FTC not wild about sale of Harry’s to parent company of rival

The Federal Trade Commission (FTC) sees competitive issues with a proposed acquisition of online shaving products retailer Harry’s Inc.

The FTC is authorizing the Bureau of Competition to file suite to enjoin Edgewell Personal Care Company’s (Edgewell is the parent company of Schick’s) proposed $1.37 billion acquisition of what it says is Edgewell’s key competitor, Harry’s Inc. The FTC’s complaint alleges that the proposed combination would eliminate one of the most important competitive forces in the shaving industry. 

“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 FTC said in a press release announcing the decision.

The FTC has issued an administrative complaint, and has also authorized staff to file a complaint requesting a temporary restraining order and a preliminary injunction in the U.S. District Court for the District of Columbia pending an administrative trial on the merits of the complaint.

According to the FTC, Edgewell, Harry’s, and market leader Procter & Gamble are among the few significant competitors in the U.S. market for the manufacture and sale of men’s and women’s wet shave razors. Edgewell is also the leading supplier of private label razors in the United States. The complaint alleges that, for many years, Edgewell and Procter & Gamble operated their respective 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 launched as an Internet-only, direct-to-consumer wet shave brand, and in 2016, Harry’s entered into brick-and-mortar retail stores. The FTC says as a result of this new competitive threat, Procter & Gamble and Edgewell reduced prices and developed previously unavailable value-priced products, generating “significant benefits” for consumers. The FTC complaint alleges the proposed acquisition would eliminate competition among suppliers of wet shave razors and would “inflict significant harm” on consumers of razors across the U.S.

“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,” 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.”

Executives from both Edgewell and Harry’s have released public commentary critical of the Feb. 3 FTC decision.

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

"We are disappointed that the FTC is attempting to block our combination with Edgewell and are evaluating the best path forward,” said Jeff Raider and Andy Katz-Mayfield, co-founders and co-CEOs of Harry's, Inc. “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."