Tuesday

9th Aug 2022

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

Opinion

Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Join EUobserver

Support quality EU news

Join us