The Federal Trade Commission (FTC) filed an administrative complaint on December 18, 2020 and authorized a lawsuit in federal court to block The Procter & Gamble Company’s (Procter & Gamble) proposed acquisition of Billie, Inc.
Billie is a direct-to-consumer company that started selling women’s razors and body care products in the fall of 2017. The company announced the Procter & Gamble acquisition planafter raising only $35 million in venture capital in last summer.
FTC Allegations Against Procter & Gamble
The complaint claims that Procter & Gamble’s proposed acquisition would allow the market leader in both women’s and men’s wet shave razors to buy Billie and eliminate increasing competition that benefits consumers.
Procter & Gamble sells women’s and men’s razors under various brands, such as Gillette, Venus, and Joy. Billie sells a quality, mid-tier women’s system razor targeted at Generation Z and Millennial women. They found success in addressing the practice of pricing women’s razors higher than comparable men’s razors—otherwise called the “pink tax.” The deal was announced in January 2020, a little more than two years after Billie debuted but after it had already seen significant growth in sales.
“Billie saw an opportunity to challenge Procter & Gamble’s position as the market leader by finding underserved, price and quality conscious customers, and building an innovative brand,” said Ian Conner, Director of the FTC’s Bureau of Competition. “As its sales grew, Billie was likely to expand into brick-and-mortar stores, posing a serious threat to Procter & Gamble. If Procter & Gamble can snuff out Billie’s rapid competitive growth, consumers will likely face higher prices.”
May Not Limit Competition Unlawfully
The complaint says that the proposed acquisition would “eliminate substantial and growing head-to-head competition between Procter & Gamble and nascent competitor Billie in U.S. wet shave razor markets.”
Specifically, with Billie rapid growth, Procter & Gamble introduced its own direct-to-consumer site marketing its women’s system razor brand, Venus. The proposed acquisition also stopped Billie’s anticipated expansion into brick-and-mortar retail stores, a move that would have benefitted consumers through greater competition between Billie and Procter & Gamble at retail locations.
Not a Unanimous FTC Action
The Commission vote to issue the administrative complaint. It directed administrative staff to seek a temporary restraining order and preliminary injunction. The vote was 4-1. Commissioner Christine S. Wilson was the lone dissenter.
The FTC will file a complaint in the U.S. District Court for the District of Columbia seeking a Temporary Restraining Order> it will also see a Preliminary Injunction to stop the deal pending an administrative trial. The court has scheduled trial to begin in June of 2021.
“As its sales grew, Billie was likely to expand into brick-and-mortar stores, posing a serious threat to Procter & Gamble. If Procter & Gamble can snuff out Billie’s rapid competitive growth, consumers will likely face higher prices,” Ian Conner, director of the FTC’s Bureau of Competition said in a statement.
The Heat is on Direct-to-Consumer Brands
If the FTC is successful with its case against Procter & Gamble, the victory will constitute another hit on direct-to-consumer brands on the base of competition dynamics.
Edgewell Personal Care announced in May 2019 that it intended to buy Harry’s, another direct-to-consumer shaving brand. However, in February 2020, the FTC filed a lawsuit to block the deal, like with Billie claiming that the deal would limit competition and innovation in the razor market.
In contrast to Harry’s, Billie is to be acquired bought before it entered the market with brick-and-mortar retail stores. If the deal is nixed by the FTC, Billie will have forfeited valuable time it could have used to expand into new locations and markets. In the same light, Procter & Gamble will lose a bit of its competitive advantage in the women’s shaving world.
Procter & Gamble on Buying Spree
In addition to the announcement concerning Billie, Procter & Gamble acquired Walker & Company. That outfit created Bevel, which is a grooming line for men of color, and Form, a hair-care line for women of color. Walker & Company moved its headquarters from Palo Alto, California to Atlanta. The reasons behind the move are because that’s the home of the company’s largest customer base, Atlanta provides cheaper talent and living costs—plus, that’s where Walker wants to raise his family.
The companies didn’t divulge the financial terms of the deal, but media sources say that investors recouped the majority, but not all, of the nearly $40 million they invested in Walker and Company. As a result, Procter & Gamble paid somewhere between $20 million and $40 million for the startup company. Walker founded the startup in 2013. It’s investors included Upfront Ventures, Andreessen Horowitz, and IVP.
Procter & Gamble announced plans to acquire This is L, a feminine-care brand that sells tampons, pads and wipes in February 2019. Again, the price of the acquisition wasn’t disclosed, but TechCrunch reported that its sources place the number at roughly $100 million.
Talia Frenkel founded This is L. in 2011. She’s a former photojournalist who worked with the UN and the Red Cross. As she was reporting on humanitarian crises around the world, she saw first-hand the neglect of women’s sexual reproductive rights and the effects of HIV/AIDS on women and girls.
Frenkel initially started a distribution campaign of condoms and then grew her business to include period products. However, her mission has never changed. For every product the company sells, it makes another available to a girl or woman in need.