Published September 16, 2017 by Carl De Luna

The European Union Competition Commission has been harsh on its monopoly rulings. The likes of Google and Intel have tasted their wrath in different scenarios. Just last year, Apple was famously asked to pay $15.7 billion USD (€13 billion) to the Irish government. They found that Apple was given a preferential tax rate or illegal aid by the Irish government. European Competition commissioner Margrethe Vestager said that Ireland should recoup $ 15.7 billion (€13 billion) with interest for unpaid taxes due from a period of 11 years from 2003 to 2014 and illegal state aid which dates back 25 years.

In response, Apple accused the European Union of revisionism. Apple, which has been scrutinized by the European Union for two years, has been one among many American multinational companies under investigation by the European Union for alleged tax avoidance. However, Vestager defended the decision stating it sends a clear message to member states that they cannot provide special and unfair tax benefits to selected companies, whether “big or small or European or foreign, part of a group or not”. She also said that Apple was only asked to pay unpaid taxes and was not given a penalty. The European Competition Commission alleges that Apple and Ireland colluded for two deals, with some dating back as late as 1991. The deal allowed Apple to divert profits earned from Europe and elsewhere via Cork, Ireland to a head office wherein the office had no employees and no economic activity. This led to them paying no or little taxes. The commission also determined that Apple was paying an effective tax rate between 0.005% and 1% for a ten-year period from 2003 to 2014, with the rate diminishing during the period even though Apple continued to grow during that time.

In comparison to Apple, Intel has gotten a reprieve so far. The EU Court of Justice issued a decision favoring the American microchip giant over the enormous $1.26 billion USD (€1.06bn) fine meted out by the European Competition Commission in 2009. It was suspected that Intel was abusing its leadership of the microchip market by bullying customers into buying their products with the end goal of lowering the market share of Intel’s nearest competitor, AMD or Advanced Micro Devices. Then European Competition commissioner Neelie Kroes revealed that Intel was guilty of paying computer makers Dell, HP, Lenovo and NEC to cancel plans making products which use AMD products, paying secret and illegal rebates to the same computer makers to utilize mostly or entirely Intel microchips and paying a retailer to only stock computers with Intel chips. Initially, the EU General Court rejected Intel’s 2014 appeal on the grounds that the incentives were considered as anti-competitive. But the EU Court of Justice argued that the EU General Court did not consider the EU Competition Commission’s efficient competitor test. The said test is a technical assessment whether Intel’s activity such as incentives made it difficult for an efficient rival to contend against Intel. But the EU Court of Justice dismissed Intel’s contention that the EU Competition Commission had no territorial jurisdiction to “issue the fine and procedural problems which affected the case”.

In somewhat similar terms, Google appealed a huge $2.8 billion USD (€2.4bn) fine against its parent company Alphabet by the European Competition Commission last June. Vestager and the commission went through 5.2 Terabytes of search results and found out that Google was guilty of abusing its standing by placing its own shopping comparison service at the top of Google search results. Vestager also considered Google’s activity illegal under EU antitrust rules. Google will have up to September 28 to make the changes and they were also given 90 days to end the anti-competitive practice or else face an additional fine worth 5% of the average daily global earning of its parent company Alphabet. Google has appealed the ruling and other American firms have voiced their support for Google’s displeasure with the fine. But the Irish Independent tech editor Adrian Weckler argued that it is not simply about America versus EU since several big American companies such as Oracle agreed with the EU fine.

The recent cases against huge American firms in the EU is slowly becoming a trend. Are they being targeted due to their geographical location? Apple, Intel and Google contend that the litany of cases against American companies in the European Union should be a cause of concern. However, it is important to note that both sides have their respective friends and foes. The legal counsel of Fairsearch, a group of internet businesses which have lobbied against Google, Thomas Vinje said that Google has “abused and leveraged its monopoly power in search”. Google holds 95% of the market share in Europe. Vinje hopes that the Commission’s decision should put a stop to Google’s abusive behavior. However, on the other side of the coin, some have criticized the Commission’s decision. What Would Google Do? author and professor Jeff Jarvis commented that the decision is “eurotechnopanic at its worst”. He also advised Europe that they cannot regulate itself into competition and that they must invest and innovate.

The three American companies must fight for their right to do business in Europe. The EU should be careful against ruling against mostly American firms. Great Britain has exited the European Union and it plans to lower corporation tax in a bid to attract international companies. Great Britain will be the hub for American companies due to enticing offers and protection from the persecution of the European Union. This will be interesting to see if and how the EU Competition Commission reacts to threats of relocation by American firms.

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