Book contents
- Frontmatter
- Contents
- Contents by potentially anticompetitive business practices
- Contents by markets
- List of figures
- List of tables
- List of contributors
- Preface
- Introduction: the transformation of competition policy in Europe
- A Anticompetitive behaviour by firms with market power
- B Agreements between firms
- C Mergers
- Introduction
- C.1 Measurement of unilateral effects
- C.2 Coordinated effects
- C.3 Vertical and conglomerate effects
- 16 Vertical effects between natural gas and electricity production: the Neste–IVO merger in Finland
- 17 Horizontal, vertical and conglomerate effects: the GE–Honeywell merger in the EU
- Bibliography
- Index
17 - Horizontal, vertical and conglomerate effects: the GE–Honeywell merger in the EU
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Contents by potentially anticompetitive business practices
- Contents by markets
- List of figures
- List of tables
- List of contributors
- Preface
- Introduction: the transformation of competition policy in Europe
- A Anticompetitive behaviour by firms with market power
- B Agreements between firms
- C Mergers
- Introduction
- C.1 Measurement of unilateral effects
- C.2 Coordinated effects
- C.3 Vertical and conglomerate effects
- 16 Vertical effects between natural gas and electricity production: the Neste–IVO merger in Finland
- 17 Horizontal, vertical and conglomerate effects: the GE–Honeywell merger in the EU
- Bibliography
- Index
Summary
Introduction
The European Commission (EC) declared in July 2001 the merger between General Electric (GE) and Honeywell ‘incompatible with the common market’ according to the Merger Regulation established in the Council Regulation (EEC) No. 4064/89. Article 2(3) of such regulation states that ‘a concentration which creates or strengthens a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it shall be declared incompatible with the common market’.
The EC formally based its decision to block the merger on two pillars:
the strengthening of GE's dominant position in the markets for large commercial aircraft engines and for large regional aircraft engines, and the creation of a dominant position on the markets for corporate jet engines;
the creation of a dominant position in the market for avionics and non-avionics aerospace components, where Honeywell enjoyed a leading position, and in the market for small marine gas turbines.
The main channels by which the merger would create and strengthen dominant positions consisted in horizontal overlaps and vertical and conglomerate integration. The combined market share of the merging parties, the influence and leverage of the financial arms of GE, GECAS and GE Capital, and the ability and incentive to bundle products are behind the conclusions of the EC.
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- Chapter
- Information
- Cases in European Competition PolicyThe Economic Analysis, pp. 434 - 464Publisher: Cambridge University PressPrint publication year: 2009
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