Dive Brief:

• An antitrust watchdog group has released a white paper on the proposed Staples-Office Depot merger that urges the Federal Trade Commission to tread carefully in the matter. Office Depot’s shareholders overwhelmingly approved the proposed deal last month. 

• The American Antitrust Institute says that while online retail mitigates the anti-competitive effects of a merger somewhat, competitive concerns remain in the office supplies segment of long-term contracts with businesses.

• The group is joined by the American Postal Workers Union in warning that the proposed merger would harm consumers due to a lack of competition in too many areas.

Dive Insight:

There’s a general sense that the FTC will look more kindly upon a Staples-Office Depot merger this time around, but the AAI is saying that things haven’t changed that much since the agency rejected the idea 18 years ago.

The antitrust watchdog group is also saying that the stakes are higher since the FTC gave its blessing to the 2013 Office Depot’s acquisition of OfficeMax. That, says the group, has only further consolidated—and lessened competition in—the business contracts market.

This could be a wrench in the merger process here. The retail business has been getting most of the attention, and it’s easy to see that both retailers are struggling against the forces of online competition and of competition coming from general retailers like Target that have increased their office supplies offerings.

But that doesn’t change the fact that the business-contract side of the operation needs competition, says AAI associate general counsel and report author Randy Stutz. ”While the deal deserves a lot of attention on retail market issues, we highlight that competition for the largest customers in the contract market is basically on life support," he said in a statement. "We don’t see any companies left in the enterprise contract market that can mount a serious challenge to Staples or Office Depot.”