Saturday

20th Apr 2019

US slams EU competition policies

  • EU competition commissioner Vestager. "The commission’s state aid investigations have considerable implications for the United States," the US Treasury says. (Photo: European Commission)

The US has accused the European Commission of imposing unfair fines on US firms in competition cases and launching investigations that threaten to "undermine progress" in the global fight against tax avoidance.

In a white paper published on Wednesday (24 August) the US Treasury strongly criticises the EU executive's investigations into Apple, Fiat Chrysler and Amazon over state aid and tax avoidance.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The Treasury says it "continues to consider potential responses should the Commission continue its present course".

Last October, EU competition commissioner Margrethe Vestager imposed a €20-30 million fine on Fiat as well as on US coffee chain Starbucks. In December, she also opened a case against McDonald's.

The commission is also investigating Google, but in antitrust cases related to suspicions that the firm is abusing its dominant market position. Earlier this year, the commission said it was studying how to make US multinationals like Google and Amazon reveal their earnings and the tax they pay.

"In the state aid cases, the commission is charting a course that sets aside years of multilateral efforts to develop workable transfer pricing rules and combat BEPS," the report says, referring to tax avoidance strategies known as base erosion and profit shifting (BEPS).

"The commission’s path runs the risk of the EU being perceived as having used its unique structure to undermine and reverse international progress on this important issue."

In this unprecedented take on EU competition policies, the US Treasury argues that "the commission’s approach is new and departs from prior EU case law and commission decisions".

It says that the commission "is seeking to recover amounts related to tax years prior to the announcement of this new approach - in effect seeking retroactive recoveries".

Transfer of revenue

It also says that this new approach "is inconsistent with international norms" because the EU does not follow rules on transfer pricing set up by the OECD, the Paris-based club of mostly wealthy nations.

"The commission’s state aid investigations, if continued on their current trajectory, have considerable implications for the United States," the report goes on.

It says in particular that "repayments ordered by the commission will be considered foreign income taxes that are creditable against US taxes owed by the companies in the United States". In effect, this will constitute "a transfer of revenue to the EU from the US government and its taxpayers".

Assessing cases involving US firms, the US Treasury also provides its own view of EU institutional mechanisms.

It says that the commission has expanded the role of the it Directorate-General for Competition (“DG COMP”) "beyond enforcement of competition and state aid law under the TFEU [the EU treaty] into that of a supranational tax authority that reviews member state transfer price determinations".

'No bias against US companies'

A commission spokeswoman said in reaction to the report that there was "no bias against US companies" and that "EU law applies indiscriminately to all companies operating in Europe".

"All companies, no matter their nationality, generating and recording their profits in an EU country should pay taxes in line with national tax laws," she said.

She said that "state aid rules and the relevant legal principles have been in place for a long time" and that it was a "standard feature of EU state aid rules" that a member states must recover benefits that are declared incompatible with the rules.

Apple faces massive Irish tax bill

The EU executive will announce how much the tech giant must pay back to Ireland, two years after it ruled that tax decisions in Dublin amounted to illegal state aid.

Opinion

Vestager is right to hammer Qualcomm

Qualcomm is greedy and stupid. When you have 90 percent of the chipset market that is the engine of the mobile phone, you shouldn't pay your customers not to do business with your competitors.

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Latest News

  1. Romania drafts EU code on NGO migrant rescues
  2. Bulgaria, Hungary, and Malta shamed on press unfreedom
  3. EU drafts $20bn US sanctions list in aviation dispute
  4. Brunei defends stoning to death of gay men in EU letter
  5. US Democrats side with Ireland on Brexit
  6. Wifi or 5G to connect EU cars? MEPs weigh in
  7. How Brexit may harm the new EU parliament
  8. EU parliament backs whistleblower law

Stakeholders' Highlights

  1. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  2. Nordic Council of MinistersNordic talks on parental leave at the UN
  3. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  4. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  5. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  6. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  7. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  8. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  9. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  10. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  11. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  12. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov

Join EUobserver

Support quality EU news

Join us