The European Commission approved, on Friday 31 July, under the EU Merger Regulation, the acquisition of the Canadian group Bombardier Transportation by the French company Alstom. This authorisation is conditional on full compliance with a commitments package offered by Alstom.
This operation should enable the French group to become the world’s number two rail operator behind the Chinese CRRC.
For Margrethe Vestager, the Commission’s Executive Vice-President responsible for Competition Policy, “thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the Commission has been able to speedily review and approve this transaction”.
The Commission’s investigation found that the transaction, as initially notified, would have raised serious competition concerns in the following areas: - very high-speed rolling stock, where the merged entity would have become the undisputed market leader with a significant market position; - mainline rolling stock, where the merged entity would have strengthened the Parties’ already large combined position in particular in France and Germany; - mainline signalling, where the merged entity would have had the ability and incentive to make it more difficult for other suppliers of ETCS on-board units (OBUs) to interface with its many already installed signalling systems (legacy OBUs) and its already operating fleet of trains (the largest in the European Economic Area). Furthermore, the merger risked making the merged an unavoidable supplier of legacy OBUs in the Netherlands.
Alstom has proposed a series of remedies to address the Commission’s concerns:
- the divestment of Bombardier’s assets currently contributing to its joint very high-speed platform with Hitachi, the ‘Zefiro’. Alstom has also committed to a series of measures aimed at preserving the joint bid offered in consortium by Bombardier and Hitachi to HS2, a project which represents the current largest opportunity for the production of very high-speed rolling stock in Europe;
- the divestment: (1) Alstom’s mainline Coradia Polyvalentplatform, (2) Alstom’s production facility in Reichshoffen in France, (3) Bombardier’s mainline Talent 3 platform, and (4) Bombardier’s production facility in Hennigsdorf in Germany;
- the supply of legacy OBUs and necessary interfacing information and support, in favour of signalling competitors;
- the supply of legacy OBUs to the Dutch infrastructure manager, ProRail, in favour of all interested operators.
The Commission considers that the final commitments address the competition concerns it identified regarding Alstom’s acquisition of Bombardier.
Alstom had notified in mid-June the proposed €6 billion acquisition of its competitor Bombardier Transport, a deal to be finalised in the first half of 2021.
For the French Minister of the Economy, Bruno Le Maire, the decision is “good news for the European rail industry, which must remain at the forefront of innovation. This decision strengthens Alstom and Bombardier as a leading global leader”.
MEP Christophe Grudler (Renew Europe, France) said the green light is proof that the EU “can change its competition criteria by taking into account the reality of the relevant market, which is global rather than European”.
“Alstom will thus become the second largest rail group in the world and will be able to compete with its many competitors, particularly the Chinese giants”, he adds. Mr Grudler said he expects the EU competition rules to be revised in early 2021.
Link to the decision: https://bit.ly/2BKid1p (Original version in French by Lionel Changeur)