President Biden’s executive order promoting competition by halting the trend toward market concentration is not a blanket prohibition on corporate mergers. In some cases, mergers are necessary to prevent key market segments from consolidating to monopoly. A case in point is the rocket motor business, where dominant player Northrop Grumman could force its sole major competitor, Aerojet Rocketdyne, out of the large solid rocket motor market. This process was already well under way before the Federal Trade Commission allowed Northrop to buy the nation’s biggest rocket motor supplier in 2018. Today, the fate of Aerojet rests largely in Northrop’s hands, which is no way to promote vigorous competition. Allowing Lockheed Martin to acquire Aerojet would restore a level playing field in the rocket motor business, so that competition can continue and innovation can flourish. If the merger does not occur, Aerojet will likely continue to lose ground, and ultimately surrender the market to sole survivor Northrop Grumman. I have written a commentary for Forbes here.
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