Bulked-Up Raytheon Draws Fire

WASHINGTON -- Raytheon Co.'s recent spate of deals to buy competing defense companies may spur federal antitrust agencies to block the deals or force major changes in them, some government and industry officials said. The fear is that the newly bulked up Raytheon would dominate key segments of military contracting.

The new Raytheon would have a near-monopoly in air-to-air missiles, night-vision equipment, sensors on spy satellites and military radar components, industry executives said. It would gain that market power from its $2.95 billion acquisition of Texas Instruments Inc.'s defense divisions and its $9.5 billion purchase of Hughes Aircraft Co., both announced in the last three weeks.

Any move by the Clinton administration to make the mergers contingent upon the sale of some segments could lead Raytheon to cancel the meticulously negotiated deals, industry officials said.

For its part, Raytheon officials say the new company would still face competition aplenty in defense electronics, and therefore the deal should not confront antitrust problems.

Critics say the deals would allow the Massachusetts firm to smother some competitors, possibly placing Raytheon in a position to drive up the price of these armaments and discourage technological innovation.

William Kovacic, a George Mason University law professor and defense antitrust specialist in Virginia, said the deal to buy Hughes is troubling because it would combine two companies that have long been bitter rivals as the Pentagon's top suppliers of air-to-air missiles.

"Raytheon-Hughes is truly dominant in those segments,'' Kovacic said. "Their challenge is to argue to antitrust officials that there's another plausible company the government can turn to'' if the combined firm raises missile prices or its products lag technologically. "One potential danger in the deal is losing the benefit of different corporations' different technological solutions.''