The national champion in the early 1990s

10The DGEMP, the central government body in charge of energy policy within the Ministry for Industry is of particular interest here. Successor to the National Mining Directorate, the DGEMP played a central role in the early 1990s, fulfilling the role of coordinator between the different departments involved in energy policy and the public energy companies. At the time, the state holdings service represented the state as a shareholder, acting in consultation with the DGEMP.

11The development of the national champion model has never been challenged by the administration responsible for energy policy. The objectives of energy policy are not in themselves an institution. Multiple in nature, they change in importance over time with the international economic and diplomatic context. This explains the recent gradual diminution of the importance of energy independence, which was seen as essential in the 1970s, in favor of competitiveness. These objectives are clearly articulated, discussed, and do not in any way constitute an a priori framework. However, the national champion model, which is a response to the objectives of economic competitiveness, energy independence, and social and territorial cohesion, is such a framework, since this model guides the actions of the administrators of energy policy, who never call it into question, but seek rather to adapt it to ensure its perpetuation.

12The archives of the DGEMP constitute an appropriate resource for the study of the way such representations were shared. Following the Maastricht Treaty, the European Commission’s intentions to reform the electricity and gas markets became more pressing. The Ministry of Industry formed a commission in 1993 to report on the changing structures of these sectors in France, based on a broad consultation of the various stakeholders. The result was the Mandil report, named after the leader of the commission, Claude Mandil. The archives of the Ministry of Industry have conserved the notes taken during the various hearings by the commission members responsible for writing the report, along with notes on their thoughts made at several stages during the process. On many occasions, the various committee members, mainly drawn from the civil service, show themselves unable to contemplate any energy policy objective that would mean abandoning the system currently in place in 1993. This system was based on state-owned companies with monopolies in the sector. Thus, the status of sole purchaser enjoyed by GDF gave it a bargaining power that would lose its effectiveness if the large French groups were to be allowed to buy their gas independently – especially given that such a change could weaken GDF, which would still be subject to the obligation to procure enough gas to meet domestic demand (including for the very groups in question). Similarly, for those drafting the Mandil report, the system of péréquation (“equalization”, a rule guaranteeing the same gas and electricity prices to all buyers in France) appeared entirely incompatible with the tenets of competition, requiring arrangements too complex to entertain: “the mechanisms necessary seem perfectly impractical”, wrote one senior official (AN 19990450/3). It is clear that the public service mission was still not, by the 1990s, separable from the companies responsible for it. In short, it appears inconceivable for those administrators to think of an energy policy meeting the requirements imposed without relying on the state-owned companies as tools to deliver it.

13In the 1990s, the activities of state-owned energy companies were supervised by state representatives sitting on their boards. Among the state officials involved, the representatives of the DGEMP played a key role in the technical supervision of the companies in question. The decisions and the most important discussions would take place “on the margins” of the meetings. Thus, on 26 January 1996, a note (AN 20090045/1) describes: “It can be reported that in a discussion outside the main Council meeting, contact was made between Mr Alphandéry, Mr. Ailleret, Mr. Mandil and myself in which we alluded to the future planning contract.”

14The apparent consensus was established before the board meeting, which appears primarily to have been a place for sharing information and a forum for expression for the trade unions. The APE, the treasury body responsible for monitoring public companies, was present, although with a less prominent role by the 1990s, when most major energy companies in France were either monopolies or near-monopolies. The DGEMP played a guiding role, particularly insofar as dividend issues were a relatively minor concern compared to energy policy issues, in which these companies were the linchpins. In the symbolic ritual of EDF board meetings, the representative of the DGEMP sat to the right of the president, an honor reflecting the importance accorded him, in the presence of the presidents of major companies appointed to the Council of Ministers and the leaders of the most powerful ministries of the government, notably the Treasury and the Finance Ministry. In the oil sector, the DGEMP was the only administration represented on the councils, and had the monopoly on relationships.

Challenging the national champion: resistance

15The 1990s brought a new context, and numerous challenges to the model. The DGEMP nonetheless continued to support the model, proving highly resistant to constraint – the most conclusive proof that the institution truly existed.

16Two types of constraints were imposed on the institution of national champion as it continued into the 1990s, forcing its promoters and supporters to change its nature. The process of European integration, re-energized by the Maastricht Treaty, led the European Commission to propose guidelines to member states for the liberalization of the electricity and gas markets. [32] Under threat of legal process based on competition directives should the political process fail, the governments of the member states reached an agreement in 1996, more than nine years after the first proposals. It is important to note that, unlike the liberalization process, this was a reform initiated by the European Commission, to which not all successive governments of the 1990s were favorable. The transposition into French law of the directives of 1996 and 1997 took place in 2000 and 2001, via the introduction of laws on the modernization of the electricity and gas sectors. This liberalization transformed the legal monopolies in distribution, transportation, importation, and production enjoyed by EDF and GDF since the nationalization laws of 1946 had made them de facto monopolies. The oil sector was governed by the Petroleum Law of 30 March 1928, which made the entire oil industry subject to a regime of authorizations. The law of 31 December 1992, driven largely by the European Commission, created a single European market for petroleum products, rendering the law of 1928 null and void.

