feedback from stakeholders in a 
market test, which the Commission launched in March 2017. 

Specifically, there are four parts to Gazprom's obligations. First, Gazprom's customers are no longer 
restricted  from  re-selling  purchased  gas  cross-border.  Second,  they  have  more  flexibility  on  where 
they want Gazprom to deliver their gas (some parts of Central and Eastern Europe, namely the Baltic 
States  and  Bulgaria,  are  still  isolated  from  other  Member  States  due to  the  lack  of  interconnectors). 
Third,  customers  receive  an  effective  tool  to  make  sure  their  gas  price  reflects  the  price  level  in 
competitive Western European gas markets, especially at liquid gas hubs. Fourth, Gazprom cannot act 
on any advantages concerning gas infrastructure. 

Combined,  these  obligations  address  the  Commission's  competition  concerns  and  achieve  its 
objectives of enabling the free flow of gas in Central and Eastern Europe at competitive prices. The 
Commission  decided  to  make  these  obligations  (so-called  "commitments")  legally  binding  on 
Gazprom,  which  means  that  if  the  company  breaks  any  of  these  obligations,  the  Commission  can 
impose a fine of up to 10% of its worldwide turnover. 

68  Case  AT.  39816  Upstream  gas  supplies  in  Central  and  Eastern  Europe,  Commission  decision  of  24  May 
2018, available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39816.  

16 

 
 
 
                                                           
On 21 June 2018, the Commission opened a formal investigation69 to assess whether supply 
agreements  between  Qatar  Petroleum  companies  exporting  liquefied  natural  gas  (LNG)  and 
European importers have hindered the free flow of gas within the European Economic Area, 
in breach of EU antitrust rules. Qatar Petroleum is the largest exporter of LNG globally and to 
Europe, accounting for around 40% of the EU's overall LNG imports and significantly higher 
import  shares  in  certain  Member  States.  The  Commission  will  further  investigate  whether 
Qatar Petroleum's long-term agreements (typically of 20 or 25 years' duration) for the supply 
of LNG into the EEA contain territorial restrictions, segmenting the EU's internal gas market. 

On  7  December  2018,  the  Commission  adopted  a  decision  rendering  legally  binding  the 
commitments offered by German grid operator TenneT70 to increase significantly cross-border 
flows  of  electricity  between  Denmark  and  Germany.  TenneT  will  ensure  that  a  specific 
guaranteed  capacity  is  available  at  all  times,  thus  allowing  more  electricity  producers  to 
access the German wholesale market. This is fully in line with the Commission’s ambition to 
make  the  European  energy  market  more  competitive  and  integrated,  and  to  facilitate  the 
Union's transition to cleaner, renewable energy sources to the benefit of consumers. 

On  17  December  2018,  the  Commission  fined71  Bulgarian  Energy  Holding  (BEH),  its  gas 
supply  subsidiary  Bulgargaz  and  its  gas  infrastructure  subsidiary  Bulgartransgaz  (the  BEH 
group) EUR 77 million for blocking competitors' access to key gas infrastructure in Bulgaria, 
in breach of EU antitrust rules. 

Furthermore,  the  Commission  continues  its  investigation  of  the  Romanian  transmission 
system operator Transgaz72 for potential export restrictions of gas. 

5. Protecting competition in the Single Market  

Successful  global  companies  are  often  the  result  of  organic  growth  in  competitive  home 
markets  due  to  their  business  expertise  and  innovativeness.  However,  in  some  cases 
companies may determine that mergers can help them gain the size and strength necessary to 
compete  more  efficiently  both  in  Europe  and  abroad.  They  may  expect  the  mergers  to 
combine complementary portfolios, bring about scale efficiencies or facilitate entry into new 
markets or geographies. These benefits, in so far as they materialise, can also bring benefits to 
their customers. EU merger control allows companies to grow by acquiring other businesses, 
while  at  the  same  time  preserving  choice,  quality,  innovation  and  competitive  prices  for 
citizens and businesses in the EU. 

The key merger operations in the agro-chemical sector 

Seeds  and  pesticides  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  assessing  recent  mergers  in  this 

LNG 

Case 

supply 

AT.40416 

69 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40416.  
70  Case  AT.40461  DK/DE  Interconnector,  Commission  Decision  of  7  December  2018,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40461.  
71  Case  AT.39849  BEH  gas,  Commission  decision  of  17  December  2018, 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39849. 
72 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40335.  

interconnectors, 

Romanian 

AT.40335 

available 

available 

available 

Europe, 

Case 

gas 

to 

at 

at 

at 

17 

 
 
                                                           
concentrated  market,  between  Dow  and  DuPont73  and  between  Syngenta  and  ChemChina74, 
the Commission assessed their impact on all aspects of competition, including farmers’ costs 
and innovation. Both decisions followed an in-depth review of the proposed transactions.  

