Category Archives: Politics

F-35

FTC Sues to Block Lockheed Martin Corporation’s $4.4 Billion Vertical Acquisition of Aerojet Rocketdyne Holdings Inc.

Agency Seeks to Prevent World’s Largest Defense Contractor from Eliminating Last Independent U.S. Missile Propulsion Provider

February 1, 2022 – Mike Spillan, Editor

Today, the Federal Trade Commission sued to block Lockheed Martin Corporation’s $4.4 billion proposed vertical acquisition of Aerojet Rocketdyne Holdings Inc, the last independent U.S. supplier of missile propulsion systems. Aerojet supplies advanced power, propulsion, and armament systems, which are critical components for the missiles made by Lockheed and other defense prime contractors.

The agency’s complaint alleges that if the deal is allowed to proceed, Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense. This is the agency’s first litigated defense merger challenge in decades.“The FTC is suing to block Lockheed Martin, the world’s largest defense contractor, from eliminating Aerojet, our nation’s last independent supplier of key missile inputs,” said FTC Bureau of Competition Director Holly Vedova. “Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe. If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles. Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation. We cannot afford to allow further concentration in markets critical to our national security and defense.”

The U.S. Department of Defense (“DoD”) reviewed the acquisition and considered the potential impacts of the transaction on national security, the nation’s industrial and technological base, competition, and innovation.

As part this assessment, the DoD facilitated a series of FTC-led interviews with DoD-impacted stakeholders. DoD’s assessment was provided to the FTC for its deliberations and final decision-making.“I deeply appreciate the collaborative relationship between DoD and FTC staff who worked closely throughout this investigation,” said Director Vedova. “The FTC determined that the proposed transaction harms competition for several weapons systems that DoD relies on to defend the nation and there is no sufficient remedy to alleviate those harms.”

Lockheed is the world’s largest defense contractor and a leading missile supplier in a highly concentrated sector. Lockheed, and its U.S missile competitors—Raytheon Technologies, Inc., Northrop Grumman Corporation, and The Boeing Company—act as missile system prime contractors to DoD. These prime contractors are key intermediaries between the U.S. government and the rest of the missile systems supply chain, including the subcontractors such as Aerojet which provide system components to them.

DoD relies on prime contractors to develop, produce, sustain, and source a variety of weapons, including missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Each of these weapons depend on critical propulsion technologies of the type supplied by Aerojet.Aerojet, as a subcontractor, is the last independent U.S. supplier of critical inputs for missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Aerojet and only one other competitor – Northrop Grumman – compete to provide propulsion inputs for missile systems and hypersonic cruise missiles to defense prime contractors.

Aerojet and Northrop Grumman both provide solid rocket motors for missile systems and supersonic combustion ramjets, or “scramjets,” which are air-breathing engines that propel hypersonic cruise missiles. Further, Aerojet is the only proven U.S. supplier of divert-and-attitude control systems that propel missile defense kill vehicles. Lockheed’s proposed acquisition of Aerojet would give Lockheed control over critical propulsion inputs that its rivals require to compete against Lockheed. Specifically, the complaint alleges that the proposed acquisition would give Lockheed the ability and incentive to deny, limit, or otherwise disadvantage competitors’ access to critical propulsion inputs for various weapons systems. The combined firm could disadvantage rivals by affecting the price or quality of the product, the quality of the engineering support, and the schedule and contract terms for developing and supplying it or otherwise disadvantage its rivals.

As a subcontractor, Aerojet also has had access to prime contractors’ sensitive information about technological advancements, cost, schedule, and business strategies. The FTC complaint alleges that post-acquisition, Lockheed would have an incentive to exploit its access to its rivals’ proprietary information to gain an advantage in competitions against them and that the U.S. government, in turn, would be harmed because the cost of missile systems, missile defense kill vehicles, and hypersonic cruise missiles would likely increase, innovation would be lessened, and quality would be reduced, hindering national security and defense interests.

According to the complaint, the proposed transaction could impact research and development as well as innovation into the future, which is vital to ensure that the U.S. remains a leader in these technologies. As an independent supplier, Aerojet has the incentive to allocate its research and development funds based on the potential return the funds would generate regardless of which prime contractor it is supporting.

The complaint further claims that, post-acquisition, the combined firm would be incentivized to allocate Aerojet investment dollars for the combined firm’s benefit alone, which could stifle innovation.

The Commission vote to issue the administrative complaint (a public version of which will be available and linked to this article as soon as possible) and to authorize staff to seek a preliminary injunction was 4-0.The FTC will file a complaint in the U.S. District Court for the District of Columbia seeking a Preliminary Injunction to stop the deal pending an administrative trial. The administrative trial is scheduled to begin on June 16, 2022.

