The Journal Gazette
Tuesday, June 11, 2019 1:00 am

Trump questions Raytheon deal

Aaron Gregg | Washington Post

The morning after manufacturers Raytheon and United Technologies announced a blockbuster merger that would create a giant in the aerospace and defense sectors, President Donald Trump said he is “a little bit concerned” about the deal's anti-competitive potential.

Echoing concerns that top Pentagon procurement officials have raised for years, the president said he is worried that the deal would harm the military supply chain by giving government buyers fewer competitive options to turn to for individual weapons systems.

“I'm a little bit concerned about United Technologies and Raytheon,” the president told the television network CNBC. He went on to say that the U.S. “used to have many plane companies” but “they've all merged ... now we have very few.”

He said too much consolidation at the top of the defense industry could weaken the government's hand in major weapons negotiations.

“It's hard to negotiate when you have two companies and sometimes you get one bid,” Trump said. “When I hear they're merging, does that mean we're taking away more competition? It becomes one big fat beautiful company, but I have to negotiate, meaning the United States has to buy things.”

The Defense Department will have to sign off on the deal before it can be finalized. In previous administrations, the White House has generally not been closely involved in those evaluations.

In a call with investors Monday morning, executives from both companies offered vague answers when asked whether they have received feedback from the Defense Department on the issue.

But they did say the added scale the merger would provide will allow the combined firm to innovate on a higher level while keeping prices low. And they repeatedly said that Raytheon and United Technologies do not compete with one another.

“I think once (Trump) understands the benefits of this merger in terms of what it's going to do to reduce costs to the government, what it's going to do to improve the technology of the U.S. government and our defense profile, and what it's going to do for jobs in this country, I think he's going to be supportive, as he has been for both companies over the course of this administration,” United Technologies Chairman and CEO Greg Hayes told CNBC soon after the president called in.

“There is nothing anti-competitive about this deal,” Hayes added. 

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