Margrethe Vestager, the EU competition chief, exercises powers that would not be tolerated in a democracy
Europe’s Competition Directorate commands the shock troops of the EU power structure. Ensconced in its fortress at Place Madou, it can dispatch swat teams on corporate dawn raids across Europe without a search warrant.
It operates outside the normal judicial control that we take for granted in a developed democracy. The US Justice Department could never dream of acting in such a fashion.
Known as ‘DG Comp’, it acts as judge, jury, and executioner, and can in effect impose fines large enough to constitute criminal sanctions, but without the due process protection of criminal law. It misused evidence so badly in pursuit of the US chipmaker Intel that the company alleged a violation of human rights.
Apple is just the latest of the great US digital companies to face this Star Chamber. It has vowed to appeal the monster €13bn fine handed down from Brussels this week for violation of EU state aid rules, but the only recourse is the European Court of Justice. This is usually a forlorn ritual. The ECJ is a political body, the enforcer of the EU’s teleological doctrines. It ratifies executive power.
We can mostly agree that Apple, Google, Starbucks, and others have gamed the international system, finding legal loopholes to whittle down their tax liabilities and enrich shareholders at the expense of society. It is such moral conduct that has driven wealth inequality to alarming levels, and provoked a potent backlash against globalisation.
But the ‘Double Irish’ or the ‘Dutch Sandwich’ and other such tax avoidance schemes are being phased out systematically by the G20 and by a series of tightening rules from the Organisation for Economic Co-operation and Development (OECD). The global machinery of “profit shifting” will face a new regime by 2018.
We can agree too that Apple’s cosy EU arrangements should never have been permitted. It paid the standard 12.5pc corporate tax on its Irish earnings – and is the country biggest taxpayers – but the Commission alleges that its effective rate of tax on broader earnings in 2014 was 0.005pc, achieved by shuffling profits into a special ‘stateless company’ with its headquarters in Ireland.
“The profits did not have any factual or economic justification. The “head office” had no employees, no premises and no real activities,” said Margrethe Vestager, the EU competition chief.
This may be true but that does not empower the Commission to act arbitrarily, retroactively, and beyond the rule of law. What is really going on – as often in EU affairs – is a complex political attack on multiple fronts. It is a reminder of why Britain must remove itself entirely and forever from the clutches of this Caesaropapist construction.
Apple’s chief executive, Tim Cook, has a €13bn axe to grind, but he is almost certainly right in arguing that Mrs Vestager is making up state aid rules as she goes along, and has yet to produce evidence that Dublin granted Apple a sweetheart deal on taxes. “This claim has no basis in fact or in law,” he said.
To continue reading: Apple travesty is a reminder why Britain must leave the lawless EU
