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ANALYSIS OF AGREEMENT CONTAINING CONSENT ORDERS

TO AID PUBLIC COMMENT

In the Matter of Ardagh Group S.A and Saint-Gobain Containers, Inc.

and Compagnie de Saint-Gobain

Docket No. 9356

I. Introduction

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

an Agreement Containing Consent Orders (“Consent Agreement”) with Ardagh Group S.A.

(“Ardagh”). The purpose of the Consent Agreement is to remedy the anticompetitive effects of 

Ardagh’s proposed acquisition of Saint-Gobain Containers, Inc. (“Saint-Gobain”) from 

Compagnie de Saint-Gobain. Under the terms of the Consent Agreement, Ardagh must divest 

six of its nine United States glass container manufacturing plants to an acquirer approved by the 

Commission. The Consent Agreement provides the acquirer the manufacturing plants and other 

tangible and intangible assets it needs to effectively compete in the markets for the manufacture 

and sale of glass containers to both beer brewers and spirits distillers in the United States. 

Ardagh must complete the divestiture within six months of the date it signs the Consent 

Agreement.

On January 17, 2013, Ardagh agreed to acquire Saint-Gobain from its French parent 

company, Compagnie de Saint-Gobain, for approximately $1.7 billion. This acquisition would 

concentrate most of the $5 billion U.S. glass container industry in two major competitors –

Owens-Illinois, Inc. (“O-I”) and the combined Ardagh/Saint-Gobain. These two major 

competitors would also control the vast majority of glass containers sold to beer brewers and

spirits distillers in the United States. On June 28, 2013, the Commission issued an administrative

complaint alleging that the acquisition, if consummated, may substantially lessen competition in 

the markets for the manufacture and sale of glass containers to brewers and distillers in the 

United States 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. 

The 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 a part of 

the public record. After 30 days, the Commission will review the Consent Agreement and 

comments received, and decide whether it should withdraw, modify, or make the Consent 

Agreement final.

II. The Parties

Ardagh, headquartered in Luxembourg, is a global leader in glass and metal packaging. 

Ardagh entered the United States glass container industry through two 2012 acquisitions – first 

acquiring a single-plant glass container manufacturer, Leone Industries, and then an eight-plant 

manufacturer, Anchor Glass Container Corporation (“Anchor”). Through the Anchor 

acquisition, Ardagh became the third-largest glass container manufacturer in the country, 

supplying glass containers for beer, spirits, non-alcoholic beverages, and food. Ardagh’s nine 

glass container manufacturing plants are located in seven U.S. states. 
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Saint-Gobain is a wholly-owned U.S. subsidiary of Compagnie de Saint-Gobain, a 

French company which, among other businesses, manufactures and sells glass containers 

throughout the world. In the United States, Saint-Gobain is the second-largest glass container 

manufacturer, supplying beer, spirits, wine, non-alcoholic beverages, and food containers. SaintGobain operates 13 glass container manufacturing plants located in 11 U.S. states. Saint-Gobain, 

operates under the name “Verallia North America” or “VNA.”

III. The Manufacture and Sale of Glass Containers to Brewers and Distillers in the 

United States

Absent the remedy, Ardagh’s acquisition would harm competition in two relevant lines of 

commerce: the manufacture and sale of glass containers to (1) beer brewers, and (2) spirits

distillers in the United States. Currently, only three firms – Owens-Illinois, Inc., Saint-Gobain, 

and Ardagh – manufacture and sell most glass containers to brewers and distillers in the United 

States. Collectively, these three firms control approximately 85 percent of the United States 

glass container market for brewers, and approximately 77 percent of the market for distillers. 

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.” In this case, both relevant product markets are already concentrated and the acquisition 

would increase the HHIs substantially. Absent the proposed remedy, the acquisition would 

increase the HHI by 782 points to 3,657 for glass beer containers, and by 1,072 points to 3,138 

for glass spirits containers. With the proposed remedy, however, Ardagh’s acquisition of SaintGobain will result in no increase in HHI in the glass container market for beer brewers and a 33 

point HHI increase in the glass container market for distillers. 

