GE knocked back again on merger with Honeywell

GE has lost round two in its protracted battle to merge with Honeywell after the European Court of Justice (ECJ) upheld a controversial decision to block the takeover.

Clifford Chance and French niche firm Vogel & Vogel acted for GE in the landmark case, which saw the European Commission ban the merger between the two US companies despite it being cleared by US competition authorities. Clifford Chance Brussels partner Simon Baxter led the team, with Joseph Vogel taking the top role for Vogel & Vogel.

GE also instructed competition expert Nick Green QC of Brick Court Chambers and Cherie Booth QC of Matrix.

Skadden Arps Slate Meagher & Flom instructed Monckton Chambers barrister Paul Lasok QC for Honeywell.

The ECJ ruled the European Commission’s decision to prohibit the proposed acquisition of Honeywell by GE was correct, although it found the commission had made errors in the case, in relation to its analysis of conglomerate effects.

GE and Honeywell have two months to appeal the decision.

Monckton Chambers competition specialist George Peretz told The Lawyer an appeal was likely.

“The analysis is very detailed and an appeal would be difficult because it has to be on a point of law, but, because of the amount of money that has already been invested in this case I would expect an appeal,” he said. “Some of the pillars were knocked down in regards to the commission’s analysis of conglomerate effects, but the building is still standing.”

Simon Baxter of Clifford Chance said: “The heart of this case was the decision regarding the errors made by the commission regarding the conglomerate effects of the merger,” he said. “The CFI supported GE’s appeal on this key point. It reaffirmed that the Commission has to meet a very high standard if it wants to block a merger on the basis of conglomerate effects – a standard that it did not meet in this case.”