U.S. Sues to Block Aluminum Plant Sale

The Justice Department on Monday sued to block Aluminum Co. of America’s proposed purchase of an Alabama aluminum rolling mill from rival Reynolds Metals Co.

In a lawsuit filed in a federal court in Alabama, the Justice Department said the $250-million purchase would mean higher prices for can makers who buy rolled aluminum and, ultimately, consumers purchasing canned beverages.

“This is a classic case of a highly concentrated industry becoming even more concentrated,” said Joel Klein, the Justice Department’s top antitrust enforcer. “Alcoa’s purchase of the Reynolds plant will reduce competition by making it easier for the few remaining producers to increase the price of can stock in the United States.”

The Justice Department lawsuit complicates Reynolds’ effort to shed a plant that the company said has already cost it $225 million to $250 million. Reynolds hoped to get out of the aluminum rolling business by selling the plant.

In a statement, Richmond, Va.-based Reynolds said the lawsuit was “contrary to precedent and the department’s own merger guidelines.” The company said it was reviewing its options.

A spokesman for Pittsburgh-based Alcoa couldn’t be reached for comment.

Purchase of the Muscle Shoals, Ala., plant would eliminate the third-largest U.S. maker of aluminum-can stock, the Justice Department charged. Alcoa is already the largest U.S. maker of aluminum-can stock, and with the Alabama plant would own about 60% of the aluminum-can-stock capacity in the country.