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28.01.19

Alstom and Siemens backtrack and submit new concessions for rail merger ahead of European Commission vote

Alstom and Siemens have offered new concessions to try to satisfy antitrust demands from the European Commission over their plans to merge and create a European rail champion, forcing Margrethe Vestager to reassess the merger at the last minute.

The EU’s top competition official seemed poised to veto the Franco-German merger last week after telling reporters she would likely reject the rail companies’ antitrust concessions – although she did say she was still open to a new proposal.

Siemens and Alstom also appeared to be ready to walk away from the deal following Vestager’s comments, with a source close to the deal claiming no further concessions would be offered as it risked offsetting the reasons for pursuing the merger in the first place.

But Alstom has today released a statement stating that it and Siemens had decided to further modify the remedies in a bid to answer all of the EU Commission’s concerns.

It specified that the industrial and economic value of the deal, and the percentage of its sales offered in concessions, would remain unchanged.

It also added that there was “still no certainty that the content of this package will be sufficient to alleviate the concerns of the commission.”

The EU Commission will now review the modified remedies ahead of a decision expected by 18 February.

The rail merger would create the world’s second largest rail company with a combined revenue of around €15bn, but the EU’s primary concern is the new company would dominate to the extent it would kill off competition in the market of rolling stock and signalling.

The French and German governments both fully support the merger, and officials have been frantically lobbying support over recent weeks. Vestager said last week it was “very, very late in the process” but that the phone was still open to amendments.

The EU Commission has repeatedly stated its objections to the European merger, and in December the rail companies submitted a remedy package consisting of signalling activities and rolling stock, as well as one of their high-speed rail technologies, representing around 4% of sales.

Five national competition regulators from Germany, Spain, Britain, Netherlands and Belgium have all warned against the merger and echoed the EU’s stance that concessions so far fall short.

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