The European Union (EU) Commission unconditionally approved the purchase of Baker Hughes, a US industry giant, by the energy giant General Electric.
In a statement from the EU Commission, it is announced that Baker Hughes, one of the world’s largest oilfield services companies, has been unconditionally approved for the purchase of oil and natural gas by General Electric. As a result of the review, it was noted that the combination of the two companies’ products at the rival markets would have no negative effect on competition.
The EU Commission has the authority to supervise whether there is a contravention in the sectors of the companies operating in the EU or what is the effect of the purchasing of a company on the market. If the EU Commission finds out-of-competition incidents in the examination, it can take precautions and prevent the company from buying.
Both US-based General Electric and Baker Hughes announced that they had signed an oil and gas merger agreement in October 2016. Under the deal, General Electric has declared that it will give $ 7.4 billion to Baker Hughes shareholders. After the new company is formed after the completion of the deal, 62.5 percent of the company will be owned by General Electric while 37.5 percent will be owned by the Baker Hughes shareholders.
Baker Hughes accepted a $ 35 billion purchase offer in 2014 by another US oilfield services company Halliburton. But, the United States Department of Justice did not approve of the deal, on the grounds that the purchase would cause a monopoly in the market.
Although this agreement between these two giants, General Electric and Baker Hughes has the risk of monopoly, the EU Commission has given direct confirmation to the agreement.