General Electric Co. (GE:US) reached an agreement with the U.S. Federal Trade Commission that will allow its $4.3 billion acquisition of the aviation business of Italian aerospace company Avio SpA to proceed.
The settlement prevents GE from interfering with the development of an engine component designed for rival aircraft-engine maker Pratt & Whitney, the FTC said in a statement issued yesterday.
The AeroEngine unit of Turin, Italy-based Avio designs an accessory gearbox for Pratt & Whitney’s PW1100G engine, which has no viable alternatives to Avio for developing that component, the FTC said.
The FTC said that the acquisition would give “the ability and incentive to disrupt the design and certification” of the gearbox for the engine, which is used on Pratt & Whitney’s 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 A320neo customers,” according to the FTC statement.
Seth Martin, a spokesman for Fairfield, Connecticut-based GE, declined to comment on the announcement.
The proposed order settling the FTC’s charges builds on a commercial agreement GE, Avio and Pratt & Whitney recently negotiated, as well as Pratt & Whitney’s original contract with Avio, the FTC said.
The proposed order also bars GE from interfering with Avio staffing (GE:US) decisions that affect the component for the PW1100G engine and allows Pratt & Whitney to have representatives on-site at the GE/Avio facility, the FTC said.
The proposed order prevents GE from gaining access to Pratt & Whitney’s proprietary information about the accessory gearbox that’s shared with Avio and lets the FTC appoint a monitor to oversee GE’s compliance with its obligations.
The FTC voted unanimously to accept the agreement, with Commissioner Joshua Wright recused.
The FTC said it worked closely with the European Commission, which approved the transaction this month, in its investigation.
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