Alstom and Siemens have jointly agreed to submit a remedy package on December 12 to the European Commission in response to its Statement of Objection of October 29. This package represents their proposal to address the Commission’s concerns while preserving the industrial and economic value of the deal.
The proposed remedies include mainly signaling activities as well as rolling stock products and represent around four percent of the sales of the combined entity. The parties consider that the proposed remedy package is appropriate and adequate. There is, however, no certainty that the content of this package will be sufficient to alleviate the concerns of the Commission. A decision by the Commission is expected by February 18, 2019.
In July 2018, the EC has announced the opening of an in-depth investigation on the proposed acquisition of Alstom by Siemens, under the EU Merger Regulation. The Commission raised concerns that the merger may reduce competition in the supply of several types of trains and signalling systems.
Following EC’s announcement, in October, the EU antitrust regulators sent a series of objections over the proposed Siemens-Alstom rail business merger.
The initial investigation found that the combined entity will be nearly three times larger than its closest competitor.
The proposed transaction would combine the two largest suppliers of rolling stock and signalling solutions in the European Economic Area, not only in terms of size of the combined operations, but also in terms of geographic footprint of their activities.
The Commission claimed that the proposed transaction would reduce competition in the markets where the merged entity would be active. According to the EC, the transaction could lead to higher prices, less choice and less innovation due to reduced competitive pressure in rolling stock and signalling tenders. ‘This would be to the detriment of train operators, infrastructure managers and ultimately European passengers who use trains and metros on a daily basis,’ EC said in its statement from July.
The transaction was notified to the Commission on 8 June 2018, when both companies have jointly filed the application for merger control clearance with the European Commission.
In September 2017, Siemens and Alstom signed a Memorandum of Understating to combine Siemens’ mobility business including its rail traction drives business with Alstom. If successful, the new entity will benefit from an order backlog of EUR 61.2 billion with revenues of EUR 15.3 billion. In total, the new entity will have 62,300 employees in over 60 countries.
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