The EC Commission’s decision to block the GE/Honeywell merger ignited a wave of criticism from the US not seen since the Boeing/McDonnell Douglas1 merger in the mid-90s. While EC Commission officials have reacted by denying that there were
fundamental differences and stressing the unprecedented level of cooperation with the US antitrust authorities,2 their US counterparts launched a vigorous attack on the decision, EU law, and the EC Commission’s competence and credibility.3 If this were not enough,4 the EC Commission suffered a further set back – gleefully referred to by its critics as a “hammer blow” – when in June 2002 the European Court of First Instance (CFI) overturned its decision to block the Airtours/First Choice merger.5
This was the first time that the EC Commission lost an appeal against one of its merger decisions, and was followed in rapid succession by the annulment of two further merger decisions,6 with appeals against another two, including GE/Honeywell pending. To many, the CFI’s judgments confirmed that the EC Commission’s internal procedures and analysis were poor. The CFI’s decisions have altered the debate over the reform of EC merger policy. It coincided with the EC Commission’s review of the EC Merger Regulation (ECMR)7 following its publication of a Green Paper.8 Despite initially complacent comments of senior officials on the depth of reform, the CFI’s scathing decisions resulted in a more critical and responsive approach, together with candid admissions of past failures. At the time of writing draft EC Merger Regulation9 and Horizontal Merger Guidelines10 have been circulated for consultation, and procedural and organisational reforms proposed, including the surprising decision to close the merger division (Merger Task Force). Indeed, events have moved so fast that the original criticisms of the GE/Honeywell decision which were to be the focus of this article, have now receded as a few among many more significant issues raised in the current debate over merger reform in Europe.