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From Antitrust Law Daily, February 6, 2019

Planned merger of Siemens, Alstom rail units dropped after EC blocks deal

By Jeffrey May, J.D.

Siemens and Alstom have called off the proposed merger of their mobility businesses after the EC blocked the deal over "serious competition concerns" about the combination of the rail industry "champions."

Following weeks of rumors that a deal between Siemens and Alstom could be scuttled on competition grounds, the European Commission (EC) today announced that it has prohibited the proposed acquisition to protect competition in the European railway industry. The EC said that the merger would have harmed competition in markets for railway signaling systems and very high-speed trains.

According to the EC, the transaction would have combined Siemens’ and Alstom’s transport equipment and service activities in a new company fully controlled by Siemens, bringing together the two largest suppliers of various types of railway and metro signaling systems, as well as of rolling stock in Europe.

It was noted that many complaints were received from customers, competitors, industry associations, and trade unions. Member state competition authorities also took issue with the merger.

Following an in-depth investigation, which was announced in July 2018, the EC concluded that the parties did not offer remedies sufficient to address the competition concerns.

In response, Siemens and Alstom have called off their deal. Apparently, the companies were unwilling to offer additional concessions to get the combination cleared.

"The remedies were extensive in scope and addressed all the concerns raised by the Commission in respect of Signaling or Very High Speed trains," the companies contended. "In addition, a number of credible and well-established European players expressed strong interest for the remedy package, thereby fully confirming its viability."

Alstom, based in France, and Siemens, headquartered in Germany, had argued that the merger would have allowed the creation of a European player able to compete against non-EU companies. It appears that the EC was unwilling to allow the transaction to go forward in order for a European-based company to compete with China-based CRRC Corporation Limited, the world’s largest supplier of rail transit equipment.

Companies: Alstom SA; CRRC Corporation Limited; Siemens AG

MainStory: TopStory AcquisitionsMergers Antitrust

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