French politicians like nothing better than to proclaim their opposition to free markets. German politicians, contrariwise, generally profess a sober appreciation of the virtues of market regulation. Yet the reality of markets for corporate control is often far removed from the rhetoric of political leaders. Despite the openness to hostile takeovers expressed by Prime Minister Gerhard Schröder in 1999, hostile takeovers are a rarity in Germany, and the ownership concentration of German companies remains high. In France, by contrast, managers of large companies have embraced takeovers as an effective tool of internal reorganization and abandoned their strategic shareholdings, notwithstanding the periodic calls from political leaders like Dominique de Villepin for those managers to rally behind the banner of economic patriotism. In short, Germany has maintained the institutions that support its passive market for corporate control, while France has dismantled such institutions. This chapter explores the politics that led to these outcomes.

This surprising institutional divergence results from the different preferences of French and German managers of large firms, and from the political capacity of those managers to shape institutions of corporate control. During the 1990s, many French firms shifted toward a strategy of international growth powered by acquisitions abroad and at home. This change in company strategy led managers to dismantle the preexisting institutions of patient capital in France. These institutions were informal, so French managers did not have to act through Parliament to secure their preferred outcomes. In tandem with these moves in the informal arena, neoliberal managers also seized control of the political organizations of the French employers’ movement. These organizations would consistently push for laws that supported the newly active market for corporate control in France, most notably during debates over the European Union's takeover directive between 2001 and 2006.