[Federal Register Volume 72, Number 157 (Wednesday, August 15, 2007)]
[Notices]
[Pages 45815-45817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-16060]


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FEDERAL TRADE COMMISSION

[File No. 071 0168]


Jarden Corporation and K2 Incorporated; Analysis of Agreement 
Containing Consent Orders 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 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 7, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Jarden/K2, File No. 071 0168,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania 
Avenue, NW, Washington, D.C. 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper 
form be sent by courier or overnight service, if possible, because U.S. 
postal mail in the Washington area and at the Commission is subject to 
delay due to heightened security precautions. Comments that do not 
contain any nonpublic information may instead be filed in electronic 
form as part of or as an attachment to e-mail messages directed to the 
following e-mail box: [email protected]. The FTC Act and other 
laws the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. All 
timely and responsive public comments, whether filed in paper or 
electronic form, will be considered by the Commission, and will be 
available to the public on the FTC website, to the extent practicable, 
at www.ftc.gov. As a matter of discretion, the FTC makes every effort 
to remove home contact information for individuals from the public 
comments it receives before placing those comments on the FTC website. 
More information, including routine uses permitted by the Privacy Act, 
may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Brendan J. McNamara (202) 326-3703, 
Bureau of Competition, Room NJ-5108, 600 Pennsylvania Avenue, NW, 
Washington, D.C. 20580.
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission 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 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 9, 2007), on the World Wide Web, at http://www.ftc.gov/os/2007/08/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, N.W., Washington, 
D.C. 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. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Jarden Corporation (``Jarden'') and K2 Incorporated 
(``K2''). The purpose of the proposed Consent Agreement is to remedy 
the anticompetitive effects that would otherwise be likely to result 
from Jarden's acquisition of K2. Under the terms of the proposed 
Consent Agreement, Jarden and K2 are required

[[Page 45816]]

to divest assets related to K2's Cajun Line[reg], Omniflex[reg], 
Outcast[reg], and Supreme\TM\ monofilament fishing line products. The 
proposed Consent Agreement has been placed on the public record for 
thirty days to solicit comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again review the proposed 
Consent Agreement and the comments received, and will decide whether it 
should withdraw from the proposed Consent Agreement or make it final.
    Pursuant to an Agreement and Plan of Merger dated April 24, 2007, 
Jarden proposes to acquire K2 in a transaction valued at approximately 
$1.2 billion (``Proposed Acquisition''). The Commission's complaint 
alleges that the Proposed 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, by lessening competition in the market for monofilament 
fishing line in the United States. The proposed Consent Agreement would 
remedy the alleged violations by replacing the competition that would 
be lost in this market as a result of the Proposed Acquisition.

II. The Parties

    Jarden is a leading provider of branded consumer products, 
including outdoor sporting goods, kitchen appliances, firelogs, playing 
cards, and a wide variety of consumer and medical plastic products. In 
2006, Jarden's revenues were approximately $3.85 billion. In April 
2007, Jarden acquired Pure Fishing Inc. (``Pure Fishing''), a fishing 
tackle company that sells products under several brands, including Abu 
Garcia[reg], Berkley[reg], Stren[reg], Mitchell[reg], and Spider[reg].
    K2 is a leading provider of branded consumer outdoor sports 
equipment. K2 reported annual sales of $1.4 billion in 2006, 
attributable to four primary business segments: Marine and Outdoor, 
Team Sports, Action Sports, and Apparel and Footwear. K2 participates 
in the fishing tackle markets through its Shakespeare division, 
marketing products under several brand names including 
Shakespeare[reg], Ugly Stik[reg], Penn[reg], Pflueger[reg], and Cajun 
Line[reg].

