Santer joins critics of anti-trust policy

Date: 23/05/1996

By Tim Jones

IN a move that is bound to upset the 'liberals' inside the European Commission, President Jacques Santer has come down on the side of those who believe its over-zealous anti-trust policy is threatening European firms' ability to compete on the world stage.

The French government - supported by the Commissioners it sent to Brussels last year - has long complained that DGIV, the Directorate-General for competition, is hobbling the creation of European firms capable of taking on the Americans.

For a long time, the French have been lonely voices speaking out against the approach taken by Competition Commissioner Karel Van Miert and his services - but now they have won the Commission president over to their cause.

“We have to rethink our competition policy,” Santer recently told a breakfast meeting of the Brussels chamber of commerce. “Sometimes it looks similar to American anti-trust policy and sometimes we break up our companies when we should be making them stronger.”

His remarks have been greeted with delight by Commission opponents of DGIV's approach to merger vetting. “This is good news,” said one. “It is a very rigid system that takes too little account of the fact that markets are more global than ever.”

Santer believes that the US competition authorities are much more adept at avoiding the creation of monopolies while, at the same time, allowing the formation of big firms which can compete globally in highly-profitable economic sectors.

“We should not allow the creation of monopolies or oligopolies but, when we analyse these cases, we must always remember that these firms operate in a global market,” said a spokesman for Santer. “Competition policy is not something you should have fundamentalist views about.”

Critics of DGIV point to the increasing number of occasions when Van Miert has either blocked commercial deals or attached tough conditions to them in areas where foreign competition is very hot. It is his toughness in the media sector which infuriates them most.

Last year, Van Miert blocked the formation of Nordic Satellite Distribution, a joint venture between Scandinavian media and telephone companies, because it would have dominated the Nordic market, as well as the creation of Media Services - a venture between Bertelsmann, Deutsche Telekom and Kirch - for fear that it would carve up the German pay-TV market.

His veto of the Holland Media Groep, which would have taken 60&percent; of the Dutch advertising market, particularly annoyed critics. Van Miert's detractors acknowledge it would have dominated the Netherlands, but point out that these media and multimedia markets are global.

“While these alliances were being blocked, in the US they were allowing the Walt Disney link with Capital Cities/ABC and Westinghouse with CBS,” said a Commission critic. “It is perverse.”

The 'liberals' within the Commission - led by Van Miert and his predecessor at competition Sir Leon Brittan - dispute the arguments now supported by Santer. “It would not be wise to accept the reasoning that in order to take on the Americans we have to accept dominant positions or allow monopolies,” Van Miert has said.

While it is true that the media market is global, he believes that European television markets are national in character. At the same time, they are just starting to grow and should not be sewn up by a handful of national telecommunications monopolies and huge publishing houses. But his critics want a review of DGIV's approach to identifying the relevant geographical and product markets when investigating mergers.

“It makes no sense to look only at the Dutch or Scandinavian markets,” said one official. “Markets are global. They use strict criteria to define markets that may have been relevant ten years ago but are not now.”