The European Commission has prohibited the concentration between Siemens and Alstom

On 6 February 2019, the European Commission prohibited the acquisition of the French Alstom SA (Alstom) by the German Siemens Aktiengesellschaft (Siemens).

Siemens is active worldwide in various business areas related to the fields of electrification, automation and digitalisation. Siemens’ Mobility division offers a broad portfolio of rolling stock, rail automation and signalling solutions, rail electrification systems, road traffic technology, IT solutions, and various products and services concerning the transportation of people and goods by rail and road. Alstom is a global player in the world rail transport industry, providing a broad portfolio of rolling stock, personalised services for maintenance and modernisation, offerings dedicated to passengers and infrastructure, digital mobility and signalling solutions.

The Commission received the notification of the proposed concentration on 8 June 2018. Having serious doubts as to the compatibility of the merger with the applicable EU rules, in July 2018 the Commission   decided to initiate an in-depth investigation aimed at assessing the effects of the proposed concentration on competition in the areas of signalling systems and very high-speed rolling stock.

The Commission’s investigation showed that the proposed operation would have removed a very strong competitor from several mainline and urban signalling markets and that the merged entity would have become the undisputed market leader in those markets. Moreover, the proposed transaction would have reduced the number of suppliers of very high-speed rolling stock, reducing the competitive pressure on the new entity.

To address the Commission’s concerns, Siemens and Alstom proposed, on the one hand, to sell or to licence some of their assets and, on the other hand, to divest a train currently not capable of running at very high speeds (Alstom’s Pendolino), or, alternatively, a licence for the use of one of Siemens’ technologies. However, the Commission found that the offered remedies were not enough to address the serious competition concerns and to prevent higher prices and less choice for railway operators and infrastructure managers. Therefore, the Commission prohibited the proposed concentration.

Sara Capruzzi