Federal Trade Commission and Justice Department Move to Strengthen Ties

Agencies Launch Joint Public Inquiry Aimed at Modernizing Merger Guidelines to Better Detect and Prevent Anticompetitive Deals at the Cost of Privacy – January 2022

WASHINGTON – The Federal Trade Commission (FTC) and the Justice Department’s Antitrust Division launched a joint public inquiry aimed at strengthening enforcement against illegal mergers.

According to the FTC, recent evidence indicates that many industries across the economy are becoming more concentrated and less competitive – imperiling choice and economic gains for consumers, workers, entrepreneurs, and small businesses. The agencies claim that these problems are likely to persist or worsen due to an ongoing merger surge that has more than doubled merger filings from 2020 to 2021. To address mounting concerns, the agencies are soliciting public input on ways to modernize federal merger guidelines to better detect and prevent illegal, anticompetitive deals in today’s modern markets.

“Illegal mergers can inflict a host of harms, from higher prices and lower wages to diminished opportunity, reduced innovation, and less resiliency,” said FTC Chair Lina M. Khan. “This inquiry launched by the FTC and DOJ is designed to ensure that our merger guidelines accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals. Hearing from a broad set of market participants, especially those who have experienced first-hand the effects of mergers and acquisitions, will be critical to our efforts.”

“Our country depends on competition to drive progress, innovation, and prosperity,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We need to understand why so many industries have too few competitors, and to think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy.”    

Competition is critical to the success of the economy. It ensures that Americans have the freedom to choose among different suppliers and different employers. When businesses face competition, it spurs them to improve their products, develop new ones, and lower prices. Mergers can reduce choices for consumers, workers, and other businesses, leaving them increasingly dependent on larger and more powerful firms that have purchased greater power to dictate the terms of their deals. To protect competition and prevent increased consolidation, Congress passed a series of antitrust laws and authorized the FTC and the Justice Department to enforce them.

The antitrust laws charge the FTC and the Justice Department with preventing mergers that may substantially lessen competition or tend to create a monopoly. Merger guidelines are frameworks for the analysis of mergers under the antitrust laws. The Justice Department first published merger guidelines in 1968, with the goal of providing transparency into the standards it applied in reviewing mergers. Since then, the agencies have published a number of updates, generally specified by whether the transaction is considered horizontal (within the same market) or vertical (within the same supply chain). Although the guidelines identify some of the competitive harms mergers present, markets may fall outside the frameworks under the current approach.

The public inquiry launched today seeks comments on developments in the modern economy and new evidence of mergers’ effects on competition to inform potential revisions to the guidelines. The agencies encourage the public, including market participants, government entities, economists, attorneys, academics, unions, employees, farmers, workers, businesses, franchisees, and consumers, to share feedback, evidence, and ideas that may inform revisions to the guidelines. Some of the specific areas of inquiry on which the agencies are seeking public input and information include:

  • Purpose and scope of merger review: The agencies seek information on whether the guidelines explain and implement the statutory ban on transactions that “may” substantially lessen competition or tend to create a monopoly, and what harms are contemplated by those standards. The agencies further seek input on whether distinctions between horizontal and vertical transactions reflected in the guidelines should be revisited in light of trends in the modern economy.
  • Presumptions that certain transactions are anticompetitive: The guidelines identify certain market circumstances that justify a presumption of competitive harm based on market concentration. The agencies seek information on whether concentration thresholds should be adjusted to improve the efficiency and effectiveness of enforcement, whether alternative metrics or qualitative factors should also trigger presumptions of competitive harm, and evidence regarding the accuracy of such presumptions.
  • Use of market definition in analyzing competitive effects: The agencies seek input on potential updates to the guidelines’ market definition analysis to better account for non-price competition. They also seek to input on when direct evidence of a transaction’s likely competitive effects, such as evidence of head-to-head competition, may eliminate the need for a separate market definition exercise.
  • Threats to potential and nascent competition: The agencies seek input on potential updates to the guidelines’ discussion of potential and nascent competitors, which may be key sources of innovation and competition.
  • Impact of monopsony power, including in labor markets: The agencies seek input on how to address the issue of buyer power in more detail in the guidelines. Labor markets are a key example of buyer power, and the agencies seek information regarding how the guidelines should analyze labor market effects of mergers.
  • Unique characteristics of digital markets: The agencies seek information on how to account for key areas of the modern economy like digital markets in the guidelines, which often have characteristics like zero-price products, multi-sided markets, and data aggregation that the current guidelines do not address in detail.

The Request for Information is available at: https://www.regulations.gov/docket/FTC-2022-0003/document.

