Thursday, September 13, 2001
GE, Honeywell file appeal
Seek reversal of EU's ruling blocking merger
The Associated Press
STAMFORD, Conn. General Electric Co. and Honeywell International Inc. filed appeals Wednesday of the European Union's decision to block their $41 billion merger.
The EU announced July 3 it was blocking the GE-Honeywell agreement, the first time it ever bore sole responsibility for stopping an all-American deal. The appeals were filed with the Court of First Instance in Luxembourg.
We believe there were errors of substance and procedure, said Gary Sheffer, a GE spokesman. It is intended to overturn the decision based on these errors.
But a decision on the appeal could take years, so even a successful appeal would be too late for the merger to go forward, Mr. Sheffer noted.
We believe that it's not feasible for the appeal to be decided in time for completion of the merger, Mr. Sheffer said.
GE wants to refute the commission's finding that the company has a dominant position in the jet engine market. That ruling, if allowed to stand, could make it difficult for GE to make future acquisitions.
Tom Crane, a Honeywell spokesman, would not comment on whether a successful appeal could allow the merger to go forward.
Our appeal argues the commission's findings are without merit, Mr. Crane said.
The court has yet to annul a merger prohibition since the EU began reviewing them under its current laws a decade ago.
Of six merger prohibitions appealed, three have been upheld and the others are pending, including last year's WorldCom-Sprint deal, which was blocked on both sides of the Atlantic.
Antitrust lawyers complain that the European courts act too slowly to save deals, but say appeals can still be valuable in clarifying legal issues.
Top on the list in the GE-Honeywell case is the EU's reasoning that GE might have been able to drive competitors out of the aerospace market by offering customers a complete package of GE engines, Honeywell avionics and financing from GE Capital Aviation Services.
That so-called bundling theory was sharply criticized in the United States, where regulators are more inclined to allow businesses to pursue such synergies, in part because they have more power to break up any monopolies that might result.
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