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Europe warns France about protectionism

The European Commission warned France on Thursday against resorting to protectionism after Paris unveiled new measures to head off hostile foreign bids for key companies.

Europe warns France about protectionism
The French government has boosted its powers of veto over foreign takeover bids, prompting the EU to issue a warning over protectionism. Photo: Patrick Kovarick/AFP

"The objective of protecting essential strategic interests is clear when it involves security or public order and that is recognised in EU treaties," EU Finance Markets Commissioner Michel Barnier said.

"But we also must check if this is applied in a proportionate fashion, otherwise it could amount to protectionism," said Barnier, a French politician.

"We cannot guarantee Europe's industrial future, its development with protectionism," he added, with "investment, not protection," the best way.

France has introduced new rules, due to come into effect on Friday, which will make it more difficult for foreign groups to take over "strategic" industrial groups such as energy and transport group Alstom which is being pursued by US conglomerate General Electric.

"The fundamental role of the state is to protect the strategic interests of France," Finance Minister Michel Sapin told Europe 1 radio earlier Thursday.

"This is true in France as it is true in any other country" seeking to safeguard national interests, Sapin added.

The new French measures extend a 2005 law to cover foreign investment in key sectors such as energy, water, transport, health and telecoms.

Any foreign bids will have to be vetted by the government as to their desirability and benefits for the French economy. 

The economyminister would then consider certain factors, including the sustainability of the proposal, the infrastructural implications, and the preservation of certain "indispensable skills" and whether the national interest is satisfied.

Permission would then be granted provided that the company meets certain commitments.

"The choice we have made, with the prime minister (Francois Hollande) is the choice of economic patriotism," Economy Minister Arnaud Montebourg told newspaper Le Monde.

"These protective measures on France's strategic interests are a renewal of our powers," he added.

Montebourg has been accused of protectionism in his efforts to promote French industry and he notably opposes the GE bid for Alstom, preferring instead a smaller tie-up with Germany's Siemens.

Alstom has said it favours GE's offer of €12.35 billion ($17 billion) for its energy activities.

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GE

US giant GE to pay France €50 million after creating just 25 jobs out of 1,000

The French government announced Tuesday that US industrial conglomerate General Electric will pay €50 million ($57 million) after falling short of its goal of creating 1,000 new jobs in the country.

US giant GE to pay France €50 million after creating just 25 jobs out of 1,000
Alstom employees protest in front of the France's Ministry of Finance in Paris. Photo: AFP

GE had pledged to create the jobs by the end of last year as part of its 2015 purchase of the power and electrical grid businesses of France's Alstom.

But shortly after closing the deal GE unveiled a series of job cuts across Europe as slumping oil and gas prices crimped demand for its heavy-duty turbines and other equipment.

The company had already warned last year that it wouldn't meet the target, though the new CEO Larry Culp confirmed in October that GE would “fulfil its commitments.”

It had promised to pay €50,000 for every job not created over the three-year period.

The French finance ministry said after a meeting with GE officials Tuesday that the firm had created just 25 new jobs overall, meaning it would pay €50 million into an industrial development fund.

“GE underscored the significant of its continual investments in France during the period, and noted that despite the particularly difficult business climate, the group had done its utmost to create jobs,” the company said in a statement.

It pointed to a $330 million investment in offshore wind turbines in France announced last year, which it expects to eventually create 550 new jobs.

But union sources said last month that GE was planning to cut nearly 470 jobs, at its Alstom Power Systems GE Energy Power Conversion units.

Under Culp the company has been trying to get its power operations on more solid financial footing, with plans to cut costs further and reduce debt.

Last week it posted a $574 million profit for the fourth quarter, a welcome turnaround from the $11 billion loss a year earlier. 

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