NEW: FTC Chair Khan Shares Warren's Concerns About Giant Defense Industry Mergers
Warren Statement: “FTC and Congress need to make major antitrust reforms in order to protect national security and cut costs for American taxpayers...”
Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today released a response from Federal Trade Commission (FTC) Chair Lina Khan to the Senator’s July 16th letter raising questions about national security and competitiveness concerns with regard to giant defense industry mergers.
Senator Warren asked the FTC chair to re-evaluate the effectiveness of the antitrust agency’s use of behavioral remedies to protect competition and prevent monopolistic behavior in the defense industry. Such remedies attempt to protect competition by preventing a newly merged firm from using competitively sensitive information to the detriment of its rivals, but studies have found these remedies ineffective. In her response, Chair Khan agreed with Senator Warren that behavioral remedies "have often failed to prevent the merged entity from engaging in anticompetitive tactics," and wrote that structural remedies (or divestitures) in the context of horizontal transactions may also "prove inadequate." Chair Khan also reported that she is not aware of the FTC ever conducting retrospective reviews of vertical transactions in the defense sector and that the FTC does not require approval from affected government agencies -- like the Department of Defense -- before completing its assessments.
Statement from Senator Warren:
“Given the waves of defense industry mergers that have slashed competition and reduced the number of major firms tenfold, both the FTC and Congress need to make major antitrust reforms in order to protect national security and cut costs for American taxpayers. The FTC can do more to address these concerns, including opposing transactions that would typically be subject to bogus structural or behavioral remedies and retrospectively unwinding anticompetitive mergers. During this period of rampant industry consolidation, Congress should give the FTC greater power to reject problematic mergers outright.”
Senator Warren’s initial letter cited and was sent on the heels of the FTC’s investigation of Lockheed Martin's proposed acquisition of Aerojet Rocketdyne, the last remaining independent domestic propulsion supplier.
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