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Obstacles to Siemens-Alstom merger ‘too high’
MUNICH, Germany, Jan 17, 2019 (BSS/AFP) – Concessions demanded by the
European Commission to allow a planned tie-up of Siemens and Alstom’s rail
operations are “insurmountable” and would likely block the plans, a Siemens
source said Thursday.
“There will be no further concessions… we’ve run into a wall that is too
high,” the source said, raising the prospect that plans to create a Franco-
German rail giant to take on Chinese competition will fail.
Siemens’ fears for the future of the deal come after Alstom said early
Thursday that there was “no certainty” the two companies’ proposals would
mollify the Commission.
The French and German firms have offered to sell off some business
activities and license other technologies, hoping to allay Commission fears
the new combination could dominate the European market for rail signalling
and high-speed trains.
Siemens is nevertheless adamant it will not give up its next-generation
high-speed technology.
From the start, the Munich-based giant agreed to give up its older Velaro
trains and offered some concessions on the second-generation Velaro Novo
under pressure from Brussels.
But the firm balked at the Commission’s demand that it license a technology
platform linked to its high-speed rolling stock, the Velaro3G System, the
source inside the company said.
“On the one hand, we have the fear of competition from China. On the other,
we have to offer a competitor ten years’ exclusivity” on the technology, they
complained.
If the new entity were to give up the Velaro3G, they would be “completely
shut out from high-speed train development in Europe for ten years,” the
source added.
Both Paris and Berlin have thrown their weight behind the proposed Siemens-
Alstom tie-up.
But the Financial Times reported Wednesday that Competition Commissioner
Margarethe Vestager was unmoved by pleas from the two capitals, urging other
members of the EU’s executive arm to stick to existing antitrust rules.
The European Commission has until February 18 to deliver a decision on the
merger.
BSS/AFP/RY/1642 hrs