Week Ahead (23 October)

Monday, 23 October – European Commission to announce decision on the acquisition of Whirlpool by Arcelik

Today, the European Commission will decide whether to approve Turkish domestic appliances maker Arcelik’s proposed purchase of Whirlpool’s European domestic appliances business. Under the deal, agreed in January, the two companies would establish a new entity, with Arcelik owning 75% and Whirlpool owning the remaining 25%.

Earlier this month, the UK Competition and Markets Authority (CMA) decided to refer the proposed deal for an in-depth Phase 2 Investigation. This came after the two parties informed the UK antitrust regulator that they would not offer any concessions to address potential competition concerns in the UK related to the deal. The CMA had previously expressed concerns that the acquisition could reduce choice in the supply of major household appliances in the UK, where the market is worth over £3.8 billion. It remains to be seen whether the European Commission will follow suit by launching an in-depth investigation or greenlight the deal after the conclusion of its preliminary review today.

Monday, 23 October - Tuesday, 24 October – Informal telecom council to be held, the first since the publication of the Commission's consultation on digital connectivity

EU telecoms ministers are meeting this week in Leon where they will also be addressed by Internal Market Commissioner Thierry Breton. The discussions will be centred around the future of the telecommunications sector and the progress of achieving the bloc’s goals of the ‘’digital decade’’.

The meeting will take place only a few days after the release of the results of the Commission’s public consultation on the future of connectivity. The aim of the consultation was to gather data and views on technological and market developments, measures regarding fairness for consumers, barriers to the Single Market and whether big tech firms should contribute to the development of gigabit networks. Its findings, involving 437 responses, revealed that the bloc is still lagging behind its ambitious goals for 2030, partly due to an investment gap of €200 billion and market fragmentation.

Commissioner Breton is expected to use this opportunity to once again call for greater market consolidation in the European telecom industry, following his announcement of a new ‘’Digital Network Act’’. In his blog post reacting to the Commission’s report earlier this month, Breton stressed that ‘’telecom operators need scale and agility to adapt to this technology revolution’’, noting that ‘’market fragmentation holds them back’’. He also warned that, ‘’in the long run this can weaken the sector and expose it to hostile take-overs, despite the critical nature of its assets’’. The latest comment could also be seen as an implicit reference to the recent entry of Saudi Arabia’s STC Group into Telefonica in Spain, amassing a 9.9% of stake.

The Council’s Spanish presidency seems increasingly sympathetic to Breton’s arguments. According to a discussion paper for this week’s meeting, the Spanish presidency appears to be steering the discussion towards an openness to consolidation within the telecom sector.

Thursday, 26 October – ECB Governing Council to hold monetary policy meeting in Athens, expected to keep rates unchanged after ten consecutive hikes

On Thursday, the ECB Governing Council (GC) meets to decide the next steps for Eurozone interest rates. The meeting comes a week after Eurostat released its September inflation data which showed inflation in the eurozone dropped to 4.3%, down from 5.3% in August. Moreover, core inflation also saw a strong decline from 5.3% to 4.5%. In its previous monetary policy meeting on 14 September, the ECB raised interest rates to a record high of 4%, marking the 10th consecutive interest rate hike within 14 months.

However, the ECB has indicated that this rate hike was likely the last in the current cycle, with the minutes of last month’s meeting suggesting that the rate hike decision was a ‘’close call’’. The governor of the Dutch central bank, Klaas Knot, part of the board’s ‘’hawkish’’ group, recently admitted that the ECB is now ‘’getting on top of inflation’’.

Additionally, all 85 economists polled by Reuters suggest that the ECB’s hiking cycle is set to conclude this week. However, there is uncertainty regarding when the ECB will initiate easing. Market consensus is that this will not happen before July 2024, as inflation levels are still twice as high as the ECB’s 2% target. In an interview last week, the Bank of Greece governor Yannis Stournaras stated that ‘’if inflation in the middle of next year falls close to 3%, that is perhaps the time to start thinking about a rate cut’’.

Thursday, 26 October - Friday, 27 October – European Council to discuss Ukraine, migration, and the state of the economy; German Chancellor to push for an extension of temporary state aid rules

This week, the European Council will be held in Brussels in order to discuss inter alia the state of the European economy, the Multiannual Financial Framework for 2021-2027, the bloc’s support for Ukraine, as well as the proposed EU migration pact are part of the provisional agenda. The ongoing conflict between Israel and Hamas could also be a major point of discussion between EU leaders, given the mixed and contradictory messaging that has once again demonstrated a lack of cohesion on a foreign policy level.

Additionally, the German Chancellor Olaf Scholz is expected to use the Summit as an opportunity to call for the extension of the EU’s temporary state aid rules until 2027, particularly those related to renewable energies and the decarbonisation of industries. These exemptions were initially introduced to address high energy prices and advance green energy initiatives, and are currently set to expire at the end of 2025. However, Scholz argues that an extension is necessary because the reforms to EU state aid rules proposed by the Commission earlier this year have not yet been implemented. Moreover, there are concerns shared by both Paris and Berlin that ending these subsidies could negatively impact their industrial competitiveness and potentially lead to the relocation of key industries.

On the other side of the argument, smaller member states, including Belgium, Denmark, Finland, and the Netherlands, oppose this extension, arguing that it may distort the internal market. In 2022, Germany accounted for approximately 53% of the European Union's total state aid approved under the temporary state aid rules.