Unless executives at Fairfield, Conn.-based General Electric Co. or officials of the European Commission make 11th-hour concessions, GE's pending $40+ billion acquisition of Honeywell International Inc. could soon be an undone deal. But deal or no deal, U.S. manufacturers must expect, at least for the time being, that the Europeans will continue to closely review -- and possibly reject -- many of their plans for major mergers and acquisitions (M&A). The reason: Significant differences over what's competitively acceptable continue to divide the U.S. and the European Commission, the 15-nation European Union's (EU) executive branch of government. There is, for example, the marquee issue of "bundling," the selling of products and services as a single package. Unlike the U.S. Justice Dept., which conditionally blessed the GE/Honeywell deal several months ago, the Europeans seem to view the packaging of complementary products and sometimes such services as financing as a serious anti-competitive practice. Specifically, relates one leading European-based antitrust attorney, the European Commission fears that if a merged GE and Honeywell were to sell aircraft engines and aviation electronics as a single package, they'd put manufacturers that sell either of the products separately at price and other competitive disadvantages. The U.S. Justice Dept. views bundling quite differently -- at least it did in the GE/Honeywell deal. "The Justice Dept. implicitly concluded that the possibility that GE might attempt to tie engines to other products -- or to financing -- was remote, given its lack of market power," states Charles H. Critchlow, a New York-based antitrust partner at the international law firm of Coudert Brothers. In the GE/Honeywell case, the European Commission "staked out a very aggressive position" on bundling, he believes. "And whether that will continue to be the case -- or whether in this particular transaction they locked themselves in and will be little bit more moderate in the future -- is anyone's guess." The antitrust divide between the U.S. and the EU, however, is about more than product bundling. There is a fundamental transatlantic difference over whom antitrust laws should protect -- consumers or competitors. In the U.S., consumer benefit is the ultimate antitrust test for a merger or acquisition, while in Europe the focus is on preserving competitors, explains Alfred Marcus, chairperson of the Strategic Management & Organization Dept. at the University of Minnesota's Carlson School of Management. "In the United States, we have evolved to [the position that] bigness is not necessarily bad," he observes. The U.S. Justice Dept.'s antitrust division or the Federal Trade Commission "will approve of mergers which can produce further economies or efficiencies and enhance competition," states Critchlow, who has 25 years' experience in the antitrust field. "And they do so in the belief that such efficiencies will benefit consumers and force other competitors to become more efficient as well -- even if players in the market who cannot, or choose not to evolve -- may ultimately see their position reduced," he stresses. In contrast, claims Critchlow, the European Commission displays "a troubling concern" that companies not be allowed to significantly increase competitiveness through a merger if other firms might not follow their example and fall by the business wayside. The commission "evidently holds this concern even in situations where a merger would result in better product offerings, cheaper distribution, or more consumer alternatives," he says. "In an economic world, U.S. regulators have the much better approach," Critchlow believes. And he criticizes the European Commission's approach to the GE/Honeywell deal for denying consumers new products, better products, and service options "simply because of a fear" that other companies -- such as Britain's Rolls-Royce PLC or U.S.-based United Technologies Corp. -- might not choose to keep up. "Increasingly, mergers and acquisitions are driven by precisely the economic considerations the commission has squarely attacked," Critchlow says. If he's right, U.S. manufacturers who do a significant amount of business in Europe should count on close European Commission review of their future M&A deals. Continued antitrust differences generally between the U.S. and the EU "probably will put a little bit of a constraint on merger and acquisition activities," predicts the Carlson School's Marcus. But Marcus also expects the European Commission to be under a microscope "to make sure that they apply their doctrines uniformly." If the Europeans become "too openly political, they'll lose credibility in the world," he asserts. Indeed, whether or not the Europeans are playing politics -- applying principles of competition to other nations' companies that they would not apply to their own -- is still a matter of debate among antitrust experts. However, Marcus does not believe that either the U.S. or the EU wants to go to war over their antitrust differences. "Both sides might ultimately cooperate. . . there is so much that both sides might gain," he asserts. In fact, Mario Monti, the EU's commissioner for competitiveness, claimed at a June 26 Brussels conference that U.S. and EU antitrust differences of opinion during the past two years "have been very rare indeed." And "when the do occur," he said, "we must learn to manage them at the technical level and avoid that they escalate into political disputes."