The comment period is open for 60 days. Comments can be submitted to regulations.gov and must be received no later than Monday, March 21, 2022. The information will be used by the agencies to consider updates and revisions to the guidelines. If such revisions are contemplated in light of the evidence received and the agencies’ independent research, the agencies will publish proposed guidelines for public comment.

In a press event, Chair Lina M. Khan gave remarks as did Assistant Attorney General Jonathan Kanter. Commissioners Noah Joshua Phillips and Christine S. Wilson issued a statement.

Editorial Note: The Sentinel is deeply concerned about the possibility of any increased governmental “cooperation” when it represents a high likelihood of individual rights being compromised, especially on such a significant scale, and encourages the Reader to examine the intended operational changes and, if you are concerned as well, visit the Public Comment site at: https://www.ftc.gov/policy/public-comments.

Original source material from this post can be found here.

Pelosi Rides Rough Road To Speaker As More Democrats Threaten To Withhold Support

More Democrats threaten to withhold support for Pelosi’s House Speaker role

WASHINGTON – A group of nine Democrats threatened Friday to withhold support for Nancy Pelosi’s House Speaker bid, creating a potential roadblock for the California Democrat who has been lobbying for weeks to get her old role back.

Pelosi was already fighting for support from a group of 16 Democrats who penned a letter, declaring they wouldn’t support the minority speaker and instead called for new leadership.

The new group of nine Democrats from the Problem Solvers Caucus threatened to withhold support for Pelosi until she agrees to a list of demands that includes House rule changes that could potentially allow for more bipartisan legislation to pass.

The group, in a statement, said it would “only vote for a Speaker candidate who supports ‘Break the Gridlock’ rules changes.”

The group met with Pelosi last week after sending her a letter about calls to change House rules that would allow all members to push bills in the House, which currently is only done by the leadership, according to CNN.

“While we appreciate Leader Pelosi’s broad commitment to our effort, we have yet to receive specific commitments to our proposed rules changes that would help ‘Break the Gridlock’ and allow for true bipartisan governing in this new era of divided government,” a statement from the group reads. “Without specific changes, we will face more of the same — small pockets of extreme ideologues will continue to block the will of the commonsense majority.”

While Pelosi is widely expected to win the House Speaker nomination next week in her caucus, she faces a tougher battle when the full House votes on her nomination in January. She will need a majority, 218 votes, to win the position.

The caucus’ threat to withhold nine votes along with the 16 members who signed a letter last week could be a potential roadblock for Pelosi. Democrats will hold at least 234 seats in the House when new members are sworn in, meaning she can only afford to lose 16 votes.

Pelosi still has weeks to lobby those on the fence before the final January vote.

Already some of those who voiced opposition have caved and now are supporting Pelosi for the role. Rep. Brian Higgins, D-N.Y., who was one of 16 to sign the opposition letter last week, reversed his position after Pelosi said she was open to Medicare for people over 50 and an infrastructure bill, something many Democrats have said would likely receive bipartisan support.

The Problem Solvers Caucus has pushed for ‘Break the Gridlock’ rule changes, which Politico notes include proposals that would allow individual House members to propose bipartisan bills, which over the years have been overlooked.

The caucus said in its statement that this month’s midterms showed that “the American people have had enough of obstructionism and pure partisanship” and instead want Congress to govern and pass meaningful legislation.

“Although we are at a stalemate in our discussions, and therefore cannot support Leader Pelosi for Speaker at this time, we will keep working with the Leader and others in hope of reaching consensus on specific rules changes for more bipartisan, common sense governing,” the group said.

Republicans and Democrats Find Common Ground: Sessions Resigns

Jefferson Beauregard Sessions III has resigned as attorney general effective immediately after being asked to do so by President Trump, ABC News has reported.

“At your request, I am submitting my resignation,” Sessions wrote in an undated letter to the president.

“Since the day I was honored to be sworn in as Attorney General of the United States, I came to work at the Department of Jusitce every day determined to do my duty and serve my country,” Sessions wrote. “I have done so to the best of my ability, working to support the fundamental legal processes that are the foundation of justice.”

Trump tweeted that Sessions’ chief of staff, Matthew G. Whitaker, will serve as acting attorney general.

On Twitter, Trump thanked Sessions for his service and announced that Sessions’ chief of staff, Matthew G. Whitaker, will serve as acting attorney general and that a permanent replacement will take place at a later date.

Previously, Trump would not say whether Sessions — who he has repeatedly criticized throughout his tenure — would be safe in his job after the midterm elections.

“I just would love to have him do a great job,” Trump told Bloomberg News on Aug. 30.

