## Facts

- General Electric Company (GE) proposed to acquire Honeywell International Inc., combining GE’s aircraft engine business and aircraft leasing arm (GECAS) with Honeywell’s avionics and non-avionics aerospace equipment businesses.
- The European Commission, applying Council Regulation (EEC) No 4064/89 (EU Merger Regulation), opened an in-depth (Phase II) investigation.
- In 2001, the Commission prohibited the concentration as incompatible with the common market, finding it would create or strengthen dominance and significantly impede effective competition in multiple aeronautical markets.
- The Commission’s theory included both horizontal concerns (overlaps in certain engine markets) and non-horizontal concerns, including alleged conglomerate/portfolio effects, bundling, and foreclosure enabled by GE’s financial strength and GECAS’s influence on aircraft purchasing/leasing decisions.
- GE sought annulment of the prohibition decision, alleging manifest errors of assessment, inadequate reasoning, and procedural violations, and challenging the Commission’s use of conglomerate effects and foreclosure theories.
- The Court of First Instance (CFI) reviewed the prohibition decision and identified errors in parts of the conglomerate-effects analysis, while still upholding the prohibition overall.

## Issues

1. Whether the Commission lawfully found the concentration would create or strengthen a dominant position and significantly impede effective competition under Articles 2(2)–2(3) of Regulation 4064/89.
2. What level of judicial review applies to the Commission’s complex economic assessments in merger control, and how “manifest error” review is conducted.
3. What evidentiary showing is required to support predicted anticompetitive effects in conglomerate/vertical theories, including bundling and foreclosure.
4. Whether alleged procedural defects or rights-of-defence violations required annulment.

## Decision

- The CFI largely dismissed GE’s action and upheld the Commission’s prohibition decision.
- The CFI held that where a merger decision rests on multiple independent grounds, the prohibition stands if at least one ground independently justifies the operative outcome.
- The CFI found manifest errors in parts of the Commission’s conglomerate-effects assessment, faulting insufficient demonstration that predicted bundling/foreclosure effects were highly probable rather than merely possible.
- Despite identified errors, the CFI concluded that the Commission had adequately established anticompetitive effects in at least one relevant market affected by horizontal considerations, which was sufficient to sustain the prohibition.

## Legal Principles

- The Commission has a margin of discretion in complex economic assessments, but courts must verify that the evidence relied on is accurate, reliable, consistent, complete for the assessment, and capable of supporting the conclusions reached.
- Merger control requires a prospective assessment; when the Commission relies on predicted strategic conduct and future foreclosure, it must conduct a rigorous analysis grounded in solid evidence.
- Conglomerate (non-horizontal) theories are cognizable under the EU Merger Regulation, but require a strengthened evidentiary showing that anticompetitive effects are likely, not speculative, including a persuasive account of causation attributable to the merger.
- A prohibition decision supported by multiple independent rationales is not annulled solely because some rationales contain errors, if at least one sufficient rationale remains valid.

## Conclusion

The CFI upheld the EU prohibition of GE’s proposed acquisition of Honeywell, while limiting the Commission’s ability to block conglomerate mergers based on predicted bundling and foreclosure without a rigorous, evidence-based showing that such effects are likely and merger-specific.


Gen. Elec. Co. v. Comm'n of the Eur. Cmtys., Case T-210/01, 2005 E.C.R. II-5575 (Ct. First Instance Dec. 14, 2005)