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Boeing to lose exclusivity?
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June 25, 1997: 8:15 a.m. ET
EU review of McDonnell Douglas bid may end exclusive supply deals
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NEW YORK (CNNfn) - Boeing Co. may be giving up its exclusive supplier airline contracts in order to win the favor of European regulators for Boeing's Mcdonnell Douglas Corp. merger.
The European Competition Commission last month released a "statement of objections" to the $14 billion merger, saying it would hurt Boeing's competitors, including Airbus Industrie, a European aerospace consortium.
Boeing would not comment on the matter.
Under the proposed plan, published reports say, Boeing would scrap the exclusivity provision from its agreements with Delta Air Lines, Continental Airlines, and AMR Corp.'s American Airlines.
Those agreements called for the airlines to buy only from Boeing for the next 20 years in return for more favorable prices.
The firm orders for 244 aircraft at a value of about $16.9 billion would remain. The purchase options for an additional 1,300 aircraft would also be intact.
However, any orders above and beyond those options would be open to other plane manufacturers, including Airbus.
The Boeing-McDonnell Douglas merger is expected to receive the green light from the U.S. Federal Trade Commission as early as next week.
In Europe, however, European Competition Commissioner Karel Van Miert has been an outspoken critic of the deal. He claimed that the exclusive supplier agreements illustrate the fact that Boeing has used its dominant position to squeeze out other aircraft makers.
A committee of antitrust experts from the EU will meet on July 4 to discuss a draft proposal. The European Competition Commission has tentatively put the issue on its agenda for July 23. It must make a final decision by July 31.
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Boeing
European Union
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