Keep Politics Out of Europe’s Competition Decisions

Posted by Project Syndicate

Keep Politics Out of Europe’s Competition Decisions

By Patrick Rey & Jean Tirole

Upset by the decision, France and Germany now want to rewrite EU merger rules and give member states more say over proposed tie-ups. But although such an approach may seem tempting, Europe would be wise not to leave competition policy enforcement in the hands of its politicians.

Supporters of the Alstom-Siemens merger said it would create a European high-speed-train champion to rival China’s CRRC, which operates in a large, and mostly closed, domestic market and – according to the deal’s backers – may soon increase its presence in Europe. 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.

The merger’s advocates dubbed it “Railbus” in an attempt to draw a parallel with the creation of European aircraft manufacturer Airbus in 1970. But whereas Airbus was a new challenger to Boeing, which had a near-monopoly in the commercial-aviation market at the time, the Alstom-Siemens merger would have reduced the number of players in the European rail industry.

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