Network Rail regulation and performance

15.01.19

German watchdog raises ‘serious doubts’ over Siemens-Alstom merger in latest blow

Germany’s competition watchdog has raised “serious doubts” over the proposed Siemens-Alstom merger and said its objections still stand despite the concessions offered by the French and German rail companies.

A letter seen by the Financial Times revealed an intervention by the independent Bundeskartellamt, which adds to the chorus of national competition regulators opposing the merger between the two European giants.

The merger has full backing from the French and German governments and Alstom and Siemens say the new company will have the capability to compete with Chinese rail giant CRRC, but the deal is now reportedly on the brink of being vetoed.

The main source of concern is that a Siemens-Alstom merger will effectively kill competition in the supply of rolling stock and signalling by creating a monopoly. In October, the European Commission said it objected to the deal unless substantial remedies were made.

Bundeskartellamt wrote to the European Commission last month stating the Siemens and Alstom had made concessions that were “neither suitable nor sufficient” to alleviate fears over competition.

Siemens and Alstom have since submitted further concessions to the EU, offering to sell one of their high-speed rail technologies to address the EU antitrust objections, but Bundeskartellamt has now confirmed that it still objects to the revisions – according to a source close to the deal.

The final decision will be made by the commission by 18 February, and it has been reported that the merger decision could set a precedent for the EU’s approach strategic and contentious mergers for the foreseeable future. 

The commission will today discuss the merger deal to address the merits of the merger before Margrethe Vestager, the EU’s competition commissioner, makes her decision, which marks a break in a three-decade old convention.

Official bodies have so far been heavily critical of the deal, with Vestager stating that the argument of creating a European champion to compete with China is unconvincing because of a lack of threat from CRRC.

The ORR and Network Rail have so far openly opposed the Siemens-Alstom merger, and last month the UK’s competition watchdog wrote to the EU Commission with the backing of several European regulators in a bid to halt the merger.

Image credit - Philipp Schulze/DPA/PA Images

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