Sometimes brick & mortar competition is enough

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When the Federal Trade Commission looks at competition in the retail sector today, it typically considers the significance of online sales. Sometimes the competition from online retailers drives the analysis. In closing the Office Depot-Office Max matter, the Commission pointed to “the explosive growth of online commerce, which has had a major impact” on the sale of office supplies. In the Toys “R” Us matter, the Commission modified certain aspects of the order against Toys “R” Us. It found that Toys “R” Us no longer had market power in part because “[o]nline sales, as a proportion of total toy sales, have almost tripled between 2002 and 2012.”

But are online sales a significant factor in every market? The Men’s Wearhouse/Jos. A. Bank transaction makes clear the answer is “no.” The Commission closed the investigation. That decision rested primarily on the competitive environment among brick-and-mortar stores, not competition from online sales.

Both companies have stores that sell men’s tailored clothing, with a significant focus on men’s suits. Both have active advertising campaigns with noteworthy promotional strategies. At the same time, buying a suit online does not seem obvious to most people, and online suit vendors generally cannot offer tailoring services. Although the online sale of suits is beginning to have some impact on traditional suit sellers, it appears to account for a relatively small percentage of the sale of men’s suits. The extent of online competition is not yet sufficiently meaningful to have driven the analysis.

Despite limited competition from the Internet, the transaction is not likely to harm consumers because of significant competition from other sources. As in all transactions, FTC staff examined which product markets were likely to be affected and what the competitive landscape looks like in those markets. There were two such markets in this matter: (1) the retail sale of men’s suits and (2) tuxedo rentals. With respect to men’s suits, there are numerous competitors that sell suits across the range of prices of the suits the merging parties offer, including Macy’s, Kohl’s, JC Penney’s, Nordstrom, and Brooks Brothers, among others. The two firms also have different product assortments that reflect their different customer bases. Men’s Wearhouse, which sells branded and private-label suits, has a younger, trendier customer set, while Jos. A. Bank, which sells private-label suits only, has an older, more traditional customer base. (The suit business: Material Differences Men’s Wearhouse and Jos. A. Bank are proving harder to stitch together, The Economist, Feb. 8, 2014)

With respect to tuxedo rentals, Jos. A. Bank has been a small player in the market since its entry in 2010. Further, the parties compete with numerous local and regional tuxedo rental firms. Although both parties have a national footprint, the information we obtained showed that having a national presence is not a distinguishing or important factor for most customers. Instead, price of the rental, quality of the tuxedo, and customer service typically drive customers’ choices. Finally, evidence gathered during the investigation indicates that entry into the tuxedo rental market is fairly easy and inexpensive.

Just as there is no one-size-fits-all suit, there is not a one-size-fits-all approach to analyzing competitive effects--in the retail sector or otherwise. Tailoring the analysis of competitive effects to the facts is as important as proper tailoring of a suit.


Men's Wearhouse is actively preventing independent tuxedo rental stores from advertising on The Knot web site. They are so dominant on this important wedding site that no competition is allowed. As the percentage of wedding attire under their control continues to grow, independent shops like ours will continue to disappear.

Hi Independent Retail -- If you have a question or comment about an antitrust issue, contact the Bureau of Competition at More information on antitrust complaints:


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