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UPDATE 1-EU Commission sees no issue in Eurostar row-source

* No problem in Eurostar procurement process - EU source

* Safety questions not a European matter - EU source

* France won’t refer matter to Commission - French source

(Adds more details, background)

LUXEMBOURG, Oct 18 (Reuters) - The European Commission says there is nothing wrong with the way Eurostar picked manufacturer Siemens SIEGn.DE ahead of rival Alstom ALSO.PA to supply 10 new trains, a European Union source told Reuters on Monday.

“On the basis of information provided, there is no problem in the public procurement process,” the source said, noting Alstom UK had not officially referred the matter to the Commission.

A row erupted when Eurostar, which runs passenger services between London, Paris and Brussels, said Germany’s Siemens would supply 10 next-generation high-speed trains as part of a 700 million-pound ($1.1 billion) fleet investment, a snub to its traditional supplier, French group Alstom. [ID:nLDE6960E7]

The Commission responded at the weekend to a letter it received from Alstom about the matter, the source said.

A German newspaper reported on Friday that France had taken the case to the Commission. [ID:nLDE69E21N].

But a separate French source said on Monday that “France has not taken the case to the European Commission, and has no intention to do so”.

This source said France had no need to go to the Commission because security rules did not allow Siemens-made stock to operate in the Channel Tunnel.

The French government has said the deal is invalid, citing safety concerns. [ID:nLDE69D1QO]

The EU source said he could not see how the safety element of the row was a European matter.

“Apparently there is a question mark over safety rules in the tunnel. On this point I can’t see exactly what the European dimension is,” the source said.

TUNNEL VISION

A Franco-British governmental commission is revising Channel Tunnel safety requirements in light of new technology, such as the traction system under the carriages of the new trains, which means there is no need for locomotives at each end.

The new Siemens trains use this system and Alstom insists current safety rules forbid their use in the tunnel.

A Siemens train operated by Deutsche Bahn on Sunday completed a first safety test run in the Channel Tunnel.

The German rail group wants to demonstrate it can operate safely on the route, which is being opened up to competition under European Union rules. [ID:nLDE69G071]

Separately, Groupe Eurotunnel GETP.PA, which manages the tunnel, said on Monday its third-quarter revenue rose 27 percent to 212.1 million euros, including acquired rail freight companies.

Like for like and excluding acquisitions, the cross-Channel rail operator’s revenue rose 8 percent to 181.3 million euros.

($1=.6252 Pound)

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