In order to discuss the consequences of the Nidec case, AK Steiermark President Josef Pesserl met with Competition Commissioner Margrethe Vestager on May 2nd 2019. Only a few weeks before, 400 jobs had been in danger in the Austrian region of Styria, following the initiated merger control proceedings of the Commission. However, thanks to its expertise and commitment, Chamber of Labour has been able to contribute to the matter. The Nidec case also shows a deeper need for reforming EU competition law.
The merger control proceedings initiated by the Commission regarding Nidec’s takeover of Embraco - the refrigeration compressor sector of Whirlpool - at the end of last year got the ball rolling. To avoid the accusation of adopting a dominant market position, Nidec decided to sell the plant in Fürstenfeld. A loss of 400 jobs in Eastern Styria, a structurally weak region close to the border had to be feared.
Engagement of the Chamber of Labour in the Nidec case
The Chamber of Labour wrote several letters to the Commission, in which it outlined its expertise. In March, a meeting took place between Josef Pesserl, President of AK Styria, and the Deputy Director-General Cecilio Madero Villarejo. Another meeting took place in May with Commissioner Margrethe Vestager. The requirements imposed by the Commission regarding the sale shall now secure the location of the plant in Fürstenfeld and all 400 jobs. The new owner must also invest 24 million euros in the production site in Fürstenfeld (and further 10 million euros in the production site in Slovakia) as well as increasing the equity capital and investing in Research & Development.
The fact that these requirements were imposed to aid the workers and the production sites in Europe is also thanks to the engagement of the Chamber of Labour. This was also emphasized by AK Styria President Pesserl in his conversation with Commissioner Vestager: “Decisions, taken by European institutions, resulting in the fact that locations and jobs are withdrawn from Europe, would dramatically unsettle the trust and faith of the people in a Common Europe”. Commissioner Vestager was very receptive and emphasised that it was also the goal of the Commission to strengthen the European market.
New AK EUROPA Position Paper: Competition law in need of reform
The Merger control proceedings in the Nidec case have once again illustrated the impact of competition-related decisions on workers and industrial locations. Hence, the EU competition law is in need of reform, which is pointed out by Chamber of Labour in a new AK EUROPA Position Paper. The EU Commission currently examines mergers predominantly under competition aspects. The Chamber of Labour supports the idea of taking impacts on industrial location and labour market policy more into account, for example by integrating these aspects as justifications in the Merger Regulation.
Furthermore, an institutionalised integration of employee representatives would be of fundamental importance, for example by forwarding registration documents at an early stage and a mandatory integration in the proceedings. One could borrow from the already existing European legal acts (Takeover Directive, Business Transfers Directive, new Company Law Package), which already provide for information obligations. Commissioner Vestager and her team, voiced their confidence during the conversation that the early integration of labour representation in competition-related decisions would be very important.
Great need for action regarding digital companies
The competition law is in particular in need of reform against the background of the advancing digitisation. The most valuable companies meanwhile are digital platforms from the USA and China. From the point of view of the Chamber of Labour it is of particular importance to have a closer look at the correlation between market power and data power. Hence, data power should also become a criterion of merger control. Another aspect is that competition law should also be closer aligned to factual circumstances. For example – according to the current definition – it would be questionable whether Amazon, the by far largest online trader in Europe, has a dominant market position. This would require a holistic view of the market power. Finally, ensuring non-discriminatory access to internet platforms was also an important concern of the Chamber of Labour. Apart from the new Position Paper, Chamber of Labour also commissioned a Study of the TU Vienna, which deals with market and data power of platform companies and possible ways to regulate these.