The US Government It Trying To Kill The Office Depot And Staples Merger

Office Depot

The U.S. government is attempting to stop the proposed merger of Staples and Office Depot.

The FTC on Monday said it was challenging the $6.3 billion acquisition of Office Depot.

The commission successfully blocked a merger between the two companies in 1997.

In the current action, the FTC argues that the Staples and Office Depot combination would violate antitrust laws by “significantly reducing competition nationwide.”

While Staples and Office Depot control a large percentage of the brick-and-mortar office supply space, they are facing intense competitive pressure these days from Amazon and Wal-Mart, among other e-commerce friendly office suppliers providers.

Last year, Staples announced plans to shut 225 stores in North America.

The FTC worries that the merger would shrink the market for large business customers, where Staples and Office Depot are often the top two bidders.

“By eliminating competition between Staples and Office Depot, the transaction would lead to higher prices and reduced quality,” the FTC said in a statement.

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Office Depot shares plummeted 17% on Monday, the steepest one-day decline in over five years. Staples shares tumbled nearly 15%.

In a joint statement the companies said the FTC move is based on a “flawed analysis and misunderstanding of the intense competitive landscape.”

They point to the FTC’s own decision in 2013 to approve Office Depot’s acquisition of rival OfficeMax.