By Ian Walker

The European Commission said Friday that it has opened an investigation into Siemens AG's (SIE.XE) proposed acquisition of Alstom SA (ALO.FR), as it believes the merger may reduce competition in the supply of several types of trains and signaling systems.

The commission said the deal will combine two of the largest suppliers of rolling stock and signaling solutions in the European Economic Area.

"The commission will investigate whether the proposed acquisition of Alstom by Siemens would deprive European rail operators of a choice of suppliers and innovative products, and lead to higher prices, which could ultimately harm the millions of Europeans who use rail transportation every day for work or leisure," said Commissioner Margrethe Vestager, in charge of competition policy.

The commission now has until Nov. 21 to make a final decision. It added that the investigation doesn't prejudge the outcome of the investigation.

Siemens announced last September that it planned to merge its rail operations with Alstom, aiming to create a European giant with the scale to fight growing competitive threats from state-backed Chinese rivals.

Under the deal, Siemens will have majority control of the new company, receiving slightly more than 50% of its shares, officials from Alstom and Siemens said a the time. Alstom shareholders will receive two special dividends totaling EUR1.8 billion ($2.13 billion at the time)--EUR4 a share for surrendering control of the company and EUR4 a share as an "extraordinary dividend," the companies said.

Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

July 13, 2018 11:44 ET (15:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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