Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC annual report portrays competition policy as tool to foster competitiveness, (Sep 23, 2014)

By Greg Hammond, J.D.

In the Annual Competition Report for 2013, delivered to the European Parliament today, European Commission (EC) Vice President Joaquin Almunia addressed the role of competition policy—such as antitrust and cartel enforcement, merger control, and State aid policy—as a tool to foster competitiveness.

Goals. During his confirmation hearings in January 2010, Almunia identified three specific goals for his tenure as Vice President: (1) restructure Europe’s banks, which were hit by the financial crisis; (2) modernize State aid control; and (3) fully involve the Parliament with the co-decision procedure in the EC’s initiative to ensure effective rights to obtain compensation for damages caused by competition infringements. He addressed each of these goals in his speech to the European Parliament.

First, Almunia noted that 110 European Union (EU) banks, or a quarter of the EU banking system, have directly received State aid since October 2008. Of these banks, 13 received support with no additional conditions; 52 negotiated restructuring plans; 33 were put into orderly resolution; and the EC is still working on the remaining 12 cases. Public support provided to the banks included capital injections and assets relief measures, as well as stabilization tools like guarantees.

Almunia identified three main achievements with the EC’s banking operation: (1) “ensuring the return to viability of the rescued banks without further need for taxpayers’ money and winding down non-viable banks-acting as a de facto resolution authority”; (2) “keeping the use of taxpayers’ money to a minimum”; and (3) “keeping the level playing field between the banks that received aid and those that didn’t.”

Second, the EC Vice President noted that the State aid instrument has been completely overhauled with the “State aid modernization strategy.” According to Almunia, the strategy was created to assist EU governments in supporting growth and creating jobs, and is focused on creating the biggest impact on the internal market. Ten guidelines, five regulations, and two notices comprise the modernization effort, which covers a range of areas, including aviation, broadband connections, energy and the environment, regional aid, research and development, and risk finance for SMEs.

Third, Almunia discussed the possible upcoming formal adoption of the damages directive, which—if passed—will be a “milestone in the evolution of competition law enforcement in the EU and will make it easier for citizens and companies to claim damages if they are victims of infringements of EU antitrust rules.” He further noted that the damages directive marks the first time draft competition legislation reached the Parliament as co-legislator under the ordinary legislative procedure.

Competition enforcement. Almunia also discussed areas of enforcement and how competition policy has the potential to create good conditions for growth. He stated that the EC’s action in credit card payment fees, which cost EU retailers and consumers an estimated €10 billion per year. “We need to create a level playing field for payments across Europe; banks and merchants need legal certainty; consumers need reasonable fees; and – as regards e-payments – we should create the conditions for non-bank players to enter the market and innovate,” Almunia said. He further noted two pieces of legislation currently before the European Parliament—the Regulation on Interchange Fees for card-based payments and the Payment Services Directive.

Almunia concluded by discussing EU competition law in digital markets, and its status on the ongoing Google investigation. “[S]ome of the twenty formal complainants have given us fresh evidence and solid arguments against several aspects of the latest proposals put forward by Google,” Almunia stated. “At the beginning of the month, I have communicated this to the company asking them to improve its proposals. We now need to see if Google can address these issues and allay our concerns.” If Google can address the EC’s concerns, then Article 9 proceedings—which lead to a commitments decision—will continue. Otherwise, the EC will likely prepare a Statement of Objections.

News: Antitrust