EU Regulators Reject GE-Honeywell Merger

European regulators formally rejected General Electric Co.'s $42-billion bid for Honeywell International Inc., citing fears that the combination would stifle competition for aircraft jet engines and electronic equipment.

The decision, which was expected, is likely to scuttle the largest industrial merger ever, although GE said it may appeal. It was the first time the European Competition Commission, a 20-member panel representing 15 countries, objected to a merger that had cleared U.S. regulatory scrutiny.

Analysts said European companies could face retaliation in their bid to acquire U.S. companies, increasing transatlantic trade tensions. The fallout was immediate at Honeywell, whose board ousted its chairman within hours of the commission decision and said the firm was looking forward to operating as an "independent company."

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