Avery Dennison Subpoenaed in Antitrust Probe
Avery Dennison Corp. and one of its main rivals say they’ve received subpoenas from the Justice Department, confirming that federal regulators are pushing ahead with an antitrust probe of the $5-billion labeling market.
Pasadena-based Avery, which commands about half of the market, said it was subpoenaed Friday in connection with the investigation. The company made the disclosure the same day in a filing with the Securities and Exchange Commission.
Avery said it was cooperating with the probe but did not elaborate. Avery spokesman Stephen Norton on Monday declined to comment beyond the filing.
Bemis Co., a Minneapolis-based competitor, also said it received a subpoena and was providing documents to the agency. Justice Department officials could not be reached for comment.
Avery’s stock fell 50 cents Monday, to close at $54.17 a share, while Bemis’ stock edged up 7 cents, to $44.95 a share. Both trade on the New York Stock Exchange.
Avery, with 2002 sales of $4.2 billion and 20,500 employees worldwide, first indicated in April that it was part of the Justice Department’s probe of the market for so-called label stock. That’s the material from which finished labels are cut for packaged foods, beverages, price tags and a host of other consumer and industrial goods.
At the time, the Justice Department was suing to block a $420-million purchase of Bemis’ MACtac unit by Raflatac Inc., a subsidiary of the Finnish paper-products maker UPM-Kymmene Corp. The government argued that the merger would hinder competition in the label-stock industry.
In its suit, the agency also made reference to an unnamed company that was “the leading producer” in the industry. Avery later confirmed it was the unidentified manufacturer, and said it eventually expected to be subpoenaed.
Avery also said it had a supplier-customer relationship with UPM, which sells some label stock to Avery but also competes with the U.S. company in many of the same global markets where Avery is active. Avery does business in 39 countries.
On July 25, a federal judge in Chicago sided with the Justice Department and blocked UPM-Kymmene’s purchase of the Bemis sticket unit, saying “price competition will be diminished” if the deal had been completed. Bemis and UPM-Kymmene promptly scuttled the transaction.
The government’s court victory raised questions about whether that would be enough to satisfy its concerns about competition in the label-stock industry, or whether the Justice Department would press ahead with its probe.
Avery last month said that it did not interpret the judge’s ruling “as suggesting any future course of action one way or the other by the Department of Justice.”
But the disclosure of the subpoenas confirmed that the government remained concerned about a possible lack of competition in the industry.
Times wire services contributed to this report.
