AlliedSignal Inc. of Morristown, N.J., and Honeywell Inc. of Minneapolis must divest themselves of elements of their avionics businesses to win approval for their $16 billion merger, according to terms of a settlement with the US Department of Justice's antitrust division. The department had argued that the merger would inhibit competition and raise prices. AlliedSignal has agreed to sell its space and navigation business in Teterboro, N.J., which produces inertial systems, including ring-laser and fiber optic gyroscopes. The company must also sell its surveillance weather radar business in Olathe, Kan., and its microelectromechanical systems business in Redmond, Wash., and related licenses for the technology. Honeywell's traffic alert and collision avoidance systems business in Glendale, Ariz., will be sold as well.