EUROPEAN COMMISSION

Brussels, 13.7.2022

SWD(2022) 188 final

COMMISSION STAFF WORKING DOCUMENT

Accompanying the document

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

Report on Competition Policy 2021

{COM(2022) 337 final}

Contents

INTRODUCTION    

1.    Antitrust and cartels    

1.1.    Review of antitrust rules and guidance    

1.2. The fight against cartels remains a top priority    

1.3. Important judgments by the European Union Courts    

1.4. Cooperation within the European Competition Network and with national courts    

2.    Merger control    

2.1. Recent enforcement trends    

2.2. Review of merger control rules and guidance    

2.3. Significant judgments by the Union Courts in merger control    

3.    State aid control    

3.1. Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak    

3.2. Facilitating the exit from the pandemic – Recovery and Resilience Facility (RRF)    

3.3. State aid for horizontal objectives    

1.4.    Strengthening the Commission toolbox – a new policy initiative redressing distortive foreign subsidies    

3.5. Monitoring, recovery and cooperation with national courts    

4.    Developing the international dimension of EU competition policy    

1.5.    Multilateral relations    

1.6.    Bilateral relations    

5. Supporting EU competition law enforcement    

5.1. Digital transformation    

5.2. Single Market Programme    

5.3. External Communication and Advocacy    

II. SECTORAL OVERVIEW    

1. Energy & environment    

2. Information and Communication Technologies and media    

3. Financial services    

4. Basic industries and manufacturing    

5.    Agri-food industry    

5.1 Overview of key challenges in the sector    

6. Pharmaceutical and health services sectors    

7. Transport, tourism, and postal services    

8. Taxation and State aid    

ANNEX 1    State aid decisions adopted under the Temporary Framework for State aid measures in 2021 by country

ANNEX II    State aid decisions COVID -19 related, adopted directly under the Treaty

by country

ANNEX III    Banking State aid cases: Decisions adopted by the Commission in 2021

by country

INTRODUCTION

The Report on Competition Policy 2021 and this Staff Working Document provide the second account of the competition policy developments under the Commission led by President von der Leyen. Covering the developments in EU competition policy in 2021, it also is the 51st year the Commission submits such a report.

As the lessons from the most severe pandemic in more than 100 years have shown across the EU, a robust competition policy and its effective enforcement is more important than ever. EU competition policy preserves and strengthens the Single market, benefits consumers, businesses and society alike.

In 2021, EU competition policy continued to play an important role in the EU’s efforts to respond to and overcome the health and economic crisis due to the COVID-19 pandemic. The Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (Temporary Framework for State aid measures) 1 to support the economy in the current COVID-19 outbreak enabled necessary and proportionate support by Member States to businesses, especially small and medium-sized enterprises (‘SMEs’), in risk because of the pandemic, while limiting negative effects on the internal market. To address the consequences of the current political and economic situation in Europe due to Russia’s invasion of Ukraine, the Commission will again use the flexibility of the State-aid policy toolbox, which will enable Member States to tackle the negative economic effects of the new emergency.

Despite the pandemic continuing worldwide, the enforcement of EU competition rules remained at a very high level in 2021. In addition to the 675 COVID-19 related State aid decisions adopted in 2021, the merger control activity remained effective with 396 merger decisions adopted by the Commission. Also in antitrust and cartels the Commission took important enforcement actions to address competition infringements and imposed a total of EUR 1 746 million in fines. The decisions covered numerous sectors such as financial markets, railway transport services, car emissions, food and biofuels. In addition, the Commission closely cooperated and coordinated on related competition issues in the European Competition Network (ECN).

As set out in its Communication on a Competition Policy fit for new challenges 2 , the Commission is undertaking an unprecedented review of EU competition policy, covering more than 20 sets of rules with the objective of making sure that EU competition policy instruments remain future-proof and support the EU’s green and digital transitions, the recovery process and the response to economic developments and to strengthen the resilience of the Single Market.

In 2021, progress was also made by co-legislators as regards the Commission proposal for the Digital Markets Act and the Regulation on foreign subsidies distorting the internal market. Finally, in the area of merger control, the Commission took measures, such as the acceptance of electronic notifications, to ensure business continuity for companies notifying transactions, while ensuring compliance with legal obligations, took measures to ensure business continuity for companies notifying transactions, while ensuring compliance with legal obligations, and continued to safeguard the implementation of the EU merger rules.

The present Staff Working Document is composed of two parts. The first part presents the main developments in 2021 across the three competition instruments: State aid, antitrust (including cartels) and mergers. In the second part, specific enforcement actions are detailed in a sectoral overview.

I.    MAIN DEVELOPMENTS IN COMPETITION POLICY AND ENFORCEMENT

Preserving market discipline to secure the functioning of the Single Market is essential especially in times of crisis. Effective enforcement of the EU competition rules is of vital importance to the digital transformation of the EU economy and to preserve the Single Market’s competitiveness and ability to adapt. Antitrust enforcement can contribute in tearing down remaining barriers to the Single Market and eliminating restrictions in the development of clean technologies and the free flow of resources necessary for the circular economy and the European Green Deal’s objectives. The present Staff Working Document highlights recent antitrust and cartel decisions, while the graphs below give an overview of antitrust enforcement activity in the past ten years, including also decisions rejecting complaints.

In 2021, the Commission made substantial progress on its ambitious review of competition policy, covering a number of its key block exemption regulations, guidelines and notices. In November 2021, the Commission adopted a Communication on a competition policy fit for new challenges 3 , which underlined the role of competition policy for the post-pandemic economic recovery, for the green and digital transitions and for a resilient Single Market. Alongside enforcement, reforms are crucial to ensure competition policy remains fully effective. In 2021, the Commission advanced on its review agenda encompassing a large number of its key block exemption regulations, guidelines and notices as well as moved forward the work on a number of ongoing initiatives to ensure fair competition in the Single Market.

Antitrust and cartel decisions 2012-2021

1.1. Review of antitrust rules and guidance

In 2021, the Commission advanced on its review of antitrust rules and guidance to ensure that they are fit for a changing market environment, including the accelerating digitalisation of the economy and presented a new initiative on the application of competition law to collective agreements for the solo self-employed.

1.1.1. COVID-19 pandemic related guidance

The Temporary Framework for State aid measures for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the COVID-19 pandemic, adopted in April 2020 4 , introduced the possibility of adopting ad hoc comfort letters, as a temporary tool. These are an exception to the self-assessment rule, and appear in addition to the existing routes for providing guidance in specific situations, as these existing routes cannot address situations of extreme urgency due to their procedural requirements 5 . The Commission clarified that it will use its discretion to decide how and when to provide guidance, but that it is ready to engage and discuss and will ensure that its extensive general guidance reflects today’s needs and business realities 6 .

On 25 March 2021, the Commission issued the second comfort letter since the adoption of the Temporary Framework for State aid measures. The letter was issued on the occasion of a pan-European matchmaking event hosted by the Commission. The aim was to address bottlenecks and speed up connections between vaccine producers and service companies (such as contract development and manufacturing organisations, fill and finish equipment producers and others) to improve planning for current and future vaccine production in Europe.

1.1.2. Guidance on vertical agreements

The Commission continued its impact assessment for the revision of the Vertical Block Exemption Regulation (VBER) 7  and the accompanying Guidelines on Vertical Restraints (Vertical Guidelines) 8 , publishing the results of the open public consultation that ended on 26 March 2021 and the summary of the contributions of the National Competition Authorities (NCAs) to the impact assessment of the Vertical Block Exemption Regulation, together with an expert report on ‘Active sales restrictions in different distribution models and combinations of distribution models’ and an expert report on ‘Cases dealing with online sales, and online advertising, restrictions at EU and national level’ 9 . On 9 July 2021, the Commission published a draft revised VBER and draft revised Vertical Guidelines for public consultation, together with a background note setting out the proposed changes 10 . This public consultation ended on 17 September 2021. On 22 November 2021, the Commission published the non-confidential contributions received from stakeholders on the draft revised rules, as well as a summary of all contributions on the draft rules 11 .

On 28 May 2021, the Commission published the report of the evaluation of the Motor Vehicle Block Exemption Regulation (MVBER) 12 and the accompagnying Staff Working Document. Overall, the evaluation concluded that, in the last decade, there have been no material developments that would justify a revamp of the MVBER regime, but that an update was necessary to reflect the importance that access to vehicle-generated data is likely to have as a factor of competition. The Commission is now working on the proposals for the future of the regime in view of the expiration of the regime on 31 May 2023.

1.1.3. Guidance on horizontal agreements

In May 2021, the Commission published the results 13  evaluation of the two horizontal block exemption regulations on Research & Development and specialisation agreements (abbreviated R&D BER and Specialisation BER respectively, together HBERs), together with the Horizontal Guidelines. The aim of this evaluation is to support the Commission decision on whether it should let the HBERs lapse, prolong their duration or revise them.

In July 2021, the Commission launched a public consultation as part of the impact assessment phase of the revision 14 . The Commission aims to have the revised rules in place by 31 December 2022 when the current rules expire.

1.1.4. Collective agreements regarding the working conditions of solo self-employed persons

Digital labour platforms have changed the way people work. They provide access to work, and flexibility, but they can also lead to poor working conditions. For self-employed persons providing services through digital labour platforms, it is not always clear whether EU competition rules allow such self-employed persons to collectively negotiate and conclude agreements on their working conditions.

To address this issue, in June 2020 the Commission had launched a process to assess whether there is a need for measures at EU level to ensure that EU competition law does not stand in the way of collective agreements of self-employed persons aiming to improve their working conditions. The Commission therefore in January 2021 published an inception impact assessment, and in March 2021 consulted all stakeholders on a detailed questionnaire. In April 2021, a dedicated meeting with Social Partners took place. On 9 December 2021, the Commission published draft Guidelines on the application of EU competition law to collective agreements regarding the working conditions of solo self-employed persons 15 .

Based on established case-law of the Court of Justice of the European Union (CJEU) 16 , the draft Guidelines describe situations when solo self-employed persons may be comparable to workers, and clarify that their collective agreements then fall outside the scope of Article 101 TFEU. This covers economically dependent solo self-employed persons, those working side-by-side with workers and those providing their services through digital labour platforms. Furthermore, the draft Guidelines clarify that self-employed persons who may not be comparable to workers, but may nevertheless have difficulties in influencing their working conditions due to an imbalanced bargaining power, may also negotiate collectively without fearing the Commission's intervention. This includes solo self-employed persons who negotiate their working conditions with counterparties of some economic strength; or persons who collectively negotiate in line with the Copyright Directive 17  and national law provisions.

1.2. The fight against cartels remains a top priority

The Commission’s strong cartel enforcement record in 2021 shows its continued determination to vigorously fight cartels and to protect the competitive process during the recovery period. In 2021, the Commission adopted 10 decisions and imposed a fines totalling EUR 1746 million. The decisions covered numerous sectors such as financial markets, railway transport services, car emissions, food and biofuels. The Commission was also able to gradually resume its inspection activities that had been temporarily suspended for sanitary and logistic reasons during the earlier phase of the pandemic.

In particular, the Commission had a strong focus on cartels in the financial services in 2021. In April 2021 18 , the Commission adopted a decision against Bank of America Merrill Lynch, Crédit Agricole, Credit Suisse and Deutsche Bank for taking part in a cartel concerningSupra-sovereign, Sovereign and Agency bonds denominated in US Dollars (USD SSA bonds). The Commission imposed fines totalling EUR 28.494 million against these banks, except Deutsche Bank, which revealed the existence of the cartel and received full immunity under the leniency procedure.

In May 2021, the Commission fined Bank of America, Natixis, Nomura, UBS, UniCredit and WestLB (now Portigon) 19  a total of EUR 371 million in respect of a cartel in the primary and secondary market for European Government Bonds (EGB). RBS (now NatWest) was not fined as it received full immunity under the leniency procedure for revealing the cartel.

In December 2021, the Commission concluded the third stage of its investigation into the Foreign Exchange spot trading market 20 . The Commission fined Barclays, RBS HSBC and Credit Suisse a total amount of EUR 344 million (which came on top of the EUR 1.07 billion that had already been imposed in the two earlier Forex cases). UBS was not fined as it received full immunity under the leniency procedure for revealing the existence of the cartels.

Furthermore, in July 2021, the Commission took a decision against five car manufacturers Daimler, BMW, Volkswagen, Audi and Porsche 21 . The Commission imposed fines totalling EUR 875 million against these car manufacturers for restricting technical development in the area of emission cleaning technology for diesel cars. Daimler was not fined because it revealed the existence of the cartel. All companies acknowledged their involvement in the cartel and agreed to settle the case.

In April 2021, in the railway transport services 22 , the Commission sanctioned Österreichische Bundesbahnen (ÖBB), Deutsche Bahn (DB) and Société Nationale des Chemins de fer belges/Nationale Maatschappij der Belgische Spoorwegen (SNCB) for their participation in a customer allocation cartel, which concerned cross-border rail cargo transport services on so-called blocktrains on key EU rail corridors. The three companies admitted their involvement in the cartel and agreed to settle the case. The Commission fined DB and SNCB a total of EUR 48 million, while ÖBB received full immunity.

In the agri-food sector, in November 2021, the Commission fined Conserve Italia Soc. coop. agricola and its subsidiary Conserves France S.A. (together ‘Conserve Italia') 23 , totalling EUR 20 million. The decision follows an earlier settlement decision adopted in September 2019 against three other undertakings for participating in the same cartel. Conserve Italia decided not to settle the case and, as a result, the Commission's investigation against Conserve Italia continued under the standard cartel procedure. For more than 13 years, from 2000 to 2013, Conserve Italia and the other cartel participants set prices, agreed on market shares and volume quotas, allocated customers and markets, exchanged commercially sensitive information, and coordinated their replies to tenders.

Finally, in December 2021, the Commission fined Abengoa S.A. and its subsidiary Abengoa Bionenergía S.A. 24 , EUR 20 million for participation in a cartel concerning the wholesale price formation mechanism in the European ethanol market. Biofuels can contribute to promote cleaner transport and reduce greenhouse gas emissions and therefore play a key role in the green transition. The investigation is still ongoing for the other companies concerned.

Cartel decisions 2021:

1.3. Important judgments by the European Union Courts

In 2021, the Union Courts issued a comparatively small number of judgments concerning the Commission’s cartel enforcement compared to the situation a few years ago. However, the overwhelming majority of judgments issued fully confirmed the Commission’s cartel enforcement practice. This included a confirmation from the CJEU of the Commission’s practice of conducting hybrid settlement proceedings. The courts also confirmed that Article 101 TFEU and Article 53 of the EEA Agreement provide the Commission with jurisdiction to review cartels that operate worldwide.

1.3.1. Procedural rights in Commission investigations – staggered hybrid cases

In a judgment concerning the Steel Abrasives cartel 25 , the CJEU held that the Commission had not breached a company’s defence rights by referring to it in a settlement decision that predated its sanctioning in a decision taken in ordinary procedure (staggered hybrid settlement case). In the CJEU’s view, the Commission did not breach the presumption of innocence and the principle of impartiality. The CJEU agreed with the General Court that the Commission had taken “sufficient precautions” in its drafting, stating “unequivocally” that the settlement decision was not addressed to the appellant and that it referred to the company where it was necessary to do so to establish the liability of the other members of the cartel.

1.3.2. The Commission’s jurisdiction

In two judgments concerning the Capacitors cartel 26 , the General Court confirmed the Commission’s territorial jurisdiction in the application of Article 101 TFEU and Article 53 of the EEA Agreement. The applicants contested the Commission’s territorial jurisdiction, namely on the ground that the anticompetitive conduct was Asia-oriented and was neither implemented nor had a significant effect in the EEA 27 and refuting any relevant link to the EEA 28 .

According to the General Court, the conditions for the territorial application of Article 101 TFEU and Article 53 of the EEA Agreement are satisfied in two situations: in the first place, where the practices covered by that article are implemented in the territory of the internal market, irrespective of the place where they were formed 29  and, in the second place, where it is foreseeable that those practices will have an immediate and substantial effect in the internal market 30 .

The General Court stated that the criterion of the implementation of the cartel is satisfied by, among other things, mere sales within the European Union of the product that is the subject of the cartel, irrespective of the location of the sources of supply and the production plants 31 .

1.3.3. Liability for cartel conduct

In a judgment concerning the Power Cables cartel, the CJEU confirmed the Commission’s and the General Court’s interpretation of the concept of ‘parental liability’ for attributing liability for a company’s cartel conduct to its parents 32 .

The CJEU confirmed that the Commission was entitled to rely on the AKZO presumption of a parent exercising decisive influence over a subsidiary not only in a situation where it held all or virtually all the capital of the subsidiary, but also where it held all the voting rights associated with its subsidiary’s shares 33 . In the same judgment, the CJEU also confirmed that the Commission was right to rely on personal links concerning the board composition of the subsidiary when finding that a parent company exercised decisive influence. Such personal links could indeed be found even in situations where a member of a company’s board is connected to another company through ‘previous advisory services’ or ‘consultancy agreements’ 34 .

In the Retail Food Packaging cartel, the CJEU confirmed settled case law on the presumption of effective exercise of decisive influence of a parent company over its controlled operating companies and further confirmed the Commission’s cartel enforcement practice in this respect 35 .

1.3.4. Setting of fines

In a judgment concerning the Steel Abrasives cartel, the CJEU set aside a part of the General Court’s judgment that reduced the original fine from EUR 6.2 million to EUR 3.87 million 36 . In the CJEU’s view, the General Court had violated the principle of equal treatment and failed to state proper reasons when it applied a 75% discount under point 37 of the Commission’s Guidelines on Fines 37  to the appellant – a discount that was identical to that given to a different company. The CJEU held that the General Court had failed to set out the reasons why, despite that difference in situation, it was consistent with the principle of equal treatment to grant the appellant a rate of reduction identical to that granted to the other company 38 .

In a judgment concerning the Capacitors cartel, the General Court confirmed the Commission’s decision to increase the fine, since the company had been held liable for a similar infringement in the past 39 . The Commission found that, notwithstanding the fact that that first infringement had been penalised when the infringement found in Capacitors cartel was ongoing, it was necessary to apply an increase in the basic amount of the fine on account for repeated infringement, and, consequently, to take into account the entire period of the company’s liability for the infringement, including a period of almost nine months preceding the adoption of the original DRAMs decision 40 . The General Court considered that the company had already been found to have committed an infringement and that, despite that finding and the penalty imposed, it had continued to participate for almost two years in another similar infringement 41 ..

The General Court, in another judgment concerning the Capacitors cartel 42 , also confirmed that the Commission did neither infringe the principle of ne bis in idem 43 nor the principle of proportionality when applying a deterrence factor of 16% despite there already having been substantial fines imposed in other jurisdictions.

In the Retail Food Packaging cartel case, the president of the General Court issued a court order dismissing an application for interim measures seeking the suspension of a Commission decision against CCPL, and ordering it to pay fines of EUR 9.44 million. The Commission had re-imposed a significantly lower fine on CCPL following an earlier successful appeal by the company concerning lack of sufficient reasoning regarding the company’s ability to pay the fine. In his court order, the president of the General Court stated that any appeal against the revised Commission decision was unlikely to be successful, as the Commission appeared to have conducted a sufficient analysis of CCPL's financial situation 44 .

1.3.5. Payment of cartel fines

In the Commission v Printeos 45 , concerning the Envelopes cartel, the CJEU dismissed the Commission’s appeal and upheld the judgment of the General Court, ruling that the Commission is obliged to pay default interest when reimbursing a competition fine provisionally paid by an addressee who contested it, and which is later annulled or decreased by the courts. Printeos was entitled to receive: 1) a default interest from the date the fine was provisionally paid until the date of its repayment to Printeos (at ECB refinancing rate plus 2 %); and 2) a compound default interest on the above amount of default interest from the date Printeos lodged its action before the General Court (i.e. ordering payment of interests on an unpaid default interest, at ECB refinancing rate plus 3.5 %).

