FTC, DOJ Issue Joint Statement on Preserving Competition in the Defense Industry

Statement Highlights Factors Key to Assessing Risks Associated with Further Consolidation

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The Federal Trade Commission and the Department of Justice today issued a joint statement reaffirming the importance of preserving competition in the defense industry. The statement describes the agencies’ framework for analyzing defense industry mergers and acquisitions and emphasizes that the antitrust agencies work closely with the Department of Defense, which is in a unique position to assess the impact of proposed defense industry consolidation on its ability to fulfill its mission.

“Competition is the essential ingredient that leads to high-quality products at lower prices,” said FTC Chairwoman Ramirez. “This is especially critical when it comes to America’s defense industry, which provides the equipment and supplies that our men and women in uniform rely on every day.”

“The Department of Justice is committed to preserving competition for current and future defense procurement. In light of recent speculation about possible future consolidation, we thought it timely to reinforce that message,” said Assistant Attorney General Bill Baer in charge of the Department’s Antitrust Division. “Working with our colleagues at the Department of Defense, our mission in reviewing proposed defense industry consolidation is to ensure that our military continues to receive the most effective and innovative products at competitive prices in both the short- and long-term thereby protecting our national security, American soldiers, sailors, marines, and air crews, and our nation’s taxpayers.”

In the joint statement, the federal antitrust agencies emphasize that the particular aspects of the defense industry, such as high barriers to entry, the importance of investment in research and development and the need for surge capacity, can be central to reviewing defense industry mergers and acquisitions. The joint statement also states that defense industry mergers should not adversely affect long-term innovation and must maintain a sufficient number of competitors, including both prime and subcontractors, to ensure that competition for current, planned and future procurement remains robust. The antitrust agencies will continue their close working relationship with the Department of Defense as established by the Defense Science Board Task Force on Antitrust Aspects of Defense Industry Consolidation, and are committed to the long-standing practice of giving the Department of Defense's assessment substantial weight in areas where it has special expertise and information, such as national security.

The Commission vote approving the statement was 4-0.

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