Europe antitrust chief not afraid of starting a fight
Google, Gazprom, Apple and Amazon beware: Margrethe Vestager is not a competition enforcer inclined to settle cases in backroom deals.
Since taking the helm as Europe’s antitrust chief, the former Danish deputy prime minister has wooed lawyers and executives with poise, wit, good coffee and a willingness to listen.
Hopes are high on all sides, not least because her big, difficult decisions are still pending, from probes into sweetheart tax deals, to Google’s alleged abuse of market dominance and Gazprom’s pricing tactics. But one trait is increasingly clear: she plays it by the book and does not cut corners.
“It’s very important not to make a habit out of settlements,” she says. “They are much more quick and much more smooth and everyone can move on, but still you need occasion to develop [case law] and only our judges and going to court can do that.”
It is a worrying show of intent for Google and a point of departure from her predecessor Joaquín Almunia, a pugnacious Spaniard who often sought negotiated deals to rapidly address antitrust problems. In the case of Google that solution proved spectacularly elusive, with three failed attempts at a pact badly denting the European Commission’s reputation and stoking anti-Google political furore in Germany and France.
Ms Vestager appears more willing to take the traditional, more confrontational route: charges, possible fines, imposed conditions and the long court battles that follow. She has gone back to basics on Google, a case simmering since 2009, and feels no inherited obligation to reopen settlement talks once her thinking and reassessing is done.
“It may sound a little strange, but the fact that there is so much political interest in the case around me made it easier to be strict on being neutral, looking at the facts, weighing arguments and interpretations against each other, and being very much aware that in the end we might meet in court,” she says. “You don’t know.”
With characteristic discretion, she declines to reveal details of her meeting with Google’s Eric Schmidt last week. “I try to have open meetings with everyone,” she says. “I may not be that old, but I have learnt that the ears are one of the few things that keep growing on a human being as we age, and I take that as a sign that one should be able to listen more and more the older you get and not just to stick with your pre-installed opinions.”
On Gazprom, another big EU antitrust case long stuck in the sidings, she is showing intent. More than three years on from antitrust raids, she says the case is almost ready, although she will only give “oracle-like” answers on timing and tactics. Still, she insists she can keep the case separate from geopolitics: conflict in Ukraine, the sanctions against Russia and the potential for retaliation from Europe’s biggest external gas supplier.
There will be no consultation with governments — be it Berlin or Sofia — over the advantages and dangers of embarking on the case. “The minute you would do that, you would politicise the case and you have a different path for that kind of concern, which is the path of energy union,” she says, referring to the EU’s strategic plan for security of energy supplies.
“For any company, it’s a comfort to know that we will try to be even-handed; that no matter the ownership of a company — be it American or Russian or European — if you want to be in the European market, you are faced with the same set of competition rules and we will do our best to enforce them no matter your nationality,” she says.
Despite this, policy makers in Washington, and even US President Barack Obama himself, have voiced concern about European politicians taking an increasingly protectionist course and picking off US companies. Ms Vestager’s probes into state-backed tax avoidance have ensnared mainly US groups, including Apple, Amazon and Starbucks.
The criticism has done nothing to damp Ms Vestager’s obvious enthusiasm for the cases. She has been outspoken about protecting a level playing field on tax — for companies big and small — and sees the investigations potentially having an important deterrent effect on aggressive tax planning. For the likes of Apple and Amazon, her hints at potentially clawing back large sums will hardly be reassuring.
“In the [EU] treaty it is quite obvious that the deterrent effect is crucial,” she says. “You have to do recovery. It’s not a choice. If it was a choice, of course it was a risk that you would be forgiven and then forgotten until the next time, but the fact and the understanding by the people who wrote this — I think — was very profound that you need deterrent effect.”
“Of course I realise that for a company, paying taxes is a cost as any other cost and it should be minimised,” she adds. “But it’s just that some companies just have better means to do that than others.”
Facebook And Other Apps For iPhone And HTC Mobile Handsets...The Google Inc. company logo is seen on an Apple Inc. iPhone 4 smartphone in this arranged photograph in London, U.K., on Wednesday, Aug. 29, 2012. Apple Inc. is seeking a U.S. sales ban on eight models of Samsung Electronics Co. smartphones and the extension of a preliminary ban on a tablet computer after winning a patent trial against the South Korean company. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg
Google
Brussels is probing Google’s search business over concerns it abused its power by stealing traffic from rival shopping, mapping or booking sites. The first of more than 20 complaints landed in 2009. Google made three settlement offers, which the commission ultimately rejected amid a revolt from complainants and politicians.
Production Of Steel Pipes For South Stream Gas Pipeline At United Metallurgical Co....A worker fits an OAO Gazprom branded protective end cap to a seamless steel pipe destined for use in the company's South Stream gas pipeline, at the Vyksa Steel Works, operated by the United Metallurgical Co. (OMK), in Vyksa, Russia, on Tuesday, April 15, 2014. Russian equities trading in New York fell for a third day, the longest slide in a month, as clashes in eastern Ukraine added to speculation that the U.S. and Europe will step up economic sanctions against the Kremlin. Photographer: Andrey Rudakov/Bloomberg©Bloomberg
Gazprom
EU officials are investigating whether Russian energy giant Gazprom abused its dominance in eastern Europe by overcharging customers, restricting the resale of its gas and blocking rival sources of supply. Raids were launched in 2011 and there were tentative settlement talks in early 2014. But the case was put on ice amid the Ukraine crisis and Russia’s annexation of Crimea.
Judge's Gavel on a blue background©Dreamstime
Tax rulings
There are five European Commission state aid probes into whether EU countries granted multinationals favourable tax deals. This covers tax rulings for Apple in Ireland, Starbucks in the Netherlands and Amazon and Fiat in Luxembourg, and Belgium’s “excess profit” rulings system. The commission can require any illegal support to be clawed back. A first decision is expected by the summer.
Margrethe Vestegar in her own words
On sweetheart tax deals:
What you do not want is tax rulings being used to shift profits from where profits are made to where profits are not taxed . . . I have friends who have businesses; small, but that’s bread and butter for people. They do not engage in tax planning. They pay their taxes. They’re just one click away from large competitors who have the resources to get organised in order to pay very little — if any — taxes and that is not fair competition.”
On Gazprom:
Anyone would welcome — and they do of course — Gazprom as a supplier. That’s not the question. It’s not a question of discrimination or not wanting to buy it. It’s a question of how does the market work?”
On Google:
It was kind of unresolved. There was still this tension about it. It was important to say, let’s pause or stop what was there, and then also for me personally to take the necessary time to get acquainted with the case.”