April 15, 2021

Brussels vetoes the merger of Siemens with Alstom and unleashes the fury of Germany and France | Economy

Brussels vetoes the merger of Siemens with Alstom and unleashes the fury of Germany and France | Economy



France and Germany will be forced to stop their claim to light a European champion of the railway sector. The mega-fusion of Siemens and Alstom, the two manufacturers that dominate the continent's market, has crashed this Wednesday against the veto of the European Commissioner for Competition, Margrethe Vestager. Neither the fierce pressure exerted by Paris and Berlin in recent weeks nor the latest concessions of both companies have convinced Brussels"The negative impact for the competition was clear," Vestager said after describing as "limited" the last concessions that the companies made to save the operation. Both countries have regretted the decision and have even advanced their intention to promote a reform of competition policy in the European Union.

The commissioner has resisted the enormous pressure of the governments of Germany and France, in favor of creating a "European champion" to face the two world giants: the Chinese CRRC (China Railway Rolling Stock Corporation) and the Canadian Bombardier Transportation. The merger, which was proposed in September 2017, was to create a large European corporation with a combined turnover of 15,300 million euros and more than 60,000 employees.

The Commission has justified the decision that the merger "would have impaired competition in the markets for railway and very high-speed train signaling systems". On the other hand, he has not seen any problem regarding the manufacture of meters and other trains, where he warns of high competition. "It's not a problem that [la compañía] be great ", added Vestager, which has justified the decision in which the resulting group" would be the largest company and, in some markets, there would be no competition ".

Vestager has flatly rejected, however, the Franco-German argument of the growing competition of the Chinese state company to give the green light to the operation. The commissioner has argued that 90% of the CRRC's activity is in its country of origin: "It has not built a high-speed train outside of its country," he reasoned. But France and Germany reject the arguments of Vestager to consider that the analysis of the operation should not only take into account the European market, but the global outlook and future trends. According to the consultancy SCI / Verkehr, in the last three years the Chinese CRRC has 71% of the global market share, while Alstom Y Siemens add up to 10%

The veto has unleashed the fury of Berlin and Paris. Before knowing the official verdict of Brussels, which has taken place after the meeting of commissioners, the French Minister of Economy and Finance, Bruno Le Maire, has affirmed through his Twitter account that Vestager has made an "economic" and "political" error in considering that the "chosen criteria are not the correct ones" and that "the Commission's role is to defend the economic interests" of The EU.

Vestager: "We will have two world leaders, not one"

In addition, Le Maire, which since January has raised the tone against the Brussels decision, has threatened an offensive by the Franco-German axis to reform the method for taking decisions on major mergers in Europe, which is centralized in the European Comission since 1989. "Now we must look to the future and refound the rules of European competition with my German counterpart Peter Altmaier [ministro de Economía y Energía] we are going to make proposals ", added Le Maire, who was interviewed this morning in France 2. The commissioner responded this afternoon that the veto of the operation is not "proof that the rules have to be changed".

Altmaier had also come in recent weeks pushing the Commission to approve the operation. "We need international champions in Europe who are capable of competing globally," the minister told Reuters. However, Vestager has considered that the EU already has several great players. "With today's decision, we get Europe to have two world leaders, not one," added the commissioner, who has warned: "Companies will not be competitive outside if they are not inside."

Given the imminence of the decision of Vestager, and after the offensive of their governments, Siemens and Alstom presented new concessions to Brussels. However, these were considered insufficient. The French authorities argued that the sales of assets that were put on the table would have benefited the growth of other companies, in particular the Spanish CAF. "There is a European manufacturer that would benefit, which is Spanish, so there is not only a French and German interest, but European interest", defended Le Maire in another of his interventions in favor of the merger.

"Without sufficient compensation, this merger would have resulted in higher prices for the signaling systems that maintain the safety of passengers and for the next generations of very high-speed trains," the commissioner concluded.

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