The Justice Department sued to challenge Parker Hannifin Corp.'s (PH - Get Report) $4.3 billion acquisition of Clarcor Inc. (CLC) on Tuesday, arguing that the already-closed deal is likely to "substantially lessen" competition in the aviation fuel filtration products arena.
The lawsuit, brought in the U.S. District Court for the District of Delaware, was filed out of concern that the deal will mean higher prices, worse service or less innovation, the DOJ said.
The department has asked the court to order Parker-Hannifin sell part of its aviation fuel filtration business to "replace Clarcor's competitive significance in the marketplace."
"Parker-Hannifin bought Clarcor knowing that this transaction raised serious antitrust concerns under Section 7 of the Clayton Act in the development, manufacture and sale of aviation fuel filtration products," said Deputy Assistant Attorney General Donald Kempf of the Department of Justice's Antitrust Division in a statement. "The Division is committed to vigorous and sound enforcement of the antitrust laws, and will do its job to protect American customers regardless of whether a merger has already been consummated."
Before the merger, the companies were the only two manufacturers of Energy Institute-qualified filtration systems in the United States, the complaint says. EI-qualified products are the only products that can be used to filter aviation fuel for use in U.S. commercial and military planes.
Acting Assistant Attorney General Andrew Finch of the DOJ's Antitrust Division said Parker-Hannifin's acquisition of its U.S. rival "has effectively created a monopoly in these critical safety products, depriving their customers of the benefits of competition."
A Parker-Hannifin spokesman said the company is aware of the DOJ action.
"Parker has cooperated fully with the DOJ throughout this process and has been working diligently to respond to their post-closing inquiry," the company said in a release. "Parker is now reviewing the complaint and looks forward to the ultimate resolution of this matter."
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