Defense, Inc.

BALTIMORE: It's not suprising that the Federal Trade Commission is expected to approve the proposed $7.9 billion merger of Lockheed Martin, the number one U.S. contractor, with sixth-ranking Northrop Grumman, since the U.S. is taking the position in the post Cold War era that preserving critical technologies is more important than avoiding monopolies. Observes TIME's Mark Thompson: "The argument here is that fewer efficient companies are better than more inefficient ones." Besides, when was efficiency ever an issue in the defense industry? While such a deal in any other sector would spark worries about concentration of market share and reduced competition, the classic rules of economics have long been suspended in the defense industry, Thompson notes. "There's just one customer: the government. It's never been that competitive to begin with." If the merger comes off, the Pentagon will be mightily dependent upon three big defense contractors: Lockheed/Northrop, Boeing/McDonnell and Raytheon, which recently put in a bid for General Electric's Hughes Electronics. Maybe then they will merge.