GOVERNMENT: Package Deals

While the U.S. packaging industry has grown larger and larger—multiplying its volume sixfold in the past quarter-century —the number of companies has grown smaller and smaller. Last week the Justice Department struck hard at the industry's urge to merge. In an antitrust suit filed against Owens-Illinois Glass Co., it asked that the No. 1 U.S. glass-container maker (1955 sales: $370 million) be forced to sell off National Container Corp., the No. 3 paper-container maker (1955 sales: $95 million), acquired in a stock swap last October.

The trustbusters charged that the merger had made Owens-Illinois the top U.S. producer of shipping containers, giving it a "decisive competitive advantage" over smaller, single-line companies, and increasing the "tendency toward monopoly in the container field generally." Replied Owens-Illinois Chairman John Preston Levis, grandson of the founder: "No antitrust violation was involved." In fact, said Levis, the merger was necessary for effective competition, "enabling us to deliver at the lowest possible cost the glass jars, bottles, tableware and other materials we make."

Three Suits. The suit against Owens-Illinois was the third antitrust case against the container industry in three months. The Justice Department also wants Continental Can Co. to dispose of Hazel-Atlas Glass Co., the No. 2 U.S. glass-container maker, and Robert Gair Co., the No. 2 paper-container maker. Largely as a result of the mergers, Continental Can sales jumped from $666 million in 1955 to more than an estimated $1 billion in 1956, and the company passed its traditional rival, American Can Co., to become the No. 1 U.S. container maker.

Mergers have become epidemic in the container industry: 20 for Owens-Illinois, 11 for National Container before it merged with Owens-Illinois, 30 for Continental Can.

Simple Survival. The industry does not deny the trend, but many of its leaders argue that container mergers are a matter of simple survival. With plastics, foils and other new materials fast moving into the container field and taking over areas once dominated by the tin can and the glass jar, the oldtime companies must expand or be left behind. The company that sticks with one type of container could be stuck.

The outstanding holdout against industry-wide diversification is American Can Co., No. 1 tin-can maker, formerly top dog in the entire industry. Says American Can's President William C. Stolk: "We just don't want to acquire companies for the sake of expanding." But last year Canco expanded into fiber milk containers; this year it bought the Bradley Container Co. and branched into plastic bottles. Unless the Justice Department wins its antitrust cases, chances are the container industry will go right on making bigger packagers out of littler ones.

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