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ANALYSIS OF AGREEMENT CONTAINING 

CONSENT ORDER TO AID PUBLIC COMMENT

In the Matter of Emerson Electric Co. and Pentair plc, File No. 161-0221

I. INTRODUCTION

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

an Agreement Containing Consent Orders (“Consent Agreement”) from Emerson Electric Co. 

(“Emerson”) and Pentair plc (“Pentair”) (collectively, the “Respondents”) that is designed to 

remedy the anticompetitive effects that would likely result from Emerson’s proposed acquisition 

of Pentair’s valves and controls business. 

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

to acquire the equity interests of certain subsidiaries of Pentair in exchange for cash 

considerations of approximately $3.15 billion (the “Acquisition”). The proposed Acquisition 

would combine the two largest suppliers of switchboxes, which are industrial valve control 

products, in the United States. 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 

substantially lessening competition in the United States market for switchboxes.

The proposed Decision and Order (“Order”) requires Emerson to divest Pentair’s 

switchbox manufacturer subsidiary, Westlock Controls Corporation (“Westlock”), to Crane Co. 

(“Crane”) no later than ten days after the Acquisition is consummated. The divestiture requires 

Emerson to transfer to Crane all of the facilities, personnel, confidential information, and 

intellectual property associated with the design, manufacture, and sale of Westlock’s products, 

which will allow Crane to effectively compete in the switchbox market.

The Commission has placed the Consent Agreement 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 Consent 

Agreement, along with any comments received, and decide whether it should withdraw from the 

Consent Agreement, modify it, or make the Order final.

II. THE RESPONDENTS

Emerson, headquartered in St. Louis, Missouri, is a diversified global manufacturing 

company that provides a variety of products and services for the industrial, commercial, and 

consumer markets. Through its Automated Solutions segment, Emerson is a leading 

manufacturer of industrial equipment and instrumentation, including valves, actuators, 

regulators, and switchboxes, which it sells to customers in, among others, the oil and gas, 

refining, chemical, and power generation industries.
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Pentair, headquartered in London, United Kingdom, with a main U.S. office located in 

Minneapolis, Minnesota, is a global water, fluid, thermal management, and equipment protection 

company. The Pentair Valves & Controls business manufactures valves, fittings, actuators, and 

controls, including switchboxes, for a broad array of industrial markets.

III. THE RELEVANT MARKETS

The relevant product market at issue in this transaction is switchboxes. Switchboxes are 

devices that monitor and control isolation (or “on/off”) valves, which control the flow of liquids 

or gases through pipes in industrial applications, including the oil and gas, chemical, 

petrochemical, and power generation industries. Switchboxes consist of a hard outer case, which 

often is made of explosion-proof material, containing switches and other electrical components 

that detect the position of a valve—that is, whether it is open or closed—and communicate that 

position via a visual display and/or digital signals to the facility’s workers and control room. 

Switchboxes are ancillary components that are typically bundled together with a valve, an 

actuator (a device that physically opens and closes a valve), and other control products into an 

“automated” isolation valve, which can open and close automatically without manual 

intervention. Because switchboxes perform a unique and essential role in the efficient and safe 

operation of industrial plants and facilities, there currently are no practical alternatives to 

switchboxes.

The United States is the relevant geographic market in which to assess the competitive 

effects of the Acquisition. The United States operates distinctly compared to international 

markets. Unlike international markets, the domestic market relies heavily on distributors, so 

competition takes place at both the distributor and customer level. Moreover, customers in the 

United States have distinct brand preferences for leading switchbox brands. Because 

switchboxes are frequently used under hazardous conditions in which safety is critical, brand 

reputation and product reliability are very important to customers. As a result, U.S. customers 

are unlikely to turn to brands that are not well established in the United States in response to a 

small but significant non-transitory increase in price. 

Pentair’s “Westlock” and Emerson’s “TopWorx” switchbox businesses are the two 

largest suppliers of switchboxes in the United States, with a combined market share of 

approximately 60%. Other than Westlock and TopWorx, there are few suppliers with 

appreciable market shares. Each of these suppliers has substantially smaller market shares than 

either Westlock or TopWorx. In addition, there is a fringe of small manufacturers with very 

small market shares. The switchboxes produced by these smaller suppliers are not widely 

accepted by customers in the United States. The Acquisition would substantially increase 

concentration levels in the U.S. switchbox market and would result in a highly concentrated 

market. Under the Horizontal Merger Guidelines, the increase in concentration would 

presumptively create or enhance market power.
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IV. EFFECTS OF THE ACQUISITION

Absent a divestiture, the proposed Acquisition would likely harm competition in the U.S. 

switchbox market. Emerson and Pentair are each other’s closest competitors in this market, and 

customers benefit from that competition through lower prices and increased product innovation. 

