2022 Annual Report on Competition Policy
ECON-VII/033
2022 Annual Report on Competition Policy
This opinion's main objective is to provide a local and regional perspective on the European Commission's annual Competition Report, which gives an overview of the key developments in EU competition policy and enforcement in 2022 and to express its political positions on the impact that competition policy developments have on regions and cities and express their views and potential concerns. The CoR normally issues an opinion on the annual competition report every two years and this will be the fourth time.
The CoR regularly voices its views on competition policy and related matters in its opinions and in the public debate, especially when competition policy (State aid) interacts with cohesion policy. The opinion is an opportunity for the CoR to highlight its role in this field and is a chance to showcase the added value of its political work, as the opinion puts forward relevant expertise from regions and cities.
The CoR regularly voices its views on competition policy and related matters in its opinions and in the public debate, especially when competition policy (State aid) interacts with cohesion policy. The opinion is an opportunity for the CoR to highlight its role in this field and is a chance to showcase the added value of its political work, as the opinion puts forward relevant expertise from regions and cities.
The European Commission's position on the opnion is as follows:
Temporary Crisis Framework and the Temporary Crisis and Transition Framework
According to the Commission’s analysis State aid measures implemented by Member States are proportionate to the economic damage suffered during the crisis in terms of GDP loss, as a reply to the CoR's concerns about aid approved under the COVID-19 Temporary Framework having unduly distorted competition in the internal Market.
The Commission notes the concerns raised that the Temporary Crisis and Transition Framework (TCTF) may possibly impact the level playing field in the internal Market because Member States have diverging financial capacity to subsidise companies negatively affected by Russia’s aggression against Ukraine, but states it Commission only approves measures when they are considered necessary, appropriate, and proportionate, after careful analysis.
Better regulation
On the CoR's call to apply the better regulation principles in this policy field, the Commission replies that revisions of the competition rules are done according to the Better Regulation rules, after carefully considering relevant aspects, including the regional dimension and the effects on small to medium-sized enterprises (SMEs).
On the Foreign Subsidies Regulation
The CoR calls on the Commission to enhance protection for European undertakings competing against companies based in third countries, through the use of EU competition policies, to which it responds that the Foreign Subsidies Regulation aims to ensure
a level playing field for all companies active in the internal market, by empowering the Commission to take action against subsidies from third countries that distort competition on the internal market. According to the Commisison, the Foreign Subsidies Regulation, however, doesot address subsidisation that is covered by the World Trade Organisation Agreement on Subsidies and Countervailing Measures (ASCM), and no action shall be taken under the Foreign Subsidies Regulation that would be contrary to the Union’s
obligations under the ASCM. In the World Trade Organisation, as well as in bilateral relations, the EU engages in cooperation and policy dialogue on subsidy issues.
On Important Projects of Common European Interest
The CoR recommends that the Commission strengthen both the initiative and the coordination of these projects, from the planning to the implementation phase, and build the engagement with local and regional players, given that these transnational industrial projects also need to be anchored regionally to ensure a more effective implementation and less bureaucracy.
According to the Commission, IPCEI are, by nature, large, complex projects requiring extensive coordination at the design and
implementation phases and involving substantial amounts of aid. The Commission says it assesses them as a matter of utmost priority and has assigned additional resources to accomplish this task. It points at the fact that the speed of the assessment highly depends on the quality of the information it receives. The Commission highlights that the IPCEI rules allow for a more flexible approach for SMEs to encourage their participation. In March 2023, the Commission introduced an amendment to the General Block Exemption Regulation (GBER) which aims to simplify the assessment framework by facilitating smaller IPCEI-related projects.
On de minimis State aid
In its opinion, the CoR suggests to raise the de minimis thresholds. The Commission mentions the new General de minimis Regulation that raises the ceiling of EUR 300 000 over three years to adjust to inflation.
Do no harm to cohesion
The Commission takes note of the Committee’s position on the 'do no harm to cohesion' principle. The Commission states it takes cohesion policy principles fully into account when amending existing, or adopting new, compatibility rules, for example the
Regional Aid Guidelines and the Temporary Crisis and Transition Framework.
STEP
The CoR points out that, despite its intention to boost the competitiveness of European companies in international markets, STEP risks failing to provide adequate support for the numerous local and regional consequences of the twin green and digital transitions, and also risks relying, to a large extent, on funds already earmarked or on the budgets of the individual Member States.
According to the Commission, STEP, while less ambitious than initially envisaged, could still mobilise up to EUR 50bn of investments
in strategic areas. Still according to the Commission, while the STEP relies on the reprogramming of, and creating synergies between,
existing programmes for supporting strategic investments, it is also an important testing ground for the future Multiannual Financial Framework and will offer the possibility, but not the requirement, to local authorities to contribute to strategic investments, and will respect cohesion principles in the process.
Temporary Crisis Framework and the Temporary Crisis and Transition Framework
According to the Commission’s analysis State aid measures implemented by Member States are proportionate to the economic damage suffered during the crisis in terms of GDP loss, as a reply to the CoR's concerns about aid approved under the COVID-19 Temporary Framework having unduly distorted competition in the internal Market.
The Commission notes the concerns raised that the Temporary Crisis and Transition Framework (TCTF) may possibly impact the level playing field in the internal Market because Member States have diverging financial capacity to subsidise companies negatively affected by Russia’s aggression against Ukraine, but states it Commission only approves measures when they are considered necessary, appropriate, and proportionate, after careful analysis.