17The movement toward privatization during the years 1986-1988 and 1993-1994 generated a second constraint on the model of the national champion. The withdrawal of state capital from enterprises started in the energy sector with the withdrawal of capital from Total, of which the state still controlled 40% of voting rights in 1990. The state then disengaged itself from Elf-Aquitaine, in which it held only 13% of capital by 1994. This withdrawal had consequences well beyond the oil sector, as these two companies had large capital interests in the oil services sector, in firms such as Technip and Coflexip. In the 1990s, Total and Elf gradually withdrew from these areas (AN 19980322/8), much to the chagrin of an administration powerless to act, but firm in the belief that these divestments would egregiously weaken the enterprises in question. The privatization of enterprises with full or strong state participation was initiated by the government, representing the political will of the day, and responding to essentially financial and ideological imperatives, in essence foreign to the way of thinking prevalent in the supervisory administration of these companies. These two transformations would eventually reveal the power of resistance of the institution of national champion, while the reactions of the administration provide the most conclusive evidence of its existence.

18The leaders of the DGEMP reveal in their notes a certain disdain for the reforms being implemented in other countries. Their criticisms are based on systematic studies conducted country by country, to which the senior civil servants regularly referred. The market liberalizations undertaken in Britain and the privatizations implemented by the German government appear to be regarded as unfavorable procedures, the consequences of which invited the leaders of the DGEMP to question the wisdom of replicating them in France, which in large part explains their reticence. In the minutes of a council session held by Directors of EDF (19 May 1995, AN 20090045/1) Claude Mandil, Executive Director of Energy and Raw Materials states:

19

“Mr. Holzer has said that, as a German electrician, he understands the French point of view, but, assuming that the status quo is not possible, he favors the introduction of the most competitive system possible while ensuring the greatest reciprocity. On this last point, both myself and President Ménage noted that while we understand his position, we are not convinced that the conclusions he drew were the most favorable for the German system.”

20The directors of the DGEMP were diehard refusers of liberalization. In a note showing the different sensitivities involved concerning the European directive of 8 November 1996 (AN 20090045/1), the director of electricity calls the Commission’s preliminary proposals “ultraliberal”. Another director, in an interview, calls the relationship of “Brussels bureaucrats” to competition “a religion”. Privatization was received by the administration as an exogenous constraint, and as such was hardly challenged, despite a few notes like that of Appert (AN 19980322/14), in which the director of hydrocarbons remarks to the Minister:

21

“National control over both groups is an important element for the security of oil supply in France. In a crisis, the state would, via statutes concerning national defense, have access to means of obliging Elf and Total to supply the French market. Maintaining a state presence furthermore helps to perpetuate the French character of the two groups (which would be threatened in the event of a takeover or merger with a foreign group).”

22The French character is justified by the asset it represents for companies and the vector of influence that they represent for France in return.

23It has already been noted that the directors of the DGEMP were imbued with the institution of the national champion, a product of the history of the energy sector, and contrary to the recommendations of the European Commission. When one of the directors of the DGEMP set out neoliberal-style projects in the 1990s, his reports were systematically annotated negatively by their recipients. He expressed his own unique position within the DGEMP in a list of particularly radical proposals. The note of 11 October 1993 from M., deputy Director General (AN 20090191/1), says:

24

“My previous written interventions on this issue have upset certain sensibilities, which I regret, and challenge certain convictions, about which I am delighted. I beg those readers who hope to find something to polemicize about in what follows to excuse me if I disappoint them.”

25In this administration, using the discipline of economics as a tool for studying the economy is not legitimate. This intervention is particularly enlightening in that M. had not been at the DGEMP for long, and was an internal appointment from the financial inspectorate. Despite the prestige associated with the latter, he occupied no particularly prestigious position at the DGEMP, being replaced after his retirement by a technocrat of some thirty years of age. M. had therefore not been “socialized” within the practices of the DGEMP or even those of the Ministry of Industry, and occupied a subordinate position within the administration.

26While the energy sector reforms in the 1990s had results not inconsistent with liberal economic policy (privatization, liberalization of markets), the DGEMP is seen to have applied the brakes to reforms, at least limiting their consequences for companies. Their detachment from the reforms occurring elsewhere in Europe and proposed by the European Commission, such as privatizations – driven by neoclassical economics – embodied the constant stance of the DGEMP with regard to the public energy companies. In this, the administration collectively pursued the institution of national champion. It acted as an a priori cognitive framework that imposed itself on the actors involved. [33] Each of their choices is the result of their reading of the situation through the lens of the institution.

Challenging the national champion: adaptation

27Subject to the joint constraints of the European Commission and the political sphere, the leaders of the DGEMP subsequently proposed solutions aimed at adapting the institution of national champion. The goal of state control of these enterprises was relaxed, and the DGEMP began to seek continued control by French capital of the French energy industry companies. For the petroleum and petroleum service sectors, this entailed protecting these companies against foreign takeovers (AN 19980322/14), while for gas and electricity, it meant retaining companies of large size, capable of implementing national energy strategies. Faced with the injunctions of the European Commission towards market liberalization, and privatization of the market leaders through political strategy, the institution led officials of the DGEMP to propose two types of practice which would allow for the continuity of French energy policy and for the stability of the national champions. It was thus the administration itself that guaranteed the continuity of this industrial policy, allowing the gradual evolution of the institution of national champion into that of international champion.

