Antitrust Law Daily Wrap Up, TOP STORY: FTC will not challenge merger of office supply superstores Office Depot, OfficeMax, (Nov 1, 2013)

By Jeffrey May, J.D.

The merger of Office Depot, Inc. and OfficeMax, Inc., the country’s second and third largest chains of office supply superstores (OSS), is unlikely to have significant anticompetitive effects in markets for the retail sale of office supplies or the sale of such supplies to contract customers, the FTC has determined. Today, the agency announced that it has closed its seven-month investigation of the transaction without taking action (Proposed Merger of Office Depot, Inc. and OfficeMax, Inc., FTC File No. 131-0104).

The Commission issued a statement, explaining its reasons for clearing the merger, despite its court challenge to the combination of office supply superstores Staples, Inc., and Office Depot in 1997.

“Although sixteen years ago the Commission blocked a proposed merger between Staples, Inc. and Office Depot, the nation’s two largest OSS, our current investigation has shown that the market for the sale of consumable office supplies has changed significantly in the intervening years,” according to the FTC.

With respect to sales in the retail channel, the FTC observed that “today’s market for the sale of consumable office supplies is broader.” The agency pointed to the sale of office supplies by mass merchants, such as Wal-Mart, Target, Costco and Sam’s Club, as well as the “explosive growth of online commerce.”

As for the sale of consumable office supplies to businesses and other customers on a contract basis, the agency’s investigation focused on contracts for large multi-regional or national customers. The merger is unlikely to substantially lessen competition or harm large contract customers, according to the agency.

Large customers use a variety of tools to ensure that they receive competitive pricing, such as ordering certain products, it was noted. Moreover, the merging parties’ are rarely each other’s closest competitor for most large customers, and non-OSS competitors take business from the parties in a substantial number of contracting opportunities. The merged entity will continue to face strong competition for such customers from Staples and a host of non-OSS competitors, the agency concluded.

The companies anticipate completing the transaction after market close on November 5.

Attorneys: Paul T. Denis (Dechert LLP) for OfficeMax, Inc. Matthew J. Reilly (Simpson Thacher & Bartlett LLP) for Office Depot, Inc.

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

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