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FTC challenges proposed merger of Staples and Office Depot

Staff writer |
The Federal Trade Commission (FTC) filed an administrative complaint charging that Staples proposed $6.3 billion acquisition of Office Depo would violate the antitrust laws.

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THe complaint says it will violate the laws by significantly reducing competition nationwide in the market for “consumable” office supplies sold to large business customers for their own use.

Framingham, Mass.-based Staples – the world’s largest seller of office products and services – and Boca Raton, Fl.-based Office Depot are each other’s closest competitors in the sale of consumable office supplies to large business customers, according to the complaint.

According to the complaint, many large business customers buy consumable office supplies for their own use under a contract.

In addition to a wide range of office supplies at competitive prices, the vendor provides them with fast and reliable nationwide delivery, dedicated customer service, customized online catalogs, integration of procurement systems, and detailed utilization reports.

That business-to-business market is distinct from the more competitive retail markets for office supplies sold to consumers.

Consumable office supplies include items such as pens, pencils, notepads, sticky notes, file folders, paper clips, and paper used for printers and copy machines.

The complaint alleges that, in competing for contracts, both Staples and Office Depot can provide the low prices, nationwide distribution and combination of services and features that many large business customers require.

The complaint further alleges that, by eliminating the competition between Staples and Office Depot, the transaction would lead to higher prices and reduced quality.

The complaint also asserts that entry or expansion into the market – by other office supplies vendors, manufacturers, wholesalers, or online retailers – would not be timely, likely, or sufficient to counteract the anticompetitive effects of the merger. Finally, the complaint asserts that purported efficiencies would not offset the likely competitive harm.

The FTC has authorized staff to seek in federal court a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger and to maintain the status quo pending the administrative proceeding.

Throughout the investigation, Commission staff cooperated with staff of the antitrust agencies in Australia, Canada, and the European Union.

The Canadian Competition Bureau also filed an application to block the transaction with Canada’s Competition Tribunal earlier today. The FTC acknowledges the exemplary work done by all agencies.

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