On  21  March  2018,  the  Commission  gave  conditional  approval  to  Bayer's  plans  to  buy 
Monsanto75 under the EU Merger Regulation, following an in-depth review. The merger was 
conditional  on  the  divestiture  of  an  extensive  remedy  package  worth  above  EUR  6  billion, 
which addresses the parties' overlaps in seeds, pesticides and digital agriculture.  

The conditional approval of the merger between Bayer and Monsanto: maintaining competition 
and innovation in the agro-chemical market 

Bayer  (Germany)  and  Monsanto  (United  States)  are  both  major  players  in  the  seeds  and  pesticides 
industries. Monsanto is the world's largest supplier of seeds, which generates most of its sales in the 
US and Latin America (less than 10% of its products are sold in Europe). Bayer is the second largest 
supplier of pesticides worldwide, selling about 30% of its products in Europe. It is also an important 
globally active seeds supplier for a number of crops.  

As  part  of  its  in-depth  investigation,  the  Commission  assessed  more  than  2,000  different  product 
markets and reviewed 2.7 million internal documents. In particular, the market investigation identified 
competition concerns in the areas of pesticides, seeds and traits, as well as digital agriculture.  

To  address  the  identified  competition  concerns,  the  Commission  decision  of  21  March  2018 
specifically required Bayer to sell its EUR 6 billion worth of relevant businesses and assets, including 
research  and  development,  to  a  suitable  purchaser.  The  Commission  concluded  that  the  divestment 
package  enables  a  suitable  competitor  to  sustainably  replace  Bayer's  competitive  constraint  in  the 
relevant  markets  and  continue  to  innovate,  for  the  benefit  of  all  Europeans,  consumers  and  farmers 
alike, and the environment. 

On  30  April  2018,  the  Commission  conditionally  approved  under  the  EU  Merger  Regulation  the 
acquisition of parts of Bayer's Crop Science business by BASF76 – in relation to the Bayer/Monsanto 
merger divestment commitments.  

By  making sure that the number of global players actively competing in these concentrated markets 
stays the same, the Commission decision on Bayer/Monsanto ensures that effective competition and 
innovation  in  seeds  and  traits,  pesticides  and  digital  agriculture  markets  continues,  and  that  farmers 
have as wide a choice as before when it comes to suppliers of seeds and pesticides in these markets. 

The transaction created the largest global integrated seeds and pesticide company. 

Given the worldwide scope of Bayer and Monsanto's activities, the Commission  cooperated 
closely with a number of competition authorities on this case, notably with the Department of 
Justice  in  the  United  States  of  America  and  the  antitrust  authorities  of  Australia,  Brazil, 
Canada, India, China and South Africa. 

When  it  comes  to  seeds  and  pesticides  there  are  additional  vital  concerns  that  go  beyond 
competition  policy,  including  consumer  protection,  food  safety  and  ensuring  the  highest 

73  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. 
74 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. 
75  Case  M.8084  Bayer 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8084.  
76  Case  M.8851  BASF  /  Bayer  Divestment  Business,  Commission  decision  of  30  April  2018,  available  at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8851.  

/  Monsanto,  Commission  decision  of  21  March  2018,  available  at 

18 

 
 
                                                           
standards for the environment and the climate. The existing national and European regulatory 
standards  on  these  matters  will  remain  just  as  strict  after  these  mergers  as  before  them  and 
continue to apply. 

Preserving effective competition on European steel markets  

Steel  is  a  critical  input  for  many  European  industries  and  products,  and  the  European  steel 
sector employs around 360,000 people in more than 500 production sites across 23 Member 
States.  

On 7 May 2018, following an in-depth review, the Commission approved the acquisition of 
Ilva by ArcelorMittal77, the largest producer of flat carbon steel in Europe and worldwide. The 
Commission  decision  is  conditional  on  the  divestiture  of  an  extensive  remedy  package  to 
preserve  effective  competition  on  European  steel  markets,  to  the  benefit  of  consumers  and 
businesses. 

The Commission’s conditional approval of ArcelorMittal's acquisition of Ilva 

ArcelorMittal, headquartered in Luxembourg, controls a wide production network across the European 
Economic  Area,  while  Ilva  has  major  production assets in  Italy,  including its  steel  plant in Taranto, 
Europe's  largest  single-site  integration  flat  carbon  steel  plant.  ArcelorMittal's  acquisition  of  Ilva 
creates by the far largest steelmaker in Europe. 

