WASHINGTON – The Justice Department is forcing Georgia-Pacific Corp. to sell its commercial tissue business in order to win government approval of its $11 billion acquisition of Fort James Corp.

The department announced Tuesday that the companies had agreed to the divestiture to resolve antitrust concerns over their original deal.

Better known for forest and building products, Georgia-Pacific would become the world’s largest tissue products manufacturer with the acquisition of Fort James. The deal would create a paper powerhouse: The companies manufactured more than 3 million tons of tissue last year and had nearly $25 billion in revenues.

Fort James and Georgia-Pacific are the largest and second-largest U.S. producers of commercial tissue, also known as away-from-home tissue, which includes paper towels, paper napkins and bath tissue sold for use in public settings. Last year, they sold a combined total of $2 billion in commercial tissue products, accounting for 66 percent of commercial sales of bath tissue, paper towels and paper napkins.

In a lawsuit filed Tuesday in U.S. District Court here to block the original deal, the department’s antitrust division said it would have substantially reduced competition in production and sales of commercial tissue by reducing the number of major competitors from three to two.

The government and the companies filed an agreement along with the lawsuit which would settle the lawsuit if, as expected, the court approves it.

“The original deal would have led to higher prices for purchasers of commercial tissue products – fast food and other restaurants, office buildings, factories, hospitals, schools and airports,” said A. Douglas Melamed, acting assistant attorney general. “This divestiture will preserve competition in this important industry.”

Headquartered in Atlanta, Georgia-Pacific is the second largest U.S. forest products company. It reported sales of $18 billion last year, including $674 million in commercial tissue.

Headquartered in Deerfield, Ill., Fort James is the largest U.S. manufacturer of tissue products. Last year, Fort James reported $7 billion in sales, including $1.3 billion in commercial tissue.

The top tissue maker in North America, Fort James has been struggling since it was created by the 1997 merger of Green Bay, Wis.-based Fort Howard Corp. and Richmond, Va.-based James River Corp.

But it boasts a powerful lineup of well-known products, including Quilted Northern, Soft ‘N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair and Dixie. Georgia-Pacific’s existing tissue products, which include Angel Soft bathroom tissue and Sparkle paper towels, are dominated by Fort James’ brands.