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Raytheon under criminal investigation as Government probes hiring

Raytheon

Raytheon Technologies Corp has announced it is the subject of a criminal investigation by the US Justice Department investigating alleged agreements to limit hiring between its jet-engine subsidiary and some of its suppliers.

The aerospace and defense giant has recently confirmed it is a target of the antitrust probe and is cooperating with the investigation, according to a Friday evening securities filing.

Raytheon has clarified no criminal charges have been filed against the firm or its associates.

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The Justice Department is scrutinizing cost reporting and other financial concerns regarding defense contracts at Raytheon Missiles & Defense, the company's main defense unit, as part of the investigation.

The contracts in question predate Raytheon's 2020 merger with United Technologies, and the corporation has set aside $290 million in reserves as a result of the investigation.

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The Department of Justice has made it a priority to prosecute labor market collusion, looking into agreements between corporations to set pay for employees and not recruit talent from competitors.

The investigation disclosed on Friday, February 11 has focused on supposed 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 pursued evidence about the Waltham, Massachusetts-based company’s Collins Aerospace avionics business.

In 2019, Raytheon received a grand jury subpoena as part of an inquiry into purported agreements not to solicit or hire personnel in violation of US competition laws, according to the company.

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 revealed Friday comes as the Biden government hardens scrutiny of corporate actions that risk undermining competition.

Several big mergers have lately been blocked by antitrust authorities, including Lockheed Martin Corp's proposed $4.4 billion acquisition of Aerojet Rocketdyne Holdings Inc.

In after-hours trade, Raytheon shares declined by less than one percent. Defense contractors dodged a larger market fall, as the stock rose 0.2 percent at the close.

Source: Bloomberg Quint

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