The potential merger of Tesla Inc. (NASDAQ:TSLA) and Space Exploration Technologies Corp. (NASDAQ:SPCX) could reportedly face extensive regulatory reviews.
A former Justice Department official told Semafor that regulators could characterize the transaction as a potentially problematic vertical merger. He said that while vertical mergers can improve supply-chain efficiency, regulators could challenge a Tesla-SpaceX deal over potential "vertical foreclosure" if Tesla gains exclusive access to SpaceX technology like Starlink, putting rival electric and self-driving carmakers at a competitive disadvantage.
The outcome would depend on the hypothetical deal’s terms, and whether President Donald Trump-aligned antitrust enforcers are willing to challenge Tesla and SpaceX CEO Elon Musk, a major Republican donor, the report added.
Democrats Could Probe Musk Merger
If Democrats regain control of the House next month, Musk could face congressional investigations and heightened scrutiny of any plans to merge his companies. Sen. Cory Booker (D-N.J.) told Reuters that antitrust agencies worldwide would examine the deal. He also pointed to national security concerns tied to Musk’s control over critical infrastructure.
Booker said that when a single person controls the infrastructure on which governments and militaries depend, “his business decisions become national security decisions, too."
Reuters also reported that Tesla’s China operations and SpaceX’s military ties through Starlink and the Pentagon could complicate a merger, potentially drawing global antitrust scrutiny over its impact on the auto, AI and aerospace industries.
SpaceX and Tesla did not immediately respond to Benzinga’s request for comments.
Musk Backs Tesla-SpaceX Merger, But No Deal Yet
On Tuesday, Elon Musk said SpaceX and Tesla have each formed special committees to evaluate a potential merger between the two companies. However, he cautioned against treating a deal as certain.
Musk said he supports the deal, calling it “a good idea." However, he noted that it would require approval from 50% of all Tesla shares, calling it "quite a high hurdle to try to achieve."
The billionaire said the companies could collaborate on superintelligence, chip design, the Terafab project, robotics and Starlink connectivity, but stressed that their special committees have yet to agree on any transaction terms, with no guarantee of a deal.
Meanwhile, Elon Musk also vowed to identify and target the people he believes are directing his critics, saying he would go after those "pulling the strings" rather than just their "puppets." His remarks followed a report that Democrats could investigate him if they win control of Congress.
Price Action: Year-to-date, Tesla’s stock has declined 17.6%, as per Benzinga Pro, while SpaceX stock lost 8.3%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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