Trystan Casey
Westinghouse Electric Corporation was formed in 1999 after the original company, George Westinghouse's Westinghouse Electric, ceased to exist due to a series of divestitures and mergers in the mid-to-late 1990s. The termination of the 40-year partnership between Mitsubishi Heavy Industries Ltd. (MHI) and Westinghouse Electric Co. can be attributed to MHI's inability to acquire Westinghouse, with the bid ultimately going to Toshiba Corp. in 2006. This, along with Westinghouse's acquisition of CBS Inc. in 1994, expansion into communications and broadcasting, and the sale of most non-broadcast operations by 1998, marked a shift in Westinghouse's focus away from its traditional industrial operations.
| Characteristics | Values |
|---|---|
| Reason for termination | Mitsubishi Heavy Industries Ltd. (MHI) broke off agreements with Westinghouse Electric Co. over cooperative work in licensing technology. |
| Date of termination | 17 January 2007 |
| History of the relationship | The relationship between Westinghouse and MHI dates back to the early 20th century. They were parties to contracts that divided world markets between them, with Westinghouse supplying technical and manufacturing information and receiving royalties. |
| Legal implications | The United States v. Westinghouse Electric Co. was a patent-antitrust case where the US government alleged that Westinghouse, Mitsubishi Electric (Melco), and MHI violated the Sherman Act by dividing world markets and restraining trade in heavy electrical equipment. |
| Outcome of the case | The Ninth Circuit considered the government's theory "novel and laced with paradox," and Westinghouse was found to have insulated its home market from competition in violation of antitrust laws. |
| Business impact | MHI formed an agreement with French nuclear power supplier Areva to collaborate in the area of nuclear energy and expand their presence in growing markets. |
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What You'll Learn
- Westinghouse and Mitsubishi's relationship dates back to the early 20th century
- Westinghouse and Mitsubishi's licensing agreements
- Mitsubishi's inability to compete in the US market due to Westinghouse's patents
- Mitsubishi tried to acquire Westinghouse but lost the bid to Toshiba
- Westinghouse's sale to Toshiba
Westinghouse and Mitsubishi's relationship dates back to the early 20th century
Westinghouse Electric Company LLC is an American nuclear power company formed in 1999 from the nuclear power division of the original Westinghouse Electric Corporation. Westinghouse Electric Corporation was founded in 1886 by George Westinghouse and was headquartered in Pittsburgh, Pennsylvania.
After the war, Westinghouse entered into technical assistance agreements with Mitsubishi Electric (Melco) in 1951 and with a predecessor of Mitsubishi Heavy Industries (MHI) in 1952. These agreements licensed Melco and MHI under Westinghouse's heavy electrical equipment patents to make and sell worldwide except in Canada and the United States. Westinghouse also provided technical information to Melco and MHI to manufacture the products.
In 1965, Melco and MHI became capable of competing in the United States and designing around Westinghouse's patents. However, due to their investment in Westinghouse technology, they became economically dependent on Westinghouse and unable to compete in the US market without infringing on Westinghouse's patents. This led to a patent-antitrust case, United States v. Westinghouse Electric Co., where the US government argued that the agreements between Westinghouse, Melco, and MHI violated antitrust laws by unreasonably restraining trade and limiting competition in the US market.
In 2006, Toshiba acquired Westinghouse Electric Company for $5.4 billion, and in 2007, Mitsubishi Heavy Industries announced its plans to terminate its 40-year partnership with Westinghouse, citing its intention to break off agreements related to cooperative work in licensing technology.
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Westinghouse and Mitsubishi's licensing agreements
Westinghouse Electric Company LLC is an American nuclear power company formed in 1999 from the nuclear power division of the original Westinghouse Electric Corporation. The original company, George Westinghouse's Westinghouse Electric, founded in 1886, ceased to exist due to a series of divestitures and mergers in the mid-to-late 1990s.
Westinghouse Electric Corporation was involved in a patent-antitrust case, United States v. Westinghouse Electric Co., 648 F.2d 642 (9th Cir. 1981). The case concerned a patent and technology licensing agreement between Westinghouse, Mitsubishi Electric (Melco), and Mitsubishi Heavy Industries (MHI), which divided world markets and allegedly violated § 1 of the Sherman Act. The government argued that the agreement was an unreasonable restraint of trade as it prevented the Japanese defendant companies from bidding against Westinghouse on equipment procurements in the United States.
The history of the relationship between Westinghouse and Mitsubishi dates back to before World War II, when they were parties to contracts under which Westinghouse supplied technical and manufacturing information and received royalties on the sale of products. These agreements permitted Mitsubishi to sell the products only in Japan and China. After the war, Westinghouse entered into technical assistance agreements with Melco in 1951 and MHI in 1952. These agreements licensed Melco and MHI under Westinghouse's heavy electrical equipment patents to make and sell worldwide except in Canada and the United States. Westinghouse also provided technical information to Melco and MHI to manufacture the products.
The government sued Westinghouse, Melco, and MHI, alleging that they combined and conspired to restrain trade and commerce in heavy electrical equipment. The government relied on evidence that Melco and MHI refrained from selling products within the Licensing and Technology Agreements in the United States and Canada without first obtaining Westinghouse's approval. The district court concluded that this showed the Japanese defendants' desire to avoid committing patent infringement.
In 1970, the Department of Justice brought an antitrust action against Westinghouse and Mitsubishi, alleging that the technology-sharing agreements had made Mitsubishi dependent on Westinghouse technology, preventing it from entering the US and Canadian markets without patent licenses. The government asked the court to terminate the agreements and require Westinghouse to license Mitsubishi under its US patents.
