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A key senator threatened Wednesday to block European businesses from buying U.S. aerospace companies if the European Commission rejects General Electric Co.’s acquisition of Honeywell International Inc. “The European aerospace companies that are the principal competitors to GE and Honeywell in engines and avionics have declared ambitions to expand through acquisitions in the United States,” Sen. John D. Rockefeller said in a letter to Commission vice president Loyola de Palacio. “If it appears that the European Commission is unfairly blocking mergers between U.S. companies principally to protect the position of European competitors, then the subcommittee will need to reexamine the open market that the U.S. has maintained for those sorts of acquisitions.” Rockefeller, D-W.Va., who chairs the Senate aviation subcommittee, also said the flap over the GE-Honeywell deal could “stall or reverse” the growing transatlantic cooperation in aerospace. GE officials declared the deal dead after European regulators demanded divestitures amounting to more than twice the assets it was willing to sell. The Commission is expected to make a formal announcement against the $41 billion merger by July 12. Also responding to the Commission’s treatment of the GE-Honeywell deal were Senate Judiciary antitrust subcommittee Chairman Herb Kohl and Sen. Mike DeWine, the panel’s ranking Republican. Their newly announced 2001 legislative agenda includes a review of how European authorities handle U.S. companies involved in mergers. “The subcommittee will work to ensure that American companies are treated fairly and in a non-discriminatory fashion when their transactions are reviewed by foreign antitrust authorities, including the European Commission,” the Wisconsin Democrat and Ohio Republican said in a joint statement. The GE-Honeywell deal has become a hot political issue in the past week. Sen. Phil Gramm, R-Texas, criticized the Commission at a Senate Banking Committee hearing for failing to approve the merger. Also mentioning the transaction were President Bush, U.S. Trade Representative Robert B. Zoellick and Commerce Secretary Donald Evans. In response, European Commission competition czar Mario Monti has criticized efforts to politicize the deal. Stephan Mahinka, a partner at law firm Morgan, Lewis & Bockius in Washington, said it is too late for U.S. lawmakers to influence the Commission. “Political pressure by members of the European Union is rarely effective, so I don’t know why pressure from a nonmember would be effective,” he said. But Mahinka said U.S. political leaders are clearly signaling their unease with the different antitrust standards applied by the Europeans. These include a general concern about giant companies and consideration of whether a deal would harm competitors. The U.S. system focuses on consumers, not competitors. If Rockefeller succeeded in enacting a bill to bar European firms from buying U.S. aerospace companies, then he would effectively stop all deal-making in that sector, Mahinka said. But Joel Mitnick, a partner at Sidley Austin Brown & Wood in New York, said he doubts Rockefeller will introduce legislation. “Such threats are no more useful than when a senator writes a letter to the Department of Justice or the Federal Trade Commission complaining about a merger,” he said. Besides chairing the aviation subcommittee, Rockefeller sits on the full Senate Commerce Committee. A review of campaign records compiled by The Center for Responsive Politics reveals that Rockefeller did not receive any money during the latest election cycle from either GE or Honeywell, though he did get contributions for all the major airlines, which favor the deal. Copyright (c)2001 TDD, LLC. All rights reserved.

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