The GE/Honeywell decision exposed a fundamental difference of opinion between the US and the EC competition authorities in the assessment of conglomerate effects. Within the context of merger control, which is by nature speculative, it is no surprise that two different authorities could reach different conclusions about one and the same merger. What is striking is that the Commission appeared to rely on theories that were largely discredited in the US during the early 1980s. Given that both regimes place consumer welfare at the heart of competition law, is the EC’s approach outdated, even deficient?
Analysis of the legal background to the GE/Honeywell decision reveals that the Commission’s reasoning is well founded in existing legal principles. In the absence of objective empirical evidence that beneficial effects derive from all conglomerate mergers, the author sees no reason for the Commission to conform to economic standards applied in other jurisdictions. The EC should not be afraid of its own unique objectives and legal culture.World Competition