Dive Brief:

• Staples said Monday that it bumped up its offer to spin off some of its business contracts to $1.25 billion from $500 million in an effort to assuage antitrust concerns that led the Federal Trade Commission to block its merger with Office Depot.

• At a court hearing last week, FTC attorney Tara Reinhart said that the agency informed Staples and Office Depot that Staples’ offer is a transfer of contracts more than an actual divestment of physical assets at a level that would ease anti-competitive effects.

• The FTC Dec. 7 had filed a complaint on antitrust grounds and a trial is scheduled for March in federal court.

Dive Insight:

Antitrust concerns in the contract-based business supplies side appears to have emerged as a major factor for the FTC. Those concerns led the agency to block the merger, and it looks like if Stapes and Office Depot are going to persuade the FTC that its merger should go forward, Staples would have to divest even more.

While Staples says it offered to transfer many of its contracts, the FTC apparently wants to be sure that enough of the infrastructure in the space is handed off to another entity in a way that would maintain a meaningful level of business outside any newly merged company.

"If it’s just a matter of more assets, then a settlement is likely doable here," Jennifer Rie, an antitrust analyst at Bloomberg Intelligence in New York, told Bloomberg.

It’s unclear how far the companies are willing to go beyond the latest spinoff offer in order to meet the threshold that might satisfy the FTC. For now, the companies say they’ll contest the FTC’s position.

“The company is confident in its legal position and looks forward to a full and impartial judicial review of the matter,” Staples said in the statement.