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EU Blocks Siemens-Alstom Deal, Germany And France Question Policy


02/06/2019


EU Blocks Siemens-Alstom Deal, Germany And France Question Policy
The deal that would have created one of the largest p[layers in the European rail industry was rejected by EU regulators on Wednesday striking a blow to the two companies - Siemens and Alstom. The cancellation of the deal has prompted a call for an overhaul of EU competition policy to better meet global challenges being issued by Germany and France.
 
In a similar move, a proposed deal for purchasing a business unit from Aurubis, Europe's biggest copper smelter by German copper company Wieland-Werke AG was also rejected by the European Commission citing concerns that the deal could hike prices for consumers.
 
According to analysts, these two rejections by the EC could prompt France and Germany to raise demands for loosening of the competition rules of the EU so that the decision reflect a more global approach instead of taking a Europe only view about mergers and acquisition and also potentially demanding a say in such matters of EU ministers.
 
A proposal to change European competition rules was being worked upon by Berlin and Paris, said German economy minister Peter Altmaier soon after the decision made by the European Commission.  
 
There is an urgent need for reforms in the industrial policy of the EU so that companies can complete, said Siemens Chief Executive Joe Kaeser. On the other hand, Alstom said  that the rejection of the deal was a definite set-back for industry in Europe.
 
"Protecting customer interests locally must not mean that Europe cannot be on a level playing field with leading nations like China, the United States and others," Kaeser said in a statement.
 
However those supporting the strict merger regulations of the EU argue that any changes as demanded could result in rules that would be opaque and unpredictable.
 
While the Commission has blocked just 9 deals, including the two on Wednesday, in the last ten years, it has approved more than 3000 mergers, said EU Competition Commissioner Margrethe Vestager.
 
"Prohibition decisions, they are rare and it is the first time (we have announced...) two prohibition decisions on the same day," she told a news conference. She added that most of the approved mergers posed no problems or sufficient remedies were offered by the companies.
 
There was little impact on the shares of the company by the cancellation of the deal.
 
The French and German governments had backed the merger of Siemens and Alstom which the companies had argued would have create a combined rail operation which would have allowed them to efficiently complete with CRRC Corp Ltd, the state owned Chinese company.  
 
The deal was blocked with the aim of protecting competition in the European railway industry, Vestager however said.
 
"Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains," she said.
 
(Source:www.euronews.com)


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