U.S. Approves Boeing-Lockheed Rocket Venture Despite Concerns

While acknowledging the deal would deliver a severe blow to competition, U.S. authorities have approved a joint venture for rocket launching of aerospace giants Boeing and Lockheed Martin. The Federal Trade Commission announced Oct. 3 that it cleared the United Launch Alliance (ULA) of the two firms after the Pentagon argued the deal would "advance national security."

The FTC, however, acknowledged that the merging of the units would "cause significant anticompetitive harm" and set forth conditions aimed at mitigating concerns about competition. The approval came at the conclusion of an apparent clash between antitrust regulators and the Defense Department over the plan announced in May 2005 by Boeing and Lockheed Martin for launching of defense satellites.

The FTC said it concluded that the merger would violate U.S. antitrust laws "by substantially lessening competition in the U.S. markets for government MTH (medium-to-heavy) launch services and government space vehicles," according to an FTC statement. "The consolidation of the nations only two suppliers of government MTH launch services is likely to cause significant anticompetitive harm. In its analysis of the transaction, however, the Commission also noted that national security issues are also central to a complete consideration of the proposed joint venture."

The statement said the Defense Department "informed the Commission that the creation of ULA will advance national security by improving the United States' ability to access space reliably." The FTC said it ordered the new joint venture to "cooperate on equivalent terms with all providers of government space vehicles," and "provide equal consideration and support to all launch services providers."

The company also "must safeguard competitively sensitive information obtained from other space vehicle and launch services providers," the FTC said.

Despite the approval, the FTC's competition office said the U.S. government "is unlikely to benefit from much of the cost savings that may be generated by the transaction."