1.3.6. Application of the Commission’s Leniency Notice

In a judgment concerning the Car Battery Recycling cartel, the CJEU confirmed the Commission’s and the General Court’s interpretation of the Commission’s 2006 Leniency Notice 46 . The CJEU held that the concept of ‘partial immunity’ should apply only to undertakings that adduce evidence concerning new facts previously unknown to the Commission. A mere strengthening of evidence already in the Commission’s possession was insufficient for a company to obtain partial immunity 47 .

Along similar lines, the CJEU confirmed in a judgment concerning the Retail Food Packaging cartel 48 the Commission’s and General Court’s position that the appellant in that case did not qualify for immunity under the Commission’s 2006 Leniency Notice, as another company first provided the Commission with information enabling it to conduct an unannounced inspection.

In a judgment concerning the Capacitors cartel 49 , the General Court confirmed the Commission’s practical application of the concept of ‘partial immunity’. In this case, the applicant provided the Commission with additional information allowing it to extend the duration of the infringement, and, in return, the Commission granted partial immunity to the applicant t for the extended time period, thereby reducing the duration multiplier used for the applicant accordingly. However, the Commission did not reduce the applicant’s gravity multiplier. In its judgment, the General Court confirms the Commission’s conclusion that the evidence submitted by the applicant  had no impact on the gravity of the infringement.

1.3.7. Private Enforcement of EU Competition Law

Due to the increase of antitrust damage actions and the application of the Damages Directive, national courts have referred many questions for a preliminary ruling to the CJEU concerning application of the Damages Directive. In 2021, the CJEU rendered its judgments in three of these cases.

On international and territorial jurisdiction

On 15 July 2021, the CJEU rendered its judgement in case RH vs Volvo 50 . Supplementing the 2019 case Tibor-Trans v. DAF Trucks 51 , the judgment provided detailed guidance on how to allocate jurisdiction over cartel damages claims under Article 7(2) of the Regulation No 1215/2012 52 Brussels I Recast. A legal or natural person domiciled in a Member State may be sued in another Member State before the courts for the place where the harmful event occurred or may occur. Consequently, in an action for damages caused by an infringement of Article 101 TFEU, the place where the damage occurred is situated in the Member State of the market affected by that infringement in which additional costs were incurred. The CJEU pointed out that two criteria should be applied to identify the competent court in the Member States. First, if the undertaking that has been harmed purchased the goods affected by the collusion exclusively within the jurisdiction of a single court, that court has jurisdiction. Secondly, if purchases were made in several places, each undertaking that has been harmed can bring the action before the court for the place where the claimant has its registered office.

On the notion of undertaking

In its judgment of 6 October 2021, the CJEU dealt with a question for a preliminary ruling submitted by a Spanish court in case Sumal 53 . The judgment clarifies, among other things that, the functional concept of an undertaking is applicable both in the public and the private enforcement of EU competition law. In follow-on actions for damages, a fully-owned subsidiary may be held liable for an infringement of EU competition law of its parent company, on the condition that they form an economic unity. The decisive criterion to identify an economic unity is an uniform behaviour on the market. The CJEU clarified that the delineation of economic unity is based on a two-step test: (i) the economic, organisational and legal links and (ii) the special link between the economic activity of the subsidiary and the subject matter of the parent's infringement. It is on the claimant to prove both links. In light of the functional concept of an undertaking, a parent company can be part of several economic units.

On the jurisdiction of national courts to apply Article 101 TFEU

On 11 November 2021, the CJEU rendered a judgment in the case Stichting Cartel Compensation 54 , confirming that a national court has the power to find an infringement of Article 101 TFEU and to award antitrust damages also for the period when the Commission did not have at its disposal effective powers for the enforcement of EU competition law. The preliminary questions referred to the Court arose in a dispute concerning damage claims in respect of conduct in the air transport sector, that had occurred prior to the application of the rules implementing Article 101 TFEU. At the relevant time the transitional regime of Articles 104 and 105 TFEU applied. In the underlying decision concerning the same conduct (Airfreight) 55 the Commission had decided that it could not apply Article 101 TFEU to the conduct for the time period covered by the transitional regime.

1.4. Cooperation within the European Competition Network and with national courts

1.4.1.Cooperation with national competition authorities within the European Competition Network

Since 2004, the Commission and the national competition authorities in all EU Member States cooperate through the ECN. The objective of the ECN is to ensure that EU competition law is applied in an effective and coherent manner against companies engaging in business practices that restrict competition in the EU.

In 2021, the Commission continued to ensure the coherent application of Regulation (EC) No 1/2003 56  on the implementation of the rules on competition (Articles 101 and 102 TFEU) through the ECN. Two of the key supporting cooperation mechanisms in this Regulation are the obligation of NCAs to inform the Commission on a new investigation at the stage of the first formal investigative measure and to consult the Commission on envisaged decisions. In 2021, 145 new investigations were launched within the network and 84 envisaged decisions were submitted.

In addition to those cooperation mechanisms set out in Regulation (EC) No 1/2003, other ECN cooperation work streams equally ensure a coherent enforcement of the EU competition rules. The ECN members meets regularly to discuss cases at early stages, policy issues, as well as matters of strategic importance. In 2021, 37 meetings across horizontal working groups and sector-specific sub-groups were organised, where competition authorities’ officials exchanged views.

1.4.2. The ECN+ Directive

The ECN+ Directive 57 empowering Member States' competition authorities to be more effective enforcers of EU competition rules in the field of antitrust entered into force on 4 February 2019. The ECN+ Directive aims to ensure that when applying the same legal provisions – the EU antitrust rules – national competition authorities have the effective enforcement tools and the resources necessary to detect and sanction companies that infringe Articles 101 and 102 TFEU. It also aims to ensure that they can take their decisions in full independence, based on the facts and the law. The new rules contribute to the objective of a genuine single market, promoting the overall goal of an open, competitive and innovative internal market creating jobs and growth.

Member States had to transpose the Directive into national law by 4 February 2021. On 19 March 2021, the Commission sent Letters of Formal Notice, opening infringement procedures against 22 Member States for non-communicating the transposing measures by the deadline. Of those, 22 Member States, fourteen however notified full transposition of the Directive before the end of 2021. The completeness of their transposing measures will be assessed before the closure of the infringement proceedings. The Commission will then check the conformity of their national transposing measures. The Commission keeps assisting the remaining Member States in the last stages of their transposition processes.

1.4.3. Cooperation with national courts

In addition to its cooperation with NCAs in the context of the ECN, the Commission also continued its cooperation with national courts. The Commission supports national courts inenforcing the EU competition rules in an effective and coherent manner by providing case-related information or opinions on matters of substance or by intervening as amicus curiae in proceedings pending before the national courts.

Following approval from the concerned courts, the Commission publishes its opinions and amicus curiae observations on its website.

1.4.4. Private enforcement

Directive 2014/104/EU on antitrust damages actions (Damages Directive) 58 aims at ensuring that anyone harmed by infringements of the EU competition rules can effectively avail itself of the right to compensation before national courts. As noted in the report about the implementation of the Damages Directive to the European Parliament and the Council of December 2020, since the adoption of the Damages Directive in 2014, the number of damages actions before national courts has increased significantly, and actions for damages have become much more widespread in the EU 59 . A significant number of actions are still follow-on actions, where the person harmed by a competition law infringement claims damages following a final decision of a competition authority.

The Commission continues to monitor the implementation of the Directive by the national courts of the Member States with a view to reviewing the Directive, once sufficient experience from the application of its rules is available.

EU merger control ensures that all firms active in EU markets can compete on fair and equal terms. Proposed transactions which may distort competition are subject to close scrutiny by the Commission. If necessary to protect competition, the Commission can give merging firms the possibility to dispel competition concerns by offering commitments. If sufficient commitments cannot be found or agreed upon, the Commission may prohibit the transaction. In its assessments, the Commission takes into account efficiencies possibly brought about by mergers. Efficiencies may have positive effects on costs and innovation, for example, provided that they are verifiable, merger-specific and likely to be passed on to consumers.

2.1. Recent enforcement trends

While the COVID-19 pandemic continued throughout 2021, the Commission’s enforcement activity remained at a very high level with a total number of 396 merger decisions adopted in 2021(405 notifications) the highest on record.

Moreover, in 2021 the Commission received 44 reasoned submissions by notifying parties in pre-notification, requesting a referral of a case from the Commission to a national competition authority or vice versa. The Commission accepted to examine two transactions following a referral pursuant to Article 22 of Council Regulation (EC) No 139/2004 (the ‘EU Merger Regulation’) 60 and referred four transactions pursuant to Article 9 of the EU Merger Regulation to be examined by national competition authorities.

The vast majority of mergers notified in 2021 did not raise competition concerns and were speedily reviewed. The simplified procedure was applied in 78% of all notified transactions under the EU Merger Regulation in 2021.

Nevertheless, in 2021, the Commission’s merger enforcement was intensive due to the large number of notified transactions as well as the complexity of a significant number of cases. Moreover, the Commission intervened in fourteen cases. An increasing number of notified transactions concerned already concentrated industries. Reviewing such transactions required the Commission to carefully assess their potential impact on competition, employing sophisticated quantitative techniques and comprehensive qualitative investigative tools.

In 2021, the Commission opened in-depth investigations (the “Phase II”) in seven cases. These cases concerned diverse sectors of the economy, including manufacture and retail of container and cargo handling equipment, technical foams and building insulation materials such as mineral wool sandwich panels, semiconductors, the digital sector, healthcare technology, as well as passenger air transport.

In line with the trends of recent years, in 2021 the Commission assessed mergers involving digital issues. For example, the Commission opened an in-depth investigation into the proposed acquisition of Kustomer by Meta (formerly Facebook) 61 , a transaction involving the market for the supply of customer relationship management software. Digital issues were also part of the in-depth investigation of the proposed acquisition of Arm by NVIDIA 62 . Despite the COVID-19 pandemic, the Commission’s enforcement activity remained similar to the most recent years. In 2021, the Commission adopted 396 merger decisions 63 and intervened in fourteen cases 64 . Seven mergers were cleared subject to commitments in Phase I and four mergers 65 were cleared subject to commitments following a Phase II investigation. Moreover, three transactions were abandoned and their notifications withdrawn during the in-depth investigation 66 . Finally, the Commission did not prohibit any transactions in 2021.

Merger outcomes 2012-2021

Most remedies accepted by the Commission in 2021 consisted of divestitures of tangible or intangible assets. This confirms the Commission’s general preference for structural remedies in merger cases as best suited to address competition concerns arising from a concentration in a durable manner.

Apart from such remedies offered in Phase II investigations, in 2021, the Commission also cleared transactions subject to remedies in Phase I in which the notifying parties offered comprehensive remedy packages in due time, including in some complex transactions such as Schwarz Group/Suez Waste Management Companies in waste management 67 . The Commission also accepted non-divestiture remedies in a few cases, where such measures were considered to effectively solve the identified competition concerns in light of the specificities of the sector and the case at hand, for instance in Siemens Healthineers/Varian Medical Systems in medical imaging and radiotherapy solutions 68 .

Moreover, the Commission adopted a decision pursuant to Article 14 of the EU Merger Regulation imposing fines of EUR 7.5 million on Sigma-Aldrich for providing incorrect or misleading information during the Commission’s investigation of Merck’s acquisition of Sigma-Aldrich in 2015 69 .

In 2021, following Illumina’s early implementation of its acquisition of GRAIL pending the outcome of merger review of the transaction 70 , the Commission adopted interim measures pursuant to Article 8(5)(a) of the EU Merger Regulation to restore and maintain the conditions of effective competition 71 . It was the first time that the Commission adopted interim measures following the early implementation of a concentration. In parallel, the Commission opened an investigation to assess a possible imposition of a fine for a breach of standardstill obligation 72 . 

Finally, on 29 October 2021, the Commission announced the opening of an investigation into a possible breach of Article 21 of the EU Merger Regulation 73 , as Hungary imposed a veto on the acquisition of two Hungarian subsidiaries AEGON by VIG, both active in the insurance sector, even though the transaction had already been unconditionally approved by the Commission on 12 August 2021 74 .

2.2. Review of merger control rules and guidance

2.2.1. The evaluation of selected procedural and jurisdictional aspects of EU merger control

In 2021, the Commission finalised and published the results of the evaluation of selected procedural and jurisdictional aspects of EU merger control 75 . Following the evaluation results, the Commission adopted a Communication providing guidance on the application of the referral mechanism set out in Article 22 of the EU Merger Regulation 76 to capture potentially problematic transactions below its turnover thresholds, for instance transactions involving firms that play a significant competitive role despite generating little or no turnover, or transactions involving innovative companies in sectors such as pharmaceuticals.

Following the findings of the evaluation, the Commission also launched an impact assessment on exploring policy options for further simplification of merger procedures, including a potential introduction of electronic notification as the default way of notifying merger transactions. The simplification initiative aims to ease the burden on businesses as well as the Commission.

2.2.2. Market definition notice

Throughout 2021, the Commission continued its review of the Commission Notice on the definition of relevant market for the purposes of Community competition law (‘Market Definition Notice’) 77 , applied in its antitrust and merger assessments. In July 2021, the Commission published the findings of the evaluation of the Market Definition Notice 78 and started working on a revised Market Definition Notice, in particular, to ensure that it remains fit for purpose and the digital age. The revision process is ongoing and the Commission will consult stakeholders on the draft of the revised Notice in 2022.

2.3. Significant judgments by the Union Courts in merger control

In its judgment of 22 September 2021, the General Court upheld the Commission’s decision imposing two fines totalling EUR 124.5 million on the telecommunications operator Altice for gun jumping, while granting Altice a limited reduction of 10% of the amount of the fine applied in relation to the infringement of the notification obligation laid down in Article 4(1) of the Merger Regulation 79 ..

In its judgment of 20 October 2021 80 , the General Court upheld two 2017 Commission decisions approving, under the EU Merger Regulation, the acquisition of certain Air Berlin assets by EasyJet and Lufthansa respectively. The General Court upheld the Commission’s assessment, notably confirming that the route-by-route assessment traditionally carried out by the Commission in merger cases involving airlines was not warranted in these two cases, since Air Berlin had completely and definitely ceased its operations at the time of the mergers. Furthermore, the General Court found that the analytical framework applied by the Commission under the airport-by-airport approach was sufficiently and adequately explained.

The Commission enforces State aid rules to ensure that the support Member State governments grant to companies does not give them an unfair advantage in the Single Market. In 2021, State aid policy continued to play an important role in the crisis response to stabilise the economy and preparing for the path to exit the crisis.

The Temporary Framework for State aid measures adopted at the beginning of the COVID-19 pandemic in 2020, and amended several times, set out the conditions the Commission applies to declare aid compatible. Well-targeted public support helped counter the damage inflicted on healthy undertakings and to preserve the continuity of economic activity. To prepare the exit from COVID-19 the crisis towards a sustainable and resilient recovery of the EU economy with focus on green and digital transition, DG Competition together with other Commission services assisted Member States in preparing their Recovery and Resilience Plans (RRPs).

However, in 2021 Commission’s activity was not limited to crisis response and recovery. The extensive review of the State aid rules and enforcement work continued across all sectors.

With the aim of improving the interplay between EU funding rules and EU State aid rules under the new Multiannual Financial Framework 81 , in July 2021 the Commission adopted an extension of the scope of the General Block Exemption Regulation (GBER) 82 , which streamlined the State aid rules applicable to national funding that fall within the scope of certain recently adopted EU programmes 83 .

In 2021, the Commission adopted revised EU Guidelines on Regional Aid, a revised Communication on short-term export credit insurance (STEC Communication) 84 , the Risk Finance Guidelines, the Communication on State aid rules for Important Projects of Common European Interest (‘IPCEI Communication'), endorsed the Guidelines for State aid for climate, environmental protection and energy (‘CEEAG'), which were formally adopted in January 2022 85 , and submitted draft Broadband Guidelines for consultation 86 . The review of the sector specific rules and guidance is elaborated further in the the second part of the Staff Working Document in the sectoral overview below.

3.1. Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak

On 19 March 2020, the Commission adopted a Temporary Framework for State aid measures to enable Member States to use the full flexibility foreseen under State aid rules to support the economy 87 . The Temporary Framework for State aid measures, which was initially established with an expiry date of 31 December 2020, provides a number of aid measures that the Commission considers compatible under Article 107(3)(b) and Article 107(3)(c) TFEU, such as limited amount of aid, selective tax advantages and State guarantees for loans. The aim of the Temporary Framework for State aid measures is to allow Member States to tackle the difficulties undertakings are currently encountering whilst maintaining the integrity of the EU internal market and ensuring a free and fair competition. The Temporary Framework for State aid measures includes certain requirements related to the green and digital transformation. Large undertakings that have received recapitalisation aid need to report on how the aid received supports their activities in line with EU targets and national obligations related to green and digital transformation, including the EU’s 2050 climate neutrality objective.

Furthermore, on the basis of Article 107(2)(b) TFEU, Member States can also compensate undertakings that have suffered damage directly caused by the COVID-19 pandemic (for example in the sectors of transport, tourism, culture, hospitality and retail). Member States can notify such damage compensation measures and the Commission will assess them directly under Article 107(2)(b) TFEU.

3.1.1. The Temporary Framework for State aid measures: expansion and prolongation

Since its adoption, the Temporary Framework for State aid measures has been amended four times in 2020, and twice in 2021, in order to support those sectors of the economy that were most vulnerable to the rules applied in the Member States as a consequence of the pandemic.

On 28 January 2021, the Commission prolonged the availability of all measures set out in the Temporary Framework for State aid measures, including recapitalisation measures, until 31 December 2021, and expanded the scope of the Temporary Framework for State aid measures by increasing the ceilings set out for certain measures and allowing the conversion of certain repayable instruments into direct grants until the end of 2021 88 . On 18 November 2021, the Commission has decided to prolong the Temporary Framework for State aid measures until 30 June 2022, while setting out a path for the progressive phase-out of crisis measures 89 . In order to further support the recovery from the pandemic, the Commission has also decided to introduce two new categories of measures to create direct incentives for future-oriented private investment and solvency support measures, for an additional limited period.

3.1.2. Measures authorised in the context of the COVID-19 pandemic

During 2020-2021, the Commission had taken more than 1180 decisions (among them slightly more than 470 amendment decisions) in all Member States, including those under the Temporary Framework for State aid measures. State support totalling EUR 3.13 trillion to companies affected by the COVID-19 pandemic was assessed. There are a number of important caveats for some measures under the Temporary Framework for State aid measures, for which it is not necessary to indicate an amount. Therefore, the amounts included are best estimates based on amounts approved in State aid decisions and other available statistics, for example, mentioned in public communications by national authorities, and in official information communicated by the national authorities.

All State aid approved was considered necessary and proportionate to support businesses and remedy the serious disturbance to the European economy due to the COVID-19 pandemic. At the same time, there were major differences in the amounts approved across Member States, which appears linked to the fiscal space they have as well as the respective size of their economies.

More specifically, 51.7% of State aid approved has been notified by Germany. Italy has notified measures that represent around 15.5% of the entire amount of State aid, while the aid notified by France represents 14.5% of this amount. The aid notified by Spain represents 5.5% of the entire amount of State aid approved, while the aid notified by Poland and Belgium corresponds to around 2.3% and 1.9%, respectively. Aid notified by other Member States is estimated to be between 0.04% and 1.5% of the total EUR 3.13 trillion estimated.

Based on the replies of 26 Member States that responded to the survey 90 , in the period until end of June 2021, of the EUR 3.01 trillion in aid approved by then, around EUR 729 billion was actually used, representing about 5.4% of EU GDP 2019. 

