EU Extends Probe into GE's Acquisition of Alstom

By Tom Fairless 

BRUSSELS--European Union authorities have extended by a month their investigation into General Electric Co.'s $17 billion acquisition of France-based Alstom SA's energy businesses, amid a disagreement over the geographical scope of the large-gas-turbine market.

The delay highlights the uncertainty around GE's biggest deal to date, a rare example of a large French company being acquired by a U.S. rival.

In a statement posted online, the European Commission, the bloc's top antitrust authority, said that it had extended the deadline for its investigation by 20 working days--to August 6.

GE Chief Executive Jeff Immelt told investors in December that the company was aiming to close the Alstom deal by July 1.

EU regulators opened the in-depth investigation three weeks ago to assess whether the proposed deal could lead to higher prices for large gas turbines.

The commission said that while four large companies competed globally to produce heavy-duty gas turbines--GE, Alstom, Siemens and Mitsubishi Hitachi Power Systems--Mitsubishi seemed to be less active in Europe than in the rest of the world.

If the regulator decides that the market is indeed European rather than global, the merger would leave only two strong competitors. In such cases, the regulator would typically block the deal or demand strong remedies, such as asset sales.

In a statement, GE said that it had agreed with the commission to extend the deadline by 20 days.

"We have a constructive dialogue with the commission and we continue to work toward a positive outcome," a spokesman for the company said.

Speaking last week about current merger cases, EU antitrust chief Margrethe Vestager said that she wasn't convinced by arguments that the commission should "look at worldwide markets."

"The argument goes that we need to protect companies, to help them become bigger companies, otherwise they can't take on international rivals,"she said in a speech in Brussels.

"I'm not convinced about these arguments," she added. "[Mergers] should not happen at the expense of consumers."

Under EU rules, merging parties are allowed to request that up to 20 additional days be added to the timeline of in-depth probes, provided that they do so within 15 working days of the launch of the investigation.

"They've decided to use it all," said Anne MacGregor, an antitrust lawyer with Cadwalader, Wickersham & Taft LLP in Brussels. "Probably there is a lot of economic analysis going on behind the scenes."

Write to Tom Fairless at [e-mail]

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