As part of its in-depth investigation, the Commission reviewed more than 800,000 internal documents 
and  took  into  account  feedback  from  over  200  customers  active  in  a  wide  range  of  sectors,  such  as 
construction,  car  manufacturing,  household  appliances,  and  tubes.  These  customers  rely  on 
competitive steel prices to compete with imported products in the Single Market as well as on global 
markets. 

In order to address the Commission's competition concerns on hot rolled, cold rolled and galvanised 
flat carbon steel, ArcelorMittal proposed to sell a number of steel plants throughout Europe to one or 
more buyers competing with ArcelorMittal on a lasting basis. 

The Commission concluded that the proposed transaction, as modified by the commitments, ensures 
that  competition  is  preserved  on  European  steel  markets  and  does  not  result  in  higher  prices,  in  the 
interest  of  European  manufacturing  industries  and  consumers.  The  decision  is  conditional  on  full 
compliance with the commitments.  

Merger  control  thus  goes  hand  in  hand  with  decisive  EU  action  to  protect  the  EU's  steel 
industry  from  unfair  trade  distortions  from  third  countries.  The  Commission  takes  into 
account the concerns of European steel industry but also the many European businesses that 
rely  on  steel  as  an  input.  Currently,  there  are  various  trade  defence  measures  in  place  on 
imports  of  steel  and  iron  products,  including  from  China,  Russia,  India  and  several  others. 
Moreover,  several  trade  defence  investigations  for  steel  products  are  currently  ongoing.  In 
addition, the Commission participates in the Global Forum on Steel Excess Capacity to tackle 
root causes of the global overcapacity in the steel sector to develop concrete policy solutions. 

The  sale  of  Ilva's  assets  to  ArcelorMittal  should  equally  help  accelerate  the  urgent 
environmental clean-up works in the Taranto Region. This essential de-pollution work should 

77  Case  M.8444  ArcelorMittal 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8444.  

Ilva,  Commission  decision  of  7  May  2018,  available  at 

/ 

19 

 
 
                                                           
continue without delay78 to protect the health of neighbouring population and environment, as 
agreed in 2016-2017 with the Italian authorities.  

In  a  separate  investigation  under  State  aid  rules,  the  Commission  had  concluded  on  21 
December 201779 that two loans granted by Italy in 2015 to support Ilva involved illegal and 
incompatible State aid. The Commission requested Italy to recover undue benefits of ca EUR 
84 million from Ilva.  

The Commission’s in-depth investigation into Siemens’ proposed acquisition of Alstom 

Trains and the signalling equipment that guide them are essential for transport in Europe. On 
13  July  2018,  the  European  Commission  opened  an  in-depth  investigation80  to  assess  the 
proposed acquisition of Alstom by Siemens, under the EU Merger Regulation.  

Siemens  (Germany)  and  Alstom  (France)  are  global  leaders  in  rail  transportation,  and  the 
proposed transaction would combine the two largest suppliers of rolling stock and signalling 
solutions in the EEA, not only in terms of size of the combined operations, but also in terms 
of their geographic footprint. 

The Commission’s concerns related to the possibility of reduced competition in the markets 
where the merged entity would be active, particularly in the supply of several types of trains 
(rolling stock) and signalling systems to rail operators. This could lead to higher prices, less 
choice of suppliers and innovative products, to the detriment of train operators, infrastructure 
managers and ultimately the millions of Europeans who use rail transportation every day for 
work or leisure. The Commission considered that the entry of new competitors into the EEA 
rolling  stock  or  signalling  solutions  markets,  including  in  particular  of  potential  Chinese 
suppliers, appeared unlikely to occur in the foreseeable future. 

The  Commission  carried  out  an  in-depth  investigation  into  the  effects  of  the  transaction  to 
determine whether its competition concerns were confirmed. The Commission considered that 
the  merger  would  have  harmed  competition  in  markets  for  railway  signalling  systems  and 
very high-speed trains. The parties did not offer remedies sufficient to address these concerns. 
On  6  February  2019,  the  Commission  prohibited  Siemens'  proposed  acquisition  of  Alstom 
under the EU Merger Regulation81.  

Fostering a competitive transport market 

A competitive and efficient transport sector is essential for a well-functioning single market, a 
sustainable growth strategy and an open economy integrated into the global markets.  

The very considerable growth in air traffic continued in 2018, partly driven by the benefits of 
intense  competition  between  airlines  and  airports.  Preserving  effective  competition  in  this 
sector  continued  to  be  a  priority.  As  regards  airports,  the  Commission  adopted  a  decision 
finding  that  the  twenty-year  extension  of  the  concession  for  Athens  International  Airport 
Eleftherios Venizelos does not constitute State aid.82 This decision was adopted only after the 

78  Since  2013,  the  Commission  has  been  pursuing  infringement  proceedings  against  Italy  for  failure  to  ensure 
that Ilva complies with EU legislation on environmental standards. 
79  Case  SA.38613  Aid 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38613.  
80 Case M.8677 Siemens / Alstom, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_8677.  
81 See http://europa.eu/rapid/press-release_IP-19-881_en.htm.  
82 See http://europa.eu/rapid/press-release_IP-18-6785_en.htm.  

