The three-year Brussels probe into Google’s search business seems to be meandering towards a thundering anticlimax. With every legal twist, revised settlement offer and procedural shuffle, the case is losing the zip that made it a cause célèbre in the antitrust world. The opposing camps, meanwhile, appear ever more entrenched and polarised. Nobody is satisfied.
For now Joaquín Almunia, the EU competition chief, is still ploughing towards a settlement, rather than issuing formal charges. But it has been a bumpy ride. The protracted process will have many more months or years to run, especially with legal appeals. There could still be surprises, even perhaps a charge-sheet, the so-called “statement of objections”. The anti-Google camp are far from surrendering. The details still matter.
The latest inch-forward came on Monday with Almunia seeking feedback on Google’s second settlement bid. The terms of the latest package will not be published, for various reasons that are hard fathom. Even so, all the complainants and most journalists covering the case now have a copy of the offer or have been talked through it. Below is a medley of insights on what is on the table and what to expect next: Read more
Backstops? A safety net for banks in difficulty? Why the fuss? We have one already! That is the rough conclusion from finance ministers meeting in Luxembourg on Monday and Tuesday.
To provide some context, the apple of discord is whether Europe should pool more public funds to stand behind its banking system. Looming on the horizon is a stress test of banks next year that is supposed to restore faith in the financial system. It may uncover horrors that can’t be covered by contributions from private investors. If a bailout is needed, the open question is whether the bank’s sovereign will be able to fund it by borrowing from the market or from eurozone bailout funds without rekindling the sovereign debt crisis.
So what is the plan? Well there is no sign of new money. For the more optimistic finance ministers the ultimate, ultimate backstop — only to be used in exceptional circumstances — is apparently a “direct recapitalisation” from the European Stability Mechanism, the eurozone’s E500bn bailout fund.
The trouble is that there are a legion of hurdles to clear before using this instrument in practice — especially if it is to be used to cover any shortfall exposed next year. The rough rules on the use of the instrument were published in June. Many senior officials think it is so encumbered with conditions as to be almost pointless. If direct recap is the backstop, some finance ministers will be worriedly looking over their shoulder.
TEN OBSTACLES TO A DIRECT RECAPITALISATION
1. German veto: Any ESM decision to take a direct stake in a bank is subject to a German veto. Berlin is determined to ensure that even if this tool is theoretically “available”, it remains unused. Wolfgang Schäuble, Germany’s finance minister, even said on Tuesday that German law would need to be changed to use the direct recap instrument.
2. German veto: the Bundestag would have to vote through any direct recap. Germany’s centre-left Social Democratic Party, the most likely coalition partner for Chancellor Angela Merkel, is dead-set against direct recapitalisation of banks. It thinks the financial sector, not taxpayers, should foot the bill for bank failure. Read more
Will a bank resolution phoenix rise from the ashes of the latest banking union debate? True to form, EU finance ministers used their informal gathering in Vilnius last week to tear into Brussels’ blueprint to empower itself as the top executioner for Europe’s ailing banks, leaving the path ahead uncertain.
This is a rite of passage for banking union proposals: the hammering the Commission endured at a meeting in Cyprus discussing its previous initiative — making the ECB the eurozone’s top bank supervisor — was something to behold.
Nevertheless it looks like a significant re-write of the Commission plan is looming, especially if a deal is to be agreed by December. Here we list 9 compromises to placate the German-led hold-outs, in roughly descending order of likelihood. The vast majority will probably be necessary for a compromise to be reached.
1. Change the executioner
This is a bad day for Europe’s financial transaction tax. The legal adviser to EU finance ministers — the Council legal service — has concluded that one of the main provisions of the Brussels designed tax is discriminatory, overreaches national jurisdiction and infringes the EU treaties.
Is some lobbying in Brussels too heavy and contrived for its own good?
Two examples spring to mind from some of the most over-lobbied issues handled by the European Commission: card fees and the antitrust case against Google. Read more
Politics in Brussels can verge on the absurd. As a case in point, we bring you the bizarre tale of how Greek Stalinists seemingly helped rescue European fund managers from a bonus cap, then deployed a form of Brussels magic that lets you vote against something, then for it.
Before we start, it is worth mentioning that this blog is partly intended as a way to fully lay out the evidence and address accusations that the FT launched a “sycophantic attack” on the Greek Communist party. Read more
Bank investors beware. Dazzling political fireworks will be launched in Brussels today that may distract you from the reform that really matters, at least over the next few years.
All the attention will naturally be on a bold move to create a powerful authority to wind up eurozone banks — a great leap forward for banking union that puts Germany’s red-lines to the test. Read more
After two sets of late-night negotiations that stretched into early morning, EU finance ministers finally reached a deal Thursday on new bail-out rules for European banks. A quick primer:
Is the deal a big step towards a banking union? It is definitely progress. But this is no leap towards centralisation. The bank bailout blueprint was proposed even before a eurozone banking union was endorsed by EU leaders last year. It is more a political pre-condition for deeper financial integration. The reform frames the powers of EU national authorities in handling bank failures and applies to euro and non-euro countries.
The impetus primarily came from the global regulatory response to the Lehman Brothers collapse in 2008. These reforms are supposed to answer the “too big to fail” question, readying the defences for the next crisis and introducing powers to make creditors shoulder the costs of bank collapse, rather than taxpayers. It just turned out the reforms were shaped in the middle of a European banking crisis, rather than in the wake of the US one.
EU financial services chief Michel Barnier takes questions on the bank bail-in debate Wednesday
Call it the Cinderella rule: complex bank reforms cannot be agreed in Brussels until after midnight. So it will be this evening as ministers reconvene to negotiate laws on how to shut down failing banks, a deal that eluded them in the early hours of Saturday morning. (Though it should be noted negotiators for the Irish government, holders of the EU’s rotating presidency, are telling interlocutors they hope to be at the pub before midnight.)
The talks don’t start in earnest until after 7pm but a compromise text is circulating. It is the opening shot from the Irish to break the impasse. Officials are more optimistic about a deal this time. Fellow Brussels Blogger Peter Spiegel has written extensively on the context of the negotiations already, so this blog offers a short summary of the main changes for those who have followed the talks:
Pity the Lithuanians. When assuming the EU rotating presidency next month they will inherit the mother of all regulatory backlogs, especially when it comes to the financial sector. It is an impossible and thankless task, a numbingly complex pile of half-negotiated, often paralysed and always contentious directives and regulations, which the European Commission is still adding to with some gusto.
There are going to be around 25 financial services files for the Lithuanians to shepherd through, either in negotiations between member states, or directly with the European parliament. The poor Lithuanian officials strong-armed to work the files will have to become instant experts. Most of the proposals will require countless long meetings with member state or parliamentary negotiators; some will need ministerial input and some sacrificial political blood.
The demands could dwarf the resources and time available. After March 2014, the parliament essentially shuts shop for European-wide elections, so the Lithuanian presidency, which runs through the end of this year, is pivotal. Some countries only have one or two financial services attachés covering the bulk of files. Getting MEPs together for talks is like herding cats. Getting them to agree is even harder, especially in this pre-election environment. A lot of the initiatives will not make it through; their fate is then in the hands of the next leaders of the EU’s parliament, commission and council. Read more