US launches price fixing investigation as UPM-MACtac deal is blocked

The US Department of Justice (DoJ) Antitrust Division is to file a civil antitrust lawsuit to block UPM-Kymmene’s acquisition of MACtac from Bemis Corporation. UPM-Kymmene is the owner of Raflatac, which recently opened a major coating operation in the US.

At the same time the DoJ has opened a criminal investigation into competitive practices in the labelstock industry. ‘Unless this transaction is blocked, the result will be increased prices for bulk paper labelstock,’ said R. Hewitt Pate, Acting Assistant Attorney General in charge of the Justice Department’s Antitrust division. ‘Our investigation has revealed that this market is already one in which competitors have sought to coordinate rather than compete. This merger would increase the likelihood that UPM and others will coordinate on bulk paper labelstock prices.’

Bemis Company signed an agreement to sell its pressure sensitive materials business segment to UPM-Kymmene for $420 million last August. A company spokesperson commented, ‘The Justice Department is to issue subpoenas with regard to this investigation. The company has received no indication of allegations against Bemis and will continue to fully cooperate with the requests of the Department.’ UPM-Kymmene says it will ‘vigorously oppose’ the DoJ’s attempt to block its acquisition of MACtac. In a statement issued today, the company says ‘UPM-Kymmene believes strongly that the acquisition is pro-competition and therefore pro-customer and intends to vigorously defend the acquisition.

Even after the MACtac acquisition, Raflatac would only have a market share in the United States of approximately 15 per cent.’ The DoJ will also subpoena Avery Dennison, although no specific allegations of price fixing have been made against the company. Avery Dennison executive vice president, general counsel and secretary Robert G. van Schoonenberg said, ‘Avery Dennison takes its legal and ethical obligations very seriously and attempts at all times to act in accordance with both.’

Court proceedings in the civil lawsuit to block the acquisition are expected to begin in June 2003.