German competition regulator Bundeskartellamt has given its approval for the acquisition of Vossloh Locomotives by Chinese rolling stock manufacturer CRRC Zhuzhou Locomotive.

Last August, Germany-based rail technology company Vossloh announced its decision to sell its locomotives business to CRRC Zhuzhou Locomotive.

Based in Kiel, Vossloh Locomotives specialises in manufacturing diesel and dual-mode locomotives for light mainline and shunting duties.

The business is reported to have faced difficulties during the past few years. It had planned to divest the company in 2014.

Bundeskartellamt president Andreas Mundt said: “In the present CRRC/Vossloh Locomotives merger case we very thoroughly examined all the particularities associated with the acquisition of a European company by a Chinese state-owned company.

“By acquiring Vossloh, CRRC takes over a key manufacturer of shunters in Europe. Possible state subsidies, the availability of technical and financial means and strategic advantages from other shareholdings were considered in the competitive assessment of the merger.”

The market has shifted to hybrid traction systems and dual-mode locomotives that can operate using both diesel engine and overhead wires for electricity.

Mundt added: “Based on our investigations, we were able to exclude a considerable impairment of competition on the European shunter market as a result of the merger.

“Although the Chinese state strongly protects CRRC, which plays a key role in as many as two of its strategic plans, namely ‘Made in China 2025’ and the ‘Belt and Road Initiative’, this case shows that while Chinese state-owned companies enter markets with substantial economic power, this does not necessarily pose a threat to effective competition.”

The acquisition of the locomotive business will mark the Chinese group’s entrance into the European rolling stock supply sector.