European Regulators Block GE-Honeywell Merger

The European Commission, meeting in Strasbourg, France, unanimously voted to block General Electric Co.’s acquisition of Honeywell International Inc. This marks the first time a merger between two U.S. companies, already approved by American regulators, has been stopped by European regulators.

According to a statement from the Commission, it “concluded that the merger would create or strengthen dominant positions on several markets and that the remedies proposed by GE were insufficient to resolve the competition concerns.”

Competition commissioner Mario Monti said, “The merger between GE and Honeywell, as it was notified, would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines.”

A statement from GE remarked, “We strongly disagree with the Commission’s conclusions about the competitive effects of GE’s acquisition of Honeywell.…The facts just don’t support these assertions. We believe this acquisition would have clearly benefited consumers in terms of quality, service, and prices.”

Multiple Proposals

Because of the competitive problems that were cited by the Commission, GE offered a new proposal in mid-June, but it was considered inadequate. On June 28, another plan from GE was rejected.

On June 29, Michael Bonsignore, chairman and ceo of Honeywell, sent a letter to GE making last-minute concessions to try to save the merger. But it was turned down by GE chairman and ceo Jack Welch, who responded, “What the Commission is seeking cuts the heart out of the strategic rationale of our deal. The new deal you propose, in response to the Commission, makes no sense for our share owners.”

GE spokesman Gary Sheffer said that the company was considering whether to appeal the decision. “We will consider all of our options,” he said.

Regarding the difference in opinion between the European Commission and the U.S. Department of Justice, Monti noted, “It is unfortunate that, in the end, we reached different conclusions, but each authority has to perform its own assessment and the risk of dissenting views, although regrettable, can never be totally excluded.

“This does not mean that one authority is doing a technical analysis and the other pursuing a political goal, as some might pretend, but simply that we might interpret facts differently and forecast the effects of an operation in different ways.”

Reportedly, some U.S. senators had suggested that blocking the deal could result in retaliation against Europe.

Honeywell CEO Replaced

The same day that the Commission made its decision, the board of directors of Honeywell announced that Bonsignore was retiring from the company, effective immediately. The board also announced the appointment of Lawrence A. Bossidy as chairman and ceo. Bossidy had served as chairman and ceo of AlliedSignal Corp., which merged with Honeywell in 1999, when he became chairman of the combined companies. He retired in April 2000.

“It is time to leave behind the distractions of the past several months and to immediately implement a laser-sharp focus on consistently meeting our financial commitments and our customers’ needs,” said Bossidy.

His mandate, he stated, is to “fix the company or sell it.”

Some experts believe that United Technologies Corp. is preparing to revive its earlier offer for Honeywell. The company was outbid by GE after it was near completion of a deal.

Publication date: 07/09/2001

Did you enjoy this article? Click here to subscribe to The NEWS Magazine

Recent Articles by Greg Mazurkiewicz

You must login or register in order to post a comment.



Image Galleries

2015 ACCA Conference

Images from the 2015 ACCA Conference in Grapevine, Texas. Posted on April 8, 2015.


NEWSMakers: Mark Crockett
Mark Crockett vice president, Crockett Facilities Services, explains the importance of technician training, the value of being a top minority-owned company in the U.S., current projects the company is managing, and much more. Posted on April 24.
More Podcasts


NEWS 05-04-15 cover

2015 May 4

Check out the weekly edition of The NEWS today!

Table Of Contents Subscribe

Legislation and Regulation

What legislative/regulatory issue is most important to you as a HVAC business owner?
View Results Poll Archive


2015 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research


Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


Magazine image
Register today for complete access to Get full access to the latest features, Extra Edition, and more.


facebook icontwitter iconyoutube iconLinkedIn i con