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EC approves DB’s takeover of Arriva

11 Aug 2010

EUROPE: The European Commission announced on August 11 that it had ‘approved under the EU Merger Regulation (EC 139/2004) the proposed acquisition of rail and bus operator Arriva plc of the UK by Deutsche Bahn’. However, the decision is conditional upon DB’s commitment to divest all of Arriva’s rail and bus activities in Germany.

Subject to this commitment, the Commission concluded that ‘the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it’. Vice-President in charge of Competition Policy Joaquín Almunia said ‘the Commission is open for cross-border integration in the newly-liberalised transport markets, provided that such transactions do not in any way reduce competition, in particular in the home market of the acquirer. The divestiture of Arriva Deutschland will ensure that competition in the German rail and bus markets keeps on developing as intended by EU legislation.’

Formally notified of the transaction on June 22, the Commission investigated the rail and bus passenger markets and rail freight markets in several member states, notably Denmark, the UK and Germany. This identified competition concerns in the German rail and bus sectors, where DB holds very substantial market shares and Arriva Deutschland has become ‘one of the major competitive forces’. But the Commission believes the proposed divestment will ‘fully remove the overlap in a clear manner’.

Welcoming the announcement, Arriva told the London Stock Exchange that Court hearings ‘to sanction the Scheme and confirm the associated reduction in capital’ would take place on August 24 and 26. Subject to the ‘satisfaction or waiver’ of any remaining conditions, the takeover will become effective on August 27.