Franco-German railway merger blocked by Brussels

Brussels has canceled a Franco-German railway merger project to help Europe compete with China.

The EU Competition Commission has blocked the merger, claiming that the union of French Alstom with the German rail arm Siemens would drive up prices.

The companies said the merger would create an industrial champion on an equal footing with other global players.

French Finance Minister Bruno Le Maire said the decision would "serve the interests of China."

"The Commission has banned the merger because the companies were not willing to solve our serious competition problems," said Margrethe Vestager, European Commissioner for Competition, in a statement.

"In the absence of sufficient solutions, this merger would have resulted in higher prices for signaling systems ensuring the safety of pbadengers and future generations of very high speed trains," she added.

Siemens manufactures ICE trains for Deutsche Bahn and builds units for the Eurostar Channel Tunnel operator. Alstom manufactures high-speed train TGV in France, among rolling stock and signaling systems.

This merger would have created an entity generating a turnover of about 15 billion euros, with significant operations on the European rail network.

But the Chinese railway giant CRRC, the world's largest player, has been more competitive for contracts abroad in recent years.

Change the rules

In December, Alstom and Siemens submitted proposals to address the competition concerns raised by the Commission. These included the sale of signaling products and rolling stock. But the measures have not satisfied the authority of the competition.

Those who support the agreement, including the French and German ministers, said the Commission should look beyond Europe in sectors such as transport and banking.

German Economy Minister Peter Altmaier said that Berlin and Paris were working on a proposal to amend EU competition rules.

Joe Kaeser, director of Siemens, said: "Europe urgently needs structural reforms (…) Protection of local customer interests should not mean that Europe can not to be on a par with major countries like China, the United States and others. "