12 March 2006

Times: City blasts EU on takeovers

The London-based investor, which has £291 billion in assets under management globally, has written a blistering letter to the European Commission warning of the danger of “economic patriotism”, which has tainted the recent round of merger activity involving Arcelor, GDF, Suez, Endesa, Gas Natural, Eon and even French yogurt company Danone.

The letter from Morley said: “Recent events in France, Spain and Poland highlight the fact that the EU market, despite the efforts of the commission, may well remain underdeveloped and fragmented as a result of such protectionist actions.

“It also usurps the ‘one share, one vote’ principle, damages shareholder value and buttresses underperforming management along the way.”

The Association of British Insurers (ABI) is preparing to wade into the fray. Peter Montagnon, director of investment affairs at the shareholder group, said: “We want to flag the great concern among investors over the proliferation of attempts by governments to pre-empt the right of shareholders to decide on takeover bids.”

Montagnon said the issue would be discussed at the ABI’s investment committee meeting tomorrow before the European Commission was approached directly.

The row about government intervention flared again earlier this year when the Luxembourg, Belgian, Spanish and French governments all voiced concerns about the proposed takeover of the steel group Arcelor by rival Mittal Steel.

It has also spread to the US, with politicians successfully opposing a plan by a Dubai company to buy six American ports.

In London, Charlie McCreevy, the EU internal market commissioner, attacked the Spanish and French governments over their interference.

McCreevy warned: “Does anyone really think I’m going to turn a blind eye to the cosy, old-boy networks between politicians and managers of companies? If they do, they’re living in a fool’s paradise“.

By Louise Armitstead

© The Times