EU probing GE’s US$17B takeover of Alstom’s power division
by Raf Casert, The Associated Press
European Commission made move after initial investigation indicated "potential competition concerns" in heavy-duty gas turbine market
BRUSSELS—The European Union (EU) opened an in-depth probe of US$17-billion takeover by General Electric Co. (GE) of Alstom SA’s power division, fearing higher prices and less choice.
The European Commission made the move after an initial investigation indicated “potential competition concerns in the market for heavy-duty gas turbines,” which are used in gas-fired power plants, it said in a statement.
EU Competition Commissioner Margrethe Vestager said her anti-competitive concerns also included “less innovation in the sector.”
In international business, the European Commission wields major power since its rejection of a multinational deal has thwarted mergers and takeovers in the past, or forced companies into fundamental changes of agreement to meet EU concerns.
The commission said that in one sector of the heavy duty gas turbines, the new GE-Alstom merged company would control about half the market in both Europe and the world, excluding China.
GE rejected the worries and said in a statement that “the gas turbine market is both global and highly competitive.”
The company said it disagrees with “the preliminary concerns” raised by the European Commission.
The commission has until July 8 to make a final decision.
Finalized in June 2014, the Alstom deal is part of GE’s new focus on building and servicing industrial equipment such as aircraft engines, power-plant turbines and oil and gas drilling equipment.
Beyond the heavy-duty gas turbines, the European Commission said in a statement that the takeover “is not likely to raise concerns in relation to power generation equipment for nuclear, coal-fired, wind and hydro power plants.”
It said it was co-operating closely with the United States Justice department.
Last summer, GE won its months-long fight to acquire the power generation business of Alstom after the French government dropped its objections and threw its support behind the American company’s offer.
The French government preferred GE’s offer to a rival joint bid from German company Siemens AG and Japanese firm Mitsubishi Heavy Industries, Ltd.
France feared that the GE takeover would cause layoffs and hand foreign owners too much influence over a major industrial player—especially one like Alstom, which makes power plant equipment and pioneered TGV high-speed trains.