ALEX BRUMMER: Google is put to the sword by the European Comission’s Danish avenger
There is much about Brussels not to like.
But under the stewardship of Danish Competition Commissioner Margrethe Vestager, the EU has shown a robust attitude towards predatory behaviour.
In an age when the Silicon Valley disrupters have gone virtually unchallenged by America’s trust-busters, the EU has stepped into the breach.
The finding that Google uses its online search facility to favour its own preferred shopping service has implications for all the digital giants.
Getting tough: Under the stewardship of Danish Competition Commissioner Margrethe Vestager, the EU has shown a robust attitude towards predatory behaviour
There long has been a belief that, by using clever code, digital providers of services can tilt choices in the direction they favour.
Online behemoths are moving into ever more diverse areas, with Amazon leading the way through its purchase of Whole Foods.
Vestager’s activism will have competition experts across the globe working overtime to keep out of the EU’s reach.
The £2.4billion fine imposed on Google represents just 0.5 per cent of the digital giant’s £520billion market value. But it could get worse if Google bosses cut up rough and refuse to comply.
Brussels has the power to fine Google’s owner Alphabet up to 5 per cent of daily turnover, which comes out at £11.7million a day.
Ouch. This is not the first time the European Commission has dared to tread where others have refused.
Britain may have been cowed by Google’s construction of a huge campus at King’s Cross in London, which will house up to 7,000 people, but Brussels is taking no prisoners.
Vestager has shown a willingness to tilt at all windmills, and last year imposed a £12.7billion fine on Apple for allegedly setting up a tax avoidance scheme routed through Ireland.
In the US, Silicon Valley keeps its reserves overseas to avoid invasive American corporation tax. In Europe, the net is closing.
Nor should we forget that Vestager put a spanner in the works of the unwanted takeover of the London Stock Exchange by Deutsche Boerse.
She also stopped the mobile telecoms deal between O2 and Three in the UK on the grounds it would reduce choice.
Contrast this with the way our own Competition & Markets Authority failed to act to prevent BT from securing control of another mobile company, EE, tightening its hold over UK telecoms.
When we leave the EU, the UK will lose the protection of British business and the consumer that Brussels has provided.
It will be incumbent on the Government to make sure that the CMA or a successor organisation has the necessary powers, can-do attitude, leadership and willpower which current watchdogs lack.
Free markets need firm policing.
The financial crisis brought to an abrupt end an era when the Bank of England’s single tool for taming animal spirits was interest rates. It now has new tools to tackle risk when matters get out of hand.
The decision to ask High Street banks to build up a 1 per cent buffer against crises follows an explosion in credit, which climbed by 10.3 per cent in the year to April, with car finance in the spotlight.
No one can pretend that personal contract plans (PCPs) on new cars are secure when the underlying asset drops sharply in value the moment that it is driven off the forecourt.
It was correct that after the crisis the Bank of England be given responsibility for both monetary and financial stability.
Therein lies a dilemma, however. At one and the same time the governor, Mark Carney, seeks to use monetary policy to secure growth and jobs during the run-up to Brexit. But he is also anxious not to let credit and easier mortgage terms, which support output, get out of hand.
What citizens may really need is a signal which changes behaviour, in the shape of the first bank rate increase in ten years.
Former Sainsbury’s chief executive Justin King once argued that the rise of Lidl and Aldi was a temporary, Great Recession-related phenomena.
He said no-frills grocers (such as Kwik Save) come and go and would struggle to reach beyond a 10pc market share.
The latest Kantar market research data shows the German discounters have a combined share of the UK food market of 12 per cent.
My own limited evidence – queues of SUVs disrupting traffic in the Surrey suburbs – suggests a much more significant change in shopping tastes.
No wonder Tesco and Sainsbury’s are seeking to add streams of income with bids for Booker and Nisa.