The four essential tests the BAE and EADS deal will have to pass With the almost universal reduction in defence budgets around the world, defence companies have been working hard to adjust, not least in the UK where BAE is overwhelmingly defence orientated, having disposed of its interest in Airbus a few years ago. A merger between BAE and the Franco-German-Spanish EADS would therefore create the world's second-largest civil/military company, with all the potential advantages of a diversified product portfolio and economies of scale. Secondly, we need to ensure that the intellectual property generated in the UK is fully protected and not diluted for political reasons. There is reason to believe that concerns on that score can be resolved because we already have a potential template in the very successful European missile company, MBDA, in which BAE, EADS and Finmeccanica of Italy are shareholders. Fourthly, there is the risk that such a massive multinational would limit competition not only in the UK but also across Europe, effectively holding governments to ransom for their defence equipment. The Coalition's White Paper earlier this year made clear that the MoD will not be afraid to buy off the shelf and there are plenty of defence companies in the US, as well as the emerging economies, to provide the necessary stick to drive down costs. Consideration will also need to be given to the potential impact on other aerospace companies like Thales of France, whose UK portfolio includes the former Shorts Brothers missile business in Northern Ireland, or Finmeccanica, which owns the Westland helicopter business as well as the Selex electronic business in Edinburgh. Would the creation of this titan of a company squeeze them out and thus damage the competitive marketplace? These are early days in the debate which follows news of this proposed merger, but a full debate there must be as the decision by the governments concerned and the competition authorities will have a significant impact upon the economy and security interests of the UK as well as our relationship with our key ally, the USA. However, providing we can meet the tests I have set out above, there is a chance that it could work. Gerald Howarth is MP for Aldershot and was formerly Minister for Security Strategy at the Ministry of Defence