Bizwatch

4 minute read
PETER GUMBEL

The Rebate Debate
Can the European Union avoid another damaging bout of budget paralysis? That’s the big question following last week’s E.U. summit in Brussels, at which French President Jacques Chirac questioned why Britain should continue to receive a €4 billion annual rebate on its payments.

In 1984, then Prime Minister Margaret Thatcher won the rebate for Britain by demanding: “I want my money back”, and holding up E.U. business for months until she got it. E.U. leaders are supposed to fix a new budget framework this year for 2007-2013, and already there’s disagreement over whether to increase the current €100 billion total by 1% — as France, Germany and some other fiscally-strapped members want — or by substantially more, as new members such as Poland are demanding. On the Continent, the rebate is considered anachronistic:

INDICATORS
Broken Trust
The European Commission rejected Microsoft’s proposals to curb the power of a monitor charged with policing its compliance with antitrust sanctions imposed one year ago. The firm has until April 11 to respond.

Smooth Finish
Three banks seeking greater influence over the running of Formula One claimed victory in their legal dispute with the sport’s supremo Bernie Ecclestone. The banks own 75% of SLEC, the firm that controls Formula One Holdings.

International Call
Nordic telecom major TeliaSonera agreed to pay $3.1 billion for a further 27% stake in Turkcell, giving it control over Turkey’s largest cell-phone operator.

INDICATORS
Broken Trust
The European Commission rejected Microsoft’s proposals to curb the power of a monitor charged with policing its compliance with antitrust sanctions imposed one year ago. The firm has until April 11 to respond.

Smooth Finish
Three banks seeking greater influence over the running of Formula One claimed victory in their legal dispute with the sport’s supremo Bernie Ecclestone. The banks own 75% of SLEC, the firm that controls Formula One Holdings.

International Call
Nordic telecom major TeliaSonera agreed to pay $3.1 billion for a further 27% stake in Turkcell, giving it control over Turkey’s largest cell-phone operator.

Smooth Finish
Three banks seeking greater influence over the running of Formula One claimed victory in their legal dispute with the sport’s supremo Bernie Ecclestone. The banks own 75% of SLEC, the firm that controls Formula One Holdings.

Britain is no longer a relatively poor member state, as it was then, but one of the richest. Britain is set to take over the rotating six-month E.U. presidency in July, so optimists are hoping that current president, Luxembourg, can craft a workable compromise before then. Don’t hold your breath.

Cross-Border Bank Raid
Italian banks are suddenly under assault from European rivals. ABN Amro of the Netherlands is expected to announce a bid for Banca Antoniana Popolare Veneta, Italy’s ninth-largest bank, as early as this week. That follows this month’s €6.5 billion bid by Spain’s Banco Bilbao Vizcaya Argentaria for the 85% of Banca Nazionale del Lavoro it doesn’t already own.

The moves amount to an earthquake for Italian banks, which are all firmly in Italian hands and have until now been able to count on the Bank of Italy to protect them from foreign takeovers. But the European Commission questioned that policy this year, putting Bank of Italy governor Antonio Fazio on the defensive. The attraction for foreigners: Italy’s banking sector is highly fragmented and not very competitive, according to Credit Suisse First Boston, meaning that greater efficiencies — and profits — can be wrung out of them.

Lucky Break?
Frankfurt prosecutors called off a probe into six Citigroup traders accused of manipulating the European government bond market last August, although a change to Germany’s law made since could now make such trades illegal. Financial watchdogs elsewhere in Europe are still investigating.

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