Several companies in Europe have tried to create big “European champions” in order to better compete with global rivals, primarily those in the United States and China. Siemens and Alstom in 2017 agreed to link up, citing “a dominant player in Asia” (China’s state-backed train maker) as a reason, but were blocked this year by the European Commission, which was concerned the merger would hurt competition at home. This led Bruno Le Maire, economy minister of France, to tell EU regulators to “wake up” to the realities of global competition.
Should Europe’s authorities let companies merge into “champions” if it weakens competition on the continent? Chicago Booth’s Initiative on Global Markets put this idea before its European Economic Experts Panel. Overall, the response was negative: almost half the economists surveyed did not think the average European would be better off, and that grew to two-thirds when weighted by respondents’ confidence.
“‘European champions’ seems to be verbal linguistics to justify undermining competition policy,” wrote University College Dublin’s Karl Whelan, registering strong opposition.
But what if China and the US, among others, have policies to create their international giants? Roughly a third of panelists still don’t think the European Union should do the same (nearly half when weighted by confidence), but a larger percentage of respondents were uncertain.
Agnès Bénassy-Quéré, Paris School of Economics
“Less competition in upstream industries may reduce competitiveness in other sectors, on top of directly reducing purchasing power.”
Nicholas Bloom, Stanford
“Protectionism has a terrible track record in history, even when justified as helping national champions.”
Response: Strongly disagree
Xavier Freixas, Pompeu Fabra University
“The market is nowadays global, and it is important to take technological risks by investing in research. Large firms can do this.”
Christian Leuz, Chicago Booth
“There are other legal and political ways to address unfair competition. Would we weaken EU IP laws just because other countries don’t have or enforce them?”
Peter Neary, Oxford
“If the choice is between a world Chinese monopoly or a world duopoly with a European firm, subsidies are justified. But details matter.”
Christopher Pissarides, London School of Economics
“Better [to] allow mergers to compete with open borders than restrict trade à la Trump.”
Response: Strongly agree