Ilva,  Commission  decision  of  21  December  2017,  available  at 

to 

20 

 
 
                                                           
initial  concession  fee  of  EUR  484  million,  which  was  based  on  financial  and  business 
parameters that were not in line with market conditions, was increased to EUR 1,115 million. 
In  the  light  of  this  increased  price,  the  Commission  found  that  the  extended  concession 
involves no State aid because Athens International Airport S.A. will pay an adequate market 
fee to continue operating Athens International Airport Eleftherios Venizelos. 

In  November  2018,  the  Commission  opened  proceedings  under  Article  101  TFEU  against 
Amadeus83  and  Sabre84,  leading  worldwide  suppliers  of  computerised  reservation  systems. 
The  investigation  focuses  on  possible  restrictions  in  competition  in  the  market  for  airline 
ticket distribution services. The Commission is concerned that such restrictions could create 
barriers  to  innovation  and  raise  ticket  distribution  costs,  ultimately  raising  ticket  prices  for 
travellers.   

As  regards  the  airline  sector,  the  Commission's  merger  decisions  in  the  context  of  the 
bankruptcy  of  Air  Berlin  allowed  for  a  timely  acquisition  of  Air  Berlin’s  assets  by  strong 
competitors  which  will  not  only  preserve  but  improve  competition  at  various  airports  in 
Germany  and  Austria  to  the  benefit  of  many  European  passengers  flying  out  and  to  these 
airports85.  To  counter  undue  distortions  of  competition  through  the  granting  of  state  aid  to 
airlines  in  economic  difficulties,  the  Commission  also  opened  a  formal  investigation  into  a 
EUR 900 million bridge loan granted by the Italian State to Alitalia in the course of 201786.  

6. Making the financial sector more resilient in a Banking Union context 

The  general  stabilisation  of  the  financial  sector  and  the  gradual  implementation  of  the 
Banking  Union  regulatory  framework  has  resulted  in  less  interventions  from  the  public 
budget,  hence  a  reduction  of  new  State  aid  cases  in  this  sector.  Moreover,  the  Commission 
could complete the monitoring of a further ten banks with respect to commitment obligations 
resulting  from  past  State  aid  decisions,  as  well  as  close  a  number  of  long-standing  legacy 
cases.  

In Germany, the Commission approved in 2018 the aid-free privatisation of HSH Nordbank 
following an open and competitive process leading to the bank’s sale at a positive price and 
entailing  restructuring  to  restore  the  bank’s  long-term  viability.87  The  Slovenian  state  sold 
65% of its stake in the NLB Group, in line with a set of revised commitments approved by the 
Commission  in  2018.88  This  sale  was  a  crucial  element  of  the  Commission's  viability 
assessment  in  the  NLB  State  aid  decision  of  2013.  The  Commission  continues  to  monitor 
Slovenia’s compliance with the remaining commitments.  

Despite the EU banking  sector’s improving resilience, parts of the  financial sector still face 
some legacy problems,  which pre-date the Banking Union framework, notably the still high 

83 Cases AT.40617 Airline ticket distribution (Amadeus), available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40617. 
84 Case AT.40618 Airline ticket distribution (Sabre), available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40618.  
85 See http://europa.eu/rapid/press-release_IP-17-5244_en.htm, http://europa.eu/rapid/press-release_IP-17-
5402_en.htm, and http://europa.eu/rapid/press-release_IP-18-4494_en.htm.  
86 See http://europa.eu/rapid/press-release_IP-18-3501_en.htm.   
87 Case SA.52288 – Germany, Commission decision of 26 November 2018, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_52288.  
88 Case SA.33229 – Slovenia, Commission decision of 10 August 2018 available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_33229.  

21 

 
 
                                                           
level  of  non-performing  loans  in  some  Member  States.  The  Commission’s  financial-sector 
State aid control continues to play a central role in dealing with these issues. 

