September 20, 2021
A bipartisan coalition of lawmakers is pressuring the Department of Defense to approve the Lockheed-Aerojet merger

A bipartisan coalition of lawmakers is pressuring the Department of Defense to approve the Lockheed-Aerojet merger

In a letter to the Department of Defense, a team of 13 congress members believes that Lockheed Martin’s planned $4.4 billion purchase of rocket engine producer Aerojet Rocketdyne should be supported. 9 Republican and 4 Democratic members of the house from Arkansas, Alabama, Oklahoma, Texas, California, and Colorado signed the letter to Deputy Defense Secretary Kathleen Hicks on August 31. These are the states where Aerojet Rocketdyne and Lockheed Martin now operate.

According to the letter, the planned acquisition is “necessary to guarantee that the defense industrial foundation is on the best footing possible to enable the sustained research, development, and production of the leading-edge rocket propulsion.” A copy of the letter was obtained by SpaceNews. The lawmakers’ second letter comes amid anticipation that antitrust regulators could contest the purchase of Aerojet by Lockheed Martin.

In a letter dated August 6, FTC Chair Lina Khan underlined her worries regarding vertical mergers, in which a company tries to acquire a large supplier. The Federal Trade Commission and the Department of Justice (DoJ) are now investigating the merger. They may seek to halt it if they find that the merger significantly reduces competition or establishes a monopoly. The Department of Defense also comments on the acquisition’s national security consequences.

The 13 legislators argue that the Department of Defense will require more modern rocket engines to tackle threats such as competitor nations’ tactical and strategic weapons. According to the letter, Aerojet would have much more resources and hence be better positioned to offer next-generation technology within Lockheed Martin than it would as an independent firm. The lawmakers point out that Aerojet Rocketdyne is the very last solo rocket propulsion producer of any size.

They echoed Lockheed Martin’s claims that this merger should be structured similarly to Northrop Grumman’s purchase of Orbital ATK, a solid rocket motors manufacturer, in 2018. Regulators accepted the Northrop-Orbital agreement on the condition that the business adopts “behavioral corrections.” Northrop had to promise to deliver motors towards its competitors in that situation.

Orbital ATK, Aerojet’s major rocket propulsion competitor, was purchased by Northrop Grumman, according to the letter. “In the space sector, the US government has backed the creation of vertically integrated primes.” Enabling the Lockheed-Aerojet merger to proceed will “restore fair competition to the rocket propulsion market.”

The same competition safeguards put in place by the FTC for the Northrop Grumman-Orbital ATK merger can be applied here, according to the letter signed by Reps. Steve Womack (R-Ark.), Bruce Westerman (R-Ark.), French Hill (R-Ark.), Rick Crawford (R-Ark.), Tom Cole (R-Okla.), Robert Aderholt (R-Ala.), Stephanie Bice (R-Okla.), John Carter (R-Texas), Doug Lamborn (R-Colo.), Marc Veasey (D-Texa (D-Calif.)

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