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Weird, huh? Not in the age of globalization--for that, in effect, is what the General Electric Co., United Technologies Corp. and Honeywell International Inc. have just done. Last year GE outbid UTC for Honeywell; American antitrust authorities approved the merger. But--though the game isn't over--the deal appears to have been nixed by the competition division of the European Commission in Brussels, which is headed by an Italian, Mario Monti. (To continue the Connecticut theme, Monti studied at Yale.) For more than 10 years, the commission has claimed jurisdiction over any merger between firms whose combined global...
Though UTC won't comment on the commission's investigations, sources close to the case say it opposed the deal. That makes sense. UTC's Pratt & Whitney division is a competitor of GE's in the global market for large aircraft engines. (With Rolls-Royce of Britain, the companies make up what is, in effect, a three-member oligopoly.) GE's competitors may have thought that by combining GE's engines with Honeywell's advanced electronics, Jack Welch's company would have been able to offer customers an irresistible package--especially since GE, through its aircraft-leasing division, is itself...
There's more to this than the usual tale of corporate rivalry. GE, after all, is no ordinary American company, and Welch--the great hero of modern American capitalism--is no ordinary boss. Since he declared the commission's conditions unacceptable, three Senators--Republican Phil Gramm and Democrats John D. Rockefeller and Ernest Hollings--have expressed concern to the Europeans. Hollings, new chairman of the Senate Commerce Committee, said the developments supported those who think the E.C. seeks to "protect and promote European industry at the expense of its U.S. competitors," and warned that "denial of a merger...would undermine...
...Europeans are playing hardball with GE, frustrating CEO Jack Welch's $40 billion-plus Honeywell merger. European Commission regulators fear that the union would give the new entity undue market power. GE, they argue, could bundle its jet engines and Honeywell's avionics, hurting Rolls Royce and other engine suppliers...
...GE told U.S. regulators last month that it was willing to sell Honeywell units--including those making regional jet engines, air-turbine starters and other aerospace products--worth about $2.2 billion in annual revenue. The E.U., though, is demanding divestitures amounting to more than $3 billion. GE says the Commission is exacting too much, undermining the rationale for the deal...