In 2018, the Commission approved liquidation aid for the sale of Cyprus' second largest bank, 
the Cyprus Cooperative Bank, and the winding down of the residual entity89. This allowed for 
the orderly market exit of the bank that had already received State support twice in the past 
and enabled the removal of almost 30% of Cypriot non-performing loans from the domestic 
banking system. Also in Cyprus, the Commission gave its approval to the ESTIA scheme to 
support  private  households  and  micro-companies  that  have  encountered  difficulties  in 
repaying mortgage loans and risk losing their primary residence.90 

In  Italy, the  Italian State guarantee scheme  to  facilitate the securitisation of non-performing 
loans  (GACS),  initially  approved  in  February  2016  and  subsequently  prolonged  until  early 
March 201991. Under the scheme, Italian banks will continue to be able to finance the disposal 
of selected non-performing loans using a State guarantee granted at market terms. The GACS 
scheme has made an important contribution to the removal of non-performing loans from the 
Italian  banking  system:  the  17  different  GACS-supported  non-performing  loan  disposals 
between the scheme’s entry into force and mid-November 2018 accounted for ca. 60% of the 
total net reduction of bad loans in Italy during that period (approximately EUR 51 billion in 
gross non-performing loans). 

7. Ensuring a level playing field in the area of taxation  

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  other  companies  (often 
local businesses), since that would severely distort competition. 

The Commission continues its fight against selective tax advantages 

On 20 June 2018, the Commission concluded that Luxembourg's tax treatment of Engie,92 a 
supplier  of  gas  and  electricity,  was  illegal  with  regard  to  EU  State  aid  procedures  and 
incompatible with EU State aid rules. As a result, Luxembourg was required to recover more 
than EUR 120 million from Engie. 

Putting a stop to selective tax advantages: The Engie decision  

Following an in-depth investigation launched in September 2016, the Commission concluded that two 
sets of tax rulings issued by Luxembourg have artificially lowered Engie's tax burden in Luxembourg 
for about a decade, without any valid justification. 

In 2008 and 2010, respectively, Engie implemented two complex intra-group financing structures for 
two  Engie  group  companies  in  Luxembourg,  Engie  LNG  Supply  and  Engie  Treasury  Management. 
These involved a triangular transaction between Engie LNG Supply and Engie Treasury Management, 
respectively, and two other Engie group companies in Luxembourg. 

89 Case SA.35334 – Cyprus, Commission decisions of 19 June 2018 and 28 August 2018, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_35334. 
90 Case SA.49554 – Cyprus, Commission decision of 3 December 2018, available at 
http://ec.europa.eu/competition/state_aid/cases/276985/276985_2032224_96_2.pdf.   
91 Case SA.51026(2018/N) – Italy, Commission decision of 31 August 2018 available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_51026. 
92 Case SA.44888 Aid to Engie, Commission decision of 20 June 2018, available at 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44888.  

22 

 
 
                                                           
The  Commission's  investigation  showed  that  tax  rulings  issued  by  Luxembourg  endorsed  an 
inconsistent  treatment  of  the  same  transaction  both  as  debt  and  as  equity,  which  did  not  reflect 
economic  reality  as  it  artificially  reduced  the  company's  tax  burden.  As  a  result,  Engie  paid  an 
effective corporate tax rate of 0.3% on certain profits in Luxembourg for about a decade.  

On this basis, the Commission concluded that the tax ruling granted a selective economic advantage to 
Engie. Specifically, the rulings enabled Engie to avoid paying any tax on 99% of the profits generated 
by Engie LNG Supply and Engie Treasury Management in Luxembourg. Luxembourg was required to 
recover from Engie more than EUR 120 million in unpaid tax. 

The Commission welcomed the legislative steps taken by Luxembourg’s Government to amend its tax 
code  and  bring  relevant  provisions  into  line  with  the  OECD's  Base  Erosion  and  Profit  Shifting 
project93. They also contain an amendment of its corporate income tax law to prevent the non-taxation 
of profits arising in the context of the conversion of loans into shares. The amendment however does 
not concern triangular transactions as those implemented by Engie. 

The  EU's  State  aid  rules  prevent  Member  States  from  giving  unfair  tax  benefits  only  to 
selected companies. Member States cannot discriminate between companies in the same legal 
and factual situation in light of the objective of the same national laws. Such discrimination 
distorts  competition  and is  illegal  under the State aid  rules.  Furthermore,  the State aid  rules 
require that illegal and incompatible State aid is recovered in order to remove the distortion of 
competition created by the aid. There are no fines under State aid rules and recovery does not 
penalise the company in question, it simply restores equal treatment with other companies. 

On  19  September  2018, the  Commission  found  that  the  non-taxation  of  certain  McDonald's 
profits  in  Luxembourg94  did  not  lead  to  illegal  State  aid.  This  treatment,  which  was  in  line 
with  national  tax  laws  and  the  Luxembourg-United  States  Double  Taxation  Treaty,  did  not 
provide  a  selective  advantage  in  favour  of  McDonald's,  but  was  the  consequence  of  a 
mismatch between Luxembourg and US tax laws. Therefore, the Commission concluded that 
Luxembourg did not break EU State aid rules.  

