Federal Trade Commission v. Procter & Gamble Co.

Facts

At the time of the merger in 1957, Clorox was the leading manufacturer in the household liquid bleach industry with 48.8% of national sales. The industry was highly concentrated, with Clorox and its nearest competitor Purex accounting for almost 65% of the nation’s sales, and the top six firms controlling 80% of the market. The remaining 20% was divided among over 200 small producers. Clorox’s dominance was even greater in certain regions, with market shares as high as 72% in the mid-Atlantic states.

Procter & Gamble was a large, diversified manufacturer of household products with 1957 sales exceeding $1.1 billion and assets over $500 million. P&G was the dominant factor in soaps, detergents, and cleansers, accounting for 54.4% of all packaged detergent sales. P&G was the nation’s largest advertiser, spending more than $80 million on advertising and an additional $47 million on sales promotion in 1957.

Prior to the acquisition, P&G was diversifying into product lines related to its basic detergent-soap-cleanser business. Liquid bleach was considered complementary to P&G’s products as both are used together in washing clothes and household cleaning. P&G’s internal studies recommended acquiring Clorox rather than entering the market independently, noting that acquisition would be “a way of achieving a dominant position in the liquid bleach market quickly.”

The FTC found that the substitution of P&G for Clorox would dissuade new entrants and discourage active competition from existing firms due to fear of retaliation by P&G. The Commission also found that the merger eliminated P&G as a potential competitor in the liquid bleach industry.