Michael Henderson suggests

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That Microsoft Fine

Thursday, 28th February 2008

You know, I'm not sure that I'm in favour of this:

The European Union imposed a record €899m (£680m) fine on Microsoft yesterday for imposing unreasonable prices on rivals for access to its dominant Windows software.

No, I'm not a particular defender of Microsoft, that's not it. And I agree fully that one of the important parts of governance that we must have is the breaking up of monopoly behaviour and the policing of created oligopolies.

What worries me though is that this money flows directly to the European Union.

The thing to remember is that the EU only has, currently, one direct source of revenue: import tariffs. These are collected by the local councils that we used to call nation states, yes, but they're handed directly over to the EU. And it's the EU which sets the rate of those import tariffs, which is one reason I'm so gloomy about the possibility of our ever having free trade while still in the Union. No governing body is likely to vote to cut off the only source of its own income that it controls.

All of the other money the EU gets is (at least nominally) voted to it periodically by the local councils, and is thus not under its direct control in the same manner.

But now we have fines on companies: they are allowed, under the rules, to fine up to 10% of a company's turnover.

As I say, it's not the particular company and it's not the particular behaviour being fined that I worry about: it's that the bureaucratic incentives will obviously be to continue to find other such companies that can be fined in a similar manner. For every bureaucracy can always do with "an increase in resources".

One way to correct said incentives might be to insist that such fines are not an addition to the EU resources: every such fine is paid back (perhaps on a per capita basis?) to the individual citizens. The simplest way to do that would be to reduce the local council contributions by said amount, after all, that money has only come from the pickiing of the pockets of the populace anyway.