It was, therefore, something of a surprise to me that about a year ago the two companies had managed to set aside their differences and agreed to merge their respective government rocket businesses.
It came as an even larger surprise that the Federal Trade Commission -- the agency charged with protecting the American consumer against monopolies -- actually approved the merger this week.
To be fair, the FTC claims that the merger will save the U.S. government $150 million. It further added that it was taking this unusual action at the bequest of the Defense Department. FTC Commissioner Pamela Jones Harbour she said that she "lacked the technical expertise to second-guess DoD's conclusion that allowing the [monopoly] is the best way to preserve national security and protect the public interest."
That's funny. I thought that was why the FTC had such a large staff -- to look into just such issues. In fact, according to a Washington Post article, FTC staffers, after reviewing the deal, did express concern that it would likely lead to both higher prices and lower quality!
Then there's the letter written this past summer by the assistant director of the FTC's Bureau of Competition, the government official openly questioning the merger. He wrote, "Here, the competition that would be lost is significant, and the economic benefits that may materialize are unlikely to trump the transaction's harm to competition."
I don't know about you, but that leaves me wondering if the supposed cost savings will ever materialize.
The U.S. Air Force alone is expected to launch more than two dozen satellites in the coming year, and numerous other weather monitoring and intelligence satellites will also be launched. In short, there doesn't appear to be any great shortage of business opportunities in the government rocket launch industry.
The bottom line is that this deal is good for Lockheed Martin and Boeing shareholders, but bad for all of us hardworking taxpayers who are going to get blasted with higher-than-necessary prices for all future satellite launches.
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With bureaucratic friends like the FTC, Fool contributor Jack Uldrich wonders why he needs any enemies. He does not own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.