July 11, 2023

Senator Warren, Representatives Deluzio, Pocan, Garamendi Urge DoD to Tighten Up the Merger Review Process and Publicly Disclose Merger Risks

“We are concerned with DoD’s history of flawed merger reviews, and we write to ensure that the Department conducts a careful thorough review of the L3Harris-Aerojet merger.”

Text of Letter (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass), a member of the Senate Armed Services Committee, along with Representatives Chris Deluzio (D-Pa.), Mark Pocan (D-Wis.) and John Garamendi (D-Calif.) sent a letter to the Secretary of Defense, Lloyd Austin, and the Under Secretary of Defense for Acquisition and Sustainment, William A. LaPlante, urging the Department of Defense (DoD) to do a full review of the merger between L3Harris Technologies (L3Harris) and Aerojet Rocketdyne (Aerojet) and disclose any identified concerns to the Federal Trade Commission (FTC), the Department of Justice (DOJ), and the public. The lawmakers called on DoD to provide as much public transparency as possible around their review of the L3Harris-Aerojet merger and similar mergers moving forward in order to protect our national security.

“This transaction would threaten competition and national security, increase prices, reduce innovation, and reduce product quality and create production delays for the defense industrial base,” said the lawmakers. “We urge the DoD to carefully review this deal and disclose any identified concerns to the FTC and the Department of Justice (DOJ), and – consistent with the need to protect national security and other proprietary information – to the public.”

In the letter, the lawmakers highlighted DoD’s own report from last year that noted that due to excessive mergers and acquisition activity, the DoD is being left with fewer suppliers, which in turn creates vulnerabilities within their supply chain. That same report also warned that additional consolidation in this market reduces competition and would have severe repercussions when it comes to our national security. 

“The proposed merger between L3Harris and Aerojet raises serious anti-competitive concerns in an already consolidated market,” the lawmakers wrote. “Waves of merger activity and consolidation have transformed our nation’s defense industry from a competitive market with over 50 firms to an oligopoly of five massive rivals.”

The lawmakers also emphasized Aerojet’s role in this market as companies like Lockheed Martin and Boeing depend on products only produced by Aerojet, putting L3Harris in the position to leverage their control over those products. Shortfalls in the domestic solid-rocket motor industrial base have already prompted DoD to study establishing an additional source. 

In addition to providing information, the lawmakers are asking that “DoD provide as much public transparency as possible – consistent with the need to protect propriety national security and business confidential information – about the findings of its review and its communications with FTC and DOJ.”

Senator Warren has engaged in oversight over corporations and called on government regulators to combat market concentration, monopolies, and anticompetitive practices across the economy:

  • In June 2023, Senators Warren and Mike Braun (R-Ind.), alongside Rep. Garamendi, reintroduced the bipartisan Stop Price Gouging the Military Act, which would close loopholes in current acquisition laws, tie financial incentives for contractors to performance, and provide the Department of Defense (DoD) the information necessary to prevent future rip-offs.
  • On May 25, 2023 Senators Warren, Sanders, Braun, Grassley, and Wyden sent a letter to DoD urging an investigation into contractor price gouging.
  • In January 2023 Senator Warren sent a letter to the FTC urging them to oppose L3Harris Technologies merging with Aerojet Rocketdyne.
  • On March 16, 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and FTC the teeth to reject deals in the first instance without court orders and to break up harmful mergers.
  • In August 2021, FTC Chair Lina Khan sent a letter to Senator Warren saying she shared her concerns about giant defense industry mergers.
  • In July 2021 Senator Warren questioned the effectiveness of behavioral remedies to protect competition and prevent monopolistic behavior in the defense industry ahead of a proposed merger of Lockheed Martin and Aerojet Rocketdyne.