(Bloomberg Opinion) -- A furious rage-tweet is not the best way for a CEO to get merger approval from competition regulators. Yet Siemens boss Joe Kaeser indulged in exactly that on Monday, blasting Margrethe Vestager – Europe’s top antitrust official – as “backward” and overly technocratic because of her likely rejection of his company’s rail merger with France’s Alstom SA. “It must be bitter if you are technically right, but do everything wrong for Europe,” he tweeted.
It’s hard to dismiss this as just an emotional, off-the-cuff reaction, given the recent drum-beat of criticism against Vestager from both France and Germany, which have thrown their full weight behind the deal. Rejecting an Alstom-Siemens tie-up would be “an economic error and a political mistake,” French finance minister Bruno Le Maire said last week. German economy minister Peter Altmaier said he had a “keen interest” in the deal going through. No wonder Kaeser felt he was on safe ground.
Throwing rocks at Brussels is a common pastime for national governments with voters to please; a French minister once dubbed the Commission the “Taliban of the law.” Germany has a history of overruling domestic antitrust verdicts, according to Berkeley Research Group’s Andreas Groehn. Even so, this is a pretty grubby campaign.
Attacking Vestager for taking her cues from technical rules, rather than politicians or CEOs, suggests she is actually doing her job. Her team has crunched the numbers and weighed the arguments of Alstom-Siemens’ proposed tie-up. Possible competition concerns were flagged back in July as worthy of review. The companies have done relatively little to ease them, offering asset sales equivalent to a paltry 4 percent of combined revenues. Why should an impartial, independent Commission be more generous to this merger than any other?
In the eyes of the deal’s backers in Paris and Berlin, Alstom-Siemens is not just any deal. It would create a European champion to counter Chinese rail powerhouse CRRC Corp., whose annual revenue of roughly 18 billion euros ($20.6 billion) is bigger than that of its Franco-German rivals combined. The Commission has countered that CRRC has yet to actually make any significant headway in Europe, while Alstom and Siemens together would be more than three times bigger than the closest regional competitor.
But for France’s Le Maire, this is just Brussels being blind to tectonic shifts in global trade. “We cannot make 21st-century industrial policy on the basis of 20th-century competition law,” he said. The deal’s supporters envision a kind of Airbus SE for trains, ready to take on all comers. A bad decision would suggest bad rules that need overhauling.
Still, whatever debate France and Germany might be interested in having on the future direction of antitrust law isn’t served by this mud-slinging. If they want to shift from protecting consumers to preserving jobs or building more European industrial champions, that requires the hard work of winning over the rest of the EU to rethink a fundamental policy.
Deciding on the hoof to bend the rules for Alstom-Siemens would create an ugly precedent for future deals and would risk putting France and Germany at an unfair advantage to the rest of Europe, where customers might have to pay higher prices to justify the two companies’ targeted 470 million euros ($537 million) in yearly savings. What’s good for French and German jobs and taxpayers might end up being bad for the rest of the EU, reckons Ioannis Lianos, a professor of competition law at UCL.
Politicians’ industrial dreams often hit the antitrust buffers. But they need to take the rough with the smooth. The day a large foreign buyer seeks to hoover up one of their domestic champions, they might appreciate those old 20th-century rules.
To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.
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