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01.11.18

EU Commission sends out antitrust warning over Siemens-Alstom merger

The EU Commission has sent a series of objections to Siemens and Alstom over their plans for a European railway merger, increasing the possibility of substantial asset sales needed to secure EU approval.

The move by the European Union’s antitrust regulator follows the opening of a full-scale investigation into the proposed deal over concerns that the combined company may reduce competition in the supply of several types of trains and signalling systems.

The French and German train manufacturers plan on creating a company capable of rivalling Chinese competition, and the two global leaders will now respond to the charges in the next few weeks.

The controversial merger has been criticised by rival companies who say they will be shut out of the market, with Network Rail and the ORR both warning that the loss in competition would substantially harm the UK railway.

Earlier this week it was confirmed that Network Rail CEO Andrew Haines wrote to the EU competition commissioner in an attempt to stop the merger, calling it “one of the most significant threats to our operations at present.”

He said that the combined company would have had a 93% share of the signalling market if operating in 2016-17, and stressed that if the merger could not be stopped then the companies must be made to sell assets.

This now seems likely, with Siemens and Alstom having until mid-December to offer a suitable solution to address the issues outlined by the commission.

The confidential statement of objections details much of the same issues highlighted by the regulator in July, according the Financial Times.

Commissioner Margrethe Vestager released a statement on 13 July saying that it was concerned that the merger would “deprive European rail operators of a choice of suppliers and innovative products, and lead to higher prices, which could ultimately harm the millions of Europeans who use rail transportation every day for work or leisure.”

It said it would investigate the deal between the two firms, with a deadline of 28 January 2019 set for the merger.

 

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 Image credit -  Arno Burgi/DPA/PA Images

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