July 23 (Bloomberg) -- The European Commission's handling of mergers hasn't been ``too tough,'' even after vetoing deals worth more than $200 billion in four years, the commission's newly appointed chief competition economist said in an interview.It's telling that the EU's response to being charged with abuse of power is to take a position that will encourage greater abuse of power in the future. Only now the EU will hide behind the time-tested U.S. excuse that "we're only violating the rights of companies to 'protect' the consumer." It's also noteworthy that the EU named a professor—a member of Europe's leftist elite—to decide what business practices are acceptable under the antitrust laws. This also mirrors current U.S. thinking, where President Bush named Muris, a George Mason University professor, to head the FTC. There is an unwritten rule that individuals with actual business experience should never assume regulatory positions over business, at least in antitrust.
Berlin university professor Lars-Hendrik Roeller, who takes up the newly created post Sept. 1, also cast doubt on cost savings claimed by companies to justify mergers and said a greater voice should be given to consumers.
``You can't say that European competition authorities have been too tough,'' Roeller said in a televised interview with Bloomberg News in Berlin. ``It's less a matter of changing course than of using economic arguments to underpin decisions in individual cases.''
Competition Commissioner Mario Monti created the post as part of an antitrust revamp amid criticism that the European Union's regulatory arm abused its powers in vetoing mergers including General Electric Co.'s $47 billion bid for Honeywell International Inc., the first time the EU killed a U.S.-approved takeover.
Roeller's appointment comes amid a pickup in merger activity worldwide, including aluminum producer Alcan Inc.'s hostile 3.4 billion-euro ($3.9 billion) bid for Pechiney SA -- an attempt to revive a takeover that regulators scuttled in 2000.
Roeller's appointment is designed to full people into thinking that decisions will now be made by professional economists rather than trial lawyers. The Muris FTC uses this tactic to great advantage, claiming that every antitrust decision is motivated by "empirical" economic evidence and not political concerns. This is never true, since antitrust only exists for political purposes, and no rational free-market economist could support such policies.
Indeed, the EU's new antitrust economist will focus on a decidedly political goal—forcing "efficiencies" on the market:
Nevertheless, Roeller said the acceptance by the commission of the need to assess so-called ``efficiencies'' in mergers brings the EU merger-review model closer to the U.S.Once again, this is a case of Europe following the U.S. lead into greater socialism, an unusual twist. Antitrust is certainly consistent with the European belief that individual rights is a convenience subject to the social needs of the state. What's remarkable is that Americans allowed this belief to seep into their culture, even when the FTC and Justice Department openly abuse power in pursuit of "consumer rights."
``The job of the new chief economist is to make this concrete,'' said Roeller. ``The goal of the reform is to focus more on efficiency gains.''
Roeller wants to see a greater focus on consumers when assessing mergers. That's in line with Monti's plans to give special access to consumer groups to antitrust reviews.
``We're not setting policy for companies, we're setting it for consumers,'' he said. ``Mergers only make sense if the consumer benefits, and that only occurs if there are synergies.''
In order to facilitate implementation of new rules governing agreements between companies that fall short of full mergers, the commission will later today issue six new guidelines on economic analysis, the scope of application of the rules and relations with other regulatory bodies.
The commission is also planning to make it easier for consumers to lodge complaints and provide information on suspected cartels. The commission will then have 40 days to inform the complainant of its decision and decide whether to open an investigation.