Boeing deal gets last-minute OK from Brussels

Brussels cleared the $15bn merger between Boeing and McDonnell Douglas yesterday, averting a transatlantic trade war at the eleventh hour.

The merger plan won preliminary approval from the European Commission after the competition commissioner, Karel Van Miert, extracted last-minute concessions preventing Boeing from concluding further exclusive supply contracts with airlines for the next 10 years and forcing the company to drop the exclusivity deals already signed with three American airlines.

The climbdown paves the way for the creation of the world's biggest aerospace and defence company and strengthens Boeing's position in the civil aviation market against that of Europe's Airbus Industrie, the US giant's only rival.

French political leaders, worried that the merger could devastate the French aerospace sector, which is dominated by Toulouse-based Airbus, made it clear they were not satisfied with the concessions.

EU officials, however, expect the clearance will galvanise Airbus's partners, including British Aerospace, which has a 20 per cent stake, into pressing ahead with their own plans to transform the consortium into a single commercial entity.

Mr Van Miert said he was happy to recommend the deal. "We insisted right up to the end we would block it if Boeing had not agreed to make changes. We got the remedies we wanted," he said.

The Commissioner admitted his office had been bombarded by callers from both sides of the Atlantic seeking to exert political pressure but insisted the case was at all times treated purely on competition grounds. In a thinly veiled criticism of President Bill Clinton, Mr Van Miert said he had been astonished to hear US calls for the competition dispute to be referred to the World Trade Organisation as Washington had previously rejected EU calls for a competition arbitration forum to be set up alongside the WTO.

Boeing's chairman, Phil Condit, welcomed the positive recommendation from the Commission, saying Boeing had given ground to Brussels' demands for concessions because EU approval for the merger was in the long-term interests of its shareholders, customers, suppliers and the 200,000 employees of Boeing and McDonnell Douglas.

He said the EU should have deferred to the US Federal Trade Commission, which approved the merger last month without conditions. But he conceded: "Had we proceeded without the approval of the European Commission we would have potentially faced large fines and potential harm to our customers."