9810086
B236756

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

S.C. Johnson & Son, Inc., a corporation.

Docket No. C-3802

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Respondent, S.C. Johnson & Son, Inc. ("S.C. Johnson"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire certain assets of the home care and home food management businesses of Dow Brands Inc., Dow Brands L.P. and Dow Brands Canada Inc. (hereinafter collectively "Dow Brands"), entities subject to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating its charges as follows:

I. DEFINITIONS

1. "Soil and Stain Remover Products" means products that are designed to pretreat soiled and stained clothing prior to washing in order to aid in the cleaning of the soiled or stained area of the clothing.

2. "Glass Cleaner Products" means products that are designed primarily to clean glass and mirrors, but which may also be used to clean other surfaces.

II. RESPONDENT

3. Respondent S.C. Johnson is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Wisconsin, with its principal place of business located at 1525 Howe Street, Racine, Wisconsin 53403-5011.

4. Respondent is engaged in, among other things, the manufacture and sale of Soil and Stain Remover Products and Glass Cleaner Products.

5. Respondent is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

III. THE ACQUIRED COMPANY

6. Dow Brands Inc. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business located at 9550 Zionsville Road, Indianapolis, Indiana 46268. Dow Brands L.P. is a limited partnership organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business located at 2030 Dow Center, Midland, Michigan 48674. Dow Brands Canada Inc. is a corporation organized, existing and doing business under and by virtue of the laws of Canada, with its office and principal place of business located at 250 6th Avenue S.W., Suite 2200, Calgary, Alberta T2P 3H7.

7. Dow Brands is engaged in, among other things, the manufacture and sale of Soil and Stain Remover Products and Glass Cleaner Products.

8. Dow Brands is, and at all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.  12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

IV. THE ACQUISITION

9. On October 27, 1997, S.C. Johnson entered into Asset Purchase Agreements with Dow Brands to acquire certain assets of Dow Brands' home care and home food management businesses for approximately $1.125 billion ("Acquisition").

V. THE RELEVANT MARKETS

10. For purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are:

  1. 1. the research, development, manufacture and sale of Soil and Stain Remover Products; and
  2. 2. the research, development, manufacture and sale of Glass Cleaner Products.

11. For purposes of this Complaint, the United States is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant lines of commerce.

VI. STRUCTURE OF THE MARKETS

12. The market for the research, development, manufacture and sale of Soil and Stain Remover Products is highly concentrated as measured by the Herfindahl-Hirschman Index ("HHI"). The post-merger HHI is 5,646 points, which is an increase of 2,730 points over the premerger HHI level. S.C. Johnson and Dow Brands are the two leading suppliers of Soil and Stain Remover Products in the United States.

13. S.C. Johnson and Dow Brands are actual competitors in the relevant market for the research, development, manufacture and sale of Soil and Stain Remover Products in the United States.

14. The market for the research, development, manufacture and sale of Glass Cleaner Products is highly concentrated as measured by the HHI. The post-merger HHI is 4,920 points, which is an increase of 1,180 points over the premerger HHI level. S.C. Johnson and Dow Brands are the two leading suppliers of Glass Cleaner Products in the United States.

15. S.C. Johnson and Dow Brands are actual competitors in the relevant market for the research, development, manufacture and sale of Glass Cleaner Products in the United States.

VII. BARRIERS TO ENTRY

16. Entry into either the market for the research, development, manufacture and sale of Soil and Stain Remover Products or the market for the research, development, manufacture and sale of Glass Cleaner Products is unlikely and would not occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 17 because of, among other things, the difficulty of developing a new product, gaining brand name recognition and customer acceptance, and establishing a network of retail distributors.

VIII. EFFECTS OF THE ACQUISITION

17. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C.  18, and Section 5 of the FTC Act, as amended, 15 U.S.C.  45, in the following ways, among others:

(a) by eliminating actual, direct, and substantial competition between S.C. Johnson and Dow Brands in the relevant markets;

(b) by increasing the likelihood that S.C. Johnson will unilaterally exercise market power in the relevant markets;

(c) by increasing the likelihood that customers of Soil and Stain Remover Products and Glass Cleaner Products would be forced to pay higher prices;

(d) by reducing innovation in the relevant markets; and

(e) by reducing the level of advertising and promotion of Soil and Stain Remover Products and Glass Cleaner Products.

IX. VIOLATIONS CHARGED

18. The Acquisition agreement described in Paragraph 9 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

19. The Acquisition described in Paragraph 9, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this twentieth day of April, 1998, issues its Complaint against said respondent.

By the Commission, Commissioner Azcuenaga not participating.

Donald S. Clark
Secretary

SEAL: