EU Launches Probe into GE's $17-Billion Acquisition of Alstom's Power Division

Strategic Insights -

The European Commission has opened an in-depth investigation into General Electric Co.'s (GE) $17-billion takeover of Alstom SA's power division, citing concerns over reduced competition and potentially higher prices in the heavy-duty gas turbine market. The commission's move comes after an initial investigation indicated potential competition concerns in the market for these turbines, which are used in gas-fired power plants. The investigation also raises concerns over less innovation in the sector.

Key Takeaways:

  • The European Commission has launched an in-depth probe into GE's acquisition of Alstom's power division, worth $17 billion, citing potential competition concerns in the heavy-duty gas turbine market.
  • The commission's investigation also raises concerns over reduced innovation in the sector, as the new GE-Alstom merged company would control about half the market in both Europe and the world, excluding China.
  • GE has rejected the European Commission's preliminary concerns, stating that the gas turbine market is both global and highly competitive.
  • The commission has until July 8 to make a final decision on the acquisition.
  • The investigation is the latest in a series of high-profile cases where the European Commission has wielded its power in international business, rejecting multinational deals and forcing companies to make fundamental changes to their agreements.
  • 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.
  • The commission is cooperating closely with the United States Justice department on the investigation.
  • GE's acquisition of Alstom's power division is worth $17 billion.
  • The new GE-Alstom merged company would control about half the market in both Europe and the world, excluding China.
  • The investigation has raised concerns over less innovation in the sector.

Statistics:

  • The heavy duty gas turbine market is estimated to be a significant part of the global turbine market.
  • The European Commission has until July 8 to make a final decision on the acquisition.
  • The Alstom deal is worth $17 billion.

Sources:

  • European Commission: statement on GE's acquisition of Alstom's power division
  • General Electric Co.: statement on the European Commission's preliminary concerns
  • Global Data Point: 2015 data on the heavy duty gas turbine market.