A planned merger between Siemens and Alstom has been stopped in its tracks after EU regulators rejected the deal due to competition concerns.
The transportation giants had put forward plans to create a combined company with revenues of roughly €15bn (£13.2bn).
But the European Commission today blocked the deal, saying it would harm competition and reduce innovation in the railway market.
“Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains,” said EU commissioner Margrethe Vestager.
The two firms had offered concessions in a bid to allay competition fears, agreeing to share Alstom’s technology for 10 years in Europe instead of five.
But Vestager today said the companies “were not willing to address our serious competition concerns”.
The commission said it had received several complaints during its investigation into the proposed merger and that competition authorities in several European countries had expressed opposition.
The planned deal, which was backed by French and German ministers, would have seen the firms join forces to take on growing competition from China.
But the antitrust regulator said Chinese suppliers are not currently present in Europe and argued it will be “a very long time” before they are credible competitors.
“Siemens and Alstom regret that the remedies they offered, including recent improvements, have been considered insufficient by the EU Commission,” the companies said in a statement.
“The remedies were extensive in scope and addressed all the concerns raised by the Commission with respect to signaling as well as very high-speed trains. In addition, a number of credible and well-established European players expressed strong interest in the remedy package, thereby fully confirming its viability.”
Terence Watson, rail industry specialist at Vendigital, said: “This decision sets a dangerous precedent by allowing protectionist jurisdictional politics to affect the future of global companies.
“On paper, this merger plan might need to address some important anti-competitive questions, but this out-and-out rejection by EU commissioners is a serious overreaction.”