October 23, 2018 / 4:54 PM / a month ago

Siemens, Alstom to face EU antitrust warning about rail merger: source

BRUSSELS (Reuters) - Siemens and Alstom will receive a warning this week from European Union antitrust regulators that their plan to create a Franco-German rail champion will hurt competition, a person familiar with the matter said on Tuesday.

The headquarters of Siemens AG is seen before the company's annual news conference in Munich, Germany, November 9, 2017. REUTERS/Michael Dalder

The European Commission, which opened a full-scale investigation into the deal in July, will send a statement of objections or charge sheet setting out its concerns about specific areas, the person said, though it is possible the timetable for doing so could slip to next week.

The move will force Siemens and Alstom to come up with specific concessions, which may include asset sales, to address the problematic areas singled out by the Commission.

Companies usually have several weeks to respond to the charge sheet and offer concessions or the deal will be blocked.

The EU competition enforcer had previously flagged worries about reduced competition in the supply of some types of trains and signaling systems and higher prices as a result of the companies’ plan to merge their rail operations.

It also said the combined company would be three times as big as its closest rival, while new players are unlikely to emerge to challenge Siemens and Alstom.

The Commission declined to comment.

Alstom said: “We have not received any statement from the Commission at this point. We have no further comment.”

Siemens did not immediately respond to a request for comment.

German industrial group Siemens and French rival Alstom announced the planned rail merger in September last year, backed by French President Emmanuel Macron but criticized by opposition politicians amidst fears of French loss of control of the TGV high-speed train.

Siemens makes ICE high-speed trains. Rivals say the dominant market power of the combined company could shut them out of the European market.

The deal is so complex that the Commission has sent more than 150 questionnaires to rivals and customers seeking their feedback.

The Commission has set a Jan. 28, 2019 deadline for completing its in-depth investigation.

Reporting by Foo Yun Chee; Editing by Adrian Croft

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