Neelie Kroes Profile, published in European Business magazine
By David Nicholson | Published in European Business magazine
At a time when Margaret Thatcher - the original Iron Lady - is in declining health, a new European version is emerging, swinging her handbag at the continent's political and business elite and causing a flurry of disquiet among this largely male college.
Neelie Kroes, the 65-year-old woman plucked from the relative obscurity of Dutch politics and academia to be the EU's Competition Commissioner, shares several traits with the former British prime minister. Like Thatcher, Kroes is a right wing free market evangelist, determined to wrest power away from the entrenched interests of society (the unions, the monopolists, politically-supported businesses) and let the market decide.
Like Thatcher was to the British Conservatives, she is the first woman to become Commissioner and has not been afraid to take on big fights. Yet whereas Thatcher was always ready to fight for Britain against Europe, famously winning a large rebate on the UK's payments to the EU, Kroes is fighting the member states on behalf of Europe's citizens and consumers.
Most recently, Kroes was infuriated by her inability to rule against the hostile acquisition of Spanish energy group Endesa by its national rival Gas Natural. The [euro]22.5 billion deal had to be referred back to the Spanish regulators because it fell foul of the 'two-thirds' rule. If two-thirds or more of the sales in a merged company are made in one EU member state, then that country, rather than Brussels, has the right to decide whether it can go ahead.
Neelie Kroes has made no secret of her view that this deal is anti-competitive and that by allowing it, Spain will be joining France and Germany in the practice of creating 'national champions', companies with the monopolistic muscle to skew business practices across the continent. Spanish legal experts believe that the deal will create monopolistic conditions in at least five out of 17 Spanish regional administrations.
Kroes is said to be a fierce negotiator and someone capable of playing a long game. Certainly she has had a long and distinguished career so far, mixing academic posts (assistant professor of transport economics at Erasmus University in the Netherlands, president of Nyenrode University) with business appointments encompassing board positions on 12 companies up until her Commission appointment in 2004.
Interestingly for someone who is now attacking France and Germany for creating national champions, Kroes has been awarded both the French Order of the Legion of Honour (1984) and the Grand Cross of the Order of the German Federal Republic (1985), not to mention the International Road Federation 'Man of the Year 1993'. Thatcher would have been proud of that one.
The early attempts by Kroes to stamp her authority on European M&A were complicated by the legacy of her predecessor, Mario Monti, who had presided over a period of high profile failed cases, where the Commission's views that mergers should be blocked were rejected by the European Court of Justice or the Court of First Instance in Luxembourg. The cases - that included ones against Airtours & First Choice and Tetra Laval & Sidel - left the Commission looking weakened. Some speculated that newly arrived Kroes would be put off such battles in future, turning her attention instead to cartel hunting, where the EU has a much higher success rate. "The Commission is going to be extremely careful before vetoing further transactions," said Michael Struys, partner at Allen & Overy in Brussels.
Well he was wrong. Instead, Kroes has laid down the gauntlet to national state regulators through this two-thirds attack, effectively accusing them of acting in support of monopolies, in order to rip off their own citizens and fellow Europeans through inflated prices.
The situation is particularly acute in the energy sector, where a monopoly situation can have a stark economic effect on consumers in other countries. The 2003 merger of German utility company E.On and gas producer Ruhrgas has been described by one of the officials working with Kroes as "One of Europe's greatest industrial mistakes - from the consumer perspective." The deal, along with other EU energy sector mergers, is responsible for extra fuel bills adding up to #10.6 billion for 2006 in the UK alone, according to research from consultancy Global Insight, equal to #186 per household.
This specific figure puts Kroes' campaign into perspective. It is not simply a case of sorting out the playground bullies, but of preventing wholesale theft of money from consumers through unfair business practices.
Privatisation is Kroes' passion. It was meant to raise standards of service and keep prices down through competition, but the centrifugal forces that spun companies away from one another now seem to have reversed, as industrialists realise that monopolies outside state control are even more fun than before. They are also taking some carefully observed lessons from the likes of Roman Abramovich, who created his vast Russian empire through buying up the millions of small shareholders (a series of 'acquisitions' in effect) in energy companies until he was in a monopolistic position.
Yet you can imagine the fury of someone like Margaret Thatcher and her pack of Europhobes, reacting to the latest example of Brussels taking away national powers and telling us what to do, even if the alternative is paying more for our gas.
It is a battle of political wills: national versus continental. The member states say they want to determine their own rules and control their economies, while Kroes is pushing for Brussels to play this role. "You can take this as a gentle word of warning if you like," said Kroes at a presentation of the EU's Energy Sector Inquiry findings earlier this year. "We are just at the beginning of a period of more intensive antitrust enforcement. I can only encourage everyone to take a close look at their practices."
This year Kroes has continued fierce campaigns against Microsoft, credit card companies and levied record fines (as much as 10 per cent of global turnover) on a series of chemical companies, guilty of running a price-fixing cartel.
Altogether, the energy sector affair marks the beginning of a sustained crusade by Kroes to crack the power of the monopolistic barons and their political friends, just as Margaret Thatcher brought the unions and the mineworkers to their knees, after they had humiliated a previous Tory government. It took years to achieve, but nobody should underestimate the determination of a woman on a revenge mission.