The European Commission has cleared Alstom’s acquisition of Bombardier Transportation, subject to certain conditions being met.
Following the EU Merger Regulation, the Commission has approved the acquisition of Bombardier Transportation by Alstom. This is a conditional approval that requires Alstom to fully comply with the commitments it offered to the EC.
“Alstom and Bombardier are leading providers of state-of-the-art trains used every day by millions of passengers across the European Union. Thanks to the comprehensive remedies offered to solve the competition concerns in the areas of very high-speed, mainline trains and mainline signalling, the Commission has been able to speedily review and approve this transaction. Going forward, a stronger combined Alstom and Bombardier entity will emerge. At the same time, thanks to these remedies, the new company will also continue to be challenged in its core markets to the benefit of European customers and consumers.”
Alstom and Bombardier Transportation currently compete in the following railway sectors:
- Very high-speed, mainline and urban rolling stock
- Mainline and urban signalling solutions – both trackside and on-board units
The Commission initially has substantial competition concerns in a number of areas. They were:
- Very high-speed rolling stock: the acquisition would have left the new entity as the undisputed market leader
- Mainline rolling stock: the two parties already have strong positions and the acquisition would have strengthened them further, especially in the German and French markets
- Mainline signalling: once merged, the new entity would be motivated and able to make it harder for others supplying ETCS on-board units to interface with the many signalling systems already installed by Alstom and Bombardier (legacy on-board units) and their fleets of trains already in operation (the largest in the European Economic Area); specifically in this area the merger risked making the new entity the unavoidable provider of legacy on-board units in the Netherlands
Following the Commission’s investigation, it was determined that the proposed acquisition would not cause competition issues in any other markets such as within mainline and urban signalling. Bombardier Transportation’s position in the European Economic Area is limited here.
To allay the EC’s concerns, Alstom put forward a number of commitments.
Alstom to Submit Commitments to EC for Bombardier Transportation Acquisition
These included divesting a number of Bombardier and Alstom assets. For example, the divestment of Bombardier’s assets that currently contribute to its joint very high-speed platform with Hitachi, the Zefiro V300. However, the joint bid put forward by Bombardier and Hitachi to build the rolling stock for HS2 (UK) is to be preserved.
Alstom gave assurances that the new entity would supply legacy OBUs along with the necessary interfacing information and support, in favour of signalling competitors, and the supply of legacy OBUs to ProRail, in favour of all interested operators.
Market participants were able to give feedback on the proposed acquisition, which was taken into account to modify Alstom’s commitments. The Commission is now satisfied that the transaction as proposed now would raise no competition concerns.
The Commission was notified about the acquisition transaction on 11 June 2020. This gave the Commission 25 working days to make a decision on whether to grant approval (Phase 1) or whether to start an in-depth investigation (Phase 2). If commitments are put forward to the Commission during Phase 1, it has an additional 10 working days in which to make a decision.
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