Boeing and Embraer have delayed the expected close of their commercial aircraft joint venture until early 2020 due to a European regulatory hold-up.
The companies say on 3 October that an assessment by the European Commission of their planned combination, which would see Boeing acquire 80% of Embraer's commercial aircraft division for $4.2 billion, has delayed the deal.
They had previously expected to close the arrangement by the end of 2019. News of the delay and scrutiny by Europe's antitrust and competition regulator comes amid an escalating trade battle between the USA and Europe.
"The European Commission recently indicated it will open a Phase II assessment in its review of the transactions, and Boeing and Embraer look forward to assisting with that review," the companies state. "Based on this development, however, the companies now expect the transaction to close in early 2020."
The European Commission says 90% of cases it reviews fall into the less-scrutinised "Phase I" category, which involves a review lasting about 25 working days.
But a "Phase II" investigation, to which the Boeing-Embraer deal is subject, could last months. The Commission initially has 90 working days to complete a Phase II review, though that period can be extended, it says.
The Commission says it received notice of Boeing's intention to acquire majority control of Embraer's commercial unit on 30 August, suggesting a review could stretch to near year-end.
"A phase II investigation typically involves more extensive information gathering, including companies' internal documents, extensive economic data, more detailed questionnaires to market participants and/or site visits," says the Commission.
News that the Commission was taking a closer look at the deal broke several days ago but Boeing and Embraer's announcement of the delay came one day after the USA announced it will levy import duties on a range of European products, including large commercial aircraft.
Such tariffs were approved by the World Trade Organization as compensation to the USA for subsidies provided by European countries to Airbus for development of commercial jets.