[Federal Register Volume 63, Number 22 (Tuesday, February 3, 1998)]
[Notices]
[Pages 5546-5547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2574]
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FEDERAL TRADE COMMISSION
[File No. 981-0086]
S.C. Johnson & Son, Inc.; Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement and the terms of the
consent order--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before April 6, 1998.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: William Baer or Steven Bernstein, FTC/
H-374, Washington, D.C. 20580. (202) 326-2932 or 326-2423.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the above-captioned consent agreement containing a consent
order to cease and desist, having been filed with and accepted, subject
to final approval, by the Commission, has been placed on the public
record for a period of sixty (60) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for January 23, 1998), on the World Wide Web, at ``http://www.ftc.gov/
os/actions/htm.'' A paper copy can be obtained from the FTC Public
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580, either in person or by calling (202) 326-3627.
Public comment is invited. Such comments or views will be considered by
the Commission and will be available for inspection and copying at its
principal office in accordance with Section 4.9(b)(6)(ii) of the
Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a proposed Consent Order
from S.C. Johnson & Son, Inc. (``S.C. Johnson''), which is designed to
remedy the anticompetitive effects resulting from S.C. Johnson's
acquisition of the home care and home food management businesses of
DowBrands Inc., DowBrands L.P. and DowBrands Canada Inc. (hereinafter
collectively
[[Page 5547]]
``DowBrands''). Under the terms of the agreement, S.C. Johnson will be
required to divest DowBrands' ``Spray `n Wash,'' ``Spray `n Starch''
and ``Glass Plus'' businesses to Reckitt & Colman, Inc. (``Reckitt &
Colman''), the U.S. wholly-owned subsidiary of the British company,
Reckitt & Colman plc. If the sale of these assets is not made to
Reckitt & Colman, S.C. Johnson will be required to divest the Spray `n
Wash, Spray `n Starch, and Glass Plus businesses, as well as DowBrands'
Urbana, Ohio manufacturing plant and DowBrands' ``Yes'' laundry
detergent, ``Vivid'' color-safe bleach, and oven cleaner businesses, to
a Commission-approved buyer.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
proposed Consent Order and the comments received, and will decide
whether it should withdraw from the proposed Consent Order or make
final the proposed Order.
On October 27, 1997, S.C. Johnson and DowBrands entered into Asset
Purchase Agreements under which S.C. Johnson agreed to acquire the home
care and home food management businesses of DowBrands for approximately
$1.125 billion. The proposed Complaint alleges that the acquisition, if
consummated, would violate Section 7 of the Clayton Act, as amended, 15
U.S.C. Sec. 18, and Section 5 of the Federal Trade Commission Act, as
amended, 15 U.S.C. Sec. 45, in the markets for the research,
development, manufacture and sale of soil and stain remover products
and glass cleaner products.
Soil and stain removers are products used by consumers in
conjunction with laundry detergent to remove specific and isolated
stains from clothing. S.C. Johnson, which sells ``SHOUT,'' and
DowBrands, which sells ``Spray `n Wash,'' are the two leading U.S.
suppliers of soil and stain removers. S.C. Johnson, which sells
``Windex,'' and DowBrands, which sells ``Glass Plus,'' are also the two
leading U.S. suppliers of glass cleaners, which are used by consumers
to clean glass, mirrors and other surfaces.
The soil and stain remover and glass cleaner markets are highly
concentrated, and the proposed acquisition would substantially increase
concentration in each market. In the soil and stain remover market, the
acquisition would result in an increase in the Herfindahl-Hirschmann
Index (``HHI'') of 5,646 points, which is an increase of 2,730 points
over the premerger HHI level. In the glass cleaner market, the post-
merger HHI would be 4,920 points, which is an increase of 1,180 points
over the premerger HHI level. By eliminating competition between the
top two competitors in these highly concentrated markets, the proposed
acquisition would allow S.C. Johnson to unilaterally exercise market
power in each market, thereby increasing the likelihood that: (1) Soil
and stain remover and glass cleaner customers would be forced to pay
higher prices; (2) innovation in these markets would decrease; and (3)
advertising and promotion in these markets would be reduced.
The relevant geographic market is the United States. It is unlikely
that the competition eliminated by the proposed transaction would be
replaced by foreign manufacturers of soil and stain removers and glass
cleaners. Foreign manufacturers of these products are unable to compete
effectively in the U.S. because they lack the necessary brand
recognition among U.S. consumers and face substantial transportation
costs, which make importing their products into the U.S. uneconomical.
In addition, new entry would not deter or counteract the
anticompetitive effects likely to flow from the proposed transaction. A
new entrant into either the soil and stain remover or glass cleaner
market would need to undertake the difficult, expensive and time-
consuming process of developing a competitive product, creating brand
recognition among consumers, and establishing a viable distribution
network. Because of the difficulty of accomplishing these tasks, new
entry into either market could not be accomplished in a timely manner.
Moreover, because of the high costs involved, it is not likely that new
entry into either market would occur at all, even if prices were to
increase substantially after the transaction.
The proposed Consent Order naming S.C. Johnson as respondent
effectively remedies the acquisition's anticompetitive effects in the
soil and stain remover and glass cleaner markets by requiring S.C.
Johnson to divest DowBrands' Spray `n Wash, Spray `n Starch, and Glass
Plus businesses to a third party. Pursuant to the Consent Agreement,
S.C. Johnson is required to divest these businesses to Reckitt &
Colman, no later than 10 business days from the date the Commission
accepts this Agreement for public comment. In the event S.C. Johnson
fails to divest to Reckitt & Colman, the Consent Agreement contains a
``crown jewel'' provision that requires S.C. Johnson to divest
DowBrands' Spray `n Wash, Spray `n Starch, and Glass Plus businesses,
as well as, at the acquirer's option, DowBrands' Urbana, Ohio
manufacturing plant and DowBrands' ``Yes'' laundry detergent, ``Vivid''
color-safe bleach, and oven cleaner businesses, within six months from
the date S.C. Johnson signed the Consent Agreement. If S.C. Johnson
fails to divest the crown jewel assets within this six-month time
period, the Commission may appoint a trustee to divest these assets.
In order to provide the acquirer with DowBrands' soil and stain
remover and glass cleaner products during a transition period, the
Consent Agreement requires S.C. Johnson, at the acquirer's option, to
provide to the acquirer a twelve-month supply of these products at
cost. The Order also requires S.C. Johnson to provide the Commission a
report of compliance with the divestiture provisions of the Order
within thirty (30) days following the date the Order becomes final,
every thirty (30) days thereafter until S.C. Johnson has completed the
required divestiture and every ninety (90) days thereafter until S.C.
Johnson has completed its obligations under the supply agreement.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 98-2574 Filed 2-2-98; 8:45 am]
BILLING CODE 6750-01-M