Week in Review (5 April)
Vestager receives digital competition report
Last year, European Competition Commissioner Margarethe Vestager has also tasked Professors Heike Schweitzer, Jacques Crémer and Assistant Professor Yves-Alexandre de Montjoye to work on a report on the future challenges of digitisation for competition policy. The report, ‘Competition Policy for the Digital Era’ was published on 4 April. Its conclusions will inform the evolution of DG Comp’s approach to digital competition issues in the coming years.
The report does not call for a fundamental overhaul of EU Competition Law in order to deal with digital challenges. It states that EU competition law has always evolved in response to new challenges and circumstances and emphasises that the basic framework should continue to ‘provide a sound and sufficiently flexible basis for protecting competition in the digital era.’ The report does suggest how the basic framework will need to evolve to deal with digital challenges. Some of these recommendations amount to a reiteration of the direction that DG Comp has taken in a number of recent cases involving Google.
Although the report does not propose a regulatory revolution, it does give a documentary and evidential basis to trends already being developed at DG Comp, and provides suggestions on how these could be further developed. In this sense, the report helps to bolster Margrethe Vestager’s desire that, even if she does not remain at DG Comp, the pattern of work and the approach that she pioneered will endure.
Draghi warns on Irish opposition’s NPL proposal
This week Mario Draghi issued a strongly worded negative opinion to the Irish Parliament’s Joint Finance Committee on the ‘No Consent, No Sale Bill 2019.’ Draghi warned that the bill, which would severely limit the ability of banks to clean their balance sheets of NPLs, could have ‘significant adverse effects on Irish credit institutions' ability to participate in Eurosystem monetary policy operations as well as on their funding situation and capacity to properly manage their balance sheets.’
Under the terms of the bill a loan secured by a residential property mortgage cannot be transferred without the written consent of the borrower. The bill is aimed squarely at preventing so called ‘vulture funds’ from acquiring NPLs secured against residential properties. Irish regulators have come out strongly against the bill.
As it is a private members bill, progress to committee stage will require the granting of a money message by the government. Given government opposition, the money message mechanism means that, normally, Pearse Doherty’s bill would have no prospect of being passed. As yet, however, we cannot completely rule out the possibility that the bill will make it to committee stage. Sinn Fein – Doherty’s party – have suggested that they could take legal action aimed at overcoming any government block. Fianna Fail, who prop up the government, have so far looked favourably on the bill and could yet use their leverage to force the issuance of a money message.
Austria unveils digital tax
On Wednesday, Austria unveiled a 5% tax on digital ad revenues. Finance Minister Hartwig Löger indicated that the tax would collect €200 million a year and would target digital firms with global sales of over €750 million, of which €25 million originate in Austria. €15 million of the proceeds will be allocated to Austrian media companies
The tax would target digital firms that have global sales of over €750 million, of which €25 million originate in Austria. Approval from parliament is still needed before the tax becomes official.