93 See http://www.oecd.org/tax/beps/.  
94  Case  SA.38945  Alleged  aid  to  Mc  Donald's  –  Luxembourg,  Commission  decision  of  19  September  2018, 
available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38945.  

23 

 
 
 
                                                           
Among the above-mentioned changes to the tax code to bring tax law in line with the OECD's 
Base Erosion and Profit Shifting project, Luxembourg strengthened the criteria under its tax 
code  to  define  a  permanent  establishment.  Under  the  new  provisions,  which  entered  into 
effect on 1 January 2019, Luxembourg can, under certain conditions, require companies that 
claim to have a taxable presence abroad to submit confirmation that they are indeed subject to 
taxation in the other country.  

Additionally, on 19 December 2018, the Commission concluded that Gibraltar95 gave illegal 
tax  advantages  to  multinational  companies  through  a  corporate  tax  exemption  regime  for 
interest  and  royalties  from  2011  to  2013,  as  well  as  through  five  individual  tax  rulings  that 
provided  selective  tax  benefits  on  certain  income  generated  by  Dutch  limited  partnerships. 
The beneficiaries must return unpaid taxes of around EUR 100 million to Gibraltar.  

During  the  Commission's  investigation,  Gibraltar  amended  its  tax  rules  to  enhance  its  tax 
ruling procedure, reinforce its transfer pricing rules, enhance taxpayers' obligations (e.g. filing 
of annual returns, providing meaningful information in applications for rulings) and improve 
transparency  on  how  it  implements  its  territorial  system  of  taxation.  The  Commission 
welcomed these improved rules, which entered into effect in October 2018. 

The Commission continues its investigations concerning tax rulings issued by the Netherlands 
in favour of Inter IKEA96 and a tax scheme for multinationals in the United Kingdom97. 

The  Commission’s  investigations  of  individual  tax  rulings  in  Member  States  prove  their 
effectiveness 

Tax rulings as such are not a problem under EU State aid rules, if they simply confirm that tax 
arrangements  between  companies  within  the  same  group  comply  with  the  relevant  tax 
legislation. However, tax rulings that confer a selective tax advantage to specific companies 
can distort competition within the EU's Single Market, in breach of EU State aid rules. 

Member States have achieved significant progress in implementing the Commission decisions 
to  recover  unpaid  taxes  adopted  in  the  previous  year  by  the  Commission,  which  de  facto 
prevents  companies  from  continuing  to  benefit  from  illegal  advantages.  In  May  2018, 
Luxembourg completed  the recovery of more than EUR 260 million  from  Amazon, plus  an 
amount of EUR 21 million of recovery interest. In October 2018, Luxembourg also recovered 
more than EUR 120 million from Engie, plus EUR 1 million of recovery interest. In the same 
month,  Ireland  recovered  the  full  illegal  and  incompatible  aid  from  Apple,  i.e.  EUR  13.1 
billion, plus about EUR 1.2 billion of recovery interest. For all these cases, the money is in an 
escrow  account,  pending  the  outcome  of  the  ongoing  appeal  of  the  Commission's  decision 
before the EU courts. 

8. Joining forces in fostering a global competition culture  

As  world  markets  continue  to  integrate  and  more  and  more  companies  rely  on  global  value 
chains,  competition  authorities  need  to  increase  their  collaboration  and  agree  on  common 
standards  and  procedures  more  than  ever  before.  Enforcing  competition  rules  effectively 

95  Case  SA.34914  UK  -  Gibraltar  Corporate  Tax  regime  (ITA  2010),  Commission  decision  of  19  December 
2018, available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_34914.  
96 
available 
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_46470.  
97  Case  SA.44896  Potential  State  aid  scheme  regarding  United  Kingdom  CFC  group  financing  exemption, 
available at http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_44896.  

SA.46470 

Potential 

IKEA 

Case 

NL, 

aid 

to 

at 

– 

24 

 
 
                                                           
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 
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 Bank98. 

At bilateral level, the Commission aims to foster the international level playing field through 
including competition and State aid provisions in its Free Trade and Assocation agreements. 
In 2018, the Commission continued negotiations with Chile, Mexico, Mercosur, Azerbaijan, 
Tunisia,Indonesia, Andorra, Monaco and San Marino and opened negotiations with Australia, 
New  Zealand,  Kyrgyzstan  and  Uzbekistan.  At  the  end  of  2018,  the  European  Union  and 
Switzerland negotiators  agreed on the text  of an  Institutional Framework Agreement, which 
also  includes  State  aid  rules.  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  2018,  the  Commission  signed  an 
Administrative Arrangement with Mexico. 

