Case 1:25-cv-10371-KPF

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

FEDERAL TRADE COMMISSION,

Plaintiff,

-v.HENKEL AG & CO. KGAA; HENKEL OF

AMERICA, INC.; HENKEL US

OPERATIONS CORP.; AIP, LLC, doing

business as AMERICAN INDUSTRIAL

PARTNERS; A-PAINT HOLDING LP; and APAINT TOPCO, INC.,

25 Civ. 10371 (KPF)

REDACTED

SEALED

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

Defendants.

KATHERINE POLK FAILLA, District Judge:

American consumers looking to purchase construction adhesives for

their next home improvement project — perhaps to install a bathtub or mount

a mirror — are likely to encounter two familiar brands while shopping at their

neighborhood home center: Loctite and Liquid Nails. By almost any metric,

they are the largest and most powerful brands in the construction adhesives

space. Loctite is owned by Henkel AG & Co. KGaA and its U.S. subsidiaries,

Henkel of America, Inc. and Henkel US Operations Corporation (collectively,

“Henkel” or the “Henkel Defendants”), while Liquid Nails is held as an asset by

A-Paint Topco, Inc. (“A-Paint”), a subsidiary of A-Paint Holding LP that is owned

by the private equity firm AIP, LLC, doing business as American Industrial

Partners (“AIP”) (together with Henkel and A-Paint, “Defendants”). Henkel now

wants to acquire A-Paint from AIP, but the Federal Trade Commission (“FTC”)

has sued to permanently enjoin the acquisition, alleging that the merging of the

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entities behind those two iconic brands would violate Section 7 of the Clayton

Act, 15 U.S.C. § 18, and Section 5 of the FTC Act, 15 U.S.C. § 45.

Following a seven-day trial, at which fact witnesses and experts from

both sides testified, the Court has concluded that the proposed transaction

would leave American consumers worse off. The FTC has shown that the

acquisition is presumptively illegal because the combined entity would hold a

more-than-80-percent share of the market for construction adhesives in

cartridge form sold in the retail channel in the United States. Moreover,

Defendants have failed to rebut the FTC’s prima facie case — that is, the FTC’s

market-share analysis is valid and appropriate; the threat of replacement by

other suppliers is insufficient to prevent the transaction’s anticompetitive

effects; and retail “power buyers” are unlikely to protect American consumers

from the anticompetitive harms. Even if Defendants could successfully rebut

the presumptive illegality of the transaction, the FTC would still carry its

ultimate burden by showing that the transaction is likely to result in additional

anticompetitive effects, including significant upward price pressure, elimination

of substantial head-to-head competition, and reduction in consumer choice

through portfolio rationalization.

For the reasons set forth below, the Court permanently enjoins Henkel

from acquiring A-Paint.

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PROCEDURAL HISTORY 1

The procedural history of this antitrust case is relatively straightforward.

In late 2025, the FTC sued to enjoin an impending acquisition in the

construction adhesives space, and the parties agreed to take matters swiftly to

trial to settle the antitrust issue before the deal’s termination date in the fall of

2026.

On December 15, 2025, the FTC filed a Complaint in this Court seeking

a permanent injunction to prevent the Henkel Defendants from acquiring APaint from AIP. (Dkt. #1 (“Compl.”) at 1). 2 Defendants filed their answers to

the FTC’s Complaint on January 26, 2026. (Dkt. #68-70).

The facts set forth in this Opinion are drawn from the Complaint (“Compl.” (Dkt. #1));

the testimony, exhibits, and deposition designations entered into evidence at the bench

trial from July 13 to July 21, 2026; and the parties’ pretrial and post-trial proposed

findings of fact and conclusions of law (Dkt. #145, 148, 180, 182).

For ease of reference, the Court refers to the various exhibits entered into evidence at

trial as “PX[ ]” if offered by the FTC and “DX[ ]” if offered by Defendants, and to their

stipulations or agreed statements of fact or law to which all parties consent as “Joint

Stip.” (Dkt. #172). It refers to the transcript of the July 7, 2026 final pretrial conference

as “FPTC Tr.” Similarly, it refers to the transcript of a particular trial day as “[Date] Tr.”

and to individual lines of testimony within the transcript as “[Date] Tr. [ ]:[ ] ([Name]

Testimony).” In addition, it refers to the FTC’s pretrial proposed findings of fact and

conclusions of law as “FTC Pretrial FFCL” (Dkt. #145); to Defendants’ pretrial proposed

findings of fact and conclusions of law as “Def. Pretrial FFCL” (Dkt. #148); to the FTC’s

pretrial memorandum of law in support of the permanent injunction as “FTC Pretrial

MOL” (Dkt. #147); to Defendants’ pretrial memorandum of law in opposition to the

permanent injunction as “Def. Pretrial MOL” (Dkt. #146); to the FTC’s post-trial

proposed findings of fact and conclusions of law as “FTC Post-Trial FFCL” (Dkt. #180);

and to Defendants’ post-trial proposed findings of fact and conclusions of law as “Def.

Post-Trial FFCL” (Dkt. #182). The Court frequently references the direct declarations of

the witnesses, which statements were submitted in advance of, and entered as exhibits

at, the trial. It also references deposition excerpts designated and counter-designated

by the parties as “[Name] Dep. [ ]:[ ].”

The Court pauses to commend both sides on truly excellent advocacy. It acknowledges

with appreciation the parties’ efforts at working collaboratively to streamline the pretrial

and post-trial submission processes and the trial itself. The Court also thanks the

parties for their cordial treatment of Court staff.

In the Complaint filed on December 15, 2025, the FTC also sought a temporary

restraining order (Compl. at 1), but it clarified in a letter filed later that day that “the

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In a joint letter dated December 23, 2025, the parties requested a bench

trial in mid-2026 for this Court to evaluate the FTC’s merger challenge. (Dkt.

#63). Upon further discussion with the parties, the Court ordered that trial to

begin on July 13, 2026. (Dkt. #66). In the same Order, which was issued on

January 7, 2026, the Court also set dates for the submission of the parties’

joint pretrial order, motions in limine, pretrial memoranda of law, and proposed

findings of fact and conclusions of law; the submission of any opposition

papers; as well as the final pretrial conference. (Id.). Thereafter, on

January 28, 2026, the Court entered the parties’ proposed Civil Case

Management Plan and Scheduling Order, in which the parties agreed to follow

an expedited schedule for fact and expert discovery, pretrial submissions, and

post-trial submissions. (Dkt. #74). After resolving a few discovery disputes

involving third parties (see Dkt. #118, 129; April 28, 2026 Minute Entry), the

Court adopted the parties’ additional proposals on limitations on their pretrial

FTC confirmed with Defendants that entry of a temporary restraining order “[wa]s not

necessary at this time” (Dkt. #6). Nevertheless, in a letter filed on February 25, 2026,

the FTC informed the Court that it “may seek temporary injunctive relief from the Court

prior to August 28, 2026 to preserve the status quo while the Court adjudicates the

litigation and to protect the FTC’s ability to consider the Court’s decision and potentially

seek an appeal if necessary.” (Dkt. #83). The parties agreed that Defendants would not

close, consummate, or otherwise complete the acquisition before August 28, 2026. (Id.).

The Court notes that in past merger reviews, the FTC has typically sought preliminary

injunctive relief in federal court while pursuing its own administrative proceedings.

See, e.g., FTC v. IQVIA Holdings Inc., 710 F. Supp. 3d 329, 340 (S.D.N.Y. 2024).

However, nothing in the FTC’s organic statute prevents it from seeking permanent

injunctive relief and pursuing the entire merger review process in federal court. See

AMG Cap. Mgmt., LLC v. FTC, 593 U.S. 67, 78 (2021) (“[T]he Commission may use

§ 13(b) [of the FTC Act] to obtain injunctive relief while administrative proceedings are

foreseen or in progress, or when it seeks only injunctive relief.”).

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and post-trial submissions as well as certain procedures in preparation for trial

(Dkt. #131, 133).

Abiding by the Court’s schedule, the parties made timely pretrial

submissions. On June 8, 2026, the FTC filed a motion to exclude the

testimony of Dr. Elizabeth Bailey, Defendants’ sole expert, along with

supporting papers. (Dkt. #136-141). Defendants filed their opposition and

supporting papers on June 22, 2026. (Dkt. #153-156). The FTC filed its reply

and supporting papers on June 26, 2026. (Dkt. #162-165). In addition, the

parties filed their respective pretrial proposed findings of fact and conclusions

of law and pretrial memoranda of law, as well as their proposed joint pretrial

order, on June 15, 2026. (Dkt. #143-148). The Court held a final pretrial

conference on July 7, 2026, at which conference the Court denied the FTC’s

motion to exclude Dr. Bailey’s expert testimony. (July 7, 2026 Minute Entry;

FPTC Tr. 28). On the same day, the Court also entered the parties’ joint

pretrial order, a trial procedures order, and a set of stipulations or agreed

statements of fact or law to which all parties consented. (Dkt. #170-172).

Trial began on July 13, 2026, and took place over the course of seven

business days, concluding on July 21, 2026. During that time, the Court

heard from 18 fact witnesses and two expert witnesses, approved a list of

preadmitted exhibits to which the parties stipulated (Dkt. #173), and admitted

additional exhibits, declarations, and deposition testimony into evidence. On

July 28, 2026, the parties submitted their respective post-trial proposed

findings of fact and conclusions of law. (Dkt. #180, 182).

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On August 14, 2026, the Court filed and provided to the parties an

unredacted copy of these Findings of Fact and Conclusions of Law under seal

and allowed the parties to propose redactions in accordance with Lugosch v.

Pyramid Co. of Onondaga, 435 F.3d 110 (2d Cir. 2006). On or before

September 11, 2026, the parties shall file a joint letter suggesting redactions to

the Findings of Fact and Conclusions of Law. Taking the parties’ suggestions

into consideration, the Court will then file a redacted version of the Findings of

Fact and Conclusions of Law on the public docket.

APPLICABLE LAW

Under Section 13(b) of the FTC Act, the FTC may seek a permanent

injunction to prevent the violation of “any provision of law enforced by the

[FTC.]” 15 U.S.C. § 53(b); see FTC v. RCG Advances, LLC, 695 F. Supp. 3d 368,

396 (S.D.N.Y. 2023); FTC v. Bronson Partners, LLC, 654 F.3d 359, 365 (2d Cir.

2011). One such provision is Section 7 of the Clayton Act, which prohibits

mergers and acquisitions “where in any line of commerce … the effect of such

acquisition may be substantially to lessen competition, or to tend to create a

monopoly.” 15 U.S.C. § 18; see FTC v. Tapestry, Inc., 755 F. Supp. 3d 386, 408

(S.D.N.Y. 2024). Another related provision is Section 5 of the FTC Act, which

prohibits “[u]nfair methods of competition in or affecting commerce[.]” 15

U.S.C. § 45; see FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 454 (1986). Here,

the FTC invokes both provisions in seeking a permanent injunction. (Compl.

¶ 83). Nevertheless, because an acquisition that violates Section 7 of the

Clayton Act necessarily violates Section 5 of the FTC Act, see FTC v. Lancaster

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Colony Corp., 434 F. Supp. 1088, 1096 (S.D.N.Y. 1977), the Court focuses its

analysis on the Clayton Act.

Through Section 7 of the Clayton Act, Congress tasked the FTC with

“arresting mergers at a time when the trend to a lessening of competition in a

line of commerce was still in its incipiency.” Brown Shoe Co. v. United States,

370 U.S. 294, 317 (1962); see also F. & M. Schaefer Corp. v. C. Schmidt & Sons,

Inc., 597 F.2d 814, 816 (2d Cir. 1979) (per curiam). Indeed, Congress’s

concern “was with probabilities, not certainties.” Brown Shoe, 370 U.S. at 323.

Accordingly, “[a]lthough Section 7 requires more than a ‘mere possibility’ of

competitive harm, it does not require proof of certain harm.” United States v.

AT&T, Inc., 916 F.3d 1029, 1032 (D.C. Cir. 2019) (quoting Brown Shoe, 370

U.S. at 323 n.39); see id. (explaining that the standard “encompasses a concept

of ‘reasonable probability’ (quoting Brown Shoe, 370 U.S. at 323 n.39)). In

addition, courts must engage in “not merely an appraisal of the immediate

impact of the merger upon competition, but [also in] a prediction of its impact

upon competitive conditions in the future[.]” United States v. Phila. Nat’l Bank,

374 U.S. 321, 362 (1963). In other words, “[c]ourts must judge the likelihood

of anticompetitive effects in the context of the ‘structure, history, and probable

future’ of the particular markets that the merger will affect.” New York v.

Deutsche Telekom AG, 439 F. Supp. 3d 179, 198 (S.D.N.Y. 2020) (quoting

United States v. Gen. Dynamics Corp., 415 U.S. 486, 498 (1974)).

Section 7 claims are analyzed under a three-step burden-shifting

framework. Tapestry, 755 F. Supp. 3d at 408 (citing United States v. Baker

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Hughes Inc., 908 F.2d 981, 982-83 (D.C. Cir. 1990) (Thomas, J., joined by R.B.

Ginsburg & Sentelle, JJ.)); see also In re AMR Corp. No. 22-901, 2023 WL

2563897, at *2 (2d Cir. Mar. 20, 2023) (summary order) (collecting cases).

First, the FTC must establish a prima facie case by defining a relevant market

and showing that the effects of the merger are likely to be anticompetitive in

that market. Tapestry, 755 F. Supp. 3d at 408; see also FTC v. IQVIA Holdings

Inc., 710 F. Supp. 3d 329, 350 (S.D.N.Y. 2024). Anticompetitive effects can

include “undue market concentration in an area of effective competition,”

Deutsche Telekom, 439 F. Supp. 3d at 199, as well as elimination of “head-tohead competition between close competitors … result[ing] in a substantial

lessening of competition,” FTC v. Sysco Corp., 113 F. Supp. 3d 1, 61 (D.D.C.

2015). Second, once the FTC makes out a prima facie case, the burden shifts

to the defendants to present evidence that “the prima facie case ‘inaccurately

predicts the relevant transaction’s probable effect on future competition’ … or

to ‘sufficiently discredit’ the evidence underlying the prima facie case.” AT&T,

916 F.3d at 1032 (quoting United States v. Anthem, 855 F.3d 345, 349 (D.C.

Cir. 2017)); see also IQVIA, 710 F. Supp. 3d at 350. Third, if the defendants

successfully rebut the FTC’s prima facie case, then the burden shifts back to

the FTC, which must produce additional evidence of anticompetitive effects and

carry its ultimate burden of persuasion, which remains with the FTC at all

times. IQVIA, 710 F. Supp. 3d at 350; Tapestry, 755 F. Supp. 3d at 409.

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FINDINGS OF FACT

The findings of fact that follow are based on the Court’s careful review of

the trial record. Further factual findings — especially with respect to the

parties’ expert testimony — are contained in the ensuing Conclusions of Law

section.

Defendants and the Proposed Acquisition

Henkel AG & Co. KGaA is a German multinational chemical and

consumer goods company headquartered in Düsseldorf, Germany. (Joint Stip.

¶ 1). It has two business units: Adhesives Technologies and Consumer

Brands. (Id. ¶ 3). In 2025, the company generated approximately €20.5 billion

in sales, with Adhesives Technologies accounting for slightly more than half of

the company’s revenue at €10.7 billion in sales. (Id. ¶¶ 2-3). Henkel of

America, Inc. and Henkel US Operations Corporation are both subsidiaries of

Henkel AG & Co. KGaA that are headquartered in Connecticut. (Id. ¶ 4).

Henkel sells construction adhesives in the United States, primarily under the

Loctite brand as Loctite PL and Loctite Power Grab. (Id. ¶¶ 5-6). 3

AIP is a private equity firm headquartered in New York, New York. (Joint

Stip. ¶ 7). In December 2024, through its affiliated funds, AIP acquired the

U.S. and Canadian architectural coating business of PPG Industries, Inc.

The business unit responsible for construction adhesives (as well as other products like

sealants) in the United States was known as Consumer and Craftsmen, North America

(“ACC NA”) until April 2026. (July 15 Tr. 680:13-22 (Brogan Testimony); July 15

Tr. 601:2-10 (Dorn Testimony)). In addition, Henkel owns the OSI brand and used to

sell OSI-branded construction adhesives, but it has decided to wind down OSI-branded

sales of construction adhesives and focus exclusively on Loctite. (July 15 Tr. 682:14-24

(Brogan Testimony); July 14 Tr. 440:19-21 (Reginelli Testimony); July 13 Tr. 65:14-21

(Jones Testimony); PX15 at 9).

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(“PPG”) for $550 million and renamed it the Pittsburgh Paint Company (“PPC”).

(Id. ¶¶ 8-9, 16; July 15 Tr. 646:11-647:2 (Nealon Testimony); PX1420 at 2).

PPC supplies paints, coatings, and certain specialty products. (Joint Stip.

¶ 16). Those specialty products are sold through several brands, including

Liquid Nails, another construction adhesives brand sold in the United States;

Homax, a repair-and-remodeling brand that primarily focuses on wall and

ceiling repair products; and Mulco, a sealant brand sold in Canada. (Id.; Dorn

Decl. ¶ 21; Brogan Decl. ¶ 75). Unlike Liquid Nails, Homax and Mulco do not

offer construction adhesives for sale in the United States. (Joint Stip. ¶ 15).

From a corporate structure perspective, AIP owns Liquid Nails, Homax, and

Mulco through its indirect ownership interests in A-Paint Holding LP, which

has as its indirect subsidiary A-Paint Topco, Inc., which in turn holds the three

brands as assets. (Id. ¶¶ 9, 11-12). Both A-Paint Holding LP and A-Paint

Topco, Inc. are headquartered in New York, New York. (Id. ¶¶ 10-11).

When PPG first announced its intention to sell the architectural coating

business in February 2024, Henkel became interested in acquiring the

adhesives and sealants portfolio (but not the paints and coatings portfolio).

(Dorn Decl. ¶¶ 21-22). Henkel launched an assessment of the potential

acquisition in March 2024, which assessment was known internally as Project

Clipper. (Id. ¶ 22). In June 2024, Henkel submitted an indicative bid to PPG

for only the adhesives and sealants assets, but its negotiations with PPG

quickly ended when Henkel learned that PPG wanted to sell its entire

architectural coating business to a single buyer. (Id. ¶ 32; PX1003 at 2).

