ASSA ABLOY’s proposed $4.3 billion acquisition of the Hardware and Home Improvement division of Spectrum Brands is facing a civil antitrust lawsuit from the U.S. Department of Justice (DOJ), which is hoping to block the transaction.
ASSA ABLOY originally announced the acquisition, which is specifically for Spectrum’s Hardware and Home Improvement division, in September 2021. The division includes the Baldwin, Kwikset, National Hardware, Pfister, and Weiser brands.
The DOJ says if the acquisition were allowed to take place, ASSA ABLOY would have a near-monopoly in premium mechanical door hardware and more than a 50% share in smart locks, leaving only one significant competitor. In addition, a the combined entity would control approximately 50% of the overall residential door hardware market.
The $2.4 billion residential door hardware industry is a heavily concentrated one, and ASSA ABLOY and Spectrum are two of the three largest producers.
Filed in the U.S. District Court for the District of Columbia, the DOJ’s complaint alleges that the proposed merger would eliminate essential head-to-head competition between the two companies. This would likely result in higher prices, lower quality, reduced innovation, and poorer service in the realms of premium mechanical door hardware and smart locks, if not in other residential door hardware as well.
“Millions of Americans rely on these companies’ door hardware products every day to meet their most basic privacy and security needs,” says Jonathan Kanter, Assistant Attorney General 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.”
Spectrum Brands CEO David Maura released a statement in response to the complaint, saying, “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. 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.”
The deal was originally expected to close by the end of the year, but the companies have agreed to extend their agreement to June 30, 2023 in the hope that they can prevail in court in the end.