Vestager Sticks Another Knife Into Macron's Plan for EU Revival
(Bloomberg) -- Germany and France may be about to lose the battle to create a giant train maker to go toe-to-toe with China. But the fight to reshape European Union antitrust rules is just getting started.
As EU Competition Commissioner Margrethe Vestager prepares to veto the high-profile rail deal between Siemens AG and Alstom SA, Berlin and Paris are asking what is the purpose of the European project if it doesn’t help build the industrial muscle to compete on a global scale.
"Do we Europeans want to be free, or do we want to be subject to a political order and technology imported from China and the U.S.?" French Finance Minister Bruno Le Maire asked during a speech in Paris Monday. "It’s up to us to decide what we want."
To shift the EU Commission’s settings, the two countries may push for national governments to be handed veto power over rulings by the competition authorities, according to two European officials with knowledge of their plans. A press officer at the German Economy Ministry declined to comment.
The assault by the EU’s two most important members highlights the extent to which taboos in Europe are being broken amid fears of China’s economic prowess, a possible euro-area recession and populists telling voters they’ve been shortchanged by the system. And it suggests just how much trouble their plans for deeper integration are facing.
Germany’s Siemens and France’s Alstom unveiled their rail deal in September 2017 as President Emmanuel Macron was taking power in Paris and looking to make an early signal of his plans to strengthen the EU’s economic ties.
The immediate goal was to build a transportation giant with combined sales of about 15 billion euros ($17.1 billion) to counter global competition, especially from China. The combination would have given the Germans control of an icon of French industry but Macron signed up anyway, once he received assurances on jobs from Siemens.
Capping years of speculation in the industry about the need for consolidation, the tie up was to mirror the emergence of European planemaker Airbus in the 1970s that went on to become the biggest competitor to Boeing Co.
At that stage in his presidency, Macron hoped it would be the first step in a far broader push that would tie Europe together with a euro-zone budget, a finance minister and harmonized corporate taxes as well as common military, university and research projects.
The key elements of Macron’s agenda have floundered as Chancellor Angela Merkel’s star faded in Germany and other nations led by the Netherlands pushed back against sharing the financial risks of weaker neighbors.
Meanwhile Vestager’s team at the European Commission, the EU’s executive arm, has repeatedly signaled that the merger terms -- even including last-ditch extra concessions -- fail to pass muster. The Brussels-based commission has picked up support from rail-network operators and some national competition authorities in Europe as a Feb. 18 deadline for a ruling nears.
Changing the Rules
In private, German and French officials are resigned to seeing their merger shot down, but they also have plans in place for the long haul. They’ll be pushing the issue of European antitrust practices up the political agenda and eventually it may feature at one of the bloc’s regular summits. The competition job will also be one of the most closely watched when the new commission is appointed after May’s European election.
"There needs to be a transformation of European competition law," Le Maire said. "For decades, the antitrust law’s focus was on a European market and consumers’ rights. It must now focus on a global market and the defense of jobs."
But changing those rules would upend decades of convention establishing the central-bank style independence of European competition authorities and usher in a new era of state interference in pursuit of national -- and pan-European -- champions.
What’s more, competition policy is also part of the political glue that holds the EU together.
It reassures small EU countries that the bigger ones won’t be able to steer industrial policy to their advantage and has chipped away at corporate power to lower prices for consumers. Its rules are embedded in the hard-to-change EU treaty and in a long history of case law with a bias against corporate dominance.
Le Maire argues that EU antitrust law has become a barrier to creating high-skilled jobs because it prevents the creation of giant companies with the resources to compete on the development of cutting edge technology. Clinging to the old goals is a "naive" luxury the bloc can no longer afford.
"We must unite and quickly," he said Monday. "More rivalry between EU nations will weaken us, more solidarity will strengthen us."
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