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Nevertheless, Henkel remained interested in those assets and began

discussions with the leading bidders, including AIP, about a possible back-toback sale — wherein the winning buyer would purchase the architectural

coating business from PPG and then turn around and sell the adhesives and

sealants portfolio to Henkel. (Dorn Decl. ¶ 33; PX1003 at 2).

Therefore, shortly after AIP acquired PPG’s architectural coating

business, Henkel and AIP began exploring a potential carve-out of the Liquid

Nails, Mulco, and Homax brands. (Dorn Decl. ¶ 34; Brogan Decl. ¶ 76).

According to Henkel’s internal documents, AIP received “high inbound interest

from multiple strategics” in the specialty business because of the “rare

opportunity … [to acquire] equitable brands that have strong presence in bigbox retailers.” (PX1420 at 2). Nevertheless, negotiations proceeded quickly

between Henkel and AIP, because on April 15, 2025, Henkel agreed to

purchase those three brands from AIP by acquiring all of the issued and

outstanding shares of capital stock of A-Paint Topco, Inc. for $725 million,

which is the transaction at issue in this case (the “Transaction” or

“Acquisition”). (Joint Stip. ¶ 19; Dorn Decl. ¶ 49; PX2008 at 6, 16; PX1420 at

27). Henkel and AIP’s codenames for the Acquisition are Project Clipper and

Project Longhorn, respectively. (Joint Stip. ¶ 20; Brogan Decl. ¶ 76; Nealon

Decl. ¶ 28; see generally PX1420).

The Transaction includes a

“break up” fee if it is not

consummated (PX2008 at 113), and its termination date is September 6, 2026,

at which time either party can terminate the agreement unilaterally as long as

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certain conditions are satisfied (Dorn Decl. ¶ 49). At the time of the agreement,

both Henkel and AIP were aware that potential antitrust issues, which are at

the center of this case, could impede the deal’s successful closing. (See, e.g.,

PX1331 at 2 (AIP partner conveying to Henkel’s Executive Vice President that

“just as

was your hot button, regulatory approval topics is mine…”);

PX2008 at 87 (

)).

The Construction Adhesives Industry

Overview of Construction Adhesives

Construction adhesives are used to bond various materials — including

drywall, molding, trim, paneling, and subfloors — in home improvement

projects as well as residential and light commercial construction. (Brogan

Decl. ¶ 18; Bowen Dep. 8:5-9; PX2025 at 18; PX2179 at 23; PX3059 at 1).

They form a distinct class of products from adjacent categories, such as paints,

sealants, superglues, and other types of general adhesives. (July 15

Tr. 687:19-688:21 (Brogan Testimony); see PX21 at 1-2). Specifically,

construction adhesives are known for creating high-strength, long-lasting

bonds and offering characteristics such as ease of extrusion, quick hold, and

limited to no bracing. (July 15 Tr. 687:13-688:20 (Brogan Testimony); PX10 at

1; PX1467 at 10, 12-13; PX2025 at 16-17, 32-33; PX2179 at 22; PX2200 at 40;

PX3003 at 42-43). For example, construction adhesives might be used to

install subflooring in a house, construct an outdoor landscape block, or mount

a mirror. (Reginelli Decl. ¶ 19; Bowen Dep. 18:17-19:4; see PX3059 at 1). In

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addition, they can be offered for multiple purposes or project-specific

applications, though most construction adhesives are marketed and sold as

general-purpose products. (July 16 Tr. 904:12-19 (Shoate Testimony); PX1467

at 37; PX2025 at 39; PX2182 at 3-5; PX3059 at 2; PX3060 at 14-17). 4

Construction adhesives come in four main technologies or chemistries:

latex, solvent, polyurethane, and Silyl-Modified Polymer (“SMP”), the last of

which is also referred to as modified silane or hybrid. (St. Marie Decl. ¶ 8;

Condie Decl. ¶ 60). Each technology has its own benefits and disadvantages.

(See Bowen Dep. 31:2-17; 49:10-21; Condie Decl. ¶¶ 30-38). For example,

different technologies have different curing mechanisms. (St. Marie Decl. ¶¶ 911). As a result, the technologies are suitable for different applications based

on their specific qualities and are priced accordingly. (Id. ¶ 8).

Specifically, latex and solvents are often “lower-quality in opening price

points,” while polyurethane and SMPs tend to be “higher quality and in higher

price points.” (St. Marie Decl. ¶ 8). Indeed, latex and solvents are on the lower

end of the pricing spectrum because of their more restrictive qualities and

limited use cases. They both cure through evaporation, which causes the

adhesive to shrink during curing and may leave gaps or air pockets in the

cured product. (Id. ¶ 10). Latex is water-based and can be used for interior

Construction adhesives are considered to be “attachment” products, meaning that end

consumers generally buy them as part of larger projects and are unlikely to visit a store

for the sole purpose of buying construction adhesives. (July 14 Tr. 253:12-22

(Blackwell Testimony); July 14 Tr. 395:19-22, 425:10-14 (Reginelli Testimony)). While

this particular product characteristic was mentioned at trial, it does not impact the

Court’s antitrust analysis.

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and all-purpose jobs, but it is not recommended for exterior use, in part

because it should be used only at temperatures above 50 degrees. (St. Marie

Decl. ¶¶ 14, 22; DX80 at 45). Unlike latex, solvents can be used in a wider

temperature range and on wet surfaces, but they are conversely not

recommended for interior use because of the evaporation process when curing

and the risk that solvents might dissolve certain materials, such as plastic and

foamboard. (St. Marie Decl. ¶¶ 15, 21; Condie Decl. ¶ 32; DX80 at 44). For

these reasons, solvents are particularly well-suited for subflooring and outdoor

landscape blocks. (St. Marie Decl. ¶ 15).

On the higher end of the pricing spectrum are polyurethane and SMP,

which are more advanced technologies with versatile qualities and broader use

cases. Both cure via chemical reaction, which prevents gaps or air pockets in

the cured product. (See St. Marie Decl. ¶ 11). Polyurethane yields a stronger

bond than latex and solvents and can be used across a variety of building

materials both indoors and outdoors. (Id. ¶ 16; DX80 at 46). Nevertheless,

polyurethane is not suitable for colder temperatures because of the lack of

moisture in the air for curing, and it can be more challenging to use on

finishing materials such as trim boards. (St. Marie Decl. ¶ 17; DX80 at 46).

Finally, SMP is the newest and most advanced technology, combining

attributes from both polyurethane and latex and demonstrating versatility as a

result. (St. Marie Decl. ¶ 18; Condie Decl. ¶ 37). It can be used in a wide

temperature range and on multiple surfaces. (July 14 Tr. 478:1-3 (St. Marie

Testimony); St. Marie Decl. ¶ 18; Condie Decl. ¶ 38). In addition, it is easy to

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use and matches the bond strength of polyurethane. (St. Marie Decl. ¶ 18;

Condie Decl. ¶ 38).

Construction adhesives are most frequently packaged in the form of

cartridges for use with a caulking gun. (July 15 Tr. 547:5-11 (Schneider

Testimony); July 21 Tr. 1426:3-5 (Oakes Testimony); Brogan Decl. ¶ 18;

PX3060 at 14; PX6101 (“Luppino Initial Report”) ¶ 44, Table 1 (cartridge form

accounting for 96 percent of 2024 sales of U.S. construction adhesives at major

retailers)). This form primarily comes in three sizes: 9-, 10-, and 28-ounce

cartridges. (PX1467 at 89-96; PX2025 at 39; PX2182 at 3-5; see Brogan Decl.

¶ 18). Applied in this form with the use of a caulking gun, the construction

adhesive product comes out as precise beads, providing the benefit of ease of

extrusion. (July 13 Tr. 79:14-16 (Jones Testimony); July 15 Tr. 547:12-548:1

(Schneider Testimony); PX2025 at 33).

Other forms of construction adhesives include small handheld squeeze

tubes (usually three to six ounces), gallon- or multi-gallon buckets or pails,

and foam. (July 15 Tr. 548:14-24, 549:20-550:12 (Schneider Testimony);

PX1467 at 89-96; PX3059 at 1). None of those forms requires the use of a

caulking gun. The handheld squeeze tubes are self-explanatory; buckets or

pails are typically applied with a mason’s trowel (July 15 Tr. 548:14-24

(Schneider Testimony); PX3059 at 1); and foam tends to be more expensive and

applied with a foam gun (July 15 Tr. 550:5-12 (Schneider Testimony)).

Fiberglass reinforced paneling (“FRP”), for example, is a type of project-specific

adhesive that is typically sold in buckets or pails because it must be troweled

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onto a surface to ensure complete coverage. (July 13 Tr. 79:7-13 (Jones

Testimony); July 15 Tr. 548:14-24 (Schneider Testimony); Bowen Dep. 35:1436:25). Taken together, these other formats accounted for less than four

percent of annual sales of U.S. construction adhesives at major retailers in

2024. (Luppino Initial Report ¶ 44, Table 1).

Finally, sales of construction adhesives differ by country. (PX1004 at 56; PX1199 at 34-36). Because of regional differences in brand awareness,

competition, and sales strategies, the parties in this case agree that the

appropriate geographic market for evaluating any potential anticompetitive

effects of the Transaction should be the United States. (PX1 at 1; PX4 at 5; see

July 16 Tr. 943:3-24 (Luppino Testimony)).

The Retail and Pro Sales Channels

There are two primary sales channels for construction adhesives: retail

and pro. (PX15 at 9; PX18 at 7). Each serves different end users of

construction adhesives, including general contractors, residential remodelers,

and do-it-yourselfers (“DIYers”). (July 13 Tr. 84:5-85:2 (Jones Testimony);

PX1463 at 45; PX1625 at 2-3; PX2025 at 26). The retail channel includes

home centers, independent hardware stores, and mass merchants, while the

pro channel is comprised generally of distributors, lumberyards, and specialty

dealers. (Luppino Initial Report ¶¶ 47-50, 136; PX15 at 9-10; PX18 at 7-8;

PX2025 at 18).

The retail channel accounts for the majority of construction adhesives

sales in the United States. In 2024, for example, the retail channel constituted

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for

construction adhesive cartridges sold in the United States, or approximately 68

percent of the total dollar amount sold by suppliers of construction adhesives.

(See Luppino Initial Report ¶¶ 242, Table 10, & 244, Table 11). Within the

retail channel, home centers — which are sometimes referred to as “big-box

retailers” — play a critical role. (July 13 Tr. 98:20-99:7 (Jones Testimony)

(discussing PX1482 at 4 and confirming that according to the document, big

box retailers represented 58 percent of the U.S. market for construction

adhesives in 2021); July 13 Tr. 188:21-24 (Blackwell Testimony); July 15

Tr. 693:19-23 (Brogan Testimony)). They focus on selling products and

services for home improvement projects at their brick-and-mortar locations,

though many also offer the option of online shopping. (Luppino Initial Report

¶ 48; July 15 Tr. 541:21-22 (Schneider Testimony); July 20 Tr. 1167:21-25

(Waits Testimony); July 21 Tr. 1415:9-14 (Oakes Testimony)). The brick-andmortar stores are generally open from 6:00 a.m. to after 5:00 p.m. every day,

including on weekends. (See, e.g., July 20 Tr. 1206:1-8 (Waits Testimony)).

The three largest and most well-known home centers in the country are Home

Depot, Lowe’s, and Menards. (Luppino Initial Report ¶ 48). In addition, the

retail channel also consists of independent hardware stores, including

thousands of franchisees of Ace Hardware, Do It Best, and True Value across

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the country, as well as mass merchants like Walmart. (July 13 Tr. 87:10-11

(Jones Testimony); Woods Dep. 51:20-52:3; Luppino Initial Report ¶ 48). 5

The pro channel, on the other hand, is a smaller and distinct channel

comprised of different intermediaries that sell construction adhesives to end

users. (July 13 Tr. 159:6-8 (Blackwell Testimony); PX15 at 9-10; PX18 at 7-8;

PX2025 at 18; PX2027 at 19; PX2203 at 3-4, 6; PX2213 at 10). Within the pro

channel, distributors like Steel & Wire and Orgill are true intermediaries, in the

sense that they purchase construction adhesives from suppliers like Henkel

and A-Paint and then resell the products to contractors, builders, home

centers, hardware stores, dealers, lumberyards, and tradespeople. (July 15

Tr. 690:20-25 (Brogan Testimony); Dardick Dep. 37:17-22, 38:1-15, 46:1147:5; Luppino Initial Report ¶ 48; PX2025 at 18; PX2203 at 6). They typically

do not have storefronts and operate instead out of warehouses so that they can

cater to specific product requests made by customers. (July 15 Tr. 692:14-19,

693:2-7 (Brogan Testimony); PX2203 at 6). Lumberyards specialize in selling

lumber and other building materials, which can include construction

adhesives, to contractors and builders. (Brosius Dep. 7:25-8:10, 37:8-23;

Luppino Initial Report ¶ 48). A good example is 84 Lumber, which is Henkel

The franchisees operate independently in selling a variety of hardware products, but

they obtain those products from larger corporate entities such as Ace Hardware, Do It

Best, and True Value, which act as distributors in this retail cooperative (“co-op”)

model. (Woods Dep. 53:5-9, 54:1-55:3; PX 2203 at 4; Luppino Initial Report ¶ 48).

Furthermore, mass merchants like Walmart typically operate large-format retail stores

that combine a supermarket with a department store to serve as a one-stop shop for

customers. (Luppino Initial Report ¶ 48).

Do It Best acquired True Value in 2024. (Woods Dep. 50:8-15).

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and A-Paint’s largest lumberyard customer with approximately 270 locations.

(Brosius Dep. 6:8-13; Luppino Initial Report ¶ 48). And specialty dealers are

“specialized supplier[s] of building materials, lumber, and construction

products that sell[] directly to professional contractors and builders,” such as

White Cap and Sherwin-William’s paint supply stores. (Luppino Initial Report

¶ 48; PX45 at 1).

The two channels are primarily distinguished by their target end users.

Indeed, as Defendants are quick to point out, there is little to no product

differentiation between the two sales channels. That is, construction adhesives

suppliers like Henkel and A-Paint sell the same brands and products in both

the retail and pro channels. (July 14 Tr. 424:23-425:3 (Reginelli Testimony);

July 15 Tr. 516:22-517:5 (St. Marie Testimony)). Nevertheless, the channels

are distinct because they attract different end users: most DIYers as well as

small and medium pros tend to shop for construction adhesives in the retail

channel, while large pros usually go through the pro channel. (July 15

Tr. 543:8-20 (Schneider Testimony); July 20 Tr. 1206:12-25 (Waits Testimony);

July 21 Tr. 1437:11-1439:25 (Oakes Testimony); PX1433 at 16; PX1481 at 9;

PX1622 at 4; PX1625 at 3). DIYers are unlikely to shop outside of the retail

channel because the distributors, lumberyards, and specialty dealers that

make up the pro channel cater almost exclusively to pros. (July 15 Tr. 690:2025 (Brogan Testimony); Dardick Dep. 64:24-65:1; Brosius Dep. 9:10-15; DX237

at 1).

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There is more crossover between channels among pros, but they, too, are

differentiated by size and purpose. (See, e.g., July 13 Tr. 148:23-25 (Jones

Testimony) (observing that the lines are “blurring”)). Small and medium pros

are independent contractors or contractors with relatively small teams that are

more likely to be hired for repair and remodel projects. (July 21 Tr. 1439:8-15

(Oakes Testimony); PX2035 at 23). Large pros, on the other hand, are more

likely to work on new construction projects and can include national firms with

thousands of employees. (PX1433 at 16; PX1481 at 9). Because of their need

for larger volumes of product and contractor-centric services, large pros

typically buy construction adhesives directly from wholesale distributors or

shop for them at lumberyards and specialty dealers. (July 13 Tr. 189:25-191:4

(Blackwell Testimony); Brosius Dep. 11:2-9, 13:16-23; PX18 at 8; PX1127 at 3;

PX1481 at 4, 6). However, they can and do shop in the retail channel, but

mostly for “fill in” and emergency supplies. (July 13 Tr. 97:4-8 (Jones

Testimony); July 15 Tr. 688:22-689:6 (Brogan Testimony); July 20 Tr. 1206:2325 (Waits Testimony); PX1110 at 3; PX1481 at 6; PX1433 at 16; PX1625 at 2).

The Role of “Big-Box Retailer” Home Centers

As the Court has already previewed, home centers, or big-box retailers,

play a critical role in the construction adhesives industry. Specifically, Home

Depot, Lowe’s, and Menards, the three largest home centers in the United

States, are important both in terms of their significant sales volume of

construction adhesives to end users and because they serve as the largest

individual customers that purchase from construction adhesives suppliers like

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Henkel and A-Paint. (July 21 Tr. 1416:1-8 (Oakes Testimony); Luppino Initial

Report ¶¶ 48-50; DX333 (“Bailey Report”) ¶ 28, Ex. 1).

Recall that sales in the retail channel accounted for approximately 68

percent of total construction adhesive cartridges sales in the United States in

2024. (See Luppino Initial Report ¶¶ 242, Table 10, & 244, Table 11). Within

retail, Home Depot, Lowe’s, and Menards constituted approximately 91 percent

of total sales in 2024. (See Luppino Initial Report ¶ 227, Table 8). By

multiplying those two percentages, one can calculate the rough share that the

three big-box retailers took of sales across all channels in the country — that

is, Home Depot, Lowe’s, and Menard accounted for roughly 62 percent of all

construction adhesives sold in cartridge form in the United States in 2024. 6

Moreover, from the suppliers’ perspective, the three home centers also

constitute their three most important individual customers. For example, in

terms of dollar sales, Home Depot, Lowe’s, and Menards accounted for

, respectively, of A-Paint’s construction

adhesives sales in 2024. (Luppino Initial Report ¶ 50, Table 3).

The three big-box retailers have different physical and geographic

footprints. Home Depot has the largest one, boasting 2,298 brick-and-mortar

stores across the United States. (July 20 Tr. 1167:21-1168:6 (Waits

Testimony); Luppino Initial Report ¶ 48). Lowe’s comes in second with over

1,700 brick-and-mortar stores in every state of this country. (July 21

The Court acknowledges that its own calculations may not precisely capture the

combined shares of the three big-box retailers given the different data sources, namely

wholesale versus retail data.

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Tr. 1415:9-20 (Oakes Testimony); Luppino Initial Report ¶ 48). And Menards is

primarily focused on the Midwest, with over 300 physical locations “spanning

as far west as Wyoming, east West Virginia, south Missouri, and up to the

Canadian border.” (July 15 Tr. 541:21-542:4 (Schneider Testimony); Luppino

Initial Report ¶ 48).

