Large and reputable firms in the European rail supply chain include Bouygues and Equans (a division of Engie Group).
A £6 billion purchase agreement between Bouygues and Equans was announced in November 2021.
When it comes to providing catenary systems—the overhead power wires that power trains—for high-speed railways in the UK, Bouygues and Equans are fierce rivals.
The delivery of High Speed 2 (HS2), the only contract in recent years for the supply of catenary systems to high-speed railways in the UK, is currently the subject of competition between the two companies.
For any upcoming contracts for the installation and upkeep of high-speed catenary systems in the UK, the Competition and Markets Authority (CMA) determined that there will be a sufficient number of reliable competitors.
The CMA is worried that having control over these 2 bids could make the remaining phases of the HS2 tender process less competitive because the current HS2 tender is already far along and the merging businesses are 2 of a smaller number of bidders in the final stages of competing for the contract.
The CMA is worried that this decline in competition may lead to a final contract with increased costs, which would have a negative ripple effect on taxpayers.
Senior Director at the CMA Colin Raftery said:
When major public projects, like HS2, are performed, competitive tenders assist in ensuring that taxpayers receive the best possible value.
The HS2 overhead catenary systems tender is further along, but the remaining bidders are still vying for the contract’s final details.
It’s critical to prevent any undermining of this process because doing so could lead to unnecessarily high additional expenditures and leave taxpayers worse off in the long run.
The businesses now have five working days to provide solutions to the CMA’s concerns about competition.
Following that, the CMA has an additional five working days to decide whether to accept any offers or send the matter for a thorough Phase 2 inquiry.