The EU vestager triumphs in the crackdown on Apple’s tax agreement, Google’s practices

EU antitrust chief Margrethe Vestager scored two major victories on Tuesday as Europe’s top court upheld her crackdown on Apple’s Irish tax deal and Google’s anti-competitive practices in two landmark cases.

Vestager, who ends her term in November, has made a name for herself over Big Tech’s tax deals with some EU countries and is trying to stifle smaller rivals. Victories at court could encourage her successor to take a similar approach.

The EU antitrust chief applauded the rulings. “Today is a huge win for European citizens and for tax justice,” she told X of the Apple ruling, also praising Google’s ruling as a big win for digital fairness.

In 2016, the European Commission ordered Apple to pay 13 billion euros ($14.4 billion) in back taxes to Ireland, saying the iPhone maker benefited from two Irish tax rulings spanning more than two decades that artificially reduced the tax burden up to 0.005% in 2014.

The Luxembourg-based Court of Justice of the European Union sided with Vestager.

“The Court of Justice gives a final judgment on this matter and confirms the decision of the European Commission in 2016: Ireland has given Apple unlawful aid which Ireland must recover,” the judges said.

They said Apple’s two Irish-incorporated units benefited from favorable tax treatment compared to Irish-taxed resident companies, which are not able to benefit from such advance rulings by the Irish tax authorities.

Apple, which said it paid $577 million in tax, 12.5 percent of its domestically generated profits, under Irish tax laws during the 2003-2014 period covered by the EU investigation, said it was disappointed by the ruling.

“The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to tax in the US,” Apple said.

SApple also said in a regulatory filing that it expects to record a one-time income tax charge of up to about $10 billion in its fiscal fourth quarter ending Sept. 28.

Ireland, whose low tax rates have helped attract Big Tech to set up European headquarters, also challenged the EU ruling, saying its tax treatment of intellectual property transactions is in line with other OECD countries.

It did, however, cooperate in an overhaul of global corporate tax rules and did the once-unthinkable, dropping opposition to giving up its cherished 12.5 percent corporate tax rate. But taxes received from multinational firms have increased since then.

The court also rejected Alphabet unit Google’s appeal against a 2.42 billion euro fine imposed by Vestager seven years ago, the first of a trio of stinging fines levied on the company for various anti-competitive practices.

“In light of the characteristics of the market and the specific circumstances of the case, Google’s conduct was discriminatory and did not fall within the scope of substantive competition,” the judges said.

Google expressed its disappointment with the ruling.

“This judgment relates to a very specific set of facts. We made changes in 2017 to comply with the European Commission’s decision,” a spokesperson said.

The commission fined the world’s most popular internet search engine in 2017 for using its own comparison shopping service to gain an unfair advantage over smaller European rivals.

Google has racked up €8.25 billion in EU antitrust fines over the past decade. It has appealed two rulings involving its Android mobile operating system and AdSense advertising service, and is now awaiting rulings.

It is also fighting EU antitrust charges issued last year that could force it to sell part of its lucrative advertising business after regulators accused it of favoring its own advertising services.

Both decisions are final and cannot be appealed.

The cases are C-465/20 P Commission v Ireland and others and C-48/22 P Google and Alphabet v Commission (Google Shopping).

There are also ongoing investigations into the Dutch tax deal of IKEA brand owner Inter IKEA in a case dating back to 2017, the Dutch tax deal of Nike and the Luxembourg tax deal of Finnish food and beverage packaging company Huhtamaki.

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