The EUs strict competition rulebook is turning into a severe annoyance for German Chancellor Angela Merkel and French President Emmanuel Macron, who want the tie-up to create the rail equivalent of Airbus.<\/p>\n
The Commissions hostility exposes a deep fault line at the heart of the EU. On one side are the more protectionist national capitals that want stronger defenses against China; on the other, the more economically liberal trade and competition officials in Brussels, who dislike the concept of industrial champions<\/a>.<\/p>\n Merkel has specifically called on Brussels not to allow its competition rules \u2014 which focus on whether a merger will harm Europes market \u2014 to stand in the way of creating heavyweights that can take the battle to Asia. French Finance Minister Bruno Le Maire also insisted last week that the deal should be approved by regulators in Brussels, saying: \u201cWe need companies that have the critical scale\u201d that are able to rival Chinas CRRC rail behemoth.<\/p>\n Lack of competition could ultimately lead to less innovation, and higher prices for passengers and cargo.<\/p>\n<\/blockquote>\n \u201cMore than the economics, this merger has to be seen as a wedding between France and Germany in a period where there are several risks to European unity,\u201d said Florent Laroche, an economics professor at the University of Lyon. \u201cIs it protectionist to improve the performance of our industry in the international market?\u201d<\/p>\n The problem for Paris and Berlin is that European Commissioner for Competition Margrethe Vestager sees a danger that a tie-up between Alstom and Siemens dramatically reduces the number of manufacturers from which European rail networks can buy their trains and signals. That lack of competition could ultimately lead to less innovation, and higher prices for passengers and cargo. She suspects that one mammoth-sized rail company in Europe could also be less competitive on a global scale.<\/p>\n As she puts it: \u201cThe champions Europe needs are not coddled favorites, freed from the need to compete within Europe.\u201d<\/p>\n Two people familiar with the case told POLITICO this week that Vestagers department reached a preliminary conclusion that the Alstom-Siemens tie-up is \u201cincompatible\u201d<\/a> with the internal market. Her statement of objections to the deal strongly suggests the two companies will have to make major divestments to secure approval in areas including high-speed trains, regional networks, signals and metros.<\/p>\n EU Commissioner for Competition Margrethe Vestager | Olivier Hoslet\/EPA<\/p>\n In recent days, Siemens Chief Executive Joe Kaeser has vented an unexpected level of frustration with the EU, and even went so far as to express a potential need to establish a \u201cGermany first\u201d strategy.<\/p>\n\n
![](\"https:\/\/www.politico.eu\/wp-content\/uploads\/2018\/07\/h_54059903-714x481.jpg\"\/)
<\/p>\n
![](\"https:\/\/www.politico.eu\/wp-content\/uploads\/2018\/11\/GettyImages-1034240940-714x476.jpg\"\/)
<\/p>\n