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Thursday, June 20, 2019

Justice Department Requires Harris and L3 to Divest Harris’s Night Vision Business to Proceed with Merger

Divestiture Will Preserve Competition for Critical Component Used in Night Vision Devices Purchased by United States Military

The Department of Justice announced today that it is requiring Harris Corporation (Harris) and L3 Technologies Inc. (L3) to divest Harris’s night vision business in order to proceed with their merger. 

The Department further said that, without the divestiture, the proposed acquisition would eliminate competition between the only two suppliers of U.S. military-grade image intensifier tubes, which are the key component in night vision devices such as goggles and weapon sights purchased by the Department of Defense (DoD) for the United States military.

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed merger.  At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. 

“The merger, as originally structured, would have given the combined company a monopoly over image intensifier tubes, an essential component in night vision devices used by the United States military,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “Today’s settlement will ensure that our armed forces continue to benefit from competition for a mission critical component that soldiers operating in low-light environments rely on every day.”

According to the Department’s complaint, Harris and L3 are the only suppliers of U.S. military-grade image intensifier tubes for night vision devices such as goggles and weapon sights that are purchased by the DoD.  Image intensifier tubes are the critical component in these devices, which amplify visible light to increase situational awareness, threat detection, and mission performance of American soldiers and aircrews operating in low-light environments.  The Department’s complaint alleges that competition between Harris and L3 has resulted in lower prices, higher quality, and shorter delivery times and has fostered innovation that has led to the development of image intensifier tubes with higher sensitivity and resolution.  According to the complaint, the combination of Harris and L3 would leave the DoD without a competitive alternative for this critical input and likely result in higher prices, less favorable contract terms, and reduced research and development efforts.

Under the terms of the proposed settlement, Harris and L3 must divest Harris’s entire night vision business, including its manufacturing facility in Roanoke, Virginia, to an acquirer approved by the United States.

The Antitrust Division and the DoD cooperated closely throughout the course of their respective investigations of the transaction.

Harris is incorporated in Delaware and has its headquarters in Melbourne, Florida.  Harris provides night vision devices and image intensifier tubes, tactical communications solutions, electronic warfare solutions, and space and intelligence systems.  In 2018, Harris had sales of approximately $6.2 billion.

L3 is incorporated in Delaware and is headquartered in New York, New York.  L3 provides night vision devices and image intensifier tubes; intelligence, surveillance, and reconnaissance systems; aircraft sustainment, simulation, and training; and security and detection systems.  In 2018, L3 had sales of approximately $10.2 billion.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon finding it is in the public interest.

Updated June 20, 2019