ANALYSIS OF AGREEMENT CONTAINING CONSENT ORDERS

 TO AID PUBLIC COMMENT

In the Matter of Jarden Corporation and K2 Incorporated

File No. 071 0168

I. Introduction

The Federal Trade Commission (“Commission”) has accepted, subject to final approval,

an Agreement Containing Consent Orders (“Consent Agreement”) from Jarden Corporation

(“Jarden”) and K2 Incorporated (“K2”). The purpose of the proposed Consent Agreement is to

remedy the anticompetitive effects that would otherwise be likely to result from Jarden’s

acquisition of K2. Under the terms of the proposed Consent Agreement, Jarden and K2 are

required to divest assets related to K2's Cajun Line®, Omniflex®, Outcast®, and SupremeTM

monofilament fishing line products. 

The proposed Consent Agreement has been placed on the public record for thirty days to

solicit comments from interested persons. Comments received during this period will become

part of the public record. After thirty days, the Commission will again review the proposed

Consent Agreement and the comments received, and will decide whether it should withdraw

from the proposed Consent Agreement or make it final.

Pursuant to an Agreement and Plan of Merger dated April 24, 2007, Jarden proposes to

acquire K2 in a transaction valued at approximately $1.2 billion (“Proposed Acquisition”). The

Commission’s complaint alleges that the Proposed Acquisition, if consummated, would violate

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, by lessening competition in the market for

monofilament fishing line in the United States. The proposed Consent Agreement would remedy

the alleged violations by replacing the competition that would be lost in this market as a result of

the Proposed Acquisition.

II. The Parties

Jarden is a leading provider of branded consumer products, including outdoor sporting

goods, kitchen appliances, firelogs, playing cards, and a wide variety of consumer and medical

plastic products. In 2006, Jarden’s revenues were approximately $3.85 billion. In April 2007,

Jarden acquired Pure Fishing Inc. (“Pure Fishing”), a fishing tackle company that sells products

under several brands, including Abu Garcia®, Berkley®, Stren®, Mitchell®, and Spider®.

K2 is a leading provider of branded consumer outdoor sports equipment. K2 reported

annual sales of $1.4 billion in 2006, attributable to four primary business segments: Marine and

Outdoor, Team Sports, Action Sports, and Apparel and Footwear. K2 participates in the fishing

tackle markets through its Shakespeare division, marketing products under several brand names

including Shakespeare®, Ugly Stik®, Penn®, Pflueger®, and Cajun Line®. 
III. Monofilament Fishing Line

Monofilament fishing line is the most widely-used and least expensive type of fishing

line. While other specialized types of fishing line, including braided (or super line) and

fluorocarbon, appear to be growing in popularity, especially among avid anglers, the vast

majority of fishing line purchases in the United States are of monofilament line. Monofilament

line is acceptable for a broad range of fishing conditions, but is particularly well-suited for

situations in which it is important for the fishing line to be flexible and stretch. Due to its low

cost and ease of use, monofilament line is popular with both novices and more avid anglers. The

evidence indicates that anglers, if faced with a five to ten percent increase in the price of

monofilament line, would not switch to braided line or fluorocarbon line. Therefore,

monofilament line is the relevant product market in which to analyze the competitive effects of

the proposed acquisition.

The relevant geographic market in which to assess the impact of the Proposed

Acquisition is the United States. Although monofilament line appears to be routinely sourced by

U.S. sellers from contract manufacturers worldwide, no foreign firm is a significant seller in the

U.S. and, in light of the entry conditions discussed below, none is likely to become significant

within two years.

The market for monofilament fishing line is highly concentrated, with Pure Fishing’s

three brands, Berkley®, Stren®, and Spider®, dominating the market. Although Shakespeare

has a smaller presence in the market than Pure Fishing, Shakespeare appears to be the secondlargest firm in the monofilament fishing line market and Pure Fishing’s most significant

competitor, due, in part, to the recent success of its Cajun Line, a red monofilament that is

growing in popularity. 

Entry into the market for monofilament fishing line that would be sufficient to deter or

counteract the anticipated competitive effects of the proposed transaction is unlikely to occur in

the next two to three years. Although obtaining a source of supply for monofilament line does

not constitute a significant barrier to entry, the need to develop brand equity, distribution,

infrastructure, and a marketing presence for the brand poses a significant barrier to de novo entry

and to entry by participants in adjacent markets. The relatively limited sales opportunities in the

monofilament fishing line market make it unlikely that a new entrant could justify the investment

required to develop and market a new fishing line brand.

The Proposed Acquisition raises significant competitive concerns in the U.S. market for

monofilament fishing line. Pure Fishing’s sales account for a substantial share of the

monofilament market. Shakespeare is Pure Fishing’s most significant competitor. Consumers

have benefitted from competition between Shakespeare and Pure Fishing on pricing, promotional

spending, and product innovations. Thus, unremedied, the Proposed Acquisition likely would

cause anticompetitive harm by enabling Jarden to profit by raising the prices of its monofilament

fishing line unilaterally, as well as reducing its incentives to innovate and develop new

monofilament fishing line products. 
IV. The Consent Agreement

The proposed Consent Agreement effectively remedies the Proposed Acquisition’s likely

anticompetitive effects in the market for monofilament fishing line. The proposed Consent

Agreement preserves competition by requiring the divestiture of Cajun Line®, Omniflex®,

Outcast®, and SupremeTM (the “Divested Assets”) to W.C. Bradley/Zebco (“Zebco”) within

fifteen (15) days after the Proposed Acquisition is consummated. 

Shakespeare’s Penn® monofilament fishing line was not included in the divested assets

because the evidence revealed that this is a rapidly declining brand and did not represent any

competitive constraint to Pure Fishing’s fishing line brands. Furthermore, Penn is best known

for its high-end fishing reels, and as a result, any remedy involving this brand would

unnecessarily present complex brand splitting concerns. 

The Commission is satisfied that Zebco is a well-qualified acquirer of the divested assets. 

Zebco is a significant market participant in the fishing tackle market with a variety products,

including fishing rods, fishing reels, and fishing rod and reel combination kits. Zebco already

has a strong distribution network and knowledgeable sales force with existing relationships with

fishing tackle retailers. 

The proposed Consent Agreement contains several provisions designed to ensure the

success of the divested assets to Zebco by requiring that (1) Jarden and K2 take steps to ensure

that confidential information relating to the divested assets will not be used by Jarden; (2) Zebco

will have the opportunity to enter into employment contracts with certain key individuals who

have experience relating to the divested assets; and (3) certain management employees of K2

who were substantially involved in the research, development, or marketing of the divested assets

be precluded from working on competitive fishing line products at Jarden for a period of two

years.

The Order to Maintain Assets that is included in the proposed Consent Agreement

requires that Jarden and K2 protect the viability, marketability, and competitiveness of the

divestiture assets between the time the Commission accepts the proposed Consent Agreement 

for placement on the public record and when the divestitures take place.

The purpose of this analysis is to facilitate public comment on the proposed Consent

Agreement, and it is not intended to constitute an official interpretation of the proposed Decision

and Order or to modify its terms in any way.