European Affairs

New EU Commissioner for Competition Margrethe Vestager Shakes Up Antitrust World     Print Email
By Ann Crittenden, independent writer and former New York Times Reporter

anncritt12The press and the public were almost breathless in describing her: “a Goblin under Google’s bed;” “the enforcer;” “a very steely character;” “a tough cookie;” and “Queen Margrethe III” – all descriptions of a 47-year-old Danish politician who has suddenly become the most talked about official in the normally staid European Union bureaucracy.

In three short weeks this spring, Margrethe Vestager, the European antitrust chief, came out swinging, announcing the European Union’s intention, after years of investigation, to call to account some of the wealthiest, most heavily muscled corporations on the face of the earth –many of them American. If it wasn’t quite a match between The Amazon vs. Goliath, it was a reminder that international political power can still challenge multinational economic power in a titanic battle over the rules of the capitalist game.


First came the news that Vestager was bringing formal antitrust charges against Google for “artificially” skewing search results to favor its own shopping service over those of competitors. Vestager said that investigations of Google were also on-going into other areas, including Google Maps and Google Travel, Google’s alleged lockout of advertising competition with exclusivity deals, and potential anti-competitive practices related to Google’s Android mobile operating system. Google called the charges “wide of the mark.”

Commentators in the U.S. wasted no time in warming to the theme that the Europeans were launching a protectionist war against a dominant American player – Google enjoys 90 percent of the search market in Europe, versus 67 percent in the U.S. But one week later, Vestager attacked another giant on Europe’s Eastern Front. She charged the Russian energy company Gazprom with abusing its market power in natural gas, specifically by means of unfair pricing, that has resulted in higher gas prices in Bulgaria, Estonia, Latvia, Lithuania and Poland. The European Commission also indicated that it suspected Gazprom of pressuring Poland and Bulgaria to participate in pipeline projects to deliver even more Russian gas to Europe.

The largely state-owned company responded that the charges were “unfounded,” and suggested that Gazprom was not subject to the European Union’s antitrust jurisdiction anyway, because it is effectively controlled by the Russian government. In other words, Gazprom claimed that as a de facto arm of the Russian government it could do business in Europe without being subject to European rules on corporate competition.

As if taking on these two giants were not enough, Ms. Vestager (pronounced “Vest-ayer”) is also continuing inquiries into tax breaks enjoyed in Europe by Apple, Amazon, Starbucks and Fiat, among others. And in mid-April, she announced an investigation into whether large e-commerce companies were creating artificial barriers preventing Europeans from buying goods across borders. The largest of these companies is Amazon, with sales more than double its closest competitor, a German conglomerate, the Otto Group.

Vestager                                                      Margrethe Vertager, Commissioner for Competition 

Who is this apparently fearless woman, who has held the post of EU competition commissioner for only seven months? For starters, this daughter of two Lutheran ministers is a highly skilled politician. A leader within the small, centrist Social Liberal Party since the age of 21, she was Denmark’s first female cabinet minister by the age of 29, a member of the Danish Parliament by her mid-thirties, and Deputy Prime Minister and Minister for Economic and Interior Affairs by her early forties, in a center-left coalition government headed by another woman, Helle Thorning-Schmitt. 

As Economics Minister Vestager cut such a dashing figure with her forthright, no- nonsense style, her ready sense of humor, and her popular Twitter feed that she became one of the inspirations behind a hit Danish political drama, “Borgen,” that has been described as Denmark’s answer to “The West Wing.” Vestager has told journalists that the lead actress followed her around for a day “to see how it works.” It apparently worked so well that Danish polls routinely showed that voters judged Ms. Vestager to be more influential than her boss.

She seems to have no qualms about alienating allies in pursuit of a result she deems important. She earned a reputation as a tough negotiator after taking a successful hard-line stance within the fragile coalition government in support of budget cuts that trimmed early retirement and other benefits. Asked about the plight of those losing their unemployment benefits, she reportedly said, “Well, that’s the way it goes.” And when chairing talks among European economics ministers on the overhaul of the EU rule book for banks, she didn’t hesitate to override the concerns of her admirer, UK chancellor George Osbourne, by supporting a cap on bankers’ bonuses. Nervous Tory officials in London told the Financial Times that “there was nothing she would not do to get the deal done.”

“I don’t know, but it comes with being a Danish politician,” she has said, in response to suggestions of a ruthless streak. “We have always had minority governments, and you need to have a very strong willingness to listen to other people and also a willingness to get things done. Otherwise nothing ever gets done.”

The forcefulness of Vestager’s personality is reinforced by the unusual power of her office in Brussels. One of the heftiest portfolios in the European Commission, competition policy is one of the areas where the Commission has exclusive competency, and as Commission President Jean-Claude Juncker wrote in his mission letter to Vestager, “action in this field will be key to the success of our jobs and growth agenda.” In particular, he encouraged her to focus on competition implications in areas such as the digital single market, energy policy, financial services, industrial policy and the fight against tax evasion.[1] As Vestager told the Financial Times, just before assuming her post, “This is not a lonesome portfolio. This is central to the things that we want to make happen in Europe so that businesses can have a fair competition and get on with what they do best.”[2]

Google now has ten weeks to respond in writing to the accusations against it. One can imagine the bonanza to their lawyers. In the meantime, Vestager flew to Washington, where she participated in a conference hosted by the American Bar Association, and stressed deep commitment to the necessity of competition in the functioning of free markets.

Then the mother of three daughters, who is married to a high school math and philosophy teacher, travelled to Brooklyn, to speak at the Danish Seaman’s Church. Vestager is known for knitting elephants in staff meetings. When she left office in Copenhagen she gave her successor as economics minister an elephant as a gift, with this note:

“I have knitted a friend for you. It’s an elephant. Elephants are social, insightful animals. They live in communities – and I have to say it – they live in matriarchal societies. They bear no grudges, but they remember well.”

Ann Crittenden is based in Washington,DC and Puycelsi, France, and is a member of the Editorial Board of the European Institute’s European Affairs online journal

[1]http://ec.europa.eu/commission/2014-2019/vestager_en

[2]The Financial Times, September 18, 2014

 
  • How Automation Shapes the Labor Market AND Political Preferences

    By Thomas Kurer, University of Zurich and Bruno Palier, Sciences Po, Paris

    We do not believe that Brexit, Trump, or the alarming success of radical right parties in almost all European countries should be interpreted as mere “electoral accidents.” Instead, we suggest that the current destructuring of political systems is connected to the profound transformation of labor markets in times of automation. Our core argument is that the specific effects of current technological innovations are key to understanding their political implications.

    Read more ...

UMD Jean Monnet Research Project

The University of Maryland has received a Jean Monnet grant from the EU to conduct a series of policy exchanges between Europe and the US on filling infrastructure needs and the utility of public/private partnerships as the financing mechanism. If interested in participating in or receiving more information about these exchanges, please contact Rye McKenzie (rmckenzi@umd.edu).

New from the Bertelsmann Foundation

The Bertelsmann Foundation is an independent, nonpartisan and nonprofit think tank in Washington, DC with a transatlantic perspective on global challenges.

"Edge of a Precipice" by Nathan Crist

"Newpolitik" by Emily Hruban

 

Summer Course