Competition Bureau Statement Regarding United Technology Corporation’s Acquisition of Goodrich Corporation

OTTAWA, July 26, 2012 — On July 26, 2012, the Bureau concluded its review of UTC’s proposed acquisition of Goodrich. The Bureau focussed its review on the effect of the proposed transaction on competition in various aviation product markets in Canada. While the Bureau found that the proposed transaction would have resulted in the lessening of competition in the manufacture and sale of certain aircraft parts and components, and have a downstream effect on Canadian airline companies who purchase aircrafts containing these products, remedial orders issued by antitrust authorities in the U.S. and Europe appear to sufficiently mitigate the potential anti‑competitive effects in Canada. In the circumstances, including, in this case, the fact that there are no Canadian assets involved, the Bureau determined not to require independent memorialization of the remedies committed to elsewhere, and issued a no action letter.

In conducting its review, the Bureau worked closely with the U.S. Department of Justice’s Antitrust Division and the European Commission. The Bureau considers this form of cooperation to be very important for the effective review of international mergers.

Background:

In September 2011, UTC and Goodrich entered into an agreement wherein Goodrich would merge with and become a wholly-owned subsidiary of UTC. Both UTC and Goodrich are engaged in the global aerospace industry, supplying various parts and components to aircraft manufacturers.

The Bureau concluded that the aerospace sector is generally global in nature and scope. Suppliers of the various components and systems described below operate and sell their products on a global basis. Customers generally adopt global sourcing strategies and, in most cases, are open to global suppliers. The vast majority of aerospace manufacturing facilities and customers of UTC and Goodrich are located in the U.S. and Europe.

In the course of its review, the Bureau, together with the U.S. and European antitrust authorities, identified product markets that raised competition issues. These issues related to the manufacture, sale and supply of:

  • electrical generators (components and systems that create electrical power and the associated distribution systems); and
  • engine controls (parts and components that control the operation of an engine, such as fuel nozzles and pumps, electrical circuitry, software and sensors).

To address competition concerns, UTC and Goodrich have committed to the U.S. and European antitrust authorities to divest certain of their operations that manufacture electrical generators and engine controls in the U.S. and Europe. These divestitures include the completion of the sale of certain assets at Goodrich’s Montreal facility that were independently already in the process of being transferred to its facility in West Hartford, Connecticut.

The remedies obtained in the U.S. and Europe address the potential for anti‑competitive effects in Canada. The proposed divestitures will enable Canadian companies to competitively source generators and electrical distribution systems, as well as engines.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case-by-case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.


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