FTC Puts Preliminary Kibosh On Staples-Office Depot Merger

When most people think of business monopolies, their thoughts turn to telecommunications or related high-tech industries. Rarely, however, do office supplies come into the discussion of antitrust laws.

However, that’s exactly what’s happening now that the Federal Trade Commission has lodged a formal complaint against the proposed merger between Staples and Office Depot. According to a statement released by the FTC, the $6.3 billion deal is in violation of antitrust laws by the very fact that both companies are each other’s closest competitors in corporate office supply sales, and such a merger would significantly reduce competition among other retailers in the same industry.

“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,” Edith Ramirez, chairwoman of the FTC, said in a statement. “The FTC’s complaint alleges that Staples and Office Depot are often the top two bidders for large business customers.”

Naturally, executives at Staples and Office Depot saw things somewhat differently. Ron Sargent, chairman and CEO at Staples, said that the acquisition of Office Depot would establish “an unparalleled opportunity to better serve customers,” while Roland Smith, chairman and CEO of Office Depot, explained that the two companies “intend to pursue legal options in order to complete this transaction.”

The FTC also wasn’t shy to invoke legal tools to slow, or altogether stop, the merger, as a temporary restraining order received a unanimous vote from the FTC’s inner circle. The administrative proceedings to review the merger won’t begin until May 10, 2016, at the earliest, though, which should give both sides plenty of time to dig in their heels.

When the case goes before a judge in the spring, the fate of American laminated portfolios and executive swivel chairs could be at stake.