As sellers of construction adhesives, however, the home centers share

similar characteristics with each other and with other retailers like Ace

Hardware, Do It Best, and True Value. Indeed, the retailers all sell

construction adhesives in their brick-and-mortar stores, typically on dedicated

shelves or bays within the paint department. (July 13 Tr. 160:16-24 (Blackwell

Testimony); July 15 Tr. 545:11-14 (Schneider Testimony); July 20 Tr. 1177:210 (Waits Testimony); July 21 Tr. 1413:25-1414:2 (Oakes Testimony); PX3013;

PX3123 at 68; PX4167 at 89-96). 7 Each shelf is in turn organized by a

planogram, which is “a map of the shelf and how … product[s] should be

placed.” (July 21 Tr. 1429:13-20 (Oakes Testimony); see July 15 Tr. 551:13-16

(Schneider Testimony)). The planogram gives direction to store associates

regarding product placement and ensures that construction adhesives shelves

are set consistently across stores. (July 13 Tr. 160:25-161:3 (Blackwell

Testimony); July 21 Tr. 1429:25-1430:5 (Oakes Testimony)). Furthermore, at

Construction adhesives are also sold outside the paint department, such as in the

building materials department and in off-shelf locations near the entrance or pro

services desk at retailers. (July 14 Tr. 381:8-19 (Reginelli Testimony); Blackwell Decl.

¶ 39). Nevertheless, because the paint department is where end consumers expect to

find construction adhesives (e.g., July 15 Tr. 545:11-14 (Schneider)), the Court’s

analysis in this case focuses on construction adhesives located on shelves in the

construction adhesive bay within the paint department at retailers.

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home centers and other retailers, end users typically purchase construction

adhesives in brick-and-mortar stores — as opposed to online e-retail

platforms — out of convenience. (July 15 Tr. 544:9-545:2 (Schneider

Testimony); July 15 Tr. 693:24-694:4 (Brogan Testimony); Oakes Dep. 23:1525; PX2025 at 25).

Home centers serve both DIY and pro end users, with small and medium

pros accounting for most of the pro sales there. (July 20 Tr. 1206:12-25 (Waits

Testimony); July 21 Tr. 1437:11-13, 1439:4-7, 1439:16-25 (Oakes Testimony);

Luppino Initial Report ¶ 174 (estimating that about half of Home Depot’s sales

in 2025 came from small pros)). Recently, however, several of the home centers

have been targeting the pro channel and looking to expand their presence

there. (See, e.g., July 13 Tr. 148:24-25 (Jones Testimony)). For example,

Home Depot and Lowe’s recently acquired pro-distribution businesses and

launched specific initiatives to appeal to more pro end users. (Id.; July 14

Tr. 383:5-13 (Reginelli Testimony); Oakes Dep. 142:7-143:1; Brogan Decl. ¶ 59;

Zambataro Decl. ¶ 69; see DX19 at 2). Both also have pro sales forces in the

field to help pros place large orders for construction adhesives. (July 14

Tr. 382:18-23 (Reginelli Testimony)). 8

In April 2026, in part because of the blurring of the line between the pro and retail

channels as well as the home centers’ targeting of the pro distribution space, Henkel

collapsed its retail and pro sales teams in a global reorganization effort. (July 13

Tr. 148:20-149:2 (Jones Testimony); July 15 Tr. 691:1-20 (Brogan Testimony)).

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The “Good, Better, Best” Spectrum of Construction Adhesives

Retailers implement pricing for construction adhesives according to a

“good, better, best” spectrum of construction adhesives. (July 20 Tr. 1188:31189:4 (Waits Testimony); July 21 Tr. 1435:9-16 (Oakes Testimony); Luppino

Initial Report ¶ 340; Bailey Report ¶ 51). “Good” refers to the lowest or value

price option, “better” refers to the mid-range price option, and “best” refers to

the higher or highest price option. (Bailey Report ¶ 51). For example, at Home

Depot, Lowe’s, Menards, and Ace Hardware, “good” construction adhesives are

typically $2 to $6 in retail price, “better” ones retail for roughly $6 to $8, and

the “best” products usually carry a retail price tag of over $8. (July 16

Tr. 847:5-20 (Shoate Testimony)). The “better” and “best” categories often

correlate with higher-quality products, which are in turn more expensive.

(Luppino Initial Report ¶ 340). This “good, better, best” spectrum applies to the

placement and assortment of construction adhesives in a planogram, especially

given limited shelf space at brick-and-mortar retail stores. (Bailey Report

¶ 51).

In addition, the “good, better, best” spectrum also informs a “trade-up”

strategy shared by retailers and suppliers. (July 14 Tr. 351:6-13 (Reginelli

Testimony); July 15 Tr. 546:18-547:4 (Schneider Testimony); Oakes

Dep. 91:17-23; Luppino Initial Report ¶ 341). Also known as “up the

continuum,” the trade-up strategy aims to move end consumers from lowerpriced commodity products to higher-priced hybrid construction adhesives.

(July 14 Tr. 351:6-13 (Reginelli Testimony); Luppino Initial Report ¶ 341). This

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strategy benefits retailers because it drives higher average unit retail prices.

(July 13 Tr. 200:17-19 (Blackwell Testimony); July 20 Tr. 1188:3-9 (Waits

Testimony); July 21 Tr. 1436:19-25 (Oakes Testimony)). It also provides

advantages to suppliers like Henkel, which are able to sell higher-priced

construction adhesives with higher margins in the “better” and “best”

categories. (Luppino Initial Report ¶ 342).

Brands in the Construction Adhesives Industry

In addition to Loctite and Liquid Nails, which are owned by Henkel and

A-Paint, respectively (Joint Stip. ¶¶ 5, 13), there are many brands with varying

degrees of penetration in the U.S. construction adhesives industry. (July 13

Tr. 138:7-18 (Jones Testimony); Luppino Initial Report ¶¶ 387-411; Bailey

Report ¶ 8; see Luppino Initial Report ¶ 251, Table 12). They include Gorilla

Glue, Titebond, DAP, Sika, Bostik, Red Devil, Sherwin-Williams, Leech, and

Flex Glue. (July 20 Tr. 1309:15-17, 1310:7-15, 1321:10-15, 1398:5-6 (Bailey

Testimony); Burroughs Decl. ¶¶ 41-51; Luppino Initial Report ¶¶ 387-411;

Bailey Report ¶¶ 17, 26; DX326). Below, the Court provides a brief overview of

four other brands that were discussed by both sides’ experts and mentioned

frequently at trial. (See, e.g., Henkel Defendants’ Opening Statement 13).

Gorilla Glue is a newcomer in the construction adhesives space, though

it is growing rapidly. (July 13 Tr. 140:3-8 (Jones Testimony); Parten Dep. 90:19). It currently offers three different SMP construction adhesives at premium

price points, and it has plans underway to develop and sell project-specific

products, including one for wood paneling. (Blackwell Decl. ¶ 27; Parten

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Dep. 14:2-14, 18:17-23, 21:2-3, 21:5-7, 27:5-28:20, 147:9-18, 147:20-21). ■

. (Parten

Dep. 14:2-14, 21:2-3, 21:5-7, 18:17-23, 147:9-18, 147:20-21). Gorilla Glue

construction adhesives have placements in all three major home centers as

well as other retailers, lumberyards, and pro distributors. (Bailey Report

¶ 12). In addition to construction adhesives, Gorilla Glue sells traditional

glues, tapes, sealants, and adhesives. (Parten Dep. 16:4-13, 90:10-91:14).

Titebond, which is owned by Franklin International, offers a dozen or so

construction adhesive products. (Bowen Dep. 12:2-21, 13:8-12; DX291 at 5-7;

July 21 Tr. 1460:5-19 (Oakes Testimony); Burroughs Decl. ¶ 49). Many of

Titebond’s products, including both multi-purpose and project-specific

construction adhesives, are at the opening price point. (July 16 Tr. 898:9-14,

900:9-901:2 (Shoate Testimony); PX2182). Titebond also offers a popular FRP

product sold in pail form. (Reginelli Decl. ¶ 55). As a brand, Titebond has a

strong following among pro shoppers. (July 20 Tr. 1324:9-13 (Bailey

Testimony); Condie Decl. ¶ 57; Bailey Report ¶ 91). It is also sold at the three

home centers and other major retailers. (Bailey Report ¶ 13).

DAP, a brand name under RPM International, is a leading supplier of

caulks, sealants, adhesives, foams, and repair products. (Luppino Initial

Report ¶ 388; Bailey Report ¶ 14). It offers about eight different products in

construction adhesives. (July 16 Tr. 899:2-5 (Shoates Testimony); Blackwell

Decl. ¶¶ 41-46; PX2182). However, none of DAP’s construction adhesive

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products is currently sold at the three main home centers. (July 15

Tr. 558:20-22 (Schneider Testimony); July 20 Tr. 1228:13-18 (Waits

Testimony); July 20 Tr. 1250:20-1251:3 (Wirth Testimony); Luppino Initial

Report ¶ 388; see PX3012 at 3). In fact, in 2024, Lowe’s tested three of DAP’s

construction adhesives in its highest-selling stores, but it did not select any of

DAP’s products for placement in Lowe’s brick-and-mortar stores. (July 20

Tr. 1263:21-1264:10 (Wirth Testimony); PX3009 at 1-2). 9 DAP estimates that

it would take

to offer a new product. (Wirth

Dep. 120:19-121:21; Luppino Initial Report ¶ 388).

Sika is a chemicals company that sells a limited assortment of

construction adhesives under its own brand. (July 14 Tr. 408:14-22 (Reginelli

Testimony) (discussing a Sika polyurethane product); Walther Dep. 6:12-16;

Brogan Decl. ¶ 25; Luppino Initial Report ¶ 394; DX249 at 15).

(Walther Dep. 45:22-46:9).

According to Defendants, the reason that Lowe’s did not stock DAP’s construction

adhesives was not because of their underperformance, but because they failed to

increase overall category sales. (July 21 Tr. 1465:13-1466:15 (Oakes Testimony)).

Regardless of the reason, the DAP test at Lowe’s demonstrates that even a well-known

caulks-and-sealants brand was unable to leverage its reputation in adjacent categories

to penetrate the construction adhesives space.

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Henkel and A-Paint Are Giants in the Construction Adhesives

Industry

Loctite and Liquid Nails Are Leading Construction Adhesives

Brands

Despite the presence of many brands, Henkel’s Loctite and A-Paint’s

Liquid Nails are the true behemoths of the industry — indeed, one competitor

has described the two brands as “the Coke and the Pepsi of the construction

adhesive brands world.” (July 20 Tr. 1257:16-1258:5 (Wirth Testimony)). In

2024, Loctite and Liquid Nails accounted for approximately

and

respectively, of construction adhesives wholesale sales in the

United States. (Luppino Initial Report ¶¶ 49, Table 2, & 50, Table 3). Most of

the sales — approximately

percent for Henkel and

percent for A-Paint —

came from the three home centers. (Id.). In comparison, wholesale sales

attributable to the next two largest suppliers, Titebond and Gorilla Glue, were

approximately

and

, respectively, in 2024 — each

of Loctite and Liquid Nails’s individual sales. (Id. ¶ 244, Table 11). 10

The wholesale revenues for Titebond and Gorilla Glue represented here are

underestimates because the numbers come from wholesale manufacturer data for

construction adhesives sold in cartridge form in the United States in 2024, meaning

that they do not account for construction adhesives sold in other forms. (See Luppino

Initial Report ¶ 244, Table 11).

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In addition to strong sales performance, Loctite and Liquid Nails’s

leading positions in the construction adhesives industry are exemplified by

their brand recognition among competitors, retailers, and end consumers alike.

Wisely, “Defendants do not deny that they have strong brands.” (Def. PostTrial FFCL 65). Henkel markets Loctite as “the #1 Construction Adhesive

Brand” and the “Trusted Brand for 20+ Years.” (July 13 Tr. 72:8-73:3 (Jones

Testimony); July 15 Tr. 681:15-18 (Brogan Testimony); PX1021 at 94, 97).

Similarly, A-Paint boasts that Liquid Nails is the “#1 brand with Pros across

key brand metrics” with “[m]ore than 50 years of experience,” “deliver[ing]

outstanding long-term durability and adhesion with products formulated to

tackle the toughest challenges” since 1968. (PX2025 at 26; PX2200 at 40). In

its due diligence on the Liquid Nails asset, AIP described the brand as “the

‘Kleenex’ of construction adhesives given its ubiquity and brand equity in the

space,” while Henkel has referred to it as “an iconic brand” with high unaided

brand awareness among shoppers at big-box retailers. (July 15 Tr. 611:15-19,

615:5-10 (Dorn Testimony) (discussing PX1403 at 43, PX1005 at 9); PX2245 at

25). Indeed, big-box retailers recognize the importance of branding among end

consumers and organize their shelf space and sales strategy accordingly. (See,

e.g., July 15 Tr. 567:10-568:3 (Schneider Testimony) (Menards merchant

describing construction adhesives as “a bit of a trust-based category” and

explaining that “the current brands that take up most of the category today,

such as Loctite, PL, and Liquid Nails … resonate with our consumers”)).

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Loctite and Liquid Nails Directly Compete with Each Other

Both Loctite and Liquid Nails offer products across the “good, better,

best” spectrum. (July 21 Tr. 1435:9-16 (Oakes Testimony); PX1467 at 37

(presenting Loctite’s current lineup); PX2045 at 1, 3-5 (presenting Liquid

Nails’s products in “base,” “mid-tier,” and premium” price points)). In fact, they

are the only two suppliers with a full suite of multi-purpose and project-specific

construction adhesives. (PX2182 at 3-5). Loctite, for one, offers opening-pricepoint products such as PL200 and Power Grab All Purpose; mid-tier products

such as PL Premium 3x and Power Grab Ultimate; premium products such as

PL Premium 8x, Power Grab Ultimate Clear, and PL Premium Max All Purpose;

as well as project-specific products for foamboard, subfloor, landscape, and

molding and paneling. (PX9162 at 9-13; PX2182 at 3-5; see PX2045 at 1).

Liquid Nails, for another, offers opening-price-point products such as Heavy

Duty and Projects; mid-tier products such as Flex 5x and Fuze*It; premium

products such as Fuze*It Max; as well as project-specific products for subfloor,

drywall, landscape, and molding and paneling. (PX9162 at 9-13; PX2025 at

39; PX2182 at 3-5; see PX2045 at 1).

To be sure, Loctite’s business strategy focuses on higher-quality

technologies like SMP at premium price points (July 15 Tr. 518:20-25 (St.

Marie Testimony); St. Marie Decl. ¶ 28; Blackwell Decl. ¶¶ 79-82; Brogan Decl.

¶ 72), while Liquid Nails is known for its commodity opening-price-point

products made primarily of latex and solvents (July 16 Tr. 898:16-20 (Shoate

Testimony)). For example, Loctite’s best-selling products — PL Premium and

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PL Premium Fast Grab, both of which use the polyurethane technology and

together account for over ■ percent of Henkel’s annual construction adhesives

sales in the United States — retail between $7.48 and $10.98. (St. Marie Decl.

¶ 30). On the other hand, Liquid Nails’s best-selling product is Liquid Nails

Heavy Duty, which is sold in either a latex or solvent formula and typically

retails for around $3.48 to $3.58. (St. Marie Decl. ¶ 31; Shoate Decl. ¶ 15).

Despite differences in their price-segment focus and relative product

strength, Loctite and Liquid Nails compete with each other along the pricing

continuum. (July 21 Tr. 1435:9-16 (Oakes Testimony)). That is, as Henkel’s

long-time consumer adhesives executive acknowledged at trial, there are

Loctite and Liquid Nails products that generally “do[] the same thing at the

same price.” (July 15 Tr. 702:18-20 (Brogan Testimony); Brogan Decl. ¶ 12

(explaining that he led Henkel’s consumer adhesives business in North America

for approximately 25 years and was recently promoted to Corporate Vice

President of Consumer & Construction Americas)).

Among commodity products, Loctite Power Grab, a latex construction

adhesive, competes with Liquid Nails Heavy Duty and other opening-pricepoint offerings. (July 14 Tr. 461:3-462:9 (St. Marie Testimony); PX1535 at 3

(Henkel internal discussion on how to “take more share from LN

Projects/Heavy Duty”)). 11 In the “better” category, Loctite’s best-selling PL

are other Loctite offerings that compete with Liquid Nails’s commodity

products, but in discussions predating the Transaction, Henkel considered exiting those

products, in part because of challenges in profitability for Henkel and because those

products represent less than

of Henkel’s construction adhesives business.

(July 20 Tr. 1317:14-19 (Bailey Testimony); Zambataro Decl. ¶ 67).

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Premium 3x, a polyurethane product, faces challenges from Liquid Nails’s Flex

5x, a hybrid product that A-Paint launched in 2023 specifically to go “head to

head” with PL Premium 3x. (PX2184; PX2189; PX2195 at 4-6, 11). For

example, A-Paint has recommended that Lowe’s reduce facings of Loctite PL

Premium 3x in favor of Flex 5x in its stores. (PX2200 at 112). And for the

“best” products at the highest price points, Loctite’s PL Premium Max, an SMP

product, is frequently pitted against Liquid Nails Fuze*It Max, a “copycat”

hybrid product that Liquid Nails also launched in 2023 specifically to target

and “counter[]” PL Premium Max. (Ziegler Dep. 130:14-22, 131:7-24; PX1265

at 39; PX1534 at 1; PX2041 at 15). Henkel acknowledges that its higherquality SMP products have lost share to recently introduced Liquid Nails SMP

products like Fuze*It Max. (July 14 Tr. 327:19-329:23 (Reginelli Testimony);

PX1715 at 4). At the same time, there are no bright lines separating “good,

better, best” products, meaning that Loctite and Liquid Nails products at

different price points with different purposes — that is, general versus projectspecific — can and do compete with each other. (See, e.g., PX2041 at 5 (APaint pitching Fuze*It Max as a replacement for Loctite’s Power Grab Tub)).

