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

COVID-19: Both WHO and Europe must learn from the current pandemic, say MEPs

iSting: Change Europe with your Writing

Normal reactions to the abnormality of the pandemic

Trade Committee advocates lower tariffs in Western Sahara

With half of Somaliland children not in school, UNICEF and partners launch education access programme

Actions not words: what was promised at the UN’s landmark climate summit?

LED lights could stop turtles and birds from drowning in fishing nets

The role of medical students in promoting women’s rights

UN experts cite ‘possible exploitation’ of workers hired to clean up toxic Japanese nuclear plant

Judicial independence under threat in Nigeria, warns UN rights expert

2019 data on official development aid & online discussion of ODA’s role in the Covid-19 crisis

Von der Leyen on Europe Day: What does Europe mean to me and why is solidarity more valid than ever

EU supports recovery and resilience in Nigeria with additional €50 million

After the Italian ‘no’ and the Brexit, Germans must decide which Europe they want

Labels for tyres: deal for greener and safer road transport

CDC advises against gatherings of 50 or more – Today’s COVID-19 updates and analysis

Review on ethics and technological development

MWC 2016 LIVE: Getty chief says one in four new images from phones

Pandemics are here to stay. Here’s how to prepare for the next one

This forgotten chemical element could be the key to our green energy future

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

China Unlimited and the Chinese dream

Who really cares for the environment?

Contact the Sting

Our healthcare systems are ailing. Here’s how to make them better

Data is the fuel of mobility. Don’t spill it for nothing

3 lessons from India in creating equal access to vaccines

More protection for our seas and oceans is needed, report finds

The gateway to carbon pricing? Air pollution policy

What are Asia Pacific countries getting right in the fight against cancer?

In New Zealand it takes less than a day to start a business

Coronavirus: 5 ways to work from home with your kids (and stay sane)

UK must make clear what it wants, MEPs say in Brexit debate

An alternative view of Globalization 4.0, and how to get there

“Private” sea freight indexes hide Libor like skeletons?

Globalization 4.0 means harnessing the power of the group

EU Cohesion policy: Commission and EBRD promote innovative use of data in public procurement involving EU funds

These are the best ways to tackle air pollution and climate change together

Why the world needs the youth revolution more than ever

Mental health of health professionals: the alter ego

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

Antitrust: Commission launches sector inquiry into the consumer Internet of Things (IoT)

These Dutch microgrid communities can supply 90% of their energy needs

The European Parliament fails to really restrict the rating agencies

Big world banks to pay $ 4.95bn for cheating customers; Is it a punishment or a gentle caress?

European Parliament to scrutinise deal on future EU-UK relations

World Cancer Day: Here’s how perceptions about the disease differ around the world

COP25 climate talks: What just happened, and what lies ahead?

‘At risk’ Mediterranean forests make ‘vital contributions’ to development

Sacrifice of fallen ‘blue helmet’ to be honoured with UN’s highest peacekeeping award

India m2m + iot Forum Hosts Successful 4th Editions of India Smart Cities Forum and India Smart Villages Forum

Mergers: Commission opens in-depth investigation into proposed acquisition of Transat by Air Canada

European car industry: The Germans want it all

Time to act together: Von der Leyen at the European Parliament July plenary

Gender equality in STEM is possible. These countries prove it

Mental health in the context of a pandemic: social distance

MEPs agree on new rules to tax digital companies’ revenues

Women in Switzerland have gone on strike – this is why

Britain’s May won the first round on the Brexit agreement with the EU

UN underscores the need to celebrate indigenous peoples, not confine them

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