“I’d love to have him look at the other side,” Trump added, underscoring his demand for Sessions to reopen the investigation into Hillary Clinton and the origins of the Russia investigation.

Earlier in August, in an interview with Fox News, Trump lashed out at Sessions, saying he failed to take control of the Department of Justice.

In his most forceful public rebuke to date, Sessions hit back shortly after, saying he “will not be improperly influenced by political considerations.”

Sen. Lindsey Graham of South Carolina, a close Trump confidante, predicted Sessions would be out of his job in the near future, but insisted Trump should wait until after November’s midterm elections.

“The president’s entitled to an attorney general he has faith in, somebody that’s qualified for the job, and I think there will come a time, sooner rather than later, where it will be time to have a new face and a fresh voice at the Department of Justice,” Graham said at the time. “Clearly, Attorney General Sessions doesn’t have the confidence of the president.”

Tensions developed between Trump and Sessions in March 2017, when Sessions recused himself from the Russia investigation and Deputy Attorney Rod Rosenstein took over.

Rosenstein soon appointed Special Counsel Robert Mueller to oversee the Russia probe, angering the president.

Trump repeatedly called on Sessions to end the probe on Twitter and TV interviews.

“…This is a terrible situation and Attorney General Jeff Sessions should stop this Rigged Witch Hunt right now, before it continues to stain our country any further. Bob Mueller is totally conflicted, and his 17 Angry Democrats that are doing his dirty work are a disgrace to USA!” Trump tweeted on August 1st.

Sessions was the first sitting U.S. senator to endorse then-candidate Trump.

Sessions parlayed that support to become attorney general, a role he held at the state level in Alabama.

The president’s priorities and Sessions’ mirrored each other. Both tough on immigration, the opioid crisis, and crime, both men have a pro-law enforcement perspective.

Aside from the president lashing out at him, Sessions’ tenure as attorney general has largely been focused on carrying out the policies of the administration and most notably, the zero-tolerance immigration policy which lead to the separation of families on the U.S.-Mexico border.

When Attorney General Sessions announced the policy in May, he warned those coming to the country illegally that the administration would prosecute them.

“I have put in place a ‘zero tolerance’ policy for illegal entry on our Southwest border. If you cross this border unlawfully, then we will prosecute you. It’s that simple. If you smuggle illegal aliens across our border, then we will prosecute you. If you are smuggling a child, then we will prosecute you and that child will be separated from you as required by law,” he said at an event in San Diego.

The policy was criticized by Democrats and Republicans alike.

Sessions also sent more judges and prosecutors to the southern border to help with processing illegal border crossers.

The attorney general also focused on pro-law enforcement priorities and often echoed the president in touting law enforcement’s objectives.

“Let me say this loud and clear: as long as I am the Attorney General of the United States, the Department of Justice will have the back of all honest and honorable law enforcement officers,” Sessions said at the 25th Annual Top Cops Awards in May.

Sessions was also a regular steward for rigorous opioid prosecution. Just recently, in Cleveland, Sessions announced four opioid cases, each targeting the selling and distribution of opioids, something that he stressed was important to the president.

It has been commented upon by many that Sessions’ actions as attorney general in regards to treatment of federal sentence reform legislation and his draconian approach to treatment of immigrants already within America’s borders may have cost the Republican party control of the House in yesterday’s elections.

Election Results: Democrats Gain Control of House But Republicans Cling to Senate

After two years of Republicans being in complete control, Congress is once again split in the Capitol.

After two years of Republicans being in complete control, Congress is once again split in the Capitol.

Democrats will take back control of the House of Representatives for the first time in eight years, but Republicans held their Senate majority as voters rendered a mixed verdict in the first nationwide election of Donald Trump’s turbulent presidency.

Poll results are still coming in but the Democrats picked up more than the 27 seats they would need to take control of the House of Representatives.

It was a historic night for women in the House of Representatives, as more than 100 won their races. The previous record was 84.

It was also a historic night for first-time female candidates, with several political newbies flipping GOP-held congressional seats, according to ABC News’ analysis.

Perhaps the biggest new political star among them is New York’s 29-year-old Alexandria Ocasio-Cortez, a liberal firebrand from the Bronx. Also among them are the first two Native American women elected to the House – Democrats Sharice Davids of Kansas and Deb Haaland of New Mexico – and the first two Muslim-American women, Rhasida Tlaib of Michigan and Minnesota’s Ilhan Oman.

Despite major victories in the House, other results allowed room for the GOP to also call the night a success. The results highlighted an extraordinary realignment of U.S. voters by race, sex, and education. Republicans maintained their strength in conservative, rural states, while Democrats made inroads across America’s suburbs.