Siemens-Alstom deal falls short in concessions

market watchdog says concessions offered by Siemens and France’s Alstom to secure a merger of their rail businesses are not enough to allay competition concerns, according to press reports yesterday.

A letter from the Bundeskartellamt regulator to the European Commission seen by the Financial Times and German newspapers warns concessions offered by the two firms are “neither suitable nor sufficient” to dispel such fears.

The Bonn-based authority shares Brussels’ concerns about the deal “completely,” the Frankfurter Allgemeine Zeitung reported.

Commission officials have until February 18 to decide on the tie-up between Alstom, maker of France’s iconic TGV trains, and Munich-based Siemens, which was announced in September 2017.

Backers of the deal to merge the two firms’ rail operations, such as French Finance Minister Bruno Le Maire, say a European champion is needed to go toeto-toe with Chinese giant CRRC in the global market. He has dismissed those expressing competition fears as living in “yesterday’s world.” If waved through, the merger would create a rail behemoth with operations in 60 countries and annual turnover of 15.6 billion euros ($17.9 billion). The firms said in December they had offered concessions to the Commission they believed would soothe competition fears, including selling off or licensing some high-speed trains and signalling technology.

But the German regulator says the proposals would not leave room for rivals to compete on either very high speed trains or signalling. Additional offers from the companies last week had not improved the watchdog’s view of the deal, business daily Handelsblatt reported.

Even the two firms acknowledged that they might not be able to offer enough to appease the Commission, a source familiar with the competition probe told Agence France-Presse (AFP) last week.

The German government has been less vocal than Paris in campaigning publicly for the tie-up - despite Berlin’s many year long effort to get Alstom to pick Siemens over U.S.-based General Electric or Canada’s Bombardier.

GERMANY’S