28In the 1990s, the DGEMP demonstrated an ongoing willingness to play the role of arbiter between French companies (to the exclusion of foreign companies), whose actions it sought to coordinate. When the state withdrew from Total, and Elf was privatized, one of the preoccupations of the Director of Hydrocarbons (the “DIHCA”) between 1993 and 1995 seems to have been the coordination of the actions of these two companies in France and abroad. A “coordination group” was set up, bringing together the secretary general of the Foreign Ministry, the minister, the two CEOs, and the DIHCA himself, and met discreetly a few times a year to coordinate the activities of the two companies “in the French interest”. In any other setting, this would be called a cartel. [34] Similarly, the DIHCA was very concerned about the competition between French petroleum services industries and foreign rivals, asking his collaborators at the DGEMP in an internal note “in the short-term, what code of conduct [should we adopt] to avoid Franco-French rivalries, both in terms of market competition and opportunities for acquisitions?” Coordination organized by the administration at a time when global competition was becoming ever tougher gave French companies a considerable advantage – that of being assured of a lack of competition between them.

29The coordination exercised by the administration may also have aimed to consolidate the shareholding of a company which lacked capital, or where the historical shareholders might wish to leave. This is the case of the oil services sector, the capital of which in early 1990 was held by the IFP together with GDF, Total and Elf, whose private and public shareholders sought to reduce their holdings. In a note to the Minister (18 July 1994, AN 19980322/13), the DIHCA addresses the restructuring of the oil services industry. The president of Elf-Aquitaine appears committed to accelerating that company’s exit from the oil services sector. For Appert, this risks “the collapse of French influence in an industry in which a continuous policy has for decades enabled French industry to play a global leading role”. In this perspective, the DIHCA proposed to intervene in Elf’s business to “delay its withdrawal from the oil services sector given that the structures ensuring the continuation of these companies have not yet been put in place”, and to ask Total “to have a more active industrial approach on these issues”.

30The administration sometimes went as far as recommending the merger of commercial entities, which can be interpreted as an extreme form of coordination. Mergers responded to the concerns of DGEMP officials that newly privatized companies or those from which the state had withdrawn as a shareholder were prey to takeover bids by foreign entities. Mergers, and the consequent increase in size, can fend off takeover threats by forcing the predator to commit more funds. Thus, while not overtly initiated by the administration, the acquisition of Elf-Aquitaine by Total in 1999 seems perfectly aligned with the coordination desired by the DIHCA in 1994. The takeover was also widely supported by the public authorities and confirmed their wish to maximize the size of French oil operators, while limiting Franco-French competition in the sector. The merger of Technip and Coflexip in 2001 follows the same logic – that of consolidating a sector vulnerable to takeover bids. Many other merger projects did not go through despite the support of the administration, including that of Framatome GEC-Alsthom, which was abandoned in 1997.

31The internationalization of GDF and EDF was led and encouraged by the DGEMP in order to prepare these companies for a potential loss in market share when the markets were opened up to competition. Framatome was also concerned. The support of the administration was by no means a given, these companies being primarily considered as tools of public policy, with no clear link to the possibility of international activity. The administration intervened on two levels. Firstly, in the formulation of the medium-term strategy of public companies, in the form of a contract between the company and the state, the elaboration of which was the responsibility of the DGEMP, in consultation with the company. This contract specified the strategic guidelines to be followed by the company and the sums of money to be allocated to its different activities. Secondly, the administration intervened when a public company under its guardianship made known its intention to make an acquisition. It could refuse this acquisition, in concert with the Treasury department responsible for public participation. The group contracts of EDF and GDF in 1996 and 1997 make it clear that internationalization was one of the guiding strategies of the two groups for the years ahead (AN 20090045/8). This internationalization, actively sought by the administration, replaced the attempt to seek external growth in the form of diversification, which was not at all appreciated by the sectors concerned by the incursion of public companies, nor by the European Commission. A note from the DGEMP on the strategic orientations of GDF for the year 2000, dated 5 September 1996 (AN 20090045/1) states: “The analyses and orientations of GDF in the international field show clear progress, in both relevance and precision, when compared to the situation in 1995”.

32The DGEMP here played the role of strategist. The internationalization of companies was encouraged, in view of the transposition into law of the 1996 guidelines for electricity and those of 1997 for gas, to prepare the companies concerned for losses of market share, considered inevitable at the time.

33The DGEMP was not systematically behind the strategies presented here, but was undoubtedly a key player, using all means at its disposal to push the desired changes. Steered by the DGEMP, these changes were gradual rather than abrupt, adapting the institution to the requirements of privatization and the European Commission. Thus the institution gradually evolved from national champion to international champion – in Total, Elf and Technip, the administration supported its international champions, linked to the state by the geography of their headquarters only, and no longer by their capital. In the other companies in the sector, it defended those national champions undergoing internationalization (due to the loss of their monopoly in France, one of the original features of these national champions). This strategy reflects a conception of competition extremely remote from those of German ordoliberalism, American neoliberalism, or the path set by the European Commission in the 1990s. To explain the resurgence of the Pompidolian model of national champion in the 1990s, it is necessary to describe the foundations of the institution: through the corporate adaptation strategies they propose, the senior officials of the DGEMP appear as a “programmatic elite” [35] – they formed a collective, structured around a program of change in public policy, holding positions of power enabling them to participate in the decision-making process. As a result of their enduring presence, these actors enjoyed sufficient resources in terms of knowledge, position, networks, legitimacy, and longevity. The following section reveals what constitutes a programmatic elite, and the characteristics that explain their support for the institution.

Historical support for the national champion

34Three pillars supported the institution of national champion, and help to explain its tenacity in the face of the injunctions of the European Commission in the 1990s. These three elements are: the victorious historiography of the sector; proximity to the captains of private industry; and, to a lesser extent, the alignment of the institution with the interests of senior civil servants. Far from being competing explanations, the three supporting structures of the national champion have an interdependency that means that all three were necessary for the institution’s survival. These supports form the basic resources available to the institution’s promoters.

