BRUSSELS: Siemens and Alstom's plan to create a Franco-German rail champion could reduce competition and lead to higher fares for travellers, EU antitrust regulators said on Friday as they opened a full-scale investigation into the deal.
German industrial group Siemens and French rival Alstom announced the planned rail merger in September last year, an industrial boost for French President Emmanuel Macron which, however, has triggered criticism from opposition politicians.
Paris said the tie-up would protect jobs but critics fear French loss of control of the iconic TGV high-speed train. The combined TGV and Siemens' ICE-high-speed trains, and signalling and rail technology would have 15.3 billion euros (US$17.8 billion) in turnover.
The companies are looking to the deal to stave off the competitive threat from bigger Chinese rival CRRC (China Railway Rolling Stock Corporation) and Canada's Bombardier Transportation.
However, the European Commission said the merged company would be a global leader with three times the market share of its closest rival and was unlikely to be constrained by competitors.
The investigation will examine whether the deal would deprive European rail operators of a choice of suppliers and lead to higher prices for the millions of Europeans who use rail transportation every day for work or leisure, European Competition Commissioner Margrethe Vestager said.
The EU competition enforcer also dismissed Siemens' arguments regarding CRRC, saying potential Chinese suppliers were unlikely to enter the market for rolling stock and signalling in the foreseeable future.
Siemens and Alstom said they would work constructively with the Commission and reiterated their goal of closing the deal in the first half of 2019.
Bombardier said the deal warrants a closer look.
"Our view is that this deal will distort fair competition and enable one player to leverage dominance in the signalling space to lock-out competition in rolling stock and hold the industry captive, at the expense of all stakeholders," its general counsel Daniel Desjardins said.
The EU executive set a Nov. 21 deadline to decide whether to clear the deal. The companies can offer concessions such as asset sales and pledges to allow rivals access key technology or services, to address regulatory concerns.
(US$1 = 0.8574 euros)
(Reporting by Foo Yun Chee, additional reporting by Alexander Huebner in Munich; editing by Philip Blenkinsop and Elaine Hardcastle)