1 / 11

Making & Saving Deals 2005 GE/Honeywell Why the European Commission said “No” Andrea De Matteis

Making & Saving Deals 2005 GE/Honeywell Why the European Commission said “No” Andrea De Matteis 7 June 2005. Outline. Introduction Merger Control in the World Merger Control in the EU GE/Honeywell Background information on the deal Relevant markets and position of parties

patrick-leach
Download Presentation

Making & Saving Deals 2005 GE/Honeywell Why the European Commission said “No” Andrea De Matteis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Making & Saving Deals 2005 GE/Honeywell Why the European Commission said “No” Andrea De Matteis 7 June 2005

  2. Outline • Introduction • Merger Control in the World • Merger Control in the EU • GE/Honeywell • Background information on the deal • Relevant markets and position of parties • Commission’s concerns & legal issues • Differences between the EU and US approach

  3. Growth in merger control • 1914 - first merger control law adopted by US Congress (Clayton Act) • Today, more than 60 jurisdictions worldwide have merger control regimes • Approx. 50 have compulsory filing requirements

  4. Member States’ control regimes Mandatory regime Voluntary regime No merger control 14 merger control regimes in the EU

  5. European Commission • Merger Task Force (“MTF”) • Part of DG Competition • Commissioner Monti • Full Commission • Advisory Committee ofMember States • Reviews all concentrationswith a “Community-wide dimension”

  6. GE/Honeywell

  7. The facts • Takeover involving two gigantic US companies: • The biggest ever industrial merger ($42 billion) • Combined worldwide turnover: $160 billion • in EU, GE $20 billion (and 85,000 employees) and Honeywell $5 billion • Deal concluded in 3 days without consulting antitrust counsel

  8. The European Approach

  9. Product Market GE Honeywell Engines for large commercial aircraft 0 Engines for large regional aircraft Dominant position (60%-70%) Substantial presence (30%-40%) Small share (10%-20%) Leading position (40%-50%) Avionics products (aircraftcontrol, flying conditions, navigation, communication) Engines for corporate aircraft 0 Leading position (50%-60%) Non avionics products (brakes, wheels, landing gear, aircraft lighting) 0 Leading position Engine Starters 0 Leading position Small marine gas turbines Active Leading position Affected markets Dominant position (52%-65%)

  10. The challengers and their theories • GE Capital will impose exclusivity for Honeywell avionics and non-avionics • GECAS will only buy planes that have Honeywell avionics thereby foreclosing competitors • Lower-priced bundles of GE engines and Honeywell avionics and non-avionics will foreclose competitors

  11. Conclusions Will there be more GE/Honeywell cases in the future? • There will be more attention paid to EC merger control by non-EU merging companies • GE/Honeywell is a rare exception to the rule of systematic convergent outcomes • Merger control necessarily involves a prospective analysis of inherently uncertain future effects • “Reasonable minds may reach different conclusions on the application of the same law to the same body of evidence." (Tim Muris, FTC Chairman)

More Related