EU merger protection comes under fire

By Penny Hawthorne | 9 May 2005

Ben Wright writing in The Business criticises the nationalism which is blocking intra-EU mergers:

Last year, Paris-based drugmaker Sanofi-Synthelabo completed its E55bn takeover of Franco-German rival Aventis. The deal grabbed headlines because of the outrageous protectionism of the French government. Jean-Pierre Raffarin, the French prime minister, laughably invoked national security to deter a counterbid from Novartis, the Swiss pharmaceuticals company, on the grounds that Aventis was a strategic French asset because of its role in creating vaccines to combat bio-terrorism and should not fall out of French hands.

France's reinvigorated interest in national champions did not stop there. Emboldened by the Sanofi-Aventis deal and declaring that key companies "must not fall into the hands of foreigners", the then French finance minister Nicolas Sarkozy in effect renationalised Alstom. In the process, he has prevented the country's main manufacturer of high-speed trains from being bought by German rival Siemens.

Few would disagree that the promotion of national champions violates every tenet of European integration and contradicts wisdom on how to reform economies, create growth and maximise competitiveness. Sarkozy's decision last year to block Siemens's approach for Alstom prompted German Chancellor Gerhard Schroder to angrily denounce such practices as "infuriating" and "extremely nationalistic".

But the Germans are not blameless.