Europe's Trustbuster Rolls Up His Sleeves

But Monti's powers may not be enough for his huge agenda

Mario Monti hardly looks like a ferocious trustbuster. The European Union's new Competition Commissioner couldn't contrast more in style from his flamboyant predecessor, Karel van Miert, who made waves for the six years he pushed for open markets in Europe. A grizzled Belgian politician, van Miert loved the occasional shouting match with an opponent. The 56-year-old Monti, by contrast, was a soft-spoken economics professor at Italy's Bocconi University before coming to Brussels as a tax expert in 1995.

Now, Monti is taking just as strong a line on antitrust issues as his predecessor. "The two of us are such different characters, but we both share the same belief--that competition is needed to construct Europe," Monti insists. Indeed, since he became competition chief last September, the slim, silver-haired technocrat has challenged everyone from the German government to Microsoft Corp. On Feb. 9, Monti launched an investigation into whether Windows 2000 could give the software giant unfair dominance in the server market in Europe. Monti also plans to investigate cross-border mergers, such as the recent tie-up of Britain's Vodafone and Germany's Mannesmann, and push EU states to take more responsibility for enforcing antitrust legislation.

It's a huge agenda--one that could help determine the future shape of European capitalism. No one doubts that the Yale University-trained economist has the smarts for the job. But Monti concedes that fighting for greater competition in Europe can be an uphill battle--especially when governments try to protect their national interests. "Member states always want to drag their feet on liberalization," he says.

For Monti, liberalizing Europe's markets means, first and foremost, forcing governments to give up their favorite drug--subsidies. Old-line industries, such as shipbuilding, steel, and autos, must restructure by themselves: Monti has opened investigations against Volkswagen, BMW, and Fiat for receiving public funds to modernize factories. Even more important than stopping handouts is ending less visible state aid. He's insisting that German Landesbanken--regional, state-dominated banks--should no longer benefit from government guarantees on liabilities. "Hidden state aid must be brought to light," he says.

Similarly, Monti wants to stop European governments from backtracking on promises to open key markets. When the Portuguese government tried to block Spain's Banco Santander Hispano Central from taking over Lisbon-based bank Champalimaud Financial Group, Monti intervened. Now, he wants to see further bank consolidation across Europe. "The creation of the euro means we are determined to have a single market for financial services," he says.

MUSCLE. Given his support of cross-border mergers, many analysts expected quick approval of the huge Vodafone AirTouch-Mannesmann deal. Monti says he has nothing against the creation of a European mobile-phone giant. But he wants to make sure Vodafone carries out its promise to sell off Mannesmann subsidiary Orange PLC without stripping it of key assets. Although Monti won't comment, observers believe he may press Vodafone to sell Orange to a strong rival, such as France Telecom.

Such muscled intervention can raise hackles. Monti also won't comment on the Windows 2000 investigation, but an aide says Monti wanted to make the point that "no company--not even Microsoft--is off-limits." Says John Frank, Microsoft's European director for law and corporate affairs: "We are surprised he would grandstand."

In the future, Monti wants to pursue even more high-profile cases. That's why he's pushing for national governments to review smaller-scale deals such as joint ventures. "We need to lighten the red tape," he says. Some worry that companies may have to deal with 15 antitrust authorities rather than one. Predicts Stephen Kinsella, an antitrust specialist at Brussels law firm Herbert Smith: "Monti will be able to choose the sexy cases for maximum political impact."

More mergers will mean more big-name cases. Monti won't win them all, but Europe may look a lot different when he's through.

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