35The institution was part of a narrative recalled in the introductory dossier presenting the DGEMP to new ministers, and which constitutes a strong identifier. Thus, in interviews, many respondents began by telling the anecdotes and detailed history that define the sector over which they have or had guardianship. This history constitutes a sufficiently robust element of identity to form the introductory passages of reports to new ministers of industry, and was above all presented as a success. The term “highly successful” (couronnée de succès) regularly recurred in interviews to describe French energy policy since the beginning of the twentieth century, of which the policies of the 1990s were seen as the heirs and successors. A note for the new minister in 1997 presenting French energy policy states that “French energy policy, pursued with continuity and consistency has undeniably been a huge success” (June 5, 1997, AN 20090185/1). State action on energy policy was considered to be a triumph, which in turn forged the identity of the DGEMP. Companies were thus thought of as levers of energy policy, delivering direct influence over certain sectors.

36

“A public company [EDF], all well and good, with its faults, perhaps – a little over-bureaucratic, a bit too ready to go on strike, but which has, overall, given satisfactory service. While in other countries – England, Italy, and even in Germany – the image was instead one of poor quality and high prices. So changing the structure was a case of ‘it can’t be worse’, while in France the question was ‘could it be any better?’ which is not the same thing”.

37This line of thought did not provide the DGEMP and the APE with any particular proof that this policy was best – at most this “Colbertist” approach was shown to work in a certain context, in which history seemed to weigh on the various actors as a set of landmarks which played a part in forging the institution of the national champion by obliging it to be an a priori framework for their practices. This is a category of institutional work that is concentrated on the past. [36] These actors thought of businesses as public policy tools. These same actors gave the institution a measure of its power, according to the analysis of Pierre François, [37] for whom the power of an institution resides in the power that its supporters agree to attribute to it. The victorious historiography shared by senior officials of the DGEMP is also consistent with the discourse identified by Brigitte Gaïti [38] concerning the postwar period.

38The institution was also based on the close proximity that the leaders of the DGEMP maintained with the leaders of the private sector, promoting the emergence and perpetuation of common categories of thought. The institution of national champion was highly favorable to large groups in the energy sector. Such proximity may be objectified in the striking similarities in the careers of the leaders in question, many of whom attended the same schools and worked in the same ministerial administrations as their counterparts who remained in the public sector, as shown in Figures 1 and 2 for 1990. Until 2000, at least 50% of energy sector managers came from the senior civil service, and of these, half from the DGEMP or closely related agencies. The DGEMP differed from the offices of state at Bercy (France’s administrative center) in its make-up. Graduates of the Ecole nationale d’administration, which provides the majority of senior civil servants in France, were represented in the DGEMP, but in relatively subordinate positions, most often occupying the seat of deputy to the administrative directors. Since 1990, the directors themselves have all come from the Corps des Mines (one of the most prominent of the corps d’état) as did seven directors of the DIHCA and nine directors of the DIGEC. Heads of departments and subdepartments were all engineers from the Mines, Bridges, Telecommunications, or Armaments corps. The DGEMP was a “house of engineers” in the words of one former director.

39The two graphs (Figures 1 and 2) are based on a study of the careers of leaders of the French energy sector, including members of executive committees and boards of directors of the largest groups (Areva, EDF, GDF, Elf, Total, Technip), taken from Who’s Who in France. At any given date, around 140 such leaders are in office.

Figure 1

Leaders of the energy sector companies who began their careers in the grands corps d’état

Leaders of the energy sector companies who began their careers in the grands corps d’état

Figure 2

Leaders of energy sector companies who have worked for the DGEMP, the decentralized departments or dependent agencies (CEA, IFP etc.)

Leaders of energy sector companies who have worked for the DGEMP, the decentralized departments or dependent agencies (CEA, IFP etc.)

40Even at this advanced stage in their careers, the fraternity mindset specific to the grands corps d’état was strongly in evidence for these highest-ranking of civil servants. The language of friends (using the informal address tu in place of the formal vous) brought them together in familiarity and solidarity. One DGEMP director, a member of the Corps des Mines, regularly sent his predictions for foreign energy markets to a list of CEOs of CAC40 companies, all of them “Miners” (AN 20090185/7). In return, these “old boys” formed a network of privileged contacts for the administration inside the companies, and were thought of as such by the directors of the central administration. Outside administrative council meetings, the directors of the public and private sectors also often encountered each other at international seminars and symposia (see diary of the DGEMP agenda and its envoys, AN 20090049/2), not to mention informal get-togethers where the real decisions were made, before any formal meetings took place. This fraternal spirit was reflected in the large-scale sharing of confidential documents, for example, impact studies carried out by the administration or by private companies. Finally, in the drafting of contracts for setting the company’s goals for the coming years, and in discussion workshops on the future of the sector, the leaders of energy companies were regularly invited to give their opinion in the form of reports, sometimes even directly participating in seminars organized by the administration – an example of the proximity revealed by William Genieys and Laura Michel [39] during their study of the armaments industry.

