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ANALYSIS OF AGREEMENT CONTAINING CONSENT ORDER

TO AID PUBLIC COMMENT

In the Matter of Ball Corporation and Rexam PLC

File No. 151-0088

I. INTRODUCTION AND BACKGROUND

Pursuant to an agreement dated February 19, 2015 (the “Acquisition”), Ball Corporation 

(“Ball”) seeks to acquire Rexam PLC (“Rexam”) in a transaction valued at approximately £5.4 

billion, or $8.4 billion, at the time the Acquisition was announced. In order to preserve 

competition that would be lessened as a result of the proposed Acquisition, the Federal Trade 

Commission (“Commission”) has accepted for public comment, subject to final approval, an 

Agreement Containing Consent Order (“Consent Agreement”) from Ball and Rexam. The 

Commission has also issued a Complaint and Decision & Order, and has assigned a Monitor 

Trustee to oversee compliance with the Consent Agreement.

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 

markets for standard 12-ounce aluminum beverage cans (“Standard Cans”) and specialty 

aluminum beverage cans (“Specialty Cans”) in the United States. The Consent Agreement

would remedy the alleged violations by restoring the competition that would be lost as a result of 

the proposed Acquisition. 

Under the terms of the proposed Consent Agreement, Ball and Rexam are required to 

divest seven aluminum can body plants, one aluminum can end plant, and other innovation and 

support functions in order to preserve competition in the relevant markets in the United States. 

These manufacturing plants account for the majority of Rexam’s sales in the United States. Ball 

and Rexam have agreed to divest these and additional assets around the world to Ardagh Group 

S.A. (“Ardagh”) in a transaction entered into on April 22, 2016 and valued at $3.42 billion, 

including assumption of liabilities. 

The proposed Consent Agreement has been placed on the public record for 30 days to 

solicit 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 proposed Consent 

Agreement and any comments received, and decide whether the Consent Agreement should be 

withdrawn, modified, or made final.
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II. THE PARTIES

Ball, an Indiana corporation headquartered in Broomfield, CO, is the largest 

manufacturer of aluminum beverage cans in the both the United States and the world. In 2015, 

Ball had total sales of $8.0 billion, 74% of which were derived from its worldwide metal 

beverage container business. Approximately 16% of Ball’s revenues come from its worldwide 

sales of metal food and household containers, and approximately 10% from its U.S. aerospace 

business. In 2015, Ball had approximately $2.7 billion in sales of aluminum beverage cans in the 

United States.

Rexam is the second-largest manufacturer of aluminum beverage cans in North America 

and the world. Rexam is a United Kingdom company headquartered in London. Rexam 

manufactures only aluminum beverage containers today, after selling its plastic packaging 

business in 2011 and its glass manufacturing business in 2005. In 2015, Rexam had total 

aluminum beverage container sales of about $5.7 billion, with approximately $1.75 billion 

coming from the United States.

Ardagh, headquartered in Luxembourg, is one of the world’s largest producers of glass 

bottles for the beverage industry and metal cans for the food industry. Ardagh does not currently 

produce aluminum cans for the beverage industry, but it serves many of the same customers as 

Ball and Rexam through its glass bottle business. In 2015, Ardagh had sales of approximately 

$5.9 billion, with approximately $3.6 billion coming from glass packaging and $2.3 billion from

metal food packaging.

III. STANDARD CANS

The first relevant line of commerce in which to analyze the Acquisition is standard 12-

ounce aluminum beverage cans (“Standard Cans”). Approximately 3 out of every 4 beverage

cans sold in the United States today are Standard Cans, which are found, for instance, in a 12-

pack of carbonated soft drinks or beer. Beverage producers purchase Standard Cans because of 

their superior shelf life, filling efficiency, recyclability, compact storage, and relatively low cost. 

