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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSI 

OFFICE OF ADMINISTRATIVE LAW JUDGE . 

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_________________________________ ) 


ANSWER AND DEFENSES 


OF RESPONDENT ARDAGH GROUP S.A. 


Pursuant to Rule 3.12 ofthe Commission's Rules ofPractice for Adjudicative 

Proceedings, Respondent Ardagh Group S.A. ("Ardagh") answers the Administrative 

Complaint ("Complaint") filed by the Federal Trade Commission ("FTC") as follows: 

INTRODUCTORY STATEMENT 

In January 2013, Ardagh Group S.A., a Luxembourg company specializing in 

metal and glass packaging and manufacturing technology, entered into an agreement with 

Compagnie de Saint-Gobain, a French company that also makes glass packaging, to 

purchase Saint-Gobain's glass container operations in the United States. Ardagh and 

Saint-Gobain operate within a fiercely competitive packaging industry in the United States 

where glass packaging competes vigorously with, and continuously loses share to, plastic, 

metal and other forms ofpackaging. Ardagh entered into this transaction because it 

believes it can reduce costs and extract other annually recurring significant 

synergies-valued at least $95 million annually (with a present discounted value well in 

excess of$1 billion)-which will enable the combined company to better compete with 

plastic, metal and other forms ofpackaging. 

In the Matter of 

Ardagh Group S.A, 

a public limited liability company, 

and 

Saint-Gobain Containers, Inc., 

a corporation, 

and 

Compagnie de Saint-Gobain, 

a corporation. 

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) Docket No. 9356 

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The Federal Trade Commission, in issuing a complaint challenging the transaction, 

paints a picture of a three-firm U.S. glass container industry that operates today in a tacitly 

collusive manner to harm their customers in the beer and spirits industries. The Complaint 

portrays brewers and distillers to be at the mercy ofthe three glass container suppliers 

because they have no packaging alternatives. 

That picture is a far cry from the truth. Domestic glass container producers have 

been under assault from nonglass containers-primarily cans and plastic-for years. From 

1992 through 2012, total U.S. glass container shipments have declined 23% as customers 

switched to other types ofcontainers. This dramatic decline in demand for glass containers 

has had severe consequences for the industry. As demand contracted, significant excess 

capacity--combined with the high fixed cost/low marginal cost characteristics of glass 

container industrial plants-led many producers to chase volume to fill their plants, only to 

find that the low prices they needed to keep customers from switching to nonglass 

containers did not cover the glass plants' high ongoing fixed costs. As a result, there was a 

reduction in capacity as plants closed and firms consolidated in order to stay in business. 

The three most significant surviving companies with glass container plants in the 

United States-what the Complaint calls the "Three Majors" --certainly do not look like 

they have any market power, let alone that they are the well-protected members ofthe 

three-firm oligopoly the Complaint alleges. Anchor Glass, which Ardagh acquired last 

year and which forms the core ofArdagh's glass container business in the United States, 

went into bankruptcy three times between 1996 and 2006. After Anchor emerged from 

bankruptcy in 2006, the first effort to sell it in 2010 failed for lack of interested buyers and 

it was only in 2012 that Anchor found a willing buyer. Moreover, for the last five years the 

efforts of Saint-Gobain's parent company to sell some or all of its worldwide glass 

container business also met with a notable lack ofbuyer interest and resulted, among other 

things, in a failed partial IPO in 2011. Finally, Owens-Illinois, Inc. (0-I) saw its stock price 

drop 40% since 2008, while the Dow Jones Industrial Average increased almost 20%. 

None ofthis is what one would expect to see ifthe industry were the tight triopoly facing 

inelastic demands from captive customers that are unable to tum elsewhere as the 

Complaint describes. 

What the Complaint fails to acknowledge are the substantial competitive 

constraints Ardagh and Saint-Gobain face today from nonglass competition, import 

competition, and the bargaining power of large buyers, as well as the limited competition 

between Ardagh and Saint-Gobain for beer and spirits customers. 

Nonglass competition. By ignoring the competition between glass and nonglass 

packaging, the Complaint flies in the face ofwell-settled precedent ofthe federal courts 

and the Commission itself. In United States v. Continental Can Co., 378 U.S. 441 (1964), 

the Supreme Court held that a merger between the second largest can producer and the 

third largest glass producer violated Section 7 ofthe Clayton Act after finding that glass 

and metal containers were in the same relevant product market for all end uses-including 

beer-for which they competed. !d. at 455,449. 

