The Competition and Markets Authority (CMA) has found that a merger between two businesses currently bidding for the installation of overhead power cables for HS2 could raise competition concerns.
Bouygues and Equans (part of Engie Group) are the two businesses in question and are both well-established names in the European supply chain game. Bouygues have recently agreed a £6bn deal to buy out Equans, announced in November 2021.
These two supply chain giants are direct competitors in relation to the supply of catenary systems that are used to supply electricity to the rolling stock through overhead power cabling for high-speed-railways. This direct competition between the two companies is currently seeing them attempt to become the main supplier for High Speed 2 (HS2).
The CMA has recently found that there is a plethora of sufficient and credible competitors for future contracts for installation and maintenance of high-speed catenary systems in the UK.
However, as the HS2 tender is currently at an advanced stage, the merging businesses are two of a smaller number of bidders in the final stages competing for the contract. This has led to concerns from the CMA that these two bids coming under the control of the merged business could make the remainder of the tender process less competitive. This competition reduction could result in a higher-cost final contract, which would have an adverse knock-on effect on taxpayers.
Colin Raftery, Senior Director at the CMA, said:
“Competitive tenders help make sure that taxpayers get the best possible deal when large public works, like HS2, are undertaken.
“The HS2 tender for overhead catenary systems is at an advanced stage, but the remaining bidders are continuing to compete on the final aspects of the contract. It’s important to ensure that this process isn’t undermined, as this could result in unnecessary additional costs, ultimately leaving taxpayers worse off.”
These firms now have five working days to complete proposal submissions to address the CMA’s competition concerns, where the CMA will have a further five working days to consider whether to accept any offer instead.
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