Whew, that was close.
We almost – almost! – had a frightening situation in which one company could have achieved world market domination in Post-it notes.
But thankfully, the Justice Department stepped in and put an end to that threat.
In case you missed it, the 3M Co. last week called off its planned acquisition of the office products division of Pasadena’s Avery Dennison Corp. This deal was about to go through, so the antitrust guys stopped it just in time.
The problem, you see, is that Avery makes mailing labels and 3M makes Post-it notes. The combination of the two would have given 3M about an 80 percent share of the label and sticky note business.
The thought of one company exercising world hegemony in such a sensitive and critical industry, was too much for the antitrust guys at the Justice Department, so they squashed that deal.
The theory is, if one company controls so much of one market, it can raise prices at will. Contemplate the horror of that global monopoly. Maybe 3M could have jacked up the price of its Post-it notes by 3 cents, 4 cents – who knows? – maybe by 5 cents a pack.
Of course, what happens in the real world is often the exact opposite of the theory. In such deals, prices often end up going down, thanks to greater economies of scale. But as the Justice Department would point out, that’s even worse.
Here’s how that could happen: The division that Avery wants to sell also makes other products, such as Hi-Liters and Marks-A-Lot markers. If 3M controlled all those goods, maybe it could have packaged them with its own office products. Imagine labels, Hi-Liters, Post-it notes all in one package – and sold at a discount! That would be unfair to competitors; they might have to lower prices, too.
Thank goodness the Justice Department stepped in and saved consumers from the scourge of low prices.
And to think that some people actually believe that the Justice Department wastes time and taxpayer money on silly pursuits.
Avery said that it wanted to sell its office products division because it is not a focus of the company. There’s already too much competition in that field anyway. The division accounts for only 13 percent of the company’s revenue. So by selling it – 3M had agreed to give Avery $550 million for it – Avery could use the money for research and development of its core products. You know, come up with better and cheaper stuff. Maybe increase shareholder value, hire a few more people, that kind of thing.
And 3M, which does specialize in office products, could more efficiently market Avery’s products. You know, faster, better, cheaper. That would make it a little better company.
But all that’s ended, too, thanks to the Justice Department. And it’s a small price to pay, if you ask me, to keep this nefarious sticky note monopoly from forming.