DoD gives go-ahead to Boeing/Lockheed joint venture, but rivals believe that recuced competition will distort market
National security outweighed loss of competition in the Federal Trade Commission’s (FTC) decision to approve the United Launch Alliance (ULA) joint venture between Boeing and Lockheed Martin to launch satellites for the US government. But competitors express concerns the deal could still distort the launch market.
Despite determining that the merger of Boeing’s Delta IV and Lockheed’s Atlas V expendable launch vehicle businesses could severely reduce competition for US government launches, pushing up prices, the US Department of Defense accepted the argument that one launch team operating two different boosters would increase the efficiency and reliability of access to space for national security needs.
As a result, the FTC’s proposed consent order, to which the two companies have already agreed, is intended to limit “ancillary competitive harms” identified by the DoD. These include the possibility that Boeing and Lockheed as both satellite manufacturers and co-owners of ULA could lock out competing suppliers of launchers and space vehicles for US government missions.
The FTC requires ULA to co-operate equally with all satellite suppliers, while Boeing and Lockheed must provide equal consideration to all launch providers for satellites delivered in orbit. All three entities are required to safeguard competitive information received from other launch and space vehicle providers. The DoD, meanwhile, says new competitors will have an annual opportunity to qualify for launch service contracts.
“The FTC recognised in its decision that there are significant competitive concessions with this transaction,” says Lawrence Williams, international and government affairs vice-president for low-cost launch provider SpaceX, which opposed the deal.
“The FTC told us it is a commitment by the US DoD that they ensure fair and open competition. They are relying on the DoD’s commitment that they are taking action to make the playing field fair and level. We plan to work with the DoD to get the [FTC’s] actions implemented [so we can] compete for future expendable launch vehicle missions,” Williams adds.
Boeing and Lockheed will consolidate their launch vehicle engineering and manufacturing facilities and workforce to save money and reduce the amount of government subsidy currently required to maintain the infrastructure required for assured access to space. The DoD, however, concluded the promised savings would not outweigh the potential anti-competitive effects of the joint venture, including higher launch prices. Williams says: “We want to compete on a level playing field. But this [ULA] subsidy is being justified on the basis of no competition.”
Source: Flight International
