Blocked GE-Honeywell merger shows need for more cooperation

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Published 05 July 2001, updated 29 January 2010

Tags

disputes, EUUS

Blocked acquisition by General Electric of Honeywell International leads to new calls for greater cooperation between competition authorities

The fact that the EU blocked a merger between two US companies after the deal had received the green light from US antitrust regulators is leading to new transatlantic tensions.

Positions:

In his press release of 3 July, Commissioner Mario Monti tried to downplay the EU-US strains over the GE case. He stressed that the Commission and the US Justice Department had worked in close cooperation during the investigation and regretted that both regulators had reached different conclusions. "The GE/Honeywell is a rare case where the transatlantic competition authorities have disagreed. I am determined to strengthen our bilateral cooperation in the future to try and reduce this risk further", Mr. Monti said.

In the US, treasury secretary Paul O'Neill was less tolerant. In an interview published in the Washington Post, he condemned the ruling and said that the Commission was "making judgements about business combinations of companies that are completely outside of their jurisdiction". He also criticised that "the people who are making these judgements are not elected by anyone".

In an interesting analysis in Washington Post, Steven Pearlstein observes: "The essence of the difference between the two approaches is that the aim of the European law is to protect competition -- and at times, threatened competitors - while U.S. law focuses more directly on protecting consumers."

Next steps:

General Electric could in theory appeal to the Court of First Instance, but there are no indications that the company would go that far.

Background:

The European Commission's decision to block the proposed acquisition by General Electric of Honeywell International has led to new calls for greater cooperation between competition authorities.

The acquisition by General Electric of Honeywell International was prohibited by the Commission on 3 July. The EU feared that the merger would have reduced competition in the aerospace industry and would have resulted in higher prices for customers, particularly airlines (see alsoEurActiv 3 July).