GE close to getting EC approval for Alstom acquisition

After a closed door meeting on 2nd July with the EC to explore the EC’s concerns over its acquisition of Alstom’s power and grid business, GE was given till 16th July to make a written submission of any modifications to the deal. The EC decision is expected by the 3rd week of August.

GE has now made its written submissions and they should now be clearly focused on the EC’s concerns. My guess is that GE would have addressed two areas:

  1. So as not to block potential – and qualified – competitors from entering the HDGT market, GE may have offered to make “open source” that technology and IP from Alstom which they do not use themselves. This could, for example, be done by making specified patents and associated test and operational results “freely” available though, perhaps, subject to some nominal royalties. These concessions may satisfy the EC’s concern that the number of OEM’s for HDGT’s would decrease such that there would be an unhealthy concentration of market share.
  2. So as to ensure that pricing for the servicing and for spare parts for Alstom’s fleet of engines would not be unduly or unfairly increased, GE could have offered to limit some margins on this business. They could, for example, hold or index prices for spare parts to 3rd party service providers in – say – Europe for machines installed prior to – say – the year 2000. I suspect that GE would have found a creative way to ensure that their business plan revenue from the service business was maintained with concessions to the EC only on margins rather than on revenue. This should bridge much of the gap, since the EC is primarily looking to avoid monopoly or predatory pricing and unjustifiable margins.

I expect that EC approval for the deal is now very close. Perhaps one more iteration will do the trick. Of course I am only speculating and I personally would like to see the deal go through.

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3 Responses to “GE close to getting EC approval for Alstom acquisition”

  1. Surge of news articles suggests that EC will approve GE acquisition of Alstom’s power and grid businesses | The k2p blog Says:

    […] speculated a few days ago that the remedies that GE had submitted to meet the European Commission’s concerns for this […]

  2. Alstom and GE trim the scope of their deal by €300 million to ensure EC approval | The k2p blog Says:

    […] in the sale price to GE. Since I suspect that GE’s proposed “remedies” are in two main areas (technology and service business), it would seem that the €300 million is made up of Alstom […]

  3. Alstom and GE trim the scope of their deal by €300 million to ensure EC approval | Utility Discount Says:

    […] in the sale price to GE. Since I suspect that GE’s proposed “remedies” are in two main areas (technology and service business), it would seem that the €300 million is made up of Alstom […]

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