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Hitachi-Thales Deal Could Push Up Fares for Passengers, UK Watchdog Says

By Joshua Kirby

 

Hitachi Ltd.'s planned acquisition of Thales SA's rail-infrastructure business could lessen competition and drive up fares in the U.K., the country's financial regulator said Friday, warning of an in-depth probe of the deal if its concerns aren't addressed.

The Japanese conglomerate last summer entered talks to buy Thales's rail-signaling business for an enterprise vale of 1.66 billion euros ($1.75 billion.) The deal between Hitachi and the French firm could eliminate a credible competitor from the tendering process for mainline signaling to be held by U.K. railway-infrastructure operator Network Rail, the country's main customer for signaling, the Competition & Markets Authority said.

"The resulting loss of competition across both mainline and urban signaling markets could increase costs for Network Rail and Transport for London and have an adverse knock-on effect on taxpayers and passengers," the regulator said, referring to the operator of the capital's metro network.

The country's signaling already suffers from a lack of competition, with the market essentially limited to just two suppliers, namely Germany's Siemens AG and France's Alstom SA, the CMA said.

Hitachi now has the opportunity to submit proposals to resolve the CMA's competition concerns. If it fails to address the concerns, the deal will face a more thorough phase two investigation, the CMA said.

 

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

 

(END) Dow Jones Newswires

December 09, 2022 02:51 ET (07:51 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.

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