Commissioner hearings: COMP Commissioner Almunia wants everyone in the financial sector to respect state aid rules
13 January 2010
Alumnia stated that competition policy should be applied rigorously while taking into account due process. Furthermore, the Commissioner-designate believes that cartels are the worst violation of competition law. He would also like to see a level playing field restored to the banking sector.
Almunia CV , EP press release, written question from the EP
First, Almunia made his introductory remarks. He stated for example that competition leads to lower prices and better quality. In addition, competition policy should be applied rigorously while taking into account due process. Furthermore, the Commissioner-designate believed that cartels are the worst violation of competition law. He indicated he will come back to the European Parliament on collective redress and he will modernise and expedite State aid procedures.
Second, MEPs were able to ask questions to Almunia. The most relevant questions can be found below:
· Jean-Paul Gauzès (EPP/ FR) asked a question about collective redress and fines. Almunia stated that competition is a crucial instrument to achieve ends. He also told MEPs that they will have a substantive and formal role in any plans to facilitate at European level damages actions against antitrust infringers; he intend to fully involve the European Parliament in accordance with the co-decision procedure. The Commissioner-designate also said that that he intends to look into different possibilities of tackling collective compensation, while stressing that there would be safeguards against the excessive aspects of class actions found in other countries. He stressed that work with the European Parliament on this issue would be continued in the next few months. He said he believed that fines needed to be kept at an appropriate level, acknowledging that if they are too low then companies engaged in antitrust conduct won't be dissuaded. He continued by saying that the level of fines adopted by the European Commission in 2006 is appropriate by and large to have this dissuasive effect. Almunia went on to say that he was sensitive to the problems of smaller companies often caught with larger fines when they are prosecuted as part of cartels dominated by multinational firms. For SMEs and one-product companies, the impact of these penalties is greater and that is something we will have to continue to look at. However, in only three out of 50 decisions adopted since the 2006 Fining Guidelines were introduced was the fine levied at the 10% maximum figure.
· Kay Swinburne (ECR / UK) asked a question on State aid to the financial sector. Almunia recalled that 4 Guidelines had been introduced to deal with state aids during the crisis. The rationale was to give coherence to the individual decisions. First, banks were rescued and now the Commission will be deciding on the follow-up. In some cases this would involve extending the procedure, in others it would involve analyzing restructuring plans. The aim was to ensure a level of playing field and that business models are viable and that lending to the real economy can continue. In addition, we should not treat worse the good performers. At the moment, when deciding on the follow-up on State aid it will be done on a case-by-case basis. He mentioned, en passant, that he thought the Commission was doing a very good job and would continue to do so.
· Jürgen Klute (GUE/ DE) asked a question about State aid to public banks. Almunia mentioned that everyone in the financial sector should respect the State aid rules. In addition, good management by the banks themselves is important.
· José Manuel García-Margollo y Marfil (EPP/ ES) asked a question to State aid to banks. Almunia said that banks received State aid to avoid bankruptcy. All those that have received State aid also have to have divestments. The State aid in the framework of the financial crisis is temporary, but he doesn’t know when. There is too much uncertainty and there are many risks. So it is impossible to say that it is over on “Day X”.
· Vice Chairman Committee TRAN asked about liberalization of the international passenger transport sector, and state financial assistance in the transport sector generally. Almunia said it was necessary to work with the Parliament on how to implement Barroso’s vision in his framework. As far as the move of the unit to DG COMP was concerned, there will be continued coordination and cooperation between the Commissioners for Transport and Competition. He announced that Guidelines for ports are expected within the coming months. He said it was difficult to say what would happen on the question of kerosene taxes.
· Burkhard Balz (EPP/ DE) asked a question about whistle-blowers and collective redress. Almunia stated that the immunity for a whistle-blower is a good idea and was very effective. He added that for cases under Article 101 of the Treaty there are exemptions which are being revised: the general vertical agreements exemption has already been discussed and will be gone into in more depth. Then there are two categories for exemption for motor vehicles and insurance, which have to be revised. All these have to be revised by May. The horizontals guidelines need to be revised by the end of the year. He is happy to listen to other opinions and exchange views up to the last moment until the Commission needs to make decision.
· Gunnar Hökmark (EPP/ SE) asked a question about the fine on Telefónica. He said wryly that the Spanish know how much pressure they can exert on Almunia. He would continue to monitor whether there are still violations by Telefónica. He supported the decision of Kroes.
· Bernard Rapkay (S&D/ DE) asked a question about the level of fines. The legal basis for the fines is Almunia so far good. He warned against those who falsely fudge the books to avoid paying up. He also said that an inability to pay can of course be alleged but, of course, you need the necessary proof. Further he said the Commission would continue to use fines as a deterrence.
