EU's Competition Authority Blocks Siemens-Alstom Rail Merger

  By Valentina Pop and Emre Peker

BRUSSELS--The European Commission on Wednesday blocked a planned merger between the rail units of Germany's Siemens AG (SIE.XE) and France's Alstom SA (ALO.FR), a move critics said would hamper Europe's ability to compete with China.

The commission, the European Union's antitrust authority, has long been skeptical about the deal, arguing that it would damage competition. A merger would lead to higher prices in signaling systems and the next generation of high-speed trains, the EU said.

The Franco-German plans--which would have created a European rail giant with combined revenues of roughly 15 billion euros ($17 billion)--had the support of French President Emmanuel Macron, who had said it would create the rail equivalent of European aircraft maker Airbus SE (AIR.FR).

But national authorities from Germany to the U.K. sided with the commission, countering political arguments in favor of creating a "European champion" and stressing the need for healthy competition within the bloc's massive market.

"Siemens and Alstom are both champions in the rail industry," European Competition Commissioner Margrethe Vestager said. "The commission prohibited the merger because the companies were not willing to address our serious competition concerns."

Berlin and Paris have in recent weeks criticized the EU's "obsolete" competition rules that in their view hamper the bloc in standing up to China's increasingly aggressive economic policies. French Finance Minister Bruno Le Maire said told France 2 television Wednesday morning that the EU's decision will serve Chinese interests, slamming the merger ban as an economic and political mistake.

"Europe urgently needs structural reform in the way it shapes its industrial future in a globally connected world," Siemens President and Chief Executive Officer Joe Kaeser said in a statement. "Protecting customer interests locally must not mean that Europe cannot be on a level playing field with leading nations like China, the United States and others."

Alstom didn't immediately respond to the decision.

Write to Valentina Pop at valentina.pop@wsj.com and Emre Peker at emre.peker@wsj.com

(END) Dow Jones Newswires

February 06, 2019 06:16 ET (11:16 GMT)

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