FTC Seeks to Block $4.4B Lockheed Martin-Aerojet Rocketdyne Deal

Lockheed Martin Corp.’s $4.4 billion deal to purchase the last independent U.S. supplier of missile propulsion is in jeopardy.

The Federal Trade Commission (FTC) has filed suit against the world’s largest defense contractor and missile maker to stop the acquisition of Aerojet Rocketdyne Holdings Inc., a technology-based manufacturer headquartered in California, the FTC announced Tuesday (Jan. 25).

The complaint, filed in U.S. District Court for the District of Columbia, alleges that if the deal closes, Maryland-based Lockheed will use its control of Aerojet to hurt competing defense contractors and consolidate multiple markets critical to nation’s security and defense.

“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe,” said FTC Bureau of Competition Director Holly Vedova in a statement. “If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles.”

Cailin Schmeer, a Lockheed spokesperson, said the company does not comment on pending litigation. “We are reviewing the FTC’s complaint and will respond in due course,” she said.

Without competitive pressure, the FTC alleged that Lockheed will be free to raise prices while delivering lower quality products with less innovation.

“We cannot afford to allow further concentration in markets critical to our national security and defense,” Vedova added.

The suit represents the first challenge to a defense contractor merger in decades, the FTC noted.

Lockheed is one of several missile competitors under contract with the Department of Defense. The others include Raytheon Technologies, Northrop Grumman Corp., and Boeing Co.

The lawsuit comes just one day after The Department of Justice’s (DOJ) Jonathan Kanter warned that the department will seek to block deals that are likely to lessen competition rather than pursuing complex settlements.

Read more: DOJ Seeks To Block Antitrust Mergers, But It is Easier Said Than Done

His warning came in one of his first speeches as head of the DOJ antitrust division at the New York State Bar Association.