Other packaging substrates, such as plastic bottles and glass bottles, do not serve as 

competitive constraints to Standard Cans. Beverage producers sell their products in different 

types of containers in order to meet consumer demand, and could not substitute other container

types for Standard Cans without risking a loss in sales. Beverage producers have also invested 

substantial sums of money in specialized filling lines that are designed to fill either aluminum 

cans, plastic bottles, or glass bottles, and cannot switch from one container type to another. As a 

result, beverage producers negotiate for Standard Cans independently from plastic bottles and 

glass bottles, and do not shift volumes between Standard Cans and other packaging substrates in 

response to fluctuations in their relative prices.

The relevant geographic markets in which to analyze competition for Standard Cans are 

regional. Beverage producers incur significant freight costs from shipping empty cans to their 

filling plants. For this reason, manufacturers of Standard Cans have built a network of plants 

throughout the United States to meet regional customer demand and minimize shipping costs. 
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Although aluminum can manufacturers often ship Standard Cans several hundred miles and win 

bids when they are not the closest supplier, it is not common or cost-effective for Standard Cans 

to ship cross-country. As a result, the Complaint identifies three regional markets in the United 

States in which substantial competition exists between Ball and Rexam for the sale of Standard 

Cans: (1) the South/Southeast; (2) the Midwest; and (3) the West Coast, consisting primarily of 

California. 

The Commission often calculates the Herfindahl-Hirschman Index (“HHI”) to assess 

market concentration. Under the Federal Trade Commission and Department of Justice 

Horizontal Merger Guidelines, markets with an HHI above 2,500 are generally classified as 

“highly concentrated,” and acquisitions “resulting in highly concentrated markets that involve an 

increase in the HHI of more than 200 points will be presumed to be likely to enhance market 

power.”1 Absent the proposed remedy, the Acquisition would increase HHIs for Standard Cans

by 1,712 points to 4,874 in the South/Southeast; by 2,201 points to 5,050 in the Midwest; and by 

1,673 points to 4,680 on the West Coast. As a result, there is a presumption that the proposed 

merger of Ball and Rexam would substantially lessen competition in each of the regional markets

for Standard Cans.

IV. SPECIALTY CANS

The second relevant line of commerce in which to analyze the Acquisition is an 

assortment of specialty aluminum beverage cans (“Specialty Cans”), which come in a variety of 

dimensions that differ from Standard Cans. Specialty Cans include 7.5-ounce and 8-ounce slim

cans, which are narrower and shorter than Standard Cans; 12-ounce sleek cans, which are 

narrower and taller than standard 12-ounce cans; 16-ounce cans, which have the same diameter 

as Standard Cans but are taller; 24-ounce cans, which are wider and taller than Standard Cans; 

and other aluminum cans in non-standard shapes and sizes. Specialty Can sales have been 

growing as beverage producers seek to package their products in new shapes and sizes to reach 

different consumers and consumption occasions.

Beverage producers package in different types of Specialty Cans for different reasons. 

For example, carbonated soft drink producers package some of their products in 7.5-ounce slim 

cans specifically to reach consumers who want a smaller portion in an attractive, sub-100 calorie 

package. Popular with producers of flavored malt beverages are 8-ounce slim cans. Energy 

drink producers package in 16-ounce and other “sleek” cans in order to differentiate their 

products and convey a premium image in ways that cannot be achieved by using Standard Cans. 

Some tea and energy drink producers further differentiate their products and convey value by 

packaging in large 24-ounce cans. 

Although one type of Specialty Can is not typically a substitute for another, it is 

appropriate to group or cluster the different Specialty Cans together for the purposes of market 

definition analysis because each of the products in the assortment is offered under similar 

 1 2010 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines § 5.3.
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competitive conditions. As such, grouping the many different types of Specialty Cans into a 

single cluster enables a more efficient evaluation of competitive effects.

