Newspaper article St Louis Post-Dispatch (MO)

European Aide Blasts Mac, Boeing Merger Antitrust Chief Says Boeing Would Dominate Market

Newspaper article St Louis Post-Dispatch (MO)

European Aide Blasts Mac, Boeing Merger Antitrust Chief Says Boeing Would Dominate Market

Article excerpt

Europe's top antitrust official said Monday that Boeing Co.'s plan to merge with McDonnell Douglas Corp. was "totally unacceptable."

In his bluntest message yet, Karel Van Miert warned that the deal would have to be altered to prevent Boeing from dominating the commercial aircraft market.

Van Miert, competition chief for the European Union, will outline his objections to Boeing and McDonnell within 10 days. The planemakers then must suggest changes in their blockbuster deal or face sanctions from the 15 nations that make up the European Union. Van Miert declined Monday to list his objections or offer potential solutions. But industry observers said they doubted that the antitrust chief's letter would contain any deal-breakers. "Exactly what these remedies are is an open issue," said Wolfgang Demisch, who follows the aerospace industry for BT Securities Corp. in New York. "But I would still be astonished if this turned out to be an insoluble problem." Although Boeing and McDonnell are both American companies, they are subject to antitrust scrutiny in Europe because of a reciprocal trade agreement. The European Union is concerned about the merger because it would cut the number of companies that make large commercial jets from three to two. The Europeans fear that Boeing would gain an insurmountable edge over Airbus Industrie, the planemaking consortium operated by companies from France, Germany, Italy and Spain. "It seems to be a very problematic case," Van Miert said. "It leads to a group which will clearly dominate the (European) market with a market share of about 84-85 percent." Although the European Union cannot block a merger outright, it can impose conditions harsh enough to make the companies reconsider. The European Union could force Boeing to sell hangars and service centers in member countries if it fails to meet its objections. The organization also could make it harder for Boeing to sell its aircraft in the trading bloc. It even has authority to impose a fine equal to 10 percent of Boeing's annual gross world income if it rules that the merger is anti-competitive and the companies proceed. Boeing has accused Van Miert of criticizing the acquisition just to put pressure on U. …

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