U.S. Seeks to Undo Parker Hannifin's Acquisition of Clarcor on Antitrust Grounds
September 26 2017 - 5:30PM
Dow Jones News
By Brent Kendall
WASHINGTON -- The Justice Department on Tuesday filed an
antitrust lawsuit challenging Parker Hannifin Corp.'s $4.3 billion
acquisition of Clarcor Inc., alleging the deal created an unlawful
monopoly.
The department, in a legal challenge filed in a Delaware federal
court, argued that Parker Hannifin's acquisition, completed in
February, had eliminated the company's only competitor in the
market for products that filter fuel for airplanes. Aircraft fuel
must be filtered to remove particles that could cause engine
failure.
The case marks the first merger challenge brought by the Justice
Department under the Trump administration. The lawsuit asks a
federal judge to order Parker Hannifin to sell off either its own
aviation fuel filtration business or Clarcor's to restore the
previous competition in the market.
"Parker-Hannifin's acquisition of its only U.S. rival for these
types of aviation fuel filtration products has effectively created
a monopoly in these critical safety products, depriving their
customers of the benefits of competition," said Andrew Finch, the
acting head of the Justice Department's Antitrust Division.
Parker Hannifin, based in Cleveland, Ohio, didn't immediately
respond to a request for comment.
The lawsuit alleged the company and Clarcor competed vigorously
before the merger, resulting in better prices and more innovation
for customers. Now, Parker Hannifin has "the power to raise prices
without fear of losing a significant amount of sales," the lawsuit
said.
The department also alleged Parker Hannifin didn't provide
significant documents or data to the Justice Department while it
was investigating the transaction.
The lawsuit comes at a time of transition for antitrust
enforcement, as Republican officials begin to take over from
Democrats who served during the Obama administration.
Antitrust enforcement often isn't considered a partisan
exercise, but Republicans have tended to take a more free-market
approach. Whether the Trump administration will continue on that
path is unclear, given that President Donald Trump has at times
embraced a populist sentiment that can be suspicious of big
businesses growing more powerful.
Mr. Trump's nominee to lead the department's antitrust
enforcement efforts, Makan Delrahim, hasn't yet been confirmed by
the Senate, but political deputies selected by Mr. Delrahim are
already in place and conducting Justice Department business.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
September 26, 2017 17:15 ET (21:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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