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European and American antitrust regulators clashed publicly for the first time Wednesday over General Electric Co.’s failed $45 billion acquisition of Honeywell International Inc. U.S. Department of Justice Assistant Attorney General William Kolasky on Wednesday criticized the European Commission, the European Union’s executive agency and competition watchdog, for vetoing the merger in July and for basing its decision on an economic theory that was “antithetical to the goals of sound antitrust enforcement.” The Department of Justice approved the GE-Honeywell merger earlier this year after requiring only minor concessions. Kolasky’s comments, made at the OECD Global Forum on Competition in Paris, brought swift condemnation from European Competition Commissioner Mario Monti. “If serious progress is to be made, I do not believe that it is helpful that one or the other side launches a public debate or assessment” of the GE-Honeywell deal, Monti said at a joint press conference with Kolasky. He added that U.S. criticism of Brussels’ antitrust methods as protectionist was “a gross misrepresentation” of E.U. competition policy. The public backbiting indicates that wounds have not entirely healed over the GE-Honeywell merger, despite a trip by Monti to the U.S. in September to discuss ways to avert similar problems in future. “It is no secret that the U.S. doesn’t agree with the Commission decision on GE-Honeywell and the underlying theory that we used in assessing the deal,” said Commission spokeswoman for Competition Amelia Torres. Following the GE debacle, Brussels has pressed for close cooperation on forthcoming merger reviews, especially with such transactions as Hewlett-Packard Co.’s planned purchase of Compaq Computer Corp. Without some kind of reconciliation, the acrimony could interfere with that deal and other future transactions, antitrust attorneys warned. “They have to kiss and make up because otherwise the certainty that businessmen need to do deals will be affected,” said Steven A. Newborn, head of the antitrust practice at Clifford Chance Rogers & Wells in Washington, D.C. Yet even with Wednesday’s high-level spat, American and European regulators have made progress in ironing out their differences. Since Monti’s meeting with Justice Department Assistant Attorney General Charles James in September, the sides have agreed to set up a working group to narrow policy rifts. “Monti said clearly that we have to look at why we achieved conflicting conclusions,” Torres said. And despite the discord on GE, antitrust lawyers on both sides of the Atlantic said the situation has not deteriorated to the point where no deal will get approved. On most mergers, the U.S. and Europe “always worked hand in hand and generally came to the same assessment,” said one European lawyer. Attorney Thomas H. Brock of Proskauer Rose in Washington said the U.S. and Europe need to better coordinate the timing of their merger rulings and other review procedures. But “in the long run, I don’t think there is going to be a knock-down, drag-out trade war,” he added. Some observers even suggest the squabbling was a necessary step in normalizing global trade. “Point of fact, there is an honest difference of opinion, and it is healthy that these differences are being aired in a public way,” said Phillip A. Proger, an attorney with Jones, Day, Reavis & Pogue in Washington. Copyright (c)2001 TDD, LLC. All rights reserved.

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