US Authorities Block Merger of Largest Defense Contractor Lockheed Martin

[Asia Economy Reporter Yujin Cho] The Joe Biden administration in the United States has blocked the acquisition of a rocket engine manufacturer by Lockheed Martin, the No. 1 U.S. defense contractor. The Biden administration's antitrust regulatory efforts, which have targeted the four major big tech companies Meta, Amazon, Apple, and Google, are now expanding into the defense industry.

According to the Wall Street Journal (WSJ) on the 25th (local time), the U.S. Federal Trade Commission (FTC) announced that it has filed an antitrust lawsuit opposing Lockheed Martin's plan to acquire rocket engine manufacturer Aerojet Rocketdyne for $4.4 billion (approximately 5.3 trillion KRW).

Lockheed Martin is the No. 1 U.S. defense contractor by sales. This acquisition has drawn criticism from the industry because it could allow Lockheed Martin to dominate the market for solid-fuel rocket motors, which are core to the U.S. missile industry.

Aerojet Rocketdyne is the only company in the U.S. space and defense sectors that develops and manufactures both liquid and solid rocket and missile engines, with customers including the U.S. Department of Defense, NASA, and Boeing.

Lockheed Martin agreed to acquire Aerojet in December 2020, but the FTC expressed concerns that this acquisition could harm competitors and lead to market monopolization in the national security sector.

Holly Vedova, Director of the FTC's Bureau of Competition, pointed out, "Without competitive pressure, Lockheed Martin could produce products of lower quality at significantly higher prices."

WSJ reported that this lawsuit is the first antitrust lawsuit filed by the FTC related to mergers in the defense industry in several decades. Lockheed CEO Jim Taiclet stated, "With the antitrust lawsuit filed, we can either challenge it in court or decide to cancel the acquisition agreement."

This FTC lawsuit comes amid the Biden administration's strong scrutiny of mergers and acquisitions by major companies, including the four big tech firms and semiconductor companies.

Last year, the Biden administration passed an antitrust law package aimed at curbing the market dominance of big tech companies, and the two major antitrust regulatory agencies, the Department of Justice and the FTC, are conducting investigations into big tech firms.

The FTC, led by hardliner Chair Lina Khan, is currently pursuing an antitrust lawsuit against Meta, and Apple has received a court ruling in a U.S. antitrust lawsuit that will inevitably impact App Store revenues.

In December last year, the FTC also filed a lawsuit opposing semiconductor company Nvidia's acquisition of the UK-based ARM.