As EU raises takeover barriers, Brussels sounds protectionism alarm
The continent is in the midst of a cross-border merger-and-acquisition boom that the EU's executive arm argues will help create a single, efficient European market for goods, services, jobs and capital.
However, a handful of Europe's politicians have voiced opposition to the recent spate of deal-making, signaling that they are not ready to see corporate Europe be redrawn along other battle-lines than national borders.
France has led the fashion in "economic patriotism", a term which French Prime Minister Dominique de Villepin coined last summer when he rallied against a rumored hostile takeover of leading French food group Danone by U.S. soft drink giant Pepsico. -----Beefing up merger
Since then Paris has been busily beefing up its merger laws to make it more difficult for corporate raiders from abroad to gain a grip on French companies.
Villepin called again for "economic patriotism" last month in opposition to a bid by Mittal Steel to acquire rival Arcelor, which is not a French-only company, having been formed four years ago by the merger of three steelmakers -- Luxembourg's Arbed, Spain's Aceralia and France's Usinor.
The French government has lined up with its Spanish and Luxembourg counterparts and the European Metalworkers Federation in a united front against the bid.
Luxembourg rushed new takeover rules through parliament, which could make it more difficult to takeover Luxembourg-based Arcelor although the government denies that was the intent.
Meanwhile, the Polish government is fighting Italian bank Unicredit's plans to merge its Polish businesses, which would create a rival to state-owned market leader PKO BP.
In the latest move to spoil a cross-border EU deal, the French government endorsed the merger of state-controlled Gaz de France with Suez after Italian energy group Enel expressed interest in the utility giant.
German energy group E.ON's launch of a hostile bid last week for Spanish power company Endesa has ruffled feathers in Madrid, where the government is studying ways of blocking the takeover. -----Brussels fretted
The return of state intervention reflex in Europe has left Brussels fretting that its tireless efforts to boost the cross-border integration of European markets is being thwarted by member states.
Against that backdrop, EU internal market commissioner Charlie McCreevy made an impassioned appeal against protectionism last week.
"I'm a firm believer in the benefits of open markets and also free movement of capital and the benefits in the long term that that brings," he told journalists.
"I am absolutely convinced that when you go down the road of protectionism, no matter how small it might be ... you get tit-for-tat measures and that leads to other problems and a very, very bad situation," he said.
Despite the increasing number of directives from Brussels to liberalize EU markets, competition law professor Jean-Francois Bellis said that protectionism was not only still there but getting worse.
"I think there's more patriotism today than before," the Brussels-based expert said. "Economic patriotism never really disappeared and national champions were never really abandoned.
There only needs to be a couple of spectacular deals and we see the reflex re-emerge," he added. "They do it please public opinion, but it's a lot of agitation in vain because they know that the result isn't in their hands and that they have practically no way to fight."