Northrop Grumman dismisses the Federal Trade Commission’s challenge for the acquisition of Orbital ATK

The CEO of Northrop Grumman Corporation, an American multinational aerospace and defense technology company, Kathy Warden said that she does not expect antitrust review on acquisition of Orbital ATK will have any “adverse impact” on the company. According to a report the CEO Warden was asked to comment on the news that the Federal Trade Commission is initiating a legal action against Northrop Grumman for allegedly violating the 2018 agreement with the U.S. government allowing acquisition of the Orbital ATK firm.

Orbital ATK Inc. was result of two merger companies such as Orbital Sciences Corporation and Alliant Techsystems in 2015. Orbital ATK deals with space, defense, aviation systems for customers around the world and before it was acquired by Northrop Grumman it was the major supplier of large solid rocket motors that used to power the US intercontinental ballistic missiles.

In September 2017 Northrop Grumman announced to acquire Orbital ATK for $7.8 billion while the Northrop was competing with Boeing for Air Force contract to build the next-generation Ground-Based Strategic Deterrent or ICBM. However, soon after Northrop Grumman acquired Orbital ATK to dominate over the solid rocket motors market, Boeing existed the contract race out of disadvantages over Grumman.

Northrop Grumman was obliged to supply solid rocket motors to competitors under the terms and condition of the acquisition “on a non-discriminatory basis.” Also, Northrop had to use firewalls to protect its classified information.The Air Force also awarded Northrop a $13.3 billion contract for GBSD. Meanwhile Boeing stated that Northrop was given an overwhelming amount of advantages.

The Federal Trade Commission was concern about the pro-competitive aspects of the deal. The CEO Warden said regarding FTC, “spent many months looking at the pro-competitive aspects of the deal, which there were many, and any anti-competitive risk before they approved the deal…During this period, the government identified only one concern, and it was around solid rocket motors. And so we agreed to a consent order to address that concern. Over the past four years, we’ve executed an extensive compliance program and worked with the government very closely in line with the terms of the order.”

Reportedly even when the U.S. government approved the Northrop’s acquisition of Orbital ATK, the FTC sued to block the acquisition on the grounds that it will create monopoly for rocket and missile propulsion system in January, 2022. The FTC’s Chair person Lina Khan said that the  agency would challenge any anti-competitive industry merger.