The EU’s powerful anti-trust sheriff, Margrethe Vestager, vetoed the merger of the Siemens-Alstom rail businesses on Wednesday, in defiance of France and Germany.
The tie-up, announced to great fanfare in 2017, had been hailed as the birth of a much needed European industrial champion, an Airbus for the railways to face down a formidable Chinese rival.
But, after months of investigation and a rejected offer of concessions from the companies, the European Commission in a rare move knocked back the proposal.
“The Commission prohibited the merger because the companies were not willing to address our serious competition concerns,” Vestager said in a statement.
“Without sufficient remedies, this merger would have resulted in higher prices for the signalling systems that keep passengers safe and for the next generations of very high-speed trains,” she added.
The heavily expected veto has infuriated Paris, where ministers lobbied hard for the tie-up, seeing it as a necessary defence to compete against China’s state-backed CRRC.
French Finance Minister Bruno Le Maire termed the refusal “an economic mistake”.
Such a decision “will serve the interests of China,” he told France 2 television.
Competition authorities in Britain, the Netherlands, Belgium and Spain have all firmly backed Vestager, afraid of increased costs for their national railways.
But backers of the tie-up wanted Vestager to look beyond Europe to the rise of CRRC, itself born of a merger of Chinese companies, before it is too late.
“Aren’t there areas such as aviation, railways, banks where you have to take the global market as a reference rather than the European one?” pleaded German Economy Minister Peter Altmaier on Tuesday.