April 10, 2021

Brussels will veto the merger of Siemens and Alstom despite fierce pressure from Berlin and Paris | Economy

Brussels will veto the merger of Siemens and Alstom despite fierce pressure from Berlin and Paris | Economy



The dreaded decision has led to an unprecedented confrontation between the European Commissioner for Competition, Margrethe Vestager, and the two companies, above all, the German one. But Vestager has also angered the governments of Angela Merkel and Emmanuel Macron, supporters of the creation of a large Franco-German company that dominates the sector. The confrontation has reached such a point that Germany and France expect the veto to be the fuse of a drastic reform of European competition policy.

The French Minister of Economy, Bruno Le Maire, warned the Commission last week that it will "make a big mistake" if it prohibits the merger. "It will not be simply an economic error, but also a political one, which will weaken the entire European industry against China."

"With this file, we have endured much more pressure than usual", admit in the Vestager department just a few days before the deadline (February 18) in which the Commission must rule on the merger of Siemens and Alstom. The same sources assure that the Commission will not hurry the term because the investigation is practically concluded and the companies no longer have margin to present new concessions.

The crossing of attacks and reproaches between Brussels and the companies has reached an unknown virulence for a competition authority accustomed to exerting its tremendous power far from the spotlight and the public debate.

Joe Kaeser, CEO of Siemens and one of the architects of the merger, has been dispatched in recent days against what he describes as "technocrats who look to the past." Kaeser also attacked through his Twitter account and sympathized with eurofuncionarios, according to the German executive, "act correctly from the technical point of view, but do everything that is wrong for Europe."

"It must be the first time that someone recognizes that the work of the Competition Department of the Commission acts correctly from the technical point of view," countered in the same way the Chief Economist of the Department of Competition, Tommaso Valletti.

Shortly thereafter, the same high-ranking community member beat Siemens in the most shameful part of his long business career. "German economic history and efficiency, Siemens was so diligent (or greedy) that not only bribes were targeted in their accounts, but they were deducted fiscally," Valletti recalled in the middle of the battle with Kaeser.

In spite of everything, the Vestager department is willing to abort the railway megafusión. Commission sources justify the decision because of the tremendous market share that the two companies would have together (more than 50% in almost all countries and in some, up to 80%) and the limited willingness to make concessions that reduce competition problems.

"They were warned from the beginning that there were problems, in high-speed trains and signaling," says a community source, who regrets that the latest concessions of the companies did not arrive until January 25, on the 109th day of a investigation that can last up to 120 days. "Too late, only eleven days after the investigation was concluded," they say in the Commission.

The community body also rejects the campaign launched by France and Germany on the need to merge the two companies to face the Chinese giant of the sector, CRRC. The Chinese company bills twice as much as Siemens and Alstom. But Brussels disdains the alleged rivalry. "China has never sold a single high-speed train outside its borders, and in Europe it has not achieved a single signaling contract," they recall in the Commission.

The Commission's arguments are echoed by the main customers of Siemens and Alstom, including the main railway managers and public administrations in Europe. "Seldom have we received so many negative comments about a possible merger," they say in Vestager's department.

The competition authorities of Spain (CNMC), United Kingdom, Holland and Belgium including they addressed themselves in writing to the European Commissioner to reject, for insufficient, the first concessions offered by the companies to obtain the approval of their union. The German authority also opposed the merger afterwards.

The European Association of Railway Infrastructure Managers (EIM) redoubled the pressure last week with another letter addressed to the president of the European Commission and to the commissioners most involved in the sector and in the merger. The operators remember that the signaling market would be dominated by 90% by the Franco-German giant. And that they can not resort to non-EU suppliers because of the strict regulations on safety and standards in force in Europe.

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