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Rail watchdog warns signalling firms' mega-merger could erase competition

Siemens

A merger between Siemens and Alstom has come under fire from the Office for Rail and Road (ORR), which has warned it could cost “tens of millions of pounds” in reduced competition.

Engineering firms Siemens and Alstom are both major players in the railway signalling and rolling stock industries. According to the watchdog, if the two firms merged they would eat up around 75% of the British railway signalling market.

For HS2’s £2.75bn rolling stock tender, Siemens and Alstom accounted for two out of the five bidders.

The ORR fears any merger would have “significant detrimental impact” on competition, which could lead to significantly higher costs in signalling and rolling stock for Network Rail.

On Friday the European Commission announced it had opened an in-depth investigation into Siemens’ proposed buyout of Alstom, citing concerns over competition if the two signalling giants merged.

The ORR has backed the move and said it would work closely with the European Commission to make sure UK taxpayers’ concerns are considered.

ORR chief executive Joanna Whittington said: “Competition in the supply chains which support Great Britain’s railway is essential if passengers and taxpayers are to receive a high quality service at an efficient cost.

“We are concerned that the proposed merger of Siemens and Alstom will significantly reduce competition, leading to increased costs in Britain’s railway signalling and rolling stock markets.

“That is why we are setting out strong arguments to the European Commission and pressing for significant structural remedies to ensure competition in key railway supply chains is protected.”

A spokesperson for Siemens said both companies believe the proposed merger will deliver substantial value for the mobility sector. The merger is still expected to take place in the first half of 2019.

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