FTC Issues Administrative Complaint Challenging Libbey, Inc.'S Proposed Acquisition of Anchor Hocking

The Federal Trade Commission today issued an administrative complaint challenging Libbey Inc.'s (Libbey) proposed acquisition of Anchor Hocking (Anchor), a wholly-owned subsidiary of Newell Rubbermaid, Inc. According to the FTC, the acquisition, if consummated, would eliminate the existing substantial competition between Libbey and Anchor, and substantially would reduce competition in the market for soda-lime glassware sold to the food service industry in the United States.

Libbey's acquisition of Anchor was preliminarily enjoined, at the FTC's request, on April 22, 2002, by Judge Reggie B. Walton of the U.S. District Court in Washington, D.C. The FTC sought the preliminary injunction so that it could conduct administrative adjudication while preserving Anchor as a viable and effective competitor. The issuance by the Commission of the administrative complaint within 20 days after the grant of the preliminary injunction extends the injunction under Section 13(b) of the FTC Act.

The FTC's complaint alleges that, if consummated, the acquisition would combine the largest and third-largest sellers of soda-lime glassware to the food service industry in the United States, substantially increasing concentration in the market for soda-lime glassware for the food service industry in the U.S.

The complaint further alleges that defendants' amended merger agreement, under which Libbey would acquire key assets used by Anchor in the food service glassware business, most significantly Anchor's two glassware manufacturing plants, while Newell would retain only most of the molds used to make food service glassware and some related assets, does not materially change the agreement's likely effect on competition. Judge Walton agreed in issuing the preliminary injunction that the amended agreement might have an anticompetitive effect similar to Libbey's acquisition of all of Anchor.

The Commission's complaint also alleges that Libbey's and Newell's changes to some terms of their proposed restructuring, described in their motion to vacate the preliminary injunction, do not materially change the agreement's likely effect on competition. That motion to vacate is pending in the District Court, and the FTC will file its response to the motion on Monday, May 13.

Libbey is a Delaware corporation with its principal place of business in Toledo, Ohio. Newell Rubbermaid, Inc., also a Delaware corporation, has its principal place of business in Freeport, Illinois. Anchor Hocking is based in Lancaster, Ohio.

Libbey produces and sells soda-lime glassware, a line of products that includes many different styles of tumblers and stemware for beverages, and other products ranging from serving platters to candle holders. Libbey produces and sells soda-lime glassware to, among others, food service customers, including distributors who resell soda-lime glassware to restaurants, hotels, and other food service establishments. Anchor is the third-largest maker and seller of soda-lime glassware to the U.S. food service industry.

According to the FTC, Libbey and Anchor are direct and actual competitors in the sale of soda-lime glassware to the food service industry. They compete with each other on price by, among other things, offering discounts and other promotions on the sale of their soda-lime glassware. Anchor prices and discounts its products in response to Libbey's pricing, and in order to take sales from Libbey. Anchor has succeeded in taking food service glassware sales from Libbey by offering lower prices to food service customers and distributors.

Additionally, the complaint charges that the reestablishment of Anchor as an independent viable competitor in the relevant market if the acquisition were consummated would be difficult, and there is a substantial likelihood that it would be unlikely or impossible to restore Anchor's business as it originally existed.

The FTC's notice of contemplated relief, issued along with the administrative complaint, states that the Commission may seek:

• An order to cease and desist from any action to complete the acquisition by Libbey of any assets or securities of Newell Rubbermaid;
  
• Rescission of the Stock Purchase Agreement and the amended merger agreement between Libbey and Newell Rubbermaid;
  
• Divestiture of an ongoing, operating business, including all assets, tangible and intangible, including, but not limited to, all intellectual property, knowhow, trademarks, trade names, research and development, and customer contracts, and including all improvements to existing products and new products developed by Newell Rubbermaid; and
  
• The additional relief necessary to ensure the creation of one or more viable, competitive, independent entities

to compete against Libbey in the manufacture and sale of food service glassware.

The Commission vote to issue the administrative complaint was 5-0.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the named parties have violated the law. The complaint marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing.

Copies of the administrative complaint and notice of contemplated relief are available from the FTC's Web site at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: antitrust@ftc.gov ; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

(FTC File No.: 011 0194)