There are not many European Union commissioners who can boast of high popularity ratings. But in the two years since her appointment as Europe's competition chief Margrethe Vestager has succeeded in pulling off the unimaginable: becoming a much-loved Brussels "Eurocrat".
During a debate on the Apple judgment in the European Parliament last month, MEPs fell over themselves to applaud the Danish commissioner on her record ruling against Ireland.
"I want to clone you," said Belgian MEP Philippe Lamberts. Others complimented her on her "bravery" and "courage" in taking on Ireland and Apple. Long-time tax campaigner Sven Giegold said she "deserved a medal".
The love-bombing was unrelentless, leaving Irish MEPs Seán Kelly and Brian Hayes to put forward the case valiantly for Ireland. The exercise ultimately proved fruitless as MEPs from across the continent appeared to unleash decades of pent-up frustration at Ireland's corporate tax policy.
Seven weeks after the Apple judgment, the Danish commissioner and former deputy prime minister sits in her 10th floor office in the European Commission’s headquarters in Brussels.
Confident and smiling, wearing killer heels and a leather skirt, she looks every inch the fictional politician she is believed to have inspired in the hit Danish political drama Borgen. The room itself is a nod to Scandinavian minimalism: all clean lines and monochrome surfaces. A friendly aide brings in two trendy handle-less coffee cups. The office is somewhere between an Ikea catalogue and a manifestation of "hygge", the new Danish lifestyle craze that translates roughly as "cosiness" and is taking the design world by storm.
That Margrethe Vestager has managed to bring her own idiosyncratic style to the drab world of EU bureaucratic decor is not surprising. This is a woman who is very much putting her stamp on things.
Though she inherited many of the most high-profile anti-trust cases from her predecessor Joaquín Almunia, Vestager has taken up the mantle and gone further than many had expected.
Apple judgment
Quite apart from the Apple judgment, Vestager’s in-tray is full. There are three open cases against
; there are also suggestions she may open a fourth front over “scraping”, the process of copying content from websites without payment, while an assessment of the Microsoft-LinkedIn merger awaits.
Russian energy giant Gazprom has also been in the commissioner's sights, while the 800 or so staff employed by the EU's competition directorate-general located a kilometre down the road in Merode are busy sifting through thousands of tax rulings, including a trawl of documents unveiled by the Luxembourg Leaks scandal.
But the last few months have been dominated by the Apple case. The order by the European Commission that Ireland collect up to €13 billion in unpaid taxes broke new ground. Though the EU's anti-trust division had previously dabbled in state aid, the record for a state aid case had been €1.3 billion in 2014. Competition experts will be watching eagerly how this plays out in the courts.
With the Government expected to refer the case to the European Court of Justice by early November, is she confident that the commission will win its case?
“We knew this was coming. We knew there would be an appeal so we are very prepared,” she says. “It’s important that we get to set out our reasons, our argument. All that is set out in the full judgment, of course, but it’s a key part of the EU competition procedure.”
The finding by the commission that Apple benefitted from €13 billion in illegal tax aid from Ireland has spooked the Government here, raising serious questions about Ireland’s economic model of attracting foreign direct investment.
Next week the European Commission's commissioner responsible for taxation, Pierre Moscovici, is expected to come forward with a revised proposal for a common consolidated corporate tax base (CCCTB). French prime minister Manuel Valls said last week he wanted to move towards a common corporate tax rate in Europe.
Vestager insists the Apple decision was rooted in state aid and not tax concerns.
“We do not do tax, we do state aid,” she says. “We look at state aid through all the tools you can use to give state aid, be it, in this issue, as a tax ruling, be it a cheap piece of land as in one of the Spanish football cases, maybe a favourable loan as in the French EDF case, or as cash . . . we look at state aid from any possible angle to see if tools are being used that shouldn’t be use to give a selective advantage.”
Political concerns
However, as critics of the Apple decision have been quick to point out, how can the EU’s competition division claim not to be motivated by political concerns when European Commission president Jean-Claude Juncker has vowed to make his commission the most political European Commission in history?
It’s an issue that raises broader questions about whether the EU’s competition division – by far the most powerful arm of the European Commission with semi-judicial powers – should come under the umbrella of the commission or should instead be a stand-alone institution.
“I don’t think our work is political,” says Vestager in response. “We have safeguards so we can take independent decisions. It is true that our decisions are fact-based, based on the evidence of the case, our case law, our case practice. If you are looking for politics, it is in a much deeper sense.
“Of course, our founding fathers put political values into the EU treaty. It’s not a neutral document. They made choices, and they said we want a level playing field, we want equal treatment, and we want us all to have a fair chance in the market . . . These values I and my team are obliged to protect.”
Others point out that there is a contradiction at the heart of the Apple ruling which, on the one hand, ordered Ireland to recoup unpaid taxes by the US company, while on the other said that other countries could be entitled to some of the spoils.
Vestager disputes that there is any problem here.
“These are two separate issues. The decision itself is about how Apple organised itself and how Irish tax legislation sits with tax rulings. In that instance, we found that the Irish should recover unpaid taxes. As a side issue, there is a question about how Apple organised itself to distribute its hardware to the African, Middle East, Indian market, etc.”
She says that, while typically value is not created at these “selling points” as contractually people are still buying their phone from Cork, Ireland, “sometimes the distributional arrangements evolve into something that actually does create value on site”.
