Lockheed Martin and Northrop Grumman have issued an official response to the US Government's anti-trust complaints against their proposed merger, arguing that the deal is necessary if they are to compete with Boeing in military aircraft and Raytheon in defence electronics.
The complaint was filed with the court on 10 March by the US competition watchdog, the Department of Justice, and backed by the Pentagon.
A start date for the hearing has now been set for 8 September and is likely to last around six weeks, with a final judgement not promised before the end of December.
The Government maintains that the merger would result in "-unprecedented vertical and horizontal concentration in the defense industry". Its challenge cites combat aircraft, electronic warfare and airborne early warning as areas where competition could suffer.
The concentration of stealth technology within the two groups is also mentioned. Northrop Grumman is building the B-2 bomber, but lost the F-117 fighter project to Lockheed Martin, which also holds the F-22. It is unclear what classified programmes the two groups may hold.
In their joint statement, the companies claim that such arguments refer to past contract competitions. "Northrop Grumman is no longer a competitor to supply military aircraft," they say, noting that the company elected not to bid as a prime contractor for the Joint Strike Fighter programme.
They add that Boeing is now twice the size of Lockheed Martin in military aircraft, following its McDonnell Douglas and Rockwell acquisitions. In defence electronics, they claim that Raytheon's $15 billion annual sales would still dwarf their own post-merger tally of $11 billion. In the key areas of airborne radars and electro-optical countermeasures, the companies argue that Raytheon has emerged as the strongest future competitor.
The response saves its strongest wording for the "particularly flawed" claims on vertical integration, claiming that it would be "economic suicide" for the newly merged group to discriminate in favour of in-house suppliers or to stop offering systems to other prime contractors and so risk of losing positions on future procurements.
Source: Flight International
