Washington Should Demand Europe Explains How Fines Are Calculated

The United States has put the European Union on notice in tweets, letters, and hearings about a range of problematic digital laws and associated enforcement decisions. While the Chamber has articulated concerns about the EU’s overall regulatory overreach, the role of fines in enforcement decisions is of growing concern.

Earlier this year, the Chamber issued a lengthy report about Europe’s unjustifiable use of fines to enforce its laws.   In its latest move, the EU this month imposed a staggering $3.45 billion fine on Google for violating European antitrust law.  At the same time, France fined Google another $380 million for a violation of the General Data Protection Regulation (GDPR). The amount of these fines, like those issued against other American companies, raise serious concerns about Europe’s motives, especially given the opacity surrounding each fining decision. 

All companies that operate in Europe must comply with European laws. Violations necessarily have consequences, and European regulators have discretion over when to levy a fine and how large it should be. Unfortunately, a pattern has emerged where the largest fines seem to be levied against American companies.   

Large fines might be justifiable if a company’s actions are fraudulent or result in significant, measurable harm to consumers. However, in the case of many EU fines, the level of harm is often trivial or even not identifiable. In other instances, when comparing violations that result in similar levels of harm, fines are levied for significantly different amounts, with American companies facing far larger payments.   

Moreover, specific legal violations may be based on vague, ill-defined standards in the law.  If a company is at the mercy of subjective interpretations of a legal standard, imposing enormous fines makes little sense. Instead, the regulator should focus on bringing clarity to the law through an enforcement action, requiring the company in question to make a course correction, rather than utilizing its fining authority. 

U.S. policymakers increasingly recognize the problem. The administration should request a formal consultation with Brussels on every fine levied on an American company, during which Brussels should spell out its calculation methods, proportionality, and due process safeguards. 

The EU will continue to enforce its rules as is its right, and American companies will keep operating in Europe. But without transparent, harm-based methodologies and credible assurances against discriminatory effects, every big fine risks becoming a flashpoint in the transatlantic relationship. Additional sunlight now will save a lot of transatlantic heartburn later. 

About the author

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

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