By Foo Yun Chee
French TGV high-speed train maker Alstom is prepared to sell assets to secure early EU antitrust approval for its bid for Bombardier Inc's rail division, people familiar with the matter said.
Alstom and Bombardier believe they have a strong case with few overlapping activities, even if EU antitrust regulators are not convinced by the concessions and instead opt to open a four-month long investigation, the people said.
Alstom's bid for Bombardier, announced in February, is worth up to 6.2 billion euros ($7 billion). The French company wants to create the world's No. 2 train manufacturer, to better compete with Chinese leader CRRC Corp, in its second attempt at a deal, after the European Commission blocked its planned merger with Siemens last year.
The EU competition enforcer is likely to demand concessions, the people said. The deadline for concessions during the preliminary review is July 9, with the EU decision due by July 16.
The sources said Bombardier may also be willing to end partnering with Japan's Hitachi on building high-speed trains, although the two companies dispute assertions that they are strong in this area.
Alstom declined to comment on concessions. Bombardier could not be immediately reached for comment.
"We have had a continuous and constructive dialogue with the European Commission and we will continue to maintain an open dialogue until the Commission announces its decision," the company said.
The watchdog has singled out three concerns about the combined companies' market power in signalling, high-speed trains and mainline rolling stock, the people said.
To address worries about mainline rolling stock, which refers to intercity and regional trains, the companies could sell capacity and/or technology or hardware, the people said.
"If we want to go quick in phase one, we can chose to do that, if we think we have a strong case, we can do phase two," one of the people said, referring to the EU's preliminary review and subsequent full-scale investigation.
Regarding onboard signalling systems, the solution is basically facilitating access to the software, which rivals can easily modify to allow legacy systems and new ones to interact, the person said.
With German, Chinese, Korean, Japanese, Spanish and Swiss rivals, the train building industry is very competitive, the people said.
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(Reporting by Foo Yun Chee, additional reporting by Gwenaelle Barzic in Paris, Allison Lampert in Toronto and Ankit Ajmera in Bengaluru; editing by Philip Blenkinsop and Susan Fenton)