EU warns France on protectionism after Alstom measures

(BRUSSELS) - The European Commission warned France on Thursday against resorting to protectionism after Paris unveiled new measures to head off hostile foreign bids for key companies, most recently Alstom.

"The objective of protecting essential strategic interests is clear when it involves security or public order and that is recognised in EU treaties," EU Finance Markets Commissioner Michel Barnier said.

"But we also must check if this is applied in a proportionate fashion, otherwise it could amount to protectionism," said Barnier, a French politician.

"We cannot guarantee Europe's industrial future, its development with protectionism," he added, with "investment, not protection," the best way.

France has introduced new rules, due to come into effect on Friday, which will make it more difficult for foreign groups to take over "strategic" industrial groups such as energy and transport group Alstom which is being pursued by US conglomerate General Electric.

"The fundamental role of the state is to protect the strategic interests of France," Finance Minister Michel Sapin told Europe 1 radio earlier Thursday.

"This is true in France as it is true in any other country" seeking to safeguard national interests, Sapin added.

The new French measures extend a 2005 law to cover foreign investment in key sectors such as energy, water, transport, health and telecoms.

Any foreign bids will have to be vetted by the government as to their desirability and benefits for the French economy.

Economy Minister Arnaud Montebourg has been accused of protectionism in his efforts to promote French industry and he notably opposes the GE bid for Alstom, preferring instead a smaller tie-up with Germany's Siemens.

Alstom has said it favours GE's offer of 12.35 billion euros ($17 billion) for its energy activities.