FTC Blocks P&G's Billie Acquisition

The Federal Trade Commission is taking legal action to prevent Procter & Gamble from acquiring Billie, a New York-based company specializing in razors and body wash.

The FTC’s official notification asserts that the proposed merger would “remove emerging, innovative competition in the wet shave razor market,” ultimately disadvantaging consumers.

Established in 2017, Billie aimed to challenge the “pink tax” – the higher pricing often applied to products marketed towards women, including razors and body wash. The company directly competed with established businesses such as P&G and Edgewell Personal Care by providing affordable, high-quality razors. Billie announced its intention to be acquired by P&G shortly after securing $35 million in venture funding in June.

“As Billie’s sales increased, the company was poised to expand into physical retail locations, presenting a significant challenge to P&G. Allowing P&G to suppress Billie’s rapid growth could result in increased prices for consumers,” stated Ian Conner, Director of the FTC’s Bureau of Competition.

P&G has recently been actively acquiring other companies. In addition to the Billie news, Procter & Gamble purchased Walker & Company, the creator of Bevel, a grooming line designed for men of color, and Form, a hair-care brand for women of color. Earlier, in February 2019, P&G revealed plans to acquire This is L, a feminine-care brand offering tampons, pads, and wipes.

Should the FTC prevail, this represents another setback for direct-to-consumer brands based on competitive considerations. In May 2019, Edgewell Personal Care announced its intention to purchase Harry’s, another direct-to-consumer shaving brand. The FTC filed a lawsuit in February 2020 to block that deal, citing similar concerns about reduced competition and innovation within the razor market.

Unlike Harry’s, Billie was acquired before establishing a presence in brick-and-mortar stores. If the acquisition is blocked, Billie will miss valuable opportunities to broaden its reach into new locations and markets – and P&G will lose a potential competitive advantage in the women’s shaving sector.

The blocking of both Harry’s and Billie’s acquisitions could have broader negative consequences for direct-to-consumer brands, particularly those in the health and wellness space.

It’s worth noting that the exit market isn’t universally challenging for companies in the consumer packaged goods (CPG) industry. We have seen successful acquisitions such as Blue Bunny’s purchase of Halo Top, Mars’ acquisition of Kind Bars, and Unilever’s $1 billion acquisition of Dollar Shave Club.

Andrea Hernández, a consultant and founder specializing in food and beverage CPG, explains that direct-to-consumer companies frequently require partnerships with large corporations to achieve the necessary distribution scale, shifting their focus towards an omni-channel approach rather than relying on a single sales channel.

“These companies face limitations in scaling to the same extent and sustaining growth without incurring debt or requiring continuous financial investment,” she said. “Alternatively, they can pursue the common strategy of being acquired by a larger company, achieving a successful outcome and gaining access to the resources needed to continue their development.”

The coronavirus pandemic has also impacted food CPG companies, prompting them to reduce their product lines (SKUs) and prioritize essential items. Previously, CPG companies might offer a wide variety of products to meet diverse customer needs, but they are now concentrating on a smaller selection to manage uncertainty in consumer behavior. In the long term, this could lead CPGs to acquire fewer companies like Billie and Harry’s, focusing instead on products that are currently performing well.

Selene Cruz, founder of Restore, a company that provides offline presence for DTC brands, expressed some surprise at the FTC’s claim that the acquisition would stifle competition. She believes that Billie’s entry into brick-and-mortar retail doesn’t guarantee enough immediate success to challenge a major corporation.

Regardless of the outcome, this situation demonstrates that the FTC is increasingly focused on both consumer protection and the technology sector.