BAE consultation

Consultation on review of BAE Systems undertakings

On 9 February 2006, the OFT launched a public consultation on the question of whether the Undertakings are still appropriate or need to be varied or superseded, or whether BAE Systems can be released from them.  A total of seven responses were received to the consultation. Some respondents considered that despite changes and developments in the UK defence sector over the last few years, the Undertakings remain relevant particularly as BAE Systems maintains a strong position in certain key capabilities where it is the owner and / or guardian of important UK technology or where it controls access to key capabilities. A number of respondents did however recognise that changes in the sector had made a case for removal of some if not all of the Undertakings. The MoD, through the Defence Procurement Agency, have also provided their views as part of the consultation process.

Provisional view

Having considered the representations made by BAE Systems, the MoD and the responses to the consultation, the OFT has reached a provisional view and is minded to give advice to the Secretary of State pursuant to section 75J of the Act that:

a. Undertaking 9 be retained;
b. the information retention provisions of Undertakings 2 and 5 be retained;
c. the supporting Undertakings 1, 16 and 17 be revised to reflect the changes; and
d. the Undertakings that remain (Undertakings 4, 6, 7, 8, 10, 11, 12, 13, 14 and 15) be released.

For practicality, in view of the substantial changes that would result, the OFT is recommending that the Undertakings as amended are brought together within a new single replacement set of undertakings that supersedes the Undertakings rather than seeking to further amend the document containing the Undertakings given in 2000.

The OFT has already consulted third parties (see press release 25/06) on changes and developments in the market in coming to this provisional view. It is now staging this further consultation with interested third parties on the detailed proposals prior to making its representations to the Secretary of State for Trade and Industry. In making comments on any of the suggested actions below, respondents should, if appropriate, draw attention to any practical implications of the suggested changes to the Undertakings.

Download the full text of the consultation on review of BAE Systems undertakings (pdf 110 kb)
Download the revised undertakings - Annexe A (pdf 90 kb)

A consolidated version of the Undertakings is reproduced at BAE Systems' website.

Comments on the above proposals or suggested draft Undertakings should be addressed to:

David Blocksidge
Mergers Branch
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX
E-mail david.blocksidge@oft.gsi.gov.uk

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