DOJ Seeks to Prevent Merger of Competing Government Contractors

The DOJ filed a civil antitrust lawsuit to prevent a government contractor from acquiring its only competitor for a contract to provide the NSA with operational modeling and simulation services.

The DOJ filed the Complaint in the United States District Court for the District of Maryland only 15 weeks after the merger was announced. In the Complaint, the DOJ argued that the two companies are the only competitors for the NSA contract, and that a merger of the two would likely result in (i) higher prices, (ii) lower quality and (iii) less innovation for services that are vital to national security. The DOJ further asserted that prior to the proposed acquisition, the contractor and its competitor engaged in a "winner-take-all" bidding war to win the NSA contract. The DOJ cautioned that if the merger were to occur, there would no longer be any competition for the contract, giving the merged entity a monopoly on the services provided.

Asa result, the DOJ alleged that acquisition would violate Section 1 of the Sherman Antitrust Act and Section 7 of the Clayton Act ("Premerger notification and waiting period").

The DOJ requested relief in the form of (i) disapproval of the merger, (ii) a prohibition on either company from entering into any other form of merger or partnership agreement, (iii) reimbursement of court costs and (iv) any other relief the court deems necessary.