EU squashes GE-Honeywell merger proposal


The European Union blocked General Electric Co.’s US$41 billion purchase of Honeywell International Inc. on Tuesday, the first time a proposed merger between two U.S. companies has been blocked solely by European regulators.

The veto of one of the world’s largest industrial mergers by the EU’s 20 member executive Commission was widely expected after the American companies failed to allay European fears the deal would create an unfairly dominant position in markets for jetliner engines and aircraft electronics.

“The merger between GE and Honeywell, as it was notified would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines,” EU Competition Commissioner Mario Monti said in a statement.

A statement from the Commission added that while GE was prepared to make amendments to the deal, “the remedies proposed … were insufficient to resolve the competition concerns” resulting from the deal.

It said the merger would have given the new company a dominant share in the market for corporate jet engines and aircraft electronics as well as strengthening GE’s “dominant positions in jet engines for large commercial and large regional jets.”

The Commission’s decision was unanimous. It came after a one-hour meeting during which Monti presented the issues to his colleagues.

EU officials, who spoke on condition of anonymity said both companies were notified immediately after the decision.

The companies’ plans now were not immediately clear. GE could either challenge the decision in court or file a new application and start the process all over again. But many believe the deal is dead.

GE spokesman Gary Sheffer said the company would not comment until it gets official word of the decision. Honeywell had no immediate comment on the EU decision.

To do business in Europe, U.S. companies must comply with EU law just as European companies must abide by U.S. law to do business in America.

However, the EU’s objections to a deal that had already secured regulatory approval from U.S. antitrust authorities has raised American hackles.