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DB's takeover of EWS approved

15 Nov 2007

THE EUROPEAN Commission announced on November 7 that it had granted conditional approval for Deutsche Bahn to acquire 100% of UK freight operator EWS Holdings.

In a statement welcoming the decision, EWS said 'both companies look forward to working together to develop freight in Europe', and stressed that 'the business strategy of EWS remains the same: to continue growing rail freight services through its operations in Britain and through Euro Cargo Rail in France'.

ECR is currently launching operations in Spain, and plans to expand eastwards across Europe. The significance of France is that the Commission said it 'had concerns that the proposed transaction, as initially notified, would result in France in a possible weakening of the competitive constraint exercised by EWS, a new entrant in this market'.

It explained that 'this concern was on the basis that DB may not have the same incentives to pursue the rail freight transport business in France with the same intensity as EWS would in the absence of a merger'.

To address this point, the Commission says 'DB has committed to fulfil EWS's expansion plans in the next five years through investment in key assets (locomotives) and personnel as set out in the EWS Business Plan and to deploy these in France'.

In fact, the requirement for motive power had already been met – though not announced – through an order placed with EMD for 60 Class 66 locos specifically for use by ECR to expand its business in France. The first three arrived in Rotterdam last week where they will undergo routine acceptance procedures, and the rest should be delivered during 2008.

EWS told Railway Gazette's UK newsletter Rail Business Intelligence that the locos have been ordered 'in response to customer demand for additional rail freight services in mainland Europe. Importantly, Euro Cargo Rail strongly expects that this additional traffic demand will result in volumes being transferred from road to rail, resulting in an increase in the volume of goods moved by rail in France'.

But the commitments extracted by the Commission go further in that ECR must 'provide fair and non-discriminatory access to EWS driver training schools and maintenance facilities in France for all third-party rail operators (except SNCF, the French incumbent) thereby lowering these potential barriers to entry and expansion for companies wishing to enter the French rail freight market'.