FTC Approves Combination of Men’s Wearhouse and Jos. A. Bank Without Conditions

On May 30, 2014, the Federal Trade Commission (“FTC”) approved the merger between Men’s Wearhouse and Jos. A. Bank, the two largest men’s wear companies without any conditions.

On January 28, 2014, the FTC issued a second to request to review the transaction.  After approximately four months, the FTC determined that ample competition existed in the market for suits and tuxedo rentals.

 In its analysis of the product markets likely to be affected by the merger as well as the state of the competitive landscape, the FTC noted that the two companies serve different market segments: Men’s Wearhouse targets the younger and trendier customer set, while Jos. A. Bank’s customers are older and more traditional.  While both carry private brands, Men’s Wearhouse also offers brand-names in its stores.  Jos. A. Bank, on the other hand, exclusively offers its private brands.  This means the stores really are not competing directly against each other because they are selling different brands.  In addition, the FTC found that there are also many competitors that sell suits within the same price and selection range as Men’s Wearhouse and Jos. A. Bank, such as Macy’s, Kohl’s, JC Penney’s, Nordstrom, and Brooks Brothers.  In addition, the FTC staff found that in the tuxedo segment of the market, the two firms compete with numerous local and smaller firms.  Overall, the FTC concluded, the merger is unlikely to harm customers.

The FTC also noted that it did not have take into great account the role online retailers played in the competitive environment of the men’s suits market. The FTC noted that to many customers, it is not obvious to buy suits online because online vendors cannot offer fitting and tailoring services.  Even though the volume of online sales of suits is on the rise, it still accounts for only a small percentage of the overall market.  The FTC, which now typically considers in depth the role online competitors play in a given market, stated that it treated online competition in this case differently than in its previous analyses of the Toys R Us and Office Depot-OfficeMax cases–where online competition played a more prominent role in the antitrust analysis–because of the aforementioned characteristics of the men’s suits market. Although the FTC did not need to determine that online sales of men’s clothing and suits offered constraints to brick & mortar stores, the FTC was able to find that sufficient brick & mortar competition existed in the retail sale of men’s clothing/suits and tuxedo rental market. Andre Barlow 202-589-1838 abarlow@dbmlawgroup.com Mark Ye 202-589-1834 mye@dbmlawgroup.com