Thursday

28th Mar 2024

Opinion

Why are Google's consultants advising on EU monopoly policy?

  • Now the commission has outsourced developing its merger policy to none other than a consultancy that helps Google push through mergers and acquisitions (Photo: Aray Chen)
Listen to article

The European Commission keeps hiring consultants with a vested interest to guide them in drafting laws and strategies.

Over the years Corporate Europe Observatory has uncovered numerous cases, for example when big consultancies advising companies on dodging taxes were hired to help design the EU's approach to tax havens. Or when major fossil-fuel investor BlackRock was hired to advise on banking and climate change.

Read and decide

Join EUobserver today

Get the EU news that really matters

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

... or subscribe as a group

Now the commission has outsourced developing its merger policy to none other than a consultancy that helps Google push through mergers and acquisitions. It seems the European Commission hasn't learned from its past scandals so it's high time for MEPs to act to stop this problem.

In 2021 the European Commission hired the economic consultancy firm RBB Economics to evaluate one of its merger control tools. RBB Economics isn't a household name, but its role in merger controls cannot be underestimated. The company works for some of the largest corporations in the world to push through mergers and acquisitions and has a long-standing relationship with Google and several other tech companies. It has played a role as a consultant for big companies in most of the recent big and controversial merger cases handled by EU competition authorities.

Moreover, RBB Economics has for years lobbied in favour of weak enforcement of the EU's merger rules, and against key provisions of the Digital Markets Act which aims to rein in Big Tech's monopoly power.

In May 2021 a partner at RBB economics said in a panel discussion organised with Apple that in "[digital] markets concentration is natural" and that tech monopolies should be rewarded for their 'risky investments' with "monopoly rents".

Almost no EU mergers blocked

The European Commission's evaluation of its merger rules comes at a crucial moment. Decades of lax merger enforcement policies have led to ever more market concentration. Studies have shown that extreme market concentration leads to increased income inequality, weakened labour rights, higher prices for consumers, and undermines democracy.

In no other sector is this more obvious than tech. Apple, Microsoft, Alphabet and Amazon are four of the top five largest companies in the world by market capitalisation.

Big Tech has used its dominance to acquire any potential competitors that might threaten this status. Meanwhile regulators have barely intervened to block any of its mergers.

European Commission figures show that between 1990 and 2021 only 30 out of 8083 notified mergers were blocked by the EU, a mere 0.37 per cent. A study for Corporate Europe Observatory shows that the commission approved nine out of 10 notified mergers without any conditions.

However, with the recently approved Digital Markets Act (DMA) Big Tech market power has come under increased public and regulatory scrutiny in Europe. Additionally, in 2021 the Commission started a broad review of its competition policy, in part to tackle the harm caused by digital monopolies.

In a context where market concentration and monopoly power are finally being questioned by regulators, it is especially alarming that an important part of that agenda is being outsourced to a consultancy company with a long track record of defending companies with monopoly interests.

Normalising conflicts of interest

The European Commission has previous form in hiring consultancy firms to undertake investigations and analysis in a policy area where these consultancies have a financial interest.

In 2020 this caused a major scandal when the commission decided to hire the asset manager BlackRock — perhaps the world's premium fossil fuel investor — to investigate how to make banking more sustainable. More than 30 MEPs signed a protest letter, and some joined a coalition of NGOs who complained to the European Ombudsman.

The ombudsman's resulting decision was remarkably robust, calling for an overhaul of the rules. While the commission did follow up by drafting several amendments to the Financial Regulation, our research shows that it has not made any attempt to strengthen its own internal procedures on hiring consultants with conflicts of interest. This explains how RBB Economics could be handed a contract that allows them to gain another foothold in EU competition policy.

To have any credibility going forward the commission must end its tradition of hiring consultants with a strong vested interest, and chart a different path in its approach to mergers. And MEPs should demand that the Commission introduces a genuine check on conflicts of interest before awarding contracts on politically important consultancy work.

Most significantly, the European Parliament is negotiating a reform of the Financial Regulation which offers a unique opportunity to ensure that consultancy firms with a vested interest are once and for all excluded from public tenders. Let's not squander this moment.

Author bio

Bram Vranken and Kenneth Haar are researchers and campaigners at Corporate Europe Observatory, the NGO exposing corporate lobbying in Brussels.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

EU sides with Google in data protection case

The European Commission suggests the French data protection watchdog overstretched its remit to make Google delist names on a global scale from search query results, as part of the 'right to be forgotten' rule in the EU's data protection regulation.

Big Tech's attempt to water down the EU AI act revealed

The launch of ChatGPT has sparked a worldwide debate on Artificial Intelligence systems. Amidst Big Tech's proclamations that these AI systems will revolutionise our daily lives, the companies are engaged in a fierce lobbying battle to water-down regulations.

Column

EU lobbying clean-up — what happened to that?

Six months after Qatargate, as institutional inertia and parliamentary privileges weigh in, the sense of gravity and collective resolve have all but disappeared. MEPs show little enthusiasm for reform of the rules that today allow them significant outside paid activities.

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Why UK-EU defence and security deal may be difficult

Rather than assuming a pro-European Labour government in London will automatically open doors in Brussels, the Labour party needs to consider what it may be able to offer to incentivise EU leaders to factor the UK into their defence thinking.

Column

EU's Gaza policy: boon for dictators, bad for democrats

While they woo dictators and autocrats, EU policymakers are becoming ever more estranged from the world's democrats. The real tragedy is the erosion of one of Europe's key assets: its huge reserves of soft power, writes Shada Islam.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us