Word: monti
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...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 sales are more than $4.3 billion and that do at least $215 million of business in the European Union. GE-Honeywell easily passed...
...asked the company to make disposals of assets way beyond anything that Welch and his successor as CEO, Jeffrey Immelt, deemed reasonable. GE hasn't formally walked away, in part to assuage Honeywell stockholders who might otherwise sue, in part because the full commission has yet to endorse Monti's view, and in part because hope springs eternal. But few now bet the deal will go through...
There's rich irony here. Until this case, officials in Washington and Brussels had boasted that competition policy was an area of splendid cooperation across the Atlantic. Moreover, Monti is about the least likely man in Brussels to be motivated by crude anti-Americanism. Indeed, he was offered the job of Foreign Minister in the Italian government of Silvio Berlusconi, conservative America's favorite European. In any event, GE competitors opposed to the deal are--like UTC--just as likely to be American as European. Airbus, Europe's flagship aviation company, says it supported the GE-Honeywell deal. I understand...
Rather than turn the case into an excuse for a trade war, officials should be considering its real issues. Monti's team--"understaffed and underpowered," in the words of an observer--relies too much on the comments of competitors for the analysis of a merger. The E.C.'s investigative and decision-making functions should be separated, as they are in the American system. Most important, global businesses need global-competition rules--and a global body to enforce them. That, however, would diminish the power of U.S. officials, including chairmen of Senate committees. So don't bet a chowder dinner...
...smaller than many think, but there are two senses in which the Atlantic dialogue is moving onto new and, for Americans, unfamiliar ground. The first involves the growing economic power of the European Union. Welch allowed that he was "surprised" by the demands made by Mario Monti, the E.U.'s antitrust commissioner, which only goes to show that one of America's most respected CEOs can't always be well informed. The E.U. has been exercising jurisdiction over mergers between non-European firms for more than a decade, and under Monti's leadership has taken an aggressive line on anything...