Dive Brief:

• Staples CEO Ron Sargent and Office Depot CEO Roland Smith issued an open letter to customers on Friday slamming the Federal Trade Commission for taking action to block the proposed merger between the two companies.
• The letter states that the FTC is basing its decision on "flawed analysis of the marketplace," and accuses the agency of having "cherry picked" facts to support its claim that the merger would stifle competition in the space, especially with regard to business contracts. 
• Rising competition from Amazon is cited in the letter, which says that the FTC has failed to consider the "disruptive effects of the digital economy" on the office supplies space. 

Dive Insight:

Staples and Office Depot are not going down without a fight.

The FTC moved to block the proposed merger in December by filing a federal complaint that cited antitrust concerns. Staples and Office Depot fired back in a press release that was similar to today's letter, saying the decision is based on a "misunderstanding" of the intensely competitive office supplies marketplace. Staples later went on to request "15 heavily redacted" documents from Amazon as it seeks to show in court that Amazon and other online retailers present serious competition to them.

The deal hinges on whether the FTC acknowledges the impact of e-commerce on the marketplace, among other things. In the letter, Staples and Office Depot say that the FTC is mostly concerned with protecting the 100 largest U.S. companies, which the agency says will pay more for office supplies if the merger goes through. Staples says it has repeatedly promised this will not happen, insisting instead that its customers will benefit from the deal. 

"[M]ore than 99 percent of our commercial customers will be, at worst, unaffected by the merger. In reality, these customers and all others will benefit directly from the merger’s cost savings and resulting lower prices," the letter reads. "The FTC continues to act against the best interests of the hundreds of thousands of business customers, and millions of everyday consumers who will benefit from the acquisition. The FTC also ignores the millions of products beyond office supplies that customers purchase, everything from cleaning supplies to breakroom snacks to furniture and technology."

The two companies will begin a hearing on Monday in U.S. District Court over FTC's blocking of the merger. Sargent and Smith were quick to point out that the merger has already been approved by Australia, New Zealand, China, and the EU: "Many regulatory agencies around the world clearly understand that the acquisition will provide us with an unparalleled opportunity to increase value and service to customers of all sizes."

The proposed merger was first announced in February 2015, but that's actually not the first time these two companies have tried to merge. The first time was back in 1997, but the FTC rejected the merger, citing evidence that prices of office supplies were lower in areas where both companies had stores.