The Federal Trade Commission announced that it has filed a lawsuit seeking to block Henkel AG & Co. KGaA from acquiring construction adhesive brand Liquid Nails.

According to the FTC’s complaint, the proposed transaction would combine the two largest construction adhesive brands sold at major home improvement retailers including The Home Depot Lowe’s and Ace Hardware. The agency alleges that the deal would eliminate head-to-head competition between Henkel’s Loctite brand and Liquid Nails resulting in higher prices lower quality and reduced innovation for consumers.

Under the terms of the proposed transaction, Henkel and its U.S. subsidiaries would acquire Liquid Nails for $725 million from private equity firm American Industrial Partners. The FTC said the transaction would significantly increase market concentration and create a highly concentrated market that is considered unlawful under current antitrust case law and federal merger guidelines.

“Affordable high-quality housing is essential to the American Dream and the antitrust laws protect Americans from anticompetitive mergers that threaten to drive up the costs of the products we use to build and maintain our homes,” said Daniel Guarnera, director of the FTC’s Bureau of Competition. “Today’s enforcement action underscores the FTC’s commitment to making sure that Americans benefit from competition.”

The FTC voted unanimously to authorize staff to seek a permanent injunction to block the proposed acquisition. The complaint was filed in the U.S. District Court for the Southern District of New York.

Antitrust scrutiny of mergers continues to shape consolidation trends across mergers and competition policy affecting coatings and adhesives manufacturers.