Alstom, Bombardier threaten to sue Israel Railways

Israel Railways train  picture: Eyal Yitzhar
Israel Railways train picture: Eyal Yitzhar

Alstom and Bombardier say the two Chinese companies in the electrification tender have merged, and must be barred from competing.

If Israel Railways does not disqualify the bids of the two Chinese companies in the railway locomotives tender, the Alstom and Bombardier companies say they will go to court. The two companies are competing in the Israel Railways electrification tender, estimated at NIS 13.7 billion.

The threat by Alstom and Bombardier follows a reported merger into a single company of Chinese companies CNR and CSR. According to Alstom and Bombardier, the Mandatory Tenders Law bars the participation in a tender by legal entities that did not enter it at the beginning.

Four companies entered the tender two months ago: Chinese companies CNR and CSR, French company Alstom, and Canadian company Bombardier. The Chinese companies have been talking about a merger in recent months, leading Israel Railways to investigate suspicions that they had coordinated their prices. Israel Railways stated that CNR and CSR had participated in the tender through their subsidiaries, so that the consolidation of the companies is creating a situation in which the two subsidiaries are becoming fellow subsidiaries.

Israel Railways hoped that it would not be necessary to disqualify the Chinese companies' bids, but it is turning out that the situation is more complicated. In a letter sent by Bombardier to Israeli Railways several days ago, it alleged that the union of the two Chinese companies had been known for several months, and had even been approved by the regulators in China.

"We were therefore surprised when we found out that the Chinese companies had submitted separate bids," writes Bombardier Israel CEO Yossi Daskal in a letter. He went on to write that the submission of two separate bids was done in good faith, and in spite of the warnings by Israel Railways in a letter sent to the Chinese last January. At the end of his letter, Daskal threatens that unless Israel Railways disqualifies the two Chinese companies' bids, Bombardier will not hesitate to file a lawsuit. Alstom also confirmed that if the bids are not disqualified, it will go to court.

In view of the threats by Alstom and Bombardier, Israel Railways sent a letter to the Chinese companies asking for an update about the status of the merger and the likelihood that it would be completed. Israel Railways management did not explicitly state that a merger would lead to the disqualification of the Chinese companies' participation in the tender, but it noted that the fact that two separate bids had been submitted posed a threat to the propriety of the process.

China Lines, the official representative of CNR Dalian in Israel, stated, "The company has submitted a bid in the tender. Reports were then published about negotiations for a merger between CNR and CSR, a merger that has not yet been approved. Legal opinions from the company making it clear that there was no fault in the bid were sent to all the parties involved. We regret that Bombardier is electing to calumniate its competitors through false representations, lies, and manipulations. There is no doubt concerning the motives of Bombardier, which is seeking to be the sole bidder in the locomotives tender, thereby continuing to supply products of a quality and price possible only in an environment with no competition."

Published by Globes [online], Israel business news - - on May 21, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Israel Railways train  picture: Eyal Yitzhar
Israel Railways train picture: Eyal Yitzhar
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