UPDATE as of 12/22: In an effort to satisfy demands of the Federal Trade Commission (FTC) upon its attempts to block the Staples-Office Deport merger, Staples proposed divesting up to $1.25 billion of its commercial contracts. The FTC rejected the company’s offer without making a counteroffer. Staples is “still willing to continue negotiations with the FTC to reach a settlement” addressing the commission’s concerns, according to a company statement.
The Federal Trade Commission (FTC) has filed a lawsuit seeking to block Staples’ proposed $6.3 billion acquisition of Office Depot, claiming that it would likely violate antitrust laws and “eliminate beneficial competition that large companies rely on to reduce the costs of office supplies.”
The complaint states that “Staples and Office Depot are often the top two bidders for large business customers,” according to Edith Ramirez, Chairwoman of the FTC.
All four current FTC commissioners voted in favor of the complaint. The FTC authorized staff to seek a temporary restraining order and a preliminary injunction in federal court to prevent the parties from consummating the merger.
In response, both Staples and Office Depot have announced they will contest the lawsuit. The retailers argue that the FTC’s decision is based on “a flawed analysis and misunderstanding of the intense competitive landscape in which Staples and Office Depot compete.” In a joint statement, the companies contend that the decision contradicts a prior FTC ruling in the 2013 Office Depot-OfficeMax merger, in which the commission declared the market highly competitive.
The administrative trial is scheduled to begin on May 10, 2016.
The lawsuit marks the second time the FTC has intervened to prevent to the two retailers from combining. In 1997, the FTC won a federal ruling that blocked an earlier planned Staples-Office Depot merger.
The companies had initially sought to ease FTC concerns by divesting $600 million of their own corporate contracts to wholesaler Essendant. However, it appears FTC employees still were not satisfied with the potential divestiture offer.