Is European Competition Law Protectionist? A Quantitative Analysis of the Commission’s Decisions
ICLE Antitrust & Consumer Protection Program Issue Brief 2019-03-25
11 Pages Posted: 2 Dec 2020
Date Written: March 25, 2019
In March of 2019, the European Commission slapped another fine upon Google for infringing European competition rules (€1.49 billion this time). This brought Google’s contribution to the EU budget to a dizzying total of €8.25 billion. Given this massive number, and the geographic location of Google’s headquarters, it is perhaps not surprising that some commentators have raised concerns about potential protectionism on the Commission’s part.
This is nothing new. Critics have long argued that European competition law has been used to shield European industries from their large American rivals. From the notorious decision to block the GE/Honeywell merger in 2001, to more recent enforcement activities in the tech sector, every European intervention against a US company tends to usher in a fresh wave of accusations.
But is there any merit to these claims of protectionism? A quick look at the monetary penalties assessed by recent decisions of the European Commission reveals that its enforcement activities (under article 101 and 102 TFEU, excluding cartels) have disproportionately affected US companies. Since the entry into force of Regulation 1/2003 (the main piece of legislation that implements the competition provisions of the EU treaties), US companies have been fined a total of €10.91 billion by the European Commission, compared to €1.17 billion for their European counterparts.
However, as we explain, the harsh fines inflicted upon US firms are not necessarily evidence of protectionism.
Instead, they are likely a result of the Commission’s decision to focus significant attention on the tech sector. Because the vast majority of large tech firms are US-based, all else equal, it is to be expected that the majority of investigations and enforcement actions would involve US firms. At the same time, the Commission’s tech-industry focus may tend to lead to larger fines when infringements are found.
Nevertheless, some caution is warranted with this conclusion. It bears noting that the Commission is hardly structured to be immune to domestic political influences that may tend toward protectionism. The decision to prioritize enforcement in the tech sector is not taken in a vacuum. Whether this policy preference is down to legitimate concerns about high-tech markets or to (potentially unconscious) protectionism is almost impossible to tell.
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