Europe's history is full of encouraging examples of restructuring. The Alstom affair has shown that Community definitely worked and god knows only too well how sensitive this affair really was. Loyalty to the principles and rules of free competition require from European Commissioner Mario Monti (and the Commission as a whole, which assumes collegial responsibility for the decisions) a first rate intellectual rigour and the ability to resist under pressure. I'm not only thinking of political pressure but also social and moral pressure resulting from what's at stake: jobs for tens of thousands of people, industrial development of the regions or site, the presence or absence of a Member State, indeed of Europe in the significant sectors of the economy. The first natural reaction is therefore understanding the possibility of state intervention in support of such objectives and clemency with regard to one or other exception to the rules and procedures.
But this is not the crux of the matter. As a general rule, tolerance and “laisser faire” don't help jobs or economic development as the artificial survival of inefficient activities prepare more serious and more damaging disasters later on and they operate to the detriment of effective competitors. Nevertheless, ”understanding exists for those who are thinking of the future. Community rules on state aid is not just an automatic chopping bloc; they sometimes allow and sometimes encourage subsidies and support for restructuring. Europe's history is full of cases where originally the ECSC and then the EEC not only allowed but directly assisted restructuring (coal, steel, shipbuilding, etc.-. what is not allowed is aid for saving something that is not accompanied by a serious and credible programme for a return to profitability as this aid saves nothing at all. During the debate, the European Parliament had cleverly organised last Tuesday evening on this subject, Commissioner Monti pointed out that aid that is sometimes tolerated for restructuring and which had failed, was nothing but harmful and jobs and companies were not saved and the result was, “promotion of plant closures, job losses, more costs to the state and taxpayers”. It is easy to calculate the artificial safeguarind of jobs in non profitable industries, it is harder to calculate job lossess in competitive companies killed off by subsidies for inefficiency.
The parliamentary debate allow for a confrontation between different postitions and contributed to puncturing the bags of hot demagogic air from certain quarters. The discussion was quite lively indeed. Mr Abitbol described Professor Monti as the, “Torquemada of European industry” and asserted that Brussels, “was capable of ruining prestigious industrial sites such as Belfort or St-Nazaire just for avenging the hurt pride of a European Commissioner”. We got the message, the “sovereignty” supporters (Georges Berthus also spoke, as did Carl Lang from the FN) used the occasion to denounce the end to France's autonomy and the domination of the “technocratic and imperialist tentacles of the lords and masters in Brussels”, accusing the Commission of transforming Europe into a “vast temporarily industrial zone”. What the “sovereignty supporters” forget is that European rules protect French companies from abuses committed elsewhere. Mario Monti underlined that French industry was able to take considerable advantage of he application of competition rules and highlighted the cases where, with the authorisation of the Commission, French firms were able to become “European champions” by uniting with other European companies (Total-Fina-Elf, Carrefour-Promodes, Arcelor).
Except for the French sovereignists, no other political group protested against the principles of European competition rules or (which is even more astonishing) the powers of the Commission, with only a partial exception. That of Mr Wurtz, President of the European United Left (GUE), who asked for, “review the discretionary power granted to the Commission on competition: it is necessary for social actors and national parliaments have their word on what criteria should be respected, what goals to set and what controls to exercise”. We can see that the demands of Mr Wurtz don't focus on individual decisions but on rules and directions. Moreover, the collaboration and power sharing exist. Mr Monti pointed out that Heads of governments had often given clear signals at the European Council, “for reducing State Aid and that they be redirected to horizontal objectives rather than towards assistance to certain enterprise sectors”; this direction is therefore not only a “fantasy dreamt up by European Commissioners). As for democratic aspects, Mr Monti pointed out that anti-trust positions were taken in Member States by authorities that did not have any more political legitimacy than the European Commission had obtained from the European Parliament (not mentioning double jurisdictional control).
