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Investing.com -- The UK’s competition watchdog is weighing Safran’s offer to sell most of its THSA systems business to address concerns that its takeover could stifle competition and drive up costs in the aviation sector, the Competition and Markets Authority (CMA) said in a statement on Friday.
The regulator’s Phase 1 investigation found that the deal, if approved without remedies, could reduce competition in the supply of Trimmable Horizontal Stabilizer Actuator (THSA) systems, a critical aircraft component that helps control the movement of the horizontal tail for stability and efficiency.
While these components are produced worldwide, Collins maintains a manufacturing presence in northern England.
Both Safran (EPA:SAF) and Collins acknowledged the CMA’s concerns early in the process and committed to submitting proposals to mitigate potential anti-competitive effects.
As part of its proposed remedy, Safran has offered to divest nearly all of its THSA design and production operations.
The CMA said it has engaged with both companies to explore solutions and is now seeking third-party feedback on whether the proposed sale would fully address competition risks.
Naomi Burgoyne, senior director for Mergers at the CMA, emphasized the importance of a competitive supply chain in the aircraft industry, stating that competition ensures airlines and logistics companies have access to the best products at the best prices.
The CMA’s initial view is that Safran’s proposal may be sufficient to resolve its concerns, but it will now undertake further scrutiny before making a final decision.
If the remedies are deemed satisfactory, the regulator will clear the deal, allowing Safran to proceed with its acquisition while maintaining competitive conditions in the THSA market.