Margrethe Vestager isn’t wasting any time. Just months after becoming the European Union’s competition chief, the Danish politician moved beyond her predecessors’ cautious policies to confront the monsters of the digital and energy worlds – Google and Gazprom. But her ambitious battles on Eastern and Western fronts may have one clear beneficiary: Europe’s mergers and acquisitions boom.
In a matter of weeks, the “Iron Woman of Denmark” picked up dossiers moldering in the filing cabinets of Joaquin Almunia, the prior competition chief, and turned them into action. “There is a lot to do,” Vestager, 47, said Monday in New York.
She has already gone after Google, and is preparing to move tomorrow against Gazprom. In the meantime, she has addressed the American Bar Association in Washington, D.C. and met with her U.S. counterparts, including Edith Ramirez, the Federal Trade Commission chair, and William Baer, head of the Department of Justice’s antitrust division.
In a speech to the Paris Europlace Financial Forum in New York, the former leader of Denmark’s Social Liberal Party stressed that competition law enforcement would play a starring role in jumpstarting Europe’s economic revival. “The (European) Commission,” she said, “has decided to start from two of the areas that most limit our potential for growth: energy and the digital economy.”
Google is Exhibit A. The commission last week formally accused the search giant of violating competition rules by distorting search results to favor its own shopping service. The charge, known as a statement of objections, capped years of probing Google’s European practices by her predecessor, who failed at three attempts to settle with the tech behemoth. Gazprom, which has also been in the commission’s crosshairs for years, is expected to be formally charged on Wednesday with anticompetitive behavior.
These actions are akin to the battle Europe waged, and ultimately won, a decade ago against Microsoft for abusing its dominant position as a supplier of operating systems for personal computers. Like Microsoft, Google has deep pockets. Its $360 billion market capitalization – far greater than that of any European company – suggests how much the company has at stake.
As for Gazprom, it is the leading natural gas supplier to European economies, including a half dozen where residents couldn’t heat their homes or light their stoves without it. The company is also controlled by the Russian state and operates as a de facto arm of the Kremlin. With President Vladimir Putin engaged in a new cold war with the West over Ukraine, Vestager is arguably using antitrust enforcement as an instrument of geopolitical power.
These aren’t the only skirmishes Vestager has instigated. She revealed on Monday that the commission will soon launch a wide-reaching investigation into the European e-commerce business. “We have indications that companies erect artificial barriers to competition,” she said. As evidence, she mentioned that just 7 percent of the 28 nation economic zone’s small and medium enterprises sell their products online across a national border.
Though Vestager may look as if she’s in a hurry, she warns that her office can only move so fast. “If you want to sustain the rule of law, then you have to build on facts, the interpretation of facts, the evidence in the case,” she said in an interview. “Justice can’t be sacrificed for speed.”
There’s also the question of capacity. While ambitious crusades may foster digital innovation and a freer energy market, and reduce consumer costs, Vestager is also about to face a wave of corporate consolidation. As my colleague Quentin Webb points out, animal spirits are back in European boardrooms. M&A activity in the region has surged 36 percent so far this year to $328 billion, according to Thomson Reuters.
Vestager says that’s “a good sign that the European economy is picking up, and that there is a renewed trust that you can actually enlarge your market share.” But she hedges when asked whether that means investors can expect the commission to impede deals, as U.S. watchdogs have done.
Vestager concedes that, when she first arrived in Brussels, “one of the things I was mistaken about was … market definition. I thought I was given a special pen and sat in my ivory tower defining markets. That’s not the case.” So she commissioned a study comparing how various markets for goods and services have changed in the decade since 2004.
Though it’s different for each industry, she discovered that consumers have seen a roughly 15 percent expansion in their market access, which suggests many mergers considered unthinkable a decade ago might be allowed today. Asked for an example, she responded: “I would be happy to look at that.” That should be music to the ears of corporate chieftains with consolidation on their minds.