The European Commission signed off on United Technologies Corp.’s (UTC) proposed acquisition of Rockwell Collins with a condition that overlapping businesses are divested, the commission announced today. Under the approval, businesses to be divested are in the areas of actuators, pilot controls, ice protection, and oxygen systems.
“We can allow this merger to go ahead because in all the markets where we raised concerns, UTC has committed to divest activities covering the entire overlap between the two companies,” said commissioner Margrethe Vestager, who steers competition policy. Given the scope of activities involved with both companies, Vestager added, ”We need to ensure that competition is preserved for all of them."
The proposed $30 billion acquisition, first announced late last summer, is bringing together two aerospace giants, covering components in nearly every part of the airplane. UTC has a larger portfolio covering power generation, propulsion systems, and landing systems, while Rockwell Collins is a major supplier of avionics and different cabin interior products, the EC noted.
But the Commission investigation raised concerns about reduced competition for trimmable horizontal stabilizer actuators (THSA), certain pilot controls (throttle quadrant assemblies and rudder brake pedal systems), pneumatic wing ice protection, and oxygen systems, it said.
Aside from those areas, the Commission determined that “other overlaps and vertical links between UTC and Rockwell Collins' activities did not lead to any competition concerns,” because enough other competition exists.
The Commission further concluded that a merged Rockwell Collins/United Technologies entity would neither have the market power nor incentives to shut out competitors through practices such as bundling or tying.
Under the conditional approval, the Rockwell THSA and pilot control businesses, based primarily in the U.S. and Mexico, would be sold, as would its entire global business in ice protection. Meanwhile, UTC’s two oxygen systems “research projects” would be divested.
