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CMA to review BAE Systems undertakings

The CMA is to review undertakings relating to BAE Systems to see if they are still appropriate.

The undertakings were first given by BAE Systems’ predecessor, British Aerospace plc, to the then Secretary of State for Trade and Industry following its acquisition in 1999 of the Marconi Electronic Systems business from General Electric Company plc.

Following an Office of Fair Trading review, the Secretary of State released BAE Systems from most of the undertakings in 2007. The remaining undertakings require BAE Systems to co-operate where possible with actual or potential prime contractors bidding for contracts for the purposes of a Ministry of Defence programme.

This is to allow other companies to compete for contracts where they might need to sub-contract BAE Systems’ existing production capacity, which had been strengthened by the merger with Marconi. BAE Systems is also obliged to appoint a compliance officer to ensure this requirement is met.

BAE Systems has now asked the Competition and Markets Authority (CMA) to review the remaining undertakings in the light of further changes to the defence sector since the last review, which could mean the undertakings are no longer appropriate. The CMA review will examine and advise the Secretary of State upon whether there has been a change of circumstances and if so, whether the undertakings should be superseded, varied or released.

The CMA anticipates that the review will be completed in spring 2017.

Further details, including the CMA’s decision statement can be found on the case page.

The review follows an earlier consultation on whether to carry out a review in response to a request made by BAE Systems.

Anyone wishing to comment on the review should email baesreview@cma.gsi.gov.uk or write to:

BAE Systems undertakings review
Competition and Markets Authority
Victoria House
Southampton Row
London WC1B 4AD