The Competition and Markets Authority (CMA) has rubber stamped its approval to the €1.7 billion proposed merger between Hitachi Rail and Thales Ground Transportation (GTS) business following an in-depth investigation.
Hitachi Rail recently refiled its merger notification with the European Commission, formally restarting the merger clearance process for the acquisition of Thales's Ground Transportation Systems (GTS) in the European Union, in preparation for the widely expected decision.
The proposed deal was first announced in August 2021, and Hitachi Rail has since secured regulatory approval in 11 of the 13 required jurisdictions. The CMA had initially been worried about the lack of competition in the digital signalling market if the merger had gone ahead.
To address the Commission's concerns, Hitachi Rail has proposed to divest portions of its own signalling business. In a statement, a Hitachi Rail spokesperson said: “Having gained clearance from the CMA, we are now focused on achieving the final anti-trust clearance from the European Commission.
Following our in-depth investigation, #Hitachi has addressed our competition concerns by offering to sell part of its mainline signalling business. We are allowing the merger with Thales to go ahead.— Competition & Markets Authority (@CMAgovUK) October 4, 2023
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“We believe strongly in the competitive benefits of the deal to acquire Thales’ Ground Transportation Systems, which will deliver value for customers in the rail signalling and mobility sectors in Europe and around the world.”
In its initial assessment in August, the CMA said that it did not believe the possible merger would have a detrimental effect on the signalling market within the UK. This was despite initial concerns that it could reduce the options within the sector.
Stuart McIntosh, chair of the independent Inquiry Group, said: Effective signalling is vital for safe and reliable rail travel, which is why it has been important for us to review this merger thoroughly before reaching a final decision.
We have concluded that the merger will not reduce competition to provide CBTC signalling systems, and in particular those required on the underground network in London.
The picture is not the same for digital mainline signalling. To address our concerns here, Hitachi is selling part of its existing mainline signalling business to an independent purchaser. This will protect competition, which is key to keeping costs down, maintaining high quality of service and promoting innovation.”