EUROPE: Freedom to flex business muscle

More relaxed rules on mergers and acquisitions, as well as new member states and a stronger euro, will help to develop a thriving commercial market in Europe

Quite apart from the euro’s current upward rise and Greece’s arrival this month in the single currency zone, there are several small signs that Europe is starting to accelerate its move towards becoming a real political and economic power.

Take a few events from last year. Vodafone succeeded in the first major hostile takeover in Germany, when it finally acquired its Mannesmann rival. The significance lay in the signal from the German business and financial community that it was at last ready to move towards a more liberal environment that encourages more open share structures and greater flexibility in the movement of capital. This was followed by the groundbreaking decision to reduce Germany’s corporate tax rate to 30 per cent.

More recently, Vivendi has gained approval by the European com mission for its merger with Seagram, which will make it owner of entertainment giants Universal Pictures and Universal Music. When the deal is completed, Vivendi will have a market capitalisation of $100bn (£66bn) and global revenues of more than $55bn (£36bn). It will also be a leading player in pay TV (through Canal Plus), mobile phones and Internet operations.

It is still surprising to realise a European conglomerate looks set to be a real contender in a market previously domin ated by the US. In fact, Viv endi could well turn out to be the one serious competitor to the corporation that will emerge from the Time War ner/ AOL merger.

Last month, even more surprisingly, there was news that France – of all countries – is ready to open up its previously closely-protected nuclear industry to competition. Electricité de France will withdraw its shareholding from the French nuclear company, Framatome, which will then be free to set up a partnership with German company Siemens. Framatome has, until now, provided most of Electricité de France’s power supplies but now the business will be open to tender. The UK’s BNF and Spain’s Enusa are expected to join the pitch list.

Meanwhile, the powerful impetus towards enlargement of the European Union continues with the news that as many as 12 countries could be lining up to join between 2003 and 2005. The contenders include Poland, Hungary, the Czech Republic, Estonia and Slovenia.

What relevance has all this for the world of marketing and advertising, you may ask. These superficially unrelated factors all indicate that we are moving towards a large trading entity of perhaps more than 400 million people and that there is a real commitment to allowing proper competition and flexible investment opportunities to flourish. This more liberal economic environment should lead to a giant, prosperous market, open to a stream of new products and services, and with a volume of demand sufficient to keep a whole range of business sectors prospering.

Where business flourishes, so too do the marketing and advertising in dustries. The next few years should be exciting times for any company involved in marketing services disciplines within and across Europe.


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