Justice Department Requires Divestiture of Faiveley Transport’s U.S. Freight Car Brakes Business Before Wabtec Acquisition
Divestiture Will Preserve Competition for Railcar Freight Brake Systems and Components in the United States
The Department of Justice announced today that it will require Westinghouse Air Brake Technologies Corporation (Wabtec) to divest Faiveley Transport North America’s (Faiveley) entire U.S. freight car brakes business in order for Wabtec to proceed with its proposed approximately $1.8 billion acquisition of Faiveley Transport S.A. and Faiveley Transport North America.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns.
“The safe and efficient passage of goods throughout the United States freight rail network is crucial to the American economy and depends on sufficient competition for freight car brake systems and components,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “The acquisition as originally proposed would have eliminated Faiveley as one of only three major companies that supplies freight car brake components in the U.S. and eliminated Faiveley as a pipeline competitor in the development, manufacture and sale of freight car control valves – essentially freezing a century-old duopoly in that market.”
The proposed settlement includes a divestiture of Faiveley’s entire U.S. freight car brakes business which develops, manufactures and sells freight car brake systems and components including: air brake control valves, hand brakes, slack adjusters, truck-mounted brake assemblies, empty load devices and brake cylinders. The divestiture also includes Faiveley’s FTEN control valve, a freight car brake control valve under development that will be available for full commercialization after approval from the Association of American Railroads.
The department believes the proposed divestiture addresses the competitive concerns raised by this transaction as originally proposed. Under the terms of the proposed consent decree, Wabtec must divest Faiveley’s entire U.S. freight brakes business to a single independent buyer approved by the United States. Wabtec has proposed that the divestiture be sold to Amsted Rail Company Inc. (Amsted Rail). Amsted Rail is a unit of Amsted Industries, a privately held company, based in Chicago. It is a leader in manufacturing railroad freight car undercarriage components and end-of-car systems for the freight rail industry. Amsted Rail’s revenues in 2015 totaled approximately $2 billion.
Wabtec, based in Pennsylvania, is a global rail equipment supplier. Wabtec provides a wide range of equipment used on freight railcars, including components of freight car brake systems used in the U.S. freight rail network, and is a dominant supplier of complete freight brake systems in the United States. In 2015, Wabtec’s worldwide revenues were $3.3 billion, of which revenues from its freight business were approximately $2 billion.
Faiveley Transport North America, headquartered in Greenville, South Carolina, is a wholly-owned subsidiary of Faiveley Transport S.A., a French corporation. Faiveley Transport S.A. makes and sells rail equipment, including braking equipment, for a variety of train applications to customers in 24 countries, including the United States. During the fiscal year ending March 31, 2016, Faiveley had global sales of approximately €1.1 billion with approximately $174 million in revenue in the United States.
As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.