Mike Stone

WASHINGTON, (Reuters) – The U.S. Federal Trade Commission has issued an informational statement. It is responsible for evaluating mergers in order to make sure they are compliant with antitrust laws. Lockheed Martin (NYSE: ) Tuesday’s statement by Aerojet Rocketdyne reveals that it intends to purchase Aerojet Rocketdyne, raising antitrust concerns.

Lockheed received a FTC warning that there were “concerns about the transaction” which could only be resolved by consent orders. Lockheed can then choose to abandon the transaction, or to fight federal litigation in order to complete the deal.

Lockheed, the world’s No. 1 defense contractor, has been criticised for approving this deal. Lockheed, the No.1 defense contractor, would be able to hold a dominant position in a critical piece of U.S. Missile Industry.

Everything from missile defense systems to Stinger missiles uses rocket motors. The proposed deal has been opposed by Raytheon Missile Company (NYSE:).

Lockheed’s $4.4billion acquisition announced late 2020 was the first big deal under its new CEO Jim Taiclet. This would change the landscape of solid rocket fuel missiles, which can be used in tandem with drones or jets.

Aerojet designs and produces liquid and solid rocket propulsion as well air-breathing supersonic engines and electric propulsion. Customers include NASA, Lockheed Martin and Raytheon Technologies (NYSE 🙂 as well as the United Launch Alliance.

Capitol Hill has reacted negatively to the deal.

U.S. Senator Elizabeth Warren, who has a keen interest in corporate behavior, asked the FTC to examine the premise and efficacy of internal firewalls like those Lockheed has proposed to prevent it from gaining a competitive advantage over peers once the deal closes, according to a July 16 https://www.reuters.com/business/aerospace-defense/senator-warren-questions-lockheeds-antitrust-solution-buy-aerojet-2021-07-20 letter.

Warren asked that the FTC take a more critical look at mergers in defense industries.

Some senators also criticized the defense industry consolidation, saying that it hindered innovation and made it more costly for the Department of Defense.