Europe is Torn by Industrial Policy Preferences

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After the European Commissioner for Competition Margrethe Vestager decided to block the Siemens and Alstom merger, the negative reactions, mainly from German and French senior officials and positions, came out swiftly. EU leaders including Angela Merkel and Emmanuel Macron accused the commission of having an antiquated perspective that would affect the continent's economic interests.

The Franco-German push for a “genuine European industrial policy” is understandable since both countries feel threatened by other economic powers like the United States and China. Hence, they published a manifesto that exposes their preferred strategy to assess what they consider a problem.

"Today, amongst the top 40 biggest companies in the world, only 5 are European," claims the critical Franco-German report. The report also includes a proposal that asks for changes in the European Union regulatory framework allowing for more protectionist measures like subsidies and updating "current merger guidelines."

Despite the undeniable logic of the report, it was met with a hostile reaction by smaller European countries, who feel threatened by the dominance of France and Germany within the European Union, and who felt obliged to publish a report of their own. In their report, the smaller EU countries argue in favor of removing labor mobility barriers and enforcing the current European market rules.

Brussels is also going expected to publish its own reaction today. The petition, which was redacted by the European Political Strategy Centre, implies that the current European competition policy is not barring the continent from creating big competitive companies and that, instead of helping it, changing the competition laws would affect the Eurozone negatively.

The document, which is still not public but has been accessed by the European Press, claims that the EU has authorized several company mergers in the past and that the situation should be assessed by taking the context into consideration.

The report also alleges that if the EU lets anticompetitive actions happen, it could have systemic consequences that would limit the European Council's intervention against anti-competitive transactions.

All the involved parts are trying to influence the upcoming European Council summit, which is going to be held this Thursday.

Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.