The relevant product markets in which to analyze the effects of the acquisition do not 

include other packaging materials, such as aluminum cans for beer or plastic bottles for spirits

for several reasons. First, Ardagh and Saint-Gobain routinely identify each other and O-I as their 

most direct competitors, focusing their business strategies, market analysis, and pricing on glass 

container competition. Indeed, glass container pricing is not responsive to the pricing of other 

types of containers. Second, although brewers and distillers use aluminum and plastic 

packaging, respectively, for their products, these customers solicit and evaluate glass container 

bids independently of their can and plastic procurement efforts. Third, brewers and distillers 

demand glass so that they may maintain a premium image and brand equity and meet their 

consumers’ expectations. Thus, brewers and distillers cannot easily or quickly substitute their 

glass container purchases with other packaging materials without jeopardizing the sale of their 

own products. Finally, Ardagh and Saint-Gobain distinguish glass containers from containers 

made with other materials based on qualities including oxygen impermeability, chemical 

inertness, and glass’ ability to be recycled. 
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The United States is the appropriate geographic market in which to evaluate the likely 

competitive effects of the acquisition. Ardagh and Saint-Gobain each maintain geographically 

diverse networks of plants that manufacture and sell glass containers to brewers and distillers 

throughout the country. Most U.S. brewers and distillers have similar competitive glass 

container alternatives from which to choose, regardless of their geographic location. The 

relevant geographic market is no broader than the United States because product weight and 

logistics constraints limit brewers’ and distillers’ ability to purchase significant volumes of glass 

containers from outside the country. 

IV. Effects of the Acquisition

Absent relief, the acquisition would result in an effective duopoly likely to cause 

significant competitive harm in the markets for the manufacture and sale of glass containers to 

brewers and distillers. The glass container industry is a highly consolidated, stable industry, with 

low growth rates and high barriers to entry. The acquisition would increase the ease and

likelihood of anticompetitive coordination between the only two remaining major suppliers. The

acquisition would also eliminate direct competition between Ardagh and Saint-Gobain. Thus, 

the acquisition would likely result in higher prices and a reduction in services and other benefits 

to brewers and distillers.

V. Entry

Entry into the markets for the manufacture and sale of glass containers to brewers and 

distillers would not be timely, likely, or sufficient in magnitude, character, and scope to deter or 

counteract the likely competitive harm from the acquisition. The glass container industry in the 

United States enjoys significant barriers to entry and expansion including the high cost of 

building glass manufacturing plants, high fixed operating costs, the need for substantial 

technological and manufacturing expertise, and long-term customer contracts. For these reasons, 

entry by a new market participant or expansion by an existing one, would not deter the likely

anticompetitive effects from the acquisition. 

VI. The Consent Agreement

The proposed Consent Agreement remedies the competitive concerns raised by the

acquisition by requiring Ardagh to divest six of its nine glass container manufacturing plants in 

the United States to an acquirer within six months of executing the Consent Agreement. In 

addition, the Consent Agreement requires Ardagh to transfer all customer contracts currently 

serviced at those six plants to an acquirer through an agreement approved by the Commission. 

Under the proposed Consent Agreement, Ardagh will divest six of the manufacturing 

plants that it acquired when it purchased Anchor in 2012, along with Anchor’s corporate 

headquarters, mold and engineering facilities. The six plants produce glass containers for 

brewers and distillers and are located in: Elmira, NY; Jacksonville, FL; Warner Robins, GA;

Henryetta, OK; Lawrenceburg, IN; and Shakopee, MN. Anchor’s corporate headquarters, mold 

and engineering facilities are located in Tampa, FL, Zanesville, OH, and Streator, IL, 

respectively. Other assets that Ardagh will divest include customer contracts, molds, intellectual 
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property, inventory, accounts receivable, government licenses and permits, and business records. 

In addition, the Consent Agreement limits Ardagh’s use of, and access to, confidential business 

information pertaining to the divestiture assets.

Through the proposed Consent Agreement, the acquirer of these assets will be the thirdlargest glass container manufacturer in the United States. These assets replicate the amount of 

glass containers for beer and spirits that the third largest supplier offers today. The acquirer will 

own plants that span a broad geographic footprint, offer a well-balanced product mix, and have 

flexible manufacturing capabilities. Its presence will preserve the three-way competition that

currently exists in the relevant markets and moderate the potential for coordination. 

Ardagh must complete the divestiture within six months of signing the Consent 

Agreement. Pending divestiture, Ardagh is obligated to hold the divestiture assets separate and 

to maintain the viability, marketability and competitiveness of the assets. With the hold separate 

in place, the divested assets, under the direction of an experienced senior management team, will 

be in a position to compete in the glass industry, independent from Ardagh. A hold separate 

monitor will supervise the management of the divestiture assets until Ardagh completes the 

divestiture. 

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

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

and Order or to modify its terms in any way.