Merger wars threaten EU summit

Inter-EU divisions over free markets versus “economic nationalism” are set be a hot – and unwelcome - political topic at Thursday’s Brussels summit.

Italy is circulating a letter to EU leaders seeking support from a coalition of economically liberal governments against a trend towards protectionism.

EU leaders had planned to gather on March 23 to discuss pre-cooked economic reform proposals against a background of rising growth.

European commission proposals to create an EU energy policy were also expected to be part of a feel good summit after the trauma of constitutional rejection in 2005.

But proceedings will overshadowed by merger disputes between key European capitals that strike at the heart of the EU’s vaunted single market.

The discord over takeovers – mainly involving high-profile energy mergers - will also clash with EU aspirations to secure power supplies by freeing up energy markets.

Rome has garnered support of the UK and the Netherlands in drafting a joint statement denouncing the rise of economic protectionism across the EU.

Italy’s finance minister Giulio Tremonti is behind the move following Polish and French national blockades on Italian takeovers.

His letter has the backing of UK and Dutch finance ministers Gordon Brown and Gerrit Zalm as well as murmurs of approval from Danish, Irish and Swedish leaders.

The split between member states over protectionism could derail Austrian EU presidency hopes to keep the summit’s agenda focused on energy and economic policy.

Tremonti’s plan is seen as striking back at French attempts to thwart Italy’s Enel takeover bid for Franco-Belgian energy company Suez.

He is also smarting at Warsaw’s veto on Italian Unicredit’s merger with Polish BPH bank – Brussels is investigating both cases.

The European commission is preparing to take action against a French law allowing Paris to block takeovers in 11 economic sectors.

Speaking in Paris on Tuesday, EU internal market chief Charlie McCreevy told French bankers the legislation was a “political Maginot line” – a WW2 reference that will add spice to Europe’s merger wars.

Spain will be soon be under Brussels under fire too for enacting laws allowing Madrid to halt a takeover of energy company Endesa by Germany’s Eon.

European commission president José Manuel Barroso has called on member states to end their squabbling over economic nationalism and concentrate on common challenges.

“We can not build barriers against each other in the single market - that's absurd. Our problems should not arise because of our problems with each other,” he said.

“We are a big supranational market of 450 million people. We can't have 25 mini-markets.”

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