Northrop Grumman’s acquisition of Orbital ATK is raising doubts about the future of competition in the market for large solid rocket motors. The Federal Trade Commission has conditioned approval of the transaction on implementation of measures aimed at protecting Northrop’s competitors in the missile business. However, the Consent Order it has prepared does little to protect Aerojet Rocketdyne, the only other domestic producer of large SRMs. Because Northrop will be both a missile producer and a supplier of SRMs, it is potentially in a position to force Aerojet out of the market. This will all come to a head in the competition to provide a successor to the Minuteman III missile. If the government does not mandate dual sourcing of rocket motors for the new missile, it may unwittingly create a monopoly — and single point of failure — in the large SRM business. I have written a commentary for Forbes here.
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