This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

The Deal: FTC Lets GE's Acquisition of Avio Unit Proceed

WASHINGTON (The Deal) -- The Federal Trade Commission late Friday, July 19, said General Electric (GE) could proceed with its proposed $4.3 billion acquisition of the aviation business of Italy's Avio SpA as long as GE does not interfere with Avio's development of a key engine component for GE's rival aircraft engine manufacturer Pratt & Whitney.

GE, based in Fairfield, Conn., is planning to acquire the AeroEngine division of Avio through CFM International, its joint venture with France's Snecma SA. The sellers are London private-equity group Cinven and Italian aerospace and defense company Finmeccanica SpA.

The FTC charged that the acquisition of Avio's aviation business would be anticompetitive because GE and Pratt & Whitney are the only two companies that manufacture engines for Airbus's A320neo aircraft and Avio currently designs a critical component -- the accessory gearbox or AGB -- for Pratt & Whitney's PW1100G engine. Pratt & Whitney has no viable alternatives to Avio for development of the AGB for the PW1100G engine, the FTC said.

Without the non-interference order, the FTC said the acquisition give GE the ability and incentive to disrupt the design and certification of Avio's AGB for the PW1100G engine used on A320neo aircraft. This would diminish competition in the sale of engines for the A320neo, which would result in higher prices, reduced quality, and engine delivery delays for Airbus SA's A320neo family of aircraft.

The FTC's proposed order settling its charges, which must be finalized by the commission after a period of public comment, builds on a commercial agreement GE, Avio, and Pratt & Whitney recently negotiated, as well as Pratt & Whitney's original contract with Avio. Portions of these two contracts are incorporated into the proposed order, and a breach by GE of the relevant agreements would violate the FTC's order.

GE would be prohibited from interfering with Avio staffing decisions related to work on the AGB for the PW1100G engine and allows Pratt & Whitney to have representatives on site at the GE/Avio facility. If Pratt & Whitney terminates its agreement with Avio post-merger, GE must provide transitional services to help Pratt & Whitney manufacture AGBs and related parts for its PW1100G engine. The proposed order also prevents GE from accessing Pratt & Whitney's proprietary information about the AGB that is shared with Avio. Finally, the proposed order allows the commission to appoint a monitor to oversee GE's compliance with its obligations. FTC staff worked closely with the European Commission throughout the investigation. Once GE and Pratt & Whitney reached their private agreement, the EC closed its investigation July 2 without taking additional action.

Stock quotes in this article: GE 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,305.98 +43.42 0.27%
S&P 500 1,842.98 +12.37 0.68%
NASDAQ 4,034.1610 +11.4670 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs