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L'interdiction de la fusion General Electric / Honeywell

par - Jan Wasilewski Aude Rousselot
Science Po
Traductions: en Original: fr Source:

sommaire suivant

Aude Rousselot and Jan Wasilewski

Run of Lobbying European

of Mr. Domenica Jacomet

Science-Po, June 2003

The prohibition of fusion

General Electric/Honeywell

from October 20, 2000 to November 20, 2001

The case fusion prohibited between General Electric and Honeywell was selected because it is a subject which allows a complete operational analysis from the point of view of our teaching, being at the same time the case of a strategy of influence which failed, and the occasion of a comparison on the methods of lobbying which are exerted on a side and other of the Atlantic.

Methodology : this analysis rests certainly primarily a press review, but also academic publications and internal notes with Cabinets of Public relations. To prevent as far as possible the skew of the univocal analysis of a fact, it as often as possible was based on at least two sources (thus of the frictions revealed at the time of the Air Show of Le Bourget, deciphered by the World, Financial Times and the BBC, or of the lesson of lobbying to European presented by Al, Crowell&Moring and European Association off Agencies Communication)

Thanks : with Sirs Dahan and Jacomet which provided us the elements of definition and appreciation of the case, by hoping that we will have known to advisedly use them in this short analysis.


Why the fusion of the two American companies of aeronautical material General Electric and Honeywell, so brilliantly announced on October 20, 2000 and ratified by Department off Justice on May 2, 2001, it finally led to the declaration of abandonment of fusion by the two partners on October 2, 2001 ?

The answer holds in a fact : the activities of this new consortium were exerted partly in Europe, subjecting it to the authority European Commission ; and in two points, one legal and the other policy :

- fusion as accepted by the American authority was incompatible with the requirements of the European legislation

- the strategy of General Electric and Honeywell1(*), during the negotiations of setting in conformity of fusion with the anti-monopoly acts of the European Union, was largely inadequate.

It is legitimate to be astonished a priori by the failure of a strategy of influence on behalf of a company equipped with all the means necessary to set up a rational and reasonable diagram of argumentation, and which more is based in the United States, the fatherland of the lobbying. This failure would however reveal, quite simply, a difference in culture of negotiation and influence on this side and other of the Atlantic.

It is thus possible to make an assumption according to which,

I. beyond of an untraceable compromise between GE/H and Commission on the questions of antitrust,

II. the multiple attempts to influence the Commission contributed to found an atmosphere of passage in force which did not play in their favor ;

III. and to conclude on this case like revealing from certain incompatibilities from traditions and methods between the United States and the European Union.

1. The untraceable compromise between GE/H and commission on the questions of antitrust

1.1. Presentation of the actors

1.1.1. Honeywell and Michael Bonsignore

Honeywell Inc. employ more than 100.000 people and manufactures inter alia products for the aircraft industry, as well as systems of automation and industrial systems of control. It is re-elected for the quality of its components avionics and the vitality of its department research and Development. Michael Bonsignore is the chairman.

1.1.2. General Electric and Jack Welch

General Electric Co. is the largest company of the world from the point of view of the capital and number of establishments abroad, it is inter alia the principal manufacturer of engines of planes in the world. It employs more than 197.000 workmen and Jack Welch is the chairman since 1980. It is known for its voluntarism and its intransigence in businesses: it was called «Neutron Jack» for the plans of massive dismissals which it organized to cleanse its subsidiary companies. It is with him that GE owes the its classification of company profiting from strongest confidence of its shareholders, and the personal hatred toughest on behalf of the trade unions.

H is the largest purchase of GE since the arrival of Welch with the head of the company: it represents the equivalent of half of the sum of all the purchases since 1980. However GE has the practice of the assimilation of whole companies : it thus absorbed Al Signal the previous year. At the time of its fusion with H, GE was in opposition with its principal domestic competitor, United Technologies: in fact, J. Welch already made make an internal study on the possibility and the interest of a fusion with Honeywell, but United Technologies is about to sign with Honeywell for a fusion to 40 billion dollars when the business is revealed in the newspapers of the morning of October 20, 2000. Jack Welch learns the news in its car, it convinces the members of the board of directors by telephone and faxes a handwritten proposal for a 42 billion in Michael Bonsignore as of her arrival with the GE seat. Two days later, the agreement on fusion-acquisition by exchange of shares is found and J. Welch declares in press conference that on the one hand « this is the clearest deal you' L ever see from has regulatory standpoint » and that in addition the operation should be finished for February 2001. This last operation is a challenge for J. Welch, it thought of it for a long time and it is held in a few months of its departure envisaged with the retirement ; it is not known if it is at the request of the members of the Board of directors or with its own request, but it was decided that J. Welch would remain at its station until the end of the transaction, which announces that the operation was regarded as crucial and delicate by the company.

The European GE establishment is strong : in 2000, the company carried out there 25 billion its 130 billion sales turnover, and it employs 85.000 people there.

> GE and H thus have two chairmen with strong personalities ; but the antitrust authority of the European Union against which them project runs up is directed it also directed by two strong personalities, namely Mario Monti for the Commission, doubled of Alex Schaub for the DG Concurrence.

1.2. Fusion GE/H

1.2.1. Strong stakes and an enthusiastic decision for fusion

As much J. Welch that Mr. Bonsignore express himself on the strong stakes which governed the decision of fusion: the goal being the reinforcement of the efficiency of the two companies, they hope to take shares of market by vertical and horizontal integration their activities in the form of savings of output and scales. Indeed, they together cover 100 countries, and much of their structures and customers are concurrent or redundant there. By proposing with their customers packs products, for example avionics of H and GE engines, at an incomparably competitive price, the new consortium is certain to widen its shares of market. It is this «bundling', or sale of goods/services in «faggots» which will be pointed by the Commission like anti-competitive.

For Honeywell, fusion with a multinational of the GE size should ensure the reinforcement of its position in its technological niches and a room for maneuver much broader from the point of view of the investments of production as well as research and development.

For GE, it is also a question of rebalancing the company GE with the development of an industrial branch which would come to counterbalance the hypertrophy on behalf of the GECAS2(*) in its consolidated balance-sheet (GECAS accounts for 42% of them, but it is known that the financial activity is much more volatile than the industrial production).

The financial importance of a fast fusion appears rather quickly: Honeywell wanted to anticipate the negotiating procedures and yielded the equivalent of 10% of its sales turnover in activities, which becomes a real handicap and loss of earnings when the procedures are put at perdurer.

Lastly, the Stock Exchange reacts very violently to the various phases of the business: with the advertisement of fusion in October, the courses of the two companies had been into light rise; as the compromise delays with its releasing, their courses drop more and more, and on June 14, the Dow index - Jones of the industrial companies which make the most profits made a fall of more than 100 points in the first opening hour of the purse whose fall of the actions of Honeywell and GE represents more of the fifth.