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In 1988, the district court applied Continental Can in denying the Commission's 

petition for a preliminary injunction to block the merger ofO-I and Brockway, Inc., the 

second and third largest glass container companies in the United States at the time. FTC v. 

Owens-Illinois, Inc., 681 F. Supp. 27 (D.D.C. 1988) (noting that, "[i]n large part, the 

instant case is a 1980s revival ofthe 1960s classic United States v. Continental Can"), 

vacated as moot, 850 F.2d 694 (D.C. Cir. 1988) (per curiam). In particular, the district 

court found that "the largest elastic end use for glass containers is beer; it accounts for over 

30% ofthe United States demand for glass containers, and there is no dispute that glass 

containers for beer compete directly with cans for packaging." !d. at 45. When the 

0-I/Brockway merger was tried in the administrative proceeding, the full Commission 

rejected an all-glass market in every end-use where nonglass usage was at least 5% and at 

least one significant commercial customer in the end-use used nonglass packaging. !d. at 

298-320. Although glass beer bottles were not alleged to be a relevant market and hence 

were not at issue in the administrative proceeding, the Commission did find that glass and 

plastic spirits containers were in the same relevant product market, even though the 

penetration ofplastic was much less than it is today. !d. at 306 (finding intermaterial 

competition throughout all sizes of spirits containers where smallest size had shifted to 

plastic, 20% ofthe largest size was bottled in plastic with projections ofhigher percentages 

in the future, many producers packaged spirits ofone type and size or another in plastic, 

and "no technical reason why distilled liquors could not be packaged in plastic in all 

sizes"). 

The changed circumstances between the 0-UBrockway case and today make the 

finding that nonglass containers must be included in the relevant market even more 

compelling. Moreover, major recent conversion successes, continuing research efforts to 

create alternative nonglass containers that customers will substitute for glass containers, 

and increasing consumer acceptance of nonglass container for a wider range of products 

belie any argument that the substitution possibilities have been exhausted. 

Glass beer bottles constitute 62% of all U.S. glass container shipments, yet over 

60% ofall beer is packaged in nonglass containers. Anheuser-Busch InBev ("AB"), the 

largest domestic brewer, has recently dramatically decreased its use of glass containers in 

the last five years-by 1.7 billion units-and now packages almost 70% of its beer in 

nonglass containers. MillerCoors, the other domestic "mass" brewer, similarly packages 

significant volumes in cans. In addition, beginning in 2014, MillerCoors also will begin 

selling product in 32 and 40 oz plastic bottles, thereby switching at least 187 million units 

from glass containers to plastic containers. Craft brewers are also rapidly adopting cans: 

although only 81 craft brewers used cans in 2010, today over 300 craft breweries, or about 

25% of all micro breweries and regional craft breweries in the United States, package over 

1025 brands of craft beer in cans. Just recently, Boston Beer, by far the largest ofthe craft 

brewers, after a decade or more oftelling its customers that it would never package beer in 

cans, has begun selling Samuel Adams Boston Lager in a new custom-designed "Sam 

Can." 

In spirits, which constitute about 4% of all U.S. glass container shipments, 

customers are also rapidly increasing their purchases of nonglass containers. Over the last 

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five years alone, spirits customers have switched about 1 0% oftheir containers from glass 

to plastic, with approximately 40% of all spirits today packaged in plastic. Today, almost 

100% ofthe smaller sized spirits containers (50 ml and 100 ml), and roughly 30% to 40% 

ofthe remaining sizes sold at retail (including the popular 750 ml), are packaged in plastic.1 

Examples of major brands packaged in plastic 750 ml bottles include SmirnoffVodka, 

Captain Morgan Spiced Rum, Jim Beam Bourbon, Sobieski Vodka, Bacardi Gold Rum, 

Southern Comfort, Gordon's Vodka, Canadian Mist Canadian Whisky, Early Times 

Kentucky Whisky, and Wild Turkey Bourbon. 

The glass container companies, through their trade association the Glass Packaging 

Institute, invest significantly in promoting the image of glass against other packaging 

materials. Ifthe only glass container customers are those with inelastic demand for glass as 

the Complaint alleges, there would be no reason to invest in these image-building efforts. 

Likewise, plastic container companies and metal container companies innovate to take 

share away from glass containers, while glass container companies innovate in an effort to 

keep their customers. 

When the relevant product markets are appropriately defined to include the 

nonglass containers that are used in the segment-the over 60% of nonglass beer 

containers and the over 40% ofnonglass spirits containers-the transaction presents no 

colorable competitive concern. 