The nominal amounts actually provided vary widely across Member States. In absolute terms, according to the data sent by Member States, France has granted more than a fourth of the total aid provided (EUR 188 billion), followed by Italy with 23% (EUR 169 billion), Germany with 19% (EUR 136 billion) and Spain with 14% (EUR 105 billion). In relative terms, Italy has increased the speed of spending in the first half of 2021 becoming the country that has provided to the economy the most as compared to its own GDP 91 (9.4%), followed by Spain (8.4%). France (7.7%), Hungary (6.7%), and Greece (6.1%). Member States that were most affected by the first wave of the pandemic show a general slowdown in the disbursement of funds from December 2020 to June 2021 (France, Germany, the Netherlands and Denmark), with the exception of Italy and Spain that have largely increased their spending in the first half of 2021. 92 The other large increases of COVID-19 related State aid expenditure in 2021 took place in the Member States most hit by later waves (Hungary, Slovenia, Latvia, Czechia, Slovakia, Lithuania and Cyprus).

This emerging picture shows that State aid measures actually implemented by Member States are not disproportionate to the economic damage suffered during the crisis. This is reassuring as it addresses potential concerns as regards the level playing field.

3.2. Facilitating the exit from the pandemic – Recovery and Resilience Facility (RRF)

The Recovery and Resilience Facility (RRF) programme entered into force on 19 February 2021 93 . It finances reforms and investments in Member States from the start of the pandemic in February 2020 until 31 December 2026. The Commission supports the implementation of the first pillar of the Next Generation EU, the RRF. With funding of EUR 672.5 billion, RRF represents by far the largest part of the NextGenerationEU recovery package of over EUR 800 billion 94 . The RRF supports public investments and reforms in the Member States, helping them to address the economic and social impact of the COVID-19 pandemic as well as to facilitate the green and digital transitions.

To receive grants and low-interest loans under the RRF, Member States have submitted Recovery and Resilience Plans (RRPs) for the Commission’s assessment before disbursement of any funds. State aid control accompanies and facilitates the implementation of the RRPs to ensure that supported investment and reform projects are compatible with State aid rules. Member States will notify to the Commission measures that may entail State aid, and that do not fall under one of the existing General Block Exemption Regulations (GBER, ABER, FIBER) or under an existing authorized scheme. To that end, DG Competition published a Practical guidance to Member States for a swift treatment of State aid notifications in the RRF framework and will continue to provide guidance and templates to the Member States 95 .

3.3. State aid for horizontal objectives

Over the years, the architecture of State aid control has evolved. Today, a substantial part of aid is granted under block-exempted schemes which are not examined by the Commission before entering into force. State aid for horizontal objectives generally accounts for the overwhelming majority of all aid.

Already now, the General Block Exemption Regulations (GBER, ABER, FIBER) 96  allow Member States to implement a wide range of public support measures in areas such as research and development, environmental protection, broadband connectivity, regional development or support to SMEs with prior notification if certain conditions are fulfilled. As illustrated by the graphs below, much of horizontal aid falls under the GBER.

GBER State aid expenditure by objective in the EU, excluding aid for agriculture, fisheries and railways

State aid decisions 2012-2021

3.3.1. State aid for climate, environmental protection and energy

In December 2021, the Commission endorsed the new Guidelines on State aid for climate, environmental protection and energy 2022 (CEEAG) 97 , replacing the Guidelines on State aid for environmental protection and energy 2014-2020 (2014 EEAG) 98 . The guidelines, which entered into force upon their adoption on 27 January 2022, follow the announcement of the European Green Deal 99 and adoption of the European Climate law 100 . The CEEAG create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to achieve the European Green Deal objectives in a targeted and cost-effective manner. Further details can be found in Section II 1.1 below.

3.3.2. State aid for research, development and innovation

To achieve the greatest possible impact with available budgets, State aid for research, development and innovation (RDI) should not replace or crowd out private financing. To the contrary, public funding should leverage more private investments. RDI aid can help where market forces alone do not deliver the necessary investments in promising but high-risk innovative projects.

In 2021, the Commission continued to ensure that aid schemes and individual measures notified or pre-notified under the RDI State aid rules were well targeted to projects enabling ground-breaking research and innovation. The Commission’s State aid control in the field of RDI covered a variety of sectors including novel technologies for the decarbonisation of industrial production processes, for electric and connected mobility, for digital solutions in process innovations, as well as research and technology infrastructures, innovation clusters and high power computing, with a focus on support for the development of new clean and digital technologies supporting Europe’s green and digital transition.

Following the State Aid Modernisation in 2014 101 , total RDI State aid expenditure under the GBER as well as the RDI Framework rose from EUR 8.9 billion in 2014 to almost EUR 14 billion in 2019, with EUR 12.8 billion disbursed under the GBER alone.

The GBER was amended in 2021 to introduce provisions to facilitate and simplify State aid assessments for RDI projects by combining funding from the Horizon Europe programme with national funds.

Following the fitness check, the Commission continued work on revising the State aid rules for RDI. The objective is to ensure that the revised State aid rules for RDI are fit for purpose taking into account the market and technological evolution as well as the specific objectives of the twin transition to a green and digital economy as well as the EU research and innovation policy.

3.3.3. Aid enabling Member States jointly to support important projects of common European interest

Until the end of 2021, the Commission assessed proposed State aid for the execution of Important Projects of Common European Interest (IPCEI) based on the compatibility criteria set out in a dedicated Communication 102 adopted in 2014. In order to be deemed compatible under these rules, eligible projects must address an important market failure or other important systemic failures and (i) significantly contribute to strategic EU objectives; (ii) involve several Member States; (iii) involve private financing by the beneficiaries; (iv) generate positive spill over effects across the EU and (v) limit distortions to competition. 

In January 2021, in line with the Commission’s battery alliance initiative 103 , the second set of batteries IPCEI, for developing innovative technologies for e-mobility and storage, jointly notified by 12 Member States, was approved by the Commission 104 .

In addition, in line with the updated Industrial Strategy Communication, discussions with Member States and industry on possible new IPCEIs in the areas of hydrogen technologies and systems, cloud infrastructure and services, microelectronics & connectivity and health have intensified in 2021. Concrete projects for two hydrogen IPCEIs (technology and industry) emerged in the second half of 2021, and just before the end of the year, a number of projects that will form part of an eventual new IPCEI in microelectronics and connectivity emerged as well. Not all of these projects have been notified to the Commission yet, but in all the areas mentioned above IPCEI are expected to emerge in the course of 2022. These can contribute to increasing the resilience of the EU and addressing strategic dependencies.

In 2021, the Commission finalised the revision of the IPCEI Communication following the fitness check of the State aid package. The new revised IPCEI Communication was adopted by the Commission in November 2021 and will apply from January 2022 105 .

The revised IPCEI Communication requires that at least four Member States participate, further incentivises and encourages the participation of SMEs in IPCEIs, clarifies the notion of first industrial deployment and introduces the ‘do no significant harm’ principle into the assessment framework. It states that IPCEIs can contribute to sustainable economic growth, jobs, competitiveness and resilience for industry and the economy in the Union and strengthen its open strategic autonomy.

3.3.4. Regional aid

In April 2021, the Commission adopted revised Regional Aid Guidelines that entered into force on 1 January 2022 106 . It is for the Member States to notify their future regional aid maps, which are subject to individual decisions by the Commission. By 31 December 2021, the Commission had adopted a new regional aid map for almost half of the Member States. 

The Regional Aid Guidelines were the first set of State aid rules to be revised following the announcement of the European Green Deal and the European Industrial and Digital Strategies. The revised rules include a number of targeted adjustments to simplify and reflect experience gained from the application of the previous rules, as well as to take into account those new policy priorities.

In 2021, the Commission also adopted several regional aid decisions authorising regional investment aid for SKBM’s investment project 107 for a new battery cell plant in Hungary and also approving the one-year extension of two operating aid schemes in outermost regions 108 . The Commission has further approved the prolongation of the French fiscal aid scheme to support productive investments in the French outermost regions until 2027 109 , and the extension of a scheme supporting social housing in Saint Martin 110 until 2025. The Commission also approved a plan to evaluate a large block exempted Greek scheme 111 .

3.3.5. Aid for financial institutions

In 2021, the Commission authorised the prolongation of existing schemes for banks to continue supporting the resilience of the sector, without the need of granting new aid to individual financial institutions. In particular, the Commission authorised the prolongation of schemes for the restructuring or orderly market exit of entities in distress, in Poland 112 , Ireland 113 and Denmark 114 , and for addressing potential liquidity challenges for banks in Greece 115 . In addition, the Commission allowed the prolongation of guarantee schemes for the securitisation of non-performing loans (NPLs) in Greece (“Hercules” 116 ) and Italy (“GACS” 117 ), continuing to help banks clean up their balance sheets without granting aid or distorting competition.

During the year, the Commission authorised indirect aid to financial institutions in schemes primarily targeted at providing social support to vulnerable households at risk of losing their home in Cyprus 118 and Greece 119 . In addition, the Commission authorised Member States to support young small and medium-sized enterprises (SMEs) and start-ups typically suffering from limited access to finance. In this respect, the Commission approved a modification of the existing risk finance scheme in France 120 . It approved a pricing methodology for market-conform guarantees to be provided by Banco Português de Fomento, a Portuguese development bank 121 , and a EUR 11.2 million capital increase for the Fund Manager of Financial Instruments in Bulgaria (FMFIB) 122 , which manages the financial instruments co-financed by the European Structural and Investment Funds. Finally, the Commission updated some State aid rules related to financial instruments, in line with the Commission’s current policy priorities, in particular the General Block Exemption Regulation (GBER) 123 , the Short-Term Export Credit (STEC) Communication 124  and the Risk Finance Guidelines (RFG) 125 .

3.3.6. Aid supporting fixed and mobile broadband deployment and take-up

The number of measures concerning support to the deployment of mobile networks continued to increase in 2021, with the adoption of a EUR 2.1 billion federal German scheme, a regional mobile scheme in Lower-Saxony, a Spanish scheme to support the deployment of passive infrastructure for the provision of mobile communication services in areas without 4G mobile coverage 126 and a Galician measure supporting rural mobile deployment 127 . The Commission also approved several decisions concerning fixed broadband, notably a Spanish measure roll out networks providing at least 300 Mbps symmetrical speeds, upgradeable to 1 Gbps symmetrical 128 , in areas with no more than one next generation access network and where available download connectivity was below 100 Mbps. The Commission also adopted the prolongation of a Croatian scheme for the development of NGA networks 129 . The Commission also approved a EUR 610 million Italian voucher scheme to facilitate the access of SMEs 130 to high-speed broadband services, as well as a measure supporting the connection of Italian schools 131 .

3.3.7. Aid strengthening the resilience of the EU semiconductors ecosystem

The State aid rules also provide a number of possibilities to strengthen the resilience of the EU semiconductors ecosystem. In its Communication on a Competition Policy fit for new challenges of 18 November 2021 132 , the Commission identified the global semiconductor shortage and the EU’s dependency on supply from a limited number of companies in a changing geopolitical context as a challenge for the Union. Against this specific background, the Communication specified that it may envisage approving support to fill potential funding gaps for the establishment in particular of European “first-of-a-kind” facilities in the semiconductor ecosystem based on Article 107(3)(c) TFEU. This legal basis allows the Commission to approve aid to facilitate the development of certain economic activities or of certain economic areas to be compatible with State aid rules, where it does not adversely affect trading conditions to an extent contrary to the common interest. In order to make sure that the overall belance of effects of such aid is positive, aid will be subject to strong competition safeguards as well as ensuring that benefits are shared widely and without discrimination across the European economy. On 8 February 2022, the Commission further clarified relevant concepts in its Communication on a Chips Act for Europe 133 .

3.3.8. Infrastructure support measures

The Commission approved several support measures for infrastructure projects. In January 2021, the Commission approved Greek public funding for the construction and operation of the North section of the E65 Motorway 134 . In March 2021, the Commission approved State aid for the reconstruction of Parc Exposition Hall 3 Le Bourget in Paris, in the context of the 2024 Olympic and Paralympic Games 135 . In July 2021, the Commission approved State aid for the construction of a carbon capture and utilisation facility in Hengelo (Netherlands) 136 . In December 2021, the Commission approved the amendment of a German measure to encourage the shift from road to railway in the Land of Saxony-Anhalt 137 .

3.3.9. Evaluation of aid schemes by Member States

The State Aid Modernisation (SAM) introduced the requirement for Member States to evaluate certain aid schemes. The aim is to gather the necessary evidence to better identify the impact, positive and negative, of the State aid and to provide input for future policy-making by the Member States and the Commission. Since 1 July 2014, evaluation is required for large GBER schemes in certain aid categories 138 as well as for a selection of notified schemes under the new generation of State aid guidelines 139 .

By the end of 2021, the Commission had approved evaluation plans covering 76 State aid schemes. Twelve additional schemes are currently under analysis, covering a total of 17 Member States 140 and the United Kingdom. Most of these decisions concerned either large regional aid projects or Research, Development and Innovation (RDI) aid schemes under GBER or notified energy and broadband schemes. In total, these schemes account for over EUR 62 billion in annual State aid budget. By the end of 2021, the Member States had delivered to the Commission 27 interim and 33 final evaluation reports. They were assessed by the Commission services and considered to be of average to good quality 141 .

In 2021, the Commission proposed a partial restructuring of the evaluation requirement, which would take into account the experience gained in previous years as well as the 2020 fitness check and fact-finding study. The revised version of the evaluation requirement features already in the newly approved guidelines on Regional aid, Risk Finance and ETS.

Due to the COVID-19 pandemic, in 2021 the Commission did not organise any workshop with Member State representatives and evaluation experts as in previous years. The Commission expects to resume the annual meetings in 2022. The current priority of the Commission is to comprehensively assess evaluation reports, both intermediate and final ones, in order to: (i.) give appropriate feedback to Member States, (ii.) make sure that results are used for better policy-making, and (iii.) provide evidence to assist Member States when reflecting on future legal developments.

1.4. Strengthening the Commission toolbox – a new policy initiative redressing distortive foreign subsidies 

In May 2021, the European Commission adopted a proposal for a Regulation on foreign subsidies distorting the internal market 142 , accompanied by an Impact Assessment report 143 . The legislative proposal follows the publication of a White Paper in June 2020 144 and an extensive consultation process with stakeholders.

The proposal aims at closing a regulatory gap. Subsidies granted by third countries currently go largely unchecked, while aid granted by EU Member States is subject to EU State aid rules. The proposed new tool is designed to tackle foreign subsidies that cause distortions and harm competition in the internal market. The proposed Regulation will allow the Commission to investigate foreign subsidies and redress their distortive effects in any market situation, but with a specific focus on concentrations and public procurement procedures.

The proposal includes three tools: i.) proposed concentrations where the target company has an EU turnover of at least EUR 500 million and the foreign financial contribution exceeds EUR 50 million, would have to be notified to the Commission; ii.) bids in EU public procurement procedures involving foreign financial contributions where the value of the procurement is at least EUR 250 million would have to be notified to the Commission; and iii.) the Commission would be empowered to investigate ex-officio other market situations, including smaller concentrations and smaller public procurement procedures.

The Commission would have exclusive competence to enforce the Regulation. When the negative effects of the foreign subsidy outweigh its positive effects, the Commission will have the power to impose redressive measures or accept commitments to remedy the distortion. Such measures and commitments include a range of structural or behavioural remedies, such as the divestment of certain assets or the prohibition of a certain market behaviour. The Commission will also have the power to prohibit a subsidised concentration or the award of a public procurement contract to a subsidised bidder. The Commission’s proposal is subject to the ordinary legislative procedure by the co-legislators, the Council and in Parliament.

3.5. Monitoring, recovery and cooperation with national courts

3.5.1 Increased monitoring of existing State aid to ensure competition on fair and equal terms

Pursuant to the most recent figures available 145 , 95.5% of the new State aid measures implemented in 2020 are covered by GBER and, among all the State aid measures active in the same year, 86.1% are GBER measures. These figures show that it is essential for the Commission to verify that Member States apply State aid schemes correctly and that they only grant aid when all required conditions are met. Therefore, monitoring is the counterweight to ‘self-assessment’ by Member States resulting from the exemption from the notification obligation (for example the GBER) and also a necessary complement of the approval of State aid schemes by the Commission.

3.5.2 Restoring competition by recovering of State aid granted in breach of the rules

To ensure the integrity of the internal market, Member States must take all necessary measures to recover unlawful and incompatible aid. The purpose of recovery is to restore the situation that existed on the internal market prior to the granting of the aid. This is necessary to ensure that competition in the Single Market can take place on fair and equal terms.

In 2021 the Commission continued its efforts to ensure that recovery decisions are enforced effectively and immediately. The Commission adopted five new recovery decisions, totaling an estimated EUR 1.2 billion to be recovered by the Member States concerned 146 . As of the end of December, the Commission had 53 recovery cases pending  147 .

By 31 December 2021, the sum of unlawful and incompatible aid recovered from beneficiaries amounted to EUR 29.4 billion 148 . At the same point in time, the outstanding amount pending recovery was EUR 7.6 billion.

In 2021, the Commission decided to launch one court action under Article 108(2) TFEU for failure to implement the recovery order in SA.34914 149 , but decided to repeal its decision following the confirmation by the United Kingdom that it had fully recovered the illegal State aid.

3.5.3. Cooperation with national courts to ensure the effectiveness of State aid rules

The Commission continued its cooperation with national courts under Article 29 of the Procedural Regulation 150 . This includes direct case-related assistance to national courts when they apply EU State aid law. National courts and tribunals can ask the Commission to provide case related information, or to provide an opinion on the application of State aid rules. The Commission may also submit amicus curiae observations on its own initiative.

While the Commission received no requests for information in 2021, it received two requests for legal opinions from courts in Latvia and Austria. The first request from the Supreme Administrative Court Senate in Riga concerned the calculation of overcompensation in the financing of renewable energy plants.

In 2021 the Commission continued to intervene in national proceedings as amicus curiae 151 . To make its views publicly known, the Commission publishes its opinions and amicus curiae observations, as well as observations to other bodies, for example. arbitration tribunals, on its website 152 .

In July 2021, the Commission adopted a new Notice on the Enforcement of State aid rules by national courts 153 and it replaces the 2009 Enforcement Notice 154 , providing updated practical guidance on the enforcement of State aid rules at national level and on the cooperation tools under Article 29 of the Procedural Regulation.

3.6. Significant judgements by the European Union Courts in the State aid area

In 2021, the Union Courts adopted a number of important State aid judgements. The following overview is based on a selection of court judgements, in particular on issues related to the distinction between State aid schemes and individual aid, the notion of selectivity, the compatibility of State aid schemes adopted in response to the COVID-19 outbreak and several procedural points.

Aid scheme and individual aid

In its judgement Commission v. Belgium and Magnetrol International 155 , the CJEU provided clarifications of the notion of an aid scheme. In particular, the Court confirmed that the existence of an aid scheme can be based on a consistent administrative practice; this is possible even if this practice coexists with legal acts that are systematically misapplied by Member States. This allows the Commission to go beyond the wording of the legal acts and determine the real scope of the aid scheme in question in order to ensure the effectiveness of State aid control.

The notions of existing and new aid

In C-128/19 Azienda Sanitaria Provinciale di Catania 156 , the CJEU clarified the notions of existing and new aid. It confirmed that changes such as a prolongation and budget increase to an authorised aid scheme cannot be regarded as being purely formal or administrative in nature. On the contrary, they constitute an alteration to existing aid within the meaning of Article 1(c) of Regulation No 659/1999. Such new aid must be notified, unless it meets the conditions of the de minimis regulation or the block exemption regulation.

Advantage

In C-890/19 P Fortischem a.s. v Commission 157 , the CJEU recalled that the application to an undertaking of rules derogating from the normal insolvency rules gives rise to State aid in certain circumstances.

In C-362/19 P Fútbol Club Barcelona v Commission 158 , the CJEU confirmed that the examination the Commission must carry out relates exclusively to the scheme in question (ex ante analysis) and not to the aid subsequently granted on the basis of it. 

In Joined Cases T-516/18 and T-525/18 Luxembourg and Engie v Commission 159 , the General Court held inter alia that the tax rulings were issued in derogation from the national rules on “abuse of law”, so they granted a “selective advantage” to Engie. 

