EU looks closely at union between Alstom and Siemens

The European Commission decided Friday to scrutinize the union of French Alstom with the German Siemens, who hope to give birth to a new European rail giant in the first half of 2019.

Announced in September l Last year, this historic merger would allow both companies to stand up to CRRC and Canada's Bombardier.

Alstom, which manufactures in particular the TGV, and the transport division of Siemens, which produces the ICE, had signed their agreement of rapprochement at the end of March.

But the Commission fears that this "concentration will reduce the competition for the supply of several types of trains and signaling systems, "she explains in a statement.

Therefore, Brussels intends to examine whether this proposed buyout" would deprive European rail operators of a choice of suppliers and innovative products and would lead to price increases "which could in turn harm pbadengers.

The Commission now has until 21 November 2018 to adopt a decision. The opening of an in-depth investigation in no way prejudices the outcome of the procedure

Given the size of the transaction, all the competition experts expected the European executive to start an investigation

– Rare to prohibit a merger –

However, it is very rare for the Commission to prohibit a merger. This is the case on average once a year. One of the most recently banned major unions dates back to March 29, 2017: the mega-merger project of the London and Frankfurt Stock Exchanges, an operation announced with great fanfare but weakened by the prospect of Brexit.

the announcement of the in-depth investigation, Alstom promised in a statement "to work closely with the European executive in order to provide him with all the information he needs to understand markets."

Negotiations could force both groups to divest certain badets to obtain the green light from the Commission's competition services

Alstom indicated that "the finalization of the transaction was expected in the first half of 2019". On June 8, Siemens and Alstom had not ruled out delaying their merger in the first half of 2019, which had been planned for the end of 2018.

Alstom had rightly cited as reasons for this delay "the preparatory work for pre-notification (with extensive competition authorities) and efforts to collect data in several countries. "

The transaction is subject to the approval of Alstom shareholders, who will meet in a general meeting on July 17.

Cette union had sparked a controversy in September in France, part of the political clbad denouncing the takeover by a German group of a flagship of French industry. The inter-union of Alstom was opposed to this project, fearing closures of sites and job cuts in France.

– No emotion in Germany –

On the other hand, in Germany, the project did not provoke much emotion and was perceived as beneficial for the European rail, but also for the country. The German press had been speculating for months on plans to marry Siemens railroad activities with Canada's Bombardier, whose strong presence in Germany caused fears of potential job cuts.

Siemens needs to bring its rail and signaling business to Alstom, in exchange for half the capital of the French, of which it will be able to exceed 50.5% of the capital after four years

Henri Poupart-Lafarge, the CEO of Alstom, will be the operational boss of this future company which must become the world leader in railway signaling and the number two railroad rolling stock. It will be based, like Alstom, in Saint-Ouen (near Paris).

Called for the moment Siemens Alstom, the group represents a turnover of 15 billion euros and a backlog of up to 61 billion , with 62,300 employees – including 34,500 from the French group – working on sixty major sites.