Alstom rescue hit by Siemens threat

19th May 2004, Comments 0 comments

FRANKFURT, May 19 (AFP) - German engineering giant Siemens is considering appealing to the European Court of Justice to block the French government's planned rescue of its ailing French rival, Alstom, a source close to the matter in Brussels told AFP on Wednesday.

FRANKFURT, May 19 (AFP) - German engineering giant Siemens is considering appealing to the European Court of Justice to block the French government's planned rescue of its ailing French rival, Alstom, a source close to the matter in Brussels told AFP on Wednesday.

Siemens' management had asked its lawyers in Brussels a few weeks ago to examine the possibility of taking such legal action, the source said.

The business daily Handelsblatt said that a definitive decision whether a suit would be launched would be made next week.

Siemens declined to comment.

Following the French-German tug-of-war last month over the Sanofi-Aventis deal, the Alstom affair has put relations between Paris and Berlin under serious strain recently.

The German government was believed to favour its national industrial giant Siemens getting hold of key Alstom activities under a rescue package for the French company being hammered out with the EU Commission in Brussels.

Such a deal was seen as some sort of compensation for Berlin's tacit agreement to the takeover of Franco-German life sciences giant Aventis by French drug maker Sanofi-Synthelabo last month.

But Paris seems to have snubbed Berlin completely by securing a deal with Brussels whereby Alstom would not be broken up and only targeted assets would be sold off.

The move has left Siemens seething, with the German company now believed to be considering appealing to the European Court of Justice to block the French rescue of Alstom in which though billions of euros of public money will be used to recapitalise the loss-making firm.

For a while, it looked like some sort of deal between Alstom and Siemens might be in the pipeline.

Siemens was commendably reticent about its intentions regarding Alstom, letting it be known that it was interested in parts of the French group, notably its turbines business, but that it was by no means "pressuring anybody".

"We're not in a predatory situation. We're awaiting the decision of the French government (on Alstom's future) with great patience," chairman Heinrich von Pierer said recently.

Von Pierer said he had talked with French Prime Minister Jean-Pierre Raffarin about Alstom last month, even if he was careful not to reveal what they had talked about.

The speculation was further fuelled when both German and French officials openly hailed the idea of creating European champions, capable of competing with powerful rivals in Asia and the US.

And to cap it all, it emerged this week that French and German government leaders would soon meet to talk about the future of "European industrial policy", with the German economy ministry claiming Tuesday that the respective heads of Siemens and Alstom, Heinrich von Pierer and Patrick Kron, would also be present.

But that seemed to have been too much for Paris, and the French finance ministry huffily retorted: "That is the first we've heard of it".

The French stance was not only a slap in the face for Siemens, but for the German government as well.

France has a reputation for skilful manoeuvering to obtain the industrial corporate arrangements it wants, but Berlin seems to end up with egg on its face when it tries to do the same.

After the acquisition of Aventis by Sanofi-Synthelabo, the most recent example was the German government's failure to engineer a merger between the country's biggest bank, Deutsche Bank, with rival Postbank.

With regard to cross-border tie-ups, Berlin is expected to be much more on its guard in future.

The French and German governments have said several times that they would like to see the creation of a European shipbuilding leader, along the same line as the European Aeronautic Defence and Space Company (EADS) in the aerospace sector.

And a key foundation stone was laid in Germany this week with heavy industry giant ThyssenKrupp merging its shipyards business with HDW, the world's leading maker of conventional, meaning non-nuclear submarines.

© AFP

Subject: French news

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