Commission clears creation of defence joint venture by BAES, JAIEC, and Leonardo

The European Commission has approved, under the EU Merger Regulation, the proposed creation of a joint venture (‘JV‘) between BAE Systems (Holdings) Limited (‘BAES‘), Japan Aircraft Industrial Enhancement Co. Ltd. (‘JAIEC‘), and Leonardo S.p.A. (‘Leonardo‘). This JV will be the prime contractor and lead systems integrator for the Global Combat Air Programme.

The Commission’s investigation

The transaction relates primarily to multi-role combat aircraft. Multi-role combat aircraft are military fighters which are designed for different types of missions. According to the parties, the strategic and economic rationale for the transaction is to develop a sixth-generation combat aircraft. The JV will be the prime contractor and lead systems integrator for the aircraft. The aircraft is intended for use by the governments of Italy, the UK and Japan, with the potential for sales to other jurisdictions/government buyers in the future.

The Commission investigated the impact of the transaction primarily on the Italian and international export markets for multi-role combat aircraft. Based on its market investigation, the Commission found that the notified transaction would not raise competition concerns given the absence of new horizontal overlaps between the companies’ activities in the relevant, i.e. Italian, national market for multi-role combat aircraft. The Commission therefore concluded that the proposed transaction would not raise competition concerns in the EEA and cleared it unconditionally.

Companies and products

BAES is a global defence, aerospace and security company, headquartered in the UK.

JAIEC is a public entity representing the interests of the Japanese aerospace industry, headquartered in Japan.

Leonardo is an industrial and technological company in the aerospace, defence and security sector, headquartered in Italy.

The JV will be the prime contractor and lead systems integrator for the Global Combat Air Programme aircraft.

Merger control rules and procedure

The transaction was notified to the Commission on 22 April 2025.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the EU Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

More information: European Commission