What do copper concentrate, container shipping and boxed juice have in common? In the eyes of Chinese regulators, a lot. Beijing’s antitrust authorities have flexed their muscles in all of these sectors. And the foreign companies involved, from Glencore to Maersk to Coca-Cola, came out the worse for it.
GE and Alstom will have to go through their own song and dance to win Chinese antitrust approval for their deal. China’s seven-year-old regulator is growing more assertive. And GE/Alstom resembles previous deals that it has restricted or rejected: they operate in sectors where homegrown companies are trying to win market share from – and master the technology of – their foreign competitors.
China is a big market for both GE and Alstom. GE’s revenues there were over $5bn last year. Alstom’s revenues from the Asia-Pacific region were more than $4bn. And there is some overlap in China: both sell gas turbines and steam turbines there. China is Alstom’s second-biggest turbine customer, while GE has sold 270 gas turbines and 70 steam turbines to the country.
Chinese regulators may be assuaged by the fact that Alstom mainly sells steam turbines (used for coal-fired and nuclear power plants) while GE sells mostly gas turbines. But the watchdog has a habit of calculating market share, however it sees fit. The wishes of domestic companies and industrial bodies will be important. GE and Alstom have joint ventures with dozens of Chinese companies; objections from them would be listened to carefully. A case in point was Beijing’s last-minute rejection of a shipping alliance between Maersk and two other companies following lobbying from China’s struggling shipping lines. Political interference from France has already taken a heavy toll. Here’s hoping Beijing will not extract too much more.