"I could've gone home early and been a great hero," said Mr Jack Welch when he announced in October that he was postponing his retirement to oversee a $45 billion (#53 billion) merger between the giant US corporation General Electric and industrial conglomerate Honeywell International. "I'm the one that's putting my neck on the line," he said.
Yesterday the EU Commission announced it was blocking what would have been one of the world's biggest mergers, and the chief executive of GE, a revered titan of corporate America, now goes into retirement with his reputation badly dented.
Mr Welch's critics in the US say he failed to anticipate the extent of European objections to "the cleanest deal you've ever seen" on the grounds that it would create an unfairly dominant position for jetliner engines and aircraft electronics in world markets.
EU Competition Commissioner Mr Mario Monti said in Strasbourg yesterday that the merger "would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines". The Commission added that the deal would give the new company a dominant share in the market for corporate jet engines and aircraft electronics.
GE reacted angrily to the decision. It "strongly disagreed" with the Commission's findings about the competitive effects of the merger and said "the facts just don't support these assertions". The company claimed that "this acquisition would have clearly benefited consumers in terms of quality, service and prices". It said that the Commission "took a fundamentally different approach to competitive issues than its counterparts in the US, Canada and nearly a dozen other jurisdictions, which approved the acquisition with few, if any conditions".
The fall-out from yesterday's decision has devastated Honeywell's management. Its board of directors met yesterday to oust chairman and chief executive Mr Michael Bonsignore and replace him with Mr Lawrence Bossidy (66).
The blocking of the GEHoneywell merger is seen in the US as a result of a fundamental difference in regulatory principles between Europe and the US. The EU is perceived as primarily concerned with the effect on business competition, while the US looks first to consumers' interests.
The point was underlined tartly by Federal Reserve Board chairman Alan Greenspan recently: "The advance of consumer interests is fundamentally the underlying rule of all American antitrust statutes. That's not true in Europe."
United Technologies, which complained to the EU Commission about the GE-Honeywell deal, is expected to renew its bid for Honeywell, presenting EU and US regulators with a possible new case to adjudicate.
Out of 400 big mergers adjudicated by both the EU and the US since 1990, the GEHoneywell deal is the first to be slapped down in Europe after gaining US approval.
Honeywell may now sue GE for breach of contract. Its market value and earnings have slipped as it waited for the expected take-over.
Mr Welch will step down soon as head of GE, unless his company appeals the EU decision. He has received $7 million for rights to his biography to be published this year.
