ROME — The European Union’s anti-trust officials must stay out of the defense sector and allow local firms to merge, integrate and build a critical mass to face global competition, the CEO of Italy’s Leonardo has warned.
Roberto Cingolani made the claim as he repeated calls for European defense firms to team up – without waiting for instructions from governments – so the continent can compete on even terms around the world.
“Anti-trust was conceived as a way to ensure free competition in Europe, but we are talking about Europe competing with China, India, Japan and the U.S.,” he told reporters in Rome on Wednesday.
“In that case anti-trust weakens us, it doesn’t help us. The concept has a sense in many sectors but we need to identify sectors like security and energy where the competition is global,” he said, adding that blocking defense mergers would condemn the sector to remain “marginal.”
Since he was appointed to run Italy’s defense giant Leonard in April 2023, Cingolani has spelled out his desire to push European industry integration, telling the Italian parliament in October he was eyeing “giant” joint ventures in Europe.
Italian industry found itself on the wrong side of European Commission anti-trust officials when shipyard Fincantieri’s bid to take over French shipyard Chantiers de l’Atlantique was nixed in 2021.
More integration in Europe will mean more cash focused on fewer programs, Cingolani said.
“Europe spends a little less than half as much as on defense as the United States. And the EU spends it on 30 programs and the U.S. on ten,” he said.
He said he had been discussing team-ups with European CEOs and said that if only three out ten ideas for alliances were successful it would be “an enormous success.”
He singled out satellite launches as a sector where European activity was too fragmented, and called for a “unified strategy” in the bloc for space launchers, services, communications and exploration.
In December, Leonardo and KNDS – the consortium teaming France’s Nexter and Germany’s Krauss-Maffei Wegmann – announced they were forming a “strategic alliance” to build tanks. A memorandum of understanding envisions starting with Italy’s order of Leopard tanks which will be assembled in Italy, and leading into Italian participation in the European Main Ground Combat System (MGCS) – a future tank plotted by France and Germany.
What has not been clear is what exact form the alliance will take and Cingolani said that was now being thrashed out. “The MOU gave us 12 months to decide what kind of collaboration to start, from a joint venture to other things,” he said, adding that a decision was likely in the next five weeks.
“One idea could be an MBDA-type alliance, a consortium which each partner having a third,” he said, referring to the pan-European missile company.
Leonardo has been reportedly mulling buying Italian military vehicle maker Iveco Defence Vehicles in order to bulk up ahead of possible European land warfare alliances. Asked about the possibility, Cingolani said the two companies had “been in contact recently” without giving any further details.
Tom Kington is the Italy correspondent for Defense News.
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- Source: https://www.defensenews.com/global/europe/2024/02/15/eu-regulators-must-let-defense-firms-merge-freely-leonardo-boss-urges/
