She Fined Tech Giants Billions of Dollars. Now She Wants Sharper Tools.
October 15 2019 - 5:55AM
Dow Jones News
By Valentina Pop
BRUSSELS -- Margrethe Vestager made a name for herself as
Europe's top antitrust enforcer by slapping record fines on U.S.
tech companies. Now she says those fines don't work.
As she prepares to start an unprecedented second term as the
European Union's competition commissioner, this time with added
powers as the EU's digital-economy policy maker, Ms. Vestager is
shifting her focus from fining giants to preventing market
abuses.
Fines are "not doing the trick," she told EU lawmakers recently,
despite having slapped Alphabet Inc.'s Google with penalties
totaling $9.4 billion in recent years. "We have to consider
remedies that are much more far-reaching."
Ms. Vestager already has the power to break up companies as a
last resort, a step some Democratic presidential candidates
including Sen. Elizabeth Warren have advocated. Ms. Vestager said
that is not her intent. "My obligation is to do the least-intrusive
thing in order to make competition come back," she said.
Instead, she pointed to national competition authorities in the
U.K. and the Netherlands, which have the power to reorganize a
marketplace before consumers or competitors suffer. She said the
two countries have "tools that could be considered, to reorganize
before harm is done."
Ms. Vestager should get similar powers, Dutch Competition
Authority Chairman Martijn Snoep told a recent conference in
Brussels. "We don't need tools to cure yesterday's problems," he
said of the Netherlands. "Tools should be aimed at preventing [bad]
behavior."
The approach departs from traditional punitive remedies because
it addresses market conditions without casting blame. Britain's
Competition and Markets Authority can order companies to divest
parts of a business in order to improve competition, "but there's
no liability, no fines," said Mike Walker, chief economic adviser
at the CMA, at the same conference.
The CMA in July launched an inquiry into online platforms and
their advertising businesses. A previous inquiry into the auditing
sector led in April to the conclusion that audit firms Deloitte
LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP
should separate their auditing and consulting businesses.
But while such powers exist in some EU countries, flexing muscle
pre-emptively across the bloc wouldn't be easy because EU law
requires the competition commissioner demonstrate harm before
imposing remedies. Acquiring U.K.-style powers would be a "major
constitutional step that would take a long time," said Matthew
Levitt, a partner at law firm Baker Botts.
A tool Ms. Vestager has revived after nearly two decades is the
option of ordering a company cease actions the commission alleges
to be anticompetitive, even before a case is completed. Ms.
Vestager in coming weeks is expected to decide whether to issue
such an order against U.S. chip maker Broadcom Inc., something she
threatened in June.
Expect more such injunctions in Ms. Vestager's second term, a
senior EU official said. These so-called interim measures can be
challenged in court, though, which legal experts say could backfire
on the commission.
"If the commission loses in court and the interim measures are
removed, then the commission may be discouraged from pursuing the
case on its merits," said Thomas Vinje, a partner at law firm
Clifford Chance. "And even if it does and succeeds, you still have
a considerable delay" due to the legal challenge.
So far, Ms. Vestager last month suffered a legal setback in a
court ruling siding with Starbucks Corp. over its payment of taxes
in Europe. Google also in September scored a legal victory over
French regulators in a European Court of Justice ruling that
restricts the whole bloc's privacy orders, limiting the " right to
be forgotten". Courts haven't so far ruled on any of her Google
antitrust cases.
The commission can also make use of more far-reaching remedies
instead of big fines, for instance allowing consumers more choice
on a platform. And, it can be stricter about the enforcement of
those remedies -- something it has done in the past, Mr. Vinje
said.
In 2009, then-competition commissioner Mario Monti opened an
investigation into Microsoft Corp. for allegedly abusing its market
dominance in bundling its Internet Explorer browser with the
Windows operating system. After hard bargaining, Microsoft agreed
to give users the choice among a random selection of internet
browsers.
"Ironically, this opened the way for Google's Chrome," on
Microsoft's operating system, said Mr. Vinje, who argued at the
time against Microsoft and has since represented clients who filed
complaints against Google.
Ms. Vestager's second term is slated to begin when a new team of
commissioners is approved by the European Parliament. Originally
scheduled for Nov. 1, the handover has been delayed as commission
candidates for other positions face scrutiny, and is now likely to
happen later in the year.
Write to Valentina Pop at valentina.pop@wsj.com
(END) Dow Jones Newswires
October 15, 2019 05:40 ET (09:40 GMT)
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