As FTC Reviews Lockheed Martin's Proposed Acquisition of Aerojet Rocketdyne, Warren Questions Agency About Preventing Monopolistic Behavior in Defense Industry
"In the two decades starting in 1980, waves of merger activity and consolidation transformed the nation's defense industry from a competitive market with over 50 firms to an oligopoly of only 5 large rivals."
Washington, DC – United States Senator Elizabeth Warren (D-Mass.) sent a letter to the Chair of the Federal Trade Commission (FTC) Lina Khan requesting information about the effectiveness of the antitrust agency’s use of behavioral remedies to protect competition and prevent monopolistic behavior in the defense industry. This letter comes as the FTC has extended its investigation of Lockheed Martin's proposed acquisition of Aerojet Rocketdyne, the last remaining independent domestic propulsion supplier.
“In the two decades starting in 1980, waves of merger activity and consolidation transformed the nation's defense industry from a competitive market with over 50 firms to an oligopoly of only 5 large rivals. After decades of horizontal consolidation, the remaining giants in this sector have shifted to vertical consolidation, buying up key suppliers and input manufacturers in order to integrate operations up and down their supply chains,” wrote Senator Warren.
When antitrust agencies have approved these vertical mergers and acquisitions, they have sometimes subjected them to so-called “behavioral” remedies. These remedies seek to protect competition by prohibiting a newly merged firm from using competitively sensitive information to the detriment of its rivals or from disfavoring the competitors that depend on it for supply, distribution, or other inputs.
“Given the questionable effectiveness of these remedies in numerous markets, I urge the FTC to re-evaluate the best method to protect competition when analyzing vertical deals, including not allowing such transactions to proceed in the first place,” continued Senator Warren.
The Senator’s letter echoes sentiments in President Biden’s recent executive order on competition in the American economy, which directs the Department of Defense to “review the state of competition” within the defense industry.
Senator Warren has been a vocal leader to rein in anti-competitive practices of large companies that can stifle competition.
- On Friday, Senator Warren joined the Data for Progress blog in breaking down President Biden’s recent competition executive orders and talking about how they put power back in the hands of consumers and workers.
- Last week, Senator Warren released a statement following President Biden's executive order to promote competition and bolster antitrust enforcement throughout the administration.
- In June, Senator Warren sent a letter to FTC Chair Lina Khan calling for a broad and meticulous FTC review of Amazon’s proposed acquisition of Metro-Goldwyn-Mayer Studios (MGM), another vertical transaction.
- Senator Warren made a statement following the announcement that the FTC will review Amazon's proposed acquisition of MGM.
- In May, Senator Warren delivered remarks at Freedom From Facebook and Google's virtual event calling to break up Big Tech.
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