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Europe’s Missing Champions

There is little doubt that US and Chinese industrial and digital champions will dominate large shares of the global economy in the decades to come. But whether they will be competing with European multinationals depends on the EU’s willingness to update its antitrust policies and expand its digital strategy.

BRUSSELS – Last month, upon hearing the news that the European Commission had blocked a merger between the manufacturing conglomerates Alstom and Siemens, the French far-right leader Marine Le Pen declared herself “over the moon.” As a rule, when Le Pen applauds something, suspicion is in order.

The Commission’s decision is indicative of a deeper problem. As matters stand, EU rules obliged the Commissioner for Competition, Margrethe Vestager, to consider the merger’s potential impact on European and regional markets in deciding whether to approve or reject it. But the rail market in which Alstom and Siemens operate is global, which means that assessments of market dominance or “impediment[s] to competition” should also account for rivals based in Japan, South Korea, China, and elsewhere.

After all, were Alstom and Siemens to form a much larger firm, it would still be dwarfed at the global level by China’s CRRC. Le Pen may dismiss the threat from CRRC as “a lie.” But Bloomberg – a far more reliable source – has correctly described it as a state-backed “monster” with revenue twice that of Alstom and Siemens combined. Itself the product of a mega-merger in 2015, CRRC grew silently in the shadows of a giant domestic Chinese market, readying its global debut. And right on cue, it was awarded a €20 million ($23 million) contract by the Czech railway operator Leo Express in 2016.

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