Hitachi Rail granted permission to acquire Thales GTS

Hitachi Rail has received approval from the UK’s Competition and Markets Authority (CMA) to purchase Thales Ground Transportation (GTS) for €1.7 billion, as reported by the railway portal Railway Supply.

The CMA conducted an in-depth investigation and concluded that the merger would raise concerns about competition in the supply of digital mainline signalling systems, increasingly used on the UK’s major rail networks.

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The group found that both Thales and Hitachi have strong capabilities in supplying these systems, and if the merger were to proceed, there would be few reliable competitors left.

In response to the CMA’s findings, Hitachi has offered to sell its existing mainline signalling business in the UK, France, and Germany. The group must gain approval for the buyer, and Hitachi’s key clients in these countries must also agree to the transfer of relevant signalling contracts.

The CMA considers this a proportionate and effective means of legal protection that will preserve competition and ensure that clients, such as Network Rail, are not adversely affected by the merger.

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The authority states that there are no longer competition issues for the supply of communication-based train control (CBTC) signalling systems used on urban rail networks like the London Underground.

The CMA concluded that although Thales is a significant supplier to the London Underground – the only urban rail network in the UK planning new CBTC projects in the foreseeable future – Hitachi is unlikely to meet TfL’s requirements for these projects.

“We have concluded that the merger will not reduce competition in the provision of CBTC signalling systems, particularly those needed on the London Underground network. The picture is different for mainline digital signalling. To address our concerns, Hitachi is selling part of its existing mainline signalling business to an independent buyer. This will protect competition, which is crucial for cost reduction, maintaining high service quality, and fostering innovation,” said Stewart McIntosh, Head of the Independent Inquiry Group.

The acquisition of Thales Ground Transportation (GTS) is also under investigation by the European Commission.

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