As the European Commissioner for Competition, Vestager holds the magic wand to dictate how the giant multinationals can operate within the EU, scrutinising the ‘selective tax advantages’ that governments lay out for bullish companies like Apple or fining companies for lying to their consumers, as we saw in her recent case concerning the Facebook/Whatsapp deal.
We are talking about companies with endless pots of money that have paved their path to power by writing their own rule book. They are not used to paying fines or publicising their inner workings. But unfortunately for them, the buck stops with Margrethe. With a 900-strong department behind her, Vestager has picked up the mantle as the true antitrust enforcer. Her demeanour is kind and open, but you can tell that behind closed doors, Vestager is a woman who will not succumb to the whims of conglomerates used to doing business their way. Her biggest challenge yet comes in the form of her ongoing antitrust case against Google, set to reach a final judgement in a few months. As mammoth a challenge as this seems to us, having already faced off (and won) against CEO of Apple Tim Cook, this is exactly what Vestager does, and why Time Magazine just listed her as one of the world’s most influential people. Acting in the best interests of some 350 million European citizens, all Margrethe wants is for everyone to play by the rules.
It feels as if American tech companies like Google, Facebook and Apple, have been on a bull run in recent years without real checks and balances on them. But it looks like you are changing that. Would you agree?
I think maybe it boils down to something different, because the European economy, consisting of a number of quite different economies, is different from the US economy – to a higher degree Europe has a social market economy. What is very characteristic in a European context is that we have developed strong protection of consumers, workers and the environment. I think also when it comes to competition law enforcement there is a very strong tradition here; it was decided by the member states all the way back to the Rome Treaty that they wanted a strong Community competence when it comes to ensuring their competition. So it is a European thing, and it is of course in my role for me to look at the rules of the game in the European economy.
You mentioned the term ‘social market economy’ and you talk about the protection in the marketplace. Do you think there is just a fundamental difference in values between Europe and the US in the way they do business?
There are many things to be said about that, and I think to a very large degree you will find that citizens hold the same values when it comes to empathy, helping people in need etc., but we have a different legislative culture.
"The congratulations stop when we find that you are misusing your dominant position to disable others from competing against you."
Margrethe Vestager on sticking to the rule book
Would you say that traditionally American multinationals have been treated as more fragile than their EU counterparts?
I wouldn’t say that. One of the reasons why Europe is such a good place to do business is that European consumers are very open to whatever nationality you hold if you have something to present to them that they like. You find however many McDonalds and however many Google searches people make a day because they are liked by many customers and not because they are American companies.
But American companies are treated quite similar in their own country. If you take a case like the first Google case, I think half of the complainants were US companies. So it’s not like you have European companies complaining against the US companies, you have a number of competitors with different flags complaining about the behaviour of Google in the market.
I think that is one of the things that show you that yes, nationality is important, but what is the most important is the behaviour in the marketplace.
Do you follow the newspapers and what they say about you? The media portray you as quite a stern character.
I follow my cases. Media attention comes with the job and I hope for everyone that they have fuller lives than their public perception.
I’m trying to get a sense of your actual role. It’s very unique wouldn’t you say? You are representing Europe and its people.
I think that the combination of the state of the world and the competence within the European Commission when it comes to competition law enforcement, you don’t see too often. But you know, it is very difficult to make a controlled experiment to see if another person with another background, another gender and another age would be acting in the same way, because you don’t have the privilege – this is the situation in the world, in the European market and this is the political situation in Europe, I’m here right now and I’m just trying to do the right thing. And that cannot be compared with what happened 10 years ago or what will happen in 10 years time because the context will probably have changed quite a lot.
There have been people who have preceded you in this role such as Mario Monti, but it is you, in particular, that has received a certain notoriety surrounding the cases you have taken on. So I’m wondering why people have resonated with you so much?
There are a number of reasons for that. One thing is that I think there is a hunger for these stories to be told, and what I do is set priorities, give direction and tell the story. This is what is needed right now, take for instance the selective advantages given by some member states to certain companies, in a situation where in some member states they have seen public service go down by 10-15% percent or maybe more. They see many more costs for themselves as citizens, and then they look at businesses and see that they do not contribute.
I get a sense, at least from the American business point of view, that America doesn’t like this encroaching sense of principled EU socialism.
Yes, but you know this is very far from socialism, because in the European model we never ever question private ownership, and if you ever embark on socialism then you are adrift in different waters because this is a market economy.
But I know what you talk about because I have family in Texas, and they like the Danish socialised medicine where we don’t have health insurance and everyone is covered for everything, but apart from that, they think we are communists, which we are definitely not.
The Apple case is fascinating. How do you think that we got to such a moment of misunderstanding where a company is smacked with such a huge fine and the Irish state colluded with them?
Well that is difficult to say because this is a question of unpaid taxes and a selective advantage to one company, which by its very nature is not available to other companies. The common understanding within the European Union was that by the front door we compete at the level of corporate taxation but that being said, we still try to make sure that we compete on localisation on open terms, because taxation shouldn’t be all there is to it, there should also be questions of how skilled the employees are, what the digital infrastructure is like, the level of research and development and market entry, all the kind of things that make it interesting.
So how it came to not only the Apple case in Ireland but also some of the cases in Luxembourg and the whole scheme we had in Belgium for multinationals only, I don’t know when exactly it happened.
You have a lot of cases that emanate from the Silicon Valley/tech world. Would you say that you are the sort of person that these companies fear?
No, why would they?
You pose to obstruct the kind of business that they want to conduct in Europe as they would usually conduct in the US?
