Global menu

Our global pages


European Commission prohibits two mergers on the same day

  • United Kingdom
  • Competition, EU and Trade



On 6 February 2019 the European Commission (the “Commission”) took the unprecedented step of announcing two prohibition decisions on the same day. Wieland / Aurubis Rolled Products / Schwermetall and Siemens / Alstom became just the eighth and ninth mergers to be blocked by the Commission in the last ten years, with over 3,000 approvals announced during that period. Unusually, Commissioner Margrethe Vestager also released a statement outlining the justifications behind the two prohibitions, as well as commenting more generally on the Commission’s approach towards competition and industrial policy.

In this briefing we consider what we know of the Commission’s reasoning behind the two prohibition decisions, and reflect on the broader implications for future transactions.

Wieland / Aurubis Rolled Products / Schwermetall

The proposed merger would have combined Wieland and Aurubis Rolled Products, both producers of rolled metal products which are an important input for the manufacturing of many products in the electrical engineering and electronics industries. Through the merger, Wieland would also have taken full control over Schwermetall, which manufactures and sells pre-rolled strip, a key input in the manufacturing of rolled copper products, to both Wieland and Aurubis Rolled Products, as well as to other copper manufacturers. Schwermetall is responsible for over 60% of European pre-rolled strip sales.

The Commission’s investigation showed that with regards to rolled copper products, Wieland would have market shares of more than 50% in value following the transaction, with only one other competitor with a market share above 10% remaining. For rolled copper products, the transaction would therefore have reduced the number of large suppliers from three to two in the EEA. The Commission also found that European customers could not rely on suppliers outside the EEA, with imports from outside Europe representing only 5% of EEA consumption.

With regards to pre-rolled strip, the Commission found that the merger would have eliminated the operational independence of Schwermetall in relation to its sales to third parties. Wieland’s acquisition of Aurubis’ stake in Schwermetall would have enabled Wieland to raise input costs for smaller competitors and gain access to their confidential information.

The Commission found that the remedies proposed by the merging companies failed to fully address its competition concerns on a lasting basis. While Wieland was prepared to divest two Aurubis plants that manufacture rolled copper products, it was not willing to divest Aurubis’ 50% stake in Schwermetall.

Siemens / Alstom

The proposed merger would have combined Siemens’ and Alstom’s transport equipment and services activities in a new company fully controlled by Siemens. It would have brought together the two largest suppliers of various types of railway and metro signalling systems, as well as the two largest suppliers of very high-speed trains (i.e., trains that travel at 300 kilometres per hour or more) in Europe.

The Commission’s investigation showed that the proposed transaction would have removed a very strong competitor from several mainline and urban signalling markets, and would have created the undisputed market leader in several mainline signalling markets.

For very high-speed trains, the Commission found that the proposed transaction would have reduced the number of suppliers by removing one of the two largest manufacturers of this type of trains in the EEA. The merged entity would hold very high market shares both within the EEA and on a wider market also comprising the rest of the world (except South Korea, Japan and China).

Crucially, as part of its investigation the Commission investigated the possible future global competition from Chinese suppliers outside of their home markets. With regards to signalling systems, the Commission’s investigation confirmed that Chinese suppliers have not even attempted to participate in any tender within the EEA, and as such, are not present in the EEA today. The Commission considered that it would therefore take a very long time before Chinese suppliers could become credible options for European infrastructure managers. In relation to very high-speed trains, the Commission considered it highly unlikely that new entry from China would represent a competitive constraint on the merging parties in the foreseeable future.

As in Wieland / Aurubis Rolled Products / Schwermetall, the Commission considered the remedies offered by the merging parties to be inadequate. Indeed, the final remedies offer was not made until the very last date of the Commission’s Phase II investigation. In relation to mainline signalling systems, the remedy proposed was a complex mix of Siemens and Alstom assets which failed to constitute a stand-alone and future proof business that a buyer could have used to effectively and independently compete against the merged entity. In relation to very high-speed trains, the parties offered to divest a train currently not capable of running at very high speeds.


The Commission’s approach in Wieland / Aurubis Rolled Products / Schwemetall is reflective of a traditional antitrust analysis in that the key concern was the fact that the combined market share of the merged entity would be in excess of 50% (generally considered to be the point at which a market share is in and of itself evidence of the existence of a dominant position). This case is also illustrative of the Commission’s general aversion towards transactions leading to a reduction in the number of key players in a market from three to two.

The Commissioner’s statement makes it apparent that a key consideration for the Commission was the fact that demand for the products in question will increase significantly in the coming years due to the growth of hybrid and electric cars. Electric vehicles require 40-80kg of copper (compared with the 20kg required by cars powered by a combustion engine), and copper products are also needed for charging stations. The Commission was strongly influenced by the fact that the end-market is clearly growing and will continue to do so over the coming years.

In Siemens / Alstom, a clear driver for the Commission was the insufficiency of the remedies offered by the merging parties. The parties offered a complex mixture of assets, with some assets transferred in whole or part, and others licensed or copied. Businesses and production sites would have to be split, with personnel transferred in some cases but not others. Moreover, the buyer of the assets would have to continue to be dependent on the merged entity for a number of licence and service agreements. Ultimately, the parties’ last minute offering would not have been sufficient to act as a competitive constraint on the merged entity, and the case highlights the importance of merging parties demonstrating a willingness to offer remedies that adequately address any potential competition concerns and to do so at a sensible stage in the process.

The Commission’s reasoning also illustrates the strict approach it will take towards arguments based on the competitive constraint imposed by suppliers from outside of the EEA. In order for such an argument to succeed the constraint must be of an immediate nature. The merging parties failed to convince the Commission that this was the case with potential Chinese suppliers.

The Commission’s investigation into Siemens / Alstom has been controversial in many respects, with strong intervention in favour of the transaction from the French and German governments, and clear opposition from a number of national competition authorities. The UK Competition & Markets Authority took the rare step of publicly expressing its concerns regarding the proposed transaction by way of an open letter to the Commission, a move which was no doubt driven by the ongoing HS2 tender. On the other hand, both the German and French governments emphasised the need for a so-called “European Champion” in high-speed train manufacturing. Whilst both Germany and France are said to be working on a proposal to change European competition rules to accommodate a more protectionist approach towards “European Champions”, the position of the Commission is clear – a company is not going to be competitive abroad if it does not have any competition at home, and unchallenged companies are unlikely to be innovative, flexible or efficient in the global market place.