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27/07/2016

Vestager dodges questions on Google probe, Irish tax loophole

Competition

Vestager dodges questions on Google probe, Irish tax loophole

Margrethe Vestager [European Parliament / Flickr]

Margrethe Vestager, the Commissioner-designate for Competition, avoided giving detailed answers to the EU’s antitrust probe into Google, as well as the ongoing investigation of tax avoidance by multinationals in Ireland, during her confirmation hearing in the European Parliament on Thursday (2 October).

Queried about the ongoing Google investigation, the Danish Commissioner-designate replied she did not know what the next steps will be, “but I am sure that there will be a next step”.

The US tech giant, which dominates the search engine market, has been the focus of a Commission investigation when competitors accused the company of promoting its own services at their expense.

“We have complaints from a huge number of competitors and we continue to see new dimensions of the problem. I will not go into specifics today, but in order to enforce competition rules, we need to be as sharp as the companies. We cannot continue to set up investigation after investigation,” Vestager said.

When asked specifically about the EU’s probe into Ireland’s tax practices, the Apple tax controversy, and other multinationals’ Irish subsidiaries, she likewise answered in general terms.

“I think this is a serious issue. The majority of companies pay their taxes, but they see that other companies get special arrangements and lower taxes. I fully respect that taxes are a member state competence, but if it affects competition, then I’ll look into how it can be stopped,” she said.

The EU is investigating whether Ireland, Luxembourg and the Netherlands have attracted investment and jobs by helping big companies avoid tax in other countries, including EU members. The Commission suspects Ireland was too lenient on the US company, allowing Apple to shield tens of billions of dollars in profit from taxation, and asked Dublin for more information on the conditions it gave the iPhone maker.

The liberal Commissioner-designate later apologised to MEPs in her final statement by admitting, “I have not been sufficiently concrete for some of your questions, but I hope that my principles and values came through.”

Relaxed with technical portfolio

It was obvious that Vestager, who seemed confident and relaxed, started the session by taking photos of the photographers in the Committee room and posted them live on the social media Twitter, tried and maybe failed to make her portfolio seem less technical and legal than it is, and closer to consumer issues.

“With strong competition rules, we can win in a global fight. Competition policies do not stand in the way for the industry. Better regulation supports companies. Without competition rules, products will become more expensive and companies will become less innovative. These things will of course not benefit consumers,” she said.

Vestager highlighted that her keywords as a Competition Commissioner would be “impartiality, neutrality and rigor”. She promised she would listen to everyone from multinationals to small firms, “but the analysis and the judgment will be my own” and potential investigations will be lead regardless of nationality, prominence and size.

The Commissioner-designate also gave two advices for companies. “The best thing is not to engage in cartels. Just a word of advice, to those who listen” and a motto for global competition, “take it through the front door”.

In the half-empty room, Vestager received applause when she disagreed with a UKIP MEP who said the EU had less trade today and was no longer competitive because of EU over-regulation.

“I don’t recognise this picture,” Vestager said. “Not in history, or in the future to come. On the contrary. We have developed the single market with a fine balance of responsibility of member states and the EU. We would have been much worse off without them [competition rules].”

This prompted a Greek MEP to say the EU had to a large extent caused the financial crisis in his country and had shown little empathy with Greek citizens.

Vestager replied: “The empathy for the Europeans who suffered the crisis is shared by everyone. You shouldn’t accuse the EU of the crisis. The EU is a key player in the solution, as we become more dependent on each other.”

New times for EU competition

Though Vestager tried to avoid commenting on concrete, ongoing investigations, she was more open to talk about what could be new policy areas in the field of EU competition.

Dutch liberal MEP Sophie in ‘t Veld, who called Vestager’s performance “impressive”, said the Commission has been slow to recognise big data and access to personal information as a factor of market power, asking what role a Competition Commissioner should play in this regard.

Vestager responded that Big Data was “the currency of the Internet”. 

“You gain much value when you have billions of people’s data that you can use to make a new analysis. I think we are not through in trying to understand what’s going on with digital companies. I would want to work with the Digital Commissioner on personal freedoms and competition. It should be now and next week and not at some point in the future, because these markets develop so quickly that you really have to be fit to keep up,” she said.

MEP Christel Schaldemose, a Danish Social Democrat, also wanted to know whether Vestager would be interested in setting up a special competition ‘taskforce’ that could show up in member states to make checks and balances.

Vestager said that while she would like for the EU to be closer to consumers when they feel abused by companies, she would need to take a closer look at the rules and member state competences before moving forward.

Background

Jean-Claude Juncker, the new President of the European Commission, announced the distribution of portfolios among his new team on 10 September.

Among the new Commissioners, due to take up their posts on 1 November, are 18 former (prime) ministers. The President has announced that the new Commission will be "very political".

The new Commission must now be approved by the European Parliament, who will interview the Commissioners between 29 September and 7 October.

During these two weeks of hearings, the 27 Commissioners will be interviewed by MEPs from relevant parliamentary commissions.

The European Parliament must then accept or reject the whole team.

>> Read more: Live: public hearings of Commissioners-designate

Timeline

  • 29 September to 7 October: Hearings of Commissioners-designate and committee evaluation meetings; no hearings on Friday 3 October 2014 and on Monday 6 October 2014 in the morning
  • 7 October: Extraordinary meeting of the Conference of Committee Chairs to evaluate the outcome of the hearings.
  • 8 to 9 October: The Groups will meet on Wednesday 8 October in the afternoon and on Thursday 9 October in the morning in order to evaluate the hearings.
  • 9 October: The Conference of Presidents meets to declare the hearings closed and finalise the evaluation
  • 22 October: Vote in Plenary

Further Reading