Import competition. In addition to competition from nonglass containers, U.S. glass 

container manufacturers face significant competition from imports. In the last five years 

alone, glass container imports almost doubled and now comprise 18% of total U.S. glass 

container shipments. Glass beer bottles are imported from Mexico today and there is 

potential for increased imports from other Mexican glass container plants. In fact, AB just 

acquired DIF A, a leading Mexican glass manufacturer that historically has provided bottles 

to the Modelo beer brands. As part of that acquisition, AB has acquired a brand new glass 

container plant at Piedras Negras, located on the Texas border. Likewise, for spirits 

customers, there are numerous companies abroad that ship glass containers to spirits 

customers in the United States. Currently, there are at least 10 other sellers importing glass 

containers from Mexico, France, Germany, the Caribbean, and China for sale to U.S. 

spirits customers, in addition to several domestic manufacturers such as Anchor Hocking 

and Piramal. 

Power buyers. The bargaining between a glass container company and its buyers is 

very asymmetrical. While the glass container plant can only produce glass containers, its 

customers have a very credible threat of switching to nonglass alternatives or imports. 

Notably, the customer does not have to switch all of its purchases of glass containers to 

Many high-end spirits brands are imported already bottled and are not part of the addressable U.S. 

container market, although their presence gives a skewed impression that nonglass containers have a 

weak presence in premium liquors. These high-end brands include Dewars, Chivas Regal, Tanqueray, 

Grey Goose, Absolut, Glenlivet, and Bombay Sapphire. 

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nonglass containers to have a significant disciplining effect. Given the high fixed cost/low 

marginal cost nature of glass container production and the limited demand for glass 

containers, even a small shift by a customer in its purchasing mix away from glass and in 

favor of nonglass can impose a very large loss ofprofits on the glass container 

manufacturer. In addition, multinational customers, such as AB and many liquor 

companies (including Diageo, Pemod Ricard, Bacardi, and Brown Forman), can discipline 

the prices in the United States by threatening to shift some oftheir demand in Europe and 

elsewhere away from the supplier's non-U.S. operations. 

Lack ofclose competition between Ardagh and VNA. Apart from competition from 

nonglass containers and glass container imports and the asymmetrical bargaining power of 

the customers with whom the parties mostly deal, it is also significant that in most 

instances Ardagh and Saint-Gobain do not compete closely with one another for either beer 

or spirits container customers. Beer bottles have a high shipping cost relative to their value 

and brewers--especially the largest ones-are very sensitive to the distance ofthe glass 

container plant to the brewery. For the most part, Ardagh's and Saint-Gobain beer bottle 

plants are not located close enough to each other to enable them realistically to compete 

with one another. 

Pricing constraints from downstream competition. Finally, even those products 

that remain in glass containers must compete with products in nonglass containers, and this 

downstream competition imposes a price constraint upstream on glass container prices. 

Thus, for example, not only can AB shift production between glass and nonglass packaging 

directly in response to a change in relative prices, even if it does not its consumers can 

switch between purchasing AB products in glass and nonglass containers. Similarly, a 

craft brewer that sells its product only in glass containers must compete for consumers with 

other craft brewers that sell their products in cans. If consumers change their purchasing in 

response to changes in relative prices ofproducts packaged in glass and nonglass 

containers, this in tum will change the purchasing patterns ofglass container customers 

away from purchasing the anticompetitively higher priced containers, thereby undermining 

the profitability of such a price increase. 

Synergies. Finally, Ardagh's acquisition of Saint-Gobain will result in recurring 

synergies in excess of $95 million annually by 2016, which have a present discounted 

value well in excess of$1 billion. These quantified synergies include overhead costs 

savings, reductions in production costs, and manufacturing footprint efficiencies. (Some 

synergies, including procurement cost savings, have not been quantified.) The synergies 

depend on Ardagh's trade secrets, process technology, and management approach. None of 

the efficiencies will occur in the absence ofthe transaction. Moreover, much ofthe cost 

saving in raw materials, energy and freight will be passed on to customers under price 

adjustment clauses in contracts and theJower manufacturing costs will make glass 

containers more competitive against nonglass containers and glass container imports. 

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I. NATURE OF THE CASE 

1. Ardagh admits that it produces and sells various types ofglass containers, 

including those used by beer and spirits bottling customers in the United States, and states 

on information and belief that Saint-Gobain Containers, Inc. ("Saint-Gobain") and 

Owens-Illinois, Inc. ("0-I"), among others, also produce and sell glass containers in the 

United States. In all other respects, Ardagh denies the allegations contained in 

Paragraph 1. 

