EU BLOCKS GE-Honeywell merger, fearing it would dominate engine and avionics market - - Tulsa, OK - News, Weather, Video and Sports - |

EU BLOCKS GE-Honeywell merger, fearing it would dominate engine and avionics market


NEW YORK (AP) _ General Electric's $41 billion purchase of Honeywell International was vetoed Tuesday by the European Union _ the first time a merger of two U.S. companies has been stopped solely by European regulators.

The decision by the EU's 20-member Competition Commission in Strasbourg, France, was unanimous.

The merger ``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.

GE chief executive Jack Welch left open the possibility of an appeal, characterizing the widely expected rejection as a setback. But analysts said the deal _ one of the biggest industrial mergers in history _ is probably dead.

The deal had won regulatory approval from U.S. antitrust regulators but ran into resistance from the EU, angering some members of Congress. President Bush also expressed concern.

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.

The commission vetoed the deal after executives failed to allay European fears that their merged company would dominate markets for jet engines and aircraft electronics.

Of the 15 mergers rejected by the commission since 1990, six have been taken to court. None of the challenges has been successful.

The combined company would have been a behemoth.

Honeywell, with some 120,000 employees worldwide, makes industrial materials such as plastics and chemicals as well as equipment for aerospace systems, power generation, transportation and factories.

GE is best known for making light bulbs and appliances, but it also includes NBC and makes power plant parts and aircraft engines. It has 313,000 employees.

Honeywell had offered to accept a lower purchase price and in return asked GE to divest more of its holdings to satisfy European antitrust regulators. But GE rejected the revisions Friday.

As a result of the failed deal, Honeywell's board of directors will oust chairman and chief executive Michael Bonsignore, The Wall Street Journal reported.

GE fell 69 cents to $49.51 Tuesday on the New York Stock Exchange, while Honeywell rose 99 cents to $35.10.
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