* Decree allows block on foreign takeovers in some sectors
* EU commissioner warns France against "protectionism"
* Analyst says could deter GE from bid for Alstom assets
* GE says to continue talks with French government
(Adds data on French takeovers)
By Jean-Baptiste Vey and Benjamin Mallet
PARIS, May 15 The French government gave itself
the power to block foreign corporate takeovers in "strategic"
sectors on Thursday, throwing up a potential roadblock to
General Electric's $16.9 billion bid for Alstom's
The decree swiftly drew a warning against "protectionism"
from the EU official in charge of competition, and was called a
"bad idea" by French employers' group MEDEF. General Electric
(GE) said it would pursue its talks for a deal with Alstom, but
some analysts suggested rival suitor Siemens would now be
The move extends a 2005 law on defence and other industries
and gives the state much-increased powers to block foreign
takeovers in the energy, water, transport, telecoms and health
sectors - potentially affecting about a quarter of the companies
in France's CAC-40 blue-chip equities index.
Any such acquisition will now need the approval of the
economy minister, the decree published in France's Official
The current holder of the post Arnaud Montebourg - a
self-described "economic patriot" - has criticised the proposed
Alstom-GE deal for fear of the impact on French jobs and
prestige, and advocated a tie-up with Siemens, which he says
would create European champions in power and trainbuilding.
"With this reform, France will have a clear and efficient
legal framework comparable to that in a number of other open
economies within and outside Europe," he said in a statement.
"This new measure will of course be applied in a selective
and proportionate manner, taking into account the merits of each
situation," he said, adding the decree would take effect within
24 hours of publication.
"This is the end of laisser-faire," he told Le Monde in an
interview published later.
Alstom has given itself until the end of the month to review
its options. Both it and Siemens declined comment, while GE said
it would continue to discuss its plans with the government.
"Our project is good for Alstom, for its employees and for
France," GE said in an emailed statement, aiming to "build a
world leading business in the energy sector with four bases in
France, preserving and creating jobs."
However, Berenberg analysts said the decree opened the door
for an alternative deal with Siemens. "With this new law, the
risk that GE will reconsider its position increases," they said.
France already lags peers when it comes to foreigners buying
Only 37 percent of acquisitions of French companies have
involved foreign acquirers since 2000, according to Thomson
Reuters data. That compares with 55 percent for Britain and 59
percent Germany over the same period.
Among the major European economies, only Italy has fewer
foreign takeovers. The United States, with a much larger economy
and bigger pool of domestic acquirers, has far fewer foreign
takeovers - just 19 pct.
Cash-strapped Alstom, which builds France's high-speed
trains as well as power turbines and associated equipment, was
bailed out by the French government a decade ago and is seen by
many in France as an embodiment of its engineering prowess.
Alstom shares were down 1.5 percent to 28.88 euros at 1255
GMT, within a CAC-40 down 0.3 percent and a flat European
The French government had given no hint it was considering
such a measure, which comes 10 days ahead of European Parliament
elections in which President Francois Hollande's Socialists are
expected to be punished for their failure to create jobs and
growth, and where the National Front - campaigning on a
protectionist, anti-EU platform - is set to score big gains.
France's flatlining economy was making separate headlines on
Thursday, missing expectations for 0.2 percent growth in gross
domestic product in the first quarter and in sharp contrast to
Germany's robust 0.8 percent growth.
The government move also comes amid mounting concerns in
other countries about foreign takeovers, with lawmakers in both
Britain and Sweden expressing opposition to U.S. drugmaker
Pfizer's attempts to buy rival AstraZeneca.
Thursday's move returns the phrase "economic patriotism" to
the French political lexicon. The expression was a key theme
under the conservative premiership of Dominique de Villepin in
2005 after French fears grew that U.S.-based PepsiCo
would mount a hostile bid on dairy giant Danone.
The European Union reacted cautiously to the decree.
"We will be looking at case law from the courts of justice
... and, of course, we will be looking at what's in the
(European Union) treaties," Michel Barnier, the EU commissioner
for the internal market, told reporters in Brussels.
The French rule should not be so wide ranging as to subject
"all transactions of purchasing a company ... to a national
authorisation. Clearly that would be protectionism," he added.
(Additional reporting by Lewis Krauskopf in New York, Tim
Hepher in Paris, John O'Donnell in Brussels and Tom Bergin in
London; Writing by Michel Rose and Andrew Callus; Editing by
Mark John and Mark Potter)