2. Ardagh admits that it proposes to acquire Saint-Gobain. In all other 

respects, Ardagh denies the allegations contained in Paragraph 2. 

3. Ardagh denies the allegations contained in Paragraph 3. 

4. Ardagh denies the allegations contained in Paragraph 4, except that glass 

container plants are expensive to build and that regulatory approvals are required. 

II. JURISDICTION 

5. The allegations in Paragraph 5 are legal conclusions to which no response is 

required. To the extent a response is required, Ardagh denies the allegations in Paragraph 5, 

except admits that the Acquisition, as defined in the Complaint, constitutes an acquisition 

under Section 7 ofthe Clayton Act. 

III. RESPONDENTS 

6. Ardagh admits that it is a Luxembourg public limited liability corporation 

(societe anonyme) incorporated and existing under the laws ofthe Grand Duchy of 

Luxembourg, having its registered office at 56, rue Charles Martel, L-2134 Luxembourg. 

Ardagh admits that its 2012 global sales were approximately $4.8 billion and that it owns 

nine glass container plants located in seven states in the U.S. In all other respects, Ardagh 

denies the allegations contained in Paragraph 6. 

7. On information and belief, Ardagh admits the first four sentences of 

Paragraph 7. Ardagh is without knowledge and information sufficient to form a belief as to 

the truth of the remaining allegations in Paragraph 7 and therefore denies them. 

IV. THE ACQUISITION 

8. Ardagh admits the allegations contained in Paragraph 8, except that it 

denies that the acquisition price is $1.7 billion. 

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V. BACKGROUND 

A. Glass Containers 

9. Ardagh admits that certain glass container manufacturers produce glass 

containers in a variety of shapes and sizes for food and beverage products. In all other 

respects, Ardagh denies the allegations contained in Paragraph 9 .. 

10. Ardagh admits that glass containers can guard against oxygen invasion, 

maintain the original flavor ofthe product packaged by the container, are chemically inert, 

and are 100% recyclable, and states that nonglass packaging materials have many or all of 

these same attributes. Ardagh further states that, although the glass container industry 

promotes glass as conveying a premium or distinctive brand image and as being associated 

with quality, many Brewers and Distillers have successfully switched to packaging 

products in nonglass packaging without apparent loss of brand image or damage to 

consumer perceptions ofquality. In all other respects, Ardagh denies the allegations 

contained in Paragraph 10. 

11. Ardagh admits that it does not manufacture flat window glass, table glass, 

specialty pharmaceutical glass or industrial glass in the United States. In all other respects, 

Ardagh denies the allegations contained in Paragraph 11. 

B. Market Structure 

12. Ardagh admits that it has 9 glass container plants in the United States. On 

information and belief, Ardagh admits that 0-I has 17 glass container plants in the U.S. and 

two in Canada and that Saint-Gobain has 13 glass container plants in the U.S. In all other 

respects, Ardagh denies the allegations contained in Paragraph 12. 

13. Ardagh admits that it entered the U.S. glass container industry in 2012 with 

its acquisition ofLeone Industries and Anchor Glass Container Corporation. Ardgah 

further admits that its proposed acquisition of Saint-Gobain would be its third acquisition 

of a glass container manufacturer in the U.S. within two years. In all other respects, 

Ardagh denies the allegations contained in Paragraph 13. 

14. Ardagh admits that there are a number ofother glass container 

manufacturers operating in the U.S., including Arkansas Glass, Piramal, Anchor Hocking, 

Gallo Glass, Bennu Glass and Gerresheimer Glass. In all other respects, Ardagh denies the 

allegations contained in Paragraph 14. 

15. On information and belief, Ardagh admits that Gallo Glass is a subsidiary of 

E. & J. Gallo Winery and that Gallo Glass that principally supplies wine and spirits bottles 

to E. & J. Gallo. Ardagh further admits on information and beliefthat Rocky Mountain 

Bottle Company is a joint venture between MillerCoors and 0-I that exclusively supplies 

beer bottles to MillerCoors. On information and belief, Ardagh admits that 

Anheuser-Busch InBev ("AB InBev") owns and operates the Longhorn Glass plant in 

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Texas and states on information and belief that AB InBev also recently acquired four glass 

container plants producing beer bottles in Mexico through its acquisition ofModelo. In all 

other respects, Ardagh denies the allegations contained in Paragraph 15. 

