FTC Blocks Staples-Office Depot Merger

The Federal Trade Commission (FTC) last week filed a complaint, charging that Staples Inc.'s proposed acquisition of Office Depot Inc. would violate antitrust laws by reducing competition nationwide in the industry for "consumable" office supplies, including writing instruments, notepads, folders and paper products, sold to large-business customers.

"The commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies," FTC chairwoman Edith Ramirez said in a press release. "The FTC's complaint alleges that Staples and Office Depot are often the top two bidders for large-business customers."

Staples and Office Depot contended in a joint open letter that the merger would be beneficial for customers.

"This merger creates an unparalleled opportunity to better serve customers of Staples and Office Depot," Ron Sargent, chairman and CEO of Staples, said in a statement. "The combined company would generate significant savings, and we're committed to investing savings in lower prices for all customers. We'll also use the savings to continue to invest in our people, technology and customer service."

Roland Smith, chairman and CEO of Office Depot, added that the two companies will not abandon their goal to merge.

"The combination of Staples and Office Depot is based on creating an organization able to compete in a vibrant market with strong regional players and powerful new national entrants," he said. "We are confident that this transaction is consistent with the 2013 FTC statement in the Office Depot-Office Max merger, and intend to pursue legal options in order to complete this transaction.

The FTC has authorized staff to seek a temporary restraining order and a preliminary injunction to prevent the parties from finalizing the merger, and to maintain the status quo before the administrative proceeding, which is scheduled to begin on May 10, 2016.