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World’s Tech Companies Look to Brussels to Resolve Antitrust Complaints

April 9, 2013 by Leave a Comment

Joaquín Almunia sometimes sends Eric E. Schmidt a text.

Like his predecessors, Mr. Almunia has the power to block mergers or fine companies billions of dollars. But where he differs is in how comfortable he is in communicating with executives across the table — or the ocean — to negotiate settlements that avoid long battles.

“I have an open phone line, or e-mail line, or SMS line at any moment,” Mr. Almunia said in an interview Monday.

Mr. Almunia, 64, served as the European Union’s commissioner for economic and monetary affairs before being appointed four years ago as the bloc’s competition commissioner. The post is likely to be his last job in Brussels and he does not foresee a return to politics in Spain, where he led the Socialists to defeat in 2000 before resigning as party leader.

But the formal complaint that recently hit his desk, focusing on how Google runs its mobile software business, is the latest sign that Mr. Almunia remains the go-to figure for antitrust enforcement in the world’s technology sector.

That complaint, filed by a coalition of companies including Microsoft and Nokia, accuses Google of using the Android mobile operating system to promote its own products and services in a majority of smartphones sold to consumers.

Mr. Almunia still must decide whether to take up the new complaint, which landed just as he appeared to be reaching the final stages of settlement talks with Google over the way it conducts its search and advertising business. But the case is growing in importance, given the rise of mobile computing.

In recent years, the European Commission has become a defender of fair play in computing and communications, even as regulatory bodies with far more experience — notably those in the United States — have grown squeamish about using antitrust law to pry concessions from some of the world’s most dynamic companies. Unlike his American counterparts, Mr. Almunia can decide punishments without judicial approval.

He has made a point of avoiding public showdowns with chief executives, or seemingly endless litigation. Indeed, he has made negotiation, rather than confrontation, a hallmark of his term in office to avoid dust-ups with giants like Microsoft and Intel, which were the subject of bitter, decade-long investigations. The change of approach has been most noticeable in the inquiry into Google’s search and advertising business.

Less than three years after formally opening the case, Mr. Almunia said this week that he would test proposals submitted by Google aimed at making it easier for people to distinguish when the company was proposing its own services — the strongest sign yet that the investigation into Google’s search business would end in a settlement and without a fine or a finding of guilt.

Even as his officials burrowed into the inner workings of Google’s hugely successful search and advertising businesses, Mr. Almunia met and spoke with Mr. Schmidt and called other senior representatives, like David C. Drummond, the company’s chief legal officer, to update them.

His willingness to meet with executives to forge relationships and to gain knowledge about the sector also extends to figures like Sheryl Sandberg, the chief operating officer of Facebook. At a meeting with Ms. Sandberg in January at the World Economic Forum in Davos, Switzerland, the two discussed “the relationship between the search activity and the social network’s activity, but they were general conversations,” Mr. Almunia said.

Not everyone is happy with how European antitrust enforcement is evolving.

Mr. Almunia’s approach has frustrated companies like Foundem, a British online comparison-shopping site, which brought one of the original complaints about the way Google runs its search and advertising businesses.

Last month, Foundem, along with companies including TripAdvisor and the powerful Federation of German Newspaper Publishers, asked Mr. Almunia to force Google to “hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display and penalty algorithms.” The complainants suggested that Google would make such concessions only if it faced formal charges, called a statement of objections.

A few days earlier, Fleur Pellerin, the French minister for digital affairs, told a French Senate committee hearing that Google “apparently systematically favors” Web sites it controls. “I hope that the European Commission will not compromise,” she said.

Mr. Almunia batted away the suggestion that he was not standing up to Google, particularly after the United States Federal Trade Commission decided in January to end a 19-month inquiry into how the company operated its search engine with a finding that it had not broken antitrust laws.

“I don’t feel that I am losing my nerve,” he said. Instead he suggested that some of the complainants had unrealistic expectations.

“It’s obvious that not everybody has the same merits,” he said. “Antitrust decisions cannot eliminate these merits and put everyone in the same position.”

One reason complainants tend to knock on the door in Brussels first is that European competition law is based on a tradition of protecting smaller businesses to ensure choice and defend against abuses. American enforcers, at least in recent decades, have tended to avoid intervention without strong evidence that consumers were harmed.

