GE wins EU approval for Alstom takeover

US giant General Electric (GE) has received EU approval for its €12.05 billion partial takeover of Alstom, on condition that GE divests a portion of Alstom’s gas turbine business to competitors.

Competition Commissioner Margrethe Vestager had earlier voiced concern that the takeover, proposed last June, would eliminate a global competitor and reduce the gas turbines market to a duopoly between GE and Germany’s Siemens.

But a pledge to sell gas-turbine assets to Italian engineering competitor, Ansaldo Energia, helped soften antitrust concerns.

“Divestment of Alstom’s key technology to produce heavy-duty gas turbines to Ansaldo will ensure that European business and consumers continue to benefit from this innovation and know how,” Vestager said. "Our analysis showed that without this divestiture, Alstom turbines risked disappearing from the market. As a result, choice would have gone down and prices up."

Alstom’s technology for large and very large gas turbines, “Is the most efficient, cleanest and flexible fossil fuel power generation technology and an important complement to more unpredictable generation from renewables - when the wind stops blowing it is mostly flexible gas-fired plants that can step in,” said Vestager.

Alstom will also relinquish two test facilities for these turbine models in Switzerland, the EU said.

The decision illustrates Europe's openness to overseas investment, so long as the rules are adhered to, the Commissioner said. "You can come and invest in Europe, but you cannot buy your way to a monopoly.”

That the EU and the US are currently negotiating a trade deal also helped grease the wheels of the eventual agreement, several insiders acknowledged.

"Today's decisions by the European Commission and Department of Justice are major milestones in completing this deal as early as possible in the fourth quarter," said GE Chairman and CEO Jeff Immelt, commenting on the biggest takeover in the company’s history. "We have addressed the European Commission's and Department of Justice's competition concerns while preserving the strategic and economic drivers of the deal."

In May, Immelt warned the American Chamber of Commerce to the EU in Brussels that, “Europe is not living up to its potential. [The deal] will give us the chance to bring innovation back to the energy business in Europe.”

In July 2001, the company’s acquisition of Honeywell International hit the skids, after EU officials infamously scuppered the high-profile bid on antitrust grounds.