Student and alumni views

In her fight for fair competition, EU’s chief regulator strengthens democratic legitimacy

PhD candidate Julian Zuber’s op-ed on Margrethe Vestager, his suggestion for Handelsblatt's Person of the Year 2017.

As EU Commissioner for Competition, Margrethe Vestager has been fighting for fair regulation within the European domestic market since 2014 – with ever more success. Ireland recently yielded to political pressure, requiring Apple to pay 13 billion euros in disputed taxes, which the Commmission had ordered it to pay. The Danish commissioner thus became a symbol for the authority of the political and the legal in a globalised world.

In Denmark, Margrethe Vestager was long known colloquially as the “ice queen”. In the EU, some have called her the “iron lady”, or the “Claire Underwood” of Brussels (referring to the TV series House of Cards). As catchy as these labels may be, they don’t do her full justice. The scope of her political influence is evidenced in the work she does as EU’s chief regulator. One of the most important aspects of her job is enforcing the EU’s antitrust law. She must ensure that all actors – no matter how big or powerful – play by the rules of fair competition. Together with her 900 colleagues, she must act when there is suspicion that competition is distorted. Defending fair competition in the EU’s domestic market also shores up the credibility of the European project.

Margrethe Vestager is a goal-oriented politician who does not shy away from challenges. For example, she imposed the highest fine ever issued by the European Union – 2.4 billion euros – in this case on the Internet company Google for promoting its own shopping service over those of its competitors. With this large penalty, which was still below the maximum sum permitted, she made it abundantly clear that no organisation, regardless of its size, is above the law. Continuing litigation against Google’s parent company Alphabet could prove even more significant for the consumer.

This is not the only example of her pluck. When the head of Apple lectured Vestager in a fit of rage, hoping to sidestep legal repercussions of a private tax deal between Apple and the Irish government, Vestager didn’t budge. The deal had set Apple’s effective tax rate at approximately 0,005 per cent, translating to a projected tax loss of 13 billion euros for the Irish treasury. Vestager insisted Apple pay this money back – with interest.

This political pressure, alongside that of other EU members – seems to be paying off. On December 4th, Ireland announced that it would start paying the sum into a trust at the beginning of next year, ahead of the European Court of Justice’s final ruling on the case. The outcome of these proceedings is still unclear, but the lawsuit is certainly putting the spotlight on the issue of tax evasion.

The European Union has sent a clear message to influential players in the EU. All companies must adhere to market regulations and cannot ignore these political guidelines. This year, the Commissioner for Competition also has Facebook in her sights. Marc Zuckerberg’s Internet company already had to pay back 110 million euros in May for submitting false information during its acquisition of the messaging service WhatsApp.

Google, Apple and Facebook aren’t the only examples. Vestager has initiated legal proceedings against several other companies, including Fiat, Starbucks, Amazon and Gazprom, for violating competition laws. Cyprus Airways, for example, had to pay 65 million euros after obtaining state subsidies illegally.

The EU commissioner doesn’t just face conflicts head-on, she recognises them as central to her work as a politician, adhering to the idea that politics doesn’t exist without disagreement. In her office there is a plaster sculpture of a fist showing the middle finger, a souvenir of a past dispute with a Danish trade union that protested one of her social benefits reforms during her term as minister. The sculpture is no trophy, but rather a respectful reminder of past political conflicts.

Vestager’s ground rules include never meeting with lobbyists, but only with leaders of companies. This is because they carry ultimate responsibility for the company and because only they can implement change. Additionally, it almost goes without saying that as a woman in leadership and as a mother of three, she is a role model for those who don’t want to have to choose between career and family. Margarethe Vestager has always made it clear what she is fighting for.

However, she is not at all sceptical of business, and she uses many products made by companies that, as commissioner, she regulates. Characteristically, in the one-hour press conference on the record-breaking Google fine, she also emphasised the company’s impressive innovative capacity. Public statements such as these give rise to hope that Europe is on the brink of a shining future as an economic powerhouse – where the strength of the law prevails over the law of the strong. Vestager thus indirectly serves as a living example of how to lead political debates between democracies and international corporations, rather than primarily between nations, with the result that citizens' interests are central.

The loss of local advantage, a seeming sword of Damocles, no longer concerns her, as this threat hangs over the heads of politicians from 28 EU member states when they compete for the lowest tax rate. For this reason it is important – as in the case of Apple and Ireland – to bring the diverse interests of member states into the public eye. Then it becomes evident that the need for politics is often downplayed when its perspective is bound by “national interests”. Vesthager is thus also combatting an oversimplified binary view of the "good" policymakers versus the "evil" markets. Injustice is always the result of actions from both sides.

In addition to all this, she was able to use the EU finance ministers’ sluggish progress in defining a common basis for assessing corporate taxation to her advantage by means of a small trick: as competition commissioner, she is principally responsible for preventing cartels and not for tax. However, by defining state tax rebates for large corporations as an illegal form of state subsidy, she put herself in a position of responsibility in this area and promptly found herself in the middle of the debate surrounding the LuxLeaks scandal, and the Paradise and Panama Papers. Now some are suggesting Margrethe Vestager should succeed the outgoing President of the European Commission, Jean-Claude Juncker.

As a politician, Vestager stands for a combination of at least three things: for competent and confident policymaking; for the establishment of European democratic interests in a globalised world – and thereby Europe itself; and for a politically successful and legitimate EU that champions the interests of its citizens and which is also not afraid of tackling the major political challenges of the day.

Especially at times like now, when many citizens have lost faith in the ability to successfully assert democratically legitimated interests, this is a great service. One does not have to agree with her politically to acknowledge this. 

More about Julian Zuber

  • Julian Zuber is a Doctoral Student at the Hertie School.