European Business News (EBN), 96-12-12

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updatedDecember 12 1900 CET

CONTENTS

[01] EU and US clear draft accord on information technology trade

[02] EU clears merger of UK cable TV interests

[03] France to relaunch Thomson privatisation next year

[04] Fiat to temporarily lay off up to 15,000 workers in January

[05] Siemens projects significant earnings growth in fiscal 1998

[06] Lopez is charged in Germany with embezzlement and betrayal of trade secrets

[07] German metal workers reach regional pay and benefits pacts

[08] Fiat to temporarily lay off up to 15,000 workers in January

[01] EU and US clear draft accord on information technology trade

The European Council, the region's decision-making body, approved a draft agreement crafted earlier this week by EU and U.S. negotiators here at the World Trade Organization, EU spokesman Peter Guilford said.

The so-called Information Technology Agreement aims to abolish tariffs by 2000 on some 300 products covering computers, computer chips, semiconductors and telecommunications equipment, a business worth $600 billion annually.

The decision came shortly after the acting U.S. trade representative, Charlene Barshefsky, urged the EU to make up its mind quickly, saying Europe's footdragging was damaging the process.

The council 'endorsed the results of EU discussions with the Americans and gave the commission the go ahead to lobby other countries to bring them on board,' Guilford said.

The U.S. is keen on sealing the pact here at the World Trade Organization's ministerial conference before it ends Friday. An agreement would be the most substantive outcome of the conference of trade ministers from WTO's 128 member nations.

With Europe's support, the U.S. can push some 30 other nations to join. Many of them are in Asia, a booming manufacturing base for electronics components.

Consensus among WTO's members is needed before the final declaration can be approved.

During lengthy late-hour negotiations, Barshefsky and Brittan thrashed out major differences over the range of products to be covered.

Europe wanted fibre optic cables, capacitors, photocopiers and graphic display tubes to be covered by the pact, while Washington wanted them excluded.

The details of the EU-U.S. deal were not announced immediately.

[02] EU clears merger of UK cable TV interests

The Commission said the clearance took account of BSkyB's current dominance of the British market for pay television and British Telecommunications near-monopoly in telephone networks.

Under the terms of the deal, the parent companies will form a new cable television and telecommunications group, to be known as Cable & Wireless Communications.

The operation will be done in two stages, involving a series of acquisitions that will eventually bring the various company interests under the umbrella of Cable and Wireless Communications. In the first stage, Bell Cablemedia, a unit of BCE, will acquire Videotron and Cable & Wireless and BCE will assume joint control of Bell Cablemedia. In the second stage, the interests of Bell Cablemedia, Nynex CableComms Inc and Nynex CableComms will be brought together under the umbrella of Cable & Wireless Communications.

The Commission said the new group will have access to Mercury's trunk lines and to the cable companies' local loop connections. This 'will provide the stimulus for the development of further competition' in the markets concerned, the Commission said.

[03] France to relaunch Thomson privatisation next year

The government also will retain a `golden share' to prevent Thomson-CSF from falling under the control of interests the state considers contrary to national interests.

The decision, announced by the Finance Ministry, comes just over a week after the state privatisation committee said it couldn't endorse the government's preference to sell Thomson to Lagardere Groupe.

The ministry said it intends to build a private company around Thomson's professional electronics and defence equipment division Thomson-CSF ''as soon as possible.''

The ministry said that, unlike the original privatisation plan, the new plan will be carried out in two stages, and will be done in a transparent manner so that the state's interests can be preserved.

The privatisation of Thomson-CSF will be followed by that of Thomson Multimedia, the group's loss-making consumer electronics division, which Lagardere had originally planned to sell to Korea's Daewoo electronics group.

French finance minister Jean Arthuis said Thomson Multimedia will be recapitalised at about 10 billion francs ($1. 9 billion).

The Finance Ministry said the terms and conditions of the new privatisation plan for Thomson will be made public in the coming days, after the plan has been presented to the Council of State, France's highest legal body, which vets all new legislation to ensure conformity with the French constitution.

Arthuis said the French government wants to meet with top Korean officials, who have charged France with discriminatory practices in cancelling the initial plan to sell part of Thomson to Daewoo. Arthuis said he wants to tell the South Koreans 'that the privatization commission and the state are not the same thing.'

He also welcomed Daewoo's statements this week that it would still be interested in bidding for TMM.

Arthuis said he personally thought the Daewoo bid 'showed industrial logic' but reiterated that the government couldn't influence the privatization commission.

The state-appointed privatisation council was only consulted on the Thomson/Lagardere project after the government had indicated its preference for the Lagardere offer over a competing bid put forward by the Alcatel Alsthom electrical and electronics group.

The opaque manner in which the government drew up the initial privatisation plans for Thomson drew wide criticism from the political and business communities.

[04] Fiat to temporarily lay off up to 15,000 workers in January

In a report to metalwork unions, which are currently negotiating a new working contract, Fiat said that between 1,700 to 15,400 workers will be laid off temporarily on a weekly basis over the next month in its factories in Pomigliano, Arese and Cassino.

