Hitachi’s £1.4bn takeover of Thales’ rail signalling business won’t impact competition in the market for supplying signalling systems for the London Underground, the UK’s antitrust agency said today.
The proposed deal led the Competition and Markets Authority to raise competition concerns back in December, as Hitachi and Thales are two of the main suppliers of signalling systems for railway networks in the UK. Siemens and Alstom are the other two leading firms.
But the watchdog said new evidence had led it to reconsider previous concerns.
The CMA said it now believed that Hitachi would “not be a credible bidder” to supply communications based train control (CBTC) systems for the Tube in the “near to medium term.”
It said Hitachi was unlikely to meet TfL’s tendering requirements for two major upcoming projects on the Underground, at Bakerloo and Picadilly, and would therefore not “be a significant competitor to Thales” in the future.
As a result, the takeover would be unlikely to significantly impact competition in the market.
Stuart McIntosh, chair of the CMAs’ independent inquiry group, said “effective competition in the urban and digital mainline signalling markets is essential for ensuring the UK’s rail transport systems are efficient and reliable for passengers who rely on these services.”
“Having reviewed the additional evidence, which indicates that Hitachi is unlikely to be a credible bidder for signalling projects on the London Underground in the foreseeable future, we have provisionally concluded that the merger would not harm competition in the supply of these systems in the UK.”
McIntosh added, however, that “our provisional view that this merger raises concerns in the supply of digital mainline signalling in Great Britain, is not affected by today’s announcement.”
The CMAs’ investigation is ongoing, with a final decision set to be made by October 6.
Hitachi and Thales were approached for comment.