Raytheon Is Target of U.S. Criminal Probe Into Hiring (1)

Raytheon Technologies Corp. is a target of a criminal investigation by the U.S. Justice Department into alleged agreements to limit hiring between its jet-engine unit and some of its suppliers, the company revealed.

The aerospace and defense giant was recently advised that it is a target of the antitrust probe, and is cooperating with the investigation, according to a Friday evening securities filing. No criminal charge has been lodged against the company or its affiliates, Raytheon said.

A company spokesman declined to comment beyond the filing.

The antitrust inquiry exposes Raytheon to new scrutiny by the Justice Department, which also is investigating cost reporting and other financial matters involving defense contracts at Raytheon Missiles & Defense, the company’s largest defense business. The contracts at issue in that probe pre-date Raytheon’s 2020 merger with United Technologies, and the company has set aside $290 million in reserves for the matter.

The Justice Department has made it a priority to prosecute collusion by employers in the labor market, investigating agreements between companies to set wages for workers and not recruit talent from competitors. In July, DaVita Inc., an operator of kidney dialysis centers, and its former chief executive officer were charged with colluding with other companies not to recruit one another’s employees.

The investigation disclosed Friday has focused on alleged hiring restrictions between Raytheon’s Pratt & Whitney division and some of the jet-engine unit’s suppliers, according to the filing. The probe also has sought information about the Waltham, Massachusetts-based company’s Collins Aerospace avionics business.

Raytheon said it received a grand jury subpoena in 2019 as part of an investigation into alleged agreements not to solicit or hire employees in violation of U.S. competition laws. A federal grand jury in December indicted a former manager at Pratt & Whitney in addition to executives at engineering services suppliers for an alleged scheme to limit hiring and recruitment between the companies.

The probe disclosed Friday comes as the Biden administration toughens scrutiny of corporate actions that risk undermining competition. Antitrust authorities have moved to block several large deals on competition grounds recently, including Lockheed Martin Corp.’s proposed $4.4 billion takeover of Aerojet Rocketdyne Holdings Inc.

Raytheon shares fell less than 1% in after-hours trading. The stock had climbed 0.2% at the close as defense contractors escaped a broader market slump.

(Updates with additional detail in seventh paragraph)

To contact the reporters on this story:
Ryan Beene in New York at rbeene@bloomberg.net;
David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story:
Chester Dawson at cdawson54@bloomberg.net

Tony Robinson

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