The feds are moving to block the $1.4 billion acquisition of shaving startup Harry’s by Schick owner Edgewell Personal Care, saying the deal would raise consumer prices.
The Federal Trade Commission — whose concerns about the merger were first reported by The Post last month — voted 5-0 to issue a preliminary injunction against the acquisition, the agency said Monday.
“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 agency said in a statement.
The complaint alleges that Edgewell and Procter & Gamble — owner of Gillette — have operated their businesses as a “comfortable duopoly characterized by annual price increases that were not driven by changes in costs or demand.”
In a statement, Harry’s co-founders Jeff Raider and Andy Katz-Mayfield said they were “disappointed” by the FTC’s move and that they were “evaluating the best path forward.”
“We continue to believe the combination of our two companies would bring together complementary capabilities for the benefit of all stakeholders, including customers,” Edgewell Chief Executive Rod Little said.
The government’s concern over the merger has been heating up since August. As The Post reported exclusively last month, FTC officials have been asking “hard questions” about the effect the deal could have on razor prices.
In a last-ditch effort to avert a clampdown, Harry’s co-founder Raider insisted in a Jan. 16 blog post that Harry’s management would instead shake-up the stodgy shaving industry and make it more competitive.
“Edgewell’s intellectual property, lower manufacturing costs and better distribution capabilities” will help keep prices the same “or even lower,” Raider wrote in the post on Medium.
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“The technology upgrades we intend to make with Edgewell will be a game-changer for our customers,” he said.
The FTC appears to have a hard time swallowing that argument, as critics note how much low-price startups like Harry’s and Dollar Shave Club have cost the established brands.
In July, P&G took an $8 billion writedown on Gillette, the nation’s leading seller of razors. At the time, P&G’s financial chief Jon Moeller blamed “new competitors” that have been offering razors “at prices below the category average.”
“Harry’s is a uniquely disruptive competitor in the wet shave market,” Daniel Francis, deputy director of the FTC’s Bureau of Competition, said in a statement. “It has forced its rivals to offer lower prices and more options to consumer across the country.”
The administrative trial is scheduled to begin on June 30.
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