DOJ Looks to Block ASSA ABLOY, Spectrum MergerSeptember 16th, 2022 by Travis Rains
The U.S. Department of Justice has filed a civil antitrust lawsuit to block ASSA ABLOY’s proposed $4.3 billion acquisition of the Hardware and Home Improvement division of Spectrum Brands Holdings Inc. According to a Department of Justice news release, ASSA ABLOY and Spectrum are two of the three largest producers of residential door hardware in the $2.4 billion U.S. industry.
The complaint, filed in the U.S. District Court for the District of Columbia, alleges that the merger would eliminate head-to-head competition between ASSA ABLOY and Spectrum. That could in turn risk higher prices, lower quality, reduced innovation and poorer service with respect to the sale of premium mechanical door hardware and smart locks.
“Millions of Americans rely on these companies’ door hardware products every day to meet their most basic privacy and security needs,” says assistant attorney general Jonathan Kanter of the Justice Department’s Antitrust Division. “Competition between these two companies, which are two of the three largest companies in an already concentrated industry, has benefitted American consumers in the form of lower prices and better quality. That important competition would be extinguished if this merger were allowed to proceed to the detriment of Americans.”
The complaint seeks to enjoin the transaction under Section 7 of the Clayton Act, and alleges that ASSA ABLOY and Spectrum have competed for years to be leaders in the U.S. markets for premium mechanical door hardware and for smart locks.
“The proposed transaction would transform these markets, giving ASSA ABLOY a near-monopoly in premium mechanical door hardware and more than a 50% share in smart locks, leaving only one significant competitor,” the Department of Justice continues. “More broadly, a combined ASSA ABLOY/Spectrum would control approximately 50% of the overall residential door hardware market.”
Hundreds of millions of dollars’ worth of mechanical door hardware and smart locks are sold each year in the U.S. Premium mechanical door hardware is made of high-quality, durable metals and is highly customizable, design-driven, and constructed with superior craftsmanship. Smart locks are also increasing in popularity.
ASSA ABLOY is a publicly traded Swedish stock company headquartered in Sweden. It sells its residential door hardware products in the United States under the August, EMTEK, and Yale brands. ASSA ABLOY’s revenues were approximately $9.1 billion in 2021.
Spectrum Brands Holdings Inc. is a publicly traded Delaware corporation headquartered in Wisconsin. It sells its residential hardware products in the United States under the Baldwin and Kwikset brands. Spectrum’s revenues were approximately $4.6 billion in 2021.
In a news release of its own, Spectrum says that the transaction will “first and foremost benefit consumers.”
“Despite disagreeing strongly with the DOJ’s purported concerns, in the spirit of compromise – and to speed delivery of the concrete benefits this transaction offers all stakeholders – Spectrum Brands and ASSA ABLOY made numerous proposals to address the DOJ’s concerns, each of which were rejected without a valid basis,” says David Maura, Spectrum CEO. “Their choice to pursue litigation places political ideology above the interests of American consumers and workers. We are confident that the Court will agree with us and will allow us to close the transaction.”