9th Feb 2006 11:00
Office of Fair Trading09 February 2006 25/06 9 February 2006 OFT TO REVIEW BAE SYSTEMS UNDERTAKINGS The OFT is to review undertakings given by BAE Systems plc following itsacquisition of Marconi Electronic Systems from the General Electric Company plcin 1999. The undertakings were accepted by the Secretary of State for Trade and Industryon 28 March 2000 in lieu of a reference to the Monopolies and Mergers Commission(now the Competition Commission) to address competition and other publicinterest concerns arising from the acquisition. These included measures tosafeguard competition at prime contractor and subcontract level and to addressnational security concerns arising in the defence sector. BAE Systems questions the continued relevance of a number of the undertakingsgiven the changes that have taken place in the defence sector since theundertakings were accepted. The OFT will examine whether, for example as a result of changes anddevelopments in the market, the undertakings are still appropriate or need to bevaried or superseded, or whether BAE Systems can be released from them. The OFT is particularly interested in views on whether changes in the sectorsince March 2000, such as international bidders more firmly establishing theirpresence in the UK market, make the undertakings or some of them no longerappropriate. Representations should be made in writing by 24 February to David Blocksidge,Mergers Branch, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square,London EC4Y 8JX, telephone 020 7211 8933, email [email protected] NOTES 1. In 1999 the proposed merger of British Aerospace plc (subsequentlyre-named BAE SYSTEMS plc) and the Marconi Electronic Systems business of theGeneral Electric Company plc came within the jurisdiction of the EC MergerRegulation (ECMR). Article 296 (formerly Article 223) of the EC Treaty permitsMember States to take measures necessary to protect their essential securityinterests. British Aerospace was requested, under Article 223 (1) (b) of the ECTreaty, not to notify the military aspects of the proposed merger to the ECCommission (see DTI Press Notice P/99/354). The military aspects of the mergerwere therefore considered under national merger control law. The Commissionannounced on 28 June 1999 that it had approved the non-military aspects of themerger. 2. Section 75G of the Fair Trading Act 1973 (FTA) (inserted by section 147of the Companies Act 1989 and amended by the Deregulation and Contracting OutAct 1994) enabled the Secretary of State to accept undertakings as analternative to making a merger reference to the Competition Commission if heconsidered that such undertakings would remedy or prevent adverse effects of themerger specified by the (then) Director General of Fair Trading (whose functionswere subsequently transferred to the OFT by section 2(1) of the Enterprise Act2002). On 28 March 2000, undertakings were accepted from BAE Systems to addresscompetition and public interest concerns arising from the transaction (see DTIPress Notice P/2000/220). 3. Under section 75J of the FTA, the OFT has a duty, in respect ofundertakings accepted under section 75G, - (a) to keep under review the carrying out of undertakings, and from time totime to consider whether, by reason of any change of circumstances, theundertakings are no longer appropriate and either the parties to them can bereleased from them, or the undertakings need to be varied or superseded by newones, and (b) if it appears to the OFT that the undertakings have not been or are notbeing fulfilled, that any person can be so released or that the undertakingsneed to be varied or superseded, to give such advice to the Secretary of Stateas it may think proper in the circumstances. Section 75J of the FTA continues to apply for the purposes of these undertakingsby virtue of the Enterprise Act 2002, section 276(1) and Schedule 24 paragraph13(1). 4. The undertakings can be viewed at http://www.baesystems.co.uk/mergerundertakings/index.htm and a descriptive summary of the undertakings isattached. A summary of the terms of the undertakings is available on the OFT'swebsite at: http://www.oft.gov.uk/Business/Register+of+Orders/reviews.htm MEDIA enquiries: 020 7211+ Corinne Gladstone 8899 Julia Smith 8898 Roger Hislop 8133 Kate Wilcox 8901 Julia Thompson 8900 Mike Ricketts [email protected] Out of hours: mobile: 07774 134814 messages: 020 7211 8961 Copies of press notices: Ext. 8993 http://www.oft.gov.uk PUBLIC enquiries: 0845 7224499 [email protected] OFT reports and consumer information leaflets are available free from: OFT, PO Box 366, Hayes UB3 1XB 0800 389 3158 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BAE Systems