16. On information and belief, Ardagh admits that Vitro and Fevisa are 

Mexican glass container manufacturers and that both export glass containers to the United 

States. Ardagh further states on information and belief that imports of glass containers to 

the U.S. have grown 41% since 2007, and accounted for over 18% of U.S. glass container 

shipments in 2012. In all other respects, Ardagh denies the allegations contained in 

Paragraph 16. 

VI. INDUSTRY BACKGROUND: MARKET CONSOLIDATION 

17. Ardagh admits that the U.S. glass container industry has changed 

significantly over the last 30 years, and states that plant closures have taken place in 

response to significant reduction in demand for glass containers as customers have shifted 

to nonglass packaging. Ardagh denies the allegations in the second sentence of 

Paragraph 17, except admits that in 1983 there were 23 glass container manufacturers 

operating in the United States, and states that it is without knowledge or information 

sufficient to form a belief as to the number ofplants oper.ated by each manufacturer. In all 

other respects, Ardagh denies the allegations in Paragraph 17. To the extent that 

Paragraph 17 purports to quote from or extract the contents ofArdagh's business 

documents, Ardagh respectfully refers the Court to those documents for their complete and 

accurate contents and context. To the extent the Complaint alleges the quoted statement is 

an admission by Ardagh, this allegation is denied. 

18. Ardagh admits that the glass container industry has been plagued with 

excess capacity as customers shifted significant portions of demand from glass containers 

to nonglass containers. Ardagh further admits that it priced aggressively to retain demand 

for its production and that at times these efforts resulted in prices that covered its short-run 

variable costs but not its long-run costs, including the costs of capital. To the extent that 

Paragraph 18 purports to quote from or extract the contents ofArdagh's or Saint-Gobain's 

business documents, Ardagh respectfully refers the Court to those documents for their 

complete and accurate contents and context. To the extent the Complaint alleges any 

quoted statement is an admission by Ardagh, this allegation is denied. In all other respects, 

Ardagh denies the allegations in Paragraph 18. 

19. Ardagh admits on information and beliefthat U.S. domestic glass container 

production capacity declined as customer demand shifted from glass containers to nonglass 

containers and the reduced demand could no longer support the existing capacity. Ardagh 

also admits that since emerging from its last bankruptcy in 2006, Anchor has followed a 

strategy (sometimes referred to as ''value over volume") whereby Anchor sought to sell 

products only at prices that allow it to sustain its business in the long run, rather than 

pursuing sales volume at prices that would not enable Ardagh to recover its full costs. To 

the extent that Paragraph 19 purports to quote from or extract the contents ofArdagh' s or 

Saint-Gobain's business documents, Ardagh respectfully refers the Court to those 

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documents for their complete and accurate contents and context. To the extent the 

Complaint alleges the quoted statement is an admission by Ardagh, this allegation is denied. 

In all other respects, Ardagh denies the allegations in Paragraph 19. 

20. Ardagh admits that after Anchor's emergence from bankruptcy in 2006 it 

sought and obtained provisions in multi-year contracts with its significant customers 

providing for pass-through of cost increases and cost reductions and surcharges for natural 

gas. These provisions shared the upside and downside risks ofsignificant changes in input 

costs with multi-year customers, gave customers more transparency into production costs, 

and better assured customers of sustainable long-run supply. To the extent that 

Paragraph 20 purports to quote from or extract the contents ofArdagh' s business 

documents, Ardagh respectfully refers the Court to those documents for their complete and 

accurate contents and context. To the extent the Complaint alleges the quoted statement is 

an admission by Ardagh, this allegation is denied. In all other respects, Ardagh denies the 

allegations in Paragraph 20. 

21. Ardagh admits that it competes for glass container contracts against 

Saint-Gobain and 0-I, as well as against other U.S. glass container manufacturers, 

imported glass containers, and nonglass packaging. To the extent that Paragraph 21 

purports to quote from or extract the contents ofArdagh's or Saint-Gobain's business 

documents, Ardagh respectfully refers the Court to those documents for their complete and 

accurate contents and context. To the extent the Complaint alleges any quoted statement is 

an admission by Ardagh, this allegation is denied. In all other respects, Ardagh denies the 

allegations in Paragraph 21. 

VII. THE RELEVANT PRODUCT MARKETS 

22. Ardagh denies the allegations in Paragraph 22. 

23. Ardagh admits that beer and spirits together account for over 60% ofU.S. 

glass container demand. Ardagh denies that spirits are an important driver for U.S. glass 

container demand, since they represent only approximately 4% of2012 glass container 

shipments. Ardagh lacks knowledge or information on the value of glass containers 

purchased by Brewers annually and does not admit the second sentence ofParagraph 23. 

