(CN) – Staples and Office Depot haven’t yet convinced U.S. regulators to let them merge, but the European Commission approved the deal Wednesday and attached some strings of its own.
A year ago, Staples announced that Office Depot shareholders had overwhelmingly approved its offer to buy the rival office supplies retailer for $6.3 billion. The proposed transaction valued Office Depot at $11 per share, which shareholders would receive in cash and Staples stock.
But the Federal Trade Commission sued to block the deal this past December, claiming the merger would violate antitrust laws by significantly reducing competition in the office supplies market.
Last month, a federal judge denied the retailers’ motion to order the government to turn over 850 documents related to its investigations of the proposed merger and the 2013 Office Depot-Officemax merger, finding the documents privileged.
But on Wednesday, the European Commission gave the merger its blessing following its own investigation which focused on international contract sales and national contract sales in the Netherlands and Sweden.
The commission found that only three companies operating in Europe – Staples, Office Depot and France-based Lyreco – have the capacity to enter into international supply contracts for large business customers, and that barriers for other companies to enter that market are high because of the specific requirements of customers.
On a national scale, the commission found the merger would reduce competition for national contracts with large businesses in the Netherlands and Sweden and for the wholesale supply of office products in Sweden where few alternative suppliers are active.
To address the commission’s concerns, Staples and Office Depot offered to sell off all of Office Depot’s contract distribution business in the European Economic Area and Switzerland and shutter all Office Depot stores in Sweden.
Once completed, the commission said the retailers’ offer will “remove the entire overlap between the merging companies in all markets where concerns were raised, thus ensuring that an important alternative will remain available on those highly concentrated markets.”
Staples may only proceed with its acquisition of Office Depot in the EU once the commission has assessed and approved the divesture to a suitable buyer, the commission said.
The commission also noted that during its investigation it had worked closely with the FTC and the Canadian Competition Bureau – which along with the FTC is challenging the merger – but that the EU’s green light has no bearing on proceedings in North America.
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