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France, Germany step up pressure over Alstom-Siemens deal

By Leigh Thomas

PARIS (Reuters) - France and Germany raised pressure on the European Union's competition chief to approve the merger of Alstom and Siemens' rail businesses, warning that thwarting the proposed European champion would be a strategic error.

French Finance Minister Bruno Le Maire said the French and German governments were fully behind the merger, as were Alstom <ALSO.PA> Chief Executive Henri Poupart-Lafarge and his Siemens <SIEGn.DE> counterpart Joe Kaeser.

"Refusing the merger between Alstom and Siemens would be an economic error and a political mistake," Le Maire told journalists on Monday before a visit by EU Competition Commissioner Margrethe Vestager to Paris.

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"We cannot take an industrial decision for the 21st century with the competition rules from the 20th century," Le Maire added, reiterating a warning to Vestager about rejecting the merger.

People familiar with the matter told Reuters on Friday that Siemens' and Alstom's plan to create a European rail champion to take on a Chinese rival had failed to win over EU antitrust regulators, despite German and French backing.

Comments from politicians reflect a frustration that the EU's competition laws no longer reflect modern-day geopolitical realities, and in particular the threat from China.

"We need international champions in Europe that are able to compete globally", German Economy Minister Peter Altmaier told Reuters on the sidelines of a technology conference in Munich.

"Talks are in an important phase and we will do everything so that this project has a chance," he added.

During her visit to Paris, Vestager refused to comment on the possible outcome of the antitrust decision due by Feb. 18, but stressed the importance of defending consumers' interests rather than building European industrial champions.

"We're dealing with two European champions, we're dealing with businesses that are very big in the European marketplace and the global marketplace," Vestager told journalists.

The French and German government have argued in favor of the merger on the grounds that it would create a European market leader capable of competing with Chinese giant CRRC <601766.SS>, which currently dwarves other rivals.

Vestager said the European Commission had looked in-depth at CRRC's position in the global market.

She added that the European antitrust enforcer would review any measures offered by the companies to ease its competition concerns, but warned it was extremely late in the process.

"Of course our phone is open, the mailbox as well, (but) when you're this late in the procedure, you have to be very blunt in remedying concerns if you want to do that," she said.

German conglomerate Siemens has already offered to license parts of its high-speed train business and sell parts of its signaling operations after the European Commission voiced concerns.

(Reporting by Leigh Thomas, addiotnal reporting by Myriam Rivet and Julie Carriat and Doug Busvine in Munich; Editing by Keith Weir)