Third, Almunia concluded: he agreed for example to keep the Committee on Economic & Monetary Affairs Committee informed and to involve the Committee
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Policy-related questions
4. What are the three main priorities you intend to pursue as part of your proposed portfolio, taking into account, where relevant, the financial, economic and social crisis and concerns related to sustainable development.
My core priority will be to use all tools of competition policy to make markets deliver more benefits to consumers, businesses and society as a whole. I will use the Commission’s powers to protect and foster competition in the internal market as a means to promote the welfare of European consumers, to improve the competitiveness of European companies and to contribute to sustainable growth and employment creation. I will therefore not hesitate to take action against companies or governments when I find evidence of unlawful behaviour – be it anti-competitive agreements between competitors, abusive behaviour by dominant companies, attempts by governments to distort competition in the internal market by means of unlawful State aid, or in case of measures concerning public or private undertakings to which the Member States grant special or exclusive rights. I will prevent mergers when they would significantly impede competition, harming consumers and competitiveness. In particular, I will ensure that competition policy supports a successful exit from the crisis competition instruments to help Member States to restructure companies in the financial sector and the real economy and to facilitate companies' access to finance. But I will not hesitate to act to prevent damaging subsidy races or undue distortions. At the same time, the crisis has made clearer that a revision of the State aid procedural framework is needed. I will use all instruments in the competition policy toolbox to contribute to making the EU a sustainable social market economy. Many of the relevant policy guidelines will have to be revised during the next mandate, and in this context I will ensure that competition policy will be an important driver to achieve the Commission's vision of the EU in 2020. Growth must be based on knowledge, skills and innovation – and State aid guidelines for research and development aim at promoting them. Growth must be green and socially inclusive – and State aid guidelines for environmental protection, for training and for delivering high-quality services of general economic interest will help achieving this. Finally, growth must be based on open and competitive markets – and enforcing the competition rules in key areas like energy, information technology and transport will support this. In this context, I am happy that I will be able to direct all competition policy instruments towards those goals also in the area of transport and energy.
5. What are the specific legislative and non-legislative initiatives you intend to put forward, and according to what timetable? What specific commitments can you make regarding in particular the committees' priorities and requests attached hereto which would fall within your portfolio? How would you personally ensure the good quality of legislative proposals?
I will develop and, where necessary, propose EU competition law and policy to reflect market realities and contemporary economic and legal thinking. I also want to continue to ensure the Commission provides clear guidance to courts, national authorities and companies.
As regards the management of the financial and economic crisis, the Commission has over the past year put a framework in place that provides transparency on how the Commission applies the state aid rules in the banking sector, with the aim to bring that sector back to viability. For the real economy, the Temporary Framework for State Aid adopted in December 2008 gives Member States the necessary flexibility to channel substantial funds to the worst-affected companies and sectors, while at the same time protecting the internal market from undue distortions of competition. I will ensure that these frameworks continue to be applied consistently to ensure a level playing field in the internal market, including as support measures are gradually phased out in due course in line with the implementation of the wider exit strategy. I intend to continue on that path of providing guidance and transparency to Member States and companies in a way that contributes to long term sustainable objectives in the EU.
At the same time, the crisis has shown that a revision of the State aid procedural framework is needed. Building on and consolidating the progress achieved over the last years, it is my ambition to modernise the way State aid investigations are conducted. This should ensure speedy handling of cases and may require improving and upgrading our investigative methods and tools.
I also want to minimise costs for businesses and reduce continuing fragmentation of the internal market. I will therefore push for further coherence and convergence in the antitrust and merger control areas across the EU. I want to maintain the strong leadership of EU competition policy world-wide and contribute to fostering convergence and co-operation among competition authorities both bilaterally and at the global level. I intend to explore more in depth the issue of antitrust damages and the compensation of victims, bearing in mind the necessity of safeguards to prevent us from the kind of excessive litigation often experienced in the US. I would like to take soundings on this and in particular with the European Parliament.
I consider the Commission's institutional set-up and decision-making system for competition to be a very strong one, with guarantees as regards effectiveness, fairness and due process.
Having competition policy within the Commission's portfolio alongside other policies has proven to be crucial and will continue to be crucial in dealing with the financial crisis, where financial policy, smart regulation and effective state aid control must go hand in hand. DG
Competition, as an integrated part of the European Commission, can also better contribute to the achievement of other policy objectives, in particular by sharing in-depth market knowledge gained through enforcement, market monitoring and sector inquiries.
I am committed to presenting high quality legislative and non-legislative proposals, respecting the principles of better regulation, relying on extensive public consultation, on market knowledge and using every opportunity for a productive dialogue with the European Parliament.
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