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Germany and France Advocate for Major EU Competition Reform

 |  May 29, 2024

Germany and France are jointly advocating for an overhaul of European Union (EU) competition regulations to enable the creation of larger, more competitive European companies, particularly in the airline and telecommunications sectors.

According to Politico, this initiative follows their frustration over the European Commission’s 2019 veto of the Alstom-Siemens merger, which aimed to create a European rail giant capable of competing with Chinese firms.

The call for reform comes amid ongoing tensions between France and Germany, the EU’s two largest economies, and the EU’s competition authority. The merger between French train manufacturer Alstom and German conglomerate Siemens was blocked by EU Competition Commissioner Margrethe Vestager, who argued it would harm consumer interests and stifle innovation within the EU. This decision has since been a sore point for both nations, who argue that the current rules are too restrictive and hinder the growth of European industrial champions.

“We need to review the current European competition rules,” Germany and France stated, emphasizing the necessity for regulatory changes that would permit consortia and consolidation in key sectors like mobile networks and aviation to fortify European resilience. This statement outlines their vision for the next European Commission’s agenda, focusing on boosting European economic growth and industrial capability.

This push for reform is highlighted by Germany’s Lufthansa facing EU resistance over its intended investment in the Italian airline ITA. The proposed regulatory changes would also allow for “targeted” subsidies aimed at helping companies navigate economic challenges, such as the COVID-19 pandemic and recent energy price spikes, despite concerns from smaller EU member states about potential market distortions.

Both countries are lobbying for more flexibility in state aid regulations to support private investments and enhance the EU’s industrial policy subsidy mechanisms. These measures are designed to aid companies in transitioning through strategic industrial sectors and innovative technologies, thereby enhancing the global competitiveness of European firms.

The broader strategy includes reducing Europe’s dependency on international trade partners and positioning Europe as a leader in emerging technologies. This encompasses sectors such as net-zero technologies, artificial intelligence, quantum computing, space and aeronautics, biotechnology, robotics, mobility, and chemicals.

Source: Politico