In a settlement announced today with the Federal Trade Commission, S.C. Johnson has agreed to divest a portion of the assets it would gain in its $1.125 billion acquisition of DowBrands, including Dow’s "Spray 'n Wash," "Spray 'n Starch" and "Glass Plus" brands. The divestiture would settle FTC charges that S.C. Johnson’s purchase would adversely affect competition and potentially raise the prices U.S. consumers pay for soil and stain removers and glass cleaners, two widely-used household cleaning products.
Soil and stain removers are products used by consumers with laundry detergent to remove specific and isolated stains from clothing. The Commission’s investigation showed that S.C. Johnson, the maker of "SHOUT," and DowBrands, the manufacturer of "Spray 'n Wash," are the two leading suppliers of soil and stain remover products in the United States. The companies also compete directly as the two leading manufacturers of glass cleaner products -- S.C. Johnson sells "Windex" and DowBrands markets "Glass Plus" -- which are used by consumers to clean glass, mirrors and other surfaces.
"This settlement ensures that millions of American consumers who buy these products will still be able to do so at competitive prices," said William J. Baer, director of the FTC’s Bureau of Competition.
In its complaint against S.C. Johnson, based in Racine, Wisconsin, the FTC alleged that the acquisition would eliminate competition between the company and DowBrands, which includes its U.S.-based DowBrands Inc., DowBrands L.P. and DowBrands Canada, in the soil and stain remover and glass cleaner markets. The FTC’s complaint stated that the U.S. markets for soil and stain removers and glass cleaners are highly concentrated and that the proposed acquisition would further increase concentration in each market. In addition, the FTC stated that because of the difficulty of developing and marketing a competitive soil and stain remover or glass cleaner product, there was little likelihood that new competitors would enter either market. In its complaint, the agency also alleged that the transaction would increase the likelihood that S.C. Johnson would unilaterally exercise market power, resulting in higher prices for consumers of these products.
As part of the agreement, S.C. Johnson would sell all assets related to Dow’s "Spray 'n Wash," "Spray 'n Starch" and "Glass Plus" businesses to Reckitt & Colman, Inc., the U.S. wholly-owned subsidiary of the British company, Reckitt & Colman plc. If S.C. Johnson fails to complete the sale of these assets to Reckitt & Colman, the company will be required to divest the "Spray 'n Wash," "Spray 'n Starch," and "Glass Plus" businesses, as well as, at a Commission-approved buyer’s option, DowBrands’ Urbana, Ohio, manufacturing plant and DowBrands’ “Yes” laundry detergent, “Vivid” color-safe bleach, and oven cleaner businesses.
The Commission’s vote to issue the proposed consent order for public comment was 4-0, with Commissioner Mary L. Azcuenaga not participating. An announcement of the proposed consent order will be published in the Federal Register shortly. The order will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, DC 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, proposed consent order and an analysis to aid public comment are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326- 2710.
(FTC File No. 981 0086)