Beverage producers would not substitute Standard Cans, glass bottles, plastic bottles, or 

other container types for Specialty Cans in sufficient quantities to defeat a hypothetical, small 

but significant and non-transitory increase in the price of Specialty Cans. Beverage producers 

package in specific shapes and sizes of Specialty Cans to maximize sales and attract certain 

customers who would not purchase their products in a different package type. Moreover, 

beverage producers have made substantial investments in infrastructure that are used to fill

Specialty Cans and that cannot be used to fill PET bottles or glass bottles.

The relevant geographic market in which to analyze Specialty Cans is the United States. 

A national market is appropriate because each Specialty Can type is produced at only a small 

number of locations nationwide, and Specialty Cans are shipped over much longer distances than 

Standard Cans, often over 1,000 miles. Specialty Cans of particular shapes and sizes are 

produced at only a few locations in the United States because their volumes are only a small 

fraction of the volume of Standard Cans, and it is not cost-effective to spread such small volumes

across a large number of plants.

Ball and Rexam are the two largest suppliers of Specialty Cans in the United States with 

shares of approximately 56% and 21%, respectively, across all Specialty Can sizes. Absent the 

proposed remedy, the Acquisition would increase HHIs for Specialty Cans by 2,284 points to 

6,267 in the United States. As a result, there is a presumption that the proposed merger of Ball 

and Rexam would substantially lessen competition in the national market for Specialty Cans. 

V. EFFECTS OF THE ACQUISITION

Absent relief, the Acquisition would likely cause significant competitive harm in the 

markets for the manufacture and sale of Standard Cans and Specialty Cans to beverage 

producers. The Acquisition would eliminate substantial direct competition between Ball and 

Rexam for the sale of Standard Cans and Specialty Cans. In individual contract negotiations 

with Ball and Rexam, beverage producers have been able to secure better prices and other terms 

by switching, or threatening to switch, their business from one supplier to the other. In some of 

these negotiations, no other suppliers besides Ball and Rexam have submitted a bid, and 

beverage producers have therefore depended on the competition between Ball and Rexam to 

obtain a contract with favorable terms. The Acquisition would also increase the ease and 

likelihood of anticompetitive coordination between the only two remaining independent

beverage can suppliers, Ball and Crown Holdings, Inc. Thus, the Acquisition would likely result 

in higher prices and a reduction in quality, selection, service, and innovation.

VI. ENTRY

Entry in the manufacture of Standard Cans and Specialty Cans would not be timely, 

likely, or sufficient in magnitude, character, and scope to deter or counteract the likely 
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competitive harm from the Acquisition. Considerable entry barriers exist in the manufacture of 

Standard Cans and Specialty Cans, including, but not limited to, substantial capital costs needed 

to construct a new aluminum can plant and significant volume requirements necessary to run a 

plant efficiently. For Standard Cans, a consistent decline in demand has created a further 

disincentive to entry, which has led to a steady removal of capacity for over 20 years. With 

respect to Specialty Cans, a new entrant would be at a significant disadvantage if it were to 

construct new Specialty Can lines compared to incumbent suppliers (led by Ball and Rexam) that 

can convert Standard Can lines to Specialty Can production at lower cost. 

The threat of vertical integration by beverage producers is also unlikely to deter or 

counteract the competitive harm from the Acquisition. A single beverage can plant requires an 

annual production volume in the billions of cans to run profitably, which would preclude all but 

the very largest beverage producers from contemplating vertical integration. Moreover, it is 

difficult for even the largest beverage producers to make a credible threat of vertical integration 

because their filling plants are spread throughout the United States in a way that they could never 

fully supply internally. As a result, even a large, vertically integrated beverage producer would 

have to continue buying at least some beverage cans from existing suppliers, but at a higher price 

since it would receive a smaller volume discount, which would further disincentivize vertical 

integration. Coupled with the significant capital costs and technical requirements needed to 

build a new beverage can plant, vertical integration would not be a credible threat for the vast 

majority of beverage producers.

