Intergrative Case

Part 3 Integrative Case The European Commission Planning is a key part of every manager's operational activities. In this case study, we can learn about the art of planning from one of Europe's most unique organizations, the European Commission, taking a hard look at how the former Commissioner of Competition Margrethe Vestager planned her agenda. The Commission is responsible for planning, preparing and proposing legislation; for managing EU policies, including the monitoring of the implementation of EU legislation and ensuring its enforcement and allocating EU funding; and for representing the EU internationally. The Commission performs these roles under the leadership of 28 Commissioners (the college), which sets priorities and takes overall political responsibility for the decisions of the Commission. Appointed every five years, the most recent college was selected in 2019. Each of the 28 Commissioners, one from each EU country including the President, must set out a multi-year plan of action, describing how priorities will be turned into concrete actions. To make planning more effective and accountable, the Commission is organized into policy departments, known as Directorates-General, which are headed by the Commissioners. Amongst other areas, the Competition Commissioner is responsible for combating trusts and cartels that can arise from acquisitions or mergers. She is also in charge of preventing member states from giving state aid to one organization at the expense of other competitors. Her ultimate goal is to make markets function better for the benefit of European consumers both households and businesses and society as a whole, by protecting competition on the market and fostering a competition culture in the EU and worldwide. By tackling market distortions and creating economic opportunities in the internal market, the Competition Commissioner aims to contribute to the Commission's agenda of boosting jobs, growth and investment. The Competition Commissioner supports, via enforcement activity, four key EU policies and initiatives: 1. Digital Single Market 2. Energy Union 3. A deeper and fairer Internal Market 4. Fighting against tax evasion and avoidance. Planning is crucial for success, as most enforcement actions turn into major headlines in newspapers and on the television. In his mission letter in November 2014, when Margrethe Vestager became a Commissioner, the President of the Commission Jean-Claude Juncker called on her 'to be bigger and more ambitious on big things, and smaller and more modest on small things'. She followed that advice to her credit. In August 2016, after less than two years in the job, Commissioner Vestager caught out two big fish: Apple, one of the largest American tech companies that paid almost no taxes in the EU on the enormous profits it had made stretching back 25 years; and Ireland, a country that has attracted massive foreign direct investment simply because of its much lower corporate tax rates compared to other EU member states. In one of the largest monetary decisions of its kind, she ordered Ireland to recover 13 billion (plus interest) in back taxes from the iPhone maker. In the ruling, Commissioner Vestager found that Dublin had set up a special tax scheme with Apple whereby it was given a tax rate of less than 1 per cent, which amounted to illegal state aid going back 25 years. Commissioner Vestager gave Ireland four months to recover the money, but it took the reluctant tax authorities in Dublin more than two years to claw it back. In September 2018, Dublin recovered 14.3 billion in back taxes from Apple: 13.1 billion in back taxes and 1.2 billion in interest. Following the Ireland/Apple ruling, Commissioner Vestager continued to plan and carry out more enforcement actions in her drive to stop anti-competitive behaviour in the EU. In July 2018, she ruled that Google must pay an antitrust fine of 4.34 billion for abusing its dominance of the Android operating system for portable cell phones. This is the second fine that Commissioner Vestager has imposed on Google. In 2017, she fined Google 2.43 billion for the anti-competitive behaviour of its search engine. Google has filed appeals against both fines. She is also investigating Amazon for its monopolistic behaviour vis--vis third-party sellers on its ecommerce platform. It is not just the American tech giants that Commissioner Vestager had in her cross hairs. In 2019, she blocked the merger of the rail operations of Siemens and Alstom, a proposed deal designed to create a European Champion to compete with China's state-backed operator, CRRC. Prior to the proposed merger, she asked the two companies to sell off certain business units, such as those that make advanced high-speed train technology, on-board computers, trackside equipment and monitoring systems. Since nearly all of the EU's main rail corridors run on equipment supplied by either Siemens or Alstom, a combined entity would have been harmful to competition both within and outside the EU. Indeed, many EU competitors have voiced concerns that they will stand little chance of winning contracts where Siemens- Alstom would be both supplier and competitor. In general, Commissioner Vestager warned of the dangers of creating European champions with overwhelming market power in a single economic sector. She believed this could jeopardize the future of that entire sector and the millions of jobs dependent on it. Rather than rely on the decisions of just one company in the railway sector, Commissioner Vestager was far more confident in the collective decisions of many companies. She thought more competition was the best guarantee of success against aggressive Chinese companies like CRRC, the world's biggest railway equipment manufacturer. Meanwhile, the incoming EU Commission Presidentelect, Ursula von der Leyen, reappointed Margrethe Vestager for a second term as Competition Commissioner in September 2019. The EU Cornmission President also gave Commissioner Vestager an enlarged role in developing a coherent EU strategy to deal with the relentless growth of the digital economy. Only days following her appointment, however, Commissioner Vestager learned the hard way that EU judges do not always agree with her rulings. In late September 2019, the EU's second highest court ruled that the Competition Commissioner had failed to demonstrate that Starbucks had benefited from illegal state subsidies in the Netherlands. As a result, unpaid taxes that had been recovered by the Netherlands, amounting to 25.7 million, were returned to the American coffee giant Integrative Case Questions 1. What is the role of the European Commission and how is it organized to carry out its plans effectively? 2. What are the objectives of the Commissioner of Competition in the European Commission and how does the Commissioner fulfil them