1.2.2. A North-American procedure without clashes

Following the agreement on the project of fusion on October 22, GE and H contacted the antitrust authorities American and Canadian in mid-November and set up a calendar of negotiation. (moreover, it seems that the first contacts with the Commission also go back to this time, even if it is impossible to determine in an unquestionable way if it is GE/H which established the contact or of the competitors of GE/H which started to wake up the attention of the European authority).

In accordance with the procedure of notification of fusions acquisitions determined by the law Scott-Rodino Binder of 1976, form HSO3(*) is deposited by the consortium with the Antitrust Division of Department off Justice and in Federal Trade Commission on November 15, 2000.

The American authorization takes place on May 2, 2001, subject to sale of a company building of the engines of helicopters by GE, without any reference to the discussions which started in Brussels since February 5 and already started to be degraded; the decision of Canadian Competition Office not to be opposed to fusion is announced on May 16 (without any regard for the fact that the phase of thorough investigation was launched on the other side of the Atlantic). This stage, the managerial projects of reorganization and technical reorganizations start to be launched between the two partners.

It is however possible that an investigation was launched to the United States, because the regulation is as follows: in the event of positive not-objection on behalf of CTF or of DoJ, the transaction is automatically validated 30 days after the notification; however the authorization intervened almost 5 months afterwards, which implies that a «second request for additional information», about the equivalent of the procedure of deepened investigation, had to be launched, but that it did not lead to the identification of elements entering in violation of the anti-monopoly acts.

> Contrary to this procedure almost without clashes in North America, which held more of the recording than another thing, the beginnings of the European procedure appear clearly hard.

1.3. Negotiations of setting in conformity

1.3.1. Objections of the Commission

Let us recall that the Commission has authority of examination on any fusion-acquisition concerning a total sales turnover of more than 4,25 billion dollars, or realizing more than 225 million dollars of sales turnover on the territory of the European Union. However, GE had realized in 2000 25 billion dollars of sales turnover in Europe, which undoubtedly subjects fusion to the regulation of the Commission by giving him the `Community dimension » devoted.

Following the recording of the notification by form CO4(*) at the DG Concurrence on February 5 February 5, 2001, all the recipients meet in Brussels for the installation of the calendar of the negotiations. With 18h30 GE and H learn with a certain astonishment that the Commission will file proceedings of thorough investigation.

The latter begins officially on March 1 and should thus be concluded 4 months later, July 1.

The purpose of the Commission is, as from this moment, to invest itself in a procedure of setting in conformity of fusion with the requirements of the European regulation, to make some disappear the elements from dominant position and bundling, considered as anti-competitive. Thus in its first document of objections of 155 pages given to the two companies on May 8, 2001, she formulates like principal requests

1. the reduction of «horizontal overlaps» on the components avionics and the engines of private aircrafts small-mail or «regional jets». This expression indicates overlappings in the production of goods, i.e. that the fact that GE and H produce the same components avionics would ensure them, once the fusion made, a dominant position on the market of the components avionics.

2. and the disappearance of the «conglomerate effect», so known under the name of theory of the wallet (cf 1.2.1).

These requests for modifications are at the same time structural and managerial: it would be necessary to separate from certain activities from a legal and countable point of view, and to sell some completely of them others, to guarantee that competition can remain in the two mainly accused fields of the components and the engines.

In fact, progressively with the discussions, a third field proves to be most difficult to negotiate: that of the vertical effects of the existence of GECAS at the sides of the market of Honeywell on the components avionics. While combining,

1. General Electric Capital Aviation Service, subsidiary of leasing and financing of planes, made it possible to make pressure on the tenants of planes,

2. and the components of Honeywell allowed an influence on the other hirers out/financeurs of planes,

what took all the competition top in bottom of the chain out of clipper, and was obviously a situation of abuse dominant position. (note: GE produced certainly components avionics, but not sufficiently to be likely to be shown of dominant position by combining them in bundles goods/services with its activity of leasing).

1.3.2. Insufficient proposals

GE/H was quickly declared surprised of the level of the requirements of the Commission, being prepared only to again present the dossier made up for the authorities American and Canadian. A complete argumentation thus had to be elaborate in the urgency by the 17 lawyers and lobbyists of the Cabinet Skadden, Arps, Slate, Meagher&Flom which was given the responsability to supplement the internal GE resource (Department off Public Relations Services of GE directed by Joyce Hergenhan) for these negotiations. (GE apparently forces H to conduct only the campaign of negotiation, even if this coalition is stable).

This delay at the beginning finally will remain like a permanent form of «defense» of GE/H vis-a-vis the requests of the Commission and not an anticipation which undoubtedly more productive and would have been exasperated.

May 29, 2001, all the recipients meet in Brussels for 2 days of hearings. According to some observers, GE/H is based in a contr' economic argumentation to defend its position, disputing in particular the bundling (wallet effect) by sending experts famous economists (of which the pr. Shapiro of Berkeley), not being able to deny the horizontal effects of fusion.

The Commission having maintained its interpretation of the effect wallet, J. Welch proposes on 12 June to sell the aerospace branch of Honeywell estimated at 2,2 billion dollars without counting the branch of production of engines of helicopters. It is at that time that the question of the GECAS emerges like major obstacle, and J. Welch immediately proposes to separate from them the activities in a legal entity independent of GE, - while remaining opposed at the request of Mr. Monti to carry out a transfer out of purse of the capital of the GECAS whose GE wants absolutely to remain owner. It is obviously insufficient vis-a-vis the requests of the Commission.

After one week of negotiations, J. flanked Welch of seven assistants twice meets Monti in the day of June 13, 2001 without managing to find compromise. Monti wants that GE sells 20% of the GECAS with a competitor, for J. Welch it is out of question : it is constant in its reasoning by its lawyers and economists who assert that « it would bee like asking has Ford CEO to drive A Toyota for 20% off his time » (Barry Nalebuff, economist of Yale). At this moment of the failure of the strategy economist, one feels that fusion is about to be fallen through.

June 17, dates legal limit to deposit proposals, GE proposes legal concessions that the Commission judges inadequate and insufficient, in particular in the absence of proposals on the GECAS. This Monti time requires the transfer of the totality of the avionics activities, which represent 3,6 billion dollars of sales turnover and half of the benefit of Honeywell.

June 27, 2001, is 2 weeks after the legal deadline to deposit proposals, GE still proposes new very precise legal concessions to be detached gradually from GECAS and with the profit from shareholders chosen, that the Commission agrees to examine but ends up declaring like always insufficient.

During all this period, J. Welch and Mr. Bonsignore médiatiquement dispute the analysis and the conclusions of the Commission on the theory of the wallet, denounce the instability (real) and the growth (real) of the requirements of the Commission5(*), and its partiality: June 14 GE thus emits a press release which supposes that the true reason of the opposition to fusion is the defense of the interests of the European companies.

> The negotiations were thus hard, and the irreconcilable positions ; the technical rejection was inevitable, and it took place on July 3, 2001 at the time of a vote in plenary session of the Commission.

With the exit of the examination of this legal part of the prohibition of the fusion, where the compromise could not be found between the Commission and GE/H on the questions of antitrust in spite of a legal strategy and economist important, one can wonder about this atmosphere in progressive drift which seems to have been the background of these difficult negotiations. One can read there all the political strategy of GE/H, and the probable reasons of his resounding failure.

