Home / Finance & Economy / Failure of Alstom-Siemens merger: Brussels has made a serious mistake

Failure of Alstom-Siemens merger: Brussels has made a serious mistake

A few days after the negative opinion of Brussels concerning the Alstom-Siemens merger, reactions and criticisms are coming from all sides. For its supporters, this merger was to create a European champion able to face the Chinese competition, but for Brussels the consumer would be injured by such a mastodon in a dominant position.

For the French Prime Minister, Edouard Philippe: “This is a bad blow to the European industry and a bad decision …”. Paris and Berlin are planning an initiative to reform European competition rules and deal with China. “We are convinced that we must rethink and change these rules,” said German Minister of the Economy Peter Altmaier. He announced “the preparation of a German-French initiative in this area”.

French Finance Minister Bruno Le Maire had earlier denounced “obsolete rules” and promised joint proposals with Germany. According to him, it would be “to take the world market as a reference and not only the European, and also give the floor to European heads of state.”

Present at the World Government Summit, an annual summit on global governance, Sunday, February 10, 2019 in Dubai, Bruno Le Maire made a strong plea for a “stronger Europe and a new and more just capitalism”.

The minister admitted that “many changes needed to be made to improve the functioning of the European Union and that some EU rules were outdated”. In this context, he cited the failure of the Alstom-Siemens marriage.

“France and Germany regret the decision of the Commission,” he said, adding that given the “brutality of the global economy, we want Europe and European companies to all the tools to compete and succeed…”.

Siemens and Alstom have expressed their opinions via news releases. “The two companies regret that the proposed compensatory measures, including the latest corrections, were not considered sufficient by the European Commission. They were very broad in scope and answered all the concerns raised by the Commission concerning signaling and very high speed trains”.

“In addition, many credible and well-established European players had expressed a strong interest in this package of corrective measures, thus fully confirming its viability,” explain the two companies.

They remain convinced that “the operation would have created significant value creation for the entire mobility sector, the European rail industry, customers, travelers and commuters, without harming European competition. It would have allowed the creation of a European player able to face the increasing competition from non-European companies…”.

In fact, Alstom, Siemens (Paris and Berlin) have repeatedly stressed that the purpose of this failed marriage was to create a champion able to cope with the Chinese juggernaut CRRC, the global railway specialist, they fear the arrival on their traditional markets. Alstom and Siemens Mobility account for around 8 billion euros in revenue each, CRRC between three and four times more.

But the European Commission did not seem convinced by the reality of the Chinese threat. It ruled that Alstom and Siemens would together have a dominant position in Europe in rail signaling and high-speed trains. Focusing on continued growth and based on a strategic roadmap, both groups are moving forward.

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