The ACCC has discontinued its review of the proposed Siemens AG and Alstom S.A. global merger, in light of the European Commission’s (EC) decision to block the transaction and the statements by the merger parties that the deal is off.
The EC’s announcement states that the divestment remedies put forward by the parties were not sufficient to address competition concerns in Europe.
“While we had not made a final decision, the transaction had raised competition concerns in Australia, especially in signalling for heavy rail passenger networks,” ACCC Chair Rod Sims said.
“We had been in discussions with the parties about possible divestment remedies, but we did not receive a finalised remedy proposal for Australia.”
“Given the global nature of the proposed merger and the competition issues involved, any remedy affecting Australia would also have had to be considered in the context of the issues raised in Europe by the EC,” Mr Sims said.
The ACCC launched an informal merger review on 19 April 2018. After consulting with interested parties, including rail network operators, civil contractors, and rail mobility providers, the ACCC expressed concerns with the proposed merger in a statement of issues published on 6 September 2018.
“Our view is that on Australian passenger networks, a merged Siemens-Alstom may not face enough competition from other suppliers of heavy rail signalling, particularly in train interlocking systems and automatic train protection systems,” Mr Sims said.
“The ACCC was concerned that incumbency advantages and barriers to entry could increase the risk that customers face higher prices and lower levels of service, and could decrease incentives to deliver innovation. Any proposal where a market leader merges with another leading player will be subject to thorough investigation,” Mr Sims said.
The ACCC liaised closely with overseas competition regulators during this review.
Background
Siemens and Alstom are global suppliers of rail mobility products and associated services. Both are active in Australia in rail signalling, rolling stock, and electrification.
Signalling systems provide safety and traffic management controls on rail networks. At their simplest, the role of these systems is to avoid collisions between trains.
Siemens is a listed German conglomerate headquartered in Munich. Alstom is a French société anonyme listed on the Euronext Paris stock exchange. The proposed transaction combined Siemens’ Mobility Division with Alstom.