English Welsh & Scottish runs railfreight services in Britain and France. Essentially, the EU executive was concerned that DB might back off on competing in France, but DB made commitments to resolve the problems.

The Commission noted DB is state-owned, while EWS is the successor of the freight business of the former British national rail monopoly. It said DB might lack incentives to compete in the French market, which EWS had recently entered.

To solve that, the Commission said DB "has committed to fulfil EWS's expansion plans in France in the next five years through investments in key assets (locomotives) and personnel as set out in the EWS business plan and to deploy these in France".

DB will also give access to EWS driver training schools and maintenance facilities in France for third-party rail operators, except the French incumbent, SNCF.

The Commission said that would lower potential barriers to entry and expansion for companies wishing to enter the French rail freight market.

See also:

EU approves German-British rail takeover - if it targets France

DPA: 07 Nov 2007

Brussels - The European Union on Wednesday approved a plan by the state-owned German railway to buy Britain's main rail-freight operator, but only if it continues expanding into the French market. Germany's Deutsche Bahn (DB) had asked EU clearance to buy English Welsh & Scottish Railway Holdings (EWS), the British former rail monopolist which operates rail-freight services in Britain and the Channel Tunnel, and which recently entered the French market.

The EU's executive, the Commission, ruled that the deal "would not significantly impede effective competition" in Europe - as long as DB promised to continue expanding EWS' freight business in France.

The Commission had feared that the deal would "weaken the competitive constraint exercised in France" by EWS' recent arrival, because "DB may not have the same incentives to pursue the rail freight transport business in France," a Commission statement said.

DB soothed those fears by promising to "fulfil EWS' expansion plans in France in the next five years through investments in key assets (locomotives) and personnel as set out in the EWS business plan, and to deploy these in France," the statement said.

The German operator also promised to give all companies except French national rail-service provider SNCF "fair and non-discriminatory" access to EWS driver-training schools "as an additional guarantee of maintaining competition in this market."

The EU is keen to strengthen the role of environmentally-friendly rail freight in Europe in an attempt to ease the burden on the continent's overloaded roads. Part of that plan involves attempts to open up national rail-freight markets to commercial competition.

However, former rail-freight monopoly holders in some countries, notably France, have fought to keep their privileges in place, leading to a very uneven development of competition across Europe.

DB is owned by the German state, but the government intends to sell off a minority stake to private investors. The British rail network was privatized in the 1980s in what remains a controversial and much-criticised move.

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Deutsche Bahn buy of EWS Railway cleared by EU, subject to conditions

AFX News: 11.07.07

BRUSSELS (Thomson Financial) - The European Commission said it has cleared German state-owned railway operator Deutsche Bahn AG's (DB) proposed acquisition of English, Welsh & Scottish Railway Holding Ltd, subject to conditions.

The commission's decision is conditional upon the commitment of DB 'to fulfil EWS's expansion plans and to provide non-discriminatory access to certain EWS training activities and maintenance facilities in France', the EU executive said in a statement.

In light of this commitment, the commission said the transaction would not significantly impede effective competition in the European Economic Area.

DB is engaged in rail passenger and freight transport (through its unit Railion) in Germany, Italy, The Netherlands and Denmark, as well as in freight forwarding, logistics and ancillary services worldwide (through its Schenker unit).

EWS is the successor of the freight business of the former UK national rail monopoly. EWS is active in rail freight transport and related services in the UK and recently, through its unit, in France. EWS also provides rail freight transport services through the Channel Tunnel.