Mergers and acquisitions will continue to be an important tool for defense and aerospace companies in accelerating change, improving their performance, reducing costs, and providing the rapid innovation demanded by the Pentagon. Mergers and acquisitions may be particularly significant is in bringing unique products to bear on critical defense problems. The acquisition of small and mid-sized companies) by larger firms is an important way of providing them with the access to customers, financial and human resources, and management support required to enter and survive in the defense market. Over the past several years, the Federal Trade Commission (FTC) has pursued several misguided antitrust investigations and suits. A current case is that of biotech company Illuminata’s proposal to re-acquire Grail, the inventor of an advanced cancer screening test. The recurring theme in these actions is the need to reign in corporations based on size or market presence. There is a real danger in allowing the FTC to set the kinds of limits on vertical mergers that it is seeking in the case of Illumina and Grail. Not only could this impair the ability of the medical system to detect cancers more easily, but it could also set a dangerous precedent for vertical mergers in the defense, aerospace, and other sectors. I have written on the danger posed by FTC overreach to the Nation’s security and health here.
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