My starting point is that every business is trying to do the right thing. The backbone of the European economy is mostly small and medium size businesses that create jobs, pay their taxes and take on apprentices, they do absolutely nothing wrong and do their best to stick to legislation both national and European wide.
That enables fair competition and I don’t see why any company should fear the competition that law enforces, unless they themselves have been trying to work the law in their favour or are not seeking sufficient advice as to what the rules of the game are here where they want to business.
But I guess when Tim Cook comes out after you have smacked a €13 billion fine on Apple for illegal state aid and he says that it is “total political crap”, it wreaks of that same socialist smell.
I get your line of thinking.
You had this meeting with Tim Cook, and you might not be allowed to talk about it, but according to the news reports it was one of the most awkward meetings to ever be undertaken. Are you allowed to give us a sense of why this was such an awkward meeting?
Oh but I never refer from private meetings.
Was there an awkward lead up to the dealings with Apple?
The reasons why I don’t divulge are quite obvious because people should be able to come to me for a meeting without thinking that afterwards I will label it or refer to it. That would make my work more difficult.
Do you think that companies such as Google and Apple, the latter of who are said to have a $800 billion market cap, just have too much power and that maybe in the future we will see some of these companies being broken up?
Well it’s very difficult to answer because with what sort of measuring stick would you say they have ‘too much power’?
I don’t measure power I measure whether or not you play by the rulebook the same as everyone else. In Europe we don’t even have a ban against monopolies; you can grow and be successful, you can be dominant, but the congratulations stop when we find that you are misusing your dominant position to disable others from competing against you and from being innovative and presenting their ideas to potential customers. So you can be very powerful but you have to accept that with these powers comes responsibility and one of them is the most obvious, which is to play by the same rules as everyone else.
One of the things that concern me is the length that Facebook will go to in the T’s & C’s and their user agreements, and most people don’t even know what they are agreeing to. Would you say that it’s a priority for you to lead the fight in consumer protection?
In my opinion at least, the American multinationals like Google, Apple and Amazon don’t like being stifled. For instance, Facebook has billions of people using their service, so their development is uninhibited, and these are the kind of tough dialogues that you are having with them.
But any industry over the last hundred years has had these kinds of discussions with the representatives of a democracy – what can we do, what can we not do, what should be the framework for doing business here? This is a societal debate in a market economy to make sure that it works for everyone.
I wish that was true. It sounds like a very idealistic way of thinking especially when there is so much tightly held control from the elites. That’s what I think all this political dysfunction and turbulence is about because people don’t feel like they have any leverage.
Well lets take for example the merger for Dow and Dupont, two huge agrochemical companies, we worked with them to enable that after the merger there would be the same innovative capacity to develop new and less harmful substances and there would still be competition so that farmers could choose different seeds at different prices, all living up to the environmental standards in Europe. These are very strong arguments that we can match that, and you cannot do that in one particular member state because then these companies become very big.
How many mergers do you work on?
Last year was the second highest year ever in recent history of merger control; I think we had more than 300.
Why do you think there are so many major mergers happening?
Because there is a lot of liquidity out there, and since the European economy is picking up and the US economy very much so as well, after the crisis there has been a wish for consolidation and also for businesses to be stronger in the aftermath, and to prevent being in a vulnerable position for the future.
The antitrust work, both cartels and misuse of a dominant position, that is a different pattern because they have a much longer life.
And then of course you have the state aid cases. They are supposed to be more limited in number but more complex in nature, because we have been making a point of saying that as soon as we know the criteria that we can all use, then member states should be able to take these decisions by themselves. We are trying to spend time on the most complicated cases that will have the most effect on trade.
"I think there is a hunger for these stories to be told."
Margrethe Vestager on her role as an antitrust enforcer
Some have levelled criticism at you and your organisation as a “supranational tax authority” or “setting an undesirable precedent”. What would you say to that?
Absolutely not because we are not a tax authority, and we can only do the state aid side of things, which is focusing on selective advantages that then completely un-level the playing field. If you want to do taxes then you should go by the front door with new legislation here in Europe and hopefully also globally. One of the many things I admire is the OECD leadership on this because they are doing very important work in order to form a global tax coalition to enable countries all over the world to tax profits where profits are being generated.
I think this then begs the question why go after the companies rather than going after the countries that are giving these selective advantages like Ireland? Or is that already happening?
You can say that it is both. The thing is, when it comes to state aid we don’t deal with fines, we say that you have to recover the legal state aid in order to restore legal competition. I think the historic reason for not working with fines is that if you were willing to give a certain company a selective advantage, then taking back the gift is not something you would want to do; you want to be a government or member state with legal certainty and where one thing is said and it is also done.
What is your take on the stormy feeling around the EU since Britain left? How do you feel that type of volatile relationship between European countries will affect your work and future business dealings?
Well Britain has been one of the strong promoters of fair competition and a level playing field for everyone to be able to make it in the marketplace, and I think they have made a very strong contribution to the totality of European culture in that, which I don’t think will change when they are no longer a member.
What about Europe in general? One of the things President Trump has complained of is Europeans deliberately using antitrust laws to weaken US firms. Do you have an opinion on Trump’s development as president and his relationship with Europe?
No I don’t. The thing with antitrust law and enforcing those laws is that business is not weakened or strengthened, it is about whether you abide by the law or not.
Finally Margrethe, some ideas have been thrown around that you may one day be the leader of the EU after Jean-Claude Juncker. Do you have any thoughts on this?
No none whatsoever.
All original images by Lieven Bulckens