CALIFORNIA : BRIEFLY / AEROSPACE : EC to Probe AlliedSignal-Honeywell Merger

The European Commission began a full probe into the proposed merger between AlliedSignal Inc. and Honeywell Inc., citing concerns about its impact on the avionics sector in Europe. The companies shrugged off the commission’s move in a joint statement, saying they are confident about final regulatory approval from the 15-nation bloc. “The companies . . . are continuing to work with the commission and expect to complete the review in time to close the merger in the fall of this year,” the statement said. “The Commission has found that due to the companies’ overlapping activities the risk of one or more dominant positions in the European economic area exists, notably for certain avionics products for commercial aviation,” the EC said in a statement after an extended routine probe. The European Union’s competition watchdog now has an additional four months to give its final verdict on the all-American deal. It rarely blocks mergers and acquisitions but can impose conditions, such as asset sell-offs, in return for its blessing. Shares of AlliedSignal dropped $2.44 to close at $61.81, while Honeywell fell $5.13 to close at $114.25, both on the NYSE.