Why did the European Commission block the merger?

General Electric (GE) is a major manufacturer of aircraft engines; one of Honeywell's strengths is in avionics - the technology used in aeroplanes.

The Commission feared that the combination of these two strengths would have given the merged firm almost complete control over the market in aviation equipment.

"Such integration, unless corrected, could have resulted in the foreclosure of the market for competitors," Mario Monti, European competition commissioner, told the BBC.

Mr Monti claimed to be acting in the interests primarily of the airlines, but also of the two firm's competitors in the aircraft-equipment business.

Although the firms attempted to meet some of Europe's concerns over the merger, Mr Monti said their concessions were both insufficient and belated.

What is so unusual about this?

This is the first time that the European authorities have vetoed a US-only merger that had already been given clearance by the American Justice Department.

The US authorities gave their approval at the beginning of May.

Mr Monti has not fought shy of big US companies in the past.

A year ago, he blocked a proposed merger between WorldCom and Sprint, two American telecoms firms. He also ruled that US media giant AOL Time Warner may not take over Britain's EMI.

But in the past, his views have always been more or less in accord with those of the US authorities; this time, he is effectively reversing an American decision.

Is competition policy in Europe much different from that in America?

It seems so.

Both sides claim to be singing from the same hymn-sheet, but there is increasing anecdotal evidence that Europe is somewhat tougher on big mergers than the US.

The key difference seems to be in mergers on the scale of GE-Honeywell, a deal worth some $42bn (�30bn).

The American authorities have tended to look favourably on mega-mergers, having waved through a few $50bn-plus deals in the last couple of years.

The Europeans, meanwhile, have often stated their determination to let no large deal go through without close scrutiny.

Will this cause a trade row?

It has certainly provoked some anger in the US, and the threat of retaliatory action from senior American politicians.

And US president George W Bush voiced his concern that he wanted the companies to be fairly treated by the EU.

Some Americans dislike what they regard as Europe's anti-business attitude; others allege that Mr Monti was hoping to protect European aerospace firms against US competition.

But the disquiet is unlikely to bubble over into a fully-fledged trade row.

Mr Monti has been at pains to build bridges with his American counterparts, stressing the long history of co-operation between the two sides.

He has also pointed out that the divergence between the two decisions arose from the fact that the implications of the GE-Honeywell merger in Europe were not the same as in the US.

America has retaliated against Europe in international trade matters before - most famously in a recently-resolved row over bananas.

But it remains unlikely that Washington would regard the failure of a corporate merger - even one involving a firm as large and well-known as GE - as serious enough to warrant souring international relations.

What next: can GE and Honeywell appeal?

There is room for an appeal against the Commission decision.

The two firms can argue, for example, that the Commission did not pay sufficient attention to their offers to divest certain key interests.

But it is unlikely that this will happen.

The two men most closely associated with the abortive merger are now out of the picture: Jack Welch, GE's chairman and chief executive, is retiring, and Honeywell sacked Michael Bonsignore, its chairman and chief executive, on Tuesday.

Would this really have been the biggest industrial merger in history?

That depends on what you mean by "industrial".

Valuing Honeywell at more than $40bn, the merger would have been the largest involving two firms in engineering or industrial manufacturing.

It just exceeds the previous record-breaker in this sector, the 1998 formation of US-German carmaker DaimlerChrysler.

But in the global scale of corporate mergers, it is relatively small fry.

Even in the last year or so, there have been deals worth more than $100bn in a variety of sectors, including pharmaceuticals (Glaxo Wellcome and SmithKline Beecham), telecoms (Vodafone and Mannesmann), banking (Citicorp and Travelers), petroleum (BP and Amoco) and media (AOL and Time Warner).