Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C.: Staples will get more docs from Amazon to defend Office Depot deal, (Feb 29, 2016)

By Jeffrey May, J.D.

In the FTC action challenging Staples, Inc.’s proposed $6.3 billion acquisition of Office Depot, Inc., the federal district court in Washington, D.C. has granted Staples’ motion to compel production of documents from Amazon, Inc. In its effort to defend the merger, Staples is seeking documents and information from Amazon to show that the merged entity would face competition from Amazon's recently launched its "Amazon Business" unit, which sells office products, consumable office supplies, and paper (FTC v. Staples, Inc., February 26, 2016, Sullivan, E.).

Staples successfully contended that non-party Amazon did not fully respond to its subpoena, seeking documents and information relevant to the merging parties’ claims and defenses in the FTC’s case. Amazon had produced 15 partially-redacted documents (totaling more than 140 pages). Staples moved to compel production of additional documents based on Amazon’s alleged incomplete document production and improper redactions.

“[I]nformation about Amazon and Amazon Business is critical to Staples’ defense,” the court concluded. Moreover, the burden or expense of the discovery sought by Staples would not outweigh its likely benefit.

Consequently, the court directed Amazon to produce documents responsive to the following three categories by March 1:

1. all of Amazon’s internal business or strategic plans/updates, including Monthly Business Reports and similar documents, created since September 2, 2015 to the present;

2. current long-range sales forecast through 2020 (and the bases for it) referenced by Amazon's Federal Rule of Civil Procedure 30(6)(b) deponent at deposition; and

3. documents sufficient to show the break-down of spend across office product categories by the top Fortune 500 customers Amazon Business serves.

In addition, the court required Amazon to produce unredacted copies of the 15 documents already produced for the court’s in camera review. The court will then rule on whether any documents reviewed in camera must be disclosed to Staples. In light of the additional documents to be made available by Amazon, Staples was permitted to take one out-of-time deposition of an Amazon employee in order to cover new information gleaned from the documents produced.

FTC proceedings. The FTC filed its administrative challenge to the Staples-Office Depot transaction in December 2015, claiming that the deal would significantly reduce competition across the U.S. market for “consumable” office supplies sold to large business customers for their own use. The administrative trial is scheduled to begin in May. In addition, the agency has moved for a preliminary injunction in federal district court to block the transaction pending the completion of the administrative proceeding. According to the agency, Staples and Office Depot are the two largest vendors of consumable office supplies to large business-to-business customers in the United States. The FTC has said that Amazon Business would not “meaningfully constrain” Staples following its acquisition of Office Depot.

This is Case No. 1:15-cv-02115-EGS.

Attorneys: Tara L. Reinhart for the FTC. Jonathan Cheng (Weil, Gotshal & Manges LLP) and Ronald F. Wick (Cozen O'Connor) for Staples, Inc. Andrea B. Levine and Andrew McHie Lacy (Simpson, Thacher & Bartlett LLP) for Office Depot, Inc.

Companies: Staples, Inc.; Office Depot, Inc.; Amazon, Inc.

Cases: AcquisitionsMergers Antitrust DistrictofColumbiaNews