On 6 February, EU Competition Commissioner Margrethe Vestager revealed issues over signalling and high-speed train manufacturing were key to the decision to block the proposed deal. Only a clear-cut remedy package could have resolved concerns, according to Mergermarket’s sister publication PaRR.

If anyone was in doubt, Vestager once again underlined that if it undermines competition closer to home, the Commission will not fold to lobbying pressure to create such behemoths in the face of state-backed giants from China or other actors.

LSE [LON:LSE]/Deutsche Boerse [ETR:DB1], which could have challenged US exchanges CME [NASDAQ:CME] and NYSE owner ICE[NYSE:ICE], is another example of a deal that would have created a regional – and even global – champion, that was stopped in its tracks by the Commission.

Straying from the competition arena, but staying in financial services, banking consolidation in the US has surged ahead while major European banking mergers have been notable by their absence.

Thursday 7 February saw the announcement of a USD 28.1bn deal between US regional banks BB&T [NYSE:BBT] and SunTrust[NYSE:STI].

Whether a similar deal in Europe is possible any time soon remains to be seen.

Much mooted potential tie-ups such as Deutsche Bank [ETR:DBK]/Commerzbank [ETR:CBK] and UniCredit [BIT:UCG]/Societe Generale [EPA:GLE] may make sense in financial press op-eds, but often fall foul of political reality or shareholders cautious on the risks of fusing lending books.

At least with those mergers blocked in Brussels, boards and shareholders had wanted the deals to proceed. It is for this reason the French and German governments are making more noise to review EU competition laws, allowing more global champions to emerge from the continent.

Germany will reportedly present proposals in the autumn, which they may push for when they hold the EU presidency in 2H20, according to PaRR.

However, rules may adapt to reflect new challenges in digital markets, rather than to help create larger European champions, according to Vestager. In a press conference on Wednesday, Vestager said “the EU might change its competition rules if we want to be sure that we are also served well by the markets when all becomes more digital.”

Though commentators have speculated the Siemens/Alstom decision may have blotted her copybook in Paris and Berlin, Vestager remains the stand-out candidate to replace Jean-Claude Juncker as commission president later this year. Her views could well shape the next commission.

With the regulatory framework apparently unyielding, dealmakers and ministries are left wondering what blockbuster strategic combinations can be achieved following the collapse of the Siemens/Alstom deal.

In the case of the rail players themselves, Alstom has been talked of in the same breath as Japanese conglomerate Hitachi [TYO:6501], which controls Italian railway-signalling manufacturer Ansaldo STS. Any potential deal with Alstom may ultimately hinge on the concessions any merger party is willing to offer, given that Siemens had pledged to maintain French jobs and industrial sites until at least 2023.

Siemens, meanwhile, was also reportedly in talks with Canadian player Bombardier [TSE:BBD.B] prior to the agreement with Alstom. It remains unclear whether this could be rekindled, or if any potential tie-up would be subject to the same levels of commission scrutiny as the Alstom deal.

M&A activity, which has largely been resolute in recent years, is starting to see cracks appearing.

In recent months, dealmakers have had to contend with rising protectionism and trade tensions, the budget dispute between the Italian government and the EU, and the threat of a disorderly Brexit. Volatility is no friend to M&A.

January’s Eurozone deal total of just EUR 9bn represents the lowest value seen in the first month of the year in the region since 2011 (EUR 8.4bn) and a 38.2% drop versus January 2018 (EUR 14.6bn).

This fall follows a subdued 2H18, which fell 54.9% versus a buoyant first six months of the year.

A lacklustre fourth quarter played a key role in the downturn, coming in as Europe’s lowest quarterly value since 3Q17 as uncertainty gripped the markets and dealmakers alike.

News that Eurozone GDP has stagnated, dragged down by Italy slipping into a technical recession, will do little to reassure boardrooms. The European Commission projects eurozone GDP growth of just 1.3% in 2019 – this was forecast at 1.9% as recently as November.

The Commission just keeps the good news coming for M&A aficionados.

Jonathan Klonowski Research Editor EMEA Mergermarket