Failed merger Alstom-Siemens: the donkey of Brussels has a good back

(B2) A deluge of criticism - often excessive and misplaced - fell on the Commission following its decision (predictable for several weeks) to refuse to authorize the merger of the activities of the companies Alstom and Siemens in the field of equipment and transportation services. Wrongly, believes our columnist Jean-Guy Giraud

« A shame", "a bad move", "an economic and political fault", "a historical blindness"… This escalation of accusations — very poorly documented — even came from public authorities, mainly French. The French Minister for the Economy played a large part in it, after very unusually trying to put pressure on the Commission during its examination of the file (1).

A solid education

A few contextual elements

First, the merger refusal companies (or certain activities) by the Commission are exceptional (6 cases out of 3000 files in ten years). In the (rare) case of difficulties, the companies concerned most often agree to modify their project or give up on their own during the investigation.

Second, the expertise and quality of the instruction cases by the Commission are generally recognized as independent and far superior to those of any other public or private body.

Thirdly, the mandate of the Commission is indeed not to promote the emergence of 'european champions' - but to preserve the “general interest”, in this case the maintenance of conditions of competition that protect other companies and the interests of consumers.

Fourthly, in carrying out this mission, the Commission is required to respect for the law (treaty and regulations) under the possible control of the European Court of Justice.

A questionable project

Similarly, one can wonder about the attitude of the two companies concerned as well as about the real nature of their project. Their replies to the Commission's objections have been late, insufficient, reluctant and incomplete, so much so that a real dialogue with the Commission has proved difficult.

The stated objective of creating a 'european champion' facing the 'Chinese champion' seemed more like a display than a real industrial project. Underlying considerations of a purely financial nature seem to have also (mainly?) motivated this project.

The Alstom and Siemens companies are characterized by respective histories extraordinarily eventful with successive and crossed mergers-sales-acquisitions until the recent past - as well as recurring state interventions (for Alstom) and legal episodes (for Siemens).

Le renunciation abrupt and total of the two companies to their proposed merger (as well as, it seems, to any judicial appeal against the Commission's decision) seems to reflect a certain lack of conviction on the realism of this arrangement, on its well-being industrial basis and its real importance for the development of each of them.

A a posteriori analysis A closer look at this episode will no doubt shed light on certain elements hitherto concealed by the superficial controversy of the moment.

It is regrettable that this affair is the occasion for a general questioning of competition policy by some governments - notably French but also (more moderately) German.

Germany seems to have rallied, more moderately, to future proposals aimed at “development of EU competition policy”.

An adaptation, despite everything, necessary of the rules of competition

However, it must be recognized that the brutal and disorderly development of economic, financial and commercial competition at the international level requires an adaptation of European means of defense as well as - among these, competition policy. This debate is not new: it is that of the balance to be found between a proactive industrial policy and a protective competition policy (2).

The Commission is well aware of this: it is up to it, in all serenity, to present the necessary legislative proposals, which cannot alter the general balance - and in particular the institutional balance - of a system which, general opinion, is one of the best performers among industrialized countries.

(Jean-Guy Giraud)