In 2014, the E.U. depended on Gazprom, a state-controlled
Russian gas company, for one-third of the natural gas used in Europe. Meanwhile,
Russia depended on the company for export-earnings. Moreover, both the E.U. and
Russia view Gazprom from not only commercial vantage-points, but geopolitical
ones as well. Both dimensions were in the mix as the European Commission weighed
bringing anti-trust charges against the company in April 2015. At the time, the
E.U.’s executive branch was already formally pursuing Google on anti-trust
grounds. Relative to anti-trust enforcement in the U.S., the E.U.’s own
represents a formidable attempt to open up competitive markets. We can
generalize, in fact, to posit a more balanced “check and balance” between
business and government in Europe.
Regarding the salience of geopolitics, the E.U.’s action
could force Gazprom to “drop conditions with European utilities that restrict
those utilities’ ability to share the gas with other countries.”[1]
We need only recall Russia’s use of Gazprom to cut off natural gas to Ukraine
in the midwinter “gas wars” in 2006 and 2009 to grasp the geopolitical weight
on the Russian side of the “commercial transactions.” Even though an anti-trust
action would also involve going after Gazprom for the more exclusively
commercial practices of “thwarting its European customers’ efforts to diversity
sources of supply, and . . . imposing unfairly high charges by linking gas
prices to those of oil, rather than basing prices on global natural gas market
rates,” the Commission’s decision-making process included the geopolitical
element of Russia’s military involvement in Ukraine at the time. That is to
say, going after even egregious commercial practices could have dire political
consequences. Government regulation of business is not merely about market
efficiency and effectiveness. In fact, Gazprom demonstrates just how salient geopolitics
can be in the management of a company.
In fact, government regulation is itself nestled in a
broader social contract, even if implicit, between business and society. The
greater a people’s ingestion of business values, the less likely is a
government to pursue powerful companies on anti-trust grounds. Those companies
may even have disproportionate influence politically. From this standpoint, the
E.U.’s executive branch may seem biased.
For her part, Margrethe Vestager, the E.U.’s competition
commissioner at the time, answered such criticism just prior to her visit to
the U.S. In her view, going after Google for skewing search results in favor of
its own shopping service is simply a matter of enforcing the law. “As
enforcers, we build our cases on evidence and on interpretation of facts
because the European Union as well as the United States is built on the rule of
law.”[2]
Although the definition of a market is different in the U.S., the relative
dearth of anti-trust enforcement in the U.S. may have been her real message
here. Rather than defending Google, Americans might see to it that their
elected representatives represent constituents by pushing for more competitive
and less oligarchic markets.
To be sure, it is one thing for one government to
go after a foreign company, and quite another for another government to go
after a domestically-based company. It is also true, however, that a domestic
company could have too much political leverage over its home government,
especially if the societal values align with those in the business world. In
the U.S., the relative value put on economic liberty and business values such
as efficiency may ironically make anti-trust action in favor of more
competitive (i.e., efficient) markets less likely; a pro-business society may
actually be less favorable to the long-term best interests of a commercial
system (while being more favorable to the more narrow interests of powerful companies).
[1] James
Kanter, “Europe Is Expected to Charge Gazprom in Antitrust Case,” The New York Times, April 20, 2015.
[2]
Jessica Guynn, “EU Enforcer Means Business,” USA Today, April 20, 2015.
