The European Commission announced it has prohibited Siemens’ proposed acquisition of Alstom under the EU Merger Regulation. “The merger would have harmed competition in markets for railway signalling systems and very high-speed trains. The parties did not offer remedies sufficient to address these concerns,” the EC says.
The merger would have significantly reduced competition in signaling and high-speed train area, depriving customers, including train operators and rail infrastructure managers of a choice of suppliers and products.
“Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains. The Commission prohibited the merger because the companies were not willing to address our serious competition concerns,” Commissioner Margrethe Vestager, in charge of competition policy, said.
Alstom announced that regrets “that the remedies offered, including recent improvements, have been considered insufficient by the Commission. The remedies were extensive in scope and addressed all the concerns raised by the Commission in respect of signaling or very high speed trains. In addition, a number of credible and well-established European players expressed strong interest for the remedy package, thereby fully confirming its viability.”
But the EC said that since the parties were not willing to offer adequate remedies to address these concerns [on signaling and high-speed areas], the Commission blocked the merger to protect competition in the European railway industry.
According to the EC, during the in-depth investigation, the Commission received several complaints from customers, competitors, industry associations and trade unions. It also received negative comments from several National Competition Authorities in the European Economic Area (EEA).
“Stakeholders were worried that the proposed transaction would significantly harm competition and reduce innovation in signalling systems and very high-speed rolling stock, lead to the foreclosure of smaller competitors and to higher prices and less choice for customers,” EC said.
The EC investigation on signalling systems highlighted that the proposed transaction would have removed a very strong competitor from several mainline and urban signalling markets. The merged entity would have become the undisputed market leader in several mainline signalling markets, in particular ETCS in the EEA and in standalone interlocking systems in several Member States, and on metro segment, the merged company would also have become the market leader in the CBTC metro signalling systems.
Regarding the very high-speed rolling stock investigation, the EC said that the proposed transaction would have reduced the number of suppliers by removing one of the two largest manufacturers of this type of trains in the EEA. The merged entity would hold very high market shares both within the EEA and on a wider market also comprising the rest of the world except South Korea, Japan and China (which are not open to competition). The merged entity would have reduced competition significantly and harmed European customers. The parties did not bring forward any substantiated arguments to explain why the transaction would create merger specific efficiencies.
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