The United States Federal Trade Commission has asked Boeing to divest certain Spirit assets ahead of its $8.3 billion acquisition of the company, in order to address certain antitrust concerns.
FTC orders Boeing to divest certain Spirit assets
The FTC, in a proposed order, has asked Boeing to divest certain businesses to Airbus and Malaysia’s Composites Technology Research to address competition concerns. Boeing, one of the world’s largest plane-makers, is preparing an $8.3 billion acquisition of Spirit AeroSystems Holdings, Inc., the world’s biggest supplier of airplane parts such as fuselages and wings- critical parts for both commercial and military jets.
In a bid to address competition concerns, the FTC has asked Boeing to divest key businesses of Spirit that supply parts to Airbus, Boeing’s direct competitor, to Airbus itself. Furthermore, Spirit’s Malaysia business, Subang, will be divested to Composites Technology Research Malaysia. Boeing and Spirit will also be required to provide transitional services to Airbus and CRTM.
Antitrust concerns
These divestitures have been planned to address competition concerns. The FTC, earlier, had addressed concerns that Boeing’s acquisition of Spirit could put it in a position where it could potentially raise costs or make it more difficult for competitors such as Airbus to access certain products and technologies from Spirit. The FTC has also ordered Boeing to continue to provide aerostructures and services to competing contractors for military aircraft. The FTC, in its order, also stated that Spirit would be required to fulfil its existing contracts and would need to be available as a supplier even for future competitors, while making sure not to discriminate in favour of Boeing while dealing with military aircraft companies that are its competitors.
Coordination with global regulators
The FTC has alleged that without these requirements, Boeing could gain an unfair competitive advantage, restrict competitors’ access and could even gain access to confidential information. The order is in line with what the European Union regulator had proposed. Boeing had then agreed to divest Spirit’s business that supplied to Airbus.
The FTC has said that it has worked closely with regulators in the European Union and the United Kingdom to analyse this proposed acquisition.
What do you think of this proposed order and the implications of Boeing’s Spirit acquisition and merger? Let us know in the comments below.
