European Ruling on Merger Ban Expected

A European court ruling this week on the European Commission’s long-standing ban on General Electric Co.’s purchase of Honeywell International Inc. may have little practical effect, but it will be studied hard for the messages it sends out.

Though the takeover bid itself had long been abandoned, a verdict Wednesday in favor of the commission could give the European Union body greater confidence in future merger cases and put in a fresh light a contentious legal theory applied to support the original ban but since undercut by the courts.

“The reasons the court gives for the decision will be as important as the question of who wins or loses,” said Bill Bishop, an economist and vice president of CRA International in London who was retained by GE in the case.

The European Commission has the power to veto merger deals between any firms that do significant business in the EU.

It used that power in July 2001 to bar General Electric from purchasing Honeywell on competition grounds, setting off a controversy that threatened a major rift between the U.S. and Europe.

U.S. agencies had easily approved the all-American deal. President Bush and members of his Cabinet condemned the EU action, with then-Treasury Secretary Paul H. O’Neill calling it “off the wall.”

From Reuters

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The Week Ahead

 Tuesday

* The Federal Reserve’s Open Market Committee meets to discuss interest rates.

* The Commerce Department reports on retail sales for November and business inventories for October.

* Quarterly earnings report expected from Best Buy Co.

 Wednesday

* The Commerce Department reports on international trade for October.

 Thursday

* The Labor Department issues the consumer price index for November.

* The Federal Reserve reports on industrial production for November.

* Quarterly earnings reports expected from KB Home, Oracle Corp. and Adobe Systems Inc.