The United States Department of Justice (DOJ) approved the acquisition this week on condition that Bemis sell Alcan cheese and meat packing assets worth $100m including two facilities in Catoosa, Oklahoma, and Menasha, Wisconsin.
The DOJ said the acquisition as originally proposed would combine two of the leading US manufacturers of flexible packaging rollstock for chunk, sliced and shredded natural cheese and shrink bags for fresh meat.
Competition concerns
Flexible packaging may be used for a variety of products, but because flexible cheese and meat packing is so specialist, the competition authorities felt that joining up Bemis and Alcan assets in these areas would give Bemis a dominant position in the market and weaken competitive pressures.
“The acquisition as originally proposed would have lessened the vigorous competition that currently exists among suppliers of flexible packaging for natural cheese and fresh meat,” said Christine Varney, assistant attorney general in charge of the DOJ’s antitrust division.
The DOJ therefore claimed the originally conceived acquisition would have led to higher prices, lower quality, less favorable supply-chain options, reduced technical support and less innovation.
Antitrust lawsuit
As part of the bureaucratic procedure leading to the announcement this week, the DOJ said its Antitrust Division had filed a civil antitrust lawsuit in the District Court for the District of Columbia to block the proposed acquisition. However, it had simultaneously filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
Bemis had expected to gain approval for its acquisition of Alcan Packaging Food Americas at the end of 2009 but announced in late December that there had been delays, and that it was working with the DOJ to develop a settlement to resolve its concerns.
Bemis is buying Alcan Packaging Food Americas from mining giant Rio Tinto, which is also selling off the other parts of Alcan Packaging. In December, Rio Tinto formally accepted the offer from Amcor to buy Alcan Packaging for US$2.025bn.
The deal includes Alcan Food Europe and Food Asia divisions, as well as its global pharmaceutical and tobacco operations. European and US antitrust authorities have both approved the acquisition.