EU warned over economic nationalism

By staff reporter

- Last updated on GMT

Related tags: European union

A top economic expert has warned against growing economic
nationalism in Europe, as reports say the French government will
move to protect 20 companies, including Danone and Carrefour, from
foreign takeovers.

Market protection can extinguish a country's investment climate, said Jean-Philippe Cotis, chief economist at the liberalist Organisation for Economic Co-operation and Development, at a press conference in Paris Monday.

He warned against the re-emergence of 'economic nationalism' in the European Union, though said it was not the OECD's place to comment further.

Cotis' words echoed those of European Commission President Jose Manuel Barroso, who last week also warned that EU member states must guard against a return to nationalist economics and rhetoric. He said this could harm the bloc's growth.

Their statements came as the dispute worsened between France and Italy over a proposed energy sector merger between Gaz de France and Suez.

The two men, however, struck a particularly hard blow across the bows of the French government.

French ministers have drawn up plans that would allow them to veto any hostile foreign takeover of 20 designated French companies, including dairy group Danone and retailer Carrefour, according to a report in La Tribune​ newspaper.

France's move to protect "strategic industries"​ was first proposed by prime minister Dominique de Villepin last summer, after rumours surfaced that US drinks and snacks group PepsiCo was looking to buy Danone.

A spate of nationalism ensued. Top ministers, including president Jacques Chirac, named Danone a "national treasure"​ and pledged to defend it against a Pepsi takeover.

Franck Riboud, Danone's chief executive, excused the French government's patriotism in a statement last September:

"I don't think there was anything out of place in the way the French government and politicians showed concern over the possibility of a hostile bid. Recent cases in the US, Italy and Germany show much the same attitude."

He added, however, that Danone did not need government protection. "I have no desire to see regulatory defence measures, and I do not want to take cover and hole up in some sort of fort behind artificial walls. I have no desire to "sanctuarise" Danone. Sanctuaries are for relics, whereas Danone thrives on the competition it faces in all its markets."

Some analysts have noted the tones of hypocrisy in the French government's protection plan. French companies, after all, bought into more foreign rivals last year than most other European countries' firms, statistics show.

Related topics: Manufacturers

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