Former EU Antitrust Chief Warns Against National Champions in European Competition Strategy

Former European Union antitrust chief Mario Monti issued a cautionary note on Wednesday against the creation of national champions as a strategy to bolster the competitiveness of European businesses, particularly in the face of increasing global competition, notably from China.

Monti, who served as Italy’s Prime Minister and as the European Commission’s competition commissioner from 1999 to 2004, highlighted potential repercussions and the risk of weakening competition enforcement, reported Reuters.

Monti’s remarks come amid heightened discussions within the EU on how to enhance the region’s competitiveness, with Mario Draghi and Enrico Letta, both Italians, slated to present reports commissioned by the EU executive. These reports are expected to emphasize the role of state aid and advocate for more protectionist measures to support European businesses in critical sectors, aiming to level the playing field against international rivals.

During an OECD conference, Monti underscored the challenges European national champions could face outside the EU. He drew attention to the 2001 transatlantic dispute when the EU blocked the merger between General Electric (GE) and Honeywell, despite approval from U.S. authorities. The decision was criticized, with accusations that the EU prioritized protecting local interests over fostering competition.

Reflecting on the GE-Honeywell case, Monti highlighted that the merger was blocked in the EU due to legitimate concerns under EU laws, effectively preventing the merged entity from operating within the broader EU market. He acknowledged the desire for European champions but cautioned against policies that might compromise competition authorities’ impartiality and effectiveness.

Monti’s warnings echoed concerns about the potential misuse of competition enforcement powers to promote national champions, which could ultimately prove counterproductive. He emphasized that such actions could jeopardize the intended outcomes, undermining competitiveness rather than bolstering it.

Source: Reuters