Brussels : Competition regulators of the European Union (EU) have approved the acquisition of the energy businesses of French company Alstom by US-based General Electric (GE) after it pledged to adequately address antitrust concerns.
The approval is conditional upon central parts of Alstom’s heavy duty gas turbines business being divested to Ansaldo of Italy, EU’s regulators concluded on Tuesday after investigations, Xinhua reported.
The European Commission argued that the transaction would lead to higher prices and fewer options for customers in the heavy duty gas turbines market, where GE is the world’s largest manufacturer and Alstom is the number three or four player globally.
Heavy duty gas turbines are mainly used in gas-fired power plants.
Divestment of Alstom’s key technology to produce heavy duty gas turbines in Ansaldo will ensure that European business and consumers continue to benefit from this innovation and know how, said Margrethe Vestager, the EU’s competition commissioner.
Under the commitment, GE will sell Alstom’s technology for two models of large gas turbines, “a large number” of Alstom’s turbine research engineers, two test facilities in Switzerland and Alstom’s Florida-based servicing business.
Meanwhile, GE will also divest the long-term servicing contracts for 34 turbines that have already been installed by Alstom, allowing the purchaser to replicate Alstom’s previous role in the market, thereby maintaining effective competition.
GE will be allowed to complete the acquisition once the EU has formally assessed and approved the finalised divestiture to Ansaldo, the EU regulator said.
The other part of the transaction, namely, the thermal power generation businesses (other than gas), grid and renewables, did not trigger any competition concerns from the European Commission as the activities of the two companies are complementary and do not overlap.
EU’s green light ended months of uncertainty and tension over the proposed acquisition. On the same day, the GE-Alstom deal also won conditional US antitrust approval.
“I am glad that we can approve this transaction, which shows that Europe is open for business and that Europe-based technology can thrive and attract foreign investment,” Vestager said.
The deal, the largest one in GE’s history, was originally announced in April 2014, when GE agreed to pay Alstom 12.35 billion euros.
The GE-Alstom deal had already been approved by the boards of both companies and by the French government.