2. The strong influence campaign installation by GE/H

2.1. A context formal and of the economic situation underestimated by the American consortium ?

2.1.1 Competitors in the air transport air

The principal competitors of GE and H are the English motor mechanics Rolls Royce and French Snecma, Rockwell and Thales (former Thomson CSF) for the products avionics, Pratt and Whitney (subsidiary of United Technologies) on the aircraft.

It seems that these various firms organized themselves rather early to counter fusion : Enrique Gonzalez-Diaz, delegated to the Commission with the file GE/H, would have been contacted as of December 2000 by companies ready to provide him elements likely to involve one « second phase » (procedure of thorough investigation)- even if the civil servant defendants at the time of « to come couiner » near the Commission, it therefore did not évincés them of the list of the companies heard at the time of the organized week of hearings from the 15 to May 20, 2001.

In addition, these companies would have even shared work : the Christian Science Monitor as Legal Times allots very precisely to United Technologies and its lobbyists of the Cleary cabinet the contribution of the evidence on the harmful effects of GECAS, and with Rolls-Royce and its advisers of Freshfields that on the bundling and the packages which undermine the concurentiality of the sector. Rockwell International would have also played its part in the technical expertise against GE/H, profiting owing to the fact that limited manpower of the Commission6(*) push it to accept the voluntary technical expertises.

2.1.2. The air transport air as a whole

Not only the aircraft industry is a privileged arena of the commercial conflicts between the United States and Europe from the point of view political and diplomatic7(*), which was a true risk unhappy set of themes for the business, but still the pressures of branch is they firmly make feel around additional topics with the business GE/H at that time.

The example of the events of the aeronautical Living room of Le Bourget from the 14 to June 18, 2001 are undoubtedly the best example. On the one hand EADS benefits from it to publicly affirm not to have testified against fusion. In addition Airbus, the principal manufacturer of European plane, announces on this occasion that it beat Boeing, its American competitor, while being ensured on behalf of ILFC, a leasing company located at the United States, the ordering (9,4 billion dollars) of one hundred eleven planes, as well as a promise to buy five giant planes A380. The military branch of Airbus obtains for its part, of the European Ministers for defense, an engagement writes according to which they will buy two hundred and twelve planes A400M, the first large military transport aircraft produced since many years by Europe. Following these declarations, the vice-president of Boeing, Harry Stonecipher, shows Airbus to force the hand of the Commission while being opposed to fusion between the two American groups. He informs, in an interview with the newspaper the World, that the conflict could extend in the commercial arena. «The United States approved this fusion. If Europe refuses it, that will it occur? We are not exactly friends, not?» known as it. It qualifies the intention of Europe economically to acquire more than two hundred airfreighters A400M «of absurdity», America being able to produce these planes with cheaper.

One could raise of other various strategies of pressure of branch : thus PDGs of Rolls-Royce and Thales Avionics they were frequently expressed publicly as for doubts about the honesty of fusion and the pressures that GE exerted on competition ; a congress of sector MRO (maintenance, to repair and overhaul) place in April 2001 in Dallas has and Delta Airlines and Air Canada do not fail to express their reservations there, and will caetera.

> A slip of the debate takes place thus of the two recipients of the negotiation (GE/H against Commission) towards the industrial spheres and policies which position indirectly for the defense of the positions. Each one sensitized the continental industrial actors of the branch concerned: Americans against Europeans, even direct out-market, in form of an abstract and polymorphic political pressure which scrambles the debate and tries to make up what was not less one will of influence by widening criticisms well beyond the direct implications of the business.

2.1.3. The American domestic policy

The republican administration, arrived at DoJ recently with the election of G.W. Bush, is famous to be a priori more «flexible» and more inclined to support Big Business8(*), than the administration Clinton the preceding one with which the Commission had gotten along well (what had been illustrated in particular by a launching in parallel of the investigations against Microsoft).

In addition, the American teams were named very tardily compared to the business, which did not facilitate the co-operation with the Commission. Thus, Charles James is not confirmed and is thus finally indeed according to Attorney General Délégué to Antitrust only June 14, 2001, i.e. once the negotiations were already contracted on the question of the GECAS. A many commentators are delayed on the impossibility of the dialog which would have strongly obéré the opening and the possibility of the compromise: Mario Monti himself regretted a posteriori not to have had of institutional interlocutor with whom to exchange on the business.

2.1.4. The tendency in the judgments of the Commission

In prolongation of the principle according to which a dominant position is harmful, the Commission based itself more and more on the new theory of the wallet or the conglomerate; this was in particular raised by certain think-tanks economists which announced that the theory of the wallet differs from the traditional perception of the predominance formed by concentration of actors on the same market, transforming it into a more strict approach of the two principles founders of the action of the Commission:

1. principle of intolerance vis-a-vis the dominant positions, even by constitution of a conglomerate of close activities

2. and principle of progressive widening of the reasoning of the DG and the authority of the Commission by constitution of legal precedents and trainings scientific9(*).

This tendency will be concretized in the decision to prohibit GE/H and will be again visible in the later decision of prohibition of TetraLaval fusion/Sidel of October 30, 2001. This last operation was considered to be harmful with competition within the Common Market in what it would have made it possible the new entity to profit from the position considered dominant of TetraLaval on the market of packing out of paperboard to strongly penetrate the market close to plastic packing. That is to say completely same problem as GE/H, where the Commission estimated that the operation would have made it possible the new entity to sell one mix of the products GE (engines of planes) and Honeywell (systems of avionics) at a price rebate compared to separate sales of the two products, to profit from the financial deterrent force from Capital GE, one of the principal actors of aeronautical leasing, to impose the products GE/Honeywell and to return the products of the two companies only available when sold together.

> It is thus this double pressure of the economic situation, completely external with the business itself, that the lobbyists and lawyers of GE/H perhaps insufficiently measured ; and, following the example place much more important left with competition in the European procedures, they counted perhaps too much on « magic bullet10(*) » of the pure political intervention to save their business.

2.2. Strategy of GE/H : to impose its power

2.2.1. Delays and lightness vis-a-vis the procedure

It was seen that the form is lodged tardily with the DG, February 5, 2001, whereas its equivalent was deposited in DoJ on November 15, 2000. It is all the more incomprehensible and unacceptable which GE had with the mojns already once the exprérience of the European procedures, with the occasionde the acquisition of the subsidiary company Engine Alliance of Pratt&Whitneyen 1996.

In addition, J. Welch returned to Brussels with new proposals two weeks after the deadline, instituting in fact a «stop-the-clock» which had not been announced by the Commission.

2.2.2. Scientific and academic disputes

GE offered the services of famous economists temporarily to go to dispute the conclusions of the analysis of the Commission as experts, in particular Professor Shapiro of Berkeley which was expressed so as to to it laconic time and polemic at the exit of hearing on the attitude of the Commission : « No it justify, legal goal poor reasoning ».

