Mergers: Commission approves acquisition of Raytheon by UTC, subject to conditions

aircraft

(Credit: Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Raytheon by United Technologies Corporation (UTC). The approval is conditional on the divestiture of a remedy package.

The transaction combines UTC’s aerospace businesses and Raytheon’s defence business. Both companies are global suppliers of military systems and equipment to aircraft and guided munition producers, as well as armed forces.

 

The Commission’s investigation

During its investigation, the Commission gathered extensive information from a broad range of defence contractors, as well as directly from armed forces of the European Economic Area (EEA).

The Commission had concerns that the transaction, as originally notified, would have reduced competition in the markets for military GPS receivers and airborne radios.

Following its investigation, the Commission found that:

  • Concerning military GPS receivers, UTC and Raytheon are two of the very few suppliers of the core military GPS technology wolrdwide, thus including in the EEA, which in turn constitutes a critical input for a broad range of military systems. Therefore, the merged entity would have faced very limited competition from alternative suppliers following the transaction.
  • Concerning military airborne radios, UTC and Raytheon are two major suppliers of these systems worldwide and, in particular, the only two real options currently available to US military aircraft manufacturers. EEA armed forces procure a variety of military aircrafts from US manufacturers, therefore the Commission was concerned that the concentration would result in harm to EEA armed forces, including higher prices.

The Commission concluded that vertical links between UTC and Raytheon’s activities did not result to harm to competition, mainly because the merged entity would have neither the ability nor the incentives to restrict competitors’ access to essential input or to a sufficient customer base.

The Commission also investigated whether the merged entity could use systems or components in its portfolio to shut out competitors, through practices such as bundling. The Commission concluded that the merged entity would have neither the ability nor the incentives to engage in such strategies and harm competition.

 

The proposed remedies

To address the Commission’s concerns, UTC and Raytheon offered to divest the following activities:

  • UTC’s entire military GPS receiver and anti-jamming business, located in Cedar Rapids and Coralville, Iowa, United States;
  • Raytheon’s entire military airborne radios business, based in Fort Wayne, Indiana, United States.

UTC and Raytheon intend to sell both divestment businesses to BAE Systems, the UK-based defence and aerospace company.

The proposed remedies remove the entire horizontal overlap between UTC and Raytheon in both military GPS receivers and military airborne radios globally.

The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns in the EEA. The decision is conditional upon full compliance with the commitments.

 

International cooperation

Given that both companies are very important suppliers of military equipment in the US, the Commission has cooperated closely with the US Department of Justice. Likewise, the Commission has been in regular contact with the Canadian Competition Bureau.

 

Companies and products

UTC, headquartered in the US, provides products and services for the building systems and aerospace industries globally.

Raytheon, also headquartered in the US, is a defence contractor that supplies defence, civil government and cybersecurity solutions with a core focus on missiles and air defence systems, radars and electronic warfare.

 

Merger control rules and procedure

The transaction was notified to the Commission on 24 January 2020.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

More information will be available on the Commission’s competition website, in the public case register under the case number M.9434.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Historical success for the First ever European Presidential Debate

Four in five adolescents failing to exercise for even 60 minutes a day, UN health agency warns

A brief history of vaccines and how they changed the world

Mexico: UNICEF calls for implementation of protocol to protect migrant children

How we can win the war against antibiotic resistance

The new EU “fiscal compact” an intimidation for all people

Where are the charities in the great Artificial Intelligence debate?

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

Tax crimes: special committee calls for a European financial police force

Eight years after Fukushima, nuclear power is making a comeback

Migration: First unaccompanied children relocated from Greece to Luxembourg

Sweden gives all employees time off to be entrepreneurs

Remittances could fall by $100 billion because of COVID-19 – here’s why that matters

Ride-hailing apps are making the developing world’s traffic problems worse

Negotiations on Investment Facilitation at the WTO gain support at Davos

EU/African, Caribbean and Pacific partnership: MEPs list key aims for renewal

Reading the smoke signals: The long-term consequences of Amazon wildfire on global health

Smart city experts should be looking to emerging markets. Here’s why

‘Global trust’ declining, ‘our world needs stepped-up global leadership’

What we’ve learned about mental health from young people

‘Mosques should be safe havens, not sites of terror’, says Guterres announcing UN plan to help safeguard religious sites

The EU lets the bankers go on rigging the benchmarks

Monday’s Daily Brief: WFP mulls ‘last resort’ Yemen aid suspension, top peacekeeping awardee announced, abuzz over Bee Day, Ebola threat ‘very high’

These tech start-ups are changing what it means to farm

Europe and the tragicomic ‘black sovranismo’

The Eurogroup+ is born to govern the EU Banking Union

Vaccinations and the movement of anti-vaccers

‘Staunch support’ for Iran nuclear deal tempered by concern over missile testing

Central Asia bloc has important role in ‘peace, stability and prosperity’ beyond region, says Deputy UN chief

Eurozone and Britain heading in different directions

Violence in North and West Africa increasingly targeting civilian and border areas – OECD/SWAC

Youth employment crisis easing but far from over

Government internet ban leaves parts of Myanmar ‘in a blackout’, UN expert calls for immediate lifting

EU Commission announces Safe Harbour 2.0 and a wider Data protection reform

5 ways for scientists and clinicians to double up on healthcare

The European Parliament rewrites the EU budget in a bright day for the Union

Energy Union: deals on efficiency targets and governance

5 things you need to know about water

Customs Union: Fake and potentially dangerous goods worth nearly €740 million stopped at EU customs in 2018

Anti-vaccination: a private choice leading to collective outcomes

A European young student speaks about the Youth Policies of the European Commission

Commission reaches agreement with collaborative economy platforms to publish key data on tourism accommodation

New EU rules to boost crowdfunding platforms and protect investors

How tech can help businesses balance profit and purpose

Blockchain can change the face of renewable energy in Africa. Here’s how

How many websites are there?

Will the end of QE come along with ECB’s inflation target?

US prosecutors now target Volkswagen’s top management, upsetting Germany

Forget retail therapy – this is the age of the conscious consumer

These are the 5 most exciting cycling projects in the world

“BRI cooperation is entering a new stage: we need a new and more constructive approach rather than waste time on suspicion”, China’s Ambassador to EU Zhang Ming underlines live from European Business Summit 2019 in Brussels

Food safety critical to development and ending poverty: FAO deputy chief

‘Uphold human dignity’, dismantle ‘specious notion of racial superiority’ urges UN chief

Factory workers are facing a mental health crisis. Here’s how to respond

More international support needed to curb deadly measles outbreak in DR Congo

COP21 Breaking News_04 December: Building a Sustainable Future – speech by UNEP Deputy Executive Director Ibrahim Thiaw at the LPAA Thematic Event on Buildings

The three US financial war fleets

Consultant in Forensic Technology – 1969

International Criminal Court acquits former president Gbagbo of war crimes in Côte d’Ivoire

How sustainable infrastructure can help us fight climate change

More Stings?

Advertising

Trackbacks

  1. […] Mergers: Commission approves acquisition of Raytheon by UTC, subject to conditions – The Europ… (europeansting.com) […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s