In  2018,  DG  Competition's  cooperation  in  competition  policy  and  in  cases,  including  the 
dialogue  on  State  aid  control,  continued  with  China's  State  Administration  for  Market 
Regulation  (SAMR)  which  was  established  in  2018  as  a  result  of  reorganization  of  the 
Chinese  central  administration.  SAMR  regroups  the  Anti-Monopoly  Bureaus  of  Ministry  of 
Commerce, National Development and Reform  Commission (NDRC) and State Industry for 
Industry and Commerce as well as the Fair Competition Review Bureau of the NDRC. The 
Directorate-General for Competition had case cooperation with SAMR in five merger review 
cases and responded to SAMR’s solicitation for comments on its draft regulations prohibiting 
abuse  of  dominant  market  position.  Moreover,  it  had  several  exchanges  at  technical  level 
regarding SAMR’s activities to promote its Fair Competition Review System. 

The Commission remains committed to fostering a far-reaching competition culture, as well 
as to promoting a global level playing field where companies can compete on their merits. In 
2018,  the  Commission  continued  its  endeavours  to  improve  multilateral  rules  regarding 
subsidies,  as  part  of  the  EU  concept  for  WTO  modernisation.  The  main  objectives  are  to 
increase  transparency,  to  have  better  rules  on  harmful  subsidies  and  to  adequately  address 
issues  with  State-owned  enterprises.  Moreover,  the  Commission  continued  to  engage  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 
continues  to  work  with  EU  Member  States  in  the  International  subsidy  policy  group  to 
exchange views and coordinate initiatives on international policy subsidies at multilateral and 
bilateral level. 

98  For  additional  and  more  detailed  information,  see  Part  I  of  the  Commission  Staff  Working  Document 
accompanying this Report. 

25 

 
 
 
 
                                                           
Upholding a regular and constructive inter-institutional dialogue  

The  European  Parliament,  the  Council  and  the  consultative  committees,  with  their  specific 
roles  vis-à-vis  European  citizens  and  stakeholders,  are  key  partners  in  the  dialogue  on 
competition policy. 

In April, Commissioner Vestager exchanged views with Parliament’s plenary session on on-
going general  achievements  in  competition policy.  In October, she discussed the benefits  of 
competition to boost the competitiveness of European industries. In November, she welcomed 
together  with  Parliament  the  finalisation  of  the  new  Directive  to  make  national  competition 
agencies more effective enforcers of the European competition rules. The Commissioner also 
had  topical  debates  with  Committees  in  Parliament:  the  Economic  and  Monetary  Affairs 
Committee  in  June  and  October,  and  the  Industry  and  Research  Committee  in  July.  For  his 
part,  Director-General  Johannes  Laitenberger  visited  the  dedicated  Competition  Working 
Group  of  the  Economic  and  Monetary  Affairs  Committee  in  May.  In  November,  he 
exchanged views with the full Economic and Affairs Committee, following Deputy Director 
General Carles Esteva Mosso's preparatory debate in this Committee in October. 

As in previous years, the Parliament adopted a resolution on the Commission's annual Report 
on competition policy. The Parliament endorsed a robust competition policy that preserves the 
integrity  of  the  internal  market  and  empowers  citizens  with  affordable  prices,  choice  and 
innovations in the market place. This was welcomed support for the Commission's efforts in 
2018 to tackle illegal cartels and abuses of a dominant position of companies, and to review 
mergers and State aid given in our Single Market. 

Also in 2018, Parliament remained engaged in the fight against tax evasion and tax avoidance. 
Parliament  welcomed  that  State  aid  control  has  proven  effective  in  tackling  selective  tax 
advantages  for multinationals.  In 2018, the Commission continued to take important actions 
in this area99. The Commission took a systematic approach to analysing the evidence on tax 
rulings from all Member States. 

Parliament urged the Commission to continue playing its key role in controlling State aid in 
the  financial  sector,  ensuring  that  aid  to  banks  be  kept  to  the  minimum  necessary  and  that 
adequate  measures  be  taken  to  return  the  banks  to  viability  and  to  minimise  distortions  of 
competition  in  the  internal  market.  The  Commission  shared  Parliament's  goal  of  reducing 
State aid in the sector over time. The Commission continued to explain its actions in this field 
in the other institutions.  

In April, Parliament organised a hearing on the digital economy. Parliament called upon the 
Commission to reflect on the way that competition enforcement can remain up-to-date in an 
online  society.  In  March,  Commissioner  Vestager  appointed  three  special  advisers  to  seek 
their input on key upcoming digital changes that will affect markets  and consumers, and on 
their implications for competition.  As part of the same exercise, the Commission  initiated a 
consultation  process  on  the  importance  of  data,  algorithms  and  other  aspects  of  the  digital 
economy and  asked interested parties to  submit their views. Parliament's ECON Committee 
welcomed these initiatives. 