2.2.3. Personal and political disputes

It is known that GE allocates important sums with the politicians in the form of legal contributions to their election campaigns : 960.000 $ in 1999 ; and that in addition the company exerts an extremely active lobbying, which cost him 7,28 million dollars the same year simply for the federal level.

It is then not astonishing that in a form of return on investment in political capital, a many personalities were expressed on the subject or returned to Brussels to support fusion : some example are enough :

- a high-civil servant of DoJ, Deborah P. Hermann, comes to Brussels on June 7 to present what it calls it « position American » in a tasty lapse which lets foresee the aggregation of the GE interests and the government of the United States.

- the same day, the American administration also raises the Ge-Honeywell business at the time of an abstract meeting with the European leaders at the time of the Summit of Gothenburg in Sweden.

- Robert Zoellick, the Representative with the Trade, regularly called with the «equitable treatment» of the case.

- finally, President Bush himself: June 18 at the evening, whereas all seemed lost, J. Welch had called Andrew Card, the Principal private secretary of the White House, to require of him « whatever help you edge give custom ». The following day, G.W.Bush stopped its turn of Poland to declare itself « concerned » by the difficulties which the Commission with fusion made.

- on July 3 Paul O'Neill, secretary with the American Treasury shows « reaching into the affairs off other countries by blocking has deal between two Custom-based companies ».

- the republican senator Phil Gramm declares on chain CNBC: «I think that it is a worrying thing, a thing to which we must pay attention. The problem of knowing which capacity the European Union must have when it examines the case of two companies which are basically American is completely real.»

2.2.4. Diplomatic and commercial disputes 

Following this declaration of the Senator Phil Gramm, two members of the Antitrust Sub-commission of the American Senate undertook besides a study on the reasons which made that the antitrust authorities American and European arrived at so different conclusions ; they affirm there that the divergence between the European and American positions «would prevent the development of open markets and open and would block the efforts of expansion of the American companies on world market.» 

June 14, 2001, GE publishes a press release which affirms that the true reason of the opposition to fusion is the defense of the interests of the European companies.

Financial Times brings back on June 26 2001 that pressures exerted directly on the Member States start to have effects: «Aces appear in EU' S unanimity against GE deal», at the point of «raising the possibility that negotiations could Be reopened » : it would be in particular of the United Kingdom and France, the Office for the English Equitable Trade wondering whether the arguments of the Commission are « suitably weightly? ».

2.2.5. Answers of the Commission 

The pressure was constant on both sides, the Commission answering the threats by the scandalized revelation of these pressures.

Thus of the declaration of Mr. Monti on June 18, 2001 in Lubljana, following the intervention of G.W.Bush. « I deplore the attempts aiming at désinformer the public and to cause a political intervention. Such ways of acting are completely moved in a business of agreement and do not affect least the Commission. It is about a legal and economic and nonpolitical question ".

Or, in order to reaffirm the competence and the legitimacy of the Commission compared to the 4064/89, Mr. Monti declared on June 20, the 2001 «nationality of the companies and the poltiic considerations never played and will never play of role in the examination of fusions. Monit pointed out to this same occasion that GE/H was the 394è case examined by the Commission implying at least an American partner since 1989, and that only four had been formally prohibited, and that the only case of fusion américano-American to be prohibited by the Commission was MCI Worldcom/Sprint, which had been prohibited also by DoJ. In addition, the Commission blocked on the same criteria fusion Volvo/Scania in 1997; and in finally several American companies carried felt sorry for and took an active part in the hearing organized by the Commission at the end of May- whereas the absence of voluntary public testimonys on behalf of the customers and GE suppliers11(*) inclined to let think that GE and the American government could exert pressures on them.

These calls to order announce that it refuses any dispute as for its economic argument, its role of antitrust authority or the independence of the European Union.

2.3. Notice : evolution of the partnership GE/H

It must be added to this description of the strategies political and media carried out by GE an important remark on the evolution of the partnership GE/H. It seems that as the situation was degraded, GE became aware owing to the fact that fusion was not finally so desirable, for the following reason : the economic situation was degraded since October 2000 when GE decided to buy H and it would not be dissatisfied to retract ; moreover, all the procedure already cost extremely expensive GE which monopolized the organization of the lobbying as of November 2000 and sees its expenditure reaching considerable failed costs ; finally if the deal fell through apparently H would lose much more than GE, because the operations of H are shaken on the long term and without possibility of rebalances nor of transfers of capital, H being an industrial company functioning with more tended flows.

From where undoubtedly an aggravation of J. Welch which pushes back with mood the last proposal however quasi-suicidal from the managerial point of view of Mr. Bonsignore on June 29, 2001: it proposes with J. Welch to lower the purchase price12(*) of H and to grant more to the Commission ; but J. Welch answers that « the new deal you proposes cuts the heart out off the strategic rationale off our deal ; it makes judicious No for our share owners ».

> The strategy of political and media jammings carried out by GE created certainly a blur, but which finished by being counterbalanced by the internal quarrel between GE and H, involving a double rigidity of the GE position taken between supplications of H and the remonstrances of the Commission.

> One thus notes the importance of the case like «precedent», the media cover, the shock of two models of negotiation and influence: what constitutes an occasion to wonder about the illustration that this case offers divergences which exist between the policies of competition and the traditions of lobbying American and European.

3. Operational analysis : occasion of a study on the perception of the lobbying in Europe by the American actors by the prism of prohibited fusion GE/H

3.1. Policies of American and European competition

3.1.1. Divergences of principles

Divergences between policies of competition American and European hold initially with definitions divergent of terms of «competition» and «dominant position «, which implies requirements of setting in conformity with the legilsation which differ basically, like J. Welch could note it: «The European regulators' demands exceed anything I gold our European advisers imagined » Mr. J. Welch off G.E said June 12, « and differ sharply from antitrust counterparts in the U.S. and Canada, which shows that you' Re never too old to get surprised ».

These conceptual divergences involve divergences in the principles of judgment of the cases:

- On the theory of the protefeuille William Kolasky, responsible the antitrust one in DoJ declared that it was «neither founded in the economic theory nor proven by the empirical facts», and that this divergence of analysis represents an absolutely fundamental dissension»

- On the concept of dominant position and protection of the competitors and the consumers: the two American authorities agree to make distorsions with competition if a fusion makes it possible to release from synergies and the scale effects or to create new markets, as many induced effects appearing in fine favorable for the consumer, contrary to the Commission which wants to protect the interests from both. Legal Times thus brings back the indirect debate between C. James and Mr. Monti : «The problem, James said, is that Monti aims to prevent harm to competitors rather than harm to competition». In answer, Monti declares that «not only competitors, goal also customers [were] worried butt the prospective customer off Ge-Honeywell». It affirmed that the dichotomy presented by C. James was false, because if competitors leave a market, the customers suffer immediately from the monopolistic or oligopolistic effects induced.

