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European Commission rejects Siemens-Alstom rail merger

AFP file photo

European Union authorities on Wednesday rejected a massive rail merger deal between France's Alstom and Germany's Siemens in what the two nations had hoped would have created a global competitor to stand up to China.

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EU Antitrust Commissioner Margrethe Vestager said it would have created a near monopoly in the European market, choking fair competition and leading to higher prices for passengers.

In her decision, she withstood political pressure from the EU's two most powerful nations.

"The Commission prohibited the merger because the companies were not willing to address our serious competition concerns," she said.

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Alstom is best known for making France's TGV and Siemens for Germany's ICE high-speed trains. They also make rail signaling systems.

Blocking mergers is rare for the EU antitrust office. In three decades, the EU approved more than 6,000 deals and banned less than 30.

France condemned the decision even before the official announcement, with Finance Minister Bruno Le Maire saying earlier Wednesday that Vestager's decision "will serve the economic and industrial interests of China."

France and Germany wanted to create a European rail giant that could compete with China's state-controled giant CRRC.

Le Maire said the EU's move will "prevent Alstom and Siemens, the two champions of rail signaling and rail transport, to merge in order to have the same weight as the Chinese big industrial champion."

He called it both a political and "an economic mistake."

"It's going to serve China's economic and industrial interests," he said.

Le Maire called for a revision of European competition rules, saying the "the pertinent market for analyzing competition is the world market and not the European market."

On Tuesday, German Economy Minister Peter Altmaier floated the same idea of giving greater weight in competition law to the global, as opposed to national or European, market.

Both the French and German governments defended the merger, but competition authorities in Britain, the Netherlands, Belgium and Spain expressed concerns that the new company would be in a dominating position that would potentially overpower smaller rail manufacturers and increase prices in the market.

(AFP)

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