Space

The Pentagon is holding back the merger of the defense and aerospace industries

The Ministry of Defense states that it “will support the Federal Trade Commission and the Ministry of Justice in antitrust investigations and recommendations concerning the defense industry base.”

Washington – Department of Defense at Fr. the report was published Feb. 15 says it will “strengthen oversight” of industry mergers amid concerns that corporate consolidation is undermining US competitiveness.

Report of the Ministry of Defense on the “state of competition in the industrial base” there was a decision by the Biden administration to block the acquisition of Lockheed Martin rocket engine manufacturer Aerojet Rocketdyne for $ 4.4 billion. The Federal Trade Commission has sued to stop the deal because of antitrust concerns, arguing it would give Lockheed a dominant position in the vital missile industry. This confrontation led Lockheed Martin to terminate the agreement.

The Pentagon’s views on the merger of Lockheed and Aerojet have been edited out public version of the FTC complaint published January 25th. A new report from the Ministry of Defense does not mention this specific merger, but notes that “if the merger threatens the interests of the Ministry of Defense, the Ministry of Defense will support the Federal Trade Commission and the Ministry of Justice in antitrust investigations and recommendations concerning the defense industry.”

“The U.S. Department of Defense is facing a historically consolidated defense industry base, making it necessary to intensify its review of any further mergers and acquisitions,” the report said. “When markets are competitive, the Department reaps benefits by improving cost, schedule and performance.”

If contractors have to compete with other firms, it “encourages them to work efficiently and effectively,” the report said. “Insufficient competition can leave gaps in needs, eliminate innovation pressures to stay ahead of other firms, lead to higher costs for taxpayers as leading firms use their market positions to charge more, and raise barriers for new entrants.”

Mergers in the defense and aerospace sectors gained momentum in the 1990s and have continued ever since. The FTC noted that its actions to stop Lockheed Martin from buying the Aerojet Rocketdyne were for the agency “the first legal issue about the merger in defense in decades.”

Since the 1990s, the number of defense contractors’ main contractors has shrunk from 51 to five, the report said. “As a result, the Department of Defense is increasingly dependent on a small number of contractors for important defense capabilities.”

Over the past three decades, the number of suppliers of tactical missiles has fallen from 13 to three, aircraft from eight to three, and satellites from eight to four.

https://spacenews.com/pentagon-to-rein-in-defense-and-aerospace-industry-mergers/ The Pentagon is holding back the merger of the defense and aerospace industries

Back to top button