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FTC Challenge Pushes Schick Deal to Acquire Harry’s Off The Razor’s Edge

Posted  February 21, 2020
By Alan H. Schwartz

Edgewell Personal Care Co., the parent company of Schick, has abandoned its plans to purchase Harry’s Razors just days after the Federal Trade Commission filed a complaint to block the merger earlier this month.

In May 2019, Edgewell entered into an agreement to purchase Harry’s Inc., a start-up shaving company, for approximately $1.37 billion in stock and cash. The two companies compete in the “wet shave” razor market.

Harry’s was formed as an upstart company in 2013 as a subscription mail order razor service where users receive products monthly by mail. Harry’s manufactures wet shave system razors and currently sells them online and in stores under the Harry’s and Flamingo brands. Its founders say they created the company because “they were tired of overpaying for overdesigned razors, and of standing around waiting for the person in the drugstore to unlock the cases so they could actually buy them.”

Edgewell is a public consumer products company with over 25 brands including Schick, Edge, and Wilkinson Sword. Schick is the number two razor maker in the U.S. trailing only P&G’s Gillette brand.

Harry’s began selling its products in Target in 2016, with prices at a “significant discount” when compared to the industry-dominant Schick and Gillette products according to the complaint. The FTC alleged that the proposed merger would “neutralize one of the most successful challenger brands ever built” and would remove “the independent competitor that disrupted Edgewell and P&G’s longstanding and stable duopoly.”

Soon after Harry’s began selling its products at Target, Gillette and Edgewell ceased their “long-standing practice of reciprocal price increases.” P&G refrained from implementing its yearly price increase and announced a price reduction across its portfolio of wet shave razor products. In 2018, Harry’s also began selling at Walmart. In response, Edgewell implemented a “significant” price decrease on its razors.

The FTC also alleged that “[t]he Proposed Acquisition is anticompetitive because it will eliminate the growing competition between Harry’s and Edgewell that has been highly beneficial to consumers. As a result of that competition, consumers today enjoy lower prices on many different types of wet shave razors, and they have a broader selection of razors at value price points.”

The FTC vote to issue the complaint and to authorize staff to seek a temporary restraining order and preliminary injunction was 5-0. The FTC administrative trial would have commenced in June.

There are reports that Harry’s may pursue litigation against Edgewell for pulling out of the deal.

Edited by Gary J. Malone

Tagged in: Antitrust Enforcement, Antitrust Litigation,