U.S. Approves Unilever, Alberto-Culver Combination, with Divestitures

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

To resolve U.S. antitrust concerns over its proposed $3.7 billion acquisition of Alberto-Culver Co., Unilever N.V. has agreed to divestures intended to preserve competition for value shampoo, value conditioner, and hairspray sold in retail stores.

The Department of Justice Antitrust Division filed a civil antitrust lawsuit on May 6 in the federal district court in Washington, D.C. to block the proposed transaction between three Unilever entities—Unilever N.V., Unilever PLC, and Conopco, Inc.—and Alberto-Culver.

At the same time, the government filed a proposed consent decree that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. The acquisition was expected to close on May 10.

Lessening of Competition

The government alleged that the transaction, as originally proposed, would have substantially lessened competition in three product markets—value shampoo, value conditioner, and hairspray sold in retail stores. According to the government’s complaint, the proposed acquisition would have eliminated substantial head-to-head competition between Unilever’s Suave Naturals and Alberto-Culver’s Alberto VO5 brands and would have given Unilever a near monopoly in the sale of value shampoo and conditioner in the United States with shares of approximately 90 percent in these two markets.

In addition, the proposed acquisition would have eliminated substantial head-to-head competition between Unilever and Alberto-Culver in the United States for hairspray sold in retail stores. The transaction would have made Unilever the largest seller of hairspray in the United States by increasing its market share from approximately 24 percent to over 45 percent, the complaint alleged.

The proposed acquisition would have enabled the combined firm to unilaterally raise the prices of shampoo, conditioner, and hairspray products above the per-merger price level.

Divestitures

Under the proposed consent decree, the companies would be required to divest Alberto-Culver’s Alberto VO5 brand and Unilever’s Rave brand, as well as associated assets. The Alberto VO5 brand consists of value shampoo and conditioner, hairspray, mousse, and other hair styling products. The Rave brand consists of hairspray and mousse products, according to the Justice Department.

International Cooperation

The Antitrust Division said that during its investigation it cooperated with the United Kingdom Office of Fair Trading, the Federal Competition Commission in Mexico, and South Africa’s Competition Commission. Both Unilever and Alberto-Culver provided waivers, in a timely way, to facilitate the effective international cooperation in this case, the Justice Department said.

The U.K. Office of Fair Trading announced on March 18 that Unilever had agreed to divest the bar soaps business of Alberto Culver—which includes the Cidal, Wright’s, and Simple brands—to resolve competition concerns that the acquisition would result in a substantial decrease in competition in the category of bar soaps.