The competition between Loctite and Liquid Nails manifests in at least

two ways: shelf space at retailers and pricing. First, given that the retail

channel constitutes the majority of construction adhesives sales, product

presence and placement on retailers’ shelves in brick-and-mortar stores are

critical for construction adhesives suppliers. (See, e.g., July 21 Tr. 1422:2-5

(Oakes Testimony)). Indeed, competition here matters because if Liquid Nails

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gets more shelf space and an end consumer shopping at a big-box retailer sees

a brand block of Liquid Nails in a prime position on the construction adhesives

shelf, Loctite could lose sales to those Liquid Nails facings. (Id.; July 14

Tr. 343:1-8 (Reginelli Testimony); PX1348 at 13 (Henkel internal slide

discussing objective to “take unit share away from Liquid Nails”)). As the

following illustration demonstrates, Loctite and Liquid Nails occupy different

shares of and positions on retail shelves:

►

CONSTRUCTION ADHES IVES

MARKET OVERV IEW

Shelf Space Per Brand

Loctite

65%

liquid Nails

24%

Gorilla Glue

(27facings)

(11facings}

(4facings)

Shelf Space Per Brand

OSI

Loctite

59%

liquid Nails

34%

Gorilla Glue

(27facings)

(13 facings)

(2 facing.s)

HNKL-FTC-100182890

PX1021-095

Confidential Treatment Requested

(PX1021 at 95 (showing Loctite facings in red, Liquid Nails facings in blue, and

Gorilla Glue facings in orange at Home Depot and Lowe’s)). Nevertheless,

because those two brands alone account for roughly 90 percent of shelf space

at home centers, one brand’s increase in shelf space almost always comes at

the expense of the other brand’s existing presence and position. (Id.; see, e.g.,

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PX3003 at 31 (Henkel lobbying Lowe’s to swap Liquid Nails Paneling for Loctite

Power Grab Molding and Paneling)).

Second, Loctite and Liquid Nails compete on price. Both brands keep

close track of each other’s as well as Gorilla Glue’s prices in internal

competitive reviews. (E.g., PX1101 at 3 (Henkel analysis of Loctite, Liquid

Nails, and Gorilla Glue prices); PX1467 at 38 (Henkel comparison of Loctite

and Liquid Nails prices); PX2081 (A-Paint’s Excel tracker of retail prices);

PX2267 (A-Paint analysis of Loctite, Liquid Nails, and Gorilla Glue pricing)).

Internally, Henkel has acknowledged that it faces “[c]ontinued pressure from

lower-priced competitors such as Liquid Nails” and has in fact lost sales to

Liquid Nails with Loctite price increases. (July 15 Tr. 267:10-15, 268:13-18

(Blackwell Testimony); PX1025 at 3). In those circumstances,

(PX1030 at 3). Similarly, A-Paint has

conducted price elasticity studies of Loctite products in setting prices for new

Liquid Nails products, including the Flex 5x hybrid product that A-Paint

introduced in 2023. (PX2197 at 4, 6, 14, 20). The goal was to ensure that

Liquid Nails’s new product was adequately “priced to go head to head with

[Loctite] PL3X.” (PX2195 at 6).

Distinct Features of the Construction Adhesives Industry

The construction adhesives industry has several distinct features that

impact the Court’s antitrust analysis and therefore warrant further discussion.

To start, brand loyalty drives purchasing decisions for construction adhesives.

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In addition, construction adhesives suppliers must bid for shelf space at

retailers in a process called the product line review (“PLR”), during which

retailers decide what to put on shelves, where products should go on shelves,

and whether any category changes should be made. (July 15 Tr. 553:24554:13 (Schneider Testimony); July 20 Tr. 1179:8-19 (Waits Testimony);

July 21 Tr. 1437:1-9, 1446:3-5 (Oakes Testimony)). At the same time, while

the PLR process provides substantial leverage to retailers over suppliers,

retailers do not necessarily share the same incentives as end consumers of

construction adhesives. The Court addresses each in turn.

Brand Is Key

Brand equity is perhaps the most important factor in driving

construction adhesives sales, meaning that brand can be a key barrier to

robust competition among suppliers. (PX1021 at 97; PX2025 at 31; PX2197 at

17). Indeed, market research demonstrates that the “[b]rand of the

construction adhesive has the most effect on purchase intent.” (PX2197 at 17

(Farnsworth analysis)). At home centers, for example, brands outside of

Loctite, Liquid Nails, and Gorilla Glue have failed to obtain any meaningful

shelf space in the construction adhesives bay. (Luppino Initial Report ¶¶ 298299, 301, 380; see PX1021 at 95). That is in large part because retailers know

that end consumers resonate with those three brands but not with others.

(July 15 Tr. 568:25-569:9 (Schneider Testimony) (explaining that brand is

relevant to Menards’s decisions about what to stock on their shelves); July 20

Tr. 1214:18-1215:2, 1219:13-1220:3, 1225:7-10, 1229:2-7, 1232:21-24 (Waits

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Testimony); Waits Dep. 127:1-6; PX3006 at 3). In other words, the brands with

“holding power” — such as Loctite and Liquid Nails — are able to keep their

key shelf placements. (July 20 Tr. 1223:6-14 (Waits Testimony); PX3006).

Brand strength takes time and financial investment to build. (July 20

Tr. 1258:7-15 (Wirth Testimony) (explaining that brand is built “through good

user experiences over time,” such that end consumers “can rely on [the brand]

and expect the results”)). During Project Clipper’s due diligence, Henkel

explained that it was interested in acquiring A-Paint in part because “[i]t would

be very difficult to organically replicate the brand equity Liquid Nails has

established over 50 years,” especially given Liquid Nails’s “very loyal

professional end user target group.” (PX1005 at 4). Moreover, brand equity

requires significant marketing expenditures and other financial investments.

Gorilla Glue, a newcomer in the space that introduced its first construction

adhesive product in 2015, spent approximately $100 million on advertising in

2023 — roughly seven times Henkel’s advertising budget for the same year.

(July 14 Tr. 365:17-366:1 (Reginelli Testimony); Parten Dep. 90:1-9; PX1033 at

16).

In addition, brand equity is specific to the construction adhesives

industry. Brands with strong recognition in adjacent categories like caulks

and sealants have not been able to leverage their brand strength and penetrate

construction adhesives using brand alone. (E.g., July 20 Tr. 1259:18-1260:11

(Wirth Testimony) (discussing DAP); July 16 Tr. 802:25-803:5, 804:2-5, 810:717 (Krebs Testimony) (discussing Sherwin-Williams); July 15 Tr. 686:23-687:9

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(Brogan Testimony) (discussing Sika as part of PX1005 at 6)). As one example,

DAP is a widely recognized brand in caulks and sealants, but its attempt to

leverage brand equity in those adjacent categories by rebranding its

construction adhesives packaging to more closely mirror those used for its

caulks and sealants did not lead to increased placements at retailers. (July 20

Tr. 1259:18-21, 1260:24-1261:19, 1263:10-1264:10, 1266:9-23 (Wirth

Testimony); PX3084). As another example, Sherwin-Williams’s White Lightning

brand is a global leader in caulks and sealants, but its brand awareness has

not helped its latex-based construction adhesive, White Lightning Speed Grip,

take off. (July 16 Tr. 801:25-803:5, 803:10-13, 804:2-5, 810:7-17 (Krebs

Testimony)). In fact, even though Sherwin-Williams enjoys a strategic

relationship with Lowe’s, the latter eliminated White Lightning Speed Grip from

its shelves in 2024 because White Lightning had little to no brand recognition

as a construction adhesive and was performing poorly in terms of sales.

(July 16 Tr. 805:3-809:3, 811:13-812:3 (Krebs Testimony); July 21

Tr. 1426:22-1428:5 (Oakes Testimony)). Even Henkel has decided to exit

construction adhesives marketed under the OSI brand, which is “really strong”

in sealants. (July 14 Tr. 440:19-21 (Reginelli Testimony); July 15 Tr. 682:1124 (Brogan Testimony)).

Indeed, brand is so key to construction adhesives that none of the three

largest home centers offers any product under its own label, which is also

known as “private label.” (July 15 Tr. 568:25-569:9 (Schneider Testimony);

July 20 Tr. 1227:10-12, 1227:16-21 (Waits Testimony); July 21 Tr. 1440:1-6

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(Oakes Testimony)). During his deposition, the Lowe’s merchant explained that

Lowe’s does not sell private-label construction adhesives

(July 21

Tr. 1440:13-1441:2 (Oakes Testimony); Oakes Dep. 49:17-50:22). Similarly, at

trial, the Menards merchant described the idea of launching a Menards private

label as “starting over … in a sense … [because] the Henkel items and the

Liquid Nails items resonate so well on the market today with our customer and

other brands don’t.” (July 15 Tr. 568:25-569:9 (Schneider Testimony)).

Suppliers Bid for Shelf Space at Retailers’ Product Line

Reviews

Retailers organize shelf space in their brick-and-mortar stores according

to the planogram, which provides direction for product placement and ensures

consistency across stores. (July 13 Tr. 160:25-161:3 (Blackwell Testimony);

July 21 Tr. 1429:13-20, 1429:25-1430:5 (Oakes Testimony)). In the

construction adhesives industry, the planogram is set and updated every few

years during the PLR process, which is usually run by each retailer’s paint

department. (July 13 Tr. 161:13-24 (Blackwell Testimony); July 15 Tr. 542:2123, 545:3-5, 553:24-554:13 (Schneider Testimony); July 20 Tr. 1168:7-16,

1179:8-1180:9 (Waits Testimony); July 21 Tr. 1415:6-8, 1446:2-5, 1437:1-9

(Oakes Testimony); PX1021 at 1). Retailers may make minor changes to their

shelf space between PLRs, but major changes to the planogram take place only

during the PLR process. (July 21 Tr. 1437:1-9, 1448:5-14 (Oakes Testimony);

see July 15 Tr. 554:5-13 (Schneider Testimony); July 20 Tr. 1181:1-11 (Waits

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Testimony) (explaining that apart from PLRs, Home Depot sometimes conducts

rapid business reviews to consider other suppliers and opportunities)).

From the retailers’ perspective, the planogram should contribute to sales

velocity or productivity — that is, retailers want to organize their shelves in

such a way that products will fly off the shelves and the amount of retail sales

will increase. (July 15 Tr. 567:5-7 (Schneider Testimony); July 20 Tr. 1221:510 (Waits Testimony); July 21 Tr. 1427:11-23, 1430:20-1431:8 (Oakes

Testimony) (“[T]ypically speaking, you are going to allocate that space to … the

proven winners and … the top-selling items.”)). Similarly, from the suppliers’

perspective, some of the most critical steps to increasing construction

adhesives sales are getting on the shelf, increasing their shelf space, and

occupying prime positions on the planogram. (July 13 Tr. 161:4-10 (Blackwell

Testimony); PX1068 at 2).

Unsurprisingly, the PLR is a meticulous and competitive bidding process,

during which construction adhesives suppliers make detailed presentations

about their own products and suggest changes to the planogram as a whole, all

of which impact shelf space, pricing, and market shares. (E.g., July 20

Tr. 1179:25-1180:9 (Waits Testimony) (explaining that Home Depot’s PLR takes

place in 12 weeks, with nationwide reset completed over the course of four to

six months); July 21 Tr. 1445:2-6 (Oakes Testimony) (explaining that Lowe’s

PLR can last around six to nine months); PX1467; PX1463; PX1613; PX2025;

PX2179; PX3003). For example, Lowe’s conducted its most recent PLR in

2024, during which Loctite, Liquid Nails, Gorilla Glue, Titebond, DAP, Flex

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Seal, and Sherwin-Williams were invited to submit presentations. (July 21

Tr. 1414:18-21, 1425:1-12 (Oakes Testimony)). The results of the PLR were

disappointing for every supplier except Loctite, Liquid Nails, and Gorilla Glue.

Lowe’s dropped existing Flex Seal and Sherwin-Williams products due to their

poor performance. (July 16 Tr. 805:3-806:16 (Krebs Testimony); July 21

Tr. 1427:6-1429:6 (Oakes Testimony)). Moreover, Lowe’s did not move forward

with any products pitched by DAP, and it stocked only FRP buckets from

Titebond despite the supplier’s pitch of a full lineup of construction adhesives

products. (July 21 Tr. 1425:13-1426:8, 1460:5-1461:3 (Oakes Testimony);

DX297 at 42-44). Loctite and Liquid Nails, on the other hand, both won some

and lost some in their competition with each other. Lowe’s eliminated Liquid

Nails Paneling and replaced it with Loctite Power Grab Molding and Paneling;

but Lowe’s also decided to continue stocking Liquid Nails’s Fuze*It and Fuze*It

Max despite Loctite’s lobbying against them as duplicative offerings. (July 13

Tr. 177:7-14, 178:4-12, 179:13-22 (Blackwell Testimony); July 21 Tr. 1423:522 (Oakes Testimony); PX3012 at 3).

As another example, Menards conducted its most recent PLR in 2025.

(July 15 Tr. 553:19-21, 564:21-25 (Schneider Testimony)). Similar to Lowe’s,

Menards invited a combination of incumbent suppliers — namely Loctite,

Liquid Nails, and Gorilla Glue — as well as other suppliers who may or may not

be in the construction adhesives space. (Id. at 554:14-557:10 (explaining that

the other suppliers are on an administrative list that is considered more

exploratory, meaning that Menards does not expect any of them to even make a

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construction adhesive or supply the volume that Menards typically requires)).

The only new supplier that Menards added as a result of the PLR process was

Red Devil, which now has a commodity product on Menards’s planogram. (Id.

at 563:7-564:16; see PX3064 at 1). Most of the other changes were swaps,

additions, and eliminations of Loctite and Liquid Nails products. (PX3064 at

1). For example, Menards removed Loctite’s PL 100 in favor of Liquid Nails

Drywall, swapped the 28-ounce Loctite PL 400 for Liquid Nails’s subfloor

product in the same size, and removed the 10-ounce Loctite PL 400 in favor of

Liquid Nails’s subfloor product in the same size. (July 15 Tr. 561:10-18,

563:22-564:5 (Schneider Testimony) (discussing PX3064)). As a result of the

2025 PLR, Loctite and Liquid Nails now constitute more than two-thirds of the

Menards construction adhesives planogram, which features only one Red Devil

product and three Gorilla Glue products outside of those two brands. (Id. at

563:7-564:16).

Through the PLR process, retailers can exert substantial leverage over

construction adhesives suppliers. (See July 20 Tr. 1302:1-10 (Bailey

Testimony)). Indeed, retailers and suppliers often engage in “multiple

conversations” and “negotiations,” during which retailers may tell suppliers

about their competitors’ proposals as well as pit suppliers against each other to

secure lower wholesale costs. (July 14 Tr. 377:15-20 (Reginelli Testimony);

July 21 Tr. 1446:3-19 (Oakes Testimony)). Moreover, suppliers do not have full

visibility into other suppliers who are also participating in a given PLR,

especially given that the PLR process is not limited to incumbents. (July 13

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Tr. 210:24-211:6 (Blackwell Testimony); July 20 Tr. 1179:15-1180:9, 1175:1115 (Waits Testimony) (explaining that Home Depot’s PLRs are open “to anyone

who’s interested in presenting to the merchant and the team their products,

their innovation, their pricing”); July 21 Tr. 1451:16-1452:5 (Oakes Testimony);

Zambataro Decl. ¶ 52; Blackwell Decl. ¶ 21; Brogan Decl. ¶ 54). As a result,

suppliers understand that suggestions of wholesale price increases may

negatively impact their pitches during the PLR process. (See July 21

Tr. 1446:3-1447:6 (Oakes Testimony)). In fact, at Menards’s latest PLR in

2025, Henkel lowered prices on its construction adhesives because Menards

leveraged another unnamed supplier on pricing. (July 13 Tr. 144:5-145:4,

146:16-20, 156:21-157:1 (Jones Testimony); DX45 at 1).

Retailer and End Consumer Incentives Are Not Aligned

Despite the leverage that retailers have over construction adhesives

suppliers through the PLR process and the broader importance of the retail

channel, the incentives of retailers are not necessarily aligned with those of end

consumers in at least two ways. First, unlike end consumers, retailers do not

necessarily shun price increases because wholesale and retail pricing are two

separate considerations. Wholesale prices — or wholesale costs to retailers for

purchasing construction adhesives from suppliers — are monitored closely by

retailers, which require suppliers to provide a detailed cost justification and

engage in a sophisticated process if suppliers wish to increase wholesale prices.

(July 15 Tr. 708:1-3 (Brogan Testimony); Borgan Decl. ¶¶ 44-45; Reginelli Decl.

¶¶ 40-41; Blackwell Decl. ¶¶ 57-58; Zambataro Decl. ¶¶ 24-25; Burroughs

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Decl. ¶ 90; Gatesy Decl. ¶¶ 19, 35). In the past few decades, Henkel has never

passed a price increase to Home Depot or Lowe’s without an increase in cost.

(July 15 Tr. 757:11-17 (Brogan Testimony)). And from Henkel’s perspective,

cost justification can be a “long and painful process” involving “months and

months of negotiation back and forth with [retailers’] finance team” and often

leading to disappointing results for Henkel. (July 14 Tr. 250:19-251:1

(Blackwell Testimony)). At Home Depot, for example, the cost justification

process requires suppliers to submit information such as raw material costs as

well as transportation and packaging costs, which information is analyzed

closely by Home Depot’s internal cost finance team. (July 20 Tr. 1171:6-12

(Waits Testimony); Zambataro Decl. ¶¶ 28, 34; DX57).

Retailers like the three largest home centers can and have rejected or

made downward adjustments to price increase requests from Henkel and APaint in the past. Examples abound of Home Depot pushing back and

decreasing the amount of Henkel’s proposed price increases, rejecting A-Paint’s

requests altogether, and asking Henkel to lower prices when raw materials

dropped in costs. (July 20 Tr. 1171:13-16 (Waits Testimony); Zambataro Decl.

¶ 37; Burroughs Decl. ¶ 79; DX192 at 10). In fact, Henkel has requested a

price increase with Home Depot only five times since 2011, all because of cost

increases due to COVID-19, tariffs, and other historic events. (Zambataro Decl.

¶¶ 25-26). Similarly, Lowe’s accepted Henkel’s tariff-justified price increase

only after Henkel agreed to offsetting commitments in marketing contributions

and rebates (Blackwell Decl. ¶¶ 69-73; DX63; DX64; DX67; DX68), and Lowe’s

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accepted a price increase from Liquid Nails that was lower than what the

supplier had requested (Burroughs Decl. ¶ 83; DX110; DX190). Menards has

similarly pushed Liquid Nails to reduce pricing on several products.

(Burroughs Decl. ¶ 67; DX219; DX220).

