Antitrust Law Daily Final judgment requiring divesture of two restraint system businesses approved
Tuesday, April 10, 2018

Final judgment requiring divesture of two restraint system businesses approved

By Stephanie K. Mann, J.D.

The federal district court in Washington, D.C. has entered a final judgment resolving a complaint filed by the Department of Justice and the manufacturer of restraint systems used on commercial airplanes challenging the acquisition multiple businesses. In order to restore competition in markets for several types of restraint systems on commercial airlines, the final judgment requires TransDigm Group Incorporated to divest two businesses, SCHROTH Safety Products GmbH and SCHTOTH Safety Products LLC, in order to resolve the Justice Department’s competitive concerns (U.S. v. TransDigm Group Incorporated, April 4, 2018, Jackson, A.).

TransDigm acquired the businesses in February 2017 in a $90 million transaction that, due to its structure, was not reportable under the Hart-Scott-Rodino Antitrust Improvements Act. The Justice Department challenged the acquisition on December 21, 2017, by filing a civil antitrust lawsuit. As stated in the complaint, AmSafe, a subsidiary of TransDigm, and SCHROTH develop, manufacture, and sell a wide range of restraint systems. Prior to the acquisition, it is alleged that SCHROTH was a growing competitive threat to AmSafe that was challenging the business on price and investing heavily in the research and development of new restraint technologies. According to the Department of Justice, the acquisition eliminated TransDigm’s most significant competitor, which will likely result in higher prices and reduced innovation.

Under the judgment, TransDigm must divest the entirety of SCHROTH, including its facilities in Pompano Beach, Fla. and Arnsberg, Germany, to a consortium between Perusa Partners Fund 2, L.P. and SSP MEP Beteiligungs GmbH & Co. KG, or an alternate acquirer as approved by the Justice Department. According to the judgment, this divesture will quickly reestablish SCHROTH as an independent competitor.

The case is No. 1:17-cv-02735-ABJ.

Attorneys: Jeremy Waters Cline, U.S. Department of Justice, for the United States. William Thomas Devinney (Baker & Hostetler LLP) for TransDigm Group Inc.

Companies: TransDigm Group Inc.

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