FTC Sues to Block Schick Owner from Acquiring Harry’s

The Federal Trade Commission is suing to block the $1.37 billion acquisition of affordable razor brand Harry’s Inc. by Schick owner Edgewell Personal Care.

The FTC complaint alleges the acquisition would eliminate one of the most important competitive forces in the shaving industry, according to an FTC release. “The loss of Harry’s as an independent competitor would remove a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer,” the release said.

The FTC, through its Bureau of Competition, filed its administrative complaint Feb. 3, along with a complaint seeking a temporary restraining order and preliminary injunction in the U.S. District Court for the District of Columbia. The action seeks to maintain the status quo pending an administrative trial set to begin on June 30.

“Harry’s is a uniquely disruptive competitor in the wet shave market, and it has forced its rivals to offer lower prices and provide more options to consumers across the country,” said Daniel Francis, Deputy Director of the FTC’s Bureau of Competition. “The Harry’s and Flamingo brands represent a significant and growing competitive threat to the two firms that have dominated the wet shaving market for decades. Edgewell’s effort to short-circuit competition by buying up its newer rival promises serious harm to consumers.”

Edgewell and Harry’s challenged the FTC’s argument that consumers would be harmed by the acquisition in statements on the administrative complaint.

“We believe strongly that the combined company will deliver exceptional brands and products at a great value and are determined to bring those benefits to consumers,” Harry’s co-founders and co-CEOs Jeff Raider and Andy Katz-Mayfield said. “We are disappointed that the FTC is attempting to block our combination with Edgewell and are evaluating the best path forward.”

“We continue to believe the combination of our two companies would bring together complementary capabilities for the benefit of all stakeholders, including customers,” Edgewell President and CEO Rod Little said. “We will review the FTC’s decision and respond in due course.”

The FTC complaint alleges Edgewell and market leader Procter & Gamble operated their Schick and Gillette brands of men’s razors, and Intuition/Hydro Silk and Venus brands of women’s razors, “as a comfortable duopoly characterized by annual price increases that were not driven by changes in costs or demand.”

Harry’s, which began as a direct-to-customer (DTC) brand before expanding into Target and Walmart stores, provided a new competitive threat, the FTC said, resulting in Procter & Gamble and Edgewell reducing prices and developing value-priced products.

“By bringing the disruptive Harry’s under Edgewell’s control, the complaint alleges, the proposed acquisition would eliminate important and growing competition among suppliers of wet shave razors, and would inflict significant harm on consumers of razors across the United State,” the FTC release said.

Edgewell’s planned acquisition of Harry’s, announced in June 2019, wouldn’t make a significant dent in Gillette’s command of the marketplace. The New York Times reported at the time that Gillette held a 47.3% of the American market as of 2018, while Edgewell’s top brands held 13.6% of the market, and Harry’s had 2.6%. A July 2019 CNBC report gave Gillette an even bigger market share, 52.8%.

In addition to Schick, Edgewell owns Wilkinson Sword men’s and women’s shaving systems and disposable razors, and Edge and Skintimate shave preparations products. It also owns Playtex, Stayfree, Carefree and o.b. feminine care products as well as Banana Boat, Hawaiian Tropic, Bulldog and Jack Black sun and skin care products and Wet Ones moist wipes.

Harry’s, Inc. also includes brands Flamingo and Harry’s Labs. Harry’s owns and operates its own razor factory in Eisfeld, Germany, employing more than 900 in the U.S., the UK and Germany.

The FTC voted 5-0 to authorize administrative action to block the acquisition.

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