* EU regulator concerned about high market share
* Worry about possible price hikes for plane, engine makers
* EU decision due by Aug. 9
* Analyst sees possible asset sales by United Tech
* United Tech, Goodrich shares little changed
By Foo Yun Chee and Scott Malone
BRUSSELS/BOSTON, March 27 EU antitrust
regulators are taking a deeper look at a $16.5 billion bid by
United Technologies Corp for aircraft components maker
Goodrich Corp, a probe that may lead to the U.S.
manufacturers selling assets to get approval for the deal.
United Tech unveiled its biggest-ever takeover in September.
The deal would reinforce its presence in the civilian aerospace
market. Goodrich parts are used on aircraft including Boeing
Co's 787 Dreamliner and Airbus' A320neo.
The European Commission said on Tuesday it had opened an
in-depth investigation after an initial assessment showed
potential competition issues in the markets for engine controls
and AC power generators, due to the companies' very high
combined market share.
"The aviation equipment industry is already concentrated and
is characterized by high barriers to entry," EU Competition
Commissioner Joaquín Almunia said in a statement.
"We need to make sure that competition is preserved and
incentives to innovate remain. We must also prevent a rise in
input prices for aircraft and engine manufacturers as well as
other aviation equipment suppliers," he said.
The Commission said it will decide by Aug. 9 whether to
clear or block the deal.
United Tech Chief Executive Louis Chenevert earlier this
month told reporters the company expected the review by the
Commission to be a "substantial process."
A spokeswoman for United Tech, the world's largest maker of
elevators and air conditioners, said on Tuesday the company had
expected the move.
"The phase II in the EU is not surprising; it is part of the
normal regulatory review process," said United Tech spokeswoman
Maureen Fitzgerald. "We continue to work with the EU and other
regulatory authorities and continue to expect a mid-year
Goodrich declined to comment.
One analyst said he did not see any major risks in the
"It's a formality that has a potential to push out the
proposed close date. I don't know that it is necessarily
something that you have to be overly concerned with," said
Daniel Holland, an equity analyst at Morningstar who follows
"At worst, the companies may have to spin off a division to
be sure that there are no areas of concern to the EU," Holland
said. "The deal has a reasonable chance of success in terms of
The Commission typically requires companies to divest assets
in return for regulatory approval. It has occasionally agreed to
licensing deals instead.
Shares of both companies were little changed following the
announcement. United Tech was down 19 cents at $83.31 and
Goodrich was off 6 cents at $124.89, both on the New York Stock
The EU watchdog said it was also concerned that the removal
of Goodrich as an independent supplier of fuel nozzles and
engine controls could lead to higher input prices for engine
makers competing with United Tech's engine subsidiary Pratt &