The global merger of rail technology firms Alstom and Siemens Mobility is off, after the European Commission decided to block the move on competition grounds.
The proposed merger of Alstom and Siemens Mobility – the rail division of German multinational Siemens AG – would have created a business with revenues of roughly 15 billion Euros (AUD$24 billion).
But EU Commissioner Margrethe Vestager on February 6 said the merger would not be allowed.
“Without sufficient remedies, this merger would have resulted in higher prices for the signaling systems that keep passengers safe and for the next generations of very high-speed trains,” Vestagere said.
“The Commission prohibited the merger because the companies were not willing to address our serious competition concerns.”
In a joint statement, Alstom and Siemens said in a statement it regrets that the remedies offered, including recent improvements made by the companies, were considered by the Commission to be insufficient.
“The remedies were extensive in scope and addressed all the concerns raised by the Commission in respect of signaling or very high speed trains. In addition, a number of credible and well-established European players expressed strong interest for the remedy package, thereby fully confirming its viability.”
In its own statement Alstom said it considered the EU’s decision “a clear set-back for industry in Europe”.
“Alstom, together with Siemens, is convinced that the transaction would have created substantial value for the global mobility sector, the European railway industry, customers, travelers and commuters, without harming European competition.”
Looking ahead, Alstom said it would focus on pursuing its own growth path as a global leader in mobility, with “excellent business fundamentals: a global footprint, a record €40 billion backlog, sales constantly outperforming market growth, and a very solid balance sheet”.
Siemens said it would take the time to assess all options for the future of its Mobility business. “Meanwhile, Siemens Mobility will continue to innovate and grow its vertically-integrated portfolio,” the company said.
The Australian Competition & Consumer Commission promptly discontinued its review of the merger, following the sides’ acceptance of the European Commission’s decision.
“While we had not made a final decision, the transaction had raised competition concerns in Australia, especially in signalling for heavy rail passenger networks,” ACCC chair Rod Sims reflected.
“We had been in discussions with the parties about possible divestment remedies, but we did not receive a finalised remedy proposal for Australia. Given the global nature of the proposed merger and the competition issues involved, any remedy affecting Australia would also have had to be considered in the context of the issues raised in Europe by the EC.”