EU Biased Against US Tech Firms? Or Just Tech Envy?

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Alan Daley Writer, American Consumer Institute
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For years, antitrust regulators in the European Union (EU) have behaved as if antitrust schemes lurk within each high-tech firm from the US. This paranoia fuels the imagined misdeeds that are the basis for high fines. If it were not for the windfall fines that the European Court of Justice (ECJ) harvests from US based defendants, Europeans might be more curious about the lack of evidence behind the adverse decisions against US high-tech firms.

In the past few years, Microsoft, Apple, Intel, Amazon, Facebook, Google, Nike, Qualcomm and Universal Studios been subjected to aggressive investigations and allegations of anticompetitive behavior. The ECJ has ordered many of them to pay billions of dollars in fines and restitution.

As distraction, the EU probed some non-US/non-EU high-tech firms (Asus, Pioneer and others) that it feels have restricted “the ability of online retailers to set their own prices for widely used consumer electronics products.”

On occasion the EU will launch an obsequious complaint against a European firm, such as Maersk (Denmark), but those antitrust settlements amount to little more than mutually beneficial adjustments in practice, and with no fines. The EU has even backed off some cases against EU firms despite staging an aggressive, news-worthy start. “EU antitrust regulators scrapped an investigation into Faurecia, Eberspaecher Group and Tenneco, three years after raiding them and others on suspicion of anti-competitive practices.”

During the period 2013 through 2016, the US Department of Justice was steered by leadership that was not business friendly. In that period, the DOJ’s antitrust fines and penalties totaled $6.86 billion, or about $1.71 billion per year. There was no trend toward increasing misbehavior – “the number of corporations, individuals charged and criminal cases brought have been fairly consistent over the last five years.”

In contrast, the ECJ has been far more profitable. The ECJ fined Microsoft $730 million in 2013 over a browser issue. The ECJ fined Apple $14.5 billion in 2016 for paying income taxes to Ireland in the amount Ireland agreed to, but less tax than the EU had fantasized was due. A $1.44 billion antitrust fine by the ECJ against Intel was affirmed in 2014. Amazon’s e-book line of business was forced to revise its practices under threat of EU antitrust fines in 2015. In 2017, the ECJ announced a $122 million antitrust fine for failure to maintain separate WhatsApp and Facebook customer lists. Google may face up to $7.4 billion in fines in 2017 for alleged multiple antitrust failures (in search and Android).

Qualcomm is currently a target of EU investigation launched under fears that the NXP-Qualcomm merger might “lead to higher prices, less choice and reduced innovation in the semiconductor market.” Nike is currently under EU investigation for attempting to control how vendors sell Nike licensed merchandise. A similar antitrust complaint is underway against Universal Studios.

The 5-year total of EU fines and penalties is likely to be near $24 billion, almost three times higher than the DOJ levies. Perhaps more costly are the defendants’ delays in implementing marketplace strategy and the additional costs resulting from EU-forced changes in practice.

High-tech firms usually offer the same products and service in both the US and the EU. Any difference in antitrust fines between the US and the EU reveals a more aggressive posture by the EU, not a material difference in defendant behavior.

A neutral observer could reach the conclusion that EU regulators exhibit their bias against US firms. Of course, the chief EU regulator denies bias and she notes that US tech-firms are investigated more because they are dominant players in the competitive marketplace. Dominance is always on the mind of EU regulators.

It is obvious to some that the EU’s anemic high-tech market share motivates the EU initiative to “overhaul the bloc’s digital market in a bid to boost growth and catch up with the United States and Asia.” That could be called bias against US firms or just strategic targeting of US firms. Regardless of which, we can expect more antitrust allegations and massive fines against US firms as the regulatory wing of the EU tries to secure a foothold for the bloc’s tech sector. We have been warned and shame on us if we don’t address this.

Alan Daley writes for the American Consumer Institute, Center for Citizen Research, a nonprofit educational and research organization.  For more information about the Institute, visit www.theamericanconsumer.org.