Grounds of Decision
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Section 57 of the Competition Act (Cap. 50B) Grounds of Decision issued by the Competition and Consumer Commission of Singapore in relation to the combination of the mobility business of Siemens AG with Alstom S.A. 24 October 2018 Case number: CCCS 400/002/18 Confidential information in the original version of this Decision has been redacted from the published version on the public register. Redacted confidential information in the text of the published version of this Decision is denoted by []. 1 TABLE OF CONTENTS Contents I. Introduction ........................................................................................................... 3 II. The Parties to the Transaction ............................................................................. 4 III. The Proposed Transaction ................................................................................... 7 IV. Competition Issues ................................................................................................ 9 V. Counterfactual ..................................................................................................... 13 VI. Relevant Markets ................................................................................................ 14 VII. Market Structure ................................................................................................ 26 VIII. Competition Assessment ..................................................................................... 42 IX. Efficiencies ........................................................................................................... 53 X. Ancillary Restrictions ......................................................................................... 54 XI. Conclusion ............................................................................................................ 56 2 I. Introduction The notification 1. On 16 July 2018, Siemens Aktiengesellschaft (“Siemens AG”) and Alstom S.A. (“Alstom”), (collectively, “the Parties”), pursuant to section 57 of the Competition Act (Cap. 50B) (“the Act”), jointly applied for a decision by the Competition and Consumer Commission of Singapore (“CCCS”) as to whether the proposed combination of Alstom and Siemens AG’s mobility business (“SMB”) by way of a contribution by Siemens AG of the SMB to Alstom in consideration for newly issued Alstom shares (hereinafter “the Proposed Transaction”), will infringe the prohibition in section 54 of the Act, if carried into effect. For the purposes of CCCS’s assessment, the Proposed Transaction would see Siemens AG acquire sole control of Alstom.1 2. In reviewing the Proposed Transaction, CCCS contacted twenty-two (22) suppliers/potential suppliers of either metros, urban signalling systems, or rail electrification (i.e. contact lines and/or traction power supply systems)2, and three (3) customers3 (collectively referred to as “third parties”). 3. Of the third parties contacted, eleven (11) replied 4 , seven (7) of whom provided substantive responses to CCCS’s questions.5 The views of the third parties who provided substantive responses were mixed. While three (3) of the third parties did not express any competition concerns 6 , four (4) 7 indicated that they had competition concerns about the Proposed Transaction. In particular, concerns were expressed regarding competition in the market for the supply of urban signalling systems for Mass Rapid Transit (“MRT”) lines in Singapore. The competition concerns included that (i) the Parties are the key suppliers of urban signalling systems; (ii) the barriers to entry into the supply of urban signalling systems appear to be significant; and (iii) the Parties may leverage on the interoperability of their metros with their urban signalling systems to foreclose competition in the supply of metros in Singapore. 4. At the end of the consultation process and after evaluating all the information including the Parties’ submissions and the concerns raised by third parties, 1 Paragraph 8.5 of Form M1. 2 Suppliers: []. 3 Customers: []. These customers are the only customers of rail transportation products in Singapore. 4 Customers: []. Suppliers: []. 5 Customers: []. Suppliers: []. 6 Customers: []. Suppliers: []. 7 Customers: []. Suppliers: []. 