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FTC Files Complaint Against Saint-Gobain, Ardagh Deal

Complaint alleges Ardagh's acquisition of Verallia North America is in violation of U.S. antitrust law.

Saint-Gobain's proposed sale of glass container manufacturer Verallia North America to the Ardagh Group, announced in January, is being challenged by the Federal Trade Commission for violation of U.S. antitrust laws. The FTC alleges that the transaction would leave Ardagh and its only significant competitor, Owens-Illinois, in control of more than 75 percent of the U.S. markets for glass containers for beer and spirits customers.

With revenues of $1.6 million in 2012, Verallia North America is the second largest glass container manufacturer in the U.S., behind Owens-Illinois. The company has 13 plants in the U.S. and employs more than 4,400 people. The proposed acquisition would be Ardagh’s third U.S. glass acquisition in little more than a year.

“If Ardagh is allowed to acquire Saint-Gobain, it would eliminate beneficial competition that has led to lower prices for beer and spirits bottles,” said Norman Armstrong, Jr., deputy director of the FTC’s Bureau of Competition.  “This combination would lead to higher costs for brewers and distillers and less innovation in the glass container industry.  Ultimately, this transaction will result in higher prices for consumers.”

Saint-Gobain planned to use the proceeds from the $1.7 billion sale to strengthen the group’s balance sheet while pursuing its acquisition policy focused on small- or medium-sized targets.

In response to the FTC complaint, Ardagh released a statement, saying it "is disappointed in the action that the Commission has taken. We believe that the transaction will benefit glass container customers and is fully consistent with the antitrust laws."

Both Ardagh and Saint-Gobain said they would "vigorously defend the transaction in litigation, whilst at the same time working with the FTC to seek to resolve its concerns."

The evidentiary hearing for this complaint is scheduled for Dec. 2, 2013.

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