EU rejects plan to merge Siemens and Alstom to create the largest European railway company

The European Commission has vetoed the merger between two major European rail transport manufacturers, German Siemens and French Alstom, who aimed to create the largest European railway.

The European Commission has rejected this business movement, in an act that has ignited anger of both Paris and Berlin, arguing that a merger between the two companies would have damaged competition in the markets of railway signaling systems and high-speed trains.

Likewise, the Commission assures that it adopts this decision whenever the interested companies have not been able to offer solutions to the doubts raised by the Commission’s executives.

The European Commissioner for Competition, Margrethe Vestager, confirmed this decision, saying that a merger between the two companies would result in “higher prices, less possibility of choice and less innovation”, so the initiative “has been blocked.”

Customers, competitors, employers and unions, opposed to the merger between Alstom and Siemens

The European Commission also announced, that during the investigation period, the Commission “received various complaints from clients, competitors, industrial associations and trade unions”, in addition to obtaining “negative comments” from different regulatory bodies of the competition of the member states.

“The merger would have created the undisputed leader in some signaling markets and a dominant player in the high-speed train segment. It would have significantly reduced competition in these areas, depriving customers, including train operators and rail infrastructure managers, of a greater supply of suppliers, ” the Commission continued.

They consider that the situation in which their European competitors would remain after the merger of these two large companies “would not be enough to guarantee effective competition in the market”.

In an international level, the Commission says that Chinese suppliers do not currently have a presence in the European market for signaling systems and that they have not even shown any intention of doing so, so it would take them a long time to become a “credible” provider within the European market.

Regarding high-speed trains, the EU government sees “highly unlikely” that the Asian giant’s manufacturers could compete effectively with the supergiant resulting from the merger of Siemens and Alstom.

The price of Siemens fell 0.5%, but that of Alstom bounced 4%.

This decision has not pleased the investors of Siemens, whose shares accumulate a decline in the session close to 0.44%, below again of the 96 euros per share.

However, the consummation of omens in the market has not displeased at all the shareholders of the French Alstom, which increased 3.98% and are around 37.67 euros per share.

Sign Up for Our Newsletters

You May Also Like

Tesla battery maker suspends Cuban cobalt supplier for fear of US sanctions

Panasonic said it cannot determine how much of the cobalt used in…

Procter & Gamble exceeds profit and sales forecasts on demand for its products

Procter & Gamble Co. reported quarterly earnings on Friday that beat estimates…

The Tesla Model 3 finally approved in Europe

Good news for the Californian manufacturer, the new Tesla Model 3 has…