EC opens in-depth investigation into Wabtec’s proposed takeover of railway equipment manufacturer Faiveley
The European Commission has opened an in-depth investigation to assess whether the proposed acquisition of Faiveley Transport of France by Westinghouse Air Brake Technologies Corporation ("Wabtec") of the US is in line with the EU Merger Regulation.
The Commission has concerns that the proposed takeover may reduce competition for railway equipment systems and subsystems in the European Economic Area ("EEA").
The opening of an in-depth inquiry does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 20 September 2016, to take a decision.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Millions of Europeans rely on trains every day to commute between work and home. Europe is also home to many manufacturers of locomotives and other rolling stock. The Commission must make sure that Wabtec’s takeover of Faiveley does not restrict effective competition and lead to less innovation in this technology-driven market, or to price increases for manufacturers, train operators and ultimately passengers."
Commission's competition concerns
The Commission has preliminary concerns regarding a number of markets for railway equipment systems and subsystems, in particular, in respect of the supply of complete brake systems and various brake components, such as friction materials, as well as pantographs.
These markets have high entry barriers due to the important technical and regulatory requirements applicable to safety-critical train equipment, such as brake systems. Significant investment in research and type approval of new products is therefore required to enter or quickly expand in these markets.
The Commission's initial investigation has shown that the proposed merger would remove a significant competitor from an already concentrated market. Wabtec and Faiveley are two of the world's largest manufacturers of various railway equipment systems and subsystems such as train brakes, doors and air conditioning systems, together with Knorr-Bremse of Germany.
At this stage, the Commission has concerns that the remaining manufacturers would be unable to sufficiently compete with and constrain the merged entity to ensure continued innovation and avoid price increases for customers.
The Commission will now investigate in-depth the proposed transaction to determine whether these initial concerns are confirmed.
The transaction was notified to the Commission on 4 April 2016.
Companies and products
Wabtec is a US-based company active worldwide in the production and supply of various railway equipment such as complete brake systems and their subsystems and pantographs. The company has a number of subsidiaries in the EEA such as Poli, MZT, Brecknell Willis and Stemmann-Technik.
Faiveley is a France-based company active worldwide in the production and supply of various train equipment including also complete brake systems and their subsystems and pantographs.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to the current transaction, there are three other on-going phase II merger investigations:
- The proposed joint venture between the telecommunications activities of Hutchison and VimpelCom in Italy, with a decision deadline on 18 August 2016;
- The proposed acquisition of Arianespace by Airbus Safran Launchers (ASL), with a decision deadline on 10 August 2016; and
- The proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR.
Latest News from
Coronavirus: Commission strengthens preparedness for future outbreaks16/07/2020 16:43:00
The Commission yesterday presented immediate short-term measures to strengthen EU health preparedness for COVID-19 outbreaks.
Coronavirus global response: EU Humanitarian Air Bridge to Haiti and new funding16/07/2020 16:08:00
As part of the EU's global coronavirus response, an EU Humanitarian Air Bridge flight will depart today from Liège, Belgium, to Port-au-Prince, Haiti.
Statement by Executive Vice-President Margrethe Vestager following the Court judgment on the Apple tax State aid case in Ireland16/07/2020 15:25:00
Statement given yesterday by Executive Vice-President Margrethe Vestager following the Court judgment on the Apple tax State aid case in Ireland.
Remarks by Vice-President Margaritis Schinas and Commissioner Stella Kyriakides at the press conference on preparedness for future possible outbreaks of COVID-1916/07/2020 14:43:00
Remarks by Vice-President Margaritis Schinas, 15 July 2020.
Public consultation: Commission seeks citizens' views in preparation of new European Democracy Action Plan16/07/2020 13:25:00
The European Commission yesterday launched a new public consultation to gather the views of citizens on the future European Democracy Action Plan.
Covid-19: how the EU fights youth unemployment16/07/2020 11:33:00
Youth unemployment remains a key concern in the wake of the coronavirus crisis. Find out more about an EU initiative to help young people find work.
Citizens call for a bigger EU budget to tackle crisis, new survey shows16/07/2020 10:38:00
A majority (56 %) says the EU should have more financial means to overcome the impact of the pandemic. Public health tops the priority list, with economic recovery and climate change.
COVID-19: EU must step up efforts to tackle medicine shortages16/07/2020 09:25:00
The Environment, Public Health and Food Safety Committee calls for more EU self- sufficiency and better-coordinated strategies to tackle medicine shortages.
Vaccine against COVID-19: Council adopts measures to facilitate swift development15/07/2020 16:33:00
The Council yesterday adopted a regulation which aims to speed up the development and the deployment of a vaccine against COVID-19 in the EU.