EC Voices Concerns on GE-Honeywell Merger
General Electric Co.’s proposed purchase of Honeywell International Inc. would give the company’s plane leasing and aircraft engine businesses an added advantage over competitors, European antitrust regulators said Tuesday.
The European Commission listed the agency’s concerns about the $49-billion transaction in a 156-page report obtained by Bloomberg News.
General Electric is prepared to sell Honeywell’s regional jet engine unit as a concession to win the EC’s approval for the purchase, the Wall Street Journal reported, citing a person familiar with the situation.
The commission also said General Electric might be able to package products at discount prices, such as GE’s jet engines and Honeywell’s engine parts and avionics, that rivals wouldn’t be able to match, stifling competition.
General Electric President Jeff Immelt said last month that the company may agree not to sell packages of products to customers, a practice known as bundling.
GE Chief Executive Jack Welch, who postponed his retirement to complete the Honeywell purchase, will be in Brussels to meet with European regulators on Friday.
Company spokeswoman Louise Binns said GE would not “comment on any aspect of its discussions with commission officials.”
Competitors such as Rolls-Royce and United Technologies Corp. have voiced concern to regulators that General Electric would have an unfair advantage as a supplier of airplane engines and electronics unless it gives up part of the business or accepts restrictions on its marketing, including not selling products solely as a package.
GE is the world’s largest jet engine maker and the largest lessor of aircraft through its GE Capital Aviation Services unit.
Honeywell sells cockpit electronics and small engines used by planes on the ground, among other parts.
The European Commission is the regulatory agency of the 15-nation European Union. It can block or force changes to company mergers even if the firms are not based in Europe.
GE and Honeywell already have received tentative approval from U.S. and Canadian regulators. GE must present possible proposals to the EC by June 14. European regulators have until July 12 to rule on the acquisition.
On the New York Stock Exchange, shares of General Electric, based in Fairfield, Conn., rose 27 cents to $49.18, while Honeywell fell 10 cents to $48.84. GE would exchange 1.055 of its shares for each Honeywell share in the takeover.
