'War is declared' between Montebourg and Almunia

Arnaud Montebourg, May 2012. [Reuters]

The tone between the French industry minister, Arnaud Montebourg, and the EU's competition commissioner, Joaquín Almunia, is becoming increasingly heated, as the pair exchanged inflammatory letters last week, EurActiv.fr reports.

“Obsolescence, radicalism, autism, self-isolation” are the words used by the French minister for industrial revival to describe Almunia, whose jobs includes the approval of mergers and state aid to industry across the 28 EU member states.

“This time war is declared,” Montebourg told a group of journalists in Paris last Wednesday (22 January).

The week before, on 14 January, Montebourg replied to a letter from Almunia, which had questioned the minister’s management of state aid in France. (Read the letter exchange here and here).

“I decided to step into the arena because the Commission is locking itself into its own ideological radicalism. Many of us demand a reform of the state aid system so that the EU can adapt to globalisation - and we get nothing!”

According to a source in the Commission, the bone of contention concerns the maritime company SNCM, which links Corsica to France's mainland. The EU executive has requested the company to reimburse part of the state aid it received from the French authorities, triggering the ire of Montebourg, who is seeking ways to maintain the company afloat.

French 'caricature'

“I deplore the caricature you make of the state aid control policy,” the commissioner replied in a letter, dated 19 December.

Almunia was referring to an interview Montebourg gave to La Tribune in which he called on the commissioner to review his “radical doctrine” of state aid.

“Far from being a radical doctrine, this policy has proved to be useful and flexible,” Almunia adds.

The French minister sees things differently, however. For Montebourg, the Commission is responsible for high-profile failures of European industry, including Alcan's takeover of French aluminum conglomerate Pechiney and the failed merger between Schneider and Legrand. Meanwhile, the USA and China have their hands free to create their own champions, Montebourg claims.

Preventing the 'collapse of Rome'

It is not the first time that Montebourg has attacked the Commission's competition policy. In an interview with EurActiv.fr in October, he called the EU's competition and state aid rules "stupid and counter-productive".

Montebourg considers that Europe can only survive if it is able to compete in the innovation race. Public subsidies happen everywhere except in Europe, he argues, citing China which spends 6% of GDP to help its companies and the United States, which spends 1%. In Germany, high-tech strategy represents only 0.3% of the country's GDP, while in France the recovery programme announced last September represents 0.2% of GDP.

“We are far from what competitors do while the EU is stuck in obsolete and unadapted views,” Montebourg said, claiming the situation was serious.

“It’s the story of Rome surrounded by the Barbarians… We are all waiting for the collapse of Rome!”

Under current rules, the European Commission has to be notified as soon as state aid exceeds €200,000. France is questioning the logic behind this low threshold, which has led the Commission to investigate small projects like aid for setting up a driving school in the Netherlands.

“While the world’s industry is being subsidised by billions, our bureaucracy is led by men who have not understood that the world has changed,” Montebourg said, proposing to review the threshold downwards.

An alliance against DG Competition

France has repeatedly asked for more flexibility from the competition directorate, the Commission department which scrutinises mergers and state aid to European companies.

Other EU countries, including the UK and Germany, have made a similar request to the Commission, asking for the state aid threshold to be reviewed.

To coordinate their initiatives, Montebourg has established a group called “friends of industry” where industry ministers from European countries meet on a regular basis. Twelve countries were represented at the group's first meeting on 23 October, including Britain and Germany. Montebourg hopes to gather even more at the next meeting in Rome, on 30 January.

One of the issues debated at those gatherings is how to better control the Commission on competition matters.

The French minister deplores that competition matters, which have “such significant consequences" for the economy and jobs, are being decided by "legal experts who apply - and even invent - rules, rather than by elected politicians responsible for making choices and expressing the preferences in the name of the European people.”

France has already pushed for the establishment of an appeals body in the EU Council to avoid abuses by the Commission.

A more flexible interpretation of the doctrine

The Commission relies on legal principles that France disputes, like that of the "prudent investor", a legal notion which calls on the states to act prudently, like a private company does.

“It’s not in the treaties," Montebourg said of the notion. "This concept means acting like a banker, while the banks are too cautious,” he argues.

The reciprocity notion could also be interpreted differently.

“Europe's competitors such as China or the US spend hundreds of billions of euros in technological innovation, while our services do everything to prevent us from doing the same. What should we think of this Commission that is handcuffing us and shackling our industries while our competitors are using drugs to run faster?” the minister wrote in his letter.

Voters will make their choice

Asked by EurActiv.fr to comment on the risks of criticising the Commission in the run up to the EU elections, Montebourg stressed the importance of having a democratic debate.

“We will bring this issue to the elections, reducing the Commission’s powers is a transnational challenge,” he said, adding that asking for a more democratic Europe is to defend it.

External links: 

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George Mc's picture

Well played Mr Montebourg.

The Rules need a radical overhaul.

The Commission could do with down sizing by 50/60 percent. The quality of commissioner is another serious issue. Very few of them could hold down a cabinet job in the top 5 or 6 EU countries.

Napoleon Bonaparte's picture

Mr Montebourg is right. The EU does nothing to stop outrageous anti-competitive mergers in the USA such as Boeing - McDonnell Douglas, does nothing to stop the outrageous social dumping of all Chinese exports into Europe from slave prison child labour suicide net dormitory "factories" or prevent European companies evading 200 years of social progress in Europe to shift all their production to 18th century China.

What's it for?

To destroy human and civlisational progress and reduce us all back to feudal serfdom except for the 1% who cannot possibly spend the 99% of the wealth they have garnered to themseles anyway.

A War on Humanity and Human Civilisation.

European's picture

Montebourg is one of the biggest lunatics in France. When he claims he's fighting for mergers and competition, what he really means is the state paying huge subsidies out of taxpayer's money to sustain obsolete industries that in reality need to be downsized.

Certainly, we need to simplify the rules, improve competition and enable industries to grow and merge in Europe. But Montebourg is certainly not the one to lead the way on that. The rules, by the way, are set by the national governments at European Council meetings, they're not invented by the Commissioners.

"The Commission relies on legal principles that France disputes, like that of the "prudent investor", a legal notion which calls on the states to act prudently, like a private company does."

That's the thing that the big-spending French government doesn't like, acting prudently.

George Mc, perhaps you could be the one responsible for telling the member-states that they are going to lose their commissioner.

The original Lisbon Treaty did in fact envision scaling down the size of the Commission. The Irish voted against this and one of the main reasons, they said, was because they wanted to keep a Commissioner forever. Once they had secured that the Commission was always going to have one representative from each member state, then they voted in favour of the treaty in the next referendum.

So, it's "democracy" in the EU in the form of the Irish referendum that has ensured that the Commission will always be large and will grow larger as new members join. Blame the vote of Irish people for that.

George Mc's picture

@ European

I understand your explanation regarding the number of Commissioners. That, however, does not make it reasonable, justifiable or democratic. In fact, you just could not make it up. If we were to start from the beginning, tomorrow, would we repeat the process and mistakes? I don't think so. In fact, you could argue that it just wouldn't happen at all because there would be no appetite from the electorate or national governments.
That is not to say that there would not be a requirement for looser EEC style trading arrangement, where if you had commissioners, they would be appointed on population size.
How can it be remotely justifiable, that Malta has the same representation as Germany or France? It is lunacy! We have reached the stage where we have Commissioners that we just don't know what to do with. Where else in the world is there an example that is run like the EU. As I said before, lunacy!