The Britain’s Competition and Markets Authority (CMA) has approved Hitachi’s EUR 1.7 billion proposed purchase of Thales Ground Transportation (GTS) business following an in-depth investigation.
The CMA’s independent Inquiry Group concluded that the merger would give rise to competition concerns regarding the supply of digital mainline signalling systems which are being used increasingly on the country’s main railway networks. The group found that Thales and Hitachi are both well placed to supply these systems and that, should the merger go ahead, few credible competitors would remain.
In response to the CMA’s findings, Hitachi has offered to sell its existing mainline signalling business in the United Kingdom, France, and Germany. The group will need to approve the purchaser and Hitachi’s key customers in these countries will also need to agree to the transfer of the relevant signalling contracts. The group considers this to be an effective and proportionate remedy, which will preserve competition and ensure customers, such as Network Rail, will not be negatively affected by the merger.
The authority says that there are no longer competition concerns regarding the supply of Communications Based Train Control (CBTC) signalling systems which are used on urban rail networks, such as the London Underground. The group concluded that, while Thales is an important supplier to the London Underground – the only urban rail network in Great Britain with plans to carry out new CBTC projects in the foreseeable future – Hitachi would be unlikely to meet TfL’s requirements for these projects.
“We have concluded that the merger will not reduce competition to provide CBTC signalling systems, and in particular those required on the underground network in London. The picture is not the same for digital mainline signalling. To address our concerns here, Hitachi is selling part of its existing mainline signalling business to an independent purchaser. This will protect competition, which is key to keeping costs down, maintaining high quality of service and promoting innovation,” Stuart McIntosh, chair of the independent Inquiry Group, said.
The acquisition of Thales Ground Transportation (GTS) is also being investigated by the European Commission.