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EU Stops the Clock on Review of Boeing Deal With Embraer

Jonathan Browning

(Bloomberg) -- European regulators halted their in-depth antitrust probe into Boeing Co.’s plan to invest in Embraer SA, saying they hadn’t received sufficient information from the planemakers.

The European Commission has been investigating the venture, warning that the deal could remove Embraer as the third-largest global competitor to both Boeing and Airbus SE, which “may therefore result in higher prices and less choice.” The commission, one of the world’s toughest merger regulators, said Monday that it “stopped the clock” and a review can only be restarted once it gets the answers it needs.

The heightened scrutiny puts new pressure on Boeing’s plan to take an 80% stake in a venture controlling Embraer’s commercial airplane and services businesses. The move, which would broaden Boeing’s reach into the regional-jet market by giving it access to Embraer’s E-Jet family, is intended to position the two companies to better compete with Airbus, which last year took control of Bombardier Inc.’s C Series aircraft -- now known as the A220.

“Parties must supply the necessary information for the investigation in a timely fashion,” a spokeswoman for the regulator said Monday in a statement. “Failure to do so will lead the commission to stop the clock.”

Regulators said last month that they didn’t see any potential rivals from China, Japan or Russia that would be able to replicate Embraer’s competition with Airbus and Boeing within the next five or 10 years. They also flagged concerns that the American aircraft maker and Embraer compete head-to-head for 100-150 seat aircraft, with the Brazilian company a “small but important competitive force” for bigger 100-225 seat aircraft.

A Boeing representative said the two firms “continue to co-operate with the European Commission as they assess our transaction and look forward to a positive resolution.”

The commission had initially set a Feb. 20 deadline for a ruling on the deal and then extended its timing by a further 10 days until March 5, before the review was suspended. Boeing and Embraer, which had already shifted their target for completing the transaction to early 2020 from this year, have said they expected additional scrutiny once the EU’s initial inquiry ended Oct. 4.

(Updates with Boeing comment in sixth paragraph.)

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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