Feb 4, 2020 - Economy & Business

Edgewell and Harry's case against the FTC merger block

Dan Primack, author of Pro Rata

Illustration: Aïda Amer/Axios

Razor-maker Harry's last May agreed to be acquired for $1.37 billion by Schick parent Edgewell and, for the next six months, there were few concerns at either company.

But, but, but: Shortly before Christmas, everything changed. "[Regulators] started asking different sorts of questions, and you could see where they were heading," says a source familiar with the situation.

  • On Jan. 16, Harry's co-CEO Jeff Raider posted a pro-merger argument via Medium, which suggests he felt the writing was on the wall.
  • On Monday, the Federal Trade Commission said it will sue to block the deal, believing that it would further strengthen a duopoly between Edgewell and market leader Procter & Gamble.
    • The FTC argues the direct-to-consumer business of Harry's and rival Dollar Shave Club did little to lower industry prices or spur innovation, but rather those things happened in 2016 when Harry's entered physical retail.
    • Read the FTC's full administrative complaint.

Sources say that Edgewell and Harry's haven't yet decided on next steps, but expectations are that they'll fight this in court. And, if so, expect them to be emboldened by the FTC's recent failure to block a merger of hydrogen peroxide companies, with a judge ruling that the agency's argument amounted to an "oversimplification."

  • The FTC's new complaint mostly ignores the impact of Dollar Shave Club, which was purchased for $1 billion in 2016 by Unilever — suggesting that its business model was already viewed as appealing before either it or Harry's moved big into physical retail.
  • Plus, it's odd to argue duopoly when a company with such major resources as Unilever is now involved. Let alone the recent, U.S. entry of South Korea's Dorco, which also supplies razors to Dollar Shave, or the continuing presence of Bic (which is working on a connected razor product, speaking to the innovation angle).
  • And don't forget about Billie, the brand focused on women, that P&G recently agreed to buy (possibly to take it off the antitrust chessboard, or perhaps as a strategic replay of the mid-1980's soda wars).

The bottom line: One possibility is that the FTC is missing the boat on direct-to-consumer. Another is that this is actually its way to test the limits of omnichannel retail, maybe as a precursor to future actions against giants like Amazon. But no matter the backstory, this one will come down to the numbers — particularly pricing — and each side thinks it has the data to prove its case.

Go deeper: FTC's move to block Harry's deal could impact ad spending

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In photos: We've seen images like the protests in Minneapolis before

Photo: Kerem Yucel/AFP/MPI/Getty Images

The photos of protests around the country following the death of George Floyd during an encounter with Minneapolis police are hauntingly familiar. We’ve seen them many times before, going back decades.

Why it matters: "What is also unmistakable in the bitter protests in Minneapolis and around the country is the sense that the state is either complicit or incapable of effecting substantive change," Keeanga-Yamahtta Taylor, an assistant professor of African-American studies at Princeton University writes in the New York Times. The images that follow make all too clear how little has changed since the modern Civil Rights Movement began in the 1950s.

Updated 8 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 11 a.m. ET: 5,968,693— Total deaths: 365,796 — Total recoveries — 2,520,587Map.
  2. U.S.: Total confirmed cases as of 11 a.m. ET: 1,749,846 — Total deaths: 102,900 — Total recoveries: 406,446 — Total tested: 16,099,515Map.
  3. Economy: The future of mobility in the post-pandemic worldGeorge Floyd's killing and economic calamity are both part of America's unfinished business.
  4. Supreme Court: Chief Justice Roberts sides with liberals in denying challenge to California's pandemic worship rules.
  5. Public health: Hydroxychloroquine prescription fills exploded in March.
  6. 2020: North Carolina asks RNC if convention will honor Trump's wish for no masks or social distancing.
  7. Business: Fed chair Powell says coronavirus is "great increaser" of income inequality.

The aftermath of George Floyd's death: Everything you need to know

A mural outside Cup Foods in Minneapolis, near where George Floyd was killed in an encouner with police. Photo: Steel Brooks/Anadolu Agency via Getty Images

Former Minneapolis police officer Derek Chauvin is in jail under $500,000 bail on charges of third-degree murder and manslaughter after a video of him kneeling on George Floyd's neck for more than eight minutes and Floyd's death catapulted the country's major cities into a state of protest.

The big picture: Floyd's fatal run-in with police is the latest reminder of the disparities between black and white communities in the U.S. and comes as African Americans grapple with higher death rates from the coronavirus and higher unemployment from trying to stem its spread.