The E.U.'s feisty competition czar, Karel Van Miert, is making decisions that will set the anti-trust agenda for companies and countries far beyond Europe

By JAMES L. GRAFF /BRUSSELS

ast summer it was a sensation, for some even an affront, when the European Union's competition czar Karel Van Miert exacted major concessions before signing off on the merger of two all-American firms, Boeing and McDonnell-Douglas. A year later and such demands seem like business as usual. Worldcom's $37 billion purchase of its former competitor, MCI Communications, has been stymied for months by Van Miert's concern that the existing company would hold a dominant position on the "backbone" of the Internet. In May, MCI agreed to sell some of those data trunk lines to the British firm Cable & Wireless for $625 million, but that was not enough to allay his concerns that the combined firm would have too much control over the future of the information superhighway. Last week MCI caved. It agreed not only to sell all of its Internet business, but also promised, according to people familiar with the deal, not to solicit its former Internet customers for a set period.

Score another one for Van Miert, 56, the E.U.'s feisty Commissioner for regulating competition and state aid to industries, and thus the man whose decisions have the most immediate effect on business in the E.U. Van Miert's Directorate General IV has power to block deals and levy fines without consulting the elected national ministers who make up the European Council. He only has to convince a majority of his fellow commissioners, something he has almost always succeeded in doing. At a time when news of mega-mergers flashes across computer screens almost daily, his staff of fewer than 500 can make CEOs cringe, governments bawl and even President Clinton grumble, as he did last summer over Van Miert's objections to Boeing's purchase of McDonnell-Douglas. "He's really shown the giants of the world that the European Union is a force to be reckoned with," says Gerrit Schohe, a Brussels-based competition lawyer. "He's got iron in his blood."

It's no surprise that Van Miert has made powerful enemies. German Chancellor Helmut Kohl wasn't above placing several telephone calls directly to Commission President Jacques Santer in May to object to Van Miert's veto of a massive digital television joint venture between the Munich-based Kirch Group and the giant media concern Bertelsmann AG. Van Miert closed the debate by banning the deal on May 27, after Bertelsmann refused to accept his proposal to open avenues of competition for other cable providers. Van Miert rejects as "absurd" the argument that his ban set Europe back in competing with big American audio-visual groups. "If we authorized the deal without conditions that the market remain open, it would have led to similar monopolies in France, Spain and Italy," he says. "Where are the big European companies then?"

Van Miert has got in hot water too over his hard-nosed attempts to wean European businesses from state aid, which currently flows at about $90 billion a year. In May he infuriated President Jacques Chirac by forcing the French government to sell off some $113 billion of the assets of its failing bank Credit Lyonnais in exchange for his approval of Paris' dauntingly expensive effort to salvage the bank in preparation for privatization by October 1999.

Observers note that Van Miert takes a certain glee in proving that his antagonists underestimate him at their peril. The eldest of nine children of a Flemish farming family, he served for 10 years as chairman of the Flemish wing of the Belgian Socialist Party, and was vice president of the Socialist International for six years. When he moved into his current position in January 1993, expectations were not high. "There was a widespread concern that Van Miert, a left-wing politician from a small country, wouldn't be strong enough," says Peter Alexiadis, a Brussels-based anti-trust lawyer with Squire, Sanders and Dempsey. The post had a stellar history, having served as a launch pad for Irishman Peter Sutherland, who went on to be the founding director general of the World Trade Organization, and then for Sir Leon Brittan, the Tory free-marketeer who now oversees the E.U.'s foreign trade brief.

There was some reason to doubt his commitment to the free market cause. In his previous position as E.U. Commissioner for transport, Van Miert had crossed swords with Sir Leon Brittan, then competition czar, more than once by supporting state subsidies for transportation. Now he plays the role of the competition purist, aligned against other commissioners with more sympathy for industrial policy, such as research Commissioner Edith Cresson of France and industry Commissioner Martin Bangemann of Germany. Van Miert's pugnacity and his habit of trumpeting decisions before the Commission has approved them has not endeared him to some colleagues. "He's not playing collegiality anymore," says someone close to the Commission. "The time will come when the others show him he's not the only commissioner."

But he has made friends as well. Despite his battle with the Clinton administration over Boeing's purchase of McDonnell-Douglas, his star is high in Washington, where he recently negotiated a far-reaching accord to share information on cases of common concern. "European Union officials are on our wavelength with respect to the need for a rational anti-trust, cartel policy," says David Aaron, U.S. Undersecretary of Commerce for International Trade. That isn't mere theory, either. Van Miert's judgments often set the framework for slower action by his U.S. counterparts because the E.U. competition authority must decide on proposed mergers within four months of their notification--a timetable Van Miert will tighten further this month. American anti-trust authorities have voiced similar concerns to Van Miert's on the Worldcom-MCI deal, and are widely expected to concur with the terms he has worked out and will present for approval by the Commission as a whole on July 8. Washington will likely take a cue as well from Van Miert's expected ruling on the same day on two air transport alliances, one between British Airways and American Airlines and another involving Lufthansa, SAS and United Airlines. In exchange for approving the alliances, Van Miert is expected to demand that BA and AA yield 267 landing slots a week at London airports, while the Lufthansa group will have to give up 100 slots in Frankfurt, Copenhagen and Oslo.

Two years ago, Germany pushed for an independent European cartel authority that would be isolated from the political pressure Van Miert faces when seeking approval for his rulings from the 19 other commissioners. The discussion has withered somewhat because Van Miert generally gets his way, though advocates of such a change still worry about political influence "when Van Miert isn't there anymore," as one German official says.

A more pervasive concern is that Van Miert's team is simply swamped with more work than it can handle. The Commission vetted 172 prospective mergers last year, up 31% on the previous year, and this year's case load is expected to surpass 200. Van Miert has been able to attract and keep a strong staff by paying close attention to their briefing papers and backing their positions when the discussion turns political. The business community would like to see the Commission reduce the number of cases it considers by creating more automatic exemptions, and sharing with national competition authorities its discretion to exempt certain mergers on grounds of social good.

Van Miert has raised thresholds to screen out minor cases but says he won't share his right to exempt bigger crossborder deals. At least until 2000, when his term expires, Van Miert is determined to remain the ultimate arbiter of how to further Europe's competitive profile. He knows that his decisions may not last in a rapidly changing global economy. "I'd be happy if people recognized that we tried to do our jobs honestly and coherently, not giving in to all kinds of pressures, not bending rules, not closing our eyes," he says. "That would be good enough."