Orbital ATK's missile systems business is at the center of Northrop's acquisition of the company. (Orbital ATK)
The Federal Trade Commission (FTC) on Tuesday evening approved the acquisition by Northrop Grumman of Orbital ATK contingent on Northrop Grumman agreeing to operate its new solid rocket motor (SRM) business independently to avoid anti-competitive behavior.
Northrop Grumman on Wednesday afternoon after the close of stock markets on the East Coast completed its $7.8 billion transaction for Orbital ATK.
To enforce a firewall around the SRM business, which Northrop Grumman is getting through the acquisition, the Defense Department’s Undersecretary of Defense for Acquisition and Sustainment will appoint a compliance officer to ensure the company complies with the FTC’s order.
The FTC's vote on the consent order was unanimous; the group saying that Orbital ATK is “the premier supplier of SRMs,” which are essential for missile systems.
Without an order to put a firewall around the SRM business, “the acquisition would provide Northrop with the incentive and ability to harm competition for missile contracts by either withholding access to its solid rocket motors or increasing SRM prices to competitors,” the FTC said. “As a result, competitors would be forced to raise the prices of their missile systems, invest less aggressively to win missile programs, or decide not to compete at all, which, in turn, would decrease competitive pressure on Northrop.”
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