Nevertheless, retailers have control over retail prices charged to end

consumers and are incentivized to raise them when suppliers increase

wholesale prices. Indeed, each of the three home centers enjoys healthy retail

margins on construction adhesives sold to end consumers — 40 to 70 percent

for Home Depot and Lowe’s, and

percent for Menards. (July 14 Tr. 360:4-9

(Reginelli Testimony); DX277 at 1). To maintain or even boost their margins,

retailers have passed on supplier wholesale price increases to end users by

increasing retail prices of the products at issue or through portfolio price

increases, which mean raising the prices of other products. (July 21

Tr. 1420:22-1422:1 (Oakes Testimony); see, e.g., July 14 Tr. 360:19-362:2

(Reginelli Testimony); PX1668 at 3). When Lowe’s accepted Liquid Nails’s price

increase requests on

retail prices for

products in 2024, for example, Lowe’s increased

products and improved its own retail

margin per unit. (July 16 Tr. 977:21-978:13 (Luppino Testimony); PX6114).

Moreover,

(See, e.g., PX1499 at 70 (

PX2025 at 38 (

)).

);

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Second, retailers and end consumers are not aligned on portfolio

rationalization, a term used here to describe the evaluation and streamlining of

product choices in the construction adhesives category. Unlike many end

consumers, retailers prefer simple brand assortments. (July 20 Tr. 1389:3-16

(Bailey Testimony)). Because of limited shelf space in brick-and-mortar stores,

retailers pursue a trade-up strategy to encourage end users to move from the

opening price point to more premium products with higher margins and are

therefore incentivized to reduce the number of stock keeping units (“SKUs”) in

favor of a more profitable portfolio. (July 13 Tr. 200:20-23 (Blackwell

Testimony); July 14 Tr. 345:3-17 (Reginelli Testimony)). In fact, Henkel has

encouraged retailers to trade up from Liquid Nails commodity products to

Loctite’s more premium offerings to the detriment of consumer choice.

(PX1021 at 96; PX1210 at 6; PX1331 at 1; PX1463 at 54). At the same time,

Henkel and A-Paint remain safe from portfolio rationalization because most

retailers would never fully eliminate the Loctite and Liquid Nails product lines

from their stores. (July 15 Tr. 597:21-598:7 (Schneider Testimony) (Menards

merchant explaining that “the discontinuation of a brand like Liquid Nails …

[would require] something significant … to happen to warrant that”); July 21

Tr. 1434:12-1435:2 (Oakes Testimony) (Lowe’s merchant explaining that

eliminating both brands “would create a tremendous amount of sales risk to

the category”)).

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Deal Rationale and Possible Effects of the Proposed Acquisition

A primary rationale behind Henkel’s acquisition of A-Paint is to “shore up

all [construction] adhesive sets and eliminate/block all other brand positions.”

(PX1016 at 2). By acquiring Liquid Nails, Henkel would be able to

(July 14 Tr. 354:18-355:20 (Reginelli Testimony);

Reginelli Dep. 220:20-221:8; PX1005 at 5-7, 9-10; PX1189 at 1). In addition,

Henkel sees a “[b]ig opportunity to move the market out of OPP [opening price

point]” and push for higher quality, price, and margin products through the

trade-up strategy shared with retailers. (PX1016 at 2; PX1189 at 1). 12

Considering the evidence presented during trial, the Court agrees with the FTC

that the possible effects of the Transaction include price increases and SKU

eliminations from portfolio rationalization, though it does not believe that

innovation will suffer.

To start, while Henkel’s modeling and business plans for the Transaction

do not currently include any wholesale or retail price increases (July 15

Tr. 638:1-9 (Dorn Testimony); July 15 Tr. 742:1-4, 749:15-19 (Brogan

At trial, several witnesses suggested that the Transaction is motivated by Liquid Nails’s

underinvested status and Henkel’s desire to save and grow an otherwise iconic brand.

(See, e.g., July 15 Tr. 627:16-21 (Dorn Testimony) (“I mean, the business thesis for us,

we’ve seen an iconic brand which was underinvested, and by underinvested, we mean

lack of resources for innovation, also not brand and marketing campaigns activation,

training to the end user and the pros who use that product. We felt there that is

something that we can rejuvenate.”)). That may be an important rationale behind the

Transaction, but it is not mutually exclusive with Henkel’s motivation to shore up its

construction adhesives portfolio and block other brands. In fact, by acquiring and

growing Liquid Nails, Henkel may be able to better achieve its competition-driven goals.

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Testimony); Dorn Decl. ¶ 42; Boone Dep. 91:24-92:11; DX8 at 19), there is a

non-zero possibility that the combined Henkel entity, which would have greater

bargaining leverage with retailers (see PX1189 at 1), may pursue such

increases in the future. Precisely for this reason, smaller retailers like Menards

are concerned that if “Henkel raises their price, [retailers like Menards] don’t

necessarily have a lot of recourse to go get something fast and quick to fill

[their] shelves” and “might have to raise [their] prices to [their] consumers,

which could have a ripple effect on other projects[.]” (July 15 Tr. 570:15571:13 (Schneider Testimony)). To be sure, Home Depot, the largest home

center, does not believe that the Transaction will have a negative impact on it

or its shoppers. (July 20 Tr. 1174:8-24 (Waits Testimony)). But even Mr. Waits

implied at trial that Home Depot may accept cost-justified price increases

requested by the combined Henkel entity, and he said nothing about Home

Depot’s own plans for raising retail prices and margins. (See id. at 1174:251175:7). This risk of price hikes is more than speculative, because retailers

understand that end consumers are unlikely to stop purchasing construction

adhesives, even with a 40-percent price increase. (E.g., July 21 Tr. 1423:9-22

(Oakes Testimony) (adopting Henkel’s proposal to eliminate Liquid Nails

product for a Loctite product that is $2 more expensive); PX3003 at 31).

Moreover, the Transaction is likely to impact portfolio rationalization in

that it could reduce the number of SKUs and thus consumer choice in the

construction adhesives category. Again, Henkel professes not to have any

current plans to remove specific Loctite or Liquid Nails products after (and as a

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result of) the Transaction. (Brogan Decl. ¶ 82; see July 15 Tr. 755:6-12

(Brogan Testimony) (“[N]o plan to eliminate any of the top performing items or

even items our customers want to keep.”)). And in general, Henkel has not

removed a product without input from its major retail customers. (July 14

Tr. 437:1-4 (Reginelli Testimony)). However, given that retailers are

incentivized to increase their returns through consolidated assortments (id.

345:7-17), SKU eliminations can easily take place with retailer approval after

the Transaction is consummated. For example, internal discussions are

already underway at Henkel about the possibility of streamlining the two

brands’ subfloor offerings and choosing one subfloor product over another.

(July 14 Tr. 357:2-358:14 (Reginelli Testimony); PX1236 at 3). And Henkel

routinely includes proposals for reducing SKUs in its PLR submissions, often at

the request of retailers. (E.g., July 13 Tr. 120:14-122:20, 122:21-124:4 (Jones

Testimony) (discussing PX1467 at 38 and PX1613 at 33); PX3003 at 59;

PX1463 at 86). The Court recognizes that Henkel has recommended

eliminating its own Loctite products in favor of portfolio rationalization in the

past. (See, e.g., July 21 Tr. 1455:10-1456:7 (Oakes Testimony) (Henkel

working together with Lowe’s to remove PL375 and PL400)). But the possible

effects of the Transaction include the risk that the combined Henkel entity may

eliminate products beyond those that have become obsolete because of

innovation or bad performance. (See Zambataro Decl. ¶ 67 (explaining that

Henkel was already considering phasing out

profitability)).

because of poor

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By contrast, the evidence at trial suggests that innovation is not likely to

be negatively impacted by the Transaction. Henkel’s due diligence reflects that

Liquid Nails is an underinvested and undermarketed brand owned by a

company that is focused on its larger paint business. (July 15 Tr. 752:19753:1 (Brogan Testimony); Brogan Decl. ¶ 79; DX7 at 2). Both its R&D and

marketing groups have reduced in size under current management, which has

“pull[ed] resources away from the [Liquid Nails] brand and the overall

technology.” (July 17 Tr. 1083:9-12 (Burroughs Testimony)). Consequently,

Henkel plans to make capital investments in Liquid Nails’s plant and double

Liquid Nails’s marketing spend. (July 15 Tr. 640:4-12 (Dorn Testimony)

(explaining that Henkel sees “opportunities to invest both in innovation and

marketing activities”); July 15 Tr. 753:2-4 (Brogan Testimony); Brogan Decl.

¶ 80; DX6; DX8 at 17). In fact, Henkel has earmarked approximately

and

for capital

expenditure (“CapEx”) investments and expansion, respectively, over the next

decade. (DX8 at 20, 36). From a product perspective, such proposed CapEx

increases could help Liquid Nails expand both its manufacturing capacity and

its ability to manufacture construction adhesives of different technologies.

(See, e.g., July 17 Tr. 1111:12-24 (Condie Testimony) (explaining that Liquid

Nails’s solvent mixers at its Temple, Texas plant could be used to make latex

products with “very little investment”)). 13

As a preemptive strike, the FTC argues that any purported efficiencies or synergies

resulting from the Transaction would be speculative. (FTC Post-Trial FFCL 72-73).

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CONCLUSIONS OF LAW

Applying the three-step Baker Hughes burden-shifting framework, the

Court determines that the proposed acquisition must be enjoined at step two.

That is, the FTC has established a prima facie case that Defendants fail to

rebut. But even if the Court were to find that Defendants had advanced a

successful rebuttal, the Transaction would still be enjoined at step three

because the FTC has produced sufficient additional evidence of anticompetitive

harm.

The FTC Has Established a Prima Facie Case

At step one of the Baker Hughes burden-shifting framework, the FTC

must establish a prima facie case that the merger is presumptively illegal by

(i) defining a relevant market and (ii) showing that the effect of the merger is

likely to be anticompetitive in that market. Tapestry, 755 F. Supp. 3d at 408;

IQVIA, 710 F. Supp. 3d at 352. The Court determines that the FTC has carried

its initial burden of production — that is, it has shown that the proposed

acquisition creates a presumptively illegal increase in undue market

concentration and eliminates substantial head-to-head competition in the

market for construction adhesive cartridges sold in the retail channel in the

United States.

However, because Defendants do not make any efficiency-based arguments, the Court

does not address them here.

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There Is a Relevant Market for Construction Adhesive

Cartridges Sold in the Retail Channel in the United States

As the Supreme Court has explained, “determination of the relevant

market is a necessary predicate to a finding of a violation of the Clayton Act

because the threatened monopoly must be one which will substantially lessen

competition within the area of effective competition,” which can be determined

“only in terms of the market affected.” Brown Shoe, 370 U.S. at 324 (alteration

adopted and internal quotation marks omitted) (quoting United States v. E. I. du

Pont de Nemours & Co., 353 U.S. 586, 593 (1957)). In particular, the “area of

effective competition” includes two components — “a product market (the line

of commerce) and a geographic market (the section of the country).” Id.

(internal quotation marks omitted). In this case, the parties agree that the

relevant geographic market is the United States. (PX1 at 1; PX4 at 5; see

July 16 Tr. 943:3-24 (Luppino Testimony); supra Findings of Fact B.1).

Therefore, the Court focuses its analysis on the relevant product market

definition.

The “outer boundaries” of the relevant product market are determined by

“the reasonable interchangeability of use or the cross-elasticity of demand

between the product itself and substitutes for it.” Brown Shoe, 370 U.S. at

325; see also Regeneron Pharms., Inc. v. Novartis Pharma AG, 96 F.4th 327,

339 (2d Cir. 2024) (explaining that cross-elasticity of demand measures

whether “consumers would respond to a slight increase in the price of one

product by switching to another product” (internal quotation marks omitted)

(quoting Todd v. Exxon Corp., 275 F.3d 191, 201-02 (2d Cir. 2001) (Sotomayor,

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J.))). Within this broad market, “well-defined submarkets may exist which, in

themselves, constitute product markets for antitrust purposes.” Brown Shoe,

370 U.S. at 325. The purpose of this exercise is “to identify the market

participants and competitive pressures that restrain an individual firm’s ability

to raise prices or restrict output.” Geneva Pharms. Tech. Corp. v. Barr Lab’ys

Inc., 386 F.3d 485, 496 (2d Cir. 2004); see also FTC v. Staples, Inc., 970 F.

Supp. 1066, 1074 (D.D.C. 1997) (“[T]he general question is ‘whether two

products can be used for the same purpose, and if so, whether and to what

extent purchasers are willing to substitute one for the other.’” (quoting Hayden

Publ’g Co., Inc. v. Cox Broad. Corp., 730 F.2d 64, 70 n.8 (2d Cir. 1984))).

Moreover, courts consider “both quantitative and qualitative evidence in

defining the relevant product market.” IQVIA, 710 F. Supp. 3d at 353. For

example, courts often look to the “practical indicia” of market boundaries, also

known as the Brown Shoe factors, “to identify whether two products are

economic substitutes and compete within the same antitrust market.”

Regeneron Pharms., 96 F.4th at 339; Tapestry, 755 F. Supp. 3d at 414. In

addition, “[a] common quantitative metric used by parties and courts to

determine relevant markets is the Hypothetical Monopolist Test (‘HMT’),” FTC v.

Meta Platforms Inc., 654 F. Supp. 3d 892, 912 (N.D. Cal. 2023), which asks

“whether eliminating the competition among the group of products by

combining them under the control of a hypothetical monopolist likely would

lead to a worsening of terms for customers” (Luppino Initial Report ¶ 59

(internal quotation marks omitted) (quoting U.S. Dep’t of Just. & Fed. Trade

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Comm’n, Merger Guidelines (the “2023 Merger Guidelines”) § 4.3A (2023))). 14

There is “no requirement to use any specific methodology in defining the

relevant market.” Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., Ltd., 20 F.4th

466, 482 (9th Cir. 2021). “As such, courts have determined relevant antitrust

markets using, for example, only the Brown Shoe factors, or a combination of

the Brown Shoe factors and the HMT.” Meta Platforms, 654 F. Supp. 3d at 912.

Ultimately, “market definition is a deeply fact-intensive inquiry,” Todd, 275

F.3d at 199, requiring courts to examine the details of each case and the

“commercial realities of the industry” at issue, Brown Shoe, 370 U.S. at 336

(internal quotation marks and citation omitted).

Here, relying heavily on the expert testimony of Dr. Marc Luppino, the

FTC proposes a product market for construction adhesive cartridges sold in the

retail channel. (FTC Post-Trial FFCL 76; FTC Pretrial MOL 6). According to the

FTC, both the Brown Shoe factors as well as Dr. Luppino’s HMT analysis

support this market definition. (FTC Post-Trial FFCL 81-86; FTC Pretrial

MOL 8-13). Defendants disagree, putting forth the testimony of their own

expert, Dr. Elizabeth Bailey, to show that the FTC’s proposed product market

definition is invalid. (Def. Pretrial MOL 6). Specifically, Defendants argue that

the FTC’s definition is overinclusive in that it improperly groups together nearly

The Court recognizes that the Guidelines, as with any agency pronouncement, are not

binding on the Court. Nevertheless, in line with Supreme Court precedent and in

keeping with its sister courts, the Court finds them persuasive on the topics discussed

in this Opinion. See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944); FTC v.

Tapestry, Inc., 755 F. Supp. 3d 386, 412 n.3 (S.D.N.Y. 2024) (“In this opinion, the Court

considers statements in the 2023 Merger Guidelines to the extent that the Court finds

them persuasive — recognizing, of course, that the Guidelines are nonbinding.”).

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all construction adhesives into a single market (regardless of chemistry,

application, price, or quality), and that it is also underinclusive because it is

improperly limited to retailers. (Def. Post-Trial FFCL 96-106; Def. Pretrial

MOL 15-22). The Court determines that there is a relevant market for

construction adhesive cartridges sold in the retail channel based on both

qualitative and quantitative evidence. 15

Qualitative Evidence Supports the FTC’s Proposed

Market Definition

The Court starts by examining the Brown Shoe factors, namely the

“practical indicia” consisting of “industry or public recognition of the

submarket as a separate economic entity, the product’s peculiar characteristics

and uses, unique production facilities, distinct customers, distinct prices,

sensitivity to price changes, and specialized vendors.” Brown Shoe, 370 U.S. at

325. The Court notes that the Brown Shoe factors are not meant to be

“mandatory” or “exhaustive” — that is, “the presence of some, and absence of

others, is not dispositive.” Alaska Elec. Pension Fund v. Bank of Am. Corp., 306

F. Supp. 3d 610, 620 (S.D.N.Y. 2018) (internal quotation marks omitted)

(quoting Se. Mo. Hosp. v. C.R. Bard, Inc., 642 F.3d 608, 614 (8th Cir. 2011)).

The FTC contends that there is also a broader relevant antitrust market for “all

construction adhesives sold in the United States, irrespective of sales channel[.]” (FTC

Post-Trial FFCL 85). Because the Court agrees that there is a narrower relevant market

for construction adhesive cartridges sold in the retail channel, it also accepts the

broader market encompassing the relevant submarket. See, e.g., FTC v. Sysco Corp.,

113 F. Supp. 3d 1, 37, 40 (D.D.C. 2015) (finding both a broad market of “broadline

distribution” as well as a narrower submarket of “broadline distribution to national

customers”).

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First, the construction adhesives industry recognizes construction

adhesive cartridges sold in the retail channel as a distinct market. (See FTC

Post-Trial FFCL 84-85; FTC Pre-Trial MOL 10). Regarding the cartridge form,

there is broad industry recognition of construction adhesive cartridges as a

distinct product because of its popularity, specific application method

(requiring a caulking gun), and the production of a precise bead. (See supra

Findings of Fact B.1; July 16 Tr. 944:16-945:11 (Luppino Testimony); Bowen

Dep. 35:14-37:1 (explaining that FRP products are not meant to be used

interchangeably with construction adhesive cartridges because FRP requires

the use of a trowel as well as complete surface coverage)).

In addition, the industry recognizes retail as its own market. Defendants

themselves have long treated, analyzed, and strategized about retail as a

distinct channel. (E.g., July 13 Tr. 74:8-75:11 (Jones Testimony) (explaining

that Henkel uses a third-party data source to track market shares in the retail

channel); PX1403 at 43 (Henkel analyzing Liquid Nails’s retail and pro sales

split); PX1480 (discussing Henkel’s retail sales channel strategy); PX2195 at 4

(A-Paint discussing the “retail category”); PX1622 at 3-4 (Henkel analyzing

retail and pro as different channels); PX2045 (A-Paint tracking construction

adhesives pricing among retailers)). Before Henkel’s April 2026 global

reorganization, both Henkel and A-Paint had sales teams dedicated to retail

customers for construction adhesives. (E.g., PX1662 at 17 (showing Henkel’s

sales organization for retail versus pro); PX2088 at 5 (showing A-Paint’s “Retail

Team”)). Those sales teams employed retail-specific strategies, including store

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visits with regional managers and store associates, that would not apply to

lumberyards, distributors, and dealers without consumer-facing storefronts.

