On 19 February, France and Germany published a joint manifesto calling for the development of a European industrial policy to ensure the global competitiveness of European manufacturing industries. The industrial strategy is to set clear objectives for 2030 under the next Commission based on three pillars:
The manifesto calls for creation of a European strategy for technology funding, a strong commitment to disruptive innovation, leadership in artificial intelligence, development of breakthrough/cutting edge technologies and support of innovation by financial markets.
Modification of the EU regulatory framework
The manifesto proposes major changes to the EU competition rules in order to (i) take state-control and state subsidies into account in merger decisions; (ii) updating the current merger guidelines to take greater account of potential and global competition in order to ensure a more flexible approach to market definition and a more long-term approach in merger decisions; (iii) the possibility of a right of appeal to the Council of Ministers which would have the power to overturn Commission merger decisions; and (iv) measures to facilitate member state financing of major research and innovation projects.
Measures to protect European companies and technologies
Here the manifesto urges the full implementation of the recently agreed measures for European screening of foreign investment, effective reciprocity measures for public procurement with third countries, a strengthened commitment to multilateralism, open markets and EU trade policy and the use of trade policy to defend strategic European interests and autonomy.
Of the three pillars, the proposed modification of EU competition law, which is a direct response to the Commission's prohibition of the Siemens/Alstom merger, is likely to prove the most controversial and the most important as it would squarely inject industrial policy considerations into EU merger decisions. Here the manifesto's proposals are both defensive – taking state ownership and subsidies into account – and offensive – consideration of potential and global competition when defining markets and assessing mergers. In addition, the manifesto proposes a significant institutional change, which would give the Council of Ministers the power to overturn Commission merger decisions, albeit subject to strict control. This last proposal would introduce a feature of German merger control – the right of the German Minister of the Economy to override a prohibition decision by the Federal Cartel Office law – into European law by giving the Council of Ministers the same power.
Although the proposals for modification of EU competition law are likely to receive the most focus, all three pillars are mutually reinforcing and suggest both a more aggressive approach in trade-related matters and an industrial policy designed to create European champions capable of competing successfully on global markets against state-owned or state-subsidised firms while at the same time supporting and facilitating innovation.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.