Boeing of the US decided on Wednesday to give way to Mr Karel Van Miert, the

European Union competition commissioner. But small concessions do not detract from Boeing's market domination. The US airline made several concessions, including agreeing to remove the exclusivity provisions from 20-year supply contracts with three US airlines - American, Continental and Delta.

Boeing did so because it wanted to avoid disruption to the most important meeting in its 81-year history. Today Boeing shareholders meet in Seattle to approve the company's take-over of McDonnell Douglas, which will create the world's biggest aerospace and defence company.

Mr Van Miert's victory has been hailed by fellow European commissioners. The concessions Boeing has made could have some detrimental effects on the future of its business.

But these will be small compared with the benefits of the take-over, which will create a $48 billion turnover group, with 200,000 employees and a towering presence in civil aircraft and military markets worldwide.

The many European suppliers to Boeing will be relieved that a damaging trade war has been averted. But Boeing's concessions will do little to improve the competitive position of Europe's fragmented defence sector or of Airbus

Industrie, the European consortium.

Nor will Boeing's concessions limit its freedom of action. Its agreement to maintain McDonnell Douglas's commercial aircraft business as a separate legal entity for 10 years will not hamper Boeing should it decide to stop manufacturing Douglas aircraft, leaving it free to persuade airlines to buy its products instead.

Boeing's undertaking to the Commission not to interfere with relations between its suppliers and other commercial aircraft manufacturers is little more than a promise of good behaviour.

But while Airbus could win orders from the three US airlines - American,

Continental and Delta - in future years, it will be difficult. The three carriers decided to buy from Boeing because it offered the widest range of aircraft at the lowest prices and because purchasing from a single supplier cuts maintenance and training costs.

It is this which should worry European Commissioners as they celebrate their humbling of Boeing and its supporters in the White House and the US Congress.

Boeing's take-over of McDonnell Douglas is one of several mergers in recent years which have consolidated the US industry, producing a handful of world-

class competitors.

If the deal wins regulatory approval, the US will have three aerospace and defence giants - Boeing, Lockheed Martin and Raytheon - compared with a dozen large manufacturers at the beginning of the decade.

By contrast, Europe's consolidation of its defence industry has barely started.

Mr Manfred Bischoff, chief executive of Daimler-Benz Aerospace (Dasa) of

Germany, points out that the US companies have the advantage of only having to deal with one government. Few EU governments are ready to see their arms industries disappear into a pan-European group.

Mr Bischoff argues that Europe should concentrate on reforming Airbus, which could later form the basis of an aerospace and defence group big enough to compete with the Americans.

And the reform of Airbus is not proceeding smoothly. The four companies which own Airbus - Dasa, Aerospatiale of France, British Aerospace and Casa of Spain -

agreed earlier this year to turn the consortium into a profit-making company. At present, it is a confederation of the four partners, who make decisions on the basis of unanimity.

Dasa and BAe, which have been pressing hardest for change, argue that, as a single company, Airbus will be able to make decisions more quickly and provide a better level of customer service. Aerospatiale, however, has been dragging its feet, arguing against having to hand its factories over to the Airbus management.

Significantly, the French government, led by President Jacques Chirac, was the most strident opponent of the Boeing-McDonnell Douglas merger and led the calls for Mr Van Miert to stand firm.

Now that the skirmish is over, and the EU has won its small victory, the

European industry needs to address itself to larger tasks. Above all it must create companies that can challenge the US in the marketplace - and not just in the negotiating chambers of Brussels.