On May 6, 2011, Unilever NV (“Unilever”) and the U.S. Department of Justice (“DOJ”) reached an agreement to settle antitrust concerns over its $3.7 billion acquisition of hair care company Alberto-Culver Co. (“Alberto”). The DOJ's Antitrust Division filed a civil antitrust lawsuit in U.S. District Court in Washington, D.C. to block the proposed transaction between the parties of the acquisition along with a proposed consent decree that would resolve the competitive concerns alleged in the lawsuit.
The DOJ alleged that the deal as it was originally constructed would have significantly reduced competition in the market for low-price shampoo, conditioner and hairspray. According to the DOJ, the original proposal would have left Unilever with approximately 90 percent of the U.S. market for low-priced shampoo and conditioner and 46 percent of the U.S. hairspray market, which could have led to higher prices for consumers. It would reduce the number of significant competitors in the value shampoo and conditioner markets from three to two. In the value shampoo market, Unilever's current share (by unit volume) is approximately 50 percent, and Alberto Culver's share is approximately 39 percent. One other competitor accounts for almost all of the remaining sales in each market (approximately 10 percent).
With the acquisition resulting in very highly concentrated markets, the DOJ sought conditions for approval of the transaction. Under the settlement, Alberto-Culver must divest its VO5 hair care brand in the United States and Unilever will sell off its Rave brand in the United States. The companies will continue to offer the brands outside the United States.
The deal was announced in September and approved by Alberto Culver's shareholders in December. The acquisition makes Unilever, based in the Netherlands, the world's leading company in hair conditioning, second-largest shampoo seller and third-largest maker of hair styling products.
The DOJ's settlement agreement is noteworthy because it requires divesture of products that influence the U.S. value shampoo, conditioner, and hair spray markets. This means that the DOJ will seek divestitures to maintain competition in value consumer segments to protect value consumers.