EC approves acquisition of Rockwell Collins by UTC
Staff Writer |
The European Commission (EC) has approved, under the EU Merger Regulation, the acquisition of Rockwell Collins by United Technologies Corporation (UTC) in the aerospace sector.
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The decision is conditional on divestment of businesses in actuators, pilot controls, ice protection and oxygen systems.
UTC and Rockwell Collins are suppliers of aerospace systems and equipment to aircraft producers such as Airbus and Boeing. Both manufacture a broad range of products, with largely complementary portfolios.
UTC focuses on products such as power generation, propulsion systems and landing systems, while Rockwell Collins focuses on avionics and different cabin interior products.
The Commission gathered extensive information from dozens of aircraft component manufacturers, airlines and airframe manufacturers during its investigation.
On the basis of its preliminary investigation, the Commission was concerned that the transaction, as originally notified, would have reduced competition in the markets for trimmable horizontal stabiliser actuators (THSAs), certain pilot controls (throttle quadrant assemblies and rudder brake pedal systems), pneumatic wing ice protection and oxygen systems.
Following its investigation, the Commission found that:
- concerning THSAs, pilot controls and pneumatic wing ice protection, UTC and Rockwell Collins are important global players that would have faced limited competition from competing suppliers after the transaction.
- concerning oxygen systems, the market is already highly concentrated, with Rockwell Collins as the leading global supplier, while UTC had plans to enter that market and challenge Rockwell Collins with newly developed technologies.
The Commission concluded that other overlaps and vertical links between UTC and Rockwell Collins' activities did not lead to any competition concerns, mainly because of the existence of a sufficient number of alternative suppliers.
The Commission also investigated whether the merged entity would have the ability and incentive to use components in its portfolio to shut out competitors, through practices such as bundling or tying. The Commission concluded that the merged entity would have neither the market power nor the incentives to engage in such strategies and harm competition.
To address the Commission's preliminary concerns, UTC offered to divest the following activities:
- Rockwell Collins' entire global THSA and pilot control businesses, located at several sites mainly in the US and Mexico,
- Rockwell Collins' entire global business in ice protection, located in a single facility in the US,
- UTC's two research projects in oxygen systems.
The Commission found that the proposed commitments fully remove the overlaps between UTC and Rockwell Collins in the markets where competition concerns had been identified.
Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns in the European Economic Area (EEA).
The decision is conditional upon full compliance with the commitments. ■