A US Navy destroyer launches a Standard Missile-6 (SM-6) during a test. Aerojet Rocketdyne provides propulsion for most Raytheon missiles, including the SM-6. (US Navy)
The Federal Trade Commission (FTC) filed a lawsuit on 25 January seeking to block US defence contractor Lockheed Martin's proposed USD4.4 billion acquisition of US propulsion manufacturer Aerojet Rocketdyne, saying the combination could reduce competition in the missile market.
The FTC described Aerojet Rocketdyne as the last independent provider of missile propulsion in the United States and the only US supplier of divert-and-attitude control systems for missile defence kill vehicles. Lockheed Martin, meanwhile, is one of only a few prime contractors for missiles.
“If consummated, this deal would give Lockheed the ability to cut off other defence contractors from the critical components they need to build competing missiles,” said FTC Bureau of Competition Director Holly Vedova. “Without competitive pressure, Lockheed can jack up the price the US government has to pay, while delivering lower quality and less innovation.”
The FTC, which has two Democratic commissioners and two Republican commissioners, voted 4-0 to file the lawsuit. The agency said it will ask the US District Court for the District of Columbia to temporarily block the acquisition while the lawsuit proceeds. The case could head to trial in mid-June.
Lockheed Martin indicated it will decide in the next 30 days whether to oppose the lawsuit or cancel the acquisition agreement. “We'll be working with our board over the next few days and weeks to make that determination,” said Jim Taiclet, Lockheed Martin's chairman, president, and CEO.
Raytheon Technologies, which uses Aerojet Rocketdyne propulsion in most of its missiles, welcomed the FTC's announcement, saying the acquisition would harm its ability to develop new missiles.
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