September 6, 2018 / 12:19 AM / 14 days ago

Australia watchdog flags concerns on Siemens, Alstom rail deal

MELBOURNE (Reuters) - Australia’s competition watchdog raised concerns on Thursday about the planned Franco-German rail merger of Alstom (ALSO.PA) and Siemens (SIEGn.DE), which it said would create by far the largest supplier of heavy rail signalling in Australia.

FILE PHOTO: Employees work at the Alstom high-speed train TGV factory in Belfort, France, October 26, 2017. REUTERS/Philippe Wojazer

“The ACCC’s preliminary view is that the proposed merger may substantially lessen competition for heavy rail signalling projects for passenger rail networks,” the Australian Competition and Consumer Commission said in a statement.

FILE PHOTO: The headquarters of Siemens AG in Munich, Germany, November 9, 2017. REUTERS/Michael Dalder/File Photo

“The reduction in competition may lead to higher prices and/or lower levels of service to customers and/or less innovation,” it said.

The commission expects to make a final decision on Nov. 29.

It is seeking comments by Sept. 20 on the closeness of competition between Siemens and Alstom and other suppliers of signalling systems in Australia.

The watchdog also wants to know to what extent other signalling providers could enter or expand in Australia if a combined Siemens-Alstom tried to increase prices or lower service levels.

The merger was announced a year ago as Siemens and Alstom sought to stave off competition from bigger Chinese rival CRRC (China Railway Rolling Stock Corporation) and Canada’s Bombardier Transportation.

However the deal has also run into concern with antitrust regulators in Europe which said the merged company would have three times the market share of its closest rival and was unlikely to be constrained by competitors.

The companies have said they aim to close the deal in the first half of 2019.

Reporting by Sonali Paul; Editing by Shri Navaratnam and Richard Pullin

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