Margrethe Vestager: the star commissioner brought back to earth

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Margrethe Vestager took on a defiant tone this week after the defeat at the hands of the EU Tribunal in its tax battle with Apple, insisting that journalists do not lose more cases than they would in the EU. during another year.

But officials admit EU competition chief faces tough choices after judges decide to rescind order for US tech company to reimburse € 14.3 billion in taxes Ireland.

After building an international reputation as a consumer champion determined to show that competition policy is “a people affair”, Ms. Vestager discovered that there were limits to her ability to teach social responsibility lessons to big technologies.

“She built her name by being tough on these issues, and many people have said that she is pushing the legal framework too far, so this is damaging her reputation,” said Fabian Zuleeg, director general of European Policy Center. “But it is important to recognize that this is not the end of the process. ”

Since taking office in 2014, the former Danish finance minister has used EU state aid rules to attack aggressive corporate tax regimes by member states like Ireland and Luxembourg. This was considered revolutionary, part of a first term largely defined by battles with tech companies.

His second term, which began in December and was accompanied by a promotion to appoint an executive vice-president with broader responsibilities for regulating the digital economy, is much more difficult. Vestager has suffered major defeats in court, not only in tax policy but also in the area of ​​merger control, where her decision to block the takeover of British mobile phone company O2 by rival Three was canceled in May.

At the same time, it had to navigate rapidly changing political terrain. Its first mandate implied not only to denigrate the American technological companies, but also to resist the Franco-German evolutions towards a more corporatist industrial policy. She argued that open competition in the EU single market was more successful than trying to bring competitors to American and Chinese companies. Things reached a critical point in 2019 when it vetoed plans to merge train manufacturers Siemens and Alstom, saying the combined group would be too dominant.

But these arguments now seem increasingly out of step with a political will for strategic independence and relocation which has been supercharged by the disruption of supply chains caused by the coronavirus emergency.

French Minister of Economy Bruno Le Maire – who described Ms. Vestager’s decision on Siemens and Alstom as “economic error” and “political error” – now speaks with confidence of uniting economic and trade policy and EU competition behind the common objective of “economic sovereignty”.

Supporters of Ms. Vestager argue that occasional reversals are inevitable given her primary mission: to ensure fair markets in an era of rapid technological revolution.

“It is trying to push competitive markets. . . with a very courageous and clear vision, ”said Monique Goyens, Director General of BEUC, the European Consumer Organization.

Ms. Goyens noted that Ms. Vestager’s broader job was to level the playing field for the EU technology sector by cracking down on tax dodging, privacy breaches and other attempts by foreign competitors to steal an advantage at the expense of consumers, while creating the market conditions for businesses that follow the rules to thrive.

Vestager won political points with consumer rights groups after Google was sued.

This week, drug maker Aspen proposed to cut the cost of cancer drugs by about 75% following a thorough investigation by the commission.

“The big picture is that we need order in the digital economy,” said Ms. Goyens. “She has been a consumer champion, and we need her to stay one. ”

The commission is expected to largely appeal Apple’s decision. Some lawyers say that, if the court has given a favorable opinion to the company, its decision leaves the door open to Brussels to attack other aggressive tax advantages granted by the member states.

Brussels launches separate campaign to use obscure article of EU treaty to bypass national vetoes on tax policy, though move should face significant resistance from some governments, including the Netherlands and Ireland.

At the same time, Ms. Vestager is embarking on the politically perilous process of seeking new powers in the field of competition law. On Thursday, it launched a major investigation into the technology sector, which could lead to other regulatory initiatives.

An upcoming digital services law will streamline the Commission’s processing of Internet platforms. Brussels also plans to give the Commission broad powers to intervene in the sectors in order to stimulate competition.

Pablo Ibáñez Colomo, Chair of Law at the London School of Economics, said that the overthrow of Ms. Vestager’s courtroom was the inevitable corollary of a strategy that had been to push the boundaries of the regime. the EU and to test the consequences in court.

“She suffered a few setbacks,” he said. “But it’s a function of risk taking. “

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