The European Commission is about to launch a four-month, in-depth probe of plans by Siemens AG to acquire Austrian engineering group VA Tech, a source familiar with the situation said on Tuesday. A senior official at the Commission's competition directorate has recommended that Competition Commissioner Neelie Kroes order the in-depth probe. The official has said the deal raises "serious doubts" about its compatibility with EU competition rules.
Kroes is expected to receive the recommendation on Wednesday and could approve it quickly or at least within a few days, the source said.
The Commission has until February 14 to decide whether to open a in-depth probe, approve the transaction or take other action.
A Commission spokesman declined to comment.
Siemens had acknowledged publicly that the deal raises some competitive problems which would have to be fixed. However, Siemens has failed to submit solutions during the Commission's initial one-month review of the deal.
The Commission sees both horizontal and vertical problems, the source said, a reference to problems with competitors and the supply chain.
VA Technology AG makes equipment for metallurgy, power transmission, water treatment, hydropower and industrial infrastructure.
The German giant has made an offer valuing the Austrian firm at about 995 million euros ($1.28 billion) and is expected to win control by the time that offer ends on Wednesday. However, its offer is contingent on regulatory approval.