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Exclusive: Boeing bid for Embraer unit faces EU antitrust probe – sources

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Via Reuters Finance

BRUSSELS (Reuters) – Boeing is set to face an EU antitrust investigation of up to five months into its bid for a controlling stake in the commercial aircraft arm of Brazil’s Embraer, people familiar with the matter said on Monday.

FILE PHOTO: An Embraer E195-2 is seen on display, sporting a livery combining a lion’s head with an integrated circuit design, during the 53rd International Paris Air Show at Le Bourget Airport near Paris, France, June 17 2019. REUTERS/Pascal Rossignol/File Photo

The deal, marking the biggest shift in commercial aerospace in decades, would reshape a global passenger jet duopoly and reinforce Western planemakers against newcomers from China, Russia and Japan.

It would give Boeing a foothold in the lower end of the market, enabling it to better compete with the CSeries jets designed by Canada’s Bombardier Inc and backed by European rival Airbus SE.

The deal values the Embraer unit at $4.75 billion.

Embraer shares opened lower after Reuters’ report on the impending investigation and were trading 2.1% weaker at 1455 GMT.

The European Commission, which has set an Oct. 4 deadline for its preliminary review of the deal, did not respond to a request for immediate comment.

The EU competition enforcer will launch a full-scale investigation following the end of its review, which could take up to five months and raises pressure on Boeing to offer concessions to address competition concerns.

The Commission recently quizzed suppliers and rivals on the deal, indicating concerns about the concentration in the market.

They were asked about the impact of the reduced number of players, from seven to six and from three to two in various segments, a person with direct knowledge of the deal said.

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Boeing said it was engaged with regulatory authorities in relevant jurisdictions and was continuing to work through the regulatory approvals process.

Embraer was not immediately available for comment.

Aviation analysts say there is limited overlap in the number of seats between Boeing’s 737 family and Embraer’s smaller E2 jets.

There is slightly more overlap between Airbus’s portfolio and Bombardier’s CSeries program which the European planemaker bought last year, they add.

Reporting by Foo Yun Chee; editing by Tim Hepher and Kirsten Donovan


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