Heads of government are concerned. The disagreement over the regulation of take-overs does not constitute a simple technical divergence over a complex and financially significant legal dossier: it infers partially different understandings of economic policy, involving the single market for financial services, industrial restructuring, the Lisbon strategy, tax competition, the moving of companies and other aspects. Furthermore, the political bodies at the highest level are concerned, if it is true, as published Stern, that Chancellor Schröder has made a move with the President of the European Council, Goran Persson and with the other Heads of government to draw their attention to this dossier. The economic press has paid a great deal of attention, by generally gathering the opinions of business circles and by insisting on the legal details that are no doubt vital, but risk discouraging the understanding of the stakes by the citizen. The reading of the documents to which the new rules on transparency give access does not help the citizen a great deal. We learn that the European Parliament, in its second reading last December, introduced fifteen amendments, that the Commission accepted three of plus a fourth in part, that the Council formulated compromises on others, that the conciliation procedure is underway, and so on.
Situating the dossier. A little chronology will enable to situate the dossier, the starting point being that take-over bids are a vital instrument of industrial restructuring and that "hostile take-overs" (that is to say bids made without the agreement of the main shareholder or the management of the company concerned, when speaking directly to the mass of shareholders) have become commonplace.
European legislation on take-overs, is an old target. The attempt, in the 1980s, to define standard and detailed rules had failed. This is why, in the 1990s, the Commission opted for a framework directive defining a minimum of common rules (transparency of operation, shareholder rights…). In each Member State, an authority would ensure respect for these rules. A specific provision (to be mentioned because it forms the basis of the present divergences) bans the management of an "attacked" company from taking defensive measures without being authorised to do so by the shareholders General Assembly;
This second draft, presented in 1996, was modified in part by the Parliament in first reading in 1997, and the Council defined, in June 1999, its "common position" on its content and, one year later, on the Anglo-Spanish divergence relating to Gibraltar. The Commission felt that the Council position represented progress for the European harmonisation of the take-over system;
In second reading (last December), the Parliament moved distanced itself from most of the project that was submitted to it over a few crucial points, including that of defence against hostile take-over bids;
The informal "dialogues" then allowed to smooth out most of the divergences (including over difficult issues such as the informing of workers, cash compensation and the time for transposition into national law), but the issue of the defensive measures and that of the Commission engagements relating to future works have remained open;
On 10 April the formal Parliament/Council conciliation procedure was opened and, on 26 April, the respective positions over these points of disagreement have been confirmed;
On 27 April, the German delegation reversed its position on defensive measures, while distancing itself not only from the draft compromise with the Parliament prepared by the Presidency and the Commission, but also from the "common position" as the Council had unanimously adopted it in June 2000. On 10 May, fourteen delegations reaffirmed this "common position", by isolating Germany. Thus the Presidency will continue its conciliation with the EP on this basis;
The conciliation procedure will continue before the end of May. For lack of a compromise between the Parliament and Council by next 6 June, the draft will become obsolete and the legislative process will have to start from zero, with a new proposal from the Commission.
The four points of Mr Bolkestein, the reservations of Mr Lehne. What explains the difficulties faced by this draft and the double theatrical partial "no" from the Parliament and the German about turn?
The point of view of Commissioner Bolkestein is summarised in four points: a) the discipline of take-over bids represents a fundamental element of an integrated market for financial services and it is explicitly cited in the Lisbon strategy; b) the restructuring of companies for the competitiveness of the EU economy and must not be blocked by artificial barriers; c) in his opinion, the possibility for company managers to counter a hostile take-over with defensive measures, without gaining assent from the shareholder, opens the door to all sorts of manoeuvres as the management could act in its own interest without concern for the interests of the shareholders; d) if the Directive is not approved by 6 June, ten years of work will have been wasted and the European economy will pay the price. Management from most of the Member States share the position of Mr Bolkestein by underlining that companies belong to shareholder and that European regulations must simplify take-over bids and not make them more complicated.
The European Parliament majority is based on other considerations: the protection of personnel (to be placed on the same standing as that of the shareholders), the dangers of moving (when a multinational restructures its activities), the national or regional anchoring of certain companies. A multinational applies to the companies it owns a global strategy that may involve the closure of installations or their displacement; several recent examples had proved this. According to the rapporteur, Mr Klaus-Heiner Lehne, German Christian Democrat, the EP has improved the Directive in several areas, and Mr Bolkestein must take into account the Parliament's position, co-legislator on the same standing as the Council, even if it does not share it. The German about turn is especially motivated (according to official explanations presented in Brussels) by the fear of discrimination to the detriment of companies in certain Member States, due to the differences between national legislation, such as the existence or absence of instruments such as the "golden share". For example, Mr Lehne explained that Alcatel can buy Siemens, but Siemens cannot buy Alcatel or that the London Stock Exchange can buy the Stockholm stock exchange, but that the opposite is impossible. The possibility of taking defensive measures on the basis of an authorisation from the General Assembly granted to the management before a hostile take-over bid would partially re-establish that balance, feels Berlin.
Valid arguments on both sides. Each thesis has valid arguments. The adversaries of the draft by Mr Bolkestein emphasis that the "European model of society" is not that of the wild capitalism of Mrs Thatcher, but that other considerations come into play, linked to the interests of the personnel, to traditions, to the regional anchoring of certain traditional activities, to the balance of the territory. At the time of the assault by De Benedetti against the Societe Generale de Belgique, Gianni Agnelli, future charismatic figure of Italian capitalism, had disapproved of hostile take-overs, when asserting that a gentleman does not enter another persons home without being invited. On the other hand, they answer that the board does not always act in the interests of the company for which it is responsible, that the management can lie dormant or keep itself to defending given positions (was this not the case of the former SGB management mentioned above?) to the detriment of the shareholders and that restructuring is crucial to the Lisbon objective: make the EU the most dynamic economy in the world. They add that the artificial saving of a company against a fight never leads to long-lasting results; they waste billions and, a little later, what should happen, happens anyway. Moreover, hostile take-overs are no longer the privilege of Anglo-American capitalism, they have become a normal aspect of the economy's dynamism.
The debate is important; the case of take-overs constitutes an aspect of the search for a balance between the given requirements for efficiency and the "European model of a society". The debates over financial services (implementation of the Lamfalussy report), on the degree and the pace of the liberalisation of public services such as the postal services or the railways or over the opening of the gas and electricity markets stem from the same problematic. Until now, the EU has been pragmatic, by taking gradual and partial opening and liberalisation measures (which have proved, in use, generally positive), but without defining neither the doctrine nor the destination. The Commission should first tidy up at home, as for the moment the impression is that each Commissioner acts according to his personal beliefs and the specific tasks that are entrusted to him. Mr Bolkestein "pulls" in a direction, with vigour and force of conviction that sometimes brings him to use with regards to the European Parliament, when he is challenged, an impulsive or even unpleasant language. Mrs Diamantopoulou is fighting for the taking into account of the social repercussions of industrial mergers and for the planning of restructuring, and she has called for the cooperation of Mr Monti to develop a document on the social consequences of competition policy. The Commission as a College approves documents going in both directions, be it the Bolkestein document on take-overs (directed in favour of shareholders), or the document by Mrs Diamantopoulou aiming to protect workers.
Respect the institutional triangle. The Commission must nevertheless accept the debate with the other institutions and the possibility that sometimes the Council and more often the Parliament do not follow it completely and modify or block a project. The dialectic of the institutional triangle, foundation of the "Community method", must be respected. (F.R.)