41Ultimately, the institution is based on the interests of administrators, individually or collectively. The “revolving door” career transition (pantouflage) is a common practice among the members of the corps d’état from which the directors of the DGEMP were usually drawn. The systematic defense of corporate interests can be seen as playing a major role in the development of career strategies, with senior positions in these same companies being filled by former administrators as they sought new challenges. This is the principle brought to light by Ezra Suleiman, [40] who sees in the protection of certain companies by senior civil servants a defense of their own future interests. In spite of this phenomenon, a look at the careers of the directors of central administrations and their deputies over the last twenty years shows that the revolving door is rather a minority practice, and cannot on its own explain the institution of national champion. Of the twelve directors and general managers of the central administration in the 1990s and 2000s, only two went to work in the private sector in this way, one of whom returned to the public sector after only two years. Numerous executives of the energy sector nonetheless started their careers in the civil service before joining the industry. Paradoxically, the implementation of systematic protection measures for energy companies may be interpreted as a defense of the purpose of the sector’s administration. By privatizing companies under its supervision and liberalizing markets controlled directly by the administration, the state deprives itself of levers, as noted by the DIHCA in a number of notes (AN 20090185/2).

42The three pillars of support outlined here help to explain the stability at the heart of the institution of national champion, with its headquarters in France and the aim, promoted by the state, of achieving critical size. This powerful support prevented abrupt changes. The administration is to be found at the center of this stability, as posited in the introduction to this article. The institutional activity accomplished by the DGEMP allowed it to develop gradually, never losing its prime characteristic – its support for large national companies. The analysis of the institution’s foundation allows an understanding of the meaning of its transformation. The revolving door phenomenon, especially in the proximity that it ensured between the administration and the leaders of the private sector, guaranteed that, rather than public ownership, the national champion retained as a characteristic the support of the state for business growth. What differentiates the elements of the institution is the degree of consistency with the interests of the leaders of private companies. The latter prefer international development and privatization to seeing the fortunes of companies they lead weaken, even at the cost of losing the state as a partner. The narrative proposed here differs then from Bob Hancké’s reading, [41] according to which French companies become major players in opposition to the state. In the case of the energy sector, this is not the case – the administration supports the movement of state-owned companies towards autonomy and empowerment. In focusing on the political sphere, investigations from a political economy perspective obscure the major role of these collective actors.

The Agence des Participations de l’État (APE) – “at the forefront of the coordination of state services”

43In the 2000s, the dominant role of the DGEMP in state-owned companies and with regard to other state officials gradually came to be challenged. The “standardization” of state monopolies was to lead the Treasury to question the role of the DGEMP as the premier state representative in dealings with the energy companies. Its role in setting prices was to be rejected by the CRE (the energy regulation commission), an independent authority, tasked since 2000 with regulating the electricity and gas markets. This challenging of the role of the DGEMP as the state’s representative resulted in the creation of the APE, and the demotion of the DGEMP delegate from the seat of honor at these companies’ board meetings: no longer the government’s commissioner, but one representative of state interests among others.

44Stockholder relations between the state and the energy companies were marked in early 2000 by the Edison affair, and the unfortunate experiences of EDF in Latin America. In 2001, EDF bought shares in Edison, an Italian conglomerate formed from recent mergers, without informing the state. The administration was informed after the event, once EDF had obtained 20% of the capital. The Italian government, furious, passed a law reducing the voting rights of EDF to 2%, preventing the public company from benefiting from its operation. A parliamentary inquiry was launched, leading to a hearing with the main parties, on both the corporate side and within the administration. It was decided on this occasion to strengthen the capacity of the state holdings service, which was promoted to become the State Holdings Agency (Agence des Participations de l’État, APE) in July 2003. The agency was given new powers, its staff numbers increased from 40 to over 70, and it was granted a measure of independence – its director was to report directly to the Minister of Finance, and not to the director of the Treasury civil service. Many young officials, most of whom came from the large administrative corps d’état, worked in the APE, which was an organ of the Treasury.

45

“The creation of the APE, an entity issuing from the Treasury, changed practices: from what I remember, the head of the APE now reported directly to the minister, and no longer to the director of the Treasury. So we went up a notch, somewhere along the way, and that person is more likely to get access to the boss of a public company.”

46While the creation of the APE was an immediate consequence of the Edison case, the attrition of the prerogatives of the DGEMP can be attributed to a generally unfavorable context. In the early 2000s, a senior DGEMP executive put it thus:

47

“The position of people at the Ministry of the Economy is to say that it’s an ordinary company, we know how to run a business – it’s an old tradition, especially after 1981 when the area had become bloated, and then had to shrink substantially, as privatization progressed, but yes, the Treasury has a tendency to say, well… whatever, EDF and GDF are businesses like any other, subject to common law, and therefore we know how to administer or manage these things.”

48The APE was, then, to become the premier state representative. This change in leadership had little effect on the institution of national champion, but lent it a different kind of support. The company was no longer considered as an instrument of energy policy by the APE, but as an asset to be nurtured. With the leadership of the APE, the institution of national champion would survive, but support for the companies was to take other forms. While the DGEMP was concerned about the profitability of companies in the 1990s, in concert with the state holdings service, the attention of the APE is directed towards industrial projects, calling in turn upon the expertise of the DGEC (Directorate of Energy and Climate, the name of the DGEMP after 2008), as expressed by an executive at the APE, responsible for energy companies, and now working for the private sector:

49

“We were at the forefront of coordinating government services. But our role was anything but that of a shareholder in the primary sense of the term. We had a concern for the general interest.”

50At the DGEMP, the national champion was a response to energy policy issues. For the APE, the national champion is a response to its role as shareholder.

