For months, the Centrist Democrats of America have been saying that the proposed acquisition of Aerojet Rocketdyne, by the behemoth Lockheed Martin, was a serious mistake that would chill innovation and competition in the missile industry.
Today, Massachusetts Senator Elizabeth Warren, a leader in the fight for a more equitable economy, also raised concerns about this potential acquisition. In fact, she sent a letter to the Federal Trade Commission expressing her misgivings about Lockheed’s intentions.
Sen. Warren’s statement hits the nail on the head:
“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…”
Warren’s primary concern, which we share, is that when companies agree to remedies to the FTC in order to get the FTC’s approval, they fail to live up to those agreements. Again, here is Warren:
“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…”
We applaud Sen. Warren for her fearless leadership on this issue.
Now, the ball is in the court of FTC Chair Lina Khan, whether or not to approve this acquisition. The Biden administration just issued an Executive Order to combat consolidation in the American economy. This is the FTC’s first big test, on how the Biden administration is going to respond to mergers and acquisitions that stifle competition. We urge Chair Khan to block this deal.