Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission releases annual competition report, (May 6, 2014)

The European Commission (EC) announced today that it has released its Report on Competition Policy for 2013. The EC’s 2013 report shows that competition enforcement helps promoting growth and competitiveness across the European Union (EU). Antitrust enforcement prevents dominant companies' from shutting out competitors from the market and creates the conditions for lower input prices for EU industry. Merger control keeps markets open and efficient. State aid policy maintains a level playing field for companies in the Single Market and helps to steer public resources towards growth-enhancing objectives. Competition enforcement is also an essential counterpart to ex-ante regulation and a key tool in preserving the EU's principal asset—the Single Market.

Policy Initiatives. In 2013, the Commission carried forward or completed important policy initiatives. The adoption of Regulation 1/2003 ten years ago started a new era in the enforcement of EU antitrust rules and has led to reflection for further improvements. In June, the Commission adopted a proposal for a directive to facilitate antitrust damages actions. The directive will reduce obstacles that currently prevent victims of antitrust infringements from seeking and obtaining compensation for the harm they have suffered before national courts. It is the first time that the Commission proposed EU legislation in this field. The proposal has in the meantime been approved by the European Parliament.

The State Aid Modernization initiative, the first comprehensive reform of state aid rules since their inception, made significant progress, according to the report. In June, the Commission adopted new guidelines on Regional Aid. In July, the Council adopted two regulations: one regulation made procedures more efficient, and another enabled the Commission to exempt new categories of aid from prior notification.

The Commission also has adapted its crisis rules for state aid to banks. Banks with a capital shortfall will have to obtain shareholders and subordinated debt-holders' contribution before resorting to state capital. This will level the playing field between similar banks located in different Member States and reduce financial market fragmentation. In December, the Commission adopted new rules to simplify merger control. This is a concrete example of the Commission's commitment to promote growth and competitiveness by reducing regulatory burdens for EU businesses and citizens.

Competition decisions. The success of European companies strongly depends on competitive prices. In 2013, the Commission also took important competition decisions, including in sectors of strategic importance for growth and competitiveness such as financial services, energy, and the digital economy. The Commission continued to be very active in its fight against cartels, which can harm consumers and impair Europe's competitiveness and growth prospects by artificially inflating input costs. In the context of its ongoing investigation into car parts, in July 2013, the Commission fined five car part suppliers for their participation in cartels for the supply of wire harnesses, which conduct electricity in cars, to Toyota, Honda, Nissan, and Renault. The Commission also imposed sanctions for illegal agreements between pharmaceutical companies to delay the market entry of generic medicines. Such agreements may harm both patients and public budgets.

The Commission engaged in wide-ranging efforts to increase the transparency of the financial sector. In December, the Commission fined eight banks a total of over €1.7 billion for participating in cartels for financial derivatives based on the LIBOR and EURIBOR interest rate benchmarks. In July 2013, the Commission sent a Statement of Objections to some of the world's largest investment banks about a suspected collusion in the market for credit default swaps.

In energy, a key input across economic sectors, the Commission focused on facilitating access to the energy market and encouraging investment. In this context, the Commission accepted legally binding commitments from ČEZ, the Czech electric incumbent. The Commission also aimed at ensuring adequate pricing by continuing to investigate power exchanges. In 2013, new state aid rules for assessing allowances granted under the EU Emissions Trading System (ETS) came into force and the Commission approved national schemes for several Member States. These rules are aimed at limiting the impact of climate change provisions on industrial competitiveness, especially for energy-intensive industry.

In the digital economy, ICT and media sectors, given their importance for economic growth and the rapid technological developments, effective competition policy and enforcement are essential to address potential malfunctioning. The Commission continued to pursue enforcement actions against telecommunications operators suspected of anti-competitive conduct and fined Telefónica and Portugal Telecom for agreeing not to compete against each other on the Iberian telecommunications markets. The Commission also made significant progress in its investigations into the potential abuse of dominant positions in the sectors of online search and advertising (the Google investigation and of Standard Essential Patents (SEPs) for mobile communications.

Global cooperation. Cooperation with competition authorities around the world helped to tackle the challenges posed by the growing internationalization of business. The Commission continued to engage in policy dialogues with competition authorities in a number of countries so as to promote convergence on competition rules and signed a co-operation agreement of a new kind with Switzerland, which will enable both competition agencies to exchange information they have obtained in their respective investigations. In 2013, the Commission also signed a Memorandum of Understanding for co-operation in the area of competition law with the Competition Commission of India.

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