[Federal Register Volume 67, Number 167 (Wednesday, August 28, 2002)]
[Notices]
[Pages 55260-55262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21970]


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FEDERAL TRADE COMMISSION

[Docket No. 9301]


Libbey Inc. and Newell Rubbermaid, 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 complaint 
issued on May 9, 2002, 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 September 20, 2002.

ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments filed in electronic form should be 
directed to: [email protected], as prescribed below.

FOR FURTHER INFORMATION CONTACT: Richard Liebeskind, FTC, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington DC 20580, (202) 
326-2441.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 
3.25(f) of the Commission's Rules of Practice, 16 CFR 3.25(f), notice 
is hereby given that the above-captioned consent agreement containing a 
consent order to cease and desist, having been filed with an accepted, 
subject to final approval, by the Commission, has been placed on the 
public record for a period of thirty (30) 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 August 21, 2002), on the World Wide Web, at ``http://www.ftc.gov/os/2002/08/index.htm.'' A paper copy can be obtained from the FTC 
Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Comments filed in paper form should 
be directed to: FTC/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains 
nonpublic information, it must be filed in paper form, and the first 
page of the document must be clearly labeled ``confidential.'' Comments 
that do not contain any nonpublic information may instead be filed in 
electronic form (in ASCII format, WordPerfect, or Microsoft Word) as 
part of or as an attachment to email messages directed to the following 
email box: [email protected]. Such comments 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 To Aid Public Comment on Agreement Containing Consent Order

I. Introduction

    The Federal Trade Commission has accepted for public comment a 
Decision and Order (``Proposed Order''), pursuant to an Agreement 
Containing Consent Order (``Consent Agreement''), against Libbey Inc. 
and Newell Rubbermaid Inc. (collectively ``Respondents''). The Proposed 
Order is intended to resolve anticompetitive effects in the United 
States food service glassware market stemming from the proposed 
acquisition by Libbey of Anchor Hocking Corporation, a wholly-owned 
subsidiary of Newell. Under the Proposed Order, Libbey cannot acquire 
any stock of Anchor or the assets of Anchor's food service glassware 
business without prior notice to the Commission. Additionally, Newell 
cannot sell or transfer all or a substantial part of the assets of 
Anchor's food service business without prior notice to the Commission.

II. The Parties, the Transaction and the History of the Litigation

    Libbey is the largest maker and seller of food service glassware in 
the United States, with substantially more than half of the sales, and 
has plants located in Ohio, Louisiana and California. Libbey produces 
and sells food service glassware, a line of products that includes many 
different styles of tumblers and stemware for beverages. Libbey sells 
food service glassware to customers that use glassware in the course of 
serving or selling food or beverages to consumers, including 
distributors who resell glassware to restaurants, hotels and other such 
establishments. Besides food service glassware, Libbey produces and 
sells glassware products ranging from serving platters to candle 
holders for the retail and industrial segments.
    Newell is a diversified company based in Illinois. Anchor is an 
indirect,

