Chirac dismisses French protectionism claims

By Chris Mercer

- Last updated on GMT

Related tags European union

Europe has no time for national champions if it is to compete in
the world, warned the European Commission president Wednesday, as
French president Jacques Chirac dismissed claims that France was

"Defending national champions in the short-term, usually ends up relegating them to the second division in the long-term,"​ said José Manuel Barroso, president of the European Commission, in a speech to the European Parliament.

His words appeared to be a thinly veiled attack on several member states, though particularly France, which has recently attempted to block a cross-border, energy sector merger and has compiled a list of 20 companies, thought to include dairy giant Danone and retailer Carrefour, that the government would protect from foreign takeover.

Barroso said companies subject to the full rigour of competition would leave protected national champions behind on international markets. He also warned that the Commission would "make no apologies"​ for intervening to enforce competition law.

French president Jacques Chirac, however, said it was absurd to claim France was protectionist.

"France is one of the most open countries in all of Europe, and accusations like this contradict the real situation."

Chirac, after a conference with German chancellor Angela Merkel on Wednesday, said figures showed that France had double the foreign direct investment of Germany and three times as much as Italy.

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.

Critics have observed that French companies took over more foreign rivals in 2005 than most other countries' firms.

Franck Riboud, Danone's chief executive, said last September he had no desire to see regulatory defence measures for Danone. "Sanctuaries are for relics, whereas Danone thrives on the competition it faces in all its markets."

Yet, Jean-Philippe Cotis, chief economist at the liberalist Organisation for Economic Co-operation and Development, warned in a recent speech against the re-emergence of 'economic nationalism' in the European Union.

It is not just France that poses problems. The US Foreign Agricultural Service (FAS) questioned in a recent report whether Italy was using country of origin labelling rules, as well as safety regulations, to protect areas of its own food industry. The FAS said the European Commission could have cause to investigate.

And, away from food, Poland has begun to assert itself more forcefully on the EU stage since the election of a more right-wing government. Commission regulators are taking action against Poland for attempting to block a merger between two Polish banks, as part of a takeover by Italy's Unicredito bank of Germany's HVB.

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