By Tom Fairless 

BRUSSELS-- General Electric Co. faces a critical few weeks of negotiations with Europe's antitrust regulator as the U.S. industrial giant seeks to close its biggest acquisition without being forced to make painful concessions.

The planned $17 billion acquisition of France-based Alstom SA's power business is central to GE's plan to return to its industrial roots, but European Union regulators are worried that the deal could lead to higher prices for large gas turbines in Europe.

The deal has faced multiple delays as GE sought to convince regulators that their concerns were misplaced rather than, for instance, the company putting forward proposals to unload a part of the power business.

Overseeing the investigation is the EU's new antitrust chief Margrethe Vestager, who has shown few qualms taking on powerful companies. Last month Ms. Vestager filed formal antitrust charges against U.S.-based Google Inc. and Russia's Gazprom OAO. She met with Jeffrey Immelt, the chief executive of GE, last week.

In the background looms GE's failed $45 billion takeover of Honeywell Inc., which the EU blocked in 2001 after U.S. competition authorities gave it the green light.

The purchase of a French industrial crown jewel by an American company became politically charged, as GE was forced to stave off a rival bid from Germany's Siemens AG, which was pulled into the contest by French officials seeking a European buyer for Alstom.

EU regulators opened an in-depth probe into the deal in February, almost a year after the offer was announced.

An initial July 8 deadline for the investigation was extended by a month in March, and the probe was then suspended in mid-April as the EU waited for the companies to provide other information. That suspension was lifted on Tuesday, according to the European Commission, the bloc's top antitrust regulator.

The new deadline for a decision by EU regulators is Aug. 21.

GE has sought to convince regulators that heavy-duty gas turbines are sold in a global market by four competing companies, including Siemens and Mitsubishi Hitachi Power Systems, and that only 5% of demand is in Europe, where the EU says only two competitors would remain after the merger.

The company's approach has been bolstered by support for the deal from the French government and customers. "The French government is very, very supportive and advocating for the deal, and customers are supportive," a person familiar with the matter said. Brazil's regulator has also approved the deal, another positive signal, the person said.

EU regulators appear skeptical.

Ms. Vestager said in March she wasn't convinced by arguments that the EU should look at global markets, and stressed that mergers shouldn't happen at the expense of consumers.

"The argument goes that we need to protect companies, to help them become bigger companies, otherwise they can't take on international rivals," Ms. Vestager said. "I'm not convinced about these arguments."

GE said on Monday it was ready to offer concessions, adding that the lengthy investigation was causing uncertainty with employees and customers of Alstom. Industry experts say the company could have taken those step months ago rather than seeking to convince regulators that they were wrong.

The EU had "never mapped out clearly" what it wanted from GE, which didn't know "what their red lines are," according to the person familiar with the matter.

Under EU antitrust law, it is up to companies to propose remedies that address the regulator's concerns after they have been stated, or to convince the regulator it is wrong. Brussels doesn't make demands of companies.

The latest two-week suspension gives GE valuable breathing space that could allow it to avoid a formal list of the EU's complaints, known as a statement of objections, said Anne MacGregor, an antitrust lawyer with Cadwalader, Wickersham and Taft LLP in Brussels, who is watching the probe closely but isn't connected to the case. Given the current deadline, the formal charge sheet could be sent in late June unless GE satisfies the EU's concerns before then, she said.

The EU could also approve the deal after it sends a formal list of complaints to GE provided its concerns are assuaged.

Meanwhile, GE has already been working for weeks on possible remedies, and those are now being discussed with regulators, the person familiar with the matter said.

Despite GE's willingness to discuss remedies, problems could still lie ahead.

A large part of the revenue from large gas turbines comes from servicing the equipment in the years following installation, said Ms. MacGregor. The commission may be concerned that independent third-party maintenance and servicing companies aren't getting enough access to the service contracts, she said. If so, the EU might require that other service providers can more effectively compete for those servicing contracts.

GE has indicated that servicing the big installed base of Alstom's products is a key attraction of the deal. That means the room for negotiation may be narrow.

Write to Tom Fairless at tom.fairless@wsj.com

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