WORLDTECHFTC Moves to Block PlayPower's Purchase of Burke Over Price Concerns
The US Federal Trade Commission is seeking to stop PlayPower, a unit of private equity firm Platinum Equity, from buying Burke, one of its nearest competitors in commercial outdoor playground equipment. The agency contends the transaction would reduce competition in a market it describes as already highly concentrated.
What the complaint alleges
The complaint says the acquisition would significantly raise concentration in a market that is already concentrated, and would eliminate the intense rivalry between PlayPower and Burke, a rivalry the agency says benefits playground customers through lower prices, better services, higher quality and increased innovation.
According to the complaint, the combined business would be able to charge even higher prices. The Commission voted 2-0 to authorise staff to seek a permanent injunction against the proposed acquisition. The attorneys general of twelve states have joined the complaint, namely Arizona, California, Colorado, Illinois, Nevada, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Washington and Wisconsin.
PlayPower's existing brand portfolio
The purchase would add the Burke brand to a commercial outdoor playground portfolio that already includes Miracle Recreation Equipment Company, Little Tikes Commercial and Playworld Systems, Inc., all of which PlayPower acquired earlier.
The complaint states that five companies, PlayPower and Burke among them, own more than a dozen playground equipment brands and together hold 85% to 90% of the United States market.
Rising prices in a concentrated market
The agency argues that losing price competition between the two firms is especially problematic, given how quickly playground prices are rising. According to the complaint, PlayPower's prices have soared in recent years even though Burke has competed aggressively and taken share from it.
Daniel Guarnera, Director of the FTC's Bureau of Competition, said state and local governments spend hundreds of millions of taxpayer dollars on playgrounds each year. He said PlayPower and Platinum Equity want to remove one of PlayPower's fiercest competitors and keep raising prices for schools, parks departments, churches and municipalities, instead of investing in better playgrounds or lowering prices.
Open questions
- Will the court grant the FTC's request for a permanent injunction?
- How will PlayPower and Platinum Equity respond to the allegations in the complaint?