EU's Merger Stance Stunts Global Players, Business Lobby Says

(Bloomberg) -- The European Union should review antitrust policies that make it tough for leading companies to merge while allowing outside interests to acquire stakes in key assets, according to the head of a lobby group made up of executives from 55 of the bloc’s biggest firms.

The EU must look again at its competition policy if it wants businesses to compete as global players with rivals from the U.S. and China, Carl-Henric Svanberg, chairman of the European Round Table of Industrialists, said in an interview Wednesday.

“We have rightfully been skeptical about the growth of enormous tech giants in the U.S. and China,” he said at Bloomberg’s London offices. “But in Europe we’ve gone the other way and basically have a policy that leaves us fragmented. I think we have to be a little bit more sophisticated. ”

Svanberg highlighted the phone sector as one where a lack of consolidation has left the region trailing. While the U.S. has four main telecoms players in Verizon, AT&T, Sprint and T-Mobile, and China has three, he said, there are 60 or 70 operators in Europe.

That in turn is a “key reason” for a slow roll out of the latest 5G technology that’s seen as vital to driving productivity across EU economies, added the executive, a former chief at Swedish telecom equipment maker Ericsson AB.

In transportation, the planned combination of French trainmaker Alstom SA with the rail arm of Germany’s Siemens AG was blocked by the European Commission in February on the grounds that it would increase prices and curb product choice. The companies had said the deal was vital if they were to fend off the threat of Chinese competition.

Svanberg, a former chairman of BP Plc who currently occupies that role at truck maker Volvo AB, said the EU should also look closely at the implications of inward investment, citing the example of the Committee on Foreign Investment in the U.S., which reviews deals for national security implications.

“America has identified strategic areas where they want to protect their companies from being acquired,” he said. “China’s doing the same. So we must also think about that.”

Bids from outside Europe that lack the checks and balances provided by Western requirements for shareholder approval and bank oversight should likewise be scrutinized, he said.

“What is hard for us to judge is when somebody comes in and offers a price that may not make free market sense because they want the technology whatever it costs,” Svanberg said. “If such acquisition targets are of strategic value to Europe we should probably think twice about that.”

He spoke after the ERT issued a policy paper titled ‘Strengthening Europe’s Place in the World’ that urges companies to focus on skills, green energy and digitization, while calling on the EU to do more to encourage investment and to help counter populism by demonstrating how free markets aid prosperity.

The report adds that the bloc must do more to address mooted plans for an energy union, digital single market and capital markets union to help end fragmentation and counter inefficiencies that are hampering competitiveness.

©2019 Bloomberg L.P.

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