European Commission Approves
Acquisition of Raytheon by UTC|
March 17, 2020
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
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:
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
The proposed remedies remove the entire horizontal overlap between UTC
and Raytheon in both military GPS receivers and military airborne radios
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