BAE Systems has asked the Competition and Markets Authority (CMA) to review some of the anti-monopoly controls imposed on it. These restraints were imposed 17 years ago when the defence giant was formed through British Aerospace's acquisition of the Marconi Electronic Systems from General Electric Company. It was meant to ease concerns about BAE's monopoly in the UK defence space.
The CMA, a watchdog responsible for preventing anti-competitive activities, said in a press release on 29 July, that it will review these undertakings to see if they are still appropriate. While many of the undertakings imposed on BAE in 1999 have been released by the secretary of state in 2007, there are two that are remaining.
These remaining undertakings require the London-based company to "co-operate where possible with actual or potential prime contractors bidding for contracts for the purposes of a Ministry of Defence programme," the release explained. This makes BAE obliged to appoint a compliance officer to ensure other companies are allowed to bid for UK defence contracts where they might be required to sub-contract BAE Systems' existing production capacity.
BAE, whose annual cost of compliance varies between £400,000 (€473,521; $529,160) and £500,000, said these undertaking are no longer appropriate amid the changes in the defence sector since its last review. It has hence asked for these to be released.
"We believe there have been a number of significant changes of circumstances in UK defence procurement and to BAE Systems' business which mean that the retention of the undertakings is unnecessary and inappropriate," a BAE spokesman was quoted as saying by the Telegraph.
However, the CMA said it will now examine the current circumstances and advise the secretary of state appropriately if there have been any changes and if so, whether these undertakings should be superseded, varied or released. It added that it anticipates this review to be completed in spring 2017.