This article, promoted by Massimo Motta (ICREA-Universitat Pompeu Fabra and Barcelona GSE) and Martin Peitz (University of Mannheim and MaCCI), has been subscribed by about 40 economists.
We have attended with concern the political pressures that have been exerted on the European Commission in relation to the merger between Siemens and Alstom, as well as the political reactions that are happening after the decision to ban it. In particular, we are extremely concerned about the announcement that the French and German governments can promote measures to relax the European competition defense policy in order to favor mergers between large European companies. The policy of defense of competition should be independent of any interference of a political nature based on alleged industrial policy purposes, and respond to considerations of economic efficiency and protection of the competitive process.
The argument that business concentrations are necessary to increase the competitiveness of European companies in international markets is false. Siemens and Alstom are already leaders in international markets, and therefore already benefit from significant economies of scale and scope. We have not found arguments in the public debate that allow us to argue that the merger between the two companies would lead to significant efficiency gains (and the European Commission maintains, in its press release, that the companies have not shown that such profits were to take place) .
In the absence of efficiency gains, the elimination of competition between Siemens and Alstom could favor an increase in its business profits, but it would encourage a less competitive behavior on the part of the merged company, with the consequent detriment to its customers (mainly, the companies of transport and rail infrastructures), which would end up paying higher prices in exchange for lower quality and innovation, also harming, ultimately, the final consumers. It is therefore not surprising that the customers of Siemens and Alstom have strongly opposed the merger (if they had expected more competitive behavior from the merged company, they would have been the main stakeholders in the merger being carried out).
The EU competition rules do not prohibit the creation of national or European champions, provided that the merger generates significant synergies and complementarities between the merged companies. In fact, the European Commission has banned mergers only on very rare occasions, when their predictions indicated that the merger would bring with it important anti-competitive effects on consumers, not compensated by possible efficiency gains.
The empirical evidence seems to indicate that there is an increase in market power and business concentration. Mitigating this trend requires that the policy of defending competition be reinforced, taking into account only impartial efficiency criteria, not political opportunism. Europe needs more efficient, more competitive, more innovative companies. Backing anti-competitive mergers would achieve the opposite objective.
Massimo Motta (ICREA-Universitat Pompeu Fabra and Barcelona GSE)
Martin Peitz (University of Mannheim and MaCCI)
Natalia Fabra (Carlos III University of Madrid)
Chiara Fumagalli (Università Bocconi, Milan)
Amelia Fletcher (University of East Anglia)
Christine Zulehner (University of Vienna)
Thibaud Vergé (ENSAE)
Thomas Rønde (Copenhagen Business School)
Giancarlo Spagnolo (SITE-Stockholm School of Economics, EIEF and Tor Vergata)
Christos Genakos (University of Cambridge)
Frank Verboven (KU Leuven)
Justus Haucap, (Düsseldorf Institute for Competition Economics-DICE)
Tomaso Duso (DIW Berlin and Technical University Berlin)
Giacinta Cestone (Cass Business School, City, University of London)
Yannis Katsoulacos (Athens University of Economics and Business)
Paul Seabright (Toulouse School of Economics)
Giacomo Calzolari (European University Institute)
Monika Schnitzer (University of Munich)
Volker Nocke (University of Mannheim and MaCCI)
Markus Reisinger (Frankfurt School of Finance & Management)
Pedro Pita Barros (Universidade Nova de Lisboa)
Juanjo Ganuza (Universitat Pompeu Fabra)
Jacques Crémer (Toulouse School of Economics)
Yossi Spiegel (Tel Aviv University)
Bruce Lyons (Center for Competition Policy, University of East Anglia)
Gerard Llobet (CEMFI, Madrid)
Konrad Stahl (University of Mannheim and MaCCI)
Klaus Schmidt (University of Munich)
Jose L. Moraga (Vrije Universiteit Amsterdam and Rijksuniversiteit Groningen)
Maarten Pieter Schinkel (University of Amsterdam)
Vincenzo Denicolò (Università di Bologna)
Michele Polo (Università Bocconi, Milan)
Philipp Schmidt-Dengler (University of Vienna)
Rune Stenbacka (Hanken School of Economics and Helsinki GSE)
Philippe Choné (Center de Recherche en Economie et Statistique, Paris)
Nicolas Schutz (University of Mannheim and MaCCI)
Emanuele Tarantino (University of Mannheim and MaCCI)
Otto Toivanen (Aalto University and Helsinki Graduate School of Economics)
Kai-Uwe Kühn (University of East Anglia)
Luis Cabral (Stern School of Business, New York University)