Competition activity run high in 2000
European Commission - IP/01/698 15/05/2001
Brussels, 15 May 2001
Competition activity run high in 2000
Competition policy activity run high in 2000 as the European Commission continued to update and modernise its rules and practice in the antitrust and merger fields while keeping pace with the increasing number of mergers and acquisitions which have also grown more complex. The 30th Annual Report on Competition Policy(1) shows the number of new cases in 2000 was 1,206, of which 564 were in the area of state aid control, 345 were merger notifications and 297 were antitrust cases. The overall figure remained broadly stable (1,249 cases in 1999) reflecting a drastic reduction of antitrust notifications following adoption of a number of so-called block exemption regulations. But it masks an increase of 18 percent in merger filings.
« The year 2000 was very busy and challenging as the Commission continued its overhaul of the antitrust procedures while coping with a new increase in merger notifications and considerable technological developments which brought new markets and practices such as business-to-business exchanges under the scope of our competition rules, » European Competition Commissioner Mario Monti commented on the occasion.
«But much remains to be done, not the least in the energy markets where there can be competition only if suppliers are free to compete for customers and customers are free to change suppliers. Only then will the consumer see the full benefits in terms of wider choice and competitive prices, » he added.
This year the Competition report puts greater emphasis on the benefits of this crucial policy for the consumer. The fine of 43 million euros imposed on Opel Nederland in September is significant because it aims to guarantee the right for individuals to buy a car wherever it is the cheapest. The decision to force TotalFina to divest 70 petrol stations on French motorways in order to get approval for its purchase of Elf led to the entrance on the market of Carrefour, an agressive supermarket chain, with ensuing price cuts.
Accent on modernisation
The year 2000 was marked by intense activity aimed at adapting the rules and practice of competition policy to an environment characterised by technological development, further integration of the single market and the upcoming enlargement of the European Union to the east.
This activity led to the adoption of new block exemption regulations in the field of horizontal agreements providing a safe haven for business agreements on research and development and on certain forms of production agreements such as outsourcing and joined production, provided companies involved do not have significant market power and do not engage in clear-cut violations of competition law. The block exemptions were complemented by guidelines which describe the general approach that should be taken when assessing horizontal agreements. Further progress was also made towards a fundamental reform of the procedure to deal with cartels and abuses of dominant positions, the so-called reform of regulation 17/62 or Modernisation started in 1999 and expected to come into force in 2003.
New guidelines were issued on 'vertical restraints', i.e. distribution, supply and other vertical agreements, to supplement the block exemption regulation of the same name adopted in December 1999.
More particularly, the Commission adopted a long-awaited comprehensive evaluation report on car distribution rules in Europe, which started the debate on the future car distribution regime after the current regulation expires in September 2002.
Merger control under unprecedented scrutiny
In merger control, the Commission set the ground work for a possible review of the Merger Regulation by submitting a report to the Council in June. The report suggests that despite the introduction of new turnover thresholds in 1997 which define whether a merger has so-called Community dimension many mergers and acquisitions continue to be notified to different national competition authorities rather than benefit from the Commission's one-stop shop review.
In December, the Commission adopted an explanatory notice on merger 'remedies' or how best to avoid creation of dominant positions or other competition problems. The notice provided greater transparency on merger control policy and procedures as well as better guidance to the business and legal comunities.
In another significant step, the Commission also adopted a simplified procedure to review unproblematic mergers such as those where there are no or only minimal overlaps.
As the march towards industry consolidation continued, the number and complexity of mergers and acquisitions increased putting the Commission's merger control policy under unprecedented attention and scrutiny from the practicioners and the media. This is particularly so in the WorldCom/Sprint deal, which was prohibited, the merger between AOL and Time Warner and the latter's deal with EMI in the music sector, a deal which was eventually dropped. Other high-profile decisions included Vodafone/Mannesmann ; Volvo/Scania, Vivendi/Canal Plus/Seagram and TotalFina/Elf.
More transparency on state subsidies
In the area of State aid control, a field where the European Commission has unique powers, progress was made on modernising the control of subsidies and on increasing transparency, a long-standing concern.
The Commission prepared the introduction, to this end, of a public register of state aid and a scoreboard, which hopefully will help reduce the volume of public funds channeled to businesses by national and regional governments creating distortions of competition in the European single market.
At the same time, the Commission focused on the correct application of its decisions by national governments, notably concerning the effective and speedy recovery of illegal aid.
The Commission also introduced regulations detailing the conditions for exempting small amounts of aid, or the so-called de minimis rule to state aid, as well as aid for small and medium-sized entreprises and for training.
Record cartel fines
The fight against cartels and abuses of dominant position was pursued with determination in 2000 with fines totalling 199.5 million euros, an increase of 77.6percent on 1999. The most important cartel decision was taken against five producers of lysine, a product used in animal feed, who were fined a total 110 million euros.
New technologies pose new challenges
Enforcement of competition rules in 2000 also met with the challenge posed by the increased globalisation of the economy and new technological developments, creating new markets and business practices. The advent of business-to-business (B2B) electronic marketplaces and the use by certain industries of voluntary agreements with environmental aims are just two examples of emerging practices which led to Commission decisions, such as on MyAircraft.com and CECED (see p.29)
But contrary to certain opinions or fears the existing competition rules proved adequate to deal with the new clicks and portals economy as they are for the traditional bricks and mortars sectors.
Still a lot to do in utilities markets
A large part of the Commission's enforcement activity in 2000 continued to be focused on recently liberalised markets such as telecommunications and energy, where a competitive environment is not yet fully established.
Last year was the second year of electricity liberalisation, but apart from the fact that at the end of 2000 not all EU countries had fully implemented the liberalisation directive, other obstacles remained in the way to the integration of European markets and of free competiton. Competition law enforcement concentrated on access to congested interconnectors as well as links between electricity generators.
The opening up of the gas market started in August last year, but as the abolition of monopoly rights and the emergence of so-called 'elligible' clients i.e. those free to chose their supplier became a reality, it also became apparent that the structure of the markets themselves was not favourable to competition.
The international dimension
Finaly, the Commission also put special emphasis on the international dimension of competition policy. The fact that the geographical scope of competition cases is widening means that more commercial transactions are falling within the jurisdiction of the growing number of countries that have adopted competition rules. To analyse these cases properly and avoid conflict, the Commission intensified its co-operation with the competition authorities of the United States and other countries. It also started discussions with Japan with a view of concluding a bilateral cooperation agreement on antitrust issues in 2001. Furthermore, the Commission continued to pay close attention to the competition aspects of enlargement, to make sure that the same rules apply with equal effectiveness throughout an enlarged Union.
(1)Available on internet http://ec.europa.eu/competition/index_en.html