FTC Sues To Challenge Lockheed Martin’s $4.4B Aerojet Deal

The Federal Trade Commission announced on Tuesday it unanimously voted to sue to block the country’s No. 1 defense contractor, Lockheed Martin’s, proposed $4.4 billion purchase of rocket engine manufacturer Aerojet Rocketdyne Holdings Inc. over antitrust worries.

Lockheed MartinPhoto Credit: Shutterstock

Lockheed CEO Jim Taiclet responded by saying the company will review the FTC’s planned challenge, adding: “With the filing of the suit, we may elect to defend the lawsuit or terminate the merger agreement.”

The FTC claims that if the deal were allowed to go forward, Lockheed could use its influence and control of Aerojet to create more consolidation and monopolize the solid fuel rocket industry. The agency said if taken to court, this would be the first litigated defense merger challenge in decades.

The FTC, consisting of two Democrats and two Republicans, voted 4-0 to challenge the deal.

“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe. If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles,” Holly Vedova, FTC Bureau of Competition Director, said in a statement. “Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation. We cannot afford to allow further concentration in markets critical to our national security and defense.”

The FTC stated it would file complaint in federal court to seek a preliminary injunction, effectively halting the deal. However, if a court rules in favor of the merging companies, the FTC generally drops its parallel administrative complaint.

The deal has drawn opposition because Aerojet’s resources would provide Lockheed a dominant position over a vital piece of the U.S. missile industry.

Democratic Senator Elizabeth Warren, applauded the FTC’s action in a statement on Tuesday.

“After decades of mergers, the defense industry is left with a few giant firms that aim to buy up key suppliers and stomp out competition. I support the FTC taking aggressive action to oppose further corporate concentration in the defense industry that could threaten U.S. national security.”

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