U.S. Challenges Parker Hannifin's Acquisition of Clarcor -- 2nd Update
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, said it had cooperated fully with the Justice Department and "is now reviewing the complaint and looks forward to the ultimate resolution of this matter."
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.