3M appears to have dropped its bid to buy Avery Dennison's Office and Consumer Products Group on Tuesday after the U.S. Department of Justice threatened to block the deal on antitrust grounds.
In a statement posted on its website, the Justice Department said the approximately $550 million acquisition of Avery would have given 3M an 80 percent share of U.S. labels and sticky notes.
"We welcome the companies' decision to abandon this deal, which raised competitive concerns in the sale of labels and sticky notes," said acting-Assistant Attorney General Joseph Wayland.
3M dominated the market for sticky notes with its Post-It brand. But 3M introduced labels that competed with Avery in 2009, which led Avery to introduce its own sticky notes. The Justice Department said consumers "saved millions of dollars" as the companies jockeyed over prices.
Spokespeople for 3M did not immediately return requests for comment.
3M is based in St. Paul, Minn. Avery Dennison is based in Pasadena, Calif. The two companies originally agreed on the purchase in December 2011.