Update

EU: 2004 Annual Report on Competition Policy

The 2004 Annual Report on Competition Policy was adopted by the European Commission in late June 2005. It provides an overview of 2004's most important legislative and policy initiatives and decisions in the field of EU competition policy.

The year saw the introduction of new EC Treaty rules on restrictive business practices and abuse of monopoly power. Amongst other things, the new set of implementing rules created a new enforcement regime based on close cooperation between competition authorities at a national and European Commission level.

During 2004, the European Commission also adopted a new block exemption regulation and guidelines on patent, know-how, designs and software copyright licensing (technology transfer) agreements. The block exemption regulation provides a legal safe harbour for many technology transfer agreements, while acknowledging that they can at times serve to harm competition and consumers.

The European Commission also demonstrated its commitment to enforcement in 2004, with three decisions, including the Microsoft decision, prohibiting the use of dominance. In addition, six decisions against cartels were adopted, with fines totalling €390 million.

New Merger Regulations commenced on 1 May 2004, which introduced better tests for identifying mergers that could harm the European economy.

Horizontal merger guidelines were also adopted, and the year saw an increase in notified transactions of 37 from the previous year, despite this figure still being lower than the number of cases in 2000.

With respect to state aid, the European Commission also adopted rules streamlining and simplifying notification procedures, and a number of important individual cases were dealt with by the Commission.

A bitter pill to swallow: €60 million fine for abuse of a dominant position

The Anglo-Swedish pharmaceutical group AstraZeneca was recently fined €60 million for abusing its dominant market position. AstraZeneca produces Losec, which is used in the treatment of ulcers.

The European Commission found that AstraZeneca had sought to restrict its competitors from accessing the pharmaceuticals market by making misrepresentations to national patent offices and by misusing pharmaceutical authorisation procedures. It held that these activities made it impossible for other companies to launch a generic product and also prevented parallel imports.

In its finding, the European Commission highlighted that the purpose of market authorisation is to give companies the right to sell medicine, not to exclude competitors.

AstraZeneca has announced that it will appeal the European Commission's decision.

A new sheen to the De Beers diamond investigation

The Belgian Association of Dealers, Importers and Exporters of Polished Diamonds (BVGD) has sought to have its antitrust case against the De Beers company re-opened. De Beers is the largest diamond manufacturer in Europe. The BVGD has argued that De Beers has continued to abuse its dominant market position by artificially limiting the availability of diamonds on the market. In addition, the group has accused De Beers of misleading the European Commission.

The De Beers investigation first began in July 2000. The European Commission's investigation ceased when De Beers offered a number of proposals to amend its supply system, which had been the subject of complaints against the company. In January 2003, De Beers was also cleared of concerns that its "supplier of choice" distribution arrangements could artificially reduce the supply of high quality diamonds.

Also currently under European Commission investigation is De Beer's joint venture with Alrosa, a Russian state-owned diamond producer.