DOJ files antitrust suit to block Booz Allen's acquisition of EverWatch

05 July 2022 2 min. read
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The US Department of Justice has filed a civil antitrust lawsuit to block Booz Allen Hamilton’s proposed acquisition of cybersecurity firm EverWatch.

The DOJ complaint, filed last Wednesday in a US District Court in Maryland, alleges the merger would eliminate competition for a defense contract with the National Security Agency (NSA), leaving the agency to face a monopoly bidder.

According to the DOJ, the NSA periodically issues a contract for provision of operational modeling and simulation services in support of signals intelligence missions. Booz Allen and EverWatch previously competed head-to-head to win this contract, and shortly before the scheduled request for proposals, Booz Allen decided to buy its rival, the DOJ said in a press release.

The department alleges the merger agreement violates Section 1 of the Sherman Act by reducing each company’s incentive to bid aggressively and violates Section 7 of the Clayton Act by substantially lessening competition.

DOJ files antitrust suit to block Booz Allen's acquisition of EverWatch

“Booz Allen’s agreement to acquire EverWatch imperils competition in a market that is vital to our national security,” said Jonathan Kanter, assistant attorney general in the DOJ’s antitrust division. “Both the acquisition agreement and the underlying transaction violate federal antitrust law.”

Jessica Klenk, a Booz Allen spokesperson, on Thursday responded, “We strongly disagree with the Department of Justice’s characterization of the proposed $440 million, approximately 500-person EverWatch transaction. We believe the acquisition would bring together two companies with complementary capabilities to support our collective national security interests and would enhance competition overall in an industry that is highly competitive.”

The McLean, VA-based management and technology consultancy intends to defend itself against allegations of anticompetitive behavior.

The Biden administration has in recent months been stepping up efforts to tackle corporate anticompetitive behavior. The DOJ in in February issued a report stating consolidation in the government contracting industry poses risks to national security and the US economy. A month before the DOJ report, the Federal Trade Commission blocked Lockheed Martin’s proposed $4.4-billion acquisition of Aerojet Rocketdyne Holdings.