That is something of a sore point for the Europeans like Mr. Almunia, who are at pains to insist they share the same goals as the Americans when it comes to consumer welfare.

Article source: http://www.nytimes.com/2013/04/10/technology/eu-competition-chief-texting-with-the-enemy.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

E.U. and Google to Discuss Antitrust Issues

December 17, 2012 by Leave a Comment

BRUSSELS — The European Union’s top antitrust regulator is expected to meet with Google executives early this week as settlement talks between the search giant and the U.S. authorities gain momentum.

The Europeans have been seeking a settlement with Google since May, and Joaquín Almunia, the Union’s competition commissioner, and Eric E. Schmidt, the executive chairman of Google, have met on previous occasions trying to reach an accord.

But the Europeans have been pressing Google harder than their U.S counterparts to address accusations that the company biases its search results to favor its own services like mapping and online shopping. That makes the expected talks between Mr. Schmidt and Mr. Almunia particularly delicate.

The two men could meet as soon as Tuesday, according to a person with knowledge of the talks who spoke on condition of anonymity as the meeting was to be private.

While Google is the dominant search engine in the United States, it holds even greater sway in Europe, accounting for more than 90 percent of searches in a number of major markets. That could leave rivals like Microsoft scope to try to set some rules — at least in the European Union, where regulators often rely more on complaints by competitors than in the United States — for how Google ranks competing services.

After a two-year inquiry, Mr. Almunia said in May that Google might have abused its dominance in Internet search and advertising, giving its own products an advantage over those of rivals.

“Google displays links to its own vertical search services differently than it does for links to competitors,” Mr. Almunia said in a statement then. “We are concerned that this may result in preferential treatment compared to those of competing services, which may be hurt as a consequence.”

The accusation that Google biases its search results to favor its own services, which originally was a main issue in the U.S. talks, has been taken off the table there, two people who have been briefed on those discussions said Sunday. They spoke on the condition of anonymity because the negotiations were continuing.

Google has consistently maintained that it offers a neutral, best-for-the-customer result.

Mr. Almunia said in May that Google would need to propose a plan within weeks for changes to various practices, including how it links to competitors’ services. Google made its first formal settlement proposal in July, but the talks have dragged on since.

In September, Mr. Almunia signaled that there were limits to how much longer his office would try to negotiate. But early this month, Mr. Almunia appeared to take a softer tone, saying that time was needed to conclude “conversations” with Google that were going on “quite intensively.”

If Mr. Almunia ultimately accepts a settlement offer, Google would avoid a possible fine of as much as 10 percent of its annual global revenue, about $37.9 billion last year. It would also avoid a guilty finding that could restrict its business activities in Europe.

A settlement would offer advantages for Mr. Almunia, too. He has sought to speed up resolution of antitrust cases to prevent them from dragging out, particularly in the fast-changing technology marketplace, where proposed remedies often rapidly lose their relevance.

As negotiations stand in the U.S. case, Google would make a set of voluntary commitments, the two people briefed on those discussions said.

Google, according to the people, has agreed to refrain from copying summaries of product and restaurant reviews from other Web sites and including them in Google search results, a practice known as screen scraping.

The company would also agree to make it easier for advertisers to transfer data on products, pricing and bidding to Google’s competitors, including Bing from Microsoft, the two people said. Google, they said, would also refrain from striking exclusive deals with Web sites to use Google’s search service.

In addition, Google would sign a consent decree, agreeing to license patents deemed essential for wireless communications on reasonable terms, the two people said. The patent issue is a late entrant to the case. Subpoenas that the U.S. Federal Trade Commission started sending to Internet companies last year laid out a wide-ranging investigation focusing on Google’s conduct in the search business. The Web site Politico reported Saturday that the talks had moved away from search, adding details to reports that Google was resisting a consent decree in that area.

Steve Lohr reported from New York.

Article source: http://www.nytimes.com/2012/12/18/technology/eu-and-google-to-discuss-antitrust-issues.html?partner=rss&emc=rss

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Warren Defends Agency at Chamber of Commerce

March 31, 2011 by Leave a Comment

WASHINGTON — She never actually uttered “I come in peace,” but Elizabeth Warren, the Obama administration aide charged with setting up the new Consumer Financial Protection Bureau, might have felt like an alien visiting an anxious planet Wednesday when she went to the United States Chamber of Commerce.