In Joined Cases T-816/17 and T-318/18 Luxembourg and Amazon v Commission 160 , the General Court annulled the Commission’s primary and alternative findings on an advantage in the context of prices for an IP licence paid between the entities of the group. The General Court considered in particular that the Commission had erred in its functional analysis and finding that a group company was merely a passive holder of the intangible assets in question. The Commission did not take due account of the functions performed by that company for the purposes of exploiting the intangible assets in question or the risks borne by that company in that context. The case is under appeal by the Commission.

As regards the application of the Market Economy Operator Principle, in C-933/19 P Autostrada Wielkopolska S.A. v Commission 161 , the novelty was that the conduct of the State was compared with that of a “private debtor”, an approach relevant to situations where the State owes money to an undertaking. The CJEU explained that unlike the situations where investors, operators, vendors or creditors seek to maximise respectively the return, fees, sale revenue or recovered assets, a private debtor seeks to minimise the money it has to pay.

Economic continuity

In C-890/19 P Fortischem a.s. v Commission 162 , the CJEU confirmed that the transfer price is only one of the factors to be taken into consideration. If it is not clear whether the transaction took place at market price, the Commission is not obliged to take a definitive position on that point.

Selectivity

In a series of judgements delivered on 6 October 2021 163 on the selectivity of a fiscal measure, the CJEU dismissed the appeals against earlier judgements of the General Court, upholding the negative decisions of the Commission adopted in 2011 concerning a Spanish measure allowing the amortisation of financial goodwill for the acquisition of foreign shares. The judgments provide important perspectives for assessing the selectivity of fiscal measures, in particular for determining the reference framework, which is necessary for the determination of selectivity of fiscal measures.

On 16 March 2021, in Cases C-562/19 P Commission v Poland and C-596/19 P Commission v Hungary 164 , the CJEU upheld the judgements of the General Court from May and June 2019, which had annulled the Commission decisions of 2016 and 2017 in cases SA.44351 (Polish tax on retail sector with progressive rates) and SA.39235 (Hungarian advertisement tax with progressive tax rates) on the grounds that, in the assessment of selectivity, the Commission incorrectly identified the reference tax system. The Court found that, outside the spheres in which EU tax law has been harmonised, the determination of the characteristics constituting each tax falls within the discretion of the Member States, in accordance with their fiscal autonomy. This includes, in particular, the choice of tax rate, which may be proportional or progressive, and also the determination of the basis of assessment and the taxable event. Those characteristics constituting the tax therefore, in principle, define the reference system or the ‘normal’ tax regime, from which it is necessary to analyse selectivity. In addition, the Court noted that EU law does not preclude progressive taxation from being based on turnover as it constitutes, in general, a relevant indicator of the taxable person’s ability to pay. Accordingly, the characteristics constituting the tax, which include progressive tax rates, form, in principle, the reference system or the ‘normal’ tax regime. Further, the Court considered that the Gibraltar case-law (Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P)) does not contradict the above finding, because the Commission had not established that the progressivity of the rates was designed in a manifestly discriminatory manner, with the aim of circumventing the requirements of EU law on State aid.

Legality of schemes adopted in response to the COVID-19 pandemic

In 2021, a novel type of litigation related to various types of aid during the COVID-19 pandemic emerged. The most frequent issues in this type of actions - initiated mainly by Ryanair - related to the application and conditions of Article 107(2)(b) TFEU as well as Article 107(3)(b) TFEU. The General Court also rejected the claims about an infringement of the principle of non-discrimination and the freedom to provide services. Out of the ten judgments rendered so far at first instance, the Commission decisions were annulled in three instances, all for the breach of the duty to state reasons.

In its judgement of 17 February 2021, Ryanair v Commission 165 , the General Court dismissed Ryanair’s action against the Commission’s decision not to raise objections concerning State aid by Sweden to airlines operating in Sweden. As regards the allegation that the aid was discriminatory, the General Court noted that the aid scheme fulfilled the conditions laid down in Article 107(3)(b) TFEU. The General Court also considered that limiting eligibility for the aid only to those airlines holding a Swedish operating licence, in view of the stable and reciprocal links between them and the Swedish economy, was appropriate to achieve the objective of remedying the serious disturbance in the Swedish economy. 

In another judgement of 17 February 2021, Ryanair v Commission 166 , the General Court dismissed Ryanair’s action against the Commission’s decision not to raise objections concerning aid by France to airlines operating in France (moratorium on the collection of civil aviation tax and the solidarity tax ordinarily imposed by the French State). The General Court confirmed that the COVID-19 pandemic as well as the restrictions and lockdown measures adopted by France to deal with its consequences, constituted an exceptional occurrence within the meaning of Article 107(2)(b) TFEU, which caused economic damage to the airlines operating in France. The General Court considered that the purpose of the deferral of the payment of the taxes had the objective to repair the damage in question. 

Procedural issues

In its judgement of 22 September 2021, DEI v Commission 167 , the General Court annulled the decisions by which the Commission came to the conclusion that an arbitration award setting an allegedly preferential tariff for electricity did not involve an advantage to an aluminium producer. In this judgement, the General Court clarified the concept of complainant as an ‘interested party’ with standing to bring an action against a decision. In addition, the General Court considered that the Commission should have made a diligent, sufficient and comprehensive assessment, by carrying out economic and technical analysis, to determine whether the electricity tariff complied with the market conditions.

In its judgement of 2 September 2021, Commission v Tempus energy and Tempus Energy Technology 168 , the CJEU set aside the earlier judgment of the General Court and upheld the Commission’s decision on the UK capacity market (security of supply mechanism in the United Kingdom in the field of electricity). The judgement confirmed that the Commission correctly applied Article 108 TFEU when it decided not to raise objections against the aid without a formal investigation. In particular, the CJEU clarified that the length of contacts between the Commission and the Member States, the complexity of a measure, the high budget of a measure or the existence of spontaneous observations from third parties did not in themselves entail that the Commission had serious difficulties to determine that the aid was compatible. The CJEU also confirmed that the Commission is not obliged to seek all information which might be connected with the case before it, even where such information is in the public domain.

In C-933/19 P Autostrada Wielkopolska S.A. v Commission 169 , the CJEU recalled that interested parties cannot themselves seek to engage in an adversarial debate with the Commission in the same way as a Member State. Although during the administrative procedure new guidelines entered into force, the CJEU concluded that the facts of the case had not changed so as to merit a second round of contacts between the Commission and the beneficiary. The Commission was not obliged to grant interested parties the opportunity to comment on the observations of the Member State.

1.5. Multilateral relations

In 2021, the Commission continued its active engagement in international competition-related fora such as the OECD Competition Committee, the International Competition Network (ICN), and United Nations Conference on Trade and Development (UNCTAD).

At the OECD Competition Committee meeting in June 2021, the Commission contributed to the discussions on competition enforcement and regulatory alternatives 170 , competition compliance programmes 171 , the concept of potential competition 172 and methodologies to measure market competition 173 . In December 2021, the Commission contributed to the Competition Committee’s deliberations on the environmental considerations in competition enforcement 174 and the promotion of competitive neutrality by competition authorities 175 .

As co-chair role of the ICN Unilateral Conduct Working Group, the Commission continued the multi-annual project on the “assessment of dominance and market power in digital markets”. The Commission contributed to various work products of the Cartel Working Group, in particular “Guidance on Enhancing Cross-border Leniency Cooperation”, “Crisis Cartels and Horizontal Cooperation in the time of COVID-19”, and the “Big Data and Cartels Project”.

In July 2021, the Commission participated in the 19th meeting of the UNCTAD Intergovernmental Group of Experts on Competition Law and Policy. The session on Competition Law, Policy and Regulation in the Digital Era focused on the challenges that competition authorities face in digital markets 176 . In November 2021, the Commission participated in the Ad Hoc Working Group on Cross Border Cartels. The Commission emphasized the trusted principles developed within the ECN with regard to cooperation and prosecution of cartels. Moreover, in December 2021, the Commission also participated to the UNCTAD Global Policy Dialogue focusing on small and medium sized enterprises and Competition Policy in the wake of the post COVID-19 pandemic.

Finally, the Commission continued its endeavours to improve international rules for subsidies. Reforming the subsidy rules is one of the EU’s main priorities for the modernisation of WTO trade rules, as confirmed in the joint statement of the EU, US and Japan 177 . To this effect, in 2021 the Commission was engaged in sectoral initiatives addressing subsidies in the international context, such as the G20 Global Forum on steel excess capacity.

1.6. Bilateral relations 

In December 2021, the Commission and the US competition authorities launched the EU-US Joint Technology Competition Policy Dialogue to develop common approaches and strengthen the cooperation on competition policy and enforcement in the tech sectors 178 .

With regard to the Korean and Japanese Fair Trade Commissions there was close bilateral cooperation under the respective cooperation agreements 179 . DG Competition's multilateral technical cooperation with the Chinese, Japanese, Korean, Indian and ASEAN competition authorities continued 180 . The Commission continued its cooperation in competition policy and in case review with China's State Administration for Market Regulation (SAMR) under the 2019 cooperation documents. The Commission aims to include provisions on competition and State aid control when negotiating Free Trade Agreements (FTAs). In 2021, the Commission continued FTA negotiations with Australia, Azerbaijan, Chile, Indonesia, New Zealand and Uzbekistan.

As regards the draft Second Generation Cooperation Agreement between the EU and Canada, the Commission is in regular contact with the Canadian Competition Bureau to find a solution on data protection in Canada lining up to the standards established by the Opinion of the Court of Justice on the 2014 EU Canada Passenger Name Record Agreement 181 . Moreover, the Commission continued the negotiations with Japan on a Second Generation Agreement with a view to updating the existing cooperation agreement from 2003 182 .

With regard the candidate and potential candidate countries, the Commission's main policy objective is to help these countries to create legislative frameworks with well-functioning operationally independent competition authorities that build up a solid enforcement record. In 2021, the Commission continued to monitor candidate countries’ compliance with their commitments under the Stabilisation and Association agreements. In addition, the Commission continued monitoring the implementation of the competition acquis in neighbouring countries, with which the EU has concluded deep and comprehensive free trade agreements.

The Commission has also been actively engaging with several African national and regional authorities to develop cooperation in the competition field. In 2021, the Commission hosted joint workshops with the South African Competition Commission on digital aspects of competition law and inter-agency cooperation. In 2022, the Commission will organise Africa-EU Competition Weeks for the first time to foster dialogue with African competition authorities at the national and regional level.

5.1. Digital transformation

The Commission recognises digital transformation as a major political priority for its current mandate (Europe Fit for the Digital Age), not only for driving change in markets but also for enabling public sector modernisation. The implementation of DG Competition’s Digital Strategy to further digitise business processes, modernise digital solutions and to transform it into a more data-driven organisation to support EU competition policy enforcement continued throughout 2021 in alignment with the Commission’s Digital Strategy 183 . In addition, DG Competition updated and continued to implement its IT security action plan to further improve cybersecurity of its information systems, their security plans and staff’s cyber skills and awareness, this in collaboration with DG DIGIT.

5.1.1 Case management modernisation

In 2021, a new corporate case management platform - CASE@EC – has been rolled out for State aid case management as well as document registration and document management processes for all competition enforcement instruments. Work continued to prepare the implementation of CASE@EC for other areas, in particular case management in antitrust, cartel and merger cases.

5.1.2. Improving digital exchanges with Member States’ administrations, companies and citizens

During 2021, DG Competition continued improving its range of existing digital solutions to enhance and fully digitise communication and collaboration processes with its external stakeholders, in particular Member State administrations, National Competition Authorities, citizens and businesses as well as attorneys and law firms. This included for example a revamped tool for Member States to report State aid (SARI2) and a new solution digitizing the negotiation on confidentiality claims with parties and producing non-confidential versions of documents in the context of Access to File and preparation of decisions (eConfidentiality).

DG Competition also launched a pilot for a new digital solution supporting requests for information in the context of market investigations (eRFI), and started a project to revamp the publication of competition cases’ data on the EUROPA website 184  to help citizens and external stakeholders to better access, search and export public data on competition.

5.1.3. Advanced data support and digital solutions for competition investigations

As DG Competition continues facing an exponential increase in the volume of electronic communications with parties as well as in electronic evidence, projects have started to improve the handling of large volumes of case related submissions as well as on premise access to files by parties concerned, developments for advanced data and machine learning services and solutions to support investigations.

Moreover, DG Competition keeps investing into state-of–the-art, non-standard hardware and software solutions operated by specialised staff in the context of investigative and forensic IT activities, performed to better detect and effectively prosecute anticompetitive conduct.

5.2. Single Market Programme

Adapting to an increasingly digital and fast-paced environment is a constant challenge for the enforcement of EU competition policy. New sophisticated digital tools and algorithms used by economic operators, combined with an exponential increase in electronic communications, the sheer quantity of data and the number of documents on case files render many competition investigations increasingly complex. DG Competition therefore identified digital transformation as a key priority for 2021 and concentrated efforts to put in place innovative and modernised digital solutions to make competition enforcement more effective by working on the implementation of its Digital Solutions Modernisation Plan.

The Multiannual Financial Framework 2021-2027 also responds to these new challenges by including for the first time a dedicated Competition programme as part of the Single Market Programme 185  with a budget dedicated to actions in support of competition policy and enforcement. With a budget of EUR 20.4 million for 2021, the Competition programme channels investment into areas that support effective and up-to-date enforcement of EU competition policy as well as policy actions, cooperation and partnerships with public administrations in the EU, global cooperation and partnerships with third country authorities, and helps raising stakeholder awareness of EU competition policy. 

Programme implementation however encountered some delays in 2021 due to the late adoption of the Single Market Programme and the necessary Implementing Commission Decision 186 , which meant that calls for tenders or other procurement measures could only be launched as of May 2021. The COVID-19 pandemic further prevented a number of planned actions to take place in the originally envisaged formats, and activities together with Member States, at international level or advocacy events continued in mostly remote and virtual formats throughout 2021. 

Despite these constraints, DG Competition has been actively pursuing a comprehensive plan to implement the Competition programme. It has, in particular, invested in the development of digital business solutions dedicated to modernise case management and interactions with external stakeholders and to increase the speed and efficiency of competition enforcement through data and artificial intelligence solutions. Furthermore, the Commission has launched a call for proposals targeting national law enforcement agencies in EU Member States, with a view to offer training for national law enforcement agencies specializing in economic and financial investigations and to raise their awareness of competition and development of investigative cooperation.

5.3. External Communication and Advocacy

DG Competition reaches out to a variety of stakeholders, including businesses, lawyers and other advisers, policy makers, academics, students and civil society more generally. Various channels are being used for this purpose, first and foremost Executive Vice-President Vestager’s own press conferences and speeches, complemented by press releases, newsletters, conferences, specialised publications and an active social media presence.

In 2021, Executive Vice-President Vestager delivered 43 speeches to a variety of audiences. The Director-General also participated in more than 40 international events. DG Competition posted some 900 tweets from its account and reached close to 14 000 subscribers with its electronic newsletter; its publications in the EU Bookshop were viewed, downloaded or ordered as paper copies some 6 000 times.

DG Competition issued more than 1 000 press releases during 2021. Some of the cases and policy initiatives generated broad media coverage, for example the Statement of Objections sent to Apple on App Store rules for music streaming providers, the decision to fine car manufacturers for restricting competition in emission cleaning for new diesel passenger cars and the proposal for a new regulation to address distortions caused by foreign subsidies in the Single Market.

II. SECTORAL OVERVIEW

1. Energy & environment

1.1 Overview of key challenges in the sector

Competition policy contributes to the EU’s environmental objectives and climate targets, including the decarbonisation of the economy. To this end, the Commission has authorised State aid measures promoting the deployment of renewables, improving energy efficiency and stimulating demand for low emission vehicles for public and private transport, thereby contributing to the reduction of greenhouse gas (GHG) emissions. Competition policy also ensures that consumers have access to clean, affordable and sustainable energy and supports innovation.

Following the adoption of the Communication on the European Green Deal 187  in December 2019, which presented a roadmap of the key policies and measures needed to reach net-zero GHG emissions in the EU by 2050 and to tackle other environment-related challenges, the EU co-legislators in 2021 adopted the European Climate law 188  in order to ensure that the EU’s climate neutrality goals will be met.

On 4 February 2021, the “Greening Competition Conference” took place to debate how competition rules and sustainability policies can work together. As follow-up, in September 2021, DG Competition published a Competition Policy Brief on the competition policy initiatives to achieve the Green Deal objectives 189 .

In the field of State aid, on 21 December 2021, the College of Commissioners endorsed the CEEAG 190 , replacing the 2014 EEAG (whose validity had been extended until the end of 2021). The CEEAG were formally adopted on 27 January 2022, entering into force on that date.

The CEEAG broaden the categories of investments and technologies that Member States can support and allow or expand aid for the prevention or reduction of pollution other than in the form of GHG, including noise pollution, aid for resource efficiency and circular economy, aid for biodiversity and for the remediation of environmental damage. They feature specific sections for aid incentivising investments in areas such as the decarbonisation of industrial processes, energy performance of buildings, and clean mobility, and ensure coherence with relevant EU law and policy, in particular, ending subsidies for the most polluting fossil fuels. They allow aid for up to 100% of the funding gap, especially where there is competitive bidding. This makes it unlikely that aid will be allowed for the most polluting fossil fuels; aid to gas will be allowed only if it is compatible with EU climate targets for 2030 and 2050. The CEEAG also contain a new section on aid for the closure of coal, peat and oil shale plants to facilitate decarbonisation in the power sector. They introduce safeguards to ensure aid is directed effectively to where it is needed, requiring Member States to consult the public and stakeholders on the main elements of large aid measures. Finally, they increase flexibility by, for instance, eliminating the requirement for individual notifications of large green projects within aid schemes previously approved by the Commission. Furthermore, the corresponding GBER articles will be revised as part of the targeted review of the GBER 191 . This revision proposes to enlarge the scope of the GBER by expanding the set of measures exempted from ex-ante notification and to increase the notification thresholds for climate, energy and environmental protection measures, whenever objectively justified.

1.2 Effective competition in the green economy

In 2021, competition enforcement continued to contribute to the EU environmental objectives through the application of the State aid, antitrust and merger rules.

1.2.1. Zero- and low-emission mobility

Zero- and low-emission mobility has been one of the Commission’s focal points. The large-scale deployment of electric charging and hydrogen-refuelling stations under a competitive market is important to ensure the take-up of electric and hydrogen powered vehicles and encourage the shift away from fossil fuels.

In 2021, the Commission approved several schemes for the deployment of electric charging stations and other alternative refuelling infrastructure as well as for the acquisition of zero- or low-emission vehicles (in particular electric or hydrogen buses for public transport) 192 . It also advised Member States on several other schemes to either bring them under the GBER or to ensure that they did not entail State aid in line with published relevant guidance 193 .

In July 2021 the Commission amended the GBER by introducing a new block exemption for aid for publicly accessible recharging or refuelling infrastructure for the supply of electricity and hydrogen to zero and low emission road vehicles for transport purposes. This will facilitate aid for comprehensive networks of such infrastructures in the Member States far beyond what was possible under the GBER rules in place before the amendment 194 . 

In July 2021 195 , the Commission adopted a decision against five car manufacturers - Daimler, BMW, Volkswagen, Audi and Porsche, imposing fines totalling of EUR 875 million for restricting technical development in the area of emission cleaning technology for diesel cars. Daimler was not fined because it revealed the existence of the cartel. All companies acknowledge their involvement in the cartel and agreed to settle the case. The car manufactures held regular technical meetings to discuss the development of the selective catalytic reduction (SCR)-technology which eliminates harmful nitrogen oxide (NOx)-emissions from diesel passenger cars through the injection of urea (also called “AdBlue”). During these meetings, and for over five years, the car manufacturers coordinated the size and ranges of the AdBlue tank and had a common understanding on the average AdBlue consumption. Through their collusive practices, they signalled to each other that they would not aim to clean better than required by law. It is the first time that the Commission has sanctioned a cartel that only concerns collusion to limit technical development.

