BAE Systems' undertakings to be reviewed by competition authority

The Competition and Markets Authority has announced it is to review undertakings relating to BAE Systems to analyse if they are still appropriate, it has been confirmed today.

The undertakings were first given by BAE Systems’ predecessor, British Aerospace plc to the then Secretary of State for Trade and Industry.

It followed then BA’s acquisition of the Marconi Electronic Systems business from General Electric Company plc in 1999.

Following an Office of Fair Trading review, the Secretary of State released BAE Systems from most of the undertakings in 2007.

According to the CMA 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Secretary of State upon whether there has been a change of circumstances and if so, whether the undertakings should be superseded, varied or released.