The Federal Trade Commission has its mind set against allowing Staples to acquire Office Depot, again rejecting an offer made by Staples to ease the commission's fears about a monopoly.
Recently, Staples offered to sell off $1.25 billion of its contracts, but that still wasn't enough for the FTC to approve the company buying out its main competitor in the office supplies market. Regulators believe the merger of the two companies would give the final company too much power in the office supplies segment and plan on continuing to oppose the merger.
Two weeks ago, the FTC stated that it wouldn't approve a deal for the merger, although Staples decided to buy Office Depot back in February, 19 years after Staples originally agreed to buy its competitor, a move which, at the time, was also blocked by the FTC.
Now with Office Depot having already acquired one of its own competitors, Office Max, regulators worry that a merger would result in a monopoly and price-gouging for office supplies.
Of course, Staples argues that no such thing would happen, particularly with online retailers like Amazon and Walmart in the mix. However, the FTC still disagrees.
"The Commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies," said FTC Chairwoman Edith Ramirez in a statement as reported by The Boca Raton Tribune. "The FTC's complaint alleges that Staples and Office Depot are often the top two bidders for large business customers." Office Depot has about 2,000 employees in the Boca Raton, Fla., area.
Staples' bid for Office Depot was originally worth $6.3 billion, but Staples shares recently fell, meaning that the deal would have less value than before. Last year, Staples announced that it would close hundreds of stores in North America due to its struggles in the office supplies business.
Staples still plans on continuing negotiations to work with the FTC, but the company also threatened legal action should the FTC continue to block the merger. An administrative trial concerning the merger is scheduled to begin May 10.
It's likely, though, that the FTC won't budge on its decision, especially after several mergers got canceled this month because of antitrust concerns, including a merger between Bumble Bee and Chicken of the Sea and a merger between General Electric and Electrolux.
Photo: Mike Mozart | Flickr
