Dive Brief:
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Staples and Office Depot Monday said they’ve agreed with the Federal Trade Commission to extend the review period for their proposed merger; the companies announced in February that Staples would acquire its rival for $6.3 billion in cash and stock.
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The new deadline for the FTC’s decision is Dec. 8 this year.
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The FTC last month reportedly had stepped up its scrutiny of the merger, looking especially at the potential impact on the corporate business supplies market, and the European Union has recently made similar moves over similar concerns.
Dive Insight:
While the proposed merger of Staples and Office Depot has already garnered regulatory approval from Australia, New Zealand, and China, the U.S. FTC and European Union regulators are being far more cautious.
At issue is the area of corporate business supplies, large accounts in the business-to-business market, rather than retail store competition.
Increased competition in office-supply sales from non-office supply brick-and-mortar and from e-commerce retailers led many to believe that the FTC may very well bless this union this time around (the companies attempted a merger in 1997). In fact, that was the FTC’s own stated reasoning when it allowed Office Depot’s acquisition of OfficeMax in 2013.
But antitrust advocates like the American Antitrust Institute say 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.
"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," AAI associate general counsel and report author Randy Stutz said in July. "We don’t see any companies left in the enterprise contract market that can mount a serious challenge to Staples or Office Depot.”
It’s not clear that more time will help the merger along, but if the FTC were to decide now, it may not be good news for the companies.