She says it may now be relevant for national authorities to consider if this distribution arrangement has changed and make a claim to some of the money, though the European Commission has no role in this.
“The way tax is organised in Europe, it is for all intents and purposes, a national competence, apart from recent legislation on automatic exchange of information, etc. Tax authorities don’t operate on a European level,” Vestager says.
Legal challenge
However, while the intricacies of competition law will be combed through in the forthcoming legal challenge, there are also questions about the way the commission handled the communication of the ruling.
While Irish officials and EU commissioner Phil Hogan were told of the €13 billion figure on the morning of the announcement on August 30th, it is understood that the Government and Minister for Finance Michael Noonan were informed that the figure would be "billions" towards the end of the previous week.
“It’s always very difficult to say, well, what you should exchange. Of course, we’d been working with the Irish Government, because it’s always the government that you deal with as the counterpart,” she says.
“We have treated it as we have every other case and have been working with the Government in giving the warnings as we have done in every other case. Of course, it’s up to everyone to consider how they will prepare themselves when they know something is coming, just as well as we do.”
In terms of future cases, Vestager does not rule out further investigations into Ireland’s tax arrangements with companies.
“I cannot say that there won’t be more cases, but I cannot say that there will be more cases. I stay neutral until we figure out there is something we really have to look into,” she says.
“We have a sample of 1,000 tax rulings overall. The majority of them are the rulings from ‘Lux Leaks’, but we have 10, 12 tax rulings from all the member states who do tax rulings. We’ve been going through these and what we’ve found is that a number of them are absolutely fine.”
Because Ireland issues far fewer tax agreements than the other 22 member states which issue tax rulings – Germany, for example, issues tens of thousands of tax rulings – Irish authorities are understood to have submitted virtually all Ireland’s tax letters which number a few hundred.
Further, these were submitted before the European Commission extended its request for information to all EU member states in December 2014. Vestager plays down any suggestion that Ireland can therefore be expected to be at the front of the queue for forthcoming judgments. “That’s not the way we work” she said.
Tense exchanges
While the commission is still trawling through the cache of documents uncovered by the Luxembourg Leaks scandal, does it present Vestager with a difficulty that her boss, Jean-Claude Juncker, was prime minister of Luxembourg when most of these tax deals were struck?
“I don’t feel it like that,” she says. “Juncker was very clear with me, from the very early days to say, ‘You have completely free hands to do what you believe is the right thing to do’ and that is how we’re working.”
While the Apple ruling has strained relations between Dublin and Brussels, it has also compounded tensions between Brussels and Washington amid accusations that Europe is unfairly targeting US companies. When US treasury secretary Jack Lew visited Vestager in July, officials reported that the Danish commissioner gave him short shrift during tense exchanges.
Vestager declines to comment on the meeting, but she does expand on the transatlantic relationship .
Following her trip to Washington last month in the wake of the Apple judgment, she tweeted as she sat on the runway that visiting the United States “makes me feel more European than ever”, adding that she was looking forward to going back home. For countries such as Ireland, which in many ways see themselves closer to Boston than Berlin, is this not a concern?
“I really did see the differences. There is a different tradition of competition policy in Europe and America. From the beginning, the European Union chose to put a ban on taxpayers’ money being put into supporting businesses selectively. On the contrary, it seems to be absolutely normal for businesses in the US to directly negotiate how much taxes they are going to pay with the state where they place their business. It’s a discussion about two very different ways of doing things,” she says.
As for the future of transatlantic relations, there are no plans for further visits to the US until the spring, she says. The imminent change in the US administration means that diplomatic engagement is likely to be minimal from Washington’s end.
Major concern
While she insists on the independence of the EU’s competition arm, Vestager believes taxation has become a major public concern across the world, and she supports, though is not directly involved with, her colleague Pierre Moscovici’s CCCTB proposal.
“I remember when Denmark held the presidency of the council in 2012 and I was at the table as finance minister, we were trying to secure agreement on automatic exchange of information on a wider range of personal income, with very little luck I have to say. A few years later, it passed,” she says.
She believes there has been a sea change in public perceptions around tax.
“To a large degree, it has come from the financial and sovereign debt crisis. People have seen their governments do unthinkable things to get in control of their spending . They have seen public salaries, benefits, pensions go down, taxes go up. They feel that they all contribute to make ends meet, and then they see that not all businesses contribute. It is unfair,” she says.
As for her own future, Vestager’s huge public profile, which was enhanced by hundreds of media appearances and interviews during the Apple controversy, has sparked speculation in Brussels that she could be lining up for a senior international position when her term as commissioner ends in 2019.
Asked whether she would return to Danish politics or consider going further afield, she remains coy.
“I don’t envision my future. I have never really planned because, to me, having a plan is like when a horse wears blinkers. If you put them on, you don’t see what’s happening out there, but sometimes the best things are happening out of the corner of your eye,” she says.
For her, it’s not about “climbing the ladder, or thinking of the next phase”. She adds with a smile: “I work from the hypothesis that I have one try at this life so better do something that you find worthwhile.” Watch this space.
CV: Margrethe Vestager
Job: European Commissioner for Competition
Age: 48
Family: Married with three daughters
Hobbies: Knitting, watching films
Something we might expect: An economics graduate, Vestager was made education minister in Denmark at the age of 29 and served as economy minister and deputy prime minister under prime minister Helle Thorning-Schmidt
Something that might surprise you: Despite her recent clash with Apple, the Danish commissioner is an avid iPad user
