- The Commission blocked the deal because it would reduce competition in rail signalling and high-speed trains.
- The companies argued they needed scale against Chinese competition; Brussels judged that it did not offset the harm to the market.
- Every large deal requires assessing antitrust risk: timing, conditions and alternatives if the authority says no.
On 6 February 2019, the European Commission decided to prohibit the merger of Siemens’ and Alstom’s mobility businesses, which would have created a European rail giant. Competition Commissioner Margrethe Vestager explained that, without sufficient remedies, the deal would have led to higher prices, fewer choices for customers and less innovation in signalling and high-speed trains.
The two companies had presented the merger as the necessary response to the growth of Chinese manufacturer CRRC, and the governments of France and Germany backed it. After months of investigation and an offer of concessions that proved insufficient, the Commission rejected the argument. Criticism from Paris and Berlin was immediate, opening a debate on how competition should be understood in Europe.
How a merger is controlled
When two companies merge or one acquires another, and the deal exceeds certain turnover thresholds, it must be notified to the competition authority before closing. In the European Union, deals with an EU dimension are examined by the Commission; national-dimension deals by each country’s authority, in Spain the National Commission on Markets and Competition (CNMC).
The review assesses whether the deal could significantly impede effective competition. If it finds problems, the parties can offer remedies: selling businesses, transferring assets or opening technologies to third parties. If those remedies are not enough, the authority can clear with conditions or prohibit. Prohibitions are rare, which is why the decision has been followed so closely.
What it teaches a mid-sized company
You do not need to be a global group to run into merger control. In Spain, the Competition Act requires notification when a market share of 30% or more is acquired or increased, or when combined turnover in the country exceeds certain thresholds, which in the general case stand at 240 million euros. Above those limits, the purchase cannot be carried out without authorisation.
That is why company sale agreements usually include the authority’s clearance as a condition precedent, set a long-stop date and provide for what happens if it does not arrive. It is wise to analyse market share in advance, in the relevant sector and geographic area, because a narrow definition of the market can change how the deal is assessed.
What to review
Before negotiating a purchase or a merger, it is worth asking whether the parties exceed the notification thresholds, how long the review could take and whether concessions might be needed. A realistic timetable avoids commitments that later cannot be met, such as a closing date incompatible with the authority’s deadlines.
It is also wise to plan alternatives: other structures, other buyers or a more limited cooperation agreement. In a context where more and more deals are scrutinised, having a plan B is part of good preparation, together with an adviser who knows the procedure and each authority’s criteria. Finally, merger control also applies to smaller deals, and a well-prepared notification, with verifiable market data and efficiency arguments, reduces the risk of the case dragging on longer than planned. In cross-border deals, moreover, the same purchase may require clearances in several countries on different timetables, so it is wise to coordinate the advisers in each jurisdiction from the outset.
A merger is not done until the competition authority gives its approval.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
