European Business News (EBN), 97-04-11

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

Page last updated April 11 1400 CET

CONTENTS

[01] Suez, Lyonnaise des Eaux announce details of merger

[02] US threatens costly block on European meat

[03] EU suspends dialogue with Iran

[04] U.S court rules in favour of Zeneca cancer-drug patent

[05] Spain's consumer prices hit 29-year low

[06] Murdoch seeks law change to help satellite TV bid

[07] France favours Alcatel, Framatome link-up

[08] Corporate and Economic briefs

[01] Suez, Lyonnaise des Eaux announce details of merger

Shares of water utility Lyonnaise des Eaux and financial holding company Cie. de Suez were suspended on the Paris bourse, ahead of the formal announcement of their merger.

The Societe des Bourses Francaises, the company that operates the Paris stock exchanges, suspended the shares at the companies' request. Trading in Lyonnaise and Suez shares will restart Monday morning, the SBF added.

The boards of the two companies approved the terms of the link-up, which had already received the backing of the Lyonnaise board.

The merged group will have annual sales of 210 billion French francs, a market capitalisation of about 70 billion francs and could post 1997 profit of at least 3 billion francs. The merger of Suez will effectively end the independence of the company created in the 19th century to build the Suez Canal.

Suez Chairman Gerard Mestrallet will be chief executive, while Lyonnaise chairman Jerome Monod will head a newly created supervisory board.

[02] US threatens costly block on European meat

Although they've been granted an extra day of meetings, the EU experts still maintain that hygiene standards in US slaughterhouses are not stringent enough.

EC scientists say the US practice of 'decontaminating' meat at the end of its production chain is 'an invitation to relax strict hygiene.'

But representatives of the US poultry industry vehemently deny such claims. 'The US inspection system is the most modern, most science based system in the world and for the EU to question the equivalency of our methods we feel really is ludicrous,' said Julie DeYoung, Director of Public Relations, National Turkey Federation.

In 1993 the EU launched a controversial initiative to negotiate broad veterinary agreements with its major trading partners.

While negotiations with some trading partners have been successful, the US and the EU have been trying for nearly three years to establish a mutual recognition system, known as veterinary equivalence.

Now there's a deadlock, and the US says that if no agreement is reached by April 15, Washington will block EU meat imports estimated to be worth $300 million a year.

Lars Christian Hoelgaard, Chief Veterinary Negotiator for the European Commission said, 'This is a US determined deadline, it is not in any way an EC determined deadline. We have made it clear in our discussions that if such action were to be taken we on our side would be forced to take action.'

Although the EC official would not elaborate the details, he did say retaliation would be swift and decisive.ive.

[03] EU suspends dialogue with Iran

Germany and the European Union recalled their ambassadors from Tehran yesterday, and other European countries are considering similar actions for what Germany called Iran's 'flagrant breach of international law.'

Unlike the U.S., which bars trade with Iran and has no diplomatic ties with the country, Europe has maintained links with the oil-rich nation, arguing that continued dialogue facilitates discussions on human rights and terrorism. Germany, the biggest supporter of the 'critical dialogue,' is Iran's largest trading partner.

But following the ruling by a Berlin court, members of the European Union will meet April 29 to review ties with Tehran. An EU spokesman said there is 'no basis for continuing the critical dialogue.'

Washington has been urging the isolation of Iran for some time, arguing that Iran sponsors terrorism, a charge Iran denies. 'The critical dialogue has not succeeded in moderating Iran's behavior,' said State Department spokesman Nicholas Burns. 'We would be very pleased if the European governments moved to choke off trade with Iran.'

The Berlin court yesterday convicted two men in the 1992 murder of Iranian- Kurdish leader Sadiq Sarafkindi and three associates in a Berlin restaurant. The court convicted two others as accomplices. Prosecutors argued that Iran's spiritual leader, Ayatollah Ali Khamenei, and President Hashemi Rafsanjani personally ordered the assassinations. 'The Iranian political leadership is responsible,' declared President Judge Frithjof Kubsch. Iran denies any involvement.

[04] U.S court rules in favour of Zeneca cancer-drug patent

The decision by the U.S. Court of Appeals for the Federal Circuit clears the way for Zeneca to enforce its U.S. patent on Nolvadex until 2002.

In a statement to the U.K. equity market, Zeneca said Novopharm's challenge to the U.S. patent on the drug has been dismissed by the U.S. Court of Appeals for the Federal Circuit.

