The European Commission has decided to prohibit the merger planned between Alstom and Siemens Mobility. This decision follows negative advice issued by several national competition authorities (including the German competition authorities).
The European Commission considers that this merger would have lead to two important areas (signaling system and high speed trains) dramatically reducing the competition in Europe with a risk of increasing prices and reducing innovation.
For the signaling systems, the merged entity would have become the undisputed market leader in several mainline signaling markets in particular the ETCS, which is essential for realizing a real rail single market. Nevertheless and despite the overall implementation of ETCS by 2022 in Belgium, we have to consider that this issue could have a significant impact regarding rail investments after this deadline.
For the high speed train sector, the merger would also have dramatically reduced the competition in Europe as Alstom and Siemens are the most important manufacturers of high speed train in Europe. The choice of the rail operators would have been greatly reduced in this strategic market for European mobility, at the same time as risking high price increases.
In other sectors of the rail rolling stock materials like the passengers Electric Multiple Unit’s and Diesel Multiple Units’s the merged entity would have also become a very strong and dominant player in countries like France and Belgium. Furthermore, Siemens and Alstom have not proposed a credible disposal plan to remedy these competition concerns.
Therefore the European Commission considers that the merger would significantly harm the interests of rail operators and passengers in the context of promoting a climate friendly and environmentally sustainable mobility in Europe.
The European Commission has rejected the argument of Alstom and Siemens that the merger was necessary to resist the threat of Chinese competition coming from the group CRCC. Firstly, so far this group is not present in Europe and has never sold any rail components in Europe. Furthermore, before trying to sell railway material in Europe, CRCC should have homologated these components , which would take time and provide an opportunity to the European Manufacturers to compete fairly.
A lot of supporters of this merger made a comparison with the aerospace industry. They plead that Europe needs a European rail champion like Airbus in the aerospace industry. It must be said that such comparison is limited in its truth for the simple reason that the aeronautical market is active on a global scale whilst the railway market can be considered as very fragmented.