March 3, 2006 | posted by Michael Baxter in Uncategorized |

You may have noticed, France doesn’t like it when foreign companies try to buy its assets. Nor, it would appear does its neighbour Luxembourg. It’s as if France has erected a new Maginot Line, one designed to keep foreign companies out.

But yesterday, the battle between the French government and those who believe in open markets entered fierce fighting on two fronts, as both Mittal Steel and Italian energy company Enel attempted to find a way around French defences.

For Mittal, it’s all down to the power of economics. This morning, the FT chose to focus in on Mittal’s argument that the merger with Arcelor would create a steel giant with the capacity to manufacture 200m tons of steel a year, that’s a fifth of world output, and more than three times the company’s current output. In short the economies of scale created by the merger of the two companies would create a steel powerhouse, with the EU, (Mittal steel is technically a British company, with its main office in Holland) presumably a major beneficiary of the deal.

Meanwhile, there appeared to be some relenting from Arcelor itself. You may recall, a few weeks ago Mittal Steel’s non executive director Wilbur Ross said of Arcelor’s boss Guy Dollé’s intransigence to the Mittal offer, that it was as if he was saying”It’s my playpen and I don’t want anyone else to play with my toys - go away”. But now, monsieur Dollé is talking about the possibility of managers from Arcelor meeting up with Mittal’s managers. But then again, its clear he isn’t picking up all the toys, because he implied he would not personally be in these meetings saying “There are other managers at Arcelor, apart from me,” he said.

Still with the Arcelor boss, yesterday he suggested that the merger should be determined on pragmatic business issues. He was quoted in the Telegraph as saying “I have said that the politicians, they have to be quiet. They are not deciding, it’s up to the shareholders.”

Turning from the steel battle to the assault from Italy, details emerged yesterday of possible behind the scenes plotting by the French government to stop the Italian energy company Enel from buying French firm Suez.

It appears that Enel was hoping to tie up with French water company Veolia, in making the bid. But details have now emerged suggesting that the French government put pressure on Veolia’s chief executive to drop the alliance.