(July 15 Tr. 692:5-13 (Brogan Testimony); PX2198; PX2270 at 10). Moreover,

Defendants’ view of retail as a separate market is shared by other construction

adhesives players, including Gorilla Glue, Titebond, and DAP. (PX3002 (Gorilla

Glue); PX3118 at 4-5 (Titebond); PX3008 at 3 (DAP)). The Court’s factual

findings further underscore the distinction between the retail and pro sales

channels. (See supra Findings of Fact B.2).

Second, the proposed market has peculiar characteristics. (See FTC

Post-Trial FFCL 82-83). Unlike lumberyards, distributors, and dealers in the

pro channel, retailers sell construction adhesives in dedicated bays with limited

shelf space in consumer-facing brick-and-mortar stores. (PX1467 at 89-96;

PX3123 at 68; supra Findings of Fact B.2-3). Because of that retail-specific

setup, the Court has found that one distinct feature of the construction

adhesives industry is that suppliers must bid for shelf space on retailers’

planogram through the PLR process. (Supra Findings of Fact D.2). There is no

equivalent PLR process for determining shelf space, pricing, and other salesrelated considerations in the pro channel, where customers operate

lumberyards and warehouses instead of retail stores. (Dardick Dep. 37:17-22,

38:1-15, 47:8-48:3; Brosius Dep. 37:8-23, 38:11-20).

Third, the proposed market attracts distinct customers, namely DIYers as

well as small and medium pros. (See FTC Post-Trial FFCL 83-84). Indeed, the

Court has found that the retail and pro channels are distinguished by their

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different end users. (Supra Findings of Fact B.2). DIYers are unlikely to shop

outside of the retail channel because lumberyards, distributors, and dealers do

not operate retail stores. And while there may be more crossover among pros,

even they are differentiated by size and purpose. The Court acknowledges that

large pros sometimes shop at retail for “fill in” and emergency supplies, but

“[t]he law does not require an exclusive class of customers for each relevant

submarket.” Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 714 (7th Cir.

1979); see also FTC v. Whole Foods Mkt., Inc., 548 F.3d 1028, 1040 (D.C. Cir.

2008) (acknowledging that customers “cross-shop” and explaining that “[t]he

fact that a customer might buy a stick of gum at a supermarket or at a

convenience store does not mean that there is no definable groceries market”

as long as there exists a core group of customers).

Fourth, the proposed market also has a distinct pricing structure and

process. (See FTC Post-Trial FFCL 84). Again, because of the unique retail

setup and the limited shelf space, retailers are incentivized to pursue the tradeup strategy that the Court has described above. (Supra Findings of Fact B.4;

see id. D.3). Moreover, retailers approach the PLR process with the trade-up

strategy in mind, rationalizing their portfolio and making changes to the

planogram according to sales velocity and other retail-specific metrics. (Supra

Findings of Fact D.2; see id. D.3). This strategy is not shared by pro

distributors, who are not constrained by shelf space and stock a wide variety of

construction adhesives, including ones specifically requested by their pro

shoppers. (July 15 Tr. 692:14-19 (Brogan Testimony)).

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On the Brown Shoe factors, Defendants make several arguments, none of

which has traction. Defendants first argue that the practical indicia are

centered on product characteristics, meaning that they do not apply to

customer or channel definition. (Def. Post-Trial FFCL 104-05; see Def. PreTrial MOL 21). See M.A.P. Oil Co. v. Texaco Inc., 691 F.2d 1303, 1308 (9th Cir.

1982) (“Those indicia are designed to compare the activities of two sellers to

determine if their products or services compete in the same market or trade in

separate markets.”). But the FTC has used the indicia to define a market for

construction adhesive cartridges, which is a product characteristic, and in any

event, many courts have applied the Brown Shoe factors to define a relevant

channel-based submarket. See, e.g., Staples, 970 F. Supp. at 1075, 1080

(applying the indicia and defining a relevant market for consumable office

supplies sold at office supply superstores despite the existence of “many

different types of retailers [that] sell these products”). 16

Next, Defendants argue that three of the seven indicia undermine the

FTC’s proposed retail-only market. (Def. Post-Trial FFCL 105). That is,

Defendants believe that construction adhesives sold to retail customers (i) do

not have “special uses or characteristics,” (ii) are not produced in “unique

Defendants make the same argument about the industry recognition factor, contending

that it only applies to industry recognition of distinct products. (Def. Post-Trial FFCL

105). But as the Court has already explained, the industry recognizes that construction

adhesive cartridges sold in the retail channel constitute a distinct market, not just that

retail customers constitute a distinct sales channel. Moreover, in cases like FTC. v.

Staples, Inc., courts have applied this factor to analyze specific channels, including

whether “superstores … [are] different from other sellers of office supplies.” 970 F.

Supp. 1066, 1075 (D.D.C. 1997).

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facilities,” and (iii) are not sold by “specialized vendors.” (Id.). See Brown

Shoes, 370 U.S. at 325. The Court disagrees on the “special uses or

characteristics” factor, having found that construction adhesive cartridges sold

in the retail channel do indeed have peculiar characteristics given the shelf

space limitations and the unique PLR process for determining which brands,

prices, and sizes of construction adhesives are allowed to be on the shelf.

(Supra Findings of Fact D.2). As for the remaining two factors, they “need not

be satisfied for the Court to conclude that the FTC has identified a relevant

market.” IQVIA, 710 F. Supp. 3d at 355.

Finally, Defendants contend that the Brown Shoe factors cannot replace

direct evidence satisfying the interchangeability standard. (Def. Post-Trial

FFCL 104; Def. Pre-Trial MOL 21). That may or may not be true, but as the

Court will explain shortly, the FTC has produced abundant quantitative

evidence to meet that standard.

Quantitative Analysis Supports the FTC’s Proposed

Market Definition

In addition to the Brown Shoe factors discussed above, the FTC’s

proposed market definition is also supported by quantitative evidence of

interchangeability derived from the HMT test. (See FTC Post-Trial FFCL 85-86;

FTC Pretrial MOL 12-13). Recall that the HMT is an economic tool that is often

used in antitrust cases to define the relevant market. Specifically, it tests

“whether a hypothetical profit-maximizing monopolist of a group of products,

such as construction adhesive cartridge suppliers, would likely impose a small

but significant and non-transitory increase in price or worsening of terms

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(“SSNIPT”).” (Luppino Initial Report ¶ 101). See also Tapestry, 755 F. Supp. 3d

at 414; Regeneron Pharms., 96 F.4th at 339; 2023 Merger Guidelines § 4.3A. If

the hypothetical monopolist could profitably impose such a price increase —

usually five percent in this type of analysis — “then a relevant product market

exists for antitrust purposes.” IQVIA, 710 F. Supp. 3d at 369.

In this case, Dr. Luppino surveys qualitative evidence first and then

conducts the HMT on a candidate market for construction adhesive cartridges

sold in the retail channel. (Luppino Initial Report ¶¶ 52, 99-122). To

implement the HMT, he relies on a summary statistic for demand for

Defendants’ construction adhesive cartridges sold in the retail channel, namely

the aggregate own-price elasticity of demand. (Id. ¶ 102). This statistic

measures “how quantity demanded for a group of products (e.g., a candidate

antitrust market) changes in response to changes in the prices of that same

product group” and therefore indicates “the extent by which consumers switch

away from that basket of products in response to a price increase.” (Id.

¶¶ 104-105). The HMT works by comparing Defendants’ aggregate own-price

elasticities of demand to critical elasticity benchmarks, which are established

by economics literature as the “level of sensitivity at which an increase in price

leads to a sufficient decrease in the quantity demanded such that a

hypothetical monopolist would likely not find it profitable to uniformly increase

prices for all products in the candidate market.” (Id. ¶ 112). If Defendants’

summary statistics are lower than the critical elasticity benchmarks, then the

proposed market satisfies the HMT as a relevant antitrust market. (Id. ¶ 114).

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After calculating the requisite numbers, Dr. Luppino finds that for a fivepercent SSNIPT, estimates of Defendants’ aggregate own-price elasticity are

“well below the critical elasticity thresholds” and “directly support the

conclusion that [their] construction adhesive cartridges sold in the retail

channel constitute a relevant antitrust market.” (Luppino Initial Report ¶ 120).

As a sensitivity analysis, Dr. Luppino runs the same test for a 10-percent

SSNIPT, which is a more conservative estimate. (Id. ¶ 121). Even then, he

finds that Defendants’ construction adhesive cartridges sold in the retail

channel continues to constitute a relevant antitrust market. (Id.). In other

words, a hypothetical monopolist in this market would find it profitable to raise

prices by 10 percent, which is more than necessary to show that this market

definition meets the standard for antitrust analysis. (Id.). And because a

market including Defendants’ products as well as other manufacturers’

products necessarily encompasses the narrower market of only Defendants’

products, “all construction adhesive cartridges sold in the retail channel …

constitutes a relevant antitrust market based on the HMT.” (Id. ¶¶ 133-134).

Moreover, “[t]he same economic logic applies to an even broader market that

includes all construction adhesive cartridges sold in all channels.” (Id. ¶ 135).

In her rebuttal report, Dr. Bailey, Defendants’ expert, attacks Dr.

Luppino’s aggregate own-price elasticity calculations as “unreliable,” which

would render his entire HMT analysis ineffective. (Bailey Report ¶¶ 125-137;

see Def. Post-Trial FFCL 30-31). According to Dr. Bailey, the price index on

which Dr. Luppino conducts his econometric analysis does not measure actual

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price changes, especially given that wholesale prices for construction adhesives

are remarkably stable (July 20 Tr. 1298:6-13, 1339:16-1340:1, 1340:18-23

(Bailey Testimony)); rather, she posits that the price index reflects weekly

variations in the composition of products shipped and the identity of retailers

receiving deliveries. (Bailey Report ¶ 136; see id. ¶¶ 126-135 (providing more

detailed explanation of why Dr. Luppino’s price index is flawed); Def. Post-Trial

FFCL 29-31 (recounting Dr. Bailey’s criticisms)).

In addition, Defendants contend that Dr. Luppino failed to calculate

cross-elasticity of demand, a critical metric in antitrust market definition that

measures whether customers would “respond to a slight increase in the price of

one product by switching to another product.” Regeneron Pharms., 96 F.4th at

339 (internal quotation marks omitted) (quoting Todd, 275 F.3d at 201-02); see

also Brown Shoe, 370 U.S. at 325 (explaining that a product market is

determined by “reasonable interchangeability of use or the cross-elasticity of

demand”); Hayden Publ’g, 730 F.2d at 71 (“[A]s a general rule, the process of

defining the relevant product market requires consideration of cross-elasticity

of demand.”). If customers would switch between products, then the products

are in the same market. But in this case, Dr. Bailey opines that Dr. Luppino’s

methodology would generate cross-price elasticities near zero, which would

indicate that Loctite and Liquid Nails products are not close substitutes for

each other. (Bailey Report ¶ 137).

Dr. Bailey and Defendants’ criticisms do not render Dr. Luppino’s HMT

conclusions invalid. To start, Dr. Luppino’s price index — and thus his

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aggregate own-price elasticity estimates and overall HMT analysis — “are not

susceptible to incidental changes in product mix.” (PX6102 (“Luppino Reply

Report”) ¶ 132). In fact, in response to Dr. Bailey’s price-mix criticism, Dr.

Luppino elected to run the HMT again, this time controlling for the share of

every individual SKU. (Id. ¶ 138). He finds that the aggregate own-price

elasticity results continue to be “well below the critical elasticity thresholds

(both at the 5% SSNIPT level and the 10% SSNIPT level) and are statistically

significant.” (Id.; see id., Table 1). In other words, “there is sufficient price

variation to identify statistically significant estimates of aggregate elasticities

even after controlling for product SKU mix.” (Id. ¶ 141).

Moreover, Dr. Luppino need not have calculated cross-elasticity to run

the HMT on Defendants’ own construction adhesive cartridges sold in the retail

channel. “Hard data concerning cross-elasticity is not the only means of

proving a relevant market.” Tapestry, 755 F. Supp. 3d at 414 (internal

quotation marks omitted) (quoting Emigra Grp., LLC v. Fragomen, Del Rey,

Bernsen & Loewy, LLP, 612 F. Supp. 2d 330, 355 (S.D.N.Y. 2009)). Indeed, the

purpose of the Brown Shoe practical indicia and Dr. Luppino’s review of the

qualitative evidence is to enable him to narrow down a relevant market on

which to run the quantitative HMT test. See id. The Court agrees with Dr.

Luppino that construction adhesive cartridges made by Henkel and A-Paint —

and by other suppliers in this space, for that matter — are substitutes for each

other. (See Luppino Initial Report ¶¶ 136-203). That general understanding is

supported by real-life examples — for instance, when Liquid Nails experienced

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a supply shortage in 2022, consumer purchases of Loctite at Lowe’s and Home

Depot increased among lower priced items and then declined again once the

shortage resolved. (July 13 Tr. 174:14-25, 176:3-16 (Blackwell Testimony)

(discussing PX1070 at 3 and PX1105); July 14 Tr. 286:23-288:11, 289:22291:10 (Zambataro Testimony) (discussing PX1221 and PX1222)). As for Dr.

Bailey’s specific opinion that cross-price elasticities would be zero (Bailey

Report ¶ 137), Dr. Luppino explains that Dr. Bailey’s estimates are likely the

result of a “flawed, alternative methodology” (Luppino Reply Report ¶ 145

n.217).

In sum, the Court accepts the results of the HMT, which, combined with

the Brown Shoe factors, indicate that there is a relevant antitrust market for

construction adhesive cartridges sold in the retail channel. 17

The Court Rejects Defendants’ Additional MarketDefinition Arguments

Defendants’ attempt to dismantle the FTC’s market definition by

characterizing it as simultaneously overinclusive and underinclusive is

unavailing. On the overinclusive front, Defendants argue that the FTC’s

definition improperly groups together nearly all construction adhesives into a

single market regardless of their chemistry, application, price, or quality. (Def.

Post-Trial FFCL 97-101; Def. Pretrial MOL 16-19). Products must be

“reasonably interchangeable” to be grouped into the same relevant product

Dr. Luppino also runs a merger simulation, which predicts price effects, to confirm the

results of his HMT analysis. (Luppino Initial Report ¶¶ 130-131). Because the merger

simulation is not a necessary component of the HMT analysis, the Court does not

discuss that separate analytical tool here and will instead address it at step three.

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market, E. I. du Pont de Nemours, 351 U.S. at 395, and “price and quality

differences may play an important role in defining market boundaries,”

Tapestry, 755 F. Supp. 3d at 418. Nevertheless, “this is a question of fact, not

a question of law.” Id. Indeed, “if the factual record does not justify such

distinctions — if ‘the differences are actually a spectrum of price and quality

differences’ within an otherwise indivisible market — then gradations based

solely on price and quality will not be ‘sufficient to establish separate relevant

markets.’” Id. (quoting In re Super Premium Ice Cream Distrib. Antitrust Litig.,

691 F. Supp. 1262, 1268 (N.D. Cal. 1988) (collecting cases), aff’d, 895 F.2d

1417 (9th Cir. 1990) (memorandum disposition)).

Here, the factual record reflects that differences in price and quality are

merely gradations along the spectrum of “good, better, best” options. To be

sure, some construction adhesive cartridges are multi-purpose while others are

project-specific, and some are more expensive than others because they are

made of different technologies, but the FTC has provided both qualitative and

quantitative evidence demonstrating that they are interchangeable. (See supra

Conclusions of Law 1.a-b). In addition, the Court has found that Defendants,

which manufacture all four technologies and span the entire pricing

continuum, make product proposals and rationalization suggestions across the

continuum during the PLR process. (See supra Findings of Fact C.2, D.2, E).

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Given these commercial realities, there is no reason to narrow the relevant

market even further. 18

Separately, on the underinclusive end, Defendants argue that the market

definition is improperly limited to retailers and should have included

Defendants’ pro-distribution customers. (Def. Post-Trial FFCL 101-06; Def.

Pretrial MOL 19-22). Defendants cite a Ninth Circuit case for the general

proposition that “the relevant market must be a product market” — that is,

“consumers do not define the boundaries of the market; the products or

producers do.” Newcal Indus., Inc. v. Ikon Off. Sol., 513 F.3d 1038, 1045 (9th

Cir. 2008). In addition, Defendants provide examples of courts rejecting

market definitions limited to specific customers and sales channels. (See Def.

Post-Trial FFCL 102-03 (collecting cases); Def. Pretrial MOL 20-21 (same)).

And Defendants further criticize the FTC for leaving out at least 33 percent of

all construction adhesives sales in the United States by excluding the pro

channel. (Def. Post-Trial FFCL 103; Def. Pretrial MOL 21). See Endure Indus.,

Inc. v. Vizient Inc., 164 F.4th 405, 410, 415-16 (5th Cir. 2026) (affirming the

district court’s rejection of a market definition that left out 30 percent of the

relevant market of hospital purchases).

Even though Defendants seem to argue that the relevant market definition should be

limited by price and chemistry, they also accuse the FTC of failing to include foam

products and FRP adhesives. (Def. Post-Trial FFCL 99; Def. Pretrial MOL 18-19). The

accusation cuts against Defendants’ argument for further narrowing the market

definition. Moreover, as the Court has described above, foam and FRP adhesives

require different tools and involve different application processes. (See supra Findings

of Fact B.1). And in any event, all other forms of constructive adhesives accounted for

less than four percent of annual sales of U.S. construction adhesives at major retailers

in 2024, meaning that their inclusion would have a de minimis impact on the overall

market size. (Luppino Initial Report ¶ 44, Table 1).

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Contrary to Defendants’ assertions, courts have routinely defined

relevant antitrust markets based on specific channels, regardless of whether

similar or identical products are also sold in other channels. See, e.g., Staples,

970 F. Supp. at 1075 (defining relevant market for consumable office supplies

sold at office supply superstores despite the existence of “many different types

of retailers [that] sell these products”); FTC v. Cardinal Health, Inc., 12 F. Supp.

