By Simon Zekaria - 24th May 2004
US industrial giant Honeywell, facing off in court with the European Commission this week, has said the EU’s decision to block its multi-billion euro merger with General Electric was “wrong on the facts”.
In what was the nadir of transatlantic relations in competition policy, EU regulators in 2001 blocked the GE/Honeywell merger in aviation hardware worth €40 billion – despite one of the EU’s regulatory American counterparts, the US Department of Justice, giving the deal the go-ahead.
"We appealed the European Commission's decision in the GE/Honeywell case because we felt the decision was wrong on the facts and the applicable law, and we look forward to presenting our case [to the court]," said Honeywell.
As one of the few times the EU has crossed swords with US regulators over merger decisions – and with the commercial scale of the tie-up on the table – the veto decision attracted much controversy.
With the appeal by General Electric and Honeywell now finally before the Court of First Instance three years on, this controversy risks rising to the surface again to marr the reputation of outgoing EU competition commissioner Mario Monti in his last few months in Brussels.
Honeywell is taking the court stand on Tuesday, with General Electric following up on Thursday.
The commission’s concerns over the merger decision centred on market dominance for the two companies for airplane engines and in-flight cockpit equipment.
EU competition authorities showed concern that the commercial leverage of the two firms in the aviation industry would effect the competitive market in the hardware.
The legal hearings this week should be followed up by a so-called ‘Advocate General’ opinion later this year.
While not having any conclusive legal weight, the AG opinion – delivered by a senior EU judge – is a very good pointer to the final judgment.
For the GE/Honeywell case, that ruling could arrive next year – or even later.
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