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Boeing Gets OK for Purchase of Hughes' Satellite Business

September 28, 2000|From Reuters

Boeing Co. on Wednesday got the green light for its $3.75-billion acquisition of the satellite and components businesses of Hughes Electronics Corp. from regulators on both sides of the Atlantic.

To preserve competition among companies that launch Boeing satellites, a consent decree announced by the Federal Trade Commission prohibits Boeing from looking at private information that its satellite division obtains from competitors who launch its satellites.

The decree, which must be approved by a court, also has other provisions.

"This consent agreement will ensure that competition in the highly specialized markets for satellites and launch vehicles will be maintained," Richard Parker, director of the FTC's Bureau of Competition, said in a statement.

In Brussels, the European Commission said the companies had offered assurances on their future behavior and the exchange of potentially sensitive information.

"The investigation dismissed earlier doubts that the operation could significantly strengthen Hughes' position in commercial geostationary communication satellites as well as the concern that the parties might induce Hughes' satellite customers to procure launch services from Boeing," the EC said.

El Segundo-based Hughes, a subsidiary of General Motors Corp., is the world's leader in commercial geostationary satellites, with a market share of 35% to 40%, the commission said.

The EC feared the deal could strengthen this position by giving Hughes sensitive information about competitors' products, as Boeing is apparently able to obtain such information through its launcher business.

But following a four-month probe, the EC concluded that Hughes Space & Communication would remain subject to competition from other large satellite contractors.

These include Lockheed Martin, Loral, Alcatel Space Industries and Astrium.

Boeing shares fell $1.50 to close at $64.56 on the New York Stock Exchange.

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