EU Antitrust Czar Nears End Of Term With Dragons To Slay
The clock is ticking for the European Union's antitrust czar, whose extensive powers put him in the front line of battles with some of the titans of the global economy.
European Competition Commissioner Joaquin Almunia aims to take landmark decisions on the alleged abuse of dominant market positions by U.
search engine king Google (GOOG.
O) and Russian gas monopoly Gazprom (GAZP.
MM) in his remaining time.
His term officially ends in November, but Brussels insiders say the Spanish socialist may be sidetracked by extra duties when some of his European Commission colleagues step down in April to contest the European Parliament election.
So Almunia, in office since 2009, has a few weeks in which either to reach settlements with the Internet giant and the energy provider in exchange for commitments to change their business practices, or to send them formal charge sheets.
Despite deep misgivings among software rivals, he seems poised to strike a deal with Google after having rejected the company's first two rounds of concessions, a senior EU official said.
He was speaking on condition of anonymity because of the confidentiality of competition regulation.
But barring a change of heart in Moscow, Almunia is likely to lay formal charges against Gazprom for discriminating among European customers over the price at which it sells gas, the official said.
That would leave a final decision to his successor, who the Kremlin may hope will be more emollient.
The euro zone crisis has diminished Europe's political clout and weakened the EU executive's sway in global negotiations on trade and climate change, but the competition commissioner's authority remains unchallenged.
Almunia is arguably the most powerful official in Brussels and the strongest antitrust watchdog in the world.
He can ban mergers that inhibit competition, stop governments handing out cash to industry, make firms repay illegal state aid, and impose huge fines on price-fixing cartels and corporations that abuse their market dominance.
The crisis has enhanced his power by thrusting him into the center of the reshaping of the European financial sector as the ultimate arbiter of state rescues of ailing banks.
"The proudest boast of all for EU competition policy is that it has graduated to being seen as the strongest antitrust enforcer around the world," said Alec Burnside, a Brussels-based competition lawyer.
"The rest of the world is inspired as much by the EU system as U.
Indeed China's emerging competition regime is inspired more by Europe than America.
" Analysts and competition lawyers say Almunia has done a good job of upholding a level playing field in financial services while applying the state aid rules sufficiently flexibly to avoid triggering a systemic collapse.
He has also pushed the EU's competition powers a little further into fiscal policy where the Commission has found it hard to legislate, challenging German tax breaks for industrial users of renewable energy, and Dutch and Irish tax clearance letters to individual multinational companies.
"These are warning shots," Burnside said.
Almunia's Dutch predecessor, Neelie Kroes, reinforced the EU competition staff sufficiently to be able to take critical decisions on state aid to banks over a weekend when the survival of a financial institution was at stake.
Many in Brussels are nostalgic for what seemed to them the golden era of EU competition policy under Mario Monti, the Italian economist who tackled and bested U.
giants GE (GE.
N) and Microsoft (MSFT.
O) in 1999-2004.
Monti stared down the likes of GE's Jack Welch and Microsoft's Steve Ballmer, whereas Almunia is seen by some as being too chummy with Google's Eric Schmidt.
Yet three of Monti's early decisions were overturned by the EU courts on appeal, whereas Almunia so far has a 100 percent success record with the courts, although they move so slowly that it is too early to tell for sure.
Part of Almunia's legacy is a string of settlements in which companies have agreed to mend their ways without the case reaching a formal Statement of Objections that can lead to huge fines and prohibitions.
Eighteen out of 24 abuse-of-dominance cases on his watch so far have been settled by commitments and only six resulted in a prohibition decision.
The advantage of such deals is that they offer a quicker solution to a problem than going down the prohibition route.
The company concerned avoids a fine and heavier legal costs, limits reputational damage and may avoid the disclosure of sensitive business information.
"Cases based on weaker economic evidence are likely to be settled on a 'win-win' basis: the defendant avoids the risk of a fine; the Commission avoids showing up empty-handed after a lengthy investigation, or worse, taking an incorrect decision that would be quashed by the court," Mario Mariniello, a former member of the chief economist team in the EU's Competition department, said in an article for the Bruegel think-tank.
The drawback is that third parties and consumers are forced to trust the Commission's judgment that their concerns have been resolved with little means to check or challenge its conclusions, he said.
In the Google case, some Internet search rivals are furious at Almunia's intention to avoid lengthy market testing of the company's latest round of remedies and reach a deal.
"The concerns raised by the Commission's investigation are too important to consumers for them to be addressed by a settlement that is not thoroughly vetted," said FairSearch, a lobby group that includes U.
online travel sites Expedia (EXPE.
O) and TripAdvisor.
Mariniello argues that in the interest of competition, the commissioner should be more transparent when he accepts concessions to close an antitrust probe by publishing detailed reasons for concluding a deal.
That would not remove incentives for Brussels or companies to reach a settlement, but it might give complainants a better chance of legally challenging a bad deal for competition.