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EU Competition Commissioner Vestager

'The Auto Industry Is a High Priority'

EU Commissioner for Competition Margrethe Vestager, 49, has made a name for herself by taking on Google, Apple and Starbucks. She talks to DER SPIEGEL about her current investigation into possible automaker collusion and Facebook's responsibilities to its users.

Ezequiel Scagnetti / DER SPIEGEL

European Commissioner for Competition Margrethe Vestager.

Interview Conducted by and
Tuesday, 11/28/2017   04:32 PM

DER SPIEGEL: Ms. Vestager, when you were recently asked about the suspected collusion among German automakers that DER SPIEGEL uncovered in late July, you said you were still missing essential information to determine whether it really was a violation of competition law. What can we do to help?

Vestager: Thanks for the offer, but we are doing fine. It just takes time. We need to work through an enormous pile of documents to find decisive proof. It is about determining whether elements of the discussions constituted a secret cartel, what elements are part of a gray area and what discussions constitute legitimate collaboration among the auto companies.

DER SPIEGEL: You recently initiated an unannounced search of BMW along with pre-scheduled searches at Daimler and VW - the two companies that self-disclosed to the German Federal Cartel Office and the EU Commission - a short time later. Did you find anything?

Vestager: We are currently evaluating the results. We need to be very thorough and cannot allow ourselves to be carried away by press reports. If we ultimately come to a decision about illegal collusion, it needs to be able to withstand scrutiny in court. As such, we can't afford to pursue a single direction. We need to be open and must work professionally.

DER SPIEGEL: How likely is it that the commission will launch a formal antitrust suit?

Vestager: At this point, I cannot say. It can take years for there to be a final decision in such cases. But I can assure you the automobile sector is a high priority for us, and that has been the case for quite some time. At this point, we know the sector pretty well. We have made eight rulings against automotive suppliers and, of course, against the truck cartel, a giant case. It seems to me that there is nothing in this sector that is immune from the possibility of forming a cartel.

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DER SPIEGEL: What makes this case so complex?

Vestager: There were countless working groups over so many years. When did they stand on the solid ground of permitted collaboration? And when did they drift into possibly illegal collusion? It is a difficult question to answer. Competition law, after all, doesn't prohibit all forms of cooperation. There are a lot of good reasons for collaboration.

DER SPIEGEL: Your agency has recently shown it has no qualms about imposing drastic penalties. In a worst-case scenario, how high could the fines be for the carmakers?

Vestager: We are not that far yet. But we have clear rules for how we calculate fines. The highest possible penalty is 10 percent of global turnover, and then there are factors that either mitigate or exacerbate the penalty, like the leniency program.

DER SPIEGEL: When it came to the truck cartel, in which six truckmakers were found guilty of price fixing, the companies were forced to pay a total of about 3 billion euros. VW and Daimler were part of that collusion case as well. Does that play a role?

Vestager: The duration and intensity of a cartel can affect things, and of course the penalty can be greater for those who are loyal clients of ours, so to speak.

DER SPIEGEL: In collusion cases, which companies are ultimately granted immunity from potential fines: The company that denounces the cartel in the first place or the company that delivers the most evidence?

Vestager: They need to deliver usable information, otherwise the entire program makes no sense. But the question of who was first is very important. After that, the danger that the entire cartel will be revealed is pretty high. It sets off a kind of gold rush for immunity. You can see that reflected in the severity of the penalty. The first company to denounce a cartel can have up to 100 percent of the fine waived. The second can then only hope for a reduction if it produces new evidence.

DER SPIEGEL: When it comes to the potential collusion among carmakers, how do you measure the cost to consumers? We're not talking about simple price fixing.

Vestager: Consumers aren't only hurt if they pay more than they needed to. They are also hurt if possible innovations fail to materialize. In the truck cartel, the manufacturers involved also coordinated pn when they would introduce certain environmental innovations. When manufacturers of nine out of 10 heavy-duty trucks participate in this kind of cartel, the customers' options for choosing a particularly environmentally friendly truck are extremely limited.

DER SPIEGEL: With the auto cartel, it also wasn't just about costs. Daimler, Volkswagen, BMW, Porsche and Audi agreed to limit the size of so-called "AdBlue tanks," which contain a solution that reduces nitrous oxide emissions. Yet they knew that doing so would mean they wouldn't satisfy emission reduction requirements. In other words, they may have colluded to commit fraud.

Vestager: That is among the accusations we are looking into.

DER SPIEGEL: Behind the scenes, the auto industry is trying to talk down the cartel case, along the lines of: "We'll see if Brussels even does anything."

Vestager: To that I can only say, we are taking this case very seriously. One should not make wrong assumptions simply because our investigation is not so visible from the outside. We are not the police, we do not knock -- searches aside -- on the doors of houses. The largest part of our work involves sitting in an office and combing through documents. With the truck cartel, our team looked through up to 300,000 documents -- and not just with the help of special data-analysis software, but also physically, paper by paper.

DER SPIEGEL: Daimler made a voluntary self-disclosure in 2014, but almost nothing happened until Volkswagen also made a self-disclosure in 2016. Why not?

Vestager: It wasn't quite like that. When the diesel scandal became public, we thoroughly examined whether any aspect of it was relevant to competition law. At that point, we concluded that it was merely fraud. That is bad enough, but not relevant for competition law. The diesel scandal initially didn't have any competition aspects. We get involved because Daimler and Volkswagen made self-disclosures.

DER SPIEGEL: Does it make you angry how VW and other auto companies are doing very little to compensate their European customers?

