Whenever I despair of the intrusiveness of government in the United States, I cheer myself up by looking at France and recognizing how much worse things could be. President Francois Hollande recently announced he would try to block General Electric bid’s for the energy business of Alstom, a French company. While France itself owns only one percent of the shares of Alstom, Hollande has arrogated to himself the authority to block such a bid because he does not believe the combination as currently structured is in France’s “strategic interest, “whatever that means. One of President Hollande’s ministers even suggested that GE make a different deal with Alstom, combining the railroad-related divisions of the companies as well. An independent analyst concluded that the minister’s idea was “ludicrous,” because GE produced diesel engines for freight trains while Alstom was in the passenger rail business.
One must be grateful for the consensus in the United States that executives and shareholders generally make the decisions about mergers and acquisitions under the laws of property and contract. Government discretion to interfere is limited to antitrust and national security considerations. The bailout of GM and the distortion of bankruptcy law was an unfortunate exception, but it was made at the time of the greatest economic crisis since the depression. In contrast, French intervention is common and constant.
The behavior of the hapless Mr. Hollande and his agents show how wise are the limitations in the United States on government fiat in the marketplace. Politicians possess little comprehension of business in general and no understanding of the details that make particular acquisitions succeed or fail.
