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Analysis to Aid Public Comment on Agreement Containing Consent Order

In the Matter of Libbey Inc. and Newell Rubbermaid Inc., Docket No. 9301 

I. Introduction

The Federal Trade Commission has accepted for public comment a Decision and Order

(“Proposed Order”), pursuant to an Agreement Containing Consent Order (“Consent

Agreement”), against Libbey Inc. and Newell Rubbermaid Inc. (collectively “Respondents”). The

Proposed Order is intended to resolve 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. Under the Proposed Order, Libbey cannot

acquire any stock of Anchor or the assets of Anchor’s food service glassware business without

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.

II. The Parties, the Transaction and the History of the Litigation

Libbey is the largest maker and seller of food service glassware in the United States, with

substantially more than half of the sales, and has plants located in Ohio, Louisiana and California. 

Libbey produces and sells food service glassware, a line of products that includes many different styles

of tumblers and stemware for beverages. Libbey sells food service glassware to customers that use

glassware in the course of serving or selling food or beverages to consumers, including distributors

who resell glassware to restaurants, hotels and other such establishments. Besides food service

glassware, Libbey produces and sells glassware products ranging from serving platters to candle

holders for the retail and industrial segments.

Newell is a diversified company based in Illinois. Anchor is an indirect, wholly-owned

subsidiary of Newell, with manufacturing facilities in Ohio and Pennsylvania. Anchor is the third

largest maker and seller of food service glassware in the United States, and, as found by a District

Court, is Libbey’s most formidable competitor in food service. Besides food service glassware,

Anchor produces and sells glassware products ranging from bakeware to candle holders for the retail

and industrial segments.

Pursuant to an agreement dated June 17, 2001, Libbey proposed to acquire all of the stock of

Anchor from Newell (the “acquisition”). On December 18, 2001, the Commission authorized the

commencement of an action under Section 13(b) of the FTC Act to seek a preliminary injunction

barring the acquisition during the pendency of administrative proceedings. On January 14, 2002, the

FTC commenced such an action against Respondents in the United States District Court for the

District of Columbia.

Pursuant to an agreement dated January 21, 2002, after the preliminary injunction action

was commenced and in response to the Commission’s vote to challenge the acquisition, Libbey and

Newell amended their merger agreement (the “amended merger agreement”). The amended

merger agreement provided that Libbey would acquire all of the stock of Anchor, but prior to closing

Anchor would transfer to Newell’s Rubbermaid Commercial Products (“RCP”) division less than 10
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percent of the assets of Anchor, and the consideration to be paid by Libbey for Anchor would be

reduced by less than 10 percent. Under the amended merger agreement, the assets to be

transferred to RCP were most (not all) of the molds, customer relationships and certain other assets

used in Anchor’s food service glassware business. Anchor would have kept, and Libbey would still

have acquired, key assets used by Anchor in the food service glassware business–most significantly,

Anchor’s two glassware manufacturing plants. Newell would not retain any capability to manufacture

glassware.

In its Amended Complaint, filed February 22, 2002, the FTC alleged that the acquisition

pursuant to the amended merger agreement would substantially lessen competition. The proposed

merger would eliminate Anchor as a competitor from the food service glassware market and RCP

would be unable to replace Anchor as a viable competitor. The Commission later issued a

statement on April 2, 2002, in which it reaffirmed its position that the amended merger would

result in a lessening of competition in violation of the Clayton and FTC Acts. Statement of the

Federal Trade Commission Regarding FTC v. Libbey Inc., et al., Apr. 2, 2002.

On April 22, 2002, the District Court granted the FTC’s motion for a preliminary injunction

pending the completion of administrative adjudication. Memorandum Opinion (“Op.”) (FTC v.

Libbey Inc., et al., 2002 U.S. Dist. LEXIS 8867 (D.D.C., Apr. 22, 2002)). 

