EU/Competition – Legal Update
Status as of: 3 November 2022
► State Aid: Revised State aid Framework on State Aid for Research, Development and Innovation adopted
On 19 October 2022, the revised “Communication on State aid rules for research, development and innovation” (RDI Framework) entered into force (link).
The RDI framework, as complemented by the GBER, is designed to support activities in the covered areas that would not be carried out without public support due to market failures. Facilitating public-private investments in innovation, research and experimentation infrastructures is supposed to support the green and digital transformation in Europe. The changes include updating the existing definitions of research and innovation activities, enabling public support for testing and experimentation infrastructures and simplifying certain rules to reduce the administrative burden and facilitate the application of the RDI framework.
► State Aid: Amendment and extension of the Temporary Crisis Framework
On 28 October 2022, the Commission extended the “Temporary Crisis Framework” for the support of the economy as a result of Russia’s war against Ukraine as adopted in March 2022 and amended in July 2022 (we reported: link and link), until 31 December 2023 and again amended it (link). The amendments include, for example, an increase in the maximum amounts of limited aid, an increase in the flexibility for liquidity support for the trading activities of energy utilities, an increase in the flexibility and support options for companies affected by rising energy costs, the introduction of new measures to reduce electricity demand and the clarification of the criteria for the assessment of recapitalisation support measures.
At the same time, the Commission has prolonged the possibility of granting investment aid to promote sustainable recovery on the basis of the Temporary COVID Framework until 31 December 2023.
► Antitrust: Commission publishes leniency guidelines
The Commission has published guidance in the form of a Frequently Asked Questions (FAQ) document (link) to facilitate leniency applications. The leniency program offers companies involved in a cartel the opportunity to avoid or at least reduce the threat of an administrative fine by confidentially disclosing the cartel and their involvement in it and cooperating with the Commission. The Commission offers potential applicants a hypothetical and anonymous discussion without any disclosures in order to clarify whether there is a cartel and whether the applicant is eligible for leniency. The document also contains clarifications on application, legal protection and benefits, as well as the presentation of new practical rules.
On 27 October 2022 and in the context of a dispute between a private railway undertaking and DB Station & Service (DB), the ECJ clarified the relationship between antitrust damage law and regulatory public law (Case C-721/20). According to the ECJ, a railway company seeking the reimbursement of an alleged overpayment of charges on the basis of Art. 102 TFEU must first refer the question of the lawfulness of these charges to the national regulatory body before bringing the matter before the court having jurisdiction.
Background: Several private railway undertakings had been in litigation with DB for years over the reimbursement of track access charges and station charges. After several rulings of the German Federal Court (BGH) had not considered a prior referral to the regulatory body to be mandatory, the Kammergericht (the highest court of the federal state of Berlin) referred the matter to the ECJ, asking the ECJ whether Directive 2001/14 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure (“Directive”) (here Art. 30 of the Directive) precludes national courts from ruling on an action for repayment of charges based simultaneously on Article 102 TFEU and national competition law, independently of the competent regulatory body.
The ECJ has now ruled that, in order to ensure the full effectiveness of Art. 102 TFEU, the exclusive jurisdiction of the regulatory bodies under Art. 30 of the Directive does not prevent national courts from simultaneously applying Art. 102 TFEU and national competition law when deciding on repayment. However, pursuant to the ECJ, this only applies if the national regulatory authority has previously decided on the lawfulness of these charges. Due to the requirement of consistent management of the rail network, the preservation of the exclusive jurisdiction of the regulatory body to decide on all aspects does not preclude Article 102 TFEU. According to the ECJ, the courts are obliged to cooperate sincerely with the regulatory bodies in order to ensure the practical effectiveness of both the Directive and Article 102 TFEU. The decision of the regulatory authority is therefore to be taken into account by the courts, even though they are not bound by it.
The mandatory application of the procurement procedure under EU law for contracts concerning public passenger transport on inland waterways may not be prevented by a national provision which reclassifies the service. This was decided by the European Court of Justice (ECJ) in a preliminary ruling of 13 October 2022 (Case C-437/21).
Public services for high-speed maritime passenger transport fall within the scope of Regulation (EEC) 3577/92 applying the principle of freedom to provide services to maritime transport within member states (Maritime Cabotage Regulation) which regulation requires a public tendering procedure for contracts for these services. Regulation (EC) 1370/2007 on public passenger transport services by rail and by road (Reg (EC) 1370/2007), on the other hand, provides the possibility of direct awards for services it covers. According to the ECJ, national regulations may treat maritime passenger transport services as equivalent to rail transport services on the basis of Reg (EC) 1370/2007, however “without prejudice” to the Maritime Cabotage Regulation. A national provision which, by placing passenger ferry services on an equal footing with rail transport services, has the effect of excluding the service in question from the application of the rules on public tendering procedures which apply to it in principle is contrary to the Maritime Cabotage Regulation and thus to EU law.
► Antitrust: International Competition Network - Statement on Competition in Times of Economic Crisis
On 25 October 2022, the German Federal Cartel Office (FCO) announced that the steering group of the International Competition Network (ICN) published a statement underlining the role of competition and competition policy in times of current global crises. The ICN includes 140 competition authorities from 130 states, making it the most important association of competition authorities. The ICN statement clarifies that competition should remain a priority both despite and because of the crises and must be a crucial component of any response to these crises. According to the ICN statement, promoting fair markets may contribute to recovery. For this to happen, however, competition law must be actively enforced because the harmful effects of competition law infringements may contribute to slowing down or even preventing economic recovery. As examples of how competition law and competition policy can address the economic effects of the crises, the ICN statement cites the promotion of growth and green innovation, the easing of supply chain constraints, the reduction of energy supply shortages and price shocks, and the mitigation of the effects of inflation.
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The Chatham Partners’ EU/COMP-team is specialized in complex issues in the areas of EU and German competition, State aid and public procurement law and has extensive practical experiences in these fields.
We would like to thank Sonja Maria Brücker for her valuable support in the compilation of this newsletter.
