Good morning, Peter Vanham here in Geneva.
Former Goldman Sachs banker and European Central Bank President Mario Draghi’s report on how to improve European competitiveness, presented this week, garnered immediate support from some of Europe’s biggest figures. EU Commission President Ursula von der Leyen stood by Draghi’s side when he presented his findings. And yesterday, current ECB President Christine Lagarde said that Draghi’s plans could be “extremely helpful” as she lowered interest rates.
But perhaps even more notable was the backing of Europe’s Fortune 500 companies.
Christel Heydemann, CEO of Orange, Europe’s third largest telecom company and No. 310 on the Fortune Global 500, told me yesterday that among her peers “everyone has been supporting” Draghi’s plans, which give practical recommendations on everything from how to increase investments in innovation to how to protect Europe against unfair competition from China.
“Unless we radically change the way Europe is organized, we’re going to see a long, slow decline. That’s what European citizens feel, [and] that’s what we see,” Heydemann said.
The most celebrated element of Draghi’s report is its support for loosening antitrust.
Draghi said the EU should facilitate telecoms mergers by assessing deals on an EU level and not national level, a talking point repeated by Heydemann yesterday. “If we look at markets in a small way, mergers will not happen,” she said. “We need companies with more abilities to invest.”
In my reading of them, Draghi’s recommendations could mark a turning point for Europe in three areas.
First, we’re likely to see more large mergers and acquisitions between Fortune 500 Europe companies due to looser and faster antitrust processes. Second, there will likely be a (debt-funded) increase in investment, to the tune of up to 800 billion euro per year. And third, Europe is likely to show its teeth against Chinese (and, to lesser extent, American) competition.
Whether that will be enough to stop Europe’s “long, slow decline”—as Heydemann put it—remains to be seen. But it sure will herald a new era for a bloc whose trademarks have been liberalization, free competition, and openness.
As a reminder, we’ll discuss these topics also at our Fortune CEO Forum in London, Oct. 23-24, and our Fortune Global Forum, Nov. 11-12, in New York. You can request an invitation here.
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Peter Vanham
peter.vanham@fortune.com
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