11.02.2006
Commenting on ULA
The public comment period is closed and the FTC has posted feedback submitted in connection with the consent agreement in the matter of United Launch Alliance -- the proposed joint venture between Lockheed and Boeing.Here are the comments filed by Northrop Grumman (by VP and general counsel Stephen D. Yslas) and SpaceX (by VP for international and government affairs Lawrence H. Williams).
As expected, and as it has argued all along (including in federal court,) SpaceX comments that the ULA merger "violates the United States antitrust laws" (that's right, section 7 of the Clayton Act and section 5 of the FTC Act, and Larry Williams does not mind repeating himself on this). Further, "DoD' s unsubstantiated assertion" of "national security benefits flowing from ULA" is "not an effective defense against an otherwise illegal merger."
SpaceX says the consent agreement "wholly ignores any concerns about the creation of a horizontal monopoly in the EELV market."
SpaceX concludes the FTC "should not allow the ULA, an anti-competitive venture, to proceed" however, if the Commission does permit the JV to go forward, it must take further steps to limit ULA's monopoly power by conditioning its approval on Boeing's and Lockheed Martin's acceptance of a consent decree containing certain "remedial provisions" to "help mitigate the loss of competition." SpaceX's proposed remedies include: "prevent the ULA from using its monopoly power and government subsidies to distort competition outside of the defense market" by requiring "total cost-disclosure" and "reimbursement." It also suggests eliminating multi-year launch allocations. Read the whole comment.
For its part, Northrop tells the FTC, "the creation of the durable launch services monopoly embodied within the ULA will end Northrop's ability to rely on the safeguard of competition; but, it will not end Northrop's dependence on Lockheed, Boeing and the ULA for launch services."
Northrop agrees with Commissioner Harbour's concurring statement that "a highy regulatory system of oversight by a 'compliance officer' appointed by the Secretary of Defense... would not be considered an effective remedy" against competitive harm.
The company spends a good part of its 4-page submission discussing its concerns about the confidentiality provisions of the proposed ULA consent order and the Transition Services Agreements. "In fact, it appears there is a hole in the confidentiality wall through which Northrop information may pour."
The company is concerned about Boeing's and Lockheed's "incentive to share confidential Northrop information" and asks how its confidentiality will be protected. It also wants to see a current version of the Boeing-Lockheed Master Agreement, as amended. (So would I.)
That's it. Only two sets of comments submitted. I'll check back to see if the FTC adds others. And I'm surprised Citizens Against Government Waste, for example, an outspoken critic of the ULA deal did not weigh in. (No matter, CAGW is cited on page one of SpaceX's comments.)
It's FTC's move. (And I'll keep my comments to myself about what I think that may be.)
