Staples, Office Depot: FTC’s Opposition To Billion-Dollar Merger Is “Flawed,” “Wrong”

Image courtesy of Mike Mozart and frankieleon

Three months after federal regulators filed a lawsuit to stop the nightmare dream formation of the $6.3 billion StaplesMaxDepot Voltron , the CEOs of the mega-office supply chains are fed up, and they’re taking that frustration to the customers by airing their true thoughts on the Federal Trade Commission’s attempt to stop the deal. 

In an open letter to customers on Friday — just three days before a hearing on the merger is set to start — Staples CEO Ron Sargent and Office Depot CEO Roland Smith expressed their belief that the FTC’s action to stop the mega-deal is “simply wrong” and “based on a flawed analysis of the marketplace and a deep misunderstanding of the competitive landscape.”

“The FTC has cherry picked a few facts to fit its narrative and support its case,” the letter stated. “In making its case, the FTC refuses to even acknowledge the rise of new competitors, such as Amazon, and the disruptive effects of the digital economy.”

In December, the FTC filed a lawsuit to block the merger based on the findings that a merged company would reduce competition nationwide in the market for “consumable” office supplies – pens, paper, sticky notes, etc. – sold to large business customers.

Because Massachusetts-based Staples – the world’s largest seller of office products and services – and Florida-based Office Depot are each other’s closest competitors in the sale of office supplies to large business customers, the agency believes that the proposed merger would “eliminate beneficial competition that large companies rely on to reduce the costs of office supplies.”

Essendant, a smaller national supplier, agreed to take over some of the commercial business contracts currently held by Office Depot and Staples if the merger goes through.

Sargent and Smith accuse the government of trying to “protect the 100 largest companies in the U.S.” and acting “against the best interests of the hundreds of thousands of business customers, and millions of everyday customers who will benefit from the acquisition.”

The office supply heads reiterated their commitment to the mega-merger, noting that the transaction is good for customers.

“The combined company will be positioned to better serve the changing needs of business customers and compete more effectively against a large and diverse set of competitors,” the CEOs write. “These customers and all others will benefit directly from the merger’s cost savings and resulting lower prices.”

Sargent and Smith also point out that the deal has, so far, already been approved in Australia, New Zealand, China, and the European Union.

“Many regulatory agencies around the world clearly understand that the acquisition will provide us with an unparalleled opportunity to increase value and service to customers of all sizes,” they write.

The FTC’s lawsuit is the second time the agency has taken action to ban the marriage of the retailers. In 1997, the commission won a ruling from a federal judge blocking a deal.

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