The European Commission’s competition chief Margrethe Vestager said on July 16 that the EC has opened an in-depth investigation to assess the proposed acquisition of rail-transportation leaders Alstom by Siemens, under the EU Merger Regulation,

Vestager said the trains and the signalling equipment that guide them are essential for transport in Europe.

“The Commission will investigate whether the proposed acquisition of France’s Alstom by Germany’sSiemens would deprive European rail operators of a choice of suppliers and innovative products, and lead to higher prices, which could ultimately harm the millions of Europeans who use rail transportation every day for work or leisure,” Vestager said.

Both companies have a wide product portfolio and compete in tenders for the manufacture and supply of high speed, mainline and urban rolling stock (trains) as well as mainline and urban signalling solutions. Signalling solutions include signalling systems that provide safety controls on the mainline and urban rail network.

According to the Commission, the proposed transaction would combine the two largest suppliers of rolling stock and signalling solutions in the European Economic Area (EEA) not only in terms of the size of the combined operations but also in terms of geographic footprint of their activities. At this stage, the Commission is concerned that the proposed transaction would reduce competition in the markets where the merged entity would be active and, in particular, that the proposed transaction could lead to higher prices, less choice and less innovation due to reduced competitive pressure in rolling stock and signalling tenders. This would be to the detriment of train operators, infrastructure managers and ultimately European passengers who use trains and metros on a daily basis.

The Commission said the EC would now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.