Decision on Alstom-Siemens merger is wrong, says Minister

European Union – Interview given by M. Bruno Le Maire, Minister of the Economy and Finance, to Le Figaro Economie

Paris, 7 February 2019

Q. – You had warned against an economic mistake and a political error, and yet the European Commission remained inflexible and prohibited the Alstom-Siemens merger. How do you explain this?

THE MINISTER – It’s up to the Commission to provide explanations. I maintain that its decision is wrong and a mistake which will cost the European rail industry dear. It is based on extremely debatable technical arguments and a view that is completely out of step with what the global market is about. The Commission limited its analysis to the European market alone, working on the principle that the Chinese, Japanese and South Korean markets were irrelevant because they’re closed to European players. It considered that the Chinese didn’t have access to the European market, whereas they’re already there! The threat will be very real, in the very near future. China has merged its operators, who are winning international markets. There’s a Chinese world champion in the rail industry, there won’t be a European one. The Commission bears responsibility for this: instead of defending Europe’s interests, it’s serving China’s.

Q. – France and Germany supported the merger, but haven’t you forgotten the other EU countries?

THE MINISTER – Absolutely not. Moreover, the tie-up would have resulted in sales of assets, signalling assets in particular, which other European manufacturers were interested in. They too would have been bolstered.

Q. – The competition defended by the Commission guarantees low prices for consumers and lower public spending for taxpayers. Shouldn’t you defend this too?

THE MINISTER – You’ve got to look to the future. The competition law we apply dates from the 20th century; it isn’t adapted to the 21st century. We’ll be proposing, with our German partner, a revision of the law so that Europe can build a genuine industrial policy which is as powerful as our trade policy. We must take account of what’s actually happening. What’s happening is that new world champions benefiting from significant state support are emerging, in areas which require huge funding capacities, and where things develop at very great speed. We can’t fight in these conditions with a rigid, quite simply obsolete law.

Q. – What changes are necessary?

THE MINISTER – Competition analysis must take different account of the relevant markets and the pace of their development. We’d also like the member states to have an increased right to examine competition decisions. This new approach will be coordinated with a strengthening – which has already begun – of the control of foreign investment in Europe in order to protect our most precious industrial fabric, and with a more robust trade policy. We have to open up the discussions there must be with China, in particular about the opening-up of its markets – especially procurement contracts – and about intellectual property and state subsidies.

Q. – But the negotiations will progress much too slowly…

THE MINISTER – True, the world is progressing faster than Europe today. I hope that what’s just happened will act as a jolt to make Europe change, and fast. Having said that, the President and I secured significant progress regarding posted workers, the control of foreign investment and the creation of a financial vehicle to bypass American sanctions on Iran. International competition is fierce; Europe must be stronger.

Q. – By challenging it, don’t you risk weakening the very European tool that is most powerful in the global arena, namely its competition controls?

THE MINISTER – On the contrary. It will be all the more effective if it takes account of what’s actually happening. It will be all the more credible for European citizens if it serves Europe’s general interest. Europe needs industrial champions. We must rise to this challenge. The issue, ultimately, is simple: do we want a vassalized Europe that depends on American and Chinese technology, or a Europe that is an industrial power on the same footing?

Q. – Are you worried for Alstom’s future? Should another merger operation be encouraged, between French companies for example?

THE MINISTER – I have no worries about Alstom, which is still a magnificent business with first-rate skills and technology. Alstom has other opportunities to grow in strength and we must work on them now. Every option will be examined./.

Published on 11/02/2019

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