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 161-0221

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

 

COMMISSIONERS: Maureen K. Ohlhausen, Acting Chairman

Terrell McSweeny

__________________________________________

)

In the Matter of )

)

EMERSON ELECTRIC CO., ) Docket No. C-4615

a corporation )

)

and )

)

PENTAIR PLC, )

a corporation. )

_________________________________________ )

COMPLAINT

Pursuant to the Clayton Act and the Federal Trade Commission Act (“FTC Act”), and its 

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

that Respondent Emerson Electric Co. (“Emerson”), a corporation subject to the jurisdiction of 

the Commission, has agreed to acquire the equity interests of certain subsidiaries from 

Respondent Pentair plc (“Pentair”); that such acquisition, if consummated, would violate Section 

7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the FTC Act, 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 Emerson is a corporation organized, existing, and doing business 

under and by virtue of the laws of the State of Missouri, with its offices and principal place of 

business located at 8000 West Florissant Avenue, St. Louis, Missouri 63136.

2. Respondent Pentair is a corporation organized, existing, and doing business under 

and by virtue of the laws of the Republic of Ireland, with its principal executive offices located at

43 London Wall, London, EC2M 5TF, United Kingdom. Its United States address for service of 

process is: Pentair plc, c/o Flow Control US Holding Corporation, 5500 Wayzata Blvd., Suite 

800, Golden Valley, Minnesota 55416-1251.
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3. Each Respondent is, and at all times relevant herein has been, engaged in 

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

12, and is a company whose business is in or affects commerce, as “commerce” is defined in 

Section 4 of the FTC Act, as amended, 15 U.S.C. § 44.

II. THE PROPOSED ACQUISITION

4. Pursuant to a Share Purchase Agreement, dated as of August 18, 2016, Emerson 

proposed to acquire the equity interests of certain subsidiaries of Pentair that are engaged in the 

valves and controls business in exchange for cash considerations of approximately $3.15 billion 

(the “Acquisition”). The Acquisition is subject to Section 7 of the Clayton Act, as amended, 15 

U.S.C. § 18.

III. THE RELEVANT MARKETS

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

analyze the effects of the Acquisition is the development, manufacturing, marketing, distribution, 

and sale of switchboxes. Switchboxes monitor and control isolation valves, which control the 

flow of liquids or gases through pipes in numerous industrial applications, including the oil and 

gas, chemical, petrochemical, and power industries. A switchbox is an integral component of an 

“automated” isolation valve, enabling the valve to open and close automatically without manual 

intervention. Switchboxes detect the position of a valve, that is, whether the valve is open or 

closed, and communicate the valve position via a visual display and/or digital signals. 

Switchboxes perform a unique and essential function to the efficient and safe operation of 

industrial plants and facilities for which there are no practical alternatives. 

6. For the purposes of this Complaint, the United States is the relevant geographic 

market in which to assess the competitive effects of the Acquisition in the relevant line of 

commerce.

IV. STRUCTURE OF THE MARKET

7. Emerson and Pentair are the two largest manufacturers of switchboxes, with a 

combined market share of approximately 60% in the United States. Other manufacturers of 

switchboxes have significantly lower market shares than Emerson or Pentair, and most have very 

small market shares. The Acquisition would substantially increase concentration in the already

concentrated U.S. switchbox market.

V. EFFECTS OF THE ACQUISITION

8. The Acquisition, if consummated, may substantially lessen competition in 

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

Act, 15 U.S.C. § 45. 
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9. Emerson and Pentair are each other’s closest competitor in the design,

development, manufacture, marketing, distribution, and sale of switchboxes. Emerson and 

Pentair sell the most widely used brands of switchboxes in the United States, TopWorx, and 

Westlock, respectively. Because switchboxes perform a critical safety function, brand reputation 

and product reliability are important to purchasers of switchboxes. TopWorx and Westlock are 

the two most highly regarded brands of switchboxes in the United States, and, for many 

customers, the only acceptable brands of switchboxes. The Acquisition would eliminate direct 

competition between Emerson and Pentair in the market for switchboxes, likely increasing prices 

and reducing innovation.

VI. ENTRY CONDITIONS

10. Entry into the market for switchboxes would not be timely, likely, or sufficient in 

magnitude, character, and scope to deter or counteract the anticompetitive effects of the 

Acquisition. Among other reasons, the substantial time and investment required to develop 

switchboxes with the requisite brand acceptance and reputation for reliability demanded by

customers, which face significant costs and potential risks associated with switching suppliers, 

would limit or delay effective entry.

VII. VIOLATIONS CHARGED

11. The Share Purchase Agreement described in Paragraph 4 constitutes a violation of 

Section 5 of the FTC Act, 15 U.S.C. § 45.

12. The Acquisition described in Paragraph 4, 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, 15 U.S.C. § 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on 

this twenty-seventh day of April, 2017, issues its Complaint against said Respondents. 

By the Commission.

Donald S. Clark

Secretary

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