Call for job losses to be considered in merger reform

Date: 22/11/01

By Laurence Frost

ANNA Diamantopoulou, the employment and social affairs chief, is to press for job losses to be taken into account when the EU decides whether or not to approve mergers and acquisitions.

Business leaders are fiercely opposed to the proposals, to be unveiled by the Greek commissioner during internal European Commission consultations on a planned reform of the EU merger regulation led by competition chief Mario Monti.

A leaked paper from Diamantopoulou's services, seen by European Voice, calls for firms notifying the Commission of merger or distribution deals to "supply information on the initial employment situation and their intentions regarding future activities" - raising the possibility that deals could be blocked if they cost too many jobs.

The document argues that the Commission is obliged by the Treaty of Amsterdam to integrate employment considerations into all policy areas.

"That includes merger policy of course," said Willy Buschak, confederal secretary of the European Trade Union Confederation (ETUC). "This is a legally binding treaty obligation across the board."

ETUC campaigned unsuccessfully for social factors to be included in the original 1989 merger regulation and is now stepping up its efforts ahead of Monti's reform proposals, to be tabled in a green paper next month.

But Diamantopoulou and the unions face an uphill struggle persuading the competition commissioner and his senior officials to make room for employment concerns. "They simply refuse to accept [the treaty obligation]," said Buschak. "They think it doesn't apply to them."

Diamantopoulou's views on merger reform are elaborated in the leaked paper, an early version of a draft consultation on company restructuring. "In view of the influence which the competition authorities exert" on restructuring, the paper says, "a consistent and logical approach to the economic and social consequences of mergers seems to be particularly necessary".

Although many of the detailed proposals have been removed from later drafts, it is understood they will instead be raised in consultation over Mario Monti's green paper. "Just because an idea is not in the [restructuring] paper, it doesn't mean it's not under discussion," an official said.

UNICE, the EU employers' group, warns that blocking deals which involve heavy redundancies would damage consumer interests and, ultimately, employment. "The merger regulation is there to assess the competition effects [of a deal] on a market," said UNICE advisor Erik Berggren. "Sometimes a company has to shed jobs in order to make efficiency gains that ultimately lead to the creation of more jobs."

Monti's spokesman, Michael Tscherny, said EU merger rules already fulfilled the Treaty requirements. "When companies file for [merger] approval, that doesn't suspend any of the normal obligations they have in the social or employment fields," said Tscherny. "It is not always possible to predict how a merger will affect the employment situation."

Anna Diamantopoulou, the Employment and Social Affairs Commissioner, is to press for job losses to be taken into account when the EU decides whether or not to approve mergers and acquisitions.