No Euro favoritism

EU's Monti says old rules apply in new economy

By JILL GOLDSMITH

Monti

Having just ruled on two giant media mergers in as many weeks, the European Union antitrust chief Mario Monti insisted Thursday that old competition regs apply even in a so-called new economy and he dismissed accusations from U.S. lawmakers that the EU favors European over Stateside firms.

Monti, who is looming as an ever-larger presence for corporate America, gave his seal of approval to the Vivendi/Seagram combo Oct. 13 and passed the America Online/Time Warner deal the week before -- the first big marriage of a traditional and a new-media company.

The EC imposed tough concessions on both deals, however. It basically forced Time Warner to scuttle a separate merger agreement with music group EMI in order to push the bigger AOL deal through.

AOL/Time Warner is waiting for approval Stateside from the Federal Trade Commission.

Execs may gripe, but a nay from Monti can prohibit a merged company from operating in European Union countries, an enormous and growing market.

"People ask, 'Don't you think you excessively regulate the new economy?' " he said during a lunch address at the Foreign Policy Institute. Monti declared that the old rules are not out of date, even in an era in which business conditions change so fast that monopolies can appear and vanish with lightning speed.

Monopoly "can be damaging, even in a fast-moving economy," he added.

The concepts remain the same, he said: A merger shouldn't reinforce or enhance a firm's dominant position, and it shouldn't enable that firm to leverage its dominant position into new markets -- which is what the Dept. of Justice has accused Microsoft of doing.

Monti said that while the EU observes different laws than U.S. regulatory bodies like the DOJ and the Federal Trade Commission, antitrust enforcers on both sides of the Atlantic speak daily and seem to be moving toward each other in terms of analysis and conclusions.

He took issue with complaints by U.S. Sens. Michael DeWine (R-Ohio) and Herbert Kohl (D-Wisc.) that the commission favors Europe, saying, "We are not pursuing any protectionist aim."

In a letter to the lawmakers, Monti insisted that the EU's framework has "no scope for the European Commission to protect European companies from being acquired by U.S. companies or to promote the commercial aspirations of European companies."

He said that over the past 10 years, the commission has ruled on 348 cases involving one or more U.S. companies. Of those, 331 deals were cleared and 16 withdrew their petitions for various reasons. The only no-go was a merger between WorldCom and Sprint.