Mercedes-Benz chief executive Ola Källenius has warned that excluding British manufacturers from European industrial preference rules would damage automotive production on both sides of the Channel, increasing pressure on Brussels ahead of negotiations over its proposed Industrial Accelerator Act.

The head of Mercedes-Benz has warned that excluding British manufacturers from the European Union’s proposed industrial preference rules would damage the competitiveness of carmakers across Europe, challenging Brussels over legislation intended to protect European production from growing international competition.

Ola Källenius, chief executive of Mercedes-Benz and president of the European Automobile Manufacturers’ Association (ACEA), criticised the prospect of restricting British participation in the forthcoming “Made in Europe” framework during discussions in Brussels on Wednesday, 14 October.

His intervention comes as European governments negotiate the Industrial Accelerator Act, which would introduce European-content requirements affecting public procurement and certain forms of industrial support.

The proposed legislation is intended to strengthen manufacturing within the EU, but its treatment of production in neighbouring countries has become contentious, particularly in an automotive industry whose factories and suppliers operate across national borders.

European production extends beyond the EU

British manufacturing remains closely integrated with continental European automotive production despite the United Kingdom’s departure from the single market.

Components manufactured in Britain are incorporated into vehicles assembled in EU member states, while British factories depend on engines, batteries, electronics and other parts produced in continental Europe.

The value of this integrated manufacturing system depends on companies being able to source components across borders without unnecessary restrictions.

Källenius warned that excluding the UK from the proposed rules would weaken manufacturers operating on both sides of the Channel.

His position reflects industry concerns that a narrowly defined European-content regime could impose additional costs on companies already facing pressure from Chinese competition, slowing demand and substantial investment requirements.

As EU Today reported in September, British Prime Minister Andy Burnham has been pressing Brussels to recognise the UK as a trusted industrial partner under the emerging framework.

Germany has also supported a broader approach that would allow selected trading partners to qualify under European-content rules where reciprocal conditions are met.

France has favoured stronger preferences for production within the EU itself, reflecting differences among member states over how far European industrial policy should extend beyond the Union’s borders.

A dispute over industrial sovereignty

The Industrial Accelerator Act proposed by the European Commission is intended to strengthen Europe’s manufacturing base and support production in strategically important sectors.

Its provisions address public procurement and industrial incentives affecting products including vehicles, steel, aluminium and clean technologies.

The Commission wants European public spending to support local industrial capacity rather than reinforce dependence on imports from major international competitors.

China has become the principal focus of those concerns because of its expanding manufacturing capacity, particularly in electric vehicles and batteries.

However, measures designed to counter Chinese industrial competition could also affect established trading partners whose manufacturers form part of European supply chains.

The United Kingdom, Norway, Switzerland and Turkey occupy different legal positions in their economic relations with the EU, but all maintain important industrial connections with member states.

An approach that treats their production as equivalent to imports from countries with substantially different market conditions could require European companies to reorganise existing supplier relationships.

For manufacturers, replacing a supplier may involve more than simply ordering components from another factory. Production standards, technical certification, logistics and long-term investment arrangements can make changes expensive and difficult.

Industry demands regulatory certainty

Following an ACEA board meeting on Wednesday, European manufacturers called for faster progress on the wider automotive legislative package.

In its 14 October statement, ACEA urged EU institutions to advance negotiations so that the package could be finalised early next year.

The association argues that manufacturers require a predictable regulatory framework to plan investments in electric vehicles, production facilities and new technologies.

Källenius linked the industry’s transition towards zero-emission mobility with the need to preserve employment and strengthen economic security.

European manufacturers are simultaneously investing heavily in electrification while competing against Chinese companies with established battery supply chains and significant production capacity.

The resulting financial pressures are particularly serious for manufacturers that must develop new vehicle platforms while maintaining existing factories and dealer networks.

Additional restrictions on component sourcing could complicate those decisions at a time when companies are seeking to reduce costs.

Britain refuses to follow EU tariffs automatically

The dispute has acquired a further dimension following remarks by British Business Secretary Jonathan Reynolds.

Speaking on Wednesday, Reynolds indicated that Britain would not automatically follow the European Union in imposing tariffs on Chinese vehicles.

The UK government maintains that trade measures must be determined according to British economic interests rather than adopted simply to align with Brussels.

That position complicates London’s attempt to secure favourable treatment under European industrial rules.

EU policymakers have argued that closer alignment on trade defences could support Britain’s claim to be treated as a trusted partner.

British ministers, however, must consider whether restrictions on Chinese imports would benefit domestic manufacturers and consumers.

The disagreement will form part of the broader economic relationship being discussed ahead of the next UK–EU summit, scheduled for 20 November.

The wider implications for EU–UK relations

The automotive dispute follows earlier negotiations over British participation in European defence procurement and other industrial programmes.

In both cases, London wants access to initiatives designed to strengthen European production while remaining outside the EU’s institutional framework.

Brussels must determine how far preferential treatment can extend to non-member countries without undermining the objectives of its industrial policy.

