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Both GE and Honeywell Appeal Merger Decision

September 18, 2001
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FAIRFIELD, CT and MORRIS TOWNSHIP, NJ - General Electric Co. and Honeywell International Inc. have both filed appeals regarding their proposed merger, which was rejected by the European Commission on July 3 (see The News, July 9, 2001).

According to the European Court of Justice, the two companies filed separately with its appeals division. The court allows appeals only on procedural matters.

Tom Crane, Honeywell spokesman, said, “The appeals argue that the European Commission’s findings are without merit.” He added, “It’s important to note that the appeals have no effect on our merger agreement,” they just deal with possible errors of procedure.

The Court of Justice has never reversed a merger decision made by the commission. Six companies have tried appeals of their merger rejections over the past decade and all have lost. In addition, since the appeals process can be lengthy, companies typically decline to appeal.

It is believed that General Electric is concerned about the European Commission’s language in turning down the merger. The combination of two major companies in the aviation business was a major concern of the commission and Mario Monti, competition commissioner. He and his colleagues cited a possible dominant market position as a problem area. Letting stand a finding of a dominant position, experts attest, could possibly block GE from future mergers.

A representative of the European Commission expects the decision to hold up against any court challenge, calling it “legally sound.” The commission is now required to file a response. A public hearing then will follow. The appeals court decision can then also be appealed.

It is believed that this slow process makes it highly unlikely that the merger can be saved.

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