Hitachi Rail has agreed to sell part of its mainline signalling business to address competition concerns surrounding a £1.4 billion merger with Thales Ground Transportation.
It means the mega-merger can go ahead, following an in-depth investigation by the Competition and Markets Authority (CMA).
The CMA was concerned about the merger’s impact on the rail signalling market because both companies are major suppliers of signalling systems for mainline and urban railway networks.
The CMA found Thales and Hitachi were both well-placed to supply these systems and, should the merger go ahead without this concession, few credible competitors would remain.
In response to the findings, Hitachi agreed to sell its existing mainline signalling business in the UK, France, and Germany, which the Group considers to be an “effective and proportionate remedy”.
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.
“Effective signalling is vital for safe and reliable rail travel, which is why it has been important for us to review this merger thoroughly before reaching a final decision,” said Stuart McIntosh, chairman of the CMA independent Inquiry Group.
“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.”
A Hitachi Rail spokesperson added: “Having gained clearance from the CMA, we are now focused on achieving the final anti-trust clearance from the European Commission.
“We believe strongly in the competitive benefits of the deal to acquire Thales’ Ground Transportation Systems, which will deliver value for customers in the rail signalling and mobility sectors in Europe and around the world.”
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