United Technologies and Rockwell Collins announced last week a US$23 billion deal that will be the largest ever in the aerospace industry when it closes, but the enormity of the tie-in could bring extra antitrust scrutiny from regulators, according to the Wall Street Journal.
This deal comes after years of small-scale consolidation in the aerospace industry, prompting regulators, especially in Europe, to take extra care in examining the long-term repercussions of creating such a powerhouse firm that expects as much as US$40 billion in revenue per year.
European regulatory concerns are the biggest threat to the completion of a deal, industry experts said. United and Rockwell don’t overlap much in operations, so a combined company would have a hand in everything from landing gears to cockpit technology. With that, regulators in the US and Europe have become concerned with both scale and scope, the Journal reported.
Some experts have compared the deal to the proposed Honeywell and General Electric merger that European regulators blocked in 2001. The reasoning for blocking that combination, the European Commission said, was that it could suffocate competition.
The combined company could demand higher prices from firms such as Airbus and Boeing by eliminating competition from other parts suppliers. Boeing has already stated that it’s against the deal, as United and Rockwell haven’t made a clear case that a combined company will increase value for.
Full Content: Wall Street Journal