LL.M., Columbia Law School, 2015
The 2014 Alstom controversy again brought to light the tension between EU merger control rules and the desires of Member States to pursue their own industrial policy objectives. The French government, wanting to protect its national security interests, maneuvered to obtain significant changes to the deal between ailing French company Alstom and GE, after having clearly voiced its preference for a deal with the German company Siemens. Former Competition Commissioner Kroes herself pointed out the “great ideological divide” that exists between industrial and competition policies. The former stems from an interventionist approach justifying government intervention in the economy because of markets’ fallibility, whereas the latter, in a liberal fashion, trusts only the free market to determine the distribution of ownership of companies. At first glance, it seems that European competition policy and Member States’ industrial policies are irreconcilable. This debate arose especially over issues of EU merger control (“EUMC”) and prompted experts to contemplate whether EUMC rules should be relaxed or even set aside to comply with industrial policy objectives. But is EUMC really incompatible with national industrial policies? The content of EUMC rules does not intrinsically exclude Member State industrial policy. Rather, it is the way in which the Commission enforces those rules that raises this obstacle, with the Commission systematically blocking Member State interventions in the merger review process.
I. Academic Opposition to EUMC
The relevant literature generally rejects the idea of reforming EUMC to accommodate the industrial policies of Member States, but the reasons for this position differ. For some, no reform is necessary because EUMC is not intrinsically incompatible with industrial policy. For others, the main step forward is reforming the Commission’s approach towards efficiencies during its merger review. Some are very critical of Member State intervention in EUMC and argue that their promotion of national champions through merger control is a tool used to hide clear protectionist goals. Thatcher gives a very different diagnostic: having examined Commission decisions in three sectors between 1990 and 2009, he concludes that the Commission simultaneously applies strict merger control rules based solely on competition criteria while also achieving the industrial policy aim of developing European champions. EUMC rules actually leave room for Member States to take actions toward industrial policy objectives; however, the Commission’s strict application of these rules usually prevents those actions in practice.
II. The Merger Regulation
The Merger Regulation (the “Regulation”) constitutes the overriding framework for review of mergers of European dimension and limits the ability of Member States to intervene in such operations. The Regulation gives exclusive competence to the Commission to review mergers with an EU dimension and to block mergers that would significantly impede effective competition in the common market. Its test for merger review is based only on competition considerations, “with only the smallest nod in the direction of anything else.”
Article 21(4) of the Regulation, however, enables Member States to interfere with EUMC to protect their legitimate interests in specific circumstances. Article 21(4) lists public security, the plurality of media, and prudential rules as legitimate interests, but leaves open the possibility of other grounds for Member State intervention, at the discretion of the Commission.
III. Member State Intervention in Merger Control
The reservation of national competence granted by Article 21(4) of the Regulation has been used by Member States as a legal shield to protect their national interests in the scope of merger operations with an EU dimension. When using Article 21(4) to support interference with EUMC, Member States generally pursue one of the following three objectives: (i) to facilitate mergers between national companies, (ii) to salvage strategic companies, and (iii) to protect “national champions” from foreign takeovers. All these goals are generally unrelated to efficiencies or economic advantages that the transaction can produce, and rather stem from (national) industrial policy objectives.
IV. The Commission’s Response
The Commission’s response to such Member State interventions has been one of a restrictive approach to the operation of Article 21(4), notably of the legitimate public interests that can be relied on by Member States. Generally, the Commission intervenes on the basis of Article 21 in order to block a Member State from stopping a merger that falls within the Commission’s exclusive competence under the EU Merger Regulation. In particular, the Commission opposes Member State interventions that attempt to protect national companies from takeovers by foreign competitors. In that sense, the Commission significantly constrains the ability of Member States to intervene in EU merger review for industrial policy reasons. Some noteworthy examples are , the latter being recognized by the literature as the most emblematic Article 21 case. Authors summarize the recurrent pattern of this kind of case: the Member State relies on national, industry-specific regulation to disrupt the acquisition of a domestic company by a foreign competitor; the Commission vigorously contests the Member State’s intervention and eventually wins the legal battle.
V. Opportunities For Successful Member State Intervention?
Even if the Commission strictly interprets Article 21(4) of the Regulation, however, it does not mean that Member States have no avenues for pursuing industrial policy objectives. Indeed, the precise scope of Article 21(4) has yet to be made explicit, particularly regarding the three specified public interests. For example, the precise scope of the “public security” interest remains undefined. Moreover, the wording of Article 21(4), pursuant to which legitimate interests “shall be recognized by the Commission,” seems to indicate that the Commission’s margin of discretion in assessing an individual measure taken by a Member State is limited. Most importantly, the scope of Article 21(4) is limited to individual measures, as opposed to general measures, meaning that general approval regimes that do not lead to formal prohibition or conditional approval decisions issued by the Member State may not necessarily be contested by the Commission. This could potentially give the Member State some limited leeway to influence the structure of certain transactions for industrial policy reasons.
