FTC Has Eyes on Telescope Firm Merger : Monopoly: Two local firms say they must join forces to be profitable. The FTC will seek a court injunction to stop them.
The Federal Trade Commission said Tuesday that it opposes the proposed merger of two Southern California companies because the combination would result in a monopoly for the manufacturers of a telescope popular among amateur star-gazers.
The FTC said it will seek a court injunction to stop the merger of Meade Instruments Corp. of Costa Mesa and Celestron International of Torrance because it would “create a virtual monopoly” in the manufacture of mid-size Schmidt-Cassegrain telescopes.
The Schmidt-Cassegrain telescope is a 14-inch instrument that uses mirrors and lenses to give the performance of a larger telescope in a compact package. The telescopes, which are used by serious amateur astronomers, sell for $1,000 or more.
Meade and Celestron contend that they must merge their operations to return to profitability and compete against Japanese imports. If they are prevented from doing so, they say, they may be forced out of business or forced to transfer their manufacturing overseas.
Steven Newborn, the FTC’s assistant director for litigation, said the commission decided last week to ask the U.S. District Court in Washington to stop the merger pending the outcome of administrative proceedings to determine its legality. “We think the commission is just wrong,” said Sidney Dickstein, an attorney representing Mead.
He said Schmidt-Cassegrain telescopes compete with all other makes of telescopes, which essentially perform the same task. “They are all used to peer at the sky,” he said.
Meade, which is owned by Harbour Group Investments LP of St. Louis, and Celestron, owned by Diethelm Holding USA Ltd.--a subsidiary of Diethelm & Co. of Switzerland--have proposed a joint venture that would result in a merger of operations for 30 years.
Combined, the two companies would have annual revenue of about $21 million. Dickstein said that Schmidt-Cassegrain telescopes made by Meade and Celestron represent only about $12 million in annual sales, compared to national sales of $80 million to $100 million of all kinds of telescopes for the entire industry.
Bernhardt Wruble, an attorney representing Celestron, said Meade and Celestron “compete intensely for a sliver of sales.”
Retailers say that although Celestron and Meade do a lot of competitive merchandising their Schmidt-Cassegrain telescopes are almost indistinguishable.
“They are basically the same telescope, although one (the Meade) is blue and the other (Celestron) is black,” said Bill Hartong, president of Oceanview Instruments, a telescope store in Newport Beach.
Wruble said the two companies represent “the last bastion of telescope manufacturing in the United States of any significance,” while most of their competitors are Japanese-based firms.