1.2.2. Energy efficiency in buildings

The GBER amendment of July 2021 simplifies the rules for State aid for energy efficiency measures in certain categories of buildings. This includes residential buildings and a new possibility of combining aid for energy efficiency measures with aid for on-site renewable energy installations, storage facilities for the renewable energy produced, equipment and infrastructures for the recharging of electric vehicles and investments in the digitalisation of the building, as well as a new possibility allowing for the aid measures to also relate to the facilitation of energy performance contracts 196 . 

1.2.3. Energy and environmental aid and the Recovery and Resilience Facility

In 2020, the Commission published guiding templates to assist Member States in the design of their national Recovery and Resilience Plans (RRPs) in line with EU State aid rules, including for a series of support measures for environmental protection in line with the “European flagships” of the Commission’s Annual Sustainable Growth Strategy 2021 197 . So far, the Commission has endorsed 22 RRPs 198 . Furthermore, Member States shall notify to the Commission any plans to grant aid, pursuant to Article 108 TFEU. In 2021, the Commission adopted four no objection decisions concerning renewables and energy storage under the RRPs 199 , with further decisions expected in the future.

1.2.4. Renewables and cogeneration

In 2021, the Commission adopted 20 no objection decisions concerning renewables and combined heat and power support schemes 200 , which concerned a number of different renewable technologies (for example geothermal, photovoltaic, onshore and offshore wind, biomass), including support for local communities and the use of decarbonisation technologies (such as hydrogen).

On 29 April 2021, the Commission approved the prolongation and modification of a German scheme to support the production of electricity from renewable energy sources and from mine gas, as well as reductions of charges to fund support for electricity from renewable sources. The reduction of charges will be available to energy-intensive companies and shore-side electricity supply to ships while at berth in ports 201 .

In addition, on 20 December 2021, the Commission approved the Austrian State aid scheme to support electricity production from renewable sources (wind, solar, hydro, biomass and biogas) until the end of 2030 202 . 

Antitrust enforcement also contributes to the objective of a low-carbon economy and the European Green Deal. In 2021, the Commission continued its investigation of ethanol producers suspected of having colluded with the aim of influencing the ethanol benchmarks published by the price-reporting agency Platts, harming competition and undermining the European Green Deal and EU energy objectives. On 10 December 2021, the Commission adopted a settlement decision with a fine of EUR 20 million against Abengoa (Spain) in this case 203 . The investigation is still ongoing for the other companies concerned.

On 10 September 2021, the Commission concluded the long-running Greek lignite antitrust case by making legally binding the measures proposed by Greece to remove the distortion created by its granting of exclusive access to lignite-fired generation to the state-owned incumbent Public Power Corporation (PPC) 204 . Specifically, Greece committed to ensure that PPC sells a portion of its wholesale electricity (generated from hydropower, gas, renewables, or lignite) through the two power exchanges present in Greece, EEX or HEnEx, several months ahead of actual delivery. This allows PPC’s rivals to have stable access to generation volumes necessary to hedge their prices against volatility, and therefore to more easily make offers to final consumers. The measures, which will lapse when the existing highly-polluting lignite plants stop commercial operations under Greece’s National Energy and Climate Plan (or at the latest by the end of 2024), are also fully in line with the European Green Deal and the EU's climate objectives.

1.2.5. Coal exit

Phasing out coal-fired power plants also contributes in a crucial way to the transformation to a climate-neutral economy, in line with the European Green Deal objectives. In 2021, the Commission continued examining measures taken by Member States to support the phase-out from coal-fired power generation. In particular, in March 2021 the Commission opened an in-depth investigation to assess whether German plans to compensate lignite-fired power plants for phasing out earlier than foreseen are in line with EU State aid rules 205 . 

Furthermore, the CEEAG introduce new compatibility rules for measures that Member States may take to support the closure of power plants that burn coal, peat or oil shale and of mining operations for these fuels 206 .

1.3 Secure Energy Supply

In 2021, the Commission continued its enforcement activity with respect to measures aimed at the security of energy supply, including capacity mechanisms.

In August 2021, following a formal investigation procedure, the Commission concluded that the Belgian capacity mechanism complied with the EEAG and with the Electricity Regulation 207 . In particular, the Commission found that, in contrast with its preliminary findings in its decision opening a formal investigation, Belgium had improved its resource adequacy assessment and brought it in line with the EU-wide methodology for resource adequacy assessment approved by the European Union Agency for the Cooperation of Energy Regulators (ACER) in October 2020 208 .

In addition, in 2021, the Commission approved, under EU State aid rules, a EUR 166.7 million Greek support measure (direct grant in favour of Gastrade SA) for the construction of a new liquefied natural gas (LNG) terminal in Alexandroupolis, Greece. The project will contribute to the security and diversification of energy supplies in Greece and, more generally, in the region of South East Europe, without unduly distorting competition 209 .

1.4 Effective competition in energy markets

The objective of competition law enforcement in the energy sector is to complement sector-specific regulation to create a well-functioning internal market for energy, where energy can be exchanged freely and securely across the EU, and where all related services are provided in a competitive manner, thus allowing businesses and consumers to benefit from reliable and sustainable energy at affordable prices.

In March 2021, the Commission initiated proceedings against the Greek electricity incumbent PPC for potential predatory behaviour in the wholesale electricity market in the Greek interconnected system (mostly mainland Greece) 210 . The investigation focuses on PPC’s alleged strategic bidding behaviour that may have resulted in its thermal units being selected for generation even when they did not cover their average variable costs. PPC’s exclusionary behaviour allegedly prevented its main generation rivals from expanding in the wholesale market and resulted in Greek consumers facing higher prices, less choice, and more pollution from less green sources of electricity generation.

Electricity trading plays an important and growing role in the effective and safe management of electricity grids and helps to ensure that electricity flows from where it is produced to where it is needed. Following a complaint, the Commission decided to open a formal investigation on 30 March 2021 to assess whether the power exchange EPEX Spot SE has been taking advantage of its dominant position to hinder the activities of competitors on the market for electricity intraday trading facilitation services in at least six Member States (Austria, Belgium, France, Germany, Luxembourg and the Netherlands) 211 . This behaviour, if proven, may be contrary to Article 102 TFEU as it may distort the prices of electricity trading, and could ultimately lead to higher electricity prices for consumers and a slowdown in the greening of the electricity system by preventing the cost-effective integration of renewable technologies in the electricity mix.

In the context of the spike in energy prices observed in the second half of 2021, the Commission started investigations into whether Europe’s main gas suppliers may have engaged in anti-competitive conduct aimed at pushing up gas prices in Europe.

The environment sector also saw intense merger and acquisition activity in 2021. In April 2021, the Commission approved the acquisition of several waste management companies located in Germany, Luxembourg, the Netherlands and Poland by Schwarz Group from Suez, subject to the divestment of the lightweight packaging (LWP) sorting plant in Rotterdam originally owned by Suez 212 . The transaction, as originally notified, would have brought together the two largest players in the LWP sorting market in the Netherlands, and would have probably led to higher prices for LWP sorting, higher recycling costs and, ultimately, increased prices in consumer goods. 

The Commission authorised on 14 December 2021 the acquisition of Suez by Veolia 213 , subject to the divestment of almost the entirety of Suez’s waste and water businesses in France. Both companies are major global players in the management of water and waste, and the Commission found that the transaction as originally notified would have probably led to higher prices and lower quality of service for public sector and industrial customers.

On 16 December 2021, the Commission also authorised the acquisition of Group Ecore by Derichebourg 214 , subject to the divestment of several metal scrap collection and recycling plants in France. Both companies are leading players in the collection, recycling and commercialisation of metal scrap in France, and together they would have had a strong position in several regions, which would have led to higher prices and less choice for suppliers and customers, to the detriment of consumers. Derichebourg offered to divest a number of plants, fully addressing the competition concerns identified by the Commission.

2. Information and Communication Technologies and media

2.1 Overview of key challenges in the sector

Markets in the information, communication, technologies and media sectors (ICT) continue to evolve at rapid pace with new devices and new intangible advances appearing, such as services, applications, and ecosystems. Business models and sources of revenue tend to change faster in digital markets than elsewhere. The media sector has significantly evolved due to technological convergence as content is delivered to users via an increasing array of devices and networks (for example films, music and editorial content offered by different platforms are available on TV screens, phones, tablets and laptops running through different telecommunications networks, including fixed or mobile). Technological innovation has also created new cross-border opportunities and poses challenges to established business practices.

The frequently observed network effects in ICT markets render them particularly prone to consumer lock-in and entrenched positions of dominant suppliers. Market players frequently hold a dual role, by operating a platform or marketplace for third parties and at the same time offering their own products or services on that platform or marketplace in competition with those third parties. In ICT markets, access to and control over various types of data will often be decisive for commercial success. At the same time, anti-competitive practices may raise barriers to entry and cause small and innovative competitors to exit early from the market.

To contribute to the digital transition, effective antitrust scrutiny of the behavior of market players, including platforms, as well as timely intervention need to be ensured in ICT markets. To make and keep markets open and competitive in line with the goals of the EU’s digital agenda, enforcement must focus on safeguarding interoperability and competition between technological platforms, and on improving standard setting.

2.2. Contribution of EU competition policy to tackling the challenges

2.2.1. Data and platforms

On 20 January 2021, the Commission fined Valve, the owner of the online PC gaming platform Steam and five publishers Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax, a total of EUR 7.8 million for restricting cross-border sales of PC video games on the basis of customers’ geographical location within the EEA (“geo-blocking”) 215 . The fines for the publishers, totalling over EUR 6 million, were reduced because the companies cooperated with the Commission. Valve chose not to cooperate and was fined over EUR 1.6 million.

The Commission is ensuring that platforms do not access and use data in an anticompetitive manner. In that regard, the Commission is investigating Amazon’s systemic reliance on non-public business data of independent sellers who offer their goods and services on its marketplace, to the benefit of Amazon’s own retail business, which is in direct competition with those third party sellers. The Commission issued a Statement of Objections in the Amazon Data case on 10 November 2020 216 and the investigation is currently ongoing.

On 4 June 2021, the Commission opened a formal antitrust investigation to assess whether Facebook (now Meta) violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Meta is active such as classified ads 217 . The formal investigation will also assess whether Meta ties its online classified ads service “Facebook Marketplace” to its social network, in breach of EU competition rules. If proven, the practices under investigation may breach EU competition rules on anticompetitive agreements between companies (Article 101 TFEU) and/or on the abuse of a dominant position (Article 102 TFEU). 

On 22 June 2021, the Commission formally opened an investigation under Articles 101 and/or 102 of the TFEU into a broad range of Google’s advertising technology (ad tech) and data-related practices 218 . The Commission’s decision to open the investigation was addressed to Google and its parent company Alphabet and concerns Google’s role and use of data in online advertising and the provision of ad tech services, that is to say online intermediation services between advertisers and publishers for serving ads.

The investigation covers notably: (1) potential restrictions on competing ad tech services’ ability to serve online display advertisements on YouTube and a potential obligation to use Google’s services to programmatically purchase online display advertisements on YouTube, since at least 2015; (2) potential reciprocal favouring of Google’s advertiser side and publisher side ad tech services, since at least 2010; (3) potential restrictions by Google on the ability of advertisers, publishers and competing online display advertising intermediaries to access data about user identity or user behaviour available to Google’s own ad tech services, since at least 2012; (4) Google’s announced plans to prohibit the placement of third party cookies on Chrome and to introduce as a replacement the “Privacy Sandbox” set of tools, at least since the plans were announced in January 2020; and (5) Google’s announced plans to stop making the advertising identifier available to third parties on Android devices when a user opts out of interest-based advertising or advertisement personalisation, at least since the announcement was made in June 2021.

The Commission has also initiated three formal antitrust proceedings against Apple concerning Apple’s rules on the distribution of apps that compete with Apple’s own apps and services on Apple’s App Store in the European Economic Area 219 . In the App Store Practices (music streaming) case in particular, the Commission has preliminary found that the requirements imposed by Apple distort competition on the music streaming market and constitute an abuse of Apple’s dominant position in the market for distribution of music streaming apps to iPhone and iPad users 220 .

Further, the Commission is also looking into potential “self-preferencing” and discriminatory practices of digital “dual role” platforms. In particular, the Commission is investigating whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users, under Amazon’s Prime loyalty programme, lead to preferential treatment of Amazon’s retail business or of third-party sellers that use Amazon’s logistics and delivery services 221 .

In July 2020, the Commission launched the consumer Internet of Things (“IoT”) sector inquiry, based on Article 17 of Regulation 1/2003 222 , to better understand the IoT sector, its competitive landscape, developing trends and potential competition issues. On 9 June 2021, the Commission published its preliminary report on the IoT sector inquiry, setting out its initial findings and providing an overview of the main competition-relevant market trends identified 223 . The publication was followed by a public consultation during which stakeholders were able to comment on the initial findings of the sector inquiry. In January 2022, the Commission published the final report 224 and its accompanying Staff Working Document 225 in which it presented the findings of the sector inquiry, including a number of potential competition concerns, raised by stakeholders. Stakeholders have in particular raised concerns in relation to (i) certain exclusivity and tying practices for voice assistants, (ii) the position of voice assistants and smart device operating systems as intermediaries between users, on one side, and smart devices or consumer IoT services on the other side, (iii) the access to and accumulation of large amounts of data by voice assistant providers; and (iv) a lack of interoperability due to technology fragmentation and the prevalence of proprietary technology.

2.2.2. Cross-border access to content

On 9 December 2020, the CJEU 226 set aside the General Court’s earlier, confirmatory judgment 227 , and annulled the Commission’s decision of 26 July 2016, which made binding commitments offered by one of the studios (Paramount) in the pay-TV investigation. Since the Commission also made essentially identical commitments binding on the remaining studios (Disney, NBCUniversal, Sony Pictures, Warner Bros.) and the broadcaster Sky by its decision of 7 March 2019, the Commission decided to withdraw that decision and close the antitrust proceedings on 31 March 2021 228 . The pay-TV investigation related to certain clauses in licensing contracts for pay-TV between six major film studios and Sky UK. Such clauses restricted Sky UK’s ability to accept unsolicited requests from consumers located outside the UK and Ireland, eliminating cross-border competition and rendering more difficult cross-border access to audio-visual content. Both judgments confirmed the Commission’s interpretation of Article 101(1) TFEU and indicate that the geo-blocking clauses at issue create absolute territorial protection and thus have as their object the restriction of competition. Moreover, the General Court’s judgement supports the Commission’s view that such clauses would not be exempted under Article 101(3) TFEU, because they are not indispensable.

2.2.3. Technology Markets

The Commission’s actions in technology markets aim at keeping markets competitive and maximising incentives to innovate. In this context, the Commission has continued monitoring compliance with its decisions in the Google Search (Shopping) and Google Android cases.

On 2 August 2021 the Commission opened an in-depth investigation on the proposed acquisition of Kustomer, a Customer Relationship Management (CRM) software provider, by Meta (previously Facebook). Following its in-depth investigation, the Commission had concerns that the transaction, as initially notified, would have harmed competition in the market for the supply of CRM software and the market for the supply of customer service and support CRM software. In particular, Meta might foreclose access to its business-to-consumer messaging channels, namely WhatsApp, Messenger or Instagram, which constitute an important input for suppliers of CRM software services. To address the competition concerns identified by the Commission, Meta offered comprehensive access commitments with a 10-year duration, namely a public API access commitment and a core API access -parity commitment, with a trustee, to be appointed before the transaction would close, to monitor the implementation of the commitments. In view of this, the Commission on 27 January 2022 approved the proposed acquisition of Kustomer by Meta, conditional on full compliance with the commitments offered by Meta 230 .

On 30 June 2021 the Commission cleared the acquisition of Xilinx by Advanced Micro Devices (AMD), both global semiconductor companies based in the US. The Commission focused on possible conglomerate effects with regard to AMD’s central processing units (CPUs) and graphic processing units (GPUs) and Xilinx’s field-programmable gate arrays, concluding that the transaction does not raise competition concerns given the lack of ability and incentive to foreclose rival providers of CPUs and GPUs.

On 27 October 2021, the European Commission opened an in-depth investigation to assess the proposed acquisition of Arm, a supplier of core architecture and intellectual property (IP) to chipmakers for the design of processing units, by NVIDIA, a global supplier of semiconductors 231 . In its preliminary investigation, the Commission had found that Arm has significant market power on the upstream market for the licensing of IP for the design of processor products. Therefore, the Commission raised serious concerns that the merged entity would have the ability and incentive to restrict or degrade access to Arm's IP by providers of processor products that compete with NVIDIA downstream, leading to higher prices, less choice and reduced innovation in the semiconductor industry. On 8 February 2022, NVIDIA informed the Commission that it withdrew its notification and demonstrated that it abandoned the concentration 232 .

On 21 December 2021, the Commission approved the acquisition of Nuance, a US software company offering transcription technology, with a focus on the healthcare sector, by Microsoft, a global technology company. The transaction, aiming at facilitating Microsoft’s entry into the healthcare space, mainly gave rise to conglomerate relationships between Nuance’s transcription software and Microsoft’s provision of productivity software, enterprise communication services and PC operating systems. The Commission concluded that the proposed transaction would raise no competition concerns on any of the markets examined in the EEA and cleared the case unconditionally 233 .

2.2.4. Telecommunication sector

European consumers must be able to benefit from increased choice in the telecommunication sector thanks to low prices, high quality and innovative services. The fast and efficient roll-out of 5G, ensuring the European industry's competitiveness in an increasingly digital society, is a key priority for the Commission. Network sharing agreements can be a source of efficiencies - such agreements can facilitate the roll-out of advanced technological solutions by reducing costs. However, not all network sharing arrangements are beneficial and potential anti-competitive effects have to be carefully assessed in order to avoid harm to competition and possible consumer harm.

In 2021 the Commission continued its investigation into a mobile network-sharing agreement between the two largest operators in Czechia, O2/CETIN and T-Mobile. Following on from the issuance of a Statement of Objections in 2019, on 27 August 2021 the Commission adopted a preliminary assessment which set out the concerns that the Commission continued to have as regards the negative effects on competition of the sharing agreement. The key concerns set out related to the reduction in the ability and incentives of T-Mobile and O2 to unilaterally invest in network infrastructure, in particular through technological hold-back, financial disincentives and information exchange. The parties offered commitments to meet the Commission’s competition concerns. The commitments relate to certain hardware upgrades, certain financial conditions for unilateral deployments and further restrictions on information exchange 234 . The offered commitments were market tested until 1 November 2021 235 . 

On 28 July 2021, the European Commission approved the acquisition of Telekom Romania Communications (TKR) by Orange, of which provide wholesale and retail telecommunication services in Romania. The approval was conditional on the divestiture of TKR's 30% minority shareholding in Telekom Romania Mobile Communications (TRMC), one of the main mobile operators in Romania. The Commission found that the transaction would have raised serious competition concerns, as Orange would have acquired TKR's 30% minority shareholding in TRMC, one of Orange’s key competitors at retail level. This may have reduced Orange's incentives to compete with TRMC and allowed it to block important investments by TRMC. The Commission found that the divestment of TKR's 30% minority shareholding in TRMC fully removes the competition concerns identified in the market for retail mobile telecommunications services 236 .

On 10 November 2021, the European Commission approved the acquisition of joint control of Open Fiber, a wholesale-only operator developing an optical fibre network in Italy, by Cassa Depositi e Prestiti (CDP), controlled by the Italian State, and Macquarie Group Limited, a multinational investment bank 237 . The transaction raised no horizontal or vertical relationships between the activities of Macquarie and Open Fiber, which was already jointly controlled by CDP (together with Enel). The Commission assessed whether the Transaction was interrelated with the potential creation, announced by CDP and TIM, the Italian telecommunications incumbent, of a single fixed network in Italy, and should therefore be treated as a single concentration. The Commission concluded that the two transactions were independent of each other. Finally, the Commission also assessed whether the transaction would increase the risks of coordination between Open Fiber and TIM, in which CDP has minority interests, and concluded that possible concerns in this regard are not specific to the transaction.

