ECJ confirms judgments

Does Apple have to pay 13 billion in back taxes?

The ECJ's confirmation of the rulings marks the end of two years of legal disputes against the tech companies.

(Bild: stock.adobe.com)

On Tuesday, the European Court of Justice confirmed multi-billion euro rulings by the EU Commission against Apple and Google. Google has to pay a competition fine of 2.4 billion euros, while Apple will have to pay 13 billion euros in back taxes in Ireland.

The Brussels authority imposed a fine of 2.4 billion euros on Google in 2017 because the search engine operator favored its own price comparison service Google Shopping over those of its competitors and therefore abused its market power. According to the information provided, Google presented the search results of its service at the top and highlighted them with images and text. The search results of competing services only appeared further down as a blue link.

According to the EU Commission, this is why users clicked on the results of Google's price service more often than those of its competitors. However, these were dependent on the data traffic from Google's general site in order to continue to be commercially successful. The Commission therefore argued that Google had abused its dominant market position.

Google appealed against the ruling to the ECJ
Google and its parent company Alphabet first unsuccessfully appealed against the EU fine before the General Court of the EU and then before the highest European court, the ECJ. The latter has now rejected the appeal and finally ruled in favor of the EU Commission. Google's behavior in this case was discriminatory and did not correspond to competition on the merits.

The tech giant had given its own price comparison service an unlawful advantage and thus abused its dominant market position, the judges in Luxembourg ruled.

Back taxes in the billions for Apple
In the case of Apple, the EU Commission ordered the iPhone manufacturer to pay 13 billion euros in back taxes in Ireland in 2016. According to the authority, Ireland, where Apple's European headquarters are located, had granted the company an unlawfully low tax rate of 0.005 percent. It argued that this violated the state aid guidelines of the international community and called on Ireland to demand the billions in back taxes. 

A lower European court had upheld Apple's and Ireland's appeal against this decision in 2020. The judges argued that the Commission had not been able to prove that Apple's tax agreements in Ireland from 1991 and 2007 constituted prohibited state aid. The Commission appealed to the ECJ.

An appeal limited to points of law can be lodged against the current ruling, in which the judges followed the Advocate General's proposal. According to the information provided, however, this has no suspensive effect.

Apple expressed its disappointment and criticized the EU Commission for ignoring the fact that the company had paid taxes in the USA. Ireland stated that the case was of historical significance at best. Nevertheless, the government is now considering what to do with the windfall.

Just one "bad" apple
On Tuesday, the globalization-critical organization Attac criticized "the tax dumping of corporations" on the occasion of the Apple ruling. "The EU Commission may have sorted out a rotten apple, but the international tax rules are still rotten and full of holes. They allow cases like Apple to be the rule," said David Walch from Attac Austria in a press release.

"Historic day for competition and consumers"
The Google ruling was initially met with largely positive comments. The German Federal Association of Digital Publishers and Newspaper Publishers and the Media Association of the Free Press welcomed it as "historic". For the online price comparison portal Idealo, which belongs to Axel Springer, co-founder Albrecht von Sonntag declared that it was a "historic day for competition and consumers in Europe".

It is crucial "that companies in Europe know when competition law will force them to share their technology with their competitors", explained Daniel Friedlaender, head of the lobby group CCIA (Computer and Communications Industry Association). The ruling provides more clarity in this respect.

The antitrust authorities in Europe want to safeguard competition in the digital economy. The decisions of the Luxembourg judges could give the EU competition authorities a tailwind in other proceedings. The Brussels authority is investigating the Facebook and Instagram parent company Meta, among others.