EU Alleges ‘Incorrect Or Misleading’ Info On GE, LM Wind Merger

Posted by Betsy Lillian on July 06, 2017 No Comments
Categories : Featured, New & Noteworthy

The European Commission (EC) is alleging that GE breached European Union (EU) merger procedural rules during the company’s acquisition of LM Wind Power earlier this year.

According to a press release from the commission, GE has been sent a statement of objections (SO) for providing “incorrect or misleading information” when it notified the commission of the planned merger on Jan. 11.

GE completed its $1.65 billion acquisition of LM Wind Power, a Denmark-based technology developer and manufacturer of rotor blades for the wind industry, in April. The completion of the transaction followed regulatory approval in the EU, the U.S., China and Brazil.

The commission notes that this investigation is limited to the assessment of breaches of the EU merger procedural rules and will not have an impact on the commission’s decision to approve the merger, which will remain valid.

When reviewing GE’s planned acquisition of LM Wind, the commission says it had to carefully assess the competitive landscape and GE’s position on the onshore and offshore wind turbine markets. However, the EC alleges that GE failed to provide information concerning its research and development activities and the development of a specific product.

In turn, according to the EC, the missing information had consequences not only for its assessment of GE’s acquisition of LM Wind but also for the assessment of Siemens’ acquisition of Gamesa.

Though this was a separate transaction in the wind turbine market – which was investigated by the commission at the same time – the information was necessary to properly assess, in both cases, the future position of GE and the competitive landscape on the markets for wind turbines, the EC says.

Then, on Feb. 2, GE withdrew its notification of the merger with LM Wind and on Feb. 13 re-notified the same transaction. According to the EC, this second notification included information on the future project, which had not been in the original one. The commission said it was then able to have a full picture of the wind turbine market.

The EC then cleared the Siemens/Gamesa transaction on March 13 and the re-notified GE/LM Wind transaction on March 20.

If the commission were to conclude that GE “intentionally or negligently supplied” incorrect or misleading information by not informing the commission of all relevant product developments, it could impose a fine of up to 1% of GE’s annual worldwide turnover, the release states.

Commissioner Margrethe Vestager, who is in charge of competition policy, says in the release, “We need companies to work with us to ensure fast and predictable merger control to the benefit of both companies and consumers. But we can only do our job well if we can rely on cooperation from the companies concerned; they must obtain our approval before they implement their transactions, and the information they supply us must be correct and complete.”

According to the EC, an SO is a formal step in an investigation in which the commission informs companies in writing of the objections raised against them. The companies can then examine the documents in the commission’s file, reply in writing, and request an oral hearing to present their comments on the case to representatives of the commission and the national competition authorities. There is no legal deadline to complete the inquiry.

In a statement, GE says, “We believe we acted in good faith to meet the EC disclosure requirements, and there was no intent to mislead. When informed of the EC’s concerns, we acted quickly and openly to resolve the issue.

“We have a strong track record of integrity and transparency in our interactions with the EC, having successful completed 50 transactions in Europe over the last decade.

“The SO is a part of the EC investigation process and does not prejudge the final outcome of the procedure. We have the opportunity to respond to it, and we will continue our constructive cooperation with the commission,” the company says.

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