CORRECT: EU Opens In-Depth Probe Of UTC's Proposed Buy Of Goodrich
March 27 2012 - 12:22PM
Dow Jones News
The European Commission said Tuesday it has opened an in-depth
antitrust investigation into United Technologies Corp.'s (UTX)'s
$18.4 billion proposed purchase of Goodrich Corp. (GR) on concerns
that it could undermine competition in some parts of the aviation
equipment sector.
"The Commission's preliminary investigation indicated potential
competition concerns regarding the markets for engine controls and
AC power generators, where the parties would have very high
combined market shares," the commission, which has antitrust powers
in the European Union, said.
"The Commission also has vertical concerns concerning the
removal of Goodrich as an independent supplier of fuel nozzles and
engine controls, as well as in the area of aftermarket
services."
The combination of the two U.S.-based companies is relevant
because it is one of the largest in recent years in an industry
with significant barriers to the entry of new players and whose
products are key for security and global economic growth.
The commission now has until Aug. 9 to decide whether to halt or
to allow the combination. These 90 working days provide useful time
for talks between the commission and the purchasing company, which
can propose tweaks in the operation to allay the EU concerns.
The commission is specifically worried that the combination
would give the resulting company a "very high" market share in AC
power generation, as Goodrich "appeared as the strongest contender
to UTC's dominant position and as a potential partner for
prospective entrants," it said.
It added that the combination could result in higher input
prices for engine makers that compete with UTC's Pratt &
Whitney.
UTC owns businesses that produce everything from helicopters and
plane engines to elevators and the combination would strengthen its
presence in aerospace by increasing the weight of the sector in the
company's revenue to roughly half. Goodrich makes aircraft
equipment ranging from landing gears to electrical power
systems.
In the EU, most mergers and acquisitions are approved without
any in-depth probe, but the commission decides to investigate
deeper if it is worried that an operation could undermine
competition in a specific market. Four other cases are currently
being investigated in-depth.
-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88;
alessandro.torello@dowjones.com
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