Margrethe Vestager – Photo © European Union 2019
(BRUSSELS) – The EU Commission put a halt to Siemens’ proposed acquisition of Alstom Wednesday, saying remedies to concerns that it would harm competition in markets for railway signalling systems and high-speed trains were insufficient.
“Millions of passengers across Europe rely every day on modern and safe trains. Siemens and Alstom are both champions in the rail industry,”said the Competition Commissioner Margrethe Vestager: “Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains.”
The Commission’s decision follows an in-depth investigation of a takeover which would have combined Siemens’ and Alstom’s transport equipment and service activities in a new company fully controlled by Siemens. It would have brought together the two largest suppliers of various types of railway and metro signalling systems, as well as of rolling stock in Europe. Both companies also have leading positions globally.
The EU executive says the merger would have created the undisputed market leader in some signalling markets and a dominant player in very high-speed trains. It would have “significantly reduced competition in both these areas, depriving customers, including train operators and rail infrastructure managers of a choice of suppliers and products”.
The Commission said it had received several complaints during its in-depth investigation, from customers, competitors, industry associations and trade unions. It also received negative comments from several National Competition Authorities in the European Economic Area (EEA).
Stakeholders were worried that the proposed transaction would significantly harm competition and reduce innovation in signalling systems and very high-speed rolling stock, lead to the foreclosure of smaller competitors and to higher prices and less choice for customers. Since the parties were not willing to offer adequate remedies to address these concerns, the Commission said it decided to block the merger to protect competition in the European railway industry.
The Commission says the creation of a genuine European railway market depends crucially on the availability of signalling systems, which are compliant with the European Train Control System (ETCS) standard at competitive prices. Investment in signalling systems that comply with this standard will allow trains to operate safely and smoothly across borders between Member States. New investments in trains are key to transition to more climate friendly and environmentally sustainable mobility.
The Commission’s “serious concerns” were that the proposed transaction would significantly impede effective competition in two main areas: (i) signalling systems, which are essential to keep rail and metro travel safe by preventing collisions,and (ii) very high-speed trains, which are trains operating at speeds of 300 km per hour or more.
The Commission says feedback from market participants about the proposed remedy confirmed its view that the remedies offered by Siemens were not enough to address the serious competition concerns and would not have been sufficient to prevent higher prices and less choice for railway operators and infrastructure managers.
In response, Alstom said it regretted the decision. In a statement, it said: “This is a clear set-back for Industry in Europe. Alstom, together with Siemens, is convinced that the transaction would have created substantial value for the global mobility sector, the European railway industry, customers, travellers and commuters, without harming European competition. It would also have allowed the creation of a European player having the ability to cope with the growing competition from non-EU companies.”
The Commission confirmed that it is currently holding three on-going in-depth investigations: the proposed acquisition by Vodafone of Liberty Global’s business in Czechia, Germany, Hungary and Romania, the proposed acquisition of Whirlpool’s refrigeration compressor business by Nidec and the proposed creation of a joint venture by Tata Steel and ThyssenKrupp.
More information will be available on the Commission’s competition website, in the public case register under the case number M.8677.
