Margrethe Vestager, the EU commissioner responsible for the bloc’s antitrust policy, insisted Brussels must defend its competition rules despite Beijing’s ambitions to branch out across Europe. The warning comes amid attempts by Paris and Berlin to push through the planned merger of France’s Alstom with Germany’s Siemens railway divisions. The EU heavyweights argued that the merger is required to combat the threat from Chinese trainmaker CRRC from entering the European markets.
Bruno Le Maire, France’s economy minister, said a rejection of the merger is a “political mistake” and leaves Europe vulnerable to China’s aggressive trade strategy.
Despite the warnings, Ms Vestager has urged the EU’s most senior officials to support her decision to ignore Paris and Berlin’s protests while continuing to block the merger.
China will not seek to sell trains in Europe for the foreseeable future, according to Ms Vestager, who added she is bound by the EU’s competition rules to block the deal unless the companies’ offer to sell off significant high-speed rail and signalling assets.
She told her fellow EU commissioners that they need to make every effort to tackle “clear and present risks” posed by China’s economic policy.
A note from the meeting revealed that Beijing’s “significant levels of strategic subsidies, restrictions on inward investment and state-sponsored outward investment and inadequate protection of intellectual property and business secrets” is a risk to EU markets.
She urged the EU to bulk up its efforts to regulate foreign takeovers and attach tough conditions to public procurement contracts.
Brussels should also work harder to police subsidies and improve security regulations of data, privacy and strategic infrastructure.
But France argues that the EU’s competition rules are “obsolete” in tackling China’s aggressive economic agenda.
Ms Vestager warned EU officials that any attempt to relax competition rules on merge would only increase costs for other European firms that need to compete internationally.
She said the current tools at her disposal are “sufficiently flexible” to adapt to the changing global economy and help “foster the right European champions specifically by fostering a competitive home market” that allows companies to be efficient enough to sell their products overseas.
Her strategy, however, has created a growing division amongst the EU’s 28 commissioners after Siemens warned it is not prepared to make further concessions and left the decision in Brussels’ hands.
The EU Commission, the bloc’s powerful executive, has not commented publicly on its deliberations apart from announcing it will make its decision by February 18.
French and German commissioners have spoken internally about the need to take into account the Chinese threat when they rule on whether the Siemens-Alstom merger should be allowed.
One German official said the Commission struggled to see beyond the EU market. They said: “They haven’t understood the way China works, it is not a market economy.
“There’s this EU bubble thing, they haven’t seen the global tectonic shifts.”
Tom Pick, a Brussels-based competition expert at law firm Fieldfisher, said he has heard nothing to suggest Ms Vestager make any U-turn in her opposition to the merger.
He said: “From what I see, what they are probably going to say is a prohibition, unless they have decided to market test again and have come to a different view.”