Boeing Merger Likely Would Clear Antitrust Review Experts Say Government Probably Wouldn’t Block A Marriage To Mcdonnell Douglas

A key factor in the outcome of a merger between The Boeing Co. and McDonnell Douglas Corp. would be the attitude of the U.S. government.

If the two companies agree to merge, the Justice Department or Federal Trade Commission would conduct an antitrust review.

Most experts believe the government would approve the merger, making Boeing-McDonnell Douglas the world’s largest aerospace company with a combined market value of $35 billion.

Raising the most questions would be a merger that joined the two commercial aircraft operations.

That type of merger, unthinkable a few years ago, would reduce the world’s major jetliner manufacturers from three to two.

Europe’s Airbus Industrie would remain Boeing-McDonnell Douglas’ main competitor.

Receiving less scrutiny would be a union of both company’s defense and space operations. Douglas’ defense business is much larger.

The Pentagon has been favoring the consolidation of the defense industry for several years. The recent mergers of Lockheed-Martin and Northrup-Grumman reflect this.

“It merges a prime contractor with a subcontractor, and it turns Boeing into a major player in the defense contracting industry,” said Charles Hill, a professor for business administration at the University of Washington. “The defense contracting business will remain very competitive after this merger.”

Even though antitrust issues would become more of a factor if Boeing and McDonnell Douglas merged commercial operations, the fact that both do business in a global market would favor approval, experts said.

Both companies sell the majority of their commercial aircraft to foreign customers.

U.S. antitrust law is designed to protect the American consumer from companies creating monopoly markets. Global markets and competition are considered when conducting a antitrust review, legal experts say.

“The existence of Airbus would clearly continue to guarantee intense competition across virtually the entire range of aircraft type,” said Randy Barber, director of the Center for Economic Organizing in Washington, D.C.