These divergences can arrive at opposite conclusions on the same phenomenon, as David Evans in Foreign Affairs notes it : « the two authorities recognized that fusion would have as a consequence a fall of the prices for the consumer. But whereas the Americans saw in this fall an undeniable benefit, Europeans transfer it like coming to the detriment from the room for maneuver from the competitors. According to the proper words of C. James, «What led the United States to clear the transaction - the prospective customer that it would make the combined firm has more effective competitor - was the very reason the HAVE opposed it.».

With regard to this conceptual quarrel, Monti tried to put an end to it at the time of a short speech to London little time after returned decision: «we are not against fusions which create more efficient firms ; we are however opposed to fusions which do not create better efficiency and are in addition likely to raise barriers against competition and to even reduce the consumer well-being ". One can note, in addition, that Mr. Monti rencotré C. James in September 2001 in Washington and that they decided there on recentrement reasoning on a défintion common of the «attack to competition».

3.1.2. Differences in process : two traditions of negotiation

The procedure of the Commission is based on the work of Merger Task force, which functions by accumulation of data, country by country, produced by product, and systematic resection by tests of market near the customers and competitors.

The contradictory public audition, a great oral examination where the companies partners, the competitors and the consumers expose their point of view, with in the chair parking adviser-listener of the rights of defense, is the most exemplary moment of this important place left with the competitors and suppliers/customers in the European procedure, unlike the amércaine. In the case of GE/H, of the questionnaires had been sent to the airline companies and to the industrialists of the branch, being a prelude to with the establishment of 15 formal testimonys. GE/H lengthily criticized this importance left with the «denunciations and allegations» made by the competitors sosu the seal of anonymity and the secrecy. It is true that, if DoJ had not succeeded with déclencehr of procedure for bundling against GE/H, it is because no airline company or supplier would have agreed to testify in public on this subject, craigant the lightnings of GE and other actors of the air transport air. To answer this criticism of influencability by the competitors, Mr. Monti stated in March 2001 with a congress of American Bar Association that «We are sufficiently not-naive, have to Be whitebait to discount the elements provided by competitors for to their vested interests. Competitors are has rather powerful source off overall assessment off mergers and potentially for the identification off cure.»

Another element which has supris the Americans is the non-juridicity of the procedure: in the United States, the business is pled before a court if it is not automatically recorded without objections; contrary, they are civils servant semi-policies of the Commission who judge businesses the antitrust one and the Americans are shocked by the fact that the procedure rests «on politicians likely to be influenced by the lobbies»13(*), and that the Commission is at the same time plaintiff, judge and jury. With that Mr. Monti can answer only while being based on the legislative definition of his function to justify of his intransigence and his independence.  

> In short, GE encountered an authority of regulation (Commission) after having quickly evacuated an authority of recording (DoJ).

3.2. Traditions American and European of lobbying

3.2.1. Legal co-operation

The GE strategists had perhaps thought of being based on a legal co-operation established since 1991 between the Commission and DoJ to make pass the business without another form of lawsuit. Indeed, the legal co-operation between the Commission and DoJ on the questions of antitrust exist since the Bilateral agreement on the Application of the Laws of Regulation of the Competition, signed in 1991, which founded one « THAT WEARS OUT Merger Working Group ». The action of this group was reinforced at the time vis-a-vis the polemic : in addition to the meetings of negotiation enters the Commission, the two firms and their lawyers, there were discussions and meetings with the official ones of DoJ, CTF, DG and Marion Monti well beyond the practices of the US-US-MWG. This co-operation however suffered at the same time from the delay of deposit of file at the DG which shifted the exchanges of information, and from the transfer of power between the teams Clinton and Bush who complicated the transmission of the files and the installation of the dialog (cf delay of the nomination of C. James 2.1.2.).

To traverse the various press and publications, one finds traces of a double official/administrative position which would differ, in the middle same of the US legal co-operation/EU. It would be thus on the councils of members of Antitrust Division that the Commission would have based its first objections on the theory of the wallet (the DOJ would not have succeeded in showing bundling because no airline company would have agreed to testify publicly before a court on this subject, as the American procedure of public testimonys claims it); whereas William Kolasky, number 2 of the same Antitrust Division publicly declared that the theory of the wallet «is neither founded in the economic theory nor proven by the empirical facts».

An estrangement more or less false, and besides more political than legal, had thus been established between the two authorities; this is why following the verdict July 4, Mario Monti expressed himself in the direction of simplicity and the appeasing: «each authority must implement its own principles and the risk of divergent sights, although regrettable, can never be excluded. I am determined to strengthen the bilateral co-operation to reduce this risk in the future» ; and since negotiations are in hand for an agreement «of second generation», that to which testifies the new one document-tallies «Best Practices one Co-operation in Merger Regulation» published on October 30, 2002 between the US ones and the EU.

3.2.2. Difference in measurement and difference in means

Without wanting to force the feature, one can say that the fact that GE had before the business only one temporary lobbyist in Brussels, and that it is its own chairman who ended up coming to negotiate step by step, is exemplary difference of measurement and means which exists between the United States and the European Union, and in particular on political and personal nature of the pressures which cannot have course in Europe.

The tradition of « revolving door system » sullied neutrality and professionalism with the lobbyists sent by GE in Brussels. Thus one knows that appear among their clients of former members of the Congress and the Secretariats, of the two political tendencies. Inter alia, Nicholas Calio, a lobbyist officially recorded as with the GE service which is today in load of the Legislative Businesses at the White House; idem, an old sénatrice of Georgia during 24 years, Sam Nunn, is today member of the Board of directors of GE and partner of a lawyer firm (King & Spalding) which was used the interests as GE during the business.

Legal Times analyzes this recourse to the political lobbyists, without precedent in its volume as in its intensity in Brussels, as being the most important element of the failure of the GE strategy : « In Brussels, aggressive lobbying off senior policy makers edge backfire. That' S what GE did, and the company' S strategy is widely considered its biggest mistake ". In the same way, the above mentioned memo of Wilmer Cutler and Pickering invites to be wary of the «magic bullet» (the intervention of people economically, politically or administratively high-placed) which is if snuffed in the United States: «applying political presses will likely causes the Commission to conclude that the off left are seeking to undermine its- authority and thereby may poison the essential final training course the procedure».

GE thus did not haggle over the mobilization of the relational resources and the recipients. But it appears here that contrary to the natural logic which would like that the number, the diversity of origin and the unit of interest are an advantage for the cause which the recipients promote, not only volume and the force, but also the nature of the lobbying operated by GE founded the mistrust and the resentment of the Commission.

3.3. An awakening for the Americans 

3.3.1. Importance of the business for the USA

Over all the period, the American press reconsiders a powerful and méliorative public image permanently: the financial weight and symbolic system of fusion between GE and H: it is the largest financial fusion of the History, it is the alliance of two large American firms belonging to the Dow - Jones (the first 30 American companies), it would be the crowning of the career of the Chairman-model which Jack Welch represents. The media are also based on the international public image of DoJ: it is known that it is regarded as a model by the Commission14(*) and that hitherto no fusion accepted by DoJ was then prohibited by the Commission15(*).

