Washington, DC - Foam equipment maker Graco Inc. has settled US Federal Trade Commission charges that it violated anti-trust laws by buying its two closest competitors in the North American market.
When Graco bought Gusmer Corp. in 2005 and GlasCraft Inc. in 2008, makers of fast set equipment (FSE) used by contractors to apply polyurethane foams and polyurea coatings, it "eliminated virtually all of its competition" in that market, commented Richard Feinstein, director of the FTC's bureau of competition in a 18 April statement. "The clear result was higher prices and diminished choices for consumers," he added.
The FTC's complaint alleges that the acquisitions eliminated head-to-head competition among Graco, Gusmer, and GCI, leaving the market almost entirely in Graco's hands. After the acquisitions, Graco raised prices for its FSE products, reduced product options, and raised barriers to entry for firms seeking to compete with it, by taking steps to ensure that its distributors would distribute only Graco's products, FTC said.
The consent order settling the FTC's charges is designed to restore competition to the FSE market that was lost as a result of Graco's acquisitions. It incorporates a private litigation settlement between Graco and Polyurethane Machinery Corp. (Gama/PMC) that requires Graco to license certain technology to Gama/PMC. The consent order also contains provisions that provide Gama/PMC and other competitors easier access to distributors, so they can distribute competing FSE products effectively in the North American market.