Europe must keep politicians away from day-to-day competition decisions, say Toulouse School of Economics' Patrick Rey and Jean Tirole.
But this was not a “no-brainer” merger that would inevitably have made the EU’s rail industry more globally competitive. After all, Alstom and Siemens already dominate their respective national markets for train-signaling systems and high-speed rolling stock.
Joe Kaeser, CEO of German engineering giant Siemens, attacked EU technocrats who he said were holding up a merger of its rail activities with France's Alstom. True, Europe must wake up to the challenge posed by China and the United States. The world’s 20 biggest high-tech companies are either Chinese or American, and the same may well be true of the healthcare sector in a decade or two, given developments in artificial intelligence, big data, and genetics.
But requiring the European Commission to take into account other matters, such as companies’ global presence, could potentially conflict with its existing mandate to protect EU citizens. After all, the Commission blocked the Alstom-Siemens deal primarily because of serious concerns that it would lead to higher prices for signaling systems and high-speed trains in Europe.
Henri Poupart-Lafarge, Chairman and CEO of Alstom, and Siemens President and CEO Joe Kaeser attend a news conference in Paris. There are several good reasons for this. For starters, politicians are subject to intense lobbying by large firms and industry organisations, which may be more interested in limiting competition than promoting it.
The Director-General for Competition has a dedicated staff that includes some 30 PhD economists specialising in competition matters. It is doubtful whether national government ministries in Berlin, Paris, or other European capitals would be willing or able to marshal a similar concentration of brainpower.
In 2018, for example, the Commission approved 370 mergers unconditionally, and a further 23 with conditions attached – in most cases after a one-month investigation. The Commission blocked only two mergers in 2017, none in 2018, and fewer than 30 since the EU Merger Regulation was adopted in 1990.Political frustration at the rejection of a single – albeit high-profile – merger is not a good reason to undermine the EU’s long-standing, independent competition authority.
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