Development of companies as a priority

51The major stages that mark the energy sector in the 2000s are dominated by financial concerns from the administration, but do not question the centrality of the institution of the national champion, which guides the APE in its actions through its role as a major shareholder in the new private companies. The APE continues to adapt the institution of national champion using the tools at its disposal. While the international champion, defended as a priority by the APE, remains a company whose size and development are considered crucial, defending its monopoly is abandoned in favor of defending its dominance of its field. The national character of the company therefore becomes more significant than the control of its capital by the state. The processes characterizing the evolution of the national champion resemble the phenomenon of institutional conversion described by Kathleen Thelen. [42] The conversion made is based on the resources of the Treasury Department, within which the APE operates. The institution of national champion is invested by new actors, officials of the APE, who give it new meaning – that of companies constituting long-term resources for the state. Meanwhile, the institution becomes more discreet [43] in response to the sensitivities of the European Commission.

52In consultation with the DGEMP, the first project of the APE was to “normalize” the status of EDF and GDF. This status – and their relationships to the state – had been hampering the international development policy of these companies. They were accused by international competitors of receiving public subsidies, enabling them to take advantage of the consolidation processes that were taking place in Europe following the liberalization of the markets, as well as enjoying the credit rating of the French state, crucial in these moments of massive external growth and, therefore, of debt.

53

“The first [upset] is one of the difficulties that EDF has regularly encountered as a result of its public status – the fact that it enjoys all the benefits of market deregulation and privatization while not being buyable itself, and is thus suspected of enjoying public subsidies, and advantageous conditions. The central question around which everything revolved was its status as a public institution with the French triple-A rating allowing it to raise capital at particularly attractive rates with all the advantages that confers, resulting in unfair competition with European competitors. So this was a debate that finally came to a head in Italy.”

54The APE suggested to successive Ministers of Economy that the status of EPIC, EDF and GDF should be revised, and that the companies should adopt limited liability status, until Prime Minister Jean-Pierre Raffarin finally made this a priority in his first public policy speech. In the procedure that led to this change of status, which passed into law on 9 August 2004, the choices of the administration are clearly made with the development of EDF and GDF in mind. Floating the shares of EDF and GDF was primarily seen as a way to boost the financing of these companies. The privatization operations were also carried out via a dilution of the state’s capital, which is quite unusual in the context of privatization given that the state gains nothing from it. However, the privatization waves of 1986-1988 and 1993-1995 were aimed instead at repaying public debt. The partial privatization of EDF and GDF was seen as the only solution to help ensure the development of these companies.

55

“So with limited financial resources, giving them the financial means… that meant one, two or three bank loans and, above all, a capital increase, which the state would never have done, or didn’t have the means to do, so the capital had to come from elsewhere. So the idea… the proposal was to float GDF, basically through a capital increase, in order to provide the financial means necessary.”

56The merger of GDF and Suez was the final stage of the process of reflection on the future of GDF, which began in 1993 with the Mandil report on the liberalization of electricity and gas markets, and consequently, on the potential for changes to companies. The position of GDF had always been considered more delicate than that of EDF, a “natural consolidator”. The DGEMP had long demanded the merger of GDF with another operator, rather in the form of a loose industrial alliance, than as a full privatization like that of 2008. Among other examples is a note made on 23 March 1999 (AN 20090045/3), which focuses on the changing status of GDF. It mentions that GDF’s competitive environment is marked by the presence of a few financially powerful players, finance being exactly what GDF lacked and what it would need in order to realize the many investments required for its positioning in the European markets. The solution found was flotation, and privatization – consequent on the merger – which replaced the idea of an industrial alliance, although the idea of alignment was similar. The aim was to achieve critical size, allowing GDF to develop in a “Europeanized” energy sector without the risk of seeing its market share gradually diminish, or fall under the control of a foreign operator.

57

“It was an opportunity, with GDF being smaller than EDF and in a single sector. It was still a risky venture at the time nevertheless… if it had stayed solely in gas, with the terms we knew, well… looking back, both in terms of value at the time of the merger, and in terms of business model developments, I think it was a very good decision to do as we did. It’s first and foremost something to do with critical size. EDF was already at critical size.”

58The APE continues therefore to adapt the institution towards conditions more acceptable to the European Commission and the governments of the member states, pursuing the gradual transition begun by the DGEMP in the 1990s. In addition to the changes advocated by the APE, the handover from one administration to the other illustrates my thesis of gradual evolution. The early 2000s were characterized by a joint authority and concerted decisions between the two bodies, after which the APE took over when it was created in 2004, the supervisory role of the DGEMP fading away, until its re-branding in 2007. The administrative structures contributed to the gradual change, and the institution of national champion in turn underwent the transformation into international champion.

The divestment of the institution by the DGEMP

59The policy of support for large energy companies conducted jointly by the APE and the DGEC, has been challenged in recent years. The creation of the Energy Regulatory Commission (CRE) in July 2000 initiated a new dynamic. Despite the insistent demands of the DGEMP to be assigned supervisory powers over the electricity and gas markets, as well as control of access to distribution networks, the prime minister decided to proceed with the creation of an independent authority. In a note to the prime minister (AN 20040098/2), his industrial adviser remarks that if France fails to follow the recommendations of the European Commission, it runs the substantial risk that arbitration might be subject to frequent legal appeal to the Commission, whose decisions would be unlikely to be favorable to EDF, posing a danger both to French energy policy and to EDF itself. To some extent, the creation of this new entity was prompted by decisions that were favorable to business considerations. The CRE, an independent authority for the development of markets for electricity and gas, saw its powers strengthened by the NOME law (Nouvelle organisation du marché de l’électricité “New organization of the electricity market”) of 7 December 2010, transposing into French law the third tranche of Commission directives adopted in 2009. This law provides for a sharing of the “nuclear rent” between EDF and alternative suppliers of electricity, requiring EDF to sell up to 100 TWh of electricity per year to its competitors with terms and conditions representative of the conditions of power generation at its plants. In other words, it requires EDF to share cheap electricity from its nuclear plants with its competitors. The law, supported by the DGEC, was widely criticized by former senior executives of the DGEMP and the APE alike. They saw in it an excessive imposition of competition and, in particular, the expropriation of EDF’s industrial apparatus.

