0910050

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Jon Leibowitz, Chairman

Pamela Jones Harbour

William E. Kovacic

J. Thomas Rosch

__________________________________________

)

In the Matter of )

)

PANASONIC CORPORATION, )

a corporation, )

)

and ) Docket No. C-4274

)

SANYO ELECTRIC CO., LTD., )

a corporation. )

)

__________________________________________)

COMPLAINT

Pursuant to the Clayton Act and the Federal Trade Commission Act, and its authority

thereunder, the Federal Trade Commission (“Commission”), having reason to believe that

Respondent Panasonic Corporation (“Panasonic”), a corporation subject to the jurisdiction of the

Commission, has agreed to acquire Respondent Sanyo Electric Co., Ltd. (“Sanyo”) (collectively

“Respondents”), a corporation subject to the jurisdiction of the Commission, in violation of

Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade

Commission Act, as amended, 15 U.S.C. § 45, and it appearing to the Commission that a

proceeding in respect thereof would be in the public interest, hereby issues its Complaint, stating

its charges as follows:

I. RESPONDENTS

1. Respondent Panasonic Corporation is a corporation organized, existing, and doing

business under and by virtue of the laws of Japan, with its head office located at 1006, Oaza

Kadoma, Kadoma-shi, Osaka 571-8501, Japan. Panasonic Corporation of North America is a

wholly-owned subsidiary of Panasonic Corporation with offices at 1 Panasonic Way, Secaucus,

NJ 07094.

2. Respondent Sanyo Electric Co., Ltd. is a corporation organized, existing and

doing business under and by virtue of the laws of Japan, with its head office at 5-5 KeihanHondori 2-Chome, Moriguchi City, Osaka 570-8677, Japan. Sanyo North America Corporation
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is a wholly-owned subsidiary of Sanyo Electric Co., Ltd., with its principal place of business at

2055 Sanyo Ave., San Diego, CA 92145. 

3. Respondents are engaged in, among other things, the production and sale of

rechargeable batteries, including, but not limited to, portable nickel metal hydride batteries. 

4. Respondents are, and at all times relevant herein have been, engaged in

commerce, as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C.

§12, and are corporations whose business is in or affects commerce, as “commerce” is defined in

Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44.

II. THE PROPOSED ACQUISITION

5. Pursuant to a Capital and Business Alliance Agreement (the “Agreement”)

concluded on December 19, 2008, Panasonic announced its intention to commence a cash tender

offer to acquire 100 percent of the voting securities of Sanyo for an aggregate purchase price of

approximately $9 billion (the “Acquisition”). 

III. THE RELEVANT MARKET

6. For the purposes of this Complaint, the relevant line of commerce in which to

analyze the effects of the acquisition is portable nickel metal hydride batteries (“portable

NiMH”). 

7. For the purposes of this Complaint, the relevant geographic area in which to

analyze the effects of the acquisition on the portable NiMH battery market is worldwide. 

IV. THE STRUCTURE OF THE MARKET

8. The worldwide market for portable NiMH batteries is highly concentrated as

measured by the Herfindahl-Hirschman Index (“HHI”) with significant differentiation among

suppliers based on quality and reputation. The combination of Respondents’ portable NiMH

battery businesses would consolidate the only two portable NiMH battery suppliers that produce

high-quality, reliable products. Post acquisition, a combined Panasonic and Sanyo will have a

market share in excess of 65 percent. The post-merger HHI would be 4,675 and the acquisition

will increase the HHI level by 2,028. This market concentration level far exceed the thresholds

set out in the Horizontal Merger Guidelines and thus creates a presumption that the proposed

acquisition will create or enhance market power. 

V. ENTRY CONDITIONS

9. Neither new entry nor repositioning and fringe expansion sufficient to deter or

counteract the anticompetitive effects of the proposed acquisition in the portable NiMH market

is likely to occur within two years. The market for portable NiMH batteries offers very limited

prospects for growth, making it unlikely that a potential competitor would have the incentive to
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make the substantial investments necessary to enter the market de novo. Existing fringe

competitors would have to significantly improve their portable NiMH production facilities,

improve the quality of their portable NiMH batteries, and overcome customers’ unwillingness to

rely on a portable NiMH battery supplier that lacks the track record for producing reliable, highquality products. The limited growth prospects for the portable NiMH battery market make it

unlikely that the fringe competitors would undertake the significant investments necessary to

reposition and expand. 

VI. EFFECTS OF THE ACQUISITION

10. The effects of the Acquisition, if consummated, may be to substantially lessen

competition and to tend to create a monopoly in the portable NiMH battery market in violation

of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, as

amended, 15 U.S.C. § 45, in the following ways, among others:

a. By eliminating actual, direct, and substantial competition between

Respondents in the worldwide portable NiMH battery market; 

b. By increasing the likelihood that Respondents would unilaterally exercise

market power in the worldwide portable NiMH battery market; and 

c. By increasing the likelihood that U.S. consumers would be forced to pay

higher prices for portable NiMH batteries. 

VII. VIOLATIONS CHARGED

11. The Acquisition described in Paragraph 5 constitutes a violation of Section 5 of

the FTC Act, as amended, 15 U.S.C. § 45.

12. The Acquisition described in Paragraph 5, if consummated, would constitute a

violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC

Act, as amended, 15 U.S.C. § 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on

this twenty-third day of November, 2009, issues its Complaint against said Respondents.

By the Commission.

Donald S. Clark

Secretary

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