This “watchdog” sounds almost competent
Mrs. Kroes has emerged as arguably the world’s most-feared antitrust enforcer.
Yay. Someone looking after my interests in Europe.
Mrs. Kroes announces big fines — €329 million on a cartel of zipper makers, for example — with relish at news conferences and denounces with bombast corporations she believes are trampling consumers.
Well, I guess enthusiasm can be a good thing. I mean, she’s not bombastically announcing huge fines just because she’s a media whore, right?
While U.S. regulators are more likely to wait and see what happens after a company becomes dominant, Mrs. Kroes is predisposed to pre-emptive action. If a company is “just blocking competition, then at the end of the day, there will be a type of monopoly,” she says.
Wait, how exactly does she distinguish aggressive competition from “blocking competition?” And how does she know which aggressive competitor is likely to become a monopoly? Even seasoned investors with a huge interest in knowing these things, and in a market like the U.S. without this kind of enforcement, can’t tell that. I mean, she must be super brilliant.
Mrs. Kroes at times lacks polish. Her English — the international language of antitrust — is rough, sometimes to the point of confusion. She has no formal antitrust training and isn’t a lawyer. She dismisses such criticism, saying she sees herself as a “generalist” who uses input from her team of specialists to make “a balanced decision.”
Wait. She doesn’t understand this stuff? How can one balance things they don’t understand?
Mrs. Kroes contemplated settling [with Microsoft] to avoid a drawn-out court fight. She also weighed the risk that the EU would lose, setting a precedent that could imperil future regulatory efforts.“We had a big and intense discussion to continue, yes or no, what Mario Monti had put on the table,” she says. Career staffers who had pursued the case for years persuaded her to press ahead.
Oh, that’s how she balances decisions. She listened to her staff and weighed what they said. And all those 29 year olds who couldn’t get a job in Europe’s stagnant labor market said, “let’s fight on?” Like that was a close call? And this was balanced against what? The advice of the pimply legal assistant who wasn’t sure she wanted to spend endless more hours copying opaque documents while the only boy with a complexion as bad as hers waited by the pier?
Mrs. Kroes’s aggressive tack has produced an uneasy relationship with lawyers who defend the companies she has targeted. Privately, several say she focuses on levying fines and is indiscriminate with her authority. Some cite a decision last month to fine German energy giant E.On €38 million for breaking a seal on a room in a company office where EU investigators had secured documents. (E.On denied any malevolence, suggesting an overly thorough night-cleaning crew was responsible.)
€38 million for breaking a seal on a room in their own building? How does one come up with a number like that?
Opposing lawyers also say that in meetings, she appears not to grasp firmly the details of antitrust law or individual cases.Mrs. Kroes held a triumphant news conference on the day the September 2007 Microsoft court ruling was announced. Asked how the ruling would affect Microsoft’s dominance, she said she hoped Microsoft’s 95% market share would decline — apparently conflating Microsoft’s near-total share of operating systems on desktop PCs with its share of computer servers, which is what the case pertained to and which is lower.
Well, there goes the “super brilliant” theory right down the toilette.
Her staff attempts to keep her scripted. At a conference in Washington last spring, Mrs. Kroes read answers to several prepared questions. Faced with one question, she gave the wrong answer, baffling the audience, according to people who attended.Other times, she sets her own path: At the same conference, Mrs. Kroes said the EU would consider “structural remedies” — antitrust argot for a breaking up a company — if Microsoft failed to submit technical documentation. The invocation of such an extreme penalty stunned her staff.
OK, in the private sector, when the CEO is thoroughly incompetent, there is eventually a market test–the company’s value destruction will become evident for everyone to see, and the CEO will be kicked out on her ear.
But this is the public sector.
She was emboldened in September by an important court victory over Microsoft that ratified her aggressive challenges. For her part, Mrs. Kroes takes a firm message from the September court victory. Her interpretation of the ruling: “Go on in this direction,” she said.
The public sector has a very different standard of “success.” It has nothing to do with value creation.
sam said,
“OK, in the private sector, when the CEO is thoroughly incompetent, there is eventually a market test–the company’s value destruction will become evident for everyone to see, and the CEO will be kicked out on her ear.”
In the public sector, the business competitiveness of the EU will continue to decline, and eventually the electorate will kick the politicians out on their ear. That is what they did in France.
Oh and I can’t help but feel a little guilty pleasure about them fining Microsoft. Something about all those hours I have spent over the years trying to get my screwed-up Windows PCs to work.
M. Hodak said,
Your “guilty pleasure” remark reminds me of something I saw on TV many years ago, when AT&T was still the Ma Bell monopoly. People were standing on a line to pay their phone bill (that does sound like another era), when a man began holding up a clerk for her cash. When the folks on line noticed what was happening, a man yelled out, “Hey, someone is trying to rob the phone company!” Everyone cheered.