DOJ REQUIRES MILL DIVESTITURES IN PROPOSED MERGER OF ALTIVITY AND GRAPHIC PACKAGING

On March 5, 2008, Altivity Packaging LLC (“Altivity”) and Graphic Packaging International Inc. (“Graphic”) entered into a settlement agreement with the DOJ that they will divest two paperboard mills-one in Indiana and the other in Pennsylvania-in order to proceed with their proposed $1.75 billion merger.

The Antitrust Division stated that the merger, as originally proposed, would have substantially lessened competition in the production and sale of a type of paperboard used to make folding cartons for consumer and commercial packaging, including cereal boxes. If for any reason divestiture of the Philadelphia CRB mill is not accomplished, the proposed settlement would require the sale of Altivity’s Santa Clara, California mill.
Altivity is the largest producer of coated recycled boxboard (“CRB”) in North America and Graphic is the fourth largest. Both companies also are major integrated producers of folding cartons made from CRB. The merger, as originally proposed, would have produced a single firm with approximately 42 percent of the production and sale of CRB in North America.

The settlement agreement obtained in this investigation demonstrates the Division’s increasing willingness to be flexible by providing the merging parties with alternative arrangements for a divestiture.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com