Brussels – September 10 could become the date in which the legacy of Margrethe Vestager, outgoing Competition Commissioner, was consigned to history – or at least to the Company Law Handbooks. In two separate but equally pivotal rulings, the Court of Justice of the EU (CJEU) ruled in favor of the European Commission, and specifically its Danish “hawk,” in the legal battles against two US tech giants: Apple and Google.
The verdicts handed down today by the Luxembourg-based court essentially sanction a confirmation of the actions of Vestager, who for ten years (i.e., two consecutive terms) headed the DG Comp, the EU executive’s directorate general for competition. The first judgement is that Google violated EU antitrust laws (and must therefore pay €2.4 billion), while the second obliges Apple to repay 13 billion in taxes to Irish state coffers.
“It is also a win for the level playing field in the Single Market, and for tax justice,” Vestager said, who commented on the verdicts at a press conference at the Berlaymont. This victory goes some way to counterbalance other rulings by the same court that, in recent years, instead represented defeats for the Commission, such as those against Amazon and Engie. The Danish commissioner also claimed as a success of the EU executive’s activism in the reforms adopted in recent years of corporate tax regimes in several member states (such as Ireland, Luxembourg, and Cyprus).
In the first judgment, the CJEU confirmed the fine already imposed by the Commission in 2017, when Google was accused of abuse of its dominant position: in essence, it prioritized its product comparison services in searches for online shopping over its competitors. The company challenged the ruling in 2021, but on Tuesday (Sept. 10), EU judges rejected the appeal.
The Apple case is more convoluted and is a classic reversal. The legal dispute began in 2016 when Brussels accused the Californian big-tech giant of having entered into an overly advantageous (to put it mildly) agreement with authorities in Ireland, a country with generous taxation where the company has its European headquarters, as many others. According to the indictment, two subsidies from Dublin in 1991 and 2007 (which Apple claims are taxable in US jurisdiction and not in the EU) would constitute undue state aid. In this way, the multinational corporation had come to pay 0.05 percent in taxes to the Irish exchequer. In 2020, the company won in a lower court, obtaining the annulment of the payment order. However, the EU executive filed an appeal that ended with today’s ruling, in which the CJEU imposed a maxi-payment of 13 billion on Apple.
The latter ruling in Europe is considered a green light to the hard line taken by Vestager against big-tech multinationals and, in particular, of her interpretation of the EU state aid rules (an approach, the one of the Danish commissioner, regarded by some as creative or even nonchalant). The two cases together – although covering different areas – helped make Brussels’ antitrust arm the most aggressive “watchdog” of the tech sector globally: since then, other countries have increased scrutiny of the sector’s business practices, especially in the United States.
However, the proceedings have also highlighted the slowness and complexity of the EU legal system, raising questions about the authorities’ ability to keep up with the rapid evolution of the technological and digital sector. Google, for example, is currently at the appeal stage in two other antitrust cases: one dating back to 2018 (in which the company was fined 4.34 billion) and the other to 2019 (with a fine of nearly 1.5 billion). Partly to address these issues, the EU in 2022 approved the legislative package called the Digital Markets Act (DMA), which gives regulators broader powers to force big digital platforms to change their business practices (and bring them into compliance with European rules) or to fine them if they do not comply.
Pasquale Tridico, the new president of the sub-committee on Taxation of the European Parliament (and head of the delegation of the 5 Star Movement in Strasbourg), commented positively on the Court’s decision concerning Apple, which he described as “historic.” “The tax advantages granted to multinationals are de facto considered tax avoidance. This practice is incompatible with the internal market and drains precious resources from public funds needed for education, health, the fight against poverty, and support for industrial sectors in crisis,” he said, urging the future von der Leyen Commission to propose “legislation that prohibits all forms of tax avoidance and competitive advantages for technology giants and large companies within the European Union.”
English version by the Translation Service of Withub
