The European Commission has approved, under the EU Merger Regulation, the acquisition of Bombardier Transportation by Alstom which is conditional on full compliance with a commitments package offered by Alstom. Closing of the acquisition is expected for the first half of 2021.
The Commission’s decision is conditional upon full compliance with the commitments. The transaction remains subject to further regulatory approvals in several other jurisdictions and customary closing conditions.
Under the acquisition of Bombardier Transportation process, Alstom proposed:
- A transfer of Bombardier Transportation’s contribution to the V300 ZEFIRO very high-speed train and an offer of IP licence to Hitachi for the train co-developed by Hitachi and Bombardier Transportation for use in future very high-speed tenders in the UK. Alstom also committed to a series of measures aimed at preserving the joint bid offered in consortium by Bombardier and Hitachi to HS2, the current largest opportunity for the production of very high-speed rolling stock in Europe;
- The divestment of the Alstom Coradia Polyvalent and the Reichshoffen production site in France
- The divestment of the Bombardier Talent 3 platform and dedicated production facilities located within the Hennigsdorf site in Germany
- Providing access to certain interfaces and products for some of Bombardier Transportation’s Signalling On-Board Units and Train Control Management Systems (TCMS)
“Thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the Commission has been able to speedily review and approve this transaction. Going forward, a stronger combined Alstom and Bombardier entity will emerge. At the same time, thanks to these remedies, the new company will also continue to be challenged in its core markets to the benefit of European customers and consumers,” said Margrethe Vestager, the Commissioner for Competition.
Investigation
The Commission’s investigation found that the transaction, as initially notified, would have raised serious competition concerns on:
- Very high-speed rolling stock where the merged entity would have become the undisputed market leader with a significant market position;
- Mainline rolling stock where the merged entity would have strengthened the parties’ already large combined position in particular in France and Germany; and
- Mainline signalling where the merged entity would have had the ability and the incentive to make it more difficult for other suppliers of ETCS OBUs to interface with its many already installed signalling systems and its already operating fleet of trains (the largest in the EEA). Furthermore, the merger risked making the merged an unavoidable supplier of legacy OBUs in the Netherlands.
In February, Alstom signed a Memorandum of Understanding on Bombardier Transportation acquisition with a price between EUR 5.8 billion and EUR 6.2 billion, which will be paid via a mix of cash and new Alstom shares. On June 11, the European Commission was notified and following analysis, it has found that the transaction, as initially notified, would have raised serious competition concerns on very high-speed rolling stock, mainline rolling stock and mainline signalling areas.
In July, Alstom has submitted to the EC four commitments to obtain the acquisition approval.
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