By Jon Sindreu, Wall Street Journal
Are big companies getting too big? Not always, judging by the aerospace sector.
This week, the European Union “stopped the clock” on its antitrust probe into Boeing’s BA +0.19% plan to buy 80% of the commercial-plane division of Brazilian manufacturer Embraer. The companies haven’t provided necessary information “in a timely fashion,” an EU spokesperson said. The move likely pushes the decision on whether to approve the deal further into 2020.
Setbacks aren’t atypical. What is more contentious is that the EU is scrutinizing the takeover at all. Deals that take out competitors aren’t popular with tech regulators right now, but plane makers offer a case-study in how they can bring benefits.
The market for 100-to-150-seat jets heated up in 2017, when Boeing’s European rival Airbus took a majority stake on the CSeries, a state-of-the-art project of Canadian plane maker Bombardier. Few of the small planes had been sold to date, so the purchase didn’t trigger the EU antitrust officials’ required revenue thresholds. German regulators did look into it and quickly cleared the transaction, on the basis that the 100-seat jet didn’t compete with the bigger ones built by Airbus.
Clients, and the CSeries business—since renamed the Airbus A220—have gained from the decision. The plane’s sales have accelerated, with high-profile orders from Delta Air Lines and JetBlue, thanks to Airbus’s vast service network and its ability to integrate the jet with other offerings.
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