For quite a while now, we have been told that ''the world is flat''. That globalisation and the dismantling of national regulations have created an international sphere of open competition in which the best - that is, the fittest, the most efficient, the strongest - will survive, independent of nationality, race, creed, etc. That in this brave new world, only talent and effectiveness matter, because global capitalism has finally created the possibilities of anyone breaking free of all the barriers posed by geography, social structure and the dead weight of tradition.

Of course, even the votaries of this brave new world have usually conceded that there will be winners and losers in this process, and have grudgingly allowed for the possibility of exclusion of the benefits for some. This is how there has been some passing recognition (even if not much concern) about agrarian crisis across the developing world, or massive increases in unemployment among workers in most countries, or problems faced by citizens facing reduced provision of public goods and services and constrained access to resources such as fuel, wood and water.

But these are after all the less dynamic (if more numerous) sections of the world economy, and for the international financial press this has been so much less exciting to watch than the action on the economic football field of high flying capitalist players. The emergence not only of ''emerging markets'' but of their own home-grown capitalists, on the international arena, has been touted as final proof of the levelling tendencies of the new globalisation. Tata Tea can buy Tetleys of England; Infosys can search for workers and locations in China; Bollywood can become the second largest film exporter; so we - or at least our own people - can conquer the world.

This is why the international rise of a company like Mittal Steel was watched with such a combination of fascination and pride in India. Lakshmi Mittal appeared to exemplify this new tendency of levelling among the international haute bourgeoisie: the local steel magnate and owner of Ispat Steel who first stepped abroad in 1989 to acquire a steel company in Trinidad and Tobago, and subsequently, through a series of acquisitions, built up what is now the world's largest and most global steel company.

Mittal Steel had shipments of nearly 50 million tonnes and revenues of over $28 billion in 2005. It owns steel-making facilities in 16 countries, spanning four continents. It employs 224,000 people spanning 49 different nationalities. Its shares are listed on the New York and Amsterdam stock exchanges. So at least some Indian could look upon Lakshmi Mittal's success and forget about the millions of farmers and workers adversely affected by corporate globalisation: among the corporates that were benefiting from the process, which was of course one of concentration and centralisation of control, there were some of our own.

And it was interpreted as yet more proof of the flatness of the world - the ability of any capitalist from any country to enter the international domain and become the biggest player of all in a particular sector, and the perception that arms-length transactions had enabled all this to happen without reference to the national origins of the player.

This is why the recent story of the Mittal Group's bid for the French steel company Arcelor is so instructive. In continuation of the almost obsessive drive for expansion through acquisition that has characterised corporate strategy in this company, in January this year Mittal Steel revealed its unsolicited bid of $22.7 billion for taking over Arcelor, a French company registered in Luxembourg. This was a hostile bid, because a previous friendly bid had already been rejected by the Arcelor management.

Arcelor is among the biggest steel manufacturers in the world, with the largest turnover (at more than $35 billion in 2005) and 94,000 employees in over 60 countries. A takeover of Arcelor by Mittal would have created a massive behemoth: far and away the largest steel company in the world, with close to monopoly power in several major markets. The share price of Arcelor shot up dramatically.

But not everyone was impressed, especially the Chief Executive of Arcelor, Guy Dollé. He dismissed Mittal Steel as ''a company of Indians'' even though it is officially registered in the Netherlands and is therefore Dutch, and Mittal himself is a citizen of the U.K. Dollé declared that European steel was "perfume" to Mittal's "eau de cologne." The governments of France, Luxembourg and Spain quickly declared their strong opposition to the deal. The French press raised questions about Mittal Steel as a ''family run business'' (Lakshmi Mittal's son is Chief Financial Officer and his daughter is a member of the board) with correspondingly murky management.

In early May, Mittal raised the offer by 34 per cent, valuing Arcelor at $32.9 billion. It became apparent that this deal would be hard to prevent since it was seen as very attractive by Arcelor's shareholders (85 per cent of shares are held by relatively small investors). The response by the Arcelor management has been nothing short of remarkable. On 26 May, Arcelor announced that it would merge with the Russian steelmaker Severstal, one of the giants created by the problematic privatisation process, owned and controlled by the 40 year old tycoon Alexey Mordashov.

Arcelor agreed to pay €13 billion for the Russian steel group, even though according to the German Commerzbank, Severstal is worth no more than around €10 billion. This also implicitly reduced the value of Arcelor's shares, which had been raised by the Mittal offer. Shareholders will vote on this deal at the end of June, but they have been told that more than 50 per cent of them must oppose it to prevent the deal, in contravention of normal practice.

Interestingly, all the concerns about personal control and management opacity do not seem to bother Arcelor as far as Severstal is concerned, even though the young Russian oligarch with a 32 per cent holding will become the main shareholder of the worldwide number one steel group, with eventual control. Even Mordashov's known proximity to Russian leader Vladimir Putin was accepted, since this deal would mean that ''Arcelor remains a European company'' in the words of its bosses.

The London newspaper the Independent of 27 May had this to say of the proposed deal: ''The Arcelor board appears so appalled at the prospect of takeover by the Indian-born steel magnate, Lakshmi Mittal, that it will do almost anything to avoid his clutches - right down to surrendering control to the Kremlin… The Arcelor board seems to think it better to sell its soul to the devil than sup with Mittal…What have these people got against him that they are willing virtually to burn the place to the ground rather than let him have the keys to the citadel?''

But why should we be interested at all in these games played by international tycoons? Forget for a moment the (legitimate) concerns about the concentration of power and the threats to competition from such merger activity. The really interesting lessons from this episode are both economic and sociological, and they tell us that the world is nowhere near as flat as we might like to think even for the very very rich and very very powerful. Finally, the pure arms length transactions unsullied by social and cultural differences do not exist, and capitalism continues to be shaped by, and rely upon, those very differences.