Hitachi Rail disappointed on CMA merger investigation

merger with Thales Hitachi Rail is “disappointed” by findings of the provisional investigation of the UK’s Competition and Markets Authority (CMA) related to the merger with Thales and says that it will examine the concerns.

“We are disappointed by the CMA’s provisional findings and will now closely examine how we can respond to the concerns raised. Hitachi remains of the firm view that the merger will not substantially lessen competition for UK signalling projects,” a Hitachi Rail spokesperson said.

The Japanese company will review the proposed provisional findings “as a matter of absolute priority and we remain committed to addressing the CMA’s concerns through a cooperative approach. Our focus now is to find the best potential mitigations and an appropriate way forward.”

For the merger with Thales, Hitachi says that the regulatory approvals are secured “all other relevant jurisdictions except the EU, where we are making good progress towards securing clearance from the European Commission this summer. This merger will be good for competition and benefit customers in the UK and internationally.”

Following a provisionally investigation, on June 8, 2023, the British Competition and Markets Authority (CMA) has announced that this transaction could result in fewer choices and options for Network Rail and TfL, which are investing million of euros to maintain and upgrade the signalling systems.

The authority says that the “should the merger go ahead, there would be fewer credible bidders remaining for digital mainline signalling tenders, which could raise costs for Network Rail and negatively impact the digitalisation of the UK’s rail network.

In august 2021 Hitachi Rail agreed to acquire Thales’ Ground Transportation Systems business at EUR 1.66 billion. With the complementary strength of GTS’s signalling activities, and rapid growth in MaaS and digitisation in the rail sector, GTS will help Hitachi Rail to potentially reach EUR 7.7 billion revenue and double-digit adjusted operating income ratio by FY2026, or around four years from closing.

In December 2022, the two companies made substantially progress towards the completion of the merger including the necessary approvals. Hitachi Rail is currently in discussion with the European Commission’s Directorate-General for Competition (DG Competition) with a view to securing approval of the transaction in the European Union. ​

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