The company 3M, which makes everything from Scotch tape to Post-it notes, says it is still interested in acquiring Avery Dennison Corporation, which makes labeling and packaging materials. Yesterday, the Justice Department said the deal had been dropped because of the government's concerns that a combined company would hurt competition in the market for labels and sticky notes. The department said combining the two companies would account for 80 percent of the market.
The sticking point for the Justice Department was the fact that consumers were paying so little for the products, said Ghansham Panjabi, an analyst who follows the industry for Robert Baird and Company. While Avery dominated the mailing label part of the industry, "3M came in, lowered the price points for you and I as consumers, just because there was more competition," he said.
How major is the sticky notes industry as a whole that the Justice Department needed to worry about it? "It is a little bit unusual that they would take such a hard line against this transaction," said Panjabi. "But I guess it's not fully done yet, and both companies intend to proceed."