Bershidsky on Europe: Merger Talks for Cement Giants
Here's today's look at some of the top stories on markets and politics in Europe.
Orban wins by wide margin in Hungary.
Fidesz, the party led by Prime Minister Viktor Orban, is likely to hold a two-thirds majority in the next parliament after Sunday's election: It is projected to win 133 of 199 seats. This means a second term in which Orban can make changes to the constitution, consolidating his authoritarian rule and further establishing a nationalist economic program that puts foreign companies at a disadvantage. The opposition complained loudly that the elections weren't fair, because the Fidesz-controlled parliament had banned political advertising on TV and Radio and companies close to Fidesz owned most of the outdoor advertising space. Considerations like these are, however, unlikely to force the EU to take issue with the election, and Orban will continue as the bloc's quirkiest leader, proving that, with enough chutzpah, an EU country can still operate under its own rules.
Vivendi sells SFR to Numericable.
The French conglomerate Vivendi made a final decision to sell its mobile operator, SFR, to Altice/Numericable, controlled by billionaire Patrice Drahi, rejecting rival Martin Bouygues offer. Bouygues had mobilized all his resources to get SFR, enlisting the help of Economics and Industry Minister Arnaud Montebourg, who openly supported his version of the deal. Vivendi's chief executive Jean-Rene Fourtou, however, remained in favor of the Numericable deal, explaining that the Bouygues option would have created a mobile operator with a 47 percent market share, "untenable in terms of competition." Fourtou explained that regulators would have demanded serious concessions to a competitor, Free, which Vivendi thought would put Bouygues-SFR at a disadvantage. Besides, Vivendi's board saw promise in the combination of mobile and cable, for which Drahi is a powerful evangelist. Since Vivendi keeps 20 percent in the merged SFR-Numericable, it has chosen a future-oriented model over a competition-reducing move: A smart decision.
Pro-Russian protesters seize government buildings in eastern Ukraine.
Angry pro-Russian crowds, apparently augmented with "tourists" bused in from Russia, seized government buildings in three major industrial cities in Eastern Ukraine: Donetsk, Kharkov and Lugansk. Ukraine's acting interior minister Arsen Avakov believes the action was "ordered and paid for" Russian President Vladimir Putin and deposed Ukrainian leader Viktor Yanukovych. He promised to "bring the situation under control bloodlessly," but the ability of the interim government in Kiev to control the country is highly doubtful. The protesters in the east understand that even the threat of violence against them may provoke Putin to make a military move against Ukraine, which Kiev fears because it effectively has no army. There is no effective counterbalance to Putin's successful attempts to destabilize Ukraine. Coupled with Russia's insistence on the repayment of $2.2 billion in Ukrainian debt to Russia's natural gas monopoly, Gazprom, the clashes in the eastern cities appear designed to make the Ukrainian authorities bow to Moscow and forget European ambitions.
World's top cement producers announce possible merger .
France's Lafarge and Switzerland's Holcim plan to merge, creating the world's biggest construction materials company with a combined market value of $50 billion. For this to happen, however, the companies must overcome antitrust hurdles: The combined entity would control 60 percent of the market in France and Canada and 30 percent in the U.S. Lafarge and Holcim say they are willing to sell off $8 billion worth of assets throughout the world to satisfy regulators. The European Commission is already investigating the two market leaders and six other companies for allegedly setting up a cement cartel. On the face of it, there is no reason for the authorities to allow a merger that will clearly create a single dominant player in the construction materials industry. The two companies' announcement means, however, that they are reasonably confident this can somehow be done. If that is so, it's rather pointless for the EU to have an antitrust regulator.
French employers and unions agree on "right to disconnect" .
After six months of tense negotiations, the French employers' associations for the consulting and tech industries, Syntec and Cinov, agreed with the labor unions that employees should have the right to disconnect all means of communication, including computers, telephones and other mobile devices, outside working hours as a means to make sure they are actually resting when they are not at the office. This may be just an empty declaration, but it is the first time in France that the right to disconnect has been put in an official document. It deserves further promotion: given the ubiquity of communications, many people never really get off work.
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Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter at @Bershidsky.
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