Vestager: For me, the case certainly raises the question as to why we in Europe don't have the option of pursuing class-action suits, as is possible in the U.S. I believe that the threat of these suits scares and disciplines some companies, because suddenly a lot more money is at stake. Class-action suits are also possible in some EU member states but not in all of them. We at the Commission would like to see consumers everywhere in the EU be granted better rights, and are currently looking into how best to accomplish that.

DER SPIEGEL: You recently said that you see "no big difference between the business practices of American tech companies and those of German car makers."

Vestager: The packaging - the exterior - looks different. But the motives of the companies are very similar. They are focused on getting something faster or cheaper than they are entitled to. To do so, they take illegal shortcuts or tear down fences. This is often motivated by greed but also sometimes by the fear of being pushed out of the market. It's all very similar.

DER SPIEGEL: You have said that the laws of democracy rather than the laws of the jungle must apply to tech companies like Google, Apple, Facebook and Amazon. What do you mean by that?

Vestager: The EU founding fathers specifically remembered how several corporations in the past had taken advantage of their monopoly positions and gained almost unrestricted power in some countries. It was the law of the jungle. The great thing about Europe is that we have managed to tame the market using democratic means.

DER SPIEGEL: But aren't the revelations of the Paradise Papers, the leak that recently uncovered a web of high-profile cases of tax evasion, proof of how powerless the EU authorities are against the tax-evasion structures used by large multinationals? Structures that are being actively promoted by countries like the Netherlands and Ireland?

Vestager: These leaks make me extremely optimistic. They are making people nervous. Those who make a living by developing tax-saving models for companies maybe now sleeps a little less soundly. We have also long been in the process of tightening the laws. Think of the directive for fighting tax-avoidance. Or the automatic information exchange that now exists between the tax authorities of the different countries.

DER SPIEGEL: Apple, which was ordered by your agency to pay 13 billion euros in back taxes to the Irish state, is still looking for tax havens and explicitly asks for tax exemption before it settles somewhere. Doesn't that make you angry?

Vestager: One doesn't change the world with frustration or anger. Governments in EU member states that take part in this race to the bottom-competition on taxes should stand in front of their citizens and say: We only tax companies that are based here but we don't touch multinational companies that do business here. I am curious how voters would react to that!

DER SPIEGEL: You used to sometimes tweet photos of homemade cookies, but now you only tweet about professional matters. Have you developed a distrust of social networks like Twitter and Facebook?

Vestager: No, but I have become more restrained. It seemed presumptuous of me to constantly write: I went jogging again. The problem with social media channels is that they only show an excerpt of what people do. That, however, leads to misunderstandings, like the impression that some people are simply perfect. But that is not true.

DER SPIEGEL: You gave up your Facebook page after you read the terms of service. What scared you away?

Vestager: I still have a so-called fan page on Facebook, but I myself no longer use Facebook for the same reason I reject supermarket discount cards: The companies suck up all that information without paying an appropriate price for it. As compensation for my data, I receive a discount on a detergent I don't even want. These companies don't even pay close to what our data is worth. That's what makes their business model so lucrative.

DER SPIEGEL: But Google and Facebook users can determine themselves whether they release personal data. They are constantly asked if they agree to the terms of service.

Vestager: Do you know anyone who has read these terms all the way to the end even once? I have. It is unbelievable what we as users simply accept. Sure, their data continues to belong to them, but they give internet companies vast rights to use that information and even to sell it to others.

DER SPIEGEL: Germany's Federal Cartel Office is currently examining whether Facebook is using its dominant market position to undermine citizens' rights to a private sphere.

Vestager: They are examining the connection between the right to privacy and the competition rules. In some cities, almost every social gathering is organized over Facebook - the next football match, the school celebration, events for clubs. It is difficult to be an active citizen if you are not on Facebook. The question is whether Facebook is taking advantage of its market dominance to impose rules for data protection on its users that aren't in agreement with the laws.

DER SPIEGEL: And do you share this belief?

Vestager: I am following the case with great interest.

DER SPIEGEL: What does power mean to you?

Vestager: Many years ago, I read Vaclav Havel, who was a dissident before he became the president of the Czech Republic. He wrote that at first, he waited at the dentist for his appointment like everyone else. A bit later, he asked if the dentist couldn't open his office a bit earlier for him. Power changes us, that is dangerous. For that reason, one should never forget that power is something that is merely loaned. That is also the reason why I have this finger.

(Vestager points to a sculpture on her coffee table, a hand with an outstretched middle finger.)

DER SPIEGEL: We thought this was a reference to the automobile or tech companies!

Vestager: No, I would never be so rude.

DER SPIEGEL: Do you also show the sculpture to people who consider you a likely candidate as the next Commission president?

Vestager: No, it is only for me. It reminds me every day that people have different views than my own and that they have every right to.

DER SPIEGEL: You are dodging a question about your plans for the future!

Vestager: That is my intention.

DER SPIEGEL: In Germany, coalition talks aimed at forming Chancellor Angela Merkel's next government have collapsed. Is that the end of French President Emmanuel Macron's plans for reforming the EU?

Vestager: No, I don't think so. German-French leadership is important for Europe, but they can't move Europe forward on their own. Maybe other EU members should use the situation in Germany to think about which reforms they would like to push for in Europe. The chances for it are looking good, because with Brexit, the opponents of further integration are losing their core. It's very possible that in 10, 15 years almost everybody will be part of the euro. Well, maybe not Denmark.

DER SPIEGEL: Ms. Vestager, we thank you for this interview.

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