On September 18, 2020, CCI approved the acquisition of (i) sole control over Bombardier Transportation UK Limited (‘Bombardier’) by Alstom SA (‘Alstom’);  (ii) 18% of the share capital of Alstom by Caisse de Dépôt et Placement du Québec (‘CDPQ’) (which is currently the second largest shareholder of Bombardier Transportation); and (iii) approximately 3% shareholding in Alstom by Bombardier.^[1]

Alstom is a corporation registered in France. Globally, it is active in the rail transport industry and develops & markets systems and equipment and services for the rail industry. In India, it is present in the mobility business, including signaling solutions, rail electrification, track works and rolling stock (locomotives and metros) and maintenance services through its subsidiaries.

CDPQ is a long-term institutional investor registered in Canada. It manages funds and invests in major financial markets, private equity, fixed income, infrastructure and real estate. It is present in India through its indirect subsidiary, CDPQ India Private Limited. The activities of CDPQ India Private Limited are advisory services to another subsidiary located in Singapore. CDPQ has investments in three portfolio companies that are active in the broader railway sector in India. It does not engage in the sale of any components/products on a standalone basis and provides complete project solutions only.

Bombardier is a Canadian multinational manufacturer of business jets and rail. It has two business divisions, i.e., Bombardier Aviation and Bombardier Transportation. Its business includes segments of transportation, engineering services & railway transport. In the aviation business, it does not have any manufacturing facility in India and is only engaged in providing engineering services.

Bombardier Transportation is the global rail solutions division of Bombardier. Its services range from trains to sub-systems and signalling to complete turnkey transport systems, e-mobility technology and data-driven maintenance services. It has an international presence and globally, it provides (i) urban rolling stock (including metro rolling stock, light rail vehicles, monorails, etc.); (ii) mainline rolling stock (including mainline trains, commuter trains, etc.); (iii) e-mobility battery technology; (iv) other rolling stock (including locomotives); (v) urban equipment and mainline equipment; (vi) signalling solutions (mainline and urban transit systems); and (vii) maintenance services. In India, Bombardier Transportation is engaged in the sale of rail vehicles, propulsion, control equipment and signalling solutions.

With regards to the overlapping products and services in India, the CCI noted that the parties compete for the manufacture and/or supply of (i) signalling solutions; and (ii) rolling stock (trains including locomotive).

It was observed that with respect to signaling solutions, which could be categorised into mainline and urban signalling, the overlaps existed only in relation to urban signalling segment which includes communications-based train control (‘CBTC’) and Non-CBTC sub-segments. Alstom and Bombardier Transportation are active in both segments. The CCI conducted its competitive assessment at the broader urban signalling level as well as at narrower CBTC and Non-CBTC segments separately.

The CCI observed that urban signalling segment is a bidding market, and past bidding data indicated that there are other global players who are not only competing in terms of participation in tenders but also won several bids. Further, the parties participated in a limited number of common projects, thereby indicating that they were not competing with each other in a significant number of contestable projects.

In the CBTC segment, bids were mostly won by Alstom, Hitachi/Ansaldo, Nippon Signal, Siemens and Thales and Bombardier did not appear to be a credible competitor to Alstom. In the Non-CBTC segment, the CCI noted that a sizeable proportion of the projects constitute non-contestable bids with a limited number of contestable projects. Bombardier is an insignificant player in these contestable bids. Siemens is a major player in projects with a significant market share. Further, basis the third-party responses and data submitted by the parties, the CCI noted the presence of other credible and big competitors operating in the urban signaling segment, such as Siemens, Hitachi-Ansaldo, Nippon and Thales. A number of international suppliers such as Hyundai Rotem, Stadler Rail AG, etc., with their own CBTC signalling solutions also have considerable presence in the international markets and are expected to enter the CBTC signalling segment in India. Further, the CCI observed that the main customers / end-users for solutions in the urban signaling segment are metro rail corporations, who possess significant countervailing buyer power as they are capable of designing tenders and structuring the bidding contest in such a way that fosters competition and maximizes their incentives. Therefore, the proposed transaction would not lead to any AAEC in the broader urban signalling market in India and in the narrower sub-segments, i.e., CBTC and Non-CBTC.

With respect to the rolling stock segment, the same can be further divided into the following categories: (i) mainline rolling stock; (ii) urban rolling stock; and (iii) locomotives. Since Alstom is not present in mainline rolling stock, there was no overlap in respect of the same. Similarly, Bombardier Transportation is not present in the locomotives segment.

Urban rolling stocks may be categorised into (i) trams / light rail vehicles, (ii) APM, (iii) metros. The CCI noted that overlaps exist only within the sub-segment of metro rolling stock since Alstom is not present in the other two sub-segments. Further, in the metro rolling stock segment, the CCI observed that same is a bidding market and past bidding data indicated that (i) there are other global players who are participating in and winning tenders; (ii) the parties have participated in limited common contestable projects; and (iii) other players were successful in winning the bids in which the parties commonly participated. In the non-contestable projects, Bombardier was found to be an insignificant player. Further, the CCI also noted that the main customers / end-users are metro rail corporations, who possess significant countervailing buyer power, as they are capable of designing tenders and structuring the bidding contest in such a way that fosters competition and maximizes their incentives.

The CCI also observed that while the parties did not have any direct vertical relationships, there are indirect vertical relationships between Alstom and CDPQ (through the subsidiaries of one of its portfolio companies), but they were not significant in terms of value or share.

Accordingly, the CCI noted that the proposed transaction was unlikely to cause any AAEC in India and granted its approval.

[1] Combination Registration No. C-2020/07/759.