The FTC continues to throttle acquisitions of razor manufacturers, but it surely doesn't imply destiny for the DTC world

Last week the Federal Trade Commission announced that it would file a lawsuit to halt Procter & Gamble's acquisition of Billie, a consumer-direct razor brand.

If that phrase inspires an episode of Déjà Vu, there's a reason: Less than a year ago, the FTC filed another lawsuit to block a similar acquisition made by personal care giant Edgewell of Harry, another DTC razor brand.

What happened to Harry & # 39; s after that lawsuit was filed provides a blueprint for what can happen at Billie as well: A week after the lawsuit was announced, Edgewell stepped back from the acquisition, citing the resources that have been required would be to fight the lawsuit in court as well as the uncertainty of the outcome. Harry later threatened legal action, although no lawsuit has yet been initiated.

When Edgewell stepped down, Co-CEOs Jeff Raider and Andy Katz-Mayfield summed up the company's next steps in a statement: “In the future, we will continue to do what we do best: develop, manufacture and sell exceptional products honest price, and our customers always come first. “Read: Harry will continue as before. Now it appears that Billie will suffer a similar fate.

The FTC lawsuit comes at a time when antitrust laws have bubbled up to the top of consumer awareness. There have been major mergers in recent years – much better known than Harry & # 39; s / Edgewell or Billie / P&G – including Disney's purchase of 20th Century Fox in March 2019, AT & T's purchase of TimeWarner in June 2018, and Viacom – CBS merger in August 2019. And the FTC (along with 48 states) sued for the dissolution of Facebook last week, and Google is at the center of its own antitrust lawsuit.

These razor brand acquisitions aren't small potatoes – Edgewell would pay $ 1.37 billion for Harry's. But they're not on the order of, shall we say, what the FTC did on Facebook. After all, one is a tool that provides nearly three billion people worldwide with information and news, while the other is a simpler element of CPG. Nevertheless, these DTC product agreements have clearly become a sticking point for the FTC.

In part, the FTC appears to be warning other DTC brands in hopes of being picked up by CPG conglomerates. The main reason, however, is that the agency is trying to address a situation that is unique to this category.

"When there are only a small number of established suppliers, who have often had a large market share for a long time and are being challenged by disruptive competitors, there is real pressure to preserve the disruptive potential of these emerging competitors," he said, partner in Ben Gris the antitrust practice at Shearman and Sterling LLP. "The FTC is concerned that they are trying to buy up this threat instead of opposing it."

It is true that the world of razors is small in terms of the number of brands in the room. There are two great legacy players, Gillette from P&G and Schick from Edgewell. The category was one of the first to be affected by the DTC disorder, first for men, 2011 at the Dollar Shave Club, then 2012 at Harry. The switch to the women's category came a little later with the launch of Billie, aimed at women in 2017, and Harry launched his own women's line, Flamingo, in 2018.

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