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From Antitrust Law Daily, October 26, 2016

U.S. conditionally approves combination of rail equipment suppliers

By Jeffrey May, J.D.

Westinghouse Air Brake Technologies Corporation (Wabtec) can proceed with its proposed acquisition of Faiveley Transport S.A. and Faiveley Transport North America, subject to the divestiture of Faiveley’s U.S. freight car brakes business to Amsted Rail Company Inc., the Department of Justice Antitrust Division announced today. The deal is valued at approximately $1.8 billion (U.S. v. Westinghouse Air Brake Technologies Corp., Case No. 1:16-cv-02147).

The Antitrust Division filed a proposed final judgment in the federal district court in Washington, D.C., requiring the divestitures. If approved by the court, the settlement would resolve a complaint, alleging that, without the divestitures, the transaction was likely to substantially lessen competition in six relevant product markets for rail freight brake components.

"The acquisition as originally proposed would have eliminated Faiveley as one of only three major companies that supplies freight car brake components in the U.S. and eliminated Faiveley as a pipeline competitor in the development, manufacture and sale of freight car control valves – essentially freezing a century-old duopoly in that market," said Renata Hesse, Acting Assistant Attorney General in charge of the Antitrust Division.

Proposed final judgment. According to the Justice Department, the terms of the proposed final judgment require the divestiture of Faiveley’s entire U.S. freight car brakes business which develops, manufactures, and sells freight car brake systems and components including: air brake control valves, hand brakes, slack adjusters, truck-mounted brake assemblies, empty load devices, and brake cylinders. The divestiture also includes Faiveley’s FTEN control valve, a freight car brake control valve under development that will be available for full commercialization after approval from the Association of American Railroads.

The approved buyer of the assets is Amsted Rail, a leader in manufacturing railroad freight car undercarriage components and end-of-car systems for the rail freight industry. According to an announcement today by Faiveley, the U.S. assets to be divested are mainly its joint venture with Amsted in freight brakes equipment.

European Commission approval. The European Commission (EC) earlier approved Wabtec’s acquisition of Faiveley Transport of France, subject to the divestment of Faiveley’s sintered friction material business—Faiveley Transport Gennevilliers. EC approval of the buyer for those assets remains pending, Wabtec reported today.

Attorneys: Doha Gamal Mekki, U.S. Department of Justice, for the United States. Craig A. Waldman (Jones Day) for Westinghouse Air Brake Technologies Corp. Ilene Knable Gotts (Wachtell, Lipton, Rosen & Katz) for Faiveley Transport S.A. and Faiveley Transport North America.

Companies: Amsted Rail Company Inc.; Faiveley Transport S.A.; Faiveley Transport North America; Westinghouse Air Brake Technologies Corp.

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