Whose Champions, Anyway?

The links between states and companies have grabbed headlines, most recently in Russia, where President Vladimir Putin seems obsessed with creating “national champions” in the energy and aerospace sectors. Such efforts seem but a part of a surge of protectionism in European political debate about business, especially when it comes to cross-border acquisitions.

Across Europe, governments position themselves to be seen as defending “national” players from “foreign” competitors. “Economic patriotism,” the slogan coined by France’s Prime Minister Dominique de Villepin following PepsiCo’s rumored attempt in July 2005 to takeover Danone, perhaps best encapsulates the political imperative. Although de Villepin’s speeches are more flamboyant than those of most political leaders, the underlying sentiment extends far beyond France.

The same impulse appears to be at work behind Italy’s policy on Autostrade, Spain’s on Endesa, Poland’s on its banking sector, the former Swedish Prime Minister’s on Volvo, German unease about “locust”-like funds on Deutsche Börse, or the United Kingdom’s ever louder defense of the London Stock Exchange’s independence from the United States.

The basic belief that underpins “economic patriotism” is that of an alignment of interests between companies considered “national” (most prominently the largest ones or so-called “champions”), their national employees, and the national community. According to de Villepin, “to defend the employees’ interests well, we must protect the interests of our companies.” He later argued that Danone should be considered “French” because its “milk collection and its water sources are in France.” But Danone’s own filings indicate that only 22% of its global sales and less than 14% of its global workforce are in France.