Zeneca said the CAFC decision affirms a previous ruling in its favor by the U.S. District Court for the District of Maryland last April.

'Novopharm's case has now been effectively disposed of, validating Zeneca's decision to enforce its U.S. patent, which is effective until 2002,' the company said.

According to Zeneca, tamoxifen is the most widely used medicine for the treatment of breast cancer. It was an original invention of ICI Pharmaceuticals, a subsidiary of Imperial Chemical Industries.

[05] Spain's consumer prices hit 29-year low

Spain's consumer price index continued to slacken, rising only 0.1% in March from February, lowering the year-on-year rate to 2.2% from 2.5% in February, the national statistics institute said.

Spanish inflation is among the highest in the 15-nation European Union, as is its unemployment which stood at 21.78% for the fourth quarter of 1996.

The figures will encourage a Spanish government battling to make the first wave of monetary union in 1999, and they add weight to Bank of France council member Paul Marchelli's belief that Spain should be in from the start , along with Portugal and Italy.

The underlying inflation rate, a measure of consumer prices excluding fresh food and energy prices, increased 0.2% in March, lowering the year-on-year 'core' rate to 2.1%, down from 2.3 percent in February.

[06] Murdoch seeks law change to help satellite TV bid

The media tycoon has been presenting his case in Washington for the new venture, which he claims will not violate laws controlling broadcast and cable TV services. However broadcasters and the cable TV industry accuse Murdoch of wanting to secure a quick launch for his new service, thereby squeezing out the competition.

News Corp.'s chief executive officer told the Senate Commerce Committee that Sky, his planned satellite-TV service that would beam 500 channels to subscribers via 18-inch satellite dishes, will carry the local signals of major and other networks covering 75% of U.S. households. But he rejected suggestions that the venture be subject to the same law that requires cable operators to carry the signals of practically all local broadcast stations.

'We'll do everything we can to accommodate everybody, big and small,' Mr. Murdoch said. But Sky won't have room on its satellites for all of the nation's 1,600 local stations. Pressed to say whether his pledge would cover them all, he said, 'I don't want to make a promise I can't keep.'

How many local broadcast signals Sky might carry has emerged as a pivotal issue in Congress's consideration of whether to change the copyright law so that Sky can retransmit local signals to subscribers. Doing so would make Sky competitive with cable and give it a potential edge over other satellite-TV services that can't offer local signals via satellite.

With local signals, Mr. Murdoch said Sky would be the first viable competitor to the cable monopoly. 'Sky is willing to risk a $3 billion capital investment to bring consumers a better choice now,' he said.

He hopes to sign up eight million customers in five years by offering a satellite dish for $50 plus a $50 refundable deposit and an installation fee, he said. The service would offer local stations in as many as 30% of households by this fall, rising to 75% by late 1998, he said.

In small markets where local broadcast signals won't be delivered via satellite, Sky will give customers an antenna and a converter box that will enable them to get the local stations clearly, Mr. Murdoch said.

The cable and broadcast industries have expressed concern that many small, independent broadcasters could be left out of the mix, though.

'Every one of those signals that is not carried on that service, I think, is dealt the death penalty,' said Amos Hostetter Jr., chief executive officer of Continental Cablevision, the cable unit of U S West.

[07] France favours Alcatel, Framatome link-up

Borotra told Le Monde newspaper the combination is possible because talks have broken down on a possible Framatome merger with GEC-Alsthom, a joint venture of General Electric and Alcatel Alsthom.

Alcatel 'already has activities in the energy area that are not part of GEC- Alsthom,' Borotra said in the Le Monde interview. 'The government favours all possible link-ups between Framatome and Alcatel Alsthom in its energy activities, GEC consequently being associated,' he said.

The GEC-Alsthom merger with Framatome was shelved because GEC wanted to have more than a minority interest in the company, while the French government wanted to maintain control of the nuclear industry.

Borotra said that Britain's General Electric Company could join the group later.

'The government is favourable to an eventual alliance between Framatome and Alcatel Alsthom in its energy activities, with GEC joining up afterwards,' he told the newspaper.

Alcatel already has a 44% stake in Framatome, with most of the remaining shares controlled indirectly by the government, while Government-run Electricite de France has 11% and French energy holding company Commissaire a L'Energie Atomique - Industrie has 36%. Framatome employees have about 5% and Consortium de Realisations, formed to sell off Credit Lyonnais' assets, has 4%.

[08] Corporate and Economic briefs

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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