On July 31, 2020, the Commission conditionally approved Alstom’s acquisition of Bombardier’s rail transport division, following a Phase I investigation.[1] The Alstom/Bombardier merger is one of the first complex deals to be cleared during the COVID-19 pandemic.
Both Alstom and Bombardier are strong global players in the rail sector, which is why the parties’ activities overlapped in several relevant areas, including rolling stock and signaling. In its assessment, the Commission identified competition concerns in three areas:
- Very high-speed rolling The Commission was concerned that the combined entity would become the market leader in the EEA.
- Mainline rolling stock. The Commission was concerned that the merger would strengthen the parties’ already strong positions in the EEA in mainline rolling [2]
- Mainline signaling. The Commission was concerned that, as a result of the parties’ significant installed base of signaling systems and their largest combined operating fleet of trains in the EEA, the merged entity would have the ability and the incentive to make it more difficult for other suppliers to interface their solutions with the parties’ legacy systems and rolling stock.
To address the Commission’s concerns, the parties offered commitments in each of the three areas. In very high speed rolling stock, the parties committed to divest Bombardier’s assets currently contributing to its joint very high-speed platform with Hitachi, the “Zefiro V300.” In mainline rolling stock, the divestment package included Alstom’s Coradia Polyvalent platform, together with its production facility. Additionally Bombardier’s Talent 3 platform, and part of Bombardier’s dedicated production facility were offered.[3] In mainline signaling, the parties committed to supply their legacy solutions to their competitors in signaling, and provide necessary interfacing information and support.[4]
The Commission approval comes only 18 months after the Commission’s prohibition of the Siemens/ Alstom transaction[5], showing that mergers in the rail sector are possible.[6]
[1] Alstom/Bombardier (Case COMP/M.9779), decision not yet published.
[2] Additionally, the Commission found that in the Netherlands, the merger risked making the parties an “unavoidable supplier of legacy OBUs.” See Commission Press Release IP/19/1371 “Mergers: Commission clears Alstom’s acquisition of Bombardier, subject to conditions,” July 31, 2020.
[3] With regard to very high speed rolling stock remedies, the parties also committed to a series of measures aimed at preserving the joint bid offered in consortium by Bombardier and Hitachi to HS2 (the largest opportunity for the production of very high-speed rolling stock in Europe). See Commission Press Release IP/19/1371 “Mergers: Commission clears Alstom’s acquisition of Bombardier, subject to conditions,” July 31, 2020.
[4] As regards the Netherlands, the parties committed to the supply of legacy OBUs to the Dutch infrastructure manager, ProRail, in favor of all interested operators. See Commission Press Release IP/19/1371 “Mergers: Commission clears Alstom’s acquisition of Bombardier, subject to conditions,” July 31, 2020.
[5] Siemens/Alstom (Case COMP/M.8677), Commission decision of February 6, 2019 reported in our February 2019 Competition Law Newsletter.
[6] See Commission Press Release IP/19/1371 “Mergers: Commission clears Alstom’s acquisition of Bombardier, subject to conditions,” July 31, 2020.