Business and industry
WASHINGTON — The U.S. Department of Justice on Tuesday said it will require Reddy Ice to sell off major assets in several states to move forward with its proposed $126 million acquisition of rival Arctic Glacier, citing concerns the deal would reduce competition and raise prices in the packaged ice market.
The Justice Department’s Antitrust Division filed a civil lawsuit in U.S. District Court in Washington, D.C., seeking to block the transaction as originally structured. At the same time, the government submitted a proposed settlement that would allow the deal to proceed if Stone Canyon Industries Holdings LP, the owner of Reddy Ice, and Chill Parent Holdco LP, the owner of Arctic Glacier, agree to significant divestitures.
According to the complaint, Reddy Ice and Arctic Glacier are the dominant suppliers of packaged ice to retail chains in Oregon, Washington, and Imperial and Riverside counties in Southern California. They also lead sales to airlines and airline caterers in the Boston and New York City metropolitan areas. Regulators said the merger, without conditions, would likely lead to higher prices and reduced service quality for customers.
“This transaction, as originally proposed, would have led to higher prices and lower service quality on packaged ice,” said Assistant Attorney General Abigail Slater, who leads the Antitrust Division. She said the settlement is designed to preserve competition for consumers and businesses that rely on packaged ice, from grocery stores to airlines.
Under the proposed agreement, the companies must divest Reddy Ice’s manufacturing and distribution facilities, customer relationships, and contracts in Imperial and Riverside counties in California and in Washington state. They must also divest customer relationships and related assets in Oregon and in the Boston and New York City areas.
In addition, the companies will be required to notify regulators in advance of certain future transactions and accept oversight by an independent monitor to ensure compliance with the consent decree.
Reddy Ice is the largest producer of packaged ice in the United States, with about $511 million in annual revenue and operations in 37 states and Washington, D.C. Arctic Glacier is the third-largest producer, with roughly $306 million in annual revenue and sales in 19 states.
The settlement will be published in the Federal Register under the Tunney Act, triggering a 60-day public comment period. After reviewing the comments, the federal court may enter a final judgment if it determines the agreement is in the public interest.
If approved, the divestitures would clear the way for Reddy Ice’s acquisition of Arctic Glacier while maintaining competition in key regional ice markets across the country
Note: View the Proposed Final Judgement here and the Complaint here.
