"The Prosecutor Is Also The Judge"

Still smarting from his defeat in Brussels, Jack Welch nonetheless showed good humor and little bitterness as he spoke last Friday with TIME writers and editors.

Q: You have said you have long wanted to buy Honeywell. So why did you wait until the end of your career?

A: The price was never right. I wasn't aware of it at the time, but our aircraft people had been working with an investment bank on Honeywell for a couple of weeks prior to this coming up in October. Don't forget that last year, Honeywell's stock had lost about 40% of its value. There, sitting on a platter, was a deal at prices far below what we ever dreamed possible. Was I supposed to not do it? I had to do it. I'd do the same thing again tomorrow. I wasn't thinking about retiring. I was thinking about running GE. I took a shot at it. I gave it everything I had. And it wasn't enough.

Q: Did you move too quickly, without assessing the E.U. regulators? Should you have paid more heed to their rejection of the deal by Time Warner [parent company of TIME] to buy EMI?

A: I had to move quickly. The deal had been made. We liked Honeywell, and we'd had a good handle on them for a long time. This wasn't like the Time Warner-EMI deal. In that case, there were overlaps in music. There was no overlap here. The difference was that our competitors had an enormous say. They made their case so strongly that the regulators believed it.

Q: When did the talks sour?

A: In January I had a very pleasant 2 1/2-hour lunch with the commissioner, and things seemed to be going pretty well. Early on, I actually thought we were going to get approval. We made our case [in a Feb. 26 meeting in Brussels], and we went back to the hotel. I thought we had a shot. Then we came back at 6:30, and they said that they had thought about our arguments, that they made some sense, but that the commission had to go to phase two [of the investigation]. I was naturally hopeful that my persuasive tone would do something. But they didn't move. Then the hearings were very tough on our guys. But the situation really turned when we started making these offers in June. I couldn't believe the stuff we were putting on the table--all the juicy avionics, $2.2 billion in divestitures--and they were just ignoring it. Incredible.

Q: How did you get along with Mario Monti?

A: Mr. Monti is a gentleman--reserved, charming--but very formal. I don't know his inner soul. I do know his staff was hard over on this opinion [rejecting the merger].

Q: What business does the E.U. have deciding whether U.S. companies can merge?

A: That really is just the way the world works. The only thing that's frustrating is that it's very difficult to be in a process where the prosecutor is also the judge. I think in the long run that has to be thought about. If this had been in the U.S., we would have a chance to have our day in court. In Europe, once they make a decision, that's the game. This isn't a transatlantic problem: European companies face the same situation. This is a problem the E.U. has to resolve.

Q: Will GE appeal?

A: Our lawyers are looking at it in consultation with Honeywell. That's a decision that's going to be made over the next month.

Q: Wouldn't your old friend Larry Bossidy at Honeywell prefer that you not appeal, so he can get his company back on track?

A: I don't know. We've stayed away from each other over the past two or three months. He and I have only had one conversation, to arrange a golf game for this weekend.

Q: What advice would you give Bill Gates or other CEOs with antitrust problems in Europe?

A: [Laughs] I don't think, in my new consulting business, that a lot of people will be interested in my advice on how to deal with the E.U.