General Electric Co may need to offer bigger concessions to win European Union approval for its purchase of Alstom SA's power unit as regulators plan to warn the U.S. company that the deal would harm competition, two people familiar with the matter said on Thursday.
GE's planned 12.4 billion euro ($14 billion) purchase of Alstom's power equipment business, the biggest deal in its history, is a key element of its expansion into industrial products and away from finance.
The European Commission said in February that the deal would leave just two gas turbine companies in Europe, with GE competing only with Germany's Siemens. A third global rival would be Mitsubishi Hitachi Power Systems.
GE is seeking to counter the commission's concerns with some concessions, the sources said.
"A statement of objections could come on Friday," one source said.
Such a document shows why the EU regulator views the deal as anti-competitive and is a prelude to a veto unless companies come up with strong arguments or significant concessions.
Alstom shares fell 3.2 percent following the Reuters story, while GE was down 0.3 percent.
An EC spokesman declined to comment. Alstom had no immediate comment. GE said it was working constructively with the regulator.
"We are focused on a positive outcome that preserves the deal economics," GE said, adding it was confident of closing the transaction in the second half of 2015.
GE has said it won approval for more than 40 deals in Europe in the past decade. But the EC blocked its planned $42 billion takeover of Honeywell International Inc in 2001 even though the deal had received U.S. approval. This stirred up a political storm that prompted U.S. President George Bush to express concerns about the veto.
The Alstom deal is not expected to face a similar outcome, despite the commission's concerns, since GE will probably offer enough concessions to satisfy regulators. The commission must also consider the French government, which has an option to acquire 20 percent of Alstom as part of letting the GE deal through.
GE would consider selling intellectual property rights to a product but not make concessions that would affect lucrative service revenues, Chief Executive Officer Jeff Immelt said last month. He projected $3 billion in eventual cost savings and other benefits from the transaction, a more bullish forecast than before.
The deal has already won approval in Brazil, South Africa and India.