On August 14, 2026, the Federal Trade Commission secured a permanent injunction blocking Henkel AG & Co. KGaA and its subsidiaries’ (Henkel) proposed $725 million acquisition of A-Paint Topco, Inc. (A-Paint), which produces Liquid Nails (a construction adhesive). While the opinion is still under seal, the decision marks the first successful deployment of the FTC’s new merger-litigation strategy to, like the Department of Justice, seek permanent injunctions in federal court without filing an action in the FTC’s administrative Part 3 court.
The Complaint and Its Posture
On December 15, 2025, the FTC filed its complaint against Henkel and A-Paint in the Southern District of New York, seeking a permanent injunction because the transaction allegedly would combine “the two biggest brands—by far—of construction adhesives sold domestically at retailers like The Home Depot, Lowe’s, Menards, and Ace Hardware.”[1] The FTC alleged that retail shelves are dominated by these two brands, and that rival manufacturers have struggled to obtain meaningful, durable shelf space with home-improvement retailers. The FTC emphasized that construction adhesives are a “critical product for building and maintaining homes,” and argued that the merger would both (1) increase an already highly concentrated market and (2) eliminate “intense head-to-head competition” that benefits DIY consumers and professional tradespeople through lower prices, better quality, and continued innovation.
The FTC’s decision to file its case exclusively in federal court and seek a permanent injunction stands in stark contrast to the agency’s traditional practice of filing an action in its Part 3 administrative court and then seeking a preliminary injunction in federal court to prevent the transaction from closing pending resolution of the in-house case. In practice, this procedure often led to the motion for preliminary injunction transforming into a de facto permanent injunction proceeding, where the FTC would generally drop its case if a preliminary injunction were denied and companies would typically abandon their deal if the preliminary injunction was granted. And, at a minimum, in the less-common cases where the FTC or companies appealed preliminary injunction orders to the federal circuit court, the outcome of such appeal was typically dispositive of the case.
Just after the case was filed, FTC Chair Andrew Ferguson confirmed that the FTC will pursue merger challenges exclusively in federal court: “I think there’s a lot more credibility in the agency’s enforcement when the final determiner of whether the law has been violated is not the person making the accusation.”[2] Chair Ferguson further emphasized that this approach could minimize the potential for constitutional challenges to the FTC’s internal adjudication system and authority.
Assuming the FTC continues with this approach, dealmakers can evaluate deal clearance risks with some degree of certainty that the procedural process employed by the FTC and DOJ when challenging mergers will be the same. For parties that end up before the FTC, this can mean faster resolution of merger challenges, and potentially, the conservation of resources that otherwise may have been expended in managing and litigating the Part 3 proceeding.
Complaint Highlights That Pocketbook Issues Remain FTC Priority
An additional, notable aspect of the Complaint is how narrowly the FTC defined the relevant market, focusing on a specific distribution channel and customer base. Specifically, the FTC alleged that the relevant market was the market for construction adhesives sold in the retail channel—i.e. home centers and hardware stores—excluding other outlets, such as distributors, which the FTC conceded “carry a wider array of brands and [adhesive] products” but which allegedly “tend to serve professionals purchasing construction adhesives in larger volumes.”[3]
The FTC’s focus on “DIYers and professional craftsmen”[4] underscores this Administration’s and Chair Ferguson’s ongoing commitment to addressing potential “pocketbook” issues facing everyday consumers. This concern was echoed by FTC Bureau of Competition Director Daniel Guarnera, who responded to the district court’s order in a similar fashion: “Anyone who looked at the construction adhesives shelves of a hardware store or home improvement retailer could see that a merger between Loctite and Liquid Nails would be a bad deal for Americans. This proposed acquisition threatened to drive up the cost of a critical product for building and maintaining homes across the United States.”[5]
Takeaways
Although the Court’s Findings of Fact and Conclusions of Law are still under seal, the Henkel case serves as a procedural roadmap for deal parties facing potential litigation with the FTC and illuminates the FTC’s continued focus on markets impacting every day consumers. It also provides an example of the FTC’s willingness to define narrow markets around a sales channel and customer base (here, home-improvement retailers and their customers). Parties contemplating acquisitions in consumer categories with defined brand leaders should engage with antitrust counsel early to evaluate potential market issues and define potential risks.
The Sheppard team is continuing to monitor developments in enforcement trends and how that may impact the review process for our clients’ transactions. Please contact our team if you have any questions about the case or these issues.
FOOTNOTES
[1] Compl. ¶ 1, FTC v. Henkel AG & Co. KGaA, No. 1:25-cv-10371-KPF (S.D.N.Y. Dec. 15, 2025), ECF No. 3.
[2] Ilana Kowarski, US FTC chairman commits to bringing deal challenges only in federal courts, MLex (Feb. 20, 2026 23:51 GMT) (citing Chair Ferguson’s comments during George Mason Antitrust Symposium, organized by the George Mason Law Review, Arlington, VA, Feb. 20, 2026).
[3] Compl. ¶¶ 30, 38, 42, supra n.1.
[4] Id. ¶ 3.
[5] Statement on FTC Win Blocking Loctite, Liquid Nails Construction Adhesive Merger, FTC.gov (Aug. 17, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/08/statement-ftc-win-blocking-loctite-liquid-nails-construction-adhesive-merger.