{"id":18719,"date":"2021-07-16T09:00:00","date_gmt":"2021-07-16T09:00:00","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2021\/07\/16\/the-ftcs-take-on-vertical-mergers-acquisitions-is-misguided\/"},"modified":"2026-08-07T21:44:57","modified_gmt":"2026-08-07T21:44:57","slug":"the-ftcs-take-on-vertical-mergers-acquisitions-is-misguided","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/commentary\/2021\/07\/16\/the-ftcs-take-on-vertical-mergers-acquisitions-is-misguided\/","title":{"rendered":"The FTC\u2019s take on vertical mergers, acquisitions is misguided"},"content":{"rendered":"\n

Across industries, the U.S. Federal Trade Commission recently looked askance at vertical mergers, those in which a company buys another having a noncompeting technology, component or other aspect of the supply chain needed for a common good or service. This is an overreach by the FTC that puts the fundamentals of America\u2019s innovation ecosystem at risk. Not only does discouraging vertical mergers and acquisitions<\/a> stifle the innovation engine of American growth, but it also jeopardizes our national security.<\/p>\n\n\n\n

Unlike the past \u2014 when companies like AT&T had Bell Labs, or the U.S. government made large investments in research and development to push advances in military technologies and then spun those off into the commercial economy \u2014 much of today\u2019s innovations are driven by startups and smaller companies. Major corporations still have in-house innovation organizations, but more often the model now is to buy innovation through M&A.<\/p>\n\n\n\n

Target companies and their investors make big bets, often longshot bets, on emerging technologies and\/or proprietary capabilities. Once considered proven, those technologies drive a company\u2019s attractiveness and valuation to other industry players. In this way, risk-taking is rewarded and innovations are onboarded and scaled, driving growth on the commercial side and superior capabilities on the national security side.<\/p>\n\n\n\n

The FTC has an important function protecting consumers from anticompetitive actions that could raise prices and stifle innovation. Unfortunately, the FTC\u2019s recent actions are a grievous overreach that hurt U.S. global competitiveness \u2014 increasing the costs to American businesses while ceding time to global competitors like China to catch up and swallow market share, or field competing capabilities.<\/p>\n\n\n\t