The Federal Trade Commission filed a lawsuit on Tuesday in an attempt to prevent a Lockheed Martin acquisition, a sale that it said would have negative consequences on missile production.
Lockheed Martin was on the verge of acquiring Aerojet Rocketdyne Holdings for $4.4 billion before the suit, which is the first time in decades the agency is litigating a defense merger.
“Aerojet supplies advanced power, propulsion, and armament systems, which are critical components for the missiles made by Lockheed and other defense prime contractors,” the FTC wrote in a release. “The agency’s complaint alleges that if the deal is allowed to proceed, Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense.”
FTC Bureau of Competition Director Holly Vedova called Aerojet the country’s “last independent supplier of key missile inputs.”
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The commission claimed that should the sale go through, Lockheed Martin would own a company that provides key technology to Lockheed Martin and its competitors and could refuse to sell or upcharge other companies.
Vedova argued that if the deal went through, it would “give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles. Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay while delivering lower quality and less innovation.”
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Lockheed Martin CEO Jim Taiclet said the merger agreement allows for a 30-day review period after the FTC’s filing to decide whether to defend the deal during a fourth-quarter earnings conference call on Tuesday. The trial is set to begin on June 16 if it does go to court.
