The deal between two pillars of French and German industry has pitted Brussels’ strict competition rules against the push among member states to create regional champions to rival state-backed Chinese companies.
Margrethe Vestager, the EU’s competition commissioner has acknowledged the economic challenge posed by China, but concluded the Chinese would not be selling trains anytime soon in Europe.
The Danish commissioner was preparing to block the Franco-German merger in line with the bloc’s strict antitrust rules after the companies’ original offer to sell some assets was judged insufficient by customers, rivals, regulators and other market participants.
On Friday, the companies sent a revised proposal to EU antitrust officials. The new proposal extended the European license for Siemens’ new Valero high-speed train technology to ten-years and added some additional signalling assets, according to people familiar with the case.
There are a number of potential buyers for the assets, with one European company interested in purchasing the entire package, according to people familiar with the case. A single purchaser is often preferred by the EU watchdog as it is more likely to quickly create a viable rival.
The companies declined to comment. The Commission said its investigation was ongoing and acknowledged receipt of the revised offer. EU rules require that offers received this late must fully and unambiguously resolve competition concerns identified.
Last week Ms Vestager said that at this late stage in the process, any new offer “would have to be very blunt in remedying concerns” as there is no time to check with market participants to see if it was sufficient.
Even the German national competition authority, the Bundeskartellamt echoed Ms Vestager’s concerns about the deal and the earlier insufficient asset sales offered by the companies.
Politicians in Berlin and Paris have strongly supported the tie-up, arguing Ms Vestager should overlook “obsolete” antitrust rules in light of the rising threat from Beijing-backed companies, built on strong industrial policy and protected access to their huge domestic market.
Ms Vestager has defended the antitrust rules and has a few days to evaluate the new offer before finalising her decision early next week. The Dane will the discuss her conclusion with the 28 national antitrust authorities before the end of the month and with the other 27 EU commissioners shortly afterward.
It would be almost unprecedented for either the national antitrust officials or the commissioners to seek to overturn the Ms Vestager’s recommendation on the case.
The EU’s final decision must be announced before 18 February.
Joe Kaeser, chief executive of the German industrial group said his “working hypothesis is that we are going to make this (deal) work” in a Bloomberg TV interview last week in Davos.
“If it doesn’t work we have options. We need to move on. We have the best mobility company in the world by profitability,” said Mr Kaeser.
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