Raytheon-United Technologies Merge Creates $135 Billion Defense Giant, Consolidating Industry Power

On April 3, 2020, Raytheon Company and United Technologies Corporation (UTC) completed a $135 billion merger creating Raytheon Technologies, the world’s second-largest aerospace and defense company behind only Boeing. The merger combined Raytheon’s weapons systems—including the Patriot missiles used in Saudi Arabia and Paveway bombs documented in Yemen civilian casualties—with UTC’s Collins Aerospace and Pratt & Whitney divisions. The deal represented the largest defense industry consolidation in decades, further concentrating market power among a shrinking number of dominant contractors. The Justice Department approved the merger after requiring limited divestitures, including Raytheon’s military airborne radios business ($275 million to BAE Systems) and UTC’s military GPS business ($1.93 billion to BAE Systems). However, these divestitures addressed only narrow competitive overlaps while leaving intact the broader consolidation that gave the combined entity increased leverage over Pentagon procurement and pricing.

Antitrust Concerns and Weak DOJ Response

The Justice Department’s antitrust review identified serious competitive concerns but required only minimal divestitures to approve the merger. DOJ found that Raytheon and UTC were the only two suppliers of military airborne radios, which provide secure communications for every Pentagon aircraft and helicopter. The merger would have created a monopoly in this critical technology, prompting DOJ to require divestiture of Raytheon’s radio business. Similarly, DOJ required UTC to sell its military GPS business to prevent anticompetitive control of positioning systems. However, these narrow divestitures left unaddressed the broader market concentration effects of combining two major defense contractors. Critics noted that the merger would reduce competitive pressure on pricing, innovation, and performance across multiple weapons categories. CSIS research had documented that defense industry consolidation within subsectors correlated with higher rates of contract termination and cost growth, suggesting the merger would harm taxpayer interests. The DOJ’s approval of the merger despite these concerns demonstrated the weakness of antitrust enforcement in defense contracting, where agency officials appeared to prioritize maintaining large prime contractors over preserving competitive markets.

Further Concentration of Military-Industrial Complex

The Raytheon-UTC merger accelerated the multi-decade trend of defense industry consolidation that began with the Pentagon’s 1993 “Last Supper” meeting that encouraged contractor mergers. The number of major defense prime contractors had shrunk from dozens in the 1980s to just five dominant firms (Lockheed Martin, Boeing, Raytheon Technologies, Northrop Grumman, and General Dynamics) by 2020. This consolidation gave remaining contractors increased leverage over Pentagon procurement: with fewer alternative suppliers, the DOD faced limited options when contractors experienced cost overruns, performance failures, or pricing disputes. The Raytheon-UTC merger also combined weapons manufacturing with the aviation components and engines used in military aircraft, creating vertical integration that increased contractor control over supply chains. Analysts warned that further consolidation might trigger additional mergers as remaining contractors sought to match Raytheon Technologies’ expanded scale and capabilities. The shrinking contractor base meant reduced competitive pressure on pricing, with consolidated firms able to charge premium prices due to limited alternatives.

Timing During Yemen War Crimes Scrutiny

The merger’s April 2020 completion occurred while Raytheon faced ongoing scrutiny over Yemen war crimes involving its weapons. Congressional investigations had documented Raytheon Paveway bombs in multiple civilian-casualty incidents including the August 2018 school bus massacre. However, this scrutiny produced no impediment to the merger or demands for accountability conditions. The merger actually strengthened Raytheon’s position by combining it with UTC’s extensive Pentagon relationships and expanding its technological portfolio, making the company more essential to defense programs and thus harder to hold accountable. The Justice Department’s merger review focused entirely on narrow antitrust concerns without considering Raytheon’s documented role in enabling war crimes or whether increased market concentration would further reduce accountability for weapons misuse. The merger demonstrated that defense contractors faced no consolidation penalties for documented involvement in atrocities—corporate growth proceeded unimpeded by human rights concerns.

Significance

The April 2020 Raytheon-UTC merger creating a $135 billion defense giant exemplified the ongoing concentration of military-industrial complex power, reducing competition and increasing contractor leverage over Pentagon procurement at taxpayer expense. The merger combined the company manufacturing weapons documented in Yemen war crimes with major aviation and engine suppliers, creating a more powerful and diversified contractor less vulnerable to accountability for any single weapons program. The Justice Department’s approval with only minimal divestitures demonstrated the weakness of antitrust enforcement in defense markets, where regulators appeared to accept contractor arguments that scale and integration served efficiency goals without rigorously examining evidence that consolidation increased costs and reduced competition. For Raytheon specifically, the merger validated the strategy of growth through acquisition as a shield against accountability—the larger and more diversified the company became, the more essential it was to Pentagon operations and the less vulnerable to criticism over specific weapons uses. The merger occurred during a period when Raytheon faced maximum scrutiny over Yemen atrocities, yet this scrutiny produced no impediment to consolidation or demands for human rights accountability conditions. The creation of Raytheon Technologies demonstrated that defense contractors operated under different rules than other industries: documented involvement in war crimes generated congressional hearings but not merger obstacles, weapons system failures (like September 2019 Patriot failures) prompted additional sales rather than accountability, and consolidation proceeded despite evidence that reduced competition harmed taxpayer interests. The merger marked another milestone in the evolution of the military-industrial complex Eisenhower warned against, concentrating weapons manufacturing power among ever-fewer corporations with increasing leverage over government policy and decreasing accountability for weapons misuse or performance failures.