Ardagh denies that nong1ass packaging is not in the relevant product market and states that 

increases in the relative value propositions ofglass and nonglass containers do cause shifts 

in Brewers' container purchasing decisions in the long run, making price increases 

unprofitable for glass container producers. In all other respects, Ardagh denies the 

allegations in Paragraph 23. 

24. Ardagh denies that Brewers and Distillers do not view other packaging 

materials as interchangeable for glass containers and states that Brewers and Distillers can 

and do package their products in both glass and nonglass containers without loss of sales 

volume or brand identity. Ardagh denies that the existence of nonglass packaging has not 

impacted its pricing behavior and states that its introduction ofprice-adjustment formulae 

and surcharges for commodity price movements is consistent with contracting practices for 

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aluminum and plastic packaging. Ardagh lacks knowledge or information sufficient to 

form a belief as to the truth ofthe remaining allegations in Paragraph 24 and therefore 

denies them. 

25. Ardagh denies the allegations in the first and second sentences ofParagraph 

25, except admits that many Brewers sell beer packaged in both glass and nonglass 

containers. Ardagh admits that it forecasts demand for craft beer as growing, but states that 

much ofthe increased consumer demand will be for craft beer in nonglass packaging, with 

only modest growth in glass volumes. Ardagh denies that it forecasts demand for glass 

bottles for beer for the two largest Brewers as stable, and states on knowledge and belief 

that demand for glass bottles from AB InBev has declined substantially in 2013 and is 

expected to decline further in the future. In all other respects, Ardagh denies the 

allegations in Paragraph 25. 

26. Ardagh denies the allegations in Paragraph 26. 

27. Ardagh denies the allegations in the first sentence ofParagraph 27. Ardagh 

admits that price is just one factor in a Distiller's decision to switch from glass to plastic 

containers, but states that spirits customers' ability to switch to plastic containers for some 

or all oftheir sizes or brands constrains Ardagh's pricing and also spurs it to compete on 

nonprice dimensions of competition-such as innovation and service-for products 

remaining in glass. Ardagh denies that any Distillers have completely converted all their 

products to plastic from glass, since most Distillers have multiple sizes and brands, some of 

which they may convert and others ofwhich they will leave in glass. Ardagh admits that 

once a Distiller converts a certain product completely to plastic, that volume rarely reverts 

to glass, but states that Distillers' ability to selectively move certain sizes and products to 

plastic provides a significant long-run competitive constraint on glass container 

manufacturers. In all other respects, Ardagh denies the allegations in Paragraph 27. 

28. Ardagh denies that it does not compete head-to-head with nonglass 

packaging. Ardagh admits that it competes against other glass container manufacturers in 

particular requests for proposals for the supply of glass containers, but denies that the 

ability of Brewers and Distillers to switch to nonglass packaging does not also act as a 

constraint. To the extent that Paragraph 28 purports to quote from or extract the contents of 

Ardagh's business documents, Ardagh respectfully refers the Court to those documents for 

their complete and accurate contents and context. To the extent the Complaint alleges the 

quoted statement is an admission by Ardagh, this allegation is denied. In all other respects, 

Ardagh denies the allegations in Paragraph 28. 

29. To the extent that Paragraph 29 purports to quote from or extract the 

contents ofArdagh' s business documents, Ardagh respectfully refers the Court to those 

documents for their complete and accurate contents and context. To the extent the 

Complaint alleges the q~oted statement is an admission by Ardagh, this allegation is denied. 

In all other respects, Ardagh denies the allegations in Paragraph 29. 

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VIII. THE RELEVANT GEOGRAPHIC MARKET 

30. Ardagh admits that the relevant geographic market in which to analyze the 

competitive effects ofthe Acquisition is no broader than the United States. Ardagh notes 

that the Complaint does not allege what the geographic market is, only what it is not, and 

hence fails to allege an essential element of a prima facie violation of Section 7 ofthe 

Clayton Act. In all other respects, Ardagh denies the allegations in Paragraph 30. 

IX. 	 MARKET CONCENTRATION AND THE ACQIDSITION'S 

PRESUMPTIVE ILLEGALITY 

31. Ardagh denies the first sentence ofParagraph 31. The second and third 

sentences ofParagraph 31 contain legal conclusions to which no response is required. To 

the extent a response is required, Ardagh admits the allegations in the second and third 

sentences ofParagarph 31. With respect to the third sentence ofParagraph 31, Ardagh 

repeats its responses to Paragraphs 22-30 ofthe Complaint and denies that glass containers 

sold to Brewers or glass containers sold to Distillers are relevant product markets in which 

to assess the competitive effects ofthe Acquisition. Moreover, the Complaint fails to 

allege the dimensions ofthe relevant geographic market. In all other respects, Ardagh 

denies the allegations in Paragraph 31. 

