By Andrea Shalal-Esa
WASHINGTON, June 12 (Reuters) – U.S. regulators have opened
a probe into whether a Lockheed-Boeing joint venture that
launches U.S. government satellites into space has flouted
antitrust laws.
The Federal Trade Commission (FTC) is investigating whether
United Launch Alliance (ULA), a joint venture of Lockheed Martin
Corp and Boeing Co, violated federal antitrust
laws by “monopolizing” or restraining competition through an
exclusivity agreement with the maker of the engines used in its
rockets, according to a FTC document obtained by Reuters on
Wednesday.
RD Amross, a joint venture of Russia’s NPO Energomash and
Pratt & Whitney Rocketdyne, a unit of United Technologies Corp
, provides RD-180 engines for ULA rockets.
Industry sources say ULA is preventing RD Amross from
selling the engines to other rocket makers, including Orbital
Sciences Corp, which is trying to break into the
lucrative market for government rocket launches.
Jessica Rye, spokeswoman for ULA, confirmed the
investigation and said the company was cooperating with
antitrust regulators.
“ULA’s contracts to purchase the RD-180 engine are lawful,
pro-competitive and designed to provide the most reliable launch
vehicle possible for critical U.S. government missions,” Rye
said. “Because this is ongoing investigation, it would be
inappropriate for us to comment on specifics.”
Pratt & Whitney spokesman Jay DeFrank said his company is
aware of the investigation and cooperating with U.S. regulators.
The FTC declined comment.
Barry Beneski, a spokesman for Orbital Sciences, said the
company had been contacted by the FTC about the probe.
“We have been contacted by the FTC about their
investigation. However we can’t be more specific than that,”
Beneski said. “In general, the company supports efforts to
ensure there is an open and fair competitive environment in the
market for launch services.”
Lockheed and Boeing formed the joint venture in 2006 after
years of competing for contracts under the Air Force’s Evolved
Expendable Launch Vehicle (EELV) program, which provides launch
services for large military, intelligence and NASA satellites.
The companies won U.S. government’s approval for the venture
by arguing that there was not enough demand for heavy lift
rocket launch services to support two competitors since the
commercial demand they had expected had failed to materialize
for such large rockets.
The U.S. Air Force, frustrated about the high cost of EELV
rocket launches, has in recent years tried to infuse more
competition into the launch service market.
ORBITAL’S ENGINES
Industry sources said the FTC investigation follows repeated
unsuccessful efforts by Orbital to buy the RD-180 engines for
its new medium-lift Antares rocket, which was developed in
partnership with NASA to haul cargo to the International Space
Station. The first Antares rocket was launched from a new
commercial spaceport in Virginia in April.
Orbital ultimately used the AJ-26 engine, a refurbished
Russian engine that is supplied by Aerojet, a unit of GenCorp
Inc, to power the rocket. But that engine is no longer in
production and there are only limited supplies available.
To be a viable competitor in the future, industry sources
say Orbital needs access to the RD-180 engine, the only liquid
propulsion engine in production that is commercially available
and can be used for Orbital’s Antares rocket.
Orbital developed the Antares rocket together with Aerojet
and Alliant Techsystems as a replacement for the Delta
II rocket built by Boeing that has been retired.
Orbital has enough AJ-26 engines to support its resupply
missions for the space station but needs more engines to be a
viable competitor for launches of medium-sized satellites that
do not need larger and more expensive boosters.
Orbital is not seeking to compete directly with ULA for
heavy lift rocket launches, but says it could save the
government money by using the Antares rocket, which costs under
$100 million, to lift smaller payloads into space.
(Additional reporting by Diane Bartz; Editing by Ryan Woo)
