WASHINGTON (CN) - Having missed a divestment deadline to finalize its merger with the oil company Baker Hughes, General Electric must now open up its checkbook, federal antitrust regulators said Tuesday.
General Electric had stipulated to the divestment of its water subsidiary in June as part of a settlement with the U.S. Department of Justice to complete its merger the next month with Baker Hughes.
Under the terms of that deal, the French water and waste-management company Suez was set to buy General Electric’s Water & Process Technologies by the end of September for $3.4 billion.
The Justice Department revealed Tuesday that divestiture is only 90 percent complete because administrative challenges have prevented the transfer of legal title to Suez in certain international jurisdictions.
Surmising that these delays will continue into 2018, U.S. District Judge Beryl Howell issued an incentive for General Electric to close the deal.
Beginning in 2018, General Electric must pay $1,500 every day that divestment is still pending, according to a final judgment dated Monday.
Howell also ordered General Electric to reimburse the United States $50,000 for attorneys’ fees for the modified final judgment.
Assistant Attorney General Makan Delrahim said in a statement Tuesday morning that the DOJ's antitrust division takes its enforcement duties seriously.
“The Antitrust Division takes seriously the enforcement of commitments parties make when settling antitrust lawsuits and will seek to have the parties reimburse United States taxpayers for the fees and expenses the Division incurs in enforcing our consent decrees," the statement said.
Delrahim praised General Electric for its cooperation on the matter and agreeing to reimburse taxpayers for costs associated with the revised final judgment.
General Electric also characterized its relationship with regulators as cooperative.
"GE and the Department of Justice cooperatively solved an issue on the sale of GE’s Water business to Suez," a spokesperson for the company said in an email. "The issue related to the transferring of title to Suez in a small number of non-US jurisdictions by agreeing on a modified timeline with incentive payments to encourage prompt transfers."
According to the final judgment, incentive payments for General Electric’s Water & Process Technologies assets in Bahrain, Egypt, Iraq, Oman, Qatar, Kazakhstan, Russia and Saudi Arabia will kick in Jan. 1, 2018. The company must fully divest its assets from those jurisdictions by Feb. 28, the judgment states.
Meanwhile, incentive payments for jurisdictions in Brazil, Indonesia and Thailand will begin on May 15, with the court holding that divestiture in those locations must be completed by Sept. 30 next year.
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