Thus, EUMC rules do not intrinsically constitute an obstacle to Member States’ industrial policy, but it is the Commission’s strict interpretation of these rules in response to Member State intervention in the EUMC process that has stood in the way. An analysis of EUMC rules reveals that the antagonism between industrial policy and EUMC need not be as extreme as we might think. Looking at EU merger control rules, we could imagine a future Commission with a different set of priorities between competition and industrial policies. The rules certainly do not preclude such a possibility.
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 This paper focuses on European merger regulation, by which I mean the Merger Regulations of both 1989 and 2004. See Council Regulation 4064/89, on the Control of Concentrations Between Undertakings, 1989 O.J. (L 395) 1–12 (EC) [hereinafter Merger Regulation 1989], and Council Regulation 139/2004, on the Control of Concentrations Between Undertakings, 2004 O.J. (L 24) 1–22 (EC) [hereinafter Merger Regulation 2004].
 This led Competition Commissioner Almunia to express his concern over rising protectionism within the EU. See MLex, Almunia Voices Concern Over Rising Protectionism, June 24, 2014, cited in François-Charles Laprévote & Antoine Winckler, European Champions and Merger Control Rules: A Few Lessons from the Commission’s Decisional Practice, 4 Concurrences 10, 10 (2014).
 Here, I use “industrial policy” to mean the steps taken by Member States to protect certain sectors of their economy or to influence their ownership for various reasons of public interest, notably in the merger review process. Critics attack such interventions on behalf of domestic companies (often referred to in the literature as “national champions”) for distorting competition and discriminating between market operators. See Antonio Goucha Soares, “National Champions” Rhetoric in European Law or The Many Faces of Protectionism, 31(3) World Competition 353, 358 (2008).
 See generally, Damien Geradin & Ianis Girgenson, Industrial Policy and European Merger Control – A Reassessment, 53 TILEC Discussion Paper 1 (2011), and Damien Neven, European Champions and Merger Control Rules: Improving Enforcement in the Current Regime, 4 Concurrences 1 (2014). Nonetheless, most experts position themselves against relaxing EU merger control rules.
 Soares, supra note 3, at 368.
 Mark Thatcher, European Commission Merger Control: Combining Competition and the Creation of Larger European Firms, 53 Eur. J. Pol. Research 443, 460 (2014). Thatcher notes that the Commission prohibits very few transactions (only two between 1990 and 2009, id. at 459) and the vast majority are approved unconditionally. Given that most proposed mergers are between European firms, especially across borders, he concludes that the outcome has been the creation of larger European firms.
 See Merger Regulation 1989, supra note 1, Article 2(3). The test was modified in the Merger Regulation of 2004 but remains based on considerations related to competition only. See Merger Regulation 2004, supra note 1, Article 2(3), which states “concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market.” See also Geradin & Girgenson, supra note 5, at 10–11.
 Leon Brittan, The Early Days of EC Merger Control, in EC Merger Control: Ten Years On (2000), at 3, cited in Geradin & Girgenson, supra note 5, at 9.
 Merger Regulation 2004, supra note 1, Article 21(4), “. . . Member States may take appropriate measures to protect legitimate interests other than those taken into consideration by this Regulation and compatible with the general principles and other provisions of Community law. Public security, plurality of the media and prudential rules shall be regarded as legitimate interests within the meaning of the first subparagraph. Any other public interest must be communicated to the Commission by the Member State concerned and shall be recognised by the Commission after an assessment of its compatibility with the general principles and other provisions of Community law before the measures referred to above may be taken. The Commission shall inform the Member State concerned of its decision within 25 working days of that communication.”
 Soares, supra note 3, at 358.
 Laprévote and Winckler studied the recent decisional practice of the Commission and conclude that it has generally adopted a strict interpretation of “public interests” pursuant to Article 21(4) of the Regulation. See Laprévote & Winckler, supra note 2, at 10–13.
 See Soares, supra note 3, at 360; see also Geradin & Girgenson, supra note 5, at 12.
 In that case, the Spanish government contested the acquisition (already cleared by the Commission) of Endesa, a Spanish electricity provider, by the German company E.ON, because the Spanish government favored an acquisition by the Spanish Gas Natural that would create a Spanish champion in the energy sector. The Spanish government issued a decree enabling the Spanish energy regulator (CNC) to review mergers in the energy sector, leading to CNC imposing strict conditions on the merger with E.ON. The Commission successfully challenged both the decree and the government’s refusal to withdraw the conditions imposed by the CNC. See Case C-207/07, Commission v. Spain, 2008 E.C.R. I-111; Case C-196/07, Commission v. Spain 2008 E.C.R. I-41. It is noteworthy that E.ON eventually withdrew its bid for Endesa, which was later jointly acquired by both the Italian company Enel and the Spanish company Acciona. See Geradin & Girgenson, supra note 5, at 12; see also Soares, supra note 3, at 360–61.