TopWorx and Westlock are the most widely used and highly regarded brands of switchboxes in 

the United States and, for many customers, are the only acceptable brands of switchboxes. By 

eliminating competition between Emerson and Pentair, the Acquisition likely would produce

unilateral effects in the form of higher prices and reduced innovation. 

V. ENTRY

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

deter or counteract the anticompetitive effects of the Acquisition. The competitive strength of 

TopWorx and Westlock largely reflects their brand reputation for reliability and durability, 

which could not be quickly replicated by a new entrant. In addition, customers will typically 

only purchase switchboxes from approved suppliers and are reluctant to consider unproven 

manufacturers. This is because customers place a premium on safety, and product failure could 

cause costly and potentially dangerous disruption to critical applications. Any new entrant 

would need to not only undertake a lengthy and costly process of new product development, but 

would also need to undergo rigorous vetting, testing, and approval to become viable alternatives 

for many customers. Given the difficulty in overcoming these obstacles, it is unlikely that a new 

entrant or existing lower-tier competitor could effectively restore the competition lost through 

this Acquisition.

VI. THE PROPOSED CONSENT AGREEMENT

The proposed Consent Agreement remedies the competitive concerns raised by the 

Acquisition by requiring Emerson to divest Pentair’s Westlock subsidiary to Crane, a publicly 

traded manufacturer of highly engineered industrial products, including industrial valves. The 

proposed divestiture includes everything needed for Crane to compete effectively in the U.S. 

market for switchboxes.

Crane, headquartered in Stamford, Connecticut, is a 162-year old company with a long 

history as a significant competitor in the U.S. industrial valves market, providing it with the 

industry experience and expertise necessary to replace the competition that would be lost due to 

the Acquisition. Crane’s portfolio of valves complements the switchbox and other valve control 

products that Westlock manufactures, but Crane does not sell any products that compete with 

Westlock. Crane has a substantial U.S. infrastructure and customer base, including many of the 

same customers as Westlock, and pre-existing relationships with many of Westlock’s 

distributors. Crane is thus well positioned to acquire and integrate Westlock and maintain the 

benefits of competition in this market.

Under the terms of the Order, Emerson must divest all of Westlock’s businesses and 

assets to Crane, including Westlock’s manufacturing facility located in Saddle Brook, New 

Jersey, and all of the confidential information and intellectual property related to Westlock’s 
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product portfolio. Emerson must also allow Crane to have access to and hire any Westlock 

employees who were engaged in the research, development, manufacturing, marketing, or sales 

of Westlock’s products. In order to ensure that the divestiture will succeed, the Order requires 

the Respondents to enter into a one-year transitional services agreement with Crane for certain 

functions that Pentair performed for Westlock (such as accounts receivable, tax, legal, payroll, 

benefits, and other related functions). In order to preserve competition with Emerson, the Order 

requires Emerson to institute procedures that protect sensitive non-public information regarding 

Westlock’s business from the Emerson business people in competing lines of business. It also 

restricts Emerson from instituting patent infringement suits against Crane for the Westlock 

switchbox product lines that are currently being marketed or in development. 

The Respondents must complete the divestiture no later than ten days after the 

consummation of the Acquisition. If the Commission determines that Crane is not an acceptable 

acquirer, the Order requires the Respondents to unwind the sale and accomplish a divestiture of 

Westlock to another Commission-approved acquirer within 180 days of the date the Order 

becomes final. Further, the Order allows the Commission to appoint a monitor to ensure that the 

Respondents expeditiously comply with their obligations under the Order and a Divestiture 

Trustee to accomplish the divestiture should the Respondents fail to comply with their divestiture 

obligations. 

VII. OPPORTUNITY FOR PUBLIC COMMENT

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

aid the Commission in determining whether it should make the Consent Agreement final. This 

analysis is not intended to constitute an official interpretation of the proposed Consent 

Agreement and does not modify its terms in any way.