Throughout the business, the media cover outr' is intense Atlantic, in the press specialized as in the media general public, and it can be strongly shown skewed: thus the political pressure passed in particular by the channel of CNBC, a chain of the cable which belongs partly to GE and on which a number of senators were expressed with virulence against the authority considered to be «protectionist» and «introducing» Commission.

The business is a true drama seen of the United States, if one believes of it Financial Times which launches out on June 29, 2001 in an account fax-by-fax of the desperate attempts at Mr. Bonsignore to save the business («Exchange off fax burries GE deal») or on July 6, 2002 in a psychological analysis of the relationship between Mr. Monti and J. Welch, in particular in descriptions of negotiations where the situations would have their place at Beckett or Ionesco («How Monti truned HT edeal into has flight off fancy»). Many is marked by the fact that the Commission prohibits fusion the day before at the evening of Independence Day.

No doubt whereas the purpose of the consequences and the conclusions which the Americans drew are to prevent in the future this scenario-catastrophe from reproducing.

3.3.2. One agrees on the fact that these prohibitions and the authority of the Commission will be growing 

It are striking to découvir in the analyzes of the think-tanks and of the American cabinets and Europeans the same conviction on the repercussions and the precedent created by the prohibition of fusion GE/H. They is focused in particular on the first steps of other decisions independent and impossible to circumvent of a Commission become «lessons that the other American firms must retain rout of Welch Jack and its methods».

3.3.3. Strategic need finally included/understood To increase the presence and the knowledge of Brussels and its logics

The failure of the GE strategy was the occasion of a methodological awakening for the Americans: the knowledge of the European procedure and the power of the Commission are the impossible to circumvent ones for any action to be carried out in Europe. In a memo of October 2001, an Al analyst evokes the business like a true lesson of lobbying : he recalls that, in the same way that GE had made validate its fusion near the Canadian authorities, the American firms must take the fold to also subject themselves to the European regulator and to yield, as for the Canadian institution, with his characteristics of spirit and procedure. European Association off Agencies Communication sees the advent in the douleuret there the ugrence of a European policy of the American firms.

It is thus a question of reinforcing the knowledge of and the presence in Brussels, in particular by the means of a targeted recruitment: the AEACA quotes in a document of April 2002 the sudden installation of the large US companies in Brussels: McDo maintains 5 there permanent; Nike 4 and Toyota 3 ; moreover, the large cabinets of Public relations and the Council recruit Community civils servant henceforth. Legal Times announces in the same direction the doubling of the permanent offices of firms American between the beginning of 2001 and semi-2002. Methodology : Need for one lobbying to the European one

As an article of 2002 indicates it, in fact définitvement the too strong and too direct methods «with American» can shock in Brussels:

US lobbyists struggle in Brussels- S. Lowenberg

While most European officials may speak English, that doesn' T mean they share American let make been worth. The American context is so neo-liberal that it is very hardware for any American, whether they are has to consume organization gold has corporation, to understand what drives Europeans. Have nap off the biggest U.S. companies cuts found out, simply transporting Washington K-Street tactics and personal to the European Union capital in Brussels does not work.

American lobbyists trying to ply to their kraft in the HAVE are finding themselves without many off to their traditional tools. This is has world largely without the campaign contributions, revolving door off to form public officials who trade one to their influence, and artificially manufactured public support - standard Al practice in Washington, whether the resulting is tobacco, pharmaceutical drugs, but nuclear power.
The insider range in Washington does not apply nearly have much in Brussels, where legislation gets tossed between the commission, the council off ministers, and the parliament so many times that broad-scale image and judicious coalition-building campaigns often make more than riffle shot lobbying. With the power in the hands off so many, intelligence and strategy take precedence over accesses and influence. Brent Staples, who heads the Brussels office off Washington, D.C. based PR and lobbying firm APCO, compare it to «three-dimensional chess.»

In the particular case of GE and H, one can note that the lesson evoked above bore its fruits: GE transferred its permanent office from London in Brussels, there reinforced its team of lawyers, and put at its head a former Italian civil servant of the Commission which would be a priori ready to tie exchanges with Mario Monti. Need for a European existence

In addition it is perhaps not a chance if the cabinets which ensured the support of «gaining» are European in fact or character, contrary to that chosen by GE.

The Cabinet Cleary, Gottlieb, Steen & Hamilton, American leader in the field of fusion-acquisitions, is present since the beginnings of the European unification : in 1951, George Ball who was then partner of the cabinet in Washington helped Jean Monnet wrote the antitrust private bills of the CEAC. Cleary thus secured a place in Brussels before even the majority of Europeans themselves (and in particular before the British, which joined the EEC only in 1973), by opening an office in Brussels since 1960. One can allot part of the success of Cleary in Europe to the choice which was made recruit mainly in Europe the members of the office: in 2001 one counts American 5% there only and 17 nationalities of the European continent. Cleary announces Establishment of Brussels at the point to represent Airbus and United Technologies... what is obviously not neutral taking into consideration debate of the business GE/H.16(*)

Freshfields is the British leader in the same field of fusion-acquisitions, it amalgamated in 2000 with the German cabinet Deringer, and is pressed on a panel of experts and a very broad team of lawyers who allows him extremely short response times. It was used the interests as Rolls Royce in the business.

Contrary, Skadden, chosen by GE for the negotiation, was certainly already the first cabinet for américano-American fusions in term of value dollar, but its office of Brussels had been open only in 1990 and did not count at the time any European in the legal team, then made up of 10 members only. Since, it counts 17 permanent nationalities and 18 lawyers.

The Cabinet chosen by GE to support the recourse in front of the Court of First Authority is Vogel&Vogel, a cabinet which is said established in Paris, Brussels and Frankfurt, working in French, English and German, having the practice of the authorities administrative and legal, French and Community, accustomed to the evaluation of the legal risk : one thus also notes in this phenomenon recentrement of the GE strategy.

> GE/H will thus have been the occasion of an awakening for the politicians as much as for the American lobbyists. It becomes a precedent which opened a number of possibilities for the future near: one can quote the question of the investigations about Microsoft, at which Joe Wilcox announces « hard battles », and Legal Times as for him advises quite simply « Yew J. Welch were to send has memo to Bill Gates, He might well advise that Brussels is not D.C. ».


As we saw, if the prohibition of fusion between General Electric and Honeywell were logical from the point of view of the European legislation, it is quite as true as the attempts at setting in conformity of fusion suffered from a noxious atmosphere created by too many and too visible attempts at influence. The failure of GE/H was thus the occasion of an awakening of the policies and lobbyists outr' Atlantique towards a redimensioning of their strategies.

This missed business will certainly remain like one of the important cases of the History of the Commission in its antitrust function, and it is carrying at the same time technical and practical lesson, presenting a legal and economic dead end as much, that the assertion of the power of the Commission.