Industrial policy at the heart of the debate. Mr Wurtz also requested revision of the “timid and fusty directives on information and consultation of workers and the European enterprise committee” in the direction of “genuine rights, including that of suspending a restructuring plan to proceed to a different expert opinion and possibility of other options. ”We're digressing from actual competition policy and entering the real crux of the debate: demands for a European industrial policy. this policy doesn't exist, said Mr Wurtz, what exists is, “the hunting down of State Aid in the name of competition rules”, whereas in this case, if there had been no State Aid, competition would have disappeared as Alstom would have posted a balance sheet revealing that in the strategic energy and railway sector, only a few European scraps would have remained in the world alongside the US giants (General Electric) and the Japanese (Mitsubishi). In reality, the Commission never really banned aid for restructuring if they were accompanied by a serious restructuring programme and if they did not hinder the functioning of the single market. But what counts for the moment, is the awareness of the need for an industrial policy. If for Mr Wurtz, “the case of Alstom is a strong illustration of the essential political choices”, for the Socialist Mr Savary, Europe needs, “an industrial policy that will protect national champions, safeguard its inestimable technological heritage and its precious know-how…this is the competitiveness of Europe which is at stake” and he also spoke of the need to boost, “on equal terms with competition policy, an industrial policy that allows the Union to defend its economic and social interests in the world, which is already ours”.
Similar remarks, even if the arguments and objectives were sometimes different, were developed by other speakers of all political tendencies, whose overriding concern was hatred of de-industrialisation in Europe. Commissioner Monti said with his light-hearted sarcasm, for which he is known, that he did not want to disappoint them, “by saying that I agree entirely”. He did add though, that one of the essential elements of an effective industrial policy is good single market functioning in competitive conditions. All business leaders would say that he fundamental contribution of the EU to their activity (production, expansion, exports etc.) is the functioning single market in competitive conditions. Mr Mont acknowledges, however, that other things are needed and said that he unreservedly supported he initiatives of his colleagues, Ms de Palacio, Mr Busquin and Mr Liikananen when they bring other elements that can facilitate other industrial developments. President Prodi and the whole of the Commission are reflecting on the problem of de-industrialisation but in the conviction that the way of resolving the problem is that Member States do not breach laws on competition and state aid Alain Liepetz observed that, “consumer protection initially consists in guarantees of supply”, the Commissioner replied by pointing out the existence of the “Failing company defence”, which allows for the risk of operators disappearing, being taken into account, which makes supply conditions more difficult. Protection of consumer interests undoubtedly represented one of the main effects, often forgotten of competition policy.
Beyond bureaucratic operations. Mr Monti also replied on specific aspects of the Alstom case and to some personal attacks. The President of the United Left group, Mr Wurtz, already mentioned, pointed out that union representatives at Alstom had since 1999 denounced, “serious management errors committed by the group's board of directors” and that Parliament voted in February 2000 for a resolution warning against the risks to the future of the company. Mr Monti thanked him for these reminders as they proved that it was not Commission that was not the possible cause of unemployment in the case of Alstom. As for the accusations of his displaying the behaviour of a “notary”, Mr Monti replied that “I perfectly understand the emotion of the unions. I am aware of the importance of the Alstom group in the European social and industrial fabric. But do we not see the political value of safeguarding the single market without competition distortion, a crucial element (not sufficient but necessary) of a social market economy. The political merit of preventing a country being able to go beyond rules of the single market when the primary beneficiaries are European companies and opportunity for growth and jobs. The political need to give confidence to Europe, showing citizens in small future Member States that the Commission as guardian of the treaty, is not severe with the small contenders and weak with the large one?”. This is a speech that goes beyond the simple aspects of procedure that the Alstom case was sometimes reduced to and invests in the general debate on industrial policy and its relations with competition policy. I think that the content and tone of the Commissioner's declaration should be taken into account, as well as the transformation - of the general direction of competition, which goes beyond a simple bureaucratic operation. The case also deserves other reflections.
(F.R.)