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Alstom and Siemens have been neck and neck competitors for years, not just in the UK but also in the wider European market. Today, the two companies are interchangeably chosen as primary or secondary contractors for almost all contracts in the UK.

According to ORR, the two companies’ combined buying powers account for 93% of Network Rail’s major signalling spend for the 2016-2017 period; Alstom and Siemens were primary and secondary contractors for six out of eight contracts.

“If you look at all of the procurements that have happened in Great Britain going back a reasonable period of time,” says Cole, “Siemens and Alstom are always there, they have a fierce competitive rivalry, and they are always there until the last two or three bidders, they ferociously litigate with each other, they are at each other’s throats. So we think this merger represents the loss of two absolutely key bidders for all of the most important competitions for rolling stock in Great Britain.”

In July this year, the two were once again amongst the final short-listed bidders for London Underground’s Piccadilly Line rolling stock contract, which was awarded to Siemens.

The companies said in a press release that “the combination of know-how and innovation power of both companies will drive crucial innovations, cost efficiency and faster response, which will allow the combined entity to better address customer needs.”

“Mobility is at the heart of today’s challenges,” Alstom’s spokesperson adds. “With two major players in a positive dynamic, this deal aims at creating a global champion that can answer these challenges, by combining two complementary activities and portfolios, with reinforced capacity in digitalisation and innovation to bring value to customers worldwide.”

However, critics and regulators have disputed claims that the merger would spur innovation, arguing that it would instead drive up prices.

“The fact of the matter is we think the merged party will have the power to charge a lot more money, because it won't face any competition from anyone else,” Cole says.

For the most part, mergers are dealt with by the Competition and Markets Authority. Because a merger of this nature seldom takes place in the rail supply chain, the ORR hasn’t felt inclined to intervene in quite a while.

“I think that shows the gravity of our concern about this,” Cole says.

And while the Alstom-Siemens combination is a pan-European merger, ORR analysis into its impacts has shown that the UK market will be particularly affected and therefore bear the brunt of the consequent loss of competition.

For example, Network Rail is almost the sole buyer of signalling works and projects in the country. Post-merger, the two companies would control at least 75% of the market, if not more.

“Whilst this is not a direct increase in charges to passengers, undoubtedly the increase in price for these products will make its way onto fares, or the taxpayer, one way or the other,” Cole says.

Threats posed by Chinese rolling stock manufacturer CRRC were cited as a primary reason behind the merger. The company is one of the world’s biggest rolling stock suppliers, ranking 318^th in last year’s Fortune Global 500 list. Its railway equipment business includes locomotives, passenger carriages, freight wagons and track engineering machinery.

But CRRC’s forays into the UK market have been modest. The company won a contract with London Underground for 71 engineering wagons in April last year, its first and so far only contract on British soil. The rest of its revenues (90%) were made up from contracts in mainland China.

“CRRC has made almost no traction in Great Britain whatsoever, very limited traction in Europe, and to suggest they are going to be some great competitive force within the short to medium term, we think it's both hypothetical and very speculative indeed,” Cole says.

The company was not invited to bid for the HS2 contract, which he argues is “a good barometer” to demonstrate that the Chinese company is not the great potential threat that the proponents of the merger suggest it might be.

The European Commission will publish its objections to the merger in September, and the parties will then be given a chance to further support their case.

“We will continue to work closely and constructively with the European Commission to explain the rationale and the benefits of the proposed combination, as well as the complex dynamics of the relevant markets, and confirm that the transaction is still expected to close in the first half of 2019,” the spokesperson says.

The investigation will conclude in December, at which point the Commission could block the merger entirely if it is deemed to have a significant adverse effect on competition, or it can instead request the two companies put in place remedies, something that the ORR supports. “What we are asking the Commission is to ensure that if this merger does go through, strong remedies are put in place which will protect competition in Great Britain,” Cole says.

“At this stage we think those remedies are likely to be structural ones, so some kind of asset divestiture, and certainly some kind of remedies over the intellectual property that the parties hold, which is a key reason for their market priority.”