It seems that, following this business and like always, the medium of the lobbying learns quickly, as the recent change of the strategies of ousting on behalf of American companies shows it. International Rockwell and United Technologies were competitors on the domestic market of GE/H : in the same way it would be Disney who would have succeeded in pushing the Commission to force AOL to make considerable concessions at the time of his acquisition of Time Warner for 165 billion dollars, and still in the same vein, Sun Microsystems would have played a part determining in the investigation in progress on the dominant position of Microsoft in the software for waiters. All these companies are domestic competitors of the suspected companies : their lobbyists would have this manner found the best means of reaching with their adversaries while changing continent and while calling some at the Commission, thus renewing the traditional one « strategy by the band ».

A.1. History of the case :

October 20, 2000- the GE chairman, Jack J. Welch, learns that United Technologies, a GE competitor, is preparing an acquisition of Honeywell. He prepares in 45 minute against-offers, written with the hand, and sends it by fax to Honeywell

October 22, 2000- plan of fusion accepted by Honeywell

At the beginning of November 2000- GE and Honeywell contact the antitrust authorities American and European about prepared fusion, beginning of regular contact in order to fill the forms with notification

November 15, 2000- deposit of form HSO (Scott-Rodino Binder) of notification near the antitrust authority of the United States

December 2000- certain GE competitors, already organized, call Enrique Gonzalez-Diaz, deputy at the Commission with the file GE/H, to provide him elements likely to involve one « second phase » (procedure of thorough investigation). They are shown of « couiner «by the aforesaid one.

February 5, 2001- deposit of the form CO of notification of fusion near the European Commission

February 26 the 2001- all recipients meet in Brussels. With 18h30 it is announced to them by Mario Monti and Alex Schaub that the Commission will pass to the second phase.

March 1, 2001- official beginning of the second phase with the opening of the procedure of four months investigation by the European Commission

May 2, 2001- authorization of fusion by antitrust building American subject to sale of a company of the engines of helicopters by GE

May 8, 2001- the Commission presents at the two companies a document of 155 pages of objections which targets mainly the bundling, horizontal overlaps in the engines of regional jets; and not so much GECAS which will appear the most important obstacle.

May 16 -Canadian Competition Office informs the two companies which it is not opposed to their fusion. This stage, the projects of reorganizations start to be launched between the two partners.

between the 15 and on May 20 - the Commission carries out hearings of American and European companies

May 29 the 2001- all recipients meet for 2 days of hearing. According to some observers, GE and Honeywell succeed in invalidating the argumentation of the Commission on the bundling (wallet effect) by sending famous economists of which Prof Shapiro of Berkeley.

June 12- to avoid the wallet effect to which the Commission hangs up again itself with force, J. Welch proposes to sell the aerospace branch of Honeywell estimated at 2,2 billion $ without counting the branch engine of helicopter, and to tally the activities of GECAS in a legal entity independent of GE, but J. Welch remains opposite at the request of the European Union to carry out a transfer out of purse of the capital of the GECAS whose GE would remain owner. It is insufficient vis-a-vis the requests of the Commission.

June 13- encloses week of negotiations. J. flanked Welch of seven assistants twice meets Monti in the day without managing to find compromise. Monti wants that GE sells 20% of the GECAS with a competitor, for J. Welch it is out of question : it is constant in its reasoning by its lawyers and economists who assert that « it would bee like asking has Ford CEO to drive A Toyota for 20% off his time » (Barry Nalebuff, economist of Yale). At this moment, one knows that fusion is about to be fallen through. At the evening J. Welch telephones to the Principal private secretary of G.W. Bush, while asking him « whatever help you edge give custom ».

13-14 Summit- June of Gothenburg, officially one does not speak about GE.

- Jeff Immelt, the successor of J. Welch, declares fusion fallen through. J. Welch returns to the USA.

June 14- Charles James, named by Bush, takes finally indeed the head of the antitrust division of the Department of Justice of the United States

- press release of GE which supposes that the true reason of the opposition to fusion is the defense of the interests of the European companies

- the Dow index - Jones of the industrial companies which make the most profits made a fall of more than 100 points in the first opening hour of the purse, follow-up of near by the Nasdaq index. The fall of the actions of Honeywell and GE represents more of the fifth of the losses recorded with the Dow - Jones

June 15- President Bush in visit in Warsaw this known as « worried «by the fact that Europeans did not accept fusion. «I worry about what Europeans oppose fusion». It also informs that the Union «has a strong interest so that GE and Honeywell are treated in an equitable way».

June 17- (legal deadline to deposit proposals), GE proposes concessions that the Commission judges inadequate and insufficient, in particular in the absence of proposals on the GECAS. Monti requires the transfer of the totality of the avionics activities, which represent 3,6 billion dollars of sales turnover and half of the benefit of Honeywell.

June 18- Monti declares in Ljubljana, furious. «I deplores attempts to misinform the public and to trigger political intervention» «This is has matter off law and economics, not politics»

June 19- Jeffrey Immelt, number 2 of GE and future successor of J.J. Welch, declares in an interview with the French journalists that the chances to save fusion became « null »

June 25- following diplomatic pressures on the various Member States, certain countries start to crack as Great Britain whose representative of the Office for Fair Traiding wonders publicly if the arguments of the Commission are « suitably weightly »

June 27, 2001 - 2 weeks after the legal deadline to deposit proposals, GE proposes new concessions, that the Commission accepts of examnier but ends up declaring like always insufficient. Robert Pitofski (former chief of Federal Trade Commission), calls Alex Schaub and Mr. Monti, ; Debbie Hermann (number two of the Antitrust division of Department off Justice) comes to Brussels and meets the administrative ones of the Commission.

June 29, 2001- letter of Michael Bonsignore, chairman of Honeywell with J. Welch, in which it proposes to lower the rate of exchange of « 1.055 shares to 1.01 shares off GE for every Honeywell share », which would lower the transaction value by 2 billion $, so that GE can sell more segments of its activity and thus go to the requirements Commission. J. Welch declines the offer in a letter, asserting «What the commission is seeking cuts the heart out off the strategic rationale off our deal. The new deal you proposes, in response to the commission, makes judicious No for our share owners.»

July 3, 2001- votes Commission prohibiting fusion

July 4, 2001 - the chairman of Honeywell, Michael Bonsignore, is dismissed. The new chairman, Larry Bossidy, request with his lawyers of defines how H could continue GE for absence of real efforts « reasonable good efforts » at the time of the procedure missed near the Commission.

September 12, 2001 -It is learned that GE agrees to buy two companies pertaining to Honeywell - Tensor and Honeywell Advanced Composites, and commits itself covering all the expenses of Honeywell relating to fallen through fusion. GE and Honeywell officially give up formulating recourse one against the other about fallen through fusion. GE and Honeywell deposit each one a recourse against the decision of the Commission to the Court of First Authority for insufficient bases of the decision of the Commission.

mid-September 2001 : Mr. Monti meets Charles James in Washington and poses the stakes of a new form of coopreation between the authorities antitrusts American and European, also declaring that the Commission examines recentrement its reasoning on the concept of « attack with competition » (with American) and either on « dominant position ».

