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© Siemens Business | July 16, 2018

In-depth investigation into Siemens / Alstom Deal

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Alstom by Siemens, under the EU Merger Regulation. The Commission is concerned that the merger may reduce competition in the supply of several types of trains and signalling systems.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Trains and the signalling equipment that guide them are essential for transport in Europe. The Commission will investigate whether the proposed acquisition of Alstom by Siemens would deprive European rail operators of a choice of suppliers and innovative products, and lead to higher prices, which could ultimately harm the millions of Europeans who use rail transportation every day for work or leisure."

At this stage, the Commission is concerned that the proposed transaction would reduce competition in the markets where the merged entity would be active. In particular, the Commission is concerned that the proposed transaction could lead to higher prices, less choice and less innovation due to reduced competitive pressure in rolling stock and signalling tenders. This would be to the detriment of train operators, infrastructure managers and ultimately European passengers who use trains and metros on a daily basis.

More specifically, the Commission's initial investigation found that:

For rolling stock, the proposed transaction would remove a very strong competitor and reduce the number of suppliers. In relation to high speed trains, the Commission has examined the impact of the transaction both within the EEA and on a worldwide basis (excluding China, Japan and Korea which appear to have barriers preventing imports from foreign suppliers). On both of these geographic markets, the merged entity would be the undisputed market leader, over three times larger than the closest competitor. The merged entity will also become the market leader in mainline (including regional trains) and metro rolling stock in the EEA. Furthermore, after the proposed transaction, competitors in the sector would struggle to compete against the merged entity's track-record and installed-base of rolling stock.

For signalling solutions, the proposed transaction would remove a very strong competitor from several mainline and urban signalling markets. After the proposed transaction, the merged entity would become the undisputed market leader, with around three times the market share of the closest competitor, and would be unlikely to face significant competitive pressure.

Furthermore, at this stage the Commission has found that the entry of new competitors into the EEA rolling stock or signalling solutions markets, including in particular of potential Chinese suppliers, appears unlikely to occur in the foreseeable future.
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December 13 2018 1:08 pm V11.10.14-2