Altmeier urges EU to protect technology from Chinese buyers
Germany spearheads effort with France to reform competition law after Alstom-Siemens veto
Paris and Berlin will this week join forces on efforts to defend Europe’s “technological sovereignty”, Germany’s economy minister has said, in a bid to fight off encroachment from global rivals and shore up EU industry in the wake of the failed Franco-German rail merger between Alstom and Siemens.
Peter Altmaier told the Financial Times that France and Germany wanted to make a joint proposal for a new European industrial strategy, including possible reform of EU competition law.
He said he and his French counterpart Bruno Le Maire had been spurred to action by the European Commission’s move to block the proposed tie-up between Siemens and Alstom, which was aimed at helping the European trainmakers to compete with CRRC, the Chinese railway group.
In an interview, Mr Altmaier, a close ally of Angela Merkel, said he would hold talks with Mr Le Maire in Berlin on Tuesday on how to ensure European companies were better able to compete with international rivals.
“Often European companies are competing globally with US or Asian firms that are very strong in their home markets,” he said. “So Europe should also allow companies to exist and become global players that are big enough to compete effectively.”
Paris and Berlin have been left fuming by Brussels’ refusal to countenance a deal between Siemens and Alstom. In recent days the two countries have emphasised the need to create and foster “European industrial champions” and warned of the risk of Europe ceding its technological supremacy to a rising China.
The challenge to the status quo from the eurozone’s two leading economies is likely to intensify debate across the EU about whether and how the bloc should protect important domestic companies and foster innovation.
Mr Altmaier has led the charge, unveiling a new industrial strategy for Germany this month. He has emerged as the face of Berlin’s growing protectionist backlash against Chinese investment, repeatedly warning of the menace posed to Germany’s future prosperity by China’s growing economic strength.
As part of his new strategy, he said the state should step in to acquire German high-tech companies if they were about to be taken over by state-backed Asian predators. He cited the €4.5bn acquisition of Kuka, Germany’s leading producer of industrial robots, by Chinese appliance-maker Midea in 2016, a deal which raised fears that much of German high-tech knowhow could end up in Chinese hands.
The minister also called for an easing of EU competition law to allow the creation of mega-companies. “It’s indisputable that when you operate in global markets you need to be of a certain size to compete successfully,” he told the FT.
That was particularly the case for companies making planes, lifts in 100-storey buildings “or trains where projects can cost €30bn or more,” he said. “That’s why it’s important that we don’t break up these companies or put obstacles in their path.”
Mr Altmaier was speaking days after Mr Le Maire on February 12 presented a three-point plan that would amount to the biggest shake-up of EU merger rules for 30 years. It included a proposal to give EU national leaders the right to overturn merger decisions by the European Commission, an idea Mr Altmaier said could be a “meaningful step”.
However, some government officials in Berlin oppose the idea, saying it could lead to arbitrary, politically driven decision-making that would diminish the commission’s role.
Mr Altmaier and Mr Le Maire have also both proposed that Brussels should consider a company’s global market share rather than just their position in the national or European market in deciding whether to approve or block a merger.
Mr Altmaier’s new industrial strategy has been fiercely criticised by some German economists. Writing in the FT this week, Christoph Schmidt, chair of the German Council of Economic Experts, described it as “highly interventionist” and criticised the idea of singling out certain “strategically important” companies for protection.
“Among the companies identified are laggards such as Deutsche Bank, leaving the reader at a loss as to why exactly — apart from its name — it should be protected while others are to be left exposed to the forces of competition,” he wrote.
Mr Schmidt said it would be better to “incentivise European companies to be highly competitive and innovative on their own account”, improve education and provide targeted incentives for companies to pursue innovation.
Mr Altmaier said his strategy also included such measures. “It talks about improving the fiscal environment, achieving more affordable energy prices and stabilising social security contributions,” he said. “Of course, cutting red tape and investing more heavily in infrastructure are also very important.”
He also denied a claim by Clemens Fuest, head of the influential Ifo Institute for Economic Research in Munich, that he was seeking to give a “state guarantee” to big companies such as Siemens and Thyssen Krupp that would protect them from break-up or hostile takeovers. “There’s no such guarantee in my strategy,” he said. “That has nothing to do with the free market.”
Mr Altmaier also addressed the issue of Chinese technological company Huawei, which a number of countries have blocked from supplying equipment to their next-generation mobile phone networks amid fears over espionage.
Last month, the German economy ministry said security of the future 5G network and the safety of products offered by telecoms suppliers was “highly relevant” and the government would be “guided” by such concerns in its buildout of the network.
Mr Altmaier said: “The German government does not want to discriminate against any company. But we insist that all products used and installed in Germany meet the highest standards of safety.”
He said Berlin was planning to “check and improve” its safety regulations and ensure that all telecoms equipment complied with them.
He also said Huawei would only be allowed to take part in the buildout of Germany’s 5G network if it provided “assurances” that it would comply with German regulations.
He said the German authorities would also need to ensure that companies such as Huawei were holding to such assurances. “That means that the relevant federal authorities, such as the Federal Office for Information Security, must have the necessary capacity to investigate [whether such promises are being kept],” he said.