60

“It’s like asking Volkswagen to open its factories up for production of Peugeots, on the grounds that it has better factories than Peugeot. And other things - unimaginable in other sectors [interviewee bangs his fist on the table], but which they seem to find easy to imagine…”

61While these laws reinforced the importance of the CRE, they also illustrate the change in fortunes of the DGEC, which, from being the protector of the companies in question, actually proposed legislative reforms contrary to their interests. The organizations (the DGEC and the CRE) have got closer, compared to the period when the directors of the DGEMP complained of the “crusade being pursued by the CRE” that threatened their prerogatives.

62How did the institution of the national champion cease to exist under the DGEC, the fervent defender of the energy companies in the early 2000s? The most likely hypothesis stems from the high turnover of senior management within the organization, and it being placed under the authority of the Ministry of the Environment and Sustainable Development. The logic of this new hierarchy was challenged by former executives of the DGEMP but defended by the new generation, marking a new and highly sensitive fault line.

63

“It was all a bit of a shock when we joined the environment part of the Ministry, but actually, it was pretty well managed – the DGEMP reorganized and became DGEC, and climate policy and new energies were integrated. It was good, all very positive.”

64

“Wanting to say no, everyone is great, everyone is super, let’s approach it ecumenically…no! It’s not possible. As far as I’m concerned a government is there to discuss, to dispute – a Minister for Energy shouldn’t always agree with the Minister of Environment and vice versa. That seems to me to be in the order of things.”

65DGEMP executives of the 1990s and early 2000s built most of their careers either at the DGEMP or at least in the energy sector. The case of Dominique Maillard (based on his entry in Who’s Who in France), head of the DGEMP from 1998 to 2007, is emblematic of this: after four years as head of the Energy Division at the Direction régionale et interdépartementale de l’environnement et de l’energie (Interdepartmental and Regional Directorate of Environment and Energy) for the greater Paris region, he joined the General Commissariat in 1980 as a rapporteur for the Energy Commission, and then in 1982 the DGEMP, which he left 25 years later. The leaders recruited in the 2000s, when they came from industry, usually remained with the DGEMP for a limited time, sometimes not even finishing their mandate, and many had never worked in the field of energy. In this later generation there are no echoes of the discourse of historic victory pronounced by their elders. The institution of the national champion had thus lost its first pillar, that of historiography. Its new position under the greater political umbrella of the environment resulted in a significantly more considered approach to environmental protection with the development of renewable energies, which was out of line with some corporate interests within the sector. The leaders of the DGEC from the energy sector came via the Nuclear Safety Authority, a body unaccustomed to having to reconcile its decisions with the business desires of nuclear operators EDF and Areva. Finally, the third pillar collapsed: after the DGEC lost its supervisory powers, its executives found it more difficult to access employment in the higher echelons of energy companies – from the 2000s, very few executives in the private sector came from the public sector (Figure 2). [44] This can be seen as a process of deinstitutionalization. [45]

66Two ideas of what a company should be collided in the administration of the late 2000s. The first might be termed the “normal” model: a company with its own, fully owned assets; the second being the historic vision of a public operator, a tool of public policy. The latter is regarded by business leaders as being hostile to them, given that they have evolved – discursively at least – towards the first model.

Support for the institution at the APE

67The senior officials of the APE appeared to adopt the discourse on the historical victory of the sector, although their words are more indicative of their commitment to these companies and to the sector as a whole rather than recognition of the value of their historical objectives as tools of public policy. While the support of the Agency’s staff was similar to that of DGEMP officials in the 1990s, it was not founded on the same basis. It was the shareholders, respectful of the long-term interest of the state, along with a lack of resources within the agency itself, which led these teams to defend the energy companies.

68Those in the energy administrations appear to enjoy breaking down the roles of the state with regard to the companies into a “shareholder role”, an “industrial” role, and a “regulatory” role. The roles vary; there is talk of the “shareholder state”, the “financial state” and the “regulatory state”, which says a lot about the current ambiguity of the role of the DGEC. This analytical breakdown is taken up by officials of the APE, who claim to represent the interests of the state as shareholder.

69

“Basically, in the state, well, in energy… it’s rich enough, but there’s the shareholder state, the budgetary state, and the industrial state. The budgetary state wants money, the industrial state wants to get things done, and the shareholder state wants to protect the companies and its shareholders, including other [minority] shareholders.”

70Taking on the role of shareholder might lead the APE to seek significant dividends, crucial in times of budget constraints. But it is the “development of long-term businesses” – the long-term assets of the state – that are prioritized, which leads officials of the APE to espouse views of the way the company should be managed. This priority is even cited on the website of the APE, which nowhere mentions a dividend policy as one of its missions.

71

“We’re working in a framework of defense of strategic interests… how can I put it? It’s very complicated to get an idea what material assets mean in the very long term. The immediate temptation is to fully embrace the positions of the management, who are often excellent, even if we criticize them – EDF has made billions of crap decisions after all – but they’re still people who have a level of experience very much higher than those at the Agency.”

