Kroes: nationalism has no place in cross-border mergers 

Polish banks

In Poland a struggle between the government and the national regulatory authority over banking mergers is escalating. On 15 March, the Polish parliament, reacting against a proposed merger of Polish banks Pekao and BPH, decided to begin a process establishing a panel to examine all bank mergers since the fall of communism. The disputed deal is an off-shoot of the larger takeover by Italian bank Unicredito of Germany’s HVB bank: the two parties to that deal owned Pekao and BPH respectively. 

Leszek Balcerowicz, a well-known economic liberal and the head of Poland’s central bank and of the banking commission wants to approve the deal. He has warned that political interference on the issue would threaten Poland’s hard-won rule of law. However Prime Minister, Kazimierz Marcinkiewicz, has warned that the merger could lead to the closure of branches and the loss of jobs and should not be allowed.

The European Commission, which approved the Unicredito/HVB deal in October 2005 is highly concerned over the Polish governments’s interference. In a related development, the Commission, on 16 March, launched a consultation on cross-border banking mergers and how to improve the supervisory process.

The row, highlighting as it does a protectionist, nationalistic zeal on the part of the government, threatens to compound fears on the tenor of the government of Mr Marcinkiewicz and the ultra-conservative views of Lech Kaczynski, first voiced on his election as President in October 2005 (see EurActiv 25 Oct 2005). 

France and Spain 

In France and Spain, interference has come in proposed mergers in the energy sector. In France, Italian company Enel was looking to takeover French energy provider Suez but, to block the deal, the government engineered a merger of Suez with the state-controlled Gaz-de-France.  

In Spain, the government has gone as far as passing emergency legislation to block a takeover by German energy company E.ON of the Spanish incumbent Endesa.

The October 2005 Commission decision approving the Unicredito/HVB merger commented, "It is in Poland that the impact of the merger is potentially greatest, since the proposed concentration will combine the second and third largest banks in the Polish market, Pekao, owned by UCI, and BPH, owned by HVB, thereby creating the leading player in terms of assets (21% of all banking assets) and more-or-less tied leader in terms of branch network. The current market leader is the majority state-owned PKO BP, which will remain in first place. The market investigation has confirmed that at the level of each of the Polish regions, competition from branches of all the main rival banks would remain strong."

Jean-Claude Trichet, president of the European Central Bank  said that it was of "extreme importance" that the independence of the Polish central bank was respected. "I hope very deeply and profoundly that this independence will be respected in the time to come because it is an essential part in the efficient functioning of the European Union."

Internal Market Commissioner Charlie McCreevy has expressed his view thus: "Not a day goes by lately without European governments commenting on, interfering in or trying to bluntly block the free flow of capital. Be it banks in Italy or Poland; a steel company in Luxembourg; energy companies in Spain and France. Everywhere you see the same outdated instinct, the same recipe of protection of the status quo, of governments promoting national champions, of shutting out competition. This type of policy will not lead to a strengthening of EU industry as they claim. [...] The policy is in fact a betrayal of Member states’ own workers, own investors and own savers." (See also EurActiv 10 March 2006.)

Commission President Barroso has also joined the fray, saying, "Economic nationalism will not build tomorrow's Europe. The Commission will exercise its powers if companies abuse their dominant positions in the market."

French President Jacques Chirac has, however, denied allegations of protectionism, saying they are "completely absurd". "I have heard here or there, notably in the foreign press, of France being accused of being in some way protectionist," he said.