Monday, January 14, 2019

German antitrust hostile to Alstom-Siemens marriage

Several Commissioners are scheduled to meet in Brussels on Tuesday to discuss the creation of a European railroad champion capable of competing with the Chinese giant CRRC.

By Jean-Michel Bezat Posted today at 12:49

Time to Reading 2 min.

Siemens CEO Joe Kaeser and Alstom CEO Henri Poupart-Lafarge in Paris in September 2017.
Siemens CEO Joe Kaeser and Alstom CEO Henri Poupart-Lafarge in Paris in September 2017. THOMAS SAMSON / AFP

The shadows accumulate day by day on the marriage of Alstom and Siemens Mobility to create a European giant of railway construction capable of competing with the Chinese CRRC, which would be twice the size of the new group. The German competition authority has just written to Brussels to express "Serious doubts" on the merits of a rapprochement between French and German companies, states the Frankfurter Allgemeine Zeitung Sunday, January 13 and the Financial Times Monday, 14th, after reading this letter.

These criticisms are in line with the warnings expressed in recent weeks by the competition authorities of Spain, Great Britain, Belgium and the Netherlands, which do not have any significant railway industries. equivalents. They believe that in many countries, Alstom-Siemens will have an exorbitant market share in the supply of high-speed trains and signaling. But the "Remedies" brought by both groups to "Grievances" in October by Margrethe Vestager, European Commissioner for Competition, are still considered insufficient by these antitrust authorities.

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As early as December 2018, the Bundeskartellamt, the German competition regulator, had ruled that Alstom and Siemens concessions were not "Not adapted or sufficient" under the rules of competition, notes the British daily. Granting temporary licenses for the former Siemens Valero generation, giving up Alstom's Pendolino (pendular train) or getting rid of signaling bricks did not seem sufficient.

A college of several commissioners is debating Tuesday in Brussels, a procedure quite unusual. It will not deal with the issue from the sole point of view of competition, but from a broader perspective including the threat of extra-European, especially Chinese, competition. In fact, Chinese groups benefit from important aid from their government (financing, regulation, protection of the internal market ...), which Brussels can not ignore.

Mr. Macron and Mr.me Merkel supported the merger project

It remains that Mme Vestager considers the Chinese threat overestimated, even though CRRC has already landed markets in the United States and enters Eastern Europe with competitive products. The Danish commissioner has until 18 February to take a final decision on a matter which, in the current context, goes beyond purely competition issues.

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French President Emmanuel Macron and German Chancellor Angela Merkel have lent their support to the merger plan since its announcement in September 2017. It is, in their view, an operation contributing to the consolidation of Europe, while there is a high-risk vote in May to renew Parliament and then the Commission.

The question is now openly posed, in Paris at least: the competition law is not it "Obsolete"according to Bruno Le Maire, the French Minister of the Economy; does it not slow down the creation of European champions in the face of the rise of Chinese industrial giants? In the railways of course, but also the electricity grids (State Grid), nuclear power plants (CGN and CNNC), telecommunications equipment (Huawei and ZTE).

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If the Alstom-Siemens merger derails, which would be a "Political fault"According to Mr Mayor, the debate on competition in the European Union will start again. Mme Vestager will then have the good fortune to say that the Commission has never prevented the birth of champions, as evidenced by the Airbus example. Since the 1990s, its services have blocked only twenty-seven operations (Legrand-Schneider, LSE and Deutsche Börse ...), but they have approved 6,000 (pharmacy, mass distribution, steel, automotive ...).

Jean-Michel Bezat

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