Other significant developments in the telecoms sector include the judgments rendered by the CJEU in the Deutsche Telekom and Slovak Telekom cases 238 . These judgments confirm that where a dominant undertaking gives access to its infrastructure but makes that access subject to unfair conditions, this behaviour can amount to an abuse 239 .

2.2.5. Media

On 22 December 2021, the Commission approved the acquisition of Warner Media by Discovery, both US companies active across the audio-visual (AV) value chain. The Commission’s investigation focused on a number of horizontal, vertical and conglomerate relationships between the parties’ activities in various Member States, mainly concerning the markets for the wholesale supply of TV channels and the retail supply of AV services. The Commission concluded that that the proposed acquisition would raise no competition concerns given that, following the transaction, the combined entity would continue to face sufficient competition from other players. In addition, the Commission found no competition concerns stemming from the vertical and conglomerate links between the activities of the companies, since the latter would not have the ability nor the incentive to engage in foreclosure practices 240 .

In 2021, the Commission dealt with a large number of State aid cases in the news media sector. Particular attention was paid to the fact that media play a key role for democracy, where support should be provided in a way that respects and promotes quality independent journalism, media freedom and pluralism 241 . The Commission has continued its policy work to sustain a free and independent media sector. Similarly, aid to film production remains an important tool to sustain the cultural diversity of the EU in the audio-visual sector. As aid to the media may also be granted under the Recovery and Resilience Facility (RRF), the Commission developed a template to guide Member States on how to apply State aid rules and procedures to aid for digitalisation of news media 242 .

2.2.6. Facilitating the Digital Transition

High quality electronic communications infrastructure is crucial for social cohesion and a competitive and sustainable economy, therefore State aid control in the electronic communications sector, including aid for broadband rollouts, plays an important role in developing a coordinated investment strategy and reaching the digital transition goals.

A public consultation on the evaluation 243 of the 2013 Guidelines for State aid to Broadband 244 came to an end in January 2021. To ensure that the Broadband Guidelines are aligned with technological and economic developments and take into account evolving connectivity objectives, in November 2021, the Commission launched a public consultation on draft for revised Broadband Guidelines 245 , with the aim to adopt them in the course of 2022.

In July 2021, the Commission adopted an extension of the scope of the GBER 246 , which concerns, among others, certain State aid measures that support the digital transition, notably aid for fixed and mobile broadband networks, as well as connectivity vouchers. This new GBER extention will also facilitate the co-financing with State aid of certain projects of common interest in the area of trans-European digital connectivity infrastructure financed under Regulation (EU) 2021/1153 or awarded a Seal of Excellence quality label under that Regulation.

Measures within the Recovery and Resilience Facility (RRF) have to comply with the State aid framework for State aid measures to support the economy in the current COVID-19 outbreak and be notified to the Commission unless they fall under the GBERor an existing authorized scheme. To facilitate the Member States’ State aid assessment, the Commission provided guidance on State aid to broadband connectivity in the form of a template on measures to support the deployment and take-up of fixed and mobile very high capacity networks, including 5G and fibre networks 247 .

3. Financial services

3.1 Overview of key challenges in the sector

Throughout 2021, financial services markets continued to be characterised by a rapid pace of technological and regulatory changes. The Commission’s intervention in the sector aims at ensuring that consumers and merchants are able to benefit fully from these developments. All instruments of EU competition policy contribute to maintaining and promoting strong competition in markets for financial services and protecting customers and innovation, while preventing systemic risks to the economy.

EU legislation, and in particular the implementation of the Interchange Fee Regulation 248 and the revised Payment Services Directive 249 aim at spurring more competition and innovation in the payments sector, to the benefit of consumers and merchants. Many payment services are characterized by network effects. As a result, distortions of competition by companies or Member States can produce particularly severe effects such as preventing innovative competitors from entering, or pushing them to exit from the market prematurely. It is therefore important to prevent or remedy such distortions.

New players regularly emerge or continue their development across financial markets, including large technology companies, such as Apple or Alphabet (Google), but also smaller or more innovative providers, in particular FinTech companies, which aim at enhancing the provision of financial services by bringing in technological innovation. This trend covers most financial services markets, including banking, payments and insurance. Digital technology and FinTech companies have also continued to facilitate access to EU capital markets for investors and the Commission pursued its objective to create a smooth functioning Capital Markets Union in 2021. The development of cryptocurrencies raises a number of regulatory challenges, including possible competition issues. Most of the regulatory issues are being addressed by Commission legislative initiatives, which also take into account potential competition concerns, such as the Commission proposal for a Regulation on Markets in Crypto-Assets (MiCa) 250 which seeks to regulate and supervise crypto-assets. The Commission will continue to monitor market developments concerning crypto-assets, as well as digital wallets for related payment and money transfers, such as Facebook’s digital wallet Novi, to ensure timely antitrust assessment of their impact for the payment sector and consumer welfare.

Incumbent players in the financial industry, including card schemes, banks and traditional insurers or brokers remain key players in the financial value chains. Throughout 2021, the Commission has thoroughly investigated consolidation, cooperation and even coordination among traditional market players. The Commission also reviewed aid schemes to banks and other traditional financial institutions.

Access to cheap and reliable financial data is also a key challenge for the industry, as such data ensures the fairness of market prices and systemic stability. Major policy initiatives and commercial strategies aiming to encourage a stronger shift towards sustainable investment through clearer indications of firms’ environmental, social and corporate governance records have further emphasised the need for fair and non-discriminatory access to financial market data such as ESG indices. All of these developments have demonstrated the essential nature of qualitative proprietary market data on which the Capital Market Union relies. In turn, this has reinforced the need to ensure that the EEA data markets are free of anti-competitive behaviours, and that concentrations in the field are carefully scrutinised.

The decision by the G20 and competent regulatory authorities to cease the publication of IBORs (starting with certain LIBOR rates at the end of 2021) to favour reliance on alternative “risk free” rates, has induced a number of international financial organisations to develop mechanisms to facilitate this transition. In particular, they have convened their members and launched consultations in order to design fall-back rates to apply to IBOR based legacy contracts. These voluntary fall-backs seek to facilitate the needed renegotiation and adjustment of the many thousands of such legacy contracts whose terms extend beyond the announced IBOR cessation dates. The fall-back design processes must be undertaken in compliance with EU competition law.

In 2021, the COVID-19 pandemic continued to impact financial services markets. In particular:

-In the banking sector, the wide range of aid schemes set-up by the Member States and approved by the Commission to support the real economy contributed to shielding EU banks from a severe downturn.

-In the insurance sector, the COVID-19 pandemic has continued to create pressure on certain lines of insurance notably those related to health and business continuity. In addition to the COVID-19 pandemic, climate change and an increasing number of severe weather events as well as increasing levels of cybercrime are affecting the insurance sector. These developments may give rise to the need for cooperation in the sector, which however must be compliant with EU competition law.

-In the payments sector, retail payments have increasingly turned digital and contactless. The trend towards an increased use of digital and contactless payments in-store and online which accelerated at the start of the pandemic continued throughout the year, strengthening the market position of companies offering such payment services.

3.2 Contribution of EU competition policy to tackling the challenges

3.2.1. Contribution of EU competition policy to innovation and fairness in payments

In 2021, the Commission continued its monitoring of the application of the Interchange Fee Regulation (IFR) 251 . 

The Commisson’s Report to the European Parliament and the Council on the application of the IFR of 29 June 2020 252 concluded that the IFR has achieved its main objectives and did not identify a need for legal revision. Following the IFR Hearing on 7 December 2020 which allowed additional stakeholders’ and national competent authorities’ views to be collected, the Commission continued market monitoring in 2021 on the basis of voluntary questionnaires to stakeholders, related in particular to recent scheme fees trends and possible circumvention of the interchange fees capped by the IFR.

3.2.2. Antitrust and cartel investigations in the financial services sector

In 2021, the Commission sanctioned three new cartels in the financial sector, imposing overall fines of EUR 740 million on 16 different financial institutions.

In April and May 2021, the Commission fined a number of investment banks a total of EUR 28.494 million for being part of a sovereign and agency bonds trading cartel 253 and EUR 371 million for participating in a cartel trading European Government Bonds 254 .

In particular, with regard to the first case, the Commission found that Bank of America Merrill Lynch, Crédit Agricole, Credit Suisse and Deutsche Bank took part in a cartel relating to Supra-sovereign, Sovereign and Agency (SSA) bonds denominated in US Dollars. The four investment banks participated in the cartel through a core group of traders that exchanged commercial sensitive information, usually on multilateral or bilateral chatrooms on Bloomberg terminals.

As for the second case, the Commission found that Bank of America, Natixis, Nomura, RBS (now NatWest), UBS, UniCredit and WestLB (now Portigon) engaged in a cartel related to the primary and secondary market for European Government Bonds (‘EGB'). They investment banks participated in the cartel through a group of traders who exchanged commercially sensitive information, mainly in multilateral chatrooms on Bloomberg terminals. The overall aim of the collaboration between the group’s traders was to help each other in their operation on the market by increasing transparency and reducing uncertainties regarding the issuing and/or trading of EGB.

In both cases, the Commission was able to confirm anticompetitive behaviour even though operators were exchanging sensitive information, coordinating prices and aligning their trading activities through sophisticated technological tools, such as multilateral or bilateral chat rooms on a specific platform for financial intermediaries.

Moreover, in December 2021, the Commission completed its cartel investigation into the foreign exchange (‘Forex') spot trading market by imposing fines totalling EUR 344 million on UBS, Barclays, RBS HSBC and Credit Suisse 255 . The Commission's investigation revealed that some traders in charge of the Forex spot trading of G10 currencies, acting on behalf of the fined banks, exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through an online professional chatroom called ‘Sterling Lads’. Barclays, HSBC, RBS and UBS acknowledged their involvement in the cartel and agreed to settle the case. The decision against Credit Suisse was adopted on the same day under the normal procedure (a so-called ‘parallel hybrid’ settlement procedure).

In 2021, the Commission also intensified its monitoring as regards competition in the EEA markets for proprietary financial market data in light of informal complaints against incumbent primary suppliers allegedly applying abusive licensing practices. The decision of international financial regulators to require financial contracts to be based on so-called risk free rates and the cessation of the publication of certain LIBORs at the end of 2021 have given rise to calls for guidance to ensure that “fall-back” design and roll out processes comply with EU competition law. As the Commission recognises that these voluntary fall-backs can play a key role in ensuring a smooth transition to alternative rates for the vast number of affected legacy contracts, it is willing to engage with organisations involved in designing such fall-back systems to allow them to determine how to ensure that they comply with EU competition law, while continuing monitoring the financial markets that currently rely on IBORs.

In the field of motor insurance, in 2021 the Commission continued its investigation into the conditions of access to the Insurance Link data pooling system administered by Insurance Ireland. On 18 June 2021, the Commission sent a Statement of Objections 256 to Insurance Ireland, presenting its preliminary concerns that Insurance Ireland arbitrarily delayed or de facto denied access to the data pooling system to companies that had a legitimate interest in joining it, and that hurdles remain in place that might affect companies seeking to enter the Irish motor insurance market. This may have the effect of placing these companies at a competitive disadvantage on the Irish motor insurance market in comparison to companies already having access to the database.

In 2021, the Commission continued its in-depth investigation as a matter of priority to determine whether there has been a breach of EU competition rules by Apple in connection with Apple Pay 257 . The investigation concerns Apple's terms, conditions and other measures for integrating Apple Pay in merchant apps and websites on iPhones and iPads, Apple's limitation of access to the Near Field Communication (NFC) functionality (“tap and go”) on iPhones for payments in stores, and alleged refusals of access to Apple Pay. Apple Pay is a digital mobile wallet operating on Apple (iOS) devices. Based on the Commission's preliminary fact-finding, Apple appears to have engaged in practices that may distort competition among providers of digital mobile wallets and reduce choice and innovation.

3.2.3. Merger investigations in the financial sector

The Commission continued to ensure that concentrations in the financial sector do not lead to higher prices, lower quality products or services, or less innovation for consumers. The Commission assessed transactions across a variety of markets, including in particular payment services, financial data, and insurance provision and distribution.

On 8 July 2021, the Commission unconditionally approved the creation of the P27 joint venture and its acquisition of Bankgirot, by six Nordic banks 258 . P27 aims at building the world’s first real-time, cross-border and cross-currency payment system, covering multiple Nordic countries. The Commission found that the transaction would not raise competition concerns, as the number of providers available would not be reduced, and the applicable regulatory requirements would prevent P27 and the parent banks from foreclosing other players.

Following an in-depth investigation opened on 21 December 2020, the Commission conditionally approved the proposed acquisition of Willis Towers Watson by Aon 259 on 9 July 2021. The Commission found that the transaction as initially notified would have significantly impeded competition in the markets for: (i) commercial risk brokerage services to large multination customers based in the EEA for the risk classes concerning property & casualty, financial and professional, and cyber risk; (ii) commercial risk brokerage services to customers for space and aerospace manufacturing risks; (iii) commercial risk brokerage in national markets in the Netherlands and Spain; (iv) non-life treaty and facultative reinsurance brokerage services globally; and (v) pension administration services to companies in relation to pension schemes offered to their employees for the market in Germany.

To address the Commission’s concerns, Aon committed to divest to rival insurance broker Gallagher the entire commercial risk brokerage country organisations of Willis Towers Watson in France, Germany, Spain and the Netherlands, Willis Towers Watson’s cyber risk brokerage business in the UK, a substantial set of additional customer contracts and personnel in a number of EEA countries and internationally, Willis Towers Watson's entire brokerage business for the risk classes space and aerospace manufacturing; and Willis Towers Watson’s entire global treaty reinsurance and facultative reinsurance brokerage organisation. Aon also committed to divest to a suitable purchaser Aon's entire German retirement benefits consulting and pension administration businesses, as well as Aon's German investment solutions business.

On 22 October 2021, the Commission authorised the acquisition of IHS Markit by S&P Global 260 , both active in the provision of financial data and other financial services, subject to the parties’ commitments to divest businesses in: (i) commodity price assessments, (ii) identifiers, (iii) financial indices and (iv) leveraged loan market intelligence. The Commission was concerned that the transaction would otherwise have created or strengthened a dominant position in these markets or would otherwise have harmed competition by leading to higher prices and less choice for customers.

On 29 October 2021, the Commission announced the opening of an investigation into a possible breach of Article 21 of the EU Merger Regulation by Hungary. Hungary had vetoed the acquisition of the two Hungarian subsidiaries of AEGON by VIG, both active in the insurance sector, even though the transaction (including the acquisition of AEGON’s businesses in Romania and Poland) had already been unconditionally approved by the Commission on 12 August 2021 261 . 

3.2.4. State aid investigations in the financial sector

In 2021, for the second year in a row, there were no new individual cases of State aid to financial institutions. This confirms that the EU banking sector has largely overcome the previous financial crisis and so far has managed to withstand the COVID-19 pandemic, also due to the wide range of aid schemes set-up by the Member States to support the real economy and approved by the Commission under the Temporary Framework for State aid measures, thus indirectly shielding banks from the consequence of a deep downturn.

Nevertheless, in 2021 the Commission authorised the prolongation of already existing schemes under which Member States can provide aid to foster the restructuring or orderly market exit of entities in distress in case of need.

For Poland, the Commission authorised the extension of both the scheme for the liquidation of credit unions (in place since February 2014) 262 and the scheme for the resolution of cooperative and small commercial banks (in place since December 2016) 263 . The Commission also approved the prolongation of the wind-down of the Polish “Bank Nowy BFG”, resulting from the resolution of the cooperative bank, Podkarpacki Bank Spółdzielczy, of January 2020 264 .

For Ireland, the Commission authorised two prolongations of the restructuring scheme for credit unions (in place since October 2014) 265 and the extension of the orderly winding-up scheme for credit unions (in place since December 2011) 266 .

For Denmark, the Commission approved the prolongation of the orderly winding-up scheme for small banks (in place since August 2017) 267 .

The Commission also approved the prolongation of a bank guarantee scheme (in place since November 2008) to address potential challenges related to banks’ liquidity situation in Greece 268 .

The Commission also authorised indirect aid to financial institutions in schemes primarily geared at providing social support to vulnerable households at risk of losing their home due to difficulties in mortgage repayments. In Cyprus, the Commission authorised a new such scheme (“OIKIA”) 269 , while in Greece, it authorised the prolongation of an existing scheme, approved in 2019 270 . In both cases, the schemes set strict eligibility criteria in terms of the value of the primary residence and income of the borrower to ensure support is targeted at those most in need.

In addition, the Commission approved the prolongation of market-consistent guarantee schemes for the securitisation of non-performing loans (NPLs). Through these schemes, Members States are allowed to help banks clean up their balance sheets without granting aid or distorting competition. For Greece, the Commission allowed the prolongation of the Hellenic Asset Protection Scheme (“Hercules”), in place since October 2019 271 . For Italy, the Commission allowed the prolongation of the Fondo di Garanzia sulla Cartolarizzazione delle Sofferenze (“GACS”), in place since February 2016 272 .

The Commission also found that Sweden’s legislative proposal to introduce a risk tax on large credit institutions did not constitute State aid 273 .

To complement commercial financing provided by lending institutions or investment funds, Member States can support young SMEs and start-ups typically suffering from limited access to finance to grow and develop their full potential in the face of asymmetric information available to investors. These measures can either be directly implemented by Member States if they fall under the GBER 274 , or structured as notifiable schemes under the Guidelines on State aid to promote risk finance investments (Risk Finance Guidelines) 275 . In this respect, the Commission approved in 2021 a modification of the existing risk finance scheme in France (for the period 2020-2025) 276 . The Commission also approved a pricing methodology for market-conform guarantees to be provided by the Portuguese development bank (Banco Português de Fomento) to small- and medium-sized enterprises 277 . By decision of 2 December 2021, the Commission approved a EUR 11.2 million capital increase for the Fund Manager of Financial Instruments in Bulgaria (FMFIB) 278 .

In July 2021, the Commission widened the scope of the General Block Exemption Regulation to cover aid granted through national funds for projects also supported by certain EU centrally managed programmes (primarily the InvestEU programme), and aid to support the twin transition to a green and digital economy that will also help the recovery from the effects of the COVID-19 pandemic 279 . 

Moreover, following a stakeholders’ consultation on the draft revised rules 280 , the Commission adopted on 6 December 2021 both the revised Short-term export credit insurance (STEC) Communication 281 and the Risk Finance Guidelines 282 . In particular, the new Risk Finance Guidelines introduce simplified requirements for the assessment of schemes targeting exclusively start-ups and SMEs before their first commercial sale and clarify the level of evidence required to demonstrate a specific market failure or other relevant obstacle to access to finance.

Finally, the Commission has announced its plans to launch an evaluation of the State aid rules for banks in difficulty in 2022 283 , in the broader context of the review of the crisis management and deposit insurance framework launched by the Commission in 2021.

4. Basic industries and manufacturing

4.1 Overview of key challenges in the sector

Making up more than 20% of the EU’s economy, manufacturing is a driver of growth and innovation and employs around 35 million people, that is to say more than 20% of the EU workforce. The two million companies active in the sector face substantial challenges, in the form of trade tensions, the introduction of advanced technologies and the need to radically adapt their practices to make them climate friendly. This has been exacerbated by the COVID-19 pandemic, which has led to disruptions in supply chains, price increases, difficulties in sourcing raw materials and components as well as substantial changes in both working practices and demand patterns.

The RRF along with the European Green Deal and a New Industrial Strategy for Europe, aim to address these challenges by supporting the competitiveness of the EU businesses and boosting investment during the recovery from the pandemic and the transition to a digitalised and clean economy. Enforcing antitrust and merger rules in the manufacturing and basic industries sectors contributes to this transformation, in particular by ensuring that innovation is not hampered and that firms can compete on fair and equal terms. Meanwhile, the application of State aid rules ensures that purely national interests do not distort competition, that loss-making companies are not kept artificially alive with continuous public funding to the detriment of more efficient competitors, and that public funding is directed towards research, training and energy efficiency.

