French-German rail merger blocked by Brussels

Alstom makes TGV high-speed trains

Brussels has knocked down a proposed French-German rail merger, designed to help Europe compete with China.

The EU's competition commission blocked the tie-up, saying uniting France's Alstom with the rail arm of Germany's Siemens would lead to higher prices.

The firms had said the merger would create an industrial champion on a par with other global players.

France's finance minister, Bruno Le Maire said the decision would "serve the interests of China".

"The Commission prohibited the merger because the companies were not willing to address our serious competition concerns," Margrethe Vestager, the European competition commissioner said in a statement.

"Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains," she added.

Siemens makes ICE trains for Deutsche Bahn and builds units for Channel Tunnel operator Eurostar. Alstom manufactures France's TGV bullet train amongst other rolling stock and signalling systems.

The tie-up would have created an entity with revenues of approximately €15bn (£13bn) with significant operations across Europe's rail network.

But China's state owned railway behemoth CRRC, the largest global player, has been competing more aggressively for overseas contracts in recent years.

Change rules

In December Alstom and Siemens submitted proposals to address the Commission's competition concerns. These included selling signalling and rolling stock products. But the measures failed to satisfy the competition authority.

But those supporting the deal, including government ministers in both France and Germany said the Commission should look beyond Europe in sectors such as transport and banking.

German Economy Minister Peter Altmaier said Berlin and Paris were working on a proposal to change European competition rules.

Siemens' chief executive Joe Kaeser said: "Europe urgently needs structural reform... protecting customer interests locally must not mean that Europe cannot be on a level playing field with leading nations like China, the United States and others."