The Federal Trade Commission announced plans to sue to block Edgewell’s $1.37 billion acquisition of shave club company Harry’s, citing concerns around competition in the consumer shaving industry.
In a unanimous decision Monday supported by both Democrats and Republicans, the agency argued that start-ups such as Harry’s are needed to rival giant corporations in the industry such as Edgewell, which owns Schick razors, or Procter & Gamble, which owns Gillette. The commission said the Edgewell-Harry’s merger would reduce the competition that drove down razor prices and spurred innovation.
“The Harry’s and Flamingo brands represent a significant and growing competitive threat to the two firms that have dominated the wet-shaving market for decades,” said Daniel Francis, deputy director of the FTC’s Bureau of Competition.
“Edgewell’s effort to short-circuit competition by buying up its newer rival promises serious harm to consumers,” said Francis.
The FTC is an independent agency within the federal government, the purpose of which is to protect consumers and enforce antitrust law through the prevention of anti-competitive business practices.
The deal, which was announced last May, would allow Edgewell to use the valuable data and consumer base of Harry’s. Harry’s has built this base up since 2013 when it started its subscription service, through which customers receive razor blades, shaving cream, and other grooming products directly by mail. Harry’s, on the other hand, would get a larger platform and infrastructure to expand beyond its nine factories.
“We are disappointed that the FTC is attempting to block our combination with Edgewell and are evaluating the best path forward,” Jeff Raider and Andy Katz-Mayfield, co-founders and co-CEOs of Harry’s, said in a statement.
“We believe strongly that the combined company will deliver exceptional brands and products at a great value and are determined to bring those benefits to consumers,” Raider and Katz-Mayfield said.
Harry’s has a relatively small share of the United States razor market, capturing just 2.6% of it in 2018, according to research firm Euromonitor. In 2018, Gillette held 47% of the market, and Edgewell’s brands, such as Schick and Wilkinson Sword, combined for 13.6% of the industry.
The FTC said an administrative trial on the merger is scheduled to begin on June 30.