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The list of big American tech companies being investigated by Margrethe Vestager, the EU’s competition chief, for either antitrust violations or sweetheart tax deals already reads like a “who’s who” of Silicon Valley: Google, Amazon, Apple. Her proclivity for going after US companies, particularly in her tax investigations (American non-tech groups like McDonald’s and Starbucks have also been targeted), has already raised eyebrows in Washington, where Treasury officials and members of Congress have accused her of an anti-American bias.
Ms Vestager has denied singling out US firms, and if she is at all chastened by the American criticism, she’s not showing it: as early as tomorrow, she is expected to roll out a second antitrust case against Google, this time accusing the California company of abusing its dominant position in smartphone operating systems to foist its suite of apps on unsuspecting consumers.
In a speech yesterday, the former Danish economy minister compared Google’s practices to the mother of all EU-US tech antitrust cases, the 1990s-era battle with Microsoft. The comparison is apt for two reasons. First is for the reason Ms Vestager intended: during the time when computing was dominated by PCs, desktops running Microsoft’s ubiquitous Windows operating systems would come “bundled” with a wide range of other Microsoft software, most importantly its Explorer internet browser. Such bundling gradually destroyed browser inventor (and onetime market leader) Netscape, since nobody needed its Navigator browser if your PC came with Explorer. Read more
This is Monday’s edition of our daily Brussels Briefing. To receive it every morning in your email in-box, sign up here.
Margrethe Vestager, the Commission's competition chief, and her mobile phone
It often seems that the European Commission’s only real game plan regarding Brexit is to hope that there won’t be any unfortunate spats involving the UK right in the middle of campaign season. That won’t be possible, and there is every sign an imminent decision over whether to allow consolidation among British mobile phone network operators could turn into a political football.
Margrethe Vestager, the EU antitrust chief, has been known to argue that cutting the number of players from four to three in any one market saps competition and, in the case of telecommunications, allows companies to increase phone bills. Her hard-line stance on a 4-to-3 Danish telecoms merger last year suggests she’s also looking to block the £10.5bn purchase by CK Hutchison’s Three of Telefónica’s O2. Or at the very least, she will impose stinging concessions.
In less combustible times, the politics would be more navigable. Ofcom, the UK regulator, has already announced it is hostile to the deal. Just this morning, Britain’s competition and markets authority weighed in, writing to Ms Vestager that the merger a “significant impediment to effective competition” in the UK’s mobile phone market. Ms Vestager could quite easily argue that she represents the sort of “more competitive Europe” that David Cameron, the British prime minister, says he wants. She could argue she is simply protecting the little guy from big corporates who will put his phone bills up. Read more
Proud competition commissioners and hard-charging chief executives are a combustible mix. Many a business leader has arrived in Brussels imagining that a bit of face time with the man in charge will clinch approval for their compelling merger proposal. How wrong they can be.
The latest lesson in bad lobbying is provided by Willie Walsh, chief executive of IAG, the parent company of British Airways and Iberia. Admittedly the story ended positively for Walsh, who last month won approval for his takeover of British carrier BMI. But the stakes were high (BMI was on the verge of collapse), the decision was finely balanced (and may still be appealed) and Walsh almost wrecked the chances of getting an early green light.
The details of the drama, which played out in February and March, are slowly emerging. One calamitous meeting between Walsh and Joaquín Almunia, Europe’s competition enforcer, nearly overshadowed the entire process. Read more
It’s less than a week since General Motors agreed to sell Opel, its European arm, to a group led by Magna International of Canada, but already a wave of anger at the implications of the deal is building up. Nowhere is this more true than in Belgium and the UK, where workers at GM plants seem far more at risk than their colleagues in Germany of losing their jobs.
This episode is, however, about much more than potential job losses. It’s about Europe’s reluctance to come to terms with huge overcapacity in its car industry. It’s about how best to preserve a broad manufacturing base in an era when the other main recent driver of European economic growth - lightly regulated financial capitalism – is discredited. Finally, it is a test of the European Commission’s ability to uphold its strict rules on competition and state aid during the worst recession in the European Union’s history. Read more