Staples & Office Depot Ask Judge To Toss Antitrust Lawsuit Without Defending Merger

Image courtesy of Mike Mozart and frankieleon

Two weeks after the beginning of a federal court hearing on the proposed mega-merger between Office Depot and Staples, the office supply chains’ lawyers have decided not to present a defense against the Federal Trade Commission’s claim that the deal is bad for consumers and businesses. 

No, the two companies — which previously said they would fight the lawsuit until the end — aren’t throwing in the towel or raising the white flag in defeat. Instead, the office supply chains says the government has failed to prove their case, and Judge Emmet Sullivan should rule in their favor, The Wall Street Journal reports.

Staples and Office Depot on Tuesday claimed that the FTC’s case against the proposed merger was so weak there was no need to present a defense.

”We believe there is a fatal flaw” in the FTC’s case, Staples lawyer Diane Sullivan said in court Tuesday when the office supply chains were supposed to begin presenting their defenses. “On this record, the court should deny” the government’s request to block the deal.

Judge Sullivan said he “did not anticipate” the companies’ resting their case without calling witnesses and would consider how to proceed.

While the move by Staples and Office Depot is unusual for a federal antitrust case, the two-week long hearing, which was expected to end later this week, has been marred with issues when it comes to the government’s case.

Staples and Office Depot are currently the top two office suppliers in the U.S. contract business, with the next closest company being W.B. Mason, which serves only select regions of the U.S. The FTC claimed that the merger would restrict competition when it comes to commercial customers restocking paper, pens and other necessities for the workplace.

And so, the key question of the hearing quickly turned to whether large corporations plan to buy their office supplies from Amazon in the future.

The office suppliers argue that Amazon is aggressively going after the commercial office supply market, and they need to merge to stay in business. However, Amazon executive Prentiss Wilson testified that the company hasn’t signed any major companies, and aren’t really pursuing big corporate contracts — yet.

But days after that testimony, Judge Sullivan allegedly scolded the FTC for maybe telling the executive from Amazon what to say on the stand.

The chastising came after Sullivan, Staples’ lawyer, asked the Amazon executive if the FTC had specifically asked him to say that Amazon wasn’t as far along in developing their commercial business supply operation as Staples and Office Depot claim.

She pointed to a draft affidavit that the FTC gave to Amazon’s lawyers, which said that Amazon wouldn’t be prepared to compete for large business supply contracts within the next two years.

Judge Sullivan ordered that the parts of the transcript recounting the FTC’s helpful suggestions be made public, while the remaining portions remained heavily redacted.

“The public ought to know that the government wanted Amazon to say some things that weren’t true,” he told the court, “and that’s going to be public.”

Staples Seeks Antitrust Ruling Without Presenting Its Defense [The Wall Street Journal]