EC Says It Objects to GE’s Purchase of Honeywell

The European Commission on Tuesday formally notified General Electric Co. of its objections to the firm’s purchase of Honeywell International Inc., but the deal is far from dead.

The European Commission’s statement of objections puts a company on the defensive but does not necessarily sink a merger. GE and Honeywell won clearance in the United States last week and now are trying to win approval from the European Commission.

GE, responding to inquiries, confirmed it had received the confidential statement in Brussels hours after Competition Commissioner Mario Monti announced it would be sent.

“We have now completed our in-depth investigation started in March, and we will soon send a statement of objections” to GE, Monti told a news conference.

Monti said the investigation has focused on the possibility that the GE deal would enable the combined firm to bundle its products and damage competitors.

GE makes engines for commercial aircraft, while Honeywell makes avionics that run the planes. GE also owns a financing arm that can help companies pay for airplanes.

The commission is concerned the combined firm could offer bargain prices that would create unfair competition.

Another commission concern is that Honeywell and GE both make engines used in regional jets that seat 70 to 100 people. The Justice Department did not see that as a problem in its analysis.

After the news conference, a spokeswoman for GE said: “We remain optimistic about the outcome of the review.”

The statement of objections, which Monti dismissed as “almost routine,” is not released publicly and sets the stage for a closed hearing at which GE, Honeywell and their rivals will give their views.

The hearing is expected by month’s end so that the commission can meet its legally required July 12 deadline for a decision.

The commission could clear the merger, set conditions or reject it.

During his news conference, Monti also said that GE had notified the Justice Department several months before it had notified the EU.

GE and European officials held discussions before the formal filing, but some critics have speculated that GE may have been trying to make certain that the Justice Department finished its review before the commission did.

GE shares fell 48 cents to close at $49.48 on the New York Stock Exchange.