Cooperation Among International Antitrust Enforcement Agencies in Division Merger Challenge
In July 2012, the Antitrust Division challenged the proposed merger of United Technologies Corporation (UTC) and Goodrich Corporation. Under the proposed $18.4 billion deal, the largest merger in the history of the aircraft industry, Goodrich would become a wholly-owned subsidiary of UTC. Both companies are engaged in the global aerospace industry, supplying various parts and components to aircraft manufacturers, and the Division concluded that the acquisition, as proposed, likely would have resulted in higher prices, less favorable contract terms, and less innovation for several critical aircraft components, including generators, engines, and engine control systems.
July 26, 2012
Justice Department Requires Divestitures in Order for United Technologies Corporation to Proceed with Its Acquisition of Goodrich Corporation
Simultaneous to filing the civil antitrust lawsuit challenging the transaction, the Division filed a proposed settlement designed to resolve the competitive concerns. The settlement requires UTC to divest certain assets that manufacture electrical generators and engine controls. In addition to the required divestitures, the proposed settlement requires UTC to extend certain contracts and provide various supply and transition service agreements, to ensure that Goodrich’s engine control customers have a reliable supply source during the divestiture period.
The settlement was the result of extensive international cooperation between the Division, the European Commission (EC), and the Canadian Competition Bureau (CCB). The interagency coordination began at the outset of the investigation, with the parties granting waivers allowing the authorities to discuss the details of the proposed merger with one another. The coordinated efforts continued with substantial dialogue through regularly scheduled conference calls, joint interviews with third parties, joint predecisional meetings with the parties via video conference, and briefings for visiting EC representatives. Ultimately, a settlement emerged, and synchronized outcomes were announced by the Division, the EC, and the CCB on July 26, 2012.
The remedies proposed by the EC were similar to those enacted by the Division. Announcing the EC’s decision, Joaquín Almunia, European Commission Vice President in charge of competition policy, stated “In this case concerning a major transaction affecting markets on both sides of the Atlantic, we worked in close and very effective cooperation with the U.S. and Canadian competition authorities.” (EC Press Release, July 26, 2012) The EC stated that “[t]he proposed commitments fully address the Commission’s concerns.” Id.
The CCB also acknowledged close cooperation with the Division and the EC in reaching its conclusion and said it “considers this form of cooperation to be very important for the effective review of international mergers.” (CCB Press Release, July 26, 2012) The CCB concluded its investigation without requiring a settlement from the parties, stating that “the remedial orders fashioned by the Division and the EC sufficiently mitigated the potential anticompetitive effect in Canada.” Id.
(L-R) Assistant Attorney General William Baer, Deputy Assistant Attorney General for Civil Enforcement Leslie Overton, Acting Deputy Commissioner for International Affairs of the Canadian Competition Bureau Brigitte Joly, and Interim Commissioner of Competition of the Canadian Competition Bureau John Pecman.
The Division’s team on the matter was led by attorney Kevin Quin and included attorneys Robert Wilder, Jenny Choe, Christine Hill, Jim Foster, Stephanie Fleming, and Kate Konopka; economists John Bender and Will Gillespie; and paralegals Kyle Ritter, Alexandra Stein, Wendy Zhao, and Jody Amann. The team worked under the direction of Maribeth Petrizzi, Chief of Litigation II; Dorothy Fountain, Assistant Chief of Litigation II; and Norm Familant, Chief of the Economic Litigation Section.