Antitrust agency denies Siemens' request to expand stake in Russian company

Siemens AG’s request to expand its stake in Russia's leading turbine manufacturer was denied by Russian antitrust agency.

Siemens had applied for permission to raise its stake in engineering group JSC Silovye Mashiny, or Power Machines, above 50 percent, the agency said. Siemens currently holds 25 percent of the Russian company.

If Siemens were allowed to take control of Power Machines, it would be able to dominate the Russian market for equipment for the electricity generation plants, which could lead to a reduction in competition, the Federal Anti-Monopoly Service said in a statement posted on its Web site.

The German engineering giant had applied to buy the 30 percent stake in Power Machines held by Russia's ZAO Interros Holding, Interros said last week. Siemens did not confirm this at the time and did not immediately respond to a request for comment Wednesday.

An earlier bid by Siemens for control of Power Machines was turned down in 2005 on security grounds: A unit of Power Machines makes turbines that power Russia's nuclear submarines.

But some industry observers have attributed the barring of Siemens to lobbying from rival Russian industrial groups that want to buy the company, which they expect to be the biggest beneficiary of a surge in orders from Russia's electricity sector as it undergoes sweeping restructuring and modernization.

The Federal Anti-Monopoly Service has given permission to take over Power Machines to two Russian tycoons - JSC Rusal owner Oleg Deripaska and JSC Severstal owner Alexei Mordashov.

Either one would need both the Interros stake and a 25 percent stake held by state-owned electricity monopoly Unified Energy Systems to gain immediate control. UES plans to sell its stake at an auction by the end of the year.

UES Chief Executive Anatoly Chubais, on a road show across Europe this week to court investors, told the Financial Times in an interview published Wednesday that the company's investment plan totals more than US$120 billion.