Siemens drops appeal against Alstom bailout

20th December 2004, Comments 0 comments

FRANKFURT, Dec 20 (AFP) - German engineering giant Siemens has decided not to appeal to the European Court of Justice against the publicly financed bailout of French rival Alstom, a spokesman revealed on Monday.

FRANKFURT, Dec 20 (AFP) - German engineering giant Siemens has decided not to appeal to the European Court of Justice against the publicly financed bailout of French rival Alstom, a spokesman revealed on Monday.

"There was a possibility of taking legal action, but we're not pursuing it," the spokesman told AFP.

According to a report in the Monday edition of the business daily Handelsblatt, Siemens had decided not to press ahead with the lawsuit, even though it had good chances of winning, so as not to place a further burden on already strained industrial relations between France and Germany.

Both Siemens' current chairman Heinrich von Pierer and his designated successor, Klaus Kleinfeld, who takes the reins of the German giant at the end of January, have both indicated they did not want to press the matter any further.

Siemens had been considering appealing to the European Court of Justice over a state-engineered rescue of Alstom, rubber-stamped by the EU Commission in Brussels in July.

As part of the rescue plan, the French government acquired a 21.36-percent stake in the maker of high-speed TGV trains via a EUR 1.75 billion (USD 2.3 billion) capital increase.

The rescue thwarted Siemens' hopes of gaining choice parts of Alstom's activities, particularly in the area of energy.

Siemens had been considering whether to sue on grounds that the state rescue of Alstom distorted competition. There were also allegations of price dumping involving suggestions that Alstom was making offers for contracts that did not fully cover all of the costs.

The accusations were refuted by Alstom.

Handelsblatt said that Siemens continued to believe that its French rival took advantage of its public subsidies to sell its products at dumping prices in Asia.

And even though the newspaper quoted sources in Brussels as saying that Siemens would have a good chance of winning any suit, it said that the German giant had been persuaded not to pursue legal action so as not to sour French-German relations.

Industrial relations between Paris and Berlin first came under heavy strain when French pharmaceuticals group Sanofi-Synthelabo made a bid for the Franco-German life sciences giant Aventis with the express support of the French government.

More recently, tensions have arisen over the European Aeronautic Defence and Space Company (EADS).

France is believed to want the company, currently co-chaired by a Frenchman and a German, to be headed solely by a Frenchman.

Berlin also objected to Paris plans to merge EADS with Thales for fear that the current balance of power within the company would swing in France's favour.

On Monday, the co-chairman designate of EADS, Noel Forgeard, said in a newspaper interview that a merger between EADS and Thales was likely to be back on the agenda in 2005.

© AFP

Subject: French News

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