European Union wins two key cases against Apple and Google

(Brussels) European justice on Tuesday definitively ruled in favor of the European Commission against the American tech giants Apple and Google in two long-running legal cases with heavy financial stakes.

The European Court of Justice (ECJ), the court of last instance, has ruled that Apple must repay 13 billion (C$19.5 billion) in back taxes to Ireland for receiving undue tax advantages that amounted to illegal state aid.

In a separate ruling, the Luxembourg-based court upheld a $2.4 billion ($3.6 billion) fine against Google for anticompetitive practices.

Both groups immediately said they were “disappointed” in separate statements.

The Apple case dates back to 2016 when Brussels ordered the manufacturer of the famous iPhone to repay 13 billion euros to Ireland.

The sum corresponds to the profits from favorable tax treatment granted to the company from 2003 to 2014, in this country where Apple had repatriated all of its revenues earned in Europe (as well as in Africa, the Middle East and India).

According to the European Commission, Apple’s Irish subsidiary had paid a derisory effective tax rate on its European profits “ranging from 1% in 2003 to 0.005% in 2014”.

But, at first instance, the EU General Court annulled the decision of the European executive in 2020, a resounding slap in the face to Competition Commissioner Margrethe Vestager, who was responsible for the case.

The Commission had lodged an appeal with the CJEU.

New twist in November 2023: in a non-binding opinion, but generally followed by the judges, the attorney general Giovanni Pitruzzella had called into question Apple’s victory.

He had proposed to the court to annul the judgment and refer the case back to the EU General Court “for it to rule again on the substance”.

The Court did not, however, follow this opinion and “decides definitively on the dispute and confirms the decision of the European Commission of 2016: Ireland granted Apple illegal aid that this State is required to recover”, it explains in a press release published on Tuesday.

Apple has always maintained that it did not receive any preferential treatment. “Our income was already subject to tax in the United States,” the group responded. “This case was never about the amount of taxes we pay, but about the government to which we are required to pay them. We always pay all the taxes we are liable for,” it assured.

Tuesday’s ruling “reveals the love affair between EU tax havens and multinationals. It delivers justice after more than a decade in which Ireland allowed Apple to evade tax,” said Chiara Putaturo of the NGO Oxfam.

Google “abused its dominant position”

In the Google case, judges upheld a €2.4 billion fine imposed on the Mountain View group in 2017 for abusing its dominant position in the online search market. This is the second largest financial penalty ever imposed by the EU in an antitrust case.

The Court considers that Google has indeed “abused its dominant position by favouring its own product comparison service. The appeal brought by Google and [la maison mère] Alphabet is rejected.

“We are disappointed by the Court’s decision. We made changes in 2017 to comply with the European Commission’s decision,” the search engine champion responded.

Google is accused of favoring its price comparison service Google Shopping by making its competitors virtually invisible to consumers. It has been forced to change the way its search results are displayed to comply with European Union requirements.

Seized by the Californian giant, the EU General Court ruled in favor of the Commission, in an initial judgment delivered in November 2021. But Google filed a new appeal, demanding the cancellation of the fine.

Attorney General Juliane Kokott had proposed in January to confirm the sanction.

The case began in 2010 with the opening of an investigation by Brussels following complaints from competitors.

This case is one of the major disputes opened by Brussels against Google, which holds the record for the two largest fines ever imposed by the European executive for anti-competitive practices.

The $2.4 billion fine for Google Shopping was a record amount at the time it was handed down. It was surpassed in 2018 by another $4.3 billion fine for abuse of a dominant position by the Android operating system for mobile phones.

In total, Google has been fined more than 8 billion euros for various anti-trust violations.

The group is also in the crosshairs of regulatory authorities in the United States and the United Kingdom.

Since Monday, it has been facing its second major trial in less than a year against the US government, which accuses it of stifling competition in online advertising. On Friday, the British competition authority, the CMA, also accused Google of abusing its dominant position in the same advertising market, which represents its main source of revenue.