December 7, 2008 / 7:00 AM / 11 years ago

NEWSMAKER-EU's Kroes juggles principles with politics

BRUSSELS, Dec 7 (Reuters) - Famous for being a thorn in the side of multinationals Microsoft (MSFT.O) and Intel (INTC.O), European Union (EU) competition chief Neelie Kroes has now become the bane of governments, notably Paris and Berlin.

Having made her name imposing record fines on companies breaching the EU’s anti-trust rules, Kroes is fighting political leaders — in particular French President Nicolas Sarkozy and German Chancellor Angela Merkel — who want her to rewrite the rulebook on state aid so they can prop up their economies in the worst credit crunch in 80 years.

After heaping billions of euros of fines on firms putting up barriers to competition, including price-fixing and running cartels, the 67-year-old faces a new battle with Europe’s leaders to uphold the rules.

In her clashes with some of the world’s top firms, she knew she had the powerful backing of the European Court of Justice. This time she may have to temper her resistance in the face of political demands to help fix the European economy.

“She will not be pushed around and will make her point, but in most cases as you will see state aid cases tend to go through in some form or another,” said Michael Tscherny, a partner at Brussels-based consultancy GPlus Europe and former spokesman for Kroes’ predecessor Mario Monti.

“The irony is that, under Kroes, the job has become more political,” he said of an earlier widespread belief that under Kroes — a trained economist and former businesswoman — the brief would be less politicised than under previous incumbents.

STRAIGHT-TALKER

The straight-talking daughter of a haulage operator has never been one to mince her words since taking up her post as the bloc’s anti-trust general from Monti in 2004.

Most recently she had a highly publicised run-in with Belgian Prime Minister Yves Leterme when he blamed her for the delay in approving his government’s bailout of Fortis FOR.AS FOR.BR bank.

Leterme said he could not reach Kroes on the weekend of the move. Kroes insisted she was in her office and did not receive any calls.

The Irish government also endured her wrath over Dublin’s plans to guarantee the deposits of Irish banks. And, resisting calls to rescue Poland’s historic but uneconomic shipyards, she said there could be no blank cheques for failing businesses.

“She will not be intimidated by anyone. She won’t be fazed by Bill Gates, Nicolas Sarkozy or Angela Merkel. She can cope with any external pressure put on her,” said one of her closest aides.

That said, the Belgian and Irish bank deals were approved in the end, and the French, German and Austrian plans should follow suit. Yet, her aide insisted, Kroes had “squeezed out everything she could” to achieve fair deals, for example by insisting the Irish scheme was extended to non-Irish rivals in the country.

“She takes the job very seriously, she has made a point about being a strong and fair Commissioner,” said Riccardo Celli, lawyer at O’Melveny & Myers in Brussels.

“The implementation of the rules has been very strong during her period,” he said, adding, “I think recently they have proven to be flexible in the various decisions on state aid.”

Kroes says she wishes to remain as the EU’s top antitrust enforcer, but the odds are stacked against a second term. Her age, European Commission rules and domestic politics all conspire against her.

Celli noted her current director general, Philip Lowe, was due to be replaced by a Dutch national, noting, “There is a sort of an unwritten rule that the commissioner would never be of the same nationality as the director general.”

But whether or not she succeeds in getting five more years in the job, Kroes has already made her mark.

“She has certainly further strengthened the Commission’s role and cemented its position as the major anti-trust authority in the world,” Tscherny said. (Additional reporting by Bate Felix; Editing by Louise Ireland and Mark John)

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