X. ANTICOMPETITIVE EFFECTS 

A. The Acquisition Will Likely Lead To Anticompetitive. Coordination. 

32. Ardagh denies the allegations in Paragraph 32. 

33. Ardagh denies the allegations in Paragraph 33. 

34. To the extent that Paragraph 34 purports to quote from or extract the 

contents ofArdagh's or Saint-Gobain's business documents, Ardagh respectfully refers the 

Court to those documents for their complete and accurate contents and context. To the 

extent that the Complaint alleges any quoted statements are admissions by Ardagh, this 

allegation is denied. In all other respects, Ardagh denies the allegations in Paragraph 34, 

except admits that 0-I is publicly traded. 

35. Ardagh denies the allegations in Paragraph 35. To the extent that Paragraph 

35 purports to quote from or extract the contents ofArdagh's business documents, Ardagh 

respectfully refers the Court to those documents for their complete and accurate contents 

and context. To the extent that the Complaint alleges the quoted statements are admissions 

by Ardagh, this allegation is denied. 

36. Ardagh denies the allegations in Paragarph 36. To the extent that Paragraph 

35 purports to quote from or extract the contents of Saint-Gobain's business documents, 

Ardagh respectfully refers the Court to those documents for their complete and accurate 

contents and context. 

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B. 	 The Acquisition Will Eliminate Direct Competition Between Ardagh 

and Saint-Gobain 

37. Ardagh denies the allegations in Paragraph 37 of the Complaint and states 

that there is very limited head-to-head competition between Ardagh and Saint-Gobain for 

Brewer or Distiller customers because of differences in the geographic location ofArdagh 

and Saint-Gobain plants with capabilities to serve different customer groups and capacity 

constraints. 

38. Ardagh denies the allegations in Paragraph 38 of the Complaint. 

39. Ardagh denies the allegations in Paragraph 39. To the extent that Paragraph 

39 purports to quote from or extract the contents ofArdagh's or Saint-Gobain's business 

documents, Ardagh respectfully refers the Court to those documents for their complete and 

accurate contents and context. To the extent the Complaint alleges any quoted statements 

are admissions by Ardagh, this allegation is denied. 

40. Ardagh admits that it competes against all competitors, including all glass 

container manufacturers and manufacturers of nonglass packaging, to offer customers 

more innovative products and better service. In all other respects, Ardagh denies the 

allegations in Paragraph 40. 

41. Ardagh denies the allegations in Paragraph 41 of the Complaint. In 

particular, with respect to the synergy estimates for the Acquisition, Ardagh denies that any 

savings are due to any anticompetitive plant closures and states that its estimates include 

projected increases in efficiency that will increase output. To the extent that Paragraph 41 

purports to refer to the contents ofArdagh's business documents, Ardagh respectfully 

refers the Court to those documents for their complete and accurate contents and context. 

XI. ENTRY BARRIERS 

42. Ardagh denies the allegations contained in Paragraph 42. 

XII. EFFICIENCIES 

43. Ardagh denies the allegations in Paragraph 43. Ardagh's business 

documents and testimony ofits executives demonstrate significant efficiencies that will be 

derived from the Acquisition. These efficiencies are merger-specific and supported by 

Ardagh' s extensive experience in making 12 significant acquisitions of rigid packaging 

manufacturing businesses in Europe and the U.S. since 1999. 

VIOLATIONS 

Count I: Illegal Agreement 

44. Except as where specifically admitted above, the allegations contained in 

Paragraphs 1-43 ofthe Complaint are denied. 

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. I 

PUBLIC 


45. The allegations in Paragraph 45 are legal conclusions to which no response 

is required. To the extent a response is required, Ardagh -Gobain denies the allegations 

contained in Paragraph 45. 

Count ll: Illegal Acquisition 

46. Except as where specifically admitted above, the allegations contained in 

Paragraphs 1-43 ofthe Complaint are denied. 

. 4 7. The allegations in Paragraph 4 7 are legal conclusions to which no response 

is required. To the extent a response is required, Ardagh -Gobain denies the allegations 

contained in Paragraph 4 7. 

AFFIRMATIVE AND OTHER DEFENSES 

The inclusion of any ground within this section does not constitute an admission that 

Respondents bear the burden ofproof on each or any ofthe matters, nor does it excuse the 

Commission from establishing each element of its purported claim for relief. 