In 2007, reports emerged of plans to terminate the 40-year partnership between Mitsubishi Heavy Industries Ltd. and Westinghouse Electric Co. Mitsubishi's president, Kazuo Tsukuda, stated that his company would break off agreements over cooperative work in licensing technology with Westinghouse.
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Mitsubishi's inability to compete in the US market due to Westinghouse's patents
Westinghouse Electric Company is an American nuclear power company that was formed in 1999. The company's main product is the AP1000, a modern pressurised water reactor with many passive safety features and modular construction intended to lower construction time and cost.
Mitsubishi Heavy Industries Ltd. (MHI) and Westinghouse Electric Co. had a 40-year partnership that began in 1952, which involved MHI licensing Westinghouse technology. The two companies collaborated to develop the AP1000, a mid-size reactor with advanced safety features.
However, MHI was unable to compete in the US market due to Westinghouse's patents. MHI was licensed under Westinghouse's foreign patents but not its US patents. This meant that MHI was effectively barred from the US market due to patent laws and their heavy investment in Westinghouse technology. The US government sued Westinghouse, Melco, and MHI, alleging that their Technical Assistance Agreements violated antitrust laws by restraining trade and commerce in heavy electrical equipment.
The US government argued that the agreement between Westinghouse and MHI was an unreasonable restraint of trade as it prevented MHI from bidding against Westinghouse on equipment procurements in the United States. MHI was economically dependent on Westinghouse technology and was unable to develop new products that could compete in the US market without infringing upon Westinghouse's patents.
The case, United States v. Westinghouse Electric Corp., was heard in 1981 and the Ninth Circuit considered the government's theory to be "novel and laced with paradox". While the government argued that Westinghouse had insulated its home market from competition, the court dismissed the government's civil action.
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Mitsubishi tried to acquire Westinghouse but lost the bid to Toshiba
Westinghouse Electric Company, an American nuclear power company, was formed in 1999 after the original company, George Westinghouse's Westinghouse Electric, ceased to exist due to a series of divestitures and mergers. The Westinghouse Electric Company was formed from the nuclear power division of the original Westinghouse Electric Corporation.
In 2005, BNFL, which had acquired Westinghouse in 1999, confirmed its intention to sell the company, then valued at $2 billion. This attracted interest from several companies, including Toshiba, General Electric, and Mitsubishi Heavy Industries (MHI). MHI had a long-standing relationship with Westinghouse, dating back to the early 20th century. They were parties to contracts that allowed Westinghouse to supply them with technical and manufacturing information and receive royalties on the sale of their products.
In January 2006, it was reported that Toshiba had won the bid to acquire Westinghouse Electric Company, offering $5 billion (£2.8 billion) for the company. On February 6, 2006, Toshiba confirmed the acquisition for $5.4 billion. This surprised many industry experts, as the market for nuclear power was expected to grow substantially, with countries like China, the United States, and the United Kingdom planning to invest heavily in nuclear power.
Mitsubishi Heavy Industries, having lost the bid to Toshiba, announced in October 2007 that it had formed an agreement with French nuclear power supplier Areva to collaborate in the area of nuclear energy and expand their presence in growing markets.
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Westinghouse's sale to Toshiba
Westinghouse Electric Company LLC is an American nuclear power company formed in 1999 from the nuclear power division of the original Westinghouse Electric Corporation. The original company, George Westinghouse's Westinghouse Electric, was founded in 1886 but ceased to exist in the mid-to-late 1990s due to a series of divestitures and mergers.
In 1998, portions of Westinghouse Electric's nuclear business were purchased by Siemens. The following year, the remaining parts were purchased by British Nuclear Fuels Limited (BNFL) and formed up as Westinghouse Electric.
In 2005, BNFL sold Westinghouse Electric Company to Toshiba. The acquisition was completed on October 16, 2006, with Toshiba obtaining a 77% share, The Shaw Group a 20% share, and Ishikawajima-Harima Heavy Industries Co. Ltd. a 3% share, for a total of $5.4 billion. Toshiba later sold 10% to Kazatomprom, the national uranium company for the Republic of Kazakhstan, for $540 million, leaving Toshiba with a 67% share.
In 2012, Toshiba considered bringing other partners into the business, and in 2013, Shaw exercised an option that brought Toshiba's share in the company to 87%.
In 2018, Toshiba sold Westinghouse to Brookfield Business Partners, a subsidiary of Canadian investment management company Brookfield Asset Management Inc., and some partners for $4.6 billion. The sale was independent of Brookfield's acquisition of Westinghouse and some of its affiliates. The deal was expected to help Toshiba rebuild its finances and focus on smaller but more stable businesses.
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Frequently asked questions
MHI Westinghouse Electric Corporation terminated their partnership due to a series of divestitures and mergers in the mid-to-late 1990s.
Westinghouse Electric Corporation, founded in 1886, experienced a setback in 1990 when it lost over a billion dollars due to bad loans. This led to a major restructuring and the liquidation of their credit operations in 1992. The company then shifted its focus to broadcasting and expanded further in that direction by acquiring CBS in 1994.
Westinghouse Electric Corporation changed its name to CBS Corporation in 1997. Most of its industrial businesses were sold off, including the Westinghouse Power Generation Business unit to Siemens in 1997 and the commercial nuclear power businesses to British Nuclear Fuels Limited (BNFL) in 1998. In 1999, CBS Corporation sold its nuclear business to BNFL, which was then reformed as Westinghouse Electric Company.
MHI, licensed under Westinghouse's foreign patents, was economically dependent on Westinghouse technology. Without access to Westinghouse's US patents, MHI was effectively barred from the US market due to patent laws and the significant investment in Westinghouse technology.
