On the Razor's Edge: FTC Sues Proctor & Gamble to Stop Its Acquisition of Billie

*** The writing does not, and is not intended to, constitute legal advice by any means***

Feel free to follow my Instagram @hongjunlive

Last semester, I took an antitrust law class to deepen my understanding of legal implications that can arise from various business decisions, particularly merger & acquisitions. European countries call this area of law "competition law", which indicates that the aim is to deter businesses from illegally engaging in behaviors that lessen competition in the marketplace. Yesterday, the Federal Trade Commission ("FTC"), a regulatory agency in charge of overseeing every pending merger or acquisition, announced that it filed an administrative complaint to stop Proctor & Gamble ("P&G") from acquiring Billie, a New York-based company that sells women's razors and other body care products. The complaint, in essence, alleged that P&G, the owner of Gillette and Venus, is already a powerful player in the U.S. razor market. Bilile, which prides itself on catering exclusively to women, embraces a "direct-to-consumer" approach with subscription services and, so far, has successfully appealed to Gen-Z, which found its reasonable pricing attractive. 

In its press release, the FTC claims that the acquisition, if consummated, would effectively "eliminate growing competition", thereby reducing the consumer welfare in the form of higher prices. Ian Conner, Director of the FTC's Bureau of Competition, noted that Billie is planning to expand into brick-and-mortar stores and would become a more direct competitor of P&G. The gist of the argument rests on the assumption that consumers would be hurt if P&G can "snuff out Billie's rapid competitive growth" by simply buying it. The decision was 4-1 and only one Commissioner voted no.

The FTC has not made the complaint publicly accessible yet, but we can make an educated guess based on similar complaints it has filed before. The FTC will first define relevant product market and relevant geographic areas where the proposed acquisition would have its impact. I believe the product market will most likely to be the women's razor market because that's where the intersection of the two businesses lie. The FTC might even broadly see it to include women's body products. As to the relevant geographic areas, the FTC can advance a convincing argument that they should be the entire U.S territories, given that Billie runs under a subscription model and P&G recently made a similar move with Venus. In that sense, the competition is national. After illustrating potential anticompetitive effects, the FTC will then set forth a claim of unfair methods of competition on the basis of 15 U.S.C. § 45. There are various metrics the FTC uses to gauge the anticompetitive effects of an acquisition, and I will make sure to go over them once the complaint is out. P&G now has to offer legitimate business justifications for why it believes the transaction is not to the detriment of consumers to prevail in the pending lawsuit.

The FTC added that it plans to file a complaint in the U.S. District Court for the District of Columbia to request a temporary restraining order ("TRO"). TRO is a pre-trial injunction that orders parties to remain the status quo until a hearing or a trial takes place. Essentially, it is telling P&G not to further proceed with the business deal. The trial is set to start on June 22, 2021. At least, for now, P&G is on the razor's edge.