EU watchdog to examine GE's $14 billion Alstom deal more closely

By

General Electric's (GE.N) 12.4 billion euro ($14.1 billion) bid for Alstom's (ALSO.PA) power equipment business could lead to price rises, EU antitrust regulators said on Monday as they opened a full-scale investigation into the deal, increasing pressure on the U.S. conglomerate to offer concessions.

GE has had its acquisition ambitions quashed by European regulators before. In 2001 the European Commission blocked its $42 billion purchase of rival Honeywell International Inc (HON.N) despite U.S. regulatory approval, though GE says it has cleared more than 50 transactions in the region since then.

The Alstom deal is part of GE's efforts to increase its focus on industrial operations and away from finance.

However, the takeover would remove one of GE's three main rivals in heavy-duty turbines used in gas-fired power plants, the Commission said. The other global players are Germany's Siemens (SIEGn.DE) and Mitsubishi Hitachi Power Systems, a joint venture formed by Mitsubishi Heavy Industries (7011.T) and Hitachi (6501.T).

"We are concerned that the proposed acquisition might not only lead to higher prices but also result in less choice for customers and less innovation in the sector," European Competition Commissioner Margrethe Vestager said.

The Commission said it is worried that GE would discontinue the production of certain models of Alstom heavy duty gas turbines (HDGTs) and not bring to the market the French company's advanced HDGT technology. It will decide by July 8 whether to clear or block the deal.

GE rejected the regulatory concerns.

"We disagree with the preliminary concerns raised by the EC statement today and Phase II is the normal process for engagement on these issues. Our goal remains to secure the required regulatory approvals and close the transaction by mid-2015," it said.

Alstom said it would cooperate with the Commission.

GE has 47 percent of the global installed base of gas turbines, JP Morgan estimates, based on 25 years of orders. That compares with 26 percent for Siemens, 8 percent for Mitsubishi and 7 percent for Alstom.

Expanding GE's installed base of turbines is a key rationale for the deal for the U.S. conglomerate, which makes significant profit from servicing the installed power equipment.

Reuters reported on Feb. 18 that the European Union competition watchdog would open a full-scale investigation into the deal.

Tags
JP Morgan, European Union
Join the Discussion
More News
No Jail for Medical Student Found Guilty of Raping Drunk

No Jail for Medical Student Found Guilty of Raping Drunk Woman Who 'Couldn't Possibly Consent': He Is 'Young' and 'Talented'

Puerto Rican Server Told to 'Go Back to Mexico' By

Puerto Rican Server Told to 'Go Back to Mexico' by Customers in Racist Note: 'No Tips for Illegals'

Georgia Man Chris Louis Leaves Children at McDonald's

Georgia Dad Left Young Children at McDonald's While He Went to a Job Interview. Cops Were Waiting When He Returned

Kolstad Stoeckel

Minnesota Man Begged Deputies to 'Put One in My Head' After Shooting Sleeping Roommate: Police