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The proposed joint venture would supply the commercial aircraft “mid-market,” including Embraer E-Jet E2 twin-engine narrow-body jets, though not the larger Boeing 737 series.

EU Investigation Delays Boeing-Embraer JV

$4.2-billion commercial-aircraft partnership may disrupt competitive balance, European antitrust agency contends

Prospective partners The Boeing Co. and Embraer reset the closing date for their Boeing Brasil-Commercial joint venture to "early 2020", in apparent response the European Union’s antitrust regulator opening a wider investigation into the market implications of the combination.

Boeing and Embraer earlier this year agreed to form Boeing Brasil-Commercial by way of Boeing’s purchase of an 80% share of the Embraer commercial aviation business. The $4.2-billion joint-venture deal has been approved by shareholders of both companies, and had been set to close by the end of 2019.

The U.S. Federal Trade Commission has already cleared the joint venture to close in the U.S., following a "detailed assessment," as noted in a joint statement by Boeing and Embraer.

In their joint statement, Boeing and Embraer explained that they continue to work together "to establish their strategic partnership, positioning both companies to deliver greater value to airline customers and the flying public, and to accelerate growth in global aerospace markets."

The two business further noted that they have undertaken diligent planning for the venture.

After a preliminary investigation into the proposed venture, the European Commission said the effect on the market will be to remove Embraer from the single-aisle commercial aircraft sector, while newer entries from China, Japan, and Russia continue to face significant obstacles to competing with Airbus and Boeing in that market segment. That may result in higher prices for airlines purchasing the single-aisle jets.

In opening the wider investigation, the European Commission set February 20, 2020, as the date for announcing its decision on the merger.

Boeing Brasil-Commercial would serve the commercial aircraft “mid-market,” meaning regional jets or narrow-body aircraft for 70-150 passengers. This would include the Embraer E-Series and newer E-Jet E2 twin-engine narrow-body jets. Boeing’s current twin-engine narrow-body aircraft, the 737 series, is not in competition with the Embraer jets, but is ensnared in an ongoing safety review and currently idled worldwide.

Boeing initiated the Embraer takeover after its rival Airbus executed a takeover of the Bombardier C Series program (now called the Airbus 220 series). The Embraer E-Series and E-Jet programs compete with the A220, but both Boeing and Airbus have been driven by the increased competition for market share.

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