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UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Maureen K. Ohlhausen, Acting Chairman

Terrell McSweeny

__________________________________________

)

In the Matter of )

)

THE SHERWIN-WILLIAMS COMPANY, )

a corporation; )

) Docket No. C-4621

and )

)

THE VALSPAR CORPORATION, )

a corporation. )

)

__________________________________________)

COMPLAINT

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

of the authority vested in it by said Acts, the Federal Trade Commission (“Commission”), having 

reason to believe that Respondent The Sherwin-Williams Company (“Sherwin-Williams”), a 

corporation subject to the jurisdiction of the Commission, agreed to acquire Respondent The 

Valspar Corporation (“Valspar”), a corporation subject to the jurisdiction of the Commission, in 

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

Act, as amended, 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 Sherwin-Williams is a corporation organized, existing, and doing business 

under and by virtue of the laws of the State of Ohio with its headquarters and principal place of 

business located at 101 West Prospect Avenue, Cleveland, Ohio.

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

virtue of the laws of the State of Delaware with its headquarters and principal place of business 

located at 1101 South Third Street, Minneapolis, Minnesota.
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II. JURISDICTION

3. Respondents, and each of their relevant operating subsidiaries and parent entities, are, 

and at all times relevant herein have been, engaged in commerce, or in activities affecting 

commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C. § 12, and Section 4 of 

the FTC Act, 15 U.S.C. § 44.

III. THE PROPOSED ACQUISITION

4. Pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of 

March 19, 2016, Sherwin-Williams proposes to purchase all issued and outstanding common 

stock of Valspar in a transaction valued at approximately $11.3 billion (“the Acquisition”), 

including the assumption of debt.

IV. THE RELEVANT PRODUCT MARKET

5. The relevant line of commerce in which to analyze the effects of the Acquisition is no 

broader than coatings used in the manufacture of industrial wood products, such as furniture, 

kitchen cabinets, and building products (“industrial wood coatings”).

6. Industrial wood coatings consist of a broad category of stains, topcoats, and sealants used 

during the manufacture of wood products such as kitchen cabinets, furniture, and building 

products. Industrial wood coatings are distinguishable from consumer wood coatings by, among 

other characteristics, their higher resistance to abrasion and water.

7. Furniture, kitchen cabinet, and building products manufacturers (“wood product 

manufacturers”) would not switch from industrial wood coatings to consumer wood coatings in

response to a small but significant and non-transitory increase in price in industrial wood 

coatings. Consumer wood coatings cannot provide the same levels of abrasion and water 

resistance that wood products manufacturers demand. In addition, industrial wood coatings are 

often sold with on-site technical assistance to wood products manufacturers. This service is 

critical to wood products manufacturers as it enables them to resolve any problems with the 

application of the industrial wood coatings on their finishing lines. 

8. Wood product manufacturers would likewise not switch from industrial wood coatings to 

alternative substrates in response to a small but significant and non-transitory increase in price 

for industrial wood coatings. Wood product manufacturers rely on finished wood in order to 

maximize sales and attract certain customers who value the appearance that finished wood gives 

to cabinets, furniture, and building products. If wood product manufacturers switched away from 

finished wood in response to higher industrial wood coatings prices, they would face an 

unacceptably high risk of lost sales. 
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V. THE RELEVANT GEOGRAPHIC MARKET

9. The relevant geographic market in which to analyze the competitive effects of the 

Acquisition for industrial wood coatings is no broader than North America. Due to high freight 

costs and logistical challenges, there are minimal imports of industrial wood coatings from 

overseas into the North American market.

VI. MARKET STRUCTURE

10. Sherwin-Williams, Valspar, and Akzo Nobel N.V. (“Akzo Nobel”) are the three leading 

suppliers of industrial wood coatings in North America. Post-Acquisition, the combined share of 

Sherwin-Williams and Valspar would be over 40% for industrial wood coatings sold in North 

America. The merged firm and Akzo Nobel together would account for over 70% of the North 

American industrial wood coatings market. 

VII. ENTRY CONDITIONS

11. Entry into the relevant market would not be timely, likely, or sufficient to prevent or 

deter the expected anticompetitive effects of the Acquisition. Considerable entry barriers exist in 

the manufacture of industrial wood coatings, including significant volume requirements 

necessary to manufacture efficiently; high capital costs to construct an industrial wood coatings

plant; and customer reluctance to switch to unproven new suppliers. 

12. Likewise, the threat of vertical integration by wood product manufacturers would not be 

timely, likely, or sufficient to prevent or deter the expected anticompetitive effects of the 

Acquisition. Even for the largest wood product manufacturers, vertical integration would not be 

a credible threat due to the significant capital costs and technical requirements associated with 

operating an industrial wood coatings plant.

VIII. EFFECTS OF THE ACQUISITION

13. The Acquisition, if consummated, is likely to substantially lessen competition in the 

relevant line of commerce in the following ways, among others:

a. by eliminating direct and substantial competition between Respondents SherwinWilliams and Valspar; 

b. by increasing the likelihood that Sherwin-Williams will unilaterally exercise 

market power; and

c. by increasing the likelihood of coordinated interaction among the remaining

competitors in the relevant market.

14. The ultimate effects of the Acquisition would be to increase the likelihood that prices of 

industrial wood coatings will rise, and that quality, selection, service, and innovation will be 

lessened.
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IX. VIOLATIONS CHARGED

15. The allegations contained in Paragraphs 1 through 14 above are hereby incorporated by 

reference as though fully set forth here.

16. 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.

17. The Acquisition described in Paragraph 4, if consummated, would constitute a violation 

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

18. The Merger Agreement described in Paragraph 4 constitutes a violation of Section 5 of 

the FTC Act, as amended, 15 U.S.C. § 45.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on 

this twenty-seventh day of July, 2017, issues its complaint against said Respondents.

By the Commission.

Donald S. Clark

Secretary

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