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| | July 2, 2015 | |
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| | Google the phrase "Jeff Immelt's Best Friend" and you will get pictures of the GE CEO with President Obama - a reminder of how hard he has worked over the last seven years to build good relations with the Democratic administration. But that did him little good late yesterday when the Justice Department filed suit to stop GE's $3.3 billion sale of its appliance business to Electrolux, saying it would result in a "duopoly" for major cooking appliances. Both GE and Electrolux said they will continue to push for the sale -- but we can guess how this story ends.
Meanwhile, Immelt's lieutenant Steve Bolze is doing battle today in Brussels with European Commission officials over its $14 billion deal to buy Alstom's energy business. Regulators say that deal will give GE too large a share of the market for heavy-duty gas turbines. GE says it is "confident" it can win regulator's approval -- but we've seen this play before, too, with the GE-Honeywell merger blocked by European regulators in 2001.
The two stalled transactions mean Immelt's effort to remake his company is now on the ropes. Which could explain why he sounded so frustrated about government regulation when he was interviewed recently by Fortune's Pattie Sellers. "We are going to live in a world for a long time with more government intervention, more regulation," he said. "This is just part of a big, I think, social trend. And it's not just the U.S., it's China, it's Europe, it's all over the world."
More below.
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| | Top News | |
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| | • GE ensnared by antitrust regulators The U.S. government has sued Electrolux to halt its purchase of General Electric's appliance division, saying the merger would create a company that would dominate too much of the market that controls the sale of appliances to home builders and property managers. Have we hit peak antitrust? It seems like it, as the government has put up a road block for a number of large deals, effectively killing the Comcast-Time Warner Cable and Sysco-US Foods mergers. Fortune • Airlines under investigation While on the topic of the federal government, the Justice Department on Wednesday said it was investigating whether major U.S. airlines have worked together to illegally keep airfares high by signaling plans to limit flights. The top four airlines, which control about 80% of the domestic air travel market, confirmed they received the regulator's letter and said they are cooperating with the probe. Reuters • How HP plans to split in two Hewlett-Packard gave some details about what it will look like after it spins off its printer and personal computer business later this year. HP confirmed CEO Meg Whitman will be HP Enterprise's president and CEO once the separation is finalized, running the portion that sells hardware like servers to businesses. HP also outlined financials for HP Enterprise, though such details for the spin off unit will be revealed after the split. Fortune • Fannie, Freddie CEOs get raises The CEOs of Fannie Mae and Freddie Mac are to see their compensations return to historic levels after the Federal Housing Finance Agency, which has sole authority over their compensation, moved to increase their pay. That decision went against the wishes of the White House, and members of the House and Senate also lamented the raises signaled a return to "business as usual" for the lenders that have operated with explicit U.S. backing since stumbling badly following the financial crisis. Bloomberg • What to look for in June jobs report The U.S. will later today release key employment data for the month of June, with economists forecasting an increase of 233,000 jobs last month, which would be a slowdown from what the government reported in May. Still, it would keep job growth above the 200,000 mark for the 15th time in the past 16 months, and economists expect the jobless rate will tick lower. Data on wages and the average workweek for Americans will also be closely watched. WSJ | |
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| | Around the Water Cooler | |
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| | • Don't add peas to your guacamole No story got more ridiculous coverage than the visceral reaction to a New York Times cooking section suggestion that Americans add fresh peas to their guacamole. Even President Obama weighed in on the matter - and for the record we agree with him, it is not a good idea. It turns out that it is actually a bad suggestion for the environment, as one ounce of avocados requires 9.1 gallons of water while 44.5 gallons is needed for a comparable amount of peas. Fortune • Overtime pay won't change how we work Harvard Business Review makes a case for why the Obama Administration's move to make more workers eligible for overtime pay might not increase the amount of money Americans earn as much as the president would hope. While it looks like millions of workers, many in the retail and food service industries, will see their salaries increase, research suggests that over time firms will actually lower base salaries in order to pay the same amount of work at the same price. Harvard Business Review • Whole Foods admits to overcharging The co-CEOs of Whole Foods have admitted that the grocery store chain at times overcharged customers in New York City, admitting the retailer made some mistakes and at the same time vowing to fix the problem. The CEOs promised to increase training of their staff and also implement a third-party auditing system to track improvements. This comes after NYC investigators said overcharging at Whole Foods was "the worst case" they had ever seen. Time | |
| | 5 things to know today | |
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| | GE's travails and June jobs — 5 things to know today. Today's story can be found here. | |
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