Staples and Office Depot want to merge and form one mega-chain of office supply stores that you mostly visit to drop off UPS packages. The Federal Trade Commission doesn’t approve of this union, because both sell supplies and serve as wholesalers to smaller office suppliers. The companies announced late yesterday that they’ve reached an agreement with Essendant, a smaller national supplier, to take over some of that business if the merger goes through.

The FTC isn’t as concerned with the effects on retail stores, since consumers don’t sign supply contracts for, say, printer cartridges and paper clips with a single vendor. However, if the two largest national business suppliers merged, companies might not be able to turn to a competitor. Retail shoppers, however, can go grab a pack of pens at Walmart.

Office Depot was the second-largest supplier in the country even before its merger with OfficeMax, then the third-largest in the industry, back in 2013. Back in December, the Commission filed an antitrust lawsuit to stop the merger over concerns about both companies’ commercial supply business.

The third-largest commercial office supply company, W.B. Mason, is regional, doing business in the Northeast and Midwest. The FTC reportedly played matchmaker, connecting Staples and OfficeMax with Essendant, a much smaller but national competitor that has been gobbling up other companies in the industry in recent years.

The company changed its name from United Stationers last year. In a statement that the companies of the future StaplesMaxDepot issued together, they explained that Essendant would take over accounts from both companies. Many of these are wholesale accounts where both Staples and OfficeMax sell to smaller office supply companies owned by women and members of minority groups.

If the FTC still objects to the merger in coming months, there will be a trial beginning on May 10. The companies extended the deadline on their merger agreement past the trial date to May 16. If the FTC drops its objection, the merger could go through earlier.

Staples, Office Depot to sell off part of corporate contract business [Boston Business Journal]
Staples, Office Depot to divest operations as they seek merger approval [Boston Globe]

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