III. Monofilament Fishing Line

    Monofilament fishing line is the most widely-used and least 
expensive type of fishing line. While other specialized types of 
fishing line, including braided (or super line) and fluorocarbon, 
appear to be growing in popularity, especially among avid anglers, the 
vast majority of fishing line purchases in the United States are of 
monofilament line. Monofilament line is acceptable for a broad range of 
fishing conditions, but is particularly well-suited for situations in 
which it is important for the fishing line to be flexible and stretch. 
Due to its low cost and ease of use, monofilament line is popular with 
both novices and more avid anglers. The evidence indicates that 
anglers, if faced with a five to ten percent increase in the price of 
monofilament line, would not switch to braided line or fluorocarbon 
line. Therefore, monofilament line is the relevant product market in 
which to analyze the competitive effects of the proposed acquisition.
    The relevant geographic market in which to assess the impact of the 
Proposed Acquisition is the United States. Although monofilament line 
appears to be routinely sourced by U.S. sellers from contract 
manufacturers worldwide, no foreign firm is a significant seller in the 
U.S. and, in light of the entry conditions discussed below, none is 
likely to become significant within two years.
    The market for monofilament fishing line is highly concentrated, 
with Pure Fishing's three brands, Berkley[reg], Stren[reg], and 
Spider[reg], dominating the market. Although Shakespeare has a smaller 
presence in the market than Pure Fishing, Shakespeare appears to be the 
second- largest firm in the monofilament fishing line market and Pure 
Fishing's most significant competitor, due, in part, to the recent 
success of its Cajun Line, a red monofilament that is growing in 
popularity.
    Entry into the market for monofilament fishing line that would be 
sufficient to deter or counteract the anticipated competitive effects 
of the proposed transaction is unlikely to occur in the next two to 
three years. Although obtaining a source of supply for monofilament 
line does not constitute a significant barrier to entry, the need to 
develop brand equity, distribution, infrastructure, and a marketing 
presence for the brand poses a significant barrier to de novo entry and 
to entry by participants in adjacent markets. The relatively limited 
sales opportunities in the monofilament fishing line market make it 
unlikely that a new entrant could justify the investment required to 
develop and market a new fishing line brand.
    The Proposed Acquisition raises significant competitive concerns in 
the U.S. market for monofilament fishing line. Pure Fishing's sales 
account for a substantial share of the monofilament market. Shakespeare 
is Pure Fishing's most significant competitor. Consumers have 
benefitted from competition between Shakespeare and Pure Fishing on 
pricing, promotional spending, and product innovations. Thus, 
unremedied, the Proposed Acquisition likely would cause anticompetitive 
harm by enabling Jarden to profit by raising the prices of its 
monofilament fishing line unilaterally, as well as reducing its 
incentives to innovate and develop new monofilament fishing line 
products.

IV. The Consent Agreement

    The proposed Consent Agreement effectively remedies the Proposed 
Acquisition's likely anticompetitive effects in the market for 
monofilament fishing line. The proposed Consent Agreement preserves 
competition by requiring the divestiture of Cajun Line[reg], 
Omniflex[reg], Outcast[reg], and Supreme\TM\ (the ``Divested Assets'') 
to W.C. Bradley/Zebco (``Zebco'') within fifteen (15) days after the 
Proposed Acquisition is consummated.
    Shakespeare's Penn[reg] monofilament fishing line was not included 
in the divested assets because the evidence revealed that this is a 
rapidly declining brand and did not represent any competitive 
constraint to Pure Fishing's fishing line brands. Furthermore, Penn is 
best known for its high-end fishing reels, and as a result, any remedy 
involving this brand would unnecessarily present complex brand 
splitting concerns.
    The Commission is satisfied that Zebco is a well-qualified acquirer 
of the divested assets. Zebco is a significant market participant in 
the fishing tackle market with a variety products, including fishing 
rods, fishing reels, and fishing rod and reel combination kits. Zebco 
already has a strong distribution network and knowledgeable sales force 
with existing relationships with fishing tackle retailers.
    The proposed Consent Agreement contains several provisions designed 
to ensure the success of the divested assets to Zebco by requiring that 
(1) Jarden and K2 take steps to ensure that confidential information 
relating to the divested assets will not be used by Jarden; (2) Zebco 
will have the opportunity to enter into employment contracts with 
certain key individuals who have experience relating to the divested 
assets; and (3) certain management employees of K2 who were 
substantially involved in the research, development, or marketing of 
the divested assets be precluded from working on competitive fishing 
line products at Jarden for a period of two years.

[[Page 45817]]

    The Order to Maintain Assets that is included in the proposed 
Consent Agreement requires that Jarden and K2 protect the viability, 
marketability, and competitiveness of the divestiture assets between 
the time the Commission accepts the proposed Consent Agreement for 
placement on the public record and when the divestitures take place.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and it is not intended to constitute an 
official interpretation of the proposed Decision and Order or to modify 
its terms in any way.

    By direction of the Commission.
Richard C. Donohue
Acting Secretary
[FR Doc. E7-16060 Filed 8-14-07: 8:45 am]
BILLING CODE 6750-01-S