Siemens, Alstom rail merger troubles the ACCC

Siemens, Alstom rail merger troubles the ACCC

The ACCC has expressed preliminary concerns about the proposed merger of Siemens A.G.’s (Siemens) Mobility Division with Alstom S.A. (Alstom), which are detailed in a Statement of Issues published today.

“A combined Siemens-Alstom would be by far the largest supplier of heavy rail signalling in Australia,” ACCC chairman Rod Sims said.

The ACCC’s review has focused on signalling systems for heavy rail passenger networks, particularly train interlocking systems and automatic train protection (ATP) systems. Signalling systems provide safety and traffic management controls on rail networks. Interlockings are the core of a signalling system; they set routes for the safe movement of trains across railway lines. Train protection systems ensure that trains comply with movement authorities issued by the interlockings.

“The ACCC’s preliminary view is that the proposed merger may substantially lessen competition in the supply of heavy rail signalling systems for passenger rail networks in Australia, in particular interlocking systems and ATP systems. The loss of competition could result in increased prices for customers, or lower levels of service, quality, or innovation,” Mr Sims said.

“We have heard from many industry participants who have expressed competition concerns with the merger. We will continue to evaluate the competitive options available to passenger rail networks in Australia.”

The proposed merger is also being reviewed by overseas competition regulators, including the European Commission.

“The ACCC is liaising closely with overseas competition regulators, as some of these potential competition issues may also arise in other countries,” Mr Sims said.

The ACCC has invited further submissions from interested parties in response to the Statement of Issues by 20 September 2018. The ACCC’s final decision is due on 29 November 2018.

Background

Siemens is a listed German conglomerate headquartered in Munich. Its Mobility Division is one of eleven business divisions. Siemens acquired signalling supplier Invensys Rail in 2013 and Perth-based MRX Technologies in 2017.

Alstom is a French société anonyme listed on the Euronext Paris stock exchange. In 2015, Alstom acquired GE’s signalling business.

Siemens and Alstom are both active in the rail mobility industry globally and each supplies rail signalling systems, rolling stock and rail electrification services in Australia. The key area of overlap between the parties in Australia is in the supply of rail signalling systems.

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