Better regulation
On the CoR's call to apply the better regulation principles in this policy field, the Commission replies that revisions of the competition rules are done according to the Better Regulation rules, after carefully considering relevant aspects, including the regional dimension and the effects on small to medium-sized enterprises (SMEs).
On the Foreign Subsidies Regulation
The CoR calls on the Commission to enhance protection for European undertakings competing against companies based in third countries, through the use of EU competition policies, to which it responds that the Foreign Subsidies Regulation aims to ensure
a level playing field for all companies active in the internal market, by empowering the Commission to take action against subsidies from third countries that distort competition on the internal market. According to the Commisison, the Foreign Subsidies Regulation, however, doesot address subsidisation that is covered by the World Trade Organisation Agreement on Subsidies and Countervailing Measures (ASCM), and no action shall be taken under the Foreign Subsidies Regulation that would be contrary to the Union’s
obligations under the ASCM. In the World Trade Organisation, as well as in bilateral relations, the EU engages in cooperation and policy dialogue on subsidy issues.
On Important Projects of Common European Interest
The CoR recommends that the Commission strengthen both the initiative and the coordination of these projects, from the planning to the implementation phase, and build the engagement with local and regional players, given that these transnational industrial projects also need to be anchored regionally to ensure a more effective implementation and less bureaucracy.
According to the Commission, IPCEI are, by nature, large, complex projects requiring extensive coordination at the design and
implementation phases and involving substantial amounts of aid. The Commission says it assesses them as a matter of utmost priority and has assigned additional resources to accomplish this task. It points at the fact that the speed of the assessment highly depends on the quality of the information it receives. The Commission highlights that the IPCEI rules allow for a more flexible approach for SMEs to encourage their participation. In March 2023, the Commission introduced an amendment to the General Block Exemption Regulation (GBER) which aims to simplify the assessment framework by facilitating smaller IPCEI-related projects.
On de minimis State aid
In its opinion, the CoR suggests to raise the de minimis thresholds. The Commission mentions the new General de minimis Regulation that raises the ceiling of EUR 300 000 over three years to adjust to inflation.
Do no harm to cohesion
The Commission takes note of the Committee’s position on the 'do no harm to cohesion' principle. The Commission states it takes cohesion policy principles fully into account when amending existing, or adopting new, compatibility rules, for example the
Regional Aid Guidelines and the Temporary Crisis and Transition Framework.
STEP
The CoR points out that, despite its intention to boost the competitiveness of European companies in international markets, STEP risks failing to provide adequate support for the numerous local and regional consequences of the twin green and digital transitions, and also risks relying, to a large extent, on funds already earmarked or on the budgets of the individual Member States.
According to the Commission, STEP, while less ambitious than initially envisaged, could still mobilise up to EUR 50bn of investments
in strategic areas. Still according to the Commission, while the STEP relies on the reprogramming of, and creating synergies between,
existing programmes for supporting strategic investments, it is also an important testing ground for the future Multiannual Financial Framework and will offer the possibility, but not the requirement, to local authorities to contribute to strategic investments, and will respect cohesion principles in the process.
THE EUROPEAN COMMITTEE OF THE REGIONS
- welcomes the fact that the Commission is revising and adapting its State aid guidelines in light of ongoing climate change and corresponding legislation to ensure that the European Green Deal can be implemented while distorting competition as little as possible;
- encourages the Commission to continue to foster the enforcement of antitrust laws to enhance competition within the markets, in order to benefit not only producers but ultimately consumers, which have all been facing surging prices, as well as challenging international events which have led to important value chain disruptions;
- alerts the Commission to the fact that prolonging the relaxation of the competition rules could continue to widen the disparity between Europe's regions, leaving behind those that, because of natural or demographic characteristics, or because they are rural areas or areas experiencing industrial transition, risk missing out on public support, particularly during crises. The CoR also points out that the financial capacity of subnational authorities does not correspond to that of the national level everywhere and that an increase of public spending may be needed, and it urges the Commission to take measures to mitigate market distortions both in the short and medium-long term, with the aim of gradually reinstating normal competition rules;
- clarifies that a reform of the State aid rules must consider the primary objective of maintaining a level of competition among the Member States and a level playing field for actors involved in the single market, striking a balance between the need to raise European investment levels to achieve the twin green and digital transition targets, but also the need to maintain cooperation between all levels of governments and high levels of economic, social and territorial cohesion in order to harmonise economic growth and welfare standards.
- welcomes the fact that the Commission is revising and adapting its State aid guidelines in light of ongoing climate change and corresponding legislation to ensure that the European Green Deal can be implemented while distorting competition as little as possible;
- encourages the Commission to continue to foster the enforcement of antitrust laws to enhance competition within the markets, in order to benefit not only producers but ultimately consumers, which have all been facing surging prices, as well as challenging international events which have led to important value chain disruptions;
- alerts the Commission to the fact that prolonging the relaxation of the competition rules could continue to widen the disparity between Europe's regions, leaving behind those that, because of natural or demographic characteristics, or because they are rural areas or areas experiencing industrial transition, risk missing out on public support, particularly during crises. The CoR also points out that the financial capacity of subnational authorities does not correspond to that of the national level everywhere and that an increase of public spending may be needed, and it urges the Commission to take measures to mitigate market distortions both in the short and medium-long term, with the aim of gradually reinstating normal competition rules;
- clarifies that a reform of the State aid rules must consider the primary objective of maintaining a level of competition among the Member States and a level playing field for actors involved in the single market, striking a balance between the need to raise European investment levels to achieve the twin green and digital transition targets, but also the need to maintain cooperation between all levels of governments and high levels of economic, social and territorial cohesion in order to harmonise economic growth and welfare standards.
