# Case 1:25-cv-10371-KPF

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URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A0f9c658a73c2fe7d

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

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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).

1

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.

2

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.
A.

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.

3

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 (
)).
B.

The Construction Adhesives Industry
1.

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

4

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)).
2.

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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out of total wholesale sales of about

Page 17 of 95

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

5

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).
3.

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
6

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

7

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

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).
5.

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).

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
1.

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

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

11

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
7%

(27facings)

(11facings}

(4facings)

Shelf Space Per Brand
OSI
4%

Loctite
59%

liquid Nails
34%

Gorilla Glue
7%

(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).
D.

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.
1.

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)).
2.

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).
3.

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

12

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)).
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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

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.
A.

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

14

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
a.

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)).

15

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

16

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.
b.

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
c.

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

17

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).

18

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.
2.

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 fro

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A0f9c658a73c2fe7d. Public record. Not legal advice.