The Commission’s proposals have already revealed disagreements between governments favouring a tightly defined European manufacturing base and those seeking to preserve wider commercial partnerships.

Källenius’s intervention strengthens the argument that industrial protection cannot be considered separately from the supply chains on which European manufacturers depend.

The final legislation will influence investment decisions, procurement arrangements and the position of British suppliers within the continental automotive industry.

The outcome will also provide an indication of how far the EU is prepared to accommodate its closest trading partners as it attempts to strengthen European manufacturing against growing competition from China.

The European Commission is assessing changes to Google’s search engine and app-store practices after imposing two substantial fines in July. Regulators must now decide whether the company’s response satisfies EU competition requirements or leaves it exposed to further enforcement.

The European Commission is continuing discussions with Google over the company’s response to €890 million in penalties imposed under the Digital Markets Act, as Brussels examines whether changes to its search engine and app-store practices are sufficient to address infringements of European competition rules.

Commission spokesman Thomas Regnier confirmed on Wednesday, 14 October, that officials remained in dialogue with the American technology company. The Commission is assessing the measures Google has introduced, taking account of feedback from businesses affected by its services before reaching a conclusion on compliance.

The review follows two decisions adopted on 23 July, when the European Commission found Google in breach of the Digital Markets Act. A €460 million fine concerned preferential treatment for Google’s own services in search results, while a separate €430 million penalty addressed restrictions preventing app developers from freely directing customers towards alternative purchasing channels.

Search rankings remain under examination

The first infringement concerns Google’s treatment of competing online services offering hotel reservations, shopping comparisons, transport information and sports results.

Regulators concluded that Google had placed its own services in more prominent positions, sometimes providing them with enhanced visual features and search functions unavailable to competing businesses.

The Digital Markets Act prohibits designated gatekeepers from giving their own products preferential treatment when ranking services that compete with those offered by other companies.

Google has already modified its European search results in response to the Commission’s decision. The changes include revised presentations of commercial information and greater prominence for independent comparison services.

As EU Today reported following the introduction of the revised search format, Google has argued that the measures could make searches less convenient and increase dependence on intermediary websites.

The company maintains that direct information previously available through its search engine may become harder for consumers to obtain.

For competitors, however, the question is whether Google’s adjustments provide genuine commercial opportunities or merely alter the appearance of search results without changing the underlying distribution of traffic.

Google Play fees face scrutiny

The second case concerns the Google Play application marketplace, where developers have historically depended on Google’s infrastructure to distribute software and sell subscriptions.

Under the DMA, developers must be able to inform customers about alternative offers and direct them towards purchasing arrangements outside the platform, including their own websites.

The Commission found that Google’s restrictions and fees had limited that freedom.

Although the company may charge for certain services associated with acquiring customers, the Commission concluded that the level and duration of its steering-related charges exceeded what the legislation permits.

Google has since adjusted its external-offers arrangements. European officials are examining whether those changes provide developers with a commercially workable alternative to transactions processed through Google Play.

The issue has consequences for subscription services, digital publishers and software companies seeking to maintain direct relationships with their customers.

A formal ability to direct consumers elsewhere is of limited benefit if the financial conditions make such transactions uneconomic.

Enforcement enters a more demanding phase

The Digital Markets Act was designed to address market practices that conventional competition investigations often took years to resolve.

Rather than requiring regulators to establish a new infringement through lengthy proceedings in every instance, the legislation imposes specific obligations on companies designated as gatekeepers.

The Commission’s DMA enforcement framework allows regulators to examine whether those obligations are being followed and to impose financial penalties when they are breached.

Google’s July fines represented an important enforcement decision. The current review concerns the company’s subsequent conduct and the practical effects of its compliance measures.

The continuation of discussions does not itself establish a fresh infringement. Further penalties would require an additional regulatory determination.

Google also faces broader obligations concerning the sharing of search data with competing providers, an issue addressed in a separate Commission decision issued in July.

These obligations concern access to anonymised information about searches, rankings and user interactions that competing search engines may need to improve their own services.

Taken together, the measures represent a substantial intervention in how Google’s European business operates.

Transatlantic tensions complicate the dispute

The proceedings have acquired a political dimension because most of the largest companies affected by the DMA are American.

President Donald Trump has criticised European penalties against US technology companies and threatened trade measures in response to what his administration regards as discriminatory regulation.

Brussels maintains that the legislation applies according to market position and commercial conduct, regardless of nationality.

European regulators must nevertheless enforce their decisions in an environment where competition policy has become entangled with wider trade relations between the United States and the European Union.

Google’s financial exposure extends beyond the €890 million imposed in July. Continued non-compliance could lead to further regulatory proceedings, while changes to the company’s services may also affect advertising revenue and its relationships with commercial partners.

The immediate assessment will concentrate on whether competing search services receive fair treatment and whether application developers can direct customers towards alternative transactions without unjustified restrictions.

The Commission has not announced a date for its final assessment. Its decision will help establish how far Europe’s digital competition legislation can change the conduct of companies whose platforms occupy central positions in online commerce.