Awards, contracts & appointments

06.02.19

Siemens-Alstom merger blocked by EU Commission in landmark decision

The EU Commission has officially blocked a merger between Siemens and Alstom, stating that the companies “were not willing to address our serious competition concerns.”

Despite months of negotiations and both the French and German government’s full backing the merger, several national competition regulators’ protestation against the plans meant that the decision from Brussels was widely expected.

The EU’s commissioner Margrethe Vestager announced it was prohibiting the Siemens-Alstom merger over concerns that the deal would have “harmed competition” in markets for railway signalling and high-speed trains and, without sufficient remedies, would lead to higher prices across the industry.

Following the EU’s antitrust concerns about the merger, Siemens and Alstom submitted a remedy package in December representing about 4% of the companies’ combined sales and including one of the company’s high-speed rail technologies.

The commission had repeatedly stated its objections to the merger and asked for further concessions and, despite a last-minute attempt to sway Brussels with an updated remedy package, announced the rejection of the merger today.

Vestager said: “Siemens and Alstom are both champions in the rail industry. 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.”

The commission said today’s decision follows an in-depth investigation into the takeover deal which it recognised would bring together two of the largest rail suppliers in Europe, a move which the companies themselves argued would allow them to compete with Chinese rail giants.

The EU Commission said the merger would have created an undisputed market leader and a “dominant player” in signalling and in very high-speed trains, “significantly reducing competition” in both areas.

This would have deprived customers, train operators, and rail infrastructure managers of a choice of suppliers and products, it said in a statement.

Alstom responded to the announcement by calling it a “clear setback for industry in Europe,” stating it regretted that the remedies offered were considered insufficient when it believed they were extensive and addressed all concerns raised by the commission.

The EU’s stance echoes the numerous complaints it said it had received in the lead-up to the decision from competitors, industry associations, unions, and national regulators regarding the negative impact on competition.

It added: “Since the parties were not willing to offer adequate remedies to address these concerns, the Commission blocked the merger to protect competition in the European railway industry.”

The commission has the duty to assess all mergers and acquisitions involving companies with turnovers above a certain threshold, and the decision marks one of the most important test merger cases for the EU since it assumed powers to vet EU mergers.

Image credit - Thierry Monasse/DPA/PA Images

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