The rise of the borderless trustbuster

It was to be the biggest industrial merger ever. In late 2000 General Electric (ge), the world’s most valuable company at the time, agreed to pay $43bn for Honeywell, a smaller American manufacturer of, among other things, aircraft electronics. Jack Welch, ge’s ceo and America Inc’s capitalist-in-chief, put off his retirement to see it through. The transaction, codenamed “Project Storm”, seemed a done deal. American authorities gave their blessing, finding no threat to competition (ge made jet engines but not avionics). Regulators elsewhere were expected to defer to America in a merger involving two American firms. So it came as a shock when, in 2001, the European Commission killed it. A diversified ge would, the eu’s competition watchdog argued, wield too much power in the market for aircraft parts. America’s trustbusters pooh-poohed the commission’s theory of “conglomerate effects”. The treasury secretary, Paul O’Neill, called the ruling “off the wall”.