Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The EU risks opening a “Pandora’s box” by loosening its merger rules, Brussels’ outgoing competition chief has warned, after her successor was appointed with a brief to be “more supportive of companies scaling up”.
Margrethe Vestager, a free market champion, hit back at calls for a wholesale overhaul of the EU’s merger regulations, amid rising pressure from France and Germany to help spur the emergence of “European champions”.
“The problem with [opening a] Pandora’s box is that you cannot really close it again, and that creates a lot of uncertainty,” she said in an interview with the Financial Times.
During her tenure as one of the world’s most powerful antitrust regulators, Vestager was known for blocking the proposed merger of Siemens and Alstom, breaking up Gazprom’s supply monopolies and fighting in court to cancel Apple’s cut-price Irish tax deal.
European Commission President Ursula von der Leyen on Tuesday nominated Spanish Socialist Teresa Ribera as Vestager’s successor, tasking her with developing a “new approach to competition policy, one that is more supportive of companies scaling up in global markets”.
The appointment came as part of a wider push by Brussels to give top industrial and economic jobs to nominees from Spain, Italy and France, which have called for more joint spending, looser budget deficit rules and a bigger role for industrial policy.
Senior commission officials said they expected a review of the bloc’s rules governing mergers of market rivals to take into account the EU’s pressing need to be more self-sufficient and considerate of security implications.
Ribera will also be tasked with changing the EU’s state aid policies to assist the industrial rollout of green technologies and renewable energy products.
“I do anticipate quite a few changes on merger policy, which is in need of reform,” said one senior official, referring to von der Leyen’s future approach to competition. “We need to look if our policy is still adequate.”
That chimes with proposals made by former European Central Bank President Mario Draghi in his recent report on how to boost Europe’s competitiveness, including using competition policy to enable consolidation to allow EU companies to compete globally.
But Vestager, a liberal politician from Denmark, insisted changes — if any — should be “surgical”, noting that merger rules, which allow Brussels to block deals when there is a risk of market domination, have rarely changed since their adoption in 1989.
The problem with a more radical overhaul was not that it would allow big businesses to be created by merger, she said. “The problem is whether or not you want that big business to be challenged.”
The new commission, which needs to be approved by the European parliament, is expected to take office before the end of the year and run the bloc until 2029.
Von der Leyen said France’s Stéphane Séjourné would oversee EU industrial strategy with “innovation and investment at its heart”, while Italy’s Raffaele Fitto would be responsible for Brussels’ multibillion-euro cohesion funds that seek to narrow the gap between rich and poor parts of the EU.
In part to balance the handling of key economic portfolios to more interventionist capitals, von der Leyen said climate policy and enforcement of fiscal rules would be run by centre-right allies from the Netherlands and Latvia respectively.
Germany and France have been vocal proponents of wider competition reforms. Critics point to the failed Siemens-Alstom merger — which Brussels blocked in 2019 — as a prime example of how rigid EU rules can stifle industrial consolidation.
Draghi argued that if the rules were changed as he proposed, the deal may have been cleared.
Vestager pushed back, insisting both France’s Alstom and Germany’s Siemens are thriving even without a merger.
“There are two companies that really have a strong position and full order books. And those two companies are Siemens and Alstom,” she said.
Read the full article here
