On March 28th, the UK’s CMA concluded its phase I review raising concerns that the transaction could be anticompetitive. However, the language of the press release suggests that Safran’s expected divestiture of horizontal stabilizer actuation systems could satisfy regulators and lead to a swift approval. Safran has until April 4 to submit formal concessions.
What’s the deal?
Safran is acquiring Collins Aerospace’s actuation and flight control business for $1.8 billion to strengthen its position in next-generation aircraft systems. With Collins Aerospace’s expertise, Safran secures a larger share of major aircraft platforms, including those from Airbus, Boeing, and military programs.
The deal has faced some regulatory scrutiny given Safran’s role in providing military equipment to different EU countries. However, the only remaining hurdles are the antitrust reviews in Europe and the UK.
What’s at Stake?
From the regulatory perspective, the main question is whether Safran could acquire all the actuation and flight control businesses from Collins, or whether regulators would ask the parties to divest parts of it, like the horizontal stabilizer trim actuators (HSTAs) or the thrust reverser actuation systems (TRAS).
If regulators request only minor divestitures, as it seems, the deal is unlikely to be at risk. In fact, Safran already signed in December an agreement with Woodward to sell part of its North America HSTA business to appease regulators. However, if major divestitures are required—though unlikely—it could undermine the strategic rationale behind the acquisition. Notably, Safran previously acquired the HSTA business from Rockwell Collins in 2018 as part of a merger divestiture, aiming to build a stronger actuation and flight control portfolio. With the addition of Collins’ primary and secondary actuation systems, Safran will be positioned to provide end-to-end actuation solutions.
Beyond regulatory concerns, the acquisition will strengthen Safran’s competitive position against American giants like UTC, Moog, and Honeywell, and in the current geopolitical landscape, it will be hard for EU regulators to block the deal.
Will It Clear?
It is likely. Despite horizontal overlaps in actuations and flight controls, there are other strong competitors both in Europe and globally that could offset any market power Safran could gain from this deal. This significantly reduces the risk of a negative decision and moves the conversation to the scope of the divestitures.
Regulators may also look at possible conglomerate effects from this merger, but given the EU precedents in this sector, this may not be a concern.
What’s the Status?
The European Commission and the UK’s Competition and Markets Authority (CMA) are currently reviewing the deal, and it is likely that both regulators will adopt similar decisions. Given the global nature of the transaction, if any remedies are required for approval, the regulators will likely coordinate to request the same divestiture and approve the same potential buyer.
One of the key concerns is that Safran and Collins overlap in horizontal stabilizer trim actuators (HSTAs) and other flight control systems, raising questions about how strong Safran’s market position will be post-acquisition, particularly in relation to competitors and customers. EU regulators may pay close attention to how the deal could impact other European companies, such as Thales, BAE Systems, and Eaton Corporation.
The parties submitted a remedy proposal to the European Commission on March 14, and a decision is expected by April 4—coincidentally, the same date as the parties need to submit remedies in the UK. Following the CMA’s decision on March 28, the parties will have five working days to submit a revised remedy that addresses any remaining antitrust concerns. Otherwise, the CMA will proceed to a Phase II investigation. However, since the concerns are limited to horizontal stabilizers and no third parties have raised objections to the merger, approval appears to be within reach.
While horizontal overlaps are typically the primary concern for regulators the EU may also assess potential conglomerate effects. This includes evaluating whether Safran could leverage its expanded portfolio to restrict competitors’ access to key inputs or bundle products in an anticompetitive manner. However, EU precedent from the UTC/Rockwell Collins merger (2018) suggests that such concerns may be minimal. In that case, regulators found that bundling and tying strategies were unlikely due to the way flight control systems are procured. Additionally, the EU determined that the primary, secondary actuation, and THSA markets were already dominated by UTC, Moog, and Parker, each holding market shares between 20% and 40%, making it difficult for any company to foreclose competitors through bundling or exclusivity strategies.
What’s the Timeline?
The European Commission’s Phase I investigation deadline is set for April 4, while the CMA’s deadline is April 16. If regulators identify significant concerns, they could launch an in-depth review, extending the process by up to four (EU) or six (CMA) months. However, the CMA has recently pledged to streamlining merger reviews, suggesting that Phase I approval remains a strong possibility. Besides, the concerns identified during the Phase I investigation could be addressed with the clear-cut divestiture suggested by the parties.
Note for Investors
One of the most sensitive hurdles for Safran in closing this deal was securing national security approvals from the U.S., U.K., and, unexpectedly, Italy. However, the company has confirmed that it has already obtained all necessary clearances, leaving antitrust reviews as the final regulatory step.
Antitrust authorities in Europe and the U.K. are unlikely to block the deal, particularly at a time when European policymakers are advocating for a stronger aerospace and defense sectors and promoting European industry champions. While the deal is expected to proceed without major divestitures, targeted remedies—such as small divestitures in THSAs or other flight control systems—will likely be needed.