2d 34, 45-46 (D.D.C. 1998) (defining relevant market for wholesale distribution

of prescription drugs despite the existence of other distribution channels);

Ansell Inc. v. Schmid Lab’ys, Inc., 757 F. Supp. 467, 471 (D.N.J. 1991)

(determining that “sale of branded latex condoms to retail distributors”

constitutes a relevant submarket). Even the Ninth Circuit ruled in the case

cited by Defendants that at the pleadings stage, the plaintiffs adequately

alleged a relevant submarket that includes only the defendant’s customers.

See Newcal Indus., 513 F.3d at 1051. Those definitions passed legal muster

because the Supreme Court has made clear in Brown Shoe that within a broad

product market, the “outer boundaries” of which are indeed determined by

product characteristics alone, “well-defined submarkets may exist which, in

themselves, constitute product markets for antitrust purposes.” 370 U.S. at

325.

That is exactly what the FTC has established here using qualitative and

quantitative evidence: a relevant antitrust market for the retail channel that

exists within a broader product market for construction adhesive cartridges.

(See supra Conclusions of Law A.1.a-b). In addition, unlike the factual record

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in Endure Industries, there is no determinative evidence in this case that the

retail and pro channels are reasonable substitutes for each other. Cf. 164

F.4th at 410 (determining that 30 percent of hospitals left the relevant channel

and made purchases in other channels over the years, thereby suggesting that

the other channels “represented a reasonably interchangeable substitute”).

And in any event, even if customers cross-shop between channels, that is

“entirely consistent” with the definition of a relevant market based on “a core

group of … customers.” Whole Foods Mkt., 548 F.3d at 1040. Therefore, the

Court confirms that the FTC’s market definition is legally sound.

The Transaction Is Likely to Produce Anticompetitive Effects

in the Relevant Market

Once the relevant antitrust market has been established, the FTC must

then show that the effect of the merger is likely to be anticompetitive in that

market. Tapestry, 755 F. Supp. 3d at 408; IQVIA, 710 F. Supp. 3d at 352.

Here, in the market for construction adhesive cartridges sold in the retail

channel, the FTC points to two types of anticompetitive harms that are likely to

result from the Transaction — undue market concentration and elimination of

head-to-head competition. (FTC Post-Trial FFCL 86-90; FTC Pre-Trial MOL 1419). The Court addresses the effects in turn, determining that each can serve

as an independent basis for prima facie antitrust liability.

The Transaction Is Likely to Cause Undue Market

Concentration

The Supreme Court has said that “a merger which produces a firm

controlling an undue percentage share of the relevant market, and results in a

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significant increase in the concentration of firms in that market[,] is so

inherently likely to lessen competition substantially that it must be enjoined in

the absence of evidence clearly showing that the merger is not likely to have

such anticompetitive effects.” Phila. Nat’l Bank, 374 U.S. at 363. Put

differently, a merger that significantly increases market concentration is

“presumptively anticompetitive.” Deutsche Telekom, 439 F. Supp. 3d at 205;

see also Tapestry, 755 F. Supp. 3d at 456.

One common measure of market concentration is market share. See

Deutsche Telekom, 439 F. Supp. 3d at 205. Indeed, “[w]ithout attempting to

specify the smallest market share which would still be considered to threaten

undue concentration,” the Supreme Court has been “clear that 30% presents

that threat.” Phila. Nat’l Bank, 374 U.S. at 364; see also IQVIA, 710 F. Supp.

3d at 378 (confirming the “present-day validity” of the 30-percent threshold).

Another measure is the Herfindahl-Hirschman Index (“HHI”), which the FTC

“routinely use[s] to assess mergers and which is calculated by adding the

squares of the individual firms’ market shares.” Deutsche Telekom, 439 F.

Supp. 3d at 205-06; see also Tapestry, 755 F. Supp. 3d at 458 (explaining that

squaring allows the HHI to account for the relative size and distribution of

firms in a given market). “In determining whether the HHI demonstrates a high

market concentration, courts consider both the post-merger HHI number and

the increase in the HHI resulting from the merger.” Tapestry, 755 F. Supp. 3d

at 458 (alteration adopted and internal quotation marks omitted) (quoting FTC

v. Penn State Hershey Med. Ctr., 838 F.3d 327, 346-47 (3d Cir. 2016)). Under

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the 2023 Merger Guidelines, an HHI of more than 1,000 indicates a

“concentrated” market, an HHI of more than 1,800 indicates a “highly

concentrated” market, and an increase of 100 points is considered a

“significant increase.” 2023 Merger Guidelines §§ 2.1, 2.4 n.21; see also

Tapestry, 755 F. Supp. 3d at 458-59. (See also Luppino Initial Report ¶ 239).

In this case, the FTC presents quantitative evidence of undue market

concentration — thus establishing the presumptive illegality of the

Transaction — using both measures. First, Dr. Luppino calculates market

share estimates using both wholesale and retail sales data and finds that the

combined Henkel–A-Paint market share is well above the 30-percent threshold

regardless of the data source. (Luppino Initial Report ¶¶ 231-235, 241-255).

In terms of wholesale sales, Defendants’ brands have a combined share of 78

percent by dollar sales and 90 percent by sales volume in the relevant market

for construction adhesives sold in the retail channel. (Id. ¶ 243; see id. ¶ 242,

Table 10). And using retail sales, the combined entity would have a market

share of 84 percent by dollar sales and 92 percent by sales volume in the same

relevant market, as illustrated by the following table:

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Table 12

::\'larket Shal'e Estimates Based on Retailer Data

Construction Aclhesins Solcl in Cartt·iclges in the Retail Channel in the United States

2024

Re,·e1me

Vendor

Total5

Pre-Merger HHI

Post Merger HHI

Delta HHI

Notes:

[I ] ··other" includes vendors with less thanl

Ounces

46.8%

37.3%

14.3%

0.4%

0.3%

0.2%

0.1%

100.0%

3,785

7,275

3,491

Totals

39.3%

53.1%

5.9%

0.5%

0.1%

0.4%

0. 1%

0.4%

0.1%

100.0%

4,404

8,582

4,178

in cartridges sales. These vendors are Great Stuff, Lanco Corp.

Outwater, PrimeSource Building Products, Protective Coating Co. Quikrete, Soudal, Super Ghie Corp!Pacer Tech.

White Lightning. Wilson. and World's Toughest Fix.

[2] Note that Ace Harch.,· are, Do It Best, and True Value data comprise sales to their respective member stores and

thm, were reported in wholesale dollars. The table adjusts Ace Hardware sales to be in retail dollars, by multiplying

units sold by Ace ·s suggested retail price Do It Best and True Value rem,1-in in wholesale dollars. As shown in

Appendix II separating Ace. Do It Best, and True Value do not substantively alter shares.

Sources: Home Depot data. Lowe's data, Menards data. Ace Hardware data, Do It Best data. Walmart data, Tme

V alue data.

(Id. 1 251, Table 12). Therefore, for all units of measurement and sources of

data, the combined Henkel-A-Paint entity would have a share of the market for

construction adhesives sold in the retail channel that greatly exceeds 30

percent. In fact, even in the broader market for construction adhesive

cartridges sold in all channels, Dr. Luppino estimates that the combined entity

would have a market share of 64 percent by dollar sales and 62 percent by

sales volume using wholesale data. (Id. 1 245; s ee id. 1 244, Table 11).

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Moreover, Dr. Luppino’s estimates are corroborated by third-party

sources as well as Defendants’ own internal estimates. (Luppino Initial Report

¶¶ 256-257). For example, the Farnsworth Group (“Farnsworth”), an

independent market research firm, estimated that in 2023, Loctite and Liquid

Nails held market shares of 39 percent and 32 percent, respectively, of the U.S.

construction adhesives market as measured by retail sales to end consumers.

(Id. ¶ 260). That means a 71 percent combined market share for the two

brands, which is also above the 30-percent threshold. And prior to this

Transaction, Henkel conducted ordinary-course market share calculations,

which show the two brands accounting for somewhere between 46 percent to

75 percent of the total market with different market definition assumptions,

methodologies, and data sources. (Id. ¶¶ 262-265; see, e.g., PX1522 at 14

(Henkel’s category update for global marketing team stating that “US – Market

share is split between two top competitors (Loctite = 40% M.S. / Liquid Nails =

30% M.S.”))).

While the market-sizing exercise that Henkel undertook for Project

Clipper shows much lower market shares for the two brands (see, e.g., PX1564

at 2 (Loctite at 6 percent share of a total addressable market of $1.8 billion);

PX1400 at 7 (Liquid Nails holding fifth place in terms of market position)),

those shares were calculated based on a much broader definition of the market

(see, e.g., PX1564 at 4 (showing a total addressable market of $1.3 billion that

includes construction adhesives, sealants, and general adhesives)). As the

Court has already discussed, the relevant market for evaluation in this case is

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the market for construction adhesive cartridges sold in the retail channel, not a

broader market for all types of adhesives in all forms and sold in all channels.

(See supra Conclusions of Law A.1). And in any event, the Court prioritizes

ordinary-course documents over any self-interested analyses conducted for the

purpose of overcoming antitrust scrutiny. See, e.g., Tapestry, 755 F. Supp. 3d

at 487 n.44 (“Given the contrary ordinary-course documents, the Court does

not credit the self-interested testimony[.]”).

Second, using the market share estimates discussed above, Professor

Luppino calculates the post-merger HHI and HHI delta, which are also well

above the thresholds provided by the 2023 Merger Guidelines. (Luppino Initial

Report ¶¶ 242-246, 251-252). Specifically, the Transaction would result in a

post-merger HHI of 6,409 and a HHI delta of 3,043 based on wholesale dollar

sales and a post-merger HHI of 7,275 and a HHI delta of 3,491 based on retail

dollar sales. (Id.). The numbers are even bigger using wholesale and retail

sales volume data. (See id.). In other words, no matter the unit of

measurement and the data source, the Transaction’s HHI numbers far exceed

the 2023 Merger Guidelines’ thresholds of 1,800 for a highly concentrated

market and 100-point delta for a significant increase in market concentration.

See 2023 Merger Guidelines §§ 2.1, 2.4 n.21. In addition, even in the broader

market for construction adhesive cartridges sold in all channels, Dr. Luppino

calculates that the Transaction would still result in a post-merger HHI of 4,458

and a delta HHI of 2,019, which more than meet the relevant thresholds.

(Luppino Initial Report ¶ 245).

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Defendants do not levy any meaningful attacks on Dr. Luppino’s market

share and HHI analyses, nor could they. His methodologies for calculating

market share and HHI are correct, and he applies them correctly to the facts of

this case. Furthermore, Dr. Luppino’s estimates for the broader market show

that even if the Court were to expand the relevant market beyond the retail

channel, Defendants would still exceed the 30-percent threshold for combined

market share as well as the 1,800 post-merger HHI threshold for a highly

concentrated market and the 100-point HHI delta indicating a significant

increase in market concentration. Indeed, Defendants concede “[i]f the Court

accepts the FTC’s market definition, Defendants do not dispute that the FTC

can use their combined share to establish a presumption [of illegality] under

the Baker Hughes framework.” (Def. Pre-Trial MOL 22).

The Transaction Is Likely to Eliminate Substantial Headto-Head Competition

Even though undue market concentration alone is sufficient to establish

a prima facie case for antitrust purposes, many courts recognize that “the

elimination of competition between the merging parties can strengthen the

conclusion that the merger will have anticompetitive effects.” IQVIA, 710 F.

Supp. 3d at 382; see also FTC v. Edwards Lifesciences Corp., No. 25 Civ. 2569

(RC), 2026 WL 228723, at *21-24 (D.D.C. Jan. 28, 2026) (determining that the

FTC can make a fact-specific showing of anticompetitive effects through the

proposed merger’s elimination of head-to-head competition without the

presumption of illegality based on market concentration). In evaluating this

particular anticompetitive effect, “[c]ourts frequently rely on

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ordinary[-]course documents and witness testimony illustrating that two

merging parties view each other as strong competitors.” IQVIA, 710 F. Supp.

3d at 383.

Here, the FTC posits that independent of its effects on market

concentration, the Transaction is anticompetitive because it is likely to

eliminate substantial head-to-head competition between Loctite and Liquid

Nails. (FTC Post-Trial FFCL 89-90; FTC Pretrial MOL 16-19). Defendants, on

the other hand, argue that the two brands have different commercial focuses

and directly compete on only a small percentage of their sales. (Def. Post-Trial

FFCL 108; see Def. Pretrial MOL 24). They emphasize that while Loctite is

focused on premium products and technologies with higher price tags, Liquid

Nails primarily offers opening-price-point products and more basic

technologies. (Def. Post-Trial FFCL 108; Def. Pretrial MOL 24). In other words,

the area of direct competition in which the two brands overlap is limited. (See

Def. Post-Trial FFCL 108; Def. Pretrial MOL 24).

The Court agrees with the FTC that “Loctite and Liquid Nails compete

closely, and fiercely, in construction adhesive cartridges sold in the retail

channel in the United States.” (FTC Post-Trial FFCL 90). Indeed, they are the

only two construction adhesives suppliers with a full suite of multi-purpose

and project-specific construction adhesives. (See PX2182 at 3-5). The Court

has already found that the two brands compete all along the pricing

continuum, identifying specific products in each of the “good, better, best”

categories that go head to head against each other. (Supra Findings of Fact

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C.2). And the Court has also found that the competition between Loctite and

Liquid Nails manifests in bidding for limited shelf space at retailers as well as

pricing. (Id.). Those factual findings support the conclusion that a merger

between the two brands is likely to eliminate existing head-to-head competition

in the relevant market. See Sysco, 113 F. Supp. 3d at 62, 65-66 (agreeing with

the FTC’s argument that the “potential for unilateral [anticompetitive] effects

here is magnified because Defendants are particularly close competitors and

many national customers consider them the top two choices for broadline

distribution”).

Moreover, ordinary-course documents and witness testimony at trial

confirm that Henkel and A-Paint view each other as strong competitors. In

internal reviews, both Henkel and A-Paint have called each other their

respective number-one competitors. (E.g., PX1722 at 10 (Henkel 2026 brand

review presentation calling Liquid Nails its “#1 Competitor in Construction

Adhesives”); PX2342 at 6 (A-Paint presentation describing “Liquid Nails: #1

competitor is Loctite”)). And at trial, Henkel’s Vice President of Sales agreed

that “in the retail space, it’s Loctite and Liquid Nails, one and two[.]” (July 14

Tr. 327:4-6 (Reginelli Testimony)). To be sure, Defendants have tried to

minimize the significance of the ordinary-course evidence with other witnesses

at trial and in their trial submissions (e.g., DX324 (showing that Liquid Nails

focuses on “good” while Loctite focuses on “better”/“best” when it comes to

pricing), but on balance, the Court is “more persuaded by the plain import of

their contemporaneous statements as reflected in the documentary record than

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by Defendants’ attempts to diminish the substantial evidence of head-to-head

competition.” IQVIA, 710 F. Supp. 3d at 385.

Because the Court determines that the FTC has established a relevant

antitrust market for construction adhesive cartridges sold in the retail channel

and demonstrated that the Transaction is likely to result in undue market

concentration as well as the elimination of head-to-head competition in that

market, the Court is satisfied that there is a prima facie case for antitrust

liability. 19

Defendants Fail to Rebut the Prima Facie Case

At step two of the Baker Hughes burden-shifting framework, the burden

of production shifts to the defendants to present evidence that “the prima facie

case ‘inaccurately predicts the relevant transaction’s probable effect on future

competition’ … or to ‘sufficiently discredit’ the evidence underlying the prima

facie case[.]” AT&T, 916 F.3d at 1032 (quoting Anthem, 855 F.3d at 349); see

also IQVIA, 710 F. Supp. 3d at 350. The defendants need not “clearly disprove

[any] anticompetitive effect” and may simply make a “showing” that the FTC’s

prima facie case inaccurately captures the acquisition’s probable effects on

competition. Baker Hughes, 908 F.2d at 990-91 (internal quotation marks

The FTC argues, and the Court agrees, that it need not definitively show that prices will

increase or that other anticompetitive effects will occur after the merger. (See FTC PostTrial FFCL 75; FTC Pretrial MOL 19-20). See, e.g., United States v. Bertelsmann SE &

Co. KGaA, 646 F. Supp. 3d 1, 22 (D.D.C. 2022) (“Section 7 does not require proof that a

merger … will cause higher prices or anticompetitive effects in the affected market.”

(alterations adopted and internal quotation marks omitted) (quoting United States v.

Anthem, Inc., 236 F. Supp. 3d 171, 192 (D.D.C. 2017))). Nevertheless, the Court will

consider other possible consequences of the Transaction at step three of the burdenshifting framework as additional evidence of anticompetitive effects.

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omitted). There are two ways in which the defendants can make the “required

showing” — “by affirmatively showing why a given transaction is unlikely to

substantially lessen competition, or by discrediting the data underlying the

initial presumption in the government’s favor.” Id. at 991. Nevertheless, “[t]he

more compelling the prima facie case, the more evidence the defendant[s] must

present to rebut it successfully.” Id.

Here, Defendants first try to dismantle the FTC’s prima facie case by

arguing that the relevant product market definition is invalid. (Def. Post-Trial

FFCL 96-106; Def. Pretrial MOL 15-22). Defendants next argue that even

accepting the FTC’s market definition, Defendants have produced sufficient

evidence rebutting the FTC’s market-share analysis. (Def. Post-Trial FFCL 10615; Def. Pretrial MOL 22-31). Specifically, Defendants offer rebuttal evidence

on four points: (i) “the FTC’s shares are misleading because they do not fully

capture the nature of competition, which occurs through bidding processes

and individual negotiations”; (ii) Defendants have limited head-to-head

competition; (iii) low barriers to repositioning and the ongoing threat of

replacement will constrain the combined Henkel entity and prevent the

anticompetitive effects; and (iv) large and sophisticated retail customers will

prevent Henkel’s ability to raise prices following the Transaction. (Def. PostTrial FFCL 106-07). The Court has already addressed and rejected Defendants’

arguments about the FTC’s market definition and the likelihood that the

Transaction will eliminate substantial head-to-head competition in the previous

section. It now turns to the three remaining rebuttal arguments.

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The FTC’s Market-Share Analysis Appropriately Measures the

Transaction’s Anticompetitive Effects

Defendants start by arguing that the FTC’s use of market-share and HHI

analyses to demonstrate undue market concentration is misleading because

those analyses do not accurately predict future anticompetitive effects. (Def.

