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February 7, 2019

European Commission rejects Siemens-Alstom merger

The European Commission (EC) has blocked the proposed merger of Siemens and Alstom mobility businesses preventing the creation of a European rail business leader.

The European Commission (EC) has blocked the proposed merger of Siemens and Alstom mobility businesses preventing the creation of a European rail business leader.

The decision was taken following an in-depth investigation of the deal.

In a statement, the EU said that the merger would have created a dominant player in the industry, affecting the railway signalling systems and high-speed train manufacturing markets.

It also added that the two companies failed to offer adequate concessions to address the EC concerns.

The EC received multiple complaints from other industry competitors, associations and trade unions during the investigation, which was launched last year,

“Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe.”

Several national competition authorities in the European Economic Area (EEA) also opposed the Siemens-Alstom merger, citing similar concerns.

EC commissioner Margrethe Vestager said: “Millions of passengers across Europe rely every day on modern and safe trains.

“Siemens and Alstom are both champions in the rail industry. Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains.”

Siemens and Alstom said they regretted the move and added that the combination would have created ‘substantial value for the global mobility sector’ and the ‘European railway industry’ without harming competition.

In September 2017, the two companies signed a memorandum of understanding (MoU) to merge their mobility businesses. It was followed by the signing of a business combination agreement (BCA) in March 2018.

Soon after the Siemens-Alstom merger was announced, concerns were raised that the merger would affect competition in the industry and trigger surge in rail components prices.

Siemens and Alstom planned to make additional divestments to secure merger approval last month, but this did not completely alleviate the EC’s concerns.

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