4.2 Contribution of EU competition policy to tackling the challenges

4.2.1. Antitrust investigations in basic industries and manufacturing

Manufacturing and consumer goods industries continue to represent a focal point of the Commission’s enforcement practice. In 2021, the Commission continued its lines of action (including individual casework, market surveillance and advocacy) in these sectors. In June 2021, the Commission conducted inspections in the sector of manufacturing and distribution of garments in Germany 284 . It also engaged with stakeholders on the potential application of the antitrust rules to co-operative schemes crisis. At the same time, it continued to monitor the aftermarkets in manufacturing industries, to ensure that competition is not reduced to the overall detriment of consumers.

4.2.2. Merger investigations in basic industries and manufacturing

On 18 March 2021, the Commission approved the acquisition of Eaton Hydraulics by Danfoss, subject to commitments 285 . Both companies are leading global suppliers of hydraulic components used in machinery for the agricultural, industrial and construction industries. Following an in-depth investigation, the Commission was concerned that the transaction could have resulted in less choice and higher prices for certain hydraulic components, namely hydraulic steering units, electrohydraulic steering valves, and orbital motors. To address the Commission’s concerns, Danfoss offered to divest three manufacturing plants located in Wroclaw (Poland), Parchim (Germany) and Hopkinsville (US), complemented by a transfer of further production lines and technology. These commitments fully address the Commission’s competition concerns and ensure that downstream manufacturers of machinery can continue to benefit from competitive prices and have choice of innovative components for their products.

On 23 December 2019, EssilorLuxottica notified its planned acquisition of GrandVision to the Commission. EssilorLuxottica is the largest global eyewear company, active in sunglasses, lenses and frames. It owns or operates several well-known brands in the eyewear universe such as Ray-Ban, Oakley and Chanel. It is also present with optical retail chains in various European countries. GrandVision is a globally active eyewear retailer, which operates some of the largest optical chains throughout Europe, such as GrandOptical and Pearle. Following an in-depth investigation, the Commission was concerned that the unparalleled brand portfolio of EssilorLuxottica, combined with GrandVision’s leading presence in the retail distribution of these products, could worsen rival opticians’ access to EssilorLuxottica’s products in Belgium, Italy and the Netherlands. To address the Commission’s concerns, EssilorLuxottica offered to divest part of its retail operations in these Member States. The Commission cleared the acquisition of GrandVision by EssilorLuxottica – subject to the conditions outlined above – on 23 March 2021 286 . Through this intervention, the Commission ensured that competition at the optical retail level remains vibrant, to the benefit of customers in these countries.

In the crop protection industry, the Commission authorised on 11 February 2021 the acquisition of Belchim by Mitsui, subject to a number of conditions 287 . These conditions were: (i) Mitsui’s transfer of its distribution agreement and customer relationships for its potato plant growth regulators (used to prevent or control sprouting in stored potatoes) for Germany, Poland, Denmark, Sweden, Norway and Finland; and (ii) Belchim’s transfer of its distribution agreement and relevant data and agreements for its paraffinic oils for virus control in seed potatoes and flower bulbs (used to control viruses) in the Netherlands. The Commission found that the transaction as originally notified would have significantly reduced competition and could have led to higher prices in the relevant countries for the supply of the abovementioned products. Through its intervention, the Commission ensured that customers of plant growth regulators and of paraffinic oils for virus control continue to have sufficient choice in the relevant countries.

In 2021 the Commission continued its investigation into and, on 13 January 2022, ultimately prohibited the acquisition of Daewoo Shipbuilding & Marine Engineering CO., Ltd (DSME) by Hyundai Heavy Industries Holdings (HHIH) 288 . Both companies are global leaders in the construction of large liquefied gas (LNG) carriers (LLNGCs), and two of the three largest players in this very concentrated market. The Commission found that the merger would have created a dominant position, reduced choice in suppliers and led to higher prices for EU customers in the global market for the construction of LLNGCs, which are very sophisticated, difficult to build and expensive vessels. The Commission based its findings on considerations such as the parties’ very high and increasing market shares, the fact that there are already very few alternatives for customers and that for a shipbuilder to successfully enter or expand in this market is extremely difficult. The parties did not formally offer commitments to address the Commission’s concerns. The Commission preserved effective competition in the LLNGC market to the benefit of EU customers (which account for almost 50% of all orders for such vessels in the past five years). 

On 3 May 2021, the European Commission fined Sigma-Aldrich EUR 7.5 million for providing incorrect or misleading information during the Commission’s investigation of Merck’s acquisition of Sigma-Aldrich 289 . The Commission had approved that acquisition in 2015 subject to the divestiture of certain Sigma-Aldrich assets, which sought to address the competition concerns identified in markets for specific laboratory chemicals. However, the Commission subsequently found evidence that Sigma-Aldrich had failed to disclose the existence of an innovation project at the time of remedy discussions, despite it being material for the Commission’s investigation. Based on Sigma-Aldrich’s contemporaneous internal documents and other evidence, the Commission concluded that Sigma-Aldrich had acted intentionally or at least by negligence. The decision underscores that the provision of correct and complete information is a cornerstone of the EU’s merger control regime and that merging parties must disclose all potentially relevant information to the Commission, or risk a fine.

4.2.3. State aid investigations in basic industries and State aid for the rescue and restructuring of companies in difficulties

Next to a constantly high number of decisions linked to the COVID-19 pandemic, the enforcement was centred on the assessment of several significant rescue and restructuring operations, with a particular focus on the airline sector (see below under 7.2.2. State aid to the aviation sector).

In addition, in December 2021, the Commission adopted a decision approving Croatia's restructuring aid to mechanical engineering company Ðuro Ðaković d.d. for a total amount of EUR 57.4 million 290 . The core business of the company is the manufacture of freight wagons for special purposes. After approving rescue aid to the company in May 2020, Croatia submitted a plan for Ðuro Ðaković to finance its restructuring and restore its long-term viability with the support of a private investor, a consortium of Czech companies DD Acquisition, who will become the controlling shareholder of Đuro Đaković. The Commission found that the aid is appropriate, that it supports a comprehensive restructuring plan running until the end of 2023, and proportionate, with an own contribution of over 50% of the restructuring costs provided by the company and the investor at market terms. Also, measures are provided to limit potential distortions of competition on the market for freight wagons where the company operates.

5.    Agri-food industry 

5.1 Overview of key challenges in the sector

The resilience of food supply chains continued being tested in 2021 as a consequence of the COVID-19 pandemic. The rise in energy prices in Europe towards the end of 2021, particularly for natural gas, has already caused a significant increase of prices for fertilisers. The prices of raw materials and the costs of freight have also sharply increased. As a result, global food prices towards the end of 2021 were at their highest levels since 2011 according to the FAO Food Price Index 291 . 

While the EU’s food supply chain has overall shown its resilience during the ongoing pandemic, some specific sectors, products, and groups of workers have had to sustain higher levels of pressure from the crisis. Challenges in storage of production, for example in aquaculture reinforced this pressure, as did the reduction in demand for these sectors’ products, in particular from the restaurant and catering sector.

These challenges add to already existing, longer-term challenges for the European agri-food industry, namely (i) increased competition from supply inside as well as outside Europe, (ii) higher and changing demands from end consumers in terms of qualitative aspects such as health, animal welfare, variety and improved traceability and (iii) higher investment needs to mitigate the impact of the agri-food value chain on the air, soil and water pollution, the GHG emissions.

Coupled with certain characteristics of the EU agricultural sector, such as low levels of concentration, small size and weaker bargaining power vis-à-vis food processors, wholesalers and retailers, it is more difficult for the sector to cope with these challenges. Moreover, the issue of generational renewal in farming continues to pose a structural risk to the viability of the EU agricultural sector in the long term, despite the positive impact of Common Agricultural Policy funds 292 .

5.1.1. The reform of the Common Agricultural Policy (“CAP”) for the period 2023-2027

In December 2021 the co-legislators adopted the reform of the CAP for the period 2023-2027 293 . The new rules include clarifications of certain competition rules and two new derogations from the scope of the application of the competition rules. The first derogation extends to all products with a protected geographical indication (protected designation of origin - PDO or protected geographical indication - PGI) and introduces the possibility to jointly fix quantities produced for a given geographical indication 294 .

The second derogation allows agreements concluded by agricultural producers (alone or together with/ other actors from the supply chain) and aimed at achieving sustainability objectives such as climate change mitigation and adaptation, reduction of the use of pesticides, animal welfare, etc., whenever such agreements aim to apply a sustainability standard higher than mandated by EU or national law 295 .

A key condition set by the co-legislators is that such agreements should impose only restrictions of competition that are indispensable for the attainment of the standard(s) at stake. The Commission and national competition authorities may decide to modify or terminate an agreement where this is necessary to prevent competition from being excluded or the pursuit of the objectives set out in Article 39 TFEU being jeopardised. The Commission shall issue guidelines for operators concerning the conditions for the application of this derogation by December 2023.

5.1.2. Challenges for the proper functioning of the Single Market

A first challenge for the proper functioning of the Single Market is the existence of protectionist agremeents in certain national markets. Operators in some national markets (for example retailers alone or together with other levels of the supply chain) sometimes agree on giving preference to domestic products even though this preference is not based on objective criteria (for example quality, specific traits, etc.) of the products. This preference is sometimes promoted through the labelling of origin of domestic products, notwithstanding  the mandatory labeling requirements for certain products and foodstuffs. 296 . Such discrimination based on nationality hurts the fundamental principle of the EU to give a fair chance to all producers inside the EU independently of their origin. The Commission, in coordination with NCA, has investigated a number of agreements in 2021 concluded between supermarket chains or between representatives of operators along the supply chain. As a result of these investigations, in most cases the terms of the agreements were modified or the agreements were terminated.

5.2. EU competition policy’s contribution to the functioning of the Single Market

5.2.1. The application of the EU State aid rules in the agricultural and fishery sector

State aid to promote the economic development of the agricultural and forestry sectors is embedded in the broader Common Agricultural Policy (CAP) and in particular the rural development policy. Similarly, State aid to promote the economic development of the fishery and aquaculture sectors is closely linked to the Common Fishery Policy (CFP) and in particular to EU support granted under the European Fisheries, Maritime and Aquaculture Fund (EMFAF). The economic effects of State aid do not change depending on whether it is (even partially) financed by the EU, or whether it is financed by a Member State alone. Consequently, the use of State aid can only be justified if it is in line with the CAP and the CFP and meets the underlying objectives of those policies in terms of ensuring viable food production and promoting the efficient and sustainable use of resources in order to achieve intelligent and sustainable growth, including economic, social and employment benefits.

The Commission has set up specific frameworks of rules for State aid in agriculture, forestry, fishery and aquaculture. Most of those rules are long-standing and have proven their relevance over the years. However, State aid rules are limited in time and the current State aid rules will expire at the end of 2022. The ongoing review comprises the Agricultural Block Exemption Regulation (ABER) 297 , the State aid Guidelines for agriculture, forestry and rural areas 298 , the Fisheries Block Exemption Regulation (FIBER) 299 , the Regulation on de minimis aid in the fishery and aquaculture sector 300 and the State aid Guidelines for fishery and aquaculture 301 . The Regulation on de minimis aid in the agricultural sector 302 was already revised in 2019 and is not, therefore, part of the ongoing revision.

In 2021, the Commission continued to assess notifications on State aid by Member States and adopted a total of 198 decisions 303  in agriculture, forestry, fishery and aquaculture and continued to advise Member States’ authorities on how to interpret and implement the applicable State aid rules. The Commission also continued to check all new block exempted measures designed by Member States under the existing ABER prior to their entry into force (in total 418) and advised Member States in case of any doubts or problems, thereby enabling them to implement the corresponding aid schemes quickly.

5.2.2. . Investigation into possible restrictions of parallel trade

In 2021 the Commission continued its ex-officio investigations into possible restrictions of parallel trade of food products. In January 2021, it initiated proceedings against Mondelez regarding a number of potentially restrictive practices on the markets for chocolate, biscuits and coffee products 304 . It also carried out other investigations, for instance in the drinks sector. Such enforcement is aimed at ensuring lower prices for consumers on the relevant markets as well as a wider choice of products offered.

5.2.3. Buying alliances and competition in retail trade in the single market

In 2021 the Commission has continued its antitrust investigation, opened in November 2019, against two large French retailers, Casino and Les Mousquetaires/Intermarché, regarding potential collusion built around their purchasing alliance, and consisting in a coordination on shop development and on prices towards final consumers 305 .

With such investigations, the Commission seeks to addresse an EU-wide systemic risk of collusion through buying alliances both at national and international level. The risk of exchanges of information reducing competition has been made more acute since retailers have often changed partners in these alliances, and specialised managers have been moving between retailers and alliances, thus providing multiplied opportunities for retailers to collude.

The Casino & Intermarché alliance case is subject to court proceedings. On 5 October 2020 the General Court had ruled on the legality of the 2017 inspection decisions of the Commission in three cases 306 . The companies concerned appealed the judgements to the CJEU.

6. Pharmaceutical and health services sectors

6.1 Overview of key challenges

Patients’ access to effective, innovative and affordable medicines forms one of the pillars of the Commission’s new Pharmaceutical Strategy for Europe 307 . Contributing to these objectives, the Commission and the competition authorities of the Member States have continued to vigorously enforce EU competition rules in the pharmaceutical and healthcare sectors in 2021. Such enforcement complements the regulatory frameworks in these sectors, and fosters both dynamic competition, which leads to more innovative medicines, and effective price competition, which in turn contributes to more affordable and accessible medicines and treatments. 

6.2 Contribution of EU competition policy

6.2.1. Antitrust enforcement in the pharmaceutical sector

In February 2021, the Commission adopted its first excessive pricing decision in the pharmaceutical sector in the Aspen case 308 . The decision makes binding Aspen’s ten-year price commitment for a range of cancer medicines in Europe (except Italy), effectively reducing prices for these medicines on average by 73%. The Commission continues monitoring the implementation of the commitments by the company.

The Commission is also scrutinising potentially anticompetitive unilateral practices hindering the entry or expansion of cheaper products (for example, generics or biosimilars) following the loss of exclusivity of the original product. In March 2021, the Commission opened a new investigation into a potential abuse of a dominant position by Teva due to a suspected misuse of the patent system as well as a disparagement campaign to foreclose competitors 309 . 

In addition, the Commission also carried out unannounced inspections in the animal health sector 310 and is investigating complaints and market information regarding, in particular, conduct that hinders the entry or uptake of competing products 311 . 

6.2.2. Merger review in the pharmaceutical sector

The Commission continued to ensure that concentrations in the pharmaceutical sector do not lead to consumers paying higher prices, having less choice or reduced innovation.

On 19 February 2021, the Commission approved the acquisition of Varian by Siemens, subject to interoperability commitments between: (i) its medical imaging solutions and rivals' radiotherapy solutions; and (ii) its radiotherapy solutions and rivals’ imaging solutions. 314 The Commission found that the transaction as originally notified would have harmed competition by foreclosing competitors in the EEA and UK markets for the supply of medical imaging solutions and radiotherapy solutions. In particular, the Commission's investigation found that the combination of Siemens, the largest supplier of medical imaging solutions, with Varian, the largest supplier of radiotherapy solutions, could lead to foreclosure of the parties' rivals through the degradation of the interoperability.

On 5 July 2021, the Commission approved the acquisition of Alexion by AstraZeneca, both global pharmaceutical companies 315 . Alexion focuses on the treatment of rare diseases, whilst AstraZeneca focuses on common diseases. The transaction gave rise to: (i) horizontal overlaps between AstraZeneca's and Alexion's pipeline drugs for the treatment of lupus nephritis, follicular lymphoma and peripheral T-cell lymphoma; and (ii) a vertical link related to the manufacture of Uplizna, a drug for the treatment of various rare diseases. The Commission found that the proposed acquisition would raise no competition concerns because of its limited impact on the markets concerned.

On 19 April 2021, the Commission accepted a request from France, joined by Belgium, Greece, Iceland, the Netherlands and Norway, to assess the proposed acquisition of GRAIL by Illumina under the EU Merger Regulation. Illumina is a leading supplier of short-read next generation sequencing systems for genetic and genomic analysis. GRAIL is a customer of Illumina, and develops cancer detection tests relying on short-read next generation sequencing systems. The proposed transaction did not meet the turnover thresholds of the EU Merger Regulation, and was not notified in any Member State, but met the criteria for referral under Article 22 of the EU Merger Regulation.

On 22 July 2021, the Commission opened an in-depth investigation in the proposed acquisition of GRAIL by Illumina 316 . The Commission had serious doubts that the proposed acquisition could reduce competition and innovation in the emerging market for the development and commercialisation of cancer detection tests based on short-read next-generation sequencing technologies.

On 18 August 2021, Illumina publicly announced that it had completed its acquisition of GRAIL, while the Commission's review of the proposed transaction was still pending. The the Commission opened an investigation to assess a possible imposition of a fine for a breach of the standstill obligation. On 29 October 2021, the Commission adopted interim measures to restore and maintain the conditions of effective competition following Illumina's early acquisition of GRAIL 317 . This is the first time the Commission adopted interim measures following an unprecedented early implementation of a concentration. 

6.2.3. State aid action in the health services sector

The Commission made progress on the evaluation of the State aid rules for health and social Services of General Economic Interest (SGEI) and the SGEI de minimis Regulation that was launched in 2019 318 . In September 2021, the Commission published an external study that it had commissioned to gain a better insight in the market developments in the hospital and social housing sector in 10 Member States 319 . This study should contribute in helping the Commission to get a better and more detailed understanding of the potential issues that Member States may have had in implementing the SGEI rules. 

On 2 June 2021, the General Court in case T-223/18 upheld the Commission decision of 4 December 2017 concluding that the remuneration of public hospitals in Lazio, Italy providing healthcare services within the Italian health care system did not constitute State aid under Article 107(1) TFEU as those hospitals are not economic in nature 320 . The General Court’s judgement has been appealed to the CJEU (C-492/21 P).

7. Transport, tourism, and postal services

7.1 Overview of key challenges

The transport and postal services sectors continue to play a key role in the EU economy. Transport is the key to both an integrated internal market and to an open economy integrated into the world economy. Postal services continue to have a significant economic and social value, not the least because they are also active on other markets, in particular parcel delivery. Efficient postal services are a key factor in allowing e-commerce to realise its full potential for growth and creating jobs.

Throughout 2021, the transport sector continued to be severely affected by the COVID-19 pandemic. In the aviation sector, several EU airlines remained under constant operational pressure due to the resurgence of infection rates and the discovery of new variants. This caused passenger movements to be restricted, with the ensuing low revenue consequences requiring immediate public support.

7.2 Contribution of EU competition policy

7.2.1. Merger review in the aviation sector

In 2021, the Commission continued with its in-depth investigation into the acquisition of Transat (the parent company of Air Transat) by Air Canada notified in April 2020. The investigation focused on the parties’ overlapping operations in the passenger air transport services between the EEA and Canada. The Commission’s investigation also focused on the extent to which the Covid-19 pandemic would impact Air Canada’s, Transat’s and their competitors’ operations in the mid- and long-term. Based on the results of the market test, the remedies offered by the parties appeared insufficient. The parties subsequently decided to terminate the proposed merger agreement on 2 April 2021 321 .

On 25 May 2021, the Commission received a notification of a proposed acquisition of Air Europa (a subsidiary of a Spanish family-owned tourism group Globalia Corporación Empresarial) by International Consolidated Airlines Group (“IAG”) which, among others, controls Iberia, British Airways, and several other airlines 322 . On 29 June 2021, the Commission opened an in-depth investigation on grounds the merger would have negatively affected competition on numerous domestic, short-haul and long-haul routes, within, to and from Spain. The investigation took in full account the impact of COVID-19 restrictions on the markets affected. IAG offered remedies but the market test revealed the remedies would not fully address the competition concerns. On 16 December 2021, the parties subsequently decided to terminate the proposed merger agreement.

