Statement of the Federal Trade Commission Regarding FTC v. Libbey Inc., et al.
Civil Action No. 02-00060 (RBW)
The Federal Trade Commission makes this statement in response to the Order of the U.S. District Court for the District of Columbia, The Honorable Reggie B. Walton, U.S. District Judge, "that counsel for the Commission advise the Court in writing by 5:00 p.m., April 2, 2002, whether the Commission authorized a challenge of the proposed amended merger agreement." As we explain more fully below, the answer to the Court's question is "yes."
On December 18, 2001, the Commission voted unanimously to authorize the Bureau of Competition, in conjunction with the Office of General Counsel, to commence an action in an appropriate Federal District Court, seeking a preliminary injunction, and other necessary temporary relief, to prevent Libbey, Inc. from acquiring Anchor Hocking Corporation from Newell Rubbermaid, Inc., pending an administrative hearing to determine the legality of the transaction under Section 5 of the Federal Trade Commission Act and Section 7 of the Clayton Act, and having reason to believe that the proposed transaction, if consummated, would violate these statutes[.]
On January 14, 2002, the FTC's Bureau of Competition, in conjunction with its Office of General Counsel, commenced an action in the U.S. District Court for the District of Columbia pursuant to the authority granted by the Commission's action of December 18, 2001.
On January 21, 2002, following the Commission's vote and the commencement of this action, defendants amended their merger agreement. The original merger agreement, dated as of June 17, 2001, provided that Libbey would acquire all of the stock of Anchor Hocking Corporation from Newell. The amended merger agreement continued to provide that Libbey would acquire all of the stock of Anchor Hocking Corporation from Newell; however, the amended agreement provided that Newell would cause Anchor to transfer to another subsidiary of Newell some assets used in the food service glassware business of Anchor Hocking. Other assets used by Anchor in the food service glassware business, most significantly both of the factories at which Anchor makes glassware, would remain with Anchor and be sold to Libbey.
The Commission affirms that the authority it granted to the Bureau of Competition and the Office of General Counsel, by vote on December 18, 2001 encompasses the authority to continue to prosecute the action commenced pursuant to that authority, notwithstanding Libbey's and Newell's amendment to their merger agreement. In particular, the Commission affirms that its December 18, 2001, action authorizing the Bureau of Competition and the Office of General Counsel to commence a lawsuit also authorized the staff to file an amended complaint. Having found reason to believe that the merger as presented to the Commission would violate the Clayton and FTC Acts, and having authorized the Bureau of Competition and the Office of General Counsel "to commence an action . . . to prevent Libbey, Inc. from acquiring Anchor Hocking Corporation from Newell Rubbermaid, Inc.," the Commission does not believe that the FTC Act or Commission procedure requires any further formal action by the Commission in this case. In particular, the Commission does not interpret Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to require the Commission formally to reconsider its actions in every case where merging parties amend a merger agreement that the Commission has found reason to believe violates the antitrust laws.
It is not unusual for parties to propose amendments to their original merger transactions after the Commission has authorized a challenge. Sometimes, the amendments satisfactorily resolve the anticompetitive concerns, and the Commission formally accepts them in settlement of the matter. Other times, as here, the parties make a successive series of proposals that continue to provide an inadequate remedy for the anticompetitive concerns posed by the transaction. The Commissioners are individually apprised of these proposals, but it is neither practical nor necessary for the Commission to vote formally on whether each successive iteration warrants any change in the scope of authority already granted to the Bureau of Competition and the Office of General Counsel to seek in Federal Court to prevent the merging parties from violating the law.(1)
In this case, the Commissioners have been advised of defendants' amendments to their merger agreement, and of defendants' assertions that those amendments should resolve the Commission's concerns with the merger. Each Commissioner has been fully advised, and is fully aware, that the Commission is pursuing its preliminary injunction action notwithstanding these amendments and arguments. No Commissioner has sought to reconsider the vote authorizing the preliminary injunction action in light of defendants' new arguments or changes in their merger agreement.
In an effort to respond as specifically as possible to the Court's Order and remove any doubt, the Commission hereby reaffirms that it has reason to believe that defendants' amendment to their merger agreement does not materially ameliorate the likely anticompetitive effect of Libbey's acquisition of Anchor Hocking. Moreover, the Commission has reason to believe that consummation of the amended merger agreement would violate the Clayton and FTC Acts. We note that, as the facts have developed in the District Court proceeding, Newell frequently changed its purported plans for operating the food service glassware business after the merger, indicating that Newell did not give serious consideration to the viability of its purported strategy.(2) Newell agreed with Libbey that Newell would retain only three Anchor employees, and would not even retain the Anchor employee charged with finding and negotiating a glassware supply for Newell. Newell has now committed to a supply arrangement for only a portion of its glassware, and that portion is to be manufactured in Colombia, where civil war is escalating, under terms that are likely to increase Newell's costs. In light of these facts, and the entire course of conduct of defendants in connection with amending the merger agreement, the Commission has not been persuaded that Newell would likely be a viable and effective competitor in food service glassware.(3)
All of these matters are, of course, subject to "thorough investigation, study, deliberation and determination" in Commission adjudicative proceedings. See FTC v. H.J. Heinz Co., 246 F.3d 708, 715 (D.C. Cir. 2001). For the present, however, the Commission continues to have reason to believe that the acquisition of Anchor by Libbey, both as originally submitted to the Commission and according to the terms of the amended merger agreement, would violate Section 7 of the Clayton Act and Section 5 of the FTC Act, and that amending the agreement
does not ameliorate the anticompetitive concerns the Commission identified on December 18, 2001. The Commission continues to have reason to believe that a preliminary injunction pending administrative adjudication is in the public interest. The Commission does not believe that the FTC Act requires it to take any further action to authorize a preliminary injunction action under Section 13(b) of the FTC Act, or to vest the Court with jurisdiction under that statute.
1. For these reasons, to the extent the Court is suggesting that a new Commission vote is required with respect to each amended proposal, the Commission respectfully disagrees. The Commission notes, however, that the five Commissioners have voted unanimously to approve and issue this Statement, and to transmit it to the Court.
2. For example, on January 10, 2002, Newell asserted - and asked the Commission to consider - that it would obtain glassware from Libbey to sell in competition with Libbey. On January 13, 2002, after the FTC questioned Newell on that plan, Newell abandoned that plan as the "world's dumbest strategy," and asked the Commission to consider Newell's plan to retain the food service glassware business with no committed source of supply.
3. The Commission has reviewed submissions by the FTC and defendants to the Court on this point, as well as all submissions made by defendants to the Commission.