U.S. FTC chair calls for tougher stance on defense mergers
WASHINGTON, Aug 12 (Reuters) - U.S. Federal Trade Commission Chair Lina Khan, responding to a letter from progressive Senator Elizabeth Warren, wrote in a letter released Thursday that she believed antitrust enforcers should take steps to block more deals.
The FTC and Justice Department, which share the work of antitrust enforcement, will often have merging companies sell assets or agree to certain practices in order to address competition concerns so that planned deals may to go forward. The FTC, to which Khan was recently appointed as chair, tends to review defense industry deals.
Responding to a letter from Warren about concerns over defense mergers, Khan said studies have shown that divestitures often fell short. "In light of this, I believe the antitrust agencies should more frequently consider opposing problematic deals outright," she said in the letter dated August 6.
She was similarly skeptical of behavioral remedies, saying "behavioral remedies pose significant administrability problems and have often failed to prevent the merged entity from engaging in anticompetitive tactics."
Warren had previously asked the FTC to take a tougher look at defense industry mergers, questioning a proposal from Lockheed Martin (LMT.N) that would allow it to buy Aerojet Rocketdyne Holdings (AJRD.N), the biggest independent maker of rocket motors.
Shares of Aerojet fell more than 4% in afternoon trading once Khan's letter was made public.
Warren had asked the FTC in particular to examine the efficacy of firewalls like those Lockheed proposes to prevent it from gaining a competitive advantage over peers once the deal closes, according to a July 16 letter whose contents were first published by Reuters. read more
The $4.4 billion deal has raised eyebrows because Lockheed would take over a company that produces 70% of the solid fuel rocket motors and other propulsion products used in everything from antiballistic missiles to air-to-air missiles.
The chief executive of one of Aerojet's biggest customers, Raytheon Technologies Corp (RTX.N), said his company would speak with antitrust regulators because of their "concerns" about the deal.
A Lockheed spokesperson said the company expects the deal to close in the fourth quarter.
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