Question

Back in 2001 General Electric was on a tear. They were considered one of the best run companies in the world. Jack Welch, the CEO, was wrapping up his tenure, and the cherry on top deal he put together was the acquisition of Honeywell. How did International Business destroy his intended final big deal?

Answer 1

The European Union Competition commissioner Mario Monti blocked the acquisition of Honeywell by GE. They felt that GE and Honeywell merger would disadvantage competitors in aviation who produce electronic components for aviation industries. Their observation was that since both were well diversified company they would have market monopoly. However, Monti laid down certain preconditions which GE refused to meet as they felt the demands were too high. Competitors in Europe and US lobbied hard to make sure the merger falls flat even though GE and Honeywell had mutually agreed to the deal earlier. The regulators observed that by Bundling GE engines and Honeywell avionics the customer will prevent free competitions. Customer choice will be hampered as they could not choose from other competitors and hence innovation in avionics will be prevented.

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