Staples Calls U.S. Office Depot Case ‘Fundamentally Flawed’

  • Companies file response to FTC antitrust suit in Washington
  • Staples, Office Depot cite competition from Amazon, W.B. Mason

Staples Inc. made its opening salvo against the U.S. case seeking to block its takeover of Office Depot Inc., saying the claims are “fundamentally flawed” because the office-supply retailers compete against numerous vendors like W.B. Mason Co. and Amazon.com Inc.

Staples and Office Depot countered that Federal Trade Commission fails to show their merger will harm competition and raise prices for corporate customers that buy under contract from the companies, according to filings Tuesday in Washington federal court.

The FTC’s complaint is a “misguided application of the antitrust laws," Staples said. The businesses face "fierce competition today and in the future from a strong and expanding set of competitors."

The FTC sued the companies earlier this month, arguing the tie-up would eliminate competition that benefits corporate customers, giving the enlarged company a 70 percent share of that market.  

The companies are fighting the FTC’s effort to get a preliminary order from a federal judge that would prevent the companies from closing their merger so that the FTC can proceed with an administrative trial in May. 

The outcome of the federal court proceeding will probably determine the fate of the merger, however. Office Depot has said that the deal will effectively be killed if the judge grants the injunction because the transaction can’t survive a drawn-out administrative trial. If the FTC loses its bid, however, the companies would be free to merge and could press the agency to drop its case.

Staples shares rose 2 percent to $9.62 at 12:17 p.m. in New York. Office Depot was up 3 percent to $5.56.

Judge Emmet Sullivan is scheduled to hear the agency’s arguments for the injunction starting March 21. FTC spokesman Peter Kaplan declined to comment.

The No. 1 and No. 2 office-supply retailers denied in their filings that they are one another’s closest competitors for large corporate customers. They also made clear they plan to defend their deal by pointing the FTC’s 2013 decision approving Office Depot’s purchase of OfficeMax. The FTC’s case is "directly contradicted" by that decision, which cited a "host" of competitors for corporate sales, said Staples.

The case is Federal Trade Commission v. Staples Inc., 15-cv-2115, U.S. District Court, District of Columbia (Washington).

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