EU Merger Rules Revamp: Readying to Face Chinese State-Sponsored Competitors

Written by | Monday, February 11th, 2019

Germany and France want to change the rules for mergers in the EU, following the EU executive’s veto of attempts by Alstom and Siemens to create a European rail company to compete with its bigger foreign competitors. Paris wants to see a broader definition of relevant markets, a recognition that markets are not set in stone but evolve in a dynamic way as well as powers from EU leadership to override a Commission decision.

 

The French believe that a broader approach would be aligned with an already planned increase in vetting of foreign investment to protect the EU’s key industrial assets. The aim is to have joint Franco-German proposal by the end of March, something both French and German leaders will discuss in February. It is believed that an overhaul is needed to allow businesses to compete fairly at an international level. Berlin wants regulators to have a deep-dive look into the markets, take into account competitors backed by state financial and political support and give veto power to the European Council.

 

Germany pivoted to a more defensive industrial policy, given by worries that foreign, particularly Chinese, companies are acquiring know-how and erode the manufacturing base in the EU. Germany also wants to establish an expert commission, which will formulate reform proposals by fall. The goal is to push the revamp during the country’s presidency in the second half of 2020. The current merger rules that were drafted in 1989 and revised in 2014 should ensure that the mergers will not significantly reduce competition and increase consumers prices in the bloc.

 

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