Siemens and Alstom submit remedies to EU Commission to finalise deal

The two companies are hoping to get their €15 billion rail merger approved by EU regulators after proposing concessions that are expected to include the divestiture of key assets.

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Source: Bloomberg

Siemens and Alstom announced that they have both filed remedies to appease European competition regulators who raised concerns that the proposed rail merger risked creating a monopoly in certain European rail markets.

‘The proposed remedies include mainly signalling activities as well as rolling stock products and represent around four per cent of the sales of the combined entity,’ The Franco-German pairing said in a joint statement on Wednesday.

‘The parties consider that the proposed remedy package is appropriate and adequate. There is, however, no certainty that the content of this package will be sufficient to alleviate the concerns of the Commission.’

Taking on China

The two companies announced their intentions to merge back in September 2017 with the aim of creating major European rail operator that had the clout to compete with Chinese state-backed CRRC.

The deal has garnered support for pro-European French President Emmanuel Macron, who is also in favour of creating a EU army. However, the EU’s competition commissioner Margrethe Vestager has expressed concern that deal will create a company capable of competing with China at the expense of creating an uncompetitive market in European rail.

Siemens and Alstom must make major divestments

European rivals have argued that the deal will destroy competition in the European rail market, which led to the EU watchdog to tell the Franco-German pair to consider making divestments of prized assets to address its concerns.

But according to media reports, the pair although interested in doing the deal have proposed a plan that offers licenses to its rivals in signalling and rolling stock rather than put major assets up for sale.

A decision by the Commission is expected by 18 February 2019.

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