Europees Hof bevestigt verbod op fusie tussen General Electric en Honeywell (en)

The European Commission welcomes the rulings by the Court of First Instance today upholding the European Commission's decision in July 2001to prohibit the merger between the General Electric Co. (GE) and Honeywell Inc. The Commission prohibited the merger as it considered that the deal would significantly impede effective competition in the markets for aerospace products and industrial systems and deprive customers from the benefits of competition. The Court's rulings confirm that the Commission was right to block the merger in view of its adverse impact on some of the markets concerned.

Competition Commissioner Neelie Kroes stated "I am pleased to welcome this important ruling insofar as it upholds the Commission's decision.The Commission will consider carefully what lessons may be learned from this judgment for our future merger policy. The ruling illustrates that in such complex transactions it is crucial for merging parties to come up with adequate remedies for all competition concerns identified by the Commission. Indeed ensuring effective competition throughout the aerospace products industry remains an important aim."

In upholding the Commission's decision to prohibit this deal, the CFI confirmed the Commission's finding that the merger would have resulted in the creation of a monopoly on the worldwide market for jet engines for large regional aircraft. The CFI also confirmed that the merger would have created dominant positions on the markets for engines for corporate jet aircraft and small marine gas turbines. Had the transaction proceeded, competition would have been significantly impeded in these markets so as to deprive customers of the benefits of price competition.

Although the Court did not agree with some aspects of the Commission's decision, in particular in relation to vertical and conglomerate effects, this did not prevent it from upholding the prohibition of the merger. The Commission will be analysing the judgment and will consider its implications for the future.

Background

On 3 July 2001, the European Commission prohibited the proposed acquisition by GE of Honeywell (see IP/01/939). The Commission carried out an in-depth market investigation lasting five months in total, during which it analysed in great depth the likely impact of the proposed transaction on competition in the markets for aerospace products (jet engines, avionics, non-avionics and engine starters) and industrial systems (small marine gas turbines).

The Commission found that the combination of the two companies' activities would have resulted in the creation of dominant position in the markets for the supply of avionics, non-avionics and corporate jet engines, as well as to the strengthening of GE's existing dominant positions in jet engines for large commercial and large regional jets. The Commission considered that dominance would have been created or strengthened as a result of horizontal overlaps in some markets as well as through the extension of GE's financial power and vertical integration to Honeywell activities and of the combination of their respective complementary products. Such integration would enable the merged entity to leverage the respective market power of the two companies into the products of one another. The merger would have had the effect of foreclosing competitors, thereby eliminating competition in these markets, ultimately affecting adversely product quality, service and consumers' prices.

GE proposed remedies during the proceedings, including after the deadline set out in the Merger Regulation. Those remedies were considered insufficient to solve the competition concerns raised by the transaction.

On 12 September 2001, GE and Honeywell brought actions before the CFI seeking to annul the Commission decision. Oral hearings took place in May 2004.