Contributor - Europe

Cathy Buyck

Boeing has revised the timeline to close its <a href="https://www.ainonline.com/aviation-news/air-transport/2019-02-26/embraer-shareholders-approve-joint-venture-boeing">proposed $4.75 billion acquisition of 80 percent of Embraer’s commercial aircraft division</a> after the European Union’s anti-trust regulator informed the companies it would open an in-depth investigation into the deal. In a joint statement released on Thursday, Boeing and Embraer said they now expect the transaction to close in early 2020 because the European Commission recently indicated it would open a second phase of an assessment in its review of the transaction.

 


The confirmation of the in-depth probe by the EU follows by one day the <a href="https://www.ainonline.com/aviation-news/air-transport/2019-10-02/wto-allows-us-impose-75-billion-duties-airbus-row">decision of the WTO</a> to allow the U.S. to impose tariffs worth $7.5 billion&nbsp;annually on imports of products from the EU as a countermeasure for subsidies to Airbus. U.S. Trade Representative Robert Lighthizer Wednesday evening said the U.S. will act on the authorization and begin applying tariffs on certain EU goods—including 10 percent on large civil&nbsp;aircraft—beginning October 18, in spite of calls by the EU to end the long-running dispute and reach a “fair and balanced solution” for the respective aircraft industries.

 


Boeing and Embraer announced the deal in July 2018 and the sides repeatedly said they expected the transaction to close by the end of the year. Last month, Embraer Commercial Aircraft CEO John Slattery told AIN he recognized the large amount of work still needed to get the go-ahead from the regulatory bodies.&nbsp;“The competition authorities around the world are very diligent at their work,” he said. “Each of the jurisdictions we have to go to—it’s ten&nbsp;in total—has a voluminous number of questions. But when you look at the empirical evidence, it’s clear to everybody there’s no competition between the E-Jet, for example, and the 737.”

 


In Thursday’s statement, Boeing and Embraer said they obtained “a number of regulatory approvals” including that of the U.S. Federal Trade Commission.

 


The European Commission’s competition directorate-general did not immediately respond to AIN’s request for comment. It is expected to detail on Friday which elements of the proposed merger raise&nbsp;competition concerns, prompting the opening of a Phase II investigation.

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