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wholly-owned subsidiary of Newell, with manufacturing facilities in 
Ohio and Pennsylvania. Anchor is the third largest maker and seller of 
food service glassware in the United States, and as found by a District 
Court, is Libbey's most formidable competitor in food service. Besides 
food service glassware, Anchor produces and sells glassware products 
ranging from bakeware to candle holders for the retail and industrial 
segments.
    Pursuant to an agreement dated June 17, 2001, Libbey proposed to 
acquire all of the stock of Anchor for Newell (the ``acquisition''). On 
December 18, 2001, the Commission authorized the commencement of an 
action under section 13(b) of the FTC Act to seek a preliminary 
injunction barring the acquisition during the pendency of 
administrative proceedings. On January 14, 2002, the FTC commenced such 
an action against Respondents in the United States District Court for 
the District of Columbia.
    Pursuant to an agreement dated January 21, 2002, after the 
preliminary injunction action was commenced and in response to the 
Commission's vote to challenge the acquisition, Libbey and Newell 
amended their merger agreement (the ``amended merger agreement''). The 
amended merger agreement provided that Libbey would acquire all of the 
stock of Anchor, but prior to closing Anchor would transfer to Newell's 
Rubbermaid Commercial Products (``RCP'') division less than 10 percent 
of the assets of Anchor, and the consideration to be paid by Libbey for 
Anchor would be reduced by less than 10 percent. Under the amended 
merger agreement, the assets to be transferred to RCP were most (not 
all) of the molds, customer relationships and certain other assets used 
in Anchor's food service glassware business. Anchor would have kept, 
and Libbey would still have acquired, key assets used by Anchor in the 
food service glassware business--most significantly, Anchor's two 
glassware manufacturing plants. Newell would not retain any capability 
to manufacture glassware.
    In its Amended Complaint, filed February 22, 2002, the FTC alleged 
that the acquisition pursuant to the amended merger agreement would 
substantially lessen competition. The proposed merger would eliminate 
Anchor as a competitor from the food service glassware market and RCP 
would be unable to replace Anchor as a viable competitor. The 
Commission later issued a statement on April 2, 2002, in which it 
reaffirmed its position that the amended merger would result in a 
lessening of competition in violation of the Clayton and FTC Acts. 
Statement of the Federal Trade Commission Regarding FTC v. Libbey Inc., 
et al., Apr. 2, 2002.
    On April 22, 2002, the District Court granted the FTC's motion for 
a preliminary injunction pending the completion of administrative 
adjudication. Memorandum Opinion (``Op.'') (FTC v. Libbey Inc., et al., 
2002 U.S. Dist. LEXIS 8867 (D.D.C., Apr. 22, 2002)).
    In granting the FTC's motion, the Court found that Libbey dominates 
the food service glassware market with a 65 percent share, while 
Anchor, with seven percent of the market, has the third largest share. 
Op. at 3. Although Libbey's market share dwarfs Anchor's, the Court 
found that ``Anchor is Libbey's most formidable competitor in the food 
service glassware market,'' because it is ``the largest seller of 
Libbey look-alikes,'' id. at 18, and because its prices ``are 
frequently 10 to 20 percent lower than Libbey's prices,'' id. at 5.
    The Court concluded that both the acquisition and the amended 
merger likely would reduce competition in the food service glassware 
market; the food service glassware market was highly concentrated, and, 
``if what is now Anchor were eliminated from the market, there are no 
other viable alternatives to Libbey's food service glassware that 
consumers could [rely] upon to acquire their glassware at the lower 
prices now offered by Anchor.'' Id. at 28. Moreover, the Court held 
that RCP would not replace Anchor as an effective competitor. Because 
RCP would not retain important assets, such as Anchor's manufacturing 
plants, brand name, customer relationships, and key employees, the 
Court held that the amended merger would have the same anti-competitive 
effects as if Libbey had acquired all of Anchor. Id. at 23.
    On May 2, 2002, Respondents moved to vacate the preliminary 
injunction order on the ground that Newell and a third party supplier 
had modified the price term under a glassware supply agreement for RCP. 
On May 17, 2002, the District Court denied Respondents' motion because 
of the numerous other cost components that would likely make RCP's 
costs substantially higher than Anchor's costs and, therefore, not a 
viable competitive alternative to Anchor. FTC v. Libbey Inc., Order 
Denying Defendants' Motion to Vacate, May 17, 2002. Reiterating the 
reasons in its earlier opinion, the Court stated that ``the FTC's 
concerns remain[ed] plausible'' and noted that the appropriate venue to 
fully evaluate the amended merger was at a full administrative hearing 
before the FTC. Id. at 3.
    Following the District Court's preliminary injunction order, on May 
9, 2002, the Commission issued its complaint against Respondents. 
Shortly after answering the complaint, on June 10, 2002, Respondents 
announced that they had withdrawn plans for Libbey to acquire Anchor 
from Newell. On July 23, 2002, Respondents entered into the Consent 
Agreement. Pursuant to Rule 3.25 of the Commission's rules of practice, 
16 CFR 3.25, a motion was filed to withdraw the matter from 
adjudication, and on July 25, 2002, the matter was withdrawn from 
adjudication for the purpose of considering the Consent Agreement.

III. The Complaint

    In its administrative complaint, the FTC charged that both the 
acquisition and the amended merger violated the Clayton and FTC Acts. 
The complaint alleges that the acquisition and the amended merger would 
eliminate competition between Libbey and Anchor, increase market 
concentration, and increase barriers to entry. The complaint also 
alleges that the amended merger would impair the viability of Newell as 
a competitor in the sale of food service glassware.

IV. Terms of the Proposed Order

    The Proposed Order (``Order'') is effective for 10 years and 
requires Libbey and Newell to provide the Commission with written 
notices prior to the acquisition, sale, transfer, or other conveyance 
of all or part of Anchor or Anchor's Food Service Business. Under the 
terms of the Order, Libbey is required to provide the Commission with 
prior written notice of its acquisition of any interest in Anchor's 
stock or in the assets of Anchor's Food Service Business. Order ] II. 
In addition, Newell must provide the Commission with prior written 
notice if it sells, transfers, or otherwise conveys any part of 
Anchor's Food Service Business to any entity not included within 
Newell. Order ] III. If Newell sells, transfers or otherwise conveys 
Anchor's Food Service Business to Libbey or Vitocrisa, Newell's 
obligation to notify the Commission extends for 10 years. Id. In all 
other circumstances, Newell is obligated to provide notice for five 
years. Id.
    Anchor's Food Service Business is defined as ``all of Anchor's 
rights, title, and interest in and to all assets and businesses, 
tangible or intangible, anywhere in the world, used in the research, 
development, manufacture, distribution, licensing, marketing, or

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sale of glassware products to Food Service Customers in the United 
States,'' and expressly includes assets that Newell may have internally 
transferred to other divisions on or after June 10, 2002. Order ] I.G. 
Anchor's Food Service Business does not include items that are 
generally available, are not unique to the glassware industry, or are 
minimally used in the production of food service glassware, such as 
sand, scrap metal, and office equipment, Id.

V. Opportunity for Public Comment

    The Proposed Order has been placed on the public record for 30 days 
for receipt of comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the Consent Agreement and the 
comments received and will decide whether to make the Proposed Order 
final. By accepting the Consent Agreement subject to final approval, 
the Commission anticipates that the competitive problems alleged in the 
Complaint will be resolved.
    The Commission invites public comment to aid the Commission in 
determining whether it should make final the Proposed Order contained 
in the Consent Agreement. The Commission does not intend this analysis 
to constitute an official interpretation of the Proposed Order, nor 
does this analysis modify in any way the terms of the Proposed Order.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 02-21970 Filed 8-27-02; 8:45 am]
BILLING CODE 6750-01-M