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The European Commission’s 2012 report on competition policy shows that without an effective European competition policy, the internal market cannot deliver its full economic potential. Private barriers to trade and competition would risk replacing the public barriers to free movement that have been painstakingly dismantled. Subsidy races would risk wasting precious budgetary resources, distorting competition between companies established in different Member States.

Competition policy reform and action

The Commission’s action in 2012 focused in particular on sectors of systemic and cross-cutting importance to the EU economy such as financial services; key network industries such as energy, telecoms and postal services; as well as knowledge-intensive markets such as smartphones, e-books and pharmaceuticals. In those sectors, EU competition enforcement complements Single Market regulation. State aid control is also a key pillar of the Single Market. The past year saw the first decisions applying the new framework on state aid for services of general economic interest (SGEIs) adopted at the end of 2011. In May 2012, the Commission launched an even more ambitious reform agenda with the State Aid Modernisation (SAM) initiative. The Commission also remained active in the fight against cartels. For example, the Commission fined seven international groups of companies close to € 1.5 billion for colluding to raise the prices of tubes used in TV and computer screens, increasing input prices for manufactures and end-consumers.

Financial sector

In the financial sector, the Commission continued to apply the state aid rules to make sure that banks receiving aid were either resolved in an orderly fashioned or were thoroughly restructured in order to return to long-term viability. The rules also reduced the burden for the taxpayer and avoided undue distortions of competition. As part of the economic adjustment programmes for Ireland, Portugal and Greece, state aid control continued to contribute significantly to the restructuring of those countries’ banking sectors. This was part of a wider effort involving not only the Commission but also the European Central Bank (ECB) and in most cases the International Monetary Fund (IMF). Again, a key concern was to ensure the integrity of the Single Market in a context of massive public financial support. In line with the sector programme for the Spanish financial sector agreed in July 2012 by the Eurogroup, the whole Spanish financial system was fully capitalised by the end of 2012 in accordance with state aid rules. The process was particularly efficient: restructuring plans were approved after just a few months and before the programme aid was disbursed. The burden for European taxpayers was also reduced to the minimum necessary to preserve financial stability thanks to extensive burden-sharing. The Commission also used its merger control tools to ensure competitive prices for companies which manage their risks by investing in derivatives in the EU: in February 2012, the Commission prohibited the proposed merger between Deutsche Börse and New York Stock Exchange Euronext.

Network industries

In the gas and electricity sectors the antitrust enforcement action focused on central and eastern European gas networks which tend to be less interconnected across borders than western European networks. The Commission opened antitrust proceedings against Gazprom in relation to a possible abuse of its dominant position in a number of central and eastern European gas markets. Likewise, in telecoms markets, where ex-monopolists still maintain strong market positions by virtue of their ownership of the fixed networks they rolled out during the monopoly era, the Commission pursued a number of enforcement actions involving alleged abuses and collusion by telecoms incumbents. The Commission sanctioned an agreement between Telefónica and Portugal Telecom not to compete with each other on the Iberian telecommunications markets).

Digital economy

In digital industries, network effects and lock-in can create entrenched market positions which could be used to shut out competitors or new entrants. Potential misuse of standard-essential patents in the so-called patent wars among smartphone manufacturers were a particular focus during 2012. The Commission opened three proceedings concerning possible abuses by Samsung and Motorola of their standard essential patents. These investigations will help clarify EU antitrust rules in this field where the Commission received numerous complaints. The Commission also accepted the commitments offered by Apple and several publishers to restore competition in the sale of e-books. The sale of the publishing and music businesses of EMI was approved subject to conditions, thereby preserving both cultural diversity and innovation in a context where consumers increasingly use digital platforms to listen to music.

Pharmaceuticals and the competition policy

Pharmaceuticals are another sector where knowledge, inventions and ideas and the intellectual property rights (IPRs) they embody are of central importance. Pharmaceutical companies may be tempted to enter into anticompetitive agreements delaying the entry of cheaper generic medicines, with the risk of harming both patients and public budgets. The Commission issued a number of statements of objections concerning potentially anticompetitive conduct and agreements in this area.

• Source: European Commission

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