On a US financial news channel yesterday, a commentator casually referred to Brussels as "the enemy". This was indicative of the ill-tempered fall-out from the European Union's first-ever veto of a merger between two US companies - General Electric and Honeywell - and one that was already approved by US officials.
The timing could not have been worse for President George W. Bush, visiting Europe to forge alliances with EU leaders. "I am concerned that the Europeans have rejected it," he said in Warsaw.
General Electric's takeover bid for Honeywell International would have created one of the world's largest industrial companies. GE dominates the market for aircraft engines and servicing, while Honeywell is a leading supplier of aircraft electronics and air traffic control systems.
Mr Bush said he had raised the proposed $41.7 billion (€48.4 billion) deal with his European counterparts but EU regulators have already scuppered the merger on the grounds that it violated competition rules and would unfairly undercut corporate competitors (such as Rolls Royce).
Brussels has a legal obligation to vet mergers of US companies with large revenue sales in Europe and does so with the acquiescence of Washington.
The ability to kill deals is two way. Objections from the US Federal Trade Commission stymied French firm Air Liquide's attempts to acquire British industrial gases group BOC last year, though it had EU approval. Nevertheless, the blocking of GE's merger with Honeywell has seen an exacerbation of transatlantic economic and political tensions.
General Electric made a final offer of concessions on Thursday to meet a deadline set by the EU Commission, but by then it knew these fell far short of requirements set by Brussels. GE said it was prepared to sell Honeywell units with annual revenue of $2.2 billion, which would reduce combined GE-Honeywell revenues by about 1.5 per cent, but the Commission asked for divestitures of units with revenues totalling $5.2 billion.
Commission spokeswoman Ms Amelia Torres left the door open a crack yesterday when she told reporters in Brussels that GE and Honeywell had "a limited opportunity to submit modified proposals". But she said the Commission would have to conclude that the new proposals removed all competition concerns. The absolute deadline for the Commission to act is July 12th.
Observers noted that a deal permitting Boeing to acquire McDonnell Douglas came on the eve of the final deadline in 1997, long after the remedies deadline - and after considerable lobbying by the United States.
The failure to close the deal is a setback for GE head Mr Jack Welch, who postponed retirement to see it through.
The office of the European Competition Commissioner, Mr Mario Monti, cited concerns about the proposed merger's potential to reduce competition in sectors such as regional-jet engines, where GE and Honeywell dominated the market; as well as the impact on competition of "bundling" GE jet engines with Honeywell electronics and financing from GE Capital Aviation Services (GECAS).
