EU: Alstom, Siemens merger concessions may not save rail deal

Efforts by Alstom and Siemens to create a European rail champion could yet hit the buffers despite their latest concessions to try to address antitrust concerns.

The merger aims to create the world’s second largest rail company—with combined revenues of about €15 billion (US$17.1 billion)—but the deal has met opposition since it was announced in September 2017.

In a statement on Monday, January 28, France’s Alstom confirmed that last-minute concessions had been offered, but sounded a note of caution, adding: “There is, however, still no certainty that the content of this package will be sufficient to alleviate the concerns of the (European) Commission.”

People familiar with the matter said last week that the European Union competition watchdog would block the deal, with a decision likely on February 6, before the February 18 deadline.

German politician Manfred Weber, leader of the European People’s Party in the European Parliament, said the latest proposals were a good way forward.

But a senior EU official cautioned that if the new concessions did not completely remedy problems raised by a market inquiry, the EU competition office will have no room for maneuvers.

Germany’s Siemens and Alstom have argued that their deal would help them be better equipped to compete with China’s state-owned CRRC, but the EU has stressed its concerns lay with defending consumer interests rather than creating regional industrial powerhouses.

The combined revenues of the rail company would be roughly half the size of CRRC but double Canada’s Bombardier.

To sweeten the deal, the two companies are now prepared to share Siemens’ high-speed train technology for 10 years instead of five in Europe, a source familiar with the matter told Reuters last week.

European Union Competition Commissioner Margrethe Vestager told Reuters on Sunday her staff were reviewing last-minute changes filed by the two companies on Friday, January 25.

But she added that they had come “way, way over the usual deadline.”

Asked if the door was still open for a possible agreement, Vestager said, “We’re looking at what was handed over to us this Friday. This is the last push, if at all possible.”

Competition agencies in Germany, Britain, Spain, the Netherlands, and Belgium have warned against the merger, saying the first set of concessions fell short.

But the French and German governments have argued that halting the deal would be a strategic error, and have thrown their weight behind the rail merger.