Of the three key decisions that were scheduled for today, the least important one (a Nokia v. Daimler patent infringement ruling in Munich) has been pushed back on very short notice by more than a month, and the second one will be announced any moment now (and probably will have been announced by the time you read this, unless you're an early bird catching a premature worm):
According to the Financial Times, which is the European Commission's favorite media outlet when it comes to leaking competition-related (and many other types of) decisions, EU competition commissioner Margrethe Vestager has persuaded enough of the other commissioners that the Directorate-General for Competition (DG COMP) can appeal Apple and Ireland's victory in the EU General Court, which held that the Commission's "state aid" decision alleging favorable tax treatment of Apple by Ireland was baseless. The final decision will be made by the Court of Justice of the EU (CJEU), which is based in Luxembourg like the EU General Court (which was previously called Court of First Instance) and focuses exclusively on questions of law, not fact--which is a huge problem for the Commission given that the factual findings didn't support its decision in the first place.
This blog has been--and obviously has no reason not to continue to be--critical of the Commission's 13-billion euro decision (by now there's even another billion and a half in play, it appears), which was deficient, self-contradictory, and hard to reconcile with the Commission's acceptance of special tax rules in other parts of Europe that do look like state aid at first sight.
25 years ago, I actually recommended to Blizzard Entertainment (now part of Activision-Blizzard) to set up an Irish subsidiary to benefit from the low corporate tax rate there that was available to foreign investors meeting certain requirements. I had previously met officials of the Irish Development Agency at Software Publishers Association (SPA) Europe conferences, and I wanted the best for my client. But it's not the best for Europe. While I'm in favor of fair tax competition, what Ireland has been doing for a long time is just to take advantage of the EU's fundamental flaws.
The EU is a failing experiment of a "supranational" (neither an international organization like the UN, where you need unanimity for all decisions and member countries retain full sovereignty, nor a single nation state) body and the idea of "ever closer (and irreversible) integration." A few U.S. tech giants now have a market capitalization in excess of all publicly-traded companies from all industries in all European countries. Tesla, which just turned 17, is more than twice as valuable as the entire German automotive industry. The Digital Age belongs to America and parts of Asia, and Europe is the continent of losers that is more concerned with its history and diversity, and with taking care of poor neighbors, than its own future. But while the EU fails most of its citizens, some small countries like Ireland and Luxembourg have managed to take advantage of the EU's systemic deficiencies, at the expense of all others. Ireland can offer its low corporate tax rate only because it markets its access to the EU's Single Market, which is about 100 times as large as Ireland's domestic market.
The problem that the founders of the EU and its predecessors faced was that the benefits of integration (stronger together) were as clear as the impossibility--in the past and even today--of getting the governments of its member states to give up all sovereignty, and to convince the populations of particularly southern countries that the continent as a whole would have to accept one set of laws--and a common language, for which English would have been the obvious choice--while still retaining some local traditions, but practically demoting national languages to regional dialects. If the EU had done that, and if the focus had been on building an economy that can compete with places in the world where people simply work a lot harder than in most of Europe, then European digital startups could address a market with half a billion inhabitants, a single language, a single set of laws (even EU directives are not a substitute for a single jurisdiction), and make it big. Instead, the EU is going down the tubes, economically speaking.
It's telling that some of Europe's most affluent countries like Switzerland and Norway aren't EU member states, and with the UK the European country with arguably the best education system has already left.
Instead of realizing and addressing those structural shortcomings, the EU Commission changed direction in a different way over the course of the 2010s: having given up on fair competition, and being unable to cure its own diseases (by the way, the EU has also failed completely to make anything positive happen with respect to the COVID-19 pandemic; actually, open borders made everything worse), the EC opted for protectionism.
That protectionism is reflected by the EU Commission's unwillingness to require Nokia to live up to its FRAND licensing obligations vis-à-vis automotive suppliers, and its new plans for a Digital Services Act designed to give the EU Commission maximum leverage over global tech giants.
Mrs. Vestager has clearly turned a blind eye to antitrust violations by European companies, with only a few token investigations meant to create the perception of a balanced approach to enforcement, while going after each and every U.S. company, no matter how absurd the theory might be.
On the subject of absurdity, the Apple-Ireland "state aid" case was a transparent attempt to scapegoat a successful company that was on the verge of bankruptcy in the 1990s and went on to become the most valuable corporation in the history of the world, without needing any oil reserves to get there. It was a smear campaign, styled as an antitrust decision.
Not only in terms of the amount at stake, but also the extreme contortion of the law and the total absence of facts that would have underpinned those theories, Mrs. Vestager's Apple-Ireland decision has been the most ridiculous Commission ruling to date. The judges of the EU General Court realized this, and tossed it in its entirety. The Commission decision even contained two fallbacks: a Plan B, where the relevant amounts of money would have been approximately 10% of Plan A, and a totally unspecified Plan C. None of the three plans worked out and the appeals court overturned the whole thing.
In order to side with the Commission, the top EU court would have to engage in the most massive miscarriage of justice in its history, and it's not like all of its decisions had been uncontroversial. The Commission's only chance is for that to happen. It's not the kind of appeal that is reasonably likely to succeed. It's a long shot, and the only way for the Commission to prevail would be for the CJEU to place politics above the law just like the Commission did when it decided to bring this appeal.
For Mrs. Vestager personally, but also for the Commission as a whole, this is worth trying even if the chances are extremely slim. It's going to take a couple of years, and by then Mrs. Vestager's going to be nearing the end of her second term as competition commissioner. The embarrassment is going to be even greater then in all likelihood, but later is better than sooner in this case--for the commissioner, for the Commission, not for Europe, which would have a greater benefit from the Commission focusing on real issues, of which there are many, some of which I just mentioned, such as Nokia's abuse of standard-essential patents to the detriment of Europe's automotive industry and IoT startups.
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