EU blocks merger deal to create European rail giant

European Union authorities on Wednesday blocked a deal to create a rail giant that could compete with China, angering France and Germany, which vowed to change the way the EU works.

The decision raised thorny questions of how to stand up to the growing economic might of China, where the government has no qualms creating state-backed monopolies.

But EU Antitrust Commissioner Margrethe Vestager kept her focus on European customers, saying the Franco-German merger would have created a near monopoly in the region, choking fair competition and leading to higher prices for travelers and companies.

"The merged company would have become, by far, the largest player in Europe," Vestager said, adding that in the rail signaling market there would have be no competition left at all.

Her office is tasked with making sure that competition is fair and consumers have enough choice. In this case, the decision clashed with France and Germany's desire to counterbalance the growing economic might of China, which controls and actively supports many of its biggest companies.

Alstom is best known for making France's TGV and Siemens for Germany's ICE high-speed trains. They face growing competition from China's CRRC Corporation, which had sales of about USD33 billion last year. Alstom had USD9.4 billion and Siemens' rail unit about USD10 billion.

French Finance Minister Bruno Le Maire said Vestager's decision "will serve the economic and industrial interests of China."
Le Maire said the EU's move will "prevent Alstom and Siemens, the two champions of rail signaling and rail transport, to merge in order to have the same weight as the Chinese big industrial champion."
He called it both a political and "an economic mistake."
Vestager insisted CRRC was not an imminent threat, since more than 90 percent of its activities were still inside China. "It has had less success outside its home market."
Le Maire said that "we must look toward the future and revise the rules of European competition."
Le Maire said there would be Franco-German proposals "in the coming weeks to revise the rules of competition and enable us to have an industrial policy much more ambitious compared to our big competitors, Americans or Chinese."