Here in the U.S., monopolies are not illegal.
You're right, at least so far. I'll bet the current Administration/DoJ is salivating over such power being sought, for redistribution over there. In this perspective, at least our glass is half full, but not as full as it ought to be.
From the WSJ.com:
Europe's Antitrust Chief Covets
Powers to Break Up Monopolies
By Brandon Mitchener
Staff Reporter of The Wall Street Journal
BRUSSELS -- Unlike the U.S., the European Union cannot break up companies that abuse their market power. Mario Monti would like to change that.
The European commissioner responsible for antitrust affairs proposed on Sept. 27 an overhaul of the 15-nation European Union's antitrust enforcement powers. In a news conference announcing the publication of the draft law, Mr. Monti said the reforms would allow the commission to increase fines for the worst infringements of EU competition law and conduct raids in homes as well as offices.
What neither Mr. Monti nor other commission officials said that day was that the draft law envisages another significant enforcement power so far denied European trustbusters: the power to force divestitures or even break up a company -- European or otherwise -- that has violated the law.
Some industry experts now wading through the 62-page document, available on the commission's Web site at www.europa.eu.int , have been surprised to find the breakup proposal, which didn't appear in previous drafts of the law circulated for consultation with industry.
"It's hidden, but it's there," said Erik Berggren, competition policy adviser with Unice, which lobbies for major European employers. The commission "is asking for divestments and things like that." He added: "We're very concerned about it."
The proposal comes as the EU seeks to streamline its structure before further members are added. That effort is itself controversial, as Euro-skeptics and proponents of a more integrated Europe tackle the question of EU structural reforms.
At least two years from adoption and requiring the blessing of European governments and the European Parliament, the proposal is in the part of the draft regulation dealing with the commission's powers to end infringements on EU law. The relevant section says that "the Commission is empowered to impose all remedies necessary to bring the infringement to an end, including structural remedies. ... This may in particular be the case with regard to cooperation agreements and abuses of a dominant position, where divestiture of certain assets may be necessary."
Because the text isn't specific to European companies, the empowerment could apply to any company with substantial market power in Europe, including foreign concerns, according to commission officials familiar with the passage.
"Could we break up Microsoft Europe? Potentially, yes," said one aide to Mr. Monti. EU Power:
Likewise, the provision would apply to any European company powerful enough to affect business. "Take Deutsche Post," said the aide, referring to the commission's investigation into allegations that the German state-owned postal group has used monopoly profits from letter delivery to cross-subsidize those segments of its business already open to competition, such as parcel delivery. "What it would mean is that if no agreement would be taken by Deutsche Post ... the commission could order it to break up so there wouldn't be any more cross-subsidization," he said.
A lawyer with Deutsche Post AG, which is moving to settle two other regulatory disputes and which has always denied wrongdoing in the case, said only that the company had no immediate intention of attacking the commission's proposal. An umbrella group representing German industry has always defended the company's interests in matters of general EU law, he said.
Officially, the commission played down the significance of the proposal, noting that it already has the power to order divestments in the course of merger reviews and deregulation. Just last week, it engineered its biggest forced divestiture ever -- Vivendi SA's $6 billion stake in pay-TV operator British Sky Broadcasting Group PLC -- in exchange for regulatory approval of Vivendi's purchase of Seagram Co. of Canada. "This is analogous to what we do under the merger regulations," said Michael Tscherny, a spokesman for Mr. Monti.
Moreover, the commission thinks European antitrust case law has already empowered it to force divestitures outside of a merger review if necessary, a power the commission just hadn't ever exercised because companies always offered other remedies in order to avoid forced divestments. "We've had this power in principle," said Mr. Tscherny, "but we'd like to see it in writing." Mr. Monti was traveling and couldn't be reached for comment.
The commission has long coveted the ability of the U.S. Department of Justice to break up such monopolies as Standard Oil and Microsoft Corp. It complains publicly that weak penalties have inhibited its efforts to fight cartels and abusive monopolies in the EU.
To date, the most the commission has ever done to a company found to have participated in a cartel or abused a dominant market position is ordered it to cease and desist from its illegal activities and slapped it with a fine. The highest fine it has imposed in a cartel case was 273 million euros ($229 million at the current exchange), and the highest on an individual company, 102 million euros.
Although the Organization for Economic Cooperation and Development and competition authorities in individual EU member states widely support the commission's call for greater enforcement powers, some lawyers say the breakup proposal goes too far. For one thing, they say, the commission is not the Department of Justice.
"In the U.S., it's the court that has the power to break up a company," said Gerwin Van Gerven, vice chairman of the competition subcommittee of the EU Committee of the American Chamber of Commerce in Belgium. The EU Committee represents most of the major U.S. multinational firms in Europe. "We'd have to be very careful if the commission had the power and not a court. That makes quite a difference, obviously."
Companies and some lawyers have long criticized the commission's effective role as judge, jury and executioner in many facets of EU competition law. Its verdicts can be appealed to the European Court of Justice or Court of First Instance in Luxembourg, but private companies rarely challenge its decisions. When they do, they usually lose.
Corporate lawyers and their lobbyist colleagues in Brussels are just beginning to debate the proposal. Unice, which calls itself the Voice of European Business, hasn't yet committed its reservations to paper but will issue a position paper on the commission's draft law shortly, said Mr. Berggren.
European governments, which are just starting to look into the matter, haven't discussed the proposal in detail, either. |
