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Rocket Maker Sues Boeing, Lockheed

California and the West

October 21, 2005|Peter Pae | Times Staff Writer

A Southland rocket maker founded by Silicon Valley entrepreneur Elon Musk filed a federal lawsuit Wednesday accusing the nation's two largest defense contractors of monopolizing the rocket launch business.

The suit by Space Exploration Technologies Corp. of El Segundo marks the latest move by the fledgling company to wrest government rocket work from Boeing Co. and Lockheed Martin Corp.

Musk, who co-founded and then sold Internet-payment company PayPal Inc. to EBay Inc. for $1.5 billion, has risked much of his fortune on the idea of developing low-cost satellite launchers.

His company, also known as SpaceX, has yet to launch its Falcon rocket, but the start-up has complained that Boeing and Lockheed had conspired to keep it out of the government market.

The suit, filed in U.S. District Court in Los Angeles, says SpaceX "has suffered significant injury from Boeing and Lockheed Martin's coordinated efforts to exclude competition from SpaceX and others...."

SpaceX alleges that Boeing and Lockheed have employed "strong-arm tactics to demand that the Air Force grant them exclusive long-term contracts." The Air Force is the largest buyer of rockets to launch military satellites.

Officials from Lockheed, Boeing and the Air Force all declined to comment on the lawsuit Thursday, saying they had not yet seen it.

SpaceX also accuses Boeing and Lockheed of creating a monopoly by agreeing to form a joint venture so that Boeing's Delta 4 and Lockheed's Atlas 5 rockets would be produced under one roof.

The venture, pending government approval, would become the primary provider of rocket launches for the Air Force, NASA and other agencies of the government.

Previously, the Air Force had said that the SpaceX rocket, though promising, has not yet proved it can launch big government satellites that can cost up to $1 billion.

Boeing and Lockheed have insisted that their joint venture was necessary amid a downturn in the telecommunication industry that has damped demand for commercial satellite launches.

Even with the Air Force orders, expected to total more than $30 billion over the next 15 years, there was insufficient demand to justify two distinct U.S. rocket makers, Boeing and Lockheed said.

The SpaceX lawsuit seeks unspecified damages and calls for a court injunction to block the joint venture.

Boeing shares fell $1.07 to close at $67.30, and Lockheed also down $1.07, closed at $61.64.

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