European Union: Directorate General for Competition

In 2016, the European Commission (the Commission) and its Directorate General for Competition - steered by Competition Commissioner, Margrethe Vestager - have pursued a dynamic policy and enforcement agenda. In its fight against cartels, which remains a top priority, the Commission took six decisions in the course of the year. Four decisions resulted from settlement procedures and two where hybrid cases. In the latter, the Commission settles with companies that acknowledge participation in a cartel and their liability for it and takes ordinary decisions with non-settling parties. The Commission also issued a statement of objections - also known as ‘charge sheet' outside of the EU. The total amount of fines imposed in these decisions was close to €3.75 billion. Other antitrust interventions included four decisions for a total of just over €6 million in fines and five statement of objections. In merger control, the Commission adopted a total of 363 merger decisions (355 in Phase I and 8 in Phase II). Of these 363 transactions, 25 were approved subject to commitments and one was prohibited: the proposed acquisition of O2, owned by Telefónica UK, by Hutchison 3G UK's Three in the market for mobile telephony in the United Kingdom. Last but not least, the Commission took 300 state aid decisions in 2013 ordering member states to recover €14.15 billion in illegal aid, of which around €13 billion is in a single case involving the fiscal aid Irish authorities granted to Apple.

Enforcement highlights

A few notable cases can give a sense of the efforts the European Commission made to keep the EU Single Market a level playing field. In cartels, on 19 July, the Commission imposed fines for a total of €2.93 billion on five European truck producers for coordinating the gross pricing of heavy and medium trucks in the European Economic Area (EEA). The companies DAF, Daimler, Iveco, MAN and Volvo/Renault had admitted their involvement in the cartel, which allowed the Commission to settle the case with them. Between 1997 and 2011, the companies colluded on pricing and gross price increases in the EEA for trucks and on the timing and the passing on of costs for the introduction of emission technologies for medium and heavy trucks required by EU environmental standards. The record amount that resulted from this investigation reflects the seriousness and duration of the infringement.

As regards antitrust, three of the four decisions were resolved by commitments made binding by article 9 decisions. In the remaining decision, the Commission fined Austrian waste management incumbent ARA for blocking competitors from entering the Austrian market for management of household packaging waste. In this case, the Commission reduced the fine by 30% because the company cooperated during the investigation; acknowledged the infringement; and offered to divest the part of the household collection infrastructure it owns, ensuring it can no longer exclude competitors. Extending incentives to cooperate beyond cartels to all antitrust cases helps the companies involved protect their reputation and can lead to shorter proceedings - which is good for consumers and law abiding rivals who can benefit from a swifter restoration of competitive conditions in the market.

Turning to merger control, M&A activity continued to rise, on course to possibly exceed previous record levels set in 2007. This is reflected in an increase in the number of notifications received: from 277 in 2013 to 362 in 2016. This important increase of strategic acquisitions requires us to be as vigilant as ever, especially in markets that are already highly concentrated and are characterised by important barriers to entry and expansion. In 2016, we observed a wave of transactions in the agro-chemical sector, container shipping industry, telecoms and energy, just to cite some examples.

The main trend in state aid control is the continued application of the broad reforms introduced a few years ago known as state aid modernisation (SAM). As a result of SAM, about 95% of state aid measures (equivalent to a combined annual expenditure of about €28 billion) are currently implemented by member states under the General Block Exemption Regulation (GBER), likely to increase due to the recent amendments. In 2016, 237 notifications reached the Commission (a decrease of about 60% compared with 2013). As a result, the Commission can focus its resources on government subsidies and other measures that might seriously harm compe­tition, which translates into more careful scrutiny, transparency, monitoring and evaluation. A number of public investments that were approved signal the continuity between state aid enforcement and the Commission's broader efforts to stimulate growth and jobs in Europe. Examples include German plans to support high-efficiency co-generation (€500 million a year) that can make an important contribution to the EU energy and climate goals and French plans to provide access to very high speed broadband everywhere (€13 billion) - a key priority of the Commission's ‘digital single market' strategy. Finally, in 2016 the Commission launched 47 ex officio investigations into alleged state aid measures.

State aid corporate tax cases deserve separate mention. The Commission continued its investigations into whether tax rulings granted by member states provide selective advantages to multi­nationals, thus distorting competition in the Single Market. In January 2016, the Commission required Belgium to recover around €700 million of tax advantages granted to around 35 companies under the Excess Profit scheme. In August, it ordered Ireland to recover a selective advantage up to €13 billion granted to Apple by way of tax rulings. Ireland has not yet complied with its recovery obligation. Finally, in September, the Commission opened an in-depth investigation into Luxembourg's tax treatment of Engie (formerly GDF Suez).

Policy developments

2016 was also a busy year for the European Commission in policy development. Work on the e-commerce sector inquiry proceeded at a brisk pace and on 10 May 2017 the Commission adopted the Final Report, which sets out the main findings. The inquiry identified business practices that may restrict competition in e-commerce in two main areas: consumer goods and digital content. The exercise will allow the Commission to target enforcement of EU antitrust rules in e-commerce markets and has already prompted companies to review their practices. On the basis of our findings, the Commission will also broaden its dialogue with national competition authorities.

Another sector inquiry covering state aid used by 11 member states to support secure electricity supplies through ‘capacity mechanisms' concluded in November 2016. The study found 35 past, existing and planned mechanisms, many of which were likely to involve state aid, although they had not been notified to the Commission. The inquiry identified the potentially damaging impact on trade and competition of uncoordinated national capacity mechanisms. Many schemes have since been notified for assessment and the Commission will pursue ex officio cases where necessary. The inquiry also informed legislative proposals in the Clean Energy Package, particularly relating to the inclusion of foreign capacity in national schemes.

In addition, the Commission continued its work to update and improve its merger review instruments. In 2016, it held a public consultation on the possible review of notification thresholds, since the current system based solely on turnovers may fail to capture transactions in which companies with little sales fetch large valuations. The reflection also included efforts to make merger review even simpler and more business-friendly than it is today.

Finally, the Commission continued its work on the ECN+ initiative. National competition authorities (NCAs) in all EU countries become our essential partners for EU competition law enforcement, accounting for 85% of all decisions - however, feedback from stakeholders kept alerting the Commission of the need to give all NCAs effective means and instruments to apply EU competition rules. The results of a detailed fact-finding exercise were put in public consultation until February and during the rest of the year we discussed and finalised a Commission proposal for a Directive to empower NCAs to be more effective enforcers. The Commission adopted the proposed Directive on 22 March 2017. Its objective is to ensure that NCAs have necessary minimum guarantees to take decisions independently and effective tools to stop and sanction infringements. The proposal will now follow the ordinary legis­lative process involving Council and Parliament, which will probably conclude in the spring of 2019.

International cooperation

Multilateral and bilateral links have been reinforced in 2016. The Commission took an active part in the competition-related activities of international bodies, such as the OECD's Competition Committee. The Commission is also a leading member of the International Competition Network, the main global forum of competition agencies.

The Commission negotiated Free Trade Agreements (FTAs) with Armenia, Mexico, Indonesia, Philippines, Mercosur, the United States and Japan; of these, the agreement with Armenia was concluded in 2017. The Commission's efforts in FTA negotiations focused on the inclusion of competition and state aid provisions, to promote the convergence of policy and practices with the ultimate objective of achieving a global level playing field. In June 2016, a memorandum of understanding on technical cooperation was signed between DG Competition and the Competition Commission of South Africa. Finally, the Commission asked the Council to conclude the second generation EU-Canada Cooperation agreement and for a mandate to negotiate a similar agreement with Japan.


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