Merger Retrospective: Examining the Kimberly-Clark and Scott Paper Company Merger

This study conducts a post-merger retrospective of the Kimberly-Clark and Scott Paper merger in 1995 to examine the impact on store prices and consumer welfare. Kimberly-Clark was a premium brand with strong market power in the United States. Scott Paper had the largest market share of tissues in Europe and was positioned as a value-oriented brand. This merger created the second largest personal care company in the United States. While the federal government conducts many simulations ex-ante, few analyses are run ex-post the merger. These are crucial to calibrate economic models and deliver accurate regulation. This study examined data from University of Chicago’s Booth School of Business using Dominick’s database, which surveyed over 100 of its chain stores in the Chicago area over a nine year period using weekly sales data of over 3,500 products. Regressions showed that despite the strong individual positions of the two companies, there were no anti-trust issues. After the merger, industry market prices rose by $0.49 or 2.8% in the Chicago area. This is within the 5% benchmark used by the Department of Justice to allow mergers to proceed.