3M Company, Antitrust Violation, Washington 2011

3M Company, 3M Abandons Acquisition of Avery Dennison, Washington 2011

3M Company has abandoned its proposed acquisition of Avery Dennison’s Office and Consumer Products Group after the Justice Department threatened to file a civil antitrust lawsuit to block the deal.

According to the Justice Department, the proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day.

On December 21, 2011, 3M and Avery agreed that 3M would acquire Avery’s Office and Consumer Products Group, which includes Avery’s labels business, for approximately $550 million.

The agreement specifically excluded some sticky notes assets, but left Avery without its brand or the sales and distribution system necessary to compete effectively in the sticky notes market.

The Justice Department’s investigation found that 3M and Avery have dominated adjacent spaces in the office products business for many years – Avery in labels and 3M in sticky notes sold under its Post-it Brand.

3M entered the labels market in the United States in 2009 and began competing with Avery, causing Avery to lower wholesale prices, increase promotions and customer rebates, and accelerate innovations in labels.

As a result of the competition between 3M and Avery, customers have saved millions of dollars and benefited from innovative labels and sticky notes products.

The proposed merger would have given 3M more than an 80 percent share of both the U.S. labels and sticky notes markets, according to the Justice Department.

3M is a Delaware corporation based in Saint Paul, Minnesota. 3M had 2011 revenues of $27 billion, has operations in 65 countries, and is one of the world’s largest manufacturers and suppliers of office products.

Avery Dennison is a Delaware corporation based in Pasadena, California. Avery had 2011 revenues of $6 billion and is a leading global manufacturer and supplier of office and consumer products.

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