European Union blocks Siemens-Alstom deal

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Siemens Velaro ICE (foreground) and Alstom TGV trainsets await action at Paris Est station. A merger of the two companies has been stopped by European regulators.
Keith Fender

BRUSSELS — The European Union's central administration, the EU Commission, has announced it will not permit the proposed Siemens-Alstom merger, which originally had been targeted to be complete by the end of 2018. The antitrust review of the deal began in July 2018.

The planned merger of Alstom with Siemens' transport businesses was first announced by the companies in September 2017.  It initially appeared European regulators would permit the deal, as the French and German governments supported the plan strongly. Trade unions representing workers at the two firms had different views: in Germany, the planned deal was broadly welcomed; in France, unions objected.

The companies and the French and German governments argued the deal would create a European company able to compete with the world’s biggest rail equipment manufacturer — Chinese conglomerate CRRC, which is focused on exporting worldwide.

Multiple European governments (including Britain, Netherlands, Belgium, and Spain) objected on the basis the deal would reduce competition in their countries for equipment — passenger trains and locomotives plus servicing/maintenance of them, as well as positive train control systems — as Siemens and Alstom already account for much of the market. Australian authorities raised similar concerns.

An earlier indication the deal would be blocked [see “Report: European Union to block Siemens, Alstom merger,” Trains News Wire, Jan. 21, 2019] had led the companies to make additional concessions to regulators [see “Alstom, Siemens to make late concessions in effort to win merger approval,” Trains News Wire, Jan. 29, 2019]. Those included selling some activities and licensing others, such as PTC and high speed rail, to competitors for up to a decade. But this was clearly not considered enough to get the deal approved.

Siemens has restructured its transportation or Mobility business as a separate company in preparation for the planned deal and press reports in Germany suggest the Mobility company may be sold via a stock-market flotation. In a statement issued after the decision, Siemens' CEO said the company would assess "all options" for its rail equipment business, Reuters reports.

Siemens, based in Germany, and French-based Alstom both have significant profiles in the North American passenger market. Siemens has built or is building equipment for Amtrak, VIA Rail Canada, and Florida’s Brightline/Virgin Trains USA, while Alstom is building the next generation of high speed trainsets for Amtrak’s Northeast Corridor.

NEWSWIRETrains News Wire

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