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EU torpedoes plan to create European rail giant to compete with China

The European Commission today said it was opposed to a plan to create a European railway giant by the merger of Alstom of France and Siemens of Germany.

The goal was to create a company able to compete in European and global markets with China Railroad Rolling Stock (CRRC), itself the result of a merger between two Chinese companies.

Bruno Le Mayor, France’s finance minister, called the decision an "economic error" that "would serve the interests of China". He pointed out that CRRC makes 200 high-speed trains each year whereas Siemens and Alstom produce 35.

The merger, which was announced in September 2017, has been vetoed by Margrethe Vestager, the commissioner for competition, on the grounds that it would decrease competition within the European single market and push up prices throughout the sector.

The decision has led to a pushing contest between Jean-Claude Juncker, the President of the Commission, and the French and German governments. Juncker defended Ms Vestager and the commission’s competition policy yesterday in a speech in Brussels, saying "we will never do politics or favouritism when it comes to ensuring a level playing field".

Sebastien Lecornu, France’s communities minister, said the French and German governments would support the two companies if they decided to appeal, and promised to "fight to change the rules of European competition". On the other side of the Rhine, Peter Altmaier, the German economics minister, called for a revision of European competition law to allow the formation of "European-scale" companies able to compete on world markets.

The two governments have been hoping to contest the global rise of CRRC, which is by far the largest train maker in the world, with more than 180,000 employees.

The decision was, however, welcomed by unions, which had opposed the merger on the grounds that it would lead to job cuts. Marine Le Pen, leader of the National Rally party (formerly the National Front) also welcomed the decision, which she said amounted to the French government "donating" Alstom to Siemens.

Image: One of Alstom’s Eurostar 373s in London (Valentin Bech/CC BY-SA 3.0)

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