Here, we identify 10 key issues relating to how the U.S. antitrust agencies—the Federal Trade Commission (FTC) and Department of Justice (DOJ)—analyze CPG transactions.

1) High-End vs. Low-End

Antitrust agencies often define the market for the merging parties’ products quite narrowly. In one notable example, the FTC defined a market limited to “intense mints” (think Altoids), which excluded traditional mints (think Life Savers).

The antitrust agencies often define markets around product sub-segments based on distinct prices, characteristic, or measures of quality within a broader category. In particular, the antitrust agencies frequently segment CPGs along a spectrum from high-end to low-end products.

2) In-Store Location

A CPG’s shelf-space location in a retail store or positioning on the shelf may also affect how the antitrust agencies define the product market and assess the merger’s effect. This is a frequent issue in food and beverage mergers.

For example, in 2002, the FTC sued to block a merger that would have combined Vlasic and Claussen pickles. The agency alleged that refrigerated pickles constituted a separate market from shelf-stable pickles sold in the center aisles.

3) Branded vs. Private Label

There is no bright line rule on whether the antitrust agencies will consider private label products “in” or “out” of the market. It depends on the facts.

Private label products were excluded when the FTC defined the market for branded seasoned salt products. In contrast, the FTC reportedly cleared Energizer Holdings’ acquisition of Spectrum Brands’ battery business (Rayovac branded batteries) because the evidence confirmed that branded batteries face strong competition from private-label batteries.

4) Sales Channels

The agencies may also limit the market to particular sales channels. For example, in a recent case challenging the combination of two cooking oil products, the FTC alleged that the market was limited to sales made to retailers. In 2011, the DOJ alleged that hairspray sold in retail stores was a separate market from the sale of such products in salons because of differences in price, location convenience, and breadth of brands carried.

Additionally, there is no bright-line guidance for whether online retail sales will be “in” the market. Only a transaction-by-transaction assessment will determine how online sales factor into market definition and competitive-effects analysis.

5) Geographic Markets

The agencies typically define the relevant geographic market in CPG mergers as national, or no broader than national. High transportation costs, differences in brands, U.S. regulations that make it difficult for customers to purchase products sold outside the U.S., or a lack of imports, may contribute to the agencies’ assessment.

Geographic markets may also be limited to certain regions, states, or metropolitan areas, at least where the seller can charge different prices to retailers based on differing competitive conditions.

6) Merger’s Effect on Competition

The ultimate question in any merger investigation is whether the transaction will “substantially lessen competition.” In short, the investigating antitrust agency tries to assess whether a merger is likely to result in higher prices, lower quality, or reduced innovation.

In CPG transactions, the concern about potentially diminished price competition isn’t limited to higher shelf prices or lower discounts to consumers. The agencies are also concerned about the potential for the merger to reduce promotional discounts, slotting allowances, and trade spend paid to retailers.

7) Brand Equity and Entry Requirements

Brand is often a key ingredient for success. But brand may also be a key reason the FTC or DOJ raises concerns about barriers to entry, expansion, or repositioning. In many of the agencies’ enforcement actions, brand equity was one of the most significant barriers to entry because it could make it time-consuming and costly for a new entrant to convince retailers to stock their product or gain consumer acceptance.

8) Documents

The merging parties’ documents are a key factor in whether the FTC or DOJ opens a detailed investigation and, ultimately, whether the agency decides to clear the merger or attempt to block it in court.

Two types of documents can be pivotal: (1) those describing the effects of the merger and (2) those reflecting how the parties analyze their market and calculate market shares.

9) Customers

Customer views carry significant weight in merger investigations. During investigations, the agencies typically call the parties’ largest customers, such as retailers and distributors, to learn how they view the merging parties’ products and which other products may be reasonable alternatives to the parties’ products.

10) Data

The antitrust agencies also routinely rely on data-driven analyses to assess the likely competitive effects of the transaction and help define markets. Two common analyses in a CPG merger are:

  • Natural Experiments. The agencies typically seek to use scanner data to evaluate the impact of certain events on the parties’ sales and prices. For example, did sales or prices of the parties’ products change after a rival product went out on recall or a new branded product was introduced?
  • Diversion analysis. A common technique is to use an event, such as an entry, an exit, or a promotion, to quantify the amount by which sales were diverted from one product to another. If a substantial volume of sales shift, the antitrust agencies are likely to view those brands as particularly close substitutes.


When evaluating potential mergers and acquisition in the CPG space, antitrust risk can be a key consideration. With guidance, careful planning, and early read-outs from anticipated economic analyses, that risk can be carefully managed to meet business objectives.

This blog post is a condensed version of an article that originally appeared August 18, 2019 on Retail Leader. Visit Retail Leader for the full version of the article, which include pre-deal pointers for industry executives and counsel.

Alexis Gilman is a Partner in Crowell & Moring LLP’s Antitrust Group in Washington, DC. From 2010-2017, he worked at the Federal Trade Commission, including three years as the head of the Mergers IV Division, where he oversaw numerous investigations of mergers involving branded consumer products, retail, and other industries.

Elizabeth M. Bailey is an economist and academic affiliate at NERA Economic Consulting in San Francisco where she handles CPG mergers and acquisitions.