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English Welsh & Scottish Railway, DB Merger OK'd

Mergers: Commission approves proposed acquisition of English Welsh & Scottish Railway Holdings by Deutsche Bahn, subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of English Welsh & Scottish Railway Holdings (EWS) by Deutsche Bahn (DB).

The Commission's decision is conditional upon the commitment of DB to fulfil EWS's expansion plans and to provide non-discriminatory access to certain EWS training activities and maintenance facilities in France.

In light of this commitment, the Commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

DB is a state-owned German-based railway company engaged in, inter alia, rail passenger and freight transport (through its subsidiary "Railion") in Germany, Italy, The Netherlands and Denmark, as well as in freight forwarding (by all modes of transport), logistics and ancillary services worldwide (inter alia through its subsidiary "Schenker").

EWS is the successor of the freight business of the former UK national rail monopoly. EWS is active in rail freight transport and related services in the UK and recently, through its subsidiary, in France. EWS also provides rail freight transport services through the Channel Tunnel.

Despite the lack of overlap in the parties' rail freight transport activities in any geographic market, the Commission had concerns that the proposed transaction, as initially notified, would result in France in a possible weakening of the competitive constraint exercised by EWS, a new entrant in this market.

This concern was on the basis that DB may not have the same incentives to pursue the rail freight transport business in France with the same intensity as EWS would in the absence of the merger.

To address the Commission's concerns, DB has committed to fulfil EWS's expansion plans in France in the next five years through investments in key assets (locomotives) and personnel as set out in the EWS Business Plan and to deploy these in France.

As an additional guarantee of maintaining competition in this market, DB committed to provide fair and non-discriminatory access to EWS Driver Training Schools and maintenance facilities in France for all third party rail operators (except SNCF, the French incumbent) thereby lowering these potential barriers to entry and expansion for companies wishing to enter the French rail freight market.


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