In July, the Commissioner exchanged views with Members of the Parliament on the way that 
competition  enforcement  helps  to  boost  the  competitiveness  of  European  industries.  She 
explained  that  for  every  company  that  wants  to  merge,  many  companies  in  Europe  rely  on 

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

26 

 
 
                                                           
input products at fair prices so that they can themselves grow in global markets. In this spirit, 
the  Commission  continues  to  investigate  large  industrial  mergers  for  their  impact  on 
competition and thanked Parliament for its strong encouragement to do so. 

As  national  competition  authorities  take  85%  of  decisions  applying  EU  antitrust  rules,  it 
proved  imperative  to  boost  their  effectiveness  as  enforcers.  In  December  2018,  Parliament 
and Council signed a Directive requiring Member States to give national competition agencies 
effective  investigative  powers  and  enforcement  tools  to  protect  competition  on  their 
territories,  as  well  as  the  possibility  to  impose  deterrent  fines  for  anticompetitive  behaviour 
and  coordinate  their  leniency  programmes.  The  Commission  assured  the  Parliament  that  it 
would  carefully  check  that  Member  States  implement  the  Directive  completely  and 
effectively.  In  response  to  a  call  from  Parliament,  the  Commission  also  stated  that  interim 
measures  could  be  a  key  tool  for  competition  authorities  to  ensure  that  competition  is  not 
harmed while an investigation is ongoing. With a view to enabling competition authorities to 
deal more effectively with developments in fast-moving markets, the Commission committed 
to  undertake  an  analysis  of  whether  there  are  means  to  simplify  the  adoption  of  interim 
measures  within  the  European  Competition  Network  within  two  years  from  the  date  of 
transposition  of  the  new  Directive.  The  Commission  agreed  to  present  the  results  to 
Parliament and Council. 

The  Commission  recognised  the  importance  that  Parliament  and  Council  attach  to  effective 
competition  throughout  the  food  chain.  In  this  spirit,  in  its  recent  decisions,  such  as  the 
Bayer/Monsanto merger in the agro-chemical sector, the merger between US-based chemical 
companies  Dow  and  DuPont,  and  ChemChina’s  acquisition  of  Syngenta,  the  Commission 
applied an approach requiring substanial divestments of assets as a condition for clearing the 
transactions.The  Commission  continued  to  investigate  AB  InBev  concerning  its  possible 
restrictions of parallel imports of its beers into Belgium. The Commission also published the 
Study on Producer Organisations and their activities in the olive oil, beef and veal and arable 
crops  sectors,  which  was  commissioned  in  order  to  understand  better  the  challenges  of 
farmers  to  set  up  producer  organisations  that  can  help  them  improve  their  position  in  the 
supply chain.   

In 2018, Commissioner Vestager and DG Competition also contributed, from the perspective 
of  competition  policy,  to  the  debate  on  the  Union's  next  multi-annual  financial  framework. 
The Commissioner attended the Competitiveness Council in March to explain how State aid 
rules  can  accommodate  the  growth  of  start-ups  and  midcaps,  in  view  of  the  on-going 
discussions on the next multi-annual financial framework. At the end of 2018, Parliament and 
Council endorsed the proposed amendment to the Council Enabling Regulation 2015/1588 to 
exempt further categories of State aid from the obligation to notify aid to the Commission.  

The  institutions  also  discussed  the  need  to  boost  competition  enforcement  further  under  the 
next  Union's  multi-annual  financial  framework.  In  December,  Parliament's  Economic  and 
Monetary  Affairs  Committee  endorsed  the  competition  aspects  of  the  Single  Market 
Programme. The Committee agreed that the Commission should have stable finances to invest 
in  IT equipment to deal  effectively with competition cases, to support cooperation networks 
with  national  and  international  competition  agencies  and  to  boost  communication  efforts  to 
secure compliance with European competition rules throughout the EU. 

Representatives  of  DG  Competition  also  exchanged  views  with  the  Economic  and  Social 
Committee.  The  Committee  endorsed  the  main  strands  of  the  Commission's  work  in 
competition  enforcement.  The  Committee  also  gave  full  support  to  the  Council  Enabling 
Regulation in the field of State aid. 

27 

 
 
The United Kingdom’s notification 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  takes  part  in  the  preparation  of  this  withdrawal,  for  what  concerns 
the  instruments  in  its  portfolio  (mergers,  antitrust  and  State  aid).  Among  other  things,  the 
Directorate-General  for  Competition  supported  the  Commission's  Task  Force  for  the 
Preparation and Conduct of the Negotiations with the United Kingdom under Article 50 TEU 
in the negotiations on the withdrawal agreement. 

28