“I do not consider myself in hostile territory right now because I believe we share a point of principle: competitive markets are good for consumers and for businesses,” Ms. Warren told about 300 executives at the chamber’s annual conference on capital markets. But, she added, “Markets don’t work in the way they are supposed to unless there are some well-enforced rules.”

The detail and scope of those rules are what worry the members of the chamber and some members of Congress, both of whom have been vocal in their criticism of the regulatory powers given to the new consumer agency by the Dodd-Frank Act, the financial regulation bill signed into law last July.

The disagreements between Ms. Warren and one of her chief critics, Representative Spencer Bachus, Republican of Alabama and chairman of the House Financial Services Committee, grew more heated hours after her address. Mr. Bachus accused Ms. Warren of mischaracterizing her recent participation in the mortgage service industry settlement talks.

Last week, Ms. Warren told the committee that she provided “advice” to the Treasury secretary and others about a possible settlement but was not involved in the negotiations. State attorneys general and federal officials are discussing a settlement with mortgage service companies in response to questionable foreclosure practices.

On Wednesday afternoon, Mr. Bachus released a seven-page document titled “Perspectives on Settlement Alternatives in Mortgage Servicing,” which, in a letter to Ms. Warren, he said demonstrated that she had a larger role than she had indicated to the committee.

“It is plain that the C.F.P.B. has done more than provide ‘advice’ on the proposed servicing settlement,” Mr. Bachus wrote. The letter requested that Ms. Warren consider “if there are any aspects of that testimony related to the C.F.P.B.’s role in the mortgage servicer settlement negotiations that you wish to clarify or correct.”

The letter was co-signed by Representative Shelley Moore Capito, Republican of West Virginia and chairwoman of the subcommittee on financial institutions and consumer credit.

Jen Howard, a spokeswoman for the consumer agency, said that Ms. Warren correctly characterized her participation. “As Elizabeth Warren testified to Congress earlier this month, the consumer bureau provided advice to various officials involved in the mortgage servicing law enforcement matter,” Ms. Howard said in a statement. “She is aware that not everyone agrees with that advice or how to address the serious deficiencies at some of the nation’s largest mortgage servicing firms.”

Mr. Bachus, a consistent critic of both the consumer agency and Ms. Warren, filled that role again Wednesday when he addressed the Chamber of Commerce conference immediately before she spoke.

Noting that he has introduced a bill to change the governance of the consumer bureau from a single director to a five-person, bipartisan commission, he characterized the powers given to the head of the consumer agency as unmatched in government.

“They regulate all financial products and services, so if it involves a dollar changing hands, they can regulate it, or she can, because she actually has total discretion” over consumer financial products, Mr. Bachus said. “If George Washington came back today, or Abraham Lincoln or Warren Buffett signed up, I wouldn’t give that person total discretion.”

Ms. Warren was followed by Thomas J. Donohue, president and chief executive of the chamber, who warned that the consumer agency could choke off economic growth in the United States.

“If not used carefully, the C.F.P.B.’s tremendous power to go after bad actors could cause serious collateral damage to America’s job creators,” he said.

Ms. Warren has disputed the notion that the consumer agency has unbridled power. “There are plenty of checks in place,” she said, including a law governing how federal agencies write and adopt new regulations. Its rules, like those of any agency, can be overturned by Congress or federal courts.

In addition, she said, the consumer bureau is “the only bank regulator — and perhaps the only agency anywhere in government — whose rules can be overruled by a group of other agencies,” specifically the Financial Stability Oversight Council, composed of nine regulatory agency heads and an independent insurance industry expert. A two-thirds vote of the council is required to overturn a consumer agency rule.

Ms. Warren also warned against making the agency subject to annual appropriations of Congress, saying it would inject politics into the regulatory structure and cause banks and other regulated agencies to lobby for looser oversight.

Regulation and competition are not, she said, mutually exclusive. “In fact, when done right, they support each other,” Ms. Warren said. “Are the Chamber’s members, as citizens or business owners and executives, in a better place today because the F.A.A. regulates air safety, because the states regulate insurance companies, because the federal government enforces antitrust statutes? Of course they are. And so is this country.”

Article source: http://feeds.nytimes.com/click.phdo?i=bf5e66036f4ea6788f18c6af5ba18c8a

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