On April 12, 2016, the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) Antitrust Division issued a joint statement explaining the standards they apply in reviewing proposed mergers and acquisitions in the defense industry. Although the statement reaffirmed that the agencies’ joint 2010 Horizontal Merger Guidelines continue to provide the framework for analyzing transactions in all industries, including the defense industry, the FTC and DOJ also acknowledged their reliance on the U.S. Department of Defense’s (DoD) “expertise, often as the only purchaser, to evaluate the potential competitive impact of mergers, teaming agreements, and other joint business arrangements between firms in the defense industry.”

Commenting that “[m]any sectors of the defense industry are already highly concentrated” and “[o]thers appear to be on a similar trajectory,” the agencies’ statement emphasized that they “will not hesitate to take appropriate enforcement action, including a suit to block” a transaction that “threatens to harm innovation, reduce the number of competitive options needed by DoD, or otherwise lessen competition.”