Germany’s Federal Cartel Office, Bundeskartellamt, has approved the CRRC-Vossloh Locomotives acquisition, explaining that the existing concerns were not reason enough to justify prohibiting the merger project and the planned acquisition had to be cleared in the end.
During the assessment of CRRC-Vossloh Locomotives acquisition, all the particularities associated with the process acquisition of a European company by a Chinese state-owned company were considered. Possible state subsidies, availability of technical and financial means and strategic advantages from other shareholdings were among most important elements which were evaluated under the approval process. “We also looked into the threat of low-price and dumping strategies and the cost advantages resulting from CRRC’s state-subsidised activities in many other markets. CRRC plays an important role in China’s industry strategies,” said Andreas Mundt, President of the Bundeskartellamt.
When examining the merger, Bundeskartellamt considered several particularities. Vossloh’s strong market position on the one hand and CRRC’s still very weak position on the European market on the other hand made it difficult to assess the participation of Chinese state-owned companies in the context of merger control. The authority’s assessment also considered CRRC’s vast technological resources. According to a survey conducted by the Bundeskartellamt, the European competitors expect the merger to distort the competition.
Vossloh Locomotives’ competitiveness has suffered considerably over the last few years and its parent company Vossloh AG decided to sell the company in 2014. Since then, established rail technology manufacturers like Alstom, Stadler, and Toshiba have entered the European market with innovative traction technologies and now also offer shunters. The market for rolling stock technology is changing towards hybrid traction systems and dual mode locomotives which can be powered by both diesel engine and electricity from overhead wires. The target company Vossloh Locomotives currently does not offer such locomotives and has lost competitive strength as a result.
CRRC has been striving to enter the European markets for rail vehicles for years, but its intention faced limitations on the European market. It provided some shunters to Deutsche Bahn for suburban trains in Hamburg and Berlin and to ÖBB’s Hungarian subsidiary, Rail Cargo Hungaria.
Following the assessment, Bundeskartellamt concludes that “CRRC is not a close competitor of Vossloh in Europe.” “Based on our investigations, we were able to exclude a considerable impairment of competition on the European shunter market as a result of the merger. Although the Chinese state strongly protects CRRC, this case shows that while Chinese state-owned companies enter markets with substantial economic power, this does not necessarily pose a threat to effective competition,” Andreas Mundt said.
By this acquisition, CRRC Zhuzhou Locomotives will benefit from Vossloh’s expertise as an established manufacturer in the future. Vossloh Locomotives is the market leader for the manufacture of diesel-powered shunters in the EU and in Switzerland. Vossloh Locomotives employs about 500 people and achieved a turnover of more than EUR 100 million in 2019.