Clorox is the nation's leading manufacturer of household liquid bleach (accounting for 49 percent-$40,000,000-of sales annually) and is the only brand sold nationally. Clorox and its next largest competitor, Purex, hold 65 percent of national sales; and the top four bleach manufacturers control 80 percent of sales.
Because all bleach is chemically identical, Clorox spends more than $5 million each year in advertising to attract and keep customers. Procter & Gamble is the dominant national manufacturer of household cleaning products, with yearly sales of $1.1 billion.
As with bleach, advertising is vital in the household cleaning products industry. Procter & Gamble annually spends more than $127 million in advertising and promotions. Procter & Gamble decided to diversify into the bleach business because its household cleaning products and bleach are both low-cost, high-turnover consumer goods, are dependent on mass advertising, and are sold to the same customers at the same stores by the same merchandising methods. Procter & Gamble decided to merge with Clorox, rather than start its own bleach division, in order to secure the dominant position in the bleach market immediately. Should the Federal Trade Commission take action against this merger, and, if so, what decision should it make?