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Vice President of the European Commission responsible for Competition Policy
Brussels, 26 November 2013
Ladies and Gentlemen:
As we approach the end of the year, I think it is appropriate to present a review of our action across our competition-enforcement instruments over the last twelve months and look at the main items for adoption in 2014.
Our activity in cartels and antitrust has been focused mainly on new and growth-promising sectors; abuses of the patent system; and financial markets.
The first investigation I will mention in the high-tech industries is the on-going Google case.
This week we expect to receive the feedback of more than one hundred market players on an improved set of commitments. Recently I’ve had the opportunity to explain in this Parliament how I see this complex investigation. In the coming months we will assess the results of the present consultation and decide on the next steps.
As to the main decisions adopted this year in these sectors, let me underline the commitments we accepted by Apple and five of the world’s largest publishers in our e-Books investigation.
We also fined Microsoft €561 million for failing to comply with legally binding commitments it entered into back in 2009. It was the first time the Commission sanctioned a company for this reason. The fine shows that I take compliance with commitments decisions very seriously.
Moving on to cases involving patents – and, for the first time, for delaying market entry of generic medicines – we imposed fines for €146 million on Lundbeck and other companies.
We also have some on-going cases relating to Standard Essential Patents. These are patents which have been committed to industry standards bodies and which smartphone manufacturers need to make sure that their devices can communicate together.
Among these investigations, two of them are more advanced. One involves Motorola. We informed the company of our concerns and we are studying their response. The other involves Samsung. The company has offered commitments which have been tested. We are analysing the results.
The third area of action I will highlight is financial markets.
Apart from the implementation of the special State aid regime for banks, we have advanced in our cartel investigations in the suspected manipulations of the Libor and Euribor benchmarks – and soon there will be fresh news. On top of this, I cannot rule out new investigations regarding similar practices.
Still in finance, last July we sent Statements of Objections to major investment banks and financial-information providers in the Credit Default Swaps case.
We have received indications of more alleged manipulation of benchmarks – this time in the Forex market.
I have to say that public policy needs to foster a change of culture in the industry. Financial markets must be safer and more transparent. Competition enforcement and regulation must go hand in hand also in this field.
Other activity in cartels includes the €141 million fine imposed on suppliers of electrical distribution systems for cars – the first decision of quite a number of investigations regarding the car parts industry.
Our cartel investigation in the market for smart card chips presented us with a novelty. After starting a settlement procedure, towards the end of last year the talks broke down with all the companies involved. Therefore we issued a Statement of Objections in April and the case will continue under the standard procedure.
In antitrust, other important decisions include the commitments we accepted by Star Alliance members Air Canada, United and Lufthansa.
We also continued our efforts to open up energy markets. We took a commitments decision with the Czech electricity incumbent ČEZ; a statement of objections was sent to OPCOM, Romania’s power exchange; and the investigation involving Gazprom is on-going.
In the telecoms industry, Telefónica and Portugal Telecom received a €79 million fine for an illegal non-compete clause; we are investigating potential abuses by Slovak Telekom; and in July we carried out inspections at the premises of Deutsche Telekom, Orange, and Telefónica, involving potential abuses relating to content transmission in their networks.
Let me now give you some figures to illustrate our work in merger control.
This year we have received 219 notifications and approved 196 deals without conditions. We’ve also cleared 12 cases with commitments – ten of them in phase I and two in phase II. Finally, we have prohibited two mergers: UPS/TNT and Ryanair/Aer Lingus.
Among the deals we cleared, I will note the creation of Penguin Random House, the acquisition of NYSE Euronext by Intercontinental Exchange (ICE), and Vodafone’s acquisition of the biggest German cable network, Kabel Deutschland.
In State aid – as I said earlier – we have continued our work with banks in distress.
Here, the main event was the introduction of new State aid rules for banks that entered into force in August. The new rules – prepared to manage the transition towards the Banking Union – draw on the insight and expertise we have gained since the beginning of the crisis.
Over the past five years, we have analysed the restructuring of 68 banks – 25 of which had to be resolved – equivalent to around one quarter of Europe’s banking sector in terms of assets.
