Margrethe Vestager: the new EU Competition Commissioner unveils her agenda to the European Parliament

06 October 2014

On 10 September 2014, Margrethe Vestager, former Danish minister for Economic Affairs and the Interior, was nominated by Commission president-elect, Jean-Claude Juncker, as European Union Commissioner for Competition. On 2 October, Ms Vestager appeared before the European Parliament for a three-hour confirmation hearing during which she explained the top priorities for her term of office.

Key messages about the new Commissioner are:
  • Will prioritise energy, financial services and digital markets;
  • A tough stance on cartels – fines must "ruin any undue profits";
  • Will maintain State aid scrutiny of national tax breaks, and support for banks; and
  • Unlikely to cave in to pressure either from large multinationals or advocates of protectionism.

A 46 year-old economist and 20-year veteran of Danish politics, Ms Vestager will head the Directorate-General for Competition in Brussels. Unlike previous Competition Commissioners, Ms Vestager will not be a Commission vice-president.  However, she plans to work closely with the vice-presidents for jobs and growth, digital single market, and energy union. She has designated Ditte Juul-Jørgensen, a DG Trade official, as the head of her cabinet.

Digital markets will be at the top of Ms Vestager's agenda

Ms Vestager has identified energy, financial services, and digital markets as among her top sector priorities. 

Ms Vestager believes that there are limits to what can be achieved in the energy sector through the case-by-case application of competition rules. She therefore plans to work closely with the Commissioner for energy and environment to further the long term goal of creating an Energy Union.

Responding to a question whether existing competition rules are right for the digital society, Ms Vestager reiterated her view that the current rules have "withstood the test of time". The key challenge is rather to ensure that the Commission understands "what is actually happening in these markets". Assisting her in this task will be Linsey McCallum – current director of DG Competition's information, communication, and media unit – who Ms Vestager has appointed as deputy head of her cabinet.

The incoming Commissioner promises a tough stance on cartels and antitrust

Cartel enforcement will be a top priority with fines remaining high. In Ms Vestager's view, only fines that are "not just another line in the spreadsheet” but that "ruin any undue profits" can have a real deterrent effect. This is bad news – if they are found to have infringed the competition rules – for the car-part manufacturers currently under investigation for bid-rigging and the banks suspected to have manipulated foreign-exchange markets.

Ms Vestager has also welcomed initiatives to encourage private damages actions by cartel victims and plans to monitor closely the impact of the Directive on antitrust damages actions.

As regards antitrust, the new Commissioner's first test will be the ongoing settlement discussions in the Google and Gazprom cases. While Ms Vestager considers settlements a valuable tool in the competition enforcement armoury, she is unequivocal that she will not accept settlements that do not fully address the Commission's concerns. 

Tax relief and the banking sector will be a key focus of State aid scrutiny

In State aid, Ms Vestager vowed to bring to an end the "crisis" State aid regime in the banking sector "as soon as market conditions allow". This, as she explained during the hearing, will allow Member States to move away from "bail-out" policies – with taxpayers coming to banks' rescue – towards a "bail-in" approach, in which that burden is shared by bondholders. 

Ms Vestager will also continue her predecessor Commissioner Almunia's scrutiny of tax advantages granted by certain Member States to large multinationals. First, she will need to take a position on the ongoing investigations into the tax breaks granted to Apple and Starbucks, but she has also not ruled out further investigations. Ms Vestager was keen to emphasize that State aid investigations should not be seen as a way of introducing a common tax policy "through the back door"; however, she will look into how certain practices "can be stopped" if they affect competition.

Responding to repeated questions regarding SMEs, Ms Vestager acknowledged the difficulties of small firms competing with large multinationals. She also committed to promoting public support for SMEs and public-private partnerships active in research and development.

A firm and neutral competition policy

Given her "steely" reputation, it may be hoped that Ms Vestager will have the political will to bring to a close some of the more protracted investigations that she will inherit from her predecessor. 

It moreover seems unlikely that she will cave in to pressure from European firms and Member States to take a more protectionist approach to competition policy. As she explained to the Parliament, she believes that "cushioning" European firms from competition in the short run will leave them at a disadvantage internationally in the long run.

She also foresees a cleaner allocation of cases between national and EU level, with the Commission focussing only on infringements with a true EU dimension. She believes that the EU should be "more ambitious on big things and less ambitious on small things". 

Finally, given her economic background and involvement in the ECOFIN Council, Ms Vestager will certainly maintain the economic approach to competition cases.  Indeed, she also sees a greater role for econometric analysis. That said, Ms Vestager herself acknowledges that there are market failures that economics alone cannot address. A close "cohabitation" between economics and "legal weapons" is therefore essential. 

A unanimous endorsement from the Parliament

Ms Vestager's strong performance during her confirmation hearing earned her the unanimous endorsement of the European Parliament. Provided that the Parliament approves the entire College of Commissioners on 22 October 2014, Margrethe Vestager will begin her five-year mandate on 1 November.

For further information, please contact the partner or member of our Competition & EU Group with whom you normally deal.

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