First Affirmative Defense 

The Complaint fails to state a claim upon which relief can be granted. 

Second Affirmative Defense 

The alleged relevant product market definitions fail as a matter of law. 

Third Affirmative Defense 

The Complaint fails to allege a relevant geographic market. 

Fourth Affirmative Defense 

The Acquisition will result in substantial merger-specific efficiencies and other 

procompetitive benefits that will benefit consumers and is procompetitive. 

Fifth Affirmative Defense 

The contemplated relief would not be in the public interest because it would, among 

other things, harm consumers. 

Sixth Affirmative Defense 

Ardagh has not knowingly or intentionally waived any applicable affirmative 

defenses. Ardagh presently lacks sufficient knowledge or information on which to form a 

belief as to whether it may have available additional, as yet unstated, affirmative defenses, 

and reserves the right to assert such additional defenses as they become known. 

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PUBLIC 


WHEREFORE, having fully answered the Complaint, Ardagh respectfully requests that 

the Commission: (i) deny the Commission's contemplated relief; (ii) dismiss the complaint 

in its entirety with prejudice; (iii) award Ardagh its costs of suit, including expert's fees 

and reasonable attorneys' fees, as may be allowed by law; and (iv) award such other or 

further relief as the Commission may deem just and proper. 

Dated: July 22,2013 Respectfully Submitted, 

s/ Wayne Dale Collins 

Wayne Dale Collins 

Lisl J. Dunlop 

SHEARMAN & STERLING LLP 

599 Lexington A venue 

New York, NY 10022 

Telephone: (212) 848 4000 

Facsimile: (212) 848 4173 

wcollins@shearman.com 

ldunlop@sheannan.com 

Heather Kafele 

SHEARMAN & STERLING LLP 

801 Pennsylvania Avenue N.W. 

Washington, DC 20004 

Telephone: (202) 508 8000 

Facsimile: (202) 508 8100 

hkafele(ci)shearman.com 

Attorneysfor Respondent Ardagh Group S.A. 

14 

PUBLIC 

CERTIFICATE OF SERVICE 

I hereby certify that on July 22, 2013, I filed the foregoing document electronically using 

the FTC's E-Filing System, which will send notification of such filing to: 

DonaldS. Clark 


Secretary 


Federal Trade Commission 


600 Pennsylvania Ave., NW, Rm. H-113 


Washington, DC 20580 


I also certify that I delivered via electronic mail and U.S. Mail a copy ofthe foregoing 

document to: 

The Honorable D. Michael Chappell 


Administrative Law Judge 


Federal Trade Commission 


600 Pennsylvania Ave., NW, Rm. H-110 


Washington, DC 20580 


I further certify that I delivered via electronic mail a copy ofthe foregoing document to: 

James E. Abell 


Monica Castillo 


Steven A. Dahm 


Joshua Goodman 


Edward D. Hassi 


Sebastian Lorigo 


Brendan J. McNamara 


Angelike Mina 


Catharine M. Moscatelli 


Angel Prado 


Kristian Rogers 


Danielle Sims 


Eric M. Sprague 


Steven L. Wilensky 


U.S. Federal Trade Commission 


600 Pennsylvania A venue, NW 


Washington, DC 20580 


jabell@ftc.gov 


mcastillo@ftc.gov 


sdahm@ftc.gov 


jgoodman(a1ftc.gov 


ehassi@.ftc .gov 


slorigol@ftc.gov 


15 

PUBLIC 


bmcnamara@ftc.gov 


amina@ftc.gov 


cmoscate11 i(cl{ftc. gov 


aprado@.ftc.gov 


krogers@ftc.gov 


dsimsl @ftc.gov 


esprague@ftc.gov 


swilenksy@ftc.gov 


Complaint Counsel 

Christine V amey 


Y onatan Even 


Veena Viswanatha 


Athena Cheng 


Cravath, Swaine & Moore LLP 


825 Eighth A venue 


New York, NY 10019 


(212) 474-1140 


cvarnev@.cravath.com 


yeven@cravath.com 


vviswanatha@cravath.com 


acheng@cravath.com 


Counselfor Respondent Saint-Gobain Containers, Inc. 

CERTIFICATE FOR ELECTRONIC FILING 

I certify that the electronic copy sent to the Secretary ofthe Commission is a true and 

correct copy ofthe paper original and that I possess a paper original ofthe signed document 

that is available for review by the parties and the adjudicator. 

July 22, 2013 By: 	 s/Heather Ka(ele 

Attorney 

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