October 2, 2001- GE and H are normally bound by their agreements American and Canadian until November ; but, and this same in the absence of final decision of the Court, the two companies state in conference press to officially give up fusion. The decision of the Court of First Authority was still not returned, without it being known truly if this abandonment deferred in fact the procedure or if it is always in hand.

A.2. Bibliography:


Regulation of the Council (EEC) No 4064/89 of December 1989 on the control of fusions between companies (legal base of the action of the Commission)

Communication of the Commission «the Monti Police chief denounces the politicisation» (June 18, 2001 in Lubjana)|0|rapid&lg=en IP/01/855

European Commission, «The Commission prohibits GE' S acquisition off Honeywell,» Close release,, 3 July 2001 (complete decision of the Commission)

Commission Close Room, «HAVE and US exit best practices concerning bilateral co-operation in merger boxes,» 30 October 2002 (methods of approndissement of the legal co-operation between DoJ and the MTF)

U.S. Department off Justice and the Federal Trade Commission, Horizontal Merger Guidelines,

Federal Trade Commission. «Promoting Competition, Protecting Consumers: In Plain English Guides to Antitrust Laws.»

Academic productions or scientists:

BANNERMAN Edward for Center for European Reform, August-September 2001 (a think tank on the policy of competition of the EU)

DYLLA Bownwyn, KNUDSEN Throws «Merger clearance in the US and in the EU: comparison» for Copenhagen Business School WP 18-2002 publications2002uk.shtml has (on the legal and economic differences of the two procedures)

EVANS David S. «The New Trustbusters: Brussels and Washington May Leaves Ways,» Foreign Affairs, 81 (1), 2002:14. or the-new-trustbusters-brussels-and-Washington-may-share-ways.html

QUIRY P. and FUR Y. for « The European rules anti-concentration » April 2002 (the change of the new theoretical and practical bases of the decisions of the Commission) (site on the finance of company)

TEMPLE LANG John, «European community antitrust law-innovation markets and high technology industries», October 17, 1996, Fordham Corporate Law Institute (anti-monopoly acts, their effects on business lawyers and their methods)

Articles of Press

Press Spécialisée

TAVERNA Michael A. and MECHAM Michael «One Down, One To Go For Ge-Honeywell Deal» in Aviation Week and Space Technology June 17, 2001 (debate in the branch and pressures of competitors and customers)

VELOCCI Anthony L. «Most Suppliers Beating Wall Street Estimates» in Aviation Week and Space Technology February 5, 2001 (financial importance of fast fusion)

Press general practitioner:

The World, many articles of which

October 12, 2001 the irresistible rise of the economic matter European Commission

November 1, 2001 Fifth veto of Brussels to a fusion since the beginning of the year : The European policy of competition is more rigid than that of America.

January 5, 2002 the number of fusions and acquisitions fell by 50% in 2001, it is American Goldman Sachs who advised the most operations in the United States and in Europe

June 8, 2002 Competes with: the judges repudiate the Commission of Brussels

October 2, 2002 Europe and the United States want to examine international fusions jointly

May 2, 2003 the Commission reforms Management Competes with

Financial Times and Financial Times Online many articles of which

June 20, 2001 Monti defend Europe' S stanza one GE/Honeywell

June 25 2001 Aces appear in EU' S unanimity against GE deal (American pressures on the Member States)

June 26, 2001 Commissioner defend HAVE over Ge-Honeywell deal (line of the commission in the negotiation)

June 27, 2001 GE makes new efforts to save Honeywell deal (new proposals of GE after the deadline)

June 28, 2001 Rivals react with scepticism over compromised (threats of competitors to take again their cations of lobbying on the negotiations are started again)

June 29, 2001 Exchange off fax buries GE deal (tentative fallen through of common proposal fax-by-fax)

June 29 2001 GE' S tough line leaves Honeywell deal in tatters (GE would lose month that Honeywell in the event of failure of fusion and remains on its hard line)

antitrust Total 2 July 2001 (debate on the total regulation of competition)

July 2, 2001 GE and Honeywell consider has future apart (Welch tries to work out a last common proposal but Bonsignore turns already to another project of fusion with UTC)

July 3, 2001 GE may appeal Brussels' decision to block Honeywell bid

July 3, 2001 Brussels poised to veto GE move for Honeywell (pressures on the chairmen: assumption of the resignation of Welch and Bonsignore after the decision)

July 3, 2001 HAVE seeks to heal rift after veto off GE/H deal (report of divergence of analysis on the same case)

July 4, 2001 Monti' S block makes waves across the Atlantic (bad acueil of prohibition in the United States)

July 6, 2001 How Monti turned GE/H into has off the flight fancy (most important of the articles of the FT; on the personal relations during the negotiation)

July 23, 2001 Blocked deal leaves Monti with one regret: He would cuts liked to approve the merger (difficulties of the economic situation of the US co-operation/EU on this file)

* 1 From now on indicated together by «  GE/H  » or separately by «  GE  » and «  H  »

* 2 GE Capital Aviation Services

* 3 name of the law

* 4 Form that the companies are held to use when the operation of concentration which they plan to form is of Community size within the meaning of the payment on the concentrations and which the operation must thus be notified at the Commission. It is annexed to payment (EC) n° 447/98 of the Commission (OJ L 61 of the 2.3.1998), which carries application of the payment on the concentrations.

* 5 These successive and contradictory requests started besides the anger of Wall Street and Wall Street Journal

* 6 40 people at the beginning of the procedure, 60 at the end, 100 in 2003

* 7 The Commission had folded under the pressure of the Clinton government during fusion Boeing/MacDonnellDouglas in 1997, with the later fury of Mr. Monti

* 8 DaN Carney, «Bush' S Trustbusters Need Another Name,» Week Business, September 13, 2002  ;

and Times «Anatomy off the GE/H disaster» July 8, 2001

* 9 cf Quiry and Fur on

and declarations of Bert Foer, president of Antitrust American Inst., with the Christian Science Monitor of June 26, 2001

* 10 Expression raised in the documents produced by Wilmer, Cutler and Pickering

* 11 from all the customer and suppliers contacted by the Commission, only Lufthansa officially came to take part in hearings.

* 12 That is to say the ratio of exchange of the actions of GE and H «from 1.055 shares to 1.01 shares off GE for every Honeywell share»  », which would lower the transaction value by 2 billion $, so that GE can sell more segments of its activity and thus go to the requirements Commission.

* 13 public lobby Highway

* 14 Mario Monti had declared that the Commission and the DG Conc, taking into consideration CTF and DoJ, were only of the «junior institutions»

* 15 whereas the opposite had arrived, 1. in the case of the prohibition of fusion Worldcom/Sprint on June 28 200 which had been prohibited on the two sides, and 2. DoJ had blocked AirLiquide fusion/BOC whereas the Commission had authorized it.

* 16 Moreover, one can note it quickly «  good  » strategy of the competitors  : attacked the cause early, allocated a technical expertise, were always ready to take again the debate, «were not discovered too much» on the media level. Only disappointment  : the prohibition of fusion deprives them to repurchase subsidiary companies which the Commission could have forced GE to give up.

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