On 31 May 2017 the European Commission published its Report on Competition Policy 2016 which covers the Commission’s competition policy actions, legislative initiatives and enforcement decisions in the previous year, along with a Staff Working Document which sets out in greater detail the issues covered by the Report. The documents together set out key developments, including in State aid, the Digital Single Market, competition law enforcement and international co-operation.
The Commission reports that the completion of the State Aid Modernisation (SAM) initiative1 has led to increased transparency and legal certainty in the State aid sphere. In particular, transparency is promoted by the new rules requiring Member States to provide information on individual beneficiaries of State aid awards exceeding €500,000 within six months from the date of grant. In addition, in May 2016 the Commission published the “Notice on the notion of aid” as one of the last building blocks of the SAM. The Notice provides guidance to help public authorities and companies determine whether public spending falls within the scope of the EU State aid rules or not. This is intended to facilitate public investment, by assisting stakeholders in designing public funding that does not distort competition in the Single Market or crowd out private investment.
Another key cornerstone of the SAM – the new General Block Exemption Regulation (GBER) – was introduced in 2014 to simplify the procedures for granting aid by authorising without prior notification a wide range of unproblematic measures. The 2016 State Aid Scoreboard indicates that over 96 per cent of new measures (for which expenditure was reported for the first time in 2015) were covered by the GBER, representing an increase of around 24 percentage points compared to 2013. According to the Commission, the surge in aid exempted under the GBER demonstrates “an important reduction of red tape”.
The Commission also highlights that it has been active in taking action against illegal State aid granted by means of selective tax advantages. High-profile cases have included alleged aid granted by Ireland to Apple, by the Netherlands to Starbucks and by Luxembourg to McDonald’s, Amazon and GDF Suez (now Engie).
The Digital Single Market
The Commission has in the past year taken various steps to boost competition and innovation across the Digital Single Market.
One development that the report discusses is the Commission’s preliminary findings in the e-commerce sector inquiry, which were published in September 2016. The final report, which has since been published in May 2017, largely follows the Commission’s initial conclusions. Following an extensive fact gathering exercise, the Commission has confirmed the growing significance of e-commerce, but has also identified certain business practices that may limit competition in this area, in particular in relation to online sales of consumer goods and copyright licensing agreements. As part of its sector inquiry, the Commission investigated the practice of ‘geo-blocking’.2 In March 2016 the Commission published its initial findings on geo-blocking, which found that the practice is widespread in e-commerce throughout the EU, especially for digital content, and in May 2016 it adopted a proposal for a Regulation intended to address geo-blocking and related practices.
In addition, the Commission flags that it considers preserving competition and innovation in the search engine market to be one of its enforcement priorities.
Enforcement of EU competition law
In December 2016 the Commission adopted a Communication on “EU law: Better results through better application” aimed at ensuring the effective application, implementation and enforcement of EU law across all policy areas. In its Report, the Commission highlights several areas where it has recently taken enforcement measures, including:
(i) The transport sector. Examples include: (i) a Statement of Objections in October 2016 to Brussels Airlines and TAP Portugal in relation to their codeshare agreement on passenger services between Brussels and Lisbon; (ii) an investigation beginning in November 2016 into whether the Czech railway incumbent České dráhy, a.s. charged prices below costs with the aim of shutting out competition; and (iii) fining truck producers in July 2016 a record of €2.9 billion for co-ordinating the prices of heavy and medium trucks;
(ii) Concentrated markets, including the crop protection market. In 2016 the Commission opened two in-depth investigations into proposed mergers in this sector: Dow/DuPont and ChemChina/Syngenta (each cleared subject to conditions in March 2017 and April 2017 respectively);3
(iii) The financial sector, with examples including (i) the ongoing investigation into MasterCard’s and Visa’s inter-bank fees in relation to payments made by cardholders from non-EEA countries; (ii) the prohibition of the proposed merger between Deutsche Börse and the London Stock Exchange in March 2017; and
(iii) the €485 million total fine imposed on three banks in December 2016 for participating in a euro interest rate derivatives cartel; and
(iv) Energy and waste management markets. Examples include: (i) an in-depth investigation beginning in January 2016 into Halliburton’s acquisition of oilfield service provider Baker Hughes (the transaction was abandoned in May 2016); (ii) the continued investigation into the potential abuse by Gazprom of its dominant position in the supply of natural gas in Central and Eastern Europe; and (iii) fining Altstoff Recycling Austria in September 2016 for abusing its dominant position by blocking competitors from entering the Austrian market for management of household packaging waste (the first time under the current regime that the level of a fine was reduced as result of a party’s co-operation in a non-cartel antitrust case).
In order to ensure that companies encounter a stable, consistent and transparent competition enforcement landscape no matter where they conduct their business, the Commission continues to engage with competition authorities in Europe and across the globe.
Building on its Communication on “Ten Years of Antitrust Enforcement under Regulation 1/2003”, the Commission has been looking at whether EU national competition authorities have all the power, resources and independence they need to effectively enforce EU competition law. In March 2017 the Commission published a proposal for a Directive (the so-called ‘ECN+ Directive’) to further empower national authorities and ensure consistency and effectiveness in their enforcement of EU antitrust rules. Amongst other things, the proposed Directive seeks to (i) provide national authorities with a set of core minimum investigative and enforcement powers; (ii) set a common legal maximum for fines for breaches of EU antitrust rules; and (iii) create a set of common leniency rules in order to encourage infringing companies to co-operate with the authorities.
At a global level, the Commission actively participates in competition-related international bodies such as the Organisation for Economic Co-operation and Development (OECD) and the International Competition Network (ICN). The results of the Commission’s engagement with the ICN in 2016 include the Merger Remedies Guide and the Cartel Working Group’s Catalogue on Investigative Powers, aimed at ensuring effective international enforcement of competition law. The Commission also continues to negotiate at a bilateral level on competition and State aid provisions in Free Trade Agreements (FTAs). For example, in 2016 the Commission entered into negotiations on FTAs with Armenia, Mexico, Indonesia and the Philippines, re-opened negotiations with Mercosur4 and made progress on negotiations with Canada and Japan to upgrade existing co-operation agreements with provisions for the exchange of information. The Commission also engages in technical co-operation with emerging economies that are developing their competition policy and enforcement regimes. For example, in June 2016 it entered into a Memorandum of Understanding with South Africa, which adds to those signed with all other BRICS countries in recent years.