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Wednesday, October 03, 2007 5:43:30 AM
October 02, 2007: 08:05 PM EST
http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-19988471.htm
Oct. 2, 2007 (Investor's Business Daily delivered by Newstex) --
Competitiveness: Fresh from their sweeping antitrust victory over Microsoft (NASDAQ:MSFT) , Europe's bureaucrats have another successful U.S. company in their sites: Qualcomm. (NASDAQ:QCOM) The EU says it's all about fairness, but we know better.
Just two weeks after its decision to levy some $631 million in fines on Microsoft, the EU's antitrust bureaucracy has now decided to go after telecommunications giant Qualcomm, too.
In case you don't know, San Diego-based Qualcomm is at the heart of the cellphone revolution. Its innovative chipsets have made it possible for people the world over, no matter how remote, to have phone service, and for people in business to be constantly in touch with their home offices.
That includes, by the way, the 27-nation EU's 493 million people.
When the Microsoft decision came down in late September, European analysts and lawyers went out of their way to say this wasn't indicative of some new anti-competitive mood in Europe, but rather a case of one company abusing its competitive clout and consumers.
One EU attorney, when asked if there would now be a "rampage" against American firms, shot back "absolutely not."
Those watching the Microsoft debacle, however, would have been much wiser to heed the words of EU Competition Commissioner Neelie Kroes, who fired a warning shot over the heads of all successful U.S. companies, saying the Microsoft decision "sends a clear signal that super-dominant companies cannot abuse their position to hurt consumers and dampen innovation ..."
The irony, of course, is Microsoft has bent over backwards to accommodate the EU, letting Europe's sluggard companies freeload off Microsoft's patents and intellectual property. But, of course, consumers aren't interested. They want the real thing.
Now, emboldened by its success against Microsoft, the EU's Orwellian-themed Competition Commission is going after Qualcomm.
Nor will Qualcomm be the last American champion that the EU's aggressive bureaucrats try to take down. Reportedly, there's a long list of companies now in the EU's sights, including Apple, Intel (NASDAQ:INTC) , Rambus and a handful of energy companies.
It seems Europe's rather weak tech sector needs the bureaucrats to do what they can't -- beat Microsoft. The EU's recent antitrust binge is a form of trade protection and, in all frankness, amounts to property theft. Trade economists note such actions will lead to higher costs, less innovation and lower standards of living for all -- not exactly a strong selling point 15r EU antitrust theory.
There's no legitimate legal basis for this. The EU simply made one up. But having succeeded once, it now feels emboldened to go after any successful American company that does business there.
It's not hard to figure out why.
As we noted not even a month ago, the EU is lagging seriously behind the U.S. in average GDP per employed person -- the broadest, and most meaningful, measure of productivity.
The average American worker produced $81,454 in real GDP in 2006, according to recently updated Department of Labor data. By comparison, the average worker in France put out $73,134, in Germany $59,870, in the United Kingdom $65,684. And so on.
In short, the EU lags the U.S. in productivity (and thus, standard of living), and badly.
Why? As we quoted International Labor Organization employment chief Jose Manuel Salazar nearly a month ago, it "has to do with the (high-tech) revolution, with the way the U.S. organizes companies, with the high level of competition in the country, with the extension of trade and investment abroad."
And that, in a nutshell, is why Europe has declared war on U.S. innovators and tech champions. It has nothing to do with "fairness" or "consumers" or even "antitrust." It's really a fear of the future.
The EU has stuck itself in a competitive mire with its stiff labor rules, extensive welfare state, high taxes and refusal to innovate. Its bureaucrats clearly fear the EU's statist ways will consign the continent to also-ran status for the remainder of this century.
Having no easy answer for Europe's ills, they attack America's best. But they do so in the courtroom, not in the marketplace.
That might work for a little while, but it's no strategy for greatness. The EU and the U.S. account for 40% of world trade and investment -- nearly $3 billion a day crosses borders. But Europe's rampant rule-making saddles companies there with $850 billion a year in costs. And its ridiculous labor laws create near-double digit joblessness.
The EU won't grow any faster by taking down America's high-tech winners. Nor will the EU's people -- having less choice and facing higher prices -- be any happier. It's bad for them, and bad for us.
It's time for the EU to end its economically foolish antitrust war against U.S. high-tech champions, and start competing for real.
Newstex ID: IBD-0001-19988471
Originally published in the October 2, 2007 version of Investor's Business Daily.
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