EU orders Alstom to partner key activities

6th July 2004, Comments 0 comments

BRUSSELS, July 5 (AFP) - The European Commission is to announce on Wednesday that beleaguered French engineering group Alstom must form partnerships in "significant parts of key activities" in return for EU approval of a plan to bail out the company, sources close to the case said Monday.

BRUSSELS, July 5 (AFP) - The European Commission is to announce on Wednesday that beleaguered French engineering group Alstom must form partnerships in "significant parts of key activities" in return for EU approval of a plan to bail out the company, sources close to the case said Monday.

This move, while guaranteeing the future of the company, amounts to something of a Pyrrhic victory for Alstom which will have to relinquish a degree of control in its main areas of operation, transport and energy, said the sources.

The sources were citing the draft decision of the commission which will also announce that the French government is to pull out completely as a shareholder by end-2008.

EU Competition Commissioner Mario Monti has already approved a French plan to provide Alstom with about EUR 2.285 billion (USD 2.75 billion) in various forms of state aid that would be combined with assistance from creditor banks.

It is now up to the full commission to decide if the plan is consistent with EU competition rules.

Concerning the partnerships, the decision will provide no further illumination about what the commission has in mind. Sources said the decision would merely describe partnerships as a scenario where the business undergoes a "structural, long-term change involving some loss of control."

"The partnerships will not be defined any further. It is up to the French to decide. What the commission will say however is that they must not be for ad hoc projects and they must be long-term and concern a significant part of (Alstom's) activities in key areas," said a source.

European Competition Commissioner Mario Monti said in May that an example of an industrial partnership would be a 50:50 joint venture for the hydro power business which has already been agreed as a short-term measure to be taken within a year.

The other partnerships do not need to be quite so drastic even if they do affect all the key parts of the company's business, said the sources.

The troubled giant builds high-speed trains, ocean liners and power stations.

Nonetheless, one source said: "This might be a Pyrrhic victory for Alstom even though it looks like everybody got something."

The French government offered to give up its stake in Alstom to make the point that its bailout of the company is not "effectively a re-nationalisation", said one of the sources.

Wednesday's decision puts an end to a probe first opened in September.

 

© AFP

Subject: French news

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