Company Merger Regulatory Controls: United States of America & the European Union

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In this paper I will consider the pre-merger policies and regulations within the United States (U.S.A.) against that within the European Union (E.U.). For the most part, the U.S.A. and the E.U. have common motives for adopting merger regulations, namely to counter the potential for anti-competitive behavior that would have an adverse affect in markets. However, in the E.U., there is a unique additional policy, namely, the desire of the E.U. Member States to create a common market. It is my hypothesis that it was this additional policy objective that resulted in a more critical scrutiny by the Commissioner of the European Community in the merger attempt between the U.S.A.-based General Electrics (GE) and the E.U.-based Honeywell companies.

First, I will provide a brief introduction to merger and acquisitions. I will then look at why merger controls are deemed necessary. Next, I will layout the general historical development and structure of the U.S.A. and the E.U. merger regulation requirements. I will point out the key distinctions, making note of the similarities and procedural considerations.

Next, the attempted transaction of GE and Honeywell, whereby the U.S.A.-based GE entity sought to acquire the E.U.-based company Honeywell, will be examined more closely to determine why the U.S.A. approved the merger and the Commission disapproved the transaction. I will conclude with observations on how the divergence in the policies of the two regulatory jurisdictions has been addressed and how this may effect future transatlantic merger transactions.

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