Sara Lee Corp. yesterday agreed to pay $3.1 million in civil penalties to settle a Justice Department complaint that it knowingly failed to notify the government in 1991 when it acquired the assets of its largest competitor in the shoe polish business.

The $17.7 billion Chicago-based consumer goods giant -- whose products include Jimmy Dean sausages, Aris Isotoner gloves, L'eggs and Hanes hosiery, and numerous bakery products and snacks -- denied any wrongdoing.

"The settlement was more expedient than the prospect of costly litigation with the government," said a company spokesman.

Sara Lee owns Kiwi Brands Inc., the country's largest shoe care products business with about 90 percent of the market. In 1991, it acquired one of its few remaining competitors, the shoe care business of Britain's Reckitt & Colman PLC, for $25.8 million. That business included the Meltonian, Griffin and Magix brands of shoe polish in the United States.

Under federal antitrust laws, a company must file with the two antitrust regulators -- the Justice Department and the Federal Trade Commission -- and allow 30 days for a preliminary investigation before it consummates a merger. The regulation is required for any acquisition of assets in excess of $15 million.

The FTC often sees cases in which companies inadvertently forget to file pre-merger applications, according to FTC officials. But Sara Lee officials "deliberately, maliciously and wantonly didn't file because they were concerned that the merger wouldn't be approved," said William J. Baer, director of the FTC's Bureau of Competition. "They knew they had an antitrust problem and they deliberately structured {the sale} so they could hide it."

The FTC got complaints about the merger and began looking into it in late 1991, later requiring that Sara Lee sell its Griffin and Esquire brands of shoe polish.

With further investigation, the FTC determined that the company had deliberately pegged the U.S. assets of Reckitt & Colman at less than $15 million so that it could avoid filing its pre-merger papers with the government, according to the complaint.

The merger of Sara Lee's shoe products business and that of Reckitt & Colman would likely have led to higher prices for millions of consumers of shoe care products without the divestiture, Baer said.

At the request of the FTC the Justice Department filed the complaint that was settled yesterday.

"The law is clear and simple. So is Sara Lee's violation," said Anne K. Bingaman, assistant attorney general in charge of the antitrust division. "Without the necessary information on proposed acquisitions, we can't protect consumers from anti-competitive transactions."

The company was in violation of antitrust laws from Oct. 4, 1991, until Jan. 18, 1995, according to the Justice Department complaint. The violations call for penalties of up to $10,000 a day, which left Sara Lee with a potential penalty of about $9 million.


Largest fines imposed on companies for making acquisitions without properly notifying antitrust authorities:

Sara Lee and Reckitt & Colman

$3.1 million


Pennzoil and Chevron

$2.6 million


Atlantic Richfield

$2 million


and Union Carbide Chemicals

Herold Honickman and

$1.9 million


Seven-Up Brooklyn Bottling

Cox Enterprises and Knight-Ridder $1.75 million


Farley and West Point Pepperell



Stephan Schmidheiny and



two Swiss electronics firms