Thomson and GEC join in sonar venture

Thomson-CSF of France and GEC-Marconi, the main defence unit of British engineering conglomerate General Electric, are pooling their three existing sonar-systems businesses. The move will create the world's largest sonar company called Thomson Marconi Sonar, which would have annual sales of around pounds 360m and 3,500 workers.

On grounds of national security, both the UK and French governments have asked the European Commission not to study the deal. The governments feel it "would not be appropriate for the military aspects of the transaction to be notified to or considered by the EC Commission under the EC merger regulation," a spokesman for the Department for Trade and Industry said.

The action by the two governments makes use of article 223 of the EC Treaty which allows member states to protect their essential security interests in merger regulation.

The European Commission had no immediate comment on the request. "The Commission has not yet received the request. As soon as it gets more detailed information it will examine the issue with all necessary care," a spokesman said.

A spokesman for GEC said: "TMS will build on the respective strengths of its two shareholders to secure European and world market leadership in sonars."

Thomson Marconi Sonar will provide sonar systems, which use sound waves to track, chart and identify underwater activity and installations, for surface ships, submarines, aircraft and mine warfare.

The company will be owned 50.1 per cent by Thomson and 49.9 per cent by GEC-Marconi, and will have operating centres in France, Britain and Australia. Its international joint venture team will be based in France.

Industry analysts welcomed the merger, calling it a tidy alliance following a confusing period for Anglo-French defence co-operation.

In February, Thomson-CSF chairman Alain Gomez resigned in a row over the best method for developing Thomson-CSF. Newspapers reported at the time that the French government forced him out because of his plans to strike a deal with GEC instead of a French partner.