Friday

23rd Jun 2017

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

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.

Row between EU ministers halts e-book tax rate

A bill to reduce VAT rates on e-books and e-publications has become the latest victim of a row between the Czech Republic and its partners over its own plan to collect VAT.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. EU leaders renew vows to uphold Paris climate deal
  2. US issues warrant for VW managers, German media say
  3. EU extends sanctions against Russia
  4. Merkel denies Franco-German deal on EU agencies
  5. Dutch PM: Turkey is upholding migration deal
  6. Britain to outline rights of UK-based EU citizens
  7. Tusk can 'imagine' the UK still remaining in EU
  8. Norway offers more blocks for Arctic oil exploration

Stakeholders' Highlights

  1. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  2. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  3. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  4. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  5. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  6. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  7. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  8. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  9. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  10. Malta EU 2017End of Roaming Charges: What Does It Entail?
  11. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move
  12. European Social Services ConferenceDriving innovation in the social sector – 26-28 June

Latest News

  1. Decision on post-Brexit home for EU agencies postponed
  2. May's offer on citizens’ rights dismissed as ‘pathetic’
  3. 'Historic' defence plan gets launch date at EU summit
  4. EU pressures firms to tackle online terrorism
  5. Lack of eligible candidates dogs EU relocation scheme
  6. Border management going virtual
  7. Tusk hints UK could stay in EU, if it wanted
  8. Merkel, Orban and the not quite closed Balkan route