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GE may have misled EC over LM acquisition

FRANCE: A preliminary conclusion by the European Commissions (EC) competition authority has found GE provided misleading or incorrect information in its notification of the takeover of blade manufacturer LM Wind Power.

The EC is looking in to GE Renewable Energy's takeover of LM Wind Power
The EC is looking in to GE Renewable Energy's takeover of LM Wind Power

If the commission concludes definitively this was the case, a fine of up to 1% of GE's annual worldwide turnover could be imposed. The investigation will not affect the validity of the merger. 

On 11 January 2017, GE notified the EC it had agreed to acquire the Danish blade firm LM Wind Power.

During its assessment of the deal, the EC found GE had failed to include details of its research and development activities, "and the development of a specific product" — namely whether the manufacturer was developing a 10MW+ offshore wind turbine.

The EC said this information would have had consequences not only for the GE-LM deal but also the Siemens-Gamesa merger, which was being considered by the EC during 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 competitions authority said.

On 2 February, GE withdrew its notification of the merger and resubmitted on 13 February with the information regarding the "future project".

This notification was cleared by the EC and the merger was approved on 13 March.

During the AWEA wind conference in May, GE's offshore wind CEO John Lavelle confirmed a probe in to the takeover. He said the company had not made a final decision on plans for an offshore turbine up to 12MW but said, "Like everyone, we're looking at bigger turbines".

The EC said an initial conclusion of the probe found GE intentionally supplied incorrect information.

A statement from GE said the company believes it acted in accordance to the rules: "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 [preliminary ruling] 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."

EC's competition commissioner Margrethe Vestager said: "We've reached the preliminary conclusion that, in this notification, GE failed to tell us about the development of a specific product.

"This mattered because in this industry, innovation is essential. Without the latest technology, you just can't compete. So in our assessment of competition, we had to know, not just what the companies were currently selling, but also what products they were developing that could affect competition in the future.

"A month after notifying, GE withdrew its notification and submitted a new one eleven days later, which did include information about the product. With that information in hand, we had a full picture of the market for our decision. And on the basis of the correct information, we were able to approve the merger as it stood," Vestager added.

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