Paris has called for the biggest shake-up of EU merger rules in 30 years, as it responded to last week’s decision by Brussels to block the partnership between German and French train manufacturers Siemens and Alstom.
French economy minister Bruno Le Maire, who has expressed anger at the decision by the European Commission to veto the merger, on Tuesday called for the creation of “European industrial champions”.
While Brussels warned that the combined company Siemens and Alstom would have been overly dominant in signalling and high-speed trains on the European market, Paris has slammed the rules as a relic of the 20th century that risks handing technological supremacy to China.
Speaking alongside German finance minister Olaf Scholz in Brussels on Tuesday, Mr Le Maire put forward a three-point plan of rule changes, saying he would discuss it further with Berlin in the coming days.
The proposals include giving EU national leaders the right to overturn the commission’s merger decisions, and equipping Brussels with the ability to approve a merger but subsequently to force the combined company to make divestments if competitive problems emerged.
“Instead of blocking the creation of an industrial champion up front, we would make a dynamic, rather than a static analysis,” Mr Le Maire said. “If there is a problem, the decision can evolve.”
The Commission’s role would be relegated and the transparency and consistency that has characterised EU merger control for 30 years would be upended
Another proposal is for Brussels to be “more systematic” in evaluating competition risks based on companies’ market share at global level. Under the current rules, Brussels decides case-by-case on the “market definition”— from national to worldwide — that should be used to assess the threats posed by mergers.
However, competition lawyers say the ramifications of the proposed rule changes should not be underestimated.
Nicholas Levy, a competition partner at Cleary Gottlieb, said the proposals would “fundamentally change the architecture of European merger control, replacing expert analysis conducted within a well-defined legal framework with political decision-making”.
“The Commission’s role would be relegated and the transparency and consistency that has characterised EU merger control for 30 years would be upended,” he said. “It is difficult to see how this would lead to better decision-making and more competitive markets.”
EU officials said Paris’s attempt to remould the competition rules was a sign of how swiftly the European political climate has changed following mounting concern about the activities of Chinese state-backed companies, not least their acquisition of European high-technology firms. The issue rocketed up the German political agenda in 2016 after the €4.5bn takeover of robotmaker Kuka by Chinese appliance maker Midea.
The merger control question has become one of Paris’s priorities in a broader Franco-German push for a new European industrial strategy, as both countries look for ways to protect their engineering expertise and foster innovation. Mr Le Maire will travel to Berlin next week for further talks on the plans.
Mr Scholz did not explicitly endorse Mr Le Maire’s three point plan on merger control, saying that Berlin wanted it to be easier “to do the necessary steps if you want to build world champions”, including via mergers.
Mr Le Maire’s proposal for EU leaders to override merger decisions mirrors an existing veto they wield over the commission when it comes to state aid. That power has never been used.
Senior French officials said that the idea was inspired by existing procedures in France, which Mr Le Maire used last year to ease the conditions attached to an agri-food merger.
“It is time for Europe to wake up, and to understand that technological evolution is happening very quickly”, Mr Le Maire said. “It is a question of economic survival.”
A spokesperson for the European Commission said on Tuesday: “We always stand ready to discuss with member states the proposals they may have regarding this”.
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