And the job is not finished. We still have 25 pending cases, in particular in the euro-area countries under programmes.
Between 2008 and 2012 the Commission approved massive amounts of State aid measures, which were used only in part, in the financial sector. In particular, only around one third of the guarantees approved by the Commission have been provided by Member States eventually.
However, the bulk of the support provided by Member States to their respective banking systems was precisely in the form of guarantee measures. In 2012, €492bn of state guarantees were still outstanding compared to the peak of €1,186bn in 2009. Less than 0.2% – that is, €2bn – of the total guarantees provided by the Member States has actually been called to date.
As regards recapitalisation measures, over the same period Member States recapitalised their respective banks for €413.2bn (or 3.2% of EU GDP in 2012). The four countries that most supported their banks with capital measures during these years were the UK (82bn), Germany (64bn), Ireland (63bn), and Spain (60bn). The top receiving banks were RBS (46bn), Anglo Irish Bank (32bn), and Bankia (22bn).
Finally, let me stress that State aid rules ensure that Member States are remunerated for their aid. For the massive guarantees provided during the past four years, Member States have received €33bn in guarantee fees – against, as I said before, €2bn of guarantees invoked. As of end 2012, Member States have received a total of €125bn in revenue in exchange for their support to the banks.
I have explained before this Committee the purpose and the main elements of the State aid Modernisation strategy launched in May 2012.
As to the regulatory components of the reform package, the Enabling and Procedural Regulations were adopted before the summer. Next in line will be the General Block-Exemption Regulation and the "De minimis" Regulation.
In addition to the new framework for the financial sector, the new Broadband Guidelines were introduced a year ago, the new Regional aid Guidelines last June and the Cinema Communication two weeks ago. The Risk Finance Guidelines – which will promote wider risk-finance measures for SMEs and midcaps – will be adopted in early January.
The process will continue in the coming months with the guidelines on Aviation, on Rescue and Restructuring for non-financial firms, on Research, Development and Innovation, and with the Environmental and Energy Guidelines.
This means that all the main elements of the State Aid Modernisation package should be in place in the first half of next year and will enter into force in July 2014 at the latest. I want to thank the European Parliament for its valuable contribution. Your opinions have been extremely useful to improve the legislative texts and the guidelines.
Another policy initiative is the Directive on Antitrust Damages Actions, adopted by the Commission in June.
The proposal has made good progress in Council and the Competitiveness Council is likely to adopt a General Approach next week.
As for Parliament, an agreement has finally been reached on the respective roles of the ECON and JURI Committees as regards their work on the proposal.
I take good note of the fact that the Parliament has also expressed a strong wish that the legislative procedure be concluded before the end of the term.
I look forward to it and I trust this will still be possible regardless of the delays caused by the discussions between your Committee and your JURI colleagues.
If eventually the Directive cannot be voted before the end of your mandate, all those who stand to benefit from the compensations will indeed receive a very negative message.
Another policy development of 2013 is the Merger Simplification Initiative, which will cut red tape and reduce costs for business.
Looking ahead, among the priority items for adoption in 2014 there will be the review – in the antitrust domain – of the Transfer of Technology Block Exemption Regulation.
I will also mention the debates on the new Payments Services Directive and – particularly – the Interchange Fees Regulation. I am working hard with my colleague Michel Barnier to facilitate the co-decision procedures on both.
Finally I conclude with developments in our international relations.
Last week I signed a Memorandum of Understanding in New Delhi with the Competition Commission of India, which means that now we have MoUs with four of the five BRICS countries. I intend to negotiate an MoU with South Africa.
Last May the European Union and the Swiss Confederation signed the first 2nd generation agreement. I welcome the work done by the European Parliament to advance on its consent process. I understand discussions are expected to start next week.
Another big international pact of interest for competition policy is the Transatlantic Trade and Investment Partnership. The competition chapter will include provisions covering antitrust, mergers, state-owned enterprises, and subsidies. I very much hope for a positive outcome in this domain and, of course, for the TTIP negotiations in their entirety.