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The Long Arm Of Europe's Free Market Czar (Int'l Edition)


International -- European Business: BELGIUM

THE LONG ARM OF EUROPE'S FREE-MARKET CZAR (int'l edition)

Van Miert is shaking up the EU with his broad antitrust powers

The meeting was tense. The chief executives of Europe's major airlines gathered on Jan. 19 in Brussels, where they pleaded with European Competition Commissioner Karel van Miert to let them join forces with U.S. carriers. But van Miert held firm against the arrangements, which he believes would have prolonged the former national air monopolies' advantage. "The airline chiefs implored: `Please close your eyes,"' van Miert recalls. "I told them no. If you are sheltered and protected, you will not be able to compete."

Europe's free-market proponents are getting an assist from an unlikely corner: the European Commission. In an otherwise gray, technocratic organization, the 55-year-old antitrust czar, van Miert, is noisy and colorful. Not only was he at the forefront of the deregulation movement--hounding Continental governments to open up telecommunications and airlines--but he is fighting price collusion, state subsidies, and other obstacles to competition on a case-by-case basis. He has also expanded the European Commission's power to investigate mergers and joint ventures. He even has extended Brussels' reach across the Atlantic, forcing Boeing Co. last summer to renegotiate its takeover of McDonnell Douglas Corp.

That's an impressive accomplishment for a farmer's son who first made his name as chairman of the Flemish Socialist Party. When van Miert took over the antitrust job in 1993 from respected British conservative Leon Brittan, expectations were low. But van Miert says that dealing with the high prices and poor service of Belgian telephone dinosaur Belgacom turned him against monopolies: "Monopolies tend to function in their own interests, for the people working there and not for the public."

Van Miert became determined to spur competition, even if it meant ruffling feathers. He has ordered dawn raids on suspected price-fixers--and imposed stiff fines on offenders. A group of cement manufacturers recently were assessed $270 million. At the same time, to the delight of business, the commissioner recently simplified the review process for mergers and acquisitions.

Van Miert can also review subsidies to industry. Although European governments still dole out $52 billion in public funds annually to such money-losers as France's Credit Lyonnais, at least the aid now comes with conditions. At a Jan. 19 meeting with French Finance Minister Dominique Strauss-Kahn, van Miert insisted that the bank sell almost all its non-French operations and shrink its presence in France.

POLITICAL MOTIVES? In other controversial cases, he has forced the German government to cut planned subsidies to Volkswagen and turned down his home country's request to spend state money to keep open an unprofitable steel mill. "State aid has been a kind of drug," he says. "To go against that is the most difficult part of competition policy."

Critics complain that van Miert blocks deals more for political reasons than because they would hamper competition. For example, during last summer's dogfight over the Boeing-McDonnell Douglas merger, some charged that van Miert won only symbolic concessions from Boeing and was simply supporting Europe's Airbus Industrie.

Similarly, he has held up British Airways PLC's proposed alliance with American Airlines Inc. for more than a year, insisting that the British carrier give away 350 valuable slots at London's Heathrow Airport to level the playing field for low-fare startups. "This slot war has nothing to do with antitrust law and everything [to do] with interventionism," argues Stephen Kinsella, an attorney with British law firm Herbert Smith. Kinsella favors stripping the European Commission of its antitrust powers and creating an independent body modeled on Germany's cartel office.

That's unlikely to happen. Antitrust is one area where Brussels wields true clout. And despite the criticism, van Miert has taken the political heat for unpopular but crucial decisions that national governments have shied from undertaking themselves. "I have to give him credit for ending the airline and telecom monopolies," admits Kinsella.

Van Miert says he will carry on his crusade through the end of his term in 1999. Mentioned as a potential candidate for European Commission President, he talks of retiring instead. But after fighting Europe's monopolies, it's hard to imagine him out to pasture.By William Echikson in Brussels


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