FTC concerned for large companies over Staples-Office Depot merger

The Federal Trade Commission has said that large companies will be harmed by the lack of competition if the office-supply retail giants Staples and Office Depot are allowed to merge.

The Federal Trade Commission (FTC) has said ‘large companies will be harmed by the lack of competition if the office-supply retail giants are allowed to merge’ in their court case challenging Staples’ acquisition of Office Depot.

Photo courtesy fortune.com
Photo courtesy fortune.com

The federal agency quoted witnesses from companies including Fifth Third Bank, McDonald’s, American Electric Power and HealthTrust in a redacted document that was filed on Monday 11 April 2016.

One witness claimed that “if Staples and Office Depot merge, we’ll be in a non-competitive environment. We will not have a competitive environment behind which to negotiate with a nationally capable contracted vendor.”

Another testified that it had ‘benefited from the competition between Staples and Office Depot, which has yielded the “best value” and the “best cost”.’

‘Staples and Office Depot have asked the judge to dismiss the case, declining to present a defense. Judge Emmet Sullivan of U.S. District Court in Washington D.C. is expected to decide in early May whether to grant the FTC a preliminary injunction to stop the merger’.

Staples declared its US $6.3 billion (AU $10.83 billion) acquisition of Office Depot in Boca Raton a year ago. The merger agreement was recently extended to May 16.

Staples lawyer Diane Sullivan told the judge on 4 April 2016 that the company would not present a defense, saying that “the government failed to make a convincing case that the deal will harm competition”.

She called the government’s case an “utter failure”, saying that “they haven’t met their burden”.

If the Staples and Office Depot merger were to go ahead, the retailers ‘would control 79 per cent of the Fortune 100 or largest companies’ market. The FTC maintains that would constitute an unlawful monopoly’.

“Effects are likely to be significant because Staples and Office Depot are each other’s closest competitors in the bidding market,” the FTC said in its summation.

“Any entry into the large-business market would not be ‘timely, likely or sufficient’.”

The FTC has also rejected ‘a plan by Staples and Office Depot to transfer US$550 million (AU$7.17 million) in large-company contracts to Illinois wholesaler Essendant as creating third viable competitor’.


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