The Federal Trade Commission (FTC) has taken a significant step to block Edgewell Personal Care Company’s proposed $1.37 billion acquisition of Harry’s, Inc., a key competitor in the wet shave market. The FTC has authorized its Bureau of Competition to file a lawsuit to prevent the merger, arguing that it would substantially reduce competition within the shaving industry.
According to the FTC’s complaint, this acquisition would eliminate a crucial competitive force in the market. The loss of Harry’s as an independent entity would remove a disruptive rival that has been instrumental in lowering prices and fostering innovation. This is particularly concerning in an industry that has historically been dominated by just two major players, one of whom is Edgewell Personal Care.
The FTC has issued an administrative complaint and has also sought a temporary restraining order and preliminary injunction in the U.S. District Court for the District of Columbia. This legal action aims to maintain the current market situation while the FTC conducts an administrative trial to assess the merits of the case.
Daniel Francis, Deputy Director of the FTC’s Bureau of Competition, emphasized Harry’s unique role in the market: “Harry’s is a uniquely disruptive competitor in the wet shave market, and it has forced its rivals to offer lower prices, and more options, to consumers across the country.” He further stated, “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 Personal Care, Harry’s, and Procter & Gamble, the market leader, are among the primary competitors in the U.S. for manufacturing and selling wet shave razors for both men and women. Notably, Edgewell is also the leading supplier of private label razors in the United States. The FTC’s complaint details how, for many years, Edgewell and Procter & Gamble, with their Schick and Gillette (men’s razors) and Intuition/Hydro Silk and Venus (women’s razors) brands, operated in a comfortable duopoly. This duopoly was characterized by annual price increases that were not justified by changes in costs or demand.
Harry’s entry into the market as an internet-based, direct-to-consumer brand disrupted this established order. In 2016, Harry’s expanded its reach by entering brick-and-mortar retail. This new competitive pressure prompted Procter & Gamble and Edgewell to react by lowering prices and developing more affordable product options, which ultimately benefited consumers. The FTC argues that by allowing Edgewell Personal Care to acquire Harry’s, this crucial competitive dynamic would be eliminated. The proposed acquisition, therefore, would stifle competition among wet shave razor suppliers and negatively impact consumers across the United States.
The Commission vote to issue the administrative complaint and to authorize legal action was unanimous, 5-0. The administrative trial is scheduled to commence on June 30, 2020. The FTC’s action underscores its commitment to promoting competition and protecting consumers in the marketplace.