72This role of the state as shareholder, which is endorsed by officials of the APE, has led the agency to defend companies in which it manages the interests of the state against other administrations, such as the Ministry of Finance which demands immediate revenues, or the DGEC and CRE which, in their role as regulators, have no interest in favoring the historical operators over the new entrants in the sector.

73

“But overall, the APE […] was experienced [by EDF] not as the shareholder, whipping it along – which is a horrible way to proceed, and not at all our vocation – but as an ally within the structure, so we had a good relationship from that point of view. This enabled us to serve as a bridge whenever dialogue broken down between the operator and the DGEC (in particular), the Ministry of Energy, possibly the regulator, or the Ministry of Finance.”

74While today many APE officials originate in the grands corps d’Etat, like their predecessors at the DGEMP in the 1990s, they do not maintain the same close relations with energy sector executives. The contract and project managers, specialized to a particular company, are much younger, often fresh out of school. As for senior managers, office managers, and assistant managers, they tend to follow careers within the APE for a relatively short time, perhaps a maximum of six years. These executives are primarily recruited for their financial and economic knowledge, having no particular prior knowledge of the energy sector. The human resources policy in the APE is such that promotion usually depends on moving between entirely different sectors, leaving energy for the railways, for example.

75

“One of the major problems of the APE is this: if I had stayed, I would have had to move into the insurance sector – we’re not building skills here.”

76Finally, a given manager will have several companies in their portfolio; for example, the sub-director in charge of investments in the energy sector will be responsible for monitoring GDF-Suez, EDF, Areva, and CNR. This is exactly the opposite of the situation at the DGEMP in the 1990s, where specialization, right up to directorial level, was the rule, although it remains just as favorable to the companies involved. Nonetheless, the lack of experience and resources among the APE officials undoubtedly makes them more malleable in response to the arguments of those companies. The APE is poorly equipped to face operators able to mobilize dozens of experts to scrutinize the consequences of a bill, for example, as in the case of the NOME law, where the state had only two or three specialists working in its name.

77

“You have one person doing 53 things simultaneously. From EDF’s point of view, that is simply shocking. On NOME, they had 70 people working on it”.

78* * *

79This survey highlights the perpetuation and evolution of an industrial policy in the 1990s, the antithesis of competition policy as promoted by the European Commission, and of the market benchmark, [46] followed by the existence of an active share ownership policy for companies in the 2000s. The latter is, implicitly, an industrial policy, since support for these large companies has serious consequences for the structure of a sector that continues to exist on monopolistic bases, not only in France but also around Europe. This survival of a French industrial policy, the consequence of a historiography marked by the triumph of state intervention, may be explained by the identity of the officials in charge of the development of energy policy. The 2000s demonstrate, however, that the institution is detached from the actors – institutional and individual – who give it meaning, as this same administration came to oppose the companies, which are subsequently supported by the Treasury. The institution seems to have disappeared during the 2000s, as French industrial policy has taken more subtle forms, particularly with regard to the European Commission. This result requires closer investigation of central government as an agent of change, where the political economy literature favors political parties, [47] within the state – “political entrepreneurs”, [48] – reducing the administration itself to a role as “booster”. [49] This study also highlights the role of the grands corps d’état, and the central government departments which they populate (Energy, Industry, Defense, Equipment, etc.), and an investigation of the administration of these bodies would indeed be highly interesting. These grands corps d’état and the directorates they control form veritable organizational strongholds, which hinder (or have hindered) the spread of neoliberal reforms within the administration. Arnaud Montebourg’s declaration of February 2014 now assumes its full meaning: his “personal idea” is the heir to a history of nearly a century of energy policy, suggesting that these corps have not yet lost all influence in the conduct of economic affairs. Resilience is not then the prerogative of neoliberal policies, [50] but belongs instead to policies favorable to powerful interests.

80The developments characterizing the institution of the national champion are of two kinds. First, the heart of the institution protects the great energy providers, guaranteeing them critical size and development protected and supported by the administration, thereby respecting the distribution of power within the sector. This reflects in part the ideas of Fligstein [51] and Thelen. [52] The dynamics of the institution are guided by its adaptation to a European environment hostile to the neo-corporatist arrangements that characterized the 1990s. The changes are driven by the changing social characteristics of the senior officials who embody the institution within the administration. It is not a separation between the rule and its application which initiates or allows change, as described by Thelen and Mahoney, [53] but a separation of the rule from the broader institutional system that encloses it. The institution of national champion was adapted by successive supporters, each with a different approach, to the requirements of the European Commission, and therefore to the broader cognitive framework that characterizes this new space and the institutional substructure that shapes it. It is an example of Wittgenstein’s proposition, as described by Pierre François, [54] that the rule never stands alone, it is always held within a complex system of rules, a system which defines it. That which guides changes in a rule is the motion of the substructure itself. This article demonstrates that this adjustment is not automatic, but depends largely on the institutional work done by those who believe in the institution. Thus, this investigation attempts to break down the elements of an institution. To consider institutions as monoliths is to underestimate their ability to adapt – their plasticity. It is important to deconstruct them analytically, in order to distinguish between permanent elements (the institution’s heart – here, the support of the state given to French companies of large and growing size) and the elements that evolve (here, the public-to-private nature of companies). This study has therefore sought to correlate these elements with the lines of support which guarantee the stability – or otherwise – of the institution. [55]