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December 16, 2009 11:08 AM

Brussels Gets Ready for New Antitrust Chief

Posted by Richard Lloyd

The European Union's competition chiefs tend to pick up nicknames. After "Steely Neelie" Kroes and "Super Mario" Monti, Brussels is still wondering about a suitable epithet for Joaquin Almunia. The former economist and politician from Spain was nominated as the E.U.'s new competition commissioner in late November.

Although he has worked in a prominent E.U. position for the last five years as the commissioner for economic and monetary affairs, Almunia's views on antitrust matters are not widely known. In client briefings, Freshfields Bruckhaus Deringer and Cleary Gottlieb Steen & Hamilton--arguably the two leading antitrust players in Brussels--both expect him to act much like his predecessor. Almunia will "continue Neelie Kroes's hands-on policy approach," says Freshfields, while Cleary elaborates: "There are no indications that he intends to deviate to any material extent from the policies of his predecessors."

That's not necessarily good news for businesses. In the last 12 months, the outgoing commissioner, Kroes, augmented her tough reputation with a whirlwind of high-profile decisions.

Most recently on Wednesday she announced an agreement with Microsoft Corporation following a long-running dispute over how the tech giant bundles its Windows and Internet Explorer software. After a decade of legal wrangling and fines for Microsoft of more than $2 billion, the Commission accepted a commitment from the company to offer Windows users a wider choice of web browsers.

The Microsoft deal adds to an already impressive list of cases for Kroes in 2009. Last May she fined Intel just over $1.5 billion for abusing its dominant position in the microchip market. In November she announced that the European banks who had accepted government handouts during the financial crisis, such as the U.K.'s Royal Bank of Scotland Group and Lloyds Banking Group, would have to slim down their businesses.

Also in November, the commission delayed Oracle Corporation's proposed $7 billion acquisition of Sun Microsytems, raising objections even after the U.S. had cleared the deal. Kroes's predecessor Monti also made his name by scuppering a high-profile deal, nixing the proposed merger between General Electric Company and Honeywell in 2001.

A decision on the Sun-Oracle merger is expected by the end of Kroes's term in late January, with most signs pointing to a deal that will let the merger through. And with the long-running Microsoft dispute drawing to a close, Almunia will not inherit a large caseload from Kroes.

Instead, attorneys expect Europe's new antitrust chief to make his mark on policy. Marc Hansen, a partner with Latham & Watkins in Brussels, points to two areas where Almunia's influence will be clear to see. "I think that state aid enforcement and the level at which fines are set are the decisions where you'll be able to see the fingerprints of the commissioner," he says.

Although Almunia's socialist background might suggest he will continue Kroes's tough stance towards companies, some lawyers speculate whether future fines during the current downturn might be more lenient, to stave off any threat of job losses caused by particularly punitive fines.

"There's now going to be a bunch of economists at the top of the commission, which could mean more decisions based on economics--but what kind of economics?" asks Peter Crowther, an antitrust partner with Dewey & Leboeuf in London. "I think there's a good chance we'll see a brand of economics that is a little more recession-friendly, especially when it comes to setting fines."

Almunia may also look again at a proposed E.U. directive that would allow private individuals to bring damages claims for breaches of antitrust law. The directive was dropped in October this year after concerns that it would be particularly tough on business without leading to significant benefits for consumers.

There's little doubt that he's taking on a commission that has been transformed in the last decade, adopting a far tougher line in its investigations. As a result, there's been a sea change in how corporate America views the E.U's antitrust watchdog, says Andreas Geiger, a partner at Brussels lobbying firm Albers & Geiger. "Previously it was thought that U.S. companies could walk all over Brussels," he says. "Now they appreciate that they need to think of the Competition Commission as well as the FTC."

How Almunia acts on policies such as private actions and state aid will offer early indications of how his term will play out--and in turn may give him a nickname to go with his predecessors. Now, what rhymes with Joaquin?

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