FTC Sues to Block PlayPower’s Acquisition of Rival Playground Manufacturer Burke

What happened Source facts

Today, the Federal Trade Commission sued to block Platinum Equity and its portfolio company PlayPower’s acquisition of BCI Burke, alleging the deal to combine two of the largest commercial outdoor playground equipment makers will drive up prices and decrease innovation and quality for equipment bought by schools, churches, parks and recreation departments and other organizations across the country. PlayPower, owned by private equity firm Platinum Equity, proposes to buy Burke, one of PlayPower’s closest competitors in the manufacture of commercial outdoor playground equipment. The proposed transaction would add the Burke brand to PlayPower’s existing commercial outdoor playground portfolio, which includes Miracle Recreation Equipment Company, Little Tikes Commercial and Playworld Systems, Inc.—brands PlayPower previously acquired. The complaint alleges that the deal will significantly increase concentration in an already concentrated market and eliminate PlayPower and Burke’s intense rivalry that benefits playground customers through lower prices, better services, higher quality and increased innovation. The complaint is joined by the attorneys general of Arizona, California, Colorado, Illinois, Nevada, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Washington and Wisconsin. “Playgrounds are an indispensable part of daily life for millions of American kids and their families. And state and local governments spend hundreds of millions of taxpayer dollars each year on playgrounds so that their communities have places for kids to play safely,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “Instead of investing in building better playgrounds or lowering prices, PlayPower and its parent Platinum Equity want to eliminate one of PlayPower’s fiercest competitors and continue to raise prices on American schools, parks departments, churches and municipalities.” The loss of price competition between PlayPower and Burke is especially problematic given rapidly rising playground prices in an already highly concentrated market. Today, five companies—including PlayPower and Burke—own more than a dozen playground equipment brands and hold 85% to 90% market share in the United States, according to the complaint. Even with Burke competing aggressively and taking share from PlayPower, PlayPower’s prices for its products have soared in recent years. And its proposed acquisition of Burke will allow it to charge even higher prices, the complaint alleges. In addition to driving up prices, the acquisition will likely lead to less innovation and poorer service and quality by eliminating Burke’s focus on providing innovative, high-quality products and robust service, according to the complaint. At the same time, the proposed acquisition could also have a negative impact on independent sales representatives who sell the companies’ equipment, leading to lower commissions or worse service terms, according to the complaint. The combination of PlayPower and Burke will significantly increase concentration, eliminate fierce head-to-head competition and result in a highly concentrated market that is considered presumptively unlawful under antitrust case law and the FTC’s and Department of Justice’s joint merger guidelines, according to the complaint. The Commission vote to authorize staff to seek a permanent injunction to block the proposed acquisition was 2-0. The FTC and co-plaintiff states filed the federal court complaint and request for permanent equitable relief in the U.S. District Court for the Northern District of California.

Recorded source facts

Today, the Federal Trade Commission sued to block Platinum Equity and its portfolio company PlayPower’s acquisition of BCI Burke, alleging the deal to combine two of the largest commercial outdoor playground equipment makers will drive up prices and decrease innovation and quality for equipment bought by schools, churches, parks and recreation departments and other organizations across the country. PlayPower, owned by private equity firm Platinum Equity, proposes to buy Burke, one of PlayPower’s closest competitors in the manufacture of commercial outdoor playground equipment. The proposed transaction would add the Burke brand to PlayPower’s existing commercial outdoor playground portfolio, which includes Miracle Recreation Equipment Company, Little Tikes Commercial and Playworld Systems, Inc.—brands PlayPower previously acquired. The complaint alleges that the deal will significantly increase concentration in an already concentrated market and eliminate PlayPower and Burke’s intense rivalry that benefits playground customers through lower prices, better services, higher quality and increased innovation. The complaint is joined by the attorneys general of Arizona, California, Colorado, Illinois, Nevada, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Washington and Wisconsin. “Playgrounds are an indispensable part of daily life for millions of American kids and their families. And state and local governments spend hundreds of millions of taxpayer dollars each year on playgrounds so that their communities have places for kids to play safely,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “Instead of investing in building better playgrounds or lowering prices, PlayPower and its parent Platinum Equity want to eliminate one of PlayPower’s fiercest competitors and continue to raise prices on American schools, parks departments, churches and municipalities.” The loss of price competition between PlayPower and Burke is especially problematic given rapidly rising playground prices in an already highly concentrated market. Today, five companies—including PlayPower and Burke—own more than a dozen playground equipment brands and hold 85% to 90% market share in the United States, according to the complaint. Even with Burke competing aggressively and taking share from PlayPower, PlayPower’s prices for its products have soared in recent years. And its proposed acquisition of Burke will allow it to charge even higher prices, the complaint alleges. In addition to driving up prices, the acquisition will likely lead to less innovation and poorer service and quality by eliminating Burke’s focus on providing innovative, high-quality products and robust service, according to the complaint. At the same time, the proposed acquisition could also have a negative impact on independent sales representatives who sell the companies’ equipment, leading to lower commissions or worse service terms, according to the complaint. The combination of PlayPower and Burke will significantly increase concentration, eliminate fierce head-to-head competition and result in a highly concentrated market that is considered presumptively unlawful under antitrust case law and the FTC’s and Department of Justice’s joint merger guidelines, according to the complaint. The Commission vote to authorize staff to seek a permanent injunction to block the proposed acquisition was 2-0. The FTC and co-plaintiff states filed the federal court complaint and request for permanent equitable relief in the U.S. District Court for the Northern District of California.