EUROPE: The European Commission has approved Hitachi Rail’s proposed €1·66bn acquisition of Thales’ Ground Transportation Systems business, subject to agreed divestments to preserve competition in the signalling market.
The announcement on October 30 means the deal has now been cleared by all 13 competition authorities which reviewed it. Welcoming the news, Thales said it expected the transaction to be completed in the first half of 2024.
The Commission’s investigation found that the transaction as initially notified would have produced a merged entity with a very high share of the markets for main line signalling projects in France (including interlockings, overlay and resignalling projects) and Germany (including overlay and resignalling projects). This would have reduced competition and potentially led to higher prices and less innovation.
To address these concerns, Hitachi Rail offered to divest its interlocking, overlay and resignalling activities in France and Germany.
The Commission agreed that the proposed mitigations would ‘fully address’ its concerns and preserve competition, adding that the purchaser would be able to run the divested business as a viable competitive force. The Commission said it would closely monitor the divestment process, and would have to approve the purchaser.
‘Hitachi and Thales are close competitors in main line signalling, notably in France and Germany’, explained Didier Reynders, who recently took over from Margrethe Vestager as Commissioner in charge of EU competition policy. ‘The divestiture of their activities in these countries will preserve competition and ensure that infrastructure managers, and ultimately customers, do not face increased prices, lower quality and less innovation.’
Hitachi Rail has also committed to divest its main line signalling business in the UK to address concerns raised by the UK’s Competition & Markets Authority.
The company said both divestments would be undertaken in accordance with all relevant processes and in consultation with the affected employees and their representatives.