Post-Trial FFCL 106-07; Def. Pre-Trial MOL 22-24). In general, it is true that

“exclusive focus on market share percentages can produce a distorted picture

of market power” — that is, “a true picture emerges only from consideration of

additional market characteristics, among them, the strength of the

competition, the probable development of the industry, and consumer

demand.” Broadway Delivery Corp. v. United Parcel Serv. of Am., Inc., 651 F.2d

122, 128 (2d Cir. 1981). Moreover, “a substantial existing market share is

insufficient to void a merger where that share is misleading as to actual future

competitive effect.” United States v. Waste Mgmt., Inc., 743 F.2d 976, 982 (2d

Cir. 1984) (citing Gen. Dynamics, 415 U.S. at 509-11 (upholding the merger

between two leading coal producers because almost all of the production of one

firm was tied up in long-term contracts)).

Here, Defendants contend that the FTC’s market shares are misleading

because they do not fully capture the nature of competition, which occurs via

the PLR bidding process and subsequent individual negotiations. (Def. PostTrial FFCL 106-07; Def. Pre-Trial MOL 22-24). Indeed, much of Dr. Bailey’s

expert testimony is focused on this “get on the shelf” level of competition, in

which many brands compete even if they do not ultimately reach the shelf and

where the “threat of being replaced” is a strong competitive constraint,

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including on wholesale prices. (Bailey Report ¶¶ 50-96). Consequently, she

opines that Dr. Luppino’s market shares are unreliable measures of future

competition because, among other things, they do not capture the competition

to get on the shelf from suppliers who compete during the PLR process but who

are currently not on the shelf. (Id. ¶¶ 97-123).

Defendants’ criticism of the FTC’s market-share analysis in this case

misses the mark. After all, market shares are perhaps the most common

analytical tool when it comes to assessing future competitive conditions.

(Luppino Reply Report ¶¶ 156-162). See IQVIA, 710 F. Supp. 3d at 390

(explaining that “economists recognize that historical revenues are typically the

best available predictor of future competitive significance” (internal quotation

marks omitted)). In fact, cases like General Dynamics are the exception rather

than the norm. In those rare circumstances, certain “changes render the

market so unstable that the Court cannot rely on recent revenues and current

market shares to guide its analysis.” IQVIA, 710 F. Supp. 3d at 390.

This case does not fit the exceptional circumstances of General

Dynamics. Indeed, market shares have been remarkably stable in the

construction adhesives market, as evidenced by third-party sources such as

Farnsworth’s historical market share estimates. (Luppino Reply Report ¶ 171,

Table 2 (displaying Farnsworth study that shows stable market shares for

Loctite, Liquid Nails, Gorilla Glue, and other brands from 2021 to 2023)). More

fundamentally, as Dr. Luppino explains, competition to “get on the shelf” is

intertwined with competition between brands for end consumers. (Luppino

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Reply Report ¶ 103). That is, brand strength and sales velocity on the shelf

affect the “get on the shelf” level of competition for shelf space. (Id. ¶¶ 104118). “It is a self-reinforcing loop in which a brand’s success in sales to endconsumers makes it more likely for that brand to be placed on [retailers’]

shelves again, which in turn, allows the supplier to make more sales.” (Id.

¶ 103). Therefore, Dr. Luppino’s market share estimates using both wholesale

and retail data adequately capture this “get on the shelf” level of competition.

The Threat of Replacement Is Insufficient to Prevent the

Transaction’s Anticompetitive Effects

Defendants next argue that low barriers to repositioning and the ongoing

threat of replacement by existing competitors will prevent any anticompetitive

effects resulting from the Transaction. (Def. Post-Trial FFCL 108-113; Def.

Pretrial MOL 24-29). The main case that Defendants rely on for this rebuttal

argument is Waste Management, in which the Second Circuit determined that

despite the Government’s successful reliance on a high post-merger market

share to establish prima facie illegality, “entry into the relevant product and

geographic market by new firms or by existing firms … is so easy that any anticompetitive impact of the merger … would be eliminated more quickly by such

competition than by litigation.” 743 F.2d at 983. In Waste Management, where

the relevant market was defined as the provision of waste disposal services to

business and industrial customers in Dallas, the Second Circuit reasoned that

the barriers to entry were low because “individuals operating out of their homes

can acquire trucks and some containers and compete successfully with any

other company” and because haulers in neighboring Fort Worth could “easily

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establish themselves in Dallas if the price of trash collection rose above the

competitive level.” Id. at 979-81, 983 (internal quotation marks omitted). Low

barriers to market entry or expansion by other firms, in turn, rendered any

market power from the proposed merger “insubstantial” and thus ensure that it

would not “substantially lessen competition in the relevant market[.]” Id. at

984; see also Frank Saltz & Sons, Inc. v. Hart Schaffner & Marx, No. 82 Civ.

2931 (JMC), 1985 WL 2510, at *10 (S.D.N.Y. Sept. 5, 1985) (explaining that

under Waste Management, “even a relatively large market share is insufficient

to show a violation when entry into the field is relatively open”); Baker Hughes,

908 F.2d at 987 (“In the absence of significant barriers, a company probably

cannot maintain supracompetitive pricing for any length of time.”).

Here, Defendants argue that this case presents an even more compelling

“entry” case than Waste Management because competitors are already in the

market and ready to expand. (Def. Post-Trial FFCL 109-11; Def. Pretrial

MOL 25-27). Dr. Bailey’s expert report, for example, lists 20 suppliers of

construction adhesives that would compete with the combined Henkel entity

(Bailey Report ¶¶ 12-26), and Defendants’ briefing specifically calls out Gorilla

Glue, DAP, Titebond, Sika, Quikrete, Red Devil, Flex Glue, and Leech as

examples of suppliers “already sell[ing] competing construction adhesives to

the retailer customers at the center of the FTC’s relevant product market” (Def.

Post-Trial FFCL 109; Def. Pretrial MOL 25). Defendants reason that many of

those suppliers sell construction adhesives in the pro channel and could easily

shift or expand into the retail channel (Def. Post-Trial FFCL 109; Def. Pretrial

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MOL 25),

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Moreover, because retailers have not signed

long-term contracts with Defendants or provided guarantees for shelf

placement, Defendants believe that retail customers like the three home

centers can change their purchasing behavior at any time, such as during the

periodic PLR process. (Def. Post-Trial FFCL 109; Def. Pretrial MOL 25).

Furthermore, Defendants contend that the lack of frequent entry or

expansion in the past does not guarantee that entry or expansion will not

happen moving forward, especially if the combined Henkel decides to raise

prices in a material way after the merger. (Def. Post-Trial FFCL 109-10; Def.

Pretrial MOL 26). To Defendants, “[t]he fact that such entry has not happened

more frequently reflects only the [current] existence of competitive, entryforestalling prices[.]” Waste Mgmt., 743 F.2d at 983; see also Baker Hughes,

908 F.2d at 989 n.9 (explaining that “failed entry in the past does not

necessarily imply failed entry in the future: if prices reach supracompetitive

levels, a company that has failed to enter in the past could become

competitive”). In other words, given the competitive dynamics at the “get on

the shelf” level and the open bidding processes run by powerful retail

customers, Defendants could easily lose shares to any of the other construction

The FTC argues that manufacturing is a barrier to expansion. (FTC Post-Trial FFCL 6972). The Court does not agree, and it has not found that manufacturing capacity is an

issue for other suppliers.

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adhesives suppliers if they stop maintaining competitive pricing. (Def. PostTrial FFCL 110; Def. Pretrial MOL 26-27). Even more so than in Waste

Management, where past entrants were “relatively small or disappeared as

independent entities by going out of business or being acquired by larger

companies,” 743 F.2d at 982, Defendants point out that suppliers like Titebond

and DAP are already significant suppliers in the pro channel (Def. Post-Trial

FFCL 109-10; Def. Pretrial MOL 27).

Nevertheless, as the FTC correctly points out, expansion and

repositioning by these existing competitors will not be “timely, likely, and

sufficient” to constrain the combined Henkel entity. Tapestry, 755 F. Supp. 3d

at 465. Indeed, “[e]ntry of competitors into a market or expansion of existing

competitors can offset anticompetitive effects ... only if the entrance or

expansion is timely, likely, and sufficient in its magnitude, character, and

scope to deter or counteract the competitive effects of concern.” Id. (alterations

adopted and internal quotation marks omitted) (quoting FTC v. Sanford Health,

926 F.3d 959, 965 (8th Cir. 2019)). Unlike in the waste collection industry

described in Waste Management, the Court finds that in the construction

adhesives industry at the center of this case, the barriers to entry are

sufficiently high that “potential entrants and expanders will not adequately ‘fill

the competitive void that will result’” if the Court allows Henkel and A-Paint to

combine. Id. (quoting United States v. H & R Block, Inc., 833 F. Supp. 2d 36,

73 (D.D.C. 2011)).

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First and foremost, the Court determines that brand is the key barrier to

entry in this space. As the Court has already found, brand equity is perhaps

the most important factor in driving construction adhesives sales. (Supra

Findings of Fact D.1). Third-party market research conducted by Farnsworth

demonstrates that the “[b]rand of the construction adhesive has the most effect

on purchase intent.” (PX2197 at 17). Brand is highly relevant to retailers’

decisions about which products to stock on their shelves (see, e.g., July 15

Tr. 568:25-569:9 (Schneider Testimony)), meaning that brands with “holding

power” — such as Loctite and Liquid Nails — are able to keep their key shelf

placements (July 20 Tr. 1223:6-14 (Waits Testimony); PX3006). Moreover,

brand equity is specific to the construction adhesives industry. Brands with

strong recognition in adjacent categories like caulks and sealants — including

DAP and Sherwin-Williams — have not been able to leverage their brand

strength and penetrate construction adhesives using brand alone. (July 20

Tr. 1259:18-21, 1260:24-1261:19, 1263:10-1264:10, 1266:9-23 (Wirth

Testimony); PX3084; July 16 Tr. 801:25-803:5, 803:10-13, 804:2-5, 810:7-17

(Krebs Testimony)). And even the home centers have refrained from offering

any construction adhesives products under their own private labels

(July 21 Tr. 1440:13-1441:2 (Oakes Testimony); Oakes Dep. 49:17-50:22).

Given the importance of branding, the Court finds that the threat of

replacement is untimely, unlikely, and insufficient to prevent the

anticompetitive effects of this Transaction because brand strength — especially

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construction adhesive-specific branding — takes time and significant financial

investment to build. Both Loctite and Liquid Nails are decades-old brands that

have acquired loyal customers because of the brands’ consistency and quality

over the years. (See, e.g., PX1005 at 4 (Project Clipper due diligence reflecting

that “[i]t would be very difficult to organically replicate the brand equity Liquid

Nails has established over 50 years”)).

Unlike in Waste Management, where the Second Circuit did not believe

that “the existence of good will achieved through effective service” would be an

impediment to competition among waste haulers, 743 F.2d at 984, the

commercial realities of this industry reflect that brands do matter for consumer

choice and behavior. After all, few Americans pick their waste haulers based

on branding, but they do recognize and buy the iconic brands of construction

adhesives while shopping at retailers. Indeed, the role of brand equity here is

akin to that in Tapestry, in which a sister court found that “brand is a

fundamental attribute of a handbag; one cannot ignore it any more than one

could ignore the brand of [a] prescription drug … in defining the separate

markets of two chemically identical substances.” 755 F. Supp. 3d at 417.

Critically, the strength of Defendants’ brands is so high that retailers have

testified at trial that even with future price increases, they are unlikely to

remove either Loctite or Liquid Nails entirely from their shelves. (See, e.g.,

July 21 Tr. 1434:12-1435:2 (Oakes Testimony) (Lowe’s merchant explaining

that eliminating both brands “would create a tremendous amount of sales risk

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to the category”)). Defendants’ attempt to analogize this case to Waste

Management is thus unavailing.

Separately, the Court is unpersuaded by Defendants’ use of Waste

Management to dispute the “timely, likely, and sufficient” standard. (See Def.

Post-Trial FFCL 111-112; Def. Pretrial MOL 27-28). To be sure, the D.C.

Circuit in Baker Hughes rejected the Government’s reliance on Waste

Management to impose a categorical “quick and effective” entry requirement.

908 F.2d at 987 (explaining that the Second Circuit’s determination of a

successful rebuttal based on “easy” entry into the trash collection market did

not mean that “successful rebuttal requires such a showing” (citation omitted)).

But the “timely, likely, and sufficient” standard differs from the “quick and

effective” requirement in that the former does not impose a specific timeline or

require evidence of specific competitors and their plans. See Tapestry, 755 F.

Supp. 3d at 470 (applying standard without specific timing or evidentiary

requirements); cf. Baker Hughes, 908 F.2d at 987 (rejecting the “quick and

effective” standard because it would “impose upon defendants the burden of

proving that entry actually will occur,” which goes beyond Section 7’s standard

of “probabilities, not certainties”).

While the Second Circuit has yet to affirmatively adopt the “timely, likely,

and sufficient” standard, nothing in Waste Management prevents the

application of this standard. Indeed, many district courts within this Circuit

have used it to evaluate the strength of the rebuttal at step two. See Tapestry,

755 F. Supp. 3d at 465-70; IQVIA, 710 F. Supp. 3d at 393-95; Deutsche

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Telekom, 439 F. Supp. 3d at 226-33; see also United States v. Visa U.S.A., Inc.,

163 F. Supp. 2d 322, 342 (S.D.N.Y. 2001). This Court follows the lead of its

sister courts and determines that, applying the “timely, likely, and sufficient”

standard, repositioning or expansion by other suppliers cannot adequately

constrain the combined Henkel entity. 21

Big-Box Retailer “Power Buyers” Are Unlikely to Protect End

Consumers from the Transaction’s Anticompetitive Harms

Finally, Defendants contend that large and sophisticated retailers obviate

the combined Henkel entity’s ability to increase prices post-transaction. (Def.

Post-Trial FFCL 113-15; Def. Pretrial MOL 29-31). According to Defendants,

“Henkel needs these retailers far more than they need Henkel.” (Def. Post-Trial

FFCL 113; see id. (explaining that about 80 percent of the combined entity’s

construction adhesives sales would be to Home Depot and Lowe’s alone)). By

Defendants’ logic, then, those retailers will keep any attempts by Defendants to

raise prices or reduce quality in check, especially because they “closely monitor

prices, will only accept wholesale price increases that are justified by cost, and

require extensive cost justification worksheets before they will accept such an

increase.” (Id. at 114).

To be sure, sophisticated buyers are “likely to promote competition even

in a highly concentrated market.” Baker Hughes, 908 F.2d at 986. Indeed, the

existence of “power buyers” like the three largest home centers “is a factor that

In any event, even without the “timely, likely, and sufficient” standard, the Court finds

that the role of brand equity is so important in the construction adhesives industry that

this case can easily be distinguished from Waste Management.

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can serve to ‘rebut a prima facie case of anti-competitiveness.’” FTC v. Wilh.

Wilhelmsen Holding ASA, 341 F. Supp. 3d 27, 70 (D.D.C. 2018) (quoting

Cardinal Health, 12 F. Supp. 2d at 59); see also United States v. Archer-DanielsMidland Co., 781 F. Supp. 1400, 1416 (S.D. Iowa 1991) (“The existence of large,

powerful buyers of a product mitigates against the ability of sellers to raise

prices.”). In some cases, courts have determined that one or a few of such

power buyers may contribute to preventing significant competitive harms. See

United States v. Booz Allen Hamilton Inc., No. 22 Civ. 1603 (CCB), 2022 WL

9976035, at *7 (D. Md. Oct. 17, 2022) (determining that there are “strong

countervailing incentives to maintain a competitive bid” for contracts with a

single government entity); United States v. Country Lake Foods, Inc., 754 F.

Supp. 669, 674 (D. Minn. 1990) (explaining that “[c]ompetition is ensured in

the market by the power of” three large distributors accounting for more than

90 percent of industry sales).

The Court agrees with Defendants that retailers like the three largest

home centers have substantial leverage over Defendants (see supra Findings of

Fact D.2), but such a “power buyer” defense is insufficient to rebut the FTC’s

prima facie case on its own. As a sister court in this District has explained,

“courts have not typically held that power buyers alone enable a defendant to

overcome the government’s presumption of anticompetitiveness.” IQVIA, 710 F.

Supp. 3d at 396 (internal quotation marks omitted) (quoting Wilh. Wilhelmsen

Holding, 341 F. Supp. 3d at 70); see also Chi. Bridge & Iron Co. N.V. v. FTC, 534

F.3d 410, 440 (5th Cir. 2008) (“[C]ourts have not considered the ‘sophisticated

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customer’ defense as itself independently adequate to rebut a prima facie

case.”).

Moreover, the “power buyer” defense is especially weak in this case given

that the combined Henkel entity would exercise greater leverage vis-à-vis the

retailers, instead of the other way around. Indeed, the “key question is what

choices are available to buyers and how those choices would change postmerger.” IQVIA, 710 F. Supp. 3d at 396. The answer here is that elimination

of head-to-head competition between Loctite and Liquid Nails would decrease

“the number of leading firms at the top of market” and leave retailers “with

fewer choices when selecting” suppliers of construction adhesives. Id. As the

Menards merchant testified at trial, if the merger goes through and “Henkel

raises their price, [retailers like Menards] don’t necessarily have a lot of

recourse to go get something fast and quick to fill [their] shelves” and “might

have to raise [their] prices to [their] consumers, which could have a ripple effect

on other projects[.]” (July 15 Tr. 570:15-571:13 (Schneider Testimony)). The

Court therefore doubts that even with their sophisticated PLR and costjustification processes, large retailers would singlehandedly be able to prevent

Defendants from raising prices.

And even with a stronger “power buyer” defense, Defendants cannot

overcome the Court’s finding that retailers are ultimately not incentivized to

protect end consumers from potential price increases and other anticompetitive

harms. Indeed, the antitrust laws do not contemplate that the Government

would outsource its market-supervision responsibilities to retailers, especially

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retailers whose interests do not align with those of end consumers. Rather, the

antitrust laws “assume that a retailer faced with an increase in the cost of one

of its inventory items ‘will try so far as competition allows to pass that cost on

to its customers in the form of a higher price for its product.’” FTC v. H.J.

Heinz Co., 246 F.3d 708, 719 (D.C. Cir. 2001) (quoting In re Brand Name

Prescription Drugs Antitrust Litig., 123 F.3d 599, 605 (7th Cir. 1997)). Such is

the case here: The Court has found that retailers control prices charged to end

consumers and have passed on wholesale price increases in the past to retail

customers as a way of protecting their own margins. (July 21 Tr. 1420:221422:1 (Oakes Testimony); see, e.g., July 14 Tr. 360:19-362:2 (Reginelli

Testimony); PX1668 at 3). In addition, because of

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