Superior Air Parts auction scuttled over antitrust concerns
Concerns that the purchase of Superior Air Parts by either Teledyne Continental Motors or Lycoming may violate antitrust laws appear to have scuttled for now a court–ordered auction in the U.S. Bankruptcy Court for the Northern District of Texas. Superior officials announced in January they had reached an $11.5 million deal with Lycoming that was to conclude at a court–ordered auction in late February.
A competing and higher bid to Lycoming’s offer came from Teledyne Continental Motors. The auction was scheduled for Feb. 24, but on that day Texas Assistant Attorney General Brett L. Fulkerson delivered a letter to Superior's attorney warning that an antitrust investigation regarding the sale is in progress. After much phone calling and legal wrangling, the auction took place two days later with Superior rejecting, for now, both bids, tossing the company back into bankruptcy limbo. Had the sale proceeded, Fulkerson warned, an antitrust case could be filed against the winning bidder. Superior remains an open bankruptcy case.
Superior Air Parts makes parts for both Lycoming and Continental engines and provides the main competition to the purchase of manufacturer’s parts. Here are excerpts from Fulkerson’s letter:
“As you are aware, the Office of the Attorney General is investigating the possibility of a reduction in competition in the market for replacement parts for piston–drive, general aviation engines in the State of Texas due to the proposed sale of Superior Air Parts, Inc. The proposed sale of substantially all of Superior’s assets to either Avco Corporation or Teledyne Technologies, Inc., poses serious concerns that sections 15.05(a) and/or (d) of the Texas Free Enterprise and Antitrust Act of 1983 may be violated.
“Due to the complex nature of the issues and our concerns about significant competitive harm, we expect that our investigation will continue into next month [March]. In order to complete our due diligence review we will send additional information requests in the form of Civil Investigative Demands or otherwise to obtain documentary material or sworn statements from persons with relevant knowledge.
“…If our investigation reveals that the sale of Superior’s assets results in the buyer acquiring market power in the relevant market we reserve our rights to take appropriate legal action in a court of competent jurisdiction.”
Stephen A. Roberts, attorney for Superior, said the U.S. Department of Justice was also looking into antitrust issues regarding the sale of Superior either to Lycoming or Teledyne Continental. Roberts said there are other interested bidders who have no antitrust issues, and he expects a deal to conclude in the next "…couple of months." In the meantime, customers are still purchasing Superior products and the firm has the funds to continue until a deal is completed.
March 5, 2009