Fiat, which sold 1.74 million cars in the first nine months of 1996, has curtailed its production by about 220,000 units this year through temporary layoffs.

The latest figures showed that car sales in Italy fell 11.4% in November from a year earlier.

[05] Siemens projects significant earnings growth in fiscal 1998

'We still intend to achieve our target of a 15% return on equity by the end of the century,' chief executive Heinrich von Pierer said at the company's annual news conference. 'We are on the right course.

Fiscal 1997 earnings will be flat as a result of profit declines expected in its components, medical equipment and auto parts businesses, Pierer said. Improved results in energy, communications and information would balance out these setbacks.

Increased profitability will also come from further productivity gains, an upswing in Germany's economy and a recovery in the worldwide components market.

The German electronics giant showed net profit of 2.49 billion Deutsche marks ($1.61 billion) in fiscal 1996. That figure was after extraordinary gains of 500 million marks from the sale of its high-performance printer business and a 'one-off' effect of an accounting change in foreign exchange hedging.

'Although we have announced a 'breather' on the earnings side for fiscal 1997, this certainly does not mean we have retreated from our medium-term profit goals,' Pierer said. 'It is clear we are making solid progress in improving our earnings structure.'

To reach those goals, Siemens is focusing its business away from Germany to Asia and the Americas, where sales growth is higher and labour costs lower.

'Business in Germany will continue to grow, but its share of our total will decline from the current 40% to less than 30% by the year 2000,' Peirer said.

[06] Lopez is charged in Germany with embezzlement and betrayal of trade secrets

Charges against three associates of Mr. Lopez also were expected to be announced by German prosecutors at a news conference tomorrow.

'The repeatedly and massively raised accusations against Mr. Lopez haven't been substantiated in the extensive investigations,' said Juergen Taschke and Eberhard Wahle, two of Mr. Lopez's lawyers, following receipt of the indictment, which was issued Tuesday.

In a separate statement, VW said GM's three-year-old allegations against the controversial Spaniard and others who followed him from GM to VW were collapsing like a 'house of cards,' because prosecutors had found no evidence of conspiracy or financial damage. 'VW neither asked for nor made use of others' secrets,' it said.

In Detroit, GM spokesman John Mueller said the indictment of Mr. Lopez and the others 'speaks for itself,' despite VW's attempts to minimize the impact of the prosecutor's actions.

'The fact of the matter is that Lopez, who has already been penalized for lying about his activities, has now been criminally charged by an independent prosecutor with the theft of our data, as have others, including current VW managers,' Mr. Mueller said. 'It serves no legitimate purpose for the leadership of VW to minimize the subversion of fair competition that is reflected by the facts leading to the prosecutor's charges.'

German prosecutors wouldn't comment on any indictment of Mr. Lopez or of his associates.

The indictment marks a turning point in GM's complaints, which began with charges of industrial espionage in 1993 and grew to include racketeering. GM had already scored numerous points against VW in a series of preliminary civil-courtroom victories in both Germany and the U.S., but until now couldn't point to an endorsement by criminal-justice officials.

This spring, GM turned up the heat by lodging a civil suit in a Detroit federal district court naming Mr. Lopez, several other top managers, including VW Chairman Ferdinand Piech, as well as VW as a company. Invoking a U.S. antiracketeering law, it charged them with conspiring to steal GM secrets and using the secrets for VW's gain.

GM has never publicly quantified its damage claims, but people close to the situation say they could run into the billions of dollars.

The defendants have all denied any wrongdoing, and VW has continued to stand by Mr. Lopez and his colleagues, most of whom still work for the company.

[07] German metal workers reach regional pay and benefits pacts

The agreements for Germany's largest IG Metall union district of North Rhine-Westphalia and workers in South Wuerttemberg/Hohenzollern and South Baden are along the same lines as one reached for Lower Saxony last week.

They provide for a lump-sum payment of 200 Deutsche marks ($130) mark lump sum payment for the first three months of 1997, followed by a pay increase of 1.5% effective April 1. The current wage contract runs out Dec. 31.

On April 1, 1998, wages will increase by 2.5%. Workers will also continue to receive 100% of normal wages in the case of illness, though overtime won't any longer be included in the calculation of 'normal wages.' The agreement on sick pay stands until the end of 2001.

The German Gesamtmetall employers association had signalled Sunday that the Lower Saxony wage agreement would be a model for other German wage districts. That concession was widely regarded as a victory for IG Metall.

[08] Fiat to temporarily lay off up to 15,000 workers in January

In a report to metalwork unions, which are currently negotiating a new working contract, Fiat said that between 1,700 to 15,400 workers will be laid off temporarily on a weekly basis over the next month in its factories in Pomigliano, Arese and Cassino.

Fiat, which sold 1.74 million cars in the first nine months of 1996, has curtailed its production by about 220,000 units this year through temporary layoffs.

The latest figures showed that car sales in Italy fell 11.4 percent in November from a year earlier.

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