DOJ on UTC/Goodrich: Divest, Divest, Divest

The Department of Justice will require United Technologies Corporation (UTC) to divest assets it would otherwise acquire in its takeover of Goodrich Corporation. Concerned that the largest aircraft industry merger in history would result in higher prices, less-favorable contracts, and less innovation for critical aircraft components, the DOJ filed a civil antitrust suit to block the proposed deal, and issued a settlement proposal to resolve anticompetitive concerns.

Both UTC and Goodrich specialize in engine generators, aircraft turbine engines and engine control systems for large aircraft turbine engines, and the DOJ complaint alleges that the merger would combine “the only two significant suppliers of large main engine generators for aircraft in the world.”

The proposed settlement includes divestiture of Goodrich’s business that “designs, develops and manufactures large main engine generators,” engine control systems, and Goodrich’s shares in joint venture Aero Engine Controls. It also extends Rolls-Royce’s option to acquire the Goodrich aftermarket business, based on its prior joint venture with UTC.

The DOJ coordinated with a number of antitrust agencies across the world that were also investigating this deal including the European Commission and the Canadian Competition Bureau and the Federal Competition Commission in Mexico and the Administrative Council for Economic Defense in Brazil.

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