VII. THE PROPOSED CONSENT AGREEMENT

The proposed Consent Agreement remedies the competitive concerns raised by the 

Acquisition by requiring Ball to divest seven beverage can plants and one can end plant in the 

United States to Ardagh. Divestitures of Rexam’s Bishopville, SC and Olive Branch, MS can 

plants preserve competition for Standard Cans in the South/Southeastern United States. 

Divestitures of Rexam’s Fremont, OH and Chicago, IL can plants preserve competition for 

Standard Cans in the Midwest. Divestiture of Rexam’s Fairfield, CA can plant preserves 

competition for Standard Cans on the West Coast. Divestitures of Rexam’s Winston-Salem, NC, 

Whitehouse, OH, and Chicago, IL can plants preserve competition in Specialty Cans in the 

United States. Finally, divestiture of Rexam’s Valparaiso, IN can end plant ensures that Ardagh 

will be able to manufacture lids for all of its Standard Cans and Specialty Cans produced in the 

United States.

As part of the Consent Agreement, Ball is also divesting Rexam’s U.S. headquarters in 

Chicago, IL and Rexam’s U.S. Technical Center in Elk Grove, IL to Ardagh. In addition, Ball 

has agreed to sell to Ardagh ten beverage can plants and two can end plants in Europe; two 

beverage can plants in Brazil; and other innovation and support functions in Germany, the 

United Kingdom, and Switzerland to resolve competitive concerns in Europe. Divestiture of the 

Ball and Rexam assets to a single, global buyer is important to preserve competition for many 

multinational customers.
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The Consent Agreement requires Ball to transfer all customer contracts currently serviced 

at the beverage can plants that are being divested to Ardagh. Additionally, in order to fully 

service the customer contract with Arizona Beverage Co. (“Arizona”) and to ensure the viability 

of certain divestiture assets, the Consent Agreement requires Ball to purchase a supply of 

beverage cans sufficient to service Arizona’s requirements for the remaining duration of that 

agreement or until Ardagh enters into a separate customer agreement with Arizona. 

The Consent Agreement also requires Ball to provide support services for up to 18 

months, including support for potential line conversions from Standard Cans to Specialty Cans, 

at Ardagh’s request. In addition, Ball must provide Ardagh with a royalty-free, perpetual license 

to use patents and technologies necessary to operate the divested can business. Ball and Rexam 

must also help facilitate the employment of certain key employees by Ardagh. 

The Consent Agreement incorporates a proposed Order to Maintain Assets to ensure the 

continued health and competitiveness of the divested assets. The Consent Agreement also 

provides that the Commission may appoint a Monitor Trustee to monitor Ball and Rexam’s 

compliance with their obligations pursuant to the Consent Agreement, and oversee the 

integration of the Rexam and Ball assets into Ardagh. The Commission has selected ING to 

serve as Monitor Trustee in this matter until integration of the divested assets is completed. The 

European Commission has also selected ING to oversee the divestiture, which makes the 

Monitor Trustee uniquely capable of monitoring the global transition of all assets acquired by 

Ardagh. The Consent Agreement also provides for appointment of a Divestiture Trustee to 

effectuate the divestitures if Ball fails to carry out the sale of assets and its related obligations.

Through the proposed divestitures, Ardagh will become the third-largest beverage can 

manufacturer in the United States and the world. Ardagh will own beverage can plants that span 

a broad geographic footprint, offer a well-balanced product mix, and have flexible manufacturing 

capabilities. Ardagh is an ideal buyer of the divested assets because it has existing long-standing 

relationships with key beverage customers through its glass bottle business, and existing 

experience with metal container manufacturing through its food can business. Furthermore, the 

fact that Ardagh does not currently produce aluminum beverage cans means that the divestiture 

will not create competitive issues of its own. Accordingly, Ardagh’s acquisition of the divested 

assets will preserve the competition that would have otherwise been lost through Ball’s 

acquisition of Rexam.

* * *

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

Order. This Analysis does not constitute an official interpretation of the proposed Consent 

Order, nor does it modify its terms in any way.