Lina Khan, chairman of the Federal Trade Commission (FTC), said recently that antitrust law enforcement officers should block competitive mergers and acquisitions more frequently, rather than relying on traditional remedies to solve transaction problems and then approve them. This view may give defense giant Lockheed Martin CorpA major acquisition brought pressure.
In a letter to Massachusetts Senator Elizabeth Warren, Lena Khan outlined her concerns about common steps taken by the Justice Department and FTC to settle mergers and acquisitions investigations. Warren wrote to the Justice Department about mergers and acquisitions in the defense industry.
FTC is currently investigating Lockheed Martin Corp's $4.4 billion acquisition of Aerojet Rocketdyne Holdings. The acquisition is seen as a preliminary touchstone of whether U. S. President Joe Biden will control a merger between defense contractors.
Khan said she was skeptical of the traditional practice of imposing conditions on the operation of the merged company, which is called behavioral remedy, adding that divestiture is the most common measure taken by companies to win merger approvals. that could also be problematic.
While structural remedies are usually better documented than behavioural remedies, studies have shown that divestitures may also prove inadequate in the face of illegal mergers, Khan wrote in the Aug. 6 letter. "in view of this, I think antitrust authorities should consider directly opposing problematic transactions more frequently."
'Behavioral remedies are difficult to monitor and often fail to stop expanded companies from engaging in anti-competitive behavior, 'Mr. Khan said in the letter. She said she was considering whether the FTC should abandon its reliance on external supervisors to prevent violations of conditions of conduct.
"I doubt whether the behavioural remedies themselves are sufficient to prevent damage caused by vertical mergers," she said. This is especially true for vertical mergers and acquisitions of large companies that have great market power at one or more levels of the supply chain. The greater the market share, the greater the risk that vertical mergers will lead to reduced competition after the merger. "