Vossloh DE18 locomotive, source: Vossloh

CRRC gets green light to purchase Vossloh Locomotives

Chinese rolling stock giant CRRC has received a green light for purchasing Vossloh Locomotives, the rolling stock unit of Vossloh Group. The deal approval was issued by German competition regulator Federal Cartel Office. With the acquisition of Vossloh Locomotives, the Chinese company will strengthen its position in the European rail market.

Vossloh Locomotives is a Germany-based subsidiary of Vossloh Group focused on the manufacture of the shunting locomotives. It is considered as the European leader in producing the diesel-powered shunters. However, the company has been suffered from competition with major rolling stock manufacturers such as Alstom or Stadler Rail when they entered the market of shunting locomotives with more innovative vehicles. As a result, Vossloh Group decided to divest its locomotive business. In August 2019, CRRC Zhuzhou Locomotive, a subsidiary of China Railway Rolling Stock Corporation (CRRC), declared its intention to buy this asset. The deal must be approved by the antitrust authorities, and now the Chinese company has got a green light.

The Federal Cartel Office of Germany (Bundeskartellamt) published on Monday, 27 Monday, its positive decision regarding the deal. “Possible state subsidies, the availability of technical and financial means and strategic advantages from other shareholdings were considered in the competitive assessment of the merger,” Andreas Mundt, President of the Bundeskartellamt, explained the approval of this deal.

Effective competition?

At the same time, many European railway lobby organisations have expressed their concerns regarding the merger of CRRC and Vossloh Locomotives. For instance, the Association of the European Rail Industry (UNIFE) noted that this deal could create a lot of opportunities for CRRC in the European rail market without a level-playing field for the European counterparts in the Chinese market. “It is crucial for the European Union to rise to this challenge and immediately ensure the conditions for open but fair trade relations between the EU and China in the rail sector,” UNIFE warned the European institutions.

However, the Federal Cartel Office of Germany thinks otherwise. “Based on our investigations, we were able to exclude a considerable impairment of competition on the European shunter market as a result of the merger. Although the Chinese state strongly protects CRRC, which plays a key role in as many as two of its strategic plans, namely “Made in China 2025” and the “Belt and Road Initiative”, this case shows that while Chinese state-owned companies enter markets with substantial economic power, this does not necessarily pose a threat to effective competition,” Andreas Mundt added.

Author: Mykola Zasiadko

Mykola Zasiadko is editor of online trade magazines RailTech.com and RailFreight.com.

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