Libbey, Inc. Settles FTC's Administrative Litigation

The Federal Trade Commission has accepted for public comment a proposed order with Libbey Inc. and Newell Rubbermaid Inc. (collectively, the respondents) to resolve alleged anticompetitive effects in the United States food service glassware market stemming from the proposed acquisition by Libbey of Anchor Hocking Corporation, a wholly owned subsidiary of Newell. On April 22, 2002, the U.S. District Court for the District of Columbia granted the Commission's motion for a preliminary injunction blocking the transaction pending the completion of administrative adjudication. On June 10, Libbey and Newell Rubbermaid abandoned the proposed acquisition. Under the proposed order, Libbey cannot acquire any stock of Anchor or assets of Anchor's food service glassware business without giving prior notice to the Commission. Additionally, Newell cannot sell or transfer all or a substantial part of the assets of Anchor's food service business without prior notice to the Commission.

Libbey, a Delaware corporation with its principal place of business in Toledo, Ohio, 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 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. Libbey is the largest seller of food service glassware in the nation. Anchor, based in Lancaster, Ohio, is the third largest maker and seller of soda-lime glassware to the U.S. food service industry.

Libbey agreed to acquire Anchor, including Anchor's food service business, from Newell on June 17, 2001. After an investigation, the Commission, on December 18, 2001, found reason to believe that the acquisition likely would reduce competition in violation of the antitrust laws, and on January 14, 2002, the Commission commenced an action in U.S. District Court for the District of Columbia seeking a preliminary injunction against the acquisition.

On January 21, 2002, Libbey and Newell amended their merger agreement to provide that 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. The Commission alleged, and the District Court found, that the amendments to the merger agreement did not change materially the merger's likely effect on competition.

On April 22, 2002, the District Court granted the Commission's motion for a preliminary injunction pending the completion of administrative adjudication. The court concluded that both the acquisition and the amended merger likely would reduce competition in the food service glassware market; the food service glassware market was highly concentrated; and, "if what is now Anchor were eliminated from the market, there are no other viable alternatives to Libbey's food service glassware that consumers could rely upon to acquire their glassware at the lower prices now offered by Anchor." Libbey and Newell thereafter moved to vacate the court's preliminary injunction order. The court denied the motion to vacate on May 20, 2002.

Following the District Court's preliminary injunction order, on May 9, 2002, the Commission issued its administrative complaint against the respondents. Under Section 13(b) of the Commission Act, the Commission must issue an administrative complaint within 20 days of the grant of a preliminary injunction in order to preserve the injunction. On June 10, 2002, the respondents announced that they had terminated their merger agreement pursuant to which Libbey sought to acquire Anchor from Newell.

On July 25, 2002, following execution of the consent agreement by respondents and counsel for the Commission, the matter was withdrawn from administrative adjudication for the purpose of allowing the Commission to consider the consent agreement.

The Proposed Order is effective for 10 years and requires Libbey and Newell to provide the Commission with written notice prior to the acquisition, sale, transfer, or other conveyance of all or part of Anchor or Anchor's Food Service Business. Anchor's Food Service Business is defined to include all assets used in the food service business, regardless of whether those assets also are used in other businesses. Thus, Anchor's Food Service Business specifically includes Anchor's two glassware manufacturing plants.

Under the terms of the order, Libbey is required to provide the Commission with prior written notice of its acquisition of any interest in Anchor's stock or in the assets of Anchor's Food Service Business. In addition, Newell must provide the Commission with prior written notice if it sells, transfers, or otherwise conveys any part of Anchor's Food Service Business to any entity not included within Newell. If Newell sells, transfers or otherwise conveys Anchor's Food Service Business to Libbey or Vitrocrisa (a joint venture between Libbey and Vitro S.A.), Newell's obligation to notify the Commission extends for 10 years. In all other circumstances, Newell is obligated to provide notice for five years.

These prior notice provisions address the concern that, in light of the fact that the respondents testified in court that Anchor's food service business was valued at less than $50 million, there remains a credible risk that Newell will seek to sell Anchor or to dispose of its assets piece by piece. (Transactions that do not exceed the $50 million threshold are not reportable under HSR rules.)

The Commission vote to accept the consent order and place a copy on the public record was 5-0. A summary of the proposed consent agreement will be published in the Federal Register shortly. The order will be subject to public comment for 30 days, until September 20, 2002, after which the Commission will decide whether to make it final. Comments should be sent to: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, proposed consent agreement, and an analysis of the agreement to aid in public comment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP (1-877-382-4357). 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)