Reuters, Paul Taylor, 25/3/2008

For an institution that sees itself as the businessman's friend, the European Commission has taken a beating lately.

The main European telecoms lobby has compared it with Soviet dictator Josef Stalin, a German energy executive has called it a greater threat to energy security than Russian monopoly Gazprom, and a top Austrian telecoms boss has said it is easier to do business in authoritarian Belarus than with Brussels.

Why the sudden outcry against an organization that prides itself on removing barriers to cross-border business, reining in state meddling in the economy and promoting free trade?

Critics in some industries say it is because the European Union's executive arm is trying to make itself more popular with crowd-pleasing initiatives that bash business.

Supporters of the Commission say it is because Brussels is tackling cozy business interests that obstruct competition and exploit dominant market positions for their own greater profit.

There is a grain of truth in both explanations.

European Commission President Jose Manuel Barroso has made no secret of pursuing an agenda of delivering lower prices and greater rights to consumers to show the benefits of the EU after voters rejected a proposed European constitution in 2005.

Brussels has used opinion polling to identify targets such as cross-border fees for mobile phone calls and text messages, as well as credit card charges, obstacles to changing bank accounts, and windfall profits of giant energy companies.

"OUTRAGEOUS"

EU Competition Commissioner Neelie Kroes has levied record fines on companies that fix prices and rig markets in everything from elevators and glass to zippers and beer.

The former Dutch business executive often accompanies hefty fines with stinging comments accusing firms involved in cartels of "outrageous" behavior and "ripping off" consumers.

Fresh from her antitrust victory over U.S. software giant Microsoft, she is trying to break up Europe's energy giants to promote greater competition. Kroes argues that separating power supply from ownership of gas pipelines and electricity grids will spur investment and force down prices.

That prompted Wulf Bernotat, CEO of Germany's E.ON, the world's biggest utility, to brand the Commission a greater threat to energy security than Gazprom, before he backed down and agreed to sell E.ON's power grid to end an EU antitrust investigation.

EU Information Society Commissioner Viviane Reding became the bete noire of Europe's telecoms firms when she used regulation, in alliance with the European Parliament, to force them to slash the cost of international mobile phone calls.

She argued holidaymakers and business travelers were being overcharged for dialing home and receiving calls while abroad.

Cheaper mobile roaming tariffs sliced hundreds of millions of dollars off phone giants' annual profits.

Telecoms companies say Brussels should leave it to market forces to drive down prices rather than bullying firms to lower charges that generate revenue to invest in modern networks.

Yet the official voice of 20 million European companies does not see Brussels as a bureaucratic enemy of business.

"From where I sit, we consider the European Commission to be as business-friendly as it can be," Ernest-Antoine Seilliere, president of BusinessEurope, said in an interview.

"Especially under the leadership of Barroso, it has a very strong conviction that what Europe wants to achieve is linked to the success of business."

But he added: "There is tendency to consider its own popularity is linked to the environment and protection of consumers in a way that could be dangerous for business."

Recent EU proposals to fight climate change by auctioning emissions permits could "pose a very heavy threat" to industries such as steel, cement and aluminum unless there is a global agreement on common environmental standards, he said.

Seilliere also worried that EU competition policy sometimes thwarts efforts to create "European champions" -- companies with the scale to compete against U.S. or Asian giants.

The Commission's main job is to uphold the freedom of movement of capital, goods, services and workers, often beating back efforts by governments to bend the rules to protect "national champions" or shut out foreign competitors.

"Business has an interest not to intimidate the Commission into becoming silent," said Alexander Schaub, a former head of the EU's competition and internal market divisions who is now a lawyer with Freshfields. If Brussels were cowed, protectionists would have a field day, he argued.