The European Commission (EC) has dismissed Boeing's proposed remedies to meet its concerns over the US manufacturer's planned merger with McDonnell Douglas (MDC). Barring a last-minute breakthrough in the discussions, the EC looks set to reject the deal.
The EC informed Boeing on 16 July that it had recommended that the proposed merger should not proceed. A final decision is scheduled to be taken by the EC on 23 July, but the Commission is not optimistic that the issues will be resolved in time.
One main sticking point has been the exclusive-supplier agreements which Boeing has concluded with various US carriers, which EC commissioner Karel Van Miert has describes as "totally unacceptable". The issue of combining MDC's commercial-aircraft division, Douglas Aircraft, with that of Boeing also concerns the EC, which would rather see the unit sold off separately. The EC is also worried that Boeing's airliner business will benefit financially from MDC's access to government funding for military projects.
Phil Condit, Boeing's chairman and chief executive, says: "We are extremely disappointed because Boeing submitted to the Commission a series of significant remedies designed to address all of the Commission's concerns."
If the deal does goes ahead against its wishes, the EC can attempt to fine both the merged company and any European companies which do business with it.
The possibility of retaliatory action from the USA has raised the spectre of a transatlantic trade war, although both sides are keen to resolve the issues through the proper channels. "I think we'd better let the process play itself out before we talk ourselves into a trade war," says US President Bill Clinton.
Source: Flight International
