Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: FTC, Canada Competition Bureau drop challenges to Staples-Office Depot deal, (May 19, 2016)

By Greg Hammond, J.D.

The FTC and Canada Competition Bureau yesterday dismissed their separate administrative actions challenging Staples, Inc.’s proposed acquisition of Office Depot. Staples and Office Depot terminated the deal following a preliminary injunction entered by the federal district court in Washington, D.C. on May 10, which blocked the acquisition pending the FTC’s administrative action (In the Matter of Staples, Inc., Dkt. 9367, File No. 151 0065).

The district court concluded that there was a reasonable probability that the proposed merger of Staples, Inc. and Office Depot, Inc. would substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers. Staples and Office Depot consequently terminated the deal on May 16, 2016. Staples is required to pay Office Depot a $250 million break-up fee.

FTC response. "This outcome bodes well for business customers in the market for office supplies," FTC Chairwoman Edith Ramirez stated. "These customers will continue to reap the benefits of the direct competition between Staples and Office Depot, which would have been eliminated if the top two suppliers had been allowed to merge."

The FTC had issued its administrative complaint in December 2015, alleging that Staple’s proposed $6.3 billion acquisition of Office Depot would eliminate head-to-head competition between the two largest vendors of consumable office supplies to large business-to-business customers in the United States. In light of the companies’ decision to abandon the deal and Staples’ withdrawal of its Hart-Scott-Rodino Notification and Report Form, the Commission decided to dismiss the complaint without prejudice.

Competition Bureau response. The Canada Competition Bureau also issued its notice of application in December 2015, claiming that if the acquisition were to proceed, Staples would have accounted for more than 80 percent of business-to-business sales of various office products to affected customers in Canada. A Notice of Discontinuance was filed on May 18.

"We are pleased that the parties have agreed to not proceed with this transaction," John Pecman, Commissioner of Competition, remarked. "This positive outcome for competition in Canada is a practical example of the benefits of international enforcement cooperation, and a testament to our productive working relationship with the US Federal Trade Commission."

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

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