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I was wondering where funds from such a fine go:

"Fines imposed on companies found in breach of EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers."




That happens to most fines, everywhere.

In case this is in accusation of corrupt practices aimed to increase the EU budget, note:

- Fines account for <5% of the EU's budget

- The EU budget is relatively small compared to national governments' budgets. EU: 150 billion, Germany + France + UK = 5 Trillion (5,000 billion). That's leaving out 24 smaller economies. National governments have a lot of input in the decision-making process and couldn't care less about a billion here or there. Especially if it risks impacting perceived rule of law.

- In any large bureaucracy, individual decision makers have incentive structure that often diverge fundamentally from those of the organisation as a whole. A prosecutor will have no financial or career advantage tied to the EU's finances. In this specific example, the commissioner responsible (Vestager) is somewhat likely to leave the commission after the May elections anyway, because of another pro-competition decision that was decidedly more important and not appreciated by France and Germany, namely prohibiting the Siemens and Alstom merger.

If you sum up all the fines collected by continent, you will see that (a) EU companies pay fines roughly equivalent to their share of economic activity in the EU, (b) Asian companies pay comparatively more, and (c) US companies are actually fined far less than their share of the economy would suggest. The most likely explanation is that rather high standards of enforcement and corporate governance in the US require less EU intervention.


> the commissioner responsible (Vestager) is somewhat likely to leave the commission after the May elections anyway, because of another pro-competition decision

Nah, EU commissioners are very unlikely to stay in their post when the Commission changes anyway, regardless of performance. That's because they are an expression of national governments' priorities at the time of commission composition (every government gets 1 commissioner, and usually tries to place it in an area it is particularly interested in - which obviously changes when a government changes "colour").

This has become even more true ever since EuroParliament obtained a meaningful vote on approving or rejecting the Commission. Because the Commission President is now a political figure expressed by the party with the most votes in EuroElections, it is almost inevitably bound to change every 5 years, when Parliament changes; when the President changes, the whole Commission usually changes as well. I fully expect this to happen this year.

In the past, Commissions would change on a different schedule, without any real vote, and it was mostly seen as an administrative body anyway. This meant a President would not change until it effectively resigned or lost the trust of all national governments, which in turn allowed other commissioners to stay on if they were already working together well, with EUParliament just rubber-stamping. This changed after the corruption scandal of 1999.


> The most likely explanation is that rather high standards of enforcement and corporate governance in the US require less EU intervention.

Or maybe the american political influence is stronger?


It would need to be stronger than EU member states' influence, which seems unlikely. I also don't remember ever hearing of even attempts to exert influence on these investigations.

Note that such agency actions are firewalled from even their EU/US/national political leadership. Even if Trump managed to convince Merkel to intervene, she wouldn't really be able to. To illustrate with a reverse example: Imagine Macron trying to get to get to a judge in a California District Court. There are multiple layers in between where they would tend to consider the call a prank and hang up.


And maybe more capital is directed towards lawyers and litigation making it more expensive and difficult to extract cash from large US companies.


> - Fines account for <5% of the EU's budget

This is maybe not as comforting as you think it sounds. 1.5B is 1% of the budget that you describe below, which is non-trivial -- that's make or break money. I'm guessing it exceeds the total annual contribution of several member states (I tried to find the actual budget, but talk about incomprehensible documents [1] -- what's an "own resource"? What's with the obsession with sugar?). To that end it seems like fines like this are a critical part of the EU's budget.

> If you sum up all the fines collected by continent

I'm wondering if you have a reference for that -- I can't really find anything definitive and it would be interesting as a data point.

[1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A...


I think I know where you are coming from, for a nation 1% is significant, but I don't think you realize what the EU budget is used for.

47% subsidies for farmers, 30% regional support subsidies (e.g. they might co-found an R&D project in an outermost region in a country):

https://en.wikipedia.org/wiki/Budget_of_the_European_Union#P...

So mostly subsidies. If there's a deficit, they can cut the regional subsidies which I believe are mostly individual projects with relatively short timespans.

The farming subsidy is more like social security, I think you'd have riots in France if you cut that significantly. Which is sad.


That is a good point. I guess in theory the fact that the amounts are rebated from the next budget could provide an incentive for individual members to push for increased fines, but given the reduction would be proportional, and national budgets are so much larger than these amounts, it wouldn't really amount to a significant national budget windfall.


> rather high standards of enforcement and corporate governance in the US require less EU intervention

More likely that US companies are so comparatively wealthy that even apparently large fines aren't as large as fraction of revenue. Anchoring fallacy.


That's one part of the story. There's only one tech company in all of Europe that can easily digest a $1.7 billion fine.

SAP is Europe's most profitable tech company by far. About $4.5 billion in net income ($7b in operating income).

The US has at least 16 tech companies at that level of profit or higher.

Just Microsoft + Google + Amazon + Facebook + Apple = $185 billion in annual operating income.

In terms of sales, those five combined companies are the size of Turkey or Saudia Arabia in GDP (they'd be around the 19th or 18th largest economy in the world).


Is profit and annual operating income supposed to be equivalent?


I used operating income for the US tech companies because the recent accounting changes can make net income an unusually volatile figure. SAP's operating income had been stable for several years so I guessed it had remained pretty similar to 2017 figures. It did jump decently for 2018, to around the high $6.x billion area. Going on that (a proper direct comparison), it's more like ~27 SAPs.


Operating income is usually a better way of measuring the health of a business than net profit since it excludes one-time charges and taxes.


I was using economic activity (i. e. revenue) in the EU, not worldwide. A company not operating in the EU shouldn't be fined, obviously.


sounds reasonable to me. this way, you get a disincetive to break antitrust rules for google, while not opening up a fight for shares of the money by their competitors afterwards. EUR 1.5b (~$1.7b) is a nice sum to fight over, after all.

edit: of course, how big the disincentive is is up for debate. :P


1.5b€ isn't a lot; Germany + France + UK = 5 Trillion (5,000 billion) as a sibling comment mentioned. They don't care about 1 billion here or there.


It would be a lot for any one of Google's competitors to fight over. That is, if the money were e.g. supposed to go directly to the competitors that were harmed here, there would be a huge allocation fight within minutes of this decision...


But it doesn't, it goes into the EU budget.


exactly. so it sounds reasonable to me. what are debating again? :P


Where did you expect them to go?


I had no idea, and was just sharing what I found


"The fines therefore help to finance the EU and reduce the burden for taxpayers."

reduce burden for taxpayers... yeah. how? i don't see my taxes dropping because ppl get fined >.> even if the amount of fines would raise consistently by 1000% still i would pay the same taxes, guarantee you that.


If you made the case that everything they said about where the fines go instead of budget is wrong, sure you would be correct. I would expect you to put forward an argument with a bit more substance than "taxes will never go down, I guarantee it" in that case, however.


> i don't see my taxes dropping because ppl get fined

What were your tax contributions to the EU last year compared with the year before?




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