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FTC seeks to block glass merger in the US due to antitrust concerns

July 2, 2013

–FTC seeks to block Ardagh Group’s planned acquisition of Saint-Gobain’s glass-bottle operations

–The $1.7 billion deal was expected to create the biggest U.S. company in the sector

–Ardagh said it would defend the deal in litigation while working to resolve FTC concerns

The Federal Trade Commission is seeking to block glass and metal-packing firm Ardagh Group’s planned acquisition of Compagnie de Saint-Gobain S.A.’s (SGO.FR) U.S. glass-bottle operations, saying the purchase would violate U.S. antitrust laws.

Ardagh said in January it planned to buy Saint-Gobain’s glass bottle-making operations for $1.7 billion, in a deal expected to create the biggest U.S. company in the sector.

The FTC said Monday the deal would reduce competition and result in the merged company and rival Owens-Illinois Inc. ( OI ) controlling more than 75% of the U.S. markets for glass containers for beer and liquor customers.

Ardagh said in a statement the company is disappointed with the FTC’s action and that a transaction will benefit glass-container customers. The company said it will defend the deal in litigation, while working with the FTC to resolve its concerns.

A representative from Saint-Gobain couldn’t immediately be reached for comment.

“This combination would lead to higher costs for brewers and distillers and less innovation in the glass container industry,” said Norman Armstrong Jr., deputy director of the FTC’s bureau of competition. “Ultimately, this transaction will result in higher prices for consumers.”

The agency has authorized its staff to seek a temporary restraining order and preliminary injunction on the deal pending an administrative trial.

The FTC noted glass bottle prices have increased more than plastic bottle and aluminum can prices in recent years, as three manufacturers, including Ardagh and Saint-Gobain, have dominated the market.

Reducing the number of competitors even more would make it much easier for two remaining companies to ratchet up prices, the FTC said.

Ardagh has been on a three-year North American buying spree since entering the U.S. market in 2010 after buying French can-manufacturing business Impress Group.

Source: Nasdaq