7.2.2. State aid to the aviation sector

As the aviation sector continued to be severely affected by the COVID-19 pandemic throughout 2021 and to assist Member States in their efforts to support the aviation sector in this context, the Commission further amended its Temporary Framework for State aid measures  323  This included increasing the aid ceilings, as well as introducing new measures to create direct incentives for forward-looking private investment and solvency support measures. The Commission also continued to support Member States in their efforts to provide compensation linked to the damage suffered as a direct consequence of the COVID-19 pandemic under Article 107(2)(b) TFEU.

In 2021, the Commission adopted 35 decisions allowing State aid in favour of undertakings active in the aviation sector, to help address their liquidity and capital needs brought about by the COVID-19 pandemic. These aid measures were generally approved under the Temporary Framework for State aid measures or Article 107(2)(b) TFEU. A few notable examples are presented below:

On 4 January 2021, the Commission announced its decision to approve the plans of Germany to contribute EUR 1.25 billion to the recapitalisation of TUI AG as part of a wider support plan 324 . The Commission noted that TUI had suffered substantial losses because of the COVID-19 pandemic, in particular because of the travel restrictions that Germany and other countries imposed to limit the spread of the virus. The Commission approved the support as it was in line with the conditions set out in the Temporary Framework for State aid measures, considering that TUI AG was facing a risk of default and insolvency notwithstanding support measures previously granted to it.

On 12 March 2021, the Commission approved a EUR 351.38 million contribution from Finland in the form of a hybrid loan to Finnair 325 . The Commission noted that Finnair had suffered substantial operating losses because of the COVID-19 pandemic, in particular because of the travel restrictions that Finland and other countries imposed to limit the spread of the COVID-19 pandemic. Similarly, on 17 March 2021, the Commission approved EUR 350 million in support to Finavia 326 , the manager of 21 airports in Finland.

On 5 April 2021, the Commission announced its decision to approve a EUR 4 billion recapitalization of Air France 327 . The Commission noted that in 2019, the Air France-KLM group reported an annual operating profit of approximately EUR 750 million but that as a direct result of the travel restrictions that France and other countries imposed to limit the spread of the COVID-19 pandemic, Air France and its holding company suffered a significant reduction in activities leading to major operating losses. France’s recapitalization of Air France was proposed in two steps, comprised of (a) the conversion of the EUR 3 billion loan already granted to Air France into a hybrid capital instrument; and (b) a capital injection of up to EUR 1 billion from the purchase of new shares. The Commission considered that the measures were consistent with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework for State aid measures.

On 5 July 2021, the Commission opened an in-depth investigation into the restructuring of the Romanian flag carrier TAROM 328 , after having approved around EUR 36.7 million of rescue aid in February 2020 329 . The restructuring plan notified by Romania in May 2021 sets out a package of measures for streamlining TAROM's operations, renewing its ageing fleet and reducing costs. The Commission will in particular examine whether the proposed restructuring plan is appropriate for addressing TAROM's difficulties and for restoring its long-term viability in a reasonable time frame without continued State aid, whether TAROM or market operators would sufficiently contribute to the restructuring costs, and whether appropriate measures to limit the distortions of competition created by the aid would accompany the restructuring.

On 9 July 2021, the Commission approved a Swedish and Danish aid measure of approximately EUR 300 million to support Scandinavian Airlines System (SAS) 330 . The aim of the measure was to provide SAS with the liquidity support it needed following the deterioration of its cash-flow situation due to the new travel restrictions and containment measures imposed by Denmark and Sweden in order to limit the impact of new waves of the virus as of September 2020. The aid took form of loans (EUR 150 million granted by Sweden and EUR 150 million granted by Denmark) with subsidised interest rates and a maturity of maximum five years. The Commission found the aid compatible under Article 107(3)(b) TFEU. 

On 16 July 2021, the Commission approved the grant of a EUR 1.2 billion rescue loan in favour of the Portuguese flag carrier TAP 331 , after a previous decision 332 had been annulled by the General Court 333 . This decision finds that the rescue loan fulfils all conditions of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty 334 . Moreover, and following an in-depth investigation, the Commission on 21 December 2021 approved EUR 2.55 billion of restructuring aid in the form of equity or quasi equity measures, including the conversion of the EUR 1.2 billion rescue loan into equity in a conditional decision, to enable TAP SGPS and the airline TAP Air Portugal to return to viability 335 . The Commission found that the revised restructuring plan and the commitments obtained, including in particular Portugal abandoning a plan to grant EUR 512 million in loan guarantees, improved the proportionality of aid. Furthermore, the decision envisages competition measures to preserve effective competition at the Lisbon airport. TAP will make available up to 18 slots per day at Lisbon airport to a competing carrier. These measures will enable the lasting entry or expansion of a competing carrier at this airport, to the benefit of consumers. A transparent and non-discriminatory selection procedure will be organised by the Commission (with the support of a Monitoring Trustee) to select the competing carrier.

On 27 July 2021, the Commission found an aid package by Germany in favour of Condor in line with EU State aid rules 336 . The approval of the aid package, based on three separate Commission decisions, related to two measures to compensate Condor for damages suffered as a result of the COVID-19 pandemic, worth in total EUR 204.1 million, and EUR 321.2 million of restructuring support to enable Condor’s return to viability.

Also on 27 July 2021, the Commission also approved a EUR 110 million aid to compensate Athens International Airport S.A. 337 , the operator of Athens international airport Eleftherios Venizelos, for the damage suffered due to the COVID-19 pandemic and the travel restrictions that Greece and other countries imposed to limit the spread of the virus. The aid took the form of a direct grant and of a cancellation of concession fees. The measure was approved under Article 107(2)(b) TFEU.

In September 2021, the Commission adopted two decisions regarding the Italian airline Alitalia. After opening an in-depth investigation on two state loans totalling EUR 900 million in 2018, the Commission has concluded that these loans would not have been granted by a market economy investor and thus constitute State aid within the meaning of the EU rules 338 . Moreover, the loans were not in line with EU rules on State aid to companies in difficulty such as Alitalia. This is because the loans were not reimbursed within six months, Italy never submitted a restructuring plan capable of restoring the company’s viability, nor was the company liquidated. The Commission therefore concluded that the loans gave Alitalia an unfair economic advantage vis-à-vis its competitors on national, European and world routes, which it needs to pay back 339 . In a separate decision 340 , the Commission also found that the new Italian airline ITA, that is set to take over part of Alitalia’s assets, is not the economic successor of Alitalia and thus not liable to repay illegal aid received by Alitalia. It also found that Italy's capital injections of EUR 1.35 billion into the new company are in line with market conditions, and therefore do not amount to State aid under EU rules.

In December 2021, the Commission adopted two other decisions concerning TAP. The Commission approved compensation for damages TAP Air Portugal suffered due to the COVID-19 pandemic as a direct result of the travel restrictions. The first decision concerned EUR 107.1 million to compensate for damage it suffered between 1 July 2020 and 30 December 2020 341 , and the second decision concerned EUR 71.4 million to compensate for damage it suffered between 1 January and 30 June 2021 342 . The Commission considers that the COVID-19 pandemic qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damages directly linked to the pandemic are justified. The measures for TAP Air Portugal compensate damage that is directly linked to the COVID-19 pandemic and they are proportionate as the compensation does not exceed what is necessary to make good the damage.

7.2.3. European Union Court judgements in aviation aid cases

In 2021, the General Court delivered a number of important judgements concerning State aid cases in the aviation sector.

On 17 February 2021, the General Court handed down its judgement 343 rejecting Ryanair’s challenges to the Commission decision approving aid to Swedish airlines 344 . The General Court rejected all of Ryanair’s pleas. In relation to the allegation that the aid was discriminatory (reserved to Swedish airlines), the General Court noted that the loan guarantee scheme satisfied the conditions laid down in Article 107(3)(b) TFEU. The General Court also held that limiting eligibility for the aid to only those airlines which hold a Swedish licence because of the stable reciprocal links which tie them to the Swedish economy, was appropriate for achieving the objective of remedying the serious disturbance in the Swedish economy.

On the same day, the General Court handed down its judgement 345 rejecting Ryanair’s challenges to the Commission’s decision to approve France’s aid to French airlines (moratorium on the collection of civil aviation tax and the solidarity tax ordinarily imposed by the French State 346 ). The General Court confirmed that the COVID-19 pandemic constituted an exceptional occurrence within the meaning of Article 107(2)(b) TFEU, causing economic damage to the airlines operating in France. The General Court considered that the objective of the deferral of the payment of the taxes clearly had the objective to make good the damage in question.

On 14 April 2021, the General Court dismissed the actions for annulment brought by Ryanair against three decisions of the Commission authorising State aid in the airline sector 347 . The cases concerned individual aid measures granted by Finland to Finnair 348 , and by Denmark and Sweden to Scandinavian Airlines (“SAS”) 349 . The General Court found that Member States can grant individual aid to companies affected by the economic consequences of the COVID-19 pandemic on the grounds of Article 107(2)(b) and (3)(b) TFEU. In particular, with regard to Article 107(2)(b) TFEU (SAS cases), the Court found that Member States are not required to make good the entirety of the damage caused by COVID-19, and that they do not have to compensate all “victims” of that damage. With regard to Article 107(3)(b) TFEU (Finnair I case), the Court found that an aid measure authorised on the basis of Article 107(3)(b) TFEU does not have to be “capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned. Once the Commission has established the reality of a serious disturbance in the economy of the Member State concerned, that State may be authorised, if the other conditions laid down in that Article are also satisfied, to grant State aid, in the form of aid schemes or individual aid, which help to remedy that serious disturbance” 350 .

On 19 May 2021, the General Court handed down its judgement 351 annulling the Commission’s decision to approve the Netherlands financial aid for the airline KLM amid the COVID-19 pandemic on the grounds of inadequate reasoning 352 . However, due to the particularly damaging impact of the pandemic on the Netherlands economy, the General Court suspended the effects of the annulment pending the adoption of a new Commission decision. The related notified aid, with a total budget of EUR 3.4 billion, consisted, first, of a State guarantee for a loan to be granted by a consortium of banks and, secondly, a State loan. By that measure, the Netherlands intended to provide temporary liquidity needed by KLM to deal with the adverse effects of the COVID-19 pandemic. In its judgement, the General Court provided clarifications on the scope of the Commission’s duty to state reasons when it declares aid granted to the subsidiary of a holding company to be compatible with the internal market, where another subsidiary of the same holding company has already benefited from similar aid.

On 14 July 2021, the General Court confirmed the Commission decision of 6 July 2020 353  approving under Article 107(2)(b) TFEU State aid in favour of Austrian Airlines, which is part of the Lufthansa group, in the form of a subordinated loan convertible into a grant of EUR 150 million as compensation for damage suffered by Austrian Airlines due to the pandemic 354 .

The General Court confirmed the Commission’s position that:

-Under Article 107(2)(b) TFEU, the Commission may consider appropriate to allow compensation for net losses not only for the period of full grounding of the beneficiary’s fleet but also for the days immediately preceding that period when there were already cancellations and rescheduling of flights due to restrictions.

-Austrian Airlines was not overcompensated due to the aid already granted to the other companies of the Lufthansa group under Article 107(3)(b) TFEU. The General Court confirmed that aid authorised under Article 107(3)(b) TFEU may in principle be combined with aid authorised on the basis of Article 107(2)(b) TFEU, provided that the requirements of each of those provisions are fulfilled. 

7.2.4. Monitoring activities in the container shipping sector

In 2021, carriers active in liner shipping services, their customers (shippers and freight forwarders), port operators and logistics services providers continued to be confronted with exceptional challenges, leading to sharp price increases for container shipping services and to deteriorated service availability and reliability. The reasons have been multi-faceted (for example strong demand for goods, port congestion, landside bottlenecks, etc.), not necessarily entirely similar across the world, and hardly attributable to only one determining factor or one category of operators.

Over the course of the year, the Commission has been in regular contact with relevant stakeholders, regulators and competition authorities worldwide to identify any scope for intervention that can facilitate the return to normal operations. In March 2021, the Commission organised a Maritime Forum, where industry representatives of the entire maritime supply chain discussed the difficulties in the sector and possible ways forward. At the Global Maritime Summit organised by the Commission in September 2021, regulators from China and the US concurred with the Commission that anti-competitive behaviour from shipping alliances aimed at increasing freight rates had not been identified at this stage.

7.2.5. State aid enforcement in the maritime transport sector

The competitiveness of the maritime transport sector is important for a well-functioning Single Market as it leads to beneficial spill-over effects for other sectors in a European maritime economy that is integrated in the global markets.

In 2021, the Commission approved a number of State aid schemes under the Maritime Guidelines 355 . On 1 July 2021, the Commission adopted a positive decision concerning a EUR 30 million French seafarer scheme aimed at reimbursing ship-owners with the social security costs of their seafarers 356 . On 5 July and 10 December 2021, the Commission approved the prolongation with amendments of two German seafarer schemes 357 . In the latter cases, the German authorities extended the scheme to all eligible vessels registered in any EU/EEA shipping register. Moreover, on 25 October 2021 the Commission approved a 10-year prolongation of a Danish seafarer scheme providing for tax deductions 358 . The schemes approved by the Commission under the Maritime Guidelines encourage ship registration within the EU and contribute to the global competitiveness of the sector without unduly distorting competition.

In addition, the Commission adopted a number of decisions, in the context of the COVID-19 pandemic, both under Article 107(2)(b)TFEU as well as the Temporary Framework for State aid measures, to compensate damages suffered by shipping companies and support companies operating in the maritime sector. Those decisions concerned amongst others damage compensation and direct grants for passenger shipping companies in Sweden 359 , compensation for Brittany Ferries in France 360 and direct grants to shipping companies in Italy 361 .

7.2.6. Rail and intermodal transport State aid enforcement

As in other transport modes hit by the new waves of the COVID-19 pandemic, public intervention in the rail sector was necessary to preserve connectivity and the Commission quickly responded to that challenge once again.

First, the Commission in 2021 approved under Article 107(2)(b) TFEU three measures 362 under which railway undertakings are compensated for the damages suffered as a result of the COVID-19 pandemic. In addition, the Commission approved seven measures, either under the Temporary Framework for State aid measures 363 or under the 2008 Guidelines on State aid for railway undertakings 364 , most of which concern reductions of track access charges and infrastructure access fees 365 .

Beside the handling of COVID-19 related cases, the Commission continued to enforce State aid rules applicable to the rail and intermodal transport sector. The Commission approved 12 schemes 366 for the coordination of transport (encompassing aid for infrastructure use, aid for the reduction of external costs or aid for interoperability) on the basis of the 2008 State aid Guidelines and Article 93 TFEU. Approved schemes include for instance aid to combined transport, aid to support measures for noise reduction, aid to support the deployment of the European Rail Traffic Management System (ERTMS) 367 and aid for single wagon transport. All these measures support the modal shift from road to rail, inland waterways or sea transport as the safer and more environmentally-friendly transport modes, which constitutes a priority to implement the European Green Deal.

7.2.7. State aid enforcement in the road sector

In August 2021, the Commission adopted, under the Temporary Framework for State aid measures, two decisions concerning aid for an amount of approximately EUR 40 million in relation to support for bus 368 and coach tourism operators 369 in Ireland. In addition, on 27 May and 5 November 2021 the Commission approved aid to undertakings engaged in road passenger transport by bus in Italy for an overall amount of EUR 25 million 370 .

7.2.8. State aid enforcement in the postal services sector

The Commission through State Aid control in the postal services sector ensures that competition between incumbent service providers and new entrants is not being distorted, that recipients of State aid are not shielded from competitive pressure and market developments and that efficiency, innovation and efficiency remains incentivised.

On 23 July 2021, the Commission opened an in-depth investigation to assess whether the compensation granted by Denmark to Post Danmark in 2020 to fulfil its public service mission is in line with State aid rules 371 . The concerns that led to the opening of the formal investigation relate to the methodologies of allocation of costs between the universal postal services and non-universal postal services and the potential impact on the net cost calculation.

On 27 July 2021, the Commission concluded that the one-year prolongation until 31 December 2021 of the provision of several services of general economic interest (SGEI) for bpost in Belgium was compatible with the internal market under Article 106(2) TFEU as it met all the conditions of the SGEI Framework 372 . The SGEIs concerned include the maintenance of a retail network, home payment of pensions and allowances, distribution of election materials and the social role of the postman.

On 2 September 2021, the Commission concluded that a two-year prolongation until 31 December 2022 worth EUR 350 million of the concession contract between Belgium and bpost for the distribution of newspapers and periodicals was compatible with the internal market under Article 106(2) TFEU as it met all the conditions of the SGEI Framework 373 .

On 10 September 2021, the Commission concluded, following an in-depth investigation that started on 14 June 2019, that a capital injection from PostNord Group AB to Post Danmark did not constitute State aid 374 . In the same decision, the Commission concluded that two capital injections from Denmark and Sweden respectively to PostNord AB constituted State aid as they conferred an advantage to PostNord AB. The two capital injections of in total SEK 667 million will be recovered.

8. Taxation and State aid

8.1 Overview of key challenges on tax evasion and avoidance and fiscal aid

The Commission enforces State aid rules in fiscal matters, notably in view of aggressive tax planning practices that distort or threaten to distort competition, as well as fiscal policy decisions that lead to discriminatory treatment of companies.

Aggressive tax planning strategies can take a variety of forms, including through the shifting of profits to low or no-tax jurisdictions where there is little or no economic activity, resulting in little or no overall corporate tax being paid. Aggressive tax planning can be realised by using preferential tax schemes, or through individual means, for example by requesting individual tax rulings. Aggressive tax planning has many adverse effects in the EU market as undue tax reliefs distort competition in the Single Market and aggressive tax planning also compromises social fairness, since the revenues foregone from not taxing the profits of multinational companies must be compensated elsewhere, usually by shifting the overall tax burden to less mobile tax bases, such as labour income and income of small-scale enterprises. Aggressive tax planning can also affect the Single market by distorting investment decisions, which are driven by tax optimisation strategies rather than other considerations.

8.2 The contribution of EU competition policy to tackling the challenges

In 2021, the Commission continued to enforce State aid rules in tax matters. Although, in the absence of harmonisation, direct taxation is a competence of the Member States, national tax measures have to comply with internal market rules and be in line with EU competition rules. The case law of the CJEU has consistently held, and recently reaffirmed 375 , that Article 107 TFEU allows the Commission to determine whether a tax measure confers on undertakings an economic advantage which places the beneficiaries in a more favourable position than other taxpayers.

8.2.1. State aid investigations concerning aggressive tax planning

In 2021, the Commission continued its investigation into Member States’ tax rulings practice and changes in tax legislation. In 2014, the Commission had started collecting information on Member States’ tax rulings practices for the years 2010-2013. This aimed at clarifying allegations whether tax rulings constitute State aid and to allow the Commission to take an informed view of the practices of all Member States. Overall the Commission looked into more than a thousand rulings.

However, Member States have moved on since 2013 both in terms of tax legislation and of ruling practices. In order to assess this evolution, the Commission at the end of 2019 requested all Member States to provide an update of their legislative and administrative practices and a list of tax rulings for the years 2014 to 2018. This review continued in 2021.

8.2.2. Ongoing aggressive tax planning cases

The Commission continued the investigation of its pending cases on alleged State aid granted by the Netherlands to Inter IKEA, to Starbucks and to Nike; and on alleged State aid granted by Luxembourg to Huhtamäki.

In 2021, the Commission defended a number of its decisions before the Union Courts. The General Court delivered its judgement in the Amazon 376 and Engie 377 cases, while the CJEU delivered its judgement in the Belgium Excess Profit 378 case.

8.2.3. Recent judgements by the CJEU on selectivity in tax matters

In 2021 the CJEU provided new important insights for the assessment of selectivity of fiscal measures (three-step test), with new guidance in relation to the first step, that is to say the determination of the reference framework, which is of particular importance in the case of tax measures, since the existence of an economic advantage for the purposes of Article 107(1) TFEU may be established only when compared with ‘normal’ taxation.

ANNEX 1.

State aid decisions adopted under the Temporary Framework for State aid measures in 2021 380  by country