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From Antitrust Law Daily, December 19, 2017

DOJ settles challenge to combination of aviation fuel filtration manufacturers

By Stephanie K. Mann, J.D.

The Justice Department has reached a settlement with Parker-Hannifin Corporation after the Antitrust Division challenged the acquisition of aviation filtration systems provider CLARCOR Inc. for substantially lessening the competition in markets for aviation fuel filtration products in the United States. Under the proposed final judgment which was filed in the U.S. District Court for the District of Delaware, Parker-Hannifin would divest the Facet filtration business, including the aviation fuel filtration assets that it acquired from CLARCOR Inc. on Feb. 28, 2017. If approved by the court, said the Department, the settlement would resolve the lawsuit, restore competition in the markets for aviation fuel filtration systems and elements, and address the Department’s competitive concerns (U.S. v. Parker-Hannifin Corp., Case 1:17-cv-01354-UNA).

"This agreement to fully divest the Facet filtration business restores the competition in the aviation fuel filtration markets that the underlying merger eliminated," said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. "Once the divestiture is completed, the acquirer will be in the same competitive position that CLARCOR enjoyed before the transaction, and the Facet brand of aviation fuel filtration products will be able to once again compete in the free market with Parker-Hannifin. This divestiture avoids the difficulties of a regulatory behavioral decree, relying instead on competition in the free market to protect American consumers and our military."

Filtration systems. Parker-Hannifin is an Ohio corporation that manufactures filtration systems, and motion and control technologies for the mobile, industrial, and aerospace markets. Parker-Hannifin sells its aviation fuel filtration products under the Velcon brand. CLARCOR Inc. was the leading provider of filtration systems for diversified industrial markets with net sales of approximately $1.6 billion in 2016. CLARCOR manufactured and sold aviation fuel filtration products under the PECOFacet brand.

Only aviation fuel filtration products qualified by the Energy Institute (EI) may be used to filter aviation fuel for use in U.S. commercial and military planes. The accompanying Competitive Impact Statement details that Parker-Hannifin and CLARCOR were the only two manufacturers of EI-qualified aviation fuel filtration systems and filter elements in the U.S. The competition between the two former competitors arguably enabled customers to negotiate better pricing and to receive more innovative products and better terms of service. The merger eliminated this competition, which would result in increased prices, decreased services and product innovation, and slower delivery of these critical safety products.

Companies: Parker-Hannifin Corp.; CLARCOR Inc.

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