Boeing-Embraer merger under further investigation amid competition concerns

EU fears proposed merger could knock out a major competitor in the aviation market and lead to higher prices and less choice
Share
Boeing, Boeing merger, Embraer, European commission, EU, US Federal Trade Commission, Boeing Brasil
Getty Images

A proposed merger between manufacturers Boeing and Embraer is being probed by the EU amid fears that it would eliminate an important competitive force in the aviation market.

The European Commission must decide by 20 February 2020 whether the merger will reduce competition by an unacceptable level.

The EU markets regulator confirmed on Friday that it had entered into Phase II of its investigation, after the proposed merger was announced earlier this year.

It said it was concerned that the proposed transaction “may remove Embraer as the third largest global competitor” and lead to “higher prices and less choice”.

The planned transaction would see Boeing acquire 80% of Embraer's global commercial aircraft business and establish a new company called Boeing Brasil.

Embraer is a major manufacturer of regional jets and is behind the E2 family of aircraft, which serve both the regional jet market and the lower end of the single-aisle market.

You might like

Belavia continues to expand its Embraer fleet

In a statement, the Commission said: “At this stage, the Commission is concerned that the proposed transaction may remove Embraer as the third largest global competitor in the already highly concentrated commercial aircraft industry.

“Potential entrants from China, Japan and Russia seem to face high barriers to entry and expansion and may be unable to replicate within the next five or even ten years the competitive constraint currently exerted by Embraer.”

Commissioner Margrethe Vestager, in charge of competition policy, said: "Markets for commercial aircraft need to function well to deliver innovative and efficient products to customers at a fair price. Therefore, with our in-depth investigation, we want to make sure that mergers in commercial aircraft do not significantly reduce effective competition on prices and product development.”

You might like

Etihad Flight College takes delivery of Embraer Phenom 100e

The transaction has been cleared by the US Federal Trade Commission and in a joint statement Boeing and Embraer said they “look forward to assisting with [the EU’s] review”.

Boeing said it expects the transaction to close in early 2020, subject to the Commission’s investigation.

Most Popular

Newsletter