Federal Trade Commission Blocks Staples, Office Depot Merger

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Summary: The number one and two office supply companies are attempting to merge, but the Federal Trade Commission has filed a lawsuit to block the deal.

The Federal Trade Commission is stepping in to block another merger between two companies. Office supply companies Staples and Office Depot had planned for a $6.3 billion merger before the FTC sued to block the plan, citing that the combination of companies would reduce competition significantly of consumable office supplies.

  

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• See Electrolux, General Electric Deal May Be Off for information about another merger that may be blocked.

The regulator of the suit states that Framingham, Massachusetts based Staples and Boca Raton, Florida based Office Depot are each other’s closest competitors, often competing against each other for the business of large companies as well as the sale of items like sticky notes, pens, paper, and paper clips.

Staples and Office Depot disagree with this argument, releasing a joint statement that the analysis was flawed and misunderstands the office supply industry, stating the FTC “will hurt customers of both companies and jeopardize our ability to compete in a rapidly evolving marketplace.” They say the biggest competitors for both companies are online marketplaces like Amazon and cheaper retailers like Walmart.

Staples and Office Depot have been trying for years to merge, but keep getting blocked. However, just two years ago Office Depot and Office Max were allowed to merge in a $1.2 billion deal.

Both companies report declining revenues, forcing them to cut staff and close stores. They argue that together they can lower prices for consumers as a stronger, united company.

Source: http://www.nytimes.com/2015/12/08/business/dealbook/ftc-sues-to-block-staples-office-depot-deal.html

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