3 CCCS, on balance, concludes that the Proposed Transaction, if carried into effect, will not infringe section 54 of the Act. II. The Parties to the Transaction Siemens 5. Siemens AG is a stock corporation (Aktiengesellschaft) organised under the laws of Germany with its registered seat in Munich and Berlin, Germany. Its headquarters are at Werner-von-Siemens-Str. 1, 80333 Munich, Germany.8 Siemens AG is the ultimate parent of the Siemens group of companies9 (hereinafter, “Siemens”). Siemens AG’s shares are quoted on the Frankfurt am Main, Germany, and Xetra stock exchanges and are publicly held.10 6. Globally, Siemens manufactures the full range of mobility products for rail transportation (including different types of rolling stock, signalling solutions and rail electrification).11 Siemens’s other businesses include systems and services for power generation, transmission and distribution, as well as energy-efficient products and solutions for production and building technology, and technologies for high-quality and integrated healthcare.12 Siemens’s businesses are bundled into the following business divisions: Power and Gas 13; Power Generation Services 14 ; Energy Management15; 8 Paragraph 7.1 of Form M1. 9 The Siemens group of companies comprise of a number of entities worldwide, including Siemens Rail Automation Limited, Siemens Signalling Co. Ltd, and Aimsun Inc, etc. The entities within Siemens that are registered in Singapore include: (a) Aimsun Pte. Ltd.; (b) Atlantis Resource Ltd.; (c) Dresser-Rand Asia Pacific Sdn Bhd (Singapore Branch); (d) Flender Pte. Ltd.; (e) Mentor Graphics Asia Pte. Ltd; (f) Omnetric GmbH Singapore Branch; (g) Power Automation Pte. Ltd.; (h) Siemens Bank GmbH Singapore Branch; (i) Siemens Gamesa Renewable Energy Singapore Pte. Ltd.; (j) Siemens Gamesa Renewable Energy Pty. Ltd. Branch Office Singapore; (k) Siemens Healthcare Pte. Ltd.; (l) Siemens Industry Software Pte. Ltd.; (m) Siemens Mobility Pte. Ltd.; (n) Siemens Postal, Parcel & Airport Logistics Pte. Ltd.; and (o) Siemens Pte. Ltd. 10 Paragraph 7.2 of Form M1. 11 Part 5 of Form M1. 12 Part 5 of Form M1. 13 The Power and Gas Division offers a range of rotating equipment and solutions focusing on environmentally-compatible and resource-saving power generation. 14 The Power Generation Services Division offers expert factory or field service support, maintenance, repairs, replacements, modernisations and upgrades of components for gas and steam turbines as well as generators and compressors. 15 The Energy Management Division supplies products, systems, solutions and services for the efficient, reliable and intelligent transmission and distribution of electrical power. 4 Building Technologies16; Mobility17; Digital Factory18; Process Industries and Drives19; Financial Services20; Siemens Healthineers21; Siemens Gamesa Renewable Energy22 and Next4723.24 7. In Singapore, Siemens conducts the same business as it does globally.25 In Singapore, the SMB has supplied rolling stock (metro trains)26 and is now active in urban signalling, maintenance equipment, provision of services related to the supply of communication systems and traction power supply systems for rail electrification.27 8. The trading name used by the SMB in Singapore is “SIEMENS”.28 The relevant Siemens entities in Singapore that currently hold the SMB are:29 a. Aimsun Pte. Ltd; and b. Siemens Pte. Ltd. 9. The total (group) worldwide turnover for Siemens in the financial year ended 30 September 2017 is approximately €83 billion (approximately S$131.29 16 The Building Technologies Division offers fire safety, security, building automation, heating, ventilation and air conditioning as well as energy management products and services. 17 The Mobility Division provides products, solutions and services regarding the transportation of people and goods by rail and road. 18 The Digital Factory Division offers a comprehensive portfolio of seamlessly integrated hardware, software, and technology-based services in order to support manufacturing companies worldwide in enhancing the flexibility and efficiency of their manufacturing processes and reducing the time to market of their products 19 The Process Industries and Drives Division helps companies improve the reliability, safety, and efficiency of their products, processes and plants. 20 The Financial Services Division provides financial solutions for Siemens’s projects and products, opens the way for new business ideas such as pay-per-use financing models and public private partnerships, and signal confidence to the markets through long-term risk participation. 21 Siemens Healthineers supplies technology to the healthcare industry. It offers diagnostic imaging, laboratory diagnostics and advanced therapies and services. 22 Siemens Gamesa Renewable Energy supplies reliable, environmentally friendly and cost-efficient renewable energy solutions, in particular wind turbines 23 Next47 is a unit to foster disruptive ideas more vigorously and to accelerate the development of new technologies. 24 Paragraph 10.8 of Form M1. 25 Paragraph 10.12 of Form M1. 26 [] Response to CCCS’s Invitation to Comment dated 27 July 2018: Siemens’s metros are currently running on the North-South and East-West Lines. 27 Paragraph 10.14 of Form M1.