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Wednesday, May 29, 2024 | Back issues
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FTC Sues to Block Staples-Office Depot Deal

(CN) - The Federal Trade Commission wants a court order to stop the proposed $6.3 billion merger of Staples and Office Depot, claiming the deal would violate antitrust laws.

In February, Staples announced that Office Depot shareholders had overwhelmingly approved its offer to buy the rival office supplies retailer for $6.3 billion. The transaction valued Office Depot at $11 per share, which shareholders would receive in cash and Staples stock.

But the Federal Trade Commission filed an administrative complaint blocking the deal on Monday, claiming that the merger would significantly reduce competition in the office supplies market, leading to higher prices and lower quality.

The complaint remains under seal, but the FTC explained its reason for intervening in the deal in a news release.

"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 statement. "The FTC's complaint alleges that Staples and Office Depot are often the top two bidders for large business customers."

The FTC also believes that expansion into the market by other office supplies venders would not be likely to counteract the anticompetitive effects of the merger, according to its statement.

An administrative trial is scheduled to begin in May 2016.

In a joint statement, the companies said they "disagree with the FTC's interpretation of the competitive landscape," and intend to contest its decision to challenge the merger.

"This combination is good for customers. It's good for shareholders, and it's good for both companies," Staples CEO Ron Sargent said. "We intend to complete this transaction and to provide our customers with the lower prices and better service that they deserve."

Staples shares fell 15 percent after Monday's announcement, while Office Max shares dropped 18 percent.

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