The Bundeskartellamt has today cleared the acquisition of Vossloh Locomotives GmbH, Kiel, by CRRC Zhuzhou Locomotives Co., Ltd., Zhuzhou (People’s Republic of China).

Andreas Mundt, President of the Bundeskartellamt: “In the present CRRC/Vossloh Locomotives merger case we very thoroughly examined all the particularities associated with the acquisition of a European company by a Chinese state-owned company. By acquiring Vossloh, CRRC takes over a key manufacturer of shunters in Europe. 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. We also looked into the threat of low-price and dumping strategies and the cost advantages resulting from CRRC’s state-subsidised activities in many other markets. CRRC plays an important role in China’s industry strategies. Furthermore, in complex vehicle approval procedures for shunters CRRC can benefit from Vossloh’s expertise as an established manufacturer in the future. However, our existing concerns were not reason enough to justify prohibiting the merger project. Vossloh Locomotives’ competitiveness has considerably decreased over the last few years and new competitors offering innovative traction technologies have entered the market. Vossloh now has several strong competitors. CRRC, on the other hand, has only been a small player on the European market so far.”

Vossloh Locomotives is the market leader for the manufacture of diesel-powered shunters in the European Economic Area and in Switzerland. The company is a subsidiary of Vossoh AG. Vossloh Locomotives employs about 500 people and achieved a turnover of more than 100 million euros in 2019.

CRRC is a subsidiary of China Railway Rolling Stock Corporation, Ltd. and the world’s largest manufacturer of rolling stock. Its activities have been focused on China so far. The CRRC group has more than 150,000 employees and operates a large number of factories in China and other countries. It achieved a turnover of 27.5 billion euros in 2018.

Several particularities had to be considered when examining the merger project. Vossloh’s strong market position on the one hand and CRRC’s still very weak position on the European market on the other hand made it difficult to assess the participation of Chinese state-owned companies in the context of merger control. CRRC’s vast technological resources were also considered in the assessment. European competitors expect the merger to distort competition, as a survey conducted by the Bundeskartellamt has shown.

The planned acquisition had to be cleared in the end. Vossloh Locomotives’ competitiveness has suffered considerably over the last few years. Its parent company Vossloh AG decided to sell the company already back in 2014. Since then, established rail technology manufacturers like Alstom, Stadler, and Toshiba have entered the European market with innovative traction technologies and now also offer shunters. The market for rolling stock technology is changing towards hybrid traction systems and dual mode locomotives which can be powered by both diesel engine and electricity from overhead wires. The target company Vossloh Locomotives currently does not offer such locomotives and has lost competitive strength as a result.

CRRC has been striving to enter the European markets for rail vehicles for years. However, its success in Europe has been limited so far. It provided some shunters to Deutsche Bahn for suburban trains in Hamburg and Berlin and to a Hungarian subsidiary of the Austrian railway company ÖBB, Rail Cargo Hungaria. CRRC is thus not a close competitor of Vossloh in Europe.

Andreas Mundt: “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.”

Further information regarding the proceedings is available in a case summary on the Bundeskartellamt’s website.