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From Antitrust Law Daily, December 21, 2017

TransDigm Group to divest Takata airplane restraint businesses

By Jody Coultas, J.D.

The Justice Department announced today that it had agreed to settle a challenge to the February acquisition of TransDigm Group Incorporated of Takata Corporation in light of TransDigm’s agreement to divest two businesses—SCHROTH Safety Products GmbH and SCHROTH Safety Products LLC—it acquired from Takata. The divestitures will restore competition in markets for several types of restraint systems used on commercial airplanes, the Justice Department said (U.S. v. TransDigm Group Incorporated, December 21, 2017).

TransDigm’s subsidiary AmSafe and SCHROTH develop, manufacture, and sell a wide range of restraint systems used on commercial airplanes, including traditional two-point lapbelts, three-point shoulder belts, technical restraints, and more advanced "inflatable" restraint systems such as airbags.

The complaint alleges that prior to the acquisition, which was not reportable under the Hart-Scott-Rodino Antitrust Improvements Act, SCHROTH was becoming a competitive threat to AmSafe. SCHROTH allegedly challenged AmSafe on price and invested heavily in the research and development of new restraint technologies. The acquisition, according to the complaint, eliminated TransDigm’s most significant competitor, and the loss of competition between AmSafe and SCHROTH was likely to result in higher prices and reduced innovation.

The Antitrust Division filed the civil antitrust lawsuit in the federal district court in the District of Columbia challenging the consummated acquisition, along with a proposed settlement that, if approved by the court, would resolve the Department’s competitive concerns. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Under the proposed final judgment, TransDigm must divest the entirety of SCHROTH, including its facilities in Pompano Beach, Florida, and Arnsberg, Germany, to a consortium between Perusa Partners Fund 2, L.P. and SSP MEP Beteiligungs GmbH & Co. KG (MEP KG), or an alternate, approved buyer. Pursuant to an agreement with the Antitrust Division, TransDigm held SCHROTH separate from AmSafe during the pendency of the Division’s investigation. The Department said that the divestiture will remedy the anticompetitive effects by quickly reestablishing SCHROTH as an independent competitor.

The case is No. 1:17-cv-02735.

Attorneys: Jeremy Waters Cline, U.S. Department of Justice, for United States.

Companies: TransDigm Group Inc.; Takata Corporation; SCHROTH Safety Products GmbH; SCHROTH Safety Products LLC; Perusa Partners Fund 2, L.P.; SSP MEP Beteiligungs GmbH & Co. KG

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