In granting the FTC’s motion, the Court found that Libbey dominates the food service

glassware market with a 65 percent share, while Anchor, with seven percent of the market, has the

third largest share. Op. at 3. Although Libbey’s market share dwarfs Anchor’s, the Court found that

“Anchor is Libbey’s most formidable competitor in the food service glassware market,” because it is

“the largest seller of Libbey look-alikes,” id. at 18, and because its prices “are frequently 10 to 20

percent lower than Libbey’s prices,” id. at 5. 

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.” Id. at 28. Moreover, the Court held that

RCP would not replace Anchor as an effective competitor. Because RCP would not retain important

assets, such as Anchor’s manufacturing plants, brand name, customer relationships, and key

employees, the Court held that the amended merger would have the same anti-competitive effect as if

Libbey had acquired all of Anchor. Id. at 23. 

On May 2, 2002, Respondents moved to vacate the preliminary injunction order on the

ground that Newell and a third party supplier had modified the price term under a glassware supply

agreement for RCP. On May 17, 2002, the District Court denied Respondents’ motion because of

the numerous other cost components that would likely make RCP’s costs substantially higher than

Anchor’s costs and, therefore, not a viable competitive alternative to Anchor. FTC v. Libbey Inc.,

Order Denying Defendants’ Motion to Vacate, May 17, 2002. Reiterating the reasons in its earlier

opinion, the Court stated that “the FTC’s concerns remain[ed] plausible” and noted that the

appropriate venue to fully evaluate the amended merger was at a full administrative hearing before
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the FTC. Id. at 3.

Following the District Court’s preliminary injunction order, on May 9, 2002, the

Commission issued its complaint against Respondents. Shortly after answering the complaint, on

June 10, 2002, Respondents announced that they had withdrawn plans for Libbey to acquire Anchor

from Newell. On July 23, 2002, Respondents entered into the Consent Agreement. Pursuant to

Rule 3.25 of the Commission’s Rules of Practice, 16 C.F.R. § 3.25, a motion was filed to withdraw

the matter from adjudication, and on July 25, 2002, the matter was withdrawn from adjudication for

the purpose of considering the Consent Agreement.

III. The Complaint

In its administrative complaint, the FTC charged that both the acquisition and the amended

merger violated the Clayton and FTC Acts. The complaint alleges that the acquisition and the

amended merger would eliminate competition between Libbey and Anchor, increase market

concentration, and increase barriers to entry. The complaint also alleges that the amended merger

would impair the viability of Newell as a competitor in the sale of food service glassware.

IV. Terms of the Proposed Order

The Proposed Order (“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. 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. Order ¶ II. 

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. Order ¶ III. If Newell sells, transfers or otherwise conveys Anchor’s Food Service

Business to Libbey or Vitrocrisa, Newell’s obligation to notify the Commission extends for 10

years. Id. In all other circumstances, Newell is obligated to provide notice for five years. Id. 

Anchor’s Food Service Business is defined as “all of Anchor’s rights, title, and interest in

and to all assets and businesses, tangible or intangible, anywhere in the world, used in the

research, development, manufacture, distribution, licensing, marketing, or sale of glassware

products to Food Service Customers in the United States,” and expressly includes assets that

Newell may have internally transferred to other divisions on or after June 10, 2002. Order ¶ I.G. 

Anchor’s Food Service Business does not include items that are generally available, are not unique

to the glassware industry, or are minimally used in the production of food service glassware, such

as sand, scrap metal, and office equipment. Id.

V. Opportunity for Public Comment

The Proposed Order has been placed on the public record for 30 days for receipt of
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comments from interested persons. Comments received during this period will become part of

the public record. After 30 days, the Commission will again review the Consent Agreement and

the comments received and will decide whether to make the Proposed Order final. By accepting

the Consent Agreement subject to final approval, the Commission anticipates that the competitive

problems alleged in the Complaint will be resolved.

The Commission invites public comment to aid the Commission in determining whether it

should make final the Proposed Order contained in the Consent Agreement. The Commission

does not intend this analysis to constitute an official interpretation of the Proposed Order, nor

does this analysis modify in any way the terms of the Proposed Order.