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Nearly 4 1/2 years after the European Commission vetoed General Electric Co.’s bid for Honeywell International Inc., a European Union appeals court is set to deliver its long-awaited verdict on the companies’ appeals next month. A spokesman for the Luxembourg-based Court of First Instance confirmed Nov. 22 that it would rule Dec. 14 on GE’s and Honeywell’s appeals to the notorious July 2001 decision scrapping the deal, which U.S. regulators had approved. The diverging decisions came to symbolize differences between the U.S. and the EU on regulatory matters, prompting many U.S. critics to call then-EU competition chief Mario Monti a “deal killer.” At the time, EU regulators concluded after an in-depth probe that a GE-Honeywell pairing would have created dominant positions in the markets for the supply of avionics, nonavionics and corporate jet engines, as well as the strengthening of GE’s existing dominant positions in jet engines for large commercial and regional aircraft. It marked the commission’s 15th veto since it began scrutinizing mergers in 1990, and it continued to reverberate through the halls of the commission’s competition department on Rue Joseph II in Brussels long afterward. In separate appeals that have been joined, GE and Honeywell are arguing that the decision be annulled and the commission pay their fees. Honeywell’s appeal is much narrower, taking issue only with the so-called bundling theory used to justify the veto. Among other things, Honeywell accused the commission of errors of fact and assessment in its understanding of bundling, and it maintained the commission was under a “strong obligation” to establish the facts and justify its decision because the merger was a highly valued global merger and Washington had already approved it. Though it’s highly unlikely GE will try to revise its long-dead deal if it wins in court, the case could affect future developments in the avionics industry. GE also seeks to remove the “dominant company” stigma regulators attached to it in the decision, which could affect other deals the commission reviews. After the CFI delivers its ruling, both the companies and the commission may still appeal to the EU’s highest court, the European Court of Justice, also based in Luxembourg. Copyright �2005 TDD, LLC. All rights reserved.

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