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General Dynamics Corp. is lobbying the Federal Trade Commission to approve its $47 million acquisition of Boeing Co.’s medium caliber cannon business, though sources said it is becoming increasingly likely the companies either will have to abandon the deal or fight for it in court. Sources said the FTC staff, consulting with the Department of Defense, has concluded that the deal would give Falls Church, Va.-based General Dynamics a virtual monopoly on the production of medium caliber guns. These weapons are used on everything from attack helicopters to fighter jets to armored vehicles. Regulators laid out those objections to the companies this month. Both General Dynamics and Chicago-based Boeing have responded by arguing that the cost savings from the merger would outweigh the loss of competition for artillery production. An FTC spokesman declined to comment. A Defense Department spokesman did not return a call for comment. Officials for both companies said they are committed to the deal and are still talking to the FTC about possible fixes short of scuttling the transaction. “We are trying to work with the FTC and General Dynamics to find a solution that works for everyone,” a Boeing spokesman said. Speculation that the agency would challenge the deal grew this week after FTC Competition Bureau Director Joe Simons said Monday that regulators are reviewing several deals of less than $50 million. Transactions below that need not be reported to the government under the Hart-Scott-Rodino Antitrust Improvements Act. “I wouldn’t be surprised if you saw some action in that area fairly shortly,” Simons said at a forum sponsored by the American Bar Association’s antitrust division. Defense Daily, a unit of Phillips Business Information Inc., reported last week that the FTC told the companies it would block the deal. But sources said that was the opinion of FTC staffers. Documents authorizing the filing of a lawsuit have not yet been distributed to the agency’s five commissioners, although that could occur next week. The commissioners also could authorize a suit during a formal meeting. Such meetings typically occur at least once a week. No more meetings are scheduled this week, while next week’s schedule should be disclosed Monday. A General Dynamics spokesman said the company still expects to win over the FTC, which he said has not made a final decision on the deal. “We are still awaiting the results of the FTC review,” he said. Copyright (c)2001 TDD, LLC. All rights reserved.

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