The Federal Trade Commission plans to block the sale of on-demand razor company Harry’s to competitor Edgewell Personal Care (the parent company of Schick) because it says the acquisition “would eliminate one of the most important competitive forces in the shaving industry.” That’s a new take on the direct-to-consumer razor market, essentially making the argument that one brand is critical to prevent big companies from dominating — or rather, continuing to dominate — the $3 billion razor industry.
Edgewell sought to purchase Harry’s for $1.37 billion. But Harry’s, founded in 2012 by Jeff Raider and Andy Katz-Mayfield, is a “uniquely disruptive competitor in the wet shave market,” according to a statement from the FTC, and an acquisition by Edgewell would “remove a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer.”
Why the FTC views Harry’s specifically as so crucial for keeping the razor market competitive is not totally clear, but there are a few clues about how Harry’s differs from rival subscription shave company Dollar Shave Club, which was acquired by Unilever in 2016 for a reported $1 billion in cash. Unlike Edgewell, Unilever did not have a razor blade brand in its portfolio of companies before it acquired Dollar Shave Club.
The FTC release notes that Edgewell, Harry’s, and Procter & Gamble “are among the few significant competitors in the U.S. market for the manufacture and sale of men’s and women’s wet shave razors.” Proctor & Gamble’s Gillette continues to lead American men’s shaving; it had about 47.3 percent of the market in 2018, with Edgewell’s brands at about 13.6 percent and Harry’s at about 2.6 percent, The New York Times reported when the Harry’s acquisition was first announced.
Harry’s does own the German factory where its blades are manufactured, according to the Times, while Dollar Shave Club’s blades were made by Dorco (or at least, they were before the Unilever acquisition). And unlike Dollar Shave Club, Harry’s products are sold at large retailers like Target and Walmart, which the FTC points to as part of the reason for Edgewell reducing “prices significantly” by the end of 2018.
Katz-Mayfield and Raider issued a statement saying they were “disappointed” at the FTC decision and were “evaluating the best path forward. We believe strongly that the combined company will deliver exceptional brands and products at a great value and are determined to bring those benefits to consumers.”