France Seeks Overhaul of EU Merger Rules to Fend Off China, U.S.

(Bloomberg) -- French Finance Minister Bruno Le Maire will demand an overhaul of the European Union’s antitrust rules that France says leave the continent’s economy and companies vulnerable to U.S. and Chinese rivals, particularly in the digital sector.

Addressing an international conference on competition and the digital economy, Le Maire will say the European Commission should take a broader view before blocking potential mergers within Europe and look more closely at the benefits. France also wants Europe to loosen rules on state aid for research and development, and examine how to prevent so-called “killer acquisitions,” when large foreign tech companies buy startups to stifle competition and innovation.

“To be pertinent and effective, the rules of competition must adapt to new economic realities,’’ Le Maire will say at an international conference in Paris, according to prepared remarks. “We can’t stand by being model students, hoping everyone else will respect the rules we force upon ourselves.”

Clipping the wings of foreign tech giants and helping to foster the emergence of “European champions” are tactics France is hoping will lead to a higher profile for Europe on a global stage increasingly dominated by the U.S. and China.

Empire-Building

The offensive is part of a broader attempt to reshape EU policies after European Parliament elections last month and ahead of the appointment of a new Commission in the fall. Le Maire says Europe should use a variety of policies to assert itself more forcefully against the world’s two biggest economies; he’s even called for a new European “empire” for the 21st century.

“We also need to act on trade policy to better protect our economies from unfair competition,’’ Le Maire will say at the conference at the Organization for Economic Cooperation and Development in Paris.

His demands for a review of competition policies follow objections to the European Commission’s decision to block the merger of the rail operations of Germany’s Siemens AG and France’s Alstom SA. The French government called the ruling a political and economic error for Europe that would serve the interests of Chinese competitors.

Le Maire will make a series of recommendations Monday for how to change the way the Commission works when assessing potential deals, including:

• assess potential competition further into the future, beyond the current two-year limit
• take into account more favorable conditions for foreign companies
• consider efficiency gains from allowing European mergers
• demand more diverse remedies for mergers rather than focusing on asset sales

Still, the French government will likely step back from its demands that European governments should have greater powers to overrule the technical decisions of the Commission. France still supports examining the idea, but Le Maire and other officials now acknowledge it would require changing European treaties.

For the digital sector, Le Maire will recommend making the Commission’s antitrust procedures more efficient and giving it greater powers to detect and investigate anti-competitive behavior of tech companies. That could involve precautionary measures to stop suspected anti-competitive behavior before a formal finding.

“The digital economy is marked by an extreme concentration and this domination is becoming a problem for competition,’’ Le Maire will say.

To contact the reporter on this story: William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Cecile Gutscher, Andrew Reierson

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