EU poised to block GE merger deal

LONDON, England -- The European Union appears ready to block the proposed merger between General Electric and U.S. electronics group Honeywell International.

Staff at the European Commission have reportedly urged EU member states to reject the $41 billion deal on competition grounds.

According to media reports, the recommendation was contained in a draft decision sent to the 15 member countries on Friday.

A spokeswoman for GE said she was unable to confirm the development, but said it would be in line with the company's expectations.

GE, the world's biggest conglomerate, last week offered to sell assets worth about $2.2 billion in annual revenues in a bid to win EU approval.

And it said it would limit future operations of GECAS, its airline leasing division.

But the draft decision is reported to detail GE's huge market power in engines and aerospace products and says the commitments offered by the company do not go far enough.

The EU is due to make a decision on whether to allow the deal by July 12.

The European Commission's spokeswoman Amelia Torres said documents are circulating to member states ahead of next week's meeting of committee of experts who will advise the competition commissioner Mario Monti.

GE's President Jeffrey Immelt was quoted as saying the company expected the proposal to be rejected.

In an interview in Le Monde, he said he believed the chances of the deal going through were "zero."

"The indications we have from the European Commission lead us to think the offer won't be accepted," Immelt told the French daily.

"The percentage is zero," he said when asked to estimate the chances of a successful conclusion to the proposed acquisition, which would create one of the world's largest industrial companies.

On Monday, the EU's top antitrust regulator said the Europeans were not the only ones with reservations about the merger.